Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 5915-UNI

STAFF APPRAISAL REPORT

NIGERIA

SECOND FORESTRY PROJECT

September 26, 1986

Western Africa Projects DepartmentAgri-culture Division B

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

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CURRENCY EQUIVALENTS

Currency Unit = Naira (N)

CalendarYear 1984 June 1985 SAR Estimates

US$ = Naira 0.77 NO.89 N1.00N = US$1.30 US$1.12 US$1.00

WEIGPTS AND MEASURES

Unless otherwise stated all weights and measures used in this report aremetric.

1 metric ton (m ton) = 2,205 pounds1 hectare (ha) = 2.47 acres1 kilometer (km) = 0.62 miles1 meter (m) = 3.28 feetI millimeter (=mm = 0.04 inches1 cubic meter (m ) = 35.30 cubic feet

ABBREVIATIONS AND ACRONYMS

ADB - African Development BankADP - Agricultural Development ProjectAP - Afforestation ProgramAPCU - Afforestation Program Coordinating UnitFARA - Federal Agricultural Recruitment AgencyFDF - Federal Department of ForestryFMAWRRD - Federal Ministry of Agriculture, Water Resources

and Rural DevelopmentFMG - Federal Military GoverpmentFMP - Forest Management ProgramFORMECU - Forestry Management, Evaluation and

Coordinating UnitFRIN - Forestry Research Institute of NigeriaMAI - Mean Annual IncrementSFD - State Forestry Department

FISCAL YEAR

January 1 - December 31

FOR OMCUL USE ONLY

NIGERIA

SECOND FORESTRY PROJECT

TABLE OF CONTENTS

Page No.

DOCUMENTS CONTAINED IN PROJECT FILE .............. (i)

LOAN AND PROJECT SUMMARY . . ............ (ii)

I. INTRODUCTION ....... . ....... ........... L

II. THE FORESTRY SECTOR .. 1...............

A. Background and Role in the Economy .1B. Sector Organization ...., 3C. The Issues ...., 3D. Sector Strategy ...., 6E. Bank Involvement ..... 6

III. THE PROJECT .. .............. 7

A. Origin and Bank Rationale . . ............, 7B. Objectives and Description . . . 8C. Organization, Implementation and Present

Status of Project ... 15D. ?roject Cost and Financing Plan ... 16E. Procurement ... ................ . 18F. Disbursement ... 19G. Auditing and Reporting . . ..................... 21H. Production and Markets . . ..................... 21I. Financial Impact and Cost Recovery . . 22J. Benefits and Risks . . .....................,,. 23

IV. AGREEMENTS REACHED AND RECOMMENDATION .25

This report is based on the findings of an appraisal mission consistingof Messrs. Sullivan, Hvidberg-Hansen, Anderson, Krishnan and Woods(Bank) and Nagle and Speechly (Consultants) who visited Nigeria in June1985. Ms. Baxevanis and Ms. Bagai provided the secretarial support andfigures were checked by Ms. DuCran.

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

Table of Contents (continued)

ANNEXES

1 Key Features of the Agricultural Sector

2-1 Supply and Demand Characteristics of the Forestry Sector2-2 Institution- in the Forestry Sector

3-1 Afforestation Program (AP)3-2 Forest Management Program (FMP)3-3 Technical Assistance Program3-4 Research Program3-5 Terms of Reference for the Preparation of a National

Afforestation Plan & a Household Energy Supply andDemand Study

3-6 Organization and Management3-7 Implementation Schedule3-8 Summary Costs3-9 Financing Plan3-10 Local Competitive Procurement Procedures3-11 Disbursement Schedule3-12 Special Account Operations3-13 Production Figures3-14 FMP Cash Flow3-15 AP Economic Analysis: Cost Benefit Calculation3-16 Industrial Plantation Program: Cost and Benefit

Maps

IBRD No. 19354: Nigeria - Vegetation ZonesIBRD No. 19355: Nigeria - Second Forestry Project

(i)

NIGERIA

SECOND FORESTRY PROJECT

DOCUMENTS AVAILABLE IN THE PROJECT FILE

Document No.

A. Background

1. Nigeria - Agricultural Sector Memorandum, 4723-UNIFebruary 1985

2. Nigeria - Agricultural Pricing Policy,June 15, 1985 4945-UNI

3. Nigeria - Issues and Options in the EnergySector, August 1983 4440-UNI

B. Project Identification and Preparation

1. Nigeria - Forestry II Project 129126Preparation Report, Volumes I and II, (Al and 2)FAO/World Bank Cooperative Program(Report No. 30/83 CP NIR 20),March 24, 1983

2. Forestry II Project Preparation Report 225995(Pulpwood Component), FORMEU (June 1984)

C. Working Papers

1 Forestry Sector2 Afforestation Program3 Forest Management Program4 Cost Tables5 Economic Analysis

(ii)

NIGERIA

SECOND FORESTRY PROJECT

LOAN AND PROJECT SUMMARY

Borrower: Federal Republic of Nigeria.

Beneficiaries: Federal Ministry of Agriculture, Water Resources andRural Development and nine State Goverments(Bauci'i, Benue, Borno, Kaduna, Kano, Ogun, Ondo,Plateau and Sokoto).

Loan Amount: US$71 million equivalent.

Terms: Payable over 20 years, including five years ofgrace, at standard variable interest rates.

Relending Terms: The Federal Government (FMG) would on-lend US$5.4million (mn) to Benue State, US$9.8 mn to KadunaState, US$4.9 mn to Ogun State and US$4.5 mn toOndo State, on the same terms as the Bank loan, forplantation management and development; these stateswould carry the foreign exchange risk. The remainingloan funds (US$46.4 rn) would either be passed asgrants to the states participating in the afforesta-tion program (US$35.5mn) or used by FMG for programmanagement, studies and training (US$10.9 mn).

Project Description: The project would support the efforts of the Federaland State Governments to: (1) strengthen thestructural base of the sector through improvedpolicies, revenue collection systems, training andresearch; (2) stabilize soil conditions in threatenedareas and improve the supply of fuelwood, poles andfodder by supporting farm forestry and shelterbeltactivities; and (3) increase the supply ofindustrial wood by improving the management ofexisting, high-priority plantations and byestablishing new plantations. Project activitieswould include: (a) an afforestation program whichwould include the supply of 41 million seedlingsthrough farm forestry activities, covering anestimated 750,000 ha, and the establishmentof 1,700 km of shelterbeltE protecting an estimated34,000 ha; (b) a forest management program whichwould include improved management of about 37,600 haof existing plantations, and establishment of3,150 ha of new plantations; and (c) assistance formanagement, training, policy analysis, research, andstudies.

(iii)

Estimated Cost:

Local Foreign TotalUS$ million

A. Afforestation Program:1. Farm Forestry 13.4 9.2 22.62. Shelterbelts 8.6 4.0 12.6

Sub-total: a/ 22.0 13.2 35.2

B. Forest Management Program:1. Existing Plantations 8.0 4.6 12.62. New Plantations 5.5 6.9 12.4

Sub-total: 13.5 11.5 25.0

C. Program Management, Training, 5.1 6.5 11.6Policy Analysis, Researchand Studies

Total Base Costs: 40.6 31.2 71.8

Physical Contingencies: 2.3 2.6 4.9Price Contingencies: 26.4 7.6 34.0Total Project Costs: b/ 69.3 41.4 110.7

a/ Farmers would contribute an additional US$6.1 million inman-days of labor and materials to the farm forestry component.

b/ Of which US$2.6 mn in duties and taxes.

Financing Plan

IBRD 29.6 41.4 71.0Federal Government 27.7 - 27.7State Governments 12.0 12.0Total 69.3 41.4 110.7

Estimated Disbursements: FY87 FY88 FY89 FY90 FY91 FY92 FY93 FY94 FY95- US$ million- - -

Annual 4.0 5.8 6.4 8.9 13.7 14.7 10.7 5.8 1.0Cumulative 4.0 9.8 16.2 25.1 38.8 53.5 64.2 70.0 71.0

(iv)

Benefits and Risks: The project's afforestation component, comprising investmentsin shelterbelts and farm forestry, would stabilize soil conditions and enhance soilmoisture and nutrient content, benefitting agricultural productivity; it also wouldincrease the supply of fuelvood. poles, fruit and fodder. The forest managementcomponent would improve the management of existing plantations and help establishnew plantations, increasing the availability of industrial timber. The support formanagement, training, policy initiatives, research and studies would greatlystrengthen the structural base of the sector. The principal risks includesmallholder acceptance of the farm forestry program, and the ability of the Federaland State Governments to provide their share of funding. The extension, monitoringand research programs have been carefully designed to limit the risk of failure ofthe farm forestry program. The project has been designed to minimize the annualfunding requirement of the Federal and State Governments.

Economic Rate of Return: Afforestation Program 15%Forest Management Program 17Z

Staff Appraisal Report: No. 5915-UNI

WAPABSeptember 1986

NIGERIA

SECOND FORESTRY PROJECT

I. INTRODUCTION

1.01 The Federal Military Government (FMG) of Nigeria has requestedIBRD to continue its assistance to the forestry sector by funding a SecondForestry Project. Originally the emphasis of the proposed project was onfurther development of the pulpwood and industrial plantations in Nigeria'ssouthern and middle belts with a small input for afforestation in thenorth. With the rapidly worsening problems of soil degradation in themiddle and northern belts, however, FMG requested that the projectestablish a broad-based afforestation program. The proposed projectreflects FMG's concern and substantial emphasis is given to developing anafforestation program for the deforested areas of northern Nigeria and theseverely eroded Jos Plateau in the middle of the country. The proposedafforestation activities would complement Bank assistance to agriculturalactivities in these areas currently being carried out by ongoingAgricultural Development and Livestock projects. FMG also has soughtassistance in improving the sector's policy base, in improving themanagement of existing industrial plantations, and in establishing newplantations. These activities would be undertaken as part of the project.

U. THE FORESTRY SECTOR 1I

A. Background and Role in the Economy

2.01 Nigeria is divided into three main ecological zones (Map 19354):a humid forest zone about 50-250 km wide along the coast with over 1,600 mmof rainfall annually; a sub-humid forest zone with 1,150-1,500 mm annualrainfall and a three-month dry season; and savannah zones in the remainderof the country - Guinea (1,000-1,500 mm rainfall, 4-5 month dry season),Sudan (500-1,000 mm, 5-7 months dry season), and the Sahel along thenortheastern border with Niger (250-500 mm, 7-8 month dry season).Nigeria's forests cater to a growing demand for the following wood and woodproducts: pulpwood for newsprint, industrial paper and packagingmaterials; poles and sawn timber for building materials, chipboard andplywood; and firewood for domestic fuel.

2.02 The forest sector has accounted for about 1-2% of GDP and 6-8% ofagricultural GDP over the last decade. Along with the rest of the economy,forest activities grew significantly in the early and mid-1970's as the oilboom fueled a rapid expansion in domestic construction. This along withthe steady loss of the high forest to agricultural land and the poor record

1/ Key statistics of the agricultural sector are in Annex 1.

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of plantation development led to the declining availability of industrialwood. In 1976, the Federal Military Government (FMG) banned the export oflogs and most wood products. The value of forest products imports hassteadily increased from US$34 million in 1971 to US$230 million in 1981,but as a percent of total merchandise imports has declined from 2% to 1Z.In recent years, forest imports have declined along with the rest ofmerchandise imports and now consist mostly of pulpwood and quality paperproducts which are not produced locally. At present the forest sectorprovides employment opportunities for some 1.5 to 2.0 million people, ofwhich the vast majority are working part time to supply firewood and poles.The production and processing of logs in the forest zones involves onlyabout 50,000 to 75,000 people.

2.03 As a result of population pressures, economic growth and poormanagement over the past two decades, Nigeria's forests and woodlands havebeen both rapidly degraded and reduced in area. This is particularly truein the north which has a sizeable population (30 million), but because ofits semi-arid character, has a smaller forest endownment than the south anda slower regeneration rate. In order to prevent the total depletion ofNigeriats forest resources, FMG has set aside 9.6 million ha of forests,roughly 10 of Nigeria's total land area, as forest reserves. About 7.2million ha (75%) of the reserves are situated in the northern part of thecountry with the remaining 2.4 million ha (25%) in the wetter middle andsouthern regions. The forest reserve areas also include some 150,000 ha ofplantations established by FNG over the last quarter centuryin the middle and southern regions.

2.04 It is difficult to determine accurately the supply and demand forwood and wood products, but the general picture is one of currentconsumption exceeding the level of sustained forest output, with thegreatest deficit occurring in the northern half of the country. Estimatesput total annual national consumption in 1985 at about 50 to 55 million m ,of which 90% is firewood. Total sustainable production is difficult todetermine since most wood comes from areas outside the forest reserves.Estimates indicate that there is an anual deficit of fuelwood and poles inthe north amounting to 5 to 8 million m (the south has adequate supplies)and an industrial wood deficit in she south, where the sawmill industry islocated, of about 2 to 3 million m . The implications of this deficit aresevere, particularly as the greatest part of it occurs in the north where,if unchecked, it could result in total soil degradation as the tree coverbecomes completely removed and massive erosion sets in. It is importantthat Nigeria act now to support afforestation programs and to studyalternative fuels and the introduction of fuel-efficient stoves so theproblem can be contained and ultimately reversed. Similarly, Nigeria needsto lay the groundwork for sustained production of sawnwood to supply localrequirements. While a sustained production program must ultimately rely onsubstantial replanting, the necess.ry policy base, fee structure andmanagement systems must be established before such investments take place.A discussion of supply and demand characteristics of the forestry sector isprovided in Annex 2-1.

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B. Sector Organization

2.05 The sector involves institutions at federal, state and locallevels. The main federal institution is the Federal Department of Forestry(FDF), an arm of the Federal Ministry of Agriculture, Water Resources andRural Development. The Forestry Monitoring and Evaluation Unit, asubdivision of FDF, has coordinated activities under the First ForestryProject (Ln. 1679-UNI, March 1979), a role that would be continued in theproposed project. However, to reflect expanded responsibilities under theproposed project, its name would be changed to the Forestry Management,Evaluation and Coordinating Unit (FORMECU), and it would be officiallyestablished (para. 3.20). Research is a federal responsibility and iscurrently being carried out by the Forest Research Institute of Nigeria(FRIN). FRIN operates several research sub-stations, including aShelterbelt Research Station at Kano. The proposed project would includefunds for studies in arid zone activities which would be closelycoordinated with FRIN. At the State level, forestry affairs are theresponsibility of the Chief Conservator of Forests, whose office - theState Forestry Department (SFD) - is directly responsible for the actualmanagement of the forest reserves in each state and for implementing stateinvestment projects funded locally or by FMG. At the local level, theLocal Government Authorities have roles which vary among states. In somestates they have received authority from the states to issue licenses andcollect revenues. More information on the institutions involved in theforestry sector at the federal, state and local levels is provided in Annex2-2. A general discussion of the Forestry Sector is p'ovided in WorkingPaper 1.

C. The Issues

2.06 The following factors have contributed to the poor performance ofthe sector: (i) lack of a national policy; (ii) an outdated forest revenuesystem; (iii) inadequate funding; and (iv) inadequate management of forestresources. These are discussed below:

(i) National Forest Policy

2.07 FMG's effectiveness in managing the development and use of thecountry's forest resources has been constrained by the lack of a nationalpolicy. Individual states have generally adopted policies regarding forestuse which fit their own specific needs. While this approach may haveworked when forest resources were plentiful, it is no longer adequate. FDFhas recently prepared a draft National Forest Policy to provide theframework and guidelines for the most efficient long-term development andutilization of the country's forest resources. Additional work on thedraft is needed to address institutional relationships in the sector,conservation issues, revenue requirements and priorities for newinvestment.

2.08 Under the proposed project, FORMECU, with consultant assistance,would review: (i) the institutional relationships in the sector between

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federal, state and local authorities; (ii) the state forest managementsystems, including the need to protect the forests from illegal felling andencrochment; (iii) the state forest revenue systems (para 2.09); and (iv)the long-term supply and demand characteristics of the sector and the roleof the pricing mechanism and alternative fuels in managing wood resources(para 3.19(ii)). Assurances were obtained at negotiations that FORMECUwould complete the above reviews by December 31, 1987 and incorporate thefindings in a revised draft National Forest Policy which would be ready byJune 30, 1988. After considering the Bank's and the states' comments onthe draft, FMG would promulgate the National Forestry Policy by December31, 1988 (para 4.01 (a) (i) and (ii). Assurances were also obtained thatFMG would review the National Forest Policy annually until projectcompletion, with the first review due June 30, 1990, and that these reviewswould take into account the Bank's comments on the Policy and therecommendations of the proposed National Afforestation Plan described inpara 3.19 (para 4.01 (a) (iii)).

(ii) State Forest Revenue Systems

2.09 Forest revenues in Nigeria are below the desirable level mainlybecause the natural forest has historically been treated as a freeresource. Trees from Nigeria's earlier plantation programs, includingthose supported through the First Forestry Project (para 2.14), have yet tomature and appropriate forest charges introduced to recover theirreplacement costs. Determining the level of charges in each state is acomplicated process depending on the type of species which either exists inthe forest reserves or is being grown on plantations, the proximity oflocal markets and the purpose of the charge, i.e., whether it is todiscourage utilization, promote selective utilization or result inclearfelling. FMG provided assurances at negotiations that FORMECU wouldemploy consultants by December 31, 1986, to undertake a review of theforest revenue systems in the project states to determine the type ofcharges employed, their current level, and whether the system and thecurrent rates are effective in meeting conservation, utilization, revenueand cost recovery objectives. Each state would participate fully in itsstudy. These reviews would bear in mind FMG's objectives as set out in itsproposed National Forest Policy and would be completed by June 30, 1987 andforwarded to FHG, the states and the Bank for review and comment. Bearingin mind the coments received, each project state would introduce a revisedforest revenue system, including levels of forest charges and a mechanismfor adjusting these levels regularly to reflect price movements, by June30, 1988. The power to establish and collect forest revenues is vestedwith the states, however FMG shall, within the limits of its constitutionalpowers, take all necessary action to ensure that the proposed system isadopted by each project state by the above date (para 4.01 (b)).

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(iii) Funding

2.10 Actual funding for forestry has amounted to 2.42 of FMG'sagricultural budget during 1981-84, compared to 3% when the Fourth Plan(1981-85) was prepared. Although resources available during the FourthPlan have been substantially lower than expected, forcing FDF to reduce itsinvestment levels, forestry has been no harder hit than the rest ofagriculture. The main difficulty has been that the reductions were oftenhaphazard, reflecting weak sector management. State governments have facedgreater constraints and in many cases have stopped new investments andreduced staff. The reduction in resources spent on forestry was inevitablegiven that oil revenues failed to materialize as expected.

2.11 FMG has advised the Bank that it intends to retain the samerelative level of funding for forestry within the Fifth Plan as in theFourth Plan, i.e. 2.5 to 3% of its agricultural investment program. Onthis basis, the proposed project would account for about 40% of theresources likely to be available to the forestry sector during theupcoming plan period.

(iv) Forest Reserve Management

2.12 SYDs have not managed the forest reserves within theirjurisdiction on a systematic basis, including the plantations establishedby FMG in the 1960s and 1970s. The cost of effectively protecting thereserves from illegal felling is high and would require a large number ofarmed patrols. The states would need to involve other branches ofgovernment in the task and this issue would be examined in connection withthe preparation of the proposed National Forest Policy (para 2.08). Since1960, FMG and the states have established 150,000 ha of industrialplantations, but most have not been thinned regularly nor protectedadequately from fire damage. Consequently, FMG is unlikely to see anadequate return on these investments unless plantation management isi-mproved. Because FNG and the State governments now agree on the impor-tance of this issue, plantation management would be supported under theproposed project.

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D. Sector Strategy

2.13 While a formal forestry policy does not exist yet, FMG hasadopted an interim strategy for the sector based on the findings of a jointFAO/Bank Forestry Sub-sector Review (Report No. WA-4066, June 30, 1982), andother studies undertaken by FDF. The main elements of FMG's strategy, inorder of priority, are to: (i) develop an appropriate policy frameworkwhich will guide the future use and development of Nigeria's forestresources; (ii) support afforestation and watershed management programs onlands which have been overcut or severely eroded from population andlivestock pressures or as a result of industrial activities; and (iii)improve the supply of industrial timber in the most efficient and costeffective manner. A discussion of the project in the context of thesepriorities, which the Bank supports, is provided in para 3.01.

E. Bank Involvement

2.14 The Bank's involvement in the sector has been through the FirstForestry Project (US$ 31 million, Ln. 1679-UNI, March 1979) which supportedFMG's strategy of establishing pulpwood plantations by providing for 22,600ha of gmelina plantations in Ogun and Ondo States. The project alsoprovided for 1,600 ha of tropical pine plantations to be grown on a trialbasis in Anambra State and technical assistance for training, studies andproject management.

2.15 When the loan closed in mid-1986, a year behind the originalclosing date, the project had achieved about 70% of the appraised plantingtargets in Ogun and Ondo States. The reduction in planting resulted fromthe shortfalls in FMG and state funding during project implementation.Total project costs are now estimated at US$65 million, compared withUS$79.3 million at appraisal. The project was designed to supply pulpwoodto the Iwopin Mill, then under construction. In reaction to financialpressures in the early 1980's, FMG slowed work on the mill and eventuallyhalted construction in 1984, with the mill, ft terms of costs, about 50%complete. A recent Bank review of FMG's industrial sector program for theFifth Plan recommended FMG undertake a complete reappraisal of the millbefore any additional expenditure is incurred, noting that modifications inproject design would be needed for the mill to become economically viable.FMG has indicated to the Bank that it does not intend to proceed with theIwopin pulpmill until after it has undertaken a reappraisal and only thLenif it can be demonstrated that completing the mill would be an economicallyviable proposition. The First Forestry Project's appraised ERR was 13% andit is estimated that the project at completion would achieve a similar ERRif the plantations were used for pulpwood. Considering the possibility themill will not be completed, a separate analysis indicates that the projectwould yield an ERR of about 10% if the plantations were used for sawntimber and fuelwood.

2.16 The Anambra pine trials experienced financial problems (lack ofstate support) and other difficulties (fires and poor maintenance).Although only 600 ha out of 1,600 ha have oeen established, the Bank and

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FMG have concluded that 600 ha provide enough area to monitor furtherdevelopment of the two pine species being tested and no further plantingsare therefore planned. FDF would continue evaluating the trials.

2.17 Under the First Forestry Project, the Ogun and Ondo State Govern-ments were to agree with the Bank on a formula for calculating the stumpagerates to be used for salvage logging of natural forest, gmelina pulpwoodard sawlogs in the project area. Agreed upon rates were to be establishedby June 30, 1980 and reviewed periodically thereafter. Before the study todetermine the formula for future rates was completed, Ogun and Ondo Statesincreased their charges for timber logged out of the forest reserves in1979 and 1980 an average of 5 to 8 times over those rates which had beenprevailing previously. When the study was completed in December 1981. itsfindings were contested by the Ministry of Industry on behalf of the Iwopinpulpmill, which did not accept the formula for calculating the stumpagevalue of gmelina pulpwood. At that point it was agreed to put the issue onhold until further progress was made on the construction of the Iwopinpulpmill. Under the proposed project, Ogun and Ondo states will reviewtheir forest revenue systems and introduce appropriate changes by June 30,1988 (para 2.11).

2.18 While the proposed project differs substantially in scope fromthe First Forestry Project, lessons learned on local funding and policyrecommendations have been incorporated. The local funding requirements arebased on a conservative analysis of FMG and state resource availabilityduring the project period and are likely to be met. The policy recommenda-tions would provide for a coherent approach to policy and revenue issues.

III. THE PROJECT

A. Origin and Bank Rationale

3.01 The project was identified in 1982 during the course of the FirstForestry Project. The FAO/IBRD Cooperative Program completed a preparationreport in 1983 and the Federal Department of Forestry (FDF) undertookadditional preparation work in 1984. The project was subsequently revisedduring appraisal when the Federal Military Governmentts (FMG) proposals forforestry during the Fifth Plan were reviewed. The appraisal's analysissupported FMG's conclusions that the policy framework for the sector wasweak and needed strengthening and that investment activities should focusprimarily on afforestation and better use of existing resources as the mostefficient means of improving the supply of industrial timber. In terms ofinvestments, afforestation should receive the highest priority since afailure to redress the threat of soil erosion stemming from deforestationwould result in the loss of large areas of productive land with hugeeconomic and sociological costs. The next highest priority was to find themost efficient means of improving the supply of industrial timber. FMGproposed to improve the management of existing plantations, which had been

ignored in recent years as a result of budget cuts, and to complement thisactivity with a limited amount of new plantings. The mission's analysissupported the approach.

3.02 The Bank's involvement in the proposed project would beconsistent with the initiatives in the Su'-Saharan Africa Report (TowardSustained Development in Sub-Saharan Afr -:a; September 1984). The Report'ssection on conservation (pages 32-33) r' ed the need for investments inafforestation, soil conservation and fue-wood production. These are areasof emphasis in the proposed project. Furthermore, FMG has indicated itsdesire to develop a comprehensive National Forest Policy which wouldprovide the basis for the future management and use of its forestresources. It has turned to the Bank not only to provide external fundingfor the required technical expertise but in order to obtain experience andadvice in these areas based on the Bank's exposure to similar situationselsewhere in Africa and other parts of the world.

B. Objectives and Description

3.03 The project has three objectives:

(a) on a national level, to strengthen the structural base ofthe sector through improved policies, training, studies andresearch;

(b) in the northern and central regions of the country, tostabilize soil conditions in threatened areas and toincrease the supply of fuelwood, poles and fodder throughfarm forestry and shelterbelt activities; and

(c) in the southern and central region, to increase the supplyof industrial wood by improving the management of existingforest reserves and plantations and establishing newplantations.

The project would have components in nine of Nigeria's nineteen states (Map19355) and would be carried out over an eight year period (1987 through1994). The Afforestation Program (AP), comprising farm forestry andshelterbelt activities (49% of base project cost) would be carried out inthe middle and northern regions of the country, while the Forest ManagementProgram (FMP), comprising improved management of forest reserves andplantations and establishment of new plantations (35Z), would be carriedout in the middle and southern regions. In addition, the project wouldprovide assistance for management training, policy analysis, research andstudies (16%). Each of these components is described below.

(i). The Afforestation Program (AP)

3.04 Details of AP are provided in Annex 3-1 with a comprehensivetreatment in Working Paper 2. AP is designed to meet the urgent need tostabilize soil conditions in highly populated, productive areas of central

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and northern Nigeria. It involves a series of investments in farm forestryand, in certain states, shelterbelts. Both types of investments arenecessary to account for different risk/reward profiles associated withdifferent ecological zones with different population densities. Theshelterbelt program is confined to Nigeria's "arid zone", the area north of12°N latitude which covers the northern half of Nigeria's fivenorthern-most states - Bauchi, Borno, Kaduna, Kano and Sokoto - where theaverage annual rainfall varies from over 1,000 m in the southern part ofthe zone to around 200 mm in the northeast. This area will be referred toin the rest of the report as zone 1. The farm forestry programs would beundertaken in the same states, but on a broader, statewide basis. Theywould be concentrated in zone 1 where they would be closely associated withthe shelterbelts to provide complementarity in terms of area protected.The areas in the soathern half of the above five states which would benefitfrom farm forestry activities will be referred to as zone 2. These areasrange between latitudes 8°N and 10°N and the annual rainfall averages 1,000mm to 1,500 mm. A farm forestry program would also be implemented on theJos Plateau, a badly-eroded part of Plateau State in central Nigeria. Thisarea will be referred to as zone 3 and is situated around latitude IO0Nwith annual average rainfall between 1,200 mm and 2,000 mm. Each of theseindividual programs is described as follows.

3.05 Farm Forestry. The farm forestry program would comprise a set ofactivities designed to encourage tree planting and maintenance on farmlandin zones 1, 2 and 3. It includes: (i) nursery development to providesufficient seedlings of various types; (ii) efforts by agriculturalextension staff to encourage and advise farmers on tree planting,protection and maintenance; and (iii) a mass media campaign to increasefarmer awareness of the need for and benefits of additional tree cover.The activities would be statewide in Bauchi, Borno, Kaduna, Kano andSokoto. In Plateau State they would be confined to the Jos Plateau, one ofNigeria's major watersheds, which ranges 700-1,340 m above sea-level andfaces severe erosion problems because of population pressures andstrip-mining. The aim is to involve about 250,000 farm families whichrepresent about 10Z of the farm families in the three zones. Thesefamilies together farm an area of some 750,000 ha. The farm forestrycomponent would only make a modest start at closing the deficit in thenorthern states between demand for fuelvood and sustainable supply. If theprogram is successfully received, it could be expanded to cover a greaternumber of farm families.

3.06 Farm forestiy would be a low cost solution to stabilizing soilconditions since the program offers a much greater scope for tree planting,with each farmer contributing through his planting efforts, than if thestates had to incur the costs of direct planting. The design of the farmforestry component carefully addresses the issue of farmer willingness totake up and maintain seedlings. The proposed project would provide for theclose involvement in the farm forestry program of the agriculturalextension staff of the Bank-supported Agricultural Development Projects

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(ADPs) which either exist or would soon exist in each state. 2/ ADPextension staff would work closely with State Forestry Department (SFD)extension staff and the farmers to ensure that the seedlings are deliveredat the correct time and that farmers receive adequate information onplanting, care and maintenance. The ADP media offices would help in thepreparation and distribution of media messages throughout each statestressing the importance of tree planting to soil protection and as asource of fuel, poles, fodder and income. Land tenure would not be amajor issue as the customary laws provide for land-rights to be vested inindividuals with the right of transfer through sale or inheritance.

3.07 Shelterbelts 3/. In particularly dry areas which have good soilpotential, the project would establish 1,700 km of shelterbelts which wouldprotect an area of about 34,000 ha. When completed the proposed programwould double the area of shelterbelts in zone 1. Although states haveestablished shelterbelts successfully in the past, programs have beenseverely curtailed in recent years because of funding problems. Projectactivities include demarcating shelterbelt areas, arranging for landacquisition, clearing the land, and planting, fencing and maintaining theshelterbelts. Shelterbelts are relatively expensive compared with farmforestry in terms of cost per ha protected (US$371 per ha for shelterbeltsand US$30 per ha for farm forestry- using base project costs), and theytherefore are only recommended for the most gravely affected areas with thepopulation density and the agricultural potential to justify thisinvestment and where lower-cost solutions like farm forestry alone would beineffective. Such areas exist in zone 1 where wind erosion and the effectsof overgrazing and overcutting threaten to render the land economicallyuseless. Shelterbelts in conjunction with farm forestry are viewed as themost appropriate means of salvaging valuable areas of land in zone I whichotherwise might lose its economic worth.

3.08 Shelterbelts would be established directly by SFDs in four of thefive northern states. Kaduna would not initially participate in theshelterbelt program since the EEC is currently assisting the state with theconstruction of 170 km of shelterbelts. Procedures to compensate farmers

2/ Bauchi ADP (Ln. 1981-UNI), Southern Borno ADP (Ln 2741-UNI)., KadunaADP (Ln. 2436-UNI), Kano ADP (Ln. 1982-UNI), and Sokoto ADP (Ln.2185-UNI), and the Plateau State component of the Multi-State ADP(2733-UNI).

3/ A typical shelterbelt consists of eight lines of fast-growingeucalyptus or neem trees (about 8 years to mature) spaced three metersapart. The belts are measured in distances, and a typical belt willrun from 1 to 20 km. Usually several belts are planted in paralleland spaced about 200 meters apart (the distance a belt can effectivelyprotect). Thus a one km belt is said to protect 20 ha of land (1 kmlong x 200 m wide = 200,000 m2 or 20 ha).

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for the land to be used for shelterbelts are well established and presentno problems. The SFDs have the technical capacity to carry out theproposed program. The AP states would consider the following criteria forselecting areas for shelterbelts: (i) on average, there are less than fourfarm trees per ha; (ii) there is evidence of declining yields, whereresowing is often necessary because of winds in the planting andgermination season; (iii) the remaining standing trees appear healthy,indicating that the water table is intact; (iv) the area yields positiveresults for soil and water table tests; and (v) the farming area is wellpopulated. Assurances were obtained at negotiations from the AP statesthat these criteria would be considered in the selection of locations whereshelterbelts would be constructed (para 4.01(c)).

(ii). The Forest Management Program (FMP)

3.09 Assistance would be provided under FMP for improved management of37,600 ha of existing industrial plantations and establishing 3,150 ha ofnew plantations. Each component is summarized below with more detailedinformation provided in Annex 3-2 and a complete description in WorkingPaper 3.

3.10 Existing Plantations. The project would provide for the improvedmanagement of 37,600 ha of the estimated 150,000 ha of industrial planta-tions in Nigeria which have been established in the last 25 years. Theproject would assist plantations where investments in maintenance would beexpected to yield an ERR greater than 10Z. These turned out to beplantations in Benue, Kaduna, Ogun and Ondo States which were near majormarkets and which had been established on good land and therefore hadexperienced the best growth and had excellent potential for future growthif properly maintained. Given funding constraints, FDF and the states havenot been able to undertake the following comprehensive activities which theproject would undertake: (1) maintaining roads and fire breaks; (2) weedingand controlling disease outbreaks; (3) thinning to permit maximum growth ofpotentially valuable sawlogs; and (4) marketing and sawmill trials toestablish outlets for intermediate plantation products. The areas to bemaintained by species are as follows:

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The Forest Management Program by Species and State(In ha)

State Gmelina Teak Eucalyptus Total

Benue 905 1,130 - 2,035Kaduna - 1,260 1,260 2,520Ogun 17,400 3,760 - 21,160Ondo 11,400 430 - 11,830Total 29,705 6.580 1,260 37,545

The primary benefits from the program would come from the increase in thenumber of economically valuable sawlogs.

3.11 New Plantations. FMG proposes to undertake selective newplantings when done in conjunction with -forest management programs, as thispermits overheads and certain investment costs to be shared. Other factorswhich are important in selecting sites for new plantations include thespecies to be grown and the expected market for the offtake. On this basisthe proposed project would support new plantations of 700 ha of teak inBenue State and 2,450 ha of pine and eucalyptus in Kaduna State. Thesize of the new plantation program in Kaduna and Benue was based on SFDmanagement capability and technical factors including soil suitability. Noadditional plantings in Ogun and Ondo States would be undertaken under thisproject as the African Development Bank (ADB) has under consideration aloan which will help establish about 12,000 ha of new gmelina plantationsin these states. FDF has worked closely with ADB and the Bank to ensurethat the two projects will not duplicate efforts. The Forestry Management,Evaluation and Coordination Unit (FORMECU) would manage both projects andthere would be integrated management units in both states. The newplantations, at a minimum, would meet part of Nigeria's deficit inindustrial fimber and would be economically viable.

(iii) Management, Training, Policy Analysis, Research and Studies

3.12 The project would provide technical assistance as well asvehicles, equipment and materials for the management, training, policyanalysis, research and studies activities of the proposed project. Themost significant element would be technical assistance which would consistof internationally-recuited experts (72 staffyears) on long-termassignments and consultants (22.5 staffyears) on short-term assignmentsundertaking studies or research work. The technical assistance program isdescribed in Annex 3-3.

3.13 Management. The project would provide 69 staffyears of expertassistance on long-term contracts to help manage the project. Allinternationally recruited staff would be phased out by end of the projectimplementation period by which time it -'s expected that all positions wouldbe filled by Nigerians. To this end, during the last six months of theircontract, the externally recruited experts would act as advisors to the

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Nigerian staff succeeding rhem. Recruitment would be open to qualifiedNigerians who are expected to ill a number of these positions.

3.14 Training. Improving traditiunal forestry training activities aswell as introducing forestry training to the agricultural extension staffof ADPs would be important project activities. A detailed description ofthe training assistance to be provided under AP and FMP is contained inWorking Papers 2 and 3.

3.15 In AP, training plays a crucial role given that the success ofthe farm forestry program depends significantly on ADP extension staff whohave to be trained to deliver a forestry extension message. The project'sForestry Extension and Training Specialist would be responsible forensuring that SFD and ADP in each AP state work together to develop anappropriate extension message for ADP staff and that this message waseffectively communicated. The specialist would liaise with the ForestryResearch Institute of Nigeria (FRIN), the Universities, the AgriculturalExtension Research Liaison Services and other sources throughout thecountry to ensure that latest developments in research are incorporated inextension training. To help meet training requirements, the project wouldrenovate and provide essential materials and equipment to the Kano ForestryVocational Training Center. The Center would provide courses forsilvicultural assistants, for forest guards and supervisors, and forextension trainers from the SFDs and ADPs.

3.16 In FMP, assistance would be provided to the Oluwa ForestryTraining renter in Ondo State which was established under the First Forest-ry Project. Oluwa provides for training needs in plantation practices bothfor field workers and supervisors. The project would provide technicalassistance for: (1) an internationally-recruited training specialist (3staffyears) to help coordinate and improve the technical quality ofinstruction at Oluwa; (2) censultant assistance (1 staffyear) to helpdevelop specific training programs and materials; (3) teaching materialsand equipment; and (4) training visits locally and abroad.

3.17 Policy Analysis, Research and Studies. The project would provide21.5 staffyears of consultant assistance for policy analysis, research andstudies. Policy analysis refers to the studies required to formulate thedraft National Forest Policy and state forest revenue systems described inparas 2.08 and 2.09 respectively. About 4 staffyears of consultancyservices would be required for these studies.

3.18 Research activities would be concentrated largely onafforestation-related issues as significant work needs to be done todevelop a comprehensive base to support afforestation activities over thelonger term. The AMforestation Program Coordinating Unit (APCU), themanagement unit responsible for coordinating AP activities, would overseethe program. Research activities would aim to: (1) improve farm forestryand shelterbelt establishment techniques, giving better tree survival andgrowth; (2) examine the acceptability and effectiveness of alternative farmforestry models; and (3) determine yields of wood and other tree products.

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Research work would be closely coordinated with SFDs and FRIN, who wouldcarry out parts of the work with project assistance (about 11.0 staffyearsof consultancy services). A description of the proposed research programis found in Annex 3-4.

3.19 The project would provide 6.5 staffyears of consultancy servicesto carry out various studies and prepare for a future project. The twomajor studies, whose Terms of Reference are found in Annex 3-5, are:

(i) National Afforestation Plan. An important project objectivewould be to prepare a national plan for afforestation inNigeria. APCU would be responsible for preparing the planwhich would be based on their practical experience carryingout the project's afforestation activities, as well as theinitial findings of some of the short-term research activi-ties and consultants' studies of afforestation requirementsin areas of Nigeria not covered under the project. As APCUwould need time to digest the initial results coming out ofthe project, FMG gave assurances during negotiations thatAPCU would prepare a draft National Afforestation Plan byDecember 31, 1989, and that after review by FMG, the Bankand concerned states it would issue a final plan by June 30,1990 (para 4.01(d)).

(ii) Household Energy Supply and Demand. APCU would beresponsible for carrying out this study, which wasidentified in the Report of the Joint UNDP/World Bank EnergySector Assessment Program (Report No. 4440-UNI, August1983). It would survey rural-urban household energyconsumption patterns in Nigeria's five northern states todetermine types of fuel used, efficiency of consumption,sources of supply, reliability of supply and costs. Thisstudy is important because the project's farm forestryactivities, even if expanded later, cannot totally solve thefuelwood deficit problem. The study would makerecommendations on the role of alternative fuels, pricingpolicies and the introduction of more efficient means ofconsuming energy. These recommendations would be importantin assisting Nigeria to find alternative ways of satisfyingor reducing household energy demand. FMG gave assurancesat negotiations that APCU would complete a draft study byDecember 31, 1987 for review by FMG, the Bank and concernedstates and that a final report would be issued by June 30,1988. FMG would carry out the recommendations according tothe timetable contained in the report (para 4.01(e)).

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C. Organization, Implementation and Present Status of Project

3.20 The project's organization and implementation arrangements, assummarized below, are discussed in Annex 3-6 and Working Papers 2 and 3.The project's implementation schedule is found in Annex 3-7. FDF wouldcoordinate project activities through the Forestry Management, Evaluationand Coordinating Unit (FORMECU), which would be officially establishedunder the project. FORMECU would concentrate on supervising FMP activitiesand would have responsibility for reviewing the draft National ForestPolicy and overseeing the studies on forest revenue systems in the projectstates. The Afforestation Program Coordinating Unit (APCU) would beestablished in Kano to coordinate AP's activities in the six participatingcentral and northern states. APCU would report to FORMECU and would beresponsible for the intensive activities required to ensure the successfulestablishment of afforestation activities. APCU would carry out theresearch program on afforestation issues, the preparation of the NationalAfforestation Plan and the Household Energy Supply and Demand study. FMGprovided assurances at negotiations that it would establish FORMECU andAPCU on terms and conditions satisfactory to the Bank, and appointindividuals to fill four positions in these units (Head and FinancialAdviser, FORMECU; Project Coordinator and Financial Controller, APCU) whosequalifications and experience shall be satisfactory to the Bank (para 4.02(f)). Appointment of acceptable candidates would be a condition of loaneffectiveness (para 4.02 (a)).

3.21 As in the First Project, field level activities would be carriedout by a project unit in each of the nine participating states, reportingto the state's Chief Conservator of Forests. Kaduna State, the only onewith both FNP and AP components, would have separate project units for eachcomponent. Assurances were obtained at negotiations that all state projectunits vould be established on terms and conditions acceptable to the Bank(para 4.01(g)). Appointment of at least five project unit managersacceptable to the Bank and ratification of at least five Project Agreementswould be conditions of loan effectiveness (para 4.02(b)).

3.22 To coordinate activities within each AP state, each AP state gaveassurances at negotiations that it would establish a statewideAfforestation Committee by December 31, 1987, which would meetsemi-annually to ensure that the operations of various agencies in ruralafforestation are properly coordinated (para 4.01(h)). Each committeewould be chaired by the State Commissioner in-charge of the ForestryDivision and have the head of the state AP project unit as ExecutiveSecretary. Other agencies represented would include the local River BasinRural Development Authority, ADP, FDF, SFD, Livestock Department andrepresentatives from the Local Goverment Authorities.

3.23 Project implementation should proceed on schedule, in partbecause FORMECU and the State Units in Ogun and Ondo are functioning underthe First Forestry Project and would continue operating withoutinterruption. FORMECU's senior staff are familiar with project details andare preparing the necessary groundwork to start up AP and TFP activities

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and the policy studies. Recruitment of international staff would behandled by the Federal Agricultural Recruitment Agency (FARA) in the UK, aninstitution established by FMG to recruit international staff for ADPs.Supported by the Bank under the Agricultural Technical Assistance Loan (Lu.2029-UNI), FARA works smoothly and efficiently. The project's initiallocal funding requirements (para 3.29) amount to less than 1Z of estimatedtotal investment resources to be spent on agriculture by FMG and theparticipating states in 1987 and should be affordable.

D. Project Cost and Financing Plan

3.24 The total project cost is estimated at US$110.7 million with aforeign exchange component of US$41.4 million or 37%. If taxes and dutiesare excluded, total costs would be US$108.1 million. Project costs arecalculated using prices obtained at appraisal and updated to May 1986, thedate of negotiations, with further adjustments made to reflect local andforeign inflation between negotiations and January 1, 1987, the estimateddate of project start-up. Physical contingencies have been calculated at10X of base costs except for salaries and wages which have been calculatedat 5%. Price contingtncies have been calculated on base costs plusphysical contingencies and compounded annually, using the following rates:

Price Contingencies Assumed in Project Cost(in Z)

1987-88 1989 1990 1991-95

Foreign Costs: 6.8 7.0 7.1 4.0Local Costs: 14.0 14.0 14.0 8.0

Total contingencies (physical and price) are equivalent to 35% of totalproject costs or 54% of base costs. Detailed project costs are found inAnnex 3-8 and Working Paper 4.

3.25 The proposed Bank loan of US$71.0 million would finance 64Z ofproject costs (or 66% net of taxes). FMG would finance US$27.7 million(25%) and the State Governments together US$12.0 million (11%). FMG wouldrelend US$24.6 million of the Bank loan (35%) on the terms of the Bank loanto Benue, Kaduna, Ogun and Ondo States for the commercially-oriented FNPcomponent (essentially for plant, equipment, buildings and furniture) undersubsidiary loan agreements between FMG and the State Governments. Comple-tion of these agreements would be a condition of disbursement of the Bankloan for the individual state component (para 4.03). The states would bearthe foreign exchange risk. The balance of the loan (US$46.4 million, 65Z)would finance FORMECU's operations and AP. Given the essentiallynon-commercial nature of AP activities, FMG would pass the Bank fundsdesignated to finance AP activities on a grant basis to the concernedstates. Cost recovery issues are discussed in paras 3.33 and 3.34.

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3.26 Project costs have been calculated on an incremental basis andare over and above the present expenditures by FMG and the nine states oncomparable forestry operations. These ongoing costs are estimated to totalabout US$18.2 million over the eight year project period in current prices.The total program costs (over the same eight year period) would amount toUS$134.9 million and include incremental project costs (US$110.7 million,82%), FMG's and the states non-incremental costs (US$18.2 million, 14Z),and farmers' contributions to AP in form of labor and some materials(US$6.1 million, 4%). Total program financing would be as follows: IBRD,US$71.0 million (53%); FMG US$31.6 million, (23%); state governments,US$26.3 million (20Z); and farmers, US$6.1 million (4%). The details ofthe financing plan are found in Annex 3-9.

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E. Procurement

3.27 Procurement arrangements are summarized as follows:

Amounts and Methods of Procurement(US$ million)

Procurement Component ICB LCB Others NA Total

1. Civil Works a/ - 2.0 0.5 - 2.5(1.7) (0.4) (2.1)

2. Vehicles, Equipment,Materials, Furniture, 21.4 3.6 8.7 - 33.7and Spare Parts b/ (21.4) (3.2) (7.6) (32.2)

3. Land for Shelterbelts 6.1 6.1and Nurseries c/ C-) C-)

4. Consultants, International - - 7.4 - 7.4Salaries and Training d/ (7.3) - (7.3)

5. Wages for seasonal e/ - - - 27.6 27.6employees (16.6) (16.6)

6. Salaries f/ - - - 12.7 12.7

7. Vehicle/Plant Operating Costs - - - 20.7 20.7and General Services g/ - (12.8) (12.8)

Total 21.4 5.6 16.6 67.1 110.7IBRD (21.4) (4.9) (15.3) (29.4) (71.0)

Note: 1. Contingencies are included in the amounts shown. Amountsin brackets indicate IBRD participation.

2. All bidding packages for goods and works overUS$300,000 equivalent would be subject to prior review(estimated at about 65% of total value).

a/ Civil works contracts, amounting to US$2.5 mn, would be mainly fornursery construction under AP and project facilities (housing andworkshops) under FlP. Given the expected small amount of eachcontract and the scattered nature of the works, about 80% of thecontracts would be procured using local competitive bidding (LCB)procedures acceptable to the Bank (Annex 3-10). Minor civil works,

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mainly involved in establishing or relocating nurseries under APwould be carried out using force account.

b/ Contracts for vehicles, equipment, materials, furniture and spareparts, amounting to US$33.7 mn, would be grouped where possible intocontracts valued at US$300,000 or more and would be procured throughinternational competitive bidding. A margin of preference equal to15% of the C.I.F. bid price of imported goods or the actual customsduties and import taxes, whichever is less, would be allowed fordomestic manufacturers. Contracts below US$300,000 would beprocured through competitive shopping with at least threequotations. An exception would be for the procurement of treatedpoles (about US$3.4 million) to be used primarily in fencingshelterbelts. As their unit value is low and transport costshigh, and they are available locally, imports would not becompetitive. These would be purchased locally using LCB.

C/ The project would provide compensation to farmers for theland to be used for shelterbelts and nurseries worth US$6.1 million

d/ The services of consultants, internationally-recruited staff andtraining assistance, valued at US$7.4 million, would be obtained inaccordance with Bank guidelines. FARA would recruit 72 staffyearsof international staff. FORNECU and APCU would be responsible foremploying about 14.5 staffyears of foreign (80%) and local (20Z)consultant services.

e/ Seasonal employees would be required in FMP and APfor manual operations (clearing, thinning, planting, nurserypreparation, shelterbelt establishment, etc). These staff would behired for specific jobs at the prevailing local wage rate.

f/ Salaries refer to costs of incremental project staff needed to carryout the project.

V Incremental vehicle/plant operating contracts and general servicescontracts, amounting to US$20.7 mn, would be for operating expenses,office/house rentals, administration and travel expenses, buildingmaintenance, bank charges and audit fees. Contracts over US$300,000would be procured through LCB; contracts below this level would beprocured by competitive shopping with at least three quotations.

F. Disbursement

3.28 The Bank loan of US$71 million would be disbursed over an eightyear period beginning in January 1987. Disbursements are based on aninitial year of start-up which includes nursery preparation and landacquisition for AP, and land clearing for FMP, followed by a six yearinvestment period and a year to complete operations. The disbursementperiod is considered realistic and takes into consideration: (i) theexperience of the First Forestry Project (full disbursement expected in 6½

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years); (ii) the West African regional profile for agricultural projects(8½ years); and (iii) the project design. The proposed allocation of loanproceeds and the disbursement percentages are given below:

Summary Disbursement Schedule(US$ Million)

Amount of the Z of ExpenditureCategory Loan Allocated to be Financed

1. Civil Works 2.0 85%

2. Vehicles, Equipment, 29.0 100% of foreign andMaterials, Furniture 80% of local.and Spare Parts

3. International Salaries, 7.0 100% of foreignConsultants and Training and 80Z of local.

4. Wages for seasonal employees 15.2 60%

5. Operating Costs and 11.0 65%General Services

6. Unallocated 6.871.0

Statements of expenditures would be used to document claims for civil worksdone by force account, wages and operational costs. Documentation would beheld by the project units for review by Bank supervision missions andproject auditors. Whenever possible, withdrawal applications would beaggregated in amounts of US$50,000 or more prior to submission to the BankGroup for reimbursement out of the loar proceeds. A summary disbursementschedule, showing amounts to be disbvSrsed to FORMECU, APCU and the statesunder FNP, and a chart providing a graphic representation of thedisbursement profile are provided in Annex 3-11.

3.29 Project and Special Accounts. FMG and the project states gaveassurances at negotiations that FORMECU, APCU and the project units wouldeach establish a project account (Account No. 1) in a local commercial bankto receive the project contributions of FMG and the states, a2d thatFORMECU would deposit the equivalent of US $1 million in APCU's AccountNo.l. FMG and the states would promptly pay their annual contributionsquarterly into these accounts in advance (par3 4.01(i)). FMG gave furtherassurances at negotiations that it would make an initial deposit intoFORMECU's Account No. 1 of the equivalent of US $2 million (501 of thefirst year's contribution) and that FOIMECU would deposit the equivalent ofUS $1 million in APCU's Account No.l. Each state gave assurances that itwould make an initial deposit of 50% of its first year's contribution intoits project unit Account No. 1 (for the nine states amounting to the

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equivalent of US $750,000) (para 4.01(j)). Compliance with this conditionby FMG, at least two of the states in FMP and at least three of the statesin AP would be conditions of loan effectiveness (para 4.02(c). Inaddition, Special Accounts (Account No. 2), which would be denominated inU.S. dollars, would be established in local conmercial banks by FORMECU,APCU and the FMP project units in Benue, Ogun, Ondo and Kaduna states intowhich the Bank would make initial deposits totalling US$3.5 million, andwhich would be used to prefinance goods and services which are reimbursableunder the loan. The Special Accounts would be operated under terms andconditions acceptable to the Bank and their replenishment would be condi-tional on FMG's and FMP states' quarterly releases of their contributions.Assurances to this effect were given at negotiations (para 4.01(k)).Details of how the Special Accounts would operate, and the initial amountsto be deposited in each, can be found in Annex 3-12.

G. Auditing and Reporting

3.30 It was agreed at negotiations that: (1) the accounts of FORMECU,APCU and the FMP project units (Benue, Kaduna, Ogun and Ondo), includingseparate accounts for amounts withdrawn on the basis of SOEs and theSpecial Project Accounts; and (2) the accounts of AP state units (Bauchi,Borno, Kaduna, Kano, Plateau and Sokoto) would be audited annually byindependent auditors acceptable to the Bank, and that audit reports wouldbe submitted 6 months after the close of FMG's fiscal year (para 4.01(1)).It also was agreed that FORMECU (for FMP) and APCU (for AP) would submitsemi-annual progress reports to the Bank (para 4.01(m)).

H. Production and Markets

3.31 The annual production figures and the mean annual increment perspecies for both AP and FMP are provided in Annex 3-13. Over the project'sestimated life (35 years for AP and 52 years for FMP), incremental woodproduction in total wvold amount to 4.3 million m3 . Of this, some 2.5million m3 (58%) would be fuelwood, 1.3 million m3 (30%) would be forpoles, and 0.5 million m 3 (12%) would be for sawlogs. In addition, APproduction would include a substantial but unquantified amount of fodderfor livestock, and an estimated 10 million mango fruits and 28 millioncashew nuts.

3.32 Under FMP, the industrial plantation project units would marketfuelwood and building poles from sales points in market towns near theproject areas. This approach was followed during previous ADPs and hasworked successfully. The small amount of higher quality poles would besold to treatment plants for conversion into electric poles for which thereis considerable demand. The most valuable output, sawlogs, would be soldto sawmillers for conversion to sawn timber. Since the annual incrementalsawlog production would average less than 0.5% of the present annual intakeby the sawmilling industry (about 6 million m 3 ), no marketing problems areanticipated. Under AP, the average annual incremental amount of fuelwoodproduced per annum when the project is fully developed would not exceed

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1-21 of the estimated present annual deficit between demand and sustainablesupply of fuelwood in the wood deficit areas of Bauchi, Borno, Kaduna,Kano, Plateau and Sokoto (5 to 8 million ms). Given that an average familyof six consumes about 3m9 of fuelvood per annum, incremental fuelvoodproduction would meet the annual needs of some 30-50,000 families. Thefuelwood and small poles produced under the farm forestry program would beused on the farm. Shelterbelts would be thinned for fuelvood and poles,and the offtake marketed locally.

I. Financial Impact and Cost Recovery

3.33 The project's financial impact and provisions for cost recoveryvary by component. There are various ways for AP to achieve cost recovery.For the farm forestry component the easiest practice would be to charge forseedlings when they are made available to farmers. Until recently, thepractice in Nigeria has been to distribute seedlings free to farmers as ameans of encouraging tree planting. In the last few years the demand forfruit tree seedlings has reached the point where SFDs have begun to chargefor them in order to bring supply and demand into balance. Charges varyby northern states ard within states, but some SFDs are collecting Nl perseedling for budded iangos. At present no charges are levied for non-fruittrees as there is less perceived economic value associated with thesetrees. The proposed media/extension effort would be targeted to changeformers' perceptions on the value of non-fruit trees. For theshelterbelts, state governments are treating these as infrastructure works,like roads, as they are large, singular investments whose merits are basedon their ecological benefits. At present neither FMG nor the states chargefarmers or communities for constructing shelterbelts. However, it shouldbe possible to recover some of their costs through the licensed harvestingof fuelwood and poles, or perhaps by charging the benefitting communi-ties/farmers a tariff to reflect part or all of the costs of construction.These issues would be explored in detail in the proposed studies of thestate forest revenue systems (para 2.09). The studies in the AP stateswould deal specifically with the issue of cost recovery of AP activities,and a revenue system would be recommended that would move to full costrecovery of AP as soon as feasible.

3.34 It is expected that FMP would achieve full cost recovery.However, sales of industrial wond from project plantations would be on thebasis of market prices and therefore it is impossible to say with certaintyif cost recovery would be achieved. A cash flow analysis of FMP, found inAnnex 3-14, based on conservative estimates of market prices shows that FMPrevenues should cover operating costs and debit service on the re-lentproceeds of the proposed World Bank loan (US$24.6 million) and provide areasonable financial return to the states on their investment. FMG'scontribution to FMP (N8.7 million) would be treated as a development grantto the states following the standard practice in Nigeria for forestryinvestments. The annual cash flow of FMG covering the projectimplementation period and five years thereafter is provided in the table onpage 2 of the above annex. It shows that FMG would experience a negativecash flow during this period, reflecting the grant element in FMH's support

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cash flow during this period, reflecting the grant element in FMG's supportfor AP activities and the costs of the federally-supported management unitstraining activities, studies and research.

J. Benefits and Risks

3.35 Given the differing natures of the Afforestation Program (AP) andForest Management Program (FMP), an overall project ERR has not beencalculated. For AP, the ERR is estimated at 15% and for FMN, 17Z. Each issummarized below. A description of the methodology and the assumptionsused in the analysis is provided in Annexes 3-15 (AP) and 3-16 (FMP);supporting documentation is contained in Working Paper 5.

3.36 The following table presents a breakdown of the ERR for AP bytype of benefit (incremental production of fuelwood/poles and increasedagriculture and livestock production; by type of investment (shelterbeltsor farm forestry); and by location (zone 1 - the area above 12'N latitudein the five northern states, zone 2 - the remainder of the five states andzone 3 - the J0 s Plateau). The first row shows the ERR for fuelwood andpole production alone, the second row, the amount by which the ERR israised on account of the ecological benefits:

ERR for AP by Type of Benefit, by Investment and by Zone

Zone 1 and 2 Zone 3

Shelter- Farm FarmBenefit belts Forestry Forestry

Fuelwood/Poles 7% 4% 16%Agriculture/Livestock 8Z 10% Not calculated

Total ERR 15% 14% 16%

3.37 In zones I and 2, the AP's output of fuelvood and poles wouldonly provide an ERR ranging from 4-7%. In zone 3, where the rainfall ismuch higher, wood grows substantially faster than in zones 1 and 2, andincremental fuelwood/pole production would provide an economic return of16% on project investment. The shelterbelts and farm forestry activitiesiL zones 1 and 2 are projected to yield substantial agricultural andlivestock benefits which, when combined with the wood benefits, give asatisfactory ERR. It should be noted that the assumptions used incalculating agricultural and livestock benefits for shelterbelts and farmforestry have been conservative. In the case of shelterbelts, the analysisassumes they would have a 20X (±5%) effect on both crop yields (i.e.,improved crop output because of greater moisture availability and nutrientcontent in the soil) and livestock benefits (greater livestock productionresulting from increased crop residues used for fodder and greater suppliesof browse). In the case of farm forestry, a 10% increase in the value ofcrop and livestock production was assumed. No agricultural or livestock

- 24 -

benefit were calculated for zone 3, but if they had been computed, the ERRwould have exceeded 20Z.

3.38 Of the above assumptions about agricultural and livestockbenefits, only the impact which shelterbelts produce on crop production hasbeen verified by similar experiences elsewhere. Studies undertaken in morethan 15 countries over the past 50 years have noted that shelterbelts canp_oduce benefits in excess of the 20% incremental growth assumed in thepresent analysis. Less information is available on the effects of farmforestry on the yields of crops, but the 10% effect on yield is consideredconservative if a good farmer-response is achieved; in fact, only about a5% effect on yields is required to justify the program economically. Thesensitivity analyses considered a 10% increase in costs, a three year lagin farmer response, and various rates of decline in soil fertility rangingfrom 0% per year (to give the "pure" production benefits of the project) to3% per year, plus one case where land might eventually be lost if erosionwere severe. The overall result is that the expected ERR ranged from 11 to17% for farm forestry, with an expected value of 14%, and from 12 to 16%for shelterbelts, with an expected value 14% (Annex 3-15).

3.39 Risks associated with shelterbelt establishment are notconsidered to be great. The states of K;ano and Sokoto have planted over1,500 km of shelterbelts. The proposed project would improve the siteselection procedures and thus an 80% survival rate is expected. The risksof the farm forestry program are more considerable since the programdepends entirely on farmer acceptance which will not be known untilactivities are underway. For this reason much attentiou has been given toreasons for past failures in designing the component. The major innovationwould be the close involvement of the state agricultural extension servicesin the process of transferring seedlings to farmers and providing advice onplanting and follow-up care. The farm forestry program would also includean extensive media program to deepen farmer awareness of ecologicalproblems and the role of tree planting in arresting these problems.Finally the program would include regular monitoring of farmer response topermit changes in approach durtng the proiect period (such as differenttypes of seedlings made availab'e, different patterns of seedlingdistribution, or increases in the numbers of seedlings supplied) to meetfarmer preferences.

3.40 FMP is designed to be a commercially viable program which willimprove the return on existing but neglected assets (maintenance ofexisting plantations) and new assets (new plantations). The ERR for bothtypes of investments under FMP would be 17% with net present value of N12.7million. The ERR is relatively insensitive to price and benefit changes:costs would have to increase by 72% or benefits decrease by 42% for the ERRto fall below 10%. FMP faces no unusual risks. Funding was the majorfactor affecting the industrial plantations in the First Forestry Project,and the proposed project has been designed to require substantially lessfunding per annum from FMG and the participating states than the previousproject. Cost recovery would be a problem if recommendations of the

- 25 -

proposed state forest revenue system studies were not adopted by the statesas called for under the project.

IV. AGREEMENTS REACHED AND RECOMMENDATION

4.01 During negotiations for t'e proposed loan, the followingprincipal issues were discussed and agreements reached with FMG and theparticipating states, and specified as conditions in the Loan and ProjectAgreements.

(a) FMG would: (i) ensure that FORMECU carries out a review ofthe draft National Forest Policy by December 31, 1987 andsubmit to the Bank for its review by June 30, 1988, theNational Forest Policy; (ii) after an exchange of views withthe Bank, publish by December 31, 1988 the revised draftNational Forest Policy; and (iii) review the said NationalForest Policy by June 30, 1990, and in each year thereafteruntil project cc'npletion, taking into account the Bank'sviews and the recommendations resulting from the proposedNational Afforestation Plan (para 2.08).

(b) EfMG would ensure that FORMECU would empLoy consultants byDecember 31, 1986 to undertake re%iews of forest revenuesystems in each of the project states to be completed indraft by June 30, 1987 for review and comment by FMG, thestates and the Bank. Bearing in mind the comments received,each project state would introduce a revised state forestrevenue system by June 30, 1988. FHG shall, within thelimits of its constitutional powers, take all necessaryaction to ensure that each project state would adopt theproposed system by June 30, 1988 (para 2.09);

(c) The AP States would employ the criteria set out in para 3.08in selecting areas where shelterbelts would be constructed(para 3.08);

(d) FMG would ensure that APCU would prepare a draft NationalAfforestation Plan b-sed on studies and research to beundertaken in agreement with the Bank by December 31, 1989,and, after considering the views of the Bank and concernedstates, issue the final plan by June 30, 1990 (para3.19(i));

(e) FMG would ensure that APCU would complete a draft study ofhousehold energy supply and demand in Nigeria's five north-eru states by December 31, 1987, and after review by FMG,the Bank and concerned states, issue a final report by June30, 1988. FMG would carry out the recommendations accordingto the timetable contained in the report (para 3.19(ii));

- 26 -

(f) FMG would establish FORNECU and APCU on terms andconditions satisfactory to the Bank, and appoint individualsto fill four positions in these units (Head and FinancialAdviser, FORMECU; Project Coordinator and FinancialController, APCU) whose qualifications and experience shallbe satisfactory to the Bank (para 3.20);

(g) The states would establish project units on terms andconditions acceptable to the Bank (para 3.21);

(h) Each AP state would establish a statewide AfforestationCommittee by December 31, 1987, to meet semi-annually tocoordinate rural afforestation (para 3.22);

(i) FNG and the project states would ensure that FORMECU, APCUand the project units would establish accounts in commercialbanks (Account No. 1). FMG and the project states wouldpromptly pay their contributions quarterly into theseaccounts in advance (para 3.29);

(j) FMG would make an initial deposit of into FORMECU's No. 1account of the equivalent of US $2 million, FORNECU woulddeposit the equivalent of US $1 million in APCU's accountNo. 1, and each state would make an initial depositequivalent to 50% of its first year's contribution into thestate project unit's Account No. 1 (para 3.29);

(k) FORMECU, APCU and FMP state units would establish SpecialAccounts (Account No. 2) denominated in US dollars forprefinancing items eligible for Bank reimbursement;replenishment of these accounts by the Bank would be condi-tional on FMG's and FMP states' quarterly releases of theircontributions (para 3.29);

(1) Annual audits would be conducted for FORNECU, APCU and thestate project units by independent auditors satisfactory tothe Bank, to be submitted 6 months after the close of FMG'sfiscal year (para 3.30); and

(m) FMG would ensure that FORMECU and APCU would submitsemi-annual progress reports (para 3.30).

4.02 Conditions of loan effectIveness would be that:

(a) FMG would have established FORMECU and APCU and haveappointed candidates acceptable to the Bank for Head andFinancial Adviser of FORMECU and for Project Coordinator andFinancial Controller of APCU (para 3.20);

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(b) at least five project unit managers have been appointed withcandidates acceptable to the Bank and at least five ProjectAgreements have been ratified (para 3.21); and

(c) FMG would have opened project accounts (Account No 1) onbehalf of FORMECU and APCU and would have made the initialdeposits; and at least two of the states in FMP and three ofthe -.tates in AP would have opened project accounts (AccountNo. 1) and would have made their initial deposits (3.29).

4.03 It would be a condition of loan disbursement for funds for eachstate in the FMP program that it had completed its subsidiary loan agree-ment with FMG providing for the onlending of the Bank loan funds designatedfor that state (para 3.25).

4.04 With the indicated assurances and conditions, the project wouldbe suitable for a Bank loan of US$71 million to the Federal Republic ofNigeria.

WAPABSeptember 1986

- 2B-NICUTA

Features of tew MtuSltural Sector Anlnex 1

Vit 1974-76 AV. 196

1. t ^

Totad (growth rate) milion 74.9 (2.5) 93.6 (3.3)Bural as X Total S 81.6 7esural Tmlies '000 10,211 12.168

2. Econedic OVerVIew

CDGPIed of Total Population 521 767Agdc. GOPlsld of srad Poultio $ 173 233Agricultural GP as 2 of Total S 24 30

3. Lmd ff a*

Land Aracl q. km. 910.770 910,770orest '000 ha 16.357 14.000

Perennil Cro '000 be 2,497 2.535An*a Cre" '000 ba 27,503 27.900

Of Which: Area Irrigated a* '000 ha la 32

4. Outputs 69-71 Lv. - 100

1. Root Crops " 104 902. Sorm " 100 833. MilUlt " 111 1074. Ground_nt (to sbhll) " 23 32Liveetock

cattle - 100 106Sheep/goats 109 125Poultry 107 187PIs- 113 163

cereal Productiou/Wead of TotalPopulation 90 80

Ceraljle of Rural Population " 92 83

5. Inlets

Fertilizer i000 tos 124 608Pesticide '000 liters na. a.n.Tractors / uidts 7.500 9.500

6. Trade a1

Total Eorte S * 9.312 11.314Of Whicb:

AgrLcultural Products S 5 4Of Which:

1. Cocoas*d Products 1 68 742. bobber z 6 63. Pals Produce Carmle, oll) 2 14 10

Total Iports / 5.670 13.437Of Which:

AgIcultural Products 8 131. Cereale and Prepartlo S 38 422. Sugar and Iobe 23 233. DAdry Products and E4gg S 19 9

Agricultural Inputs S 2 6

7. Gor nt Expendture b/

Total Rarrent Budget $ a 2.040 8.562Of Which: Agriculur I ITotal Capital Budget S a 5.332 3,024Of Which: Agriculture r 2 13

Dag for 1983 eonly.Fe ra lGvarnmt only.

r/ Remainlg land area Is under peranent pastura and other laud ucs.

Data Sources: (l) FAO Produetion. Fertellisr and Trade Yearbooks; (iI) NigeriaCotry Econoiec hm (Dec. 1985); (Iii) Nigera Agricultural Pricing Policy Peport

WAPAB (Oct. 1984); (lv) Rev.s1 Of Public Expedltur Pn m in Nigeria (Oct. 1985); (v)September 1986 lID Data Bank and (vi) VAM's Key Indicator Table of 1186.

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Annex 2-1Page 1 of 2

NIGERIA

SECOND FORESTRY PROJECT

Supply and Demand Characteristics of the Forestry Sector

1. Overall Demand Supply. jstimated annual demand (cons mption) in1983 amounts to 50 to 55 million m3 of which 45 to 50 million m representsfuelvood and poles and 5 million m , industrial wood. EsSimated annualsupply on a sustainable basis is about 40 to 45 million m . The supplycomes from 2 sources: (i) lands outside the forest reserves and (ii) theforest reserves. The largest source is from trees/brush found in forestareas, and on agricultural/other lands outside the reserves. The sustain-able yields from this sour9 e are not accurately known but they probably donot exceed 25-30 million m per annum and are declining since the.;e areasare most frequently overcut to meet the deficit. The second source, theforest reserves 1/, provide about 15 million m of wood annually on asustainable basis (9.6 million ha with an assumed mean annual increment of1.5 m /ha). Thus, th5 annual deficit could be as high as 15 million m oras low on 5 villion m , depending on consumption patterns and rainfall iny one year. Probably on average the deficit amounts to some 10 mUllion

m . The deficit is regionalized, comprising about 5 to 8 million m offuelwood and poles in the north (the south is self-sufficient in fuelwoodand poles) and 2 to 3 million m of industrial wood in the south (thesawmiilling industry is located in the southern half of the country near thesource of supply).

2. Fuelwood and Poles. The imbalance between supply and demand offuelwood and poles is most pronounced in Nigeria's five northern states ofBauchi, Borno, Kaduna, K no and Sokoto where the annual deficit amounts tobetween 5 to 8 million m . Land is rapidly being cleared for agriculturalpurposes and commercial fuelwood suppliers are having to travel severalhundred kilometers to collect wood for urban markets. Poor rainfallconditions and increased numbers of nomadic herdsmen, driven south intoNigeria by drought in the Sahel, have exacerbated the pressure on the treestocks in the north. The imbalance in fuelwood supply between the northand south is reflected in prices Nhich range as high as N120Im in northernurban centers compared with N10/m in the south.

3. Industrial Wood. Most demand for industrial wood comes from 23large private saw mills (annual intake 500 3000 m ) and some 950 smallerprivate mills (annual intake 4.0 million m ) located for the most part inthe forest zones in the middle and southern belts. In addition there are 6

L/ About 7.2 million ha 175%) of the reserves are situated in thenorthern part of the country with the remaining 2.4 million (25%) intze wetter middle and southern regions.

- 30 -Annex 2-1

Page 2 of 2

plywood mills (annual wood intake 220,000 m ) also owned for the most partby the private sector. FMG has been responsible for investment in pulp andpaper mills, embarking on three major projects in the mid 1970s. It hasrecently completed expansion of the pulp and paper mill at Jebba to produce65,000 tons per gnnum of industrial paper and paperboard (annual woodintake 130,000 m ). A second mill at Calabar to produce 100,000 tons pesannum of newsprint began operating in 1985 (annual wood intake 384,000 mAthird pulp and paper mill at Iwopin for fine paper (annual intake 650,000m) has been partially completed, but the high cost of the remaining works(N300 million) has led FMG to postpone further investment for the present.

4. Total annual industiial wood requirements (sawlogs and veneerlogs) in 1985 amounted to about 5 million m . At present only about 1.6million ha of the forest reserves (out of 2.4 million ha) in the forestzones (including 150,000 ha of plantations) are capable of providing about2.4 million m of industrial wood annually on a sustained basis. Theremaining supply comes from forest areas outside the forest reserves whichare being overcut in order to meet demand. It is estimated that at presentlevels of overcutting those areas are likely to be stripped of theircommercial timber by the end of the century.

5. Implications. With estimated fuelwood and pole demand exceedingsustainable supply in the north, the gap is filled by overcutting trees onexisting lands, leading to loss of tree cover and potential loss of soilproductivity. To counter these problems afforestation programs areurgently needed. There are also other areas to be examined, sinceafforestation programs alone will not meet northern fuel requirements. Oneis the introduction of alternative fuels. With fuelwood price increases inthe north, alternative fuels such as kerosene become attractive. FMG'srecent decision to increase substantially all fuel prices except kerosene,vhich will now be cross-subsidized, will enable kerosene to remain as apossible substitute for fuelwood in urban areas of the north. Since thepresent knowledge on the extent of kerosene use in the north is limited,the project would include funds to study household energy consumptionpatterns and preferences. A second factor which would help dampen thegrowth of consumption is the introduction of fuel efficient stoves. Theextent to which I.-proved stoves are being used or could be introduced innorthern areas weuld be examined under the proposed household energy study.

6. in the case of industrial wood, the prospects are that in theforest areas outside the reserves all the valuable industrial species willhave been logged by the end of the century. Nigeria will then be forced toimport sawlogs or increase its imports of forest products. Nigeria wouldneed to plant 250,000 ha of forest plantations just to meet the currentdeficit, and substantially greater hectarage to meet expected growth indemand. In addition to replanting programs, the country needs to improvethe management of existing plantations to make sure present resources arewell utilized. The proposed project would support improvements in forestmanagement and provide assistance for high priority planting.

WAPABSeptember 1986

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Annex 2-2Page 1 of 3

NIGERIA

SECOND FORESTRY PROJECT

Institutions in the Forestry Sector

1. Organizational Structure. Responsibility for forestry affairs atthe national level rests with the Federal Ministry of Agriculture, WaterResources and Rural Development (FMAWRRD). Within FMAWRRD, the FederalDepartment of Forestry (FDF), located in Lagos, carries out the ministry'sresponsibilities for: (i) formulating national forest policies; (ii)promoting forestry projects that are of national interest, and channellingfederal funds to finance such projects to the states; and (iii) coordinat-ing and monitoring state forestry activities. Under the First ForestryProject, FDF established the Forestry Monitoring and Evaluation Unit inlbadan to coordinate IBRD-assisted project activities and monitor otherfederally-assisted forestry projects throughout the country. The aboveunit's responsibilities would be extended to cover the proposed project aswell as other donor-assisted activities in the forestry sector. Its namewould be changed to the Forestry Management, Evaluation and CoordinatingUnit (FORMECU).

2. The State Forestry Departments (SFDs), headed by Chief Conser-vator of Forests (CCF), are directly responsible for the actual managementof the forest reserves in each state as well as for the control ofnon-reserved forests. The SFDs work closely with the Local GovernmentAuthorities (LGAs) within each state, and their roles in terms of estab-lishing plantations, issuing licenses and collecting revenues vary amongstates. For the most part the SFDs have responsibility for establishingand managing new plantations and setting stumpage fees for various species.In some states, the LGAs issue licenses for harvesting forest reserves andcollect revenues, which are kept by the LGAs and form a major source oftheir incomes. The fees charged for logging or harvesting forest resourceshave historically been low, and have inadequately reflected the true valueof the species or its replacement cost. The project addresses these issuesas part of its input on forest policies.

3. As of 1981, the total established staff of the 19 SFDs was 9,478with a fill ratio of about 70%, or about 400 staff per state, of whichabout 4Z or 16 per state were in the technical/professional grades (GL8 andabove). In the last three years, the austerity crises facing the stateshave forced layoffs within the forestry services. The northern states aretypically understaffed in higher managerial positions; the middle andsouthern states lack staff with practical orientation and experience. Thebudget crisis has also forced the northern states to curtail their

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Annex 2-2Page 2 of 3

shelterbelt programs and the middle and southern states, their plantationprograms.

4. Institutional responsibility for forestry training is shared bythe Federal University system (college level), the Forestry ResearchInstitute of Nigeria (FRIN-technical training), and FDF (in-servicetraining). At college level, the University of lbadan has a wellrecognized Forestry Department which dates to the 1960s, comprising 32professionals. An estimated 50 students graduate annually, about thenumber which can meaningfully be absorbed by the State and Federal forestryservices. FRIN operates technical training schools at lbadan, Jos andSapoba where two year courses are given for silvicultural assistants andsix month courses for forest guards. These schools operate competently andseveral hundred .tudents graduate annually. Finally, FDF has responsibili-ty for the School of Wildlife Management in New Bussa, the Sawmill TrainingSchool in Benin City, and the in-service training centers at Oluwa andKano. The in-service training centers are recent additions to Nigeria'sforestry training system. The First Forestry Project assisted the con-struction of the Oluwa School which has just begun to offer techni-cal/vocational courses for forestry staff. The proposed project wouldcontinue providing assistance to Oluwa and would help improve the opera-tions of the Kano School.

5. FRIN is responsible for Nigeria's forestry research. Located inIbadan, it was established in 1954 under FMAWRRD where it remained until1977 when it was transferred along with other federal research activitiesto the Federal Ministry of Science and Technology. This arrange.-nt hashampered coordination of activities, although this problem pales in compar-ison to what has happened to FRIN during the recent period of budgetausterity. FRIN like other research organizations has been pared to thebone, with budgets inadequate to pay existing staff let alone car-y outresearch projects. FRIN operates several sub-stations, including theShelterbelt Research Station in Kano and the Savanna Forest ResearchStation in Samaru. The proposed project would provide funds for :,udies inarid zone afforestation activities which would be coordinated with theresearch staff at the Kano sub-station.

6. Performance. Most of the institutions in the sector haveperformed poorly in recent years. FDF has yet to develop and promulgate anational forestry policy which sets out clearly the nation's objectives forits forest resources and its plans for achieving them. Part of the reasonis the resistance from the states and LGAs who, in times of financialduress, have frequently preferred to exploit existing resources rather thanconserve in the nation's long-term interest. FMG has also been slow torealize the need for such a policy. However, the increasing problems offuelwood shortages in the north and the visible impact this has had on theenvironment has created the situation where FMG is now ready to develop andpromulgate a national policy. The states as well are more receptive to theidea both because their resources are dwindling and they must depend on FMGfor resources to invest in forestry projects.

- 33 -Annex 2-2Page 3 of 3

7. Funding has also constrained performance of the institutions inthe sector. At the federal level, FDF received only 2.4Z of the federalagricultural investment budget during 1981-84, compared to 3Z expected,forcing it to substantially reduce its Fourth Plan (1981-85) investmentprogram. FRIN's funding situation was even worse and it has been unable tocarry out any major research in the last few years. At the state level,funding shortages were also severe. Most state forestry investments weresuspended and many reduced their forestry staff. Funds were not availableto manage existing plantations.

-APABSeptember 1986

- 34 -

Annex 3-1Page 1 of 12

NIGERIA

SECOND FORESTRY PROJECT

AFFORESTATION PROGRAM (AP)

1. Overview. The project's afforestation program (AP) is designedto meet urgent needs to stabilize soils in the middle and northern regionsof Nigeria. Areas of geographic concentration for AP are those which: (i)have already suffered environmental degration; (ii) are in areas of highpopulation pressure and (iii) which have good prospects for continuedfarming as long as soil fertility is sustained. The project's AP areastretches from the border with the Niger Republic in the North to thesouthern end of the Jos Plateau in the Plateau State and has for purpose ofsimplicity been divided into three zones. In general the area has a harshclimate with long dry seasons and periodic droughts. Demand for fuelvoodand building materials, changing agricultural practices and overgrazing areresponsible for the profound negative environmental impact in the area,particularly in the carrying capacity of the soils.

2. Organization of Annex. This annex provides: (i) an cverview ofAP components; (ii) the reasoDs for envircnmental degradation in the area;(iii) the experi-ence of past efforts to ozi:est the decline; (iv) thestrategies for AP; (v) the detailed components of AP. A further discussionof AP is in Annexes 3-6 and 3-15 and Working Papers 2 and 5.

3. Afforestation Program Components. The AP involves separate, butcomplementary, programs of shelterbelts in the northern drier zones andfarm forestry throughout. The shelterbelt program is confined to the areasnorth of 12°N latitude. This is Nigeria's ar'd zone, which covers thenorthern half of Bauchi, Borno, Kaduna, Kano and Sokoto States. This areaessentially represents the front line in the fight against desertificationand is referred to as Zone 1. The farm forestry programs are statewideprograms to be implemented by ADP extension staff. In Zone 1, farmforestry would be closely associated with the shelterbelt program. Zone 2,the areas in the southern part of the five northern states would benefitsolely from farm forestry programs. These areas range from 8°N to 12°Nwith rainfall averages of 1,000 mm to 1,500 mm/year. The Jos Plateau(Zone 3), which is also seriously eroded from overcutting and mining, wouldhave its own uniquely designed farm forestry program. This area is at 10°Nlatitude but with slightly higher rainfall (1,200 mm to 2,000 mm) becauseof its higher elevation.

4. Demand for Wood. Consumption of wood in the Zones 1 and 2currently estimated to be 15 million m3 per year, of which about 85Z is forfuel and 15Z for building materials and fences. This compares with a meanmmual increment (MAI) from the natural growth of the forest reserves ofonly 3.6 million m 3, plus perhaps another 4 to 7 million ms from trees on

- 35 -

Annex 3-1Page 2 of 12

farm and fallowland. Thus there is a net deficit of some 5 to 8million m9. 1/ Wood production from forestry plantations is small incomparison with these figures, about 0.1 million ms/year. The rate ofconsumption is increasing (with population growth) while the MAI isdeclining. Excluding forest reserves, the standing volume of tree stocksis less than 5-10 years of the current annual rate of consumption in thearid zone. The consequences of this have been fourfold:

a. A marked decline in farm tree stocks in the arid zone.Although good data are lacking, it is variously reportedthat the number of farm trees has declined from around 15-20per hectare in the early 1950s to around 3 per hectare.

b. A threatening decline in soil fertility. This has probablyoccurred already in many areas, though scientificmeasurements are lacking. 2/ There are broadly four effectswith the possibility of a fifth setting in: gulley erosion;the loss of topsoil to winds; greater surface evaporationand reduced soil moisture content as surface wind velocitiesincrease; reduced recycling of soil nutrients; and thepossibility that further nutrients (dung and crop residues)will be consumed as fuel if fuelwood becomes scarce.

c. The harvesting of tree stocks without replenishment in thesouthern regions of the northern states for wood sales tothe arid zone. Firewood is transported extensively overdistances of 200-400 km, and is a profitable activity forsubsistence farmers and traders further south. While thisis offering the arid zone some respite from (a) and (b), itmeans that the ecological damage is gradually being exportedfurther south.

d. Serious encroachment on and degradation of the forest andgame reserves, including the extensive reserves at Yankari(in Southern Bauchi).

5. Agriculture. The predominant form of agriculture is intensivearable cropping (mainly millet and sorghum) during the short rainy season.Because of increasing populations, fallow periods are becoming shorter ornon-existent, leaving the soil continuously exposed and subject to erosion.Farmers frequently try to grow crops on areas where the soil depth has beenreduced to only a few decimeters. Contour cultivation is seldom seen onsloping areas. While cultivation is still mainly by hand, there is an

1/ Supply and demand is discussed further in Annex 2-1.

2/ Such data would be gathered for the preparation of the long-term plan.See Annex 3-5.

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Annex 3-1Page 3 of 12

increase in the use of draught cattle and is some cases tractors. As wellas decreasing the area under forest, this has caused a reduction in thenumber of farm trees which some farmers consider an impediment tomechanized operations. However, the value of certain farm trees for fruitand fodder is recognizrd and in many cases these are left, even wherecultivation is mechanized (see W.P. 2, para 1.05). Farm planting of treeshas been very limited despite government efforts to encourage it over thelast decade. Notable exceptions are fruit trees (cashew, mIango and guava),which can be grown in areas with higher water tables, and windbreak hedgesof Euphorbia spp.

6. Livestock. Livestock densities in the northern states are thehighest in Nigeria. Many animals are owned by nomadic Fulani herdsmen,although there are considerable locally owned populations of sheep andgoats in villages. Actual numbers of livestock are difficult to estimateand vary considerably with the seasonal movement of Fulani herds. InSokoto State, where estimates have been based on ntmbers brought in forvaccination, the following populations are recorded: goats 7 million, sheep4 million, cattle 3.6 million, and others (camels, donkeys and horses) o.5million. Livestock browsing is a major factor in contributing to the lossof tree cover. Natural regeneration in forest reserves has become almostuon-existent and older trees are dying as a result of increased lopping forfodder. Since eradication of the tsetse fly, cattle numbers in the regionhave increased dramatically. Unless well-protected, no trees plantedeither on farmland or in plantations and shelterbelts can survive browsing.Even Epecies such as neem (Azdirachta indica) which were previouslyconsitered to be unpalatable, and which could be successfully establishedin p_antations without fencing 10 years ago, are now eaten by goats andcamels. There is no doubt that in the long term restoration of asufficient vegetative cover will require a reduction in livestock numbers,greater control of their movement and efforts to produce alternativesources of fodder. The Bank-assisted Second Livestock Project wouldinclude measures that address the problem, such as providing for newgrazing reserves on which pastoralists would establish 4 ha leguminousfodder plots.

Previous Policies in the Arid Zone

7. Forestry Policy. The present forest policy in all AP states isbased on the Forestry Law of Northern Nigeria enacted in 1938. The lawrecognizes the need for protection and management of the area's forestresources to safeguard the climatic and water regimes upon whichagricultural and pastoral productivity depend. While acknowledging thepriority that food production has over forestry, the law states the need tocreate, protect and manage forest estate areas as well as for theprotection of forest vegetation on unreserved lands. The states' forestservices have the responsibility for creating and managing the forestreserves in such a manner that the maximum benefit to the national economyis derived, consistent with the principles of sustained yield.

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Annex 3-1Page 4 of 1 2

8. Reserve land originally included State forest reserves, nativeauthority forest reserves and communal forest areas. Since localgovernment reform, native authority forest reserves have been included inthe Government forest estate and the ownership of all reserves have beenvested in local governments. The tasks of management of the Governmentforest estate however still remain with the states' forest services. Whilethe states have the responsibility for protection and management, theharvesting and collection of revenues is administered by the localgovernments. This division of responsibility has made management difficultand, because of the importance of royalty revenues to local governments,cutting allowed is frequently in excess of desirable levels.

9. In addition to collecting revenues from harvesting in forestreserves, the local governments also have responsibility for the collectionof tariffs from the cutting of economic trees on non-forest land. Thesefees vary by species, each of which has a minimum allowed girth. Certaineconomic farm trees were protected completely prior to 1955, but a changein the law permitted felling mature trees with a girth of greater than 6feet, with the intention of promoting regeneration. Regeneration orreplanting has not occurred and in general local governments do not havethe capacity either to police the cutting of trees outside forest estatesor to collect the tariffs.

10. The devolution of authority to local governments has undoubtedlybeen detrimental to both the management of reserve areas and theconservation of trees on non-forest land. However, given the present stafflimitations of the forest services in relation to the size of the reserveareas and the pressures on them, it is doubtful whether a reassignment ofresponsibility at this stage could do much to rescue the situation.

11. Plantations and Shelterbelts. Overall the state forestryservices have been able to undertake modest investments in plantations andshelterbelts, amounting to about 23 thousand hectares by 1985, of which 21thousand were in Sokoto and Kano. Of these plantings, about 1,700 km ofshelterbelts were established, mainly in Sokoto and Kano, protectingperhaps 20,000 hectares of arable land. The success rate is about 70%.There have been useful experiences particularly in Kano and Sokoto, whichwill serve the states well. Nevertheless, the amount of planting done sofar is sufficient to supply less than 0.5% of the wood needs of thenorthern states while the shelterbelts protect, at most, less than 0.3% ofthe ecological threatened areas in the arid zone.

12. The Government's Previouis Arid Zone Afforestation Project (AZAP)In 1977, increasing concern about the scate of desertification in the northprompted the Federal Government to form the National Committee on Arid ZoneAfforestation. Activities, which were carried out mainly by the StateForestry Divisions, included the establishment and operation of nurseries;establishment of plantations and shelterbelts; encouragement of commercialand individual woodlots; and publicity. Seedlings and fencing material forfarm and village planting were provided free to the public. During theperiod 1979-84, about 55.5 million seedlings were raised in 60 --urseries

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Annex 3-1Page 5 of 12

across the five states. Of these, more than 93% were forest trees (mainlyneem and eucalyptus), the remainder being fruit trees. About 4,100 ha ofshelterbelts and plantations were established using 5.5 million seedlings,with the balance of 50 mill 4.on being distributed for farm and communityplanting. A center for voLational training in arid zone forestry wasestablished in Kano with the first intake of trainees in 1983.

13. Because of funding shortfalls, the Federal Government terminatedthe project at the end of 1984 and transferred the nurseries to the RiverBasin Rural Development Authorities in each state. So far only theAuthorities in Bauchi and Borno have taken ove, the nurseries and thesestill have not developed a definitive afforestation plan.

14. Lessons of the Government's Previous Project. The main lessonsrelate to (i) farm forestry, (ii) shelterbelts, and (iii) general issues offunding, administrative capacity, organization and forestry law.

15. Ci) Farm Forestry. The farm forestry program did not succeed inits objectives and the bulk of the seedlings distributed to farmers werevasted. The free seedlings were sometimes discarded and the potting soilused for fertilizer. Given the drought, many withered and others were deadon arrival owing to the difficulties of distribution. Most were notprotected from livestock or otherwise maintained after planting and, insome cases, the choice of seedlings was wrong. The program also aimed atstate-wide distribution, which compounded seedling delivery problems, madeit difficult for the nurseries to determine farmer's needs, and probablyundermined the program's credibility with the farmers.

16. Nevertheless, there were some successes, and though the risksremain significant, conditions are also now more favorable for thedevelopment of farm forestry. First, village plantings for shade and fruitwere visibly successful even in the most arid regions, and were respectedand protected by the communities. Indeed, the fruit trees (which onlyaccounted for 10% of all seedlings produced under the project) were popularon farms, and commanded a good price (about NO.5-1.0) at some nurseries.Second, the awareness of communities of the ecological problem is muchgreater now, and local community and religious leaders are beginning toinvolve themselves in the task of encouraging farm and community plantings.Third, economic incentives in Nigeria are no longer seriously biasedagainst food crop production and investment in arable land. Fourth, theprogram was seriously handicapped by not using the agricultural extensionservices to encourage the ideas of farm forestry and provide supportingadvice to farmers and feedback to the nurseries and supporting research andmonitoring activities were lacking. Fifth, and most significant, there ismuch evidence, albeit not well documented, that traditional tenurial andpastoral activities are gradually changing under the influence of economic,social and demographic changes in the region. As the Second LivestockProject notes, about 30% of the Fulani herdsmen had settled permanently by1979, a further 50% practiced limited seasonal migration, and only 20% werenoxadic. Settlement is accompanied by significant reductior- of averageherd sizes, from 80-100 head for the nomad, to 30-70 for sem-settled,

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seasonal pastorialists to 20-30 for fully settled. There is also an activeulirket in land sales and rentals. 3/ Hence, influences of economicincentives, demographic cuange, changes in farming systems, and thetechnical, institutional and infrastructural support for agriculture (underthe AMPs), livestock and farm forestry, have better prospects than beforeof improving land management practices in the region.

17. (ii) Shelterbelts. Shelterbelts have been established inNorthern Nigeria since the early 1960s and the techniques are well known.Their principal function is protecting and rehabilitating the land. Theirvood products, though significant and important, are essentiallyby-products of the program which increase their economic justification.

18. Shelterbelt plantings so far have provided important experienceand have also demonstrated that, even in the rost arid areas of Nigeria,shelterbelts can be successfully established. However, failures haveoccurred (about 20-30% failed in Kano and Sokoto, t1-ough the percentageswere much higher in other states). The main reason was that, given thepaucity of funds allocated to the program, planting took precedence overresearch into and testing of soils (for nutrients, pans and water tables)prior to site selection. Also, the earlier shelterbelts, thoughestablished in ecologically threatened areas, were not always establishedin areas that were, simultaneously, economically the most important.Hence, under the project, a much greater emphasis will be placed onresearch, testing and site selection.

19. (iii) Funding, administrative capacity, organization and forestrylaw. These are all complex subjects, but their complexity must not beallowed to obscure the fundamental and simple point that no institution canbe expected to execute its responsibilities, let alone carry out importantinvestment and maintenance programs, if it is tardily funded andunderfunded. This has been the situation in Northern Nigeria for manyyears. Arid zone afforestation is now given a high priority by State andFederal Government.

20. Funding aside, it is clear that the administration of forestrypolicy in the arid zone is fraught with difficulties. The confusion ofresponsibilities between State Governments and Local Authorities over suchissues as licences, the collection of stumpage fees and the maintenance ofreserves is, among other things, undermining the revenue base. Indeed, toeffect reforms in licencing policies and stumpage fees, it will benecessary, first, to redefine both forestry policy itself and how it is tobe administered.

3/ See W.P. 5 for a further discussion of land values.

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Annex 3-1Page 7 of 12

Strategy of the Project

21. General Principles Behind the Planting Programs. Given the rateand extent at which deforestation is taking place, the most promising andfinancially plausible approach to afforestation is a combined program offarm forestry and shelterbelts. As noted above, the MAU from all the stateplantation and shelterbelt projects in the northern states amounts to lessthan 1% of an increasing volume of consumption. For the public sector toshoulder the task of afforestation itself would require roughly atwenty-fold increase in state forestry investment and maintenanceactivities. Hence it is necessary to involve the farmers in theafforestation programs themselves. This has two advantages. First,farmers greatly outnumber foresters so that their part-time involvement asan off-farm activity offers prospects of a significant increase in plantingrates. Second, and related to this, the approach greatly reduces thepublic expenditure requirements since the costs of tree planting,protection and maintenance are borne by the farm families themselves.

22. Since the public financial costs of farm forestry, assuming a 40%seedling survival rate, are less than one fifth of those of shelterbeltsand the economic returns are higher, the question arises whether it wouldnot be better to concentrate exclusively on farm forestry. The answer isthat risk-return considerations favor shelterbelt establishment in the moreimmediately threatened areas. In addition, shelterbelts are likely to havean important demonstration effect. Shelterbelts are thus seen as animportant component of arid zone afforestation in the short term becausetheir establishment can be directly controlled by the states and the factthat their beneficial effects can be readily demonstrated. In this way,they may also act an an impetus to private farm tree planting.

23. The Size of the Project and Afforestation in the Long-Term. Thesize of the project was determined by three factors: the public revenueconstraint; risk; and the need to lay a solid foundation, in terms offorestry policy, institutional development, research and field experiencefor the implementation of a long-term plan. With respect to the publicrevenue constraint, the state and federal budgetary contributions agreedupon are considered realistic and achievable. As discussed above, it isalso the public revenue constraint which makes the farm forestry program,with its relatively low demands on the public revenue per hectare offarmland protected, an indispensible element of any afforestation strategyin the Arid Zone. In spite of its risks, there is no other financiallyfeasible alternative in sight than to pursue the farm forestry approach inconjunction with other programs such as shelterbelts and forestrymanagement.

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Annex 3-1Page 8 of 12

24. The farm forestry component would cover about 250,000 farmfamilies which represents about 10 of the farm families in the project'sthree zones. 4/ The shelterbelts would protect O.;J3 million hectares inzone 1. For the long term it will be necessary to undertake research toprepare the ground for the implementation of a larger effort.Realistically, the investment program is likely to extend over a 30-50 yearperiod, assuming the rate of invec'ment can be scaled up by a factor of twoor three over the level proposed under the present project. At the sametime, substantive experience has been gained from the 1,700 km ofshelterbelts planted so far and from the fatm forestry program introducedin the Government's previous AZAP program; hence it is considered that asignificant start can be made by planting another 1,700 km of shelterbeltsand a farm forestry program which builds on previous experience.

25. Within each state, the scale and scope of project activities havebeen tailored towards its needs and capabilities. Kano, which has a largearea in the arid zone, the highest population density and well-provencapability in arid zone afforestation, has the largest share of theprogram. Sokoto and Borno have greater needs for land protection but, bothrequiring extra institutional support, have been given relatively smallerphysical targets but more technical assistance. Bauchi, with only a smallarea in the arid zone and Kaduna, which already has an EEC supported aridzone afforestation project, each have rather modest programs. WorkingPaper 2 provides a detailed description of the scale and type of projectactivities within each state.

Specific Aspects of the Project Strategy

26. Organization. The main activities under the project are farmforestry development and shelterbelt establishment together with thenecessary nursery upgrading and seedling production. These will b.;supported by training programs to strengthen the states' forest servicesand the preparation of a long-term plan. The agency responsible forimplementation in each state will be the Division of Forestry under theumbrella of an Afforestation Project Coordination Unit (APCU) based inKano. There will be close coordination with the Agriculture DevelopmentProjects (or, in the case of Borno, the State Agricultural ExtensionService) which are to provide the necessary extension. Inter-ministerialcommittees at the State level service will be established to discussproject progress and issues of policy. Working P;?er 2 provides a moredetailed statement of project organization within each State and of theCoordinating Unit.

4/ This includes only families reached by the extension service. Thisestimate excludes about 30Z of the seedlings which would be madeavailable on demand from communities and other farmers.

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Annex 3-1Page 9 of 12

27. Nurseries. During the period of the Arid Zone AfforestationProject, 68 nurseries were established throughout the 5 states. Inaddition, the State Governments have independently operated about 145nurseries, mostly within the arid zone, and there-are several small ADPnurseries in Kano and Kaduna States. The total seedling production if allnurseries were operating at full capacity is likely to be more than 30million seedlings annually - well in excess of what can be absorbed in arural afforestation program given the States' present agriculture andforestry extension capabilities. There is thus little need to expandnursery capacity and the immediate aims must be to improve the efficiencyof seedling production and distribution.

28. Selected nurseries will be improved through replacement of wornequipment and ensuring a reliable water supply, as well as the provision ofnew vehicles for seedling distribution. Provision is made for some newuurseries to be est2blished to reduce transport costs in distribution andto relocate close to water. A maximum of eight new (or relocated)nurseries will be established and 27 existing state forestry nurseries willbe upgraded. 5/ Each nursery will have a capacity of about 250,000seedlings per year. One nursery in each zone will function as a centralnursery and will have basic mechanical workshop facilities.

29. Farm Forestry. Farm forestry include village and schoolplanting, and small private woodlots, although the primary emphasis will beaddressed at on-farm planting. In terms of both environmental impact andwood production, on-farm planting offers the greatest potential benefits.Approaches to farmers will be used. First, selected farmers close toshelterbelt locations (zone 1) will be encouraged to participate in anintensive demonstration/model approach in which they would be given closeattention from both forestry and ADP extension officers. Second, about IOZof the farm families in zones 1, 2 and 3 would be targets for the generalADP/Forestry Division extension program, receiving the standard extensionmedia messages as well as regular visits from ADP field overseers.Thirdly, extra seedlings would also be raised for distribution by SFD's sothat the normal demand from the public is met.

30. None of the states have so far levied charges for non-fruit treeseedlings, and fruit seedlings provided by the forest services havegenerally been free. 6/ The ADPs in Kano and Kaduna already charge forfruit trees, but the project would not require specific changes in cost

5/ In fact the establishment of new nurseries will essentially involverelocating existing ones which, because of distance to priorityshelterbelt locations or unreliable water supplies, cannot operateefficiently.

6/ Some states have experimented with charges for fruit trefms (mangos,cashews) which have been popular.

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Annex 3-1Page 10 of 12

recovery fees pending a broader study of the issue. Fertilizer and fencingwould be sold and small supplies would be made available for sale at theADP retail outlets for farmers who wished to purchase them.

31. Extension Methods. Extension work will comprise two majorcomponents: (i) widespread media publicity through a variety of channels;and (ii) the "grassroot" level contacts through the agricultural extensionservices and at the nurseries. Publicity material for dissemination acrossthe five arid zone states will be prepared by the Training and ExtensionDivision of the Coordinating Unit in Kano. This will include written andillustrated material in Hausa and other local languages, radio programs,and video films for display with publicity vans. Additional moral andpublic support in promoting tree planting and protection would be soughtfrom religious and traditional leaders. Farmer level contact will be donethrough the agricultural extension services of the ADPs. The extensionmessage will comprise:

(i) the values of different types of trees in terms of what theyproduce and what can be gained in consumable products andfinancial returns;

(ii) the value of trees in terms of their protective function andtheir enhancement of agricultural productivity;

(iii) how trees can be included in existing agricultural systems;

(iv) how to get seedlings, how to plant them and how to maintain andprotect them; and

(v) the importance of leaving standing trees when clearing land foragriculture.

Since the project will utilize the existing extension services in the zone,its main activity will be the training and technical support of theextension workers.

32. Shelterbelts. Shelterbelts have been established in NorthernNigeria since the early 1960s and the techniques are well known. Theirprincipal function is protecting and rehabilitating land. While such areasare generally close to the northern fringes of the country, this is notuniversally so. Belts will be situated so as to protect well-defined areaswith the intention that the land between them will be restored to givehigher yields. Areas where shelterbelt establishment is likely to bedifficult - such as active sand dunes or those where irrigation would berequired after planting - will be avoided, at least for the present. Inall situations, there is to be a combined farm-forestry/shelterbeltapproach, with strong encouragement for farmers whose land falls betweenthe belt to plant field trees.

33. All states compensate farmers for land taken out of production.

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Annex 3-1Page 11 of 12

This compensation is based on the improvements farmers have made to theland plus trees that exist on the land. The current rate of compensationin the northern states is N650 per hectare.

34. Preparation of the Long-Term Plan. The project will only supporta small portion of the program necessary to rehabilitate critical areas ofthe arid zone. As noted earlier, the magnitude of the problem is such thatit is estimated at least 50 years work will be needed to achieve adequatecontrol of desertification. There are at present no long-term plans fordefining how this will be done and, moreover, there is insufficientinformation on which to base them. The compilation of a sufficient database on the causes of desertification, short- and long-term social andenvironmental trends, and the impact of various remedial mEasures isnecessary. Such information would provide a picture of what is happeningin the arid zone and indications of what the most profitable steps to solvethe problems would be.

35. Compilation of existing data and gathering new data would startin project year 1 and would be substantially completed by project year 3.

36. Training Component. The project emphasizes the importance ofchanging the outlook - and the practices - not only of the farmingcommunity, but also those of government services in agriculture, livestock,extension and forestry. In the past, trees and tree products wereavailable from natural sources to most rural people in northern Nigeria.They are dwindling as human and livestock populations rise. Nomadiclivestock have traditionally grazed and fertilized farmers' land andthreatened the existence of small trees in a climate in which these alreadyhave severe establishment difficulties. Government advisory services haveoffered advice on growing crops, improving livestock production, andachieving better health and nutrition, but have not given the same emphasisto growing trees. There is increasing pressure on forest reserves andrecently local governments have given rights to influencial people to cutthem down.

37. Rural families need to change their attitudes towards their rolein the planting and protection of trees, while government staff in stateforestry departments (SFDs) and local governments need to change theirroles from solely the planting, protection and management of trees ingovernment plantation and shelterbelts to teaching farmers and communitiesto do so for trees for which they have ownership. Agricultural extensionstaff too, who have been taught to think of production from arable land interms of crops, need to understand the place and the potential of trees inassociation with those crops.

38. A large scale farm forestry program would involve SFDs in theneed to (a) communicate with large rural populations; (b) educate farmersand communities in the value of planting and protecting of trees; (c)interact closely with other rural technical agencies; and (d) developexpertise in fodder, fuelwood and fruit tree species with which most oftheir staff have had little experience. Moreover, even with efficient

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Annex 3-1Page 12 of 12

production, distribution and planting of tree seedlings, their subsequentsurvival is threatened by livestock over which the individual owners of thetrees have little control. A major education program directed at theowners of the livestock as well as the landholders is therefore esential tothe successful survivial of the trees. This also calls for a program ofaction for which SFDs are ill-equipped. A major or' itation and trainingprogram and review of job responsibilities will be 4uired to prepare SFDand LG forestry staff for new responsibilities and working relationships.High recurrent costs would prohibit SFDs from developing independent fieldextension services and they will need to rely heavily on the fieldextension workers of ADPa to convey technical advice on tree growing tofarmers. This will reqtire the training of agricultural extension staff toorient them to this new role. SFDs will be able to draw on well developedstaff training capability in ADPs, and existing capability in the designand use of mass media in ADPs and other agencies in the northern states.

39. The training component will support Government's objective ofdeveloping the training capability, systems, and procedures, throughoutSFDs, and supply the necessary physical resources, to provide, on acontinuing basis, the skills needed by SFD, ADP, and LG staff at all levelsfor implementation of the forestry project. The provision of a SeniorForestry Extension and Trainirg Specialist in APCU would establish a focalpoint for training in arid zone forestry. His role will be to assist SFDmanagers in the arid states to develop effective training procedures andprograms to improve staff performance; to develop training capability atthe Kano Center and among SFD Extension and Training Officers; to be intouch with sources of forestry training expertise in FDF, FRIN, and theuniversities, and with expertise in training technology in ADPs, ExtensionResearch Liaison Services of the Universities, ARMTI, Administrative andTechnical Training Centers, and other sources through the country.Specific training objectives and activities include:

(a) Mass education program;

(b) Training of extension ;ersonnel;

(c) Community development (pilot program);

(d) Training of forestry staff in nursery and shelterbelt techniques;

(e) Background Forestry Training for SFD and LG staff; and

(f) Institutional development.

WAPABSeptember 1986

Annex 3-2-46 - 'age-= 5t 11

NIGERIA

SECOiD FORESTRY PROJECT

Forest Management Program (FMP)

1. FMP objectives are to increase the supply of industrial timber inthe most cost-effective manner. The Bank's analysis indicated that themost cost effective way to achieve this objective Was to improve themanagement of high-priority existing plantations which either had beenneglected by the states in the past, or ran the risk of being neglected inthe future, given the constraints on local capital and recurrentexpenditures. Without investment in thinning programs, fire maintenance,weeding, and efforts to market intermediate plantation products, the nationfaced the real prospect of achieving sub-optimal returns to previousinvestments.

2. The Bank also determined that it would be economically attractiveto associate a limited amount of new planting with the plantationmanagement program as the shared overheads along with specialcharacteristics of the sites selected would enable the new plantations tohave attractive economic returuis.

3. FMP would cover plantations in four states: Benue, Kaduna, Ogunand Ondo. Each state would involve management of existing plantations; newplantations would be restricted to Benue and Kaduna. The program in eachstate is described in detail in Working Paper 3 and is summarized below.

Mi) Benue State

4. The project area is situated about longitude 7°E and latitude7°30'N in the western part of Benue State. The forest reserves in whichthe project will operate are within the local governrent areas of Ankpa,Dekina and Idah. Project activities will cover plantations in thefollowing forest reserves:

Name of forest reserve LGA Plantation areaha

Western Okura Dekina 534Ojofo Dekina 63Acharane Ankpa 534Ibaji Ojoko Idah 904

Total 2,035

5. The project area lies within the derived savannah zone. Theforest reserves which are in the project area have all been logged but theyhave still considerable forest areas with valuable timber species. Thehigh forest areas of these reserves are characterized by species such asClorophora exelsa, Kbaya senegalensis, Triplochiton scleroxylon, Afzelia

_ 47 _ Annex 3-2Page 2 of 11

africana, Antiaris africana. With increasing human influence (farming) theforest becomes dominated by oil palm Elaeis guineensis and siam weed,Eupatorium.

6. The main aim of the project is to manage about 2,035 ha ofplantations already established in the forest reserves of Acharane, WesternOkura, Ajofo and Ibaji-Ojoko. Management would involve an active thinringprogram with utilization and marketing of the thinning produce. Inaddition a moderate planting program of 700 ha would be carried out duringthe project period. The project would administratively come directly underthe Chief Conservator of Forest of Benue State and the state governmentwould second the necessary forestry personnel to the project. Becauseutilization and marketing would be the major activity of the project, itsexecution would be carried out in close conjunction with the New NigerianTimber Company (NNTC) situated centraily in Okura-Lafia close to theplantation ares in Western Okura and Acharane Forest Reserves. The NNTCsawmill is functioning as a company while about 95% of its share capital isheld by state and local governments (Dekina, Ankpa and Idah). In additionto the main savmill there is a wood workshop and a treatment plant. Theproject would share workshop and possibly office facilities with thesawmill. A sen:'or staff house and store facility would be built atOkura-Lafia near to the sawmill site.

7. The Project Manager would be internationally recruited. He wouldbe an experienced forester or engineer with experience in forestmanagement, wood processing and marketing. He would be assisted by agraduate forester with proven experience in forest management andadministration. The assistant project manager's post would be advertisedon a national basis. An experienced project engineer would be recruitednationally after advertisement. He would be responsible for running ofworkshop, for road construction and maintenance as well as for supervisionof mechanized forestry operations. He would work closely with the sawmillpersonnel and some overlapping of functions with that of the sawmilloperation can be expected to take place. A forest superintendent,recruited nationally, would be in charge of marketing and utilization. Aforest superintendent would be in charge of plantation thinnings andanother for plantation establishment and maintenance. The two lastmentioned positions are expected to be filled by state government staff. Aplantation supervisor (senior silvicultural assistant or forestsuperintendent) would be in charge of daily operations in each of the fourmajor plantations (Acharane, Acharu, Alade, Oforachi).

8. Management of pre project plantations. The project will manage1,735 ha of gmelina and teak plantations established by the state and anestimated 300 ha of gmelina planted by the federally sponsored pulpwoodproject at Oforachi Plantation in Idah Division. Management will includefire protection, the most necessary road maintenance and a thinningprogram. Teak gron in the Benue area is expected to yield a mean annualincrement of 12.1 m per ha over a 45 year period. The already existingteak plantations are of a good quality but are presently lacking fireprotection and thinning. A thinning program for the teak plantations has

- 48 - Annex 3-2rage i or 11

been costed under the project. This would bring high quality poles on themarket and increase the potential value of plantations by increasing theamount of sawlogs in the later thinnings and in the final clearfelling.

9. During the first project year, 145 ha would be thinned; theprogram would gradually increase to about 373 ha per year. During theproject period thinnings in the younger age classes (1-5, 6-10) will bedone with bousavs and axes while in the age classes 11-15 and 16-20chainsaws will also be used. Thinning will be selective; however, a lineof trees will be felled with regular intervals (5 or 7 rows) to give easyaccess for transportation of the felled wood products. Some extraction byfour wheeled tractors will be necessary in the older age classes but can bekept at a minimum because of the proposed access lines which will allowlorry or tractor with trailer to enter. Teak poles and fuelwood would besold from sales centers in Ankpa, Ayangba and Idah and possibly otherlocations. Such sales are already being carried out by the forestrydivision of the Ayangba Agricultural Development Project.

10. New Plantations. About 700 ha of new plantations would beconcentrated in the western Okura and Acharane forest reserves whereexisting plantations in Acharu and Acharane would be expanded. Taungyafarmers have been operating in both the~se reserves and large areas havebeen cleared and are available for planting. Because of this and therelatively small scale of the program landclearing has been based on manualmethods. The existing nursery at Okura Lafia will be used. Seedlings canbe raised on land quite adjacent to the Okura Lafia river and hand wateringwill be used considering the small production program and the short timenecessary to produce potted seedlings of teak. Teak seeds are obtainablefrom older plantations in Idah Division and additional seeds could ifnecessary be obtained from Nimbia in Kaduna State or from FRIN. Plantationsites will be surveyed and demarcated the year prior to planting, and theroad and access track network laid out. Soil surveying is not necessary asareas adjacent to previous plantations all are on good soils previouslycarrying high forest.

11. The major benefits of the project would be training of staff andthe beginning of a more systematic utilization of plantations than hastaken place in the past. Project benefits have been calculated based onthe incremental volumes deriving from the thinning program in Teak.Incremental volumes from the thinning program has been calculated on thebasis of age classes. In addition, benefits from the yields of plantationsestablished by the project has been taken into account.

(ii) Kaduna State

12. Kaduna State is located in the north central part of Nigeriabetween latitudes 9°N and 13°N. It spans the northern Guinea Savanna andSudan Savanna climatic belts and has a wide variation of vegetation andsite conditions. In the central and southern parts of the state these arefavorable for productive forest plantations. Plantations have beenestablished in sa-veral locations mainly from Zaria southwards. The project

- 49 - Annex 3-2Page 4 of 11

would support further activities in two of these areas - the Afaka andRibako Forest Reserves, close to Kaduna City and the Nimbia Forest Reserveclose to Jemwac in the extreme south of the State. Afaka is 20 km west ofKaduna on the main highway to Lagos. It is at about 10'40'N latitude and7P20'E ln;gitude. Ribako is 45 km east of Kaduna and at the same latitude.It is also connected to the city by a good road. Nimbia Forest Reserve is200 km south of Kaduna on the main highway to Joe via Kafanchan and 70 kmfrom Jos City. It is located at about 9'20'N and 8°30'E.

13. Afaka and Ribako are in the- Northern Guinea Zone. Most of thevegetation occurring naturally is Isoberlinia doka savanna woodland andshrub savanna. The grass cover becomes increasingly more abundant from thevalley woodlands to the floodplain grasslands. The Isoberlinia trees withtheir association of Monotes, Uapaca, Parinari, Afromosia, Launea, Swartziaand Daniellia trees form a thin canopy over a shrub layer which includesGardenia, Terminalia and Pilostigma. The ground flora grasses includeAndropogon spp. The shrub savanna is often devoid of Isoberlinia which hasbeen eliminated by fire and the shrubs listed above, with additionalgrasses such as Cteneum, Hyporrhenia and Trachypogon, dominate the site.

14. Teak (Tectona grandis) and Gmelina arborea plantations werestarted in Nimbia in 1957. By 1980, 1,613 ha of teak and 193 ha of Gmelinahad been established. While both species have shown excellent growth therehave only been sporadic attempts at management of the stands and generallythey are overstocked. Thinning that has been carried out has often beentoo light and infrequent and there has been no defined schedule with targetstockings at different ages based on measured growth rates. Inadequaterecords are maintained of the intensity of thinning in different stands andof the volumes harvested. There has been no planting at Nimbia since 1980.Elsewhere in Kaduna, plantations were started in the late 1960s. Theseincluded Kabama and Guga Forest Reserves in the Zaria area and Ribako andAfaka Forest Reserves close to Kaduna. The main species were Eucalyptuscamaldulensis and E.tereticornis with smaller areas of Pinus caribaea andP.oocarpa. Up to 1981 the areas established at each location were asfollows:

Location

Species Kabama Guga Afaka Ribako- - - - Area in ha

Eucalyptus 461 803 636 598Pines - - 208 29

15. Establishment results and growth rates of Eucalyptus havegenerally been good and many of the older areas have been harvested withheavy thinnings between 1979 and 1983, mainly to supply fence posts for theArid Zone Afforestation Project. However, there appears to have been nomanagement of the subsequent coppice regeneration and in these stands manystumps now carry 5 to 6 stems. Singling is needed if the residual standsare to have value for products other than fuelvood and small poles. Ihere

-50 _ Annex 3-2Page 5 of 11

has been no planting at Afaka or Ribako since 1982. Both sites havenurseries with some machinery and equipment and seedlings are stillproduced for distribution to the public at Afaka. The total area of AfakaFR is about 14,700 ha of which it is estimated some 3,000 ha remainsuitable for productive forest plantations. About 1,500 ha are on the mostproductive site classes according to the 1967 soil surveys. There isprobably a larger area suited for planting at Ribako and also at the AnaraForest Reserve, between Kaduna City and Ribako. Together these reserveshave a total area of 37,190 ha and a similar range of site classes.

16. The project would have two components: (i) the plantationprogram at Afaka would be reinstated and proceed to establish the remainingplantable area within the forest reserve with the aim of producing mainlypoles and fuelvood for Kaduna and some sawnwood; and (ii) existingplantations at Afaka, Ribako and Nimbia would be brought into well-definedmanagement regimes to improve their quality and hence the value of theirfuture production. An inventory of all plantations in the state would becarried out and improved management of plantations not directly affected bythe project would be encouraged.

17. The new plantation component would establish 2,450 of Eucalyptusand pine plantation over an 8-year period. It would upgrade the existingnursery at Afaka and provide equipment necessary for roading, andestablishment, protection and maintenance of plantations. The existingplantation component would support an inventory to determine stockinglevels, volumes and growth rates of 4,560 ha within the state. It wouldintroduce appropriate thinning regimes for 1,250 ha of Eucalyptusplantations at Afaka and 1,260 ha of teak at Nimbia as well as providingassistance with the marketing and utilization of the thinnings andcontinued protection of the plantations. Boron fertilizer would be appliedto 1,200 ha of Eucalyptus plantations at Afaka and Ribako to prevent dieback and improve their yield and quality.

Project Organization and Management

18. A project management unit would be attached to the Division ofForestry. It would be headed by an internationally recruited projectmanager who would have a Nigerian counterpart as assistant project manager.The project manager should have had considerable experience in themanagement of forestry projects under tropical conditions includinginventory, utilization and marketing as well as afforestation. Autilization and marketing office reporting directly to the project managerwould be in charge of sales of wood products. There would be a smalladministrative support staff headed by a chief accountant at Kaduna HQ andthree operational units: (i) Afaka/Ribako Forest Operations; (ii) NiabiaOperations; and (iii) Engineering, as well as a team to carry out theplantation inventory.

19. The Afaka and Ribako Field Operations Unit would haveresponsibility for seedling production at the Afaka nursery, preparation ofplantation plans, manual operations, and forest protection. The Nimbia

-51 - Mex u-2

Operations Unit would prepare management plans and mark stands forthinning. It would also directly supervise crews carrying out manualthinning operations in young stands.

20. The Engineering Unit would operate and maintain heavy equipmentat Afaka and Nimbia. Because of the importance of high quality maintenancethe unit would be headed by an internationally recruited project engineer.There would be a field service section at each site plus a workshop atAfaka. All sections would report to the Project Enginner but the fieldservice sections in each site would also be directed by the Superintendentsin charge of forest operation units, who would ensure that the quality ofsite preparation, firebreaks and thinning was according to prescription.

21. The planting at Afaka would establish the best sites of remainingreserve area with pines and eucalyptus as set out in the followingschedule:

- Project Year -Species 2 3 4 5 6 7 Total z

Area Planted in ha

E. camaldulensis 40 70 100 100 100 80 490 20E. tereticornis 40 70 100 100 100 80 490 20E. cloeziana 100 175 250 250 250 200 1,225 50P. caribaea 20 35 50 50 50 40 245 10

Total 200 350 500 500 500 400 2,450 100

This distribution of species is provisional and will depend on a closerexamination of their performances on different sites. If possible,E.cloezina should be even more favored because of its demonstrated superiorperformance on good sites.

Management of Pre-project Plantations

22. Management of existing plantations would provide inputs forimproving the growth and value of the final output of existing plantations.It would involve fertilization of the Afaka and Ribako Eucalyptusplantations with boron to prevent die back, thinning of coppice regrowth inbarvested Eucalyptus plantations at Afaka and thinning of teak at Nimbia.An inventory would be conducted of all industrial plantations in Kaduna(4,560 ha) to determine the present stocking levels, and standing volumesand to estimate the productivity of different sites in order to preparedetailed management plans.

23. An inventory of existing plantations would be started in thefirst project year. A series of bounded plots would be measured coveringaU species and age classes. The details of the sampling plan would beworked out by the project manager and measurements would be made by a crewof 9 technicians under the leadership of a mensuration officer. Assuming a

Annex 3-2-52- Page 7 of 11

0.5Z sampling intensity and 0.04-he sample plots, about 600 plots wouldneed to be measured, involving 9 months of field work. This should becompleted by the middle of project year 2. Compilation and analysis of theresults would proceed simultaneously with the measurements and it would beexpected that the final results would be available to project management bythe end of PY2.

24. Management of the eucalyptus plantations at Afaka and Ribako willinvolve thinning coppice regeneration and application of boron fertilizerto prevent tip die back. The need for the operations and the extent ofeach type would have to be confirmed by the proposed plantation inventory.Provisionally, there are two categories:

(i) Stands established earlier than 1976: most of these havebeen heavily _± ! ;'d and have coppice regeneration up to 7years old; and

(ii) Stands established 1976-81: these will all have reached 12years by the end of the project period and stems should havesufficient dimensions for clearcutting.

25. Management of teak at Nimbia will involve the introduction ofthinning schedules into currently overstocked stands with the aim ofreducing stockings to desired levels and improve the out-turn of highervalue sawlogs and transmission poles. As the stands cannot be thinnedimmediately to the appropriate levels for their age classes, the scheduleset out below is recommended:

Current Age Class6 - 10 11 - 15 16 - 20

Total Area (ha) 555 835 200Area to Treat (ha) 500 560 200Desired Stocking (s/ha) 1,100 780 510Approx. observed stocking

(s/ha) 1,500 1,400 1,200

(iii) Ogun and Ondo States

26. The project areas are the Omo Forest Reserve in Ogun State andthe Oluwa Forest Reserve in Ondo State. These reserves are situated aboutlatitude 7°N and longitude 4"30'E. The reserves have a common boundary inthe Oni River, flowing in North-South direction; the Omo Reserve is boundedby the town of Ogbere in the West and the Oluwa Forest Reserve by the OluwaRiver in the East. The Benin-Lagos expressway cuts through the southernpart of both reserves. Both reserves are gazetted; Omo has an area of139,100 ha and Oluwa 88,100 ha.

27. The reserve is dominated by high forest tree species. There are,however, in the Oluwa reserve considerable areas with old cocoa farmscarved out as so called enclaves in the forest reserves and an area of

Annex 3-253 Page 8 of 11

about 43,000 ha is covered by forest plantations in both reserves. Thenatural forest has practically all been logged in the past; speciesincluded Entandophragma cylendricum (sapelli), Khaya grandifoliolt(mahogany), Afromosia elata (afromosia), Triplochiton scler lon (obeche,wava), Nauclea diderichii (opepe), Clorophora exelsa (iroko), Terminaliasuperba (white afara, liMba), Terminalia ivorensis (idigbo). Tree heightsrange up to 40 m; climbers and lianas abound and grasses are generallysuppressed. When the forest canopy is opened, areas become invaded by thesiam weed, Eupatorium, which with increasing amount of cultivation getssucceeded by grasses; such areas are vulnerable to fires and the ecologicalconditions become more like that of the savannah because of the progressingdeterioration of soil conditions.

28. Both states were administered under the south western region whenforestry planning began about 1915. Initially forest management in Nigeriaconcentrated on establishment of forest reserves. Forest reserves in thesouth were divided into blocks and concessionaries were allowed to log theforest on a long term rotational pattern. Planting began in the mid 1960'swhen relatively small areas were established annually by the two states.

29. As from about 1976 a nationwide pulpwood project was initiated.The purpose was to grow gmelina pulpwood for a projected future pulpwoodindustry. This scheme was financed by the Federal Ministry of Industiresand administered by FDF. Implementation was carried out jointly by the FDFand state government staff. By the end of 1979, 12,638 ha of gmelinaplantations had been established by the two states and the federallysponsored pulpwood project. In addition to gmelina about 4,190 ha of teak(Tectona grandis) were established between 1964 and 1983 (Omo 3,760 ha,Oluwa 430 ha). Indigenous species were planted already as from 1918, theseinclude Terminalia spp, Khaya grandifoliola, Nauclea diderichii andTriplochiton scleroxylon; pines were also planted in the Oluwa ForestReserve. These areas total 3,340 ha (1,240 ha in Omo and 2,100 ha inOluwa) but as all species mentioned are fire prone, most of the areasplanted with species other than gmelina and teak have suffered much firedamage.

30. The previously well controlled concess_on system was not kept upwell as from the 1970's. Previous long term concession arrangements werereplaced by shorter term felling rights; the control of farmingdeteriorated and a considerable amount of illegal felling is reported to betaking place at present. The two forest reserves are under control of theforestry departments of the Ogun and Ondo State Governments which altocollects forest revenues. Local governments are not involved as it is thecase in the northern states.

31. The First Forestry Project (Ln. 1679-UNI) was to establish 22,600ha of gmelina plantations. The plantations were meant to supply pulpwoodto the Iwopin Pulpmill which was already under construction when the firstforestry project was prepared. Plantations were meant to be kept in a 15year rotation with one thinning at the age of seven; the clearfelling atage 15 would produce a combination of pulpwood and sawlogs. At the time of

Annex 3-2

Page 9 of 11-54 -

expected loan closing by end of June 1986 the project would have achieved72Z of its total SAR planting target (22,600 ha) for Ogun and Ondo Statescombined.

32. The main aim of the proposed project is to continue protectivemanagement of the gmelina plantations which were established during thefirst projLct and before, as there is a significant probability thatwithout the project, the states would not have the resources to do so.This would mainly mean upkeep of fire control systems and for this purposethe system of roads and tracks in the plantations would be maintained.During project implementation a study would be carried out of the gmelinaplantations to examine the optimum system of management under variousscenarios. The project would also maintain teak plantations and carry outa thinning program in these for the purpose of improving potential sawlogproduction. During project implementation emphasis would be on utilizationand marketing contrary to the first project in which plantationestablishment was the highest priority. In addition, the project wouldadvise the state governments on management of the Omo and Oluwa ForestReserves in general, with particular emphasis on attaining sustained yieldmanagement in the part of the natural forest which is not expected to beconverted to plantations.

33. Project managers are expected to be seconded from each state SFD.A forest manAgement and utilization specialist would be recruitedinternationally to assist each project unit. He would advise FDF and stategoverments concerning possible future pulpwood harvesting. He would workon market promotion and monitor the thinning, and sales on each of thestate units. The project engineer for each state unit would be recruitednationally. He would have a key function in the project being responsiblefor the workshop and plant miiairtenance. He would also be responsible forroad and fireline maintenance and be involved in supervision of allmechanized forestry operations. Two senior technical officers, responsiblefor workshop, and for road maintenance would report to the projectengineer. A superintendent would be in charge of completing the smallcivil work programs which have been costed under each of the units and formaintenance of buildings. The Chief Accountant would handle all projectaccounting and assist project managers in administrative matters wheneverrequired. A pJantation officer would be responsible for general plantationcontrol; he would keep records of farmers presently growing crops outsideof the enclaves. He would monitor any diseases and pests and be in chargeof fire control. He would be assisted by a number silvicultural assistantswho would each supervise a portion of the plantation (one silviculturalassistant for each 2,000 ha of plantations. A forest utilization officerwould be in charge of the sales at each unit and a forestry supervisor(forest officer or superintendent level) would supervise the thinningoperation. He would also be in charge of carrying out inventory work whichwould be planned by the forest management and utilization adviser and theproject managers.

34. The project in Omo forest reserve would maintain fire preventionand fire control system in about 17,000 ha of Gmelina and 3,760 ha of teak;

Annex 3-2_ S5 ~ Page 10 of 11

roads would be maintained and a thinning program would be carried out in850 ha of teak plantations. In the Ondo State project maintenance wouldcover the existing Gmelina (11,363 ha) and teak plantations (430 ha);thinning would include all the teak plantations. Area surveys will be madeof the plantations. Inventory work will also be carried out on a samplebasis in the teak plantations and will form the basis for planning thethinning program.

35. The selective thinning in teak would bring high quality poles onthe market and increase the potential value of plantations by increasingthe amount of sawlogs in the later thinnings and in the final clearfelling.There are no measurement data available on growth of teak in the projectarea but plantations are generally of a good potential except that thinningis lacking or inadequate. Growth is expected to be at least as high as inWestern Benue and the thinning and yield models for Western Benue have beenused. Thinning models have been prepared for age classes, 1-5, 6-10, 11-15and 16-20. These models show incremental output of the proposed models ascompared to the no thinning alternative.

36. In the Omo fore3t reserve there are 3,750 ha of teak plantations,the thinning program to be carried out by the project would be based uponthe thinning plan made after surveys and inventory work has been carriedout. The project itself would carry out a thinning program in 850 ha.Part of the remainting area could be thinned by contractors if sold onstump to them. In the Oluwa forest reserve all the 430 ha of teak would bethinned after a thinning plan has been carried out. Thinning of Gmelinahas not been costed under the project because of the uncertainty concerningthe pulpmill.

37. In Southern Nigerian roundwood poles could be used for manypurposes where presently sawnwood is used. Teak poles and fuelwood wouldbe sold from demonstration sales centers. The location of these would haveto be determined by the project units during implementation. However, thetowns of Ore and Ondo would seem to be relevant in the case of the Ondoproject unit, while Ijibu-Ode should be considered in connection with salesfrom Omo. Some of the output is expected to be sold directly at roadsidein the forest. Prospects for sales at stump to major contractors shouldalso be examined.

38. Sales centers would carry fuelwood and poles cut into fixedlengths (probably 3m, 4m, 6m and 8m). Large poles which can be used aselectric poles would also be sold, both treated and untreated. It isimportant that the sales center be placed centrally near markets and maintraffic centers. The sales yards would be low cost operations and would bemanned by a sales clerk and one or two workmen to assist, depending onvolumeb sold daily. A price list would be made up for stores and poles ofvarious lengths. Stock control would be kep: currently by the sales clerkand physical stock controlled frequently by project management.

39. In addition to poles being sold locally at the demonstrationsales centers more distant markets should be sought for special contracts.

Annex 3-2

-56 - Page 11 of 11

The forest management and utilization specialist would be involved withmarket promotion. In the middle of the Omo forest reserve is a sawmill,now operated as a state owned company, the Gateway Timber Industries Ltd.The sawmill has a chemical treatment plant which at present is not used itsfull capacity. An agreement should be made with the sawmill for treatingof poles from both c" the plantatiorn units and the possibility of startinga large scale production of transmission poles should be examined.

40. Teak wood saw relatively easily, is very stable and take a goodfinish; it is excellent for furniture making. Sawn teak is much soughtafter in Ibadan and Lagos and the price can reportedly be about double ofthat of mahogany. No systematic sawing of plantation grown species is atpresent taking place in Nigeria; this is mainly because natural woodresources still exist but also because plantations, mainly established asfrom the late 1960's, are only about the present time get-ing into the agewhen larger dimensions are available. Because plantation grown Linbers donot obtain the same large dimensions as indigenous hardwoods they shouldpreferably be sawn on lighter equipment to reduce waste and to increase thespeed of sawing.

41. The major benefits of this project component would be thebeginning of systematic forest management with emphasis on utilizationaspects. In the past, plantation efforts were practically all gearedtowards planting. Incremental benefits have only been taken into accountfor the thinning programs in teak which has been costed under the directproject program. Benefits could be larger if the project succeeds incarrying out thinning in larger areas through sales on stump or on a selffinancing revolving fund basis. Another major benefit would be protectionof the pre project plantations against fire. No attempt has been made toquantify the benefit of fire protection in economic terms as this would besomewhat speculative.

WAPABSeptember 1986

-57 -

Annex 3-3Page 1 of 3

NIGERIA

SECOND FORESTRY PROJECT

Technical Assistance Program

1. The proposed technical assistance program would comprise 72staff years of internationally recruited experts and 22.5 staff years ofconsultancy services. Each of these components is described below.

(i) Internationally Recruited Experts (72 staff years)

2. The Federal Agricultural Recruitment Agency (FARA) wouldhandle all international recruitment. Set up by FMG to handle ADP re-cruitment and supported by the Bank-assisted Agricultural TechnicalAssistance Project (Ln 2029-UNI), FARA is able to recruit staff at areasonable cost (about US$65,000 per annum in 1985), partly because itsoverhead is absorbed and not passed on to the projects. Anotheradvantage is that it permits FMG to standardize remuneration for thehundreds of international experts working on agricultural projects inNigeria. Although FARA would advertise internationally, Nigerians wouldbe able to apply. If found tI.e most appropriate for the position, theywould be awarded the contract. The terms Nigerians receive are lessfavorable then the normal international contract terms, but provide apremium over the civil service, serving as an inducement to attractqualified candidates.

3. The need for internationally recruited assistance in Nigeriacomes primarily from the lack of qualified local staff who are willingto work in the civil service or at civil service salary rates. Thisscarcity is particularly acute for senior managers, financial personnel,notably qualified accountants, and skilled technical staff. The pro-posed project would follow a system that has worked well with the ADPs.It is a mixed management system where expatriate and local staff workclosely together with expatriates gradually being phased out as compe-tent local staff become available for senior positions. Often the localstaff have held mid-management positions and once they have had appro-priate exposure to the project, are able to replace the expatriatestaff. This normally holds true for the top management jobs- Some ofthe specialist jobs like Financial Controller are more difficult tolocalize and it is not unusual to have to fill these positiors withinternational experts for the duration of the project. For the proposedproject, it is assumed that no expatriate would remain on post for morethan six years. Since the project implementation period is for eightyears, it is assumed that the project would be under total localnanuagement for its last two years. Internationally recruited expertsare required for management and training.

-58 - Annex 3-3Page 2 of 3

4. Management (69 man years). Experts would be recruited to helpmanage FORMECU, APCU and several of the state project units under AP andFMP. Specifically, the following positions would be filled from thebeginning of the project:

(a) FORMECU YearsHead of Unit 3Financial Adviser 3Monitoring and Evaluation Officer 3Data Processing Officer 3Forest Management Officer 3Forest Utilization and Marketing Officers (2) 6Sub-Total 21

(b) FED State Units

Kaduna - Project Manager 4Engineer 4

Benue - Project Manager 4Sub-Total 12

(c) APCU

Project Coordinator 5Financial Controller 5Silviculturist/Agroforester 5Training and Extension Officer 5Sub-Total 20

(d) AP State Units

Borno - AP State Coordinator 4Kano - AP State Coordinator 4Plateau - AP State Coordinator 4Sokoto - AP State Coordinator 4Sub-Total 16

Total Staff Years 69

The positions and the amount of time recommendedi &or eachdepends on the size of the program being administered and the ploviousexperience Nigeria has had in the various activities to be undertaken bythe project. In case of FMP, Nigeria has had extensive experience withindustrial plantations and therefore it should be possible for FORMECUand FMP state project units to operate largely with local staff.FORMECU is currently headed by a competent Nigerian, who is expected toretain his position when the post is advertised internationally. APpresents more problems, particularly the farm forestry component whichwould require a great deal of careful attention and high level

-59 - Annex 3-3Page 3 of 3

involvement to succeed. For this reason APCU's four top positions wouldbe internationally recruited as well as the project managers in the fourlargest AP state units. Given that the AP program would take severalyears to be successfully launched, each position would be occupied forfive years by internationally qualified staff.

5. Training (3 man years). A training adviser would be recruitedto manage the forestry training program at the Oluwa Forestry TrainingCenter in Ondo State. The expert would advise the school's principal oncurricula, staffing and teaching practices. A similar role in the KanoForestry Training Center would be played by APCU's internationallyrecruited Training and Extension Officer.

(ii) Consultancy Services (22.5 staff years).

6. APCU and FORMECU would retain consultants to help withtraining policy analysis, studies and research. In selecting firms orindividuals, they would follow the "Guidelines for the Use ofConsultants by World Bank Borrowers and by the World Bank as ExecutingAgency". Consultants would be retained for the following work.

7. Training (1 staff year). Consultants would visit the OluwaForestry Training Center periodically to provide guidance on forestryteaching techniques. The consultants would advise local teachers onstate of the art developments in technical subjects and would be able toimport teaching materials to improve the content of forestry courses.

8. Policy Studies (4 staff years). The project would support twomajor policy studies. One would prepare a National Forest Policy Study,the other would prepare a National Forest Revenue System. These studiesare described in paras 2.08 and 2.09, respectively.

9. Research (11.0 staff years). Research activities would beundertaken in conjunction with AP. The activities are described indetail in Annex 3-4.

10. Studies (6.5 staff years). About 4.5 staff years of consul-tants' time would be used for the long term Afforestation Plan andHousehold Energy Supply and Demand Studies to be undertaken by APCU(para 3.19). Two staff years of consultancy time would be used forpreparing a follow-up project.

SAPABSeptember 1986

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Annex 3-4Page 1 of 3

NIGERIA

SECOND FORESTRY PROJECT

Research Program

Aims

1. Although there have been many years experience in arid zoneafforestation, improvements can still be made in basic techniques and thereis at present very little knowledge of the magnitudes of direct and indi-rect benefits. A research program is proposed which would aim to: (i)improve establishment techniques, giving better survival and growth; (ii)examine the acceptability and effectiveness of alternative farm forestrymodels; (iii) determine yields of wood and other tree products; and (iv)monitor the effects and impact of various types of afforestation activitiesin particular the effects of shelterbelts and farm forestry on wind veloci-ties, soil moisture retention, nutrient status and the general effect ofcrop yields. Three levels of research are envisaged: (i) practical fieldinvestigations to improve shelterbelt establishmen_ results; (ii) morecomplex research giving results of importance to long-term planning; and(iii) longer term research, the results of which are of secondary impor-tance to the project's main goals. The first type would be carried outmainly by the research unit in each state with guidance where needed fromthe Technical Division in APCU. Topics would include species testing,nursery techniques, establishment techniques and soil and water testing.The second type of research would be carried out under the auspices of theTechnical Division in APCU. Work would be contracted to qualified agenciesand organizations. Topics might include wood yields, effects ofagro-forestry systems and effects of shelterbelts. The third category ofresearch would be left to existing research agencies. This might includenon-wood yields of farm tree species, the silvics of endemic species andnatural forest management systems. For topics in categories (ii) and (iii)above, where specialized scientific skills would be required, research workwould be contracted to local institutions (for example the ShelterbeltResearch Station of FRIN or the Chad Basin Research Institute) orconsultants. The opportunities for obtaining bilateral assistance for someresearch fields, especially category (iii), should be investigated. Theresearch topics listed under (i) to (iii) above are mentioned separately inthe following.

Research Topics

2. Species Selection. Knowledge about suitable species for the aridzone and their environmental requirements is already well developed.However, further investigations into the introduction of untried speciesand provenances is warranted. Test seed would be procured by the TechnicalDivision in APCU and distributed to each state for test plantings. Smalldemonstration plots would initially be established at different locations

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Annex 3-4Page 2 of 3

in each state. They should include both neem and Eucalyptus camaldulensisas standards.

3. Nursery Technicues. In general, no problems are experienced withraising seedlings. One exception is Acacia albida which apparently becomesdormant if grown in pots, this being a severe constraint to its wider useas a farm tree. Research is needed into the reasons for this dormancy andways to overcome it by nursery techniques. Such a topic could best becarried out by one of the research inst_tutions, although tests withdifferent nursery practices could be done by the states.

4. Establishment Techniques. A better knowledge of measures toincrease early seedling growth and to enhance survival in difficult sitesis required. Topics to examine might include: seedling size, size ofpolypot, seedling hardness, use of fertilizer manure and/or compost in thefield; site preparation including size and depth of planting hole andplanting in furrows; direct sowing and the use of goats in propagation ofA. albida.

5. Soil and Water Testing. As part of routine operational proce-dure, soil testing would be carried out in shelterbelt areas prior toestablishment. This would determine soil depth, depth of the water table,texture, water holding capacity and pH. The information would be used todecide site suitability, the species to plant there and any special mea-sures necessEry. The work would be carried out by each state's researchunit.

6. Wood Yields. There is very little knowledge about the yields ofeither plantation or farm tree species, although both FRIN and the ChadBasin Research Institute have started work in this area. Provision wouldbe made to continue this work. Species of initial interest would beEucalyptus camaldulensis, neem, Acacia senegal, A. nilotica, A. albida.Early results would have to be obtained from measurements of free standingand plantation grown trees at different ages, but growth plots should alsobe established in both new and coppiced areas. Equally it will be impor-tant to determine the rate of branch rtgrowth on lopped trees. Thisresearch would be carried out under the auspices of the Technical Sectionin APCU but would require assistance from FRIN or other agencies.

7. Agroforestry Systems. In order to improve the acceptance of farmtree planting there is a need to get a better understanding of the tradi-tional production systems and the place of trees in them in terms of bothecology and socio-economy. The effects of farm trees on crop yields alsoneed to be better understood and scientifically quantified. These investi-gations would need to be carried out by a team including an agronomist, asociologist and a forester and should be done on a contract basis.

8. Skl'terbelt Effects. The effects of shelterbelts on reduction ofwind speeds and the consequent effects on soil moisture, soil movement andeventually yields of different major crops need to be better quantified for

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Annex 3-4Page 3 of 3

different trees species, ages season, etc. Work already started by FRIN inthis field would be continued.

9. Yield of Other Tree Products. Knowledge of yields of tannin, gumarabic, baobab bark and various types of fruit are not well known; evenless well quantified is production from different fodder tree species.

10. The Silvies of Endemic Savanna Species which are not yet wellknown warrant further study and their place in possible arid zone forestrysystems should be assessed. Work would include studies of the species'growth habits and their environmental requirements in relation to theirmanagement in natural forest ecosystems and their possible use as plantedspecies.

11. Management of Natural 'orests would include examination of theeffects of excluding livestock on the regeneration and growth of naturalforests in different rainfall and soil zones and also the effects ofintroduction of various harvesting practices.

Implementation

12. Those topics which could be handled by the state forestry divi-sions would be supervised by the research officer assigned to each state'sadministration unit, a professional forester at the assistant conservatorlevel (GL-09). He would be supported by a forest superintendent, anassistant superintendent, 3 overseers and 6 attendants. A 2-wheel drivepick up, basic equipment and materials are provided for.

13. Research undertaken under APCU would be supervised by thesilviculturist/agroforester in charge of the Technical Division. It wouldmainly be carried out by FRIN or the Chad Basin Research Institute ca acontract basis, although some might more appropriately be handled z.private consultants. Provision is made for research equipment, consAltan-cies, stipends and transportation.

WAPABSeptember 1986

- 63 _

Annex 3-5Page 1 of 6

NIGERIA

SECOND FORESTRY PROJECT

Terms of Reference for the Preparation of a National Afforestation Planand a Household Energy Supply and Demand Study

I. National Afforestation Plan

1. The development of a National Afforestation Plan for Nigeriawould aim to: (i) obtain a clear picture of the factors contributing todeforestation in northern Nigeria as well as problems with soil erosion orland degradation in other parts of the country through the compilation ofavailable information from various sources and the collection of additionalnecessary data through trials and surveys; and (ii) based on thisinformation, recommend a long-term program of investments to arrest andreverse the process.

2. The work would be carried out under the supervision of the Readof the Technical Division of APCU. Studies would be undertaken in theareas of site evaluation, forest inventory and growth, rural sociology,agroforestry and silviculture, and agriculture and livestock. A generaldescription of these studies is as follows:

(a) Physical Site Conditions

(i) Review available information on changes in physicalconditions leading to desertification in the arid andsemi-arid zones, including climatic change, geology,soil conditions, vegetational change and waterrelations, where possible relating trends to humaninfluences such as land clearing, cultivation methods,overgrazing and modification of stream and river flowsthrough irrigation works;

(ii) gather additional primary data as needed and practicalwithin the term of the assignment;

(iii) on the basis of this information, outline possiblemeasures to arrest deforestation;

(iv) in coordination with other team members, describe

- 64 -Annex 3-5Page 2 of 6

practical measures for amelioration of the physicalenvironment that can be implemented within a 20- to30-year period; and

(v) specify the need and methods for gathering additionalinformation and outline a system for monitoring changesin key environmental factors.

(b) Forest Conditions and Tree Stocks

(i) Design a system for performing an inventory todetermine growing stocks in different forest types,both in forest reserves and non-forest land, and oftree stocks on agricultural land, concentrating on the5 northern states, including areas outside the aridzone, but also including badly deforested areas inother parts of the country. The inventory would makeuse of available remote sensing imagery such asLandsat, aerial photography and SLAR, and include newimagery where needed;

(ii) supervise the implementation of the inventory andanalyse the results in terms of growing stocks bydifferent category, and growth and depletion rates;

(iii) provide methods for quantifying the important non-woodtree products and for determining their growth anddepletion rates;

(iv) specify the need and methods for continuing movltoringof tree stocks and their growth rates; and

(v) based on preliminary estimates of growing stock andgrowth and depletion rates, make projections ofbalances of wood and other products given differentscenarios of human and livestock population growthrates and demands for the products.

(c) Rural Sociology

(i) Review information on rural populations, including bothsettled and transhumant communities in order todetermine their patterns of natural resource use andhow these are changing as a result of internal andexternal pressures;

(ii) examine attitudes of rural populations to farm forestryand determine what sociological constraints exist tofarmers planting and protecting trees and what type ofapproach would be successful in overcoming theseconstraints;

- 65Annex 3-5Page 3 of 6

(iii) identify areas where comiunities can exert positiveinfluences in the conservation of their local naturalresources and outline conditions that government cancreate to facilitate such actions;

(iv) comment on the role that local traditional andreligious leaders can play in influencing change; and

(v) in coordination with the other experts, developlong-term plans for land use management, concentratingon the arid zone but also including other badlydeforested areas, ensuring that any proposals aresociologically sound.

(d) Agroforestry and Silviculture

Ci) Critically review the alternative approaches toafforestation, reforestation, natural forestmanagement, and farm forestry taken in Nigeria and alsoin neighboring countries with arid and semi-aridconditions, detailing, with reasons, successes andfailures;

(ii) based on the experience gained from previous andongoing efforts, outline a 20- to 30- year forestryprogram for all of Nigeria, concentrating on the aridzone with the aims of providing forest productssufficient for the projected demands of the populationand of protection of soil and water resources;

(iii) describe the infrastructure and organization needed tocarry out the recommended program and provide estimatesof costs; and

(iv) describe a monitoring system for assessing the progressof the plan's implementation.

(e) Agriculture and Livestock

(i) In cooperation with the ADPs and the State Ministriesof Agriculture, review current agricultural practices,including the role played by sedentary and transhumantlivestock;

(ii) based on information available in the ADPs, categorizedifferent classes of land according to soil type, watertable, average annual rainfall and degree of exposureand from ADP and other data estimate levels ofproductivity for different major food and fooder crops,attempting to relate productivity to exposure;

- 66 -Annex 3-5Page 4 of 6

(iii) outline experiments to obtain primary data on variousinfluences on crop yields;

(iv) examine the fodder production from crop residues, andfrom farm and forest trees, and determine the livestockcarrying capacity of different locations;

(v) together with the agroforestry/silviculture and siteevaluation studies, examine possible changes in farmingsystems that would allow farmers to increase the numberof trees on farms at reasonable expense withoutreducing crop production;

(vi) outline a plan for introducing improvedagro-silvicultural-pastoral systems and, drawing on theexperiences of the ADPs, describe in detail how theextension service would work;

(vii) provide recommendations on ways to manage and controlthe livestock populations, including proposals forincreased fodder production and settlement outside thearid zone; and

(viii) outline a system to monitor the adoption of improvedfarming practices and their effects in terms ofimproved environment and crop yields.

Timetable

3. APCU would carry out the above studies with the assistance ofconsultants. In addition, APCU would oversee some basic research work intospecies selection, nursery and establishment techniques, soil and watercharacteristics, etc. (see Working Paper No. 2, pg. 33-35). Once thepreparatory studies are complete, APCU, with the assistance of consultantsas necessary, would prepare a detailed plan for a program of futureinvestments in afforestation would have as their objective: (i) reduce theprocess of deforestation; (ii) enhance soil fertility and create theclimate for improved agricultural production; (iii) improve theavailability of fuelwood, poles, fodder, fruit and other wood-relatedproducts.

II. Household Energy Supply and Demand Study

Development ObJective

4. To assist the formulation of policies to help meet householdenergy needs in northern Nigeria.

- 67 -

Annex 3-3Page 5 of 6

Immediate Objectives

5. Establish existing household energy consumption patterns andpreferences by income level, geographical area and socio-economic grouping.

6. Establish the current and prospective availability and cost ofhousehold fuels, relative to existing and potential demand.

7. Evaluate the potential, acceptability and economic attractivenessof potential substitute fuels for wood, as well as for energy conservationmeasures.

8. Outline a recommended household energy strategy to meet longtermhousehold energy needs at minimum cost.

Indicators of Achievement

9. Data on existing and anticipated demand for fuelwood to orientthc scale and location of fuelwood supply and conservation initiatives.

10. Information on the current and potential future acceptability,on, social, performance and cost grounds, of potential substitutes forfuelwood, including electricity, kerosene and LPG.

11. Information on the technical and economic potential for raisingthe efficiency of energy use through such measures as improved wood stovesand more efficient charcoal production techniques.

12. Identification of cost-effective measures to improve theacceptability, availability and affordability of substitute fuels and ofalternate technology for consuming and producing energy.

Outputs

13. A concise report describing current household energy consumptionpatterns in northern Nigeria and preferences, relative to the cost andavailability of supplies. A review of the potential for and possible meansto promote substitution of alternative fuels to wood and of raising theefficiency of energy use. The outline of a recommended strategy forsatisfying long-term household energy needs in northern Nigeria, includingpolicy measures, investment requirements and institutional changes, whichwould guide the Nigerian Federal and State authorities, the World Bank andother donors in planning fuelwood-related forestry and fuelvoodconservation projects and NNPC and NEPA in improving the marketability andsupply of substitute fuels.

Description of Activity

14. Identification of appropriate Nigerian educational/researchinstitution(s) to participate in survey planning, conduct field interviewsand assedile and analyse data.

- 68 -Annex 3-5Page 6 of 6

15. Selection of appropriate urban and rural survey sites inconsultation with federal and state officials.

16. Development of household survey questionnaires and fuel supplyanalysis questionnaires.

17. Recruitment and training of enumerators. Pilot testing andrefinement of questionniares.

18. Survey of sample households and fuel supply situation at eachsite.

19. Data assembly, manipulation and analysis.

20. Preparation of conclusions and recommendations concerninghousehold energy strategy.

WAPABSeptember 1986

-69 -

Annex 3-6Page 1 of 13

NIGERIA

SECOND FORESTRY PROJECT

Organization and Management

1. FDF would have overall responsibility for the project which itwould exercise through the Forestry Management, Evaluation andCoordinating Unit (FORMECU), which would be officially established underthe project. FORMECU would oversee directly FMP activities and wouldalso have overall coordinating responsibility for AP, but it woulddelegate operational control to the Afforestation Project CoordinatingUnit (APCU), which would see that AP was carried out in the sixparticipating states. The annex discusses FORMECU's operations whilethose of each FMP state (Benue, Kaduna, Ogun and Ondo) are described inAnnex 3-2. Also described in this Annex are APCU and the state AP unitsand the general management of AP activities. Charts are at the back ofthe annex.

(i) FORMECU

2. FORMECU would be the main coordinator of the proposed project.It would play a role in technical assistance coordination such asrecruitment of international staff and consultants and would also keepthe Director of FDF currently informed on project developments. TheHead of FORMECU and several senior staff would be recruitedinternationally, though qualified Nigerians would be eligible tocompete. FDF would supply the necessarv counterpart staff as well assupport staff.

3. FORNECU would keep a current dialogue with state governmentsconcerning the states' financial contributions and it would monitor andadvise on project accounting and progress in auditing. The FinancialAdviser of FORMECU would be internationally recruited. He should haveseveral years of experience in management and accounting practices witha large project or corporation and should also have experience fromAfrica. The Financial Adviser would control FORMECU's own accounts andhelp project units to set up a uniform accounting system and assist themin drafting financial regulations. He would be assisted by anaccountant and the necessary accounts staff for FORMECU's ownaccounting. The Financial Adviser would travel regularly to FMP projectunits and APCU to supervise accounting practices, control systems andstores. Each project unit should be visited at least once every threemonths.

4. FORMECU would monitor closely the performance of each forestryunit under the project. Based on time studies, standard performancetargets would be set up for all forestry operations. Against these

Annex 3-6

-70- Page 2 of 13

performance targets, actual achievements would be measured. Projectsunits would be advised if they deviate significantly from standtrdperformance.

5. Monitoring in the proposed project would cover more units thanin the first project and the scope of work would be greater and morediversified. FORMECU would prepare regular reports on the achievementsof the industrial forestry program in Benue, Kaduna, Ogun and Ondostates, and would review monitoring activity and reports being preparedby APCU. A monitoring and evaluation officer, to be recruitedinternationally, would be responsible for monitoring the entire project.FMP data collection and monitoring, following the present system, wouldbe carried out by Nigerian counterparts. The monitoring and evaluationofficer would be assisted by three FDF monitoring officers responsiblefor monitoring (a) APCU, (b) Kaduna, and (c) Benue, Ogun and Ondo statesprograms. Nigerian counterparts would assist with analysis of data andproject evaluation. The monitoring and evaluation officer should be aneconomist or forest economist and have several years of experience inproject analysis and evaluation.

6. To assist with development of marketing and utilizationexpertise two experts would be recruited to internationally work withthe FMP states on marketing and end uses of plantation wood. A thirdexpert, knovledgeable on forest management issues, would be recruitedinternationally by FORMECU. He would advise the FMP project units onforest management practices.

(ii) Afforestation Project Coordinating Unit (APCU)

7. APCU would form the link between the states and the FederalDepartment of Forestry. It would provide general technical supervision;monitoring and evaluation; coordination of research, training andextension; procurement and financial control. In addition, it would beresponsible for development of a long-term plan for forestry activitiesin the arid zone. All incremental positions would be costed under theproject.

8. The Unit would be headed by a Project Coordinator who wouldreport to the Director of FDF through FORMECU in Ibadan. The ProjectCoordinator, who would be internationally recruited should ideally be aprofessional forester and must have substantial experience in naturalresource management. Three other positions in the unit would also beInternationally recruited - a financial controller, a silviculturist/agroforestry officer and an extension/training officer. Senior locallyrecruited staff would include a monitoring and evaluation coordinator,and a procurement officer. Other support staff would include anadministration officer and senior superintendents who would assist theserior officers.

Annex 3-6rage e or 13

- 71 -

9. The Finance and Procurement Division would be responsible formaintenance of the project a accounts, handling disbursements from theWorld Bank and Federal Government and preparation of bidding documents.

10. The Technical Division would have the responsibility fordrawing up technical specifications for field operations and preparationof annual plans. It would also determine research needs and appointconsultants or research institutes where appropriate. The divisionwould also appoint consultants and coordinate the preparation of theNational Afforestation Plan.

11. The Training and Extension Division would have responsibilityfor coordinating the training needs at all levels in the states anddeveloping training programs. It would also be responsible for adminis-tration of the Forestry Vocational Training Center at Kano and prepara-tion of extension material in collaboration with the ADPs.

12. The Monitoring and Evaluation Division would design andprepare instructions for monitoring work to be carried out in each ofthe States, specifying the needs for diffeient types of information tobe collected. It would collate results and prepare reports for manage-ment and also follow up activities where targets were not being achievedin order to clarify the reasons and to take counter-measures wherenecessary.

13. A committee would be formed in each state to ensure that theoperatious of various government agencies involved in AP are properlycoordinated and that there is no inefficient duplication of effort intheir activities. Each committee would be chaired by the StateCommissioner in charge of the Forestry Division and have the AP's statemanager as Executive Secretary. Other agencies represented wouldinclude the River Basin Rural Development Authorities, FDF, the ADPs,the Livestock Service (where these do not fall under the samecommissioner as forestry) and a representative of the local governmentagencies. A similar committee already exists in Sokoto (it includesfarmers' representatives and traditional rulers as well as both Stateand Federal Division Heads and local governments).

(iii) AP State Units

14. Borno, Kano, Plateau and Sokoto. In these States all projectactivities would be the responsibility of a State Project Coordinatorwho would report to the Chief Conservator of Forests. This positionwould be filled th7ough international recruitment. There would be asmall administration unit attached to the Forestry Division Headquartersplus Zonal Operations Units (two in Kano and Plateau and three each inBorno and Sokoto) for carrying out the activities in the field. Thezones would correspond closely with the administrative zones of theADPS.

Annex 3-6-72- Page 4 of 13

15. The State HQ Administration Unit would have a support func-tion, facilitating coordination with APCU at Kano, and general account-ing and clerical work. It would have four senior officers (GL 09): anaccountant with responsibility for financial control and local pur-chases; a monitoring officer who would assist locally with the monitor-ing and evaluation work performed by Kano; a research officer, who wouldorga°ize practical field trials; a training/extension officer who wouldprepare each state's extension and training in coordination with theADPS and APCU. The Unit would have a support staff of 17 (GL 04-06)including technical assistants, research overseers and clerks.

16. Each Zonal Operations Unit would be headed by a Senior ForestSuperintendent (GL 18) who would oversee all project activities within azone and vould coo?dinate directly with the Zonal Agricultural Officesof the ADPs on farm forestry extension issues. There would be threeForest Superintendents (GL 07) in each zone having responsibilities forthe operation of nurseries, shelterbelt establishment and farm forestryextension.

17. Each nurser would be supervised by an Assistant ForestSuperintendent (GL 05 who would have responsibility for day-to-daynursery management. There would be two Silvicultural Assistants (GL 03)and five skilled laborers (GL 01) attached to each nursery. Additionalworkers would be hired on a casual basis during peak work periods.

18. There would be one Shelterbelt Unit in each zone (except inPlateau which only does farm forestry). These would determine exactshelterbelt locations and layout, based on State priorities, identifythe land owners, survey areas and generally supervise the establishmentand maintenance operations. Two assistant superintendents per zonewould be responsible for the direct supervision. They would each havethe assistance of four Silvicultural assistants and six skilled laborers(10 in Kano). Additional casual labor would be hired during theplanting season.

19. Each zone would have a Farm Forestry Extension Unit, managedby a forest superintendent (GL 07). There would be one AssistantExtension Superintendent for each LGA which had been selected forconcentration of farm forestry activities in the zone. These wouldcoordinate directly with the Acsistant Agricultural Superintendent levelin the ADP with regard to seedling requirements and scheduling ofdistribution xor farm planting. Because there is no ADP in northernBorno there would be four Silvicultural Assistants for each LGA in thenorthern part of Borno to assist the agricultural extension service.

20. Nurseries would be the foci of activities for shelterbelt andfarm forestry operations and vehicles and equipment would be used forboth as required. Zonal offices would be established at one centralnursery in each zone.

Annex 3-6-73 - 7age 5 o 13

21. Bauchi would have essentially the same structure as Borno,Sokoto and Kano but, because the program would operate in only one zone(comprising the LGAs of Kabagum and Gamawa), the structure would besimplified and there would be a smaller staff. At the State administra-tive level, the position of State Project Coordinator would be carriedout by a Senior Forestry Division Officer. This administration unitwould have key officers in charge of monitoring, research,training/extension and accounting but the support staff would only beten. In the field, there would only be two nurseries, and shelterbeltestablishment activities would probably be restricted to a singlelocality in any one year. There would thus be one nurserysuperintendent in charge of two nurseries (each run by an assistantsuperintendent), a shelterbelt superintendent and two extensionsuperintendents (one in each local government).

22. In Kaduna, the EEC - Kaduna Arid Zone Afforestation Project(KAZAP) would include farm forestry extension as well as shelterbelt andplantation establishment activities in all five LGAs in the arid part ofthe State (Katsuna, Maru, Daura, Dutsin Ma and Kankija). To avoidpossible conflict the project would not duplicate establishment efforts,restricting activities to farm forestry extension in coordination withthe ADP in locations where KAZAP was not active. Only a small projectmanagement unit would therefore be set up at Forestry Division headquar-ters. Principal officers directly involved with the project wouldinclude one forest superintendent for nurseries, three nursery assistantsuperintendents.

(iv) Operations of AP

23. Nurseries. During the period of the Arid Zone AfforestationProject, 68 nurseries were established throughout the 5 northern states.In addition, the State Governments have independently operated about 145nurseries, mostly within the arid zone, and there are several small ADPnurseries in Kano and Kaduna states. The total seedling production ifall nurseries were operating at full capacity is likely to be more than30 million seedlings annually - well in excess of what can be absorbedin a rural afforestation program given the States' present forestryextension capabilities. There is thus little need to expand nurserycapacity and the immediate aim must be to improve the efficiency ofseedling production and distribution.

24. This would be achieved by the improvement of selected nurser-ies through replacement of worn equipment and ensuring a reliable watersupply, as well as the provision of new vehicles for seedling distribu-tion. Provision is made for some new nurseries to be established toreduce transport costs in distribution and to relocate close to water,but seedling production under the project will be restricted to theneeds of shelterbelt establishment and a realistic supply to farmforestry. A maximum of eight new (or relocated) nurseries would beestablished and 27 existing state forestry nurseries would be upgraded.Each nursery would have a capacity of about 250,000 seedlings. One

Annex 3-6r-age b or 13

- 74 -

nursery in each zone would function as a central nursery and will havebasic mechanical workshop facilities.

25. The upgrading and relocation would be phased over the projectperiod depending on the size of the shelterbelt program and the abi;'-yof the agricultural extension services t absorb seedlings for farmforestry. Investment would begin in the first project year so thatnurseries would be fully operational for production by the start of PY2.

26. Essentially, the establishment of new nurseries would involverelocating existing ones which, because of distance to priorityshelterbelt locations or unreliable water supplies, cannot operateefficiently. Activities involve land acquisition, site preparation,construction of fences and windbreaks, erection of basic buildings forstores and accommodation of supervisory staff, transfer or purchase ofirrigation equipment and purchase of tools. Since each nursery wouldfunction as a center for shelterbelt establishment, the equipment wouldinclude items needed for field operations as well as for seedlingproduction. To assure a reliable water supply it is assumed that allnew nurseries would require boreholes.

27. There is a wide variation in the conditions and capacities ofpresent nurseries. The inputs needed to upgrade each to produce 250,000seedlings efficiently vary accordingly. It has been assumed that noadditional land would need to be purchased, nor any site preparationcarried out. Fencing would need general repair and some extension,while buildings would not need to be repaired and upgraded. For irriga-tion equipment, the pumps, supply main, spares and water tank would bereplaced for each nursery but replacement of only 50% of the spraylinesneeded for new nurseries is assumed. Tool and equipment replacementwould be complete. Boreholes would be provided for only 75% of nurser-ies.

28. The seedling production to be supportee under the projectwould be sufficient for shelterbelts and the proposed farm forestryprogram. The individual states may, however, wish to maintain addition-al nurseries and produce extra seedlings if required. The proportion offruit and fodder tree seedlings would be increased from that producedunder the AZAP program. Technical assistance would be given to the ADPsin Kano and Kaduna tc raise their own seedlings in small villagenurseries but these woold receive no direct financial support fornursery establishment or seedling production.

29. The production schedules are based on the requirements for theshelterbelt programs of each state and estimated capacities of extensionservices. Shelterbelt requirements are based on 4,000 seedlings perkilometer while farm forestry needs assume that 10% of the farm familieswould be reached and each would receive 100 seedlings in a phasedprogram with an equivalent amount of seedlings being made available forother demands.

_ 75 _ Annex 3-6Page 7 of 13

30. The two principal species for shelterbelts would be Eucalyptuscamaladulensis and neem (Azdirachta indica) which would be produced inthe approximate proportions 40:60. Seeds are readily available in eachstate. For farm forestry both these species would also be produced butas a smaller proportion (estimated at 20Z) of the total output than inrecent years. While it is not practical here to specify the proportionsof seedlings to be produced, Working Paper Z, Table 10 provides a listof some which have been found useful. the marLeries should give prefer-ence to those for which farmers show the greateaL demand, although thereshould also be active promotion of species which ai' known to produceenvironmental benefits (such as Acacia albida). Seed for most areavailable but collection may be difficult for some where. pods areparticularly pilatable to livestock (e.g., the acacias and Parkia).Farmers should be encouraged to collect seeds and a payment for anydelivery to nurseries might be considered.

31. Farm Forestry Activities. Farm forestry considered here wouldinclude village and school planting, and small private woodlots, al-though the primary emphasis will be addressed at on-farm planting whichoffers the greatest potential benefits.

32. Extension work would comprise two major components:

(i) 3widespread media publicity through a variety of channels;and

(ii) the "grassroot" level contacts through the agriculturalextension services and at the nurseries.

Publicity material for dissemination across the five arid zone stateswould be prepared by the Training and Extension Division of APCU. Thiswould include written and illustrated material in Hausa and other locallanguages, radio programs, and video films for display with publicityvans. Additional moral and public support in promoting tree plantingand protection would be sought from religious and traditional leaders.Farmer level contact will be done through the agricultural extensionservices of the ADPS and must be closely coordinated with their otherpublicity work. Extension workers must be able to communicate tofarmers:

(i) the values of different types of trees in terms of whatthey produce and what can be gained in consumable pro-ducts and financial returns;

(ii) the value of trees in terms of their protective functionand their enhancement of agricultural productivity;

(iii) how trees can be included in existing agriculturalsystems; and

Annex 3-6Page 8 of 13

(iv) how to get seedlings, how to plant them and how tomaintain them; and

(v) the importance of leaving standing trees vhen clearingland for agriculture in southern areas of the statesoutside the arid zone.

'This information mu-- be included as a part of regular agriculturalextension messages. The main project activity would be the training andtechnical support of the extension workers.

33. The links between the forest service and agricultural exten-sion in each state worild have to be developed as the program gets underway and will depend on the characteristics of each ADP. It is envisagedthat the point of contact would be at the Assistant Forest Superinten-dent level in the Forestry Divisions and the Agricultural Superinten-dents in the ADPs or Extension Service. This means that field overseerswould not be supervised directly by Forestry staff and that division incommand would be avoided. It also means that agricultural staff insupervisory positions would also have to receive training in agro-forestry. Suitable orientation programs in agroforestry aim at thevarious middle lewel ADP officer should be developed by the Training andExtension Division at Kano in close coordination with senior ADP offi-cers. In each zone there would be higher level contact between thesenior zonal forest superintendents and the agricultural officers of theADPs.

34. The types of model introc!ueed must take into account the farmpopulations' demands for agricultural laud and the difficulties ofprotecting young trees from animals. Detailed development of suitablepackages would have to be part of cooperative work by the forestryservices and the ADPs as the project is implemented. In broad terms,alternatives to consider are:

(i) dispersed tree planting in fields;

(ii) rows of trees with intercropping;

(iii) four-around planting on field borders; and

(iv) block plantings, such as woodlots.

35. Maintenance, Protection, Monitoring and Evaluation of FarmForestry. In visits to villages subsequent to planting the extensionworker would present material to reinforce the idea of the need formaintenance of the young seedlings, including weeding and protectionmeasures. The ADP monitoring system involves visiting randomly selectedfarmers and determining by questionnaire the adoption rate and impact ofvarious ADP practices. Monitoring and evaluation of the impact of farmforestry extension efforts would be made partly in conjunction with

_ 77 _ Annex 3-6

Page 9 of 13

these ADP monitoring activities. Additional items would be added to thequestionnaires to include:

(i) whether the sample farmer was participating in farmforestry;

(ii) if so, how many seedlings were received and of whattypes;

(iii) when they were planted;

(iv) what type of planting, e.g. field planting, four-aroundor voodlot;

(v) were inputs used (what type, what costs, from where);

(vi) an assessment of survival; and

(vii) enumeration of any problems experienced.

The data obtained from compiled ADP reports would be provided to themonitoring officer in the Forestry Division headquarters who woulddetermine the needs for follow-up by the zonal forestry extension staff.Follow-up may be called for in cases of poor survival, or other problemsarising from the ADP monitoring reports. However, monitoring indepen-dent of ADP activities, would also be carried out by the forestryextension staff and the state monitoring officer. This would involveonly participating farmers and provide much more in-depth checks ondegree of adoption and success rates.

36. Shelterbelts have been established in Northern Nigeria sincethe early 1960s and the techniques are well known. Their principalfunction is protecting and rehabilitating land which is consideredvaluable both because of population density and because the land issufficiently productive to grow crops but which, because of overexposuredue to overcutting of farm trees, has shown a marked decline in yields.While such areas are generally close to the northern fringes of thecountry, this may not necessarily be so. Belts should be situated closeto protect well-defined areas with the intention that the land betweenthem will be restored to give hig.er yields. Areas where shelterbeltestablishment is likely to be difficult-such as active sand dunes orthose where irrigation would be required after planting-should beavoided, at least for the present. Therefore a few locations in eachstate (maximum one per zone) would be selected and these would beadequately established before moving on to others. In all situations,there should be a combined farm-forestry/shelterbelt approach, withstrong encouragement for farmers whose land falls between the belt toplant field trees.

37. There is considerable variation in the designs adopted bydifferent states and so far limited evidence to show that any are

Annex 3-6-78 - rage iu of 13

superior. In Kano most belts have single species, either neem oreucalyptus, and comprise 8 rows of trees at 3x3 meter square spacing togive a width of 27 meters. In Kaduna several variations have beentried, including 3-r7w neem belts at 3x3 meter triangular spacing andalso 150 meter wide belts of 50 rows. Both Sokoto and Bauchi have useda combination of species. In Bauchi, two windward rows of Acaciasenegal, one row of Acacia nilotica and six leeward rows of neem havebeen tried giving a total width of 30 meters. The Sokoto model has twoouter rows of Acacia nilotica (both windward and leeward) and 7 interiorrows of neem. The aim of the more shrubby acacias as outer rows is toIncrease wind resistance at lower levels and to give the belt a moreaerodynamic profile, cutting down turbulence close to the edges.Unfortunately, the acacias have proven highly palatable to goats and nolonger form an effective barrier. Kano and Sokoto have both adopted a200-meter interval between belts giving a protected area of approximate-ly 20 hectares per kilometer. The width of shelterbelts is the majordifference between the states and there is no proof that one is betterthan the other. While a wider belt takes more land out of agriculturalproduction and increases the amount of compensation that has to be paid,the fencing costs per ha, and hence the wood production costs, are lowersince the length of border for each hectare is less (e.g. a 1-kmshelterbelt of 30 m width has about a 1OZ shorter fence for each hectarethan a 27 m belt). The costing here is based on a 30-meter width butthis does not imply that this model should be used everywhere. Singlespecies belts are proposed-neem in areas of lower rainfall andeucalyptus in higher rainfall areas-but tests with combinations shouldcontinue. The length will depend on the areas that need to be pro-tected. Openings will be needed to allow passage through but to cutdown on edge turbulence, these should not be at less than one kilometerintervals. The orientation of the shelterbelts should be at a rightangle to the most damaging winds-in general NW-SE. It is generallyaccepted that shelterbelts should be laid out in series as there isevidence of a cumulative protective effect. There are also advantagesin protecting a block of land rather than a strip. Therefore, thereshould be at least four parallel belts in any location. As wind ve-locity is reduced on the leeward side for about 12 times the tree heightand eucalyptus and neem will grow to 15-20 m high, a spacing of 200meters between belts is appropriate.

38. A provisional selection of land for shelterbelts would be madeby the senior forest superintendent in each zone. These would all beinspected by the State's project coordinator and a final selection madeaccording to the implementation program. This should be completed atleast one year in advance of planting. It would be an advantage ifareas for several years' planting programs could be selected and securedat one time. The shelterbelt superintendent in each zone would beresponsible for identifying the landowners and notifying them that theirland was required. If negotiations were needed these would be carriedout by the zonal senior forest superintendent. The belts would besurveyed and demarcated using chain and compass. Marker pegs would beplaced at 100 meter intervals and on corners.

-79 - Annex 3-6Page 11 of 13

39. Site preparation would involve the felling of any trees andremoval of stumps by hand followed by disc ploughing with a 48 kw wheeltractor and heavy duty offset disc harrow. The ploughing would break upthe surface soil to allow the penetration of rain water and provide abetter rooting environment for the seedlings. The operation shouldnormally be finished by the beginning of February.

40. Fencing would be carried out after ploughing. Fences wouldconsist of wire mesh as previously used by AZAP, plus two top strands ofbarbed wire, attached with binding wire to pressure-treated 2 metereucalyptus or teak posts (from industrial plantations). Posts will beplaced at 3 meter intervals. Gates should be located at convenientpoints for tractor entrance. Staking would be necessary to ensure anaccurate even spacing of 3 meters between rows to permit mechanicalweeding. Triangular spacing is preferred to square spacing as thiswould reduce the jetting effect of wind between the stems. A compassand tape would be used to locate peg positions.

41. Fire is not a great threat in the arid zone and good weedingas prescribed above should minimize the risk. However, forest guardpatrols around the belts should be maintained during the period ofhighest risk between the end of the rainy season and the time thatvegetation outside the fence has been grazed down by cattle. This wouldbe the main responsibility of the Silvicultural assistants and theskilled laborers during the fire season. Arrangements should be made tomobilize people from nearby villages in case of fire outbreak. Theforest guards should also regularly inspect fencing and make sure noneis broken down.

WAPA BSeptember 1986

NIGERIASECOND FORESTRY PROJECT

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2DMFORAISION PROGRAM

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Deveohpnt _ m _ _ m _ _ _ _ _ m _ _ m m _ -m -- 11 m 1 1 1 1 ,InnVActMtthOsII .m. m,. 1 1 11 IS*ifo~oCruTcaw ul AFarrn Iis i i i*mm

otdlt I ...cr _ _ ___P_ IMI I Ii I I I I

1 a9 1OS MMAIMN 1 P90AAMX II

W "4"mnU R epogawn Rt.

CatTlSlt t=tlioeVStw4. , nO,thon W'r,a -30

WAASoft 19S6

NIGERIA

SECOND FORESTRY PROJECT

SUMMARY COSTS BY PROGRAK

Naira ('000) (USS'OOO) XForeign X Total

Local Foreign Total Local Foreian TotaL Exchange Base Cost

A. Afforestation Program

1. Farm Forestry 13,446.3 9,183.3 22,629.6 13,446.3 9,183.3 aZ,629.6 41 312. ShetterbeLts 8,545.2 4,002.5 12,547.7 8,545.2 4,002.5 12,547.7 32 18

Sub-Total 21,991.5 13,185.8 35,177.3 21,991.5 13,185.8 35,177.3 38 49

B, Forest Management Program

1, Existing Plantations 8,036.5 4,586.2 12,623.7 8,036.5 4,586.2 12,623.7 36 18 12. New Plantations 5,462.2 6,947.6 12,409.8 5,462.2 6,947.6 12,409.8 56 17 w

Sub-TotaL 13,498.7 11,534.8 25,033.5 13,498.7 11,534.8 25,033.5 46 35

C. Program Management,Training, PoLicyAnaLysis, Researchand Studies 5,118.3 6,431.2 11,549.5 5,118.3 6,431.2 11,549.5 56 16

Totat Base Cost 40,608.5 31,151.8 71,760.3 40,608.5 31,151.8 71,760.3 43 100

Physical Contingencies 2,254.2 2,593.0 4,847.3 2,254.2 2,593.0 4,847.3 54 7

Price Contingencies 26,399.6 7,646.8 34,046.4 26,399.6 7,646.8 34,046.4 23 47

Total Project Costs 69,262.3 41,391.7 11.nA54.n 69,262.3 41,321,A 110.A54n.0 3z 15

00

WAPA B

September 1986 0I CIO

-84-Annex 3-8

h111 Page 2 of 3

(FfiSTATIN MM FTRY WANEENT)SUMMIARY COSTS (INVESTMENT AND RECURRENT)

(N1 '000) (1 '000) Z TotaZ fonon km

Local For.lo Total Loca Fowrin Total Cxchm Costd

1. ZIIJESTIENT COSTS

PM EIT.E0IU E S EMICLtES 149.4 8v93B.8 10e,48.4 1,5496. 8693.8 10,498.4 85 15IHICLES 1215.1 3,803.0 5016.1 1.21S. 1 3#803.0 54018.1 76 7LlFM NU1R 12.4 - 12.4 12.4 - 12.4 0

FnNIi M EDIPNEIT 236.P 22.0 489.8 236.8 252.0 49.8 52 1SBEL!Eh.T 5%35.2 34916.8 9s292.0 S5365.2 3,96.3 9,282.0 42 13

-WXM 12.57.2 625.9 1463.1 1,257.2 625.9 1,833.1 33 3TECHIICAL ASUSTANMIE ScoNULTANCIES "6.; 1?2.25,6 4918*4 661.6 436.6 46911.4 67 7FENCDIG RAT S 24.0 24. 46.0 24.0 24.0 49.0 50 0LAE FOR LM CLRING 9.4 - 9.4 9.4 - 9.4 - 0

rot INuSEIm COSTS 10,331.5 21,817.1 Z14.6 10,331.5 21,U7.1 32,149.6 d6 4

1. u0 er COSTS

SLARIES 17335.5 432.0 17,767.5 17935.5 432.0 17767t.5 2 25TEOIIICMa cALSSTMICE 127.8 751.8 879.6 127.8 751.8 69.6 US IENERML. wMfISR*TIE COSTS 3P115.0 1,982.6 5P7.6 39115.0 19982.6 5097*6 39 7RwT MM EUIc f WESTINTIR*TnS 860.0 2I172.9 3,032.9 660.0 29172.9 3.032*9 72 4

YEHICLE OIERETIE CAST 1,316.6 2P430.0 3746.5 1,3166 2t430*0 3746.5 65 5BIMDL MInJIEIWCE 137.2 56.86 96.0 137.2 58.8 196.0 30 0R.F NSER 4#034.2 1,104.5 S 136.7 4i034.2 1t10445 5,139.7 21 7FERTILIZER S COICALS 55.6 211.1 266.7 55.6 211.1 266.7 79 0SEEILINS PIIAOCTION 115.1 105.4 220.5 115.1 105.4 220.5 48 0SELTERDELT oIS 3,180.0 5.7 3,265.7 3,160.0 85.7 3,265.7 3 5

TOtal EDREN T CuSTS 309277.0 9.33498 39,611.8 30,277.0 9334.8 39P611.8 24 5STotlB NSELINE COSTS 40,609.5 31,151.9 712760.4 40606.5 31,151.9 71,760.4 43 100

Phnical C.tinamiues 2,254.2 2593s.0 447.3 2,254.2 2593.0 4,347.3 53 7Price Ca1niuci.s 26,399.6 7s646.8 34O046.4 26,99.6 7646.8 34,046.4 22 47

Total FOOECT COSTS 699262.3 41,391.7 110,654.0 69,262.3 41s391.7 110,1540 37 154u in inmz suz mz amm

WAPABSeptember 1986

NutRIASECOD rmasrmv P CT

(<F0REATIU0N MS FIKISTT IMWNWISUMMARY COSTS BY PROJECT COMPONENT

(lRA '000)

-N -mo. FbwsileaFOREST MANAGEMENT PROGRAM TRAINING Cui timncies

AFFOPE5iESTAT1ON .1515 . . ICYAILYBIS

IWUCHI ON KAM KANO OKOTO PLATEAU wa*Ir Il 0W 06UI mu 8SEMCN SuIW stal 2 AUn. m ..... u.uuaga- .. au as6am u.n..... 5.. a..... smumm 91a41111111

I. IW6SThNOT COSTS

PtMfT.EQUJZPf(J I YENhCLS 203.1 706.7 217.5 1,P037,2 802.1 401.9 3i410,4 2,216.6 763.0 932.5 P5.4 10,486.4 u.s u9o.sWHICLES 209.0 633.0 95.0 737,0 682,0 5400 0 418.0 - 80. 7 300 632.5 5.012,1 6,4 0.8LAND FOR MsERY 1.8 2.7 - 2.7 5.2

FRNIJTUtE MD EOUItJffT 4.0 6.0 - 6.0 6.0 15.0 46.6 22.2 63.0 40.0 270.0 48iS 10.0 48.9WELDINGS ~~~~~~~~~~41,4 9910 2, 248. 40.0 267.4 - 9.12.0 4.4 406.8

ELTERIELT 1U46,6 2,320,5 2,948*4 2,466.5 117.6 160; 203,6 241.0 438 1.131 9.0 170.3OUILDINSS 41o4 99of 29s? 148,6 404 267,4 i - -e. 2 -. 2 - 4330.0 ,103#4 10.0 411.1

TECHIICAL ASSISTANCE I CONSILIANCIES - 300.0 - - 300.0 - - 2 - - 4U8. O.0 t16

FENCING MrERIALS 12.0 10,0 - 18.0 * - 4. 4.6 0.4LA9R FOR LN CLEMIK1 0.4 0.6 - 0.6 - 7,8 _--

Total INWSTIENT COSTS ;,617.3 4;066,6 342;2 4898.5 44696,6 1.237,3 4192.6 loS10.7 1,49.6 2449.5 5101.1 32.141,6 7.5 2,410W1

11 RECURIENT cSrTS

SM*SIES 650.2 1,937,5 - 3,238,6 1,224,4 1.145.S 3,53,5 2,095.6 1,797.2 14949.? 2192.7 17.767.5 4.2 753.5TECO@ICML ASSISTdCE - - - - - 480U 0 3000 - * 9. 879.6 10.0 mo.

GEIENIAL AINIISTRATIIE COSTS 33.1 126,5 40,5 125.2 104s9 a668a 43718 265.5 204.9 21907 1485.3 50097.6 916 490.2

PLANT MDEQUPMNTOERATI ONS COST 667.0 569.0 594.7 690.2 304.0 3,032.9 10.0 303.3VEHICLE OPERATIIIG COST 83,6 277,3 55.4 251.5 275.5 60S.2 374.1 291.3 383.0 532.6 35.8 3.746.5 9.2 345.0DUILDINS MINTEWAN 1,6 3.2 - 3.2 3,2 - - 14. 196.0 10.0 19.6

R,F NtSERY 222,3 933.7 538.7 2.117,4 1W306,6 223* 2.37 4.10 2456FERTILIZER AND CHENICALS - - - - 361 62.3 1,I 220U7 10.0 26.7

SEEK INOS MODU6TION - - 623 153222065 1040 22.1SHFI*TERLT ON 403,4 616,4 - J0037.3 IOOB.5 -_ 3s2657 4-4 143.1

Total RECUmNT COSTS 1.394,2 4;114;6 634,6 4;773,2 3923,2 3s459v0 5,980.1 6,9 2t979.9 3,400.4 4642.0 39.611.8 6,2 2,437.2

rota IANLZIE COSTS 3.011.5 8,201.2 976.8 9.671,7 8.6198 4,6963 I0.lfl,7 5'497g6 404;'4 4 9 71,760.4 6.8 4.B47,3 -amiwucal ComtIynwciss 41.6 381,5 53.3 474,7 438,0 412.0 606,6 443,2 357.1 391.9 864.8 34,507.3 0,0 l0.0

PriCo C.Mt1nWuwic# 1,665,9 4o476,5 495.0 5,152,5 4,437.2 2.199,5 4,231.1 25333 241306 2,381.4 3917.5 34,046.4 5.6 0.0 ,n

Total MOECT COSTS 4.719,1 13*059,3 1S26;0 1529.0 13,449 ; 15,212,4 89474.0 6,957.1 7,667.2 1444I.0 110654.0 6.1 6,746.?32.8383 8a3aas zaaumm umaimum *a.mms.m san"oglgazm anamna nasna m

Taxn 73,8 205 .3 31.0 255,2 219s4 295. 43'.3 213,. 210,47 22.49t 3701. 4131,7 7. J167.3ForuiM Excf.an 955.4 30.36,1 5066 4,50644 408,3 3 ,9,23362 ,4, 2791 87424,30777 ,6.

WAPABSeptember 19B6

-86 - Annex 3-9

Pap 1 of 2

NIGERIA

SECOND FORESTRY PROJECT

Program Cost and Financing PLan(USS/I)

CY 1987 1988 1989 1990 1991 1992 1993 1994 Total ZPY 1 2 3 4 5 6 7 8

I Project Cost:IBRD 7.40 5.40 6.90 10.90 16.50 12.40 9.00 2.50 71.0 64FMG 4.00 4.00 4.00 4.00 3.00 3.00 3.00 2.70 27.7 25

States

Bauchi 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.80Benue 0.12 0.12 0.12 0.12 0.12 0.12 0.12 0.12 0.96sorno 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 1.60Kaduna 0.30 0.30 0.3U 0.30 0.30 0.30 0.30 0.30 2.40Kano 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 2.00Ogun 0.12 0.12 0.12 0.12 0.12 0.12 0.12 0.12 0.96Ondo 0.11 0.11 0.11 0.11 0.11 0.11 0.11 0.11 0.88Plateau 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.80Sokoto 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 1.60

Sub-totaL 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 12.00 11

Total 12.90 10.90 12.40 16.40 21.00 16.90 13.50 6.70 110.70 100

II Existing Staff:

FMG 0.30 0.35 0.40 0.46 0.51 0.56 0.62 0.68 3.88 21States

Bauchi 0.10 0.12 0.14 0.16 0.18 0.20 0.22 0.24 1.36Benue 0.10 0.12 0.14 0.16 0.18 0.20 0.22 0.24 1.36Borno 0.05 0.06 0.07 0.08 0.09 0.10 0.11 0.12 0.68Kaduna 0.10 0.12 0.14 0.16 0.18 0.20 0.22 0.24 1.36Kano 0.20 0.24 0.28 0.32 0.36 0.40 0.44 0.48 2.72Ogun 0.10 0.12 0.14 0.16 0.18 0.20 0.22 0.24 1.36Ondo 0.10 0.12 0.14 0.16 0.18 0.20 0.22 0.24 1.36Plateau 0.10 0.12 0.7- 0.16 0.18 0.20 0.22 0.24 1.36Sokoto 0.20 0.24 0.28 0.32 0.36 0.40 0.44 0.48 2.72Sub-totaL 1.05 1.26 1.47 1.68 1.89 2.10 2.31 2.52 14.28 79

TotaL 1.35 1.61 1.87 2.14 2.40 2.66 2.93 3.20 18.16 100

III Farmers: _ 0.50 0.80 0.95 1.15 1.20 1.00 0.46 6.06

TotaL Program: 14.25 13.01 15.07 19.49 24.55 20.76 17.43 10.36 134.92

Program Summary:IBRD 7.40 5.40 6.90 10.90 16.50 12.40 9.00 2.50 71.00 53FMG 4.30 4.35 4.40 4.46 3.51 3.56 3.62 3.38 31.58 24States 2.55 2.76 2.97 3.18 3.39 3.60 3.81 4.02 26.28 19Farmers - 0.50 0.80 0.95 1.15 1.20 1.00 0.45 6.06 4TotaL 14.25 13.01 15.07 19.49 24.55 20.76 17.43 10.36 134.92 100

WAPASSe!jtember 1986

NIGERIA

SECOND FORESTRY PROJECT

Financing Plan by State and by Financing Source

(N Million)

Afforestation Program Forest Management Program Program ManagementTrajning,StudiMes tc. Totat

Bauchi Borno Kaduna Kano PLateau Sokoto Benue Kaduna Ogun Ondo Tud

IBRD 3.00 8.40 1.00 9.80 4.7u 8.60 5.40 9.80 4.90 4.50 10.90 71.0FMf 0.92 3.06 0.37 3.50 1.81 3.29 2.11 3.17 1.81 1.58 6.04 27.7 cStates 0.80 1.60 0.16 2.00 0.80 1.60 0.96 2.24 0.96 0.88 - 12.01

TotaL 4.72 13.06 1.53 15.30 7.31 13.49 8.47 15.21 7.67 k.96 16.94 110.i7

Re-tending Arrangements. FMG would re-Lend USS24.6miLLion of the IBRD Loan for FMP activities on the saome terms as the

IBRD loan to the following states: Benue (USS5.4 milLion), Kaduna tUSs9,8 milLion), Ogun (US$4.9 miLlion) and Ondo

(US$4.5 million). The states would carry the foreign exchange risk.

WAPAB ISeptember 1986 S

o 1L

- 88 -

Annex 3-10

NIGERIA

SECOND FORESTRY PROJECT

Local Competitive Procurement Procedures

The Federal Government'S general local competitive biddingprocedures have been reviewed and found generally acceptable with someexceptions. Bid documents for local competitive bidding under the projectshould specify:

(a) The criteria for evaluating bids should be clearly set outin the bid documents and should specify that award will bemade to the lowest evaluated bidder;

(b) bids should be accompanied by a bid security, or bid bond;

(c) all bids should be opened in public and bidders'representatives allowed to attend; and

(d) successful bidders snould be required to submit aperformance security on release of their bid security, orbid bond.

WAPAB

September 1986

- 89 -

Annex 3-11

Page 1 of 3

NIGERIA

SECOND FORESTRY PROJECT

Disbursement Schedule a/

IBRu (8 Year Period) Disbursements P-.-ofile in ZFY and In Nigeria First Forestry

PY/CY Semester Semester Cumulative % (Agriculture) Project

1 (1987) FY87 S2 4.0 4.0 6 0 0FY88 Si 3.4 7.4 10 2 2

2 (1988) FY88 S2 2.4 9.8 14 6 11FY89 Si 3.0 12.8 18 12 20

3 (1989) FY89 S2 3.4 16.2 23 20 28FY90 Si 3.5 19.7 28 30 46

4 (1990) FY90 S2 5.4 25.1 35 40 59FY91 Si 5.5 30.6 43 50 69

5 (1991) FY91 S2 8.2 38.8 55 59 80FY92 SI 8.3 47.1 66 68 8'

6 (1992) FY92 S2 6.4 53.5 75 77 90FY93 S1 6.0 59.5 84 83 95

7 (1993) FY93 S2 4.7 64.2 90 89 100FY94 Si 4.3 68.5 97 93

8 (1994) FY94 S2 1.5 70.0 99 97FY95 S1 1.0 71.0 100 99

9 (1995) FY95 S2 100

a/ Estimated Board Presentation: 7/86Estimated Effectiveness: 3/87Project Implementation Period: Scheduled

to begin 1/87 and conclude 12/94 = 8 yrs

WAPAB

Septeiber 1986

- 90 -

Annex 3-11Page 2 of 3

NTGERIA

SECOND FORESTRY PROJECT

For FMP States, FORMEU and APCU(US$ million)

Category Forest Management Program States AP States FORMEU TotalBenue Kaduna Ogun Ondo APCU

1. Civil Works 0.2 0.2 0.3 0.3 1.0 - 2.0

2. Vehicles, Equipment, 1.5 3.7 1.2 1.0 20.6 1.0 29.0Materials, Furnitureand Spare Parts

3. Int'l Salaries, 0.3 0.5 0.1 0.1 4.5 1.5 7.0Consultants andTraining

4. Wages 2.0 3.5 1.5 1.5 6.5 - 15.0

5. Operational Costs 1.0 1.3 i.1 0.9 6.3 0.4 11.0

6. Unallocated 0.4 0.6 0.7 0.7 4.3 0.3 7.0Total 5.4 9.8 4.9 4.5 43.2 3.2 71.0

WAPABSeptember 1986

NIGERIASECOND FORESTRY PROJECT

(AFFORESTATION & FOREST MANAGEMENT)DISBURSEMENT PROFILE

100- ~~~SECOND FORESTRY PROJECT , '

.. FIRST FORESTRY PROJECT

8e v

w

z40 oa36-

20-

10 Ph

PYI PY2 PY3 PY4 PY5 PYS PY7 PYS PYg W

FY87 THRU FY95WASA1Septemlbr 1Iooo

-92 - Annex 3-12

NIGERIA

SECOND FORESTRY PROJECT

Special Accounts No.2

An amount equal to US$3.5 million (N3.5 million), financed as anadvance from the Bank loan, vould be deposited in Special Bank Accounts,designated Project Bank Account No. 2, 1/ as follows:

(US$)

AZAPCU 2,250,000FORMECU 250,000Kaduna 250,000Benue 250,000Ogun 250,000Ondo 250,000

Total 3,500,000

Each of the above units would use Special Account No. 2 tofinance incremental expenditures eligible for reimbursement, and would bereplenished against certified Statements of Expenditure (SOEs). Each SOEwould include proper certification such as engineering certificates forcivil works noting the quantity and value of the work performed, invoicesfor goods and services, payroll vouchers for daily wages, log records forvehicle and plant operating expenses, etc.

The disbursement application requesting replenishment would besupported by: (a) copies of the SOEs (the supporting evidence would beretained in the project for review by supervision missions and theproject's auditors); (b) a statement of transactions on the spccial AccountNo. 2 certified by the commercial bank; and (c) a reconciliation ofwithdrawals and deposits with statements of permitted expenditures and IBRDdisbursements certified by the Project Unit Manager and FinancialController/Chief Accountant that IBRD procurement guidelines and procedureshad been complied with.

Any disbursements made from this account which are not acceptableto IBRD would be met by FPG (FORMECU and APCU) or the state governments(Benue, Ogun, Ondo, Kaduna) depositing a corresponding amount in AccountNo. 1.

WAPABSeptember 1986

93 ~ -Annex 3- 13Page 1 of 4

NIGERIASECOND FORESTRY PROJECT

Afforestation ProgramShelterbelt Production Schadule

Pn Fuelvood Poles Total

10 2.75 2.75 5.5011 3.13 3.13 6.2612 8.00 6.74 14.7413 8.89 7.42 16.3114 13.60 13.30 26.9015 12.82 12.61 25.4316 11.30 11.70 23.0017 14.10 15.49 29.5918 14.19 21.28 35.4719 14.38 21.05 35.4320 12.80 19.54 32.3421 13.26 20.43 33.6922 18.68 30.08 48.7623 12.94 22.18 35.1224 12.79 19.19 31.9825 13.78 20.66 34.4426 17.08 25.61 42.6927 17.06 23.18 40.2428 10.50 13.00 23.5029 12.67 15.37 28.0430 16.56 20.87 37.4331 14.94 18.48 33.4232 14.67 17.09 31.7633 10.89 13.57 24.4634 15.99 20.32 36.3135 14.74 18.48 33.22

332.51 433.52 766.03Assumptions:

(i) 1,700 km established PT 2-7:215, 245, 325, 350, 350, 215.

(ii) 401 Eucalyptus : 24 m/lkm/yr.601 Neem : 15m3 /km/yr.

(Ili) 331 of stems harvested at ages:- 8, 12. 16 for Eucalyptus; giving50/50, 40/60, 30/70 fuelvood: poles.

- 10,15, 20 for Neem, giving60/40, 50/50, 40/60 fuelvood: pules.

(iv) Subsequent coppice harvests of 33Z of stems every12 years for Eucalyptus and 15 years for Neem.

WAPA BSeptember 1986

- 94 -

Amma 3-13Page 2 of i

SeCORD FORESTR RJC

AFFORESTAnON PROM

Farm Forxstry Pgoduetonu aJ

(Kano, Kaduna. Sokoto, Bauchi and Borno States)

FulvoodFrom Fruit

FT F3Lv23d Pole-, oddsr TSa me Cashew('ooow( '000 Fruit) ('000 Fruit)

7 54.48 163.19 326.3

10 0.32 0.32 21.75 598.111 0.98 0.98 62.25 870.012 1.96 1.96 130.50 1,087.513 3.58 3.58 1.16 239.25 1,087.514 5.22 5.22 3.48 348.00 1,087.51S 6.53 6.53 6.96 435.00 1087.516 6.53 6.53 12.76 435.00 1.087.517 6.53 6.53 18.56 435.00 1,087.518 6.53 6.53 23.20 435.00 1,087.519 6.53 6.53 23.20 435.00 1.087.520 6.53 6.53 23.20 435.00 1,087.521 6.53 6.53 23.20 435.00 1.087.522 6.53 6.53 23.20 435.00 1,087.5Z3 6.53 6.53 23.20 435.00 1,087.524 6.53 6.53 23.20 435.00 1,087.525 6.53 6.53 23.20 435.00 1.087.526 6.53 6.53 23.20 435.00 1,087.527 6.53 6.53 23.20 435.00 1,087.528 6.53 6.53 23.20 435.00 1,087.529 6.53 6.53 23.20 435.00 1,087.530 6.53 6.53 23.20 435.00 1.087.531 6.53 6.53 23.20 435.00 1.087.532 6.53 6.53 23.20 435.00 1.087.533 6.53 6.53 23.20 435.00 1.087.534 6.53 6.53 23.20 435.00 1,087.535 6.53 6.53 23.20 435.00 1,087.5

149.19 149.02 460.52 9,936.08 28.111.9

a/ Produ.tiot Assuptions;(i) 29 million *eedlFg8 planted years 2-7:

5s. 1o02 152. 252. 252, 202.

(11) Species distrIbution: 202 fualvood502 fuelvood/fodder152 mango152 cashew

(iii) Survival: fuelvood 302fuelwood/fodder 402fruit trees 50S

(iv) Production:fuelwood: trees Mhrvested annually after 8 years -

0.0 m /tree.fuelvood/fodder: trees lopped annually after 10 years -

0. 004u /tree/year.mango: 200 fruits/tree annually after 8 years.cashev: 500 fruits/tree annually after 5 years.

wAPAB

September 1986

- 95 - Annex 3-13Page 3 of 4

NIGERIA

SECOND FORESTRY PROJECT

Afforestation Project

Farm Forestry Production a/

Plateau State

Py Fuelvood Poles Total

'OOO.3 'OOOm3 'OOOm

4 0.4 0.1 0.55 0.8 0.1 0.96 3.0 0.9 3.97 7.1 2.3 9.48 15.0 5.6 20.69 26.5 10.5 37.010 42.5 17.6 60.111 62.1 26.5 88.612 76.9 34.5 111.413 96.3 43.2 139.514 97.0 43.6 140.615 98.3 44.5 142.816 92.3 40.5 132.817 93.5 41.3 134.818 95.2 42.4 137.619 93.9 41.6 135.520 95.5 42.6 138.121 96.1 43.0 139.122 95.8 43.2 139.023 87.5 38.3 125.824 82.4 36.4 118.825 73.5 32.9 106.426 57.4 25.7 83.127 40.7 18.7 59.428 23.1 11.2 34.329 5.4 3.6 9.030

Total 1,558.2 690.8 2,249.0

a/Production Assumptions

(i) seedlings produced FYI to PY8 in millions: 0.5, 0.75, 1.25.1.75, 2.25, 2.75, 2.75, 2.75.

(ii) surviving seedlings planted by farmers PYL to FYB -in percent : 30, 40. 50, 60, 65, 65, 65, 65.- in millions 0.15, 0.3, 0.63, 1.05, 1.5, 1.8, 1.8, I.8.

(iii) 30Z of seedlings estimated to be used in woodlots and 70% plantedas single trees.- for woodlots in FYI - PY8 million seedlings: 0.05. 0.09, 0.19, 0.32.0.45, 0.54, 0.54. 0.54.- as single trees, in PY1 - FnB million seedlings 0.10, 0.21, 0.44, 0.73,1.05, 1.26, 1.26, 1.26.

(iv) spacing in woodlots 1.5 x 1.5 m resulting in the following areaplanted PYI - PY6 in ha.: 11, 20, 43, 72,3101, 122, 122 and 122.- mean annual increment of woodlots 17.9m .

(v) yield of single trees 0.015 m3 in average per year througp 20 years.

WAPAB

September 1986

-96- Annex 3-1'

NIGERIA Page 4 of 4

SECOND FORESTRY PROJECT

FOREST MIANAGEMET PROGRAM(000, m)

EXISTING AND NEW PLANTATION PRODUCTION

p_ Fuelvood Sma1l Poles Electric Poles Sawloga Total

1 1.6 9.1 - - 10.72 2.9 15.1 - - 18.03 4.2 17.3 0.2 - 21.74 6.0 27.5 0.3 - 33.85 5.3 26.1 0.3 - 31.76 4.7 19.3 0.3 - 24.37 4.9 20.4 0.3 - 25.68 6.4 25.5 1.0 - 32.99 5.1 20.0 1.0 - 26.1

10 8.5 32.9 1.9 - 43.311 4.2 16.6 0.9 - 21.712 3.2 13.3 0.7 - 17.213 4.4 21.5 4.0 - 29.914 0.5 14.8 - - 15.315 9.2 13.2 3.5 3.5 29.416 0.5 4.3 - 0.1 4.917 8.7 28.9 13.7 8.2 59.518 7.5 25.3 11.7 7.0 51.519 0.6 4.3 0.3 0.1 5.320 9.5 11.7 20.6 6.7 48.521 0.9 4.3 0.9 - 6.122 0.9 4.2 0.9 - 6.023 9.5 18.6 18.1 17.8 64.024 0.7 2.8 0.6 - 4.125 - - -26 0.7 * 0.6 1.5 0.5 3.327 1.3 1.3 3.0 1.0 6.628 7.5 3.2 21.2 35.0 66.929 -38.2 -92.7 -25.6 17.0 -139.530 1.9 2.0 4.5 1.5 9.931 -30.5 -78.5 -10.3 23.0 -96.332 - - - - _33 - - - - -34 - - 1.3 2.5 3.835 - - 2.5 5.0 7.536 -4t.3 -117.3 -23.9 62.7 -126.837 - - 3.8 7.5 11.338 - - 3.8 7.5 11.339 - - 2.5 5.0 7.540 - - - - _41 -'7.1 -115.1 -47.1 92.9 -116.442 - - - - _43 - - - - _44 - - - - -45 - - - - _46 - - - - -

47 - - 1.5 11.9 13.448 - - 3.0 23.8 26.849 - - 4.5 35.8 40.350 - - 4.5 35.8 40.351 - - 4.5 35.8 40.352 - - 3.0 23.8 26.8

Total 515C3I1 691.3 39.5 471.4 468.5

Assuwtions:

This table is compiled from the projected outcomeof the proposed lavestments in Benue, Ogun, Ondo,and Kaduna. Working Paper 3 containsthe estimated yields per state project.

WAPA 8September 1986

- - Annex 3-14Page 1 of 2

NIGERIA

Second Forest Project

Forest Management Program Cash Flow a/

(N Million)

INFLOWS OUTFLr%WS

Disbursement of Net Cumu-IBRD Loan F(G & d Annual lativeState Govt. b Cash Project-/ Debtef Total Cash Cash

PY Co-;ributions-/ Revenues- Inflow Costs Service Outflow Flow Flow

1 6.4 0.5 6.9 6.4 0.1 6.5 0.4 0.42 3.6 0.8 4.4 3.6 0.3 3.9 0.5 3.93 3.5 0.9 4.4 3.5 0.5 4.0 0.4 1.34 5.2 1.4 6.6 5.2 0.8 6.0 0.6 1.95 7.3 1.0 8.3 7.3 1.3 8.6 (0.3) 1.66 4.5 1.0 5.5 4.5 1.4 5.9 (0.4) 1.27 4.3 1.4 5.7 4.3 1.7 5.0 (0.3) 0.98 3.6 1.6 5.2 3.6 3.0 6.6 (1.4) (0.5)9 2.5 2.5 0.8 3.4 4.2 (1.7) (2.2)

10 3.3 3.3 0.6 3.3 3.9 (0.6) (2.8)11 3.2 3.2 0.6 3.1 3.7 (0.5) (3.3)12 3.2 3.2 0.5 3.0 3.5 (0.3) (3.6)13 3.7 3.7 0.4 2.8 3.2 0.5 (3.1)14 5.3 5.3 0.4 2.6 3.0 2.3 (0.8)15 7.7 7.7 0.4 2.5 2.9 4.8 4.016 5.5 5.5 0.4 2.4 2.8 2.7 6.717 6.9 6.9 0.4 2.2 2.6 4.3 11.018 6.9 6.9 0.4 2.0 2.4 4.5 15.519 4.8 4.8 0.4 1.9 2.3 2.5 18.020 6.7 6.7 0.3 1.8 2.1 4.6 22.6

Average PY 21-30 2.0 2.0 0.2 0 0.2 1.8 40.6 by PY30

Average PY 31-52 3.0 3.0 0.1 0 0.1 2.9 104.6 by PY52

a/ For FMP in Benue, Kaduna, Ogun and Ondo States.'W Based on Financing Plan and Disbursement Schedules.cl/ Based on sales of fuelwood, poles, electric poles and sawlogs (Working Papers

3 and 4).dt Project costs including taxes and contingencies PYI-8; estimated recurrent

costs thereafter.e/ Based on IBRD loan at 10, repayable in 20 years with 5 years grace.

WAPABSeptember 1986

-98 - Annex 3-14Page 2 of 2

NIGERIA

SECOND PORESTRY PROJECT

EMG Cash Flow (1987-99)(N million)

OUTFLOWS INFLOWS TOTAL

PFG contributions FHG debt Payments rece-to project a/ service on ived from on-

PY/CY __IB loan b/ lending c/

1 87 4.0 0.4 0.1 (4.3)2 88 4.0 0.6 0.3 (4.3)3 89 4.0 1.5 0.5 (5.0)4 90 4.0 2.7 0.8 (5.9)5 91 3.0 4.0 1.3 (5.7)6 92 3.0 7.8 1.4 (9.4)7 93 3.0 8.5 1.7 (9.8)8 94 2.7 9.7 3.0 (9.4)9 95 10.4 3.4 (7.0)10 96 9.6 3.3 (6.3)11 97 8.5 3.1 (5.4)12 98 8.1 3.0 (5.1)13 99 7.4 2.8 (4.6)

TOTAL 27.7 79.2 24.7 (82.2)

a/ From Annex 3-9, page 1.b/ Based on IBRD loan at IOZ, repayable in 20 years with 5 years of grace

and assuming an exchange rate of Nl - US$1.c/ From Annex 3-14, page 1.

WAPABSeptember 1986

- 99 -

Annex 3-15Page 1 of 7

NIGERIA

SECOND FORESTRY PROJECT

AFFORESTATION PROGRAM (AP)

Economic Justification: Cost-Benefit Calculations

(i) Zones 1 and 2 (Bauchi, Borno, Kaduna, Kano and Sokoto States)

Cost

1. Financial costs have been converted into economic costs in thestandard way (a) by estimating the tradable components in border pricesdirectly (May 1985 figures at N1.0 = US$ 1.0) and (b) by converting thenon-tradables into border prices using conversion factors. Fornon-tradables such as land and manual labor (which are the principal nontradable inputs in the project) a local conversion factor of 0.3 was usedbased on the value of the output of traditional agriculture (mainly sorghumand millet) in border prices. For all other non-tradables (mainly polesand local professional labor) the standard conversion factor (which equals0.35) was used. Apart from these adjustments, the cost components areidentical to those used for the financial analysis (in real prices), withthree exceptions: (i) Roughly 90% of the costs of the Coordinating Unit areto be incurred for scientific, social and economic research, and for thepreparation of a long term plan; they have therefore not been included inthe economic costs because the benefits of this work would occur in futureshelterbelt and agro-forestry programs, rather than in the programspresently being appraised. The costs so excluded amount to about 15Z ofthe project costs. (ii) The land occupied by the shelterbelts has beencosted at its economic value rather than in terms of compensation paid bythe State Governments. (iii) The economic costs to farmers of planting andprotecting the seedlings have been included (t'Ve financial analysisexcludes them); they add about 30% to the economic costs of the project.The present worths of the economic costs are shown in Table 1.

Benefits: Basis of Estimates

2. The benefits are broken down into three main components:

(a) the value of the tree products themselves - firewood, poles andfruit. (Fodder is counted under (c));

(b) the positive effects of the tree planting programs on soilfertility arising from improved moisture retention and nutrientrecycling. These benefits are estimated from the incrementalvalue of enhanced crop yields; and

Annex 3-15-100 - Page 2 of 7

(c) the positive effects on livestock activities arising from theextra dry season fodder being made available by the increase incrop residues (associated with (b)) and the planting of foddertrees and shrubs.

3. A fourth benefit could be added - the prevention of furtherdecline in the carrying capacity of the soils (known as the prevention ofdesertification), but this benefit is by far the most uncertain anddifficult to quantify. This is because there is little scientific dataavailable on actual changes taking place in soil fertility (such data wouldbe collected under the project) and on the socio-economic variables thatexplain the underlying causes. While it is possible that desertificationwould occur without the project's interventions, at what rate and over whattime is at present impossible to determine. By not quantifying thisbenefit in the base case, the project's economic analysis is likely to beerring on the conservative side.

4. Given such uncertainties and analytical difficulties, however,the only practical course was to concentrate first on what are the betterunderstood and better documented benefits noted above - the positiveeffects of afforestation programs on wood production, on cropping and onlivestock activities. As will be seen, these benefits alone are sufficientto justify the project economically. With respect to shelterbelts, thisconclusion is consistent with the findings ex post of shelterbelt plantingsin many other countries; with respect to farm-forestry, it is contingent onsecuring a good farmer response to the program, as discussed more fullybelow. However, given the ecological changes taking place in the region,this course leads to an under-estimate of the returns. For this reason,and also to focus attention on the ecological issues, the sensitivityanalysis also includes a rough estimate of what are termed desertificationprevention benefits based, as noted, on the net present worth of croppingand livestock activities protected. The results of an alternative analyticmodel based on "with" and "without" project scenarios are also presented.This analysis yields an ERR similar to that from the quantification of thethree main benefits listed above.

Shelterbelts

5. Numerous studies of shelterbelts have shown that crop yields aresignificantly improved in the sheltered areas through improvements in soilnutrient and moisture content, the latter being achieved through areduction in surface wind velocities (and thus of surface evaporation).After allowing for the effects of shade, and the use of land, water andnutrients by the trees themselves, the conclusion is widely accepted thatshelterbelts can be expected to have a 20 + 5Z effect on crop yields, the

Annex 3-15

-101- Page 3 of 7

figures used in this SAR. 1/ Further, it has been found that in dry years,the effects of the trees on soil moisture retention is more vital, with theeffects on yields being appreciably higher than the figures just quoted.

6. Such increases in yields are also expected to improve onlivestock production because the increases in crop residues increase theavailability of dry season fodder; e.g., one hectare of traditional cropsproduces about 700 kg of leaves and 900 kg of stalks suitable for fodder, atotal of 1600 kg. Assuming 50% of the stalks are used for dwellings andfences, a 20% increase in yields produces about 300 kg of additionalfodder, a figure that could be raised to 400 kg through the planting offodder trees and shrubs by farmers between the belts; this increment issufficient to support about a quarter of a tropical livestock unit (one TLU= one cow or 5 goats) in the dry season.

7. The results of the cost benefit calculations are presented inTables 1 and 2, and in sum are as follows (figures in N million):

Item Low Case Base Case High Case

Cost 4.8 4.4 4.4Benefits:-crop yield effects 2.7 3.6 4.5-livestock effects 1.2 1.6 2.0-wood 2.2 2.2 2.2

6.1 7.4 8.7Net Present Value of Benefits(10% discount rate) 1.3 3.0 4.3

Economic Rate of Return, Z 11% 13% 14%

The assumptions behind the calculations are discussed more fully in WorkingPaper 5. In brief: the crop yields to which the incremental effects applyrelate to traditional agriculture, which currently yields about N140/ha/year in border prices; income from livestock activities is estimatedto be N60(ha/year; the net income of farm activities is taken to be 15% ofgross income; to allow for agricultural development in the region, a slowgrowth of yields is also assumed, amounting to 3% per year beginning inabout 15 years time; the wood benefits are based on the productionschedules shown in Annex 3-13, with fuelwood being priced at its keroseneequivalent value at N25/cubic meter, and poles in border prices ofN20/cubic meter; the shelterbelt failure rate is taken to be 20%.

l1 W.P. 5 summarizes the results from over 180 field studies in 15countries.

Annex 3-15102 - Page 4 of 7

8. The low case assumptions correspond to a 10Z increase in projectcosts, while yield effects cover the 20% (± 5%) range noted above. Thewood benefits are kept the same throughout, since they were based onconservative assumptions.

9. On these assumptions, the shelterbelts have returns in the range12-14%, with an expected value of 13%. This serves to emphasize theimportance of the shelterbelts in terms of their positive contribution tooutput - from crops, livestock and of wood. These estimates are slightlylower than those shown in Table 3 based on the analytical approach of"with" and "without" the project which concluded that the expected ERR forshelterbelts is 14%, and is within the range 13% to 15%. The reason forthe higher value is that the "with/without" approach assumes, morerealistically, a slow decline in soil fertility oner time until theshelterbelts become established (in the 'without" project case, the slowdecline continues), a prospect which is not unlikely in the ecologicallythreatened areas where the shelterbelts are to be located. With regard tothe possibilities of the ecological risks being yet greater than this, i.e.of a yet more rapid decline in soil fertility, the calculations in Table 1also include the desertification prevention benefits, noted above. Thisraises the returns by one more percentage point to 15% with a range of 14to 16%.

Farm Forestry

10. As discussed in the main report and Annex 3-1, the farm forestryapproach to aforestation is intended to accomplish the same objectives asshelterbelts by encouraging farm tree plantings. The essential differenceis that involvement of the farmers in planting trees both reduces thepublic expenditure costs significantly and offers prospects, if theresponse is good, of a considerable increase in afforestation rates.

11. The main difficulties with estimating the benefits of farmforestry are two-fold. First, there is a dearth of scientific informationon the effects of tree densities over farmlands on soil moisture andnutrient content; the favorable ecological effects are not disputed, buttheir precise magnitude is unknown. The difficulty of obtaining suchinformation is compounded by the point that it isn't sufficient to haveinformation on individual farms, but on tree densities over quite a largearea, because individual farmers obtain considerable protection from windsand surface evaporation from their neighbors' trees. In fact, if onlyisolated farms practice farm forestry, the benefits are likely to be small,and it will be important for the project to secure a good response withinwell defined areas, to be measured in terms of a high proportion of thefarms being involved. 2/ However, the point remains that there is no

2/ As discussed in Annex 3-1, one of the difficulties with the previous(Footnote Continued)

- 103 - Annex 3-15

Page 5 of 7

readily available scientific information on the effects of farm forestryand local tree densities on soil moisture and nutrients. Second, asvariously discussed, the farmers' response to the program is uncertain and,of course, the benefits will turn greatly on this.

12. For these reasons, the benefit-cost caLculations first consideredthe questions of what impact would the project have to have on yields inorder to justify the investment on a 10% rate of return basis, and is suchan impact feasible? The results presented in Table 2 show that only a 6 to9% (say 5-10%) impact is required based on incremental production of crops,livestock and wood, and 0% if the desertification prevention benefits areincluded. It is generally agreed that, if a good farmer response isobtained, a yield effect of about 10% or more is achievable.

13. For completeness, the following is a summary of the resultspresented in Tables 1 and 2, assuming a 10% yield effect, and concentratingon the output-enhancement benefits only (figures are in N millions):

Item Low Case Base Case

Cost 15.2 13.7

Benefits:-crop yeield effects 9.2 11.5-Livestock effects 4.1 6.8-wood and fruit 2.7 3.6

11.0 21.9

Net Present Value of Benefits(10X discount rate) 0.8 8.2

Economic Rate of Return, % lZ 14%

The low case assumptions correspond to a three year lag in farmer responseand a 10% increase in costs. Both cases assume a 40% seedling survivalrate. A high case was not considered, given the risks and uncertaintiesdiscussed above. The expected return is in the range 11 to 14%.

14. As with shelterbelts, the analytic approach of the "with" and"without" scenario was also applied to the problem as a cross-check. Theresults were of the same order, but somewhat highe., giving an ERR 16% with

(Footnote Continued)AZAP program supported by FGN was that it aimed at state-widedistribution, and so diluted the program's impact.

- 104 - Annex 3-15Page 6Cof 7

a range of 15 to 18%, partly because a slow decline in soil fertility wasassumed (see Table 4), and partly because the possible lags in farmerresponse and cost increases were not considered. The ERR of the presentanalysis also rises to 14 to 16% if the desertification prevention benefitsare included.

15. It must be emphasized once more that such benefits depend greatlyon a good response from farmers within defined areas; farmer response canbe measured directly in terms of numbers of seedlings planted andsurviving, about 10-15 farm trees per hectare being thought minimal. Ifthis is obtained, the ecological and economic benefits are not disputed,their high value, in relation to costs, being partly explained by the loicosts themselves; e.g. the overall investment in farm forestry on anannualized basis is about $3.5/ha/year, or $2.5/ha/year, after the woodbenefits are netted out, which is very small in relation to the gross andnet values of cropping activities in the region, so that only smalloutput-enhancement benefits give good returns, even after -llowing for theeffects of discounting. It is, therefore, not the technological oreconomic assumptions that are in doubt; it is in the various social andeconomic factors affecting farmer response that the main risks lie. Theproposed project has been designed to provide for a better farmer responseto the farm forestry program than that which was experienced in theprevious AZAP program. The involvement of the agricultural extensionservices and a regular monitoring of farmer response are now bothconsidered crucial. The previous AZAP program also had the goal ofstate-wide coverage from the outset. This is now considered unrealistic,and a more concentrated approach in defined areas, coverin 6 1OZ of farmfamilies and 2.5% of the arid zone is more likelv to lay the foundationsfor the implementation of a more substantial afforestation plan building onthe experiences gained ana the research and studies financed by the presentproject.

(ii) Zone 3 (Plateau State)

16. Costs. Financial costs have been converted into economic costsusing the same assumptions for farm forestry ir. Zones 1 and 2 (para 1).

17. Benefits. Seedlings produced would increse from 0.5 million inthe first project year to 2.75 million as rrom the sixth year. It has beenestimated that the percentage of surviving seedlings would increase from30% to 65Z as from the fifth project year. Seventy percent of theseedlings are estimated to be planted as single trees or in lines -fhile 30Zwould be used for woodlots. Although fruit trees will be raised in thenurseries, the majority of trees delivered to farmers are expected to beEucalyptus and the benefits have been calculated using Eucalyptuscamaldulensis as a model.

18. Eucalyptus planted as single trees can produce a mean annualIncrement of 0.02 m per year on 3the Jos Plateau. However the moreconservative estimate of 0.015 m per year has been assumed in thecalculation of benefits. Woodlots would be established at close spacing

- 105 - Annex 3-15Page 7 of 7

(1.5 m x 1.5 a). The inputs used for establishment of one ha of Eucalypthas been shown in Table 9. Based on the seedlings utilized for woodlotsand the proposed spacing au area of 613 ha would b5 established during theproject period. A mean annual increment of 17.9 m per ha per year hasbeen forecast of which 37% is estimated to be poles and 63% fuelvood.

19. The ERR calculations for Zone 3 are provided in Table 5.

WAPABSeptember 1986

- 106 - Annex 3-15

Table 1 Table 1Summary of Costs and Benefits. Figures are P

Present Values, N, millions, Border Prices (Nl-$i) Discounted at 10 Z

Low Base HighQuantity Case Case Case

Economic CostsNurseries and Seedling Distribution Base 5.6Shelterbelts Case 4.0 AsTraining and Extension Plus 1.0 forState Management 1OZ 2.0 BaseCoordinating Unit 0.6

Sub-total, incl. 4Z Contingencies 13.7

Farmer's Costs 5.0 5.0 5.0

Total Cost 20.0 18.7 18.7

Economic Benefits

A. Prevention of Desertification:-Shelterbelt Areas 2.8 2.8 2.8-Agro Forestry Areas 18.0 18.0 18.0-Sub-total 20.8 20.8 20.8

B. Enhancement of Output: Cropping Activities-Shelterbelt Areas 2.7 3.6 4.5-Agro Forestry Areas 9.2 11.5 11.5-Sub-total 11.9 15.1 16.0

C. Enhancement of Output: Livestock Activities-Shelterbelt Areas 1.2 1.6 2.0-Agro-Forestry Areas 4.1 6.8 6.8

.3 8.4 8.8

D. Enhancement of Output: Tree Products-Shelterbelt Areas 2.2 2.2 2.2-Agro Forestry Areas 2.7 3.6 3.6-Sub-total 4.9 5.8 5.8

Sub-total, B+C+D 22.1 29.3 30.6

Total Benefits, A+B4C+D 42.9 50.1 51.4

Various Meaures of Net Benefits

NPV of Benefits Minus Costs 22.9 31.4 32.7Benefit-Cost Ratio 2.1 2.7 2.7Economic Rate of Return, Z 14 16 16

Measures of Net Benefits Excluding (A), above

NPV of Benefits Minus Costs 1.9 10.6 11.8Benefit-Cost Ratio 1.1 1.6 1.6Economic Rate of Return 10 14 14WAPA BSeptember 1986

- 107 - Annex 3-15Table 2

Table 2 Page 1 of 2

Summary of Costs and Benefits by Component (Shelterbeltsand Farm Forestry). Figures are Present Values

in N millions, Border Priced (N I - $1), Discounted at 10%

Low Case Base Case High Case

Shelterbelts 'including desertificationprevention benefits):

-Costs 11 4.8 4.4 4.4-Benefits 8.9 10.2 11.5-NPV 4.1 5.8 7.1-B-C Ratio 1.9 2.3 2.6-Rate of Return, Z 14% 15% 16%

Agro-Forestry (including desertificationprevention benefits):

-Costs 1/ 15.2 13.7 13.7-Benefits 34.0 36.3 36.3-NPV 18.8 22.6 22.6-B-C Ratio 2.2 2.7 2.7-Rate of Return, Z 14% 16% 16%

Shelterbelts (excluding desertificationprevention benefits)

-Costs 1/ 4.8 4.4 4.4-Benefits 6.1 7.4 8.7-iqPV 1.3 3.0 4.3-B-C Ratio 1.3 1.7 2.0-Rate of Return, Z llZ 13% 14%

Agro-Forestry (excluding desertificationprevention benefits)

-Costs 1/ 15.2 13.7 13.7-Benefits 16.0 21.9 21.9-NPV 0.8 8.2 4.6-B-C Ratio 1.1 1.6 1.3-Rate of Return, % 10% 13% 13%

Agro Forestry Turning Point Analysis:Required Net Effect on Crop Yield toGive a 10% Rate of Return 2/

-Including Desertification PreventionBenefits O% 3/ 0% 3/ 0% 3/

-Excluding Desertification PreventionBenefits 9% 6% 6%

I/ Attributing 15% of the state management and coordinating unit costs tothe shelterbelts and 85% to farm-forestry.

Annex 3-15- 108 - Table 2

Page 2 of 2

2/ The net effect allows for land taken out of production by trees. Thisis about 3% when the trees are fully mature. In the case of acacias,the fertility of the land under the trees is actually increasedsignificantly.

3/ The theoretical figures are negative, meaning that, on the assumptionsof this case, no effect on yields is required to justify theplantings.

WAPABSeptember 1986

Annex 3-15

- 109 - Table 3Page 1 of 2

Table 3

Afforestation Program (Zone 1)

Shelterbelt Cost and Benefit Streams,N per hectare, in Border Prices 1,

Income With Income NetProject Without Project Project Discounted

Year Gross Net Gross Net Impact Values 2/

1 174 -6 200 30 -153.90 134.3312 169 25 194 29 -3.78 2.8823 164 25 188 28 -3.67 2.4404 159 24 183 27 -3.56 2.0665 154 23 177 27 -3.45 1.7496 149 22 172 26 -3.35 1.4817 145 22 167 25 -3.25 1.2548 158 35 162 24 10.44 3.5189 171 48 157 24 24.11 7.09010 184 61 152 23 37.75 9.69111 197 74 147 22 51.38 11.51112 210 86 143 21 64.98 12.70813 216 87 139 21 66.57 11.36314 222 88 135 20 68.17 10.15615 229 89 131 20 69.77 9.07316 236 90 127 19 71.39 8.10317 243 91 123 18 73.02 7.23518 250 93 119 18 74.67 6.45719 258 94 116 17 76.33 5.76220 266 95 112 17 78.01 5.14021 274 96 109 16 79.71 4.58422 282 97 105 16 81.43 4.08723 290 99 102 15 83.17 3.64424 299 100 99 15 84.94 3.24825 308 101 9 5 14 86.73 2.89526 317 103 93 14 88.55 2.58027 327 104 91 14 90.40 2.29928 336 105 88 13 92.28 2.04829 347 107 85 13 94.19 1.82530 357 109 83 12 96.13 1.62631-50 1922.56 9.561

IRR 14.7%

Footnotes overleaf.

Annex 3-15

110 - Table 3Page 2 of 2

11 This is an alternative analysis using the same ecological and economicrelationships as those used for the results presented in Tables 1 and2. It was undertaken to cross-check the methodoloty used in the SARand serves to display the cost and benefit streams over time in afamiliar way. The slow decline of soil fertility over time (3% peryear) is an additional assumption. This case excludes the desertifi-cation prevention benefits shown in Tables 1 and 2. Other assumptions:Farm output, including livestock, in year 1 is 5200/ha, with net yieldbeing 15% of this; gross yield effect of shelterbelts is 25% (equi-valent to net yield effect of about 20%); land occupied by shelterbeltsis 13% of areas; shelterbelt cost per hectare sheltered is N150;agricultural yields rising at 3% per year (autonomous innovation) inprotected areas; net value of timber 125/cubic meter; land occupied byshelterbelts is costed at its net value without the project; a saelter-belt failure rate of 20%.

2/ At the IRR rate.

WAPABSep tember 1986

Annex 3 -15- 111 - Table 4

Table 4

Afforestation Program (Zones 1 and 2)

Farm Forestry Cost and Benefit Streams, N per hectare, Border Prices

Income With Income NetProject Without Project Project Discounted

Year Gross Net Gross Net Impact Values 1/

1 194 29 200 30 -30.90 26.4502 192 29 198 30 -0.89 0.6533 190 29 196 29 -0.88 0.5534 188 28 194 29 -0.87 0.4695 186 28 192 29 -0.86 0.3976 184 28 190 29 -0.86 0.3377 183 27 188 28 -0.85 0.2858 181 27 186 28 -0.84 0.2429 179 27 185 28 -0.83 0.20510 177 27 183 27 -0.82 0.17411 175 26 181 27 -0.81 0.14712 174 26 179 27 -0.81 0.12513 172 26 177 27 -0.80 0.10614 170 26 176 26 -0.79 0.09015 169 25 174 26 -0.78 0.07616 182 39 172 26 12.85 1.06717 195 52 170 26 26.48 1.88218 209 65 169 25 40.10 2.44019 222 79 167 25 53.73 2.79920 235 92 165 25 67.35 3.00321 242 93 164 25 68.66 2.62022 250 94 162 24 69.99 2.28623 257 95 160 24 71.36 1.99524 265 97 159 24 72.76 1.74125 273 98 157 24 74.19 1.52026 281 99 156 23 75.65 1.32727 290 100 154 23 77.15 1.15828 298 102 152 23 78.68 1.01129 307 103 151 23 80.25 0.88330 316 104 149 22 81.86 0.077131-50 1637.24 3.802

IRR 16.8%

Assumptions: As for Table 3 but yield increment of lOZ, 3Z of landoccupied by trees, and a 1X annual decline in soil fertility until treesare established.

1/ At the IRR rate.

WAPABSeptember 1986

NI16RIA

sicwo V "5T*I C

(PLAEAuU ZOE 32

COSTS Aim liwiissO@ NJAI.

1 2 3 4 5 6 7 I * to It 52 is 54 is I 7 1 is 1I 20 25 22 2

nlEoad 1t0los) - 7.56 13.77 29.61 49,57 00.52 104.53 121.12 162.63 112.27 143.7 156.26 13.1 71.10 12.l 123.0 50094 120,72 13.99 560o.0 62.4lPOLES - - .07 1. 4.20 7.05 H5e"5 22.t7 3544 54.l7 60.2 7720 W.3 f6.01 3.1l 49,50 u3.01 52.17 69,2 75.1 O.d 34A.FUElISy (SINGE lIMB - - - - * 25.20 78.12 189,00 372,9 37.5 M950 I2.60 11.12 1510,12 1590.12 1590,12 1510.12 1590.12 11012 1.U 1510.12 I54.92 1512.00puES - 1 6.70 26.97 65.25 12,7N 220.11 212,73 421.5 54.797 54.9t 5. 5417 547 7 5t497 5Wt97 54,97 54027 522W

SUIDIAL KNEtIIS - - 8,65 1s5.73 67.71 161.71 351.02 r2.,22 1021.43 1541,3 1164.51 2304 23n730 2414,07 22415 22077 236.26 2293.55 233693 2354,26 2351.2 2136047COSTS

IfC I Cal 943.20 990.40 2.40 6100 549.00 319.70 355.40 325.00 200 2.00 20, 250s.05.0 2MA.0 250.00 00 250.00 250,00 254.00 250.00 25.00 2so0,0250M00fvW IVINAUT 01 0.89 1.62 3.49 s,s 3.20 9.91 9.1 9.9i * - . . . . . .foiU S ITZillwiC TREES) 5.52 38 o0l 129 1.1ll 22.3 229 223 - - - - - - - -

swITALM. CTS 545.91 995.64 u.o 6954 576,31 352.4 36.24 353.st e 50025o.0 250,6 250e 250,06 250,A0 250.e0 256.00 250.60 250see M.oN 2so.00 250.te 25s.06 250s00El NWITS

NEl M3EIII -545.95 -9,54 -63.10 -*2069 -50o, -264.53 -226.53 -2.2 379.22 m.u 1291.65 534.5U 2110,04 2129,32 214407 1990.25 203.77 207.26 20u3.5 206.93 2104.26 2105.21 00,7

WAPABSeptember 1986

oI.,

MIHIKA

SCOND FOlSTlR 9OJECT

(PLATEA zm Si

COMs NO KWfTIO mIMiA

24 25 26 27 2 29 IN 52

MW','

LEL (so ISS l17 104,5 50.71 n.,50 97.50 97.50PUs 43094 56.31 43J35 53.4 52.X M2.U

FUlEL ISIL IMESI 1401.12 I217.14 fl4 1U1.04 317,52 -FolS 463.72 420.21 2. 211.24 IO0.2

UIOTAi UICII 2010.57 17.73 1405.41I084.14 577.00 149,oN

COSTS

IIAECI COST 210.00 250.00 100 00,0 0250.00 250 00250,00IMMO INUT(slouLor-

- FMW 1UlS(XlLML rIsESI

SUIIOIL COTSS 250.00 2so.0 250,00 250.00 21000 2s0e00 2so.00

KY wtisrs

MET KIEfiIS 1741571541731151.41 754,14 327.00 -100.14 -250.0I

.____ ,... ...._._ - - - - -.- .-.-.-... .__.

Jnmwrv 14. M11 14150 w

Inte l Rate et o atur nt 1t o tfNosaaaaagaOIaaaanaaae*#aamazs Gaz

tarat 15.F9

WAPAB

September 1986

H()a

-114 -

Annex 3-16

Page 1 of 3

NIGERIA

SECOND FORESTRY PROJECT

FOREST MANAGEMENT PROGRAM

Economic Analysis

General

1. Period: 52 years including 7 years investment period.Exchange Rate: US$1 = Naira 1

Cost Assumptions

2. Costs are in 1985 constant terms and include all costs forKaduna, Benue, Ondo and Ogun States.

3. SCF .35 is applied to financial costs for converting them toeconomic costs.

4. Costs include 5% physical contingencies on all but technicalassistance, consultancies and salaries.

Benefits Assumptions

5. Production = volumes produced by species, by year, by age and byplantation are given in the project working paper (Working Paper 3).

6. Prices: Economic prices in constant 1985 terms. They arederived for each product based on import/export parity prices afteradjusting for economic cost of domestic transport, handling, milling andfelling to give values at the stump. The following standard converstionfactors were applied:

Handling .35Transport .42Milling .39Felling )Cross Cutting and) .39extraction toroadside

WAPABSeptember 1986

SECOND FORSCTRY TrOAECr

Industrial Plantations ProprimCOSTS MD SENEF1IISOO NAIRA)

1 2 3 4 5 6 7 8 10 22I 12 2 3 24 2 5 26 1 7 tS 19 20 21 22

A. TOtAL COSTS

rOJAL COSTS 33.2.50 1352.60 1436.50 1949.70 3220.30 2435.90 2109.90 1239.00 357.30 357.30 357.30 357.30 357.30 357.30 357.30 357.30 357.30 357.30 357.30 351.30 357.30 351.30

P. TOTAL ICAiEFITS

TOTAL, LENEPIIC 357.40 529.56 688.60 1003.83 760.36 686.2? 964.44 2344.07 1934.2? 2327.0? 2975.50 3024.50 3845.81 4771.62 9329.77 5732.88 7937.91 7663.94 4760.23 3460.1K 2713.03 4824.95

C. ToTAL NHT BrENrITS

TOTAL NEI BENEFITS 3004.10 823.04 747,90 945.07 L451,94 2747,61 2145.46 -105.07 1596.79 -2161.7? 2618.20 -2667.20 -3489,32 -4414.32 -7972.47 5175.58 -7580.61 7306.54 -4402.83 -5203.58 -2355.73 -4467.60

WAPADSeptember 1986

'5

0 La

0~

N16(RIA

gram FO9RV6R mtocr

Industrial Plantations Program

COOtS AN) KwFJruwo0o NEAIAJ

23 24 25 26 27 21 29 30 33 32-33 34 35 36 37-38 39 40 41342-46 47 U6 49-Il

A. rurAL. COSrS

TOTAL. COSTS 35?.30 357.30 357.30 357.30 £57.30 357.30 357.30 357.30 357.30 357.30 357.30 101.00 101.00 301.00 101.00 101.00 105.00 301.00 101.00 101.00 101.00 OJ

I.tOFAL StNU3TO

TOTAL OtNEFIlS 6047,79 3315.75 319.06 3536.32 6539.34 9915.34 95.41 5148.97 2829.39 M90M6 3702.90 10317.94 471.331M 22114 594.43 667.26 -37'&005 - 2877*1S 5436 6631.57 51.

C. TOTAL KET KnrFiTs

TOTAL MET MumE1 -5690.49 473.05 476.36 1379.02 -63112.04 -9551.04 13332.13 -4791.67 -2472.09 -254.38 -3345.60 -30416.04 -370.33 -7290.64 -1493.41 -561.26 382.05 103.00 -2776.13 -SM5.36 -W0.57 -.

Iinternal Rates of Return of Not StreaAS

W#0t 3~~~~6.761

WAPA,BSeptember 1986

N G E R N I G E R

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S J KADIUNAAUN

B E N I N 8 A U C;i~~~~~~~~~~ I N

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N I G-f.? R ....... ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~VEETTONZOE

CAPIrAL PLATEAU~~~~~~~CrOC ZO40TEITISOFZNE ~ J"' '.

NOITGBERR9I5

l e ~~~~~~~~~~~~~~~~~~~~~~~N I G E R

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M O\.

t ; g 0t _g0- ' '@ = !5 _>,, xUtDt56=< /<J '~ )/ SECOND FORESTRY

r ; 2 _1 y i . i--_ ) Nvi M Kutot / / vI PROJECT~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~f ,OO,,1 bO~,~~AChTi

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DECEMBER OO85