World Bank Document

Document of The World Bank

FOR OFFICIAL USE ONLY

Public Disclosure Authorized Report No. 5161-NIR Public Disclosure Authorized STAFF APPRAISAL REPORT

NIGER

IRRIGATION RERABLITATION PROJECT Public Disclosure Authorized

May 30, 1985 Public Disclosure Authorized West Africa Projects Department Agriculture 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. CURRENCYEQUIVALENTS

Currency Unit = CFA Franc (CFAF) US$1.0 = CFAF 460 CFAF 1 million = US$2,174

SYSTEMSOF WEIGHTSAND MEASURES

Metric British/US Equivalents 1 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 acres 1 metric ton (m ton) = 2,205 pounds (lbs_)

ABBREVIATIONSAND ACRONYMS

ADDM Ader-Doutchi-Eaggia, an intermittent tributary of the Sokoto River in the Tahoua Province of Niger BCEAO Banque Centrale des Etats de l'Afrique de l'Ouest (Central Bank for WTestAfrican 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 Fund FAC 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...... 1 B. The Rural Sector ...... 1 C. Institutions...... 3 D. Sector Issues and Strategy...... 7

II. PROJECT AREA...... 10

A. Physical Resources...... 10 B. Socio-Economic Features...... 12 C. Past Development and Present Situation of the Irrigation Sub-Sector...... 13

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

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

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

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

This report is based on the findings of an appraisal mission to Niger in November-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), Adolphe Chavancy (Agriculturalist, Consultant) and Hendrik Rozeboom (Rice Processing and Marketing Specialist, Consultant). This report was edited by Ms. Michale Moriarty (Editorial Assistant) and processed by Mr. Jacques Bourgoin and Ms. Jehanne Romain.

This document has a restricteddistibution and may be used by recipientsonly in the performnce of thir officialduties. Its contents may not otberwise be discosed withoutWorld Bank authorization. - ii -

Table of Contents (continued)

V. ORGANIZATIONAND MANAGEMENT...... 31

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

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

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

VII. ECONOMIC JUSTIFICATIONAND RISKS.45

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

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

ANNEXES

3-1 Evolution of CultivableAreas 3-2 Input and Agricultural Equipment Requirements 3-3 Construction Schedule

4-1 Draft Terms of Reference for Technical Assistance 4-2 Estimated DisbursementProfile

6-1 Evolution of Area, Yield and Production: Rice, Cotton, Sorghum and Onions 6-2 Cost Recovery: Irrigation for Rice 6-3 Rice Crop Budget 6-4 ONAHA: Summary Financial Statement 6-5 ONAHA: Projected Income Statement 6-6 Government Project Related Cash Flow

7 Key Parameters Used in Economic Analysis

MAP

IBRD No. 18074R: Niger - IrrigitationRehabilitation 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. - iv -

Ref. No. Document Code

A.12 Dossier d'appel d'offres, fourniture de 221.250 (23) materiel de travaux publics (financedby 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'alimentationen electricite des 221.249 perimetres irrigues de Kokomani, Saga, N'Dounga I et II, Iollo, Libore, Seiberi et Daikena, May 1984.

Reports by HELIOS

A.17 Rapport d'investissementet recommandations 127.608 (G1 8) sur 1'organisationet la gestion de 1'ONAHA et des cooperatives.

A.18 Partie I Orientationsgenerales, July 1983. "

A.19 Partie II Structures juridiques, July 1983.

A.20 Partie III Structures financieres.

A.21 Partie IV Structures organisationgestion ONAHA, 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 ) - v/I NIGER

IRRIGATION REHABILITATIONPROJECT

CREDIT AND PROJECT SUMMARY

Borrower: Republic of Niger

Beneficiaries: National Irrigation Authority (ONAHA) and irrigation cooperatives through ONAHA.

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

Terms: Standard

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

Project Description The main objectives of the proposed Project are to promote cooperatives'/farmers' self-reliance in management of irrigation schemes in order to ensure the sustainability of investments, reduce Government's recurrent costs, increase production, and improve farm income. The project would comprise the rehabilitation of existing irrigation perimeters and includes the tollowing components: (a) rehabilitationof irrigation infrastructureand equipment; (b) crop intensification; (c) assistance to cooperatives; (d) adaptive research and seed multiplication; (e) strengthening of ONAHA; and (f) strengtheningof RINI.

Project Benefits: The Project's main benefits would derive from: (a) incremental production of paddy, cotton, sorghum and onions on areas to be brought back into production and increased yield and cropping intensities; and (b) savings on operating and maintenance costs by substituting electric pumps for diesel ones. Lessons learned under this project, in particular with regard to cooperative management of irrigation schemes as well as the role of ONAHA, would be applied to future investments in this field.

Risks: No significant technical risks are associated with the physical rehabilitationworks. The only major foreseeable risk is that the irrigation schemes would be inadequatelymaintained. This risk has been minimized under the project by introducing a pump maintenance scheme by the private sector, by financing an important training program for cooperatives, and by providing the necessary framework (contracts between Government and cooperatives, internal regulations, etc.) to establish a reliable system of maintenance and operations. Other possible risks are related to management capability of ONAHA, the lead executing agency. They would be - vii -

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

Summary Project Cost Estimate:

Local Foreign Total …--US$ million ---

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

Total Base Costs 9.3 12.0 21.3 Contingencies: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 2.7 IDA 3.8 5.5 9.3 CCCE 3.8 5.5 9.3 KfW 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 0.4 Cumulative 2.2 3.6 5.6 7.0 8.1 8.9 9.3

Economic Rate of Return: 18%

Map: No. IBRD 18074R

WAPAC May 1985 NIGER

IRRIGATION REHABILITATIONPROJECT

I. INTRODUCTION

A. Project Background

1.01 At the request of the Government of the Republic of Niger, IDA and CCCE financed a comprehensive study of the rehabilitation of the irrigation subsector, which was carried out by consultants SOGREAH/Louis Berger and Helios, starting in February 1982. The first phase of the study consisted of a thorough analysis of the subsector and identificationof technical, institutional and sociological constraints on performance. The second phase consisted of a topographic survey of the existing irrigation and drainage networks, retention dams and flood control works, preparation of engineering designs for the bidding and construction stage, and guidelines for institution building. The third phase provided a feasibility study for the proposed project, which was appraised in November-December 1983. The fourth and last phase, which started immediately after appraisal, consists of additional field engineering studies and the preparation of bidding documents.

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

(a) all the perimeters included in the first and second phases of the study, except for three perimeters which were eliminated for technical and economic reasons, and four other perimeters, which were being rehabilitatedby the European Development Fund (EDF);

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

B. The Rural Sector

1. Resource Base

1.03 Niger is a land-locked country, bounded by Algeria and Libya to the North, Chad to the East, Nigeria to the South, and Mali, Burkina Faso and Benin to the West. Niger's closest access to the sea is about 600 km from its Southern 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 population, estimated at 5.9 million in mid-1982, is growing at an annual rate of 3.3%. About 75% of the population is concentrated on less than 8% of the land area formed by the Southern rainfall belt, where annual precipitation is between 500 mm and 800 mm. In this area of about 100,000 kM2 , population density averages about 201km2, but exceeds 100/km2 in the more favorable locations in the valleys, which are mainly found along the Niger River and in Tahoua Province. Rainfall is not only scant but also irregular, making Niger vulnerable to droughts. In the early seventies, Niger experienced severe drought: its livestock herd was decimated and food production declined dramatically. Average annual deficits were 135,000 tons, or 122 of the total cereals demand, but in the worst years (1973 and 1975) the deficits were as high 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 than 500,000 tons. The two consecutive years of poor rains in the pastoral areas may have had a serious long-term impact on the natural pastures. The contribution of the irrigation subsector to national agricultural production is limited, with irrigated lands representing less than 1% of the total cultivated 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 and exports of uranium, and on the other to increased agricultural and livestock production. With the increased revenues, Government launched an ambitious public investment program. During 1980-82, however, the real GDP growth rate slowed to 1%. This sharp decrease was caused by a drop in uranium prices and by a slowdown of uranium production and exports, combined with less favorable harvests 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, due to greater public investment, from 3% of GDP in 1976 to 7% in 1980. The relative importance of the agricultural sector, however, declined from 50% in 1976 to 43% in 1980. Uranium has been the most important export commodity since 1973, and has accounted for three-quartersor more of total merchandise exports since 1977. The remainder is made up of agriculturalproducts, mainly livestock (cattle on the hoof, and hides and skins), followed by cowpeas. The once-importantNigerien exports of groundnuts dropped dramatically during the 1973/74 droughts, and have since then remained at insignificantlevels. While Niger has been virtually self-sufficientin staple grains since 1976 except in 1984/85, 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 in export earnings, the agricultural sector, including livestock, fishing and forestry, remains the most important economic activity and the principal livelihood 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 cereals production, followed by sorghum, providing about 20%. Rice is a distant third, supplying only 2% of the cereals production. Maize production is still at an insignificant level. The marketed volume of total cereal production is estimated at 15-17%. The principal cash crops are groundnuts, cowpeas and cotton. Groundnut production has declined sharply from 260,000 tons in 1972 to 96,000 tons in 1981, due to a decline in relative profitability vis-a-vis cowpeas, repeated disease outbreaks and difficulties in reconstituting seed stocks after drought. This decline in groundnut production was offset by cowpea production, which increased from 72,000 tons in 1971 to 280,000 tons in 1981. Compared with groundnuts and cowpeas, cotton has been a marginal cash crop. It was once exported, but its production has declined and now cannot meet the needs of the domestic textile industry. -3-

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 Input Supply Center ("Centrale d'Approvisionnement'"- UNCC/CA). The subsidized prices for agricultural equipment, fertilizer and pesticides are fixed by decree every year. Agricultural equipment is produced at three UNCC workshops in Zinder, Tahoua and Dosso. Much of the fertilizer comes from Nigeria, where fertilizer has been heavily subsidized until recently. The amount of funds available for input subsidies is fixed by the Ministry of Plan: this amount was halved from CFAF 600 million in 1981/82 to 300 million in 1982/83, but increased to 550 million in 1983/84. Since official fertilizer prices were raised substantially in 1981/82 (40-75%), UNCC/CA has had difficulty selling its subsidized fertilizer because of strong competition from private traders, who supply farmers with undetermined quantities of fertilizer smuggled from Nigeria, particularly in the area close to the Nigerian border (para 6.11). Official prices of animal-drawn equipment have been gradually increased in recent years. Despite the above recent price increases, subsidies in 1983/84 still ranged from 21% to 36% on fertilizer and from 42% to 60% on animal-drawn equipment; 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 a National Price Committee chaired by the Ministry of Commerce and Transport. These prices, with the exception of paddy, remained almost unchanged from 1978/79 to 1981/82. They were then substantially raised in 1981/82 and 1982/83. The price of millet increased from CFAF 40 to CFAF 70, then to CFAF 80/kg (100% over two years), sorghum from CFAF 45 to CFAF 60, then to CFAF 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 were steadily raised by a total of 90% between 1979/80 and 1982/83, from CFAF 45 to CFAF 85/kg, which represents 106% of the economic price at farm gate. Cotton and sorghum are at about 70-75% of their respective economic prices at farm gate (para 6.09). Except for cotton, private traders are active in parallel markets, where prices are determined by market forces. As part of its austerity program supported by the IMF under the Standby Arrangements and by IDA under the structural adjustment program, Government is considering the liberalization 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 is the personal representative of, the President. Each province is divided into administrativedistricts governed by "Sous-Prefets". Administrative districts are further divided into "cantons", each governed by a chief who is elected by the chiefs of the villages concerned and receives a Government allowance. The "vcanton"is the point of contact between modern Covernment and traditional authority. The mechanism for coordinating development activities has been of - 4 -

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

2. National IrrigationAuthority (ONAHA)

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

1.11 ONAHAhas its headquarters in Saga, 13 km away from Niamey, and has four regional offices in Tillabery, Niamey, Tahoua and Diffa. The legislation which created ONAEAdefined two major objectives: (a) to ensure the execution of new irrigation works financed by the state, and (b) to ensure operations and management of existing or new irrigation schemes, including extension works for farmers. To achieve these objectives, the Central Directorate of ONAHAis divided into four divisions: the Infrastructure Division (topography and civil works on force account), the Materials Division (maintenance and repairs of civil works equipment, vehicles, pumps and tractors), the Agricul- tural Development Division (land preparation by tractors, agricultural extension and cooperative management and traiining) and the Administrative and Financial Division (general administration, personnel and accounting). The regional offices are similarly organized. As of September 1982, ONAHA employed 510 people, of which 194 were at the headquarters and 316 at the four regional offices. During 1983, however, efforts were made to reduce personnel, and as of October 1983, its total personnel was 351.

1.12 ONAHA has since its creation acquired technical competence in civil works construction as well as in the area of support to agricultural production. The Bank- and KfW-financed Namarigoungou project (Cr. 851-NIR, satisfactorily completed in March 1984) helped ONARA to develop these skills. Weaknesses are still found, however, in its administrative and financial management. Since its creation, ONAHA has been confronted with severe financial problems resulting from non-receipt of funds appropriated in the Govern- ment capital budget (National Investment Fund) and from services charged at rates below actual costs. Internal control over personnel and administrative procedures seems to be lax, which leads to inefficiency and waste of resources. - 5 -

1.13 At the Zinder seminar 1/ (November 1982). the new orientation toward self-management of irrigation schemes by cooperatives was recommended and later endorsed by Government. This decision consequently modified the future roles of ONAHAto:

(a) developing new irrigation schemes and rehabilitating the existing ones;

(b) acting as manager until cooperatives take over management of perimeters;

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

This would entail, in the long-run, personnel and budget reductions, as well as 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 for cooperative development, input supply, seasonal and medium-term credit recovery and primary marketing. It also managed some agricultural projects and operated three workshops where farm implements are assembled. At the Zinder Seminar, the reorganization of UNCC, so that it would deal only with cooperative training, was proposed and later endorsed by Government. UNCCwas legally dissolved in December 1984. Its functions are being transferred to the 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 for providing agricultural credit, processing loan applications and bookkeeping for cooperatives' accounts. Because its credit eligibility criteria and sanctions in case of default have been ill-defined and ill-enforced and because it diverted most of its financing to questionable lines of credit for agricultural and agro-industrial parastatals, CNCA is now totally illiquid and practically bankrupt (para 1.25).

1/ The Zinder Seminar on the organization of agricultural development projects and related policies was held in November 1982. It attracted a wide range of participants from national and international organizations, including representatives of cooperatives. Government officials of the ministries concerned, youth and women's associations and external aid donors. The major thrust of the recommendations,proposed at the Seminar and adopted by the Council of Ministers in March 1983, is a transfer of responsibility from parastatals to cooperatives, with the goal of self-managementof development activities. - 6-

5. Rice Processing Parastatal (RINI)

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

6. Cooperatives

1.17 Niger has one of the most imaginative and best-adapted cooperative legislations in West Africa. After the failure of experiments with cooperatives based on individual membership, UNCC started a new system in 1966 based on collective membership in basic socio-economic entities, i.e., villages or sections of villages in the case of large villages. Village Mutual Groups ("Groupement Mutualiste Villageois" - GMV) have been formed and gradually regrouped into cooperatives since then; almost all the territory is now organized into cooperatives. A GM4V is constituted by heads of households in each village or each section of a village, which is collectively responsible vis-a-vis the cooperative to which it belongs as well as to credit organizations. Each GMV is represented within the cooperative by representatives consisting of a president, a secretary, a treasurer and five delegates. A cooperative's general assembly, constituted of delegates from GMVs, elects a board of directors of the cooperative, which in turn delegates some of its functions to an executive committee consisting of a president, a secretary and a treasurer.

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

1.19 Irrigation cooperatives formed by all the farmers/beneficiariesin each irrigation perimeter are assisted by ONAHA for technical and financial management. When a new irrigation perimeter is developed, ONAHA equips it with a director and a certain number of village extension workers, depending on its size. Directors of perimeters currently take care of financial management, such as payments to suppliers, keeping track of bank accounts and calculating irrigation operating costs. Under the proposed project, however, cooperativeswould receive training in literacy and management (para 3.17) and be in direct charge of the above operations, with perimeter directors having only an advisory role. The proposed changes are in line with Government strategy to promote cooperative self-management. - 7 -

7. National Agricultural Research Institute (INRAN)

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

D. Sector Issues and Strategy

1. Government Strategy

1.21 Since the droughts in the early 1970s, Government policy with respect to the agricultural sector has been to give the highest priority to food security. Meeting this objective, however, is not easy for Niger's agricultural sector, which is characterizedby the following:

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

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

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

(d) the high cost of irrigation operations, with investment costs above US$10,000/haand a per capita availabilityof irrigable land of only one third of the average for the Sahelian countries;

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

(f) human resource bottlenecks.

1.22 Government has responded to these challenges and constraints by developing strategies to exploit the potential of rainfed and irrigated agriculture. In rainfed agriculture, the strategy is to set up, in viable rainfed cultivation areas, a regional "Productivity Project" that would provide smallholders with improved extension, input supply, credit and marketing. In controlled irrigation, the Five-Year Plan 1979-1983 set a modest goal of developing of about 1,000 ha per year, which was achieved on average during the Plan period. The results so far obtained from tl.earea- based productivity projects in rainfed agriculture have been far below those originally expected, and serious reevaluation of the on-going projects is underway. At the Zinder Seminar in November 1982 on the organization of - 8 - agricultural development projects and related policies (para 1.13), the constraints and difficulties in implementing current large-scale area development projects were recognized. The Government's stated policies following the Zinder Seminar recommendations are:

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

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

2. Policy Issues

1.23 On the output pricing and marketing issue, given its large deficits and severe burden on the financial sector, redefinition of OPVN's roles is under intensive discussion in the context of the structural adjustment program. Government is making arrangements to liberalize pricing and marketing of millet and sorghum by adopting a tender system. Under the IMF Standby Arrangements, the pricing and marketing of cowpeas have already been liberalized.

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

(a) maintaining the absolute volume of Government subsidies at their 1983 level;

(b) reducing subsidy rates gradually; and

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

Following the dissolution of UNCC (para 1.14), the reorganizationof the input distribution system by CA is being studied and aims at transferringmanagement of input distribution to cooperatives and encouraging direct transactions between private traders and cooperatives.

1.25 Agricultural credit is in real difficulty. The national agricultural credit bank (CNCA) is virtually bankrupt (para 1.15), with outstanding credits of CFAF 7.5 billion, most of which are unrecoverable. The main problem of CNCA is that it has been forced to deviate from its original mandate and has turned to financing seasonal credits and operating deficits of public enterprises,directing less than 20Z of its total resources to farmers. Furthermore, the lack of stringent criteria for credit allocation and repayment has led to a high delinquency rate. It is IDA's view that CNCA cannot become viable given (a) unsatisfactory recovery rates and the related bad precedents set, and (b) the low estimated demand for medium-term credit whereby no agricultural bank could meet all its costs at current rates of interest. IDA has suggested that CNCA should cease operations and be liquidated and that, as an alternative to CNCA, interim mechanisms should be -9- sought within projects where there is effective demand for credit, until longer-term solutions are found. The proposed project would entrust the management of short- and medium-term credit to cooperatives with technical assistance from ONAHA. The above three issues, namely, output pricing, input pricing and agricultural credit have been extensively discussed with Goverment in connection with the structural adjustment programs and will continue to be addressed in the context of the ongoing policy dialogue.

3. Previous Bank Involvement in the Rural Sector and Performance Evaluation

1.26 Since 1969, nine credits have been approved for a total of US$91.6 million. They include one agricultural credit, one drought relief project, two in forestry (Forestry I and II), three projects in rainfed-based area development (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 at providing smallholders with credit for seasonal inputs and implements. The results were far from satisfactory for several reasons, including a lack of support for production technology and severe droughts during the project period. The second was the Drought Relief project (Cr. 441-NIR: US$2 million) of 1974 to finance small subprojects which were generally executed satisfactorily. Two forestry projects (Cr. 800-NIR for US$4.5 million and Cr. 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 irrigated tree plantations, as well as 700 ha of pilot state-managed rainfed tree plantations. The second project is financing rural mini-nurseries to supply plants for about 6,200 ha of rural tree plantations, as well as the expansion of state-managed rainfed tree plantations. Due to the recent drought, the project is being reoriented to concentrate on maintenance and rehabilitation of the plantation already executed. Three credits for rainfed area development 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$16.7 million) became effective in October 1976, February 1981 and February 1982, respectively. Although the first Maradi project has been satisfactorily completed, the second Maradi and Dosso Agricultural projects have encountered major 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 of services such as animal health, animal husbandry and delivery of drugs and feed supplements to pastoralists in the semi-arid pastoral zone; it had been proceeding satisfactorily until the recent drought hit the project zone very severely.

1.27 The Namarigoungou Irrigation project (Cr. 851-NIR) became effective in October 1979 and construction started in early 1980. IDA financed US$15.0 million, KfW financed DM 12.5 million (US$6.0 million), and to meet the financial difficulties of the project, KfW later granted an additional DM 10.0 million (US$4.0 million). The project has increased Niger's agricultural production, especially rice (about 10,000 tons of incremental paddy production), through the development of 1,450 ha of irrigated lands (1,350 ha of rice perimeters and the rest for vegettbles and other crops), and has raised the income of participating farmers. Other project components included the - 10 - 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 account started poorly but greatly improved during the construction period. The quality of the work, moreover, was good. Overall, ONAHA has developed considerable skill in civil works construction, which could be used to advantage in the proposed project.

1.29 The project's main achievements are:

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

(b) the successful introductionof animal traction (no land preparation by 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 maintenance, and set aside a provision for equipment replacement;

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

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

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

The appraisal mission of the proposed project judged, however, that to sustain the present high performance further support would be necessary. For this reason, the Namarigoungou perimeter would be included in the proposed project for 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 two parts. The first, located in the Niamey Province, consists of the Niger River valley, stretching about 500 km across the country. The other part, located in the Tahoua Province, is composed of the basin of the Ader-Doutchi-Maggia (ADM), an intermittent tributary of the Sokoto River. The total area to benefit directly from the project area is Sahelian. Average annual rainfall in the Niger River valley ranges from 400 mu in the Namarigoungou perimeter in the north to 650 mm in Say in the south. In the ADM valley, these values lie between 400 and 600 mm. Rainfall during the last decade has frequently been below average, but the statistical evidence for a possible long-term trend is - 11 -

inconclusive. About 80% of annual rainfall is received during the four-month period from June through September. Rainfall is usually brief, violent and localized. Temperatures are highest in May/June with an average maximum of 44°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 smooth changes due to the regulatory effect of the inland delta in Mali. The median maximum 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 the period 1966-80, down from the 37 m3/s observed in the period 1929-65. Between 1966 and 1980, the minimum dry season discharge exceeded 3.5 m3/s nine years out of ten, the most critical period being from end-June to mid-July. Strict adherence to the cropping calendar is required to limit water use exclusively to rice nurseries during this period. The development and use of short cycle varieties would further alleviate the problem. Water supply in the ADM region is sufficient for supplementary irrigation of the wet season crop. However, catchments can only irrigate parts of the perimeters' area during the dry season. The situation has also gradually deteriorateddue to siltation of the reservoirs; for instance, it was found that the storage capacity of the Ibohamane and Moulela reservoirs has decreased by half over the past 15 years. The situation is less severe for the other perimeters included in the proposed project. Groundwater found in the reservoir bottom and in some parts of the perimeters is used to grow off-season crops and vegetables. The water quality in both the Niger and Maggia Rivers is excellent for irrigation and can be classified Cl-SI in the USBR classificationsystem.

3. Soils

2.03 The soils of the ADM perimeters are composed mainly of mixed calcareous alluvium; they are mostly deep, low in organic matter, moderate to low in inherent fertility, erosive on slopes, and are quite variable in texture depending on their depth and location within most perimeters. Soil alkalinity is not a problem in these perimeters and salinity is found only in some spots at the foot of the Moulela and Ibohamane dams. Neither alkalinity nor salinity will be a problem as long as subsoil drainage continues to be satisfactory (except, as indicated above, close to dams constructed on per- meable subsoils). The soils of the rice perimeters near Tillabery are silt loams to clay loams, low to moderately low in organic matter, and moderately fertile. These perimeters generally lie slightly higher than the floodplain oi the river, and pose no serious drainage problems. Salinity/alkalinityare not evident here either, except in unirrigated areas where the water table is high (Daikena and Lossa), on old high bunds and on wind-blown soil piled against upraised rocks (Kokomani), and in swampy areas along the Niger River (Sona). Soil textures of the rice perimeters near Niamey range from silt loams to clays, with some sandy loams, particularly in the N'Dounga area. Heavy cracking clays are common in Saga, Seiberi and Saadia. These perimeters are 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 of the year. These poorly drained areas would be reclaimed under the project through construction of adequate drains. Salinity is found in some places in the Seibery perimeter, but would not be a threat with adequate water management practices. - 12 -

B. Socio-EconomicFeatures

1. Population and Land Tenure

2.04 The project would directly benefit about 80,000 people. In the Niger River valley, the dominant ethnic groups are the Songhay (or more specifically, the Kado group) in the Tillabery district and the Zarma in the Niamey district. In addition, one finds, on irrigated perimeters, the Kourtey group (originally Peul), who are pastoralists and traditional rice growers, and the Wago group, who are also rice growers. Irrigation schemes have displaced some farmers who cultivated rice in the floodplains with traditional methods. Land allocation depends basically on the number of active male adults: each parcel is about 0.25 ha, but a family with several active male adults may be allotted more than one parcel. Priority was also supposed to be given to former occupants (mainly Kourtey and Wago) growing traditional rice, but this rule was not always respected, since the Kados, although not rice growers, are numerically dominant in the area. A detailed survey of family units 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 irrigated land per family unit, or 0.23 ha per active male adult. Other sample surveys indicate that an average family unit contains 12 people in the Sona, Lossa and Kokomani areas and 10.3 people in N'Dounga, Libore and Seiberi. The socio- economic study carried out as part of project preparation work found certain evidence that the economic situation of women had deteriorated because of irrigation development, e.g., reduction of areas available for vegetable gardening and shortage of fuelwood. In view of redressing the situation, and promoting integration of women in cooperative development, the proposed project would finance certain promotional activities for women.

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

2.06 Farmers engage in both rainfed farming and rice cultivation during the wet seasons. Since irrigated parcels are small, families consider them a supplementary source of cereals. They also have supplementary income from sales of livestock, market gardening (particularlynear Niamey) and miscellaneous jobs. Seasonal or longer-term emigration of young men, to urban areas and 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 unit has about 8-10 people. In Ibohamane, farmers typically engage in irrigation for cotton and sorghum, rainfed farming for millet and sorghum, gardening in the 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 served by a tar-surfaced road. Perimeters in the ADM valley are linked by earth - 13 -

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 with banking and postal facilities.

3. Health

2.09 Recent surveys have shown that waterborne diseases (malaria, bilharzia and gastro-intestinalinfections) are of serious concern, especially for young children. The proposed project would not exacerbate the present situation, but would instead reduce the incidence of malaria and bilharzia by improving the drainage and cleaning of canals.

C. Past Development and Present Situation of the 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 is divided into the ADM valley (20,000 ha), the area along the Komadogou River and Lake Chad in the East (50,000 ha), and ancient river valleys called dallols and other small valleys (60,000 ha). As compared with the potential in the Niger and ADM valleys, that of the Komadogou River and Lake Chad area and dallols is much less known and little developed. Out of the irrigation potential in the Niger valley of 140,000 ha, only 30,000 ha are lowlands ("cuvettes"), which have generally good soils easily irrigable by low-lift pumping. The rest consists of upland terraces where soils are quite hetero- genous and high-lift pumping is costly. As of end 1983, there are about 10,000 ha developed or under development in Niger, of which 6,000 ha are in the 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, was introduced only in the mid 1960s and has been implemented in piecemeal fashion. The development of 6,000 ha of irrigated land involved 12 different donors, and a variety of designs, equipment brands, services to farmers and cost recovery policies. With the exception of Namarigoungou (1,450 ha), all perimeters have areas of between 50 and 400 ha. About 90% of the areas developed are under rice monoculture. Irrigation is obtained by low lift pumping, 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 effective competition and of economies of scale, high design standards (all primary and secondary canals are lined), and the absence of multi-annual contracts. The proposed project includes 13 perimeters in the Niger valley, namely, all perimeters except for five EDF-financed perimeters, two USAID-financed perimeters, and three perimeters eliminated for technical and economic reasons.

2.12 Yields as high as 6 tons paddy/ha/crop are possible at farm levels if all recommended practices are used, but overall performance has not ful- filled this potential. In 1982, average yields on the rice perimeters were estimated at 2.6 tons/ha/crop. Moreover, about one quarter of the total land - 14 - developed was abandoned and farmers could not manage a second crop on about 15% of the cultivated area. The reasons for this poor performance are:

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

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

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

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

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

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

3. In the ADM Valley

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

2.14 Because gravity irrigation requires few operating expenses, the situation 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, which cannot be prevented, reduces the capacity of the reservoirs and will eventually fill them up. Another problem is the poor maintenance of the irrigation and drainage infrastructure, which can lead to the abandonment of parts of the perimeters. -15 -

III. PROJECT OBJECTIVES AND DESCRIPTION

A. Objectives and Brief Description

3.01 The overall objectives of the proposed project, which are in accordance with Government's policies on food security, are to improve incomes and the general welfare of the rural population in the project area. The key innovations being introduced are: the extensive participation of beneficiaries in the operation and management of perimeters, an increased cost recovery rate and the involvement of the private sector in the maintenance of pumping equipment. Together, these are expected to ensure the durability of the irrigation schemes. Specific objectives are:

(a) rehabilitation of infrastructureand equipment on 16 perimeters (11 perimeters in the Niger valley, covering about 2,200 ha, and five perimeters in the ADM valley, covering about 850 ha); generalization of the practice of rice double cropping on the 11 perimeters in the Niger valley; an increase in water availability for the dry season crops and extension of the useful life of the reservoirs in the ADM valley;

(b) crop intensification,in order to raise the average paddy yield by about 1.2 tons/ha/crop on the above-mentioned 2,200 ha of rice perimeters to be rehabilitated, and to consolidate the performance of 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 rehabilitatedand those of Namarigoungou and Say), totalling about 4,700 ha; and

(d) strengtheningof ONAHA and RINI.

3.02 The above objectives would be achieved through the following project components:

(a) rehabilitationworks;

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

(d) adaptive research and seed multiplication;

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

(f) strengthening of RINI.

3.03 The project would be implemented over a five-year period, from October 1985 to September 1990. Rehabilitation works are expected to be completed during the first two years. - 16 -

B. Detailed Features

1. RehabilitationWorks

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 the ADM valley (Moulela,Kawara, Guidan-Magagi,Tounfafi and Ibohamane), totalling about 850 ha. The main improvement in the Niger valley would consist of the replacement of all diesel-driven pumping units with electric ones, which are easier to maintain and more economical. Diesel pumps will be repaired and kept as back-ups in case of power failure. In the ADM valley, the main works would be the rehabilitationof catchment dams. Details of works to be carried out are as follows:

(a) in the Niger valley: (i) electrification of seven irrigated perimeters including the erection of 24 km of medium tension transmissionline; (ii) installation of 38 electric pumping units and four diesel- driven pumping units in 14 pumping stations, either to replace existing electric or diesel-driven pumping systems, or to add additional drainage capacity, including rehabilitation/construction of associated structures and civil engineering works; the additional energy requirement can be accommodated within the existing capacity; (iii) reshaping and reinforcementof about 30 km of protection dykes, to protect the perimeters against the maximum flood levels occurring in a one to one hundred-year frequency; (iv) rehabilitation of some 75 km of irrigation canals, 135 km of primary and secondary drains, 190 km of field drains, 190 km of access roads; and the rehabilitation of associated structures; 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) rehabilitationof 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 Niger valley perimeters are concrete lined, whereas in the ADM region most canals are 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 drainage system, especially in the perimeters south of Niamey and in the ADM, is inadequate and would be reconstructed to a capacity of the main drains of 1.2 1/s/ha in the Niger valley and 2.5 1/s/ha in the ADM region. Most of the primary and secondary drains would be reshaped under the proposed project and some new ones dug. All field drains would be reconstructed. To provide all-weather access, primary access roads leading to pumping stations would be - 17 - reshaped and resurfaced with laterite; all other access roads would be reshaped as needed.

3.06 The capacity of the pumping stations to be rehabilitated would be designed for 2.65-3.30 1/s/ha depending on the conveyance system (open canals or buried pipes) and climatic conditions. Farmers would irrigate a maximum of 12 hours per day for rice in the Niger valley and ten hours per day for upland crops in the ADM region. The existing irrigation canals were originally designed for about 1.6-6.0 1/s/ha and most canal capacities would not be changed, since current discharge and water levels are adequate.

3.07 The electrification of the pumping stations would be subcontracted to the National Electricity Authority (NIGELEC). Assurances were obtained at negotiations that ONAHA and NIGELEC would conclude an agreement satisfactory to IDA not later than December 31, 1985. Assurances were also obtained at negotiations that farmers would be given preferential rates of electricity for irrigation.

2. Institution Building for Adequate Maintenance

3.08 Proper maintenance of pumping equipment is one of the most critical conditions for the success of the project. ONAHA, as a Government agency, cannot attract the qualified staff required for a high standard of pumping equipment maintenance and for the monitoring of spare parts inventory. It is also subject to Government pressure to be lax on the collection of payments for services it renders to cooperatives, a practice which would eventually lead to poor maintenance. For these reasons, maintenance of pumping equipment would be entrusted to the private sector. Maintenance contracts would bind each cooperative and representative of an equipment supplier and would be monitored by ONAHA. In order to keep maintenance costs to a minimum and at the same time prevent poor maintenance, ONAHA would review the contractor's performance under maintenance contracts annually, as well as supervise implementation of pump maintenance. Bids for pumping equipment were invited for a package of pumps and maintenance. Only one supplier proposed a maintenance contract. which was found too expensive. Negotiations with the supplier are under way to reduce maintenance costs. Assurances were obtained during negotiations that ONAHA would ensure that arrangements satisfactoryto IDA are made to assist cooperatives to select qualified contractors for the maintenance of pumps and review annually the adequacy of such maintenance by such contractors and take action to remedy any maintenance deficiencies disclosed by the annual review.

3.09 Maintenance of irrigation and drainage canals and dykes that requires heavy equipment would be the responsibilityof ONAHA, though farmers would have the option of hiring a private contractor. The project would finance the cost of the equipment and the creation of two brigades attached to the regional offices of Niamey and Tillabery. The periodicity of works on each 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 beneficiaries' responsibility. If they do not perform the task satisfactorily, ONAHA would do it and charge the labor to cooperatives. - 18 -

3. Crop Intensification

3.11 Crop intensificationwould be carried out on the 16 perimeters to be physicalLy rehabilitated (para 3.04) and Say, and continue to be carried out on the Namarigoungou perimeter, totalling about 4,700 ha (Annex 3-1). It would 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 of 2,600 kg/ha/crop on the perimeters to be rehabilitated;

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

(c) average yields of about 2,800 and 2,000 kg/ha for cotton and sorghum, respectively, on the five perimeters in the ADM valley (850 ha), compared with the present yields of about 2,600 and 1,850 kg/ha, respectively.

3.12 Agronomic packages. Agronomic packages for rice would be based on proven techniques already promoted on the Namarigoungou perimeter and on previous experience in similar ecological conditions. Rice transplanting, which is already a general practice, would be maintained. The variety now grown, IR 1529-680-3, performs well in terms of yield, grain quality and milling out-turn. Its cycle is also satisfactory: 135 and 125 days for the dry 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 help generalize double cropping and save on energy costs. The project would set up a simple seed multiplication scheme, taking advantage of the autogamous character of rice and its high multiplication coefficient from seed to harvest (about 100). In these conditions, small quantities of foundation seed produced by INRAN (para 3.18) would be multiplied on collective cooperative seed plots or by contract farmers on site, in order to produce enough good quality seed for the next crop. By repeating this process, the rice field would be progressively cleaned of impurities and good varietal purity would be achieved in two to three years.

3.13 Fertilizer and pesticide application. Application rates of fertilizer on rice would be upgraded since the results of trials carried out over five cropping seasons under the Namarigoungou project demonstrated that the new formula (400 kg of compound fertilizer 15-15-15 and 150 kg of urea) would yield incremerntalvalue of production 5-6 times greater than incremental fertilizer costs with the presently practiced formula (100 kg of compound fertilizer and 200 kg of urea) under the existing price structure. This rate, already applied since 1984 in the Namarigoungou perimeters, would be adjusted during project implementation to fit diverse ecological conditions, in the light of results of the adaptive research program (para 3.18). Seed dressing and insect control techniques tested in Namarigoungouwould be extended to all rice perimeters. On cotton, sorghum and onion, application rates would remain unchanged except for insecticides on cotton, which would be changed to a more active and efficient formula. Cooperatives would be provided with a seasonal credit fund to purchase inputs in required quantities and to offer seasonal credit to their members. Details of input rates and requirements are found in Annex 3-2. - 19 -

3.14 Farm implements. Animal traction equipment and pedal threshers would be promoted to permit timely land preparation and threshing, and to alleviate workload bunching between rainfed crops and the wet season rice crop. The objective would be to have one set of farm equipment for 2 ha of irrigated rice perimeters. To meet this target, the project would supply, on credit, 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 equipment) and 1,500 pedal threshers. In addition to 13 rice perimeters and five perimeters in the ADM valley, the other perimeters may also benefit from this program. In order to ensure that animal draft equipment is properly maintained, 30 blacksmiths would be given technical and management training and would receive the equipment they require on credit. They would be assisted by two regional trainers. The implementation of this animal traction promotion program would make it unnecessary for farmers to request custom land preparation by ONAHA's tractors.

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

4. Assistance to Cooperatives

3.16 The success of the project in the long run hinges on the participation of beneficiaries, and on their adequacely maintaining the assets put at their disposal. Niger has already made encouraging headway in this direction. For several seasons now, some irrigation cooperatives have incurred and paid most direct operating costs themselves. They also routinely set aside funds for 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 irrigation cooperatives (para 1.18). To provide a favorable environment for cooperative self-management,Government has taken the following actions:

(a) clear up cooperative accounts, with the assistance of a consultant financed by CCCE, in order to assess their net financial situation vis-a-vis banks, suppliers of goods and services, and collection agencies;

(b) define the terms of ONAHA/cooperative contracts under which the responsibility for scheme operation and maintenance would be transferred to cooperatives; at a minimum, beneficiaries would be required to reconstruct the field drains and irrigation ditches and - 20 -

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

(c) submit to IDA a model of internal cooperative statutes defining members' obligations, procedures for eviction and inheritance rights on irrigated plots.

In addition, Government is requested, as a condition of effectiveness, to prepare a plan for reconstructing cooperatives' debts including recommendations, if necessary, through a Government-appointed committee, for debt rescheduling, cancellation, or expulsion of non-payers, and to achieve progress satisfactory to IDA, in the implementation of such plan. It is expected that ONAHA/cooperative contracts and internal cooperative statutes will be adopted by all irrigation cooperatives under ONAHA's supervision, thus ensuring country-wide application of the major principles of institutional rehabilitation. Assurances were obtained at negotiations that ONAHA would not start rehabilitation works on a given perimeter until it has concluded a contract with the cooperative concerned and this cooperative has adopted internal statutes consistent with the model.

3.17 Assistance to cooperativeswould 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 managevment tool;

Cd) manage primary paddy marketing; and

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

Toward that end, a functional literacy and numeracy program would be implemented with the assistance of the Literacy Directorate of the Ministry of Education. The design of simple accounting procedures, initiated during project preparation with CCCE financing, would be completed and tested before project start-up. During project implementation,short-term consultants would be provided to assist in the implementation and evaluation of the program. Assistance to cooperative management would be provided by financing the cost of cooperative directors throughout project implementation, as well as the cost of seminars and training in management for cooperative accountants, executive members of cooperatives and women. ONAHA, with its own specialized staff assigned to headquarters and regional offices, would oversee cooperatives' management and see that their statutes are enforced. The project would make credit available to cooperatives for purchasing collective equipment (pumps for gardening, paddy dehullers, millet mill, etc.). It would help them establish village woodlots on soils unsuitable for crops. It would also provide them with sufficient working capital to enable them to apply the recommended intensificationpackages and to prefinance collective charges for operating irrigation perimeters (e.g., energy, collective nursery). - 21 -

5. Adaptive Research and Foundation Seeds Production

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

6. Strengthening of ONARA

3.19 To help ONAHA assume its role of lead executing agency, the project includes financing for incremental staff, office equipment, vehicles and operating expenses at ONAHA's headquarters and regional offices. This involves setting up a new unit for coordination, monitoring, evaluation, financial planning, budgeting and budgetary control (para 5.06). Assurances were obtained at negotiations that ONAHAwould set up this unit to be staffed and fully operational no later than December 31, 1985, and that this unit would be staffed throughout project implementation by personnel 'whose qualifications and experience would be satisfactory to IDA. In addition, the project would finance key posts in the Administrative and Financial Directorate, i.e., an expatriate administrative and financial director and a Nigerien chief accountant at ONAHAheadquarters and three accountants at ONAHA regional offices (para 4.14). The project would also finance the costs of annual audits over the project implementation period, and a study of the use of groundwater in the ADM valley to either supplement gravity irrigation or to replace 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 to enable this entity to process the incremental paddy production expected from the project, and to improve its overall efficiency. This option was chosen since existing private rice mills are too small to absorb considerable quantities of paddy collected by cooperatives from their members as payments of their debts (seasonal input and water charges). In order to run its mills effectively and become financially viable, RINI would need financial and managerial assistance. Financing requirements for this component, provided by CCCE and KfW, would include additional storage capacity, weighing equipments, technical assistance and an increase of RINI's permanent funds to enable it to purchase 3,000 tons of paddy each season from its own resources. The project would also finance a feasibility study of husk combustion as an alternative to diesel engines for the operation of rice mills. In order to improve management, Government is about to negotiate a management contract for RINI with CFDT. As a condition of effectiveness, Government would cause RINI to sign a management contract for RINI satisfactory to IDA with a qualified firm. - 22 -

C. Status of Project Preparation

3.21 Engineering designs based on sound criteria and adapted to expected project performance are available for all works to be constructed. Prepara- tion of bidding documents was completed in May 1984. Bid evaluation has been evaluated in order to minimize the risks of cost overruns. The construction schedule 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 or the health of the population. On the contrary, the regular canal cleaning achieved by the project would increase the speed of the water flow, thereby reducing the population of schistosome-bearingsnails, which are the agent of bilharzia. However, it is recognized that the project would not alleviate the problem of water pollution in a few villages caused by fertilizer and pesticide run-off into river meanders that have been cut off for use as pumping reservoirs. No water supply component is included because this would have been too expensive, difficult to implement and hard to justify on equity grounds, since the villages concerned still have better access to good quality drinking water in the main river flow than most areas in the country.

E. InternationalWater Rights

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

IV. PROJECT COST AND FINANCIAL ARRANGEMENTS

A. Cost Estimates

4.01 Total project costs, net of taxes and import duties (which would be waived) but including contingencies, are estimated at CFAF 11.6 billion, equivalent to US$25.2 million, of which 57Z is foreign exchange. Project costs are summarized below. - 23 -

Summary Project Costs a/

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

Rehabilitation Works On Force Account 1,255 1,664 2,922 2.8 3.6 6.4 57 30 By 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 & Seed Multiplication 112 174 286 0.2 0.4 0.6 61 3

Strensthening of ONAHA Assistance to ONAHA 360 731 1,091 0.8 1.6 2.4 67 I1 Monitoring & 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 5 Price 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 adjustment factor of 9.1Z on local cost, and 4.8Z on foreign cost. The total allowance for physicalcontingencies amounts to 5% of base costs. Price contingencies. which amount to 13% of total costs or 14Z of base costs includingphysical contingencies,have been calculatedat the followingannual percentagerates: - 24 -

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 proposed that its contribution be limited to (a) providing the Namarigoungou equipment to be used for the rehabilitation works (valued at its depreciated replacement value) and the cost of its overhaul; (b) salaries of incremental civil servants; and (c) salaries and related costs of the agriculturalistworking on the Namarigoungou project during the interim period. Beneficiaries' financial contribution 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, or US$3.9 million as a grant. CCCE and IDA would share the remaining project costs equally. The CCCE loan would be for a term of 30 years including ten years 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 11 IDA 9.3 37 CCCE 9.3 37 F.R. of Germany (KfW) 3.9 15

Total 25.2 100

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

(a) IDA, CCCE and KfW will jointly finance US$8.3 million (49%, 27% and 24%, respectively), including:

(i) the cost of civil works on force account, excluding expatriate staff cost, new equipment and vehicles and overhaul costs of the 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 - 25 -

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

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

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

C. On-Lending and Administrationof 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 the proceeds for agricultural equipment on medium-term credit, which would be on-lent to cooperatives. Assets created or upgraded by investments (rehabilitation works) would belong to Government, while ONAHA would act as a manager for the assets. Funds for applied research and the electrification of the pumping stations would be passed on to other subcontracting Government agencies (INRAN and NIGELEC) by ONARA also as grants. ONAHA would furnish the appropriate Government services with all the means necessary (except civil servant salaries) to carry out training activities and the establishment of woodlots. Funds for initial establishment of seasonal credit funds for cooperatives would be passed on to cooperatives by ONAHAas grants. After the initial establishment of seasonal credit funds for cooperatives, individual members' repayments against short-term credit for inputs would be paid into the revolving fund administered thereafter by each cooperative. Farmers would obtain medium-term credit in kind, i.e., receive equipment purchased by ONAHA. Farmers' repayments against medium-term credit for farm implements and collective equipment would be paid to cooperatives which in turn pay back principals to Government at an annual interest rate of 1% over a period of a maxinum of eight years (para 5.08). - 26 -

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

Total Govt. Benef. IDA CCCE KfW

1. Rehabilitationworks - 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 0.4 seed 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 expenditures for rehabilitationworks to be reimbursed under external financing, a revolving fund would be established immediately after credit effectiveness with all cofinanciers' contributions for a total amount of CFAF 720 million (US$1.6 million). 1/ IDA would make an initial deposit of CFAF 353 million (US$0.8 million, 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 and services to be paid directly and local personnel salaries, adjusted to delays in processing of reimbursement requests and payments. The major items are costs of force account works (CFAF 287 million: average four month requirements of the first year costs such as civil works, local personnel and vehicle operating costs) and payment to cooperatives of seven perimeters to be rehabilitated in the first year to establish revolving funds for working capital (CFAF 267 million). These costs are jointly financed by IDA, CCCE and KfW. - 27 - also make an initial deposit of their respective shares (27% and 24%) into their respective Special Accounts. Upon the completion of civil works by force account and payment of cooperatives' revolving funds, the Special Account deposit would be reduced to CFAF 70 million. IDA would replenish its part of the revolving fund upon receipt of satisfactory evidence that all expenditureswere 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 major packages: the pumping equipment, vehicles and farm implements would be financed by CCCE; the electric power lines by KfW. The earth moving equipment, threshers and rehabilitation of the dams in the ADM region will be financed exclusively by IDA and will be procured under international competitive bidding. These and other procurement arrangements are summarized in the following table with amounts to be financed by IDA shown in parentheses.

4.08 The dispersed and sporadic nature of rehabilitation works on the irrigation/drainagesystems, roads and protection dykes, and the need to work around cropping schedules, give an advantage to ONAHA in implementing these works on force account. Most of the construction equipment needed as well as the required skilled manpower are already available from the recently completed Namarigoungou project. Additional experience would be gained in operating the maintenance equipment to be procured under the proposed project, which would initially be used for construction and thereafter for maintenance of the main infrastructure. Comparison of construction costs by the Namarigoungou force account fleet and proposed by local contractors shows further that unit costs for earthworks done by contractors are higher than those of works done on force account. Works to be done on force account, mainly comprising the physical rehabilitationof the perimeters (earthwork and structures), would amount to US$7.3 million, including local and expatriate staff costs. - 28 -

Amounts and Methods of Procurement (US$ million)

Procurement Method Total Project Items to Be Procured ICB LCB Other N.A. Cost

Earthworks, structures, buildings 1.2 0.43 a/ b3 5.1 and 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 4.5 costs and misc. equipment (0.2) (1.7) (1.9)

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

Revolving funds for cooperatives - - - 1.6 1.6 and 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 and Budgetary Control Unit, ONAHA (36 man-months), CCCE finances Chief Exigineer (21 man-months) and Works Supervisor (21 manm-onths), both for force account works, Rice Processing expert, RINI (24 man-months) and Administrative and Financial Director, ONARA (36 man-months), and KfW finances Administrative and Financing Manager for force account works (24 man-months) and Agriculturalist/Rice Expert (36 man-months). ft Including the preparation studies financed by CCCE. - 29 -

2. Contract Review

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

3. Consultants

4.10 Expatriate staff and short-term consultant costs amount to about US$3.6 million, including contingencies, for 246 man-months of resident expatriate staff and 39 man-months of short-term consultants. Assurances were obtained at negotiations that the terms of reference, qualifications and experience of expatriate staff and censultants financed by IDA would be acceptable to IDA. Particular emphasis will be given to the training of local personnel for subsequent managerial and staff positions within ONAHA. The draft terms of reference are shown in Annex 4-1.

F. Disbursement

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

4.12 Withdrawal applications would be fully documented, except for categories (1)(b) and (3)below, for which statements of expenditures (SOE) would suffice. In the case of the SOE procedure, supporting documentation would be kept by ONAHA for verification by the auditors financed under the project, and for review by IDA supervision missions. Withdrawal applications for civil works done on force account (Cat. (1)(b)) would be supported with a statement 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 reimbursement application for less than an estimated US$20,000 equivalent.

4.13 The disbursement profile deviates from the Aggregate African Regional Profile for irrigation projects because of the initial disbursement to the special account, the fact that physical rehabilitationwill take place only in the first two project years, and because of the favorable disbursement experience in Namarigoungou, where the whole credit was disbursed in about five years from Board presentation. Disbursement of the present project is expected to be completed in six years. The schedule of disbursements is in Annex 4-2. - 30 -

Allocation and Disbursement of IDA Credit

% total estimated cost to 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 incremental staff on contract (other than in category (4)), training and operating costs and office equipment 1.4 49

(4) Services of consultants, experts and 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 preparation facility 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 since 1980/81. The most recent accounts for 1982/83 are audited but not certified since the auditors cannot vouch for the accuracy of the accounts. The deficiencies in ONARAts accounts are mainly due to a shortage of adequately trained accounting staff at senior and intermediate levels, and a lack of internal control over the application of procedures. In view of the general weakness of ONAHA's financial management, the proposed project would set up a new unit (para 3.19), whose functions include financial planning, budgeting and budgetary control, to tighten internal control, and finance key posts in - 31 - the Administrative and Financial Dir. torate, namely, an expatriate administrative and financial director and a Nigerien chief accountant at ONAHA headquarters and three accountants at ONARA regional offices. In order to ensure efforts to redress the current accounting practices, recruitment of an administrative and financial director, ONAHA, chief accountant and three regional accountants with qualifications satisfactory to IDA would be a condition for credit effectiveness. They would be responsible for implementing recommendations made by the auditors to improve ONAHA's accounting practices and putting order in ONAHA's accounts by September 30, 1986, the date 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 implementation by independent auditors acceptable to IDA and financed by the project. Audited financial statements and reports, of such scope and in such detail as IDA may reasonably request, will be submitted to IDA within four months of the end of each fiscal year. The auditor's report will include a statement on the adequacy of the accounting system and internal controls and on whether or not IDA funds have been used for their intended purposes. The report will also confirm that summary SOEs, submitted as justification for disbursement under Categories (1)(b) and (3) (para 4.12), correctly reflect detailed records kept by ONAHA. Assurances on the above were obtained at negotiations.

4.16 Assurances were obtained at negotiations that ONAHA would establish and maintain separate project-related accounts in accordance with sound and accepted accounting principles and practices, and that ONAHA would complete the design and installation of a cost-accounting system and start its operations not later than December 31, 1985.

4.17 Assurances were also obtained at negotiations that cooperative accounts would be audited by independent auditors acc ptable to IDA every other year, starting from fiscal year 1985/86, and audit reports would be submitted 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) submit to IDA, within two months after the end of each semeste., bi-annual progress reports in a format still to be agreed, and (b) submit to IDA a Project Completion 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, starting in October 1985, with ONAHA as the lead agency. ONAHA's General Manager would act as Project Manager, except for the RINI component, which would be managed separately by RINI. ONAHA's three Regional Offices (Tillabery, Niamey and Tahoua) are responsible for day-to-day project activities and field level coordination. ONAHA would be directly responsible for implementing the physical rehabilitationof the irrigated perimeters and for carrying out crop development activities (extension, crop intensification, monitoring and - 32 - evaluation). Adaptive research and the production of foundation seeds would be subcontracted to INRAN. For cooperative training, ONAHA's Regional Offices would coordinate and supervise the implementation of training activities by regional teams composed of representatives of the Literacy Service of the Ministry of Education, the "Animation" Service of the Ministry of Planning and ONAHA. The Forestry Service of the Ministry of Hydrology and Environment would, under ONAHA's supervision, establish village woodlots on soils unsuitable for crops.

5.02 The physical works would be implemented over a two year period. The autonomous force account unit exists with the core local staff and would be responsible for the construction of works on force account, as well as for supervision of the contracted works. The force account unit would be headed by an expatriate Chief Engineer to be recruited, who would be responsible to ONAHA's Director General; he would in turn be assisted by two other expatriates, i.e., a works supervisor and an administrative and financial manager for force account, and local staff. Since local staff developed considerable skills under the Namarigoungou project, the input of expatriate staff has been reduced considerably from its level in this previous project. At the end of the construction period, most of the local staff engaged in construction activities would be transferred to the regional maintenance brigades that are to be established under the proposed project.

5.03 In the interim period between the closure of the Namarigoungou project and the start of the proposed project, a nucleus staff would be retained at the Namarigoungou project headquarters at Tillabery and financed from the revolving fund established by Goverment for the implementation of the Namarigoungou project. This staff would be responsible for the reconditioning of that portion of the heavy equipment procured under the Namarigoungou project that would be redeployed under the proposed project.

5.04 Civil works related to buildings and pumping stations would be awarded to the private sector. The electrification of the pumping stations would be subcontracted to NIGELEC. Civil works related to irrigation and drainage systems, dykes and access roads would be executed on force account by OKAHA. Farmers would participate in the rehabilitationworks by reconstructing field drains and reshaping field irrigation channels on a no-cost basis.

5.05 Once the rehabilitation works are completed, responsibility for scheme operation would be transferred to farmers. Maintenance of field drains and irrigation channels would be the responsibility of the beneficiaries. Farmers would have the option of having the main perimeter infrastructure maintained by ONAHA at a fixed rate and at real costs, or hiring a private contractor,with ONAHA supplying technical assistance. Pump maintenance would be contracted out to the private sector. Maintenance contracts would bind each cooperative and the pump supplier representative,and would be monitored by ONARA (para 3.08).

B. Financial Management

5.06 In addition to normal financial accounting, ONAHA has started to develop a cost-accounting system. This system needs to be adapted to the Project's transactions and tied in with the basic accounting data of each regional office. Adequate procedures will be established between ONARA's - 33 - regional offices and the cooperatives to take into account their respective financial responsibilities for operation and maintenance of the rehabilitated perimeters. Cost data will be analyzed and synthesized by staff for financial planning, budgeting and budgetary control in the new unit to be created (para 3.19) which will report directly to ONAHA's General Manager. In addition to processing cost data for decision making, it will support ONARAin the areas of long-range planning, budgeting, budgetary control (including control of cooperatives' cost recovery performance) and internal audit.

5.07 A financial and administrativemanager (expatriate),a chief accountant and three regional accountants, with qualifications and experience satisfactory to IDA, will be recruited by ONAHAin 1985 with CCCE financing, before project start-up. Their costs during the project implementation period would be borne by the project. The financial and administrative manager and the chief accountant will have primary responsibility for:

(a) the financial and cost-accounting system;

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

They will also participate in budget preparation. Assurances were obtained at negotiations that ONAHA would continue to employ a financial and administrative manager and a chief accountant with qualifications and experience satisfactory to IDA.

C. Credit Management and Marketing

5.08 The project will finance two types of credit. Credit would not be channelled through CNCA which, because of past questionablelending practices, is facing increasing recovery problems. Being practically bankrupt, it has now ceased all lending operations. Hence, until a long-term solution for agricultural credit is worked out, credit under the project would be handled in the following way. First, seasonal credit would be provided by cooperatives to their members out of their seasonal credit funds (a total of US$0.9 million), to be established at each cooperative by the project as a grant. With this fund, cooperatives purchase seasonal inputs for the use of members and prefinance collective charges for irrigation operations (para 3.17). Cooperativeswould have the option of purchasing seasonal input directly from the private sector, or of ordering them from the Input Su-.ply Center (CA). Seasonal credit extended to individual members by cooperatives would bear annual interest of not less than 12% for the provision of expected inflation and bad debts. Assurances on the above were obtained at negotiations. Secondly, medium-term credit would be provided for farm implements (US$1.9 million), blacksmith equipment (US$34,000), threshers (US$0.6 million), and collective equipment (US$0.35 million). Medium-term credit would be managed by cooperatives with technical assistance provided by ONAHA. Their members would put a minimum 10% down-payment and repay the rest at an annual interest rate of 12X to cooperatives over a period of a maximum of five years. As noted in para 4.05 cooperativeswould in turn repay to Government at an annual interest rate of 1.0% over a period of a maximum of eight years. Assurances - 34 - on the above were obtained at negotiations. Since further details on terms and conditions for credit remain to be laid out, Government is re;uested, as a condition of disbursement for agricultural equipment and seasonal credit fund (categories (2)(b), (2)(c) and (5)), to make contractual arrangements with cooperativessatisfactory to IDA for seasonal and medium-term credit.

5.09 In order to avoid a high rate of delinquent payments, cooperatives have elected to require their members to market, through their cooperative, a quantity of paddy at least equivalent in value to their debts due to those cooperatives. This arrangement is acceptable to IDA. However, farmers should be allowed to take advantage of the higher prices which may exist on the private market. Therefore, assurances were obtained at negotiations that (a) farmers would be given the option of selling, either to RINI through their cooperatives or to the private sector, any surplus of marketable paddy above what they owe to their cooperatives, and (b) Government would be committed to the purchase, through RINI, of all the quantities offered to it by farmers, in order 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 Namarigoungou and Say; 8,000 tons if these are excluded). An increase in paddy production would result from the expansion of cultivable areas by about 300 ha, the increase in crop intensity, and from average yields per ha that would increase from their present level of 2.45 tons/ha in wet seasons and 2.75 tons/ha in dry seasons, to 3.7 tons/ha and 4.0 tons/ha, respectively. These average yields at full development are realistic and could be comfortably achieved, since yields as high as 5 tons/ha/crop are already observed in the Namarigoungou perimeters. The yield increases would be realized by:

(a) improved doses of fertilizer (150 kg of urea and 400 kg of compound fertilizer 15-15-15 instead of the currently recommended practice of 200 kg of urea and 100 kg of compound fertilizer);

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

6.02 The "without project" production level for 11 physically rehabilitated rice perimeters is assumed to remain at the level of PYO except for the - 35 -

Kokomani perimeter. 1/ In the case of perimeters at Namarigoungou, for which 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 present high average yield levels at Namarigoungou (3.7 tons/ha in wet seasons and 4.0 tons/ha in dry seasons) would not be sustained and would decline to 2.7 and 3.0 tons/ha, respectively, levels that are currently observed in other neighboring perimeters. Average yields at the Say perimeter, which also will not be physically rehabilitated, would increase "with p_oject" from the present level due to improved fertilizer application and other support activities.

6.03 "With project" productions of seed cotton and sorghum reach tneir peaks in PY4 (about 1,200 tons and 900 tons, respectively) while those of onions peak in PY3 (2,850 tons). Incremental productions of seed cotton and sorghum, however, would peak in PY15 (990 tons of seed cotton and 740 tons of sorghum) due to the fact that the useful life of the perimeter at Ibohamane would be prolonged by raising the dyke level of the reservoir dam, thus maintaining irrigable lands at the present level until PY14. This is because without the project, irrigable lands would start declining from PY4. In addition, it is assumed that two dams at Moulela and Kawara would not remain operational beyond PY5 under the "without project" situation and that there would thus be no production at two perimeters after PY6. Increase in production of cotton and sorghum would result from a minor increase (15 ha) of cultivable area and modest increases in average yields (150-200 kg/ha of increase), resulting mainly from better water management. 2/ Incremental production of onions is entirely from the Ibohamane perimeter, where dry season cultivation would become possible through increased availability of water 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 the range of 25-40,000 tons per year during 1977-82, with about 90% coming from the Niamey Province. Total rice consumption was estimated at 70-80,000 tons in 1981/82. National paddy production meets only some 40% of consumption needs, the rest is met by official imports of rice (40,000 tons) and private imports.

1/ Due to the breakdown of pumps, there is no production at the Kokomani perimeter, whose conditions are otherwise reasonable. In the "without project" case, replacement of pumps would be made to restart production on the existing cultivable areas and to maintain current yields.

2/ Agronomic packages including fertilizer formula and cultivation practices would remain unchanged except for application of more efficient insecticides on cotton. - 36 -

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 of licensed private traders. Commercial imports of rice (other than food aid) by OPVN have increased at an average annual rate of 25X from 15,700 tons in 1977/78 to 39,000 tons in 1981/82. Given a population growth rate of 3.3% a year and an even higher rate of urban population increase, the demand for rice can be expected to keep rising. Incremental paddy production from the project of about 11,000 tons (rice equivalent 7,000 tons) would therefore have a ready market. In 1983, however, rice imported to Niger, even with the natural protection from imports provided by high inland transport costs, has been cheaper than locally-produced rice. In mid-1983, OPVN, the sole buyer for RINI's local rice, stopped buying from RINI while importing rice to exploit higher profits, thus leaving RINI with mounting stocks. This situation was alleviated when Government imposed an import duty on rice (12% on imported price at the border) to protect local production from the unusual fluctuation of world market prices, in addition to increasing import licenses for private imports to 5,000 CFAF/ton. This compensatory levy on rice imports is subject to regular review. Based on the Bank's commodity projections, it is estimated that import parity prices of rice in Niamey will increase by about 14% in real terms 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, about 25-30% is marketed by cooperatives to RINI. The rest is consumed on farms or sold in local markets. Until recently, Government imposed compulsory paddy sale by cooperatives to RINI at official producer prices. The compulsory level was raised from 1.5 tons/ha/cropping season to 3.0 tons/ha/cropping season in the 1981 wet season. If actually enforced, this measure would have left nothing for consumption by farmers and was considered one of the major reasons for farmers' dissatisfaction and disinterest in rice cultivation. Under the project, however, it is proposed that individual farmers deliver to cooperatives a quantity of paddy equivalent to their dues to cooperatives. The typical crop budget indicates that this would amount to 1.3 tons/ha of paddy, or 35% of total production (3.7 tons/ha). This seems reasonable and is in line with what is currently marketed through cooperatives. Since farmers would have other individual financial obligations at harvest time, the volume marketed through official channels could be higher than the equivalent of the charge due to cooperatives if official producer prices are competitive with the 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 one ton of paddy/ha/season, 12,000 tons would be sold to RINI annually. Based on the existing input/outputprice ratios, and assuming that RINI has liquidity to finance its paddy purchase, the long-term break-even point for RINI is estimated 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 tons reached in 1975/76 to an estimated 2,800 tons in 1983/84. The French Company for Cotton Development ("Compagnie Francaise de Developpement des Textiles"' - CFDT) markets and processes seed cotton at its own ginning factories for sale to the local textile manufacturing company, SONITEXTIL. The total existing ginning capacity is 14,000 tons of seed cotton (10,000 tons in Madaoua and - 37 -

4,000 tons in Maradi). The factory in Mfadaouais the only one in operation at the moment, and is running significantly below capacity. The SONITEXTIL factory can treat 1,500 tons of fiber annually, equivalent to 3,700 tons of seed cotton. The peak incremental production of 990 tons of seed cotton expected under the project could be easily ginned and marketed for local use. Since 1980/81, Government has increased cotton producer prices twice in successive years. Cotton production might increase to the point where Niger could resume cotton exports. Sorghum is marketed by OPVN at official producer prices through cooperatives or by local traders at market prices. Onions produced in Tahoua are marketed by private traders mainly for export to neighboring 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 the previous season; they were successively raised in 1981/82 and 1982/83 (para 1.08). Economic prices for paddy, rice and sorghum are calculated as import parity prices. Although cotton is not exported at the moment, its economic prices are calculated as an export parity derived from world market prices, because the recently improved price incentive (from CFAF 62/kg in 1980/81 to CFAF 120/kg in 1982/83) may induce increases in cotton production for export. Since market prices for paddy are not readily available, official producer 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 department and from market to market. Market prices for onions also vary between seasons and years, ranging from CFAF 30/kg to 120/kg or more, but an average of CFAF 76/kg is used for economic analysis. Economic prices for paddy, rice, sorghum and cotton are calculated using the Bank's commodity price projections up to 1990 (details in Working Paper 7). A comparison of the official, market and economic prices is shown in the following table. - 38 -

Financial and Economic Prices (CFAF/kg)

Official Market Economic Farmgate Official Producer Prices Prices Prices Wholesale

1983/84 1983/84 1983 1990 1983/84

Main crops Paddy 85 85 80 / 95 / - Rice - - 154 a 176 - ISO Sorghum 70 80/90 96 86 110 Cotton 120/110 b/ 120/110 - 176 159 - Onion - 76 76 76 -

By-products Bran - 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 kg of paddy and 1 kg for bag weight), then weighed, and each cooperative member is paid for 70 kg of paddy at the current official producer price of CFAF 85/kg. Therefore, individual farmers are paid CFAF 80.4/kg for their paddy and the remainder, CFAF 4.6/kg, is kept by cooperatives to cover for losses in transit. Cooperatives then sell paddy to RINI at CFAF 88/kg. The difference, CFAF 3/kg, is used by cooperatives to cover primary marketing costs. The transport from cooperatives to RINI's rice mills was previously the responsibilityof cooperatives, with an additional CFAF 2/kg paid to them, but the responsibilityhas rested with RINI since the 1983/84 wet season.

6.11 At present, urea and compound fertilizer 15-15-15 are procured mainly from Nigeria. Supplier prices plus distribution costs for urea and compound fertilizer (CFAF 60/kg and CFAF 66/kg, respectively) are substantially lower than import parity prices on international markets. Official prices are even lower: CFAF 50/kg for urea and CFAF 45/kg for compound fertilizer 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 in Nigeria, degrees of control on officially distributed fertilizers by Nigerians, and market exchange rates between the CFA franc and the Nigerian Naira. Undez these extremely uncertain conditions, the most pessimistic scenario is assumed: Niger would import fertilizer entirely from - 39 - international markets. 1/ In that case, the fertilizer formula would have to be altered from 150 kg of urea and 400 kg of compound fertilizer 15-15-15 to 200 kg of urea and 100 kg of DAP (dismmonium phosphate) which provide almost the same nutrients and are more efficient in terms of transport costs per nutrient. Estimated import parity prices for urea and DAP (CFAF 120/kg and CFAF 140/kg, respectively)based on the Bank's commodity price projections are used both for economic and financial analyses.

D. Cost Recovery

1. Subsidies

6.12 Government policy with regard to subsidies -wasoriginally considered as 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 and equipment and to poor maintenance of pumping equipment and irrigation and drainage infrastructure. This policy thus had effects on beneficiaries that were the opposite of those intended. Now that uranium revenues have severely declined, there is little justification for any subsidy on farm implements.We can still see a justification,however, for a subsidy on seasonal inputs in the absence of any form of crop insurance, and to the extent that the budgetary allocation for this would entail no rationing. At negotiations, the Niger delegation confirmed that it is the Government stated objective to gradually abolish all agricultural input subsidies (para 1.24) and that, in fact, under a recent USAID agricultural sector grant, the Government is already committed to reducing the average rate of subsidy on agricultural equipment to 15% by end-1988. We agreed fox the purpose of this project to accept Government's present efforts and that this question will be reviewed during preparation of the structural adjustment credit. Assurances were obtained at negotiations that cooperatives would bear the full costs of operation and maintenance, including provisions for the renewal of pumping equipment.

2. Cost Recovery in Irrigation

6.13 A main principle in costing irrigation is that all the maintenance and operations costs for irrigation have to be borne by beneficiaries. The pumps would be installed at first by the project, but their future replacement would be the responsibility of cooperatives. Beneficiaries would also be required to bear the full costs of operation and maintenance, which include costs related to cooperative collective nurseries, energy, pump and infrastructure maintenance costs, salaries for a pump attendant and a cooperative bookkeeper, replacement of pumps, and salary for a cooperative manager (from PY6). The only cost not recovered from beneficiaries is related to various

1/ This represents the most pessimistic case because it is likely that Niger could still get fertilizers from Nigeria at prices cheaper than internationalprices because a demand for the hard currency CFA franc would continue to be strong in Nigeria and the quantity of fertilizer consumed in Niger is very small compared with the Nigerian consumption. - 40 - technical advice provided by ONAHA staff. Combined with production costs paid by individual farmers, such as fertilizers (valued at international prices), pesticides and land preparation, the total monetary costs of production would represent 38-40% of the gross production. This is within the range generally accepted as the upper limit of the monetary costs:output value ratio for such a project. A sensitivity analysis further shows that this ratio would go up to 49% when yields are reduced by 20Z to 3 tons/ha, to 42% with an increase of electricity costs of 25X, and to 50% with a 20% decline in paddy prices. Cost recovery 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 at CFAF 80.4/kg, which farmers receive. b/ From the Daikena perimeter, which bears costs higher than the average perimeters with electric pumps. - 41 -

E. Financial Implicationsfor Beneficiaries

6.14 Income of farmers under the project is derived not only from irrigated plots, but also from rainfed farming, livestock, market gardening and non-agricultural sources. Since information on activities outside of irrigated rice production is not readily available, farm family budgets have not been prepared. Instead, the impact of the project on farmers' incremental income from rice cultivation has been examined. This approach seems reasonable, since the project will not affect agricultural activities outside of irrigated parcels, because the development of animal traction is expected to eliminate bottlenecks when work requirements for rainfed and rice cultivation are in conflict. Benefits from this, however, reside mostly in rice production, because if rainfed and rice farming are in competition, priority is always given to the former. Moreover, the equipment would be purchased by selected farmers (one set for 2 ha of irrigated land) and rented out to others. Owners of equipment would improve rainfed farming with the help of the equipment, but for the majority of farmers the impact of the project on rainfed farming would be negligible. 1/

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

1/ It is assumed that for half of the time, equipment would be devoted to rainfed farming. However, for economic analysis, the full cost of animal-drawn equipment has been charged to the project, as no incremental production is assumed from rainfed crops. - 42 -

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

Without project With project Interim First Second Full year yea /r ea 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 - collectivecharges 102,780 103,190 124,496 129,504 129,504 - individualcharges d/ 83,000 103,200 139,675 140,300 141,400 (ofwhicv 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 1,493 Ctof net income/man-day withoutproject) (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, valued at CFAF 10/kg.

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

e/ Twenty man-days' saving per season from use of a pedal thresher. f/ Before physical rehabilitation and improvements in rice cultivation but with 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 fertilizers would be imported from international markets and that the fertilizer formulae would be changed to more efficient ones (urea and DAP) in terms of transport - 43 - costs per nutrient, but almost'equivalent in nutritive value to the formula consisting of urea and compound fertilizer 15-15-15. It is assumed that subsidies on agricultural inputs and farm implements would be eliminated immediately. In reality, subsidies on fertilizers and farm implements would be gradually reduced, at a rate which is not certain (para 6.12). In the "twithoutproject" case, it is assumed that the total amount of subsidy per hectare, based on the current fertilizer application and rate of subsidy, would be maintained. In both cases, land preparation is assumed to be done by animal traction on a rental basis, but the higher unit cost per hectare in the "with project" case reflects elimination of subsidies on equipment. Rental costs of a pedal thresher are included in the "with project" case only and the man-day input is accordingly reduced. The table shows that net incomes during the interim period (before physical rehabilitation and before improvements in rice cultivation but with no subsidy on inputs) would slightly decline. The table also shows a jump in production costs, due to payment of operating and maintenance costs at full, upgrading in pesticides and fertilizer applications and elimination of subsidies on inputs, but paddy yields increase only gradually. This would cause a reduction in net income in the first year after the physical rehabilitation. This, however, is not considered as a threat to the project for three reasons. Firstly, subsidies on fertilizer and farm implements would be eliminated gradually. Secondly, assumptions on gradual increases in yields are in fact conservative and a jump in yields from the first year after physical rehabilitation is possible, if all the inputs and crop calendar are respected as recommended. Thirdly, even if yields improve only gradually, it is unlikely that farmers will abandon cultivation in the face of a reduction in income in the interim and first years because:

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

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

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

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

1/ Insecticides on cotton would be changed to more efficient ones but costs remain the same. - 44 - most of the incremental gross value of production (CFAF 20,500/ha) 1/ would become farmers' incremental net income.

F. Financial Analysis of ONARA

1. Financial Situation

6.18 Upon its creation in 1979, ONANA received as Initial capital an investment grant in kind (office buildings and secondhand equipment) valued at CFAF 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 new subsidized programs without adequate financing. As a result, ONARAhas been obliged to borrow funds from CNCA, and is unable to repay its accumulated debt of CFAF 900 million. Given the gravity of the financial situation, i.e., negative cash flow, depleted working capital, high financial charges, inadequate cost recovery, and a critical shortage of permanent funds, ONAHA's finances were thoroughly reviewed with Government and cofinanciers during the appraisal mission. Detailed financial statements showing ONARHA'spast performance (1980-84) are given in Annex 6-4.

2. Financial Remedies

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

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

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

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

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

(e) assurances were obtained at negotiations that Government would adequately and timely finance ONAHA's overhead expenditures for services performed on Government's behalf, and which are not covered by external sources, by transferring to ONAHAits quarterly contribution, at the beginning of that quarter. With the clearing-up of ONAHA'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 x CFAF 85/kg - CFAF 8,500. - 45 -

recovery policies, these costs would be drastically reduced from their present level of about CFAF 450 million to CFAF 200 million in 1984 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 contributionwould be limited to the salaries of civil servants. After project completion, perimeter directors would be replaced by managers hired and paid by cooperatives. However, Government would have to retain and finance the costs of a nucleus extension network (one agent for 600 ha), the adaptive research program and the operation of technical and support services at central and regional levels. These incremental recurrent costs at project completion are estimated at about CFAF 55 million at constant base prices (1984), in addition to ONABA's non-incremental overhead costs, which are estimated at CFAF 200 million at constant base prices. The total requirement of CFAF 255 million for Goverment financing of recurrent costs represents less than two thirds of the ONAHA's present budgetary requirements. ONAHA's cash flow, including Government financing needs from its budget, is shown in Annex 6-5. Govern- ment's annual revenues, to be derived from that part of beneficiaries' incremental monetary income to be spent on taxable goods, are estimated at about CFAF 65 million at constant base prices. Government project-related cash flow (Annex 6-6). after taking into account elimination of subsidies on operating and maintenance costs of irrigation (para 6.12), shows a deficit throughout the 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 kg per average irrigated holding of 0.25 ha). which would represent less than 6Z of output value. If such a tax were applied to the entire irrigated area, it would provide enough funds for a positive cumulative project-related cash flow. However, the premature introduction of a capital tax could discourage farmers and endanger the cooperative development process sought by the project. Since monetary costs of production are estimated to represent about 40% 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 the projected yields are actually achieved. Assurances were obtained at negotiations that ONAHA would carry out a study by December 31, 1988 in order to review the extent to which farmers shall be able to contribute towards the capital cost of irrigationworks and would transmit the recommendationsto the Government 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 River valley, and that of cotton, sorghum and onions in the ADM valley. Incremental production of paddy would come primarily from 11 existing irrigated perimeters once they are physically rehabilitated, thus regaining cultivable areas. improved technical packages, including animal-drawn equipment and new fertilizer formulae, would also be introduced. In the case of five perimeters in - 46 - the ADM valley, the project would increase the cultivable area or postpone the drying up of perimeters caused by siltation of the dams, and increase the cultivable area in the dry season. In addition to incremental production, direct project benefits include savings on operation and maintenance costs of pumps by substituting electric pumps for diesel ones. Furthermore, time saved by introducing threshing machines on rice perimeters is valued at the estimated opportunity cost of- labor of CFAF 600/day and is added to the project benefits. Together with main crops, such by-products as rice straws and brans are also taken into account in the direct project benefits.

2. Non-quantifiableBenefits

7.02 The project's institutional rehabilitation program would also have substantial benefits. These are not readily measurable but would have spill- over effects on the entire irrigation subsector in Niger. A reliable and sustainable system of irrigation operations would be ensured by increased self-management by cooperatives and by clarifying and enforcing responsibilities of the parties involved (cooperativesand state agencies). This system, once it is proven to be workable and sustainable,would be a model for all the existing and future perimeters and would help rationalize the use of irrigation investments. From the long-term sectoral point of view, the project's indirect benefits through institutional reforms are far more important than its direct, quantifiablebenefits.

B. Economic Analysis

7.03 Rates of return are calculated according to the following major assumptions:

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

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

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

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

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

7.04 Based on these assumptions and prices, economic costs and benefits were 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 the Namarigoungou 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 results can be summarized as follows:

Economic Rates of Return CX)

Share in EER Economic Costs

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

ADM Valley Five perimeters 12 18 Excluding overhead costs 18 (13)

Total 18 100

7.05 Sensitivity analysis was performed on the above five cases as follows:

Sensitivity Analysis . )

Switching value at 10% % Change Base Cost Benefits Cost +20% Case +20% -20% Benefits -20% Benefits Costs

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

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

Total 18 15 14 11 -36 56 - 48 -

Overali rates of return for the ADMperimeters as a whole are relatively low when they include their share of overhead costs and some individual perimeters are 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;

(d) better alternative investment opportunities are scarce in agriculture.

C. Risks

7.06 Given the available detailed engineering studies and experiences acquired by ONAHAunder the Namarigoungou project, the physical execution of rehabilitation works would not pose a problem. One major foreseeable risk is related to maintenance and operations. The maintenance of pumping stations, which is vital to the success of the project, would be assured by a pump supplier. In order to keep maintenance costs to a minimum and at the same time prevent poor maintenance, an annual review of maintenance contracts would be introduced to check performance (para 3.08). Another serious risk would be the cooperatives' failure to achieve self-management of perimeters, either because of technical inability on the part of cooperatives, or through financial failure due to unpaid charges by cooperative members. To minimize the former risk, the project would finance a variety of training programs, not only for cooperatives, but also for those with advisory roles. The latter risk would be reduced by establishing internal contracts specifying rights and obligations in the case of non-payment of charges. In addition, the fact that the project consists of independent perimeters is an advantage, since problems in one perimeter would not necessarily affect the project as a whole.

7.07 Other possible risks are financial and managerial. One risk would be failure by Government to provide a sufficient budgetary allocation to ONAHA. This risk cannot be entirely ruled out but the amount at stake is less than ONAHA's present budgetary requirement and Government's project-related cash flow will be favorable. The risk related to ONAHA's management capability would be minimized by financing a training program for its staff and technical 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 the following principal points:

(a) ONAHA and NIGELEC would conclude an agreement satisfactory to IDA for the implementation of the electrification of the pumping stations not later than December 31, 1985 (para 3.07); - 49 -

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

(c) ONAEA would ensure that arrangements satisfactory to IDA are made to assist cooperatives to select qualified contractors for the maintenance of pumps, and review annually the adequacy of such maintenance by such contractors, and take actions to remedy any maintenance deficiencies disclosed by the annual review (para 3.08);

(d) ONAHA would not start rehabilitationworks on a given perimeter until it has concluded a contract, satisfactory to IDA, with the cooperative concerned, and this cooperative has approved internal statutes consistent with the model satisfactory to IDA (para 3.16);

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

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

(g) the terms of reference, qualifications and experience of all expatriate staff and consultants financed by IDA would be acceptable 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 independent auditors (para 4.14);

(i) ONAHAaccounts would be audited annually by independent auditors acceptable to IDA; audited financial statements and reports, of such scope and in such detail as IDA may reasonably request, would be submitted to IDA within four months after the end of each fiscal year; the auditor's report would include a statement on the adequacy of the accounting system and internal controls, and on whether or not IDA funds have been used for their intended purposes; the report would also confirm that statements of expenditures, submitted as justification for disbursement under categories (l)(b) and (3), correctly reflect detailed records kept by ONAHA (para 4.15);

(j) ONAHA will establish and maintain separate project-related accounts in accordance with sound and accepted accounting principles and practices, and complete the design and installation of a cost accounting system and start its operations not later than December 31, 1985 (para 4.16);

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

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

(1) ONAHA would submit to IDA bi-annual progress reports, under the format to be agreed within two months after the end of each semester, and would prepare a project completion report not later than six months after the credit closing date (para 4.18);

(m) cooperatives would be required to charge an interest rate not less than 12% on the seasonal credits they extend to their members 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 the rest at an annual interest rate of 12% to cooperatives. Cooperatives would in turn repay to Government at an annual interest rate of 1.0% (para 5.08);

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

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

(q) cooperatives would bear the full costs of operation and maintenance, including provisions for the renewal of pumping equipment (para 6.12);

(r) ONAHA would not undertake activities for which adequate financing is not secured and would charge the full cost for services it renders (para 6.19);

(s) Government would adequately and timely finance ONAHA's overhead expendituresfor services performed on Government's behalf, and which are not covered by external sources, by transferring to ONAHA its quarterly contribution, at the beginning of that quarter (para 6.19); and

(t) ONAHA would carry out a study by December 31, 1988, in order to review the extent to which farmers shall be able to contribute towards the capital cost of irrigationworks and would transmit the 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 cooperatives' debts including recommendations,if necessary, through a Government-appointed committee, for debt rescheduling, cancellation, or expulsion of non-payers, and would have achieved progress satisfactory to IDA in the implementation of such plan (para 3.16); - 51 -

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

(c) ONAHA would employ a financial manager, a chief accountant and three regional accountants with qualificationssatisfactory to IDA (paras 4.14 and 5.07);

(d) Government would make satisfactoryarrangements for the assumption 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 makes contractual arrangements with cooperatives satisfactory to IDA for seasonal and medium-term credit (para 5.08).

8.04 With the above assurances and conditions, the proposed project constitutes a suitable basis for an IDA development credit equivalent to SDR 9.6 million (US$9.3 million) to the Republic of Niger.

WAPAC May 1985 - 52 -

Annex 3-1

NIGER IRRIGATION REHABILITATION PROJECT

EVOLUTIONOF CULTIVABLEAREAS (ha)

PYO Full development (PY3) Wet Dry Wet Dry Season Season Season Season

Daikena 105 / 100 / 108 108 Kokomani 43 - 43 - 43 43 Sona 120 112 145 145 Lossa 118 110 173 173 Kirkissoye 94 86 100 100 Saadia 105 103 105 105 Saga 338 301 380 380 Libore 204 170 245 245 N'dounga I 214 176 258 258 N'dounga II 216 176 272 272 Seiberi 315 285 357 357 Namarigoungou 1,350 1,350 1,350 1,350 Say 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 0b Guidan-Magagi 120 46 120 33 - Founfafi 19 0 27 0 Ibohamane 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 the moment.

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

WAPAC May 1985 - 53 - Annex 3-2

NIGER IRRIGATION REHABILITATION PROJECT

INPUT AND AGRICULTURAL EQUIPMENT REQUIREMENTS

PYO PY1. PY2 PY3 PY4 PY5 1984/85 1985/86 1986/87 1987/88 1988/89 1989/90

I. INPUTS A. Rice 15-15-15 (400 kgJha):t 690 a- 2,760 2,970 3,230 3,230 3,230 urea (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:'000packages 0 19 21 23 23 23 seeds (40 kg/ha):t 270 270 300 320 320 320

alternativefert. 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. Cotton 15-15-15 (200 kg/ha):t 84 84 84 85 85 85 urea (50 kg/hb:t 21 21 21 22 22 22 insecticides- - mixture of cypermethrine15 g - 6 6 6 6 6 and Profenofos150 (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. Sorghum 15-15-15 (150 kglha):t 63 63 63 64 64 64 urea (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/0 Animal traction units - O 400 400 400 400 400 Threshing machines 0 300 300 300 300 300 Blacksmith 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 the bI 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 of Nigeria and Niger has to import fertilizers from mixture of cypermethrine 15g and Profenofos 150 the 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

NIGER IRRIGAJIONREHABIUTATION 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 X966 v 196 4A 2. Sedln 0dConts h ______

& Puno T A _D I - ODMor,d m Eu -A _ _ = __ _ OA*- Er M1 ngT A _ 4. EWCoC_ __=__M_

6. R ohbond CdkTw Dom A _ _ 6 - a cOaSICN Of FACECACONT_ _ 7. Pw T A mfElArw

8. ReoondI1tkxfgefNoncolgaungou Eiqutmnt- - - 9. RdaUao o dmLA - PsnslrwNordhd Nommy

- Pedmets. SouthOf MoM and ADMRaglan _

7 =7endr A=Awaid D = Ddlvue I = kTopomertallon Ucddan -2

WAPAC May 1985 - 55 -

Annex 4-1 Page 1 of 7

NIGER

IRRIGATION REHABILITATIONPROJECT

DRAFTTERMS OF REFERENCEFOR TECHNICALASSISTANCE

A. Chief Engineer

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

(a) co-ordinate the various construction activities;

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

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

vd) supervise the constructionof pumping stations (which will be done by contractor); and

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

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

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

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

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

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

(d) handle all the personnel and administrativematters for the Project Unit for construction. - 56 -

Annex 4-1 Page 2 of 7

2. The expert should have a degree in accounting, with at least five years experience in the financial administrationof important development projects. He should likewise be well versed in administrativequestions (personnel management and general administration)relative to such projects.

C. Works Supervisor at the Force Account Unit

1. Assisted by two locally recruited supervisors, the expertwill be responsible for the works to be implemented by force account, as well as the supervision of works implemented by contractor, i.e.:

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

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

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

(e) training of two locally recruited supervisors to enable them to supervise maintenance brigades once the rehabilitationwork is over.

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

D. Agriculturist/RiceExpert

1. The expert will assist the Chief of the Agricultural Development Division of ONAHA to ensure the good liaison between Research and Extension. Specifically,he will:

(a) monitor activities subcontracted to INRAN such as fertilizer trials, screening new rice varieties and production of foundation seeds; - 57 -

Annex 4-1 Page 3 of 7

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

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

(e) train his deputy in technical matters.

2. The expert should have at least five years experience in his specialty, preferably in irrigation projects in Sahelian Africa, 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's Director General, the expert will have primary responsibilities for:

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

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

Cc) designing and installing a cost-accountingsystem;

Cd) analyzing and synthesizing cost data provided by the Administrativeand Financial Department for the use of ONAHA management;

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

(f) training in technical and managerial matters of all staff under his supervision,especially his deputy who would take over his post after three years.

2. The expert should have at least five years professional experience, some of which preferably in the area of budgeting and management, and a university degree (or its equivalent) or membership in a recognized professionalbody evidencingformal knowledge of modern accounting theory and practice in accordance with generally accepted international standards. - 58 -

Annex 4-1 Page 4 of 7

F. Chief of the Monitoring and Evaluation Unit

1. Under the direction of ONAHA's Director General, the expert will have general responsibilitiesfor providing ONAHA management with data and information on all the irrigation perimeters under supervision of ONAHA. Specifically,he would be responsible for:

(a) designing and implementinga system of keeping production records, which would include yields, areas planted, quantities harvested, seasonal inputs used and use of agricultural 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 of crop calendars, marketing of output, sitw:tion of accounts for renewals, etc.;

gc) designing and implementinga farming system survey which covers total activities of farmers, including rainfed farming, livestock, vegetable production and management activities;

(d) centralizing and analyzing information from organizations outside of ONAHA (INRAN and Directorate of Literacy) on applied research and functional literacy programs;

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

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

2. The expert should have at least five years of professional experience in project evaluation techniques, including sampling techniques, data collection with rural people and statistical analysis; experience with data processing and analysis using computers is essential, and he should have a university degree (or its equivalent) in agricultural economics or a related discipline.

G. Director of Administrative and Financial Department of ONAHA

1. Under the direction of ONAHA General Manager, the expert would have primary responsibilitiesfor:

(a) setting up detailed accounts and an ONAHA account consolidating three regional accounts; - 59 -

Annex 4-1 Page 5 of 7

(b) establishing and maintaining separate project-related accounts;

(c) designing and implementing sound internal and management controls, particularly with regard to equipment maintenance, inventory control and vehicle operating costs;

(d) following up auditor's recommendations;

(e) preparing withdrawal applications from the IDA credit account and maintaining disbursementrecords;

(f) processing of tender documents and supervision of all procurement procedures;

(g) preparing annual financial statements;

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

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

2. The qualificationsand experience of the Administrativeand Financial Director would be:

(a) a university degree (or its equivalent) or membership in a recognized professional lobby evidencing formal knowledge of modern accounting theory and practice in accordance with generally accepted international standards;

(b) at least five years' professional experience, preferably in a country using the OCAM or French accounting plans, and some of which in a commercial enterprise, or a large pCU4ic corporation; and

H. Rice Processing Expert

1. Under the direction of RINI General Manager, the expert would have primary responsibilitiesfor:

(a) establishing a quality control system on paddy sold to RINI and supervising implementationof the system; - 60 -

Annex 4-1 Page 6 of 7

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

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

2. The expert should have at-least five years of professional experience at managerial levels in operations of rice processing 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 Force Account Unit, specifically to:

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

(b) help carry out a study concerning the availability of irrigation water during the period of low river level on the 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 General Nanager of ONARA.to monitor alkalinity and salinity problems caused by drainage deficiency, particularly on the Namarigoungou and Seiberi perimeters.

Detailed Curriculum Vitae

Detailed curriculum vitae will be provided for each of the expatriates, which will give, among others, complete information on:

(a) their degrees and professional qualifications;

(b) their experience in the areas required, with details about the projects (or parts of projects) for which they have been responsible;

Annex 4-1 Page 7 of 7

(d) good knowledge of French language;

(e) etc...

Special Responsibility of the Expatriates Recruited to Train their Nigerien Counterparts

The expatriates should devote a considerable portion of their activities to training the Nigerien counterparts under their jurisdiction. This very important aspect of the expatriates' role should not be neglected. Experience in training will be an important selection criterion.

WAPAC May 1985 NIGER IMRRIGATIONREISXYTA TUION PROJECT ESTIMATEDDISBURSEHENT PROPILE

IDA Fn and QartersEndi ByQuarter Cmu lative

1986 1 1.8 1,8 */ III 0.2 2.0 IV 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=t IV 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 7.3 II 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 I III 0.2 8.7 it" 199 _90 I,, IV 0.2 8.9 1992 1 0.2 9.1 ol at ro II 0, 2 9o3.1 zgI stesal p.f II.

Assumescredit would be effective in October 1985. Includes refinancingof PPF (US$1,ooo000), Initialdeposits to special accounts (US$800,000). fie AggregateAfrican Regional Profile for irrigation projects wa somewhat modified to take into account the initial disbursement to the special account, the fact that physical rehabilitation will take place in the first two years only and the favorable disbursement experience in the N amrigoungou project.

WAUAC 8 May 1985 -63 - Au3z6-1

uzm

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

no nL m n FM ns5 lW/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 6,750 erae 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 28,3D0 Incrinal 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 4,400 Avera yeld (kg/ha) 2,600 2,400 i 2,520 - 3,090 3,50 3,3 Pratim (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 3450 AV-rP yield (k/a) 2,600 2,600 2,600 2,600 2,600 2,600 Pwa_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 4330 Averg yIld (kg/h1) 2,370 2,570 2,570 2,700 2,780 2,780 Pro-- ctim it) 1,030 1,08(. 1,080 1,170 1,190 1,190 without projeCt Tota area (ha) 420 420 420 120 420 380 AV-qg yield (kg/ha) 2,570 2,570 2,570 2,570 2,570 2,570 Mdaction (t) 1,080 1,080 1,030 1,030 1,050 930 Incro 1ital,prodetio 0 o 90gIO 220

M. S

Total area (ba) 420 420 420 4130 430 43 Averp yield (kg/ha) 1,101 1,80 1,. 1,910 2,010 2,010 Prodbctia (t) 770 770 770 30 80o 88o without project Totad are (be) 420 420 420 420 410 380 Aver, yield (kg/bh) 1,840 1,810 1,840 1,40 1,8U0 1,40 Produceio () 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 57 Ave-e yld Ct/ha) 30 30 30 30 30 30 Pmductie (t) 1,680 1,680 1,410 2,350 2,220 1,720 Without project Totaldre (ba) 56 36 47 33 29 20 Awerag yield (kg/ha) 30 30 30 30 30 30 Poductie () 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 pbyslcal rehabilitation.

WAPAC may 1985 S861 Lug DYJV n Ana iima ama Wmammuw Man dilIU waumimiw mummu sJlWWmsemienls 3mi gn OMInow ir., - _mumNM az3" w su u _sNU Cniu ie ii 1*1I1UEmflUowUIm311165 6

3116123mA l now 010d1*m S A met UILfA-Wlmfla U Al it a WfMKM~- MM"9 nmws muoMOmaIo KMUOB'awm 3V" lamw MS gma a 'munami mm ataunman mmsmatso Wa madmu ENam DIV c 315hZKISSWilt I 3linliN-IS96I5IIIIII551U MdlThL (1 man eu aIm w"enA111sse111111 1 a im ulna imnsi mzi

3 1111tu111mu 91 Iliwflimegggag1ma _UUIL iaIUU ai t mWca urucan1S a goimi U 011L A_ W MA11111 WSIA-I A1K MM-I ci arnmwuanmra'us am aJomaanAa MDT'ma MaU noDMG WU 31m1me11aAUK Mtes StUNmid

-maamn urnes s mm n wn mma am 9mm -V mu9 tVur mu Km 11111umimi EJa m ame sWim NMa uGam mm IZa:mn t*a 'a -811C weeam re m cue t- Ero nl* gmW i," iso mam MAmm11I S6 51an anmlisa Sitat amI anmli a & ana 110 *amaunorurniM am 1111MIua an em no1 mU arn mi lu "a mel oBai is; S5 umum: a -min am nh MMwgng amma urn-s mmn a nunz am lU mmm :11 mmizuas Unit ltaU m11Ima urn11 usls MN NM Omi no use Omu us1 mc mm alum40aM unuuaO -n 9551 4i - cnu arn emm a ni omanmuAw uraU a_ mas ua a l W s a. mm~ ~ ii- ~ am ~a c ~ mxu " n m a* usOn usNm usnI ascm nua cm cm smZ maw m risgiumulil* jaimli1113um w 06Mam Om a 06a onrn -a aI- 0un mma_s oTam uaus am -m -1111MIT NMI -ol am1 -ir ml 0l fl auiLS mi Intll In In InII I= OR 11 InK OM a uwusum Venuiu

KIZ SW Zia UR1 UKs lin AM2 UIZ inc mima uisme misa3i Mtt a Mt 11111 Ut 191 Mt 191 Mt I maca- a11MIC31IJEISM ma am a2n i lk .me mu.mm mm wsan ur mat outa 55*anE U S USlcmw SU lIE =SU1K6111W NEll am1 MN0 mu1 mu11 NUW inumnam Omi uo awl Nui mu mu15 noa us us -a=1s11AN NuaUT am- =a- usN- n--a ma Oma a-am mlaOMa w M1M cutI wini gin CnII Ml? CUT 9III cut1 will Mu111rn1 us mit .11 eI ems on an t1 mu a amino mini swi aII

a a nsz~~~~~ama a 4j9a= am-En ez ezl aa"ges Ci 1 _sS

nauic mm usa s mmu umumi; I;I must a wn mcamulima mam Wmfmm IMur lowa owna aam a aa ama aa maa usca -mm1=1g namm mis s mSO anu s m anu u _ ist

DAn a IMl sm anm s

nalnnwn nwn nDll sKIJtsu - 65 - hAx 6-3

rrn RmE CROP maDr

uInmT PROT HnH Proo El1 111 BE FUFIST WE SET UK) 111 VWS Kr NV Kr m vi at NET My off NV MEK KME SUM EKE SONM EE ES E mmMEaMK -

emve or Fmana

PAS Y1EU 2450 275 2450 2753 V775 326 3160 3563 3716 - YASEAT U.4CFAF1J 1963 221100 196 21100 2110 253 2490 231460 29746 =60 oTm uc 2203 22n. 22nu0 ao-3 250366 35321 32 11- 3 VIAE N ICFAF1KM6 2200 20 26 23D 03300 3666 32500 35360 35603 TOTALam NEf 2136 2Ul1 218910 243100 266 110 63 27 31346 33 3511

101M COlSTS

COLECTIVE0NW35 inlU 9s 4f9 5766 woe Urn 1s11 ma Jma 1U2 11m ATla miasin wow a 40003 4a0 330 336 336 334 334De 3 RAIIAUE 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 4as 3EPECrTIUlElhHNO t. 3) 215 215 212 215 363 363 363 363 33 363 OTI PEIATII COSTS 0 0 0 2000 0 e 20 263 zw 20 FINIEILOIIRS 0 3 0 0 2179 2179 2179 2179 217m 21m7 TMTAL 5139 51390 51 51555 62246 6224 64752 64152 64112 602

IIUTIIIL a69 FERTILIR& PESnCIIES EV 26900 2W00 31000 31000 3033 315D 33 3353 35 a LAW PEATIn F) 1200 12600 13000 IB060 IBM0 I3060 300 1006 16 IB0 TIEESUI 11C316E 0 0 °0 a macawo gme g 6s30 36 gm T ET PAIDDYIFKi 2453 2m 2450 275 2775 3260 3106 356 3 4001 FIMUCIALCINMA O 0 0 0 2312 2312 2312 2312 2312 2312 TEArlL 41350 41650 51450 51750 6962 70650 6555 70350 705 701653

TOTALMuImCu cETs 52740 934 103645 103345 13173 135 1347m 135102 ISi 135602

U lT1EW 126240 5066 11s5s i79155 16W= 154911 144531 171293 197178 220m (RATIOMZ7TH/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 10U I1

IIETIOfEIU. KY1 739 no 725 173 010 1107 1032 1274 1461 157 [RAIOMITHIMITHOUT OET) 0.93 1.05 1.18 1.31 2.36 1.79 1.a

Al MIllET PROJECT:SFfHIFKSW MIIT0 COSTSFOR fIES SEENS;NO ISTICIES; FERTIUZERz2Oi IF lA AN HE OF W ATCFAF120 MD ATCFAFII/I6 RESPETVELYM 51111RPER 11 CFW410tFER 20eH. ITHPROJECT: CFWfU5/k94U/lMHA MIlKCOSTS FEt 1PO SENLCFfF6B0IK1; FERTILIZER20hlO IF M IEAm 0 F MHP F- 2HA ATCFIF1201 AN CFFI40/KSRESPECTIlELY MITR S1111.DS. 32 ITNIUTPROJECT IU3116 MIKIEAC MST FORPERIEIER .ITH PRECTD1IC E EORETPAIMS KINEIDEEIU. SALE? FOR P1 AnTEITS,mu IEHECiATI0UF PulL C SITUPRIPRJECT PA FIRSTm SCO BY rnITHPROJEC OLT EL R COW.A WMIT, IITHPROJECT ATFULL EVELGPNETFORCOP. rAIR IFUIS ElISIEIONAENT) m ACCIUTAT. 021MIlIE PRJECTOILY FOR NOtLETTE.UIITN PROJECT FERUWOICCME AN IILET1E. El MITHOUTPROECT: 2e1 fIIEl AmU eeOF DV ATCFtFI1/ Mu CFAFI'40MWITN SUS13T PEt OROlOF CFAF4I0 mu0 FESTICIIS. IITHPFPRECT 20191 OF IEA mu 1SM1FI ATCFAFI2A1 AM CFAFI40/KU MITIIEIT911513. F) LAI PEMARATIEIS WIIEit AINIlI-TRACTIOLN1HER COSTS MIIN PROJECT REFECTS FIL COSTSOF E IU NITT111ff53513. 61 BME PHSICKL IENLITATII AN BEFORE11IH VE IN RICECULTIVRTII Dr NU SSAY I INTS. WI WM. PNSICM.LREBIIAIITA7E0.

P.L) IT. IS SStD I11BON CASES IVITHOUT 11 ITl PROWECT)THAT FERTILIZERS FRIill NIIIRIA AKE IT AVAIIALEMI E, THOEEFUIEN16E HASm I1PDRTFEE DITERITIEALLIlETS. TIE IE FERTILIZERFUMED lIVE ANRIIIATELYSAWE TRMIENTSASTIE OLDONB lISlE COe FERTILIZER115-15-15). RISIDY PER NA IS CIM TEDTO K ElIL U THEPRESENT AUSOLUE A_T PERNA; 1DE (60-50)126020; 15-15-15166-4 11001410;TOTAL 4100

WAPAC May 1985 - 66 -

Abes 6-4

As of Saetp ar usc19aou seihs

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

Operatin revenme 76.2 226.1 345.2 23.8 8.0 Opeting 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 IXM 1. S5art. of fUnds Intenua cah Lw bi 51.4 (46.0) (195.1) (106.0) (93.0) basemet ret er 250.1 - 168.4 lang-ern borrovinig di - 74.1. 29.7 Capital 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 Nunde C 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 capital increas or (decrae) hl (167.7) (258.0) (510.8) (646.5) (767.2)

LUNQ Eq Currnt sets 213.5 689.5 1,230.5 1,530.5 1,630.5 Les 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 96.5 Capital 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 during calendar 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 CFAF103.8 millin f-,om CEA at 10.-% during 3.5 year to buy 10 trucks for lonniI project. e/ From Goverament. ff CFAF 74.1 million plus 52.6 aillion. ji CFAF 29.7 million plus 209.1 million. h/ Financedby ClNA overdraft.

Li Of which ClNC overdraft Is - follows (in CFAF million): 1980 - 139.2 1981 - 225.0 1982 - 558.6 1983 - 627.0 1984 - 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 (C0M flied aasets) plus 59.8 (trucks). kI 1981 - 74.1 - 14.7 - 59.4 1962 - 59.4 * 29.7 - 29.7 - 59.4 1983 - 59.4 - 29.7 - 29.7 1984 - 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 Grant in 1982 is as follos: 142.3 (frou 1981) - 92.6 (1982 amortization) * 168.4 (additional investment grant) - 218.1.

JAPA6C liaV 1985 - 67 -

Annex 6-5

NIGER IRRIGATION REHABILITATIONPROJECT

PROJECTEDINCOME STATEENT OF ONARA (ClAF million, current values until PY5, constant thereafter)

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

REVIEIU

STU7IEIESIEINEYS 29 40 17 la 19 20 21 23 24 LI PREPARATIOBY TRACTORS 33 23 19 27 20 13 9 5 0 EIPNEII VBEHICIESRENTAL 204 104 61 65 69 73 77 92 87 INRASIRUCTIIErAINTEINCE 123 136 145 145 PUtSIAITENIIIN 7 9 17 9 0 0 0 0 0TIERS 30 7 4 4 5 5 5 5 6 TOTALREVEIjES 305 lIB t1O 131 122 239 2U 260 262

EIl

IWTERIAIL SAOLIEAND LRICANT 59 30 32 28 24 62 60 59 70 ELECTRICITY 6 9 10 11 11 12 13 13 16 SPAREPUTS 45 31 2S 26 24 35 37 39 44 OTERS 15 7 7 10 10 10 10 10 20 TPANPOtT 17 25 20 21 22 24 25 27 29 SERVICESAnl IAR1ES TELEPIE 9 7 8 .8 9 10 10 11 13 RENT 11 10 10 ti 11 12 13 13 14 NAIIEN ACENIDREPAIR 27 19 21 20 18 52 55 57 63 INSWAICES 12 7 5 5 6 10 11 11 12 OTHERS 19 1 1 0 0 0 0 0 0 PERSo SALARIES0N SAPPLMEJNTSAUXILIARY 165 111 go 90 71 133 129 131 173 SAtMIS ANDSUPPLEIENTS CIVIL SEVT 47 20 113 120 127 135 143 151 160 SOCIALSEWRITY &OTERCHRSS 49 30 40 40 40 54 54 56 67 TAXESMD DUTIES 1 2 1 1 2 2 4 4 5 FINANCIALCHAES 149 200 250 0 0 0 0 0 0 TOTALEXPESES 631 509 634 351 375 551 564 592 6

NETPROFIT (10l FOREDEPRECIATION -326 -328 -524 -250 -253 -312 -316 -322 -424

OVENNENTSUSIDY 274 200 200 212 225 238 252 268 342 LOCALSARIES (OV IT) Al 103 109 116 123 130 138 146

BALANCEFORE DEPRECIATIN -52 -129 -221 71 8 49 66 83 64

DEPRECIATION 65 30 20 20 20 64 64 64

BlALA1EAFTER DEPRECIATIN -117 -151 -241 51 68 -15 2 19 0

SOURCE:A AUDIT1992183 AND WN BIDETS193184 AND 141/85

A) CIVILSMRUITS SLRIES FORNERLY PAIED DIRECTLY BYFOCTIOS PtILIIES BUTCRE TO MM AFTER1985. WAPAC may 1985 NICER IRRIGATIONREHABILITATION PROJECT

GOVERNMENTPROJECT RELATED CASH FLOW (CFAFmillion, current to PY7, constantthereafter)

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

A. Sources/Inflow Total externalsources 602 3,710 3,228 644 486 448 ------Agriculturalcredit repayments - 25 82 141 199 259 237 179 121 63 Indirecttaxes on farmersa/ - - 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 Projectnet cost 770 3,767 3,344 821 724 748 78 83 83 83 83 83 83 83 Debt 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 36 109 109 CCCEc/ - 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 incrementalproduction and 100% of cotton and onion Incrementalproduction.

b/ StandardIDA ters.

S/ 30 year loan,10 years grace on principalwith 1.5% interestrate and 20 years repaymentwith 2.0% interestrate.

WAPAC May 1985 - 69 -

Annex 7 Page 1 of 2

NIGER IRRIGATION REHABILITATIONPROJECT

KEY PARAMETERS USED IN ECONOMIC ANALYSIS

Output Prices: (a) Rice, cotton and sorghum, using Bank's commodity price 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 Niamey reference market. (c) Cotton - 15% discount fror the reference price (Mexican middling), export parity price. (d) Sorghum - 15% premium to reflect preference for local varieties. Import parity price with Niamey reference market.

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

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

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

Benefit Lag: Production benefits accrue six months after on-farm expenditures. Production benefit streams lagged throughout by six months.

Replacement of Vehicles and Equipment: Vehicles and motorcycles: every three years; electric pumps: every ten years; diesel pumps: 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 economic analysis. 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 7 Page 2 of 2

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

Labor Required to Reconstruct Field Drains by Farmers: Beneficiaries' contribution in labor (30,000 days for 11 Niger valley perimeters 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, where average yields gradually decline from 3.7 tons/ha in wet seasons and 4.0 tons/ha in wet seasons to 2.7 tons/ha and 3.0 tons/ha respectively in project year 5; and (ii) Kokomani, where breakdown of pumps prevents farmers from growing rice in the perimeter whose conditions are otherwise good (without project it is assumed that pumps are replaced and production resumes with "without project" yields). (b; Replacement of pumps and maintenance costs are included in order to maintain the current level of production.

WAPAC May 1985 Bl_ LI,*r, 300 ) ~~M A * @ - * * __loU R | ,3.- ______30 0 / M A ygAbQ IuoL_ p

Kwo ~~~~~~~~~~~~~~~~~~~~~~~~~~~~Abolo *, S/ Tho° l Ayoi,i ______Ouollom______Ill;rl.

o ' o bo GuidonGv -mago Tounlaf, ' -- ' Mo J ra ~ comewr_ Gr0g5unTop

Dogondourch, / I \ rlrralrecfoutFi;

B UR K I No.i J-D- -__ _ r N I G ER ,seibetl[ J s / \ Vs&s / IRRIGATION~~~~~~~~PROJECT REHABILITATION lz < sgy _ -if I ~~~~~StchemesUnderthe Prac Al PhysicolRehobilatottjn A ComplementaryInvestments ioj §~~~~~~~~~~~~~~~~~~~~~~~~~~CcEmeNet1 Underthe 700 A ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ComPletedand in seirvice Under construction N.. A ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~PhysicalRehabilitation / o tin service I A N t Proisected -"C_ MzRivrsd *1 I'~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~'~~~0 ,0 Main Roaid& t ~ ~ < ~ | ' 8 r - _ \ .Iner,nationalBoundaries /\ 30 0 lualtyatsmi Ise ,,siil948-1977) M ALEMt IA I N I G E R 12 i i Lr 'rrNIFi 9 N ( B E N I N GERIA4' M ARCHWl-I