World Bank Document€¦ · document of the world bank report no: 17146-se project appraisal...

Document of

The World Bank

Report No: 17146-SE

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED CREDIT

IN THE AMOUNT OF SDR 5.9 MILLION(EQUIVALENT TO US$8.0 MILLION)

TO THE

REPUBLIC OF SENEGAL

FOR AN

AGRICULTURAL EXPORT PROMOTION PROJECT

November 6, 1997

Agriculture mCountry Department 14Africa Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective October 1997)

Currency Unit = CFA Franc (CFAF)l

CFAF 100 = US$0.17US$1 = CFAF 590

FISCAL YEAR

January I - December 31

ABBREVIATIONS AND ACRONYMS

CAS Country Assistance StrategyCECI NGO involved in Research and International Cooperation (Centre

d'Etudes et de Cooperation Internationale)CIDA Canadian International Development AgencyEU European UnionGPH Senegal's Professional Horticultural Group (Groupement des

Professionnels de l'Horticulture)IDA International Development AssociationNGO Nongovernmental OrganizationPCD Project Concept DocumentSEPAS Senegal's Agricultural Product Exporters' Organization (Senegalaise

d'Exportation deProduits Agricoles et de Services)SOE Statement of Expenditures

Vice President: Mr. Jean-Louis SarbibCountry Director: Mr. Mahmood Ayub

Sector Manager: Mr. Jean-Paul ChausseTask Team Leader: Mr. Ousmane Sissoko

'The exchange rate of the CFAF is fixed at 100:1 to the French Franc which is a floating currency.

SENEGALAGRICULTURAL EXPORT PROMOTION PROJECT

CONTENTS

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A: Project Development Objective ................................................................ 2

1. Project development objective and key performance indicators .......................... .....................2

B: Strategic Context ................................................................ 2

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project .....................22. Main sector issues and Government strategy ............................................................... 23. Sector issues to be addressed by the project and strategic choices ....................... ......................3

C: Project Description Summary ................................................................ 3

1. Project components .................................................... 32. Key policy and institutional reforms supported by the project ..................................................33. Benefits and target population .................................................. 44. Institutional and implementation arrangements .................................................. 4

D: Project Rationale .................................................. 5

1. Project alternatives considered and reasons for rejection ..................................... 5............52. Major related projects financed by the Bank and/or other development agencies . 63. Lessons learned and reflected in the project design .74. Indications of borrower commitment and ownership 75. Value added of Bank support in this project .7

E: Summary Project Analysis .7

1. Economic .72. Financial .83. Technical .84. Institutional .85. Social .86. Environmental assessment .97. Participatory approach ............................................................... 9

F: Sustainability and Risks .9

1. Sustainability: ......................... 92. Critical Risks ...................... 103. Possible Controversial Aspects ...................... 10

G: Main Loan Conditions ...................... 10

1. Effectiveness Conditions ....................... 102. Other ....................... 11

H. Readiness for Implementation ....................... 1

1. Compliance with Bank Policies ....................... 11

Annexes

Annex 1. Project Design Summary 12Annex 2. Detailed Project Description 14Annex 3. Estimated Project Costs 17Annex 4. Cost-Benefit Analysis Summary 18Annex 5. Financial Summary 20Annex 6. Procurement and Disbursement Arrangements 21

Table A. Project Costs by Procurement Arrangements 24Table B. Thresholds for Procurement Methods and Prior Review 25Table C. Allocation of Credit Proceeds 26

Annex 7. Project Processing Budget and Schedule 27Annex 8. Documents in Project File 28Annex 9. Statement of Loans and Credits 29Annex 10. Country at a Glance 31Annex I I Summary of the Environmental Analysis. 33

Map: IBRD 29056

SenegalAgricultural Export Promotion Project

Project Appraisal Document

Africa RegionCountry Department 14

Date: November 6, 1997 Task Team Leader: Mr. Ousmane SissokoCountry Director: Mr, Mahmood Ayub Sector Manager: Mr. Jean-Paul ChausseProject ID: SN-PE 51610 Sector: Agriculture Program Objective Category: ESD/PSDLending Instrument: Specific Investment Loan (SIL) Program of Targeted Intervention: [] Yes [x] No

Project Financing Data [] Loan [x ] Credit [ ] Guarantee [] Other [Specifyl

For Loans/Credits/Others:

Amount (US$m/SDRin): US$8.0m/SDR 5.9mProposed terms: [ ] Multicurrency [] Single currency, specify

Grace period (years): 10 [ Standard Variable [] Fixed [] LIBOR-basedYears to maturity: 40Commitment fee: n/a

Service charge: 0.75%

Financing plan (US$m, ):Source Local Foreign Total

Government 1.4 1.4IDA 3.2 4.8 8.0Producers/Exporters 0.4 0.6 1.0

Total 5.0 5.4 10.4Borrower: Government of SenegalGuarantor:Responsible agency(ies): Ministry of Agriculture

Estimated disbursements (Bank FY/US$M): 1998 1999 2000 2001 2002 2003Annual 0.6 1.5 2.2 2.2 1.2 0.3

Cumulative 0.6 2.1 4.3 6.5 7.7 8.0

For Guarantees: [ Partial credit [ Partial risk

Proposed coverage:Project sponsor:Nature of underlying financing:Terms offinancing:

Principal amount (US$)Final maturity

Amortization profileFinancing available without guarantee?: [] Yes [ NoIf yes, estimated cost or maturity:Estimated financing cost or maturity with guarantee:Project implementation period: 1998-2002 Expected effectiveness date: 2/1998 Expected closing date: 12/2002

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A: Project Development Objective

1. Project development objective and key performance indicators (see Annex 1):

The project's objectives are to diversify and develop private agricultural exports, a core objectiveof the Government's export-led growth strategy. This would be achieved through: (a) specific actionsaimed at export market development and diversification; (b) strengthening of existing privateproducers/exporters' professional organizations, and encouraging the creation of farmers' associationswhere neededl and (c) upgrading of export facilities at the airport of Dakar.

B: Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project (see Annex 1):

CAS document number: 13909-SE of 1/26/95 Date of latest CAS discussion: 2/16/95.New CAS will be presented to the Board in early 1998.

The project supports the CAS objective of sustainable economic growth with equity and povertyreduction, which explicitly also recognizes the facilitation of supply response from the private sectorthrough diversification of production and exports of both traditional and non traditional high value crops,as a major sustainable source.

Following the 1994 devaluation of the CFA Franc, which provided an important incentive foragricultural export development and diversification, a number of high value-added agricultural exportproducts from Senegal have become competitive on overseas and regional markets. By providing aneffective vehicle to support private sector investment and involvement in export crop development anddiversification, and by streamlining the role of agricultural professional organizations in the agriculturalexport sector, the project fits well in the Bank's country strategy.

2. Main sector issues and Government strategy:

Because of previous economic and institutional distortions over the past decade, farmers'reluctance to invest in new or improved technologies and the natural degradation of land, agriculturalproduction has stagnated in Senegal since the beginning of the decade. While, prospects for Senegal'smain export and import substitution crops have improved since the parity change of the CFA Franc inJanuary 1994, there is concern that the sector has not responded as well as some other francophonecountries to the favorable conditions created by the parity change. The Government's strategyrecognizes that despite this generally disappointing performance, the agricultural sector has a greatpotential for employment and growth in the short to medium term, through export growth and forwardand backward linkages, and that pockets of dynamism are emerging in the private sector, involved inhigh-value crops or activities either for exports or urban markets, such as horticulture, confectionerygroundnuts, cattle fattening, etc.

The Government's Lettre de Politique de Developpement Agricole (LPDA) issued in April 1995,and supported by the Agricultural Sector Adjustment Credit (PASA: Cr 2738-SE) defines broadlySenegal's medium- and long-term agricultural policy. It is consistent with the macroeconomicdevelopment strategy designed to respond to the new opportunities created by the change in the parity ofthe CFA Franc in 1994. The major objectives of the strategy as set out in the LPDA are: (i) a sustainedagricultural growth of 4% per annum; (ii) improved food security; and (iii) increased rural employmentand income. To achieve these objectives, the Government has undertaken to: (i) deregulate prices andtrade of agricultural products and inputs; (ii) withdraw from all commercial activities to focus on publicservice functions, such as policy formulation, agricultural services, regulatory functions, monitoring and

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evaluation; (iii) adopt a legal framework to promote land-tenure security and private investment; (iv)promote agricultural intensification and diversification; and (v) decentralize government functions andtransfer their management to civil society as much as possible.

3. Sector issues to be addressed by the project and strategic choices:

The Government's strategy toward increasing agricultural production aims at supporting the privatesector development and involvement in agricultural production and export through specific measuresindicated above. In order to develop the potential sources of sectoral growth and in view of the potentialfor non traditional crop production, the Government is considering, with the support of the Bank andpossibly other donors, setting up an agricultural export promotion operation that could be a major vehiclein assisting individual producers/exporters and their private organizations in responding to the demandand product requirements of the regional and international markets, especially for non traditionalagricultural products. This operation is expected not only to contribute to further agricultural growth andprivate sector development, but also to increasing the income of some of the rural poor since 80 percentof the country's poor live in rural areas where agriculture is the main income generating activity.

C: Project Description Summary

1. Project components (see Annex 2for a detailed description and Annex 3for a detailed costbreakdown):

Component Category Cost Incl. % of Bank- % ofContinzencies Total financinz Bank-

US$MM) (US$M) financingA. Export Promotion and Institution 4.6 44 3.6 45Diversification Activities building

B. Support to Producers/Exporters' Institution 2.7 26 1.8 23Associations building

C. Upgrading of Export Facilities Physical 1.4 14 1.2 15

(Project Management) Project 1.7 16 1.4 17Management

Total 10.4 100 8.0 100

2. Key policy and institutional reforms supported by the project:

The project will support the Government's export-led strategy and reforms undertaken toderegulate prices and trade of agricultural products and inputs. The existing policy and institutionalframework would not inhibit the project viability and sustainability; this continues to be perceived asfavorable by most producers/exporters.

3. Benefits and target population:

The project will benefit tens of private agricultural producers/exporters and their professionalorganizations, and reach thousands of smaller growers of exportable crops. It will foster improved linksbetween production and markets and result in increased exports of high-value agricultural products andcontribute to reducing the country's excessive reliance on a couple of traditional products. The project isalso expected to help create jobs for producers/exporters and to bring them new technology and trainingopportunities. It will therefore lead to important institutional and capacity building benefits (cf. para. Elbelow).

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4. Institutional and implementation arrangements:

Implementation period: Four years: 1998-2002Executing agency: Ministry of AgricultureProject coordination: Project Management TeamProject oversight (policy guidance, etc.): Project Steering Committee (below).

Accounting, financial reporting and auditing arrangements:

The Project Management would ensure that separate project accounts are established andmaintained in accordance with principles and practices satisfactory to IDA, and provide annual financialstatements. The Private Sector Foundation (PSF), established under the Private Sector Capacity BuildingProject (Cr. 2759-SE) as a private agency, which has now gained significant experience in financialmanagement, disbursement and procurement, would be entrusted with processing all financial servicesincluding the accounting system, financial management, disbursement and procurement under theproject. The project financial management system will ensure adherence to accounting and auditingstandards acceptable to the Bank, and provide timely and reliable information that can give early warningin project implementation. During appraisal, PSF's following key areas have been reviewed and foundin sound agreement with Bank established procedures: Staffing was found to be adequate; the foundationis staffed with three former big auditing firms' employees. Accounting: PSF has developed a powerfulaccounting software, "Progeco", that segregates levels of responsibilities with regard to authority ofinput and control. Procurement and Disbursement procedures were found to be consistent with Bankrequirements. Furthermore, the project's financial specialist will oversee payment and procurementprocesses together with procurement contract management information and project expenditures. Allproject accounts, the special account and financial statements would be audited by independent auditorsacceptable to IDA. The audit report would specifically include the auditors' opinion on the SpecialAccount and on the reliability of Statement of Expenditures (SOEs) as a basis for IDA creditdisbursement. The audit report would also include an assessment as to whether goods and services havebeen procured from eligible sources, and an opinion on the proper utilization of goods and servicesunder the project. The auditors' reports would further include a statement on the adequacy or otherwiseof the accounting system and internal controls. The cost of audit would be paid from the IDA Credit.The audited statements, accounts, auditors' long-form reports and short-form opinion reports would besubmitted to IDA not later than six months after the end of each fiscal year. The appointment of auditorssatisfactory to IDA will be a condition of Credit effectiveness.

Monitoring and evaluation arrangements:

Project monitoring will be carried out through regular field visits and written reports by theproject management. Semi-annual progress reports on project activities will also be established by themanagement. Project monitoring by the Government will be made through a Project Steering Committeewhich will include representatives from the Government and the private sector. They will be responsiblefor reviewing and approving the project's budgets and annual work program (AWP) including all majorcontracts, once a year. Producers' and exporters' professional organizations will be also involved inproject execution through participation in thematic technical committees to review and follow up theproject activities and advise on the selection of beneficiaries for project support. Project outcomes willbe evaluated during execution and at project completion. A project mid-term review will be carried outby the Government and IDA after the second year of project implementation.

Reporting. During the project's four-year implementation period (1998-2002), project accounts, specialaccount, SOEs and financial statements will be audited every year by an independent auditor acceptableto IDA and according to international auditing standards, with the audit reports to be submitted to IDA

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no later than six months after the end of each project year. The Government will also remit to IDA semi-monthly reports showing progress toward the achievement of agreed upon objectives, and animplementation completion report will be submitted to IDA within six months of IDA credit closing.

D: Project Rationale

1. Project alternatives considered and reasons for rejection:

Some donors are currently involved or considering to engage in selected agricultural exportpromotion activities. Examples include the European Union (EU) which is providing financial assistanceto smaller exporters and has established a guarantee fund to cover the four main formal banks (BICIS,CBAO, CNCAS, SGBS) for extending loans to agricultural exporters. Similarly, CIDA is working witha Canadian NGO to provide technical and advisory support to individual producers and farmerorganizations engaged in horticultural crop production with some export activity, in the areas of St.-Louis and Thies. However, since their activities remain relatively small, these donors are anxious towork with IDA as a catalyst to cover a broader range of activities directed at agricultural exportpromotion and diversification. In this context, they are also contemplating additional support to thesector for the coming years, under parallel financing arrangements with IDA. As a result, the idea ofgoing ahead with the proposed project has been recognized as the appropriate route by such donors andthe Government alike. Because of their teething problems and difficulties in grouping all interestedproducerslexporters, the alternative of executing the project by existing private export organizations suchas the Senegalaise d'Exportation de Produits Agricoles et Services (SEPAS) and the Groupement desProfessionels de l'Horticulture (GPHM, was rejected. Similarly, project execution by an arm of theGovernment was considered and rejected in view of high demand for efficiency that such a businessoriented operation requires, in addition to the need for maintaining a higher private sector involvement inthe operation throughout.

The project supports the CAS objective of sustainable economic growth with equity and povertyreduction, which explicitly also recognizes the facilitation of supply response from the private sectorthrough diversification of production and exports of both traditional and non traditional high value crops,as a major sustainable source. (cf. para. B I above).

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2. Major related projects financed by the Bank and/or other development agencies (completed, ongoingandplanned):

Sector issue Project Latest Supervision (Formn 590)Ratings

(Bank-financed projects only)Implementation DevelopmentProgress (IP) Objective

(DO)Bank-financedBusiness Environment Private Sector Capacity S S

Building Project (Cr. 2759-SE). Ongoing.

Business Environment Private Sector DevelopmentOperation. (Planned for FY99).

Agricultural Diversification Agricultural Research II (Cr. S S2107-SE). Completed.

Small Rural Operations II U U(Cr. 1992-SE). Ongoing.

Agricultural Policy Agricultural Services Project S S(Cr. 2108-SE). Ongoing.

Agricultural SECAL (Cr. S S2738-SE). Completed.

Agricultural Intensification and Agricultural Services andDiversification Producer Organizations

Program (Planned for FY1998).

Other development agenciesCECItCIDA Production and Regional

Marketing Support toVegetable Producers in St.-Louis and Thies.

EU Export Guarantee and Creditto Small and Medium SizeEnterprises.

IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)

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3. Lessons learned and reflected in the project design:

The Bank experience in supporting export promotion in Africa and other regions shows that whiletraditional exports need to be part of an outward-oriented strategy, the future is in non traditional exports.Foreign market development, the identification of customer and product requirements beforehand, andthe presence of a catalytic mechanism that facilitates the establishment of partnerships between localagricultural producers and foreign investors -- have proven to be central factors for successful entry intothe international markets. Even a modest increase in a country's share of world markets has often beenan important ingredient for growth. The project design takes into account the above lessons ofexperience.

4. Indications of borrower commitment and ownership:

The Government's commitmnent is illustrated by the fact that it has undertaken a number ofinitiatives including a series of workshops, action plans and trade facilitation studies, to encourage andenhance private sector involvement in agricultural and agro-industrial activities with significant exportpotential. It also acknowledges that the project will have to be privately managed.

5. Value added of Bank support in this project:

In view of the Bank's prior involvement in private sector development in Senegal, theimportance of agricultural diversification and export in the country strategy, and the expected catalyticrole the Bank may play, the Government has requested Bank support for launching the present operationand coordinating donor activities in the field of agricultural export promotion.

E: Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)

1. Economic (supported by Annex 4):

[x] Cost-Benefit Analysis: NPV=US$ 5.8 million; ERR= 18% []Cost Effectiveness Analysis:n/a

The two approaches used--Economic Rate of Return and Net Present Value--both provide veryfavorable results. An evaluation of the present value of net benefits from the project shows that theproject would result in net revenue of US$5.8 million after ten years and US$17.3 million after fifteenyears. A second method used is a computation of the Economic Rate of Return, which yields a rate of ofreturn of 18% at ten years and 25% at fifteen years. Compared to an opportunity cost of capital of 12%,the project looks well ahead of covering its costs by the first ten years. Sensitivity analysis indicates thatthe rate of return is robust. There is a 92% probability that the ERR would be above 12%. Theswitching values measured are all above 30% of base values. A summary of the results is presented inAnnex 4.

There are numerous benefits to the Senegalese economy. A more coordinated and streamlinedeffort towards agricultural exports would enhance Senegal's image on the world market. Exportdiversification and increased exports of high valued horticultural crops would reduce the risks of declinesin export revenue due to dependence on a few traditional exports and increase Senegal's market shareand competitiveness. It would also increase the value of Senegalese agricultural exports. Agriculturalexport industries would expand leading to increased taxes payable to Government. The expansion ofthese industries and increase in small-holder production and export of agricultural crops, would bothgenerate employment. The resulting incomes from this increased employment would have a multipliereffect in other sectors. The infrastructure to be developed from this project would also be useful to otherexports.

The structure of the project is such that it would empower agricultural exporters' and producers'

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associations. The resulting benefits are numerous including: increased efficiency in the transfer ofinformation on prices and emerging markets to exporters and producers through their associations;improved quality and packaging procedures; joint negotiations for freight capacity and charges; jointtraining, promotion and use of improved technology; innovation and advocacy towards a favorablepolicy environment: strong associations, in a coordinated effort would be able to address the constraintsof irrigation and land tenure. These latter benefits though mostly unquantifiable, will go a long waytowards strengthening the Senegalese agricultural export production and marketing sector.

2. Financial (see Annex 5): NPV=USS 4.4 million; FRR= 15%

The project financial analysis was conducted relaxing the assumptions of shadow pricing andtaking into account taxes, duties and contingencies. The results presented in Annex 5 confirm thefinancial soundness of the project. Under the project, the Government's contribution will be limited tocovering taxes and duties estimated at US$1.4 million, while producers/exporters will share in the costsof services requested by them and contribute gradually to covering maintenance and operating costs.

Fiscal impact: The fiscal impact is further expected to be positive in view of expected taxes payable to theGovernment, conservatively estimated at US$1.7 million.

3. Technical:

The project technical design and cost estimates are appropriate to Senegal's needs and wereconfirmed by representatives of major producers'/exporters' professional organizations to be within theirexpectations.

4. Institutional:

Project implementation will be under the general supervision and guidance of the Ministry ofAgriculture (MOA) as decided upon by the Government of Senegal (GOS). Other interested ministriesand private producers and exporters' associations, formally established as non-government associations,would be represented in a Project Steering Committee (PSC) responsible for supervising theimplementation of the proposed project and coordination and monitoring of overall project activities.The establishment of the Project Steering Committee will be a condition of IDA Credit effectiveness.

Project management will be assumed by professionals experienced in private agricultural exportoperations, recruited through open competition, to provide technical and market development advice toindividual producers/exporters and their associations. The project management team may be assisted byinternational technical assistance (on short- or medium-term contracts) experienced in exportdevelopment and finance, and farmer organization, and connected to an extensive network of foreignbuying agencies. It is expected that project beneficiaries would gradually assume the financing ofservices provided by the management team and that the capacity to provide critical services will continueto be available after project completion.

5. Social: n/a

6. Environmental assessment: Environmental Category []A [x] B []C

An environmental analysis was conducted for the project with a view to ensuring that it will haveno significant negative impact, that the expected increases in cultivated areas will take place on clearedland, with no impact on flora and fauna, and that mitigation measures will be taken to minimize the

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impact of pesticides on soil, water resources and affected population. It is expected that the project willcreate incentives for the stabilization of agriculture by promoting environmentally sound cash crops andby increasing beneficiaries' income in rural and urban areas through the marketing of high valueagricultural products. Given the scope of project activities, the project is classified under environmentalcategory B according to the Operational Directive (OD) 4.01, Annex E.

7. Participatory approach:

Project preparation involved a significant participatory approach. Beneficiaries including privateproducers/exporters were involved in project preparation and design through information sharing,systematic consultation and collection of feedback and written comments. Similarly, CECI-an NGOactively involved in supporting vegetable production and marketing, and donors interested in agriculturalexport such as CIDA and EU, were also consulted systematically and contributed primarily throughsharing information on the subject.

F: Sustainability and Risks

1. Sustainability:

The project would enhance the capacity of the agricultural export sector to respond to thecountry's export promotion and diversification objectives. By strengthening farmer organizations andagricultural exporters' professional groups, the project would contribute to build a local capacity thatwould further ensure that actions initiated under the project are carried out and pursued upon projectcompletion. In view of the importance of the private sector's effective involvement and participation inproject activities and costs, project benefits will be also maintained after project completion, with alldirect cost of services to be recovered at the end. During project execution, beneficiaries will be requiredto contribute between 20 and 40 percent of the direct costs for all of their requested project support,according to eligibility criteria and cost sharing mechanisms established in the Project ImplementationManual.

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2. Critical Risks (reflecting assumptions in the fourth column of Annex 1):

Risk Risk Rating Risk Minimization Measure

Annex 1, cell "from Outputs to Objective"

Continued Government commitment for greater role M The Government has so far agreed thatof private sector in ag. exports may be short-lived. private sector play a leading role in ag.

export and this will be confniredthrough clear delineation of theGovernment and private sectorrespective roles under the project.

Uncoordinated donor action may entail risks of M Systematic coordination with otherduplication. projects and structures and

collaboration with ag. professionalorganizations will be a core activity ofproject management team.

Producers willingness to group for product N Through providing in time market data,processing, packaging/labeling and shipping may be price information and commondifficult to materialize. packaging and other services, the

proposed project will play a key role infacilitating the grouping ofproducers/exporters to bulk andstandardize their production in order totake full advantage of exportopportunities.

Annex 1, cell "from Components to Outputs"

Non availability of local project management and N Reasonable in-country capacity exists;implementation capacity. this may be supplemented by short-

term external expertise withinternational market networkconnections. In addition, assuranceswill be obtained that key staff willundergo an open competitive selectionprocess and should be satisfactory at alltimes during project execution.

Overall Risk Rating MRisk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk)

3. Possible Controversial Aspects: n/a

G: Main Loan Conditions

1. Effectiveness Conditions:

A key project related conditionally will be the need to agree with the Government on theestablishment of an autonomous project management structure staffed with private professionalsexperienced in agricultural export. Other conditions will include obtaining agreement from the

Government that it will: (a) appoint a Project Management Team with key personnel satisfactory to IDAat all times, and establish a Steering Committee with equal private and public representation; (b) appointindependent auditors satisfactory to IDA, to audit all project accounts and financial statements; (c) adopta Project Implementation Manual acceptable to IDA. The draft Project Implementation Manual wasdiscussed during Negotiations and found satisfactory

2. Other: n/a

H. Readiness for Implementation[ ] The engineering design documents for the first year's activities are complete and ready for the start ofproject implementation. [x ] Not applicable.[x ] The procurement documents for the first year's activities are complete and ready for the start ofproject implementation.[x ] The Project Implementation Plan has been appraised and found to be realistic and of satisfactoryquality.[ ] The following items are lacking and are discussed under loan conditions (Section G):

I. Compliance with Bank Policieslx] This project complies with all applicable Bank policies.[ ] [The following exceptions to Bank policies are recommended for approval. The project complies

with all other applicable Bank policies.]

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Page 1 of 2.Annex 1

Senegal: Agricultural Export Promotion Project

Project Design Summary

Narrative Summary Key Performance Indicators' Monitoring and Supervision Critical AssumptionsSector-related CAS Goal: (from Goal to Bank Mission)

Sustainable economic growth GDP and agricultural growth National statisticswith equity and poverty Customs datareduction and supply responsefrom private sector throughdiversification of agriculturalproduction and ag. exports.Project Development General objectives: (from Objectives to Goal)Objectives

Export diversification and Increase in private horticultural National statistics Macro and fiscal policy of theincrease in agricultural exports exports by 15% a year, from Customs data Government to remainthrough private sector. 6,000 T to 10,000 T from 1998 favorable.

to project end, significantincrease in other ag. exports, andexporting new products.

Specific objectives: Annual Work Program (AWP)Increase in share of project and Semi-annual Progresssupported exporters in: private Reports (SPR)horticultural exports by 15% ayear, from 1998 to project end,the increase in other ag. exports,and exporting new products.

Project Outputs (from Outputs to Objectives)

1. Market potential for 1.1 No. of private exporters 1.1. 1. Annual Work Program Continued Govt. commitmentincreased and diversified reached: 50 by project end, (AWP)/Semi-annual for greater role of private sectorexport has been identified and over 1,000 producers Progress Reports (SPR) in ag. exports

1.2 No. of exporters/importers 1.2.1 AWPISPRrelations establishedformally: 5 a year, at least.

1.3 Trial shipments completed 1.3.1. AWP/SPRand evaluated: 5-10 a year.

1.4 Trade shows participation w/ 1.4.1 AWP/SPRimpact on ag. exportdevelopment.

1.5 Research contracts on new 1.5.1 Signed and executedproduct development contractseffective.

1.6 No. of products 1.6.1 Project reportsstandardized.

2. Establish effective 2. 1 Members using services of 2.1.1 AWP/SPR Coordination w/other projectcapability of ag. professional packaging centers. and structures to avoid risks oforganizations to bulk and duplication.export products

Baseline and targeted values should be shown, with the latter divided into values expected at mid-term, end of project and full impact.

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2.2 Members attending project 2.2.1. AWP/SPRtraining and using its svcs.

2.3 Central data/info. referral isoperational.

3. Selected export facilities are 3.1 Packaging centers 3.1.1 Field visits, supervision. Producers willingness to groupupgraded. operational (1-2) and their for product processing,

services used. packaging and shipping.3.2 Improved airport storage 3.2.1 Field visits, supervision.

capacity (refrigeratedstorage, outside sheds)

Project Components Inputs: (from Components to Outputs)

1. Export promotion and 1.1 Int'l market research Availability of implementationdiversification activities. 1.2 Intl' events (fairs, seminars, capacity.

tours)1.3 New product development1.4 Product quality /presentation

improvement1.5 Trial shipments1.6 Ag. export guidelines

prepared by int'l and nat'lexperts.

(US$4.6 million)

2. Strengthening of ag. 2.1 Product packaging andprofessional organizations. national labeling

2.2 Acctg., mgmt. , othertraining

2.3 Central referral/data info.svc.

2.4 Financial and legal advisoryservices

2.5 Newsletters and ExportManuals.

2.6 Nb of financial packagesprepared w/ projectassistance.

2.7 Packaging centersoperational (1-2).

(US$2.7 million)

3. Upgrading of selected export 3. 1 Refrigerated and outsidefacilities. storage facilities for

perishables

(US$1.4 million)

4. Project management 4. 1 Project management team 4.1.1. Project reports.operational at projectinception, and collectingperformance data.

(US$1.7 million)

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Annex 2


Project Description

Project Component I - US$4.6 million (total cost of component, including contingencies)

Export Promotion and Diversification Activities. Under this component the project will assistSenegalese producers/exporters in: (i) market research, customer identification, meeting qualityrequirements, trial shipments, obtaining pre-export finance and developing maritime agriculturalexport crops in addition to those currently exported by air ; (ii) product development andprocessing, and quality control via targeted adaptive research; and (iii) establishment of businesspartnerships between local exporters and foreign businesses and assistance in identifyingregional and overseas niches. The project will provide direct in-house assistance from its staffincluding a specialist in market research and product development, who is also expected to drawupon his international network corporate connections for market information, identifying andsecuring outlets and establishing commercial partnerships. In addition, the project will providefor contracting ad hoc services with local or international firms and institutes in those areasrequiring more specialized inputs such as research for new product development includingagricultural product processing, product quality certification, international ISO certifications forproduct processing, the establishment of national standards and norms, etc. which will befinanced fully by the project.

With respect to market research and development, the project activities will not only begeared at overseas markets but also at developing regional niches. Both traditional and nontraditional horticultural products, for which potential for increasing Senegal's share is promising,will be encouraged and benefit from project support for which there is a clamor fromproducers/exporters engaged in crops such as green beans for which the country could maintain aleader role over the coming years in addition to melon, grapefruit, confectionery groundnuts, andothers such as cashew nut, cherry tomato, avocado, mango, asparagus, aubergine, okra, pepper,tropical plants, etc. The project will finance the full cost of those research activities which willbenefit the entire agricultural export community. The project will also encourage and contributeto business canvassing activities for all promising products as well as exporters' participation inselected specialized international fairs. Trial shipments including product preparation andforwarding of new export crops will be also conducted under the project to further support exportdiversification; these will be complemented with the follow-up of export transactions, productacceptance and final sale results.

Project Component 2 - US$2.7 million (total cost of component, including contingencies)

Support to Producers/Exporters' Associations. Under this component, the project will dealprimarily with: (i) strengthening existing private professional organizations: producer groups,export associations, cooperatives, interprofessional groups of professional associations, whichcould become a major vehicle for non traditional export market development and for lobbyingactivities, etc.; (ii) encouraging the creation of farmer associations by developing a properstrategy with the help of the project's farmer organization specialist; and (iii) setting up a centralreferral/data information service as well as providing management and legal advice required forthe formal establishment of nascent associations and for developing their work programstogether with training in simplified cost accounting and management principles. In this respect,

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project support will benefit existing and future producers'/exporters' associations and theirindividual members. Because product quality and presentation constitute key requirements fortapping external markets, the project would facilitate product grouping for packaging and qualitycontrols in selected packaging centers that may be established under the project. Major existingassociations, including the Senegalaise d 'Exportation de Produits Agricoles et Services (SEPAS)and the Groupement des Professionels de l 'Horticulture (GPH), whose activities account for thebulk of horticultural exports of the country, have already indicated their interest in participatingin project activities and willingness to contributing to cost sharing for the expected projectsupport. Direct assistance and short-term consultancies will be provided under this componentto provide training in simplified accounting systems, management and legal advice in preparingstatutes and operating principles and procedures. A central referral/data information service willbe established to provide just-in-time infornation to producers/exporters on going market prices,cargo plans, quantity and quality requirements, etc. A provision will be also included in theproject primarily to help smaller members of exporters/producers' associations prepare soundfinancial packages including relevant technical infornation and thereby, help make theirbusinesses more attractive to local banks and further improve their access to formal financialservices.

In addition to representing the interests of their members, producers/exporters'associations are expected to be play a major role in lobbying activities for the trade in dealingwith common issues affecting their members on which they will have an increased bargainingpower. In doing so, it is expected that such problems including but not limited to the inadequateavailability of irrigation water in the neighborhood of Dakar, land tenure issues, etc.Strengthening of professional organizations will also bring other benefits such as furthering localinstitutional capacity for project oversight and execution, and ensuring the sustainability ofproject action once it is completed.

Project Component 3 - US$1.4 million (total cost of component, including contingencies)

Upgrading of Export Facilities through upgrading/rehabilitating infrastructure (cold storage,storage capacity, outside sheds, etc.) at the airport for preserving perishable products in transit.Such rehabilitation will concern the airport of Dakar. Studies and the actual execution of workwill be carried out under this component. All infrastructure upgraded under the project will beprivately managed with appropriate cost recovery for maintenance.

Project Management and Implementation

The project will be implemented over a four-year period from 1998 through 2002, underthe generai supervision and guidancq of the Ministry of Agriculture. The project will providesupport for project management which will be assumed by qualified private professionalsexperienced in agricultural export or related activities and farmer organization. The support forproject management will cover investment costs and operating costs on a decreasing basis, for atotal of US$1.7 million including contingencies.

So far, all stakeholders including the GOS, would-be beneficiaries and donors, concurredthat the project management team will have full autonomy in decision-making and carrying outday-to-day project activities, and be responsible for achieving the agreed upon monitorableresults under the project. As it was recognized that project management will be entrusted toexperienced and able private professionals with a mastery of the trade, all key project staff willbe selected on the basis on an open competitive process and with fixed term renewable contracts.

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The project management unit will be a light autonomous structure, which will bemanaged in a private fashion, with fixed term contractual staff and no Government interferencein day-to-day management. At project inception, a National Project Manager (NPM) will berecruited on a fixed term contract of two years, renewable on the basis of demonstratedperformance. He will be assisted by technical staff including two senior local professionalsexperienced in agricultural export or related activities, a local financial and accounting specialistand support staff.

The NPM will have management, coordination and monitoring responsibilities includingbut not limited to: (a) implementing the project, coordinating and monitoring project execution;(b) contracting and supervising the execution of contracts between the project and specializedinstitutions and the technical assistants for market research and product development,dissemination of export standards and requirements, adaptive research, technical agricuwturaladvice, etc.; (c) preparing the project's annual work programs (AWPs), annual budgets, acccuntsand financial statements, progress reports, disbursement applications and procurement plans andexecution; (d) liaising with the Government, institutes and professional organizations involved inagricultural export crops promotion, etc.; and (e) coordinating project activities with those ofdonors. Major responsibilities of the senior local professionals will involve: (a) disseminatinginformation on product quality standards and requirements; (b) advising and following up on theefficient use of technical packages for specific export crop production; (c) coordinating exportpromotion activities including fairs, business tours and market tests; (d) following up theactivities of agriculturl producers'/exporters' associations and helping the formal ofestablishment thereof, if any; (e) coordinating training activities and field demonstrations; (f)helping prepare these organizations' business plans, budgets and financing options; and (g)assisting in data management, dissemination including memberships, price, market andproduction indicators.

The project management team will be assisted by a team of international technicalassistance - an export development and sales specialist with financiallexport finance experience,data management and export logistics expertise - who will be paired with the above localexpertise. Such technical assistance will further provide services for: (a) setting up appropriateaccounting and financial management systems for the agricultuml professional associations; (b)designing the data base management; (c) providing guidance and advice to local professionalstaff with the objective of helping develop a local expertise that could overtime become thefoundation of a specialized private service for export market development and export logisticsmanagement; (d) promoting the establishment of professional organizations, where warranted;(e) preparing the training programs and organizing training sessions; and (f) provide the requiredtraining to transfer their knowledge, know-how and responsibilities to the local professionalstaff. In this connection, the technical assistance will be accountable and its performance will beevaluated on, among other things, the extent to which such transfer actually takes place. Ad hoctechnical assistant assignments in export logistics and air freight advisory will be also secured.The above technical assistance contract will be financed for a period of two years which maypossibly be extended for a duration not to exceed twelve months upon satisfactory performance.

Appointment of project management team with key personnel to be satisfactory to IDAat all times during project implementation would be a condition of Credit effectiveness. Toensure that the provisions of the Project Implementation Manual are observed by the projectmanagement, the draft document was discussed at negotiations and found satisfactory. Theadoption by the Government of a Project Implementation Manual acceptable to IDA will be acondition of Credit effectiveness.

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Annex 3


Estimated Project Costs'

Proiect Component Local Foreign Total- -------------------- US $ million--------------------

Export Promotion and Diversification Activities 1.2 2.9 4.2Support to Producers'/Exporters' Associations 1.5 0.9 2.4Upgrading of Export Facilities 0.6 0.7 1.3Project Management 1.3 0.3 1.5

Total 4.6 4.9 9.4

Total Baseline CostPhysical Contingencies 0.1 0.1 0.2Price Contingencies 0.3 0.5 0.8

Total Proiect Cost 5.0 5.4 10.4

Numbers may not add up due rounding

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Annex 4


Cost Benefit Analysis Summary(in US$ million)

Present Value of Flows Fiscal ImpactEconomic FinancialAnalysis Analysis' Taxes Subsidies

Benefits 12.1 11.7 1.7Costs 6.3 7.3 1.4Net Benefits 5.8 4.4IRR (10 year) 18% 15%IRR (15 year) 25% 23%

Summary of Benefits and Costs:

The economic analyses were conducted in constant 1997 prices. Economic costs were computed ascurrent financial costs minus taxes, duties and price contingencies. The total economic cost used for theanalyses is US$ 8.5 million, while the financial cost is US$ 9.6 million; the corresponding presentvalues are US$6.3 million and US$7.3 million, respectively. The present value of economic benefits areUS$12.1 million and that of the financial benefits is estimated at US$11.7 million.

Main Assumptions:

The underlying assumptions for the project economic analyses are as follows:

That demand for high valued agricultural products (fruits, nuts and vegetables, etc.) remains strongespecially in targeted markets and for the identified products;

* That the targeted markets (or market niche) remain opened for export;

* That international freight rates and handling charges do not increase excessively to make exportsunprofitable;

* That producer prices change in relation to international prices to reflect the true market incentives;

* That the agricultural production and trade policy environment remains favorable and the overallmacroeconomic environment remains stable;

* That producers and exporters associations play their role in assisting members;

* That constraints such as irrigation, land tenure, export financing will be alleviated or at least notworsen.

'If the difference between the present value of financial and economic flows is large and cannot be explained by taxesand subsidies, a brief explanation of the difference is warranted, e.g., "The value of financial benefits is less than that ofeconomic benefits because of controls on electricity tariffs."

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Sensitivity analysis / Switching values of critical items:

Various factors that are likely to change were analyzed and are discussed in this section. Increased costof air freight would increase transfer costs, reduce margins and make some commodities unprofitable toexport. Increased use of sea freight for some crops such as mango, aubergine and melon which is apossibility, would reduce their transfer costs, increase the margin and make them more profitable toexport.

Increased costs of production or low domestic supply, would lead to increased producer price followedby lower margins, making export unprofitable. Reductions in international prices and increase inhandling charges could make exports unprofitable. An analysis of the variables used in the economicanalyses and effect of their changes on the rates of return led to the identification of the critical valuesshown in table below.

Switching (Critical) Values(in CFAF)

Variable Switching Base PercentageValue Value Change

ProducerPrices/kg

Green Beans 400 250 60Cherry Tomato 800 100 700

Exchange Rate (FCFAIUS$) 850 590 44Air Freight 702 520 35

International Prices/ kgGreen Beans 1020 1500 -32Cherry Tomato 1500 2250 -33

A simulation was conducted using the Crystal Ball software, around the critical values by building inprobabilities and possible distributions. A simulation of 20% change in producer prices, 10% change inair freight, international prices and exchange rate, led to a favorable result in terms of project viability.There was a 92% chance that the ERR would at least equal the opportunity cost of capital, i.e. above12%. It is therefore concluded that the overall performance of the project is robust.

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Annex 5


Financial Summary(in US$ million)

Years Ending

Implementation Period Operational Period1998 1999 2000 2001 2002 2033 2004 2005

Project CostsInvestment Costs 1.9 2.9 2.4 2.0Recurrent Costs 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3

Total 2.2 3.2 2.7 2.3 0.3 0.3 0.3 0.3

Financing Sources (% of total proiectcosts)

IDA 78 78 77 75Government 13 16 15 12Beneficiaries 9 7 10 13 100 100 100 100

Total 100 100 100 100 I

Detailed project financial analyses were conducted and are summarized in para E2 above. They confirm the financialsoundness of the project and its fiscal sustainability. Under the project, the Government's contribution will be limited tocovering taxes and duties estimated at US$1.4 million, while producers/exporters will share in the costs of servicesrequested by them and contribute gradually to covering maintenance and operating costs. The fiscal impact is furtherexpected to be positive in view of expected taxes payable to the Government, conservatively estimated at US$1.7million.

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Page I of 6Annex 6


Procurement and Disbursement Arrangements

Procurement

1. All goods, works and services financed under the IDA Credit would be procured inaccordance with IDA guidelines of goods, works and services [(Guidelines: Procurement underIBRD Loans and IDA Credits, January 1995 as revised in January and August 1996 (Goods andWorks Guidelines),and Guidelines: Selection and Employment of Consultants by World BankBorrowers, January 1997 (Consultants Guidelines)]. Contracts to supply goods and equipment,vehicles and consulting services would be processed under a contractual arrangement with thePrivate Sector Foundation (PSF), which has adequate experience and control procedures in placefor procurement and is presently supported under the Private Sector Capacity Building Project(Credit 2759-SE), and awarded by the project management. Contract for civil works would beprocessed under a contractual arrangement with the Agency for the Management and Executionof Public Works (AGETIP), which has extensive experience in civil works contracts using Bankprocedures.

Contracts for works

2. There is only one major civil works contract--for upgrading the cargo warehousecapacity at the Dakar airport--to be carried out under the project, which is estimated to costUS$720,000 of which IDA financing is expected to be about US$540,000. This contract wouldbe procured by International Competitive Bidding (ICB), acceptable for the Bank. For all othercontracts, involving minor works, each is expected to cost less than US$50,000, with anaggregate amount of US$100,000. These contracts would be awarded on the basis of at leastthree quotations from eligible contractors.

Contracts for vehicles. goods and equipment

3. Contracts for vehicles, goods and equipment would be grouped by lots. Contracts forlots expected to exceed US$200,000 would be procured by International Competitive Bidding(ICB) procedures, acceptable to the Bank. Use of ICB is only expected for the refrigerationequipment to be used in the extension of the storage facilities at the Dakar airport, at anestimated cost of US$540,000. There would be no other procurement by InternationalCompetitive Bidding (ICB) procedures as the lots for all other vehicles and equipment are notexpected to exceed US$200,000 per contract and are therefore not likely to attract internationalbidders. National Competitive Bidding (NCB), procedures acceptable to IDA, would be used forcontracts equivalent to or more than US$50,000 and less than US$200,000. The total value ofgoods to be procured under NCB should not exceed US$1,300,000 for the life of the project.Contracts under US$50,000 for the procurement of items that cannot be grouped into bulkprocurement and for readily available off-the-shelf goods would be procured by comparing pricequotations obtained from at least three local suppliers. Procurement by this method should notexceed the total sum of US$350,000 for the life of the project. The implementation unit wouldbe required to prepare a computer-based system to monitor that the aggregate amounts agreedupon would not be exceeded during project implementation. IDA's prior review procedures forcivil works and goods would apply to all purchases for which the contract value is equivalent or

- 22 - Page 2 of 6

in excess of US$50,000.

Contracts for Technical Assistance and Traininsz

4.1 Oualitv- and Cost-Based Selection (OCBS)

Except as otherwise stated in paragraph 4.2 below all consultants' contracts would beprocured using QCBS. Consultants' services, as listed in paragraph 3.13 to 3.18 of theGuidelines will also be procured using QCBS.

4.2 Other Procedures for the Selection of Consultants

a) Selection Based on Consultants' Qualifications: Services for contracts forassignments for which the need for preparing and evaluating competitive proposalsis not justified and estimated to cost less than US$20,000 equivalent per contract forindividual contracts and US$50,000 equivalent per contract for consulting firms,may be procured under contracts awarded on the basis of appropriate qualificationsand references in accordance with paragraphs 3.1 and 3.7 of the ConsultantsGuidelines. Services that may fall in this category would be related to research,product quality and development, product dissemination, financial advice,establishment of national norms, and proper operational procedures.

b) Single Source Selection. Services estimated to cost less than US$20,000 equivalentper contract for individual consultants and US$50,000 equivalent per contract forconsulting firms, may, with IDA's prior agreement, be procured in accordance withthe provisions of paragraphs 3.8 through 3.1 1 of the Consultants Guidelines.

c) Individual Consultants. Services for consultants and other contractual staffemployed by project management would be procured under contracts awarded toindividual consultants in accordance with the provisions of paragraphs 5.1 through5.3 of the Consultants Guidelines.

4.3 Review by the Bank of the Selection of Consultants:

a) Scheduling the Selection Process. The selection process for the recruitment ofconsultants, including the cost estimate, the contract packaging, applicableprocedures, the short list, selection criteria, the proposed implementation programand the disbursement schedule shall be furnished to IDA for its review and priorapproval, in accordance with paragraph 1 of Appendix I of the ConsultantsGuidelines.

- 23 - Page 3 of 6

b) Prior Review. (i) All contracts for the employment of consulting firms estimated tocost the equivalent of US$100,000 or more, the procedures set forth in paragraphs 1and 2 [other than the 3rd subparagraph of para 2 (a)] and 5 of Appendix I of theConsultants Guidelines shall apply. (ii) All contracts for the employment ofconsulting firms estimated to cost the equivalent of US$50,000 or more per contract,but less than US$100,000, the procedures set forth in paragraphs 1, 2 [other than the2nd subparagraph of para. 2 (a)] and 5 of Appendix I of the Consultants Guidelinesshall apply. (iii) All contracts for the employment of individual consultantsestimated to cost the equivalent of US$20,000 or more, the qualifications, experienceand terms of reference (TORs) of the consultants shall be furnished to the Bank forits prior review and approval.

4.4 Post Review. All contracts not governed by the paragraph 4.3 (b) above, the proceduresset forth in paragraph 4 of Appendix 1 of the Consultants Guidelines shall apply.

Disbursements

Use of statements of expenses (SOEs):

1. Disbursements will be fully documented except for expenditures for operating costs,training and contracts for goods and consulting firms costing less than US$100,000 equivalent.Statements of Expenditures (SOEs) will also be used for contracts for individual consultantscosting less than US$50,000 equivalent. The training program will be included in the AnnualWork Program and approved annually. All expenditures above 20 percent of the initial depositto the Special Account would be eligible for direct payment by IDA. All supporting documentswill be retained by the Project Management and made readily available for review by periodicIDA supervision missions and external auditors.

Special account:

2. To ensure that funds for project implementation are available as and whenneeded, a Special Account in local currency would be established at a commercial bankacceptable to IDA, with an initial deposit equivalent to US$600,000, to cover about three monthsof expenditures, to be withdrawn from the Credit Account after Credit effectiveness. TheSpecial Account would be replenished monthly or more often when the total disbursed amountsto one third of the initial deposit, whichever is sooner.

3. The Credit funds are expected to be disbursed faster than the standarddisbursement profile for agricultural projects in Senegal, in view of the shorter implementationperiod for this operation which, in essence, is a private sector support operation includinginstitution building and time-bound technical assistance. Disbursements are expected to becompleted by December 31, 2002.

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Annex 6, Table A: Project Costs by Procurement Arrangements

(in US$'000 equivalent)

Expenditure Category Procurement Method Total Cost(including

contingencies)ICB NCB Other NBF

1. Works 720 99 819(540) (74) (614)

2. Goods 487 1,265 350 2,103(365) (917) (300) (1,582)

3. Services 6,563 1/ 6,521(4,976) (4,900)

4. Miscellaneous 942 2/ 942(868) (868)

Total 1,207 1,265 7,955 0 10,385(905) (917) (6,219) (0) (7,964)

Note: N.B.F. Not Bank-financed (includes elements procured under parallel cofinancingprocedures, consultancies under trust funds, any reserved procurement, and any othermiscellaneous items).

Figures in parenthesis are the amounts to be financed by the IDA credit.

1: All consulting services would be obtained in accordance with the Bank's procurement guidelines (seealso paras. 4.1-4.4 of this annex). Most consultant services would be obtained using short lists fromdatabases already compiled by other IDA funded projects in the country.

2: Miscellaneous expenditures are those related to the project's incremental operations costs. Theyinclude rent, utilities, office supplies, vehicle and equipment operating and maintenance costs, andtravel allowances of project staff. They would be mostly obtained through local shoppingprocedures, given the small amounts of the individual purchases and the difficulty in combining themin sufficiently large lots.

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Annex 6, Table B: Thresholds for Procurement Methods and Prior Review

Expenditure Contract Value Procurement Contracts Subject toCategory (Threshold) Method Prior Review

I. Works Equal or more than ICB Equa! or more thanUS$50,000 US$50,000Less than US$50,000 Comparison of at least

three quotations

2. Goods Equal or more than ICB Equal or more thanUS$200,000 US$50,000Equal or more than NCBUS$50,000

Less than US$50,000 National Shopping

3. Services Equal or more thanUS$20,000 forindividuals and equal ormore than UtS$50iooo forfirms.

4. Miscellaneous

Total value of contracts subject to prior review: $7.8m, or 75% of total costs

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Annex 6, Table C: Allocation of IDA Credit Proceeds

AmountExpenditure Category in US$million Financing Percentage

1. Works 0.6 100% of foreign and80% of localexpenditures

2. Vehicles, Equipment and Materials 1.1 100% of foreign and80% of localexpenditures

3. Consultaht Services and Training 3.0 100%

4. Ag. Export Promotion Services 1.2 100%

5. Operating Costs 0.9 80% 'till 6/30/2001;40% thereafter

6. PPF 0.4

7. Unallocated 0.8

Total 8.0

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Annex 7


Project Processing Budget and Schedule

A. Project Budget (US$000) Planned Actual(At final PCD stage)

150

B. Project Schedule Planned Actual(At final PCD stage)

Time taken to prepare the project (months) 6 5First Bank mission (identification) 06/03/1997 06/03/1997Appraisal mission departure 09/29/1997 9/29./1997Negotiations 11/15/1997 10/15/1997Planned Date of Effectiveness 02/01/1998

Prepared by: Ministry of Agriculture

Preparation assistance: [PPF, trust funds, cofinanciers, etc.]

Bank staff who worked on the project included:

Mr. Mahmood Ayub (Country Director, CD 14)Mr. Jean-Paul Chausse (Technical Manager, AFTA3)Mr. Ousmane Sissoko (Sr. Financial Analyst, Task Team Leader)Mr. Leopold Sarr (Ag. Services Specialist)Mr. Abdoulaye Seck (Economist)Ms. Lynn Engstrand (Private Sector Development Specialist)Mr. Dirk Prevoo (Operations Analyst)Ms. Andrea Vasquez (Task Assistant)Ms. Asha Ayoung (Procurement Specialist)Mr. Wolfgang Chadab (Disbursement Officer)Mr. Kishor Uprety (Lawyer)

- 28 -

Annex 8


Documents in the Project File*

A. Project Implementation Plan

B. Bank Staff AssessmentsDetailed Cost TablesEstimated Disbursement ScheduleDetailed Economic Analysis

*Including electronic files.

Generated: 11/07/97

Annex 9Status of Bank Group Operations in Senegal

IBRD Loans and IDA Credits in the Operations Portfolio(As of September 30, 1997

Difference Between

expected

Original Amount in US$ Millions and actualLoan or Fiscal disbursements a/

Project ID Credit Year Borrower Purpose

No. IBRD IDA Cancellations Undisbursed Orig Frm Rev'd

Number of Closed Loans/credits: 90

Active Loans

SM-PE-2369 IDA29850 1998 REPUBLIC OF SENEGAL INTEGR.HEALTH S.DEV. 0.00 50.00 0.00 49.13 0.00 0.00

SN-PE-41567 IDA29510 1997 REPUBLIC OF SENEGAL ENDEMIC DISEASES 0.00 14.90 0.00 14.78 14.92 0.00

SN-PE-44383 IDAN0240 1997 REPUBLIC OF SENEGAL URBAN TRANS REP TA 0.00 6.60 0.00 6.71 0.00 0.00

SN-PE-46648 IDA29720 1997 REPUBLIC OF SENEGAL REGIONAL POWER 0.00 10.50 0.00 10.54 0.00 0.00SN-PE-46768 IDA29630 1997 REPUBLIC OF SENEGAL SUST.PART.ENGY.MGMT. 0.00 5.20 0.00 5.20 0.00 0.00

SN-PE-2373 IDA28720 1996 REPUBLIC OF SENEGAL HIGHER EDUC I 0.00 26.50 0.00 22.94 24.15 0.00

SN-PE-35621 IDA28730 1996 REPUBLIC OF SENEGAL PILOT FEMALE LITERAC 0.00 12.60 0.00 9.94 10.58 0.00SN-PE-2346 lDA27580 1995 REPUBLIC OF SENEGAL WATER SECTOR 0.00 100.00 0.00 84.69 97.90 97.89SN-PE-2376 IDA27590 1995 REPUBLIC OF SENEGAL PRIV.SCTR.CAP.BLDG 0.00 12.50 0.00 8.02 9.44 9.44

SN-PE-35615 IDA27230 1995 REPUBLIC OF SENEGAL COMM NUTRITION 0.00 18.20 0.00 13.08 15.17 15.20SN-PE-2357 IDA24730 1993 REPUBLIC OF SENEGAL HUMAN RES DEV'T II 0.00 40.00 0.00 16.12 14.69 0.00

SN-PE-2342 IDA22660 1991 REPUBLIC OF SENEGAL TRANSPORT SEC. SECAL 0.00 65.00 0.00 15.02 9.30 9.10

SN-PE-2331 IDA21080 1990 REPUBLIC OF SENEGAL AG. SERVICES 0.00 17.10 0.00 1.82 .63 .62

SN-PE-2327 IDA19920 1989 REPUBLIC OF SENEGAL SMALL RURAL OPS. II 0.00 16.10 0.00 5.79 5.64 0.00

SN-PE-2339 IDA18680 1988 REPUBLIC OF SENEGAL INDUSTRY SECTOR 0.00 33.00 0.00 5.66 4.04 3.94

Total 0.00 428.20 0.00 269.64 206.46 136.19

Active Loans Closed Loans Total

Total Disbursed (IBRD and IDA): 149.40 1,187.68 1,337.08of which has been repaid: 0.00 168.10 168.10

Total now held by IBRD and IDA: 428.20 976.78 1,404.98Amount sold : 0.00 5.46 5.46

Of which repaid : 0.00 5.46 5.46Total Undisbursed : 269.64 6.37 276.01

a. Intended disbursements to date minus actual disbursements to date as projected at appraisal.b. Rating of 1-4: see OD 13.05. Annex D2. Preparation of Implementation Summary (Form 590). Following the FY94 Annual Review of Portfolio performance (ARPP), a

letter based system will be used (HS . highly Satisfactory, S - satisfactory, U = unsatisfactory, HU . highly unsatisfactory): see proposed Improvements in

Project and Portfolio Performance Rating Methodology (SecM94-901), August 23, 1994.

Note:Disbursement data is updated at the end of the first week of the month. OQ

0

Generated by the Operations Information System (QIS)

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Page 2 of 2

SenegalSTATEMENT OF IFC's

Committed and Disbursed PortfolioAs of 30-Sep-97

(In US Dollar Millions)

Committed DisbursedIFC IFC

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic1980 BHS 0.00 .46 0.00 0.00 0.00 .46 0.00 0.001981/88 ICS 3.00 0.00 0.00 0.00 3.00 0.00 0.00 0.001994/96 SOGECA 0.00 .33 0.00 0.00 0.00 .28 0.00 0.001996/97 AEF SERT .63 .43 0.00 0.00 .63 .39 0.00 0.001997 SEF NBA SA 1.86 0.00 0.00 0.00 .93 0.00 0.00 0.00

Total Portfolio: 5.49 1.22 0.00 0.00 4.56 1.13 0.00 0.00

Approvals Pending Commitment

Loan Eauity Ouasi Partic

1997 GTI DAKAR 13.09 1.50 1.51 0.00

Total Pending Commitnent: 13.09 1.50 1.51 0.00

Generated by the Oprations Information System (OIS) on 1 1/07/97

-31 -

Annex 10 Page 1 of 2Senegal: Agricultural Export Promotion Projec

Senegal at a glance-... ~~~~~Sub-'

POVERTY and SOCIAL ha8l LwlSenegall- Afdsa' Menai.mmGaat~

Population mid-1996 (milons) . .7 60 3.22GNP per capita 1096 (USS) 56L40b0

GNP199604150asum ~ ~ ~ ~4.9 294 1.601

Average annual growth. 19909

Population (%M. 2.7 1.7,Labor fbrce()27 . . GPGi

* ~~~~~~~~~~per --Mosm recent estlnate btssyearavblaatc 1980) ampleaIlIU

Poverty. headoount ktdc Uox ppt5nUrban population (U of totalpopula#an 42 31. 20.,LUfeexweCtm at bdehyw)5 52- 63Infant morWtalt (per' 1.6000AeWfs2 9 69 Chid msJnutriton (% ofwwts5 20A==es to safe water (U ofppfao).. 4 53Illiteracy (Ucp~so. g 5. 7 43 '34Gross primary enrollment( ooAeap fao 60 72 10

Male 67 7 li2 LwhomumFemale .8365 09 _ _ _ _ __ _ _ _ _ __ _ _ _ _ _

KEY ECONOMIC RATIOS, ad LONG-TERKTRENDS,

1976' 1985 1905 190

GOP (billons US$) .9 26 4.9 5.1Gross domesfti ivesamlmVGDP 17. 10. . 15. 16.3 OseU DExports of goods and swvbcesGDP. 368 :2. 31.6 30.6-Gross domestic savin)gs/GOP 12"5 :-0.7, 104 .11.4

Gross national savinasrGOP. 60 -5. 9. 10.0

Current account baiance,JGO 4.4: :.:16.6 -6.1 -6.8Interet payments/GP I. 2.0. 1.2 . SavitiTota debt/GOP IS 90.4.- 79.0Tota debt service/exports 5. 20.7 17.6Present value of debt1GDP . . 51.6Present Valu odeeprs. .. 148.9 nsmm

:197545 190646. -1906 190116 199746(average annual gowth)GDP 2.0 1.9 46 5.6 .9 -

GNP per capita -1.2 .-03': -.S.6 1Exports of goods and servIces: 2.2 2.9: 8.1 4 4.1

STRUCTURE of the ECONOMY ______________

(% of GDP) 17 9 95 19Agticultume 26.9 16. 21.0 2`1.3 32-Industry 20.3 15.6 19.5 19.7

Manufacturng 16.4 11.3 12.9 12.9 .services 52.8 67.9 59.6 69.0.4

Private consumption 72.2 83.9 78.4 76.2 .*IGeneral government consumptio 15.2 16.8 11.2 10.4Imports of goods and services 41.6 40.9 3.8. 351.5

,197545 1916-96 195 1996(average on-el growth) Gi'wS l5b5fto5pIW lePUw4%)

Agricuftur -1.4 1.5 0.9 7.5 a0-Industry 2.1 3.0 9.7 7.0

Manufacturing 2.5 2.4 9.6 5. iservices 3.1 1.7 4.7 4.5

Private consumption 3.0 0.9 10.1 6.2 eGeneral govemnment consumption 5.3 -2.9 1.6 1.3 I Gross domestic ienvstmnt 4.48 5.0 29.2 114.5. -.eImports of goods end servicess 3.3 -0.4 6.6 5.6Gros nationa product 1.6 2.2 4.6 5.6 I" n

Note: 1996 data ame prellmlnauy esttrmates.*The diamonds show four key Indficator in the counbY (in bold) compwted with its income-group average. I data we mfiessig. ledummnil W

be iuncoplete.

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Senegal

PRICES and GOVERNMENT FINANCE1975 1985 1996 1996

Domestic prces nfla on)(% changJ) 40Consumer prces 31.7 13.0 8.1 2.8Impliit GOP deflator 11.5 9.1 7.6 2.8 20

Government finance f

(% of GDP) 91 s2 93 s9 es soCurrent revenue 18.9 18.2 16.9 15.6 -20Current budget balance 2.6 -0.5 3.8 3.8 - GDP w CrtOveraN surplus/defkit -0.3 -3.5 -1.4 -1.4

TRADE1975 19685 1995 1995

(milons USS) Export and Import lvls (miil US$)Total exports (fob) 503 515 969 98 e 500

Groundnut products 209 53 102 80Phosphates .. 58 33 38Manufactures 13 8 40 33 o000

Total imports (cit) 612 904 1.383 1,440

Food 190 197 394 398 10 v rI IFueland enrgy 46 173 138 176Capital goods '129 83 180 '188 6____________

Export price index (1987=100) .. 74 90 91 so 91 s2 93 94 9 9s

Importprice index (1987=100) 82 125 131 o EDimponsTerms of trade (1987=100) .. 91 72 69

BALANCE of PAYMENTS1975 1985 1995 1995

(rnimons USS) Current account balance to GDP ratio (% |Exports of goods and services 688 851 1.544 1.588 0 1Imports of goods and services 782 1,165 1,797 1,852 901 9S 92 193 94 5 9 |Resource balance -94 -314 -253 -264

Net income -76 -127 -155 -130 5 4Netcurrenttransfers -10 8 110 58

Current account balance, LJLJbefore official capital transfers -179 -434 -298 -337 1 T

Financing items (net) 175 420 380 390 L|Changes in net reserves 5 14 -82 -64 |-1S

Meno,:Reserves induding gold (mill.L USS) 31 15 283 -291Conversion rate (1oca11USS) 214.3 449.3 499.2 511.6

EXTERNAL DEBT and RESOURCE FLOWS1975 19U5 1995 1996

(migions USs) Composition of total debt, 1995 (milL US$)Total debt outstanding and disbursed 349 2,563 3,845 A A

IBRD 10 89 35 23 G 231IDA 43 232 1,126 1,194 128

BTotal debt service 42 190 296 | 1128

IBRD 1 10 16 12IDA 0 4 14 15

Composition of net resource flws EOfical grants 44 96 371 1246Official creditors 39 130 48Private creditors 19 -5 -25 \/ CForeign direct investment 23 -16 1 347Portfolio equity 0 0 0 | 7

700WVorld Bank program

Commitments 31 25 216 42 A-IBRD E-BilateralDisbursements 19 33 107 110 B- IDA D- Othr mullatl F - PrFivatePrindpal repayments 0 6 18 17 C-IMF G-Short-termNet fows. 19 27 89 93 __1

Interest payments 1 8 12 11Nettransfers 18 19 77 82

Development Economics 8U28U97

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Annex 11 Page I of 9


Summary of the Environmental Analysis

L. EXECUTIVE SUMMARY

1.1 Preamble

Senegal has a semi-arid climate -with a significant temperature variations throughout the country. Lying in thetransition zone between the Sudano-Guinean region and the Sahel, the country's climate is characterized bywide rainfall va?l2rion with limited amount of surface water and biomass resources but considerable amountof ground water. With its fragile narural resource base, an increasing population and poor farming practices,resource degradation is accelerating. The population is relatively dense, and with a demographic growth rateof 2.7 percent per annum and 61% of rural population, the demand for land and renewable natural resource istakling a great toll on the country's narural resource base resulting in the potential degradation of the physicalenvironment. The country's agricultural production has grown at a rate of not more than 2.7 percent perannum with an extension of areas under cultivation rather than through intensification of productivity.

This prevailing situation has subjected Senegal to a potential ecological and socio-economic crisis in the pastrvo decades which has led to a severe land degradation and massive migration of its rural population to thecities and uroan centers, and even to -uhe neighboring humid West African countries.

To reverse this situation and help arrest the degradation of this fragile natural resource base, the Governrnentof Senegal with its donors partners, pa-ticularly the World Bank-, have initiated the country's firstenvironmental strategic framework, trie National Environmental Action Plan (NEAP), in order to define thestrategies and provide the necessary legislative framework and regulatory mechanism required to protect,control, enforce and monitor the use of the country's poor natural resources.

Senegal is an agricultural country where the natural resource degradation is being accelerated by the pressurefrom the rain-fed and irrigated farming in the dry and semi-humid areas, combined with itinerant pastoralpractices from the degraded region in the northern part of the country, and by the incessant migration.

The agricultural activities have led to considerable problems, such as: soil degradation; ground waterpollution: over-exploitation of the unconfined, water table aquifers; flora-fauna reduction; and the degradationof the populations' health conditions. These damages are likely to be more important around lakes and damswhere diseases such as malaria and schistomiasis are prevalent.

The Pilot Agricultural Export Promotion Project (PAEPP) will engender an intensive agricultural activitywhich will have some repercussions on the fragile ecosystem of the country. The implementation of theproject may lead to a surface water withdrawals, particularly from the lakes of the Diama dam. Also, theground water may be impacted, notably, through boreholes in shallow aquifers, as well as, the destruction ofthe vegetation cover in the Senegal river valley, the digging of irrigation drainage canals, the use ofagrochemicals such as fertilizers, pesticides, and herbicides, and the concentration of population which couldput damageable pressures on the natural resource base, including the flora and fauna.

The Project will also increase the work-time on the overall work line, such as from farming to packaging,transportation and storage. Even if the agricultural activity is advantageous economically, it cannot be donewithout negative impact on the physical environment and the social fabric.

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The immediate consequences of the project's impact on the environment are two folds:

(i) at the physical level, there will be a significant "change" due to the loss of vegetation cover alreadyin an advanced degradation stage in the Niayes region and the loss of forage in the Senegal rivervalley zone. Also, the population pressure will accelerate the degradation of the soil and watercontamination, and cause an uncontrolled felling of trees for use as fuelwood; and

(ii) the disruption of the traditional agricultural practices of autochtones and the destruction of fauna'shabitat. The damages of the use of pesticides particularly on farmers and riparian population can alsobe added.

The natural resource base of Niayes zone and, particularly Dakar's region and its vicinity, is already sufferingdue to the intensive exploitation of soil, water aiid vegetation cover through over-population. The capacity tocontain this over-ecploitation of the natural resources of the region has been considerably reduced and the riskof salinization and water depletion, as well as, soil erosion remain extremely high.

The zones around Diama are presently attracting a rapid movement of people which would impact thevegetation cover as well as the fauna and their habitats.

Conversely, the Casamance zone and the south in general remain intact compared to the above regions. Theproduction potential of this region is one of the highest in the country. The ecosystem is renewed veryquickly due to its relatively good soils, the sufficient rains and undisturbed vegetation.

To increase the sustainability of the PAEPP and avoid the degradation of the physical and social environment,in particular the soils, water resources and vegetation of this fragile ecological system, it is envisaged to set upon a regional basis at the early stages of the site preparation, preventive and mitigative measures accordingly.As a result, an environmental assessment (EA) has been conducted as part of the PAEPP. The EA compliesdirectly with the World Bank 's directives, in particular OD 4.01 and its Annex C: Environmental MitigationPlan.

1.2 Project Description

The main objectives of the project are to: assist the private farmers involved in both traditional and non-traditional crop production and export; support and motivate new and innovative producers in thedevelopment of high value-added crops which can be produced in Senegal; and strengthen farmersorganizations by providing technical advice and training to farmers in crop production, export andmanagement. Also, the project will contribute to improve storage of perishables by upgrading facilities at theairports of Dakar and St. Louis and encourage bulk shipment

The project comprises four main components:

1.2.1 Promotion and Diversification Activities

These activities will consist of: (i) market research, customer identification, meeting qualityrequirements, trial shipments and obtaining pre-export finance; (ii) product development andprocessing, and quality control via targeted adaptive research; and (iii) establishment of business

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partnerships between local exporters and foreign businesses and assistance in identifying regional andoverseas niches.The project will provide direct in-house assistance from its staff including a specialist in marketresearch and product development, who is also expected to draw upon his international networkcorporate connections for market information identifying and securing outlets and establishingcommercial partnerships. In addition, the project will provide for contracting ad hoc services withlocal or international firrns and institutes in those areas requiring more specialized inputs such asresearch for new product development including agricultural product processing, product qualitycertification, international ISO certifications for product processing, the establishment of nationalstandards and norms, etc. Both traditional and non-traditional horticultural products, for which thepotential for increasing Senegal's economic share are promising, will be encouraged and benefit fromproject support for which there is a clamor from producers and exporters. The project will alsoencourage and contribute to business canvassing activities for all promising products as well asexporters' participation in selected specialized international fairs.

1.2.2 Support to Producers/Exporters Associations

Under this component, the project will support producers/exporters by: (i) strengthening existingprivate professional organizations: producer groups, export associations, cooperatives and inter-professional groups, which could become a major vehicle for non-traditional export marketdevelopment and for lobbying activities, etc.; (ii) encouraging the creation of farmer associations; and(iii) setting up a central referral/data information service, as well as, providing management and legaladvice required for the formal establishment of nascent associations and for developing their workprograms together with training in simplified cost accounting and management principles. In thisrespect, project support will benefit existing and future producers/exporters' associations and theirindividual members. Because product quality and presentation constitute key requirements for tappingexternal markets, the project would facilitate product grouping for packaging and quality controls inselected packaging centers that may be established.

1.2.3 Upgrading of Export Facilities

To improve product quality the project will upgrade and /or rehabilitate existing infrastructure such ascold storage, storage capacity, outside sheds, etc. at the airport for preserving perishabte.products intransit. Such rehabilitation will involve small but important work at the airport of Dakar, and possiblythat of St. Louis if volumes so warrant. Preliminary studies and the actual execution of work will becarried out under this component. It is expected that the component will be co-financed under parallelfinancing by other donors involved in agricultural export promotion activities in the country.

1.2.4 Project Management and Implementation

The project will be implemented over a four-year period from 1998 through 2001, under the generalsupervision and guidance of the Ministry of Agriculture. The project will provide support for projectmanagement which will be assumed by qualified private professionals experienced in agriculturalexport or related activities and farmer organization. The support for project management will coverinvestment costs and operating costs on a decreasing basis.

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The project management team will have full autonomy in decision-making and carrying out day-to-dayproject activities, and be responsible for achieving the agreed upon monitorable results. All key project staffwill be selected on the basis of an open competitive process and with fixed term renewable contracts.

1.3 Initial Conditions

Senegal has a total land area of 196,720 km2. It is located in West Africa, bordering the Atlantic Oceanbetween Guinea -Bissau and Mauritania. The Atlantic Ocean stretches for over 500 kilometers along thewestern portion of the country. Senegal is bounded by four countries, Guinea-Bissau and Guinea in theSouth, Mauritania in the North, and Mali in the East. The Gambia is almost an enclave of Senegal, in theCenter. The terrain is generally low, rolling plains rising to foothills in southeast. Three rivers flow acrossthe country in an east-west direction: Senegal river (170km) in the north; the Gambia river (750km) and theCasamance river in the south.Senegal has a dry tropical climate, hot and humi'd. It has a rainy season (June to October) with strongsoutheast winds;nc, a dry season (November to May) dominated by the hot, dry harmattan winds. Theenvironment is characterized by occurrences of soil erosion, desertification, overgrazing, overfishing and awildlife population threatened by poaching. The country has three types of vegetation; forest in the south,Savannah in the central part and steppe-like in the north.

In 1994, Senegal had a population of about 8.5 million, giving an average density of 36 people persquarekilometer. The annual population growth rate is currently 2.7 percent. The religion is predominantly Muslim(94 percent), with small populations of Christians (5%) and traditional religions (1%).

In general, women and children in Senegal suffer from inadequate access to education and other social services.For instance, in 1988 thepercentage of total population age 15 and over literate 28.6%; male literacy 38.8%and female literacy 19.4%. This is evidenced by key social indicators such as infant mortality and mortality ofchildren under 5 years. The average life expectancy in the country is 50 years.

1.4 Statutorv Framework.

The Pilot Agricultural Export Promotion Project is a direcf fit into the overall frameWorlof the agriculturalpolicy and the natural resources management policies which the Government of Senegal and the donorspartners have defined and embodied in the three major undertakings:

(a) The Agriculture Development Policy Letter;

(b) The National Environmental Action Plan (to be adopted in September 1997); and

(c) The Land Tenure Action Plan.

t Although Senegal does not have a legal requirement at this time for formal enviromnental assessment, the land0 tenure law has been revised in 1996. The revised version of the land tenure law is still in conflict withI customary law with respect to the stated fact that all land belong to the State. Although it includes provisions0 to decentralize land tenure rights to village communities, it is unclear whether the State can overrule the village

decisions. Increasingly, land adjudication is being decided on a more decentralized basis by the heads of theI

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family. Thus, there is a gradual emergence of the sense of private ownership. Hence, family groups haveactively attempted to establish their rights over portions of community land, often extending their overalldomain and encroaching on virgin, unexploited areas. The lack of land tenure security is a source of negativeimpact to the natural resource base, as well as, potential cultural conflict on the social resettlement fabric ofcommunities in the country.

1.5 Probable Impacts of the Project.

In general, the proposed Pilot Agricultural Export Promotion Project (PAEPP) would engender changes onthe ecological systems to be developed and these changes are bound to affect the fragile vegetation cover, soilfertility, the ground water as well as the surface water, and to a large extent, the social fabric of the riparianpopulation.

1.5.1 The Possible Positive Impacts of the Project

It is however clear from the assessment that the project's impact on the natural resource base as well as thesocial and economic fabric is globally positive. It will contribute to the maintenance of the social equilibrium ofthe regions population by globally maintaining the ecosystems equilibrium through the amelioration of thequality of life of the people. The creation of employment for the economically active would reduce the rural-xodus, improve the quality of life of both males and females, which would reinforce the production capacity ofhe exploiters, improve their dietary intakes and reduce malnutrition, in particular, infant malnutrition. This,vould eventually have significant positive impact at the national level, as well as, lead to potential financialjenefits and appreciation in the improvements of the living standards in the country. The gain from the exportsvill reinforce the economy and the positive impacts will benefit nationally the producers/exporters.

1.5.2 The Possible Negative Impacts of the Project.

i addition to the project negative impacts on the vegetation cover, the soil and the affected population,enerally water related diseases do exist due to the presence of lakes and drainage canals in the project are.otential negative impact from pollution exists in areas where water is withdrawn in large quantities from theireatic aquifers that may result in droughts. Water related diseases are important in areas where surfaceater are to be used, mainly in the Saint-Louis region. The incidence of malaria and bilharzia contamination ofaters by fertilizers and pesticides, and soil erosion can post major threats especially where there is poor wateranagement, over-use of fertilizers and pesticides and poor drainage

idertaking the crop production and related activities without a sound natural resources renewal measures:ll undoubtedly lead to an irreversible, disruptive ecosystem. The affected population could be exposed toveral risks, such as health and social crisis, and even in the short terrm to a decrease of life standards, if noegrated measures of protection and improvement are taken to prevent the immediate effects on the physicalvironment and the social fabric.

,otential cultural conflict that could arise between autochtones and allotchtones farmers may contribute tonegative impacts if the land tenure problems for which the autochtones are still sensitive are not totally

ved.

degradation of the land and the vegetation cover could lead to the reduction of productivity, increase the.flict between farmers and stock breeders, and accelerate the intensive over-use of fertilizers.

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At the export level, the search for quality products will lead, on one hand, to the increase in the quantitative useof agrochemicals for treatment during cropping, packaging, and storage, and on the other hand, to an increaseof road and air traffic. As a result, negative impacts will occur mostly in road traffic accidents, noise effectsdue to increase load of vehicles and airplanes transportation, gas emission effluents, and from contamination asa result of pesticide misuse and over-use.

Other possible negative impacts are soil degradation, salinization and water pollution, and transportation relatedactivities, especially, in the Niayes areas. Degradation of the vegetation is more of a threat in the St. Louisregion, and the downstream of Senegal River in the northern part of the project area, such as Walo.

At the institutional level, if the rules and preventive measures are not clearly defined to enable the public sectorplay its new role of service promoter (see the LPDA), the implementation of the project by the private sectorcan lead to a conflict between the two sectors which could hamper the overall success.

1.6 Mitigation Measures

The mitigation plan, which is in conformity with the World Bank's operational directives, attempts to put inplace the required mechanisms to control the effects of the project on the natural environrnent. It is envisagedto carry out an inventory of the natural resources prior to the implementation of the pilot agricultural exportpromotion project and to establish a monitoring and surveillance mechanism for the rehabilitation andmanagement of the perimeters, including the crop production and complimentary commercial activities atspecific sites.

The particular measures advocated within the framework of the project are the organization of the populationswhich will directly or indirectly be affected by the execution of the project. In order to ensure that therecommendations of the assessment are carried out, and subsequent mitigative measures are implemented, it isenvisaged that community based organizations are established, supported and trained in the management of allenvironmental issues generated by the project.

The mitigation measures include standard techniques to prevent or control: erosion and agrochemical pollution,increased social infrastructures, afforestation efforts combined with irrigation development, and a strongemphasis on information campaign for soil, water and biomass conservation.

As one of the most important concerns is the potential negative impacts of the water-related diseases on theriparian population, protection measures to minimize such risks is very important. The type of crops to becultivated will be another indicator to predict the possible trend of the diseases at the specific sites. Most of theproject areas have little preventive measures to mitigate health risks.

It is important that hygiene education and conmmunity based management and awareness component bedeveloped to ensure better sanitation and water supply services to the affected groups.

A ground water quality and soil salinization monitoring system should be set up before any further developmentof fragile sites particularly in the Niayes areas. A meaningful activities such as an up to date geographicalinformation system (GIS) should be developed for further survey to subsequently quantify the natural resourcesavailable in the areas by national research institutes (CSE, CDH/ISRA, etc) which will undertake a detaileddesk and field inventory study of each site.

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For the implementation of these measures, there is a clear need for a collaborative effort between the projectmanagement, local communities and non-governmental organizations ( NGOs), as well as, outside specialists tohelp enhance irrigators, traders and the entire populations knowledge on how to sustain the resource base in theproject zones.

Another measure of paramount importance is to devise a mechanism for the protection of the ground andsurface water resources from contamination either by agrochemicals or salinization. This measure requires awater resources expert or an institution with the expertise which can be able to intervene on behalf of therelevant Governnental structures to help develop guidelines for monitoring and follow-up of the waterresources.

It is proposed that the Government and the producers/exporters support the four components and finance astudy to complement the findings of this environmental assessment on health risks and the protection of thelocal environment.

The suggested institutions responsible of the implementation of the above activities are:

1. the Ministry of Water Resources which will coordinate and site the monitoring and the follow upfacilities;

2. the public works enterprises will build the infrastructures; and

3. specialized firms in water resources management to design the system and analyze the date, this firmcan also assist the administration and producers/exporters.

1.7 Environmental Monitoring

The environmental monitoring of the project must be coordinated at the central level by the Ministry ofEnvironment and Natural Resources Protection in collaboration with the Ministries of Agriculture and WaterResources.

At the local level, it is envisaged to involve the services of non-govermmental organizations as well as theservices of the irrigators and the population at large. If the PAEPP is to be sustainable, envionmentalmonitoring must be integral to the management process.

The environmental monitoring component will play an important role. These evaluations would impactpositively on the management process only if they identify major environmental and human problems, and verify:hat the recommendations of the EA have been carried out. In the medium and long term, these evaluations,vould reduce the unpredictable impacts of the project on the environment by enabling the management to)ropose new measures, revisiting earlier recommendations and designing new directions to minimizemanticipated negative impacts.

('he primary concern will be the identification, at the earliest stages of project implementation and on a:ontinuous basis, of any pollution of the water resources, degradation of the soils, increase in the risks ofliseases and the social tension between the various players of the project notably the farmers, investors,terders, the migrant workers and the traditional land owners.

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The monitoring of all the above activities should be carried out by recognized Non -GovernmentalOrganizations and private firms who have experience in community development projects and are familiar withthe overall natural resources and land use activities, particularly in the Niayes and Saint-Louis areas. Themonitoring project should be allocated a reasonable annual amount of funding for an effective implementation,according to the draft terms of reference and the prepared budget (annex 6).

1.8 Recommendations

The most important concern in agricultural activities in semi-arid country like Senegal is the negative impactsof water-related diseases, soil degradation and water contamination and its over exploitation. There is a weakinstitutional link between existing irrigation scheme and preventive public health. Therefore, it isrecommended that the-communities be involved in hygiene education and sanitation development in affectedvillages, and to train producers and their employees in a safe use of agrochemicals.

A natural resource inventory and water resource management component will be required in the earlyplanning stages of the crop production to ensure that appropriate preventive measures can be taken in a timelymanner.

It is recommended that the Government of Senegal support the reinforcement and the management of aground water, surface water and soil quality monitoring system and community instinttional developmentcomponent which will include the following: (i) local capacity building; (ii) social infrastructure component;and (iii) community based natural resource management.

The project should benefit from detailed studies of the anticipated sites prior to actual development bycarrying out detailed inventory of the natural resources, evaluate the immediate effects of the zones on theresources and recommend the possible solutions in the medium and long term for the preservation of theresources which are of paramount importance for the maintenance of the ecological equilibrium.

A ground water quality and soil salinization monitoring system should be set up before any furtherdevelopment of fragile sites, particularly in the Niayes areas. A meaningfuil activities such as aliup to dategeographical information system (GIS) should be developed for further survey to subsequently quantify thenatural resources available in the areas by national research institutes (CSE, CDH/ISRA, etc..) which willundertake a detailed desk and field inventory study of each site.

At the local level, it is recommended that the services of non-governmental organizations (NGOs) forsustainable and environmental monitoring as an integral part of the management process. This will alsopermit the reinforcement of the national capacity in the crop production and commercial activities. The localNGOs seem to be the best actors to be considered. They will, in collaboration with the project, carry out caseby case studies on the socioeconomic aspects.

Like wise, there should be a strong support for the establishment of community based organizations in theaffected villages to provide the leadership in sound natural resources management. These community basedgroups may provide innovative techniques for more effective local level management which may prove usefulror the private irrigation and agro-processing project. Taking the lead role may also encourage the applicationzf conservation measures to reduce any unexpected negative impact on the natural and social environment .

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It is recommended that a control system be established to monitor the water resources quality and behaviorand soil quality, especially in the areas which will utilize surface water and ground water. This will be aneffective way of eliminating the risk of salinization.

The NGOs experiments in community development will prove to be valuable for the reduction of the risk ofdiseases spreading in the areas of intervention where the public health risks are high. This type of anintervention would facilitate community development in such zones which are highly populated.

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World Bank Document€¦ · document of the world bank report no: 17146-se project appraisal...

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Transcript of World Bank Document€¦ · document of the world bank report no: 17146-se project appraisal...