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The World Bank

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CR. 1619-lJii

Report N. :-3944-1-E

REPORT AND RECOMMENDATION

OF THE

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

ON A PROPOSED CREDIT

OF SDR 9.6 MILLION

TO

THE REPUBLIC OF NIGER

FOR AN

IRRIGATION REHABILITATION PROJECT

May 31, 1985

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CURRENCY EQUIVALENTS

Currency Unit - CFA Franc (CFAF)US$1.0 = CFAF 460

CFAF 1 million = US$2,174

SYSTEMS OF WEIGHTS AND MEASURES: METRIC

Metric British/US Equivalents1 meter (m) = 3.28 feet (ft.)1 square meter (n2) = 10.76 square feet (sq.ft.)1 cubic meter (n3) = 35.30 cubic feet (cu.ft.)1 kilometer (km) = 0.62 mile (mi.)1 square kilometer (km2) = 0.39 square mile (sq.mi.)I hectare (ha) = 2.47 acresI metric ton (m ton) = 2,205 pounds (lbs.)

ABBREVIATIONS AND ACRONYMS

ADM Ader-Doutchi-Maggia, an intermitteu< tributary of the SokotoRiver in the Tahoua province of Niger

BCEAO Banque Centrale des Etats de l'Afrique de l'Ouest (CentralBank for West African Monetary-Union)

CCCE Caisse Centrale de Cooperation Economique (French Aid Agency)CNCA Caisse Nationale de Credit Agricole (National Agricultural

Development Bank)GMV Groupement Mutualiste Villageois (Village Mutual Group)INRAN Institut National de Recherches Agronomiques du Niger

(National Agricultural Research Institute)KfW Kreditanstalt fur Wiederaufbau (Federal Republic of Germany

Aid Agency)NIGELEC Societe Nigerienne d'Electricite (National Electricity

Authority)OPVN Office des Produits Vivriers du Niger (Grain Marketing Board)ONAHA Office National des Amenagements Hydro-Agricoles (National

Irrigation Authority)RINI Socifte Riz du Niger (Rice Processing Parastatal)

FISCAL YEAR

October 1 - September 30

NIGER FOR OMCIAL USE ONLY

IRRIGATION RVIHABILITATION PROJECT

CREDIT AND PROJECT SUMNARY

Borrower: Republic of Niger

Beneficiaries: National Irrigation Authority (ONABA) and theIrrigation Cooperatives through ONAHA

Credit Amount: SDR 9.6 million (US$9.3 million equivalent)

Terms: Standard

On-lending Terms: The Government of Niger would pass on the total creditamount to ONAHA and cooperatives as a grant, except forthe medium-term credit which would be passed on tocooperatives as a loan.

Project Description: The main objectives of the proposed Project are topromote cooperatives'/farmers' self-reliance inmanagement of irrigation schemes in order to ensure thesustainability of investments, reduce Government'srecurrent costs, increase production, and improve farmincomes. The project comprises the rehabilitation ofexisting irrigation perimeters and includes thefollowing components: (a) rehabilitation of irrigationinfrastructure and equipment; (b) crop intensification;(c) assistance to cooperatives; (d) adaptive researchand seed multiplication; (e) strengthening of ONAHA;and (f) strengthening of RINI.

Project Benefits: The Project's main benefits would derive from:(a) incremental production of paddy, cotton, sorghumand onions on areas to be brought back into productionand increased yield and cropping intensities; and(b) savings on operating and maintenance costs bysubstituting electric pumps for diesel ones. Lessonslearned under this project, in particular with regardto cooperative management of irrigation schemes as wellas the role of ONAHA, would be applied to futureinvestments in this field.

Risks: No significant technical risks are associated with the physicalrehabilitation works. The only major foreseeable risk is that theirrigation schemes would be inadequately maintained. This risk hasbeen minimized under the project by introducing a pump maintenancescheme by the private sector, by financing an important trainingprogram for cooperatives, and by providing the necessary framework(contracts between Government and cooperatives, internal regula-tions, etc.) to establish a reliable system of maintenance andoperations. Other possible risks are related to financial risks ofirrigated agriculture and management capability of ONAHA, the leadexecuting agency. The former appears to be small, given the

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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Government's sound pricing policies for paddy in recent years, andthe latter would be minimized by financing a training program forONAHA's staff and technical assistance.

Project Cost Estimate (net of taxes):

Local Foreipn Total---- US$ million --

Rehabilitation Works 3.6 5.9 9.5Crop Intensification 1.4 1.0 2.4Assistance to Cooperatives 2.1 1.1 3.2Applied Research & Seed Multiplication 0.2 0.4 0.6Strengthening of ONAHA 1.1 2.0 3.1Strengthening of RINI 0.8 0.5 1.3Project Preparation (PPF) 0.1 1.1 1.2

Total Base Costs 9.3 12.0 21.3Contingencies: Physical 0.5 0.5 1.0

Price 1.2 1.7 2.9

Total Project Costs 11.0 14.2 25.2

Financing Plan:

Government and Beneficiaries 1.6 1.1 2.7IDA 3.8 5.5 9.3CCCE 3.8 5.5 9.3KfW 1.8 2.1 3.9

Total 11.0 14.2 25.2

Estimated Disbursements:

1986 1987 1988 1989 1990 1991 1992-------------------- USS million -------

Annual Z.2 1.4 2.0 1.4 1.1 0.8 0.4Cumulative 2.2 3.6 5.6 7.0 8.1 8.9 9.3

Economic Rate of Return: 18%

Staff Appraisal Report: No. 5161-NIR

Map: IBRD 18074R

INTERNATIONAL DEVELOPWTNT ASSOCIATION

REFORT AND RECOMMENDATION OF THE PRESIDENTTO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT

CREDIT TO THE REPUBLIC OF NIGER FORAN IRRIGATION REHABILITATION PROJECT

1. I submit the following report and recommendation on a proposeddevelopment credit for the equivalent of SDR 9.6 million (US$9.3 millionequivalent) on standard IDA terms to the Republic of Niger to helpfinance a proposed Irrigation Rehabilitation Project. Additionalexternal financing for the project would be provided by loans fromFrance (through the Caisse Centrale de Cooperation Economique, CCCE) inthe amount of US$9.3 million equivalent and by a grant from the FederalRepublic of Germany (through the Kreditanstalt fur Wiederaufbau, KfW),in the amount of USW3.9 million equivalent. The CCCE loan would be fora term of 30 years, including ten years grace, at an interest rate of1.5% per annum during the grace period and 2% per annum thereafter.

PART I - THE ECONOMY

2. An economic mission visited Niger in August 1984 in connectionwith an IMF Standby mission, and the main findings of the mission areincorporatee in the following paragraphs. These findings weresubsequently updated by a mission in October 1984. Annex I containsupdated country data.

Background

3. With its 1.27 million km2 of land, Niger is about 2.5 timesthe size of France. Niger is a landlocked country, and its closestaccess to the sea is about 600 km from Niger's southern border. Nearly90% ot the total population is concentrated in a thin band along thesouthern border. Only 12% of the land is considered arable, and only2.5% is actually under cultivation. Rainfall is limited (150-750 mm)even in the agricultural zone and often irregular, and soil fertility islow and declining due to its intensive use. The total population wasestimated at 5.9 million in 1982 and is growing at about 3.3% per annum.Per captta income was estimated at US$260 in 1983. Niger's socialindicators are among the lowest in the world. Life expectancy at birth,which is only 43 years, is low even by African standards. The adultliteracy rate is only 8% and the primary enrollment ratio only 23%.

4. Niger belongs to the West African Monetary Union whichprovides its members with a common currency (the CFA Franc) fullyconvertible into French Francs. The full convertibility of the CFAFranc and the liberal foreign trade policies pursued by the MonetaryUnion members have kept the Nigerien economy very open in the past.This openness was further strengthened by the very strong trade linksthat have always existed between Niger and its neighbors, particularlyNigeria. Another particularly important characteristic of the MonetaryUnion is the strong discipline imposed over monetary and fiscal policies

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of the met-ber countries, in return for the guaranteed convertibility ofthe currency.

5. Like other Sahelian economies, Niger's is dominated by sub-sistence agricultural activities with millet and sorghum accounting for80% of the cultivated area. Livestock is also an important source ofincome for a large segment of the population and is one of the country'smajor export commodities. Despite its meager agricultural resourcebase, Niger has traditionally been self-sufficient in food productionexcept during the Sahelian drought in the early 1970s and again inrecent years. The discovery of large uranium deposits in the latesixties and their development propelled the mining sector into animportant position in Niger's economy. The sector is now the country'sprincipal foreign exchange earner and an important source of Governmentrevenues.

Economic Development in the Seventies

6. During the past decade Niger went from a period of despair toa period of almost unlimited hope for the future. In the earlyseventies, Niger experienced severe drought: its livestock herd wasdecimated, and food production declined dramatically. Real per capitaCDP declined at an average annual rate of 0.5Z during the first half ofthe decade. On the expenditure side, per capita consumption declined by6Z per annum although gross domestic investment grew at a modest annualrate of 3.2% with the help of increasing foreign aid. Uranium produc-tion and export began in early 1971, but the impact of the sector on thenational economy was only moderate in the first half of the seventies asprices were stable.

7. During the second half of the decade, Niger's fortune improveddramatically. More favorable climatic conditions allowed an acceleratedrecovery of the agricultural sector. With intensive Government programsthe Nigerien livestock herd was rapidly reconstituted. Food productionsteadily increased and by 1979 Niger was once again self-sufficient andeven managed to show a substantial surplus. Moreover, the u.aniumsector experienced a boom. By 1977, uranium exports accounted for 53%of total exports of goods and non-factor services, and that shareincreased to 70Z at the end of the decade. As uranium prices andquantities exported increased rapidly, Niger's total export receiptsincreased from CFAF 12 billion in 1975 to CFAF 85 billion in 1979. Thecontribution of the sector to public revenues followed the same trer.d.The share of uranium in total Government revenues increased steadilyfrom 18% in 1975 to an all time high of 46Z in 1979. Government uraniumrevenues grew from CFAF 4 billion to CFAF 25 billion in the same period.As a result of the good performance of agriculture and mining sectors,real GDP grew at an average annual rate of 7.2%; per capita consumptiongrew at an annual rate of 4.5% and gross domestic investment at anaverage rate of 16.7%.

8. On balance, therefore. Niger's economic performance during the1970s was very good, particularly by Sahelian standards. This was dueto favorable world market prospects for uranium as well as soundeconomic policies of the Government which encouraged a rational use of

foreign aid and export earnings, and which limited pricing and otherpolicy distortions that are common smong most West African countries.

The Early Eighties, the Uranium Crisis, and the Drought

9. The decade of the eighties started with serious sigis pointingto a long lasting crisis for the uranium sector. Between 1979 and 1982real prices of uranium exports fell by more than 50Z. Uranium exportearnings stagnated at around CFAF 95 billion and uranium revenuesdeclined sharply from CFAF 25 billion in 1979 to CFAF 13 billion in1982. During the same three years, agricultural production alsodeteriorated. Unfavorable climatic conditions forced Niger once againto supplement its food production by increasing quantities of grainimports. Food grain deficits in 1981 and 1982 reached about 100,000tons per year. During 1983/84, the country experienced a seriousdrought which hit the livestock sector in particular. As a result ofthese developments, real GDP stagnated in 1981 and 1982 and declined bynearly 3Z in 1983.

10. Public finance. Unfortunately the serious slowdown in econo-mic activity was not followed by an equal slowdown in Niger's publicexpenditures. The lack of clear signals from the uranium market expertsleft the Nigerien authorities uncertain about the future of the sector.Expecting a quick recovery of uranium prices, the Government continuedto implement its ambitious Five-Year Development Plan by increasinglyrelying on foreign borrowing to finance the public investment expendi-tures. It was not until 1982 that action was initiated to adjust to thereduced export and revenue prospects.

11. As the uranium boom came to an end in 1980, overall Governmentrevenues stagnated in 1981 and 1982 at a level of CFAF 75 billion andeven declined in 1983 to CFAF 72 billion. Meanwhile, overall Governmentexpenditures continued to grow rapidly, increasing from CFAF 124 billionin 1979 to a level of CFAF 173 billion in 1982. This was not only theresult of the Government's aggressive investment strategy but also dueto the unsatisfactory financial performance of the parastatal sectorwhich had expanded rapidly during the late 1970s. Poor management andfrequently uneconomic Government policies and regulations led to largeoperating losses in many public enterprises, adding an additional burdento the Government budget. The overall Government deficit increased fromCFAF 65 billion in 1979 to CFAF 103 billion in 1982, requiringprogressively higher levels of borrowing which, in turn, created asevere public debt burden. Public debt service as a percentage ofGovernment revenues increased from 2% in 1979 to 20% in 1982.

12. Balance of payments and debt. The heavy investments inequipment and infrastructure associated with the opening of a seconduranium mine and the implementation of a large public investment programresulted in increasing current account deficits for Niger's balance ofpayments, in particular after the uranium exports started to stagnateand agricultural imports increased during L9EO-82. The financing ofthis growing deficit forced the country to accumulate a heavy foreigndebt which reached CFAF 296 billion in 1983.

13. Although official development assistance to Niger more thandoubled between 1977 and 1981, nearly 50% of its foreign debt wascontracted on commercial terms. As a result, external debt servicepayments increased dramatically from $9 million in 1977 to over $200million in 1983, equivalent to 11% and 53% of the country's exports ofgoods and services, respectively. This ratio was expected to continueto increase rapidly during the next years unless debt relief wasobtained.

Niger's Reaction to the Crisis

14. Faced with the rapid deterioration of the country's economicand financial situation, Niger's Head of State instructed his Governmentin 1982 to (a) introduce urgent austerity measures in the 1982/83 budgetand (b) prepare a consolidation program for 1983/84 and 1984/85 aimed atrestoring balance to the financial situation of the public sector.Subsequently, in 1983, a number of changes in the Government's organiza-tional structure were made which strengthened the Ministries of Plan andFinance and gave the Prime Minister overall responsibility for theeconomic and financial management of the country.

15. A strict austerity program was implemented starting 1982/83.Government wages and salaries were frozen, benefits to high schoolstudents were discontinued and Government purchases of goods andservices were tightly controlled. Most importantly, public investmentexpenditures were sharply reduced and a tighter control on foreignborrowing was imposed. During 1983, the Nigerien Government prepared,with the assistance of the World Bank, a two year consolidation programfor the period 1983-85 to help the domestic economy adjust further tocurrent financial constraints. This program was subsequently supportedby a first IMF Standby Arrangement of SDR 18 million and a CFF of SDR 12million for 1983/B4. Recently, in November 1984, the Government nego-tiated a second IMF Standby Arrangement of SDR 16 million to support thecontinuation of its consolidation efforts during 1984/85. Both programsare aimed at a progressive reduction in the overall Government budgetarydeficit and in the current account deficit of the country's balance ofpayments, as well as laying the foundation for a recovery in economicactivity through selective supply oriented measures. To achieve theseobjectives, the Government is committed to: (a) implement a fiscalreform program and improve tax collections; (b) limit the growth ofcurrent expenditures; (c) initiate measures to stabilize the financialsituation of major public enterprises; (d) liberalize marketing andpricing policies; (e) reduce and restructure public investmentexpenditures; and (f) reschedule the external debt.

16. During 1983/84, all measures envisaged under the stabilizationprogram were effectively implemented and, so far, all the performancecriteria under the IMF Standby Arrangements have been closely observeddespite the emergence of drought conditions and the closure of theNigerien border, both of which had an adverse impact on the economic andfinancial situation. The budgetary deficit is estimated to have beensharply reduced from 7.3% of GDP in 1982/83 to 4.7% in 1983/84, reflect-ing mainly a nearly 50% cutback in investment expenditures combined witha small increase in tax revenues as well as a containment of the growthof current expenditures to 8%. Also, a considerable reduction was

achieved in the arrears of public enterprises. On the external side,the current account deficit was reduced from 9% of GDP in 1982 to 4% in1983, and is estimated to have narrowed marginally to 3.9% in 1984.External debt service payments, which were scheduled to be at a level of40% of exports of goods and services in 1984, were reduced to 30% as aresult of th2 debt relief obtained from the Paris Club in November 1983and from foreign banks in early 1984. Further debt relief for 1985 wasrecently negotiated with the Paris Club in December 1984. Howev-:r, duemainly to the adverse weather conditions prevailing in the Sahel regionduring 1983/84, real GDP continued to fall by nearly 4% in 1984. Pooragricultural harvests are estimated to have resulted in a record cerealdeficit of about 500,000 tons for the crop year 1984185.

17. The Gavernment fully intends to continue its austerity programin the coming years as indicated in the second Standby Arrangement whichit has just concluded with the IHF. Hovever, continued austerity willseverely constrain Niger's development unless accompanied by furtherpolicy measures that will allow the country to restore -- andmaintain -- a minimum acceptable level of growth momentum in the medium-term future. For this reason, the Government has requested the assis-tance of the World Bank to formulate a program of structural adjustmentto be implemented in the coming years. This program of policy reform iscurrently under preparation.

Structural Adjustment

18. The resources needed for the development of Niger -- human andfinancial, domestic and foreign, public and private -- are likely toremain severely constrained during the remainder of this decade andbeyond. Major changes in domestic policies focused on increasing theefficiency with which these scarce resources are used are, therefore,critical if a significant turn-around in Niger's growth prospects is tobe achieved. Broadly, this involves a reduction of dtstortions in thestructure of economic incentives in the country as well as improvementin the allocation of public resources.

19. The structure of prices in Niger is considerably less dis-torted than in many of its neighboring countries because of the relativeopenness of the economy. Prices of most agricultural inputs andoutputs, for example, are broadly in line with world markets as areenergy prices. However, the overall incentives structure has favored arapid expansion of the public sector to the detriment of privateinitiative. A large number of parastatals have been established toenable the Government to intervene directly in the domestic economy.But the efficiency of the public enterprises has generally been low. Inagriculture, in particular, parastatal organizations have become bothhighly costly and inefficient in providing input supply services andmarketing outlets to farmers and greater private sector involvement isneeded to enable the sector to fulfill its leading role in the country'slong-term development. Similar problems exist in other key sectors ofthe economy. A major reform of the parastatal sector, its policies andits institutional framework, is thus an important component of thestructural adjustment program.

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20. Also, Niger's current industrial incentives system has con-siderable shortcomings. Industrial promotion policies, together withthe trade regime, have favored activities which are not necessarily inline with the comparative advantage of the country and have resulted inan inefficient use of capital and only limited employment opportunities.Moreover, the allocation and administration of industrial incentiveshave, de facto, discriminated against small and medium-scale industrydevelopment and have given the Government excessive control over privateinvestment decisions.

21. In general, the Government will need to focus its scarcefinancial resources and administrative capacity on only a limited andselective set of production growth and poverty alleviation problems forwhich market forces alone would be insufficient. Moreover, much moreefficient allocation of budgetary resources will need to be achievedthrough improved planning/programming procedures to ensure that existingdevelopment projects are more fully utilized and maintained, and thatnew investments are only considered when they are of the highestpriority. Besides taxation, public resource mobilization must also beimproved through the introduction of new cost recovery mechanisms.Finally, the Government will need to restructure its large accumulateddebt, which threatens to jeopardize the country's future economic andsocial development.

22. The Government of Niger fully recognizes the need for aprogram of structural reform if the country is to have any hope ofmaintaining a minimum level of development momentum. However, thepreparation of such a reform program will take considerable time.Detailed studies are needed to formulate appropriate policy responses tothe country's structural problems and, subsequently, time will berequired by the Government to reflect on the proposed changes and arriveat a consensus with respect to the timing of their implementation. AnEconomic and Financial Management Improvement Project, which wasrecently approved by the Executive Directors, constitutes a first stepin this process. Besides the strengthening of the country's publicadministration, the Project will assist the Government in defining amedium-term adjustment program to complement its short-termstabilization efforts.

Niger's Future Development Prospects

23. Whereas structural adjustment is essential in Niger to permitthe economy to realize its productive potential, it is, in itself, not asufficient condition to achieve sustainable long-term growth. A con-certed development effort is required to reduce the country's severereal resource constraints and expand the production base of the economy.Primarily, this will involve further development of the agriculturalsector and, to a lesser extent, of the energy and mining sectors. Itwill also require the accelerated development of Niger's human resourcesin combination with an active program to slow population growth.

24. With the fundamental change in its economic outlook as aresult of the downturn of the uranium sector, Niger will, once again,have to rely primarily on its limited agricultural resources for itseconomic development in the medium term. However, the future of its

agriculture is uncertain. Past increases in production were achievedthrough more intensive use of better soils and greater use of marginallands. Continuation of these practices would severely reduce soilfertility over time. Food self-sufficiency in the eighties and beyondcan only be achieved through gradual improvements in yields on landsthat are already under cultivation and through an effective .*opulationpolicy. Given past low levels of investment in human resources, theproblems posed by recurrent droughts, and the limited state of theexisting agricultural technology suited to Niger's conditions, theneeded improvements will require a restructuring of the agriculturalsector and will be very difficult to achieve without major andcontinuing support from the international community. Also, support forbetter use of modern agricultural inputs, the development of small scaleirrigation schemes, and applied research will be crucial to the futuredevelopment of Niger's agriculture.

25. Other development potential might ex.ist in (non-uranium)mining and energy. Limited geological surveys and exploration haveproduced mixed results. An important coal deposit of apparently goodquality was identified in 1983, but the landlocked position of Niger andthe transportation cost for even the local market casts serious doubtover the economic viability of the development of the coal deposit.Similar comments apply to the recent discovery of small oil reserves,the exploitation of which appears to be uneconomical at this stage.More efforts and better planning of geological surveys and explorationwill be needed to have a better assessment of energy and miningdevelopment potential.

26. Efficient use of these potential resources will requirefurther development of the education system. Primary education willneed to be expanded as rapidly as feasible, and professional and voca-tional training designed to meet the specific needs of the Nigerieneconomy will need to be made available to develop human capital as aproductive resource and reduce the country's skilled manpower con-straints. However, the increasing scarcity of public revenues willrequire original solutions to the financing of such human resourcesdevelopment. On the other hand, the current rate of population growthof 3.3% per year means that the economy would have to devote an in-creasing share of its resources just to maintain existing low levels ofincome. Consequently, reduction of the population growth must accompanythe development program.

PART II - WORLD BANK OPERATIONS IN NIGER

27. Twenty-five IDA credits have so far been approved for Niger,totaling US$233.4 million. Annex II contains a summary statement ofthese credits as of March 31, 1985. Nine credits have been for therural sector (drought relief, rural development, forestry, irrigationand livestock), and eight for roads, primarily aimed at upgrading themain and feeder road networks. The eight other credits covered telecom-munication, education, power and industrial development, and economicand financial management support to the Government. The rural sectorreceived a total of US$91.6 million, of which US$47.4 million was forrainfed agriculture, US$14.6 million for forestry, US$15 million forirrigation, US$12 million for livestock and US$2.6 million for others.

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28. While Government's macroeconomic performance has been quitesatisfactory, its performance in project preparation and implementationhas been rather mixed. This is particularly true for livestock andagriculture where ongoing projects (Second Maradi, Dosso and FirstLivestock projects) have encountered major difficulties due to a lack ofproven technical packages for rainfed farming, land allocation problemsin nomadic areas, as well as generally cumbersome administrativeprocedures and local funding problems. Admittedly, projectimplementation in these sectors has been seriously handicapped by therecent drought. Except for highway and feeder road construction,implementation of social infrastructure projects, i.e. education, hasalso been slow. Thus, environmental, institutional and managerialconstraints explain why our lending program -- two projects a yearamounting to about US$20 million -- remained rather limited in recentyears and less than originally expected. This is, however, a situationwe hope will improve in the near future (see paras. 30-32).

29. Moreover, due to the current slump in the world economy, thecountrv is having difficulty meeting counterpart financing requirementswhich during the uranium boom were set at levels of 20-30% of totalproject costs. In view of the determined steps which the Government istaking to resolve its financial difficulties, IDA has, under its SpecialAction Program, introduced increased cost sharing arrangements for new,as well as ongoing projects and, where necessary, introduced revolvingfunds to pre-finance project expenditures. The proposed projectincludes both features -- 89% external financing of project costs and arevolving fund. In addition, to assist Government in alleviating theeffects of the severe drought, the Bank has amended some of the projectscurrently under implementation to finance the purchase of animals fordestocking, as well as seed and emergency food distribution.

30. The Bank's operational strategy in Niger is two-fold: toassist the country in the formulation and implementation of appropriateadjustment programs for the short- and medium-term future, and to helpaddress the country's long-term growth and development issues. FacedwLth the severe financial crisis in 1982, the Government of Niger hasincreasingly turned to the Bank -- and to the IMF -- for technical andfinancial assistance in the preparation of appropriate policy responses.This has led to a rapid expansion of the Bank's dialogue with thecountry on macro-economic and sectoral policy issues during the last twoyears, both separately and in conjunction with project lending. Asoutlined in paragraph 22, the Economic and Financial ManagementImprovement Project approved in 1984 is specifically designed to assistthe Government in analyzing these issues. A structural adjustmentcredit is planned for mid 1986 to support tie adjustment efforts thatthe Government is now introducing. Depending on the success of theGovernment's efforts to define and implement a program of broad policyreform, Bank Group lending would include in the future other forms ofnon-project lending such as sectoral or structural adjustment typeoperations.

31. Lending operations will also support Niger's long-termdevelopment by emphasizing productive investment and institutional

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reform, particularly in the agricultural sector. Here, the severity ofnatural constraints and the present state of technical knowledge makedevelopment slow and difficult. However, experience with ongoingprojects has demonstrated that potential may exist, and the Bank issearching for ways both to stimulate production and to mitigate theimpact of recurrent droughts. Bank Group lending will support projectsto increase production through gradual development of irrigationpotential, provision of services to pastoralists, and crop-livestockintegration. Future lending in the sector will continue in thesedirections, while seeking especially to improve technical packages,lower irrigation costs, and introduce smaller-scale, grassroots-initiated development projects.

32. Other sectors that will continue to be the focus of BankGroup operations will be human resources (health and education), watersupply, energy and transportation. Thus, our future lending strategywill consist of a mix of structural adjustment and project lending, acombination which we hope will assist Government in overcoming itspresent financial crisis and, in the long run, develop the country'sproductive resources in an optimal fashion. This should entail anincrease in our lending program for Niger in the coming years if theGovernment is able to take the steps to prepare and implement Bankoperations in a timely fashion. The proposed project would be thesecond operation during this fiscal year. A Power Engineering andTechnical Assistance Project (Credit No. 1511-NIR) was presentedearlier. Projects in the transport and health sectors are presentlybeing appraised and are expected to be presented to the Board in FY86.

PART III - THE AGRICULTURE AND RURAL SECTOR

Sector Background

33. Agriculture remains the most important activity and theprincipal livelihood of the population, accounting for a little lessthan half of GDP and about a quarter of the country's exports. Never-theless, the country is constrained by poor agricultural resources. Percapita availability of arable land with at least 600 mm precipitationand of irrigable land is only one third of the average for the Saheliancountries. Rainfall is not only scanty but also irregular, making Nigervulnerable to droughts. In the early seventies, Niger experiencedsevere drought that reduced livestock herds and food productiondramatically. Most recently, 1983/84 was poor and 1984/85 very poor:it is estimated that cereal shortfalls in 1984/85 may amount to morethan 500,000 tons as compared with the estimated demand of about 1.3million tons. The two consecutive years of poor rains in the pastoralareas may have led to a serious long-term impact on the naturalpastures. The contribution of the irrigation subsector to nationalagricultural production is limited, with irrigated lands representingless than 1% of the total cultivated area.

34. Nigerien agriculture is largely subsistence-based. Theprincipal crop is millet, supplying about 75Z of the total cerealsproduction, followed by sorghum, providing about 20Z. Rice is a distantthird, supplying 2% of the cereals production. The principal cash crops

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are groundnuts, cowpeas and cotton. The main export commodity inagriculture is livestock (cattle on the hoof), followed by cowpeas. Theonce important exports of groundnuts have remained at insignificantlevels since the 1973/74 drought. Cotton has been a minor cash crop endits production does not meet the needs of the domestic textile industry.

35. In rainfed agriculture, the Government strategy has been toset up regional "productivity projects" in viable cultivation areas,which aim to provide smallholders with improved extension, input supply,credit and marketing. The results so far obtained from the"productivity projects" have been far below those originally expected,mainly due to lack of appropriate technical packages for below averagerainfall situations. At a national seminar in November 1982 in Zinderon the organization of agricultural development projects and relatedpolicies, the constraints and difficulties in implementing currentlarge-scale area development projects were recognized. The Government'sstated policies following the Zinder seminar are to promote farmers'participation and self-management, to promote grassroot level technicalpackages through small-scale, village level tests and demonstrations,and to upgrade extension teams so that they can respond to changinglocal demands. In controlled irrigation, Government has set a modestgoal of developing about 1,000 ha per year. The importance of improvingmaintenance of irrigation schemes and cost recovery was recognized atthe Zinder Seminar. and self-management of irrigation schemes bycooperatives was recommended and later endorsed by Government. Theproposed project is in line with this Government strategy.

The Irrigation Subsector

36. The irrigation potential in Niger is estimated at about270,000 ha. Of this, 140,000 ha is in the Niger valley. The rest is inthe ADM (Ader-Doutchi-Maggia) valley (20,000 ha) in Tahoua Province, thearea along the Komadogou River and Lake Chad in the east (50,000 ha),and in ancient river valleys called dallols and other small valleys(60,000 ha). Out of the irrigation potential in the Niger valley of140,000 ha, only 30,000 ha are lowlands ("cuvettes"), which havegenerally good soils easily irrigable by low-lift pumping. The restconsists of upland terraces where soils are quite heterogenous andhigh-lift pumping is costly. As of end 1983, there are about 10,000 haof irrigated land developed or under development in Niger, of which6,000 ha are in the Niger valley and 3,500 ha in the ADM valley.

37. Niger valley. About 90X of the areas developed in the Nigervalley are rice monoculture. With the exception of Namarigoungou(1,450 ha), the 22 existing perimeters vary in size from 50 to 400 ha.Most pumping stations are equipped with diesel engines.

38. Potential yields as high as six tons of paddy/ha/crop areattainable if all recommended practices are followed, but actualperformance has fallen well short of this production potential. In1982, average yields were estimated at only 2.8 tons/ha. Moreover, onequarter of the total land developed was abandoned due to thedeterioration of irrigation infrastructure, and farmers could not managea second crop on 15% of the remaining area. The reasons for this poorperformance are: (a) faulty design (e.g., some pumping stations are

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located in parts of the river that dry up during the low-flow season);(b) too much reliance on parastatals for the design, operation andmaintenance of the irrigation schemes; (c) unduly standardized agronomicpackages that do not take account of different local conditions in thearea; (d) lack cf a good seed multiplication and distribution system;(e) workload conflicts between the wet season rice crop and traditionalrainfed crops, which could be resolved by providing animal tractionequipment; and (f) lack of incentives for farmers (e.g., compulsorymarketing of unduly high quotas imposed by Government and unattractiveofficial prices until 1982).

39. The ADM valley. Irrigation in the ADM valley, obtained bygravity from three small catchment basins, is essentially a supplementto the rains. The main crops during the wet season are cotton andsorkhum in rotation. Average yields are already high at 2.6 and 1.9tons, respectively. Dry season crops are vegetables (mainly onion),maize and wheat. On one perimeter, double cropping is impossiblebecause of the small capacity of the reservoir. On the others, 10-50%of areas developed are double cropped. The main problem in the area isthe increasing siltation of the reservoirs, which reduces their capacityand would eventually render them inoperative. Another problem is thepoor maintenance of the irrigation and drainage infrastructure, whichhas led to the abandonment of parts of the perimeters.

National Irrigation Authority (ONAHA)

40. The "Office National des Amenagements Hydro-Agricoles" (ONAHA)was created in 1979 as a financially autonomous public enterprise of anindustrial and commercial character, charged with the preparation ofstudies and execution of irrigation works, the management of irrigationschemes, the provision of extension services and the recovery of watercharges. Since its creation, ONAHA has acquired technical competence incivil works construction as well as in the areas of support activitiesfor agricultural production. The Bank- and KfW-financed Namarigoungouproject (paras 45-49) helped ONAHA to develop these skills. The neworientation towards self-management of irrigation schemes bycooperatives, recommended at the Zinder Seminar and later endorsed byGovernment, put emphasis on the role of ONAHA in: (a) developing newirrigation schemes and rehabilitating the ex'sting ones; (b) acting as amanager until cooperatives take over management of perimeters;(c) providing services at full cost at the request of cooperatives; and(d) helping to ensure self-management by cooperatives.

41. A weakness, however, is found in administrative and financialmanagement. Internal control over personnel and administrativeprocedures is weak. In addition, ONAHA has been confronted with severefin.-ncial problems because Government failed to provide it with fundsbuhgeted and would not allow it to charge cooperatives at rates whichcovered costs. As a result, ONAHA has been obliged to borrow funds fromthe National Agricultural Development Bank ("Caisse Nationale de CreditAgricole" - CNCA), and is currently unable to repay its accumulated debtestimated at CFAF 90D million. As conditions of effectiveness for theproposed project, Government is to make satisfactory arrangements forthe assumption or settlement of ONARA's accumulated debts to CNCA, andto pay off ONAHA's overdues to its suppliers (CFAF 200 million)

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(Section 6.01 of draft Development Credit Agreement - DCA). In general,the proposed project would strengthen ONARA's financial andadministrative capability (para. 57).

Cooperatives

42. Niger has a good legal framework for the development ofcooperatives. Since 1966, Government has promoted a cooperative systemwhich is based on collective membership of basic socio-economic enti-ties, i.e., villages. Several Village Mutual Groups ("GroupementMutualiste Villageois" - GMV) comprised of heads of households in eachvillage are combined to form a cooperative. A GMV is collectivelyresponsible vis-&-vis the cooperative to which it belongs for obtainingcredit, purchasing inputs, collecting water charges, etc. Almost allthe territory is now organized into cooperatives.

43. Irrigation cooperatives formed by all the participatingfarmers in each irrigation perimeter are assisted by ONAHA for technicaland financial management. Under the proposed project, cooperativesthemselves would be in direct charge of the operations and management ofirrigation schemes, with ONAHA having only an advisory role and pro-viding training.

Rice Marketing and Pricing

44. The national production of paddy is estimated to have been inthe range of 25-40,000 tons per year and meets only some 40% of consump-tion estimated at 70-80,000 tons. The rice processing parastatal("Societe Riz du Niger" - RINI) buys paddy from farmers throughcooperatives at fixed prices set by Government and sells the rice to theGrain Marketing Board ("Office des Produits Vivriers du Niger" - OPVN)or private merchants at prices also set by Government. Official paddyprices were raised in 1982 to their current level of CFAF 85/kg, whichprovides adequate incentives to farmers. However, the Government is nowconsidering full liberalization of cereal pricing as part of its futurestructural adjustment program. Government until recently imposedcompulsory paddy sales by cooperative members to RINI at levels whichleft very little for their own consumption. However, farmers would nowbe given the option of selling to RINI or to the private sector anysurplus of marketable paddy above what they owe to their cooperatives(e.g., for direct operating costs of irrigation and seasonal inputs)(Section 2.05 of draft Project Agreement - PA).

Experience under Previous Irrigation Projects

45. Namarigoungou Irrigation Project. The project (Credit No.851-NIR) became effective in October 1979 and construction started inearly 1980, jointly financed by IDA and KfW. The project was completedin December 1983, and a project completion report is under preparation.

46. The project has increased Niger's agricultural production,especially rice (about 10,000 tons of incremental paddy production),through the development of 1,450 ha of irrigated lands (1,350 ha of riceperimeters and the rest for vegetables and other crops), and has beensuccessful in raising the income of participating farmers.

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47. The project's main achievements were: (a) the setting up oftwo well-functioning cooperatives, which are models for other coopera-tives; (b) the successful introduction of animal traction andfoot-operated threshing machines; (c) a good record of cost recovery (inaddition to the cost of inputs, beneficiaries bore the full cost ofenergy and pumping set maintenance, and set aside a provision forequipment replacement); (d) effective seed multiplication at thefarmers' group level (Namarigoungou even produces seeds for otherperimeters); and (e) acceptable yields (despite serious pest attacks,present yields average 4 tons/ha of paddy) and the achievement of doublecropping on the entire area developed.

48. The appraisal mission of the proposed project judged, however,that to sustain the present high performance, further support would benecessary. For this reason, the Namarigoungou perimeter would beincluded in the proposed project for such aspects as credit, follow-uptraining, agricultural extension, assistance to cooperatives, andmonitoring of alkaline soils.

49. The lessons learned from the Namarigoungou Project have beenincluded in the proposed project which in turn is expected to providefurther experience in particular with regard to cooperative managementof irrigation schemes and the role of ONAHA in irrigation developmentand monitoring. Thus, the implementation of the IrrigationRehabilitation Project would provide Government and IDA with importantinformation which would be most valuable for the preparation of futureinvestment projects in this field.

PART IV - THE PROJECT

Project History

50. Preparation of the project began in February 1982 with a PPFadvance of US$1 million and a CCCE advance of US$200,000. Based on thefeasibility study, project appraisal was carried out by a joint IDA/CCCEmission in November-December 1983. Negotiations were held in February1985 with a Nigerien delegation led by His Excellency Mr. Haladou Salha,Secretary of State of Rural Development. Two important problemsconcerning the rice processing agency "Riz du Niger" and medium-termcredit distribution remained unresolved during negotiations. However,satisfactory solutions to these two points have now been worked out andare discussed below.

Project Objectives and Description

51. The principal project objectives are to promotecooperatives'/farmers' self-reliance in management of irrigationschemes, to ensure the sustainability of the irrigation schemes, and toincrease production of paddy, cotton, sorghum and other crops, thusimproving farm incomes. The project also aims at developing aninstitutional framework for future irrigation development by:(a) ensuring extensive participation of cooperatives/farmers inoperating and managing perimeters; (b) setting up an efficient costrecovery mechanism; (c) involving the private sector in maintaining

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pumping equipment; and (d) strengthening ONAXA, the Government'sirrigation development agency. These objectives would be achieved Inexisting irrigation perimeters through the following project components:

(a) rehabilitation of irrigation infrastructure andequipment;

(b) promotion of crop intensification, including promotion ofanimal traction;

(c) assistance to irrigation cooperatives;

(d) introduction of adaptive research and seedmultiplication;

(e) strengthening of ONAHA's management capability, includingsetting up a monitoring and evaluation unit; and

(f) strengthening of RINI's management capability.

The Staff Appraisal Report (No. 5161-NIR) is being circulated to theExecutive Directors separately. Annex III contains supplementaryproject data.

52. Rehabilitation works would cover 16 perimeters, namely, 11pump-irrigated perimeters in the Niger valley, totaling about 2,200 ha,and five gravity-irrigated perimeters in the ADM valley, totaling about850 ha. The main improvement in the Niger valley would consist of thereplacement of most diesel-driven pumping units with electric ones,which are easier to maintain and more economical. Diesel pumps would berepaired and kept as back-ups in case of power failure. In the ADMvalley, the main works would be the rehabilitation of the threecatchment dams, including raising the crest level of one dam(Ibohamane). In both valleys, rehabilitation works would also involvethe reshaping and reinforcement of protection dykes, and therehabilitation of portions of irrigation canals, drains and accessroads. The rehabilitation of infrastructure would bring back intoproduction an additional area of about 350 ha, included in the total of3,050 ha, and introduce double cropping to the whole rice area in theNiger valley. ONARA would not start rehabilitation works on a givenperimeter until it had concluded a contract, satisfactory to IDA,spelling out mutual obligations regarding operations and maintenance ofirrigation works with the cooperative concerned and this cooperative hadadopted internal statutes consistent with the model satisfactory to IDA(Section 2.05 of draft PA).

53. After rehabilitation, ONAHA would continue to be responsiblefor any maintenance of irrigation and drainage canals and dykesrequiring heavy equipment. Terms and c_aditions for such maintenancewould be set out in contracts between ONARA and each cooperative. Theproject would finance the establishment of two maintenance brigadesattached to regional offices of ONARA. Any canal maintenance to be doneby hand would be the responsibility of cooperatives. Maintenance ofpumping equipment, on the other hand, would be entrusted to private

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contractors, and bidders for pumping equipment have been requested tosubmit bids for pump maintenance. Pump maintenance contracts betweeneach cooperative and an equipment supplier would be monitored by ONAHA.ONAHA would review maintenance performance under such cantractsannually.

54. Crop intensification programs would be carried out on the 16perimeters to be physically rehabilitated as well as the two riceperimeters of Say and Namarigoungou where no physical rehabilitation isnecessary (4,700 ha altogether). The intensification would aim at:(a) an average paddy yield of 3,850 kg/ha/season on the 13 riceperimeters (3,835 ha), compared with the present average vield of2,600 kg/ha on the perimeters to be rehabilitated; (b) a double croppingon all rice areas; and (c) average annual yields of 2,800 and2,000 kg/ha for cotton and sorghum, respectively, in the ADM region,compared with the present yields of about 2,600 and 1,850 kg/ha,respectively. These improvements would be achieved by: (a) increasingfertilizer dosages based on results of trials carried out inNamarigoungou; (b) providing medium-term credit for the purchase of2,000 pairs of draft animals with equipment and 1,500 pedal threshers toenable timely land preparation and threshing; and (c) supplying pureseed.

55. Assistance to cooperatives. The success of the project in thelong run hinges on the participation of beneficiaries and on theiradequately maintaining the assets put at their disposal. While con-siderable progress has already been made in this field, clearly definedresponsibilities and a strong training program are still required toachieve self-management by cooperatives in the maintenance of irrigationworks and pumps, marketing of paddy and preparation of propercooperatives' accounts. To provide a favorable environment forcooperative self-management in irrigation schemes, Government has takenactions to clarify cooperative accounts viS3-a-vis banks, suppliers,collection agencies and individual members, as well as to draw up adraft contract between Government and cooperatives, and a draft of thecooperatives' internal statutes. Government has also been requested asa condition of effectiveness to prepare a plan for reconstructingcooperatives' debts including recommendations, if necessary, through aGovernment-appointed committee, for debt rescheduling, cancellation, orexpulsion of defaulters and to take concrete steps to implement such aplan. This exercise is well under wav. Functional literacy andnumeracy programs, executed by the Literacy Service of the Ministry ofEducation and the "Animation" Service of the Ministry of Planning, andcoordinated by ONAHA, are at the core of the training program forcooperatives. Simple accounting procedures suitable for cooperativeswere also developed as part of project preparation. ONAHA wouldsupervise cooperative management and ensure enforcement of contracts andstatutes. It would also help them establish village woodlots on soilsunsuitable for crops. In addition to animal traction equipment andpedal threshers (para 54), the project would provide medium-term creditfor blacksmith equipment and collective agricultural equipment as wellas seasonal credit for inputs, as outlined further in paragraph 70.

56. Adaptive research and seed multiplication. The NationalInstitute of Agronomic Research (INRANI) would conduct on-site fertilizer

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trials and would introduce and test new rice varieties. INRAN wouldalso produce, on a contract basis. rice foundation seeds to be multi-plied by cooperatives. Two agronomists, financed by the project andposted at ONAHA headquarters, would be the key liaison between researchand extension. They would assist ONAHA regional offices in testing thepackages proposed by INRAN, plan the production of foundation seed andmonitor the quality of cooperatives' and contract farmers' seedmultiplication.

57. Strengthening of ONAHA. Given the weak administrative andfinancial management of ONAHA, the project would finance additionalstaff including an expatriate financial manager and a chief accountant,office equipment, vehicles and operating expenses, as well as revolvingfunds for UNAHA to prefinance expenditures to be reimbursed underexternal financing. In addition, ONAHA would establish a unit forcoordination, monitoring, evaluation, financial planning, budgeting andbudgetary control. ONAHA would set up this new unit to be fullyoperational not later than December 31, 1985, and would appointpersonnel with qualifications and experience satisfactory to IDA tostaff the unit (Section 2.06 of the draft PA). Due to lack of effectiveinternal control over administrative procedures, the most recentaccounts (1982/83) of ONAHA were not certified. In order to redressthis situation, a condition of effectiveness of the IDA credit would bethat ONAHA employ a financial manager, a chief accountant and threeregional accountants whose qualifications would be satisfactory to IDA(Section 6.01 of draft DCA). ONAHA would put order in its accounts bySeptember 30, 1986, the date by which these accounts must be certifiedby independent auditors (Section 4.01 of the draft PA).

58. Strengthening of RINI. RINI's technical and financial capa-bilities have improved significantly since mid 1983. However, in orderto run its rice mills effectively and become financially viable, RINIwould need financial and managerial assistance. The project wouldfinance additional storage capacity, minor equipment, and technicalassistance for RINI to enable it to process the paddy purchased from theproject cooperatives and farmers and to improve its overall efficiency.Government is in the process of negotiating a management contract forRINI with the French Company for Cotton Development (CFDT). As acondition of effectiveness, Government would cause RINI to sign amanagement contract satisfactory to IDA (Section 6.01 of draft DCA).

International Water Rights

59. Since works would be limited to the rehabilitation of existingperimeters, the project would not cause the consumption of river waterto exceed the consumption capacity that was originally foreseen forthese perimeters under optimal conditions. Water consumption would,however, be marginally increased over the current level because someareas are not under cultivation at present due to the deterioration ofirrigation works. The project would not have significant adverseeffects on downstream riparians. All Niger river riparians have signedthe 1980 convention creating the Niger Basin Authority, which ischarged, inter alia, with harmonizing and coordinat4ng nationaldevelopment plans on the Niger river. The convention requires memberstates to inform the authority of any works undertaken on the river. At

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negotiations, the Government confirmed that they had complied with thisrequirement.

Project Implementation

60. The project would be implemented over a five year period,starting in October 1985, with ONAHA as the lead agency. ONAHA'sGeneral Manager would act as Project Manager, except for the RINIcomponent, which would be managed separately by RINI. ONAHA's threeRegional Offices (Tillabery, Niamey and Tahoua) would be responsible forday-to-day project activities and field level coordination. ONAHA wouldbe directly responsible for implementing the physical rehabilitation ofthe irrigated perimeters and for carrying out crop developmentactivities (extension, crop intensification, monitoring and evaluation).Adaptive research and the production of foundation seeds would besubcontracted to INRAN. The electrification of the pumping stationswould be subcontracted to the National Electric Authority (NIGELEC).For cooperative training, ONAHA's Regional Offices would coordinate andsupervise the implementation of training activities by regional teamscomposed of representatives of the Literacy Service of the Ministry ofEducation, the "Animation" Service of the Ministry of Planning andONAHA. The Forestry Service of the Ministry of Hydrology andEnvironment would, under ONAHA's supervision, help establish villagewoodlots on soils unsuitable for crops.

Cost Estimates and Financing Plan

61. Total project costs, net of identifiable taxes and duties, areestimated at US$25.2 million equivalent, of which about US$14.2 million(572) in foreign exchange costs. Cost estimates are based on pricequotations as of December 1983, adjusted to February 198', the date ofnegotiations. They include physical contingencies totaling 5% ofproject base costs, and price contingencies on local costs of 6%annually, and on foreign costs applied as follows: 1985, 5%; 1986,7.5%; 1987-89, 8%.

62. The proposed financing plan is based on a combination of jointand parallel arrangements among the external donors and reflects theirparticular preferences on the terms and conditions of theirparticipation in the project. External sources, including IDA, wouldprovide US$22.5 million equivalent, or about 89Z of total project costs,net of taxes. IDA would finance US$9.3 million equivalent (37Z of thetotal); CCCE, US$9.3 million equivalent (37Z); and KfW, US$3.9 millionequivalent (15%). IDA would finance rehabilitation of the catchmentdams in the ADM valley (US$1.2 million), the earthmoving equipment(US$1.2 million) and pedal threshers (US$0.3 million), expatriate staff(Chief of Monitoring and Evaluation of ONAHA, Chief of FinancialPlanning, Budgeting and Budgetary Control of ONAHA) and short-termconsultarts (together US$1.4 million). Jointly with CCCE and KfW, IDAwould also finance rehabilitation works on force account (excludingequipment and expatriate staff), miscellaneous construction, localoperating costs, miscellaneous equipment and seasonal credit funds forcooperatives. In addition to the above, CCCE would finance the pumpingequipment, civil works related to pumping stations, vehicles, farmimplements, the revolving fund for RINI and consultants (US$6.8 million)

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under a parallel arrangement, and KfW would finance the electricalequipment, works and equipment for RINI and consultants (US$1.8 million)also under a parallel arrangement.

63. The Nigerien Government contribution to project costs would beabout US$1.3 mlllion equivalent (5.0Z) to finance the overhaul of theNamarigoungou equipment used for the rehabilitation works andincremental civil servant staff salaries. Beneficiaries' contribution,consisting of down-payments for agricultural equipment and medium-termcredit repayment, is estimated at US$1.4 million (5.7%).

Procurement and Disbursemene

64. Engineering designs are available for all works to be con-structed. Preparation of bidding documents was completed in May 1984.In order to minimize the risks of cost overruns, bids have been calledand are currently being reviewed, and the results do not affect the costestimates.

65. Procurement. Works and goods to be financed under parallelarrangements by CCCE and KfW (para 62) would be procured throughprocedures acceptable to these agencies. Works and goods to be financedexclusively by IDA would be procured under international competitivebidding (ICB). Except for rehabilitation of the catchment dams in theADM valley (IDA under ICB) and civil works related to pumping stations(CCCE), rehabilitation works on irrigation/drainage systems, roads andprotection dykes would be done on force account, since the dispersed andsporadic nature of the works and the need to work around croppingschedules give an advantage to ONAHA. Force account work done under theNiamarigoungou project has proven less expensive when compared with thequotations for similar works by local contractors. Contracts for othercivil works totaling US$0.2 million would be awarded in accordance withlocal procedures acceptable to IDA. Contracts for miscellaneousequipment valued at less than US$50,000, to be financed under a jointarrangement, would be awarded on the basis of local competitive 'iddingprocedures, which are acceptable to IDA. Amounts and methods ofprocurement are shown in tabular form at Annex IV, where the IDA amountsare in brackets.

66. Consultants. Expatriate staff and short-term consultantscosts amount to about US$3.6 million, including contingencies, for 246man-months of resident expatriate staff (for force account works,ONAHA's financial, agricultural and monitoring staff, RINI's riceprocessing expert) and 39 man-months of short-term consultants.Expatriate staff and consultants to be financed by IDA would be selectedin accordance with procedures satisfactory to IDA and their terms ofreference, qualificatinns and experience would also be acceptable toIDA.

67. Contract review. All bidding packages for works and goodsover US$100,000 financed by IDA would be subject to IDA's prior reviewof procurement documentation. Such packages are expected to constituteabout 90% of the total estimated value of works and goods contractedother than force account works. The remaining contracts would be

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subject to random post-review by IDA after contract award. Civil worksdone on force account would be reviewed through annual budget approval.

68. Disbursement. Disbursement of the proposed IDA credit isexpected to be completed in six years under the following categories:

(1) Civil works:(a) rehabilitation of catchment dams (US$1.1 million) -- 1002

of total expenditures;(b) other (US$1.3 million) -- 49% of total expenditures;

(2) Equipment:(a) construction (US$1.1 million) -- 100% of total

expenditures;(b) agricultural -- threshers (US$0.3 million) -- 90% of

total expenditures;(c) agricultural -- other (US$0.1 million) -- 44% of total

expenditures;

(3) Salaries of ONAHA's incremental staff on contract, trainingand operating costs and office equipment (US$1.4 million) --49% of total expenditures;

(4) Services of consultants, experts and specialists and studies(US$1.4 million) -- 100% of total expenditures;

(5) Seasonal credit fund (US$0.2 million) -- 49% of totalexpenditures;

(6) Special Account (US$0.8 million);

(7) Refunding of PPF (USS1.0 million); and

(8) Unallocated (US$0.6 million).

Withdrawal applications would be fully documented, except for cate-gories (l)(b) and (3) above, for which statements of expenditures (SOE)would suffice. In the case of the SOE procedures, supportingdocumentation would be kept by ONAHA for verification by the auditorsfinanced under the project and for review by IDA supervision missions.

On-Lending and Administration of Funds

69. The proceeds of the IDA credit would be passed on by Govern-ment in grant form to ONAHA and as a line of credit to cooperatives atan annual interest rate of 1.0% to purchase agricultural equipment.Assets created or upgraded by investments (rehabilitation works) wouldbelong to Government, while ONAHA would act as a manager for the assets.Funds for applied research and the electrification of the pumpingstations would be passed on to other subcontracting Government agencies(INRAN and NIGELEC) by ONAHA. ONAHA would furnish the appropriateGovernment services with all the means necessary (except civil servantsalaries) to carry out training activities and the establishment ofwoodlots.

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70. Credit management. The project would finance two types ofcredit. Credit would not be channelled through the NationalAgricultural Development Bank (CNCA) which, because of past questionablelending practices, is facing increasing recovery problems. Beingpractically bankrupt it has now ceased all lending operations. Hence,until a long-term solution for agricultural credit is worked out, creditunder the project would be handled in the following way. First,seasonal credit would be provided by cooperatives to their members outof their seasonal credit funds (a total of US$0.9 million), to beestablished at each cooperative by the project as a grant. With thisfund, cooperatives would purchase seasonal inputs for the use of membersand prefinance collective charges for irrigation operations. After theinitial establishment of seasonal credit funds, individual members'repayment against seasonal credit would be paid into the revolving fundadministered thereafter by each cooperative. Seasonal credit extendedto individual members by cooperatives would bear annual interest of notless than 12% to cover administrative costs, bad debts and expectedinflation (Schedule 4 of draft DCA). Secondly, medium-term credit wouldbe provided for farm implements (US$1.9 million), blacksmith equipment(US$34,000), threshers (US$0.6 million), and collective equipment(US$0.35 million). Medium-term credit would be managed by cooperatives,with technical assistance provided by ONAHA. Farmers would make aminimum 10% down-payment and repay the rest to the cooperatives at anannual interest rate of 12% over a period of a maximum of five years.Cooperatives would in turn repay Government at an annual interest rateof 1.0% over a period of a maximum of eight years (Schedule 4 of draftDCA). Since further details on terms and conditions for credit remainto be laid out, Government would, as a condition of disbursement foragricultural equipment and seasonal credit funds (Categories (2)(b),(2)(c) and (5)), make contractual arrangements with cooperativessatisfactory to IDA for seasonal and medium-term credit (Schedule 1 ofdraft DCA).

71. Revolving funds. In view of Government's limited capacity toprefinance expenditures for rehabilitation works, each of thecofinanciers would establish a revolving fund for a total amount ofCFAF 720 million (US$1.6 million) immediately after crediteffectiveness. IDA would make an initial deposit of its share (49% ofthe total), CFAF 353 million (US$0.8 million), .nto an IDA SpecialAccount. IDA would replenish the revolving fund upon receipt ofsatisfactory evidence that related expenditures were eligible forfinancing.

Auditing and Reporting Requirements

72. ONAHA would keep separate project accounts at its threeregional offices and would consolidate them in accordance with sound andacceptable accounting principles and practices. In additior, ONAHAwould complete the design, installation and operation of r costaccounting system by December 31, 1985. Annually audited financialstatements and reports for ONAHA, as well as bi-annual reports onphysical and financial progress of the project, would be submitted toIDA for review according to an agreed schedule. Cooperatives' accountswould also be audited by an independent auditor every other yearstarting from fiscal year 1985/86 and ONAHA would provide assistance for

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the design and installation of an appropriate accounting system forcooperatives, and training of local bookkeepers capable of running thesystem.

Recurrent Costs and Cost Recovery

73. All the direct mai.ntenance and operating costs for irrigation,including energy, maintenance of infrastructure and pumps, replacementof pumps and salaries of perimeter managers, would be borne bybeneficiaries (Section 2.05 of draft PA). ONAHA would charge the fullcost of maintenance services for irrigation infrastructure to allow itto replace maintenance equipment. Recovery of investment costs(irrigation infrastructure and initial installation of pumps) is aotenvisaged, at least at the beginning of the project. However. onceyields improve and farmers accept the principle of paying all the directmaintenance and operating costs, there may be room for a "capital tax"to recover a part of investment costs. Therefore, the imposition of the"capital tax" is subject to a detailed review in PY3 (1987/88) and maybe introduced in PY4 (1988/89) if the results of monitoring andevaluation of farmers' income demonstrate its feasibility. Whilecooperatives would thus assume increased responsibility for irrigationoperations and maintenance, Government would retain responsibility forand finance the costs of a nucleus extension network, the adaptiveresearch program and the operation of technical and support services atcentral and regional levels. These incremental recurrent costs (CFAF 55million) and ONAHA's non-incremental overhead costs (public servicefunctions) would amount to CFAF 255 million per year in 1984 prices, forwhich Government would provide timely and sufficient funds to ONAHA(Section 4.02 of draft DCA). This amount is less than two thirds ofONAHA's present budgetary requirement. Government's project-relatedcash flow is positive prior to debt service buz slightly negative,except for a few years, after debt service; the proposed capital taxwould render the post-debt service cash flow positive.

74. The Government originally established a policy of subsidizedagricultural inputs as a means of transferring some of the uraniumrevenues to the rural sector. Although the uranium revenues wereseverely depleted, the subsidies were retained, with the consequencethat quantities of inputs available were reduced. Since the benefits ofimproved inputs have been demonstrated, there is little justificationfor a subsidy on farm implements (current subsidy rates ranging from 40to 60%), although there is some justification for a subsidy on seasonalinputs as a proxy for the absence of any form of insurance against cropfailure. At negotiations, the Government confirmed that it is theGovernment's stated policy to gradually abolish all agricultural inputsubsidies and that, in fact, under a recent USAID agricultural sectorgrant, the Government is already committed to reducing the average rateof subsidy on agricultural equipment to 15% by end-1988. IDA agreed forthe purpose of this project to accept the Government's present efforts.Reduction of subsidies both on agricultural equipment and seasonalinputs would continue to be reviewed in the context of the structuraladjustment program currently under preparation.

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Project Benefits and Risks

75. The project would directly benefit about 80,000 people. Theyare essentially subsistence smallholders. engaged in rainfed farming aswell as in irrigation with a small parcel of about 0.25 ha each and aretherefore somewhat better off than others who do not have access toirrigation. The main quantifiable benefits of the project would beincreased production of paddy in the Niger River valley, increasedproduction of cotton, sorghum and onion in the ADM valley, savings onoperation and maintenance costs, and time savings resulting from the useof pedal threshing machines for paddy. At full development, annualincremental production is estimated at 11,000 tons of paddy (PY5),990 tons of seed cotton (PY15), 740 tons of sorghum (PY15), and 1,710tons of onion (PY4). Non-quantifiable project benefits are expected tocome from the improvement in institutional arrangements, which aims atestablishing a reliable and sustainable system of irrigation operationsin the country.

76. The economic rate of return on the overall project is esti-mated at 18%. In the event of a 20% decrease in benefits and 202increase in costs, the rate cf return would fall to 14% and 15Z respec-tively. The rate of return for the 14 Niger valley perimeters alone is20% and for the ADM valley (five perimeters), 12%.

77. The technical risks associated with the physical rehabilita-tion works are minimal. The only major foreseeable risk is related tomaintenance and operations. The maintenance contracts of pumpingstations entrusted to the private sector are subject to an annualperformance check to keep maintenance costs to a minimum and at the sametime to prevent poor maintenance. The other risk would be the failureon the part of cooperatives to establish a reliable system ofmaintenance and operations. To minimize this risk, the project wouldfinance an important training program covering functional literacy,numeracy and management, and would ensure that the necessary framework(contracts between Government and cooperatives, internal regulations andclearing-up of accounts) is in place before any rehabilitation workstarts. The fact that all the perimeters are independent wouldsubstantially reduce the risk of a major project failure.

78. Other possible risks are financial and managerial. One riskwould be failure by Government to provide a sufficient budgetaryallocation to ONAHA. This risk cannot be entirely ruled out but theamount at stake is less than ONAHA's present budgetary requirement andGovernment's project-related cash flow would be favorable. The riskrelated to ONAHA's management capability would be minimized by financinga training program for its staff and technical assistance and byGovernment's strong commitment to this project.

PART V - LEGAL INSTRUMENTS AND AUTHORITY

79. The draft Development Credit Agreement between the Republic ofNiger and the Association, the draft Project Agreement between the

- 23 -

Association and ONARA, and the Recommendation of .:he Committee providedfor in Article V, Section 1(d) of the Articles of Agreement of theAssociation, are being distributed separately to the ExecutiveDirectors.

80. Special conditions of the proposed project ara listed inSection III of Annex III. A condition of disbursement for medium-termand seasonal credit is that Government make contractual arrangementswith cooperatives satisfactory to IDA for credit distribution (para 70).Conditions of effectiveness are as follows: (a) Government would makesatisfactory arrangements for the assumption or settlement cf ONAHA'saccumulated debts to CNCA (para 41); (b) Government would -ay offONAHA's overdues to its suppliers (para 41); (c) Government wouldprepare a plan for reconstructing cooperatives' debts includingrecommendations for debt rescheduling, cancellation, or expulsion ofdefaulters and would have taken concrete steps to implement such a plan(para 55); (d) ONAHA woiild employ a financial manager, a chiefaccountant and three regional accountants whose qualifications would besatisfactory to IDA (para 57); (e) Government would cause RINI to sign amanagement contract, satisfactory to IDA, with a qualified firm(para 58); and (f) Government would meet the conditions of effectivenessof the CCCE loan and KfW grant.

81. I am satisfied that the proposed credit would comply with theArticles of Agreement of the Association.

PART VI - RECOMM1ENDATION

82. I recommend that the Executive Directors approve the proposedcredit.

A.W. ClausenPresident

Attachments

dateWashington, D.C.

-24- ANNE IPage 1 of 5

NICER - SOCIAL INDICATORS DATA SNBTMical REFERNCc9 GROU PS (UICISTED AVKRACU) L

HOST (SOST RICS RSTiInf) .Lbon ICKT LOW INCO1M AnICA HIDDLE ICUS

196ri! 19701M ESTDEACfTE SOUTE OF SARA AFRCA S. Or SWAR

M (2H3 W q. uIDTOTAL 1267.0 1267.0 1267.0AZRICULRUAL 126.0 L30.0 131.2

a CAPI (CSS) 120.0 L40.0 310.0 249.1 i1112.9

n Cmu oON MR CAPTA(KILOCRAMS OF OIL EQUIVALENT) 4.0 17.0 32.0 62.6 529.0

rOPULDATOD - VITAL STATXFrICsPOPUL.ATIOH.NID-TZAR (THOUSANDS) 2878.0 4008.0 3678.0URBAN POPULATION (3 or TOTAL) 5.8 8.4 13.5 19.2 29.7

POPULATION PROJICTIOHsPOPULATIOH IN YAR 2000 (HILL) 1o. 5STATIONUA POPULATION (KILL) 40.0POPULATION N#ENTIDM 1.9

POPULATION DENSITYPER SQ. DI. 2.3 3.2 4.5 32.5 55.8PER SQ. DI. AGRI. LAmo 22.5 30.8 43.5 119.2 111.5

POPULATION ACE STRUCTIRE (I)0-14 IRS 44.8 46.) 47.0 45.6 43.4

1364 TRS 52.7 31.1 50.7 51.3 31.765 AND ABOVE 2.6 2.6 2.5 2.9 2.9

POPULATION CRORTH RATE CI)TOrAL 2.3 3.3 3.2 2.8 2.6URSAN 4.1 7.0 7.1 6.2 5.2

CRUDE BIRTH RATE (PER THOUS) 51.9 50.7 51.5 46.6 47.0CRUD0 DEATH RATE (PER THOUS) 26.8 23.8 20.1 17.7 15.2GROSS REPRODUCTION RATE 3.5 3.5 3.5 3.2 3.2

FAMILY FLANNINGACCEPTORS. ANNUAL (THOUS)USERS (2 OF MAUIlD WEMCN) .. ..

FOOD -D ITUTIOSINREl OF FOOD PROD. PER CAPITA(1969-71-100) 112.0 96.0 83.0 85.8 91.6

PER CAPITA SUPPLY OFCALORIES CZ OF REQUIREENHTS) 101.0 89.0 102.0 86.4 98.2PPOTEINS (CANS PER DAT) 65.0 17.0 69.0 49.9 56.7

DIF WHICH ANIMAL AND PULSE 20.0 19.0 26.0 /c 18.3 17.0

CHILD (ACES 1-4) DEATH RATE 44.7 35.0 27.0 23.8 18.7

LIFE EXPECT. AT BIRTH (YEARS) 37.2 40.5 44.9 48.4 51.7INFANT MRT. RATE (PER THOUS) 178.0 isa.0 232.0 117.5 102.7

ACCESS TO SAFE WATER (PPm)TOTAL -- 20.0 27.0 /d 21.8 3536URAN ._ 37.0 3807d 61.5 34.1RURAL. .. 19.0 26.0 7 14.2 27.3

ACCESS TO EXCRETA DISPOSAL(I OF POPULATION)

TOTAL .. 1.0 1.0 /d 32.0URBAN .. 10.0 36.0 7i 69.2RURAL . .. 3.07i 24.8

POPUIATION PER PHYSICIAN 82170.0 58090.0 38790.0 /a 27477.8 11948.3POP. PER NURSINC PERSON 8460.0 £ 7020.0 4650.0 7W 3396.2 2248.9POP. PCR HOSPITAL BED

TOTAL 2210.0 2220.0 1640.0 /a 1089.0 966.9URBAN - 360.0 420W0 7r 395-2 368.7RURAL .. 4230.0 2020.07W 3094.0 4012.1

ADH.SSIONS PER HOSPITAL RED 10.4 3 34.7 /b

AVERACE SIZE OF HOUSEHOLDTOTAL .. ..URBAN .. ..RURAL .. ..

AVERACE NO. OF PERSONSIROOKTOTAL .. ..URBAN ,,RURAL ' - - ' ' ' -

ACCESS TO ELECT. El oF DWELLINGS)TOTAL .. ..URBAN .. ..RURAL .. ..

- 25 - AN'=d IPaige 2 of 5

t.. :14 _ - SOCIAI INDICATORS DATA SHEETNL :mR AEFERENCE GROUPS (WEICHTED AVERAGES) La.

HDST C3DST RECENT ESrVIMn) fbRECENT LOW INCOME ARICA !IIDDLE INCOME

19601-b 1971a! ESTINATE1b SOUTH OF SAHARA AFRICA S. or SAHARA

IlSlUKIArtolG

ADJUSTLD ENROLLNENT RATIOSPRIMARY: TOTAL 5.0 14.0 23.0 /I 69.2 91.0

MALE 7.0 18.0 29.0 7; 78.5 90.5F8HALF 3.0 9.0 17.0 7; 57.6 73.6

SECONDARY: TOTAL 0.3 1.0 4.0 /a 13.1 17.4KALE 1.0 2.0 5.0 7; 17.6 23.7FEMALE 0.1 1.0 2.07; 8.3 14.8

VOCATIONAL (2 OF SECONDARY) 1.3 2.7 1.3 /a 7.2 S.3

PUP! L-TEACNHR RATIOPRIRARY 43.0 If 39.0 41.0 1e 46.1 33.6SECONDARY 11.0 7F 20.0 28.0o7T; 25.9 24.3

ADULT LITERACY RATE (2) 0.9 .. 9.8 44.3 35.6

CON5EWIT10bPASSENGER CARS/THOUSAND POP D.3 1.4 2.4 /a 3.5 20.7RADIO RECEIVERS/TNOUSAND POP 3.3 36.2 45.2 41.9 100.8TV RECELVERS/THOUSAND POP .. .. 0.9 2.0 18.5NEWSPAPER ("DAILY GENERAL

INTEREST-) CIRCULATION?ER THOUSAND POPULATION 0.3 0.5 0.6 Ia 5.4 17.2

CINEMA ANNUAL ATTENDANCE/CAPITA .. 0.2 .. 1.4 0.3

LABOR FDRCETOTAL LABOR FORCE (THOUS) 94b.0 1276.0 1821.0

FEMALE (PERCENT) 9.0 9.7 10.2 36.) 33.8AGRICULTURE (PERCENT) 95.0 93.0 91.0 77.4 57.1INDUSTRY (PERCENT) 1.0 2.0 3.0 9.8 17.4

PARTIClPATION RATE (PERCENT)TOTAL 32.9 31.8 31.0 41.0 36.3MALE 60.2 58.1 56.4 52.1 47.6FEMALE 5.9 6.1 6.2 30.2 25.1

ECONOMIC DEPENDENCY RATIO 1.4 1.5 1.6 1.1 1.4

INCMtE D1STREBU1TIOPERCENT OF PRIVATE INCOHERECEIVED BY

HICHEST 51 OF HOUSEHOLDS .. .. .. .. -HICHEST 202 OF HOUSEHOLDS .. .. . -

LOWEST 2OX OF HOUSEHOLfDSLOWEST 402 OF HOUSEHOLDS .. --

FovWRTT TASCET anonESTtIATED ABSOLUTE POVERTY INCOMELEVEL (USS PER CAPITA)

URBAN 133.0 Ic 168.3 525.3RURAL . .. 63.0 7i 90.8 249.0

ESTIMATED RELATIVE POVERTY INCOMELEVEL (USS PER CAPITA)

URBAN .. .. 133.0 Ii 107.7 477.4RURAL .. .. 53.0 7;W 65.0 186.0

ESTIMATED POP. BELOW ABSOLUTEPOVERTY INCOME LEVEL (X)

URBAN .. .. .. 34.7RURAL .. .. 35.0 /A 65.4.

NOT AVAILABLENOT APPLICABLE

The group averages for eacb Indicator are population-welghted arithmetic means. Coverage of countries among theindicators depends on availabillty of date and is not uniform.

/b Unless otherwise noted, "Data for 1960- refer to any year between 1959 and 1961; -Dats for 1970" between 1969 and1971: and data for -Moat Recent Estimate" between 1980 and 1982.

/I 1977; /d 1976: Ie 1978; /f 1962; I& 1964: /h 1966; 11 1975.

JUNE. 1984

-26 -ANNEX

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27 ANNEX I

Page 4 of 5ECONOMIC INDICATORS

MROSS NATIONAL PRODUCT IN 1993 Annual comound rate of grouth 12, constant 1972 pricesl

US9 KIn. 2 1972-40 1904-3

GNP AT KARKET PRICES 1319.0 100.0 3.0 -2.0GROSS DOMESTIC INVESTMENT 257.0 I!.5 7.3 -GROSS NATIONAL SAVINGS 78.3 5.9 - -

CURRENT ACCOUINT DALANCE -190.9 -14.5 - -EXPORTS OF S0IS, UFS 400.1 30.3 5.9 -15.2INPORTS OF GOODS, UPS 481.6 37.1 6.1 -15.1

OUTPUT, LABOR FORCE AND PRODUCTIVITYVALUE ADDED IN 1993US$ KIn. I

AGRICULTURE 592.0 42.0INDUSTRY, MINING 297.0 20.4SERVICES 530.0 37.6

TOTALIJAVERAGE 1409.0 100.0

GOVERNMENT FINANCE CENTRAL GOVERNMENT

CFAF billion I of SDP19BO 1991 1992 1993 1990 1991 1992 1993

CURRENT RECEIPTS 72.9 74.8 73.7 68.9 18.2 16.1 14.4 12.9CURRENT EXPENDITURES 65.6 68.4 75.0 76.2 26.4 14.7 14.7 14.2

CURRENT SURPLUS 7.3 6.4 -1.3 -7.3 1.9 1.4 -0.3 -1.4tAPITAL EXPENDITURES 77.9 110.4 91.4 96.8 19.5 23.9 17.9 16.2OYERALL BALANCE -70.6 -104.0 -92.7 -94.1 17.6 -22.4 -19.1 -17.5

MONEY. CREDIT AND PRICES 199O 1981 1982 19B3

(Billion CFPF Outstanding End Period)MONEY AND IUASI-NONEY 77.9 94.0 P3.0 80.1BANK CREDIT TO PUBLIC SECTOR -7.5 -3.0 16.3 20.7DANK CREDIT To PRIVATE SECTOR 89.9 102.0 110.4 113.4

(Percentages or Index NumberslHONEY AND QUASI-RONEY (% GOP) 19.4 20.2 16.2 14.9IMPLICIT GOP DEFLATOR 11990=1001 100.0 110.0 121.2 130.9

Annual Percentage Changes in:GDF DEFLATOR 10.0 10.0 10.2 6.0BANK CREDIT TO PUBLIC SECTOR - - - 27.0DAW CREDIT TO PRIVATE SECTOR 17.6 13.6 11.1 2.7

DATE: 1, 30:35

-28 - ANNEX I

TRADE PAYMENTS AND CAPITAL FLUNS Page 5 of 5

BALANCE OF PAYMENTS HERCHANDISE EXPOR1; (Average 1981-93)1981 2992 1993

---- ~ ~~ ~~~ ~~~~ USS Iln. .million USS

EXPORTS OF GOODS & NFS 538.6 417.5 400.1 LIVESTOCK PRODUCTS 56.b 14.7IMPORTS OF GOODS & NFS 596.9 il1.0 411.3 URANIUM 297.4 77.2RESOURCE GAP -59.1 -196.5 -BB.7 OTHER GOODS 31.0 9.1

NET FACTO,I INCOME -91.3 -90.4 -67.2 TOTAL 305.D 100.0of mhich: NLT ant. payments 65.9 71.9 52.9NET TRANSFERS -43.0 -36.5 -34.9

BALANCE ON CURRENT ACCOUNT -409.0 -320.4 -190.9EXTERNAL DEBT IDECEMBER 31, 19031

OFFICIAL GRANT AID 147.2 144.5 119.4 USS Iln.

NET OFFICIAL ILT BORRORIuHNG 292.9 46.3 75.1 PUBLIC DEBT, INCL. UNDISBURSED 603.4Disbursements 376.0 195.0 159.6 NONGUARANTEED PRIVATE DEBT 120.7Amortizatian B3.1 149.7 93.5

TOTAL OUTSTANDING & DISBURSED 724.1NET CREDIT FROM THE IMF - - 32.3OTHER CAPITAL (NET) - - 8.9CHAN6E IN RESERVES (increase - -36.9 129.6 -44.9

2

DEBT SERVICE RATIO FOR 1983 36.9

RATE OF EXCHANGE PUBLIC DEBT, [ICL. GUARANTEED 15.7USs 1.00 = CFAF 271.7 ;20.6 381.1

!DA/IBRD LENDING, AUGUST 17, 1994USs Iln.

OUTSTAND1NG L DISBURSED 102.5UNDISBURSED 106.0

TOTAL 210.5

DATE: 1i30/C5

- 29 -

ANNEX IIPage 1 of 2

REPUBLIC OF NIGER

IRRIGATION REHABILITATION PROJECT

STATUS OF BANK GROUP OPERATIONP IN NIGER

A. STATEMENT OF IDA CREDITS(as of March 31, 1985)

Borrower: Republic of Niger

US$ MillionCredit Fiscal Amount (less cancellation) c/Number Year Purpose IDA a/ b/ Undisbursed

Fourteen credits fully disbursed 79.0 -

885 1979 Livestock 12.0 4.6886 1979 Feeder Roads 10.0 2.0967 1980 Dosso Agr. Dvt. 20.0 17.71026 1980 Second Maradi Rural Dvt. 16.7 10.91151 1981 Education 21.5 7.91225 1982 Industrial Development 16.0 9.51226 1982 Second Forestry 10.1 6.71309 1983 Water Supply 6.5 4.91394 1983 Fourth Highway 23.6 13.11493 1984 Economic & Financial 11.7 10.3

Management Improvement1511 1985 Power Eng. and T.A. 7.5 7.1

Total 234.6 94.7of which has bien repaid (3.3)

Total now outstandingand held by IDA 231.3

Total undisbursed 94.7

a/ Prior to exchange adjustments.b/ Computed at the rate of the approval dates.cl Computed at the March 31, 1985, rate of US$0.991273=1 SDR.

- 30 -

ANNEX IIPage 2 of 2

B. STATEMT OF IFC INVESTKENT AS OF MARCH 31, 1985

Loan AmountNumber Year Borrower Purpose of Loan Equity Undisbursed

-(US$ Million)_

619-NIR 1982 Les Moulins Flourmill 2.22 0.33 0.32du Sahel S.A.(MDS)

.

Bank Group Operationsi'NIG3

- 31 - ANNEX IIIPage 1 of 2

NIGER

IRRIGATION REHABILITATION PROJECT

Supplementary Project Data Sheet

Section I Timetable of Key Elements

(a) Time taken to prepare the project: two years.

(b) Project prepared by: SOGREAH/Louis Berger and Helios.

(c) Departure of Appraisal mission: December 1983.

(d) Completion of negotiations: May 23, 1985.

(e) Planned date of effectiveness: October 1985.

Section II Special IDA Implementation Actions

None.

Section III Special Conditions

(a) Farmers would be given the option of selling to RINI or to theprivate sector any surplus of marketable paddy above what theyowe to their cooperatives (para 44);

(b) ONAHA would not start rehabilitation works on a given peri-meter until it has concluded a contract, satisfactory to IDA,with the cooperative concerned and this cooperative hasapproved internal statutes that are consistent with the modelsatisfactory to IDA (para 52);

(c) ONAHA would set up a unit for coordination, monitoring,evaluation, financial planning, budgeting and budgetarycontrol not later than December 31, 1985, and would appointpersonnel with qualifications and experience satisfactory toIDA to staff the unit (para 57);

(d) ONAHA would put order in its accounts by September 30, 1986,the date by which these accounts must be certifiable byindependent auditors (para 57);

(e) Cooperatives would be required to charge an interest rate notless than 12% on the seasonal credits they extend to theirmembers (para 70);

(f) All medium-term credits would be managed by cooperatives, withtechnical assistance provided by ONARA. Farmers would make aminimum 10% down-payment and repay the rest to thecooperatives at an annual interest rate of 12% over a period

- 32 -ANNE IIIPage 2 of 2

of a maximum of five years. Cooperatives would in turn repayGovernment at an annual interest rate of 1.02 over a period ofa maximum of eight years (para 70);

(g) Cooperatives would bear the full cost of operation andmaintenance of irrigation infrastructure, including provisionsfor the renewal of pumping equipment (para 73); and

(h) Government would provide adequate financing for ONAHA'soverhead expenditures for services performed on Government'sbehalf, which are not covered by external sources. Thisfinancing would be transferred to ONAHA on a quarterly basisat the beginning of each quarter (para 73).

- 33 -ANNEX IV

Amounts and Methods of Procurement(US$ million)

Procurement Method TotalProject

Items to Be Procured ICB LCB Other N.A. Cost

a/ b/_Earthworks, structures, buildings 1.2 0.4 3.5 5.1and forestry plantations (1.2) (0.1) (1.6) - (2.9)

Pumping stations - - 1.6 b - 1.6

Electric power lines - - 0.7 c/ - 0.7

Construction equipment/vehicles 1.2 - 1.3 0.6 d/ 3.1(1.2) (1.2)

Agricultural equipment 0.6 0.4 1.9 b -_ 2.9(0.3) (0.1) (0.4)

Local staff, training, operating - 0.5 - 4.0 4.5costs and misc. equipment (0.2) (1.7) (1.9)

Expatriate staff, consultants, - - 4.5 e/ - 4.5audits and studies (1.4) (1.4)

Revolving funds for cooperatives - - - 1.6 1.6and RINI (0.5) (0.5)

Project preparation facilities - - 1.2 f/ - 1.2(1.0) (1.0)

Total 3.0 1.3 14.7 6.2 25.2

(2.7) (0.4) (4.0) (2.2) (9.3)

a/ Construction by force account.b/ Parallel-financing by CCCE and procured through procedures accept-

able to them.c/ Financing by KfW and procured through procedures acceptable to

them.d/ Depreciated replacement value and recouditioning cost of the

Namarigoungou equipment.e/ Expatriate staff, of which IDA finances Chief of Monitoring and

Evaluation, ONAHA (36 man-months) and Head of Financial Planning,Budgeting and Budgetary Control Unit, ONAHA (36 man-months), CCCEfinances Chief Engineer (21 man-months) and Works Supervisor (21man-months), both for force account works, Rice Processing expert,RINI (24 man-months) and Administrative and Financial Director,ONAHA (36 man-months), and KfW finances Administrative andFinancing Manager for force account works (24 man-months) andAgriculturalist/Rice Expert (36 man-months).

fl Including the preparation scudies financed by CCCE.

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