Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 5161-NIR

STAFF APPRAISAL REPORT

NIGER

IRRIGATION RERABLITATION PROJECT

May 30, 1985

West Africa Projects DepartmentAgriculture C

This document has a restricted distribution and may be used bv recipients only in the performance of|their official duties. Its contents may not otherwise be disclosed without World Bank antborization.

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CURRENCY EQUIVALENTS

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

CFAF 1 million = US$2,174

SYSTEMS OF WEIGHTS AND MEASURES

Metric British/US Equivalents1 meter (m) = 3.28 feet (ft.)1 square meter (m2 ) = 10.76 square feet (sq.ft.)1 cubic meter (m3 ) = 35.30 cubic feet (cu.ft.)1 kilometer (km) = 0.62 mile (mi.)1 square kilometer (km 2 ) = 0.39 square mile (sq.mi.)1 hectare (ha) = 2.47 acres1 metric ton (m ton) = 2,205 pounds (lbs_)

ABBREVIATIONS AND ACRONYMS

ADDM Ader-Doutchi-Eaggia, an intermittent tributary of the Sokoto Riverin the Tahoua Province of Niger

BCEAO Banque Centrale des Etats de l'Afrique de l'Ouest (Central Bank forWTest African Monetary Union)

CA Centrale d'Approvisionnement (Input Supply Center)CCCE Caisse Centrale de Cooperation Economique (French Aid Loan Agency)CFDT Compagnie Fran-aise pour le Developpement des Fibres Textiles

(French Company for Cotton Development)CNCA Caisse Nationale de Credit Agricole (National Agricultural Develop-

ment Bank)EDF European Development FundFAC Fonds d'Aide et de Cooperation (French Aid Grant Agency)GMV Groupement Mutualiste Villageois (Village Mutual Group)INTRAN Institut National de Recherches Agronomiques du Niger (National

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

Agency)NIGELEC Societe Nigerienne d'Electricite (National Electricity Authority)OPVN Office des Produits Vivriers du Niger (Grain Marketing Board)ONAHA Office National des Amenagements Hydro-Agricoles (National Irriga-

tion Authority)RINI Societe Riz du Niger (Rice Processing Parastatal)UNCC Union Nigerienne de Credit et de Cooperation (Nigerien Credit and

Cooperative Union)

FISCAL YEAR

October I - September 30

FOR OMCIAL USE ONLY

NIGER

IRRIGATION REHABILITATION PROJECT

TABLE OF CONTENTS

Page

DOCUMENTS CONTAINED IN PROJECT FILE ................................... iii-v

CREDIT AND PROJECT SUMARY ............................................ vi-vii

I. INTRODUCTION...

A. Project Background ....................................... 1B. The Rural Sector ......................................... 1C. Institutions ............................................. 3D. Sector Issues and Strategy ............................... 7

II. PROJECT AREA .................................................. 10

A. Physical Resources ....................................... 10B. Socio-Economic Features .................................. 12C. Past Development and Present Situation of

the Irrigation Sub-Sector ................................ 13

III. PROJECT OBJECTIVES AND DESCRIPTION ............................ 15

A. Objectives and Brief Description ......................... 15B. Detailed Features ........................................ 16C. Status of Project Preparation ............................ 22D. Project's Ecological Impact .............................. 22E. International Water Rights ............................... 22

IV. PROJECT COST AND FINANCIAL ARRANGEMENTS ....................... 22

A. Cost Estimates ........................................... 22B. Proposed Financing Plan .................................. 24C. On-Lending and Administration of Funds ................... 25D. Special Revolving Fund Account ........................... 26E. Procurement and Use of Consultants ....................... 27F. Disbursement ............................................. 29G. Accounts, Audits and Reporting ........................... 30

This report is based on the findings of an appraisal mission to Niger inNovember-December 1983. Mission members included Messrs. Djibril Av(Agriculturalist/Leader), Bernard Dussert (Financial Analyst), Jan Pruntel(Engineer) and Ms. Noriko Iwase (Economist), all from IDA, and Messrs.Jean-Frangois Barres (Rural Development Specialist, Consultant), AdolpheChavancy (Agriculturalist, Consultant) and Hendrik Rozeboom (Rice Processingand Marketing Specialist, Consultant). This report was edited by Ms. MichaleMoriarty (Editorial Assistant) and processed by Mr. Jacques Bourgoin andMs. Jehanne Romain.

This document has a restricted distibution and may be used by recipients only in the performnce ofthir official duties. Its contents may not otberwise be discosed without World Bank authorization.

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Table of Contents (continued)

V. ORGANIZATION AND MANAGEMENT ................................. 31

A. Project Implementation .31B. Financial Management ..................................... 32C. Credit Management and Marketing .......................... 33

VI. PRODUCTION, MARKETS, PRICES AND FINANCIAL ANALYSIS .34

A. Production .34B. Markets ................... ,... 35C. Prices ..................... 37D. Cost Recovery .39E. Financial Implications for Beneficiaries,., . 41F. Financial Analysis of ONARA .44G. Recurrent Costs and Impact on Government Finances .45

VII. ECONOMIC JUSTIFICATION AND RISKS .45

A. Project Benefits ...................... 45B. Economic Analysis ....................... ,,.,,.46C. Risks .48

VIII. AGREEMENTS REACHED AND RECOMMENDATIONS,....................... 48

ANNEXES

3-1 Evolution of Cultivable Areas3-2 Input and Agricultural Equipment Requirements3-3 Construction Schedule

4-1 Draft Terms of Reference for Technical Assistance4-2 Estimated Disbursement Profile

6-1 Evolution of Area, Yield and Production: Rice, Cotton, Sorghum andOnions

6-2 Cost Recovery: Irrigation for Rice6-3 Rice Crop Budget6-4 ONAHA: Summary Financial Statement6-5 ONAHA: Projected Income Statement6-6 Government Project Related Cash Flow

7 Key Parameters Used in Economic Analysis

MAP

IBRD No. 18074R: Niger - Irrigitation Rehabilitation Project

-Wii-NIGER

IRRIGATION REHABILITATION PROJECT

DOCUMENTS CONTAINED IN THE PROJECT FILE

A. Selected Reports and Studies Related to the Project

Reports by SOGREAH and Louis Berger

Ref. No. Document Code

A.1 Donnees de base et diagnostic (vallee du fleuve - 126.823 (W1 -3)Ader Doutchi Maggia), May 1982.

A.2 Donnees de base et diagnostic (complement Ader- 126.823 (S1-3)Doutchi Mag§ia - Vallee de la Komadougou) -(avenants n s 1 et 2), July 1982.

A.3 Avant-projet sommaire et etude de prefactibilite 126.823 (FF1 -3)des perimatres de l'Ader Doutchi Maggia,November 1982.

A.4 Avant-projet detaille des perimetres de la 126.823 (LL 115)vallee du fleuve Niger, May 1983.

A.5 Etudes de la nappe alluviale de l'Ader Doutchi 126.823 (X)Maggia (avenant n° 4), November 1982.

A.6 Reconnaissances complementaires de l'Ader 126.823 (II)Doutchi Maggia (avenant no 4), June 1983.

A.7 Avant-projet sommaire et etude de prefactibilite 126.823 (GG)du perimetre de Sakoira, March 1983.

A.8 Etude de factibilite des perimatres de la vallee 126.823 (MM1&2)du fleuve Niger, September 1983.

A.9 Organisation Cooperative et Formation (avenant 126.823 (HH)n° 4), September 1983.

A.10 Etude hydropedologique (avenant no 3), October 126.823 (KK)1983.

A.11 Dossier d'appel d'offres, stations de pompage, 221.251 (B1 -4)March 1984.

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Ref. No. Document Code

A.12 Dossier d'appel d'offres, fourniture de 221.250 (23)materiel de travaux publics (financed by IDA),March 1984.

A.13 Dossier d'appel d'offres, fourniture de 221.250 (1)materiel de travaux publics (financed by CCCE),March 1984.

A.14 Dossier d'appel d'offres, barrages de l'Ader 221.302 ( 1&2)Doutchi Maggia, March 1984.

A.15 Dossier reserve a l'administration, April 1984. 221.251 (A1&2)

Report by NIGELEC

A.16 Projet d'alimentation en electricite des 221.249perimetres irrigues de Kokomani, Saga,N'Dounga I et II, Iollo, Libore, Seiberi etDaikena, May 1984.

Reports by HELIOS

A.17 Rapport d'investissement et recommandations 127.608 (G1 8)sur 1'organisation et la gestion de 1'ONAHAet des cooperatives.

A.18 Partie I Orientations generales, July 1983. "

A.19 Partie II Structures juridiques, July 1983.

A.20 Partie III Structures financieres.

A.21 Partie IV Structures organisation gestionONAHA, July 1983.

A.22 Partie V Systames organisation et gestion "ONAHA., July 1983.

A.23 Partie VI Organisation gestion - cooperatives,July 1983.

A.24 Partie VII Organisation - environnement -

economie, July 1983.

v

Ref. No. Document Code

B. Working Papers

B.1 Engineering Components. 221.253 (B1)

B.2 Agricultural Components. 221.253 (B2)

B.3 Training. 221.253 (B3)

B.4 Monitoring and Evaluation. 221.253 (B4)

B.5 Rice Processing and Marketing. 221.253 (B5)

B.6 Project Costs. 221.253 (B6)

B.7 Economic Analysis. 221.253 (B7)

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NIGER

IRRIGATION REHABILITATION PROJECT

CREDIT AND PROJECT SUMMARY

Borrower: Republic of Niger

Beneficiaries: National Irrigation Authority (ONAHA) and irrigationcooperatives through ONAHA.

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

Terms: Standard

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

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

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

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

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minimized by financing a training program for ONAHA's staff andtechnical assistance.

Summary Project Cost Estimate:

Local Foreign Total…--US$ million ---

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

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

Price 1.2 1.7 2.9

Total Project Costs 110 14.2 252

Financing Plan:

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

Total 11.0 14.2 25.2

Estimated Disbursements:

1986 1987 1988 1989 1990 1991 1992…----- US$ million ------

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

Economic Rate of Return: 18%

Map: No. IBRD 18074R

WAPACMay 1985

NIGER

IRRIGATION REHABILITATION PROJECT

I. INTRODUCTION

A. Project Background

1.01 At the request of the Government of the Republic of Niger, IDA andCCCE financed a comprehensive study of the rehabilitation of the irrigationsubsector, which was carried out by consultants SOGREAH/Louis Berger andHelios, starting in February 1982. The first phase of the study consisted ofa thorough analysis of the subsector and identification of technical, institu-tional and sociological constraints on performance. The second phase con-sisted of a topographic survey of the existing irrigation and drainage net-works, retention dams and flood control works, preparation of engineeringdesigns for the bidding and construction stage, and guidelines for institutionbuilding. The third phase provided a feasibility study for the proposedproject, which was appraised in November-December 1983. The fourth and lastphase, which started immediately after appraisal, consists of additional fieldengineering studies and the preparation of bidding documents.

1.02 During appraisal, consultants' proposals were amended and it wasagreed that the proposed project would include:

(a) all the perimeters included in the first and second phases of thestudy, except for three perimeters which were eliminated for tech-nical and economic reasons, and four other perimeters, which werebeing rehabilitated by the European Development Fund (EDF);

(b) two perimeters (Namarigoungou and Say) for which support serviceswere deemed necessary; and

(c) the rehabilitation of three existing rice mills needed for pro-cessing incremental paddy production.

B. The Rural Sector

1. Resource Base

1.03 Niger is a land-locked country, bounded by Algeria and Libya to theNorth, Chad to the East, Nigeria to the South, and Mali, Burkina Faso andBenin to the West. Niger's closest access to the sea is about 600 km from itsSouthern border. The country covers 1.27 million kM2 , of which 75% is desert,15% semi-arid and less than 10% suitable for crop cultivation. The popula-tion, estimated at 5.9 million in mid-1982, is growing at an annual rate of3.3%. About 75% of the population is concentrated on less than 8% of the landarea formed by the Southern rainfall belt, where annual precipitation isbetween 500 mm and 800 mm. In this area of about 100,000 kM2 , populationdensity averages about 201km2, but exceeds 100/km2 in the more favorablelocations in the valleys, which are mainly found along the Niger River and inTahoua Province. Rainfall is not only scant but also irregular, making Niger

vulnerable to droughts. In the early seventies, Niger experienced severedrought: its livestock herd was decimated and food production declineddramatically. Average annual deficits were 135,000 tons, or 122 of the totalcereals demand, but in the worst years (1973 and 1975) the deficits were ashigh as 450,000 tons. Most recently, 1983/84 was poor and 1984/85 very poor:it is estimated that cereal shortfalls in 1984/85 may amount to more than500,000 tons. The two consecutive years of poor rains in the pastoral areasmay have had a serious long-term impact on the natural pastures. The contri-bution of the irrigation subsector to national agricultural production islimited, with irrigated lands representing less than 1% of the total culti-vated area (para 2.10).

1.04 Between 1976 and 1980, Niger experienced rapid economic growth.During this period, GDP grew at an average annual rate of 7.5% in real terms.This high growth rate was attributable on the one hand to rising output andexports of uranium, and on the other to increased agricultural and livestockproduction. With the increased revenues, Government launched an ambitiouspublic investment program. During 1980-82, however, the real GDP growth rateslowed to 1%. This sharp decrease was caused by a drop in uranium prices andby a slowdown of uranium production and exports, combined with less favorableharvests than in previous years.

1.05 The uranium boom also induced structural changes in the economy.The contribution of the mining sector to GDP increased from 8% in 1976 to 14%in 1979. The importance of construction and public works also increased, dueto greater public investment, from 3% of GDP in 1976 to 7% in 1980. Therelative importance of the agricultural sector, however, declined from 50% in1976 to 43% in 1980. Uranium has been the most important export commoditysince 1973, and has accounted for three-quarters or more of total merchandiseexports since 1977. The remainder is made up of agricultural products, mainlylivestock (cattle on the hoof, and hides and skins), followed by cowpeas. Theonce-important Nigerien exports of groundnuts dropped dramatically during the1973/74 droughts, and have since then remained at insignificant levels. WhileNiger has been virtually self-sufficient in staple grains since 1976 except in1984/85, its cereals imports, mainly rice and wheat, have accounted for 3-5%of total merchandise imports in recent years.

1.06 Despite the recent structural changes and its diminished role inexport earnings, the agricultural sector, including livestock, fishing andforestry, remains the most important economic activity and the principallivelihood of the population. Nigerien agriculture is largely subsistence-based, producing such food crops as millet, sorghum, and, to a lesser extent,rice. The principal crop is millet, supplying about 75% of the total cerealsproduction, followed by sorghum, providing about 20%. Rice is a distantthird, supplying only 2% of the cereals production. Maize production is stillat an insignificant level. The marketed volume of total cereal production isestimated at 15-17%. The principal cash crops are groundnuts, cowpeas andcotton. Groundnut production has declined sharply from 260,000 tons in 1972to 96,000 tons in 1981, due to a decline in relative profitability vis-a-viscowpeas, repeated disease outbreaks and difficulties in reconstituting seedstocks after drought. This decline in groundnut production was offset bycowpea production, which increased from 72,000 tons in 1971 to 280,000 tons in1981. Compared with groundnuts and cowpeas, cotton has been a marginal cashcrop. It was once exported, but its production has declined and now cannotmeet the needs of the domestic textile industry.

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2. Input Pricing

1.07 Government pursues a policy of subsidies on agricultural inputs,which have been distributed by the Nigerien Credit and Cooperative Union("Union Nigerienne de Credit et de Cooperation" - UNCC) through its InputSupply Center ("Centrale d'Approvisionnement'" - UNCC/CA). The subsidizedprices for agricultural equipment, fertilizer and pesticides are fixed bydecree every year. Agricultural equipment is produced at three UNCC workshopsin Zinder, Tahoua and Dosso. Much of the fertilizer comes from Nigeria, wherefertilizer has been heavily subsidized until recently. The amount of fundsavailable for input subsidies is fixed by the Ministry of Plan: this amountwas halved from CFAF 600 million in 1981/82 to 300 million in 1982/83, butincreased to 550 million in 1983/84. Since official fertilizer prices wereraised substantially in 1981/82 (40-75%), UNCC/CA has had difficulty sellingits subsidized fertilizer because of strong competition from private traders,who supply farmers with undetermined quantities of fertilizer smuggled fromNigeria, particularly in the area close to the Nigerian border (para 6.11).Official prices of animal-drawn equipment have been gradually increased inrecent years. Despite the above recent price increases, subsidies in 1983/84still ranged from 21% to 36% on fertilizer and from 42% to 60% on animal-drawnequipment; they stood at 13% for carts.

3. Output Pricing

1.08 Prices paid by the parapublic marketing agencies for millet,sorghum, groundnuts, cowpeas, paddy and cotton had been fixed annually by aNational Price Committee chaired by the Ministry of Commerce and Transport.These prices, with the exception of paddy, remained almost unchanged from1978/79 to 1981/82. They were then substantially raised in 1981/82 and1982/83. The price of millet increased from CFAF 40 to CFAF 70, then toCFAF 80/kg (100% over two years), sorghum from CFAF 45 to CFAF 60, then toCFAF 70/kg (55% over two years), cotton (top grade) from CFAF 62 to CFAF 80,then to CFAF 120/kg (94% over two years). As for paddy prices, they weresteadily raised by a total of 90% between 1979/80 and 1982/83, from CFAF 45 toCFAF 85/kg, which represents 106% of the economic price at farm gate. Cottonand sorghum are at about 70-75% of their respective economic prices at farmgate (para 6.09). Except for cotton, private traders are active in parallelmarkets, where prices are determined by market forces. As part of itsausterity program supported by the IMF under the Standby Arrangements and byIDA under the structural adjustment program, Government is considering theliberalization of the pricing and marketing of most of agricultural outputs(para 1.23).

C. Institutions

1. Local Government

1.09 A "Prefet" for each of the seven provinces is appointed by, and isthe personal representative of, the President. Each province is divided intoadministrative districts governed by "Sous-Prefets". Administrative districtsare further divided into "cantons", each governed by a chief who is elected bythe chiefs of the villages concerned and receives a Government allowance. The"vcanton" is the point of contact between modern Covernment and traditionalauthority. The mechanism for coordinating development activities has been of

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Provincial and District Technical Committees under the chairmanship of the"Prefet" and the 'Sous-Prefet". respectively. These committees include asmembers heads of Government technical departments and representatives of localauthorities. This structure, however, is being replaced by the "Societe deDeveloppement" which is organized as a hierarchical structure, i.e., atnational, provincial, district, canton and village levels. The goal of the"Societe de Developpement" is self-management, as well as participation indecision-making by the population coucerned, with Government technicalofficers limited to advisory roles. Local government has been involved withthe operation and management of irrigated perimeters, land distribution,eviction of cooperative members not fulfilling their obligations, paddymarketing, debt repayment, etc.

2. National Irrigation Authority (ONAHA)

1.10 ONAHA, which will be the lead agency for project implementation, wascreated in 1979 as a financially autonomous public enterprise of an industrialand commercial character, taking over from the Rural Engineering Departmentfor the preparation and execution of irrigation works, and from UNCC for theoperation of irrigation schemes, extension and recovery of water charges.ONAHA's Board of Directors is chaired by the Minister of Rural Development.

1.11 ONAHA has its headquarters in Saga, 13 km away from Niamey, and hasfour regional offices in Tillabery, Niamey, Tahoua and Diffa. The legislationwhich created ONAEA defined two major objectives: (a) to ensure the executionof new irrigation works financed by the state, and (b) to ensure operationsand management of existing or new irrigation schemes, including extensionworks for farmers. To achieve these objectives, the Central Directorate ofONAHA is divided into four divisions: the Infrastructure Division (topographyand civil works on force account), the Materials Division (maintenance andrepairs of civil works equipment, vehicles, pumps and tractors), the Agricul-tural Development Division (land preparation by tractors, agricultural exten-sion and cooperative management and traiining) and the Administrative andFinancial Division (general administration, personnel and accounting). Theregional offices are similarly organized. As of September 1982, ONAHAemployed 510 people, of which 194 were at the headquarters and 316 at the fourregional offices. During 1983, however, efforts were made to reducepersonnel, and as of October 1983, its total personnel was 351.

1.12 ONAHA has since its creation acquired technical competence in civilworks construction as well as in the area of support to agricultural produc-tion. The Bank- and KfW-financed Namarigoungou project (Cr. 851-NIR, satis-factorily completed in March 1984) helped ONARA to develop these skills.Weaknesses are still found, however, in its administrative and financialmanagement. Since its creation, ONAHA has been confronted with severe finan-cial problems resulting from non-receipt of funds appropriated in the Govern-ment capital budget (National Investment Fund) and from services charged atrates below actual costs. Internal control over personnel and administrativeprocedures seems to be lax, which leads to inefficiency and waste ofresources.

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1.13 At the Zinder seminar 1/ (November 1982). the new orientationtoward self-management of irrigation schemes by cooperatives was recommendedand later endorsed by Government. This decision consequently modified thefuture roles of ONAHA to:

(a) developing new irrigation schemes and rehabilitating the existingones;

(b) acting as manager until cooperatives take over management of peri-meters;

(c) providing services (maintenance, etc.) at full cost at the requestof cooperatives; and

(d) helping to ensure self-management by cooperatives.

This would entail, in the long-run, personnel and budget reductions, as wellas improved staff training in management and technical matters.

3. Nigerien Credit and Cooperative Union (UNCC)

1.14 UNCC was established in 1962 as a public enterprise responsible forcooperative development, input supply, seasonal and medium-term creditrecovery and primary marketing. It also managed some agricultural projectsand operated three workshops where farm implements are assembled. At theZinder Seminar, the reorganization of UNCC, so that it would deal only withcooperative training, was proposed and later endorsed by Government. UNCC waslegally dissolved in December 1984. Its functions are being transferred tothe National Union of Cooperatives and the Ministry of Rural Development,although details remain to be seen.

4. National Agricultural Development Bank (CNCA)

1.15 CNCA, established in 1967 as an offshoot of UNCC, is responsible forproviding agricultural credit, processing loan applications and bookkeepingfor cooperatives' accounts. Because its credit eligibility criteria andsanctions in case of default have been ill-defined and ill-enforced andbecause it diverted most of its financing to questionable lines of credit foragricultural and agro-industrial parastatals, CNCA is now totally illiquid andpractically bankrupt (para 1.25).

1/ The Zinder Seminar on the organization of agricultural developmentprojects and related policies was held in November 1982. It attracted awide range of participants from national and international organizations,including representatives of cooperatives. Government officials of theministries concerned, youth and women's associations and external aiddonors. The major thrust of the recommendations, proposed at the Seminarand adopted by the Council of Ministers in March 1983, is a transfer ofresponsibility from parastatals to cooperatives, with the goal ofself-management of development activities.

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5. Rice Processing Parastatal (RINI)

1.16 RINI is the parastatal responsible for paddy processing. Its equityis almost entirely owned by Government. It operates three industrial ricemills (donated by external aid) with a total annual capacity of about 16,000tons. RINI buys paddy from cooperatives at fixed prices set by Government andsells the rice to the Grain Marketing Board ("Office des Produits Vivriers duNiger" - OPVN), or to private merchants at prices also determined by Govern-ment. Its technical and financial capacities have been weak, but haveimproved significantly since mid-1983. However, in order to run its ricemills effectively and reach the breakeven point, RINI would need financial andmanagerial assistance in addition to sufficient quantities of paddy toprocess.

6. Cooperatives

1.17 Niger has one of the most imaginative and best-adapted cooperativelegislations in West Africa. After the failure of experiments with coopera-tives based on individual membership, UNCC started a new system in 1966 basedon collective membership in basic socio-economic entities, i.e., villages orsections of villages in the case of large villages. Village Mutual Groups("Groupement Mutualiste Villageois" - GMV) have been formed and graduallyregrouped into cooperatives since then; almost all the territory is noworganized into cooperatives. A GM4V is constituted by heads of households ineach village or each section of a village, which is collectively responsiblevis-a-vis the cooperative to which it belongs as well as to credit organiza-tions. Each GMV is represented within the cooperative by representativesconsisting of a president, a secretary, a treasurer and five delegates. Acooperative's general assembly, constituted of delegates from GMVs, elects aboard of directors of the cooperative, which in turn delegates some of itsfunctions to an executive committee consisting of a president, a secretary anda treasurer.

1.18 The cooperative legislations issued in October 1978 and January 1979were designed mainly for rainfed farming and have required that cooperativeboundaries coincide with those of cantons, the lowest layer of the adminis-trative organization. However, there have been de facto cooperatives on eachirrigated perimeter, whose boundaries never coincide with those of cantons.UNCC prepared modifications to the legislations of 1978 and 1979, whichessentially recognize the specific character of irrigation cooperatives andthe new structure for cooperatives to be reDresented at the "Societe deDeveloppement". This new law was passed in May 1984.

1.19 Irrigation cooperatives formed by all the farmers/beneficiaries ineach irrigation perimeter are assisted by ONAHA for technical and financialmanagement. When a new irrigation perimeter is developed, ONAHA equips itwith a director and a certain number of village extension workers, dependingon its size. Directors of perimeters currently take care of financial manage-ment, such as payments to suppliers, keeping track of bank accounts andcalculating irrigation operating costs. Under the proposed project, however,cooperatives would receive training in literacy and management (para 3.17) andbe in direct charge of the above operations, with perimeter directors havingonly an advisory role. The proposed changes are in line with Governmentstrategy to promote cooperative self-management.

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7. National Agricultural Research Institute (INRAN)

1.20 INRAN is responsible for agricultural research. It was establishedin 1975, under the tutelage of the Ministry of Rural Development, taking overfrom French research institutes. In 1979, INRAN was transferred to theMinistry of Higher Education and Research and back again to the Ministry ofRural Development at the end of 1984. Among the research stations it operatesis one specializing in rice and located at Kolo, in the project area. For itsrice program, INRAN is supported by a subregional office of the West AfricanRice Development Association (WARDA). INRAN suffers from the followingweaknesses: it has virtually ignored farming systems research, its program-ming and monitoring have been lax, its links with extension agencies have beenweak and its operating budget is not commensurate with its staffing.

D. Sector Issues and Strategy

1. Government Strategy

1.21 Since the droughts in the early 1970s, Government policy withrespect to the agricultural sector has been to give the highest priority tofood security. Meeting this objective, however, is not easy for Niger'sagricultural sector, which is characterized by the following:

(a) limited and often irregular rainfall which makes rainfed farmingrisky and vulnerable to droughts;

(b) a per capita availability of arable land receiving over 600 mm ofrainfall of only one fifth of the average for the Saheliancountries;

(c) declining rainfed yields, reflecting shorter fallow periods andcultivation of more marginal lands as a result of population growthof about 3.3Z per year;

(d) the high cost of irrigation operations, with investment costs aboveUS$10,000/ha and a per capita availability of irrigable land of onlyone third of the average for the Sahelian countries;

(e) inadequate applied research into yield increase by intensification,absence of technological breakthroughs; and

(f) human resource bottlenecks.

1.22 Government has responded to these challenges and constraints bydeveloping strategies to exploit the potential of rainfed and irrigatedagriculture. In rainfed agriculture, the strategy is to set up, in viablerainfed cultivation areas, a regional "Productivity Project" that wouldprovide smallholders with improved extension, input supply, credit andmarketing. In controlled irrigation, the Five-Year Plan 1979-1983 set amodest goal of developing of about 1,000 ha per year, which was achieved onaverage during the Plan period. The results so far obtained from tl.e area-based productivity projects in rainfed agriculture have been far below thoseoriginally expected, and serious reevaluation of the on-going projects isunderway. At the Zinder Seminar in November 1982 on the organization of

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agricultural development projects and related policies (para 1.13), theconstraints and difficulties in implementing current large-scale area develop-ment projects were recognized. The Government's stated policies following theZinder Seminar recommendations are:

(a) mobile, better-trained extension teams responding to changing localdemands;

(b) promotion of farmer participation and self-management; and

(c) small-scale, village-level tests and demonstration activities topromote "bottom-up" technical packages.

2. Policy Issues

1.23 On the output pricing and marketing issue, given its large deficitsand severe burden on the financial sector, redefinition of OPVN's roles isunder intensive discussion in the context of the structural adjustmentprogram. Government is making arrangements to liberalize pricing andmarketing of millet and sorghum by adopting a tender system. Under the IMFStandby Arrangements, the pricing and marketing of cowpeas have already beenliberalized.

1.24 On the input pricing issue, Government's desire to transfer incomefrom uranium to the rural sector has been thwarted by a drop in uraniumrevenues. Following the Zinder Seminar recommendations, the Government'sstated policies are:

(a) maintaining the absolute volume of Government subsidies at their1983 level;

(b) reducing subsidy rates gradually; and

(c) liberalizing input distribution, thus allowing cooperatives to takecharge of input purchase and distribution, and giving priority tonew areas in need of subsidies.

Following the dissolution of UNCC (para 1.14), the reorganization of the inputdistribution system by CA is being studied and aims at transferring managementof input distribution to cooperatives and encouraging direct transactionsbetween private traders and cooperatives.

1.25 Agricultural credit is in real difficulty. The national agricul-tural credit bank (CNCA) is virtually bankrupt (para 1.15), with outstandingcredits of CFAF 7.5 billion, most of which are unrecoverable. The mainproblem of CNCA is that it has been forced to deviate from its originalmandate and has turned to financing seasonal credits and operating deficits ofpublic enterprises, directing less than 20Z of its total resources to farmers.Furthermore, the lack of stringent criteria for credit allocation andrepayment has led to a high delinquency rate. It is IDA's view that CNCAcannot become viable given (a) unsatisfactory recovery rates and the relatedbad precedents set, and (b) the low estimated demand for medium-term creditwhereby no agricultural bank could meet all its costs at current rates ofinterest. IDA has suggested that CNCA should cease operations and beliquidated and that, as an alternative to CNCA, interim mechanisms should be

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sought within projects where there is effective demand for credit, untillonger-term solutions are found. The proposed project would entrust themanagement of short- and medium-term credit to cooperatives with technicalassistance from ONAHA. The above three issues, namely, output pricing, inputpricing and agricultural credit have been extensively discussed withGoverment in connection with the structural adjustment programs and willcontinue to be addressed in the context of the ongoing policy dialogue.

3. Previous Bank Involvement in the Rural Sectorand Performance Evaluation

1.26 Since 1969, nine credits have been approved for a total of US$91.6million. They include one agricultural credit, one drought relief project,two in forestry (Forestry I and II), three projects in rainfed-based areadevelopment (Maradi I, II and Dosso), one in the irrigation sub-sector(Namarigoungou), and one in livestock. The first credit (Cr. 207-NIR: Agri-cultural Credit project for US$0.6 million) was signed in 1970 and aimed atproviding smallholders with credit for seasonal inputs and implements. Theresults were far from satisfactory for several reasons, including a lack ofsupport for production technology and severe droughts during the projectperiod. The second was the Drought Relief project (Cr. 441-NIR: US$2 million)of 1974 to finance small subprojects which were generally executed satis-factorily. Two forestry projects (Cr. 800-NIR for US$4.5 million andCr. 1226-NIR for US$10.1 million) were approved in May 1978 and April 1982,respectively. The first forestry project financed 400 ha of pilot irrigatedtree plantations, as well as 700 ha of pilot state-managed rainfed treeplantations. The second project is financing rural mini-nurseries to supplyplants for about 6,200 ha of rural tree plantations, as well as the expansionof state-managed rainfed tree plantations. Due to the recent drought, theproject is being reoriented to concentrate on maintenance and rehabilitationof the plantation already executed. Three credits for rainfed areadevelopment schemes (Maradi I: Cr. 608-NIR for US$10.7 million, Dosso:Cr. 967-NIR for US$20.0 million and Maradi II: Cr. 1026-NIR for US$16.7million) became effective in October 1976, February 1981 and February 1982,respectively. Although the first Maradi project has been satisfactorilycompleted, the second Maradi and Dosso Agricultural projects have encounteredmajor difficulties in implementation, mainly due to lack of technical break-throughs in rainfed farming (Maradi and Dosso) and to weak project management(Dosso), and have failed to attain their agricultural production objectives.The Livestock project (Cr. 885-NIR for US$12 million), approved in March 1979,covers the center and east of the country and mainly provides a package ofservices such as animal health, animal husbandry and delivery of drugs andfeed supplements to pastoralists in the semi-arid pastoral zone; it had beenproceeding satisfactorily until the recent drought hit the project zone veryseverely.

1.27 The Namarigoungou Irrigation project (Cr. 851-NIR) became effectivein October 1979 and construction started in early 1980. IDA financed US$15.0million, KfW financed DM 12.5 million (US$6.0 million), and to meet thefinancial difficulties of the project, KfW later granted an additional DM 10.0million (US$4.0 million). The project has increased Niger's agriculturalproduction, especially rice (about 10,000 tons of incremental paddy produc-tion), through the development of 1,450 ha of irrigated lands (1,350 ha ofrice perimeters and the rest for vegettbles and other crops), and has raisedthe income of participating farmers. Other project components included the

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provision of services to farmers already cultivating in the project area,training for staff and farmers, and the improvement of health services.

1.28 Efficiency of use of construction equipment under force accountstarted poorly but greatly improved during the construction period. Thequality of the work, moreover, was good. Overall, ONAHA has developed con-siderable skill in civil works construction, which could be used to advantagein the proposed project.

1.29 The project's main achievements are:

(a) the setting up of two cooperatives which are models for othercooperatives;

(b) the successful introduction of animal traction (no land preparationby tractors) and foot-operated threshing machines;

(c) a good record of cost recovery: in addition to the cost of inputs,beneficiaries bore the full cost of energy and pumping set mainte-nance, and set aside a provision for equipment replacement;

(d) effective seed multiplication at the farmers' group level(Namarigoungou even produces seeds for other perimeters);

(e) applied research (fertilizer, pest control) to make up for deficien-cies at the national level; and

(f) acceptable yields (despite serious pest attacks, present yieldsaverage 4 tons/ha of paddy) and double cropping on the entire areadeveloped.

The appraisal mission of the proposed project judged, however, that to sustainthe present high performance further support would be necessary. For thisreason, the Namarigoungou perimeter would be included in the proposed projectfor such aspects as credit, follow-up training, agricultural extension,assistance to cooperatives, and monitoring of alkaline soils.

II. PROJECT AREA

A. Physical Resources

1. Location and Climate

2.01 The project area (see Map No. IBRD 18074R) is divided into twoparts. The first, located in the Niamey Province, consists of the Niger Rivervalley, stretching about 500 km across the country. The other part, locatedin the Tahoua Province, is composed of the basin of the Ader-Doutchi-Maggia(ADM), an intermittent tributary of the Sokoto River. The total area tobenefit directly from the project area is Sahelian. Average annual rainfallin the Niger River valley ranges from 400 mu in the Namarigoungou perimeter inthe north to 650 mm in Say in the south. In the ADM valley, these values liebetween 400 and 600 mm. Rainfall during the last decade has frequently beenbelow average, but the statistical evidence for a possible long-term trend is

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inconclusive. About 80% of annual rainfall is received during the four-monthperiod from June through September. Rainfall is usually brief, violent andlocalized. Temperatures are highest in May/June with an average maximum of44°C, and lowest in December/January, with an average minimum of 11°C.

2. Hydrology

2.02 The water discharge of the Niger River undergoes rather smoothchanges due to the regulatory effect of the inland delta in Mali. The medianmaximum flow at Niamey is over 2,000 m3/s, and normally occurs in November.The median minimum discharge occurs in end-June, and was 14 m3 /s for theperiod 1966-80, down from the 37 m3/s observed in the period 1929-65. Between1966 and 1980, the minimum dry season discharge exceeded 3.5 m3/s nine yearsout of ten, the most critical period being from end-June to mid-July. Strictadherence to the cropping calendar is required to limit water use exclusivelyto rice nurseries during this period. The development and use of short cyclevarieties would further alleviate the problem. Water supply in the ADM regionis sufficient for supplementary irrigation of the wet season crop. However,catchments can only irrigate parts of the perimeters' area during the dryseason. The situation has also gradually deteriorated due to siltation of thereservoirs; for instance, it was found that the storage capacity of theIbohamane and Moulela reservoirs has decreased by half over the past 15 years.The situation is less severe for the other perimeters included in the proposedproject. Groundwater found in the reservoir bottom and in some parts of theperimeters is used to grow off-season crops and vegetables. The water qualityin both the Niger and Maggia Rivers is excellent for irrigation and can beclassified Cl-SI in the USBR classification system.

3. Soils

2.03 The soils of the ADM perimeters are composed mainly of mixedcalcareous alluvium; they are mostly deep, low in organic matter, moderate tolow in inherent fertility, erosive on slopes, and are quite variable intexture depending on their depth and location within most perimeters. Soilalkalinity is not a problem in these perimeters and salinity is found only insome spots at the foot of the Moulela and Ibohamane dams. Neither alkalinitynor salinity will be a problem as long as subsoil drainage continues to besatisfactory (except, as indicated above, close to dams constructed on per-meable subsoils). The soils of the rice perimeters near Tillabery are siltloams to clay loams, low to moderately low in organic matter, and moderatelyfertile. These perimeters generally lie slightly higher than the floodplainoi the river, and pose no serious drainage problems. Salinity/alkalinity arenot evident here either, except in unirrigated areas where the water table ishigh (Daikena and Lossa), on old high bunds and on wind-blown soil piledagainst upraised rocks (Kokomani), and in swampy areas along the Niger River(Sona). Soil textures of the rice perimeters near Niamey range from siltloams to clays, with some sandy loams, particularly in the N'Dounga area.Heavy cracking clays are common in Saga, Seiberi and Saadia. These perimetersare for the most part relatively low-lying and tend to be very poorly drained;a high percentage of their gross areas is either swampy or under water most ofthe year. These poorly drained areas would be reclaimed under the projectthrough construction of adequate drains. Salinity is found in some places inthe Seibery perimeter, but would not be a threat with adequate water manage-ment practices.

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B. Socio-Economic Features

1. Population and Land Tenure

2.04 The project would directly benefit about 80,000 people. In theNiger River valley, the dominant ethnic groups are the Songhay (or morespecifically, the Kado group) in the Tillabery district and the Zarma in theNiamey district. In addition, one finds, on irrigated perimeters, the Kourteygroup (originally Peul), who are pastoralists and traditional rice growers,and the Wago group, who are also rice growers. Irrigation schemes havedisplaced some farmers who cultivated rice in the floodplains with traditionalmethods. Land allocation depends basically on the number of active maleadults: each parcel is about 0.25 ha, but a family with several active maleadults may be allotted more than one parcel. Priority was also supposed to begiven to former occupants (mainly Kourtey and Wago) growing traditional rice,but this rule was not always respected, since the Kados, although not ricegrowers, are numerically dominant in the area. A detailed survey of familyunits and allocation of irrigated parcels is available only for Namarigoungou.It shows that, on average, there are 1.8 male adults and 0.42 ha of irrigatedland per family unit, or 0.23 ha per active male adult. Other sample surveysindicate that an average family unit contains 12 people in the Sona, Lossa andKokomani areas and 10.3 people in N'Dounga, Libore and Seiberi. The socio-economic study carried out as part of project preparation work found certainevidence that the economic situation of women had deteriorated because ofirrigation development, e.g., reduction of areas available for vegetablegardening and shortage of fuelwood. In view of redressing the situation, andpromoting integration of women in cooperative development, the proposedproject would finance certain promotional activities for women.

2.05 In the few urban perimeters close to Niamey there are some absenteebeneficiaries of irrigated parcels. They often live in town, have non-agricultural income, and contract out their rice cultivation. This practicenaturally lowers yields, leads to the neglect of irrigation works, and resultsin non-payment of collective charges. Although this is not a widespreadproblem, internal cooperative regulations (para 3.16) would eliminate low-performance beneficiaries.

2.06 Farmers engage in both rainfed farming and rice cultivation duringthe wet seasons. Since irrigated parcels are small, families consider them asupplementary source of cereals. They also have supplementary income fromsales of livestock, market gardening (particularly near Niamey) and miscella-neous jobs. Seasonal or longer-term emigration of young men, to urban areasand neighboring countries, is also common.

2.07 In the ADM valley, the dominant group is Hausa, but Aderawa N'Gabas(related to the Touareg) and Peul are also present. An average family unithas about 8-10 people. In Ibohamane, farmers typically engage in irrigationfor cotton and sorghum, rainfed farming for millet and sorghum, gardening inthe reservoir dam in dry seasons, as well as some livestock.

2. Roads and Communications

2.08 All perimeters, except three in the Niger River valley, are servedby a tar-surfaced road. Perimeters in the ADM valley are linked by earth

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tracks passable year-round, except for two months during the rainy season.The vicinity of the capital and other towns (Tillabery, Tahoua, Say, Malbaza,etc.) provides a large outlet for all agricultural products, along withbanking and postal facilities.

3. Health

2.09 Recent surveys have shown that waterborne diseases (malaria,bilharzia and gastro-intestinal infections) are of serious concern, especiallyfor young children. The proposed project would not exacerbate the presentsituation, but would instead reduce the incidence of malaria and bilharzia byimproving the drainage and cleaning of canals.

C. Past Development and Present Situation ofthe Irrigation Sub-Sector

1. Irrigation Potential in Niger

2.10 The irrigation potential in Niger is estimated at about 270,000 ha.Of this total, about half (140,000 ha) is in the Niger valley. The rest isdivided into the ADM valley (20,000 ha), the area along the Komadogou Riverand Lake Chad in the East (50,000 ha), and ancient river valleys calleddallols and other small valleys (60,000 ha). As compared with the potentialin the Niger and ADM valleys, that of the Komadogou River and Lake Chad areaand dallols is much less known and little developed. Out of the irrigationpotential in the Niger valley of 140,000 ha, only 30,000 ha are lowlands("cuvettes"), which have generally good soils easily irrigable by low-liftpumping. The rest consists of upland terraces where soils are quite hetero-genous and high-lift pumping is costly. As of end 1983, there are about10,000 ha developed or under development in Niger, of which 6,000 ha are inthe Niger valley and 3,500 ha in the ADM valley.

2. In the Niger Valley

2.11 Modern irrigation, aimed at securing full control of water, wasintroduced only in the mid 1960s and has been implemented in piecemealfashion. The development of 6,000 ha of irrigated land involved 12 differentdonors, and a variety of designs, equipment brands, services to farmers andcost recovery policies. With the exception of Namarigoungou (1,450 ha), allperimeters have areas of between 50 and 400 ha. About 90% of the areasdeveloped are under rice monoculture. Irrigation is obtained by low liftpumping, for which most pumping stations are equipped with diesel engines.Construction costs are in the range of US$10,000/ha, which is unusually high.This is due to the country's land-locked position, the lack of effectivecompetition and of economies of scale, high design standards (all primary andsecondary canals are lined), and the absence of multi-annual contracts. Theproposed project includes 13 perimeters in the Niger valley, namely, allperimeters except for five EDF-financed perimeters, two USAID-financed peri-meters, and three perimeters eliminated for technical and economic reasons.

2.12 Yields as high as 6 tons paddy/ha/crop are possible at farm levelsif all recommended practices are used, but overall performance has not ful-filled this potential. In 1982, average yields on the rice perimeters wereestimated at 2.6 tons/ha/crop. Moreover, about one quarter of the total land

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developed was abandoned and farmers could not manage a second crop on about15% of the cultivated area. The reasons for this poor performance are:

(a) faulty designs, e.g., some pumping stations are located in parts ofthe river that dry up during the low-flow season;

(b) excessive reliance on parastatals for the design, operation andmaintenance of the irrigation schemes. Because they lacked thefinancial resources, the flexibility and the skilled manpower, theycould not perform satisfactorily;

(c) ill-defined agronomic packages, e.g., there is a uniform recommenda-tion for fertilizer application that has no basis in reliableadaptive research. Similarly, no prescription was available when anoutbreak of White Fly (Aleurocybotus indicus) occurred in 1982;

(d) lack of a good seed multiplication and distribution system;

(e) workload conflicts between the wet season rice crop and traditionalrainfed crops, although there are ways to resolve, or at least toalleviate, these conflicts, primarily by providing animal tractionequipment, which already exists in some cooperatives; and

(f) lack of incentives for farmers: with the above difficulties, outputon irrigated plots could hardly meet farmers' needs for self-sufficiency, yet Government tried to impose mandatory quantities tobe marketed in order to supply Government-owned mills. Until 1982,official prices were not sufficiently attractive.

3. In the ADM Valley

2.13 Modern irrigation was introduced in the ADM valley, as in the Nigervalley, in the mid-1960s. Irrigation potential and the level of developmentare, however, much lower than in the Niger valley (para 2.10). Irrigation,obtained by gravity from small catchment basins, makes up for any shortfall inrains during the rainy season. The main crops during the wet season arecotton and sorghum, rotated in a ratio of 1:1, which has proven satisfactoryon both technical and economic grounds. Performances are already high:average yields are 2.6 and 1.85 tons/ha/crop for cotton and sorghum, respec-tively. Dry season crops are vegetables (mainly onion), maize and wheat. Onone perimeter, double cropping is impossible because of the low capacity ofthe reservoir. On the others, 10-50% of areas developed are double cropped.

2.14 Because gravity irrigation requires few operating expenses, thesituation in the ADM valley is not as serious as that in the Niger valley.The main problem is that the increasing siltation of the reservoirs, whichcannot be prevented, reduces the capacity of the reservoirs and willeventually fill them up. Another problem is the poor maintenance of theirrigation and drainage infrastructure, which can lead to the abandonment ofparts of the perimeters.

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III. PROJECT OBJECTIVES AND DESCRIPTION

A. Objectives and Brief Description

3.01 The overall objectives of the proposed project, which are in accor-dance with Government's policies on food security, are to improve incomes andthe general welfare of the rural population in the project area. The keyinnovations being introduced are: the extensive participation of beneficia-ries in the operation and management of perimeters, an increased cost recoveryrate and the involvement of the private sector in the maintenance of pumpingequipment. Together, these are expected to ensure the durability of theirrigation schemes. Specific objectives are:

(a) rehabilitation of infrastructure and equipment on 16 perimeters (11perimeters in the Niger valley, covering about 2,200 ha, and fiveperimeters in the ADM valley, covering about 850 ha); generalizationof the practice of rice double cropping on the 11 perimeters in theNiger valley; an increase in water availability for the dry seasoncrops and extension of the useful life of the reservoirs in the ADMvalley;

(b) crop intensification, in order to raise the average paddy yield byabout 1.2 tons/ha/crop on the above-mentioned 2,200 ha of riceperimeters to be rehabilitated, and to consolidate the performanceof the Namarigoungou and Say perimeters (1,650 ha);

Cc) assistance to cooperatives, to promote self-management and self-reliance on 18 perimeters (the 16 perimeters to be rehabilitated andthose of Namarigoungou and Say), totalling about 4,700 ha; and

(d) strengthening of ONAHA and RINI.

3.02 The above objectives would be achieved through the following projectcomponents:

(a) rehabilitation works;

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

(c) assistance to cooperatives;

(d) adaptive research and seed multiplication;

(e) strengthening of ONAHA, including setting up a monitoring andevaluation unit; and

(f) strengthening of RINI.

3.03 The project would be implemented over a five-year period, fromOctober 1985 to September 1990. Rehabilitation works are expected to becompleted during the first two years.

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B. Detailed Features

1. Rehabilitation Works

3.04 Rehabilitation works would cover 11 perimeters in the Niger valley(Daikena, Kokomani, Sona, Lossa, Kirkissoye, Saadia, Saga, Libore, N'dounga I,N'dounga II and Seiberi), totalling about 2,200 ha, and five perimeters in theADM valley (Moulela, Kawara, Guidan-Magagi, Tounfafi and Ibohamane), totallingabout 850 ha. The main improvement in the Niger valley would consist of thereplacement of all diesel-driven pumping units with electric ones, which areeasier to maintain and more economical. Diesel pumps will be repaired andkept as back-ups in case of power failure. In the ADM valley, the main workswould be the rehabilitation of catchment dams. Details of works to be carriedout are as follows:

(a) in the Niger valley:(i) electrification of seven irrigated perimeters including the

erection of 24 km of medium tension transmission line;(ii) installation of 38 electric pumping units and four diesel-

driven pumping units in 14 pumping stations, either to replaceexisting electric or diesel-driven pumping systems, or to addadditional drainage capacity, including rehabilitation/con-struction of associated structures and civil engineeringworks; the additional energy requirement can be accommodatedwithin the existing capacity;

(iii) reshaping and reinforcement of about 30 km of protectiondykes, to protect the perimeters against themaximum flood levels occurring in a one to one hundred-yearfrequency;

(iv) rehabilitation of some 75 km of irrigation canals, 135 km ofprimary and secondary drains, 190 km of field drains, 190 kmof access roads; and the rehabilitation of associated struc-tures; and

(v) construction of three cooperative stores;

(b) in the ADM valley(i) rehabilitation of three catchment dams, including raising the

crest level of one dam (Ibohamane);(ii) reshaping and reinforcement of about 15 km of protection

dykes; and(iii) rehabilitation of some 30 km of primary and secondary

irrigation and drainage canals, and 30 km of tertiary drains,as well as 5 km of primary roads.

3.05 Most of the primary and secondary irrigation canals in the Nigervalley perimeters are concrete lined, whereas in the ADM region most canalsare lined with the natural stones (laterite) abundant in that region. Reha-bilitation of the irrigation canals consists mainly of silt and brush removal,filling of dilation groves and reshaping of embankments. The present drainagesystem, especially in the perimeters south of Niamey and in the ADM, isinadequate and would be reconstructed to a capacity of the main drains of1.2 1/s/ha in the Niger valley and 2.5 1/s/ha in the ADM region. Most of theprimary and secondary drains would be reshaped under the proposed project andsome new ones dug. All field drains would be reconstructed. To provideall-weather access, primary access roads leading to pumping stations would be

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reshaped and resurfaced with laterite; all other access roads would be re-shaped as needed.

3.06 The capacity of the pumping stations to be rehabilitated would bedesigned for 2.65-3.30 1/s/ha depending on the conveyance system (open canalsor buried pipes) and climatic conditions. Farmers would irrigate a maximum of12 hours per day for rice in the Niger valley and ten hours per day for uplandcrops in the ADM region. The existing irrigation canals were originallydesigned for about 1.6-6.0 1/s/ha and most canal capacities would not bechanged, since current discharge and water levels are adequate.

3.07 The electrification of the pumping stations would be subcontractedto the National Electricity Authority (NIGELEC). Assurances were obtained atnegotiations that ONAHA and NIGELEC would conclude an agreement satisfactoryto IDA not later than December 31, 1985. Assurances were also obtained atnegotiations that farmers would be given preferential rates of electricity forirrigation.

2. Institution Building for Adequate Maintenance

3.08 Proper maintenance of pumping equipment is one of the most criticalconditions for the success of the project. ONAHA, as a Government agency,cannot attract the qualified staff required for a high standard of pumpingequipment maintenance and for the monitoring of spare parts inventory. It isalso subject to Government pressure to be lax on the collection of paymentsfor services it renders to cooperatives, a practice which would eventuallylead to poor maintenance. For these reasons, maintenance of pumping equipmentwould be entrusted to the private sector. Maintenance contracts would bindeach cooperative and representative of an equipment supplier and would bemonitored by ONAHA. In order to keep maintenance costs to a minimum and atthe same time prevent poor maintenance, ONAHA would review the contractor'sperformance under maintenance contracts annually, as well as supervise imple-mentation of pump maintenance. Bids for pumping equipment were invited for apackage of pumps and maintenance. Only one supplier proposed a maintenancecontract. which was found too expensive. Negotiations with the supplier areunder way to reduce maintenance costs. Assurances were obtained duringnegotiations that ONAHA would ensure that arrangements satisfactory to IDA aremade to assist cooperatives to select qualified contractors for the mainte-nance of pumps and review annually the adequacy of such maintenance by suchcontractors and take action to remedy any maintenance deficiencies disclosedby the annual review.

3.09 Maintenance of irrigation and drainage canals and dykes thatrequires heavy equipment would be the responsibility of ONAHA, though farmerswould have the option of hiring a private contractor. The project wouldfinance the cost of the equipment and the creation of two brigades attached tothe regional offices of Niamey and Tillabery. The periodicity of works oneach canal would be agreed in the ONAHA-cooperative contracts (para 3.16),with a fee covering ONAHA's full cost.

3.10 Any canal maintenance that can be done by hand would be the benefi-ciaries' responsibility. If they do not perform the task satisfactorily,ONAHA would do it and charge the labor to cooperatives.

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3. Crop Intensification

3.11 Crop intensification would be carried out on the 16 perimeters to bephysicalLy rehabilitated (para 3.04) and Say, and continue to be carried outon the Namarigoungou perimeter, totalling about 4,700 ha (Annex 3-1). Itwould aim at:

(a) an average paddy yield of 3,850 kg/ha/crop on the 13 rice perimeters(3,800 ha) compared with the present average yield of2,600 kg/ha/crop on the perimeters to be rehabilitated;

(b) a cropping intensity of 2.0 on the 11 rice perimeters to be rehabi-litated, compared with the present cropping intensity of 1.85; and

(c) average yields of about 2,800 and 2,000 kg/ha for cotton andsorghum, respectively, on the five perimeters in the ADM valley(850 ha), compared with the present yields of about 2,600 and1,850 kg/ha, respectively.

3.12 Agronomic packages. Agronomic packages for rice would be based onproven techniques already promoted on the Namarigoungou perimeter and onprevious experience in similar ecological conditions. Rice transplanting,which is already a general practice, would be maintained. The variety nowgrown, IR 1529-680-3, performs well in terms of yield, grain quality andmilling out-turn. Its cycle is also satisfactory: 135 and 125 days for thedry and wet seasons, respectively. However, the project would aim at identi-fying varieties with shorter cycles (8-10 days less per crop) in order to helpgeneralize double cropping and save on energy costs. The project would set upa simple seed multiplication scheme, taking advantage of the autogamouscharacter of rice and its high multiplication coefficient from seed to harvest(about 100). In these conditions, small quantities of foundation seedproduced by INRAN (para 3.18) would be multiplied on collective cooperativeseed plots or by contract farmers on site, in order to produce enough goodquality seed for the next crop. By repeating this process, the rice fieldwould be progressively cleaned of impurities and good varietal purity would beachieved in two to three years.

3.13 Fertilizer and pesticide application. Application rates of fertili-zer on rice would be upgraded since the results of trials carried out overfive cropping seasons under the Namarigoungou project demonstrated that thenew formula (400 kg of compound fertilizer 15-15-15 and 150 kg of urea) wouldyield incremerntal value of production 5-6 times greater than incrementalfertilizer costs with the presently practiced formula (100 kg of compoundfertilizer and 200 kg of urea) under the existing price structure. This rate,already applied since 1984 in the Namarigoungou perimeters, would be adjustedduring project implementation to fit diverse ecological conditions, in thelight of results of the adaptive research program (para 3.18). Seed dressingand insect control techniques tested in Namarigoungou would be extended to allrice perimeters. On cotton, sorghum and onion, application rates would remainunchanged except for insecticides on cotton, which would be changed to a moreactive and efficient formula. Cooperatives would be provided with a seasonalcredit fund to purchase inputs in required quantities and to offer seasonalcredit to their members. Details of input rates and requirements are found inAnnex 3-2.

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3.14 Farm implements. Animal traction equipment and pedal thresherswould be promoted to permit timely land preparation and threshing, and toalleviate workload bunching between rainfed crops and the wet season ricecrop. The objective would be to have one set of farm equipment for 2 ha ofirrigated rice perimeters. To meet this target, the project would supply, oncredit, 2,000 pairs of draft animals with matching equipment (tool bar, plow,cultivator and cart, no farmer would be obliged to take a full set of equip-ment) and 1,500 pedal threshers. In addition to 13 rice perimeters and fiveperimeters in the ADM valley, the other perimeters may also benefit from thisprogram. In order to ensure that animal draft equipment is properly main-tained, 30 blacksmiths would be given technical and management training andwould receive the equipment they require on credit. They would be assisted bytwo regional trainers. The implementation of this animal traction promotionprogram would make it unnecessary for farmers to request custom land prepara-tion by ONAHA's tractors.

3.15 Extension. If the intensification program is to succeed, farmersneed adequate extension advice. The project would finance the cost of villageextension workers at a ratio of one extension worker to about 200 ha (800farmers). After three years, the extension density would be decreased to oneextension worker to 600 ha (2,400 farmers), which should suffice for trans-ferring to farmers the findings expected from the applied research programsand for maintaining a high standard of seed multiplication. The project wouldalso finance the cost of one director on each perimeter throughout the projectimplementation period, in order to assist cooperatives in both managerial andtechnical matters. After project completion, each cooperative would decidewhether or not to hire its own manager, either the former perimeter directoror someone else of the cooperative's choice. Training and supervision ofextension staff would be the responsibility of regional offices of ONAHA,assisted by an expatriate rice agronomist and his counterpart, both assignedto headquarters (para 3.18).

4. Assistance to Cooperatives

3.16 The success of the project in the long run hinges on the participa-tion of beneficiaries, and on their adequacely maintaining the assets put attheir disposal. Niger has already made encouraging headway in this direction.For several seasons now, some irrigation cooperatives have incurred and paidmost direct operating costs themselves. They also routinely set aside fundsfor pump renewal and major repairs. Further progress requires a clear defini-tion of responsibilities and a strong training program in self-management.Government has passed a new law recognizing the specific character of irriga-tion cooperatives (para 1.18). To provide a favorable environment for coopera-tive self-management, Government has taken the following actions:

(a) clear up cooperative accounts, with the assistance of a consultantfinanced by CCCE, in order to assess their net financial situationvis-a-vis banks, suppliers of goods and services, and collectionagencies;

(b) define the terms of ONAHA/cooperative contracts under which theresponsibility for scheme operation and maintenance would be trans-ferred to cooperatives; at a minimum, beneficiaries would berequired to reconstruct the field drains and irrigation ditches and

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bear the full cost of energy, maintenance of irrigation and drainagenetwork, and maintenance and renewal of pumping equipment; and

(c) submit to IDA a model of internal cooperative statutes definingmembers' obligations, procedures for eviction and inheritance rightson irrigated plots.

In addition, Government is requested, as a condition of effectiveness, toprepare a plan for reconstructing cooperatives' debts including recommenda-tions, if necessary, through a Government-appointed committee, for debtrescheduling, cancellation, or expulsion of non-payers, and to achieveprogress satisfactory to IDA, in the implementation of such plan. It isexpected that ONAHA/cooperative contracts and internal cooperative statuteswill be adopted by all irrigation cooperatives under ONAHA's supervision, thusensuring country-wide application of the major principles of institutionalrehabilitation. Assurances were obtained at negotiations that ONAHA would notstart rehabilitation works on a given perimeter until it has concluded acontract with the cooperative concerned and this cooperative has adoptedinternal statutes consistent with the model.

3.17 Assistance to cooperatives would aim at enabling them to:

(a) adequately maintain the assets put at their disposal;

(b) prepare and monitor their semi-annual budgets;

Cc) understand and prepare their accounts and use them as a managevmenttool;

Cd) manage primary paddy marketing; and

'e) increase their ability and incentive to undertake collective andproductive investments.

Toward that end, a functional literacy and numeracy program would be imple-mented with the assistance of the Literacy Directorate of the Ministry ofEducation. The design of simple accounting procedures, initiated duringproject preparation with CCCE financing, would be completed and tested beforeproject start-up. During project implementation, short-term consultants wouldbe provided to assist in the implementation and evaluation of the program.Assistance to cooperative management would be provided by financing the costof cooperative directors throughout project implementation, as well as thecost of seminars and training in management for cooperative accountants,executive members of cooperatives and women. ONAHA, with its own specializedstaff assigned to headquarters and regional offices, would oversee coopera-tives' management and see that their statutes are enforced. The project wouldmake credit available to cooperatives for purchasing collective equipment(pumps for gardening, paddy dehullers, millet mill, etc.). It would help themestablish village woodlots on soils unsuitable for crops. It would alsoprovide them with sufficient working capital to enable them to apply therecommended intensification packages and to prefinance collective charges foroperating irrigation perimeters (e.g., energy, collective nursery).

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5. Adaptive Research and Foundation Seeds Production

3.18 The project aims to establish a fruitful dialogue between INRAN andONAHA by subcontracting specific activities to INRAN. These activitiesinclude fertilizer trials on sites that are representative of the main ecolo-gical conditions, and the introduction and screening of new rice varietiesintended for future extension activities. INRAN would also be entrusted withthe production of rice foundation seed to be multiplied by cooperatives(para 3.12). Assurances were obtained at negotiations that ONAHA and INRANwould conclude an agreement satisfactory to IDA not later than December 31,1985. An agronomist and his counterpart, posted at ONAHA headquarters, wouldbe the key liaison between INRAN and ONARA. They would assist ONARA regionaloffices in testing the packages proposed by INRAN, plan the production offoundation seed, and monitor the quality of cooperatives' and contractfarmers' seed multiplication.

6. Strengthening of ONARA

3.19 To help ONAHA assume its role of lead executing agency, the projectincludes financing for incremental staff, office equipment, vehicles andoperating expenses at ONAHA's headquarters and regional offices. Thisinvolves setting up a new unit for coordination, monitoring, evaluation,financial planning, budgeting and budgetary control (para 5.06). Assuranceswere obtained at negotiations that ONAHA would set up this unit to be staffedand fully operational no later than December 31, 1985, and that this unitwould be staffed throughout project implementation by personnel 'whosequalifications and experience would be satisfactory to IDA. In addition, theproject would finance key posts in the Administrative and FinancialDirectorate, i.e., an expatriate administrative and financial director and aNigerien chief accountant at ONAHA headquarters and three accountants at ONAHAregional offices (para 4.14). The project would also finance the costs ofannual audits over the project implementation period, and a study of the useof groundwater in the ADM valley to either supplement gravity irrigation or toreplace it once the reservoirs have silted up.

7. Strengthening of Societe Riz du Niger (RINI)

3.20 The strengthening of RINI was included as a project component toenable this entity to process the incremental paddy production expected fromthe project, and to improve its overall efficiency. This option was chosensince existing private rice mills are too small to absorb considerable quan-tities of paddy collected by cooperatives from their members as payments oftheir debts (seasonal input and water charges). In order to run its millseffectively and become financially viable, RINI would need financial andmanagerial assistance. Financing requirements for this component, provided byCCCE and KfW, would include additional storage capacity, weighing equipments,technical assistance and an increase of RINI's permanent funds to enable it topurchase 3,000 tons of paddy each season from its own resources. The projectwould also finance a feasibility study of husk combustion as an alternative todiesel engines for the operation of rice mills. In order to improve manage-ment, Government is about to negotiate a management contract for RINI withCFDT. As a condition of effectiveness, Government would cause RINI to sign amanagement contract for RINI satisfactory to IDA with a qualified firm.

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C. Status of Project Preparation

3.21 Engineering designs based on sound criteria and adapted to expectedproject performance are available for all works to be constructed. Prepara-tion of bidding documents was completed in May 1984. Bid evaluation has beenevaluated in order to minimize the risks of cost overruns. The constructionschedule can be found in Annex 3-3.

D. Project's Ecological Impact

3.22 The project would not have any adverse effect upon the ecology orthe health of the population. On the contrary, the regular canal cleaningachieved by the project would increase the speed of the water flow, therebyreducing the population of schistosome-bearing snails, which are the agent ofbilharzia. However, it is recognized that the project would not alleviate theproblem of water pollution in a few villages caused by fertilizer and pesti-cide run-off into river meanders that have been cut off for use as pumpingreservoirs. No water supply component is included because this would havebeen too expensive, difficult to implement and hard to justify on equitygrounds, since the villages concerned still have better access to good qualitydrinking water in the main river flow than most areas in the country.

E. International Water Rights

3.23 Since works would be limited to the rehabilitation of existingperimeters, the project would not cause the consumption of river water toexceed the consumption capacity that was originally foreseen for these peri-meters under optimal conditions. Water consumption would, however, be mar-ginally increased over the current level because some areas are not undercultivation at present due to the deterioration of irrigation works. Theproject would not have significant adverse effects on downstream riparians.All Niger river riparians have signed the 1980 convention creating the NigerBasin Authority, which is charged, inter alia, with harmonizing andcoordinating national development plans on the Niger river. The conventionrequires member states to inform the authority of any works undertaken on theriver. At negotiations, the Government confirmed that they had complied withthis requirement.

IV. PROJECT COST AND FINANCIAL ARRANGEMENTS

A. Cost Estimates

4.01 Total project costs, net of taxes and import duties (which would bewaived) but including contingencies, are estimated at CFAF 11.6 billion,equivalent to US$25.2 million, of which 57Z is foreign exchange. Projectcosts are summarized below.

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Summary Project Costs a/

Total% Foreign Base

local Foreign Total Local Foreign Total Excange Costs---- CFAF million ----- -- US$ Million ---

Rehabilitation WorksOn Force Account 1,255 1,664 2,922 2.8 3.6 6.4 57 30By Contractors 381 1,047 1.428 0.8 2.3 3.1 73 15

Total Rehabilitation Works 1,639 2,711 4,350 3.6 5.9 9.5 62 44

Crop Intensification 627 452 1,079 1.4 1.0 2.3 42 11

Assistance to Cooperatives 980 524 1,503 2.1 1.1 3.3 35 15

Adaptive Research & SeedMultiplication 112 174 286 0.2 0.4 0.6 61 3

Strensthening of ONAHAAssistance to ONAHA 360 731 1,091 0.8 1.6 2.4 67 I1Monitoring & Evaluation 127 205 333 0.3 0.4 0.7 62 3

Total Strengthening of ONAHA 487 936 1,423 1.1 2.0 3.1 66 15

Strengthening of RINI 370 229 599 0.8 0.5 1.3 38 6

Refinancing of PPF 47 499 546 0.1 1.1 1.2 91 6

Total Baseline Costs 4,262 5,524 9,786 9.3 12.0 21.3 56 100

Physical Contingencies 211 242 453 0.5 0.5 1.0 .53 5Price Contingencies 538 800 1.337 1.2 1.7 2.9 60 14

Total Project Costs 5.010 6.566 11.576 31.0 14.2 25.2 57 118

a/ Due to rounding, totals may not su.

4.02 Unit costs are based on price quotations as of December 1983,adjusted to February 1985, the date of negotiations, using an adjustmentfactor of 9.1Z on local cost, and 4.8Z on foreign cost. The total allowancefor physical contingencies amounts to 5% of base costs. Price contingencies.which amount to 13% of total costs or 14Z of base costs including physicalcontingencies, have been calculated at the following annual percentage rates:

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Assumed Price Contingencies(in Z)

1985 1986 1987 1988 1989

Foreign Costs 5.0 7.5 8.0 8.0 8.0

Local Costs 6.0 6.0 6.0 6.0 6.0

B. Proposed Financing Plan

4.03 In view of Government's tight financial situation, it is proposedthat its contribution be limited to (a) providing the Namarigoungou equipmentto be used for the rehabilitation works (valued at its depreciated replacementvalue) and the cost of its overhaul; (b) salaries of incremental civilservants; and (c) salaries and related costs of the agriculturalist working onthe Namarigoungou project during the interim period. Beneficiaries' financialcontribution would consist of down payments and credit repayment instalments.Government and beneficiaries' contributions are estimated at US$2.7 million.The Federal Republic of Germany through KfW would contribute DM 12 million, orUS$3.9 million as a grant. CCCE and IDA would share the remaining projectcosts equally. The CCCE loan would be for a term of 30 years including tenyears grace, at an interest rate of 1.5% per annum during grace period and 2%per annum thereafter. The financing plan is thus as follows:

Financing Plan

USS million (Z)

Government and beneficiaries 2.7 11IDA 9.3 37CCCE 9.3 37F.R. of Germany (KfW) 3.9 15

Total 25.2 100

4.04 The proposed financing plan is based on a combination of joint andparallel arrangements as follows:

(a) IDA, CCCE and KfW will jointly finance US$8.3 million (49%, 27% and24%, respectively), including:

(i) the cost of civil works on force account, excluding expatriatestaff cost, new equipment and vehicles and overhaul costs ofthe Namarigoungou equipment (US$3.4 million);

(ii) agricultural equipment, except farm implements and threshers,excluding beneficiaries' contribution (US$0.2 million);

(iii) cooperatives' revolving fund (US$0.9 million);(iv) miscellaneous equipment (US$0.3 million); and

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(v) local operating and training costs (US$3.5 million);

(b) A parallel arrangement is elaborated to cover the costs of thepumping equipment, vehicles, electric power lines, the earthmovingequipment, rehabilitation of the dams in the ADM valley, farmimplements, threshers and expatriate staff.

A summary of the proposed financing plan by type of expenditures is presentedon the following page.

C. On-Lending and Administration of Funds

4.05 The proceeds of the IDA credit (and of the CCCE and KfW financing)would be passed on by Government in grant form to ONAHA except for theproceeds for agricultural equipment on medium-term credit, which would beon-lent to cooperatives. Assets created or upgraded by investments (rehabili-tation works) would belong to Government, while ONAHA would act as a managerfor the assets. Funds for applied research and the electrification of thepumping stations would be passed on to other subcontracting Governmentagencies (INRAN and NIGELEC) by ONARA also as grants. ONAHA would furnish theappropriate Government services with all the means necessary (except civilservant salaries) to carry out training activities and the establishment ofwoodlots. Funds for initial establishment of seasonal credit funds forcooperatives would be passed on to cooperatives by ONAHA as grants. After theinitial establishment of seasonal credit funds for cooperatives, individualmembers' repayments against short-term credit for inputs would be paid intothe revolving fund administered thereafter by each cooperative. Farmers wouldobtain medium-term credit in kind, i.e., receive equipment purchased by ONAHA.Farmers' repayments against medium-term credit for farm implements and collec-tive equipment would be paid to cooperatives which in turn pay back principalsto Government at an annual interest rate of 1% over a period of a maxinum ofeight years (para 5.08).

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Detailed Financing Plan by Type of Expenditures(US$ million)

Total Govt. Benef. IDA CCCE KfW

1. Rehabilitation works- force account 7.3 0.7 - 3.0 2.4 1.2- contractor work 3.9 - - 1.3 1.9 0.7

11.2 0.7 - 4.3 4.3 1.9

2. Crop intensification 3.0 0.1 1.3 0.4 1.1 0.1

3. Applied research and 0.7 0.1 - 0.1 0.1 0.4seed multiplication

4. Assistance to cooperatives 3.9 0.4 0.1 1.5 1.2 0.7

5. Assistance to ONAHA 2.8 - - 1.3 1.3 0.2

6. Monitoring and evaluation 0.9 - - 0.7 0.1 0.1

7. Assistance to RINI 1.5 - - - 1.0 0.5

8. PPF and CCCE advance 1.2 - - 1.0 0.2 -

Total 25.2 1.3 1.4 9.3 9.3 3.9

Percentage (100.0) (5.3) (5.7) (37.0) (37.0) (15.0)

D. Special Revolving Fund Account

4.06 In view of Government's limited capacity to prefinance expendituresfor rehabilitation works to be reimbursed under external financing, a revolv-ing fund would be established immediately after credit effectiveness with allcofinanciers' contributions for a total amount of CFAF 720 million (US$1.6million). 1/ IDA would make an initial deposit of CFAF 353 million (US$0.8million, 49% of the total) into an IDA Special Account. CCCE and KfW would

1/ This involves the costs in the first year excluding equipment, works andservices to be paid directly and local personnel salaries, adjusted todelays in processing of reimbursement requests and payments. The majoritems are costs of force account works (CFAF 287 million: average fourmonth requirements of the first year costs such as civil works, localpersonnel and vehicle operating costs) and payment to cooperatives ofseven perimeters to be rehabilitated in the first year to establishrevolving funds for working capital (CFAF 267 million). These costs arejointly financed by IDA, CCCE and KfW.

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also make an initial deposit of their respective shares (27% and 24%) intotheir respective Special Accounts. Upon the completion of civil works byforce account and payment of cooperatives' revolving funds, the SpecialAccount deposit would be reduced to CFAF 70 million. IDA would replenish itspart of the revolving fund upon receipt of satisfactory evidence that allexpenditures were eligible for financing; CCCE and KfW would do likewise.

E. Procurement and Use of Consultants

1. Procurement of Goods and Works

4.07 Cofinanciers have agreed on the parallel financing of majorpackages: the pumping equipment, vehicles and farm implements would befinanced by CCCE; the electric power lines by KfW. The earth moving equip-ment, threshers and rehabilitation of the dams in the ADM region will befinanced exclusively by IDA and will be procured under international competi-tive bidding. These and other procurement arrangements are summarized in thefollowing table with amounts to be financed by IDA shown in parentheses.

4.08 The dispersed and sporadic nature of rehabilitation works on theirrigation/drainage systems, roads and protection dykes, and the need to workaround cropping schedules, give an advantage to ONAHA in implementing theseworks on force account. Most of the construction equipment needed as well asthe required skilled manpower are already available from the recently com-pleted Namarigoungou project. Additional experience would be gained inoperating the maintenance equipment to be procured under the proposed project,which would initially be used for construction and thereafter for maintenanceof the main infrastructure. Comparison of construction costs by theNamarigoungou force account fleet and proposed by local contractors showsfurther that unit costs for earthworks done by contractors are higher thanthose of works done on force account. Works to be done on force account,mainly comprising the physical rehabilitation of the perimeters (earthwork andstructures), would amount to US$7.3 million, including local and expatriatestaff costs.

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Amounts and Methods of Procurement(US$ million)

Procurement Method TotalProject

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

Earthworks, structures, buildings 1.2 0.43 a/ b3 5.1and forestry plantations (1.2) (0.1) (1.6) - (2.9)

Pumping stations - 1.6 b 1.6

Electric power lines - 0.7 ct _ 0.7

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

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

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

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

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

Project preparation facilities - - 1.2 - 1.2(1.0) _(1.0)

Total 3.0 1.3 14.7 6.2 25.2

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

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

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

them.d/ Depreciated replacement value and reconditioning cost of the Namarigoungou

equipment.et Expatriate staff, of which IDA finances Chief of Monitoring and Evalua-

tion, ONAEA (36 man-months) and Head of Financial Planning, Budgeting andBudgetary Control Unit, ONAHA (36 man-months), CCCE finances ChiefExigineer (21 man-months) and Works Supervisor (21 manm-onths), both forforce account works, Rice Processing expert, RINI (24 man-months) andAdministrative and Financial Director, ONARA (36 man-months), and KfWfinances Administrative and Financing Manager for force account works (24man-months) and Agriculturalist/Rice Expert (36 man-months).

ft Including the preparation studies financed by CCCE.

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2. Contract Review

4.09 All bidding packages for works and goods over US$100,000 would besubject to IDA's prior review of procurement documentation, resulting in acoverage of about 90% of the total estimated value of works and goodscontracts other than force account works. The balance would be subject torandom ex-post review by IDA after contract award. Civil works done on forceaccount would be reviewed throuSh annual budget approval.

3. Consultants

4.10 Expatriate staff and short-term consultant costs amount to aboutUS$3.6 million, including contingencies, for 246 man-months of residentexpatriate staff and 39 man-months of short-term consultants. Assuranceswere obtained at negotiations that the terms of reference, qualifications andexperience of expatriate staff and censultants financed by IDA would beacceptable to IDA. Particular emphasis will be given to the training of localpersonnel for subsequent managerial and staff positions within ONAHA. Thedraft terms of reference are shown in Annex 4-1.

F. Disbursement

4.11 Disbursement of the IDA credit would be against the categories ofexpenditures and within the limits shown on the following page.

4.12 Withdrawal applications would be fully documented, except forcategories (1)(b) and (3)below, for which statements of expenditures (SOE)would suffice. In the case of the SOE procedure, supporting documentationwould be kept by ONAHA for verification by the auditors financed under theproject, and for review by IDA supervision missions. Withdrawal applicationsfor civil works done on force account (Cat. (1)(b)) would be supported with astatement of the work performed certified by the Chief Engineer (para 5.02)with unit costs to be agreed annually with IDA. IDA will not accept a reim-bursement application for less than an estimated US$20,000 equivalent.

4.13 The disbursement profile deviates from the Aggregate AfricanRegional Profile for irrigation projects because of the initial disbursementto the special account, the fact that physical rehabilitation will take placeonly in the first two project years, and because of the favorable disbursementexperience in Namarigoungou, where the whole credit was disbursed in aboutfive years from Board presentation. Disbursement of the present project isexpected to be completed in six years. The schedule of disbursements is inAnnex 4-2.

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Allocation and Disbursement of IDA Credit

% totalestimated costto be disbursed

Categories Amount by IDA Credit(US$ million)

(1) Civil works:(a) Rehabilitation of catchment

in the ADM 1.1 100(b) Other 1.3 49

(2) Equipment:(a) Construction 1.1 100(b) Agricultural (threshers) 0.3 90(c) Agricultural (others) 0.1 44

(3) Salaries of ONABA's incrementalstaff on contract (other thanin category (4)), training andoperating costs and office equipment 1.4 49

(4) Services of consultants, expertsand specialists, and studies 1.4 100

(5) Seasonal credit fund to cooperatives 0.2 49

(6) Special account 0.8 100

(7) Refunding of project preparationfacility 1.0 100

(8) Unallocated 0.6

Total 9.3

G. Accounts, Audits and Reporting

1. Accounts and Audits

4.14 ONAHA's accounts have been examined by independent auditors since1980/81. The most recent accounts for 1982/83 are audited but not certifiedsince the auditors cannot vouch for the accuracy of the accounts. The defi-ciencies in ONARAts accounts are mainly due to a shortage of adequatelytrained accounting staff at senior and intermediate levels, and a lack ofinternal control over the application of procedures. In view of the generalweakness of ONAHA's financial management, the proposed project would set up anew unit (para 3.19), whose functions include financial planning, budgetingand budgetary control, to tighten internal control, and finance key posts in

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the Administrative and Financial Dir. torate, namely, an expatriate adminis-trative and financial director and a Nigerien chief accountant at ONAHAheadquarters and three accountants at ONARA regional offices. In order toensure efforts to redress the current accounting practices, recruitment of anadministrative and financial director, ONAHA, chief accountant and threeregional accountants with qualifications satisfactory to IDA would be acondition for credit effectiveness. They would be responsible for imple-menting recommendations made by the auditors to improve ONAHA's accountingpractices and putting order in ONAHA's accounts by September 30, 1986, thedate by which these accounts must be certifiable by independent auditors.Assurances on the above were obtained at negotiations.

4.15 ONAHA accounts would be audited annually during project implementa-tion by independent auditors acceptable to IDA and financed by the project.Audited financial statements and reports, of such scope and in such detail asIDA may reasonably request, will be submitted to IDA within four months of theend of each fiscal year. The auditor's report will include a statement on theadequacy of the accounting system and internal controls and on whether or notIDA funds have been used for their intended purposes. The report will alsoconfirm that summary SOEs, submitted as justification for disbursement underCategories (1)(b) and (3) (para 4.12), correctly reflect detailed records keptby ONAHA. Assurances on the above were obtained at negotiations.

4.16 Assurances were obtained at negotiations that ONAHA would establishand maintain separate project-related accounts in accordance with sound andaccepted accounting principles and practices, and that ONAHA would completethe design and installation of a cost-accounting system and start itsoperations not later than December 31, 1985.

4.17 Assurances were also obtained at negotiations that cooperativeaccounts would be audited by independent auditors acc ptable to IDA everyother year, starting from fiscal year 1985/86, and audit reports would besubmitted to IDA within four months of the end of each such two year period.

2. Reporting

4.18 Assurances were obtained at negotiations that ONAHA would (a) submitto IDA, within two months after the end of each semeste., bi-annual progressreports in a format still to be agreed, and (b) submit to IDA a ProjectCompletion Report not later than six months after the Credit closing date.

V. ORGANIZATION AND MANAGEMENT

A. Project Implementation

5.01 The project would be implemented over a five year period, startingin October 1985, with ONAHA as the lead agency. ONAHA's General Manager wouldact as Project Manager, except for the RINI component, which would be managedseparately by RINI. ONAHA's three Regional Offices (Tillabery, Niamey andTahoua) are responsible for day-to-day project activities and field levelcoordination. ONAHA would be directly responsible for implementing thephysical rehabilitation of the irrigated perimeters and for carrying out cropdevelopment activities (extension, crop intensification, monitoring and

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evaluation). Adaptive research and the production of foundation seeds wouldbe subcontracted to INRAN. For cooperative training, ONAHA's Regional Officeswould coordinate and supervise the implementation of training activities byregional teams composed of representatives of the Literacy Service of theMinistry of Education, the "Animation" Service of the Ministry of Planning andONAHA. The Forestry Service of the Ministry of Hydrology and Environmentwould, under ONAHA's supervision, establish village woodlots on soils un-suitable for crops.

5.02 The physical works would be implemented over a two year period. Theautonomous force account unit exists with the core local staff and would beresponsible for the construction of works on force account, as well as forsupervision of the contracted works. The force account unit would be headedby an expatriate Chief Engineer to be recruited, who would be responsible toONAHA's Director General; he would in turn be assisted by two otherexpatriates, i.e., a works supervisor and an administrative and financialmanager for force account, and local staff. Since local staff developedconsiderable skills under the Namarigoungou project, the input of expatriatestaff has been reduced considerably from its level in this previous project.At the end of the construction period, most of the local staff engaged inconstruction activities would be transferred to the regional maintenancebrigades that are to be established under the proposed project.

5.03 In the interim period between the closure of the Namarigoungouproject and the start of the proposed project, a nucleus staff would beretained at the Namarigoungou project headquarters at Tillabery and financedfrom the revolving fund established by Goverment for the implementation ofthe Namarigoungou project. This staff would be responsible for the recondi-tioning of that portion of the heavy equipment procured under theNamarigoungou project that would be redeployed under the proposed project.

5.04 Civil works related to buildings and pumping stations would beawarded to the private sector. The electrification of the pumping stationswould be subcontracted to NIGELEC. Civil works related to irrigation anddrainage systems, dykes and access roads would be executed on force account byOKAHA. Farmers would participate in the rehabilitation works by reconstruct-ing field drains and reshaping field irrigation channels on a no-cost basis.

5.05 Once the rehabilitation works are completed, responsibility forscheme operation would be transferred to farmers. Maintenance of field drainsand irrigation channels would be the responsibility of the beneficiaries.Farmers would have the option of having the main perimeter infrastructuremaintained by ONAHA at a fixed rate and at real costs, or hiring a privatecontractor, with ONAHA supplying technical assistance. Pump maintenance wouldbe contracted out to the private sector. Maintenance contracts would bindeach cooperative and the pump supplier representative, and would be monitoredby ONARA (para 3.08).

B. Financial Management

5.06 In addition to normal financial accounting, ONAHA has started todevelop a cost-accounting system. This system needs to be adapted to theProject's transactions and tied in with the basic accounting data of eachregional office. Adequate procedures will be established between ONARA's

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regional offices and the cooperatives to take into account their respectivefinancial responsibilities for operation and maintenance of the rehabilitatedperimeters. Cost data will be analyzed and synthesized by staff for financialplanning, budgeting and budgetary control in the new unit to be created(para 3.19) which will report directly to ONAHA's General Manager. In addi-tion to processing cost data for decision making, it will support ONARA in theareas of long-range planning, budgeting, budgetary control (including controlof cooperatives' cost recovery performance) and internal audit.

5.07 A financial and administrative manager (expatriate), a chief accoun-tant and three regional accountants, with qualifications and experiencesatisfactory to IDA, will be recruited by ONAHA in 1985 with CCCE financing,before project start-up. Their costs during the project implementation periodwould be borne by the project. The financial and administrative manager andthe chief accountant will have primary responsibility for:

(a) the financial and cost-accounting system;

(b) the treasury function, i.e., payments, banking operations, debtmanagement, monitoring of Government budget allocations, inventoriesand the preparation of the annual financial statements; and

(c) procurement and administrative affairs.

They will also participate in budget preparation. Assurances were obtained atnegotiations that ONAHA would continue to employ a financial and adminis-trative manager and a chief accountant with qualifications and experiencesatisfactory to IDA.

C. Credit Management and Marketing

5.08 The project will finance two types of credit. Credit would not bechannelled through CNCA which, because of past questionable lending practices,is facing increasing recovery problems. Being practically bankrupt, it hasnow ceased all lending operations. Hence, until a long-term solution foragricultural credit is worked out, credit under the project would be handledin the following way. First, seasonal credit would be provided by cooperativesto their members out of their seasonal credit funds (a total of US$0.9million), to be established at each cooperative by the project as a grant.With this fund, cooperatives purchase seasonal inputs for the use of membersand prefinance collective charges for irrigation operations (para 3.17).Cooperatives would have the option of purchasing seasonal input directly fromthe private sector, or of ordering them from the Input Su-.ply Center (CA).Seasonal credit extended to individual members by cooperatives would bearannual interest of not less than 12% for the provision of expected inflationand bad debts. Assurances on the above were obtained at negotiations.Secondly, medium-term credit would be provided for farm implements (US$1.9million), blacksmith equipment (US$34,000), threshers (US$0.6 million), andcollective equipment (US$0.35 million). Medium-term credit would be managedby cooperatives with technical assistance provided by ONAHA. Their memberswould put a minimum 10% down-payment and repay the rest at an annual interestrate of 12X to cooperatives over a period of a maximum of five years. Asnoted in para 4.05 cooperatives would in turn repay to Government at an annualinterest rate of 1.0% over a period of a maximum of eight years. Assurances

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on the above were obtained at negotiations. Since further details on termsand conditions for credit remain to be laid out, Government is re; uested, as acondition of disbursement for agricultural equipment and seasonal credit fund(categories (2)(b), (2)(c) and (5)), to make contractual arrangements withcooperatives satisfactory to IDA for seasonal and medium-term credit.

5.09 In order to avoid a high rate of delinquent payments, cooperativeshave elected to require their members to market, through their cooperative, aquantity of paddy at least equivalent in value to their debts due to thosecooperatives. This arrangement is acceptable to IDA. However, farmers shouldbe allowed to take advantage of the higher prices which may exist on theprivate market. Therefore, assurances were obtained at negotiations that(a) farmers would be given the option of selling, either to RINI through theircooperatives or to the private sector, any surplus of marketable paddy abovewhat they owe to their cooperatives, and (b) Government would be committed tothe purchase, through RINI, of all the quantities offered to it by farmers, inorder to ensure that farmers obtain at least the official price set by Govern-ment.

VI. PRODUCTION, MARKETS, PRICES AND FINANCIAL ANALYSIS

A. Production

6.01 Incremental irrigated rice production at full development (PY5)would be about 11,000 tons of paddy (including the perimeters of Namarigoungouand Say; 8,000 tons if these are excluded). An increase in paddy productionwould result from the expansion of cultivable areas by about 300 ha, theincrease in crop intensity, and from average yields per ha that would increasefrom their present level of 2.45 tons/ha in wet seasons and 2.75 tons/ha indry seasons, to 3.7 tons/ha and 4.0 tons/ha, respectively. These averageyields at full development are realistic and could be comfortably achieved,since yields as high as 5 tons/ha/crop are already observed in theNamarigoungou perimeters. The yield increases would be realized by:

(a) improved doses of fertilizer (150 kg of urea and 400 kg of compoundfertilizer 15-15-15 instead of the currently recommended practice of200 kg of urea and 100 kg of compound fertilizer);

(b) strict adherence to the cropping calendar with the help of animal-drawn equipment; and

(c) general improvement in rice cultivation.

6.02 The "without project" production level for 11 physically rehabili-tated rice perimeters is assumed to remain at the level of PYO except for the

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Kokomani perimeter. 1/ In the case of perimeters at Namarigoungou, forwhich support activities are provided, but not physical rehabilitation,production would increase in relation to the "without project" situation.Without such support activities as cooperative training, provision of animal-drawn equipment, and applied research under the proposed project, the presenthigh average yield levels at Namarigoungou (3.7 tons/ha in wet seasons and4.0 tons/ha in dry seasons) would not be sustained and would decline to 2.7and 3.0 tons/ha, respectively, levels that are currently observed in otherneighboring perimeters. Average yields at the Say perimeter, which also willnot be physically rehabilitated, would increase "with p_oject" from thepresent level due to improved fertilizer application and other support activi-ties.

6.03 "With project" productions of seed cotton and sorghum reach tneirpeaks in PY4 (about 1,200 tons and 900 tons, respectively) while those ofonions peak in PY3 (2,850 tons). Incremental productions of seed cotton andsorghum, however, would peak in PY15 (990 tons of seed cotton and 740 tons ofsorghum) due to the fact that the useful life of the perimeter at Ibohamanewould be prolonged by raising the dyke level of the reservoir dam, thusmaintaining irrigable lands at the present level until PY14. This is becausewithout the project, irrigable lands would start declining from PY4. Inaddition, it is assumed that two dams at Moulela and Kawara would not remainoperational beyond PY5 under the "without project" situation and that therewould thus be no production at two perimeters after PY6. Increase inproduction of cotton and sorghum would result from a minor increase (15 ha) ofcultivable area and modest increases in average yields (150-200 kg/ha ofincrease), resulting mainly from better water management. 2/ Incrementalproduction of onions is entirely from the Ibohamane perimeter, where dryseason cultivation would become possible through increased availability ofwater during dry seasons. Evolution of areas, yields and production for rice,cotton, sorghum and onions is detailed in Annex 6-1.

B. Markets

1. Rice

6.04 The national production of paddy is estimated to have been in therange of 25-40,000 tons per year during 1977-82, with about 90% coming fromthe Niamey Province. Total rice consumption was estimated at 70-80,000 tonsin 1981/82. National paddy production meets only some 40% of consumptionneeds, the rest is met by official imports of rice (40,000 tons) and privateimports.

1/ Due to the breakdown of pumps, there is no production at the Kokomaniperimeter, whose conditions are otherwise reasonable. In the "withoutproject" case, replacement of pumps would be made to restart production onthe existing cultivable areas and to maintain current yields.

2/ Agronomic packages including fertilizer formula and cultivation practiceswould remain unchanged except for application of more efficientinsecticides on cotton.

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6.05 Imports of rice and cereals are handled by the Grain Marketing Board("Office des Produits Vivriers du Niger" - OPVN), together with a handful oflicensed private traders. Commercial imports of rice (other than food aid) byOPVN have increased at an average annual rate of 25X from 15,700 tons in1977/78 to 39,000 tons in 1981/82. Given a population growth rate of 3.3% ayear and an even higher rate of urban population increase, the demand for ricecan be expected to keep rising. Incremental paddy production from the projectof about 11,000 tons (rice equivalent 7,000 tons) would therefore have a readymarket. In 1983, however, rice imported to Niger, even with the naturalprotection from imports provided by high inland transport costs, has beencheaper than locally-produced rice. In mid-1983, OPVN, the sole buyer forRINI's local rice, stopped buying from RINI while importing rice to exploithigher profits, thus leaving RINI with mounting stocks. This situation wasalleviated when Government imposed an import duty on rice (12% on importedprice at the border) to protect local production from the unusual fluctuationof world market prices, in addition to increasing import licenses for privateimports to 5,000 CFAF/ton. This compensatory levy on rice imports is subjectto regular review. Based on the Bank's commodity projections, it is estimatedthat import parity prices of rice in Niamey will increase by about 14% in realterms between 1983 and 1990 (para 6.09). The import tax would be, therefore,a temporarv measure.

6.06 Out of the total paddy production of irrigated perimeters, about25-30% is marketed by cooperatives to RINI. The rest is consumed on farms orsold in local markets. Until recently, Government imposed compulsory paddysale by cooperatives to RINI at official producer prices. The compulsorylevel was raised from 1.5 tons/ha/cropping season to 3.0 tons/ha/croppingseason in the 1981 wet season. If actually enforced, this measure would haveleft nothing for consumption by farmers and was considered one of the majorreasons for farmers' dissatisfaction and disinterest in rice cultivation.Under the project, however, it is proposed that individual farmers deliver tocooperatives a quantity of paddy equivalent to their dues to cooperatives.The typical crop budget indicates that this would amount to 1.3 tons/ha ofpaddy, or 35% of total production (3.7 tons/ha). This seems reasonable and isin line with what is currently marketed through cooperatives. Since farmerswould have other individual financial obligations at harvest time, the volumemarketed through official channels could be higher than the equivalent of thecharge due to cooperatives if official producer prices are competitive withthe private sector and if immediate cash payment to farmers is assured.

6.07 Based on a total irrigated rice production area of about 6,000 ha(including areas outside of the rehabilitation project) and a minimum of oneton of paddy/ha/season, 12,000 tons would be sold to RINI annually. Based onthe existing input/output price ratios, and assuming that RINI has liquidityto finance its paddy purchase, the long-term break-even point for RINI isestimated at 10,800 tons per year.

2. Cotton and Other Commodities

6.08 Niger's seed cotton production declined from the peak of 11,000 tonsreached in 1975/76 to an estimated 2,800 tons in 1983/84. The French Companyfor Cotton Development ("Compagnie Francaise de Developpement des Textiles"' -CFDT) markets and processes seed cotton at its own ginning factories for saleto the local textile manufacturing company, SONITEXTIL. The total existingginning capacity is 14,000 tons of seed cotton (10,000 tons in Madaoua and

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4,000 tons in Maradi). The factory in Mfadaoua is the only one in operation atthe moment, and is running significantly below capacity. The SONITEXTILfactory can treat 1,500 tons of fiber annually, equivalent to 3,700 tons ofseed cotton. The peak incremental production of 990 tons of seed cottonexpected under the project could be easily ginned and marketed for local use.Since 1980/81, Government has increased cotton producer prices twice insuccessive years. Cotton production might increase to the point where Nigercould resume cotton exports. Sorghum is marketed by OPVN at official producerprices through cooperatives or by local traders at market prices. Onionsproduced in Tahoua are marketed by private traders mainly for export toneighboring countries such as Nigeria, Benin, Togo and Ivory Coast.

C. Prices

6.09 Official crop prices for the 1983/84 season are the same as for theprevious season; they were successively raised in 1981/82 and 1982/83(para 1.08). Economic prices for paddy, rice and sorghum are calculated asimport parity prices. Although cotton is not exported at the moment, itseconomic prices are calculated as an export parity derived from world marketprices, because the recently improved price incentive (from CFAF 62/kg in1980/81 to CFAF 120/kg in 1982/83) may induce increases in cotton productionfor export. Since market prices for paddy are not readily available, officialproducer prices are used for financial analysis. Market prices for sorghum,estimated to be in the range of CFAF 80-90/kg, vary from department to depart-ment and from market to market. Market prices for onions also vary betweenseasons and years, ranging from CFAF 30/kg to 120/kg or more, but an averageof CFAF 76/kg is used for economic analysis. Economic prices for paddy, rice,sorghum and cotton are calculated using the Bank's commodity price projectionsup to 1990 (details in Working Paper 7). A comparison of the official, marketand economic prices is shown in the following table.

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Financial and Economic Prices(CFAF/kg)

Official Market Economic Farmgate OfficialProducer Prices Prices Prices Wholesale

1983/84 1983/84 1983 1990 1983/84

Main cropsPaddy 85 85 80 / 95 / -Rice - - 154 a 176 - ISOSorghum 70 80/90 96 86 110Cotton 120/110 b/ 120/110 - 176 159 -

Onion - 76 76 76 -

By-productsBran - 30 30 30 -

Straws - 10 10 10 -

Cotton seed - 30 30 30 -

a/ Import parity prices at wholesale in Niamey.b/ CFAF 120/kg for the superior grade and CFAF 110/kg for the other.

6.10 Paddy marketed through cooperatives is put into 75 kg bags (74 kgof paddy and 1 kg for bag weight), then weighed, and each cooperative memberis paid for 70 kg of paddy at the current official producer price ofCFAF 85/kg. Therefore, individual farmers are paid CFAF 80.4/kg for theirpaddy and the remainder, CFAF 4.6/kg, is kept by cooperatives to cover forlosses in transit. Cooperatives then sell paddy to RINI at CFAF 88/kg. Thedifference, CFAF 3/kg, is used by cooperatives to cover primary marketingcosts. The transport from cooperatives to RINI's rice mills was previouslythe responsibility of cooperatives, with an additional CFAF 2/kg paid to them,but the responsibility has rested with RINI since the 1983/84 wet season.

6.11 At present, urea and compound fertilizer 15-15-15 are procuredmainly from Nigeria. Supplier prices plus distribution costs for urea andcompound fertilizer (CFAF 60/kg and CFAF 66/kg, respectively) are substan-tially lower than import parity prices on international markets. Officialprices are even lower: CFAF 50/kg for urea and CFAF 45/kg for compoundfertilizer in 1982/83, with subsidy elements of 17% and 322, respectively.Since the Nigerian Government has reduced the fertilizer subsidy rate from 85%to 50% in 1984 and to 40% in 1985, the future availability of cheap fertilizer(subsidized by Nigeria) is uncertain; it would depend on fertilizer prices inNigeria, degrees of control on officially distributed fertilizers byNigerians, and market exchange rates between the CFA franc and the NigerianNaira. Undez these extremely uncertain conditions, the most pessimisticscenario is assumed: Niger would import fertilizer entirely from

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international markets. 1/ In that case, the fertilizer formula would haveto be altered from 150 kg of urea and 400 kg of compound fertilizer 15-15-15to 200 kg of urea and 100 kg of DAP (dismmonium phosphate) which providealmost the same nutrients and are more efficient in terms of transport costsper nutrient. Estimated import parity prices for urea and DAP (CFAF 120/kgand CFAF 140/kg, respectively) based on the Bank's commodity price projectionsare used both for economic and financial analyses.

D. Cost Recovery

1. Subsidies

6.12 Government policy with regard to subsidies -was originally consideredas a means of transferring some of the uranium revenues to the rural sector.In practice, however, it has led to a rationing of agricultural inputs andequipment and to poor maintenance of pumping equipment and irrigation anddrainage infrastructure. This policy thus had effects on beneficiaries thatwere the opposite of those intended. Now that uranium revenues have severelydeclined, there is little justification for any subsidy on farm implements. Wecan still see a justification, however, for a subsidy on seasonal inputs inthe absence of any form of crop insurance, and to the extent that thebudgetary allocation for this would entail no rationing. At negotiations, theNiger delegation confirmed that it is the Government stated objective togradually abolish all agricultural input subsidies (para 1.24) and that, infact, under a recent USAID agricultural sector grant, the Government isalready committed to reducing the average rate of subsidy on agriculturalequipment to 15% by end-1988. We agreed fox the purpose of this project toaccept Government's present efforts and that this question will be reviewedduring preparation of the structural adjustment credit. Assurances wereobtained at negotiations that cooperatives would bear the full costs ofoperation and maintenance, including provisions for the renewal of pumpingequipment.

2. Cost Recovery in Irrigation

6.13 A main principle in costing irrigation is that all the maintenanceand operations costs for irrigation have to be borne by beneficiaries. Thepumps would be installed at first by the project, but their future replacementwould be the responsibility of cooperatives. Beneficiaries would also berequired to bear the full costs of operation and maintenance, which includecosts related to cooperative collective nurseries, energy, pump and infra-structure maintenance costs, salaries for a pump attendant and a cooperativebookkeeper, replacement of pumps, and salary for a cooperative manager (fromPY6). The only cost not recovered from beneficiaries is related to various

1/ This represents the most pessimistic case because it is likely thatNiger could still get fertilizers from Nigeria at prices cheaperthan international prices because a demand for the hard currency CFAfranc would continue to be strong in Nigeria and the quantity offertilizer consumed in Niger is very small compared with theNigerian consumption.

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technical advice provided by ONAHA staff. Combined with production costs paidby individual farmers, such as fertilizers (valued at international prices),pesticides and land preparation, the total monetary costs of production wouldrepresent 38-40% of the gross production. This is within the range generallyaccepted as the upper limit of the monetary costs:output value ratio for sucha project. A sensitivity analysis further shows that this ratio would go upto 49% when yields are reduced by 20Z to 3 tons/ha, to 42% with an increase ofelectricity costs of 25X, and to 50% with a 20% decline in paddy prices. Costrecovery data are detailed in Annex 6-2 and summarized below.

Coet Recovery Data(CFAF/ha/crop)

Wet season Dry season

Yield (kg/ha) 3,700 4,000

Gross value of production -/ 332,480 356,600

Collective costs- cooperative nurseryb/ 11,130 11,130- energy for pumpin§/- 14,200 14,200- pump maintenance - 4,100 4,100- pump attendant saJ7ry 4,800 4,800- renewal of pumps -b/ 10,300 10,300- infrastructure maintenance - 11,500 11,500- manager and bookkeeper salary 4,180 4,180- other operating costs 2,360 2,360- collective financial charges 2,180 2,180

Sub-total - collective costs 64,750 64,750

Production costs at individual charges 70,550 70,850

Total monetary costs 135,300 135,600(paddy equivalent in kg) (1,680) (1,690)

Monetary costs as X of gross value 40 38

Family labor 84,200 84,200(217 days at 600 CFAF/day)

Revenue after family labor 113,180 137,800(paddy equivalent in kg) (1,410) (1,700)

a/ Including straw (3,500 kg/ha) valued at CFAF 10/kg. Paddy is valued atCFAF 80.4/kg, which farmers receive.

b/ From the Daikena perimeter, which bears costs higher than the averageperimeters with electric pumps.

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E. Financial Implications for Beneficiaries

6.14 Income of farmers under the project is derived not only from irri-gated plots, but also from rainfed farming, livestock, market gardening andnon-agricultural sources. Since information on activities outside of irri-gated rice production is not readily available, farm family budgets have notbeen prepared. Instead, the impact of the project on farmers' incrementalincome from rice cultivation has been examined. This approach seems reason-able, since the project will not affect agricultural activities outside ofirrigated parcels, because the development of animal traction is expected toeliminate bottlenecks when work requirements for rainfed and rice cultivationare in conflict. Benefits from this, however, reside mostly in rice produc-tion, because if rainfed and rice farming are in competition, priority isalways given to the former. Moreover, the equipment would be purchased byselected farmers (one set for 2 ha of irrigated land) and rented out toothers. Owners of equipment would improve rainfed farming with the help ofthe equipment, but for the majority of farmers the impact of the project onrainfed farming would be negligible. 1/

6.15 Detailed rice crop budgets are shown at Annex 6-3 and summarizedbelow:

1/ It is assumed that for half of the time, equipment would be devoted torainfed farming. However, for economic analysis, the full cost ofanimal-drawn equipment has been charged to the project, as no incrementalproduction is assumed from rainfed crops.

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Income from Rice Production(CFAF/ha/year) a/

Without project With projectInterim First Second Fullyear ea yea /r if development a -

Paddy yield (kg/ha) b( 2,600 2,600. 2,990 3,300 3,850

Gross value of production C/ 462,080 462,080 535,390 592,640 689,080

Production costs- collective charges 102,780 103,190 124,496 129,504 129,504- individual charges d/ 83,000 103,200 139,675 140,300 141,400(of whicv fert. & pest.) - (53,800) (62,000) (77,076) (77,076) (77,076)

Sub-total - production costs 185,780 206,390 264,171 269,804 270,904

Net income 276,300 255,690 271,219 322,836 418,176(% of net income/man-day

without project) (93%) (98%) (-17%) (151%)

Labor (no. of man-days) 320 320 280 280 280

Net income/man-day 863 799 969 1.153 1,493Ct of net income/man-daywithout project) (93%) (f12t) (134%) (173%)

a/ Total of wet and dry seasons.

b/ Averages of wet and dry season yields.

cl Paddy valued at CFAF 80.4/kg. Includes value of by-products, straw, valuedat CFAF 10/kg.

d- Without project: 200 kg of urea and 50 kg of DAP at CFAF 120/kg andCFAF 140/kg with subsidy per ha of CFAF 4,100 and no pesticides. Withproject: 200 kg of urea and 100 kg of DAP at CFAF 120/kg and CFAF 140/kgwithout subsidy.

e/ Twenty man-days' saving per season from use of a pedal thresher.

f/ Before physical rehabilitation and improvements in rice cultivation butwith no subsidy on inputs.

After physical rehabilitation.

6.16 In view of the uncertain fertilizer supply from Nigeria, the"without project" and "with project" scenarios both assume that fertilizerswould be imported from international markets and that the fertilizer formulaewould be changed to more efficient ones (urea and DAP) in terms of transport

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costs per nutrient, but almost' equivalent in nutritive value to the formulaconsisting of urea and compound fertilizer 15-15-15. It is assumed thatsubsidies on agricultural inputs and farm implements would be eliminated imme-diately. In reality, subsidies on fertilizers and farm implements would begradually reduced, at a rate which is not certain (para 6.12). In the"twithout project" case, it is assumed that the total amount of subsidy perhectare, based on the current fertilizer application and rate of subsidy,would be maintained. In both cases, land preparation is assumed to be done byanimal traction on a rental basis, but the higher unit cost per hectare in the"with project" case reflects elimination of subsidies on equipment. Rentalcosts of a pedal thresher are included in the "with project" case only and theman-day input is accordingly reduced. The table shows that net incomes duringthe interim period (before physical rehabilitation and before improvements inrice cultivation but with no subsidy on inputs) would slightly decline. Thetable also shows a jump in production costs, due to payment of operating andmaintenance costs at full, upgrading in pesticides and fertilizer applicationsand elimination of subsidies on inputs, but paddy yields increase onlygradually. This would cause a reduction in net income in the first year afterthe physical rehabilitation. This, however, is not considered as a threat tothe project for three reasons. Firstly, subsidies on fertilizer and farmimplements would be eliminated gradually. Secondly, assumptions on gradualincreases in yields are in fact conservative and a jump in yields from thefirst year after physical rehabilitation is possible, if all the inputs andcrop calendar are respected as recommended. Thirdly, even if yields improveonly gradually, it is unlikely that farmers will abandon cultivation in theface of a reduction in income in the interim and first years because:

(a) the reduction is not significant (CFAF 2,600 per farmer per seasonin the interim year and CFAF 640 per farmer per season in the firstyear after physical rehabilitation);

(b) the irrigated plot is not the only source of income; and

(c) irrigation has an important "drought-proofing" benefit.

At full development, the "with project" total production costs would increaseby 46%, while the gross value of production per year with the project wouldincrease by 49%. As a result, the "with project" net income per ha per yearwould rise by 51% as compared to the "without project" situation, and the netincome per man-day by 73% (average of two crops).

6.17 In the case of the perimeters in the ADM valley, a modest increasein yields of cotton and iorghum (150-200 kg/ha each) results primarily frombetter water management, not so much from intensification of cultivation. 1/Since labor requirement and production costs remain unchanged except for aslight increase in maintenance costs for irrigation works (CFAF 2,850/ha),

1/ Insecticides on cotton would be changed to more efficient ones but costsremain the same.

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most of the incremental gross value of production (CFAF 20,500/ha) 1/ wouldbecome farmers' incremental net income.

F. Financial Analysis of ONARA

1. Financial Situation

6.18 Upon its creation in 1979, ONANA received as Initial capital aninvestment grant in kind (office buildings and secondhand equipment) valued atCFAF 250.1 million, as well as a Treasury advance of CFAF 75 million.Although ONAHA's by-laws provide a framework for financial autonomy, Govern-ment has been constantly interfering in ONANA's operations to launch newsubsidized programs without adequate financing. As a result, ONARA has beenobliged to borrow funds from CNCA, and is unable to repay its accumulated debtof CFAF 900 million. Given the gravity of the financial situation, i.e.,negative cash flow, depleted working capital, high financial charges, inade-quate cost recovery, and a critical shortage of permanent funds, ONAHA'sfinances were thoroughly reviewed with Government and cofinanciers during theappraisal mission. Detailed financial statements showing ONARHA's past perfor-mance (1980-84) are given in Annex 6-4.

2. Financial Remedies

6.19 The success of the proposed project depends on putting ONAHA onsound financial footing and finding ways and means to prevent a repetition ofthe present dismal situation. Towards that end:

(a) Government would make satisfactory arrangements for the assumptionor settlement of ONAHA's accumulated debts to CNCA, as a conditionof effectiveness;

(b) Government would pay off ONAHA's overdues to its suppliers (CFAF 200million) as a condition of effectiveness;

(c) cofinanciers would provide ONAHA with Special Revolving FundsAccounts in order to enable it to pay for goods and services forwhich direct payment cannot be made (para 4.06);

(d) assurances were obtained at negotiations that ONAHA would notundertake activities for which adequate financing is not secured andwould charge the full cost for services it renders; and

(e) assurances were obtained at negotiations that Government wouldadequately and timely finance ONAHA's overhead expenditures forservices performed on Government's behalf, and which are not coveredby external sources, by transferring to ONAHA its quarterly contri-bution, at the beginning of that quarter. With the clearing-up ofONAHA's financial situation and the enforcement of the new cost

1/ 100 kg of cotton X CFAF 120/kg - CFAF 12,000. 100 kg of sorghum xCFAF 85/kg - CFAF 8,500.

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recovery policies, these costs would be drastically reduced fromtheir present level of about CFAF 450 million to CFAF 200 million in1984 constant terms, a goal that is within Government's means.

G. Recurrent Costs and Impact on Government Finances

6.20 During project execution, Government's direct contribution would belimited to the salaries of civil servants. After project completion, peri-meter directors would be replaced by managers hired and paid by cooperatives.However, Government would have to retain and finance the costs of a nucleusextension network (one agent for 600 ha), the adaptive research program andthe operation of technical and support services at central and regionallevels. These incremental recurrent costs at project completion are estimatedat about CFAF 55 million at constant base prices (1984), in addition toONABA's non-incremental overhead costs, which are estimated at CFAF 200million at constant base prices. The total requirement of CFAF 255 millionfor Goverment financing of recurrent costs represents less than two thirds ofthe ONAHA's present budgetary requirements. ONAHA's cash flow, includingGovernment financing needs from its budget, is shown in Annex 6-5. Govern-ment's annual revenues, to be derived from that part of beneficiaries' incre-mental monetary income to be spent on taxable goods, are estimated at aboutCFAF 65 million at constant base prices. Government project-related cash flow(Annex 6-6). after taking into account elimination of subsidies on operatingand maintenance costs of irrigation (para 6.12), shows a deficit throughoutthe life of the project except for a few years. To eliminate this shortfall,a capital tax was envisaged, equivalent to 200 kg of paddy/ha/crop (or 50 kgper average irrigated holding of 0.25 ha). which would represent less than 6Zof output value. If such a tax were applied to the entire irrigated area, itwould provide enough funds for a positive cumulative project-related cashflow. However, the premature introduction of a capital tax could discouragefarmers and endanger the cooperative development process sought by theproject. Since monetary costs of production are estimated to represent about40% of gross value of production, a cautious approach is necessary. Conse-quently, it is proposed that a capital tax be introduced only if and when theprojected yields are actually achieved. Assurances were obtained at nego-tiations that ONAHA would carry out a study by December 31, 1988 in order toreview the extent to which farmers shall be able to contribute towards thecapital cost of irrigation works and would transmit the recommendations to theGovernment and to IDA for comments.

VII. ECONOMIC JUSTIFICATION AND RISKS

A. Project Benefits

1. Direct Benefits

7.01 The project would increase production of paddy in the Niger Rivervalley, and that of cotton, sorghum and onions in the ADM valley. Incrementalproduction of paddy would come primarily from 11 existing irrigated perimetersonce they are physically rehabilitated, thus regaining cultivable areas.improved technical packages, including animal-drawn equipment and new ferti-lizer formulae, would also be introduced. In the case of five perimeters in

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the ADM valley, the project would increase the cultivable area or postpone thedrying up of perimeters caused by siltation of the dams, and increase the cul-tivable area in the dry season. In addition to incremental production, directproject benefits include savings on operation and maintenance costs of pumpsby substituting electric pumps for diesel ones. Furthermore, time saved byintroducing threshing machines on rice perimeters is valued at the estimatedopportunity cost of- labor of CFAF 600/day and is added to the project bene-fits. Together with main crops, such by-products as rice straws and brans arealso taken into account in the direct project benefits.

2. Non-quantifiable Benefits

7.02 The project's institutional rehabilitation program would also havesubstantial benefits. These are not readily measurable but would have spill-over effects on the entire irrigation subsector in Niger. A reliable andsustainable system of irrigation operations would be ensured by increasedself-management by cooperatives and by clarifying and enforcing responsibili-ties of the parties involved (cooperatives and state agencies). This system,once it is proven to be workable and sustainable, would be a model for all theexisting and future perimeters and would help rationalize the use of irriga-tion investments. From the long-term sectoral point of view, the project'sindirect benefits through institutional reforms are far more important thanits direct, quantifiable benefits.

B. Economic Analysis

7.03 Rates of return are calculated according to the following majorassumptions:

(a) proje4t life of 20 years with no residual values;

(b) economic prices in 1983 constant terms, calculated using the Bank'scommodity price projections up to 1990 for rice, sorghum, cotton andfertilizers, and the observed average market price for onions;

(c) standard conversion factor of 0.85 is applied to local components ofproject costs and miscellaneous local costs;

(d) opportunity cost of labor of CFAF 600/man-day to value time saved byusing threshing machines at the rate of 80 man-days per machine peryear, and to cost labor contribution by beneficiaries for recon-structing field drains and reshaping field irrigation channels;

(e) the "without project" production level is assumed to remain at thelevel of PYO, except for the Kokomani and Namarigoungou perimetersand the ADM valley (para 6.02); and

(f) the "without project" costs are based on the maintenance of currentproduction levels, which requires replacement of existing pumps(every five years for diesel pumps and every ten years for electricpumps) and expenses for maintenance and operations.

7.04 Based on these assumptions and prices, economic costs and benefitswere calculated in five different ways, i.e., for: (a) 11 perimeters in the

- 47 -

Niger River valley to be physically rehabilitated, (b) 11 perimeters plus theNamarigoungou and Say perimeters, (c) five perimeters in the ADM valley,(d) five perimeters in the ADM valley excluding overhead costs, and (e) total.The details are presented in Working Paper 7 and in Annex 7, and ERR resultscan be summarized as follows:

Economic Rates of ReturnCX)

Share inEER Economic Costs

Niger River ValleyPhysically rehabilitated 11 perimeters 15 68Including Namarigoungou and Say 20 82

ADM ValleyFive perimeters 12 18Excluding overhead costs 18 (13)

Total 18 100

7.05 Sensitivity analysis was performed on the above five cases asfollows:

Sensitivity Analysis. )

Switching value at 10%% Change

Base Cost Benefits Cost +20%Case +20% -20% Benefits -20% Benefits Costs

Niger River ValleyPhys. rehab. 11 perimeters 15 12 11 8 -25 33Including Namarigoungou & Say 20 16 15 12 -39 64

ADM ValleyFive perimeters 12 9 8 6 -ll 12Excluding overhead costs 18 15 14 11 -39 64

Total 18 15 14 11 -36 56

- 48 -

Overali rates of return for the ADM perimeters as a whole are relatively lowwhen they include their share of overhead costs and some individual perimetersare of marginal economic viability. Their inclusion, however, can be justi-fied on the grounds that:

(a) EER excluding overhead costs would go up to about 18Z;

(b) these perimeters do not warrant a free-standing project itself;

(c) irrigation has an important drought proofing effect which is nottaken into account in the ERR; and

(d) better alternative investment opportunities are scarce in agricul-ture.

C. Risks

7.06 Given the available detailed engineering studies and experiencesacquired by ONAHA under the Namarigoungou project, the physical execution ofrehabilitation works would not pose a problem. One major foreseeable risk isrelated to maintenance and operations. The maintenance of pumping stations,which is vital to the success of the project, would be assured by a pumpsupplier. In order to keep maintenance costs to a minimum and at the sametime prevent poor maintenance, an annual review of maintenance contracts wouldbe introduced to check performance (para 3.08). Another serious risk would bethe cooperatives' failure to achieve self-management of perimeters, eitherbecause of technical inability on the part of cooperatives, or through finan-cial failure due to unpaid charges by cooperative members. To minimize theformer risk, the project would finance a variety of training programs, notonly for cooperatives, but also for those with advisory roles. The latterrisk would be reduced by establishing internal contracts specifying rights andobligations in the case of non-payment of charges. In addition, the fact thatthe project consists of independent perimeters is an advantage, since problemsin one perimeter would not necessarily affect the project as a whole.

7.07 Other possible risks are financial and managerial. One risk wouldbe failure by Government to provide a sufficient budgetary allocation toONAHA. This risk cannot be entirely ruled out but the amount at stake is lessthan ONAHA's present budgetary requirement and Government's project-relatedcash flow will be favorable. The risk related to ONAHA's management capa-bility would be minimized by financing a training program for its staff andtechnical assistance, and by Government's strong commitment to this project.

VIII. AGREEMENTS REACHED AND RECOMMENDATIONS

8.01 During negotiations, assurances were obtained from Govern ent on thefollowing principal points:

(a) ONAHA and NIGELEC would conclude an agreement satisfactory toIDA for the implementation of the electrification of thepumping stations not later than December 31, 1985 (para 3.07);

- 49 -

(b) farmers would be given preferential rates of electricity forirrigation (para 3.07);

(c) ONAEA would ensure that arrangements satisfactory to IDA aremade to assist cooperatives to select qualified contractors forthe maintenance of pumps, and review annually the adequacy ofsuch maintenance by such contractors, and take actions toremedy any maintenance deficiencies disclosed by the annualreview (para 3.08);

(d) ONAHA would not start rehabilitation works on a given perimeteruntil it has concluded a contract, satisfactory to IDA, withthe cooperative concerned, and this cooperative has approvedinternal statutes consistent with the model satisfactory to IDA(para 3.16);

(e) ONAHA and INRAN would conclude an agreement satisfactory to IDAfor the implementation of the adaptive research and seedmultiplication programs not later than December 31, 1985(para 3.18);

(f) ONAHA would set up a new unit for coordination, monitoring,evaluation, financial planning, budgeting and budgetary controlto be staffed and fully operational not later than December 31,1985, and would appoint staff with satisfactory qualificationsand experience to staff the unit (para 3.19);

(g) the terms of reference, qualifications and experience of allexpatriate staff and consultants financed by IDA would beacceptable to IDA (para 4.10);

Ch) ONAHA would put order in its accounts by September 30, 1986,the date by which these accounts must be certifiable by inde-pendent auditors (para 4.14);

(i) ONAHA accounts would be audited annually by independent audi-tors acceptable to IDA; audited financial statements andreports, of such scope and in such detail as IDA may reasonablyrequest, would be submitted to IDA within four months after theend of each fiscal year; the auditor's report would include astatement on the adequacy of the accounting system and internalcontrols, and on whether or not IDA funds have been used fortheir intended purposes; the report would also confirm thatstatements of expenditures, submitted as justification fordisbursement under categories (l)(b) and (3), correctly reflectdetailed records kept by ONAHA (para 4.15);

(j) ONAHA will establish and maintain separate project-relatedaccounts in accordance with sound and accepted accountingprinciples and practices, and complete the design andinstallation of a cost accounting system and start itsoperations not later than December 31, 1985 (para 4.16);

(k) cooperatives' accounts would be audited by an independentauditor every other year starting from fiscal year 1985/86 and

- so -

audit reports would be submitted to IDA within four months ofthe end of each two year period (para 4.17);

(1) ONAHA would submit to IDA bi-annual progress reports, under theformat to be agreed within two months after the end of eachsemester, and would prepare a project completion report notlater than six months after the credit closing date(para 4.18);

(m) cooperatives would be required to charge an interest rate notless than 12% on the seasonal credits they extend to theirmembers from the seasonal credit fund (para 5.08);

(n) all medium-term credits would be managed by cooperatives.Their members would put a minimum 10% downpayment and repay therest at an annual interest rate of 12% to cooperatives.Cooperatives would in turn repay to Government at an annualinterest rate of 1.0% (para 5.08);

(o) farmers would be given the option of selling to RINI or to theprivate sector any surplus of marketable paddy above what theyowe to their cooperatives (para 5.09);

(p) Government, through its relevant agency, would be required tobuy at the official price all quantities of paddy offered to itby farmers (para 5.09);

(q) cooperatives would bear the full costs of operation and main-tenance, including provisions for the renewal of pumpingequipment (para 6.12);

(r) ONAHA would not undertake activities for which adequate financ-ing is not secured and would charge the full cost for servicesit renders (para 6.19);

(s) Government would adequately and timely finance ONAHA's overheadexpenditures for services performed on Government's behalf, andwhich are not covered by external sources, by transferring toONAHA its quarterly contribution, at the beginning of thatquarter (para 6.19); and

(t) ONAHA would carry out a study by December 31, 1988, in order toreview the extent to which farmers shall be able to contributetowards the capital cost of irrigation works and would transmitthe recommendations to the Government and to IDA for comments(para 6.20).

8.02 Conditions of effectiveness of the IDA credit would be:

(a) Government would prepare a plan for reconstructing coopera-tives' debts including recommendations, if necessary, through aGovernment-appointed committee, for debt rescheduling,cancellation, or expulsion of non-payers, and would haveachieved progress satisfactory to IDA in the implementation ofsuch plan (para 3.16);

- 51 -

(b) Government would cause RINI to sign- a management contract forRINI satisfactory to IDA with a qualified firm (para 3.20);

(c) ONAHA would employ a financial manager, a chief accountant andthree regional accountants with qualifications satisfactory toIDA (paras 4.14 and 5.07);

(d) Government would make satisfactory arrangements for the assump-tion or settlement of ONARA's accumulated debts to CNCA(para 6.19);

(e) Government would pay off ONARA's overdues to its supplier(para 6.19); and

(f) the effectiveness of the CCCE loan and KfW grant.

8.03 A condition of disbursement for agricultural equipment on medium-term credit and for the seasonal credit fund would be that Government makescontractual arrangements with cooperatives satisfactory to IDA for seasonaland medium-term credit (para 5.08).

8.04 With the above assurances and conditions, the proposed projectconstitutes a suitable basis for an IDA development credit equivalent to SDR9.6 million (US$9.3 million) to the Republic of Niger.

WAPACMay 1985

- 52 -

Annex 3-1

NIGERIRRIGATION REHABILITATION PROJECT

EVOLUTION OF CULTIVABLE AREAS(ha)

PYO Full development (PY3)Wet Dry Wet Dry

Season Season Season Season

Daikena 105 / 100 / 108 108Kokomani 43 - 43 - 43 43Sona 120 112 145 145Lossa 118 110 173 173Kirkissoye 94 86 100 100Saadia 105 103 105 105Saga 338 301 380 380Libore 204 170 245 245N'dounga I 214 176 258 258N'dounga II 216 176 272 272Seiberi 315 285 357 357Namarigoungou 1,350 1,350 1,350 1,350Say 300 300 300 300

Sub-total Niger valley 3,522 3,312 3,836 3,836

Moulela 58 10 65 5 b/Kawara 50 0 50 0bGuidan-Magagi 120 46 120 33 -Founfafi 19 0 27 0Ibohamane 590 0 590 57

Sub-total ADM valley 837 56 852 9'

Total 4 359 3.368 4 6 88 3931

Due to breakdown of the pumps, there is no irrigation at themoment.

b/ Availability of irrigated lands will decrease as a result ofsiltation in the reservoirs.

WAPACMay 1985

- 53 - Annex 3-2

NIGERIRRIGATION REHABILITATION PROJECT

INPUT AND AGRICULTURAL EQUIPMENT REQUIREMENTS

PYO PY1. PY2 PY3 PY4 PY51984/85 1985/86 1986/87 1987/88 1988/89 1989/90

I. INPUTSA. Rice

15-15-15 (400 kgJha):t 690 a- 2,760 2,970 3,230 3,230 3,230urea (150 kg/ha):t 1,380 - 1,040 1,110 1,210 1,210 1,210

pesticides

- furadan:t 0 6 I 15 15 15- thioral:'000 packages 0 19 21 23 23 23seeds (40 kg/ha):t 270 270 300 320 320 320

alternative fert. formula -/- urea (200 kg/ha):t - 1,380 1,480 1,620 1,620 1,620- DAP (100 kg/ha):t - 690 740 810 810 810

B. Cotton15-15-15 (200 kg/ha):t 84 84 84 85 85 85urea (50 kg/hb:t 21 21 21 22 22 22

insecticides -- mixture of cypermethrine 15 g - 6 6 6 6 6

and Profenofos 150 (14 1/ha)

alternative fert. formula -E- urea (100 kg/ha):t - 42 42 43 43 43- DAP (50 kg/ha):t - 21 21 22 22 22- potassium chloride (50 kg/ba):t - 21 21 22 22 22

C. Sorghum15-15-15 (150 kglha):t 63 63 63 64 64 64urea (j0 kg/ha):t 21 21 21 22 22 22

alternative fert. formula C/- urea (100 kg/ha):t - 42 42 43 43 43- TSP (50 kg/ha):t - 21 21 21 22 22

II. EeQMPMe/0Animal traction units - O 400 400 400 400 400Threshing machines 0 300 300 300 300 300Blacksmith equipment 0 10 10 10 0 0

-a The without-project dose is 100 kg/ha of 15-15-15. - Insecticide application would be changed from thebI The without-project dose is 200 kg/ha of urea. currently used formula (2 applications of 2.8 1/ha- Modified fertilizer formula if compound fertili- of Peprothion and 5 applications of 2.6 1/ha of

zer (15-15-15) is not available cheaply from Decis) to more active formula (7 applications ofNigeria and Niger has to import fertilizers from mixture of cypermethrine 15g and Profenofos 150the international markets. / at 2 I/ha).

- Including a pair of oxen, a multi-purpose bar,a plow, a cultivator and an oxen cart.

UAPAC

May 1985

- 54 -

Annex 3-3

NIGERIRRIGAJION REHABIUTATION PROJECT

Conn Schedulb

. 9ll 195 1M16 1S9|7

1 2 3 4 - 2 3 4 1 2 3 4 4 2 3 4

kt-_R___C wdmnsfim fec149 196 X966 v 4A2. Sedln 0d Conts h _ _ _ _ _ _

& Puno T A _D I

- OD Mor,d Eu m A - _ _ = __

_ *- M1 OA Er ngT A _

4. EWCoC _ __=__M_

6. R oh bond CdkTw Dom A _ 6 _ - a

cOaSICN Of FACEC ACONT_ _7. Pw T A mfElArw

8. ReoondI1tkxfgef Noncolgaungou Eiqutmnt- - -9. RdaUao o dmLA

- PsnslrwNordh d Nommy

- Pedmets. South Of MoM and ADM Raglan _

7 =7endrA=AwaidD = DdlvueI = kTopomertallon

Ucdd an -2

WAPACMay 1985

- 55 -

Annex 4-1Page 1 of 7

NIGER

IRRIGATION REHABILITATION PROJECT

DRAFT TERMS OF REFERENCE FOR TECHNICAL ASSISTANCE

A. Chief Engineer

1. The expert will be Chief of the Force Account Unit forConstruction and, as such, should:

(a) co-ordinate the various construction activities;

(b) review designs for the construction of irrigation anddrainage networks and hydraulic structures;

'c) organize and superintend works done by force account;

vd) supervise the construction of pumping stations (whichwill be done by contractor); and

(e) supervise the preparation of surveys, detailed estimatesof quantities for each type of work, basic production,cost data, etc.

2. The expert should have at least five years experience in thestudy and execution of irrigation schemes, preferably inAfrica. He will have a degree in Rural Engineering/or RuralWorks/or Public Works, or in Hydraulic Engineering.

B. The Chief of the Administrative and Accounting Services at theForce Account Unit

1. The expert will be responsible for all the financial andadministrative matters of the Project Unit for construction,specifically to:

(a) set up accounting procedures for force account works,particularly for maintenance works, to determine fullunit costs of such works;

(b) establish and maintain accounts related to force accountto be consolidated into project-related accounts;

(c) monitor unit costs for civil works done on force accountto be agreed annually with IDA; and

(d) handle all the personnel and administrative matters forthe Project Unit for construction.

- 56 -

Annex 4-1Page 2 of 7

2. The expert should have a degree in accounting, with at leastfive years experience in the financial administration ofimportant development projects. He should likewise be wellversed in administrative questions (personnel management andgeneral administration) relative to such projects.

C. Works Supervisor at the Force Account Unit

1. Assisted by two locally recruited supervisors, the expert willbe responsible for the works to be implemented by forceaccount, as well as the supervision of works implemented bycontractor, i.e.:

(a) the construction/rehabilitation of earthworks (dikes,irrigation and drainage canals, field roads);

(b) the execution of on-farm works (land clearing, landlevelling, construction of bunds, and digging irrigationand drainage ditches);

(c) the construction/rehabilitation of concrete (or masonry)works in the irrigation and drainage networks;

(d) execution of civil engineering works done by contractorfor the pumping stations, and the ADM barrages; and

(e) training of two locally recruited supervisors to enablethem to supervise maintenance brigades once therehabilitation work is over.

2. The works supervisor should, in particular, be qualified inthe execution of irrigation works by force account, and shouldbe especially experienced in the use of heavy earthmovingequipment and other heavy equipment. He should have at leastten years experience in the execution of this type of works,at least five years of which should be in the execution ofworks by force account.

D. Agriculturist/Rice Expert

1. The expert will assist the Chief of the AgriculturalDevelopment Division of ONAHA to ensure the good liaisonbetween Research and Extension. Specifically, he will:

(a) monitor activities subcontracted to INRAN such asfertilizer trials, screening new rice varieties andproduction of foundation seeds;

- 57 -

Annex 4-1Page 3 of 7

(b) assist ONAEA's regional offices in testing andintroducing the new agronomic packages proposed by INRAN;

(c) monitor the quality of cooperatives' and contact farmers'seed multiplication;

(d) assist ONAHA's regional oftices in training andsupervising extension staff; and

(e) train his deputy in technical matters.

2. The expert should have at least five years experience in hisspecialty, preferably in irrigation projects in SahelianAfrica, and have a degree in agronomy.

E. Head of Financial Planning, Budgeting and Budgetary Control Unit

1. Budgetary Control Unit. Under the direction of ONAHA'sDirector General, the expert will have primaryresponsibilities for:

Ca) preparing annual work programs of ONAHA, and with thehelp of the Administrative and Financial Director,corresponding ONAHA budgets;

(b) monitoring activities against budgets and objectives inwork programs and controlling budgets;

Cc) designing and installing a cost-accounting system;

Cd) analyzing and synthesizing cost data provided by theAdministrative and Financial Department for the use ofONAHA management;

(e) long-term planning of ONAHA's activities, includingfinancial and personnel needs, cash flow projection andorganization; and

(f) training in technical and managerial matters of all staffunder his supervision, especially his deputy who wouldtake over his post after three years.

2. The expert should have at least five years professionalexperience, some of which preferably in the area of budgetingand management, and a university degree (or its equivalent) ormembership in a recognized professional body evidencing formalknowledge of modern accounting theory and practice inaccordance with generally accepted international standards.

- 58 -

Annex 4-1Page 4 of 7

F. Chief of the Monitoring and Evaluation Unit

1. Under the direction of ONAHA's Director General, the expertwill have general responsibilities for providing ONAHAmanagement with data and information on all the irrigationperimeters under supervision of ONAHA. Specifically, he wouldbe responsible for:

(a) designing and implementing a system of keeping productionrecords, which would include yields, areas planted,quantities harvested, seasonal inputs used and use ofagricultural equipment;

Cb) monitoring management of irrigatior. by cooperatives,parameters of which would include unit operating costs(energy, salaries, repairs, etc.) for irrigation,repayment record for water charges by members, respect ofcrop calendars, marketing of output, sitw:tion ofaccounts for renewals, etc.;

gc) designing and implementing a farming system survey whichcovers total activities of farmers, including rainfedfarming, livestock, vegetable production and managementactivities;

(d) centralizing and analyzing information from organizationsoutside of ONAHA (INRAN and Directorate of Literacy) onapplied research and functional literacy programs;

(e) carrying out a study by end 1988 to determine if acapital tax should be levied; and

(f) training and supervising the Nigerien deputy to enablehim to take over the unit from Project Year 4.

2. The expert should have at least five years of professionalexperience in project evaluation techniques, includingsampling techniques, data collection with rural people andstatistical analysis; experience with data processing andanalysis using computers is essential, and he should have auniversity degree (or its equivalent) in agriculturaleconomics or a related discipline.

G. Director of Administrative and Financial Department of ONAHA

1. Under the direction of ONAHA General Manager, the expert wouldhave primary responsibilities for:

(a) setting up detailed accounts and an ONAHA accountconsolidating three regional accounts;

- 59 -

Annex 4-1Page 5 of 7

(b) establishing and maintaining separate project-relatedaccounts;

(c) designing and implementing sound internal and managementcontrols, particularly with regard to equipmentmaintenance, inventory control and vehicle operatingcosts;

(d) following up auditor's recommendations;

(e) preparing withdrawal applications from the IDA creditaccount and maintaining disbursement records;

(f) processing of tender documents and supervision of allprocurement procedures;

(g) preparing annual financial statements;

(h) training in technical and managerial matters of all staffunder his supervision; and

(i) monitoring movements of personnel and handle all thepersonnel matters.

2. The qualifications and experience of the Administrative andFinancial Director would be:

(a) a university degree (or its equivalent) or membership ina recognized professional lobby evidencing formalknowledge of modern accounting theory and practice inaccordance with generally accepted internationalstandards;

(b) at least five years' professional experience, preferablyin a country using the OCAM or French accounting plans,and some of which in a commercial enterprise, or a largepCU4ic corporation; and

(c) experience with data processing on computers isnecessary.

H. Rice Processing Expert

1. Under the direction of RINI General Manager, the expert wouldhave primary responsibilities for:

(a) establishing a quality control system on paddy sold toRINI and supervising implementation of the system;

- 60 -

Annex 4-1Page 6 of 7

(b) improving efficiencies of existing facilities at RINI'sthree rice mills;

(c) providing technical advice to improve overall operationsof RINI, including bagging and storage; and

(d) training in technical and managerial matters of Nigerienstaff under his supervision.

2. The expert should have at-least five years of professionalexperience at managerial levels in operations of riceprocessing mills.

Draft Terms of Reference of Selected Short-Term Consultants

I. Design Engineer (three months each for PY1 and PY2)

1. The consultant will work under the Chief Engineer of the ForceAccount Unit, specifically to:

(a) alter design, if necessary, of rehabilitation work; and

(b) help carry out a study concerning the availability ofirrigation water during the period of low river level onthe Daikena, Kokomani, Sona, Lossa and Saadia perimeters,and recommend solutions.

J. Drainage Consultant (three months)

1. The consultant will work under the direction of the GeneralNanager of ONARA. to monitor alkalinity and salinity problemscaused by drainage deficiency, particularly on theNamarigoungou and Seiberi perimeters.

Detailed Curriculum Vitae

Detailed curriculum vitae will be provided for each of theexpatriates, which will give, among others, complete informationon:

(a) their degrees and professional qualifications;

(b) their experience in the areas required, with detailsabout the projects (or parts of projects) for which theyhave been responsible;

(c) evaluations by the administrative authorities for whomthese projects were executed;

- 61 -

Annex 4-1Page 7 of 7

(d) good knowledge of French language;

(e) etc...

Special Responsibility of the Expatriates Recruited to Train theirNigerien Counterparts

The expatriates should devote a considerable portion of theiractivities to training the Nigerien counterparts under theirjurisdiction. This very important aspect of the expatriates' roleshould not be neglected. Experience in training will be an importantselection criterion.

WAPACMay 1985

NIGERIMRRIGATION REISXYTA TUION PROJECT

ESTIMATED DISBURSEHENT PROPILE

IDA Fn andQarters Endi By Quarter Cmu lative

1986 1 1.8 1,8 */III 0.2 2.0IV 0.2 2.2

II 0.3 2,8 -T r_III 0.4 3.2 - -_IV 04 3.6

1988 I 0,5 4.1 I = 1 1 -=II 0.5 4.6 F1

III O.S 5.1 I'mmm=tIV 0.5 I.6 _ _ _ _ =- _

1989 1 0.4 6.0 _

III 0.3 6.7 j__ ____ - |IV 0.3 7.0

1990 I 0.3 7.3II 0.3 7.6 _1II 0.3 7.9

IV 0.2 8.1

1991 1 0.2 8.3 70 _II 0.2 8.5 11t ttlI titI t[tI, I i I f I 1 I T I IIII 0.2 8.7 it" 199 I,, _90

IV 0.2 8.9

1992 1 0.2 9.1 ol at roII 0, 2 9o3.1 stesal zgI p.f II.

Assumes credit would be effective in October 1985. Includesrefinancing of PPF (US$1,ooo 000), Initial deposits to specialaccounts (US$800,000). fie Aggregate African Regional Profile forirrigation projects wa so mewhat modified to take into account theinitial disbursement to the special account, the fact that physicalrehabilitation will take place in the first two years only and thefavorable disbursement experience in the N amrigoungou project.

WAUAC 8May 1985

-63 - Au3z6-1

uzm

ZVOLV Or OAM, YID D APRODUCT=:ICE, COM=, SOwiN AMfl CI

no nL m n FM ns5lW/S5 23/a86 196/8i7 1938 l9O/7 29"1"

I. U!ncing _ d _Iuuug & SaY

Mota' are () 16,750 6,750 b 7,1S0 7,700 7,700 7,700*veag yid (kglhe) 3,200 3 350 - 3,01.0 3,330 3,600 3,330

Pnubctro (t) 21,000 20,600 21,700 25,00 27,9 29,50

otal a () ( 6,750 6,750 6,750 6,750 6,7 6,750erae ywId k/a) 3,200 3 - 2,920 2,86 2,790 2,700

Proction (t) 21,000 2o,400 20,000 19,300 28,0 28,3D0Incrinal prodction t) 0 200 1,700 6,5oo 9,200 11.200

Ew1udfng Nmriemu & Sg

Totad are (a) - 3,4s0 3,450 3,350 h 4,400 4,.00 4,400Avera yeld (kg/ha) 2,600 2,400 i 2,520 - 3,090 3,50 3,3Pratim (d) 9,oo0 8,s5 9,700 13,600 25,500 L6,800

without DxoJ-ot a/

Woth ar ni ' 3,450 3.450 31450 3,450 3450 3450AV-rP yield (k/a) 2,600 2,600 2,600 2,600 2,600 2,600Pwa_tio. (t) 9,000a 9s,0 9,000 9,000 9,000 9,000

Inervdatal proactiom (t) 0 - S00 700 4,660 6,500 7,300

II. 013

Totda area (ha) 420 420 420 430 430 4330Averg yIld (kg/h1) 2,370 2,570 2,570 2,700 2,780 2,780Pro-- ctim it) 1,030 1,08(. 1,080 1,170 1,190 1,190

without projeCtTota area (ha) 420 420 420 120 420 380AV-qg yield (kg/ha) 2,570 2,570 2,570 2,570 2,570 2,570Mdaction (t) 1,080 1,080 1,030 1,030 1,050 930

Incro 1ital, prodetio 0 o 90 gIO 220

M. S

Total area (ba) 420 420 420 4130 430 43Averp yield (kg/ha) 1,101 1,80 1,. 1,910 2,010 2,010Prodbctia (t) 770 770 770 30 80o 88o

without projectTotad are (be) 420 420 420 420 410 380Aver, yield (kg/bh) 1,840 1,810 1,840 1,40 1,8U0 1,40Produceio () 770 770 770 770 755 7I0

Incrmcsl productin te) 0 0 0 60 12in 20

o. "UWth proect

Totad are (ha) 56 56 47 95 74 57Ave-e yld Ct/ha) 30 30 30 30 30 30Pmductie (t) 1,680 1,680 1,410 2,350 2,220 1,720

Without projectTotaldre (ba) 56 36 47 33 29 20Awerag yield (kg/ha) 30 30 30 30 30 30Poductie () 1,680 1,680 1,410 1,10 870 600

Zncau1tal productieo (c) 0 0 0 1,710 1,350 1,1.10

Total cultivated area of vet and dry seasona.

b/ Reflectillg lOX losses in production on areaa under the pbyslcalrehabilitation.

WAPACmay 1985

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-n 9551 4i - cnu arn emm a ni omanmu Aw

On m nI cm nu cm cm mZ m m risgi jaim li1113um w

an isa an at a an a an urn am ua

06M Om 06 on - - 0 mm oTam aus am-m -1111 MIT NMI -ol am1 -ir ml 0l fl auiLS mi

Intll In In InII I= OR 11 InK OM a uwusum V enuiu

KIZ SW Zia UR1 UKs lin AM2 UIZ inc mima uisme misa3i

Mtt a Mt 11111 Ut 191 Mt 191 Mt I maca - a 11MIC31IJEISMi lk .me mu. mm ws mat out 55* U S lcmw

lIE =SU1K 6111W NEll am1 MN0 mu1 mu11 NUW inumnamOmi uo awl Nui mu mu15 noa us us -a=1s11ANNu - - - --N n m Om -am mlaOM MaUT am =a us a a a a a w M1

ur aU W a_ mas ua a l s a.mm ~ ~ ~ ~ ~ " n mxu * ii- am a c m a

cutI wini gin CnII Ml? CUT 9III cut1 will Mu111rn1

us usN us as a s aw umulil*am a a rn a aI un a_s u

us mit .11 eI ems on an t1 mu a amino

a a ama a a= am a Ci 1 S _s

mu I;I mumi; a mulima fmmnauic mm usa s m u must wn mca mam Wm IMur

low own am a a am a a m usc - na a a a a a a a mm1=1 g ammmis s mSO a nu s m u anu _ ist

ma am a2n mm an ur a anE US SU

DAn a IMl sm anm s

nal n nwn nwn nDll sKIJtsu

mini swi aII

nsz~~~~~ 4j9 -En ez ezl a"ges

- 65 -hAx 6-3

rrn

RmE CROP maDr

uInmT PROT HnH ProoEl1 111 BE FU FIST WE SET UK) 111 VW S

Kr NV Kr m vi at NET My off NVMEK KME SUM EKE SONM EE ES E mmMEaM K -

emve or Fmana

PAS Y1EU 2450 275 2450 2753 V775 326 3160 3563 3716 -YASE AT U.4CFAF1J 1963 221100 196 21100 2110 253 2490 231460 29746 =60oTm uc 2203 22n. 22nu0 ao-3 250366 32 35321 11- 3 VIAE N ICFAF 1KM6 2200 20 26 23D 300 03 3666 32500 35360 35603TOTAL am NEf 2136 2Ul1 218910 243100 266 110 63 27 31346 33 3511

101M COlSTS

COLECTIVE 0NW35in lU 9s 4f9 5766 woe Urn 1s11 ma Jma 1U2 11m

ATla miasin wow a 40003 4a0 330 336 336 334 334De 3RAIIAUE IF IIRAT E 3 0 0 0 11500lisp 11506 1n H301 11m 1156

. SOM m ERTEIEKA. C) ian isB 16 iw 1s8i Is 41K 4134 412 4as3EPECrTIU lElhHNO t. 3) 215 215 212 215 363 363 363 363 33 363OTI PEIATII COSTS 0 0 0 2000 e 0 20 263 zw 20FINIEILOIIRS 0 3 0 0 2179 2179 2179 2179 217m 21m7TMTAL 5139 51390 51 51555 62246 6224 64752 64152 64112 602

IIUTIIIL a69FERTILIR & PESnCIIES EV 26900 2W00 31000 31000 3033 315D 33 3353 35 aLAW PEATIn F) 1200 12600 13000 IB060 IBM0 I3060 300 1006 16 IB0TIEESUI 11C316E 0 0 ° 0 a macawo gme g s30 6 36 gmT ET PAIDDY IFKi 2453 2m 2450 275 2775 3260 3106 356 3 4001FIMUCIAL CINMA O 0 0 0 2312 2312 2312 2312 2312 2312TEArlL 41350 41650 51450 51750 6962 70650 6555 70350 705 701653

TOTAL MuImCu cETs 52740 934 103645 103345 131 73 135 1347m 135102 ISi 135602

U lT 1EW 126240 5066 11s5s i79155 16W= 154911 144531 171293 197178 220m(RATIO MZ7TH/ITIUIT PROT ) 0.92 .93 0.92 1.03 1.14 1.19 E5 1.47

1174A INPUT 160 160 160 160 140 140 14 1 U 10 I1

IIET IOfEIU. KY1 739 no 725 173 010 1107 1032 1274 1461 157[RAIO MITHIMITHOUT OET) 0.93 1.05 1.18 1.31 2.36 1.79 1.a

Al MIllET PROJECT: SFfHIFKSW MIIT 0 COSTS FOR fIES SEENS; NO ISTICIES;FERTIUZER z2Oi IF lA AN HE OF W AT CFAF120 MD AT CFAFII/I6 RESPETVELY M 51111R PER11 CFW410t FER 20eH. ITH PROJECT: CFWfU5/k94U/lMHA MIlK COSTS FEt 1PO SENL CFfF6B0IK1;FERTILIZER 20hlO IF M IEA m 0 F M HP F- 2HA AT CFIF1201 AN CFFI40/KS RESPECTIlELY MITR S1111.DS.

32 ITNIUT PROJECT IU3116 MIKIEAC MST FOR PERIEIER .ITH PRECT D1IC EEORET PAIMS KINEIDEEIU. SALE? FOR P1 AnTEITS, mu IEHECiATI0U F PulL

C SITUPRI PRJECT PA FIRST m SCO BY rnITH PROJEC OLT EL R COW. A WMIT , IITH PROJECT AT FULLEVELGPNET FOR COP. rAIR IFUIS ElISIEION AENT) m ACCIUTAT.

021 MIlIE PRJECT OILY FOR NOtLETTE.UIITN PROJECT FERUWOICCME AN IILET1E.El MITHOUT PROECT: 2e1 fIIEl mU A ee OF DV AT CFtFI1/ Mu CFAFI'40M WITN SUS13T PEt OR Ol OF CFAF4I0

mu0 FESTICIIS. IITHP FPRECT 20191 OF IEA mu 1SM1 FI AT CFAFI2A1 AM CFAFI40/KUMITIIEIT 911513.

F) LAI PEMARATIE IS WIIE it AINIlI-TRACTIOL N1HER COSTS MIIN PROJECT REFECTS FIL COSTS OF E IU NITT111ff 53513.61 BME PHSICKL IEN LITATII AN BEFORE 11IH VE IN RICE CULTIVRTII Dr U SSAY N I INTS.WI WM. PNSICM.L REBIIAIITA7E0.

P.L) IT. IS SStD I11 BON CASES IVITHOUT 11 ITl PROWECT) THAT FERTILIZERS FRIill NIIIRIA AKE IT AVAIIALE MI E,THOEEFUIE N16E HAS m I1PDRT FEE DITERITIEAL LIlETS. TIE IE FERTILIZER FUMED lIVE ANRIIIATELY SAWE

TRMIENTS AS TIE OLD ONB lISlE COe FERTILIZER 115-15-15). RISIDY PER NA IS CIM TED TO K ElIL UTHE PRESENT AUSOLUE A_T PER NA; 1DE (60-50)12602 0; 15-15-15 166-4 11001410; TOTAL 4100

WAPACMay 1985

- 66 -

Abes 6-4

As of Saet p ar usc19 aou ihs se

1980 196 192 193 1984-----wESel ------- Forecst

Operatin revenme 76.2 226.1 345.2 23.8 8.0Opeting casts and Deprec. no.5 606.9 807.8 595.8 437.0

Operatin Incas (loss) (243.3) (380.8) (462.6) (374.8) (253.0)- Finacial dchrgs 0.0 20.2 90.9 9f.0 100.0* Operating subsidiss 250.0 325.0 259.1 274.0 250.0-noet Income (Cls) 5.7 (76.0) 294.4 (1U2.0) (103.0)

WIIIDS SrATr IXM1. S5art. of fUnds

Intenua cah Lw bi 51.4 (46.0) (195.1) (106.0) (93.0)basemet ret er 250.1 - 168.4lang-ern borrovinig di - 74.1. 29.7Capital rant £1 - 75-0 - 40.7 -

Total - S5orce 376.5 30.1 15.7 (1.0) (93.0)

GaIative 376.5 406.6 422.3 318.3 225.3

2. blctn of NundeC pitol expindinreW 524.2 125.7 f/ 238.8 /Vain capital increase or

(decree) (147.7) (110.3) (252.8) (133.7) (122.7)tedsptioa of loag-te debt - 14.7 29.7 29.7 29.7

Total - Appliceatis 376.5 30.1 15.7 (106.0) (93.0)

Caulative vatting capitalincreas or (decrae) hl (167.7) (258.0) (510.8) (646.5) (767.2)

LUN Q E qCurrnt sets 213.5 689.5 1,230.5 1,530.5 1,630.5Les current liabilities I/ (361.2) (947.5) (1.741.3) (2.175.0) (2.397.7)

(167.7) (258.0) (510.8) (664.5) (767.2)

aet fixed aets 478.5 662.1 j/ 4S&.1 206.1 216.1

Total asats 330.8 186.1 (56.7) (360.4) (553.1)

Lang-ten debt kf - 59.4 59.4 29.7 -Inmestnent grant 1/ 250.1 162.3 218.1 148.4 96.5Capital great 1/ - 75.0 52.7 30.4 8.1 -Retained earniiga (losses) 5.7 C 70.3) ( 364.6) ( 5166.6) ( 649.6)

Penenent funds (or shortage) 330.8 134.1 (56.7) (360.4) (553.1)

a/ Unaudited, except 1981 accomts. the 1982 and 1983 accouncs will be audited duringcalendar year 1980.

D/ Net incoe (loss) plus depreciation.

i lade in kind by Covernat (office buildings and secoodand site equipent In 1980;new tractors in 1982).

d/ Loan of CFAF 103.8 millin f-,om CEA at 10.-% during 3.5 year to buy 10 trucks forlonni I project.

e/ From Goverament.

ff CFAF 74.1 million plus 52.6 aillion.

ji CFAF 29.7 million plus 209.1 million.

h/ Financed by ClNA overdraft.

Li Of which ClNC overdraft Is - follows (in CFAF million): 1980 - 139.21981 - 225.01982 - 558.61983 - 627.01984 - 750.0

jI The trucks bought for the Koni I project are recorded in a pecial acCount:"Irrigated perinetersprojsects and operations". CFAF 442.1 million - 382.3 (C0Mflied aasets) plus 59.8 (trucks).

kI 1981 - 74.1 - 14.7 - 59.41962 - 59.4 * 29.7 - 29.7 - 59.41983 - 59.4 - 29.7 - 29.71984 - 29.7 - 29.7 - 0.In fact, no repayment has been made so far to OiUA (1984).

I Amortized according to the OCAI accountIng sytem. For exmmple. the Invetsent Grantin 1982 is as follos: 142.3 (frou 1981) - 92.6 (1982 amortization) * 168.4(additional investment grant) - 218.1.

JAPA6CliaV 1985

- 67 -

Annex 6-5

NIGERIRRIGATION REHABILITATION PROJECT

PROJECTED INCOME STATEENT OF ONARA(ClAF million, current values until PY5,

constant thereafter)

1993 1994 1985 PY1 Pm2 P13 PY4 PY5 "6-20IESTIITEID) IPRWECTED)

REVIEIU

STU7IEIE SIEINEYS 29 40 17 la 19 20 21 23 24LI PREPARATIO BY TRACTORS 33 23 19 27 20 13 9 5 0EIPNEII VBEHICIES RENTAL 204 104 61 65 69 73 77 92 87INRASIRUCTIIE rAINTEINCE 123 136 145 145PUtSIAITENIII N 7 9 17 9 0 0 0 00TIERS 30 7 4 4 5 5 5 5 6TOTAL REVEIjES 305 lIB t1O 131 122 239 2U 260 262

EIl

IWTERIAILSAOLIE AND LRICANT 59 30 32 28 24 62 60 59 70ELECTRICITY 6 9 10 11 11 12 13 13 16SPARE PUTS 45 31 2S 26 24 35 37 39 44OTERS 15 7 7 10 10 10 10 10 20

TPANPOtT 17 25 20 21 22 24 25 27 29SERVICES Anl IAR1ESTELEPIE 9 7 8 .8 9 10 10 11 13RENT 11 10 10 ti 11 12 13 13 14NAIIEN ACENID REPAIR 27 19 21 20 18 52 55 57 63INSWAICES 12 7 5 5 6 10 11 11 12OTHERS 19 1 1 0 0 0 0 0 0

PERSoSALARIES 0N SAPPLMEJNTS AUXILIARY 165 111 go 90 71 133 129 131 173SAtMIS AND SUPPLEIENTS CIVIL SEVT 47 20 113 120 127 135 143 151 160SOCIAL SEWRITY & OTERCHRSS 49 30 40 40 40 54 54 56 67

TAXES MD DUTIES 1 2 1 1 2 2 4 4 5FINANCIAL CHAES 149 200 250 0 0 0 0 0 0TOTAL EXPESES 631 509 634 351 375 551 564 592 6

NET PROFIT (10l FORE DEPRECIATION -326 -328 -524 -250 -253 -312 -316 -322 -424

OVENNENT SUSIDY 274 200 200 212 225 238 252 268 342LOCAL SARIES (OV IT) Al 103 109 116 123 130 138 146

BALANCE FORE DEPRECIATIN -52 -129 -221 71 8 49 66 83 64

DEPRECIATION 65 30 20 20 20 64 64 64

BlALA1E AFTER DEPRECIATIN -117 -151 -241 51 68 -15 2 19 0

SOURCE: A AUDIT 1992183 AND WN BIDETS 193184 AND 141/85

A) CIVIL SMRUITS SLRIES FORNERLY PAIED DIRECTLY BY FOCTIOS PtILIIES BUT CRE TO MM AFTER 1985.

WAPACmay 1985

NICERIRRIGATION REHABILITATION PROJECT

GOVERNMENT PROJECT RELATED CASH FLOW(CFAF million, current to PY7, constant thereafter)

PYO PYI PY2 PY3 PY4 PYS PY6 PY7 PYs PY9 PYIO PY11-20 PY21-30 PY31t

A. Sources/InflowTotal external sources 602 3,710 3,228 644 486 448 - - - - - -

Agricultural credit repayments - 25 82 141 199 259 237 179 121 63 Indirect taxes on farmers a/ - - 2 16 10 77 90 94 92 92 92 91 90 90

Total - Sources 602 3,736 3,312 801 745 784 327 273 213 155 92 91 90 90

B. Applications/Outflow

Project net cost 770 3,767 3,344 821 724 748 78 83 83 83 83 83 83 83Debt service

IDA corlitment fee b/ - 15 13 9 6 4 1 - - - - - -IDA principal + service charge b/ - 5 9 13 18 22 26 27 27 27 27 36 109 109CCCE c/ - 5 26 47 52 5 60 60 60 60 60 245 245 -

Total - Applications 770 3,792 3,392 890 800 830 165 170 170 170 170 364 437 192

C. Surplus/(Deficit)Annual (168) (56) (80) (89) (55) (46) 162 103 43 (15) (78) (273) (347) (102)Cumulative (168) (224) (304) (393) (448) (494) (322) (229) (186) (201) (279) (3,009) (6,480)

a/ 10% on 50% of value of paddy incremental production and 100% of cotton and onion Incremental production.

b/ Standard IDA ters.

S/ 30 year loan, 10 years grace on principal with 1.5% interest rate and 20 years repayment with 2.0% interest rate.

WAPACMay 1985

- 69 -

Annex 7Page 1 of 2

NIGERIRRIGATION REHABILITATION PROJECT

KEY PARAMETERS USED IN ECONOMIC ANALYSIS

Output Prices: (a) Rice, cotton and sorghum, using Bank's commodityprice projection made on July 13, 1984 up to 1990.

(b) Rice - for 35% broken rice imported by Niger, a 15%discount from the reference price (Thai 5Z broken)is applied. Import parity price with Niameyreference market.

(c) Cotton - 15% discount fror the reference price(Mexican middling), export parity price.

(d) Sorghum - 15% premium to reflect preference forlocal varieties. Import parity price with Niameyreference market.

Input Prices: Assuming that Niger would import fertilizers frominternational markets, using Bank's commodity priceprojection made on July 13, 1984, up to 1990 for urea,DAP, chloride phosphate, and TSP.

Standard Conversion Factor (SCF): Used to convert local components ofproject costs and miscellaneous local costs to borderprice terms in lieu of item-specific border pricing:0.85.

Labor: Opportunity cost of farm labor at CFAF 600 per day, average ofactual peak and off-peak of unskilled labor.

Benefit Lag: Production benefits accrue six months after on-farmexpenditures. Production benefit streams laggedthroughout by six months.

Replacement of Vehicles and Equipment: Vehicles and motorcycles: everythree years; electric pumps: every ten years; dieselpumps: every five years; animal traction equipment:every ten years; pedal threshers: every five years;other equipment: every ten years.

Costs: About 80% of project costs are included as costs for economicanalysis. The following costs are excluded:

(a) studies and audits;(b) wood plantation;(c) revolving fund for RINI;(d) 50% of ONAHA vehicles and equipment and vehicle

operating costs;(e) 50% of investment and technical assistance for RINI;(f) oxen carts; and

- 70 -

Annex 7Page 2 of 2

(g) a part of animal traction units and pedal threshersdistributed to the EDF and other perimeters.

Labor Required to Reconstruct Field Drains by Farmers: Beneficiaries'contribution in labor (30,000 days for 11 Niger valleyperimeters and 8,700 days for five ADM valley perimeters)is included, valued at CFAF 600 per day.

Without Project Assumptions:(a) Production level is assumed to remain at the level

of PYO, except for: (i) the Namarigoungou, whereaverage yields gradually decline from 3.7 tons/ha inwet seasons and 4.0 tons/ha in wet seasons to 2.7tons/ha and 3.0 tons/ha respectively in projectyear 5; and (ii) Kokomani, where breakdown of pumpsprevents farmers from growing rice in the perimeterwhose conditions are otherwise good (without projectit is assumed that pumps are replaced and productionresumes with "without project" yields).

(b; Replacement of pumps and maintenance costs areincluded in order to maintain the current level ofproduction.

WAPACMay 1985

| ) ~~M A LI,*r, Bl_

,3.- * @ - * *

300

/ M A y oL _ p _ gAbQ Iu _ _ _ _ __ 3 0 0 __loU R

*, / Kwo

S ~~~~~~~~~~~~~~~~~~~~~~~~~~~~Abolo

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Tho° l

A

Gr0g5unTo p J

Gv Tounlaf, '

ra ~ _ comewr Mo -- '

o bo o ' Guidon -mago

\ rlrralrecfoutFi; I Dogondourch, /

B UR K I No.i r J-D- -__ _

s / Vs&s ,seibetl \ [ J N I G E R

-if lz < _ / IRRIGATION REHABILITATIONsgy

~~~~~~~~PROJECTI ~~~~~Stchemes Under the Prac

Al Physicol Rehobilatottjn

A Complementary Investments

700 §~~~~~~~~~~~~~~~~~~~~~~~~~~C cEme1Net Under the ioj

N.. A ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ComPleted and in seirviceA Under construction

/ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Physical Rehabilitation

t I A N o t in service

*1 I'~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~'

Proisected

Main Roaid&| 8 r -' t ~ ~ ~ ~~~0 < ,0

-"C_ MzRivrsd

M ALE I I N I G E RM A t 12 /\

\ _ .Iner,national Boundaries

i Lr NIFi<v' 'rr {tHAD

30 0 lualtyats mi Ise ,,sii l948-1977)

(HADf

i

GERIA 4' ( B E N I N > 9 N G E R tA o 0 20 30 6o S5e.

M ARCHWl-I