UNCLASSIFIED

ZAMBIA

Western Province Small Farmer Production

611-0205

UNCLAS SIFIED /

ACTION MEMORANDUM FOR THE AID/ZAMBIA REPRESENTATIVE

FROM: Ernest F. Gibson, Agriculture Development Officer, AID/Zambia

SUBJECT: Project Authorization - Western Province Small Farmer Production Project - 611-0205

PROBLEM: Your approval is required for an Operational Program Grant (OPG) of t483,000 from the Section 531, Economic Support Fund Appropriation, to AFRZCARE, a registered private voluntary organization (PVO) to assist the Government of the Republic of Zambia (GRZ) in increasing the production and incomes of peasant farmers. through the Western Province Small Farmer Development (Honey and Beeswax Production) Project 611-0205. It is planned that a total of t483,000 will be obligated in FY 83.

DISCUSSION: Zambia, because of its rich natural resources has the potential to become on of Africa's major food producers. In recent years however, Zambia's net import of foods and foodstuff has contributed to the country's balance of payments and foreign exchange problems. AFRICARE in cooperation with the Ministry of Lands and Natural Resources, proposes to assist the GRZ in increasing the productivity and incomes of small farmers practising agriculture in Kaoma and Lukulu Districts of Western Prcvince, and Mumbwa District in Central Province.

The area bordered by these districts is one of the major tiaditional producers of honey and beeswax in Zambia - the other major areas are in Northwestern and Northern Provinces. However, marketed production has been erratic due to the lack of a dependable -market. AFRICARE, at the request of the GRZ, developed this *roject to respond to the needs of some 450 active and approximately 1,000 expected small farmers practicing agriculture in the project area. AFRICARE's experience in assisting developing countries and expertise in agricultural activities has been demonstrated over the last 12 years.

The AFRICARE proposal is consistent with the GRZ's Third National Development Plan (1979-1983), which gives priority to agricultural production and rural development. The proposal is also supportive of AID/Zambia's focus on increasing food production and incomes of small farmers. - 2 - In order to accomplish the objectives of 483,000 of this proposal, a total is being requested for obligation amount, which covers life-of-project in FY 83. This over a funding, will be expended three year period. The following areas table illustrates the in which funds will be required.

ITEM YEAR 1 YEAR 2 YEAR 3 TOTAL Personnel/Fringe Travel 20,000 21,292 18,292 Allowance 16,616 59,584 22,072 18,372 57,060 Equipment Coxstruction 68,500 Tr ining -- -- 68,500 189,82515,000 -- OLher Costs 17,000 9,000- 189,82541,000 42,842 13,434 10,755 TOTAL 352,783 67,031 73,798 56,419 483,000 The GRZ and AFRICARE will contribute or 26 the equivalent of per cent of the total project $167,895 will cover capital costs. This contribution for the revolving credit the Provincial Beekeeping fund, salaries of Officers Officer, the District Beekeeping and an accountant to manage of training the revolving fund, costs and workshops for beekeepers, development and operational and project costs, including fuel for vehicles. project It has been concluded from the analysis in the proposal that: 1. The project approach is technically and economically sound and socially acceptable; 2. the technical design and reasonable, cost estimates are and adequately planned, the thereby satisfying requirements of Section 611(a) Assistance of the Foreign Act of 1961, as amended; 3. the timing and funding of project activities are appropriately scheduled. 4. sufficient planning has been done for the implementation, monitoring and evaluation of project progre!;s, and 5. all statutory criteria have been satisfied. The Initial Environmental Examination in Annex A of (IEE) which can be found the proposal: has been reviewed the Africa Bureau Environmental and approved by Officer (State 048977, 2/23/83). dated - 3 -

There are no unusual conditions precedent to oe satistied. There is one convenant however, which requires that the Grant Agreement include a detailed description of the control and administration of the revolving fund.

The following waivers apply:

-- Source and Origin waiver from AID Geographic Code 000 to Code 935 to permit procurement of Miscellaneous types of honey and beeswax processing equipment which have an approximate value of $9,500.

-- Pursuant to the existing blanket/Source origin waiver and authority granted by the Acting AA/AFR o' January 21, 1983 for procurement of RHD vehicles (State 021544 dated 1/25/83), procurement of two each, diesel, four- wheel drive, 1 tons pick-up trucks (Landcruiser or equivalent) and one diesel, 2 ton carrying capacity truck (Dyna or equivalent) is authorized. -- Pursuant to HB 3, Chapter 4B5E (5) (A), waiver of the 25 Percent non-AID contribution.

Above waivers can be foundin Annex D of the proposal. The Project Review meeting was held on May 18, 1983, and significant issues regarding equity and economic feasibility emerged. REDSO/ESA worked with AID/Lusaka to further analyze and satisfactorily resolve these issues. (See Nairobi 16911, Lusaka 2625, Nairobi 18992, Lusaka 3291). A Congressional Notification was requested on 11 May, 1983 (See Lusaka 01994) and the waiting period has expired without comment.

AFRICARE will implement the project through its representative in Zambia, in cooperation with the Beekeeping Division, Department of Forestry, Ministry of Lands and Natural Resources in Western and Central Provinces. AFRICARE will also provide a consultant to assist in the establishment and operation of the processing plant, and as necessary the services of a training/extension specialist, Agricultural Economist and Project Manager. AFRICARE will submit semi-annual progress reports, and an evaluation of the project, jointly conducted by AID, AFRICARE and GRZ representatives, will be held at the end of the first year of the project. The responsible AID Officer in the field will be Ernest F. Gibson, Agricultural Development Officer, AID/Zambia and the REDSO/ESA backstop officer will be Jim Graham.

There are currently no significant human rights issues in Zambia. RECOMMENDATION: That you sign the attached Project Authorization thereby authorizing the Grant and the requested waiver. -4-

Attachment:

1. Project Authorization 2. PID-like document approval 3. AFRICARE Proposal 4. Waiver Approval

AID/Zambia Clearances:

ADO, AID/Zambia: E. Gibson (draft) Date 5/18/83 Eng. AID/Zambia: C. Groceman (draft) Date 4/29/83 Mgt. AID/Zambia: M. Ireland (draft) Date 5/18/83 REDSO/ESA Clearances: JGraham ( 8 Eidet SCallison V- KHansen JAnderson PBloom

REDSO Director Concurrence: (/. Date - / with provision that con traints of Section 620-q are met PROJECT AUTHORIZATION:

Name of Country/Entity: (Zambia) AFRICARE

Name of Project: Western Province Small Farmer Production Project

Number of Project: 611-0205

1. Pursuant to Section 531 of the Foreign Assistance Act of 1961, as amended, I hereby authorize a grant to AFRICARE, a registered private voluntary organisation, for the Western Province Small Farmer Production Project - Zambia, involving planned obligations of not to exceed $485oo in grant funds over a two and one-half year period from the date of authorization, subject to the availability of funds in accordance with the AID/OYB allotment process, to help in financing foreign exchange and local currency costs for the project.

2. The project will assist the Government of the Republic of Zambia to increase food production and incomes of small farmers in Kaoma, Lukulu and Mumbwa Districts by financing the costs of improving extension, training and marketing services; construction and equipping of a small honey and beeswax processing plant; vehicles and supplies; and a revolving credit fund for project participahts.

3. The Grant Agreement, which may be negotiated and executed by the officer to whom such authority is delegated in accordance with AID regulations and Delegations of Authority, shall be subject to the following essential terms and covenants and major conditions, together with such other terms and major conditions, together with such other terms and conditions as AID may deem appropriate.

4.a. Source and Origin of Goods and Services:

Goods and services financed by AID under the project shall have their source and origin as specified in AID Handbook I, Supplement B, Chapter 16Blb and AID Handbook 13, Chapter 4, in the cooperating country.

b. Waivers: Notwithstanding paragraph a, above, and the requirements set forth in Handbook 18, Chapter 5, that commodities procured with grant funds have their source and origin in the U.S. is waived as follows:

...... /2 - 2 -

(I) Based upon the justification set forth in Annex D of the Project Proposal to permit the procurement of miscellaneous types of Honey processing equipment at an approximate cost of $9,500 which has at their source and origin countries included in AID Geographic Code 935, it is hereby determined that exclusion of procurement of the honey and beeswax processing equipment from free world countries other than those included in Code 000 would seriously impede attainment of U.S. foreign policy objectives and the objectives of the foreign assistance program.

(2) In accordance with the blanket waiver granted by the AA/AFR (Acting) in January 21, 1983 (see Annex D), procurement of three right hand drive project vehicles which have anapproximate cost of $50,000 and have as their source and origin countries included in AID Geographic Code 935 is authorized.

(3) Based upon the justification set forth in Annex D of the Project Proposal, waiver of AID HB-3, Chapter 4B5E (5) (A), 25 per cent non-AID contribution.

c. Convenants:

AFRICARE shall convenant:

To ensure that the control and administration of the revolving fund is carried out according to the terms and conditions of the Grant Agreement.

...... Date Frederick M. Perry Acting AID Representative Ajparindixk" to HEP Part I~

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Mr. FrderickM.Pery (I L SI(;NLVI...l~ Acting AID Representative (r. D y .

A 10 1I531- 4 7,.781

M = Z011-011Z TABLE OF CONTENT'i

SECTION I. - PROJECT PURPOSE AND DESCRIPTION ...... 1 SECTION II. - PROJECT BACKROUID ...... 2 SECTIOi III. -PROJECT ANALYSIS ...... 4

A. - Economic Impact ...... 0 ...... 4 B. - Technological Considerations ...... 7 C. - Sociological Factors ...... 18 D. - Scope of Impact ...... 18 E. - Institutionalization ...... * ...... 19 SECTION IV. PROJECT - D.;IGN AND IMP1:MEjPLAION ...... 20 A. - Implementation ...... 20 B. - Measurement and Evaluation ...... 23 SECTION V. - FINANCIAL PLAN ...... 24 A. - Donor Agency Contribution ...... 24 :. - Africare Contribution ...... 24 C. - Government Contribution ...... 25 D. - Beekeeper's Contribution...... 25

SECTION; VI. - CONDITIONS ...... 25

SECTION VII. - BUDGET ...... 26 LOG FRA E...... 28 A NEX S: I*fZ and Government Letter of Request.

Tables

Table 1 - Estimated Annual Honey/Beeswax Production and Income among Active Beekeepers in Project Area ...... 6 Table 2 - Projected Honey and Beeswax Production/income in kwacha Among Newly-Recruited Beekeepers...... 8 Table 3 - Annual Beekeeping Division income in Kwacha on Projected Honey/Beeswax Sales ...... 9 Table 4 - Beekeeping Division Fixed Costs in Kwacha in Maintaining Project Area Operations ...... 10 Table 5 - Marketed Honey Production 1970.81 ...... 11 Table 6 - Chronology of Beekeeping Activity ...... 14 Table 7 - Cash flow Projection of Revolving Fund to be Established by Africare ...... %...... 30 I. PROJECT PURPOSE AND DESCRIPTION Africare proposes to support development of village-based production processing and i marketing of honey and beeswax in Zambia's Western and Central Provinces. The estimated cost is $482.283. In addition, Africare will lend up to K75,000 to the Forestry Department to establish a revolving fund to purchase honey and beeswax, make loans of equipment to beekeepers and cover recurrent expenditures until the program becomes self-sustaining.

The two-and-a-half-year project, to be implemented by the Forestry Department's Beekeeping Division, will improve extension and training for an estimated 450 active honey-gatherers in the region and for nearly 1,000 others expected to resume or take up the trade. They will be encouraged to organize in small groups to facilitate extension, local processing and marketing.

The combination of the revolving fund and the introduction processing of a capability at the village level and at a small plant to be built at Kaoma is expected to promote greatly expanded production of an especially high-grade honey and beeswax for domestic consumption and export. The principal beneficiaries will be the honey-gatherers, largely subsistence farmers who have a long tradition of collecting wild honey for use mainly in beer-brewing andl to a lesser extent, as food. The number of active beekeepers is exectced to increase three-fold response in to the larger assured market, improved extension, the availability of training and credit, and recently-improved price incentives. Annual production of honey in Kaoma, Lukulu and Mumbwa Districts (see map) is expected t: triple in three years to about 120 tons. The associated production of beeswzx, now discarded by villagers for lack of a marketing outlet, will supplement beekeepers' meager cash incomes. Together with increasing produittion in North-Western Province output from the project area will contribute significantly toward satisfying domestic consumer and industrial demand for honey and beeswax and produce modest export earnings.

2/.... - 2 .N

The project has peripheral implications for forest conservation, health and nutrition. Improved extension among beokeepers is likely to reduce needless destruction of trees through careless use of fire and inefficient preparation of bark hives. As a food with a high nutritional value, honey has a role to play in Zambia's quest to achieve self- sufficiency in basic foodstuffs. Expanded use of honey as a sweetener could have a slight impact on national health by providing a natural alternative to refined sugar. Zambian health services, which use honey as a medicinal base, may also benefit from a more reliable supply. During the life of the project, Africare will underwrite the revolving fund mentioned above, provide logistical assistance (importation of vehicles and equipment) and technical advice, monitor the project's financing and evaluate progress. The first year will be devoted to establishing the necessary infrastructure, including a small processing plant in Kaoma and housing for three beekeeping extension officers. The revolving fund will enable the Beekeeping Division to purchase all honey and beeswax offered for sale. Proceeds from the sale of processed honey and beeswax will sustain the revolving fund and within two years liquidate the Africare loan.

II. PROJECT BACKGROUND

The Beekeeping Division has planned for some years to develop the three regions of Zambia's greatest honey and beeswax potential: North-Western and Northern Provinces and the sections of Western and Central Provinces embraced by this proposal. North-Western Province is the country's major honey-producing area and the most proximate to the Beekeeping Division headquarters and processing plant at Mwekera, near the Copperbelt city of Kitwe. The German Agency for Technical Cooperation, which has been supporting an integrated rural development program in the Province since 1977, has helped considerably to promote improved apicultural practices and marketed production of honey and beeswax. Encouraged by this successful model,the Forestry Department has approached the British government to support similar work in Northern Province and Africare to cover Western Province and one district (Mumbwa) in Central Province.

3/.... -3-

Africare's representative in Zambia began exploratory discussions with the Beekeeping Division and Forestry Department officials in early 1981. These led later in the year to a five-day field visit to Kaoma District, during which meetings were held with local officials and with honey-gatherers in several villages and the Angolan refugee settlement at Mayukwayukwa. Given past failures by parastatal agencies such as Namboard and Zamhort* to redeem their promises to purchase honey and beeswax in the region, the interest shown by the people in the project was remarkably positive. Asked what was most needed to encourage greater production, the honey-gatherers focused on the absence of a dependable marketing structure. Many expressed interest in learning improved methods of hive-making, gathering and local procussing. Most surprisingly, few urged an increase in the official producer price, perhaps because it had recently been raised 22 percent. The Beekeeping Division's basic objectives are to promote economic development, in this case honey and beeswax production, which simultaneously strengthens conservation of an important natural resource--Zambia's vast but rapidly-dwindling forests. It hopes to reduce unnecessary tree-cutting and fires caused by honey "hunters" who use primitive and destructive techniques to obtain honey. As a small agency with limited resources, the Beekeeping Division has the advantage of serving a skilled constituency of traditional honey-gatherers. With considerable scope for extension, training and introduction of the activity to non-participants, the Beekeeping Division is mainly concerned with building upon an existing foundation. But broader involvement by people in the project area is likely only if the basic problem of marketing is resolved. In developing the following proposal, the Beekeeping Division and Africara have drawn upon the model applied in the North-Western Province integrated rural development program since 1978. Primarily through improved extension and marketing services, the IRDP and Beekeeping Division incireased honey sales in Mwinilunga District from nine tons in 1978 to nearly 69 tons in 1981. Kabompo District honey sales increased

*National Agricultural Marketing Board and Zambia Horticultural Products Ltd.

4/.... -4-

from 15 tons to 30 tons in the same period. Where there were no organized beekeeping groups in either district three years ago, there are now 25. By contrast, only 190 kilograms of honey was marketed in 1981 from Kaoma District through the Beekeeping Division and about 300 kilograms of beeswax--and this only because of the joint Division/ Africare field trip, which made it possible to make purchases in the villages and transport the produce to Mwekera. Figures for 1982 are about the same. Yet Kaoma has the potential to produce 65 tons in an average year, at least twice what beekeeping officers believe is being cropped and sold locally, mainly for brewing mbote, a honey beer. Because the informal beer market is thought to be sated, or nearly so, any expansion of honey production awaits a wider and more dependable market. The only relevant study on the project area supports the Division's hopes. Writing in 19590, Francis G. Smith of Peekeeping Research Station in Tabora, Tanzania, recalled that local response to extension work carried out in the 1930s in the then-Mankoya (now Kaoma) District was very good. Northern Rhodesia (as Zambia was then called) became a major exporter of beeswax in this period, with shipments rising from almost nil in 1934 to more than 110 tons in 1946. Exports then dropped off to half this level during the 1950s. By 1978, the volume was down to 14 tons.

Africare's experience in beekeeping has been limited but successful. In the Casamance Region of Senegal, Africare supported introduction of frame hive production on a pilot basis in a single village. Fourteen beekeepers were producing a regular supply of honey for the local market when the three-year program ended in 1981.

III. PROJECT ANALYSIS

A. Economic Impact Based on the Beekeeping Division's conservative estimate of the number of active and potential beekeepers in the project area, and upon equally conservative hive-occupancy and honey-flow rates, the project is economically viable. It will increase the incomes of nearly 1,500

OBeekeenin 5 in Northern Rhodesia, Its Prospects and Recommendations for Its Development. peasant families and enable the Beekeeping Division to sustain the recurrent costs involved, including operation and maintenance of the processing plant in Kaoma and the two project vehicles.

Although it is assumed that the project will eventually contribute to Zambia's export earnings, this benefit is likely to be modest in comparison to the generation of domestic economic activity. Because the export potential cannot be accurately projected, particularly in the case of honey (for which there is no prior export record), this has not been factored into the economic analysis. Presumed export earnings, therefore, are best regarded only as an underscoring of the conservative nature of the overall economic projection.

There are an estimated 450 beekeepers regularly tending bark hives in Kaoma, Lukulu and Mumbwa Districts. Occupancy rates vary between 40 and 50 percent and the production per occupied hive in a low-average flow year (a function of rainfall) is six to nine kilograms. Table I uses the lower figures to estimate current honey production and incomes for active beekeepers. Because virtually no honey is now being bought in the project area by the Beekeeping Division, it is assumed that all current production is consumed locally or sold to beer brewers. The per capita income of K60 is thus a combined cash/kind approximation of the economic value of the beekeeper's efforts. Table I further assumes that, given a reliable market, the average beekeeper, who now maintains about 50 hives, will increase his'hives and production by 20 percent. Ilia income will increase, as well, through sale of the byproduct, beeswax, which he now must throw away for lack of a buyer. As a result, related income of current beekeepers is expected to rise by more than 50 percent to KIO annually.

Expansion of honey gathering among both new and inactive beekeepers is projected by the 7-ekeeping Division as 950, more than twice the number now active. Table 2 assumes that fewer than a third of these will be drawn into production during the first year and that three years will be required to recruit and train the full number. Based on the gradually rising production of the new honey-gatherers and the relatively static level of output predicted for the active corps, the Beekeeping Division can anticipate purchasing nearly 80,000 kg in the project's first full year and more than 110,000 kg in the third year. Table 3

6/..... -6-

TABLE 1

Estimated Annual Honey/Beeswax Production and Income Among Active Beekeepers in Project Area*

in Kwacha District/Beekee ers :rent Prod/Income Projected Prod Income Total Projected Income Honey Value B'wax Value Honey JValue B'wax Value (kg) (kg) (kg) (kg) Kaoma/247 29,640 20,748 35,568 24,898 3,557 5,336 30,234 Lukulu/103 12,360 8,652 14,832 10,382 1,483 2,225 12,607 Mumbwa/l00 12,000 8,400 14,400 10,080 1,440 2,160 12,240 TOTAL/450 54,000 37,800 64,800 45,360 6,48o 9,721 55,081

*Based on a low average honey flow of 6 kg per hive, occupancy rate. 50 hives per beekeeper and 40 percent All honey assumed to be sold at official No revenue assumed price of 7On/kg and beeswax at KI.50/kg. at present for beeswax, which is unmarketable. beekeepers will increase Finally, it is assumed that the number of their hives, and therefore production, by 20 percent if assured a market. -7-

traces the Beekeeping Division's expected purchases and income from project the area. The total costs indicated are derived from Table 4, which outlines the estimated fixed costs of operating and maintaining the extension, marketing and processing sectors over a three-year period. The substantial profits indicated should allow the Beekeeping Division to reimburse Africare for its K75,000 revolving credit facility within two years and to establish its own credit and working capital reserve. As Table 5 and the accompanying graph show, honey production has proved responsive to price incentive. Although producer and retail prices were raised in 1975-76, marketed production lagged because a poor of rainfall year. Allowing for sharp fluctuations since then, however, production has soared since 1976-77. The producer price has risen 3.5 times since 1975; the retail price 2.27 times; and marketed production 3.8 times. Adjusted for inflation, beekeepers are obtaining about 125 percent higher prices for their produce now than in 1975. Within the projected area, the economic benefits will be varied. The incomes of nearly 1,500 families will increase an average of K30. Most of the 950 additional beekeepers to be recruited into production will contribute to rural job creation by employing a part-time assistant. Finally, the greater number of bees may have a modest effect on flowering food croDs--articularly sunflower--as well as maize, cotton, beans and groundnuts. Mumbwa District and, to a lesser extent, Kaoma District major are food producing regions. Improved pollination is expected to have some slight impact on yields.

B. Technological Considerations The gathering of comb honey in central and southern Africa is a traditional activity dating back thousands of years to when bushmen peoples roamed widely in the region. Today it is still practiced extensively, with bark hives hung from trees, throughout the abundant woodlands of' western and north-western Zambia. The majority of gatherers are skilled in making hives and handling bees, but often lack expertise the needed to prepare the honey and beeswax properly for sale. most While are aware of the need to conserve the forests, there are some who prefer to save themselves the trouble of making and tending their own hives; they simply cut down trees where bees have established a -8

TABLE 2

Projected Honey and Beeswax Production/Income in Kwacha Among Newly-Recruited Beekeepers*

District/B'kee-,ers Honey/kg Beeswax/kg Total Income

Kaoma Year 1 (150) 7,200 720 6,120 Year 2 (300) 14,400 1,440 12,240 Year 3 (500) a4,000 2,400 20,400

Lukulu Year I ( 75) 3,600 360 3,060 Year 2 (150) 7,200 720 6,120 Year 3 (250) 12,000 1,200 10,200

Mumbwa Year 1 ( 65) 3,120 312 2,652 Year 2 (130) 6,240 624 5,304 Year 3 (200) 9,600 960 8,160

Total Year 1 (290) 13,920 1,392 11,832 Year 2 (580) 27,840 2,784 23,664 Year 3 (950) 45,600 4,560 38,760

*Production based on 20 hives per beekeeper throughout three-year period, 40 percent occupancy and six kg/hive annual production. -9-

TABLE

Annual Beekeeping Division Income in Kwacha on Projected Honey/Beeswax Sales*

Project Honey/kg Honey/kg Income Beeswax Beeswax Total Total Net Year Purchased Processed* K3.50/kg Purch'd Income Income Costs Income . (K3.50/kg)

Year 1 78,720 55,104 192,864 7,872 27,552 220,416 144,482 75,934

Year 2 92,640 64,848 226,968 9,264 32,424 259,392 211,457 47,935

Year 3 110,400 77,280 270,480 11,040 38,640 309,120 244,752 64,368

'Using 70 percent recovery rate - 10 -

TABLE 4

Beekeeping Division Fixed Costs in Kwacha in Maintaining Project Area Operations

ITEM YEAR 1 YEAR 2 YEAR 3

Honey/beeswax purchases 66,912 78,744 93,840 Vehicle depreciation 14,250 14,250 14,250 (4yrs/initial cost K57,000, inflation 15%) Vehicle maintenance 4,000 7,000 11,000 Vehicle operation 22,000 27,000 33,000 Drivers (2xKl,200/yr) 2,400 2,400 2,400 Night allowances (exten.) 2,500 2,500 2,500 Extension officer salaries 12,428 12,428 12,428 Processing plant fixed costs -Building depreciation @ 5% of K65,000 cost 3,250 3,250 -Building maintenance @ 2.5% of initial cost 1,625 1,625 -Equipment depreciation @ 12% of K30,000 cost 3,600 3,600 -Equipment maintenance @ 5% of initial cost 1,500 1,500 Electricity costs 2,400 2,400 Packaging (b6ttles, lids, labels @ 66n/kg) 18,168o 42,760 50,959 Labor 1,824 12,000 12,000

Totals 144,482 211,457 244,752

*Assumes only half of honey pu hnqad in f f -7 will ho c'ld in that period. - 11 -

TABLEF 5

Marketed Honey Production 1970-81

Honey/kg Price Value (in KA 1970 4,585 KO.90 K 4,126.50 1971 2,351 .90 2,115.90 1972 5,522 .90 4,969.80 1973 6,304 .90 5,673.60 1974 3,668 .90 3,301.20 1975 13,055 .90 11,749.50 1976 8,095 1.50 12,142.50 1977 27,380 1.50 41,O70.OO 1978 19,380 2.60 50,390.60 1979 48,071 2.60 124,984.60 1980 30,104 2.60 78,270.40 1981 1982 63,123 2.95 186,211.37

Honey Purchases (kg) Price in Kwacha

70,000 .75 65,000 - 350 6o,ooo 60,000 -. 25

55,000 - .00 50,000 - .75 45,000 - - .5o 4o,000 / -. 25

35,000 - -. 00 30,000 - 1.75 25,000 - .1.50 20,000 7 -1.25

15,000 ------/1.00 10,000 -. 75 5,000------50 ...... "" 1970 71 72 73 74 75 76 77 78 79 80 81

Beekeeping Division purchases

Producer price ......

Retail price - 12 -

natural hive and raid the honey. Not only do they destroy trees and bee colonies, they often start forest fires through careless use of fire when "smoking" the bees. Training and improved extension are necessary to address these problems. The traditional bark hive has proved an effective device and is preferred by most beekeepers. Although it yields far less than a frame hive, the bark hive is much easier to construct. (See diagram on following page.) An experienced gatherer can make five bark hives in a day, at no cost except his own labor, whereas a skilled carpenter requ...res one day to build a single frame hive at considerably greater cost in labor and materials. Bark is fragile and tends to bend, warp and crack unless taken from a tree with "twisted grain," preferably the julbernardia paniculata species which abounds in the project region. If the tree is suitable, a cylinder of bark about one meter long and 30-40 centimeters in diameter is cut and levered from a straight trunk. Two types of bark hives are generally used in Zambia, as shown in the diagram. Experience in Zambia suggests that the best hive is about midway in dimension between the long-thin and the short-fat hive. The ideal hive is watertight, reasonably draught-proof, safe from pests, not susceptable to extreme heat or cold, stable and large enough to accommodate an efficient working colony of bees. A well-made hive will last three to five years. Zambia is blessed with many flowering trees and shrubs favored by the Adansonii bee which has adapted itself to the mixed woodlands that predominate in the Lroject area. The 'mix" of trees is ideal for maximum honey production and assures availability of pollen and nectar for the bees in poor rainfall years when some species may flower only briefly or not at all. This ideal woodland consists of 10 percent early flowering trees, 60 percent "main flow" species (principally brachystegia) and 30 percent second flow species such as julbernardia. The bees are able, therefore, to sustain themselves and produce honey in years of poor rainfall, and 4n good rainfall years they can follow the flow seasonally and build up a heavy surplus of honey that can be readily cropped. The only essentialrequirement is that the bees have access to a perennial supply of water within 1,000 meters of their hive.

13/.... - 13 -

COQNG TH IN HIVE 30cm SIDE V cw ; 1.5 2 .0 m ----.. _-

PE5 OVERLAPPING JOINr

0 END VIEW

..o - a. cm SHO.T FAT H IVE SIDE VIEW 1.0-1.25 yn .

5-acm SEAL

!EG:, END4 VI EW

"ING -OUD. OF 6A--C'N,, 14 -

Hives are ideally spaced to avoid competition among colonies and to maximize yields. They may be concentrated to some extent, particularly by gatherers producing for iarket, but care must be taken not to destroy too many trees in one area in making the hives. (The Forestry Department estimates that normal beekeeping activity results in an annual deforestation rate of one half of one percent--an acceptable loss against the forest growth's natural regeneration of at least two percent.) Occupation rates can be reduced by overcrowding as well as by not mounting the hive sufficiently high in an evergreen (or nearly evergreen) tree to protect against severe fluctuations in temperature. The Beekeeping Division recommends the ideal concentration in areas like Kaoma, Lukulu and Mumbwa as 100 hives per square kilometer. In a typical village or group of villages, with perhaps 30 beekeepers, this is likely to mean that the farthest a man must walk to tend his hives is about 2.5 kilometers. The hives are best hung to take advantage of the main swarming season, when many colonies are looking for a new home, normally in September-October in the project area. (See below for chronology of beekeeping activity.) An accupation rate of 40 percent is satisfactory. Since most swarms are the remnants of colonies cut out of trees by honey hunters, they i:iust be allowed to build up a new supply of honey.

TABLE 6

Chronology of Beekeeping Activity

lonth Floral Activity Bee Activity May to June Julbernardia in full flower Breeding slows and honey surplus is stored June Little flowering Little hive activity July Few flowers Little hive activity August Marguesia, parinari and Breeding starts and builds Syzygium start flowering up during the month September-October Brachystegia start flowering Breeding continues rapidly and swarming occurs October-riovember Brachystegia in full flower Breeding slows and surplus honey is stored December-February Few trees in flower Breeding stops and then resumes at low level February-March Few trees, more herbs flowering Breeding remains slow March-April Julbernardia starts flowering Rapid build-up and swarming

15/.... /1/ - 15 -

The beekeeper traditionally waits until the second flow following occupation to crop the surplus, by which time the colony has replenished its population of worker:3 and drones.

The most common natural hazards to the bee colony are pests such as the honey badger, red ants, bush babies and tree mice. Placing thorns about a meter and a half from the base of the tree is an effective deterrent to the badger, but only constant attention will prevent other pests from fouling the hives and forcing the bees to abscond in search of a safer home. European foulbrood disease has been detected in the past in a few areas of Zambia, but it is not regarded as a serious threat.

The Beekeeping Division relies on extension to help traditional gatherers improve their mastery of the beekeeping art. This applies especially to construction of hives and the preparation of honey and beeswax for sale. Stationing of a full complement of beekeeping officers in the project area and provision of transport will enable the Division to establish an effective extension program and actively recruit more people into beekeeping.

Bacause it would be impractical and expensive to send interested beekeepers to -he Beekeeping Training Center in Kabompo, in North- Western Province, the Division plans to hold training programs in Kaoma, Lukulu and Mumbwa. The weeklong sessions will be conducted by headquarters staff from Mwekera and cover all aspects treated in the Kabompo course, including the construction and use of frame hives., (During the project field visit, beekeepers frequently asked whether training would be possible.) A small booklet on beekeeping, prepared in 1981 by the Department of Social Development and the Beekeeping Division for use as follow-on reading material for graduates of functional literacy classes, also will be translated into local languages and made available in rural libraries.

Extension in the project area has been virtually nil. Because of lack of housing and transport, beekeeping officers are stationed only in Kaoma and Munmbwa. Except for limited trips by bus and bicycle, they have been unable to conduct many village talks with beekeepers, who are organized where possible into groups of 20-40 members. The main obstacle to promoting beekeeping, however, has been the Division's inability to purchase honey and beeswax in the villages.

$See Annex for curriculum used at Kabompo Beekeeping Training Center. 'V - 16 -

Beekeepers in the region have had only bad experiences with previous efforts to market thtJSr honey and beeijwax. Namboard and Zamhort purchased quantities of honey and beeswax in the area a few years ago but never paid the producers. Private traders also have attempted to buy directly from producers, but abandoned the effort when they discovered their lack of expertise in dealing with beekeepers, the difficulty of reaching them on poor roads and problems with processing the honey and beeswax for sale. Market opportunities are excellent, nevertheless, for an organization geared to working closely with the producers. The Beekeeping Division personnel understand the problems faced by beekeepers and have long experience in processing and marketing. Because of excellent production in Mwinilunga 'and Kabompo Districts in 1981 and 1982, Zambia is making strides toward meetingdomestic honey requirements. Against an estimated national consumption of 300-500 tons (counting what is used for beer brewing), the Division purchased more than 99 tons in Mwinilunga, Kabompo, Kaoma and Zambezi Districts in 1981. (Final 1982 figures are being compiled.) However, domestic market potential almost certainly exceeds 500 tons, which is about 80 grams per capita. Sales until now have been handled almost exclusively by the Division's limited outlets at the Mwekera headquarters and at a few Forestry Department offices in major towns and cities. Major urban supermarkets and the Village Industry Service in Lusaka have begun retailing honey, and honey now enjoys a consistent place on grocery store shelves. Government-operated retail chains have recently started stocking honey in their stores throughout the country. At least two private food companies and one cooperative also are marketing honey. In the meantime, the Beekeeping Division reports that several foreign buyers are ready to purchase both honey and beeswax from Zambia. These include Japan, France, Italy, Belgium, West Germany and Great Britain. In this regard, the lighter, sweeter honey produced in Kaoma and surrounding areas could be particularly important. Blended with the darker, less sweet variety produced in North-destern Province (where the "sweeter" julbernardia species is less common than in Kaoma), it improves the quality and marketability of Zambian honey. The beeswax market is a bit paradoxical. Zambia normally imports beeswax for industrial purposes such as the manufacture of paints, polishes and cosmetics, while it exports its own production. The Beekeeping Division has been unable, until 1981, to bleach raw beeswax for industrial

17/.... 17 -

use. With the necessary machinery now installed at Mwekera, Zambia is able to reduce beeswax imports and increase exports in proportion to the increased amounts of honey purchased in areas like Kaoma and Lukulu, where otherwise the beeswax is thrown away. In the project area alone, if current honey production is estimated at 54,000 kilograms, then about 5,000 kilograms of beeswax worth K17,500 are being lost annually. (About one kg of beeswax is obtained with every 10 kg of honey.)

The processing of honey and beeswax requires proper handling and equipment at both the village and factory level. Although honey can be pressed and strained simply enough for local consumption, most honey not converted to beer is sold to the Beekeeping Division in 20-liter plastic containers. The beekeepers must take special care to pack these with comb honey that has not been soiled or adulterated with pollen, water and other foreign matter. Extension officers play an extremely important role in ensuring that the beekeepers understand how to care for their raw honey lest it: be rejected when offered for sale. Likewise, the extraction and cleaning of the beeswax requires careful attention during a two-hour operation which will yield about 2.2 kg per container.

The Beekeeping Division currently processes and refines all honey and beeswax it purchases at its small facility at Mwekera. The plant hao an annual capacity of 300 tons of honey atLd 0 tonj of beesiax, az well as storage for about 50 tons of honey and beeswax combined. The expanded production in North-Western Province and the increases anticiDated in the project area will eventually outstrip Mwekera's processing capacity. Given the potential marketed production from Western and Central Provinces, the Beekeeping Division plans to construct a 130-square meter processing plant in Kaoma and a 50-square meter store room. The plant's processing capacity of 200 tons will be adequate to cope with maximum production in a good flow year. Although some of the honey will have to be transported to Mwekera for blending, the plant will greatly reduce the volume of produce that must be hauled nearly 800 kilometers from Kaoma to Mwekera. Most of the honey can be marketed directly in Lusaka, just 400 kilometers away, for local sale and national distribution. A processing/storage facility in Kaoma also will eliminate the costly and inconvenient transporting of plastic containers to Mwekera and back to the project are for re-use.

The processing plant will use semi-automatic equipment to be purchased in the United States and Western Europe. (The Dadant Co. of Illinois supplied most of the equipment now used at Mwekera.) The plant will' - 18 -

diesel draw its power from the Zambia Electricity Supply Corporation generator serving Kaoma.

C. Sociological Factors

The project is intended to give full flower to a traditional power economic activity, create rural employment, improve the purchasing diet and of peasant farming families and marginally improve the local food supply. of As mentioned earlier, the gathering of honey and the keeping the Luvale, bees in bark hives have been common for centuries among forests. Chokwe, Mbundu and other peoples of Zambia's western-central the While it has seldom been an individual's principal occupation, for the gathering of honey for food and beer has long been a means region's subsistence farmers to supplement their income. The majority bark of active beekeepers in the area maintain only two or three dozen hives, which they tend seasonally in the early morning or evening, when millet the bees are quiescent, without taking time away from their maize, times as and sorghum crops. However, most could cope with two and three market many hives if it was worth their whil.?--i.e., if there were' a for honey that is in excess of local demand. Beekeeping generally requires a helper, particularly during the cropping of hives, when any delay in climbing up and down a tree can which result in unpleasant confrontation between the beekeeper and bees have had time to mobilize against the intruder. Although it represents only a part-time job at best, the opportunity to assist a beekeeper is a form of gainful employment, as well as an opportunity to learn the trade. D. Scooe of Imnact With the exception of Mumbwa District, which is a relatively prosperous farming area, the project region is notable for its lack of economic development. Population in Naoma and Lukulu Districts is scattered and roads poor, which has discouraged progress. Agriculture is essentially subsistence and many families rely on cassava as a staple, supplemented by maize, millet, sorghum and some rice. Many people live far from health centers and schools. Not surprisingly, it has proved equally difficult to provide people with effective agricultural extension and marketing services, the lack of beekeeping assistance being an object example.

19/ .... - 19-

The development of the beekeeping industry is being pursued within the context of Zambia's campaign to achieve basic food self-sufficiency. Although honey is a minor product by itself, it is food. Beekeeping has the added virtues of being labor-intensive and complementary to silviculture and agriculture. The protection and use of Zambia's extensive forest resources can benefit directly from a more care-fully-evolved beekeeping industry.

Although the focus here is on commercially-oriented production of honey and beeswax, many families--given access to extension and information--might well decide to hang a few hives purely for their own consumption. The rising price of refined sugar, not to mention its frequent absence from the market, might well encourage backyard beekeeping. The short Social Development booklet on beekeeping referred to above may help extension efforts to introduce this as a household activity.

E. Institutionalization

The Beekeeping Division is in a position, within a few years, to be a financially self-supporting body capable of generating foreign exchange as well as contributing to government revenue. The Division is presently han-dicapped by the requirement that all revenue must revert to the Ministry of Finance, which then doles out limited amounts for capital investment and for imprest accounts for purchasing honey and beeswax. Without the temporary expedient of a revolving credit fund provided under the West German aid program in North-Western Province and the permission to borrow from a sister agency, Industrial Plantations Ltd., the Division would have been unable to purchase most of the honey and beeswax offered for sale in Mwinilunga and Kabompo in 1981 and 1982. The Ministry of Finance and Cabinet Office are reviewing the Beekeeping Division's operation with a view to allowing it to function on a more rational financial basis. The Division hopes that it will be permitted in the future to enjoy the same status as Industrial Plantations, which also falls under the Forestry Department and which has access to its own earnings as needed.

In a precedent-setting decision, the Zambian cabinet in 1969 agreed to allow the Industrial Plantations (IP) Division of the Forestry Department to become self-managing. This was based on the Ministry of Finance's acceptance of evidence supplied by the Forestry Department

20/.... - 20 -

which demonstrated IP's economic viability. Since 1970, IP has operated essentially as a private enterprise, although it remains a government institution. It receives annual government grants for capital investiment, but must cover all recurrent expenditures. Audits carried out annually by private firms are submitted to the Ministry of Finance. IP has shown a profit in seven of the past 12 years.

Based on the data it:has presented, the Forestry Department expects the Ministry of Finance to recommend to the cabinet that the Beekeeping Division be placed on a similar footing with IP. There is reason to believe, therefoie, that the Beekeeping Division will become self-accounting within two years.

The Division would remain a part of the Forestry Department and would continue to be staffed by civil servants. As it grows in economic importance, it is assumed that the Division will be better able to recruit, train and.hold professional staff. Government and quasi-government bodies which provide essentially-rural services must be able to provide adequate housing, transport and basic general support if they are to attract and retain competent personnel. The Beekeeping Division is characterized now by a small but dedicated professional staff. To implement its plans in the project area, it intends to transfer extension officers from less productive regions to Kaoma and Lukulu, including a senior man who will become the provincial beekeeping officer stationed in Kaoma.

Tables 3 and 4 indicate that the project is economically viable. Within three years of start-up, the Beekeeping Division should be purchasing at least 110,400 kilograms of honey in the area during an average year. When processed, this will yield about 77,000 kilograms for sale at the newly-raised price of K3.50/kg. The profit on this volume should be adequate to establish a healthy cash reserve and revolving fund to support continuation of the program within three years.

IV. PROJECT DESIGN A4D IMPLEMENATION

A. Implementation

The Beekeeping Division will be responsible for implementing the project in cooperation with Africare technical advisors and the Africare representative in Zambia. Africare will assist by purchasing three - 21 -

vehicles and processing equipment outside Zambia. Two Toyota Landcruiser pickups to be bought in Botswana will be assigned to Kaoma and Lukulu for extension work and collection of produce. A two-ton lorry also to be purchased in Botswana will be used to collect produce and transport it to the processing plant and to marketing points. Construction of two staff houses in Kaoma, one in Lukulu, and the processing plant in Kaoma is expected to take one year. Contracts will be awarded to Zambian firms on competitive bid through the Western Province Tender Board. Blueprints and cost estimates for the housing have been provided by the Ministry of Works and Supply and reviewed by AID/Zambia's engineer. Plans, final cost estimates and siting for the the processing plant and storage facility are complete. The b engineer has inspected all sites.

Imnlementation Time Chart Activity 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 . . 30 icles purchased )cessing equipment -ders/shipped iolving Fund 3tablished

istruction tendered !keeping booklet *anslated .keeping booklet ,'inted is:ruction begins i~ding completed ;cessing equipment astalled and plant )mmissioned iolving fund advance Lquidated aluation

As scon as funding is secured, the Beekeeping Division will nominate a provincial beekeeping officer to be based in Kaoma when housing becomes available. The district beekeeping officers already resident in Kaoma and Mumbwa will begin organizing beekeeper groups.

22/e .. - 22 -

A district beekeeping officer will be posted immediately to Lukulu if temporary housing can be obtained. Otherwise, the Kaoma officers will have to cover Lukulu in the interim.

Extension work, training of beekeepers, provision of beekeeping equipment (smokers, knives, veils, etc.) on credit, and the purchasing of honey and beeswax can begin immediately if the project commences during one of the two normal cropping periods. The focus at first will be on helping existing beekeepers and organized groups, which will function as the primary extension forum. Recruitment and registration of new beekeepers will be conducted largely through the beekeeper groups. Short training programs and workshops will be held periodically in the district centers by the beekeeping officers and staff from Mwekera. These sessions will stress proper techniques for building and hanging bark hives, handling of bees and preparation of honey and beeswax for sale. Where interest shows, women will be encouraged to participate, mainly in home processing and preparation. Programs for advanced beekeepers will be held as well as for those interested in using frame hives.

If the project begins during either of the main cropping/purchasing periods, after the honey flows of March-April and October-November, every effort will be made to encourage sale of honey and beeswax. In the project's early stage, a bottleneck may develop in the provision of plastic containers which the Division supplies to registered beekeepers for delivering comb honey. The containers, which hold 20 kilograms of honey, are manufactured in Zambia, but delay should be anticipated in filling the initial order of 2,000. If a sufficient number of containers can be distributed in the project area, all honey purchased will be transported to Mwekera for processing until the Kaoma facility is operational. Beeswax will be taken to Mwekera in any event to be bleached, although some may be sold directly in Lusaka and the Copperbelt to industrial consumers.

The availability of a revolving fund of up to K75,000 provided by Africare, will enable the Division to purchase all honey and beeswax offered for sale in the project area. It will also be able to purchase and lend equipment and tools to beekeepers and cover the operating and maintenance costs of the project vehicles. Loans will be made only to members of registered beekeeping groups on the recommendation of each group's loan committee. Repayment will be to the district beekeeping officers in cash or in-kind (honey or beeswax). The Beekeeping Division is technically and administratively able to implement the project, having acquired experience on similar lines in the IRDP North-Western Province beekeeping program. Africare, having helped to design the project, will assist logistically and provide technical, evaluation and financial monitoring services where required. The Africare Representative will maintain close liaison with the Division vis-a-vis the management of the revolving fund. (Africare is supporting a similar credit mechanism as part of another Zambian project, the Kafue Flats Fishing Development Program.)

B. Measurement and Evaluation The objectives of the program are to produce more honey and beeswax and increase peasant incomes. The production and income levels projected in Tables 1, 2, and 3 provide reasonable targets against which to measure progress. The first year will necessarily be devoted to infrastructural work: construction and equipping of the processing plant, building of staff housing, and purchase of vehicles. Provision of reliable transport will have immediate effect. The district beekeeping officer now based in Kaoma will be able to reach all beekeeping areas, to strengthen organization of existing beekeeping groups, register new beekeepers, hold village training sessions and organize marketing routes and buying schedules. Again, depending on the time of year the project actually starts, results may not be readily visible. For instance, although the Beekeeping Division will have immediate access to the revolving fund to purchase huncy containers, the order will take ti:.c to fill and the containers will then have to be delivered to beekeepers. If the project start coincides with one of the two main honey-cropping periods, it may not have much immediate impact on sales to the Beekeeping Division. Allowing for various afflictions suffered by most construction projects in Zambia, it. is not realistic to expect the processing plant to be operational until the second year. That is all the more reason to devote the first year to organization and training of beekeepers. In the interim, all honey and beeswax purchased will be transported to Mwekera for processing. Ultimately, the major factor determining the project's long-term success is the Beekeeping Division's financial freedom and flexibility. Without the ability to draw as needed on its income, the Division will be hard-pressed to sustain gains achieved in the project area. As stated earlier, there is reasonable hope that this problem will be resolved during thc life of the program.

Evaluations iill be conducted at several intervals during the two and half year course of the project. The Africare representative in Zambia and the Beekeeping Division will review progress after six months and between the 12th and 18th months. The final evaluation will be conducted between he 24th and 30th months by a professional apiculturalist.

V. FINANCIAL PLAN

A. Donor Aiency Contribution

The budget below for externnl a:;siLstan-e covers Africare's administrative costs and initial capital expeuditure. Equipment for the processing plant is to be purchased in the United States and Western Europe. Two Toyota Landcruiser pickups and a 2.5 ton Dyna diesel truck will be purchased in Botswana. These are cover, d by a blanket waiver for southern Africa which cites the need for righthand-drive vehicles and servicing.

The three staff houses and proceLsing plant will be built by private contractors on Zambian Government tender. Building plans for the type 302 and 315 houtvcs and procensing plant have been reviewed by AID/Zambia. Site p1",ns will be provided.

Africare ".ii j.rzivide tochnical auzistance, Luupported by the grnnt, to aid in the setting t: -t-nd operation of the proce:;ini- plant during each year of the pro iect. In addit:ion, Africare will providQ a training and extension snecialist and funds to improve the quality of the Beekeeping Division's extens.ion -ervice. These two technicians, along with the Africare/Washington agricultural economist, will evaluate the project in years 2 and 3.

B. Africare Contribution

Recurrent expenditures that would normally be budgeted above will be covered by a revolving fund to be administered by the Beekeeping Division or the Forestry Department. Africare will provide up to K75,C00 to sustain the find's solvency, particularly in the first months when there will be L:; ule or no income generated in 1.he project urea. Based on the cash flow .urojection2 :.Jown in Table 7, L!e fund should become self-supporting within three y,:ars. Africare will disburse funds as needed. These will be refunded no later than the 30th month of the project, in the absence of extenuating circumstances to be defined in a working agreement between Africare and the Government. The agr:cment will clearly specify the - 25 -

function of the fund, its procedures and the Government's obligations to Africare. The working agreement will also commit the government in principle to allowing the Beekeeping Division to continue operating the fund beyond the term of the project.

C. Government Contribution

The Beekeeping Division presently maintains two extension officers in the project area. This will increase to four with the assignment to Kaoma of a senior officer as Western Province beekeeping officer and a district beekeeping officer in Lukulu.

The Division will also contribute the time of headquarters personnel to conduct training workshops for beekeepers.

D. Beekeener's Contribution

Where necessary, various beekeeper groups will construct simple storage shelters on self-help.

VI. CONDITIONS

A. Africare will provide up to K75,000 to support the revolving fund.

B. The project has been requested in writing by the Chief Conservator of Forests in the Ministry of Lands and Natural Resources and by the National Commission for Development Planning. (See Annex for latter.)

C. Non-U.S. Government contribution in cash or equivalent will be at least one quarter of total project cost.

26/ .... - 26 -

VII. BUDGET

A. U.S. Government Funding

YEAR 1 YEAR 2 YEAR 3 TOTAL PERSONNEL & FRINGE

01 Afr/Z management (3 man months/yr) $ 7,500 % 7,500 7,500 $ 22,500 02 Project manager (0 man month/yr) 2,500 2,500 2,500 7,500 Training &.Extension Specialist (1 man month/yr) 2,500 2,500 2,500 7,500 Agricultural Economist (2 man weeks/yr) -0- 1,154 1,154 2,308 03 Consultant - honey & beeswax production & processing expert 6,ooo 6,000 3,000 15,000 (100 man-days) 10 Fringe benefits (U.S. hire overseas 12%) 900 900 900 2,700 11 Fringe benefits (U.S. hire 12%o) 600 738?38 2,076 $20,000 $21,292 018,292 $ 59,584 TRAVEL & ALLOdANCES 30 In-country travel $ 3,000 % 3,000 $ 1,500 $ 7,500 31 In-country subsistence 2,000 2,000 2,000 6,000 37 International travel (@02,200/trip) 4,400 6,600 6,6oo 17,600 38 International per diem (e 588/day) 7,216 10,472 8,272 25,960 $16,616 $22,072 $18,372 $ 57,060 EQUIPMENT 43 Honey/beeswax processing machines 015,000 $ -0- $ -0- $ 15,000 44 Honey presses 3,500 -0- -0- 3,500 45 1 2.5 ton Dyna truck (diesel) 20,000 -0- -0- 20,000 50 Vehicles - Host Country use (2 LWB Landcruiser pickups) 30,000 -0- -0- 30,000 $68,500 -0- $ -0- $ 68,5oo - 27 -

VIII. BUDGET CONTINUED

YEAR 1 YEAR 2 YEAR 3 TOTAL

CONSTRUCTION 73 One 315 house $ 45,351 % -0- $ -0- 0 45,351 Two 302 houses 61,754 -0- -0- 61,754

74 One wax/honey processing 75,000 -0- -0- 75,000 77 Site Development Building inspection 7,720 -0- -0- 7,720 $189,825 0 -0- 0 -o- $189,825

TRAINING 80 Travel & allowances for workshops 8,000 10,000 6,000 24,000 83 Demonstration and Training 7,000 7,000 3,000 17,000 % 15,ooo $17,000 $ 9,000 $ 41,oo

OTHER DIRECT 85 Telexes & Cables 400 400 200 1,000 88 Freight 3,000 -0- -0- 3,000 3,400 $ 400 $ 200 $ 4,000

TTA! DIRECT 313,341 60,764 4'5,864 419,969.

Indirect on personnel, travel, training & other direct @ 21.45% 11,80i 13,034 9,63.8 34,673 Indirect on equipment and construction @ 10.7% 27,641 -0- -0- 27,641

T*r AL 352,783 973,798 .S55.70- ,S4.2 1

Rev. April 26, 1983 27A -

B. Non-U.S. Government Contributions

1. Africare -- Revolving credit fund K 75,000

2. Beekeeping Division

-- Salaries Provincial beekeeping officer (750,/m x 30) 22,500 District beekeeping officers ( 4OO/m x 3 x 30) 36,000

-- Training and Workshops Mwekera HQ officers' time (8 workshops x 400) 3,200 -- Accounting One full-time officer to manage revolving fund, etc (500/m x 30) 15,000

-- Headquarters staff time (100/m x 30) 3,0OO -- Project development (40 md x 30) 1,200

3. Department of Social Development, Ministry of Labor and Social Services.

-- Social development officers' time (50/m x 30) 1,500 -- Development costs of Beekeeping Instruction Booklet 5,000 4. Beekeepers

-- Workshops (opportunity cost of 25 participants x 8 workshops x 5 days at K1.00/d) 1,000 -- Production activity (additional time devoted to beekeeping at one day per month x 30 x 450 current beekeepers) 13,500

-- Training for new beekeepers (opportunity cost for 900 persons engaged in five days training each) 4,500 5. Kaoma and Lukulu District Councils -- Opportunity cost or value of land used for building sites 10,000 Total K191,400 ($167,895)

Note: Exchange rate used: 0i.00 = K1.14 LOGICAL FRAM4EWOR!K

i!ARRATIVE OBJECTIV..LY VERIFIABIE MEAJS OF IflPORTANT SUMMARY IN: DICATORS VER IFICATION ASSUMPTIONS Program/Sector goal: To promote production of Annual marketed production Beekeeping Divisions Rainfall during project food (honey) and increase of honey will increase to 120 records of purchased period will be minimally peasant incomes in Kaoma, tons within three years. of honey and beeswax, adequate to sustain bee Lukulu and Iumbwa Districts Existing beekei.per's income colonies. in Zambia. derived from honey and beeswax sill increase about 50% in three years.

Project purpose: To establish a marketing Provide extension and training On site observations and structure serving the above for an estimated 450 active Beekeeping Division districts, records. along with a honey gatherers in the region Beekeeping Division records. regional processing capabi- and nearly 1,000 others Lity for honey and beeswax, expected to resume or take up " -o improve the extension trade. i services in the area for A small plant will be built at existing and newly Kaoma with a 200 ton capacity. recruited beekeepers.

Outputs: Increase production and 85,O00 kg purchase first full Beekeeping Division records Adequate rainfall and price processing of honey. year and more than 110,000 kg incentive. Farmers trained in the third year. 1o constraints other than housii Functioning credit system K70,O00 revolving credit and transDort stand in the way in place. in place. of assignment of personnel to proposed sites. LOGICA1. FRALEdORK (CONTINUED)

NARBATIVE OBJECTIVELY VERIFIABLE 14EANS OF SUI.4HARY IMPORTANT INDICATORS VERIFICVA':'IOI ASSU!IPATIONS nputs:

Personnel Africare Management Support 5 person months/year Time and attendance records Beekeeping Division will provide Consultants 36 days/year Project Reports promised personnel at proposed Site visits sites. Housing

1 315 house in Kaonia SA5,351 1 302 house in Kaoma )6W,754 3302 house in Lukulu

Inputs: Plant I 150-square foot process- ) Project Reports ing plant in Kaoma ) 1 SC-square-foot storage area in Kaoma )

ehicles 2 LWB Landcruisers Pick ups (diesel) 030,000 1 2;Ston lorry (diesel) 020,000 ,, Equipment and Supplies Processing Equipment, 018,500 Supplies and Tools.

Training $41,000 Credit Africare line of credit K7-5,000 ~, r4

01K 'iii

rr

4~ I r/ ~

~'44

j (j . . ANNEXES

1. Impact Identification and Evaluation Form

2. Official Zambian Government Letter of Request

3. Kabompo Beekeeper Training Center Curriculum 4. Waiver Justification

5. Proposed memorandum of Agreement between AFRICARE and the Ministry of Lands and Natural Resources

6. Checklist of Statutory Criteria IMPACT IDE:T'IFICATION AND [':VALUATION FORM Program for Honey and Beeswax rn~uction and Processing Western and Central Frovinces Republic of Zambia Impact Areas and Sub-Areas 1/ impact Identification and Evaluation

A. LAND USE

1. Changing the character of thi land through:

a. Increasing th population . . . . . N b. Extracting natural resourqes ..... L

c. Land clearing: ...... N d. Changing soil chracter .N...... N 2. Altering natural defenses...... N 3. Foreclosimg important uses ...... N 4. Jeopardizing manor his works ...... 5. Other factors

B. WATER QUALITY

1. Physical state of water ...... N 2. Chemical and biological states ...... N 3. Ecological balance ...... N

4. Other factors

1/ See E:.:lanatorv Notes for this form. 2/ Use the follo:ingc s :bols: N - No. envircnmental impact - Little environmental impact M Moerat environmental impact H - Liqn envircnmental impact August 1976 U - Unkno.t,n_environmental impact IMPACT IDENTIFICATIOt AtJD EVALUATION FORM

C. ATMOSPHERIC

.1. Air additives ...... _ 2.Air pollution ...... 3 . Noise pollutionI . . . . . N 4. Other factors

D. NATURAL RESOURCES

1. Diversion, altered use of water ...... N .2. Irreversile, inefficient commitments . . . N 3. Other factors

E. CULTURAL

1. Altering physical symbols ...... N 2. Dilution of cultral traditions NN...... 3. Other factors Traditional work practice L

F. SOCIOECONOMIC

1. Changes in economic/employment pqtterns . .4 * I 2. Changes ia-i 'ooulation ...... N 3. Changes in cultural patterns ...... _ 4. Other factors IMPACT tDETirICATIOINIAND EVALUATION FORM1

G. r{EALil

1. Changing a natural environment ,"......

2. Eliminating an ecosystem element ...... 3. Other factors

H. GENERAL

1. International impacts...

2. Controversial ipacts ...... N. t N 3. Larger program impacts ......

4. Other factors

I. OTHER POSSIBLE I'.PA!CTS (not listed above)

See attached Discussioh of imoacts. EXA lINATION Or NATUREZ, SCOPE AND MAGW1ITUDE" OF ENVIRONMENTAL IMPACT Program for Honey and Beeswax Production and Processing est~rn and Central Provinr-es iRepublic of Zambia

I.-

This two-and-a-half-year roject, to be implemented by the Republic of Zambia's Forestry.Department B ekeeping Division with support from Africare, will improve extension and tra ning for an estimated 450 active honey-gatherers in the Western and Central Pro'inces and for nearly 1,000 others expected to resume or take up the trade. They will be encouraged and assisted to organize in small groups to.facilitate extension, local processing and marketing. The Seekeeping Division has planned for some years to develop honey and beeswax production and processing in the three regions with greatest potential, namely the North-Kester Northlrn n, and sections of the Western and Central

Provinces. Efforts- in the North-Western Province (the country's major honey producing area) are being supported by the German Agency for Technical Cooperation. Encouraged by this successful model, the Forestry Department approached the British Government to support similar work in the Northern Province, and asked Africare to support work in the:Western and Central Provinces. Under the proposed project! the Forestry Department's Beekeeping Division will promote and enable increasid honey and beeswax production, processing and marketing, while at the same time strenqtheninq the conservation of an important

natural resource--Zambia's vastjbut rapidly dwindling forests. Through promotion of improved methods for..hive-maing, honey gatherinq and local orocessinq, the establislLnent of a processincj p.anc, and the establishment of a revolvi:n fund for ".'irchasing, transpo2ting, p-ocessinq and marketing honey, it is expected that the nuwmber of beekeepers Can b-2 :incr'eased, while at the same time reducing unnecessary tree-cutting and fires caused by "honey hunters" who use primitive and dostructive technliqs to Obtdin honiy. A:; . linallf agency with Limited re;our:cs,

the BeekeepingoDivision has rtke advantage of serving-e skilled constituency of honey-gatherers, and a-broader involvement by farmers in the project area can

be achieved through the impro-ments proposed to the marketing system. The specific zones for pr ject activity are the Kaoma, Lukulu and Murnbwa Districts, where annual production in three years is expected to triple to about 120 tons. The associa'&ted prodbctionIS of beeswax, now discarded by villagers for

lack of a marketing outlet, will supplement beekeepers' meager cash incomes. Output from the project area will contribute significantly toward satisfying domestic consumer and industriji demand for honey"and beeswax and produce modest export earnings. As a food wi h high nutritional value, honey has a role to play in Zambia's quest'to achi~ve self-sufficiency in basic foodstuffs. The initial revolving fund (being contributed on a loan basis by Africare to the projec: will gradually be replaced by the Beekeeping Division by proceeds from the sale of processed honey and beeswax,: and thus the fund will eventually become self- sustaining.

The extension, processing .and marketing activities of the program will be supported under this project through the contruction and equipping of the processino plant, and through the construction of staff housing for extension staff in the project area.

rT. Discussion of Tmmacts

A. Land-use !mDats

(i) Construction

Blueprints for the construction of the three units of staff housing (standard GOZ type houses) have been reviwed and approved by the USAID Engineer in Zarnbia and by USAID/.REDSO (Nairobi%, and wll be constructed through standard procedures of Ehe

Buildings Deoartnent of the mini stry of 'Works and Supply. The USAID Engineer in Zambia will provide engineering services to ensure that construction procedures MUAID D ei n Luaer[int.'.9. t',r the conntri.tiot of.the prrce:;s r1 rpj1nt will be reviewed USAID to the construction-e that facil1t.. Given the limitea- nature and~size of coostruction under this project, it canbe determined t1 t cons~ructov te thehyt cion- the will not be environmentally harmful.

(4:.)______n

mwnereaar two 'environmetal donderns in this project-:- what impact :will an increase in.the numbr of .farmers ongaqed rate of deforestak'cn ,--.-"m ,e in beekeeping have on the rte of tre bark),: -deforestaionSc -the farmers presently make hives from tree bark), anc. what mpact will this increase:'in the number of beekeepers have on "the wi.rd i ife preserves.

To respond to the first oncern a brief review of current beekeeping practices in Zambia is called for. 'Lukuu i Rresently, in the project areas land N "iaather"- of Kaceme, Numbiawa-there are approximately 450 beekeepers. Most of these beekeepers are full time -farmrs for whom beekeeping is a sideline activity. Trditionally farmers in,*e thuir beehives from the bark of the _ulber- nardia s-ecies--a tree which when mature is of sufficient height and diameter .to'provide bark sufficient to make a hive with dimensions approximately six feed in length and l feet in diameter. When the bark has been *thetree the strfoped from tree des. This species=of tre2 begins to provide suitable bark

at age 40 and remains. suitabel until the tree dies. Thus the bark is taken on y in mature forest. Further, orly one tree out of ten has bark suitable for'making hives. Presently the farmer makes only one hive from a tree. As the market for hbney and beeswax expands,. and farmers percieve the potential for added itcme through beekeepina, more farmers will be attracted

to beekeeping. WIithout an organized Proaram and improved extension service, the destruction of trees will increase in the same indiscriminate manner which is.currentry-rractivcd. In other words, eve-n without the present program there ;.ijl, 11 l- !;%,mr.. n1en-r, i 1h I tnr ,)r' ....., r hi'I.b hl, wil I ,,.,I diroct propor~ionnd incrn,.p izl thO Ostruction * hoa1 :t b the' forest. -Therr3 arC.-Se6ra Pronram whichshldea.. ape ts to teproposecl prar hih hol enibi1.? ian increase 11) the,.number o4 far-mer~s enqg1cled in beekeepjrp, while* foncurrr~nt1.y -brinqing about an Overall p oportionate decrease in the number of trees being .destroyed.

The presentmethod of slecting the trees for cuttirc is totally indis- crimante. Although only one of ten *ttees has suitable bark, at present farmers Cut trees without regard to lroximity or the over-forty age of trees. Throuch a simple program of seiectivi-cutting the same number of trees can be cut with- Out the overall present dest~uctive element. Indeed a selective cuttinq pro- gram could contribute to the coverall technioue of thinning for conservation anid improved qrowth. ik second feature of tae program which should dramatically reduce the jiumner of trees-needed to make bark hives is to help the farmers increase the nurber of hives th-,, can mak10i from a single tree. Given the present estimate that a farmer in general makes only one hive from a single trec, and the estimate that each of the present beekeeners will increase the number of hives they tend by ten, (fr1 ml50 to 60) the these number of trees destroyed 450 farmers wiil be abojt by 4,500 every three to four years (the life of a beehive) If this same traditional practiCe were followed by the 950 new bee- keepers to be added through thks proqram (,ith an averaqe of 20 hives oer farmer) a total of 19,00o treep would be needed every thrue to four years grand total of 23,500 trees when combined with tho -Zforts of the Present farmers).

Itis estimated by .neepina division that by encouraging strating a more effecient and demon- use Oz the trees, as many as five hives can be made from.,a sincle tree rather th.-in the present one hive.' Thus overall, the number of additiona1 troes ne:',ied' could be rudWlied from thet estimat,d 23,5,,0 ,Ic-.'n to

approximately. 5.000 trteIr. It is not beinge suqggested tlor ijs i

-that -each beekeeper will clnstruct five hives'; but an averace increase co tare

or four hive's will'be siarificant-- The reduction i.n the number cf trees

needed combined".)wjth" the celective thinninq approach already menti6ned will

.have the effect of orotectng and improving the environment.

A finalfeature of the prqgrdm will be an effort to help move the farmers

from-making hives from bark to utlizing trame hives. Frame hives would also

dramatically reduce the number of trees needed since the entire tree. can be

used to-rake many hives. Convincinq farmers to change from barn hives will

not be an easy task however, since frame hives will cost about $50.00 .er

hive whereas the bark hive' is free', that is costinq only the labor required

to strip the bark-.and construc the hive.

The three above features of the program.n will be undertaken through

the Beekeeping Division of the Porestry Department through an increased ex- tension service wnicn .-s an integral part of the program.

At some point in time, as the beekeepinq industry expands as an incrme generat6r, a reforestation-replanting program might be introduced. Given the problems associated with educating the African populace on the value of forest conservation in areas where there is a scarcity of trees, as in'the Sahel, it is not feasible to believe a reforestation program could easily or quicklv

*be introduced in these areas of Zambia where forests abound. Thus, while the intrbduction o f i refosestation Scheme in conjunction with the expanding beekeeping progralmight bq desir-ible it is not realistic at this point and therefore is- not include:l as cne of the coals of this 212 year project.

The second environmental concern is the impact the prozran will have on wild game reservations. i Except along the western edge of the Kafue National Park where bek, ep-in- i ; IPot alHi w!, -he jirtject 11v t!,t tot:!,i ii, i. " game areas. The districts of Kaoma and Lukulu are not even classified as game management areas. Tius, the eonclusion* is that the proqram will have no detrimental impact on :he animal life.of Zambia.

B. Cultural Tmpacts i

(i) Taditional Work Practices As ndicated above anL in the project :iescription, the project will tend to.counter traditional practices which result in inefficient ose of trees for ma-king bark hives, and indiscriminate cutting and burning of trees by "hone.y hnter". Although this in effect will have'a minor 'L'pacc on cultural practies by traditional honey gatherers, the beneficial

impact to the environment far outweighs this, and therefore the net effect can be determined to be beneficial.

III. Recomendation

Proposed construction activiries, for housing and the processing plant, will have no major negauive environmental impact. The extension progrnm will incorporate measures to strengthen conservation practices with respect to the removal of trees'and the fabrication of bark hives, while at the same time introuducing to the extent possible frame hives. There is no forese.:able negative effect to wildlifei in the project area. The major cultural impact will be to reduce negati*e cultural practices with respect to honey gathering in the area. Thereore, a negative determination i; r-cormien, -d for this project. . V

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SATURDAY In E E 1 E 2 E: P E s WAIVER JUSTIFICATIONS

PROBLEM: Approval is required for a procurement source/ origin waiver from AID Geographic Code 000 (U.S. only) to AID Geographic C6de 935 .(Special Free World) for the purchase of honey processing equipment.

AY-' Cooperating Country: Zambia B) Authorizing Document: Graht Agreement CQ. Project Western Province Small Farmer Production Project (611-0205) D, Nature. Funding Economic Support Funds E! Descriptiui, UT Commodities: Miscellaneous types of honey processing equipment F) Probable Procurement Origin: Western Europe (Code 935) G) Probable Procurement Source: Western Europe (Code 935) H) Waiver Amount: $9,500

I. PROCUREMENT SOURCE/ORIGIN WAIVER:

DISCUSSION: The Beekecping Division of the Ministry of Forestry is establishing a honey processihg plant, in Kaoma under this project. Previously, certain requirements for the honey processing industry were imported from the United States. The Beekeeping Division, however, has been informed by U.S. suppliers that storage tanks, a dosing machine, a honeypump operating on 220V - 50 Hz, a filtering unit equipped with heating system, honey extractors with six frames, and un-capping trays are not available from the U.S. The U.S. firms can supply only about $3500 worth of the total requirements.

-The Beekeeping Division has learned, however, that the rem ining equipment, estimated to cost about $9,500, is available from European sources, and wishes to obtain a waiver from the source/origin requirement, 000, U.S. only, to Code 935, Special Free World, in order to solicit quotations from these European sources. Neither are the items in-question known to be available from AID Code 941 sources.

JUSTIFICATION: According to'Chapter 5, Section B 4 a (2) of Handbook One, Supplement B, a waiver may be granted when the commodity is not available from countries or areas included in the authorized geographic code. - 2 -

According to Delegation of Authority 140, and the Guidelines for implementation of DOA 140 issued in October, you may grant source/ origin waivers for commodities, other than vehicles, when the value of the procureilent is $100,000 or less, with the clearance of the Regional Legal Advisor and the Regional Supply Advisor.

II. VEHICLE WAIVER:

Pursuant to the blank source/origin waiver authority granted by the Actiny AA/AFR on January 21, 1983 (State 021544 dated 1/25/83), approval for the procurement of three right hand drive project vehicles (two landcruiser pickups and one diesel Dyna truck) which have an approximate cost of $50,000 is requested. The justification for utilizing this waiver authority is as follows:

1) There are no American manufactured vehicles of the type and configuration required for use in this project (multipurpose lLndrovers), and

2) In addition, there are no facilities in Zambia for servicing and maintaining American manufactured vehicles or for purchasing spare parts as needed. The source of these vehicles will be either Zambia, Malawi or Zimbabwe; the origin will be either Japan or the Republic of South Africa.

RECOMMENDATION: For the above reasons, it is recommended that you:

1) approve a procurement source/origin waiver from AID Greographic Code 000 to Code 935 for procurement of three right-hand drive vehicles.

2) grant a source/origin waiver in the approximate amount of $9,500 to permit procurement of the above-described equipment from countries included in AID Geographic Code 935 and certify that exclusion of procurement from Free World countries other than the co-operating country and countries included in Code 941 would seriously impede attainment of U.S. foreign policy objectives and the objectives of the foreign assistance program, and

3) certify that exclusion of procurement from Free World countries other than the co-operating country and countries included in Code 941 would seriously impede the attainment of U.S. foreign policy objectives and the objectives of the foreign assistance program. ACTION MEMORANDUM FOu I IE AID, A.l AL:.h, II.,I;lNrATI%'I, .AMfIA FROM: ARrHUR J. LAEMMEIRZAH R SU/I.SA ',UPPLY ADVISOR PROBLEM: Approval it reQuired ior ;I p Curem(rit ,ource/ origin waiver from AID Geographic Coue D00 (U.S. onLy) to AID Geographic Code 935 (SpeciaL Free World) for the purLhase of honey proce sing equ ipmen t A) Cooperating Countr,!: ZamLi B) Authorizing Document: Grant Agreement C) Project: Western Province Small Farmer Produc:ion Project (6!1-J205) D) Nature of Funding: Economic Support Funds E) Doscri.ption of Commodities: MiscLLareuvtt.'pes of honey pr c(:., i.tq e:Iu p-

F) Probabei. Procurement Origin: Weu.teri EurpI (Code 930 G) Probable Procurement Source: Westerr, Eur... (Code 935)

H) Waiver Amount: ,;,501)

DISCUSSION: The E.ike,,jinCr Divi.ori nl Lh,: flilii i c.Of F:c ,:r. is estabLishing a Io ,.* ;hr >..ing p ,ji. in K.iom.: ur,.Ic-r tli.; project. PreviousLy, ':certain requ cir.mnt. For" the huve- processirng inaus.rv we'e imported from the Uni ,d S ::tes. The n.ekeping Divi nior, h..owever, has b,:en inrforned by U.. suppliers that .tor'e ta-n;s, a doting mchinc, kih(,i.e/ pump operating on 220V - 5C0rz, a fiLtering unit equipavd with haing syszt m, honey o racuors -ith !ix frume,;,. :,, un- Capping t rays 3rn not iv ;i L a b L f r o m t he ,. S "n,. .S. firm-: can sunply only :.mnt &M,5 O wrth of thei. : L ,r:rnon1,.

The Beeke,,ing Dl..i;iin has luarnd, howevrr, remaining equipmenr, thit ihe tslitu;: a to cos' :buuit 19,50U, is *vai LabLe from Euragpun 4;urcL s, and WKi.i :; to ,bo:.,i: 1 N. from the sourc./ V.r iri ,inr, eq ui e,:.nt, 000, U.S. oL , to Code 935, special free world, in oerect L, solicit quuLga, ons fror. these Eurooean sources. Neither are th,. iKeis in question knnwn to be ,v;iL h , -. : . AID Code 941 ;.,rci s. JUSTIFICATIO:!: Ac"'rding to Chooter 5, Section 8 4 1 (2) Handbook One, of Supple- rt 2, a 4aiver may be granted %.when the commdi:y is not ,vyL.aol.2 from countries ur aruas included in the authorized geo raphic cud,:. of. According to Delegation Authority 140, .ni th , GuideLines for imptemeitption DOA 140 iS SL .J in of Oc. .)b r, >OU 1,6y ilran waivers for commod :.;ourcti/ )t i j1in iti,s, ol ,i:r than vehicLo:.:, of the procurorlent when tlhe vtjLue is $'100,0U0 or of the L"ss, with tho. cluarance Regional LegaL Advisur and he R,'gionaL Supply Advisor.

RECOMMENDATTON: Tnh: the approximate you grant 0 suUrce/oricin amuunr of $9,500 to wr.iver in permit PrOCurement of the above-described e:iuipmenit from coun'itmies AID Geographic included in Code 9__5 ,,nd certify procurement from that ('xclUt ion of Free World countries operating other than the co- country and countries included in Code seriously impede attainmnent 941 wouLd of U.S. foreign and the objectives poLicy objectives. oi che foreigi assistance program.

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FROM: Ernest F. Gibson, Agriculture Development Officer SUBJECT: Western Province Small Farmers Production Project 611-0075 -- Waiver of 25 percent Non-AID Contribution PROBLEM: AID Handbook 3, Chapter 4B5E (5) a, Operational Program Grants requires that "Normally 25 percent of the cost 6f the project must come from non-AID sources. Any request for waiver must be included in the project proposal and approved by the appropriate AID bureau or mission".

DISCUSSION:

(A) Zambia's economic situation has deteriorated over the years due to low copper prices which have drastically reduced the Government of the Republic of Zambia's revenues. The agricultural sector has also been affected by drought in the last two seasons which forced the country to spend huge sums of money to import food. The economy has faced increasing oil bills even though oil imports have decreased. Because of adverse terms of trade the country's overall bills for imports have been increasing yearly. The balance of payments has recorded increasing deficits since the middle of the seventies. The current long-term debt burden is estimated at upwards of 50 percent of export earnings. With reduced export earnings against huge import bills, the economic situation is not likely to improve in the near -future.

Despite this bleak situation, the Zambian Covernment has taken positive several steps to address the problems of declining revenues and insufficient investment in the agricultural sector. These included raising real producer prices for various crops; reducing subsidies on consumer goods and selected producer inputs; adjustment of tax laws to be more favorable towards farmers; liberalization of depreciation of allowances and write-offs on agricultural investments; a 20 per cent devaluation of the Kwacha; and acceptance of stringent IMF conditions which are in part designed to increase real investment and productivity of the agriculture sector. The latter conditions have resulted in unprecedented financial constraints. The Government of the Republic of Zambia budget for 1983-84 has been reduced overall by some 20 percent (although there has been a slight increase in budget allocation to the agriculture sector). Zambian Government Ministries and departments are able to cover salaries - with very little left over for operating expenses - and capital expenditures have been severely curtailed. ,IjI, ' 1_',.

IIf .lnerkn(UrI IIcf' ,,':~e'e.'.lJ

Bet,:een tie Hlinistr; of I .indt; iinrid Tinural r.enourcn:1 The Republic of Zambia and Africare for Implementation of a Prorrainmr-

to Develop Honey and Beesi.wax ro'duction

in ',e.-tvrzi and Cenf.ral J'rovincer;

,4iHEREA Africare, a.non-govqrnment, non-profit organisation, in an agreement dated 12 February 1981 with the National Comn.isf;ion for "rvelc'm,'nt Planning, hns undertaken to. sui port rural development in Zambia; and '.,I.EiA; at the reruest of trlc Department of Forestry, the 1%ational Commission for Development Planning, in a letter dated 22 June 1982, has requested Africare to unint in development of L.he beekeeping industry in Kaoma, Lukulu aild Ihinbwa D!i tricts;" and recipient 9f f rom WHIEREAS Africare is the/ uS 2 . 8 GryGvant / tie U. Atency for International Development to supiort the project, ar described in Annex I, Ii' IS HEREBY AGFITlD: Article 1: Scone and Purpose of Agreement

1.1 Objective Tho project is intended to increase production of honey .'nd beeswax primarily in 1Kaoma, Lukulu and llumbwa Districts. T1,is objective is to be'achieved by improving cztension and training almong traditional beekeepers, batablishing a honey proceinsing plant in i'.aoma, and by providing a revolving credit fund through which the beekeping IDivision (hereafter roferred to -is 'the Division'+ of Lhe Department of Forestry w:ill purc!:,;e all honey and beeswax offered for saile in the pro.iect area and covor all project-related recurrent cnsts. 1.2 Location, The project Iwill serve Kaoma, Lukul.u and lumba Districts, n1lthourh it is possible that conti'guous zea:o of ilongu and Sesheke Di:;tricts may also .enefit.

2/. ... 1.3 Organiuatini .The project wil 1. he. impl!m1nnt fI b, :hc floeo-.pi15 I)iviocn, beadqu&rtered at Mwlekera,! through it.- nrovincza and din:rict of-'rov=. 4 Technictal As,;i tance In addition to the rivision', rrof;;sional staff, the pro.J'(cI: will have access to such technical nypertise from Africar- as may he required. 1.5 Equipment and Supplies Africare shll. provide three project vehicles as described in the budget (Annex II). as well ;s equipment required for the honey procesrsing niant in Inomrnn. Other vupp i-s nd equipme.nt required, as described in Annexes T and II, will be purchased in Zambia through the revolvintr fund described in 1.1 above. 1.6 Staff Housing Tuo standard GRZ type 302 houses will be conotructed to accommodate district beekeepin;, officers in ltaoma and 1ukulu. One standard G(iZ type 315 house will be'built in Kaoma to accommodate the provincial beekeeping officer. The houses shall be buil on tender, issued on competitive bid through the. 'estern Province Tender Board. The avci'a-e unit co, t of the two 302 houses shall not exceed the equivalent of U) 4!,.877. and thie cost of the 315 house shall not exceded the equivalent cost of US 0 45,351. 1.7 Honey Frocesojing Plant The honey processing plant and storage building will. be constructed in Kaoma at a maximum cost of US 075,000-00.

Article 2: Contributions and Obligations of Africare 2.1 Importation of Equipment Africare shall purchase and import all equipment neceC~ary,' including the three vehicles and honey processing equipment mentioned in 1.5 above. 2.2 Title to Vehicles The projecti'vehicles shall be reF,;.sLered in the name of Af"icare, unless otherwise a~recd in ,:riting between Africare and the Division, If' registered by A~ricare, title to thu vehicles shall be conveyed to the Division at the full-term completion of the project.

3/.... 2.3 Techic-ll Alonistance - Africare shall provide short-term technical advisers when as and they may be required to assist ',ith implementation of the pro.ject.

2.4 Revolving Credit Fund In addition to pro-viding fundn for purchpse of equipment and construction of staff housing and honey proce:noinf plant, Africare will loan up to K75,onn ih installments to the Division for the purrnose of establishing a revolving credit fund. Article 3: Contributions and Oblitraions of the Division and the Ministra

3.1 Pro.ject staff The Division shall assign a provincial beekeeping reside officer to permanently in Kaoma to supervise implementation of the project. He shall be assisted by three disti-ict beekeeping officers resident Kaoma, in Lukulu and Mumb-,a. The Division shall. take all necessary action to ensure that the above officers are in their f.3iUnrent.;from the beginnine of thL pro.ject regardless of when pcr'm1n.cnt housing may bi? available. .2 Management of devolving Crudit Fund The Division and th: Ministry of Lands and [Natural Resources shall ensure that the revolving credit fund, to be suntaired by Africare, shall be efficiently and properly i;lanai;ed, a.,;outlincd in 4.4 below. 3.3 Self-Accouritizir; Status for Beekeeping Divisiiori The Ministry shall make every effort to pJlnce the Division, within the first two years of the project, on a self-accounting baiJs to ensure the continued economic viability of the project. Article 4: Disbursements and Renorts

4.1 Budget Funds availablP for the project includLn 1) lp to K75,000 for the revol.ving credit, fund, ,id 2) 44482.?3 a.,; )i. tcd in Annex .11. 4.2 Constructijn f Staff I[ousinri z.ikidH;one7 [",?Jt a. Unless ot hcrw4:.,i arreo,; in u ttnr, by A,ricare, constructi of on the honey processin.7r plant in 'aome and the staff housing referrd to in 1.6 above shall bo done in accordance with standard G('Z tender procedures through the ;'e:tern 'rovince Tenderp Board. b. No constructiozn or site prei-aration may belin sifl.hout writ:LOi concurrence by Africare. - I

c. Paymunt to Elhe conL 'tict.or(::).;Ii.1.1. ho jiado by .. " 'a , ijn 'the form of nionlgnerls erierfuet;, upon protjmi ,. on , hui. i]q :e ti-' [,-i : !,:,' v,.; .. L 1o Pr'o v i~n c ia l. 1: w '. i llu !Z.L,= o f " ' " d. Africaree- reserves the rirght to .i.thhold the abovt. rjauynulnf.,; if it has reoson to believe that the ..;ork certified h:is nol. been done in accordance with le building specifications or to the standard required by the Nin'istry of ';orkn ar:i 2unply or by the Unitcd ;.ten Agency for International Develorme.nt:. "It is understood that a civil. engineer from the latter agency may and "!ll periodically inpsect the site preparation and construction on all work authorised under this agreement. 41.3 Acceptance of Funds The Division shall designatc in writing to Africaro the nn:ne and address of the officer(s) authorised to accept project funds. The Division shall be responsible for establishing a project bank account for the purpose of, receiving and disbursing project fund; iin its cusJtody. -4.4 Revolvjne Credit Fund a. Africare agrees to provide the Division up to K'5,000 to establish a revolvinC, fund for the sole purpose of purchasin;j honey, and beeswax in th: project area and for covering operatin - expenses; specified in (c) below. b. The Division agrees to repay to ,Africare all adv-,nces made to the fund, starting no later than 24 inonths following establis:i:nit of the fund. Repayment is to be effected in full ithin three :/ea-z of the fund's establishment. '.Istablishmnt, will cooimence with the first disbursem ent of cr edit to the fund by Affricare. c. In addition to sustainin;; purchase.os of honey and beeswax exclusively in the project area, the fund may be u:ned only for the following purposes: -- fuel and r.aLntenance of the three proJect vehicles when engaped on project-relatcrd mi3siono. --purchas4 of tools to be sold to -n-kecperson loap bair --purcha 4'of noney containers, jars, lijc and other items required tfr the collection ac:r packJginl; of honey -- travel and ni-lht allowances for Division personnel on bu.zi:,,Zs directl, related to the project --dages for irivers and casual workers required in the projcct area -- Operating costs of the honey processin- wages, plant, including, electricity charges and maintenance d. Any paym;n:; made for the abov, directly by i;fricave, pr:i.or -to forvial establishment ef the fund, ,;Ihall be regnrded on credit advances to the fund and shall be repayable bV'-the Division in accordnco with 4.4b above. e. The Division shall appoint an officer with accounting experience whose primary responsibility shall be the manage.ment of the revolving fund. f. All cheques and disbursements from thr. fund shall require the signature of the above officer and of the Chief Beekeeping Officer or his designated alternate. g. The Division shall establih 'a onparate accounting and reporting system for the project and for the revolvin(; fund. h. In anticipation of formal er;Lblishment of t.he fund and the project bank account, the.Division shall prepare an estimate of funds required for the revolving fund in its first two months of operaLion. The first Africare disbursement to the fund :ill be based on thi:; estimate. i. The Division will prepare reports to Afric::re on the operation of the revolving fund, to be submitted 30 days following receipt of the first disbursement and on a monthly basis thereafter until such time as the Division's financial obligation to Africard is satisfied. The reports shall include the following: --copy of the fund's most recent bank statement --amounts of honey and beeswax purchased during the repoutinq period in each of the three districts (Kaoina, Lukulu and Mumbwa) and the amounts paid --amounts of lhoney and beeswax from the project area sold by the Division during the reporting period and the resultin; income --Itemized li-t of allowuable expenscs, per 4.4c above, with photocopies of receipts and payment vouchers attached. Originals will be kent by the Division -- revised, two-month estimate of exnenses and income --request .if any, for an additional credit advance bascd on the ablove estimate k. Africare reserves the right, as it deems necezs;ary, to reruer:t an independent audit of the fund no more than once every 12 months. The cost of such audits shall be chargeable to the revolving fund and, therefore, to the Division's financial obligntion to Africare.

/, 1 . All. incomr, ri'nia .he proj,,cl..,rn :;hIal I. be dvponil,,d In :.1h,, ;evo]"ing bank nccount. 1.5 Other Pinanciirt onozt:; Apart from the rcport ing requirmen L:;'f or Lhe r,'vo, vi np 1,1111 described abnvP, the jivision will nroviice Africarp with quarterly/ fin.onc~al statement,- and supportinr dncumentaninn (receipts) oncointinr, for pro.iect funds disbursed to thp Division for use out.-idp the torrms of the revolving, fund. W.ithin three months of the termination of the project, the Division will submit'to Africare a final financial report and return all unexpendnd funds in kwacha. 4.6 Froject Pepor'ts >nginninr, three months, frui the .atn of l.his aw:reement "ijd on "t nuarterly basis thiorn:,fter, the Division: will -.ubtnit: to Afrier :, report on progress toward achieving the objectives of the pro.iect.

Article .: Cooneration and kenresentation

5.1 Africare presentative Africare's resident representative in Zambia ,;hall act a,. Uhe principal liaison betaLen Africare aivi th, Divisi.on, the Dep:,rtmw-n .:f Forestry and inistr:y. ie shall le authorised to speak and act for Africare on all. project-related matters. 5.2 Access to Project Areas and InformaLion The Division, the Department of Forestry and the iinistr; -,;hall. provide access to all reports and information relating to the project as Africare may reasonably request. Authorined representatives of Africare and the U. .3. Agency for International Development may periodically inspect the activities carried out under the projeclt, the utilisation of all goods and services financed under the project grant and the revolvi.ng fund, and any relevant reports and record!. 5.3 Audit of Revolving Fund Per 4.4k, the.Division shall permit an independent audit of the reVolving fund, if so requested by Africarci.' Article • 6:' Ehtr Into Force, Termnination and Disutes

6.1 Commencement of Project and Dirrtion This agreement shall enter intc force upon signature by both parties and shell remain in effect for 30 lonth.; or until the Diviiion liquidates its financial obligation to Africare vis-a-vis the revolving fund, whichever occurs later. 6.2 Termination Elither party may terminate this agrc ,ient with 90 days written 611-K-007

ANNEX 6

CHECKLIST OF STATUTORY CRITERIA

CROSS REFERENCE: Country checklist is up to date. Zambia FY 83.

A. GENERAL CRITERIA FOR PROJECT:

1. FY 80 App. Act unnumbered; FAA Sec. 634A; Sec. 653(b); (a)

describe how authorizing and appropriations Committees of Senate

and House have been or will be notified concerning the project;

(b) is assistance within (operational year budget) country or

international organisation allocation reported to Congress (or

not more than $1 million over that figure?)

(a) CN expired 1 June, 1983.

(b) Assistance is within (OYB) country allocation reported to

Congress.

2. FAA Sec. 611(a) (1): Prior to obligation in excess of $100,000

will there be (a) engineering, financial and other plans necessary

to carry out the assistance and (b) a reasonably firm estimate of

the cost of the U.S. of the assistance? The GRZ plans have

provided up-to-date construction and cost estimates which have been

approved by AID engineers. - 2-

3. FAA Sec. 611 (a) (2): If further legislative action is required within recipient country, what is basis for reasonable expectation that action will be completed in time to permit orderly accomplish-

ment of purpose of the assistance?

No legislative action is required to implement the project.

4. FAA Sec. 611 (b); FY 80 App. Act Sec. (501): If for water or water-related land resource construction, has project met the standards for Planning Water and Related Land Resources dated October 25, 1973?

Not applicable.

5. FAA Sec. 611 (e): If project is capital assistance (e.g., con- struction), and all U.S. assistance for it will exceed $1 million, has Mission Director certified and Regional Assistant Administrator taken into consideration the country's capability effectively to

maintain and utilize the project?

Not applicable.

6. FAA Sec. 209: Is project susceptible of execution as part of a regional or multilateral project? If so why is project not so executed? information and conclusion whether assistance will encourage regional development programs. Project is not susceptible tojexecution as part of *aregional or multilateral project. -3-

7. FAA Sec. 601 (a): Information and conclusions whether project'will encourage efforts of the country to; (a) increase the flow of international trade; (b) foster private initiative and competition; (c) encourage development and use of cooperatives, credit unions, and savings and loan associations; (d) discourage monopolostic practices; (e) improve technical efficiency of industry, agriculture and commerce; and (f) strengthen free labor unions.

The project is designed to improve the technical efficiency of agriculture (e), and over the long term foster private initiative and competition (b). All other items are not applicable.

8. FAA Sec. 601 (b): Information and conclusion on how project will encourage U.S. Private trade and investment abroad and encourage private U.S. Participation in foreign assistance programs (including use of private trade channels and the services

of U.S. Private enterprise).

Not applicable.

9. FAA Sec. 612 (b); Sec. 636 (h): Describe steps taken to assure that, to the maximum extent possible, the country is contributing local currencies to meet the cost of contractual and other services, and foreign currencies owned by the U.S. are utilized to meet the

cost of contractual and other services.

The GRZ is committing its resources in support of the project through the provision of personnel, facilities and some operating costs, etc. -4-

10. FAA Sec. 612 (d): Does the U.S. own excess foreign currency of the country and, if so, what arrangements have been made for its

release?

Not applicable.

11. FAA Sec. 601 ( ): Will the project utilize competitive selection

procedures for the awarding of contracts, except where applicable

procurement rules allow oLherwise?

Yes.

12. FY 80 App. Act Sec. (521): If assistance is for the production of any commodity for export, is the commodity likely to be in

surplus on world markets at the time of the resulting proeictive capacity becomes operative, and is such assistance likely to cause

substantial injury to U.S. Producers of the same similar or

competing commodity?

Not applicable.

AID/Zambia: F. Nyirenda:CSM: June 14, 1983. FUNDING CRITERIA FOR PROJEiCT

1. Development Assistance Project Criteria

a. FAA Sec. 102 (b); 111; 113; 281 a: Extent to which activity will (a) effectively involle the poor in development, by extending access to economy at local level, increasing labor-intensive production and the use of appropriate technology, spreading investment out from cities to small towns and rural areas, and insuring wide participation of the poor in the benefits of development on a sustained basis, using the appropriate U.S. institutions; (b) help develop cooperatives, especially by technical assistance to assist rural and urban poor to help themselves toward better life, and otherwise -ncourage democratic private and local governmental institutions; (c) support the self-help efforts of developing countries; (d) promote the participation of women in the national economies of developing countries and the improvement of women's status; and (e) utilize and encourage regional cooperation by developing countries? a. Not applicable, as this project is ESF. However, the project supports the GRZ Third National Development Plan (TNDP) especially its emphasis on agriculture and rural development, as well as (a), (c) and in part (b) above.

b. FAA Sec. 103, 103A, 104, 105, 106, 107: Is assistance being made available: (include only applicable paragraph which corresponds to source of funds used. If more than one fund source is used for project, include

relevant paragraph for each fund source.) - 2 -

(1) (103) for agriculture, rural development or nutrition; if so (a)

extent to which activity is specifically designed to increase productivity

and income of rural poor; (103A) if for agricultural research, full

account shall be taken of the needs of small farmers, and extensive use of

field testing to adapt basic research to local conditions shall be made;

(b) extent to which assistance is used in coordination with programs carried

out under Sec. 104 to help improve nutrition of the people of developing

countries through encouragement of increased production of crops with

greater nutritional value, improvement of planning, research, and education with respect to nutrition, particularly with reference to improvement and expanded use of indigenously produced foodstuffs; and the undertaking of pilot or demonstration programs explicitly addressing the problem of malnutrition of poor and vulnerable people; and (c) extent to which activity increases national food security by improving food policies and management and by strengthening national food reserves, with particular concern for the needs of the poor, through measures encouraging domestic production, building national food reserves, expanding available storage facilities, reducing post harvest food losses and improving food distribution.

FAA, Sec. 10.3: Proj ect target group is specifically designed to increase productivity and incomes of small-scale rural farmers.

(2) (104) for population planning udner Sec. 104(b) ot health under Sec.

104(c); if so, a. extent to which activity emphasizes low-cost, integrated

/ -3-

delivery systems for health, nutrition,and family planning for the poorest

people, with particular attention to the needs of mothers and young

children, using paramedical and auxiliary medical personnel, clinics

and health posts, commercial distribution systems and other modes of

community research.

Not applicable.

(4) (105) for education, public administration, or human resources

development; if so, ektent to which activity strengthens nonformal

education, makes formal education more relevant, especially for rural

families and urban poor, or strengthens management capability of institutions

enabling the poor to participate in development; and b. extent to which

assistance provides advanced education and training for people in

developing countries in such disciplines as are required for planning and

implementation of public and privAte development activities.

Not applicable.

(5) (106) for technical assistance, energy, research, reconstruction, and

selected development problems; if so, e:ctent activity is: (i) (a) concerned with data collection and analysis, the training of skilled personnel,

research on and development of suitable energy sources, and pilot projects to

test new methods of energy production; and (b) facilitative of geological

and geophysical survey work to locate potential oil, natural gas, and coal

reserves and to encourage exploration for potential oil, natural gas and

coal reserves; (ii) technical cooperation and development, especially with

US.private and voluntary, or regional and international development, organisations; (iii) research into, and evaluation of, economic development - 4 -

process and techniques; (iv) reconstruction after natural or manmade

disaster; (v) for special development problems, and to enable proper

utilization of earlieg U.S. infrastructure, etc, assistance; (vi) for

programs of urban development, especially small labor-intensive enterprise

marketing systems, and financial or other institutions to help urban

poor participate in edonomic and social development.

Not applicable.

c. (107) is appropriate effort placed on use of apprqriate

technology? (relatively smalbr, cost-saving, labor using technologies

that are generally most appropriate for the small farms, small businesses and small incomes of the poor.)

Yes. d. FAA Sec. 110 (a): Will the recipient country provide at least 25% of the costs of the program, project, or activity with respect to which

the assistance is to be furnished (or has the latter cost-sharing requirement been waived fro a "relatively least developed" country)?

The GRZ is committing budgetary resources, personnel, facilities and equipment valued at less than 25% of the project, which requirement has been waived. e. FAA Sec. 110 (b): Will grant capital assistance be disbursed for project over more than 3 years? If so, has Justification satisfactory to

Congress been made, and efforts for other financing, os is the recipient country "relatively least developed"?

Not applicable.

/g - 5 -

f. FAA Sec. 281 (b): Describe extent to which program recognizes the

particular needs, desires, and capacities of the people of the country;

utilizes the country's intellectual resources to encourage institutional

development; and supports civil education and training in skills required

for effective participation in governmental processes essential to self-government.

The project is in direct response to the GRZ TNDP. A key feature is the emphasis on marketing, institutional development, training and

appropriate technology as they relate to enhanced performance in the

agriculture sector, the key to the economic well being of the country.

g. FAA Sec. 122 (b): Does the activity give reasonable promise of

contributing to the development of economic resources, or to the increase

of productive capacities and self-sustaining economic growth?

Yes, the institutional development and trainingproposed are essential to Zambia's economic growth possibilities.

2. Development Assistance Project Criteria (Loans Only)

a. FAA Sec. 122 (b): Information and conclusion on capacity of the

country to repay the loan, at a reasonable rate of interest.

Not applicable

b. FAA Sec. 620 (d): If assistance is for any productive enterprise

which will compete with U.S. enterprises, is there an agreement by the

recipient country to prevent export to the U.S. of more than 20% of the

enterprise's annual production during the life of the loan?

Not applicable. - 6 -

3. Project Criteria Solely for Economic Support Fund

a. FAA Sec. 531 (a): Will this assistance promote economic or I political stability? 'To the extent possible, does it reflect the

policy directions of section 102?

Yes, Zambia's c&ontinued economic health is crucial to it's

political stability especially in the volatile Southern

Africa region.

b. FAA Sec. 531 (b): Will assistance under this chapter be used

for military, or paramilitary activities?

No.

AID/Zambia: F. Nyirenda:CSM:June 14, 1983 STANDARD ITEM CHECKLIST

A. PROCUREMENT

1. FAA Sec. 602: Are there arrangements to permit U.S. small business

to participate equitably in the furnishing of goods and services financed?

Yes.

2. FAA Sec. 604 (a): Will all commodity procurement financed be from the

United States except as otherwise determined by the President or under

delegation from him?

Yes.

3. FAA Sec. 604 (b): Will all commodities in bulk be purchased at prices no

higher than the market price prevailing in the United States at time of

purchase?

Yes.

4. FAA Sec. 604 (c): Will all agricultural commodities available for

disposition under the Agricultural Trade Development and Assistance Act

of 1954, as amended, be procured in the United States unless they are not

available in the United States in sufficient quantities to supply emergency

requirements of recipients?

No agricultural commodities are anticipated under this project.

5. FAA Sec. 604 (d): If the cooperating country discriminates against U.S.

Marine insurance companies, will agreement require that marine insurance be

placed in the United States on commodities financed?

Not applicable. - 2 -

6. FAA Sec. 604 (e): If offshore procurement of agricultural commodity or

product is to be financed, is there provision against such procurement

when the domestic price of such commodity is less than parity?

No agricuultural commodities are anticipated under this

project.

7. FAA Sec. 604 (f): Are there arrangements whereby a supplier will not

receive payment under the commodity import program unless he/she has

certified to such information as the Agency by regulation has prescribed

Not applicable.

8. FAA Sec. 608 (a): Will U.S. Government excess property be utilized

wherever practicable in lieu of the procurement of new items?

Yes.

9. eMA Sec. 901 (b): (a) Compliance with requirement that at least 50 per

centum of the gross tonnage of commodities (computed separately for dry

bulk carriers, dry cargo liners, and tankers) financed shall be

transported on privately owned U.S. - flag commercial vessels to the

extent that such vess~ls are available at fair and reasonable rates.

Yes.

10. International Air Transport; Fair Competitive Practices Act, 1974: If

air transportation of. persons or property is financeebn grant basis,

will provision be made that U.S.-flag carriers wil'. be tulized to the

extent such service is available?

Yes. -3-

B. OTHER RESTRICTIONS

1. FAA Sec. 620 (h): Do arrangements preclude promoting or assisting the foreign aid projects or activities of Communist-Bloc countries, contrary to the best interests of the United States?

Yes.

2. FAA Sec. 636 (i): Is financing prohibited from use, without waiver, for purchase, long-term lease, exchange, or guaranty of sale of motor

vehicle manufactured outside the United States?

Yes.

3. Will arrangement preclude use of financing:

a. FAA Sec. 114: To pay for performance of abortions or involuntary sterilizations of to motivate or coerce persons to practice abortions? To pay for performance of involuntary sterilizations as method of family planning or to coerce or provide any financial incentive to any person to practice sterilizations?

Yes.

b. FAA Sec. 620 (g): To compensate owners for expropriated nationalized

property.

Yes.

c. FAA Sec. 660: To finance police training or other law enforcement

assistance, except for narcotics programs?

Yes. - 4 -

d. FAA Sec, 662: For CIA activities? Yes.

e. App. Sec. 103: To pay pensions, etc. for military personnel? Yes.

f. App. Sec. 106: To pay U.N. assessments?

Yes.

209(d) g. App. Sec. 107: To carry out provisions of FAA Sections

and 251 (h)? (Transfer to multilateral organization for lending). Yes.

at least 4. FAA Sec. 201 (d): If development loan, is interest rate

2 per cent per annum during grace period and at least 3 per cent loan on per annum thereafter? Can the country borrower service the

harder than standard development loan terms? Not applicable.

AID/Zambia: F. Nyirenda:CSM: June 14, 1983. F'~cz- .1.

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