AFRICAN DEVELOPMENT BANK

TUNISIA

GHEZALA MATEUR AGRO-INDUSTRIAL COMPLEX DEVELOPMENT PROJECT

COMPLETION REPORT

Department of Agriculture And Rural Prepared by NARD.1 Development - North Region March 1995 i

TABLE OF CONTENTS

Page BASIC INFORMATION SHEET

I. INTRODUCTION 1

II. SECTORAL AND PROJECT OBJECTIVES 2 2.1 Sectoral Objective 2 2.2 Project Objective 2 2.3 Description of Project 2 2.4 Detailed Project Description 3

III. PROJECT FORMULATION 5

3.1 Background 5 3.2 Preparation, Appraisal, Negotiation and Approval 5

IV. PROJECT IMPLEMENTATION 7

4.1 Entry into Force and Start-up 7 4.2 Modifications 8 4.3 Implementation Schedule 8 4.4 Reporting 9 4.5 Procurement of Goods and Services 10 4.6 Sources of Finance and Disbursement 11

V. OPERATIONAL PERFORMANCE AND PROJECT OUTPUTS 14

5.1 Overall Evaluation 14 5.2 Results of operations 18

VI. INSTITUTIONAL PERFORMANCE 21

6.1 Management and Organizational Efficiency 21 6.2 Recruitment, Training and Re-training of Staff 22 6.3 Performance of Consultants, Contractors, Suppliers and the Borrower 24 6.4 Technical Assistance 24 6.5 Clauses and Conditions 24

VII. FINANCIAL PERFORMANCE 25

7.1 Financial Results 25 7.2 Rate of Return 27 7.3 Financial Conditions and their Implementation 27

VIII. ECONOMIC PERFORMANCE 28

IX. SOCIAL IMPACT 30

X. ENVIRONMENTAL IMPACT 31

XI. SUSTAINABILITY OF OUTPUTS 32 ii

XII. PERFORMANCE OF THE BANK AND OTHER COFINANCIERS 33

12.1 Project Objectives and Justification 33 12.2 Project Implementation and Operating Income 33

XIII. CONCLUSIONS AND LESSONS 35

13.1 Conclusion 35 13.2 Lessons 36 13.3 Recommendations 37

This report has been prepared by Messrs. D. Razafindrakoto, Veterinary Doctor and Head of Mission, M. Empain, agronomist, and L. Soumah, consultant in financial analysis, following a completion mission conducted in March 1995. Any additional information can be obtained from Mr. M.T. Futa, Division Chief, NARD.1. iii LIST OF ANNEXES

Map 1 : Map of Project Location (Appraisal Report) Map 2 : Plan of the Ghezala-Mateur Agro-industrial Complex (1995)

Annex 1 : List of Goods and Services (April 1984) Annex 2 : List of Goods and Services (1984) Annex 3 : List of Goods and Services (29 January 1987) Annex 4 : Increases in Areas Annex 5 : Increases in Yields Annex 6 : Increases in Plant and Animal Production Annex 7 : Financing Schedule/Outputs by Component Annex 8 : List of OTD Contracts with Various Suppliers Annex 9 : Organization Chart of OTD (1983) Annex 10 : Organization Chart of OTD (1993) Annex 11 : OTD Operating Account for 1983 and 1987-1993 Annex 12 : OTD Balance Sheets for 1983 and 1987-1993 Annex 13 : OTD Income Statement for 1983 and 1987-1993 Annex 14 : Accounts of the Agro-industrial Complex for 1983 and 1987-1993 Annex 15 : Accounts of the Agro-industrial Complex for 1983 and 1987-1993 Annex 16 : Accounts of the Agro-industrial Complex for 1983 and 1987-1993 Annex 17 : Calculation of the Financial and Economic Rates of Return Annex 18 : List of Documents Consulted iv CURRENCY EQUIVALENTS

Rate in appraisal report : 1 UA = 0.707554 DT (August 1983) January 1985 rate : 1 UA = 0.889 DT January 1987 rate : 1 UA = 0.960 DT January 1991 rate : 1 UA = 1.304 DT January 1995 rate : 1 UA = 1.441 DT

WEIGHTS AND MEASURES

Metric System

ACRONYMS AND ABBREVIATIONS

ADB : African Development Bank BNA : Banque nationale agricole TD : Tunisian Dinar OTD : Office des terres domaniales ASAP : Agriculture Sector Adjustment Programme GDP : Gross Domestic Product UA : Unit of Account v BASIC DATA

1. Loan Number CS/TN/AGR/83/020 2. Borrower Government of Tunisia 3. Guarantor - 4. Beneficiary Office des Terres domaniales 5. Executing Agency Office des Terres domaniales

A. ESTIMATE LOAN AT APPRAISAL ACTUAL 1. Amount (in UA) 14,950,000 12,405,991 2. Interest Rate (%) 9.5 9.5 3. Statutory Commission (%) 1 1 4. Commitment Charge (%) 1 1 5. Commitment level 15 years 1989-2004 6. Repayment Period 5 years 5 years 7. Grace Period - 24 and 25/10/83 8. Negotiation Date September 1983 22/11/83 9. Approval Date - 30/12/83 10. Date of Signature January 1984 15/05/85 11. Date of Effectiveness 1 Amendment of the Loan Agreement

B. PROJECT INFORMATION ESTIMATE AT APPRAISAL ACTUAL

1. Total Cost (UA) 37,500,000 23,380,000 2. Finance Plan (in UA million) F.E. LC. FE LC.

ADB 14.95 - NA NA OTD 3.41 18.24 NA NA Gvt. 0.59 0.36 NA NA

Total 18.95 18.60 NA NA

3. Date of first disbursement 31/12/85 06/08/85 4. Date of last disbursement Start- 31/12/89 12/09/91 5. up Date of completion 1984 1984 6. 1987 1992

C. PERFORMANCE INDICATORS

1. Cost Overruns - - 17% 2. Period off schedule - For effectiveness 1 and a half years - For completion 6 years - For the last disbursement 2 years - Number of postponements of deadline for last disbursement 1 (31/12/92) vi Status of Implementation of project completed List of verifiable indicators see annex 6 Institutional Performance average Performance of the borrower average Performance of suppliers average

ESTIMATE AT APPRAISAL ACTUAL

8. Economic Rate of Return 15% 10% 9. Financial Rate of Return 15% 08%

D. MISSIONS

No. persons Date Department P/M

- Identification NA October 1981 NA NA - Preparation None - Appraisal 4 2/5 to 21/05/83 OARD 76 - Launching 1 February 1984 OCRN NA - Monitoring 1 June 1985 OCRN NA NA September 1988 NCPR NA - Supervision 2 February 1986 OCRN/FTRY NA 2 20 to 29/07/86 OARD/FTRY 18 1 18 to 30/01/87 OARD 12 1 13 to 27/07/87 OARD 14 1 22/03 to 04/04/90 NARD 12 1 26/05 to 04/06/91 NARD 9 - PCR 3 10 to 24/03/95 NARD 42

- OTD to Abidjan 2 13 to 15/05/85

E. DISBURSEMENT (in UA) ESTIMATE AT APPRAISAL ACTUAL %

- Total disbursed 14,950,000 12,405,991 83 - Amount cancelled - 2,544,009 17

- Annual Disbursement 1985 4.49 11,018,971 1986 3.97 - 1987 4.55 635,580 1988 1.94 - 1989 - 1990 490,484 - 1991 260,856

F. SUPPLIERS

The list of suppliers and the contents, date of signature and amount of contracts are given in annex 8. 1. INTRODUCTION

1.1 The Ghezala Mateur Agro-industrial Complex Development Project is situated in northern Tunisia in the Bizerte Governorate. It covers 5,300 ha stretching from the north-west of Mateur to the southern part of Lake Ichkeul, and cover the Mateur Plain, which has been drained outside the project, and the Ghezala area, which is watered from the Joumine dam. The complex is under the management of Office des terres domaniales (OTD) a public establishment whose mission is to develop state land and disseminate new technologies amongst private farmers and assist them through input supply and product marketing.

1.2 According to the objectives recapitulated in paragraph 2.2, the project is in line with Tunisian policy at the start of the 6th Plan. Given the important position occupied by agriculture in the country’s economy, this policy aimed at development of agricultural production potential so as to remedy the national food deficit, stabilize the trade balance, absorb unemployment and stem the rural exodus (see 2.1). Under its 5th Plan (1982-1986), the Tunisian Government has thus decided to intensify investment efforts in the sector. This intensification involved (i) improved management of water allowing for a considerable increase in productivity (ii) modernization of production techniques and (iii) improved supervision of the rural areas. It concerned private arable land and the state lands used for agriculture. To implement this policy, the Tunisian Government envisaged major investments that necessitated recourse to external aid, and it was in this context that ADB was contacted to finance the foreign exchange costs of the development of one of the 4 OTD complexes, the Ghezala Mateur complex. However, since most of the procurement turned out to be by local bidding, the financing was extended to cover local currency costs.

1.3 The Bank Group has financed 11 projects in Tunisia’s agricultural sector. The first, the Medjerda Valley Development Project, dates from 1998. The sector’s projects are as follows: 1 agro-industrial project (Ghezala Mateur), 4 irrigation sector projects, 3 rural development projects, 2 agricultural lines of credit to BNA and an ASAP. 2

II. SECTORAL AND PROJECT OBJECTIVES

2.1 Sectoral Objectives

Tunisia’s agricultural policy reflected the role of agriculture in the country’s economic and social development process. The objectives assigned to it are:

i) Raise productivity and increase national production so as to remedy the food deficit and thus reduce the country’s reliance on vital commodities such as cereals and animal-base products;

ii) Maintain high long-term growth, in a sector that contributes to a healthy trade balance;

iii) Counter unemployment by creating jobs in the major growth-led sub-sectors, such as irrigation and stockbreeding, and thus combat the rural exodus.

2.2 Project Objectives

2.2.1 the Ghezala-Mateur Agro-industrial Complex project aimed firstly at increasing production of various agricultural products (apples, pears, grapes, meat, milk, eggs) and also at rural extension, by virtue of the complex’s influence and reputation and through demonstration, of the most effective product production and processing technologies. These technologies concerned sprinkler and drip irrigation, the use of superior dairy bulls, cattle stalling, improvement of pasture ground for sheep, poultry farming, apple, pear and grapes growing by espalier and irrigation methods.

2.2.2 At appraisal, the peak production was projected at: 1,500 tons of apples/pears, 9,000 tons of table grapes, 2,000 tons of wine grapes for 140,000 l of wine, 28,000 tons of forage crops, 15,000 tons of forage, 6,250 tons of milk, 34 tons of cheese manufactured from ewe milk, 54 million eggs and 400 tons of culled hens.

2.3 Description of Project

2.3.1 The project consisted in intensifying livestock and crop production by establishing a 400 ha orchard under drip irrigation, dry cultivation of 250 ha of wine grapes, installation of sprinkler irrigation for a 500 ha feedlot; procurement of 1,000 in-calf heifers and 3,000 ewes, pasture improvement on 500 ha by planting fescue grass, and poultry farming. The project also sought to strengthen agro-food activities through construction of a fruit and cheese packaging plant. 3

2.3.2 The project components were:

A. Irrigation works B. Agricultural machinery and equipment C. Cattle buildings D. Procurement of Livestock E. Pasture Improvement F. Poultry farming G. Agro-industry H. Orcharding I. Recurrent Expenditure.

2.4 Detailed Description of the Project

2.4.1 Component A : This component had two parts: (i) the setting up of a drip irrigation network on a 400 ha area. This involved drilling and equipping of 3 boreholes (45 l/s) in the Oued Msaken area, (i) a head station with fertilizer filtering, regulating and injection equipment, PVC pipes and drippers and (ii) establishment of a sprinkler irrigation network on 500 ha. This involved the laying of supply-pipes, upright tubes and watering ramps.

2.4.2 Component B: To develop 900 ha of irrigated blocks and 750 ha under dry cultivation, the project was to acquire 48 fitted- out tractors (45 HP, 75 HP and 110 HP tractors). Other vehicles were also envisaged: 10 cars, 3 trucks including one refrigerated van, 10 combined trailers, 3 power shovels, 3 liquid manure tanks, a weighbridge and 5 sets of animal scales.

2.4.3 Component C: The project construction concerned 5 loose-housing units for 250 cows; a loose-housing barn for production of in-calf heifers, and a fattening shed to hold 1,000 bull calves.

2.4.4 Component D: the purchase of stock was to concern 1,000 in-calf cows and 3,000 Sicilo-Sardinian yearling ewes.

2.4.5 Component E: This component comprised 2 activities: (i) purchase of fescue-grass seeds (festuca elatior arundinacea variety) for biannual sewing on the 500 ha of improved pastures and fencing and (ii) purchase of oat and field–bean seeds for 300 ha, fodder sorghum seeds for 100 ha and ray-grass clover seeds for 100 ha (giving a total of 500 ha of irrigated forage crops). This component included the costs of development of parcels and fertilization.

2.4.6 Component F: Poultry farming, requiring construction of modern henneries houses to contain 200,000 layers. The project provided for a hatchery for 5,000,000 eggs, 3 chicken coops for 35,000 pullets each and 4 California-type complexes for battery–reared layers.

2.4.7 Component G: The agro-food activity had two phases: (i) construction of a fruit packaging plant with a capacity for 8,000 T a year, comprising structural works, cold store), plant (processing lines, refrigerators, stand-by generators), transport equipment (trucks and lift trucks) and packaging facilities, and (ii) structural works for a 55-ton cheese factory, 4

comprising buildings, plant (storage tanks, manufacturing vat, cheese tub, moulds and power presses, etc.).

2.4.8 Component H: The fruit production concerned 250 ha of wine grapes, 100 ha of apple/pear trees and 300 ha of table grapes. This component covered the cost of plantations, fertilization and pest control.

2.4.9 Component I: This component covered the recurrent expenditure on all the project components for 4 years of implementation. 5

III. PROJECT FORMULATION

3.1 Background

OTD was set up in 1961. Given the dispersion of the state lands under its management, it set up several production sub units referred to as «agro-combinats». Each of these complexes is specialized in function of the use to which the land is put. The Ghézala- Mateur unit was set up in 1975 through the merger of the Zenig-oued Msaken and Ras el Ain farms and the Ichkeul cooperative production unit, which were situated next to each other, in order to rationalize management of these state land. In 1979, a development plan was drawn up to intensify this complex’s irrigation and stockbreeding activities, whose high costs required external financial assistance.

3.2 Preparation, Appraisal, Negotiation and Approval

3.2.1 The project was identified by ADB in 1981 and prepared by OTD. The initial preparation, in July/August 1982, was followed by a request for ADB financing. The document presented in that regard was summary and incomplete, and could not provide a basis for ADB decision, for example, with regard to the cost-effectiveness of the proposed project. It was thus updated by OTD in April 83, and made to include technical, institutional, economic and financial aspects that were missing. However, this second preparation was also unsatisfactory, considering changes that had taken place and results of implementation of the project. (see para. 4.2 and chapter 5). In comparison with the report of July 82, the following modification should be noted:

i) Cancellation of drainage work on the plain of the complex (2,800 ha) since this investment was financed outside the project on Kuwaiti funding. The works were completed in 84/85 ;

ii) Abandonment of the slaughter unit and puree production unit so as to reduce costs. These investments did not subsequently prove necessary.

3.2.2 The project was appraised in May 83 by an ADB composite mission comprising an agro-economist, a livestock expert, an irrigation expert and an agronomist. The project as presented and designed in the April 1983 appraisal report, has not undergone any major modifications, apart from including in the project expenses, the cost of the equipment for the 910 ha to be irrigated (component A). The cost of drip irrigation of 500 ha (in foreign and local currency) represented the Govrnment’s share in the final financing plan. The purchase of equipment for the 410 ha drip irrigation had already been programmed by OTD and were noted as part of the OTD contribution to the final finacing plan. During the negotiations held on 24 and 25 October 1983, the following modifications were made to the loan agreement:

i) Since OTD had no direct access to the international financial market, the Tunisian government decided to act as borrower, with OTD as loan beneficiary. A condition concerning the on-lending of the loan was thus added to the agreeement; 6

ii) (ii) after the attention of the Tunisian side was drawn to the need to compliance with ADB procedures for procurement, a pre-condition and an additional «Other condition » were added, requring submission to of ADB tender documents, bid analyses records, bids and draft contracts, prior to definitve award of contracts;

iii) the method of project supervised procurement was extended to the plantations, and to construction of the the cheese production unit, the packaging plant and the hen house.

3.2.3 The project was approved by the Board of Directors on 22 November 1983 and the loan agreement signed on 30 December 1983. 7

IV. PROJECT IMPLEMENTATION

4.1 Entry into force and start up

4.1.1 Aside the general conditons of the loan agreement, there were 7 conditons precedent to entry into force of the loan. The general conditions and dates of fulfilment are as follows:

i) Submission of the authorized specimen signatures - by letter of 4 May 1985;

ii) Submission of the record of ratification by law N°84-57 of 1 August 1984 ;

iii) Submission of legal opinion on ratification – by letter of 4 May 1985.

4.1.2 Prior to loan effectiveness, ADB was to receive from the borrower:

i) An undertaking that regular provisions would be made in its budget to meet its share of the project cost, as provided for in the financing plan; This condition was fulfilled on 14 May 1985 ;

ii) An undertaking by OTD that regular provisions would be made in its budget to meet its share of the project cost, as provided for in the financing plan; This condition was fulfilled on 14 May 1985;

iii) An undertaking that additional sources of finance would be sought in the event of overruns of the estimated cost of the project. This condition was fulfilled on 14 may 1985 ;

iv) An undertaking that it would not utilize the proceeds from the loan to settle duties and taxes relating to the goods and services needed to implement the project. This condition was fulfilled on 14 May 1985;

v) The agreement for on-lending of the loan on the same terms to OTD. This condition was fulfilled on 10 April 1985;

vi) A copy of the initial set of tender documents and the relevant procedures set out in section 7.02 of the agreement. This condition was met on 30 January 1985 ;

vii) The list of project goods and services. This condition was fulfilled on 5 April 1985. The list is provided in annex 1.

4.1.3 The agreement also contained two «Other conditions »:

i) An undertaking that pipes supplying irrigation water to the 100-hectare Joumine block would be laid before the 4th year of the project implementation. This condition was fulfilled in 1987 with the construction of a supply canal between the Mateur block and the Joumine dam;

ii) Undertaking to provide ADB with copies of the other tender documents and the relevant procedures mentioned in section 7.02 of the agreement. This condition has been fulfilled (See 4.13 to 4.16). 8

4.1.4 The agreement actually entered into force on 15 May 1985, which was 1 year and 5 months after the signing of the loan agreement. This lag is primarily due to slow administrative procedures on the borrower’s side, in meeting the general and pre-conditions. The project actually started in 1984, with the preparation of tender documents for procurement of equipment for agriculture, fruit farming and poultry farming.

4.2 Modifications

4.2.1 Several modifications have been made to the project in the course of its implementation. These relate to procurement of goods and services, the financing plan and the physical outputs of the project. With regard to procurement procedures, the major changes concern local invitation of tenders in place of international competitive bidding. This was justified by the relatively small cost of certain items, the limited number of goods and services and the existence of many suppliers in Tunisia.

4.2.2 Concerning the financing plan, the 2 main modifications with regard to ADB funds are participation in component 1 (irrigation) and the financing of the majority of the local currency cost. The latter particularly concerns contracts that are 100% financed by ADB, but implemented local enterprises. Procurement of locally produced pullets, preparation of land for fruit growing, purchase of dairy bulls and financing of recurrent expenditure such as salaries and the temporary work force (request No. 7). For the other sources of finance, there is a decrease in OTD financial participation. Lastly, the list of goods and services has been extensively modified during project implementation. The modifications concern the quantities as well as the specifications of goods acquired. The reasons for these numerous changes and modifications are set out in detail, component by component, in chapter 5.

4.3 Schedule of Implementation

4.3.1 The project was to be implemented over a period of 4 years, from 1984 to 1987. Though it started in 1984, with the first tender invitations, it was actually implemented over 8 years, and was completed in 1992, with the construction of the cold storage areas and cancellation of the loan balance.

4.3.2 The first project outputs noted in 1985 were preparation of the land for fruit growing, procurement of agricultural equipment and planting materials. The plantations were established between 1985 and 1988, covering all the different specifications. The irrigation equipment was put in place as the plantations came into existence. The tractors, farming implements and trucks were delivered to the project between 1985 and 1986, and the other additional equipment (trucks, refrigerated vans, fork lifts) were subsequently procured. The animal farm buildings (stables, chicken coops and heifer centers) were built in 1985 and 1986. However stock supplies fell behind schedule after several unsuccessful tenders and the fever epidemics that made it impossible to import the ewes from Italy. The layers were received in two stages; a first batch in 1989 and a second in 1990. The egg- storage refrigerator and the cold storage rooms were the last outputs of the project. The former was constructed in 1990 and the latter in 1991 and 1992, to allow fore payments in respect of the last project activities. 9

4.3.3 The project outputs thus spanned twice the period envisaged at appraisal; this is primarily due to the various activities under the project and the time required for preparation of specifications, invitation of tenders and certain components such as the cold store. OTD thus had to review the initial planning of activities scheduled to cover a more realistic period of 6 years. In addition, several unsuccessful tender invitations are to be re-conducted. Nevertheless, better preparation and organization would without doubt have enabled OTD to implement this project in good time, i.e. within 6 years.

4.4 Reporting

4.4.1 Under the loan agreement, the borrower undertook to provide ADB with a quarterly progress report and certified copies of the project financial statements within 6 months following the end of the financial year. Regarding the progress reports, the few actually provided to ADB were submitted on an irregular basis. They were summary and contained major errors concerning certain outputs. The OTD report of October 1985 mentioned that the fattening center had been set up whereas it has never been; the same applies to the 250- hectare wine-grape plantation. These reports did not make it possible to follow the status of the project with regard to the overall accounting (ADB and OTD expenditure), the institutional aspects and the project performance in terms of animal production. It should however be conceded that the wording of the relevant condition in the loan agreement was not clear: «The borrower shall undertake to submit to the Bank reports on the supervision or monitoring of the project, in accordance with directives to be given from time to time for that purpose". The financial statements were not sent regularly to the Bank either. A completion report was sent behind schedule (23 February 1995) after several reminders. It was very brief, contained wrong figures and did not give any information on the operational performance of the project. The ADB completion report was prepared in April 1995, which is over 2 years after the end of the project. This delay was caused by the project (the staff concerned), since its version of the report was not sent to ADB until March 1995.

4.4.2 Several ADB missions visited the project, giving rise to several reports. However most of these supervision or monitoring reports are not available in the Bank’s archives. Those available generally focused on matters awaiting solutions (primarily the situation with regard to contracts and contract award) and did not provide exhaustive information on the physical implementation of the components and on the performances with regard to animal and plant production. These reports thus made it difficult to have a clear idea of the status of the project and the performance. 10

4.5 Procurement of Goods and Services

4.5.1 According to the loan agreement, procurement was to be conducted as follows:

i) International competitive bidding for the purchase of all equipment, the plants, inputs and livestock;

ii) OTD supervision for the plantations, construction work (including the hen houses) and the mounting of the equipment for the cheese factory and the packaging plant.

4.5.2 During the implementation of the project, there was a chronic lack of compliance with procedures. Indeed several irregularities were noted with regard to procurement of goods and services, whereas the relevant procedures had been clearly explained and set out during the negotiations (paragraph III b3 of the negotiations record) and two conditions had been laid down in that regard as part of the loan agreement.

4.5.3 The most significant irregularity concerned the invitation of tenders, the bid analysis and contract award and signature, all without prior ADB approval. The tender documents revealed:

i) Non-compliance with bidding deadlines (agricultural equipment and machinery: 15 days, fruit tree contracts: 20 days, pullet contracts: 19 days, etc.);

ii) Modification of ADB-approved specifications (pullet contract: 400,000 instead of 100,000, apple tree contract: 400,000 instead of 66,000, etc.);

iii) Modification of the types of goods to be acquired (modification of the composition of the 45 HP, 75 HP and 110 HP tractor equipment, etc.);

iv) Extension of tendering to certain non-ADB members, e.g., (Malta).

4.5.4 Further irregularities were noted. These included goods procurement under project supervision rather than international competitive bidding, without ADB authorization (ewe and heifer contracts), the signing of negotiated contracts (pullet contracts), signing of the additional price clause on firm and non-revisable contracts (pullet contracts). In all these cases, ADB made official comments and called for caution, even though it ultimately endorsed the decisions.

4.5.5 By a telex dated 13 February 1990, ADB indicated to the project management its dismay at the fact that its procedures were still being disregarded at the end of the project. It must be said that throughout the implementation, ADB showed considerable flexibility in approving the selection of awardees as determined by the project management. 11

4.6 Sources of Financing and Disbursement

4.6.1 The distribution at appraisal and definitive distribution of project costs among the different sources of financing are given below:

Table 4.1

Financing Plan (in UA/TD million)

------Appraisal------Actual------

NA NA UA Equivalent % UA Equivalent %

ADB 14.95 14.32 39.8 12.40 11.29 53

OTD 21.65 15.32 57.6 10.03 9.20 43

GVT 0.95 0.67 2.6 0.95 0.67 4

Total 37.50 30.31 100.00 23.38 21.16 100.00

4.6.2 Owing to the initial assessment of costs in UA, with the attendant exchange rate fluctuation, and non-realization of certain investments, the final project cost fell short of the estimates. The value of the Tunisian Dinar in fact decreased in relation to UA, falling from 1.413396 at appraisal to 0.693962 at the completion date. The non-executed investments concern the dairy sheep, as the tendering in that regard was not conclusive, the cheese factory, whose cost-effectiveness was compromised by the existence of new private cheese factories in Mateur, the lamb fattening center, which was in the end entrusted to other complexes, and the hatcheries and henneries, since the national demand for hatcheries remained covered by existing facilities. The lamb fattening center, hatcheries and chick incubators were however replaced by other investments deemed necessary (housing, hen houses, and office block, egg storage area). As regards the «Agro-industry» complex, the final capacity of the cold store was reduced from 8,000 tonnes to 1,500 tonnes.

4.6.3 The interim financing plan was also modified. It is possible to determine ADB’s share of the financing, on account of the disbursement documents. For reasons stated in 4.6.2, it is below the estimates (UA 12.40 million instead of UA 14.95 million). However, in relative terms, it has increased from 39.8% to 53% of the total project cost. In the absence of separate accounting under OTD, it is impossible to determine the exact respective shares of OTD and the Government. The figures in the table are only based on the estimates provided by the Tunisian authorities. The Government’s share should be much larger than indicated, considering the construction of the Joumine dam (around 5 million TD). However, this was not the participation envisaged at the time of appraisal, and for lack of accurate expenditure accounts, the appraisal amount has been used in preparing this report. The OTD share of financing has been estimated at 42.9% of the total cost of the project, instead of 57.6%, and that of the Government at 4.1%, instead of 2.6%. 12

4.6.4 As regards ADB financing, the table below compares the amounts envisaged by component at appraisal and the actual expenditure according to the report submitted by OTD. It should be noted that the project archives and those of ADB are not such that it is possible to verify this situation component by component.

Table 4.2

ADB Financing (in DT)

Appraisal Actual %

Irrigation works 0 226,341 Agricultural Machinery & 840,122 683,522.5 81.3 Equipment 1,207,015 971,231 80.4 Cattle buildings 1,256,402 989,001.9 78.7 Stock Procurement 83,440 0 - Pasture improvement 4,980,860 5,670,364 113.8 Poultry farming 2,807,616 1,334,177 47.5 Agro-industry 879,782 1,430,514.6 162.5 Orcharding 2,261,663 0 0 Recurrent expenditure Total 14,316,900 11,305,152.0 78.9

4.6.5 According to the OTD completion report, ADB thus contributed TD 226.341 to the financing of the «Irrigation works» which were initially to be entirely financed by OTD. Moreover, the ADB budgetary provision earmarked for the «recurrent expenditure» has apparently been used up in investment, though this is not fully corroborated by the reimbursement justifications submitted to ADB, which show that ADB provided amounts covering recurrent expenditure (salaries, cost of ground preparation, etc…).

4.6.6 The envisaged and actual disbursement schedules are shown in the table below: 13

Table 4.3

Disbursement Schedules (in UA Million)

ADB OTD GVT

Appraisal Actual Appraisal Actual Appraisal Actual

1984 4.49 - 2.75 NA - - 1985 3.97 11.018 5.25 NA 0.35 NA 1986 4.55 - 6.30 NA 0.39 NA 1987 1.94 0.635 7.35 NA 0.21 NA 1988 ------1989 ------1990 - 0.490 - - - - 1991 - 0.260 - - -

14.95 12.403 21.65 10.03 0.95 0.95

4.6.7 There were a number of significant delays in disbursement of ADB funds. The first disbursement, scheduled for 1984, did not materialize until 1985. The last disbursement was scheduled for 1987; it was realized in 1991. These delays reflect a departure from the implementation schedule. The first disbursement of UA 11.018 million was in place of UA 4.9 million requested by the borrower. It had the effect of upsetting the established credit arrangements, and pushing the second disbursement back to 1987. The third disbursement was not until 1990, since it concerned agro-industry, which was delayed in favour of production activities. The two last disbursements were for the purchase of pullets. Finally. out of a total ADB participation of 14.95 million, only UA 12.403 million, or 82.88% of the projected amount has been disbursed. The balance has been cancelled on account of the cancellation of the dairy ewes purchases and the cheese factory.

4.6.8 For lack of precise and separate accounts, it has not been possible to provide an actual schedule of disbursements by OTD and the Government. The total OTD participation indicated is also only an estimate. The Government’s contribution is no doubt more significant, but in the absence of precise details, we have had to use the amount provided at appraisal.

4.6.9 In sum, the final project cost falls short of the estimates. The initially identified sources of finance each made their contribution, however the financing plan underwent modifications, mainly entailing reduced participation of OTD (the executing agency), an increase in the relative level of participation of the Government, and significant ADB participation in the local currency financing. The latter is due to inadequate control of disbursement requests submitted to ADB. Without separate accounting, it has not been possible to determine the precise respective shares of financing of the Government and OTD. The disbursements span a period twice as long as envisaged, and there is an error in the amount of the first operation that affected expenditure allocation throughout implementation. These factors contributed to the decrease in the project rate of return. 14

V. OPERATIONAL PERFORMANCE OF THE PROJECT

5.1 Overall Evaluation

5.1.1 From the financial standpoint, the project has been completed at a final cost of TD 21.16 million, or UA 23.38 million, which is 76.51% of the initial cost. In terms of physical implementation, it is also considered completed. Changes and departures are noted in comparison with projections contained in the appraisal report (in many cases, ADB approval was only sought and obtained a posteriori). These concern:

- The components whose financing involved ADB participation;

- The respective costs of the various components;

- The nature, quantity and unit cost of goods to be procured under these components.

5.1.2 Annex 7 shows the details of the actual realization costs, as well as the actual physical content of each component, as compared to projections at appraisal. Component by component, the physical outputs are the following.

5.1.3 Component A: Irrigation Works. Three boreholes for drip irrigation of the designated areas were not drilled and the blocks were watered directly from the Joumine and Ghezala dams. The table below shows the situation (in ha) :

Table 5.1

Irrigation Outputs (in Ha)

Projection Actual Difference

Drip 400 137 34% Sprinkler 500 550 110% Controlled Submersion - 220 - Total 900 907 100%

5.1.4 It is seen that the total area to be irrigated has been maintained. However, the drip irrigation sections have been reduced. This is mainly because of the high investment cost, added to the operational problems encountered as a result of the use of dam water containing sediments and limestone (scaling and mud coating of drippers). The project management thus opted to make up for the reduction through controlled submersion of part of the cultivated area. This procedure consists in circulating water in open channels lying parallel to the plantation lines. Though less effective, this system is much less costly than the drip irrigation. Therefore drip irrigation was limited to the table grapes and controlled submersion was used for rest of the fruit plantations (38 ha of table grapes, 170 ha of apple trees, 5 ha of pear trees and 10 ha of peach trees). Lastly, sprinkler irrigation was used only for the forage crops and cereals. 15

5.1.5 Component B : Agricultural Machinery. This component has had several changes, enumerated below:

- the number of trucks and trailer vehicles has increased to meet the actual needs of the project as regards transportation for eggs; for the concentrated cattle and poultry feed, fertilizer and fruit ensilage and harvesting (from 2 to 6 and 10 to 29, respectively) ;

- the number of tractors and light vehicles actually purchased by the project does not tally with the requests approved by ADB. However, regarding the tractors, it is noted that their number, according to their horsepower, has been adapted to the actual needs of the project. Therefore the number of 45 HP tractors needed for fruit production was reduced from 11 to 6, owing to the decrease in the areas under fruit. Conversely the number of 110 HP tractors increased from 6 to 13, according to OTD, in response to the areas under cereals. However, out of 13 tractors, 5 have reportedly been transferred to other complexes. The number of 75 HP tractors has increased from 31 to 32, because of the needs arising in the poultry farming and agro-food processing components. Owing to the difficulty in working the land which highly hydromorphous, the project has also acquired 2 caterpillar tractors;

- the number of liquid manure trucks increased from 3 to 5, because of the expansion of the poultry farming component (the number of layers increased from 200,000 to 400,000);

- lastly, the 5 animal scales were not purchased, since the fattening of bull calves was abandoned.

5.1.6 Component C : Cattle Buildings. This component has been modified since the calf fattening was abandoned and entrusted to other complexes, owing to the limited availability of forage at Ghezala Mateur. Twelve housing units that were not initially envisaged have been constructed for the veterinarian and the other technicians, whose constant presence is considered indispensable. The 5 stables (including the milking areas) and the heifer barn have been built. These buildings have been well built. They are functional and well maintained.

5.1.7 Component D : Purchase of Stock. This component has been fully implemented as regards the procurement of the 1,000 in-calf heifers, though only 750 were imported from Holland; the remaining 250 were obtained from other complexes. On the other hand, only 1,500 sheep were obtained. As the two tender invitations were inconclusive, OTD decided to obtain, under project supervision, 314 yearling ewes and 826 lambs from the Thibar complex and 360 yearling ewes from the El Alem complex. These sheep have reportedly been transferred to other complexes and OTD has finally taken them off the project accounts.

5.1.8 Component E: Pasture Improvement. This component, which involved the development of 500 ha of improved grazing ground through sprinkler irrigation has been 78% completed, with 550 hectares sprinkler irrigated (including 50 km of acacia eburnea and cyanohylla, cypress and white poplar windbreaks) and 230 ha of pastureland improved by the planting of fescue-grass, ray-grass, accacia ligulata and atriplex. The decrease in improved pasture ground is due to the reduced number of sheep acquired under the project. 16

The appraisal did not provide for any rotation of forage with grain. During the project implementation, the following rotations have been adopted: biannual planting (wheat – fodder), triennial planting (wheat coarse grain fodder) or four-yearly planting (beets –wheat – grain – fodder). The forage planted comprised barley oats, sorghum, ray-grass and bersim- barley for the production of green fodder. The crops will be rotated with beets or grain such as durum wheat and common wheat or coarse grain such as barley oats and triticale. The areas under cereal developed between ‘84 and 94 are given in annex 4. These areas received 15 tons of manure yearly, 200 kg of DAP phosphate and 350 kg of ammonium nitrate per ha.

5.1.9 Component F :Poultry Farming: This component has been modified considerably, since the supervising ministry was not in favour of the construction of the chicken coops incubators. It in fact considered that the capacity of the poultry houses existing on the national territory had not been fully utilized and there was therefore no need to construct others. The hatcheries were therefore also abandoned, since the two structures are normally indissociable. In place of the 10 henneries for 200,000 layers, a hatchery with a capacity for 5,000,000 eggs and 3 coops for 35,000 pullets each, the project now has 20 chicken coups for 400,000 layers, a housing unit, an office block and 4 washroom facilities. These buildings have been well constructed. They are functional and well maintained. Additional equipment acquired includes 1 lift truck, one 66 KVA standby generator set, one electric transformer, 3 pressure washers, two insulated vehicles and 1,500 cases for transporting pullets).

5.1.10 Component G : Agro-industry. For this component, the appraisal report did not state the work nor the materials/equipment required. It only provided for construction of an 8,000 tonne capacity cold store to hold fruits and a 55-ton capacity cheese factory. During implementation, the real needs surfaced, leading to construction of a 1,500 tonne cold store and a cold store to contain 270 tons of eggs. The fruit cold store comprises a central building equipped with a platform, a weigh bridge a packaging area and 10 cold rooms, one of which is specially regulated and equipped for grapes. The additional equipment acquired comprises: 3 lift trucks, one 250 KVA standby generator, pallet trucks, palox and cases. These buildings have also been well constructed and maintained.

5.1.11 The cold store capacity has been scaled-down to from 8,000 tons to 1,500 tons in line with the potential quantity of fruits to be stored. It should be stressed that the capacity envisaged at appraisal is greatly over-estimated. The egg storage refrigerator has proved indispensable considering the need for appropriate storage temperatures on account of humidity and production in low consumption periods (summer months) or to cope with peak consumption during certain periods of the year, such as the month of Ramadan. The cheese factory was abandoned because there were already two private cheese factories in Mateur. 17

5.1.12 Component H: Orcharding. The table below shows the outputs of this component (in ha) :

Table 5.2

Fruit Production (in ha)

Estimates Actual Rate

Wine grapes 250 0 0% Table grapes 300 175 38% Apple trees 100 167 167% Pear trees 0 5 0% Peach trees 0 10 0% Total 650 357 55%

5.1.13 There was no wine grape production under the project. The complex already had 201 ha of wine grapes and decided to limit its production to that moreso as it is a crop not requiring irrigation. The wine grape areas were reduced in order to limit grape production to the marketing capacity of these delicate crops, that require particular storage and transport arrangements. Already the areas under Italian Muscat (125 ha) and 50 ha) are considered very large compared to the actual potential of the regional market. It should however be noted that other factors came into play: these include the nature of the soil which is not always suited to grapes planting and the cost of these plantations. In that regard, the latter the project developed double T espaliers (training) (as opposed to single espaliers) and increased the density of plants per hectare (1,666 plants/ha) making for much higher costs than envisaged (over 5,000 TD per additional hectare) but expected to double yields. These areas were provided 10 tons of fertilizer 100 kg of super phosphate 100 kg of ammonitre and 300 kg of potassium sulphate per ha.

5.1.14 The apple plantations have single espaliers on 50 ha and no espaliers on 117 ha, giving a total of 167 ha, (75% beyond the projections) so as to offset the reduction of other fruit plants. The varieties selected are golden delicious, ricared, golden spur and ozark gold. The pear (5 ha of j. guyot and williams) and peach (10 ha red top and coronet) have not shown very good progress, since the soil had a high limestone content unsuited to such crops and despite the substantial use of understock. Annex 4 shows the areas planted between 1985 and 1988.

5.1.15 To establish the orchards the project in 1984 developed a first block of 70,000 grafted apple seedlings. In 1985 the number was increased with 167,000. Muscat grafts 10,000 Aledo seedlings, 50,000 pear understock, 132,000 standard apple seedlings and 400,000 apple understock. These made possible the outputs mentioned in paragraphs 5.1.12. As regards the grapes, the quantities acquired made it possible to realize about 100 ha. The difference between that and the 175 ha realized was made up by the purchase of grapes stock out of OTD funds. The same applies to the peach trees. For the apple/peach seedlings and understock the difference between the outputs (175 ha) and the «plantable» potential of 290 ha (number of seedlings acquired minus 66% loss in the understock seed farms and 5% loss 18

through the plantation resumption) is due to the unsuccessful development of understock nurseries (45,000 loss of pear understock and over 400,000 apple understock).

5.1.16 Component I : operation. Despite the identification of recurrent expenditure in the disbursement requests submitted by OTD to ADB. the ADB budgetary provision has reportedly been used up in investments, probably for the «poultry farming», «orcharding» and «irrigation works» components.

5.1.17 In the final analysis it can be seen that OTD enjoyed considerable freedom in the allocation and ultimate use of credit for the project components. This attitude is due to the lack of familiarity with ADB rules and procedures and the flexible disbursement method adopted, which consisted in submission of requests for reimbursement of expenditure incurred, along with supporting documents. In practice, this often entailed unilateral decisions leading to changes in the financing plan the nature and quantities of certain items to be acquired, and terms of procurement of certain goods, and departure from the established procedures for procurement of goods and services. However the decisions taken were ultimately endorsed by ADB, probably since they were considered opportune and favorable for implementation of the project given the weaknesses in its preparation. The overall performance of the project did improve, and can be rated as fair.

5.2 Operating Results

5.2.1 Tables 4, 5 and 6 review the indicators mentioned in the appraisal report to assess the efficiency and impact of the project. These indicators comprise projections as well as the results actually obtained. Generally speaking the results for stockbreeding and the forage production were good even though they sometimes fell short of the projections. The projected orcharding results were overall too optimistic and the soil conditions unsuited to the types of fruits selected. In addition the project suffered several years of drought (87, 88, 91) which adversely affected all activities.

5.2.2 Poultry farming: As indicated in paragraph 5.1.9, the hatchery and coops were never constructed. However the ultimate aim of the operation was to produce eggs for consumption. Contrary to the initial plans, there was therefore no chick and pullet production. The latter were obtained from external suppliers, at egg-laying age. Moreover the pace of procurement of these pullets/layers was slower than envisaged. It was only in the 6th year of the project (1990) that the initially- projected peak stock of 200,000 layers was exceeded. This delay was due partly to delayed construction and equipping of the hen houses, and partly to the problems encountered in obtaining a supply of starting pullets that offered the best guarantees of success. The actual production performance is very good since the outputs were : 285 eggs/layer for 11.5 months of laying, feed consumption estimated at 157g/egg produced and a mortality rate of 1% during the laying period. The production of meat from culled hens on the other hand could only follow the pace of procurement of these layers. Which explains why it is far lower than envisaged.

5.2.3 Cattle farming: for this component it is difficult to clearly determine the share of the project, firstly, since the complex already had its own stock before start-up and, also because there are stock movements each year between the different complexes given their respective holding and feeding capacities, and in response to climatic fluctuations. It is known that in- calf heifer imports totalled only 750 head and that the 20 others were acquired locally. This stock subsequently grew though the total stock was not maintained at Ghezala Mateur. The number of milk cows maintained in the complex practically always remained above 19

estimates, as did the milk production. From the standpoint of production, the performance is considered good since there is presently a fertility rate of 85%, a mortality rate among the young animals of 8.4%, a cow mortality rate of 1.5%, a milking average of 5,204 l per cow and 6,263 l per lactating cow. Meat production is inexistent since the calf fattening activity was abandoned.

5.2.4 Sheep rearing: As indicated in paragraph 5.1.7, stock acquired locally was sent to other complexes. As a result, no milk nor cheese was produced under the project. However the complex does have its own stock, amongst which it has promoted in-breeding though the numbers have remained lower than envisaged in the appraisal report. The same applies to its milk production. The complex has also not produced any cheese since it does not have its own cheese factory. Its ewe milk production was sold to a private cheese factory in Mateur. Production has been good, since the results are: a fertility rate of 87%, a fertility rate of 28.4%, a mortality rate among the young animals of 12.3%, an adult animal mortality rate of e 3.06% and a milking average of 110 l per nursing ewe.

5.2.5 The crop production concerned forage and fruit crops. As regards the yields, the forage was to attain peak production in year 3, and the table grapes and apple/pears in year 8, Since the archarding and cropping were completed between 1985 and 1988, 1993/1994 could be counted as the full development period of the project. Since that year was disastrous in terms of the climate (temperate winter and drought). 1992/1993 will be taken as the year of reference. This year is considered by OTD as a very good year in terms of climate. The results received from OTD are the following (in T/ha) :

Table 5.3 Agricultural Yields (in ha)

Yds obt’d Potential Yields Yields - Appraisal 1993 1994

Cereal 4.1 2.3 5 - Green Fodder 40.1 18.9 45 80 Beets 35.3 35.2 45 - Apples 17.1 1.2 20 15 Pears 3.8 1.6 10 15 Peaches 1.3 0.4 8 - Grapes 11.1 6.2 20 30

5.2.6 This table shows that the yields from the fodder, cereal and beets are relatively high, though they could be improved (see potential yields column). The fruit production is limited, particularly for the pear and peaches, for the reasons given in paragraph 5.1.14. The yields obtained from apples and grapes improved, however, annex 5 shows that they are overall low. The main factors limiting fruit production are the nature of the soil and the varieties selected, especially in the case of apples. These varieties are European and require a period of intense cold (minimum of 400 hours in freezing temperatures) to ensure optimal production of fruits, whereas the average winter temperature of the Ghezala Mateur region is 10°C and rarely falls below 0°C. 20

5.2.7 The grapes yields are also low, owing to a number of factors that were not adequately controlled during the establishment of the plantations (fertilization, trimming and irrigation). Considering the soil/climatic conditions at Ghezala Mateur, the projections at appraisal were over optimistic. Annex 5 shows the trend in actual yields obtained year by year since production started on these plantations. It shows significant declines during the years of drought, even though these were irrigated crops. This is because the water supply during the drought period, for example from the Joumine dam, was insufficient, with the result that the frequency of irrigation was limited.

5.2.8 The crop production represents the areas cultivated as well as the yields obtained. The table below compares expected production and the actual production (in tonnes) 1993 and 1994.

Table 5.4

Agricultural Production (in T)

Actual Production Expected Production 1993 1994 (Peak ) Cereal 225 359 - Forage 16846 6162 28000 Beets 2647 2428 - Grapes 1949.5 1093.7 9000 Apples/pears 10.3 210 1500 Peach 3.6 -

5.2.9 The table in annex 6 giving the production details year by year, shows a major gap between the estimates at appraisal and the actual results obtained. These differences reflect the areas actually cultivated and the yields obtained, 21

VI. INSTITUTIONAL PERFORMANCE

6.1 Management and Organizational Efficiency

6.1.1 The project did not provide for any institutional reform It was executed by Office des terres domaniales (OTD) as provided in the appraisal report. This is an industrial and commercial public establishment established by decree-law N°61-15 of 30 September 1961 under the supervision of the Ministry of Agriculture. It is administered by a Board of Directors whose membership has not changed since the start of the project.

6.1.2 This Board of Directors has full powers to ensure the proper functioning of OTD, and to that end meets at least four times a year. To control operations it hires each year an external auditing firm that submits an audit report analyzing the situation (operating account, balance sheet). In particular, its mission entails:

- Preparation of the OTD budget and accounts; - Approval of draft contracts; - Decisions on transactions ; - Drafting of staff rules; - Delegation of special powers to the MD

6.1.3 The decisions of the Board are executed by the Chairman/Managing Director, who is appointed by decree and assisted by a Deputy Director. The MD has changed twice since the start of the project. This level of executive power entails autonomy in human resource management under the conditions set forth in the relevant regulations, and authorization to commit expenditure within the limits of the mandate.

6.1.4 The OTD organization chart is shown in annexes 9 and 10. The one applicable at the time of appraisal has changed. There are now 9 departments instead of 12. The 5 animal and plant production departments have been brought together under a single directorate called the «Agricultural production directorate». The same applies to the 3 equipment and infrastructure departments, which are now under the "Equipment Directorate". The computer department has become a sub-directorate. The current organization chart thus includes the Office of the Deputy Director, as it did before, but now three directorates and one sub- directorate are attached to it, while six directorates are attached to the overall Directorate: Administrative. Financial, Commercial, Agricultural Production, Equipment and Development studies.

6.1.5 There is no doubt that the changes made have brought about to improved functioning of OTD and better quality management, by ensuring more effective distribution of tasks among the departments, as well as various coordination levels that obviously lighten the load of the central directorate. In addition, the appraisal report states that OTD had competent staff heading the different units, a corps of engineers to supervise activities, and an adequate number of qualified senior staff on the ground, with the result that there was no need for technical assistance nor special training outside the existing organization. This was confirmed on completion of the project. 22

6.1.6 Within the Ghezala Mateur complex, the poultry section was separated from the rest and made autonomous, making the individual entities more easily manageable. What should be noted though is the legal inexistence of the complex, since it is OTD that has legal recognition. It is the latter that manages the complex’s budget, therefore there is no notion of separate project accounting; neither for the entire Ghezala Mateur Complex budget, nor even for the overall OTD budget. Indeed, since the complex had already acquired certain property and facilities even before project start up, and which it continues to manage, it has been impossible to clearly distinguish the OTD contribution to the project.

6.1.7 In sum, OTD institutional performance should be assessed in terms of the management of its entire assets in addition to the Ghezala Mateur Complex. The operating accounts and the audited balance sheets for these entities show overall positive results, but the net results have always been negative, on account of the provisions for loan repayment and the exchange losses (See annexes 11 and 12). According to the institutions that oversee OTD, this office will for a long time be required to manage several complexes, including that of Ghezala Mateur, despite the government’s adoption of a policy towards privatization. OTD is in fact considered to be on the same footing as any other legal entity and should thus oversee the asset entrusted to it, keeping up its performance.

6.1.8 In the case of the Ghezala Mateur complex, the autonomy granted to the poultry section made it possible to establish units that are more humanly manageable, better monitored, more closely controlled and more efficient. The results have also improved as a result of continued training of its staff, and the fact that this staff has been supplied with a manual for control of technical performances, which it is required to consult at all times to for each of the areas of production.

6.2 Recruitment, Training and Re-training of Staff

6.2.1 The project envisaged consolidation of the existing permanent employment, establishment of 650 new permanent jobs, (500 in the agricultural sector and 150 in the agro- industrial sector) in addition to the hiring of 500 seasonal employees. All these staff were to receive both theoretical and practical training, through OTD facilities.

6.2.2 In reality the staffing trends have been as follows: 23

Table 6.1

Staffing

Outset Projection Actual

Technical Senior Staff 15 15 24 Administrative Senior 4 4 5 Staff 49 49 71 Worker Supervisors 263 913 269 Permanent employees - 500 518 Seasonal employees 331 1481 887 Total

6.2.3 Thus, despite an increase, the initial projections have not been attained. The number of permanent employees increased by 38 instead of 650. This shortfall is due to an over optimistic projection of the needs and possibilities. On the other hand, the temporary/seasonal employee estimate was exceeded. This was because of the abundance of the seasonal tasks (sewing, harvesting, etc). On the whole, the recruitment situation can be considered prudent and rational, in that the production targets were attained by a limited number of employees.

6.2.4 As regards quality, the majority of the employees were practically trained on the ground, through, daily work. However, specific training was organized for beet root cultivation, apple tree supervision, grape supervision, mounting of silos, fertilization, weeding, trimming, grafting, packaging, 12 technicians and 71 worker supervisors benefited from this training. For stockbreeding, special training was organized on artificial insemination, milking and poultry farming. This training was given to 6 technicians and 40 worker supervisors.

6.2.5 The project has also indirectly contributed to the training of the region’s farmers, as well as students of various origins. Visits and short student practical training sessions organized by national or foreign training concerns are held throughout the year at the Ghezala Mateur complex. These concern the different areas of activity: poultry farming, fruit farming, forage, cereals, etc. All such visits are recorded in the complex’s golden book.

6.2.6 In sum, there were no particular problems in the recruitment, management and training of the complex employees, and the complex considers that it has attained its objective of acquiring a certain «influence» as a reference, through its diverse relations and the services it provides. 24

6.3 Performance of Consultants, Contractors, Suppliers and the Borrower

6.3.1 The performance of the contractors and suppliers was average. Admittedly, the works and goods were satisfactory. The delivery deadlines were met, and minimum after-sales service was provided. However, a few exceptions need to be mentioned:

- SMTE company, which was supposed to supply the lightening conductor, did not meet its obligations. The matter is in court;

- FTI enterprise, which contributed to the establishment of the cold store, provided the service behind schedule. The delay was penalized;

- The “sheep” contractor did not perform the contract because OTD backed out, following the appearance of foot-and-mouth disease in the country of origin;

- Performance of the “pullet” contracts was also slow because of very strict health requirements of OTD, which limited the number accepted after sorting, for each delivery;

- As regards after-sales service, the repair of a breakdown of the refrigeration equipment required bringing the only technician capable of doing the repairs from the parent company in Italy.

6.3.2 The performance of the Borrower is average, in view of the one and a half-year period between the signing of the loan agreement and loan effectiveness. As regards the Executing Agency, its performance could be considered average in terms of the results obtained, and bad in terms of compliance with ADB rules and procedures (see paragraphs 4.5.1 to 4.5.5).

6.4 Technical Assistance

The project was not designed to and did not receive technical assistance either in management or in other disciplines because, as indicated in paragraph 6.1.5. OTD has enough qualified managerial staff to perform all the tasks.

6.5 Clauses and Conditions

The clauses and conditions of the loan agreement are contained in paragraphs 4.1.1 to 4.1.4. None of them concerned institutional measures, which was not, in any case, required for the proper implementation of the project, in view of the outcomes at project completion. On the other hand, two clauses and conditions concerned measures relating to the procurement of goods and services. The first was fulfilled; the second was not, even though it was relevant and its non-fulfilment did not give rise to by sanctions. 25

VII. FINANCIAL PERFORMANCE

7.1 Financial Results

7.1.1 OTD’s commercial accounting complies with the Tunisian accounting plan. The agricultural year runs from 01/09 to 31/08. At the end of the year, the financial statements (balance sheets, operating accounts, profit and loss accounts) are prepared and submitted for internal and external auditing before presentation to the Board of Directors. Internal audit is undertaken on a permanent basis by the general inspectorate directly attached to the General Directorate. The inspectorate sees to compliance with administrative and accounting procedures. External audit is undertaken at two levels: first by a financial controller appointed by the Minister of Finance as part of State control of public authorities and establishments, and then by an independent auditing firm authorized each year to audit the inventories, financial statements and asset base of OTD. Since the appraisal, OTD auditing procedures have improved significantly. External audit is carried out regularly and reservations expressed by the auditors are increasingly addressed. The current balance sheets reflect the assets situation of OTD.

7.1.2 The financial analysis of OTD was based on financial statements for 1983 (at appraisal) and 1987 to 1992 financial years. The table below summarizes the operating accounts for 1983 and 1987 to 1992.

Table 7.1 Operating Accounts for 1983 and 1987-1992 (in TD million)

1983 1987 1988 1989 1990 1991 1992

Operat. revenue 41604 43301 47085 42084 52254 64109 83652 Operat. costs 42285 44644 47459 45920 50647 57629 72146 Operat. income -681 -1343 -374 -3836 1607 6480 11506 Net income 223 -2923 -919 -5065 -833 -555 1552

Self-financing 4339 5491 7105 3439 7065 7343 9191 Working ratio -0.33 -0.40 +2.45 +1.32 -0.39 -0.26 0.13 Operat. ratio 1.02 1.03 1.01 1.09 0.96 0.92 0.86

7.1.3 An analysis of the operating accounts of OTD at project appraisal and during the five financial years preceding project completion shows an annual average increase in income of 11%, with a decline in 1989 due to drought. The net income for the year has always shown a deficit since project appraisal because of provision for liabilities and charges and for debt. Turnover losses are constantly reducing. The operating ratio fell from 1.02 in 1983 to 0.86 in 1992.

7.1.4 Salaries account for the most significant costs. They increased from TD 11.897 DT in 1983 to TD 19.065 in 1991, which corresponds to an average annual increase of 10%. They account for 28% and 27% respectively of the total income. This reflects a positive trend of the personnel budget heading, thanks to the initial operation of new investments and the 26

optimum use of human resources. External works, supplies and services increased by 32% and account for 5% and 7% of OTD income in 1983 and 1991 respectively.

7.1.5 Appropriations to the reserve reflect a policy of prudence adopted by OTD in its determination to cope with foreign exchange risks. Financial costs account for about 0.5% of the outstanding long and medium-term loans; this shows that the Government has not yet passed on the semi-annual loan instalmental repayment conditions to OTD.

7.1.6 The financial structure of OTD has been reviewed for the 1983 and 1987 to 1992 financial years. The table below summarizes the review:

Table 7.2 Summary of OTD Balance Sheets (1983 and 1987-1992)

1983 1987 1988 1989 1990 1991 1992

Fixed assets 36272 55989 59429 59232 60152 61405 64540 Current assets 36579 56791 54736 53664 57792 64389 77626 Perm. capital 51059 78777 76641 76476 75191 75529 70455 ST debts 13555 25070 28457 31824 31387 37189 49909

Working capital 14787 22788 17212 17244 15039 13528 5915 Liquidity ratio 2.70 1.69 1.92 1.68 1.84 1.73 1.55 Leverage ratio 0.70 1.01 1.09 1.69 1.28 1.25 1.11

7.1.7 The balance sheet total increased by 100% each year from 1983 to 1992. The liquidity ratio is satisfactory and confirms the presence of positive working capital. However, rather than use it, OTD resorted to short-term borrowing whose amount was multiplied by 4.2 between 1983 and 1993. This is not rational in financial management because the loans incur additional financial costs. That is also why the leverage ratio is alarming. The fixed assets, which accounted for 50% of the balance sheet total in 1983, attained 56% in 1991. The permanent capital covered the fixed assets at project appraisal in 1983. The working capital was positive from 1987 to 1991 despite the huge investments. It remained positive though lower until 1993 (TD 5.915 million in 1992 and TD 7.633 million in 1993). The capital scarcely changed since it was state contribution. The current assets were multiplied by 1.76. A breakdown of the current assets shows that both the working and liquid assets are significant. That is partly due to the selling conditions of milk (down payment equivalent to thrice the price of the product) and eggs (by invitation to bid), and partly to the marketing conditions of poultry products (products sold before production). 27

7.1.8 Details of OTD’s operating accounts, balance sheets and results are given in Annexes 11. 12 and 13. The same applies to the operating accounts. balance sheets and results of the Ghézala-Mateur agro-industrial complex, which are given in Annexes 14. 15 and 16. The general conclusion of the review is that the good cash situation of OTD is only apparent. Its long-term leverage is alarming since its capital depends on State contribution. The losses recorded during project implementation and in 1993 should encourage OTD to improve its management.

7.2 Rate of Return

At project appraisal, no assumption was mentioned for the calculation of the rate of return. This makes comparison with the status of the rate at completion difficult. The project rate of return is now calculated in terms of the assumptions defined in Annex 17. It yields a financial rate of return of 8% instead of 12% estimated at appraisal. This result is due mainly to the non-implementation of some productive investments, such as the Calf Fattening Centre for meat production, the cheese factory for cheese production, and to the poor performance in orcharding.

7.3 Financial Conditions and their Implementation

The financial conditions defined in the loan agreement were fulfilled. In fact, the undertaking by the Borrower and OTD to pay their respective contributions was met because the final cost of the project turned out to be lower than the estimates and OTD contracted short-term loans from local financial institutions to replenish its working capital. However, it should be mentioned that the most important point which concerned the keeping of separate accounts for the project and particularly for the loan fund was not included in the conditions. 28

VIII. ECONOMIC PERFORMANCE

8.1 The expected economic outcomes of the project were:

- Reduction of shortfalls in certain basic food items (milk, eggs, meat and fruits) and regulation of markets for these products:

- its impact on the production system in the area as a result of its propagation in rural areas;

- creation of new jobs.

8.2 On the whole, the target figures for these indicators were not completely achieved except as regards the production of eggs and milk. Meat production was abandoned by the project and entrusted to other agro-industrial complexes. Fruit production was poor for two reasons: unfavourable climate and poor choice of varieties for cultivation. The number of jobs was also lower than expected.

8.3 More specifically, the project outcomes are as follows:

- milk production: 6,246,000 litres instead of 6,450,000 litres, or 97% of the estimates. This corresponds to 1.5% of national output and 1.3% of the country’s annual dairy imports;

- egg production: 65,100,000 instead of 54,000,000 tonnes, or 120% of the estimates. This corresponds to additional consumption of 9 eggs per inhabitant per year;

- fruit production: 1,710 tonnes instead of 8,500 tonnes, or 20% of the estimates in 1992. This corresponds to additional consumption of 0.2 kg of fruits per inhabitant per year;

- job creation: 38 permanent jobs instead of 650, or 5.8% and 518 temporary jobs instead of 500, or 103.6%.

8.4 On the other hand, throughout implementation, the project contributed fully to the regulation of the egg and fruit market thanks to its storage facilities, by supplying part of its produce during periods of shortage or high consumption. Its role as technical reference for farmers in the area was also significant, although it is difficult to evaluate it in figures. In fact, it resulted in many placements and organized visits in the complex, and many farmers adopted irrigation. Lastly, through the invitations to bid, it contributed to the operation of many local enterprises and companies. 29

8.5 The new calculation of the project’s economic rate of return, based on the assumptions defined in Annex 17, gave 10% instead of the 15% estimated initially. The reasons for this are the same as those mentioned in paragraph 7.2 namely, non- implementation of some investments and poor performance in orcharding. Lastly, despite the good will and some competence of the Executing Agency, the yield is perhaps not the best for a private company. 30

IX. SOCIAL IMPACT

9.1 The social impacts of the project specified in the appraisal report are sometimes similar to the expected economic impacts. They are:

- the consolidation of permanent employment; - the creation of 650 new permanent jobs; - the creation of 500 seasonal jobs; - continuous training for the staff; - the training of neighboring farmers; - reduction of shortfalls in certain basic food items (milk, eggs, meat, and fruits).

9.2 In fact, as indicated in paragraphs 6.2.2. 6.2.3 and 8.3, the permanent staff of the complex was maintained. However, it was not possible to obtain details of movements (retirement, dismissal or transfer). According to OTD, there were few transfers of senior staff, including the Project Manager. As regards the creation of new jobs, it concerned only 38 workers instead of the 650 estimated for permanent jobs, whereas the estimated 500 temporary jobs were exceeded, Job opportunities therefore concerned the most underprivileged population, most of whom live in the towns of Ghezala and Mateur, with high female participation.

9.3 As regards training, the project fulfilled its obligations as indicated in paragraphs 6.2.4 and 6.2.5. Furthermore, it contributed to the implementation of decisions taken by the State to increase staff salaries by 5% over a period of three years.

9.4 With respect to reducing shortfalls in certain basic food items, the contribution of the project, as indicated in paragraph 8.3, is of course low in comparison with national needs, but it is significant in the light of the regulatory role of OTD in the domestic market. In fact, through its storage and conservation facilities, the Ghézala-Mateur agro-industrial complex always intervened whenever there was shortage of eggs or fruits on the market, particularly in Tunis at certain times of the year.

9.5 Lastly, although not mentioned in the appraisal report, the project contributed a lot to the promotion of women. In fact, 40% of the casual jobs offered in the agricultural sector are occupied by women. In the poultry sector, 80% of the permanent and temporary jobs are also held by women. Moreover, thanks to the training received, the performance of the female staff is considered excellent.

9.6 In the final analysis, the social impacts of the project are many and positive, even if they were not always scheduled or estimated in figures. And since they are linked to the very nature of the activities, they will remain. 31

X. ENVIRONMENTAL IMPACT

10.1 To produce the 907 ha of irrigated crops, the Ghézala-Mateur agro-industrial comp lex did not cultivate new areas; rather, it recuperated land previously used for rainfed cereals and forage crops, 230 ha of improved pasture were created on the 1,300 ha of natural pasture owned y the agro-industrial complex. There was no problem of salinity or soil degradation following the use of water from the Joumine and Ghezala dams for the irrigation of crops.

10.2 The structure and texture of the soil, which is fairly rich and compact due to the presence of clay, was improved with the use of straw, manure and dung as organic manures and mineral fertilizers (ammonitre, super triple, K sulphate and DAP phosphate). No study was conducted on the impact of the percolation of these fertilizers on the groundwater table, especially for ammonitre (nitrate fertilizers) whose migration strength is more than for the other fertilizers. However, this is important because the fertilizer is used for the fertilization of forage crops on the drained soils of the Mateur plain and whose outlet is Lake Ichkeul, a natural reserve classified by UNESCO.

10.3 The components concerned with intensive stockbreeding (cattle breeding and poultry farming) have significant impact on the environment, given the risks of storing manure and dung. Although all these products are used for the organic enrichment of forage crops (15 tonnes/ha) and orchards (10 tonnes/ha), storage problems have not been solved, especially for hen droppings which require 34 months of storage before use as fertilizer. It was recommended that cemented and impermeable holding areas be constructed, 32

XI. SUSTAINABILITY OF OUTPUTS

11.1 On the whole, the project outputs are sustainable. However, in view of the net negative outcomes recorded so far, OTD should, at all costs, try to improve its financial performance. Moreover, the problem also concerns the sustainability of this State management structure, depending on the economic policy options which the State may choose in future.

11.2 As regards the nature of the activities, since they are agricultural production activities, which form part of the country’s economic priorities and not only reduce shortfalls in certain basic food items but also improve the balance of payments through the export of certain products, they will be supported by the Government.

11.3 As regards its technical and economic aspects, the project is in an agricultural area not far from Tunis which is a sure market for its products. The crops grown are adapted to the area, except fruit trees whose yields are still low; these are mainly stockbreeding (poultry farming and dairy production), and cereal products which were the initial activities of the complex. Moreover, the complex plays an important role each year in the regulation of the local market, selling part of its products during periods of shortage and high consumption. It also uses production methods and technologies which are suitable and efficient for the area. Lastly, it is a growth centre, offering hundreds of jobs to the population of the area.

11.4 As for the project infrastructure, it was constructed with concrete, in accordance with good trade practice and therefore offers the required guarantees of sustainability. With respect to the facilities, they are being monitored and controlled regularly. Guarantee for their maintenance each year is ensured by the systematic inclusion of an item for maintenance in the budget. As concerns foreign exchange requirements for the procurement of spare parts, they have so far not posed any problems especially as OTD is an exporter of produce and can therefore freely use 20% of its foreign exchange earnings, in accordance with current financial practice in the country. 33

XII. PERFORMANCE OF THE BANK AND OTHER COFINANCIERS

12.1 Project Objective and Justification

12.1.1 The Bank showed prudence in refusing to appraise the project presented in 1982 and requesting the Borrower to conduct further study to address the inadequacies of the preparation report. However, during appraisal later, it approved the objectives and justifications presented in the modified preparation report. The project’s overall relevance was verified at completion, but the figures proposed at appraisal were not always correct or rational.

12.1.2 The Executing Agency was the initiator of the project and undertook its preparation. As regards quality, the project objectives and justifications are consistent with the needs of the country and the economic policy of the Government. The project’s contribution to the regulation of the market of basic food items (milk, eggs and fruits), especially as concerns the increase in production of these food items, seems modest in relation to the country’s requirements, but is nonetheless substantial. On the other hand, the figures proposed in the objectives were not properly assessed, thereby requiring several modifications during project implementation (cancellation of the hatchery and incubators, the fattening centre and cheese factory, and the wine grape plantation), or resulting in poor production performance (orcharding).

12.1.3 The Borrower merely approved the proposals of the Executing Agency, and consequently shares with the latter responsibility for the success and errors.

12.2 Project Implementation and Operating Income

12.2.1 The Bank did not, at appraisal, point out the errors and inadequacies of the project preparation. These concern, in particular, the investment estimates which had to be cancelled during implementation (hatchery, incubators, fattening centre, cheese factory, 250 ha of wine grapes) and replaced with other unscheduled investments (houses for layers, egg storage centre, administrative block, health blocks, housing units), the poor choice of tree plants to be grown as well as overestimation of the capacity of the cold store and the number of staff to be recruited. It undertook several supervision missions. However, the missions were often restricted to solving specific problems and scarcely allowed for the monitoring of the overall trend of project outputs and performance. The financial aspect was not adequately monitored, hence the absence of separate accounts was not detected in time. It duly honoured all disbursement requests submitted by the Borrower. However, it committed the serious error of making the first disbursement before loan effectiveness, for double the amount requested. This led to the unscheduled and uncontrolled use of the surplus by OTD. It did not take the Executing Agency to task for the irregular and rare submission of reports. However, despite all these weaknesses, it could be said that the understanding and flexibility shown by the Bank throughout project implementation ultimately enabled the Borrower to carry through the project, though with performance lower than initially expected but satisfactory nonetheless. In fact, the Bank always approved a posteriori the changes made by the Executing Agency to correct preparation inadequacies and errors, most often despite non- compliance with the rules and procedures. The overall performance of the Bank should therefore be considered average. 34

12.2.2 The Executing Agency participated in project financing by sometimes resorting to short-term borrowings from local financial institutions. The amount of such contribution is lower than that proposed at appraisal, in both absolute and relative values. This is partly due to the reduction in the final cost of the project. It committed several errors and inadequacies at project preparation (paragraph 12.1.1). In the final analysis, the good performance as regards physical outputs and the relatively satisfactory production results of the project attest to the efforts made towards the success of the project, but unfortunately to the detriment of ADB rules and procedures. Its performance could therefore be considered average.

12.2.3 The Borrower took a rather long time to fulfil the conditions precedent to loan effectiveness. Its contribution to project financing was not accurately assessed. Although it is estimated to be above the estimates, it does not correspond to the commitments made. In fact, it had complete confidence in OTD whose management results were communicated to it through the Board of Directors. Its performance is therefore average at best. 35

XIII. CONCLUSIONS AND LESSONS

13.1 Conclusion

13.1.1 The Ghézala-Mateur Agro-Industrial Complex Development Project may be considered as a project with generally satisfactory results. In fact, many infrastructure and development works were undertaken; they are operational and maintained. Except for the disappointing yields in orcharding, animal and plant production is significant. However, many circumstances obstructed its smooth running:

- late fulfilment of the conditions precedent, due to the Borrower;

- late implementation of the project due to problems of procedure, unsuccessful invitations to bid, and non-performance of some contracts;

- error made in the first disbursement, which led to the release and unscheduled and uncontrolled use of a significant tranche of the loan;

- non-compliance with ADB rules and procedures;

- change in the nature of some project activities;

- no separation of project accounts from the entire accounts of the management organ, OTD. This made it impossible to know the exact financial contribution of the Executing Agency and identify any misappropriation of funds.

13.1.2 Furthermore, a significant portion of the loan (17%) had to be cancelled at project completion. This was partly due to inadequacies in project preparation, resulting in significant modifications in the investments to be undertaken (cancellation of the hatchery, incubators, fattening centre, cheese factory, grapes plantation, construction of more hen houses, egg storage facilities, administrative block, health blocks and housing units, reduction of the capacity of the cold store for the storage of fruits), but also in unforeseen circumstances which led to the cancellation of some scheduled purchases (dairy sheep).

13.1.3 However, adjustment efforts made by OTD during implementation, often despite ADB rules and procedures, and the understanding shown by ADB allowed for a posteriori approval of some decisions taken by OTD, mitigated the negative impacts of the circumstances.

13.1.4 As regards the performance, it could be considered average. The target figures were not always achieved as scheduled because of: 36

- the various delays recorded;

- incomplete implementation of some components;

- overestimation of some objectives and performance at preparation and appraisal.

13.1.5 Consequently, the updated financial rate of return of the project fell from 12% to 8% and the economic rate of return from 15% to 10%.

13.1.6 According to the supervisory Ministry of the project, the said project is considered a good project whose outcomes are really beneficial to the country’s economy. According to the Executing Agency, the Ghézala-Mateur Agro-Industrial Complex is considered one of the most performing agro-industrial complexes under its management, if not the best. In any case, it is a reference in Tunisia in poultry farming, milk production, fodder production and management of irrigated orchards.

13.2 Lessons

Several lessons may be drawn from the implementation of the Ghezala-Mateur Agro- Industrial Complex Development Project. They concern:

i) Preparation: Inadequate project preparation led to errors in technical choices of fruit varieties, the planting method, irrigation systems, irrigated cropping system (5.1.4. 5.1.8. 5.1.14 and 5.1.15). errors in the estimates of fruit yields, marketable produce (5.1.13), the number of staff to be recruited (6.2.3) and many modifications during project implementation to construct profitable infrastructure such as the cancellation of the cheese factory, the fattening centre, the hatchery and incubators, reduction of the capacity of the cold store for the storage of fruits (5.11) and the construction of a cold store for the storage of eggs. It would not be superfluous to point out that project preparation is important and that enough time should be taken to conduct it, Any inadequacy during this phase is rarely corrected at appraisal. It is only during supervision that the required adjustments can be made, if they can be done correctly and properly;

ii) Management Structure: OTD is a public establishment whose activities concern production directly. Despite the relatively satisfactory results obtained in Ghezala Mateur, there is room to wonder if they could not be better under private management (6.1.7. 6.3.2 and 11.1);

iii) Planning: The complexity of the project and the Executing Agency’s lack of experience in the management of ADB loan generally resulted in the excessive extension of the project implementation period (4.3.3);

iv) Loan Agreement: Generally speaking, the omission or lack of exact details concerning practical measures in the loan agreement often led to many inadequacies in project implementation (4.4.1 on irregular submission of reports, 4.6.3, 4.6.5, 4.6.6, 4.6.8 and 4.6.9 on the absence of separate accounts and non-compliance with the distributions and financial commitments); 37

v) Accounts: On the whole, the omission in the loan agreement of a condition on the need to keep separate accounts for the project, as regards both the loan resources and other sources of finance, made it impossible to know the exact financial contribution of the Executing Agency or identify any misappropriation of funds (6.1.6);

vi) Supervision: The scheduling of supervision to solve only pending problems, such as those relating to contracts, made it impossible to know the actual performance of the project, its outcomes in terms of yields and output, or monitor its overall trend. The absence of a proper structure for monitoring and evaluating the project only worsened the situation (4.4.2);

vii) ADB Rules and Procedures: Lack of familiarity with ADB rules and procedures led to exchange of often virulent correspondence between ADB and the Executing Agency. However, since no sanction was actually taken, the violations continued throughout project implementation. This also resulted in late implementation (4.5.2 to 4.5.5);

viii) Disbursement: The error committed during the first disbursement led to the unscheduled and uncontrolled use of the surplus credit. This did not facilitate proper implementation of the project (see 4.6.7);

ix) Audit : Since the Borrower did not submit an audit report, the failure of the Bank to ensure preparation of an audit report made it impossible to correct inadequacies not identified by the supervision missions (4.4.1);

x) Keeping of Records: The failure of ADB and the Borrower to keep proper records did not facilitate the work of the mission. Neither did it make it possible to know the details of the project outputs (4.4.2) ;

13.3 Recommendations

From the lessons in the previous paragraph, the following recommendations could be made:

i) Project preparation should be undertaken with the utmost care and attention, and the required amount of time should be devoted to it. The resulting report should provide for a monitoring-evaluation unit within the Executing Agency (13.2(i) and 13.2(vi)) and pay particular attention to realistic scheduling of project implementation (4.3.1. 4.3.3 and 13.2(iii));

ii) ADB should reflect on the criteria to be adopted for the selection of a State or private management structure, depending on the nature and content of the project proposed for financing, and ensure that they are taken into consideration at each project evaluation (11.1 and 13.2(ii));

iii) When an executing agency is responsible for several projects, or when it has to manage a complex or multiple-donor project, the loan agreement should in particular specify the conditions and practical financial management modalities, as well as the respective responsibilities of the contracting parties (13.2 (vi) and 13.2(vii)); 38

iv) Project appraisal should be undertaken on the basis of a complete and reliable report resulting from serious and detailed preparation and providing all the required accurate figures, for proper analysis and appraisal. In any case, efforts should be made to avoid excessive haste, merely to attain the target (13.2(I)); v) Project implementation should provide for a phase to enable the implementation staff to get acquainted with ADB rules and procedures in the beginning. Supervision should be conducted at least once each a year with, as much as possible, a team comprising the project officer and the disbursement officer, and all aspects of project implementation should be monitored. This would, in particular, allow for better knowledge of project performance and outcomes, as well as avoid problems of disbursement error. An audit mission should be organized whenever a project does not fulfil its financial obligations (13.2(vi). 13.2(vii) and 13.2(ix)); vi) Project implementation should be monitored more closely and more strictly as regards compliance with loan conditions and ADB rules and procedures. To that end, ADB should study and ensure adoption of practical ways of implementing sanctions likely to be taken (13.2(iv). 13.2(v). 13.2(vi) and 13.2(vii)); vii) ADB should call on Borrowers to continue ensuring strict control of project performance so as to further improve them, and remind them of the importance and utility of completion missions. To that end, it should study and ensure the implementation of measures required for proper keeping of project records in its various departments and by the borrowers (13.2(x)). and emphasize, throughout project implementation, on the importance of their future evaluation at completion by providing for an internal monitoring/evaluation structure, by reiterating the need to submit progress reports periodically, and by ensuring permanent sensitization of executing agencies. viii) ADB should ensure that completion missions are scheduled within the periods prescribed by the rules and procedures so as to avoid discouraging executing agencies and loss of information due to dispersal of records (13.2(x)).

ANNEX 1 TUNISIA

GHEZALA-MATEUR AGRO-INDUSTRIAL COMPLEX

List of Goods and Services (4 April 84)

Amount Amount Components Quantity (TD million) (UA million)

Irrigated blocks Drip irrigation Borehole 3 0.19 0.27 Irrigation network 410 ha 0.83 1.17 Sprinkler Supply and laying 500 ha 0.49 0.69

Agricultural equipment 45 HP tractors 11 0.123 0.17 75 HP tractors 31 0.567 0.80 110 HP tractors 6 0.163 0.23 Isothermic lorry 1 0.028 0.04 Lorry (20 T) 2 0.083 0.12 Light vehicle 10 0.071 0.10 Trailer 10 0.071 0.10 Power shovel 3 0.022 0.03 Liquid manure tank 3 0.015 0.02 Weigh bridge 1 0.021 0.03 Animal scales 5 0.018 0.03

Livestock buildings Cattle sheds (215 cows) 5 0.796 1.13 Heifer Centre 1 0.55 0.78 Fattening Centre 1 0.11 0.16

Livestock procurement Heifer 1000 1.17 1.65 Ewe 3000 0.527 0.74

Pasture improvement Pasture 500 ha 0.16 0.23

Poultry farming 200.000 layers Civil works 2.009 2.84 Equipment 0.955 1.35 Eggs and pullets 0.756 1.07

Agro-industry Packaging factory 4000 T/year Civil works 0.171 0.24 Equipment 0.74 1.05 Cheese factory 55 T/year Civil works 0.076 0.11 Equipment 0.15 0.21 Orcharding Wine grapes 250 ha 0.238 0.34 Table grapes 300 ha 0.716 1.01 Apples/pears 100 ha 0.239 0.34 Operating Costs 7.78 11.00 Total 19.83 28.03 Phy. contingencies (5%) 0.99 1.40 Price escalation (10%) 5.75 8.13 Total 26.57 37.55

This list was approved by the ADB in TD. It concerned the total project amount. and not the loan amount.

ANNEX 2

TUNISIA

GHEZALA MATEUR AGRO-INDUSTRIAL COMPLEX

LIST OF GOODS AND SERVICES (1987) (TD million)

------ADB------OTD. ------Government ------Local Currency Local Currency For. Exchange For. Exchange Foreign Total Exchange A. Irrigation works 0 0.682 0.691 0.419 0.256 2.048 B. Agricultural equipment 1.238 0.223 1.461 C. Livestock building 0.944 0.849 1.793 D. Livestock procurement 1.973 0.335 2.308 E. Pasture improvement 0.058 0.139 0.197 F. Poultry farming 3.039 1.489 4.528 G. Agro-industry 1.099 0.467 1.566 H. Orcharding 0.695 0.973 1.668 I. Operating costs 1.530 1.734 7.741 11.005 Total 10.576 2.416 12.907 0.419 0.256 26.574 ANNEX 3

TUNISIA

GHEZALA-MATEUR AGRO-INDUSTRIAL COMPLEX List of Goods and Services (29 January 1987)

Component Amount (in UA)

Irrigated blocks 0.0 Agricultural equipment 945.359.9 Livestock buildings 1.305.706.7 Livestock procurement 1.315.400.0 Pasture improvement 93.897.9 Poultry farming 5.390.0 Agro-Industry 2.364.635.6 Orcharding 990.000.0 Operating costs 2.545.000.0 Total 14.950.000.0 This list was approved by the ADB in UA. It concerned only the loan amount. ANNEX 4 Page 1 of 2 TUNISIA

GHEZALA-MATEUR AGRO-INDUSTRIAL COMPLEX

Increases in Areas (in ha)

Crop 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 Pre-project Sprinkler forage crops Estimates Oats/field beans 0 0 100 200 300 300 300 300 300 300 Sorghum 0 0 50 100 100 100 100 100 100 100 Ray-grass/clover 0 0 50 100 100 100 100 100 100 100 Actual Green fodder 0 0 0 0 150 193 183 336 420 420 Cereals 0 0 0 0 78 72 93 0 0 78 Beet 0 0 0 0 0 0 0 0 0 52

Rainfed Orcharding Wine grapes (estimates) 0 75 150 200 250 250 250 250 250 250 Wine grapes (actual) 0 0 0 0 0 0 0 0 0 0

Irrigated Orcharding Apple trees/pear trees (estimates) 0 0 0 50 100 100 100 100 100 100 Apple trees/pear trees (actual) 0 0 52 105 148 172 172 172 172 172 Peach trees (estimates) 0 0 0 0 8 8 8 8 8 8 Table grapes (estimates) 0 0 100 200 300 300 300 300 300 300 Table grapes (actual) 0 0 0 100 150 175 175 175 175 175

Reduction of area under rainfed cereals 0 0 -52 -205 -534 -620 -631 -691 -775 -905 For growing of irrigated crops

Rainfed Forage Crops Fescue pasture (estimates) 0 100 300 500 500 500 500 500 500 500 Fescue pasture (actual) 0 0 0 46 98 166 212 230 230 230 Natural pasture (estimates) 0 -183 -734 -1063 -1308 -1308 -1308 -1308 -1308 -1308 Natural pasture (actual) 0 0 0 -46 -98 -166 -212 -230 -230 -230 ANNEX 4 Page 2 of 2 TUNISIA GHEZALA-MATEUR AGRO-INDUSTRIAL COMPLEX

Increases in Areas (in ha)

Crop 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Sprinkler forage crops Estimates Oat/field beans 300 300 300 300 300 300 300 300 300 300 Sorghum 100 100 100 100 100 100 100 100 100 100 Ray-grass/clover 100 100 100 100 100 100 100 100 100 100 Actual Green fodder 420 325 360 360 360 360 360 360 360 360 Cereals 55 156 125 125 125 125 125 125 125 125 Beet 75 69 65 65 65 65 65 65 65 65

Rainfed Orcharding Wine grapes (estimates) 250 250 250 250 250 250 250 250 250 250 Wine grapes (actual) 0 0 0 0 0 0 0 0 0 0

Irrigated Orcharding Apple trees/pear trees (estimates) 100 100 100 100 100 100 100 100 100 100 Apple trees/pear trees (actual) 172 172 172 172 172 172 172 172 172 172 Field beans (actual) 8 8 8 8 8 8 8 8 8 8 Table grapes (estimates) 300 300 300 300 300 300 300 300 300 300 Table grapes (actual) 175 175 175 175 175 175 175 175 175 175

Reduction of area under rainfed cereals -905 -905 -905 -905 -905 -905 -905 -905 -905 -905 for the growing of irrigated crops

Rainfed Forage Crops Fescue pasture (estimates) 500 500 500 500 500 500 500 500 500 500 Fescue pasture (actual) 230 230 230 230 230 230 230 230 230 230 Natural pasture (estimates) -1308 -1308 -1308 -1308 -1308 -1308 -1308 -1308 -1308 -1308 Natural pasture (actual) -230 -230 -230 -230 -230 -230 -230 -230 -230 -230 ANNEX 5 Page 1 of 2 TUNISIA

GHEZALA-MATEUR AGRO-INDUSTRIAL COMPLEX

Increases in Yields (in T/ha)

Crop 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 Pre-project Sprinkler forage Crops Estimates Oat/field beans 0 25 30 40 40 40 40 40 40 40 Sorghum 0 50 60 70 80 80 80 80 80 80 Ray-grass/clover 0 50 60 70 80 80 80 80 80 80 Actual Green fodder 0 0 0 0 23.68 7.42 55.84 34.62 34.6 39.21 Cereals 0 0 0 0 3.2 0.7 2.8 2.1 3.1 2.9 Beet 0 0 0 0 0 0 0 0 0 62.67

Rainfed Orcharding Wine grapes (estimates) 0 0 0 0 3 4 4.5 5 5.5 6 Wine grapes (actual) 0 0 0 0 0 0 0 0 0 0

Irrigated Orcharding Apple trees/pear trees (estimates) 0 0 0 0 0 0 4 5 7 10 Apple trees/pear trees (actual) 0 0 0 0 0 0 4.37 3.01 10.88 3.3 Peach trees (actual) 0 0 0 0 0 0 0 0.55 0.2 0.2 Table grapes (estimates) 0 0 0 0 0 5 10 15 20 25 Table grapes (actual) 0 0 0 0 0 0 5.31 5.54 5.66 6.52

Reduction of area under rainfed cereals 2.5 2.5 2.5 1.8 1.8 1.8 1.8 1.8 1.8 1.8 for the growing of irrigated crops 1.8 1.8 1.8

Rainfed Forage Crops Fescue pasture (estimates) 0 23 25 28 30 30 30 30 30 30 Fescue pasture (actual) 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 Natural pasture (estimates) 3 3 3 3 3 3 3 3 3 3 Natural pasture (actual) 3 3 3 3 3 3 3 3 3 3 ANNEX 5 Page 2 of 2 TUNISIA

GHEZALA-MATEUR AGRO-INDUSTRIAL COMPLEX

Increases in Yields (in T/ha)

Crop 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Sprinkler Forage Crops Estimates Oat/Field beans 40 40 40 40 40 40 40 40 40 40 Sorghum 80 80 80 80 80 80 80 80 80 80 Ray-grass/clover 80 80 80 80 80 80 80 80 80 80 Actual Green fodder 40.11 18.96 41 41 42 42 42 42 42 42 Cereals 4.1 2.3 4 4 4 4 4 4 4 4 Beet 35.3 35.2 50 50 50 50 50 50 50 50

Rainfed Orcharding Wine grapes (estimates) 7 8 8 8 8 8 8 8 8 8 Wine grapes (actual) 0 0 0 0 0 0 0 0 0 0

Irrigated Orcharding Apple trees/pear trees (estimates) 12 14 15 15 15 15 15 15 15 15 Apple trees/pear trees (actual) 17.1 1.22 11 11 11 11 13 13 13 13 Peach trees (actual) 1.29 0.45 1 1 2 2 3 3 3 3 Table grapes (estimates) 30 30 30 30 30 30 30 30 30 30 Table grapes (actual) 11.14 6.25 8 8 8 9 9 9 9 9

Reduction of area under rainfed cereals 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 for the growing of irrigated crops

Rainfed Forage Crops Fescue pasture (estimates) 30 30 30 30 30 30 30 30 30 30 Fescue pasture (actual) 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 Natural pasture (estimates) 3 3 3 3 3 3 3 3 3 3 Natural pasture (actual) 3 3 3 3 3 3 3 3 3 3 ANNEX 6 Page 1 of 4 TUNISIA

GHEZALA-MATEUR AGRO-INDUSTRIAL COMPLEX

Increases in Output (in T)

Crop 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 Pre-project Sprinkler Forage Crops Estimates Oat/field beans 0 0 3000 8000 12000 12000 12000 12000 12000 12000 Sorghum 0 0 3000 7000 8000 8000 8000 8000 8000 8000 Ray-grass/clover 0 0 3000 7000 8000 8000 8000 8000 8000 8000 Actual Green fodder 0 0 0 0 3552 1432 10218 11632 14532 16468 Cereals 0 0 0 0 249.6 50.4 260.4 0 0 226.2 Beet 0 0 0 0 0 0 0 0 0 3258.8

Rainfed Orcharding Wine grapes (estimates) 0 0 0 0 750 1000 1125 1250 1375 1500 Wine grapes (actual) 0 0 0 0 0 0 0 0 0 0

Irrigated Orcharding Apple trees/pear trees (estimates) 0 0 0 0 0 0 400 500 700 1000 Apple trees/pear trees (actual) 0 0 0 0 0 0 751.64 517.72 1871.3 567.6 Peach trees (actual) 0 0 0 0 0 0 0 4.4 1.6 1.6 Table grapes (estimates) 0 0 0 0 0 1500 3000 4500 6000 7500 Table grapes (actual) 0 0 0 0 0 0 929.25 969.5 990.5 1141

Reduction of area under rainfed cereals 0 0 -130 -369 -961 -1116 -1135 -1243 -1395 -1629 for the growing of irrigated crops

Rainfed Forage Crops Fescue pasture (estimates) 0 2300 7500 14000 15000 15000 15000 15000 15000 15000 Fescue pasture (actual) 0 0 0 179.4 382.2 647.4 826.8 897 897 897 Natural pasture (estimates) 0 -549 -2202 -3189 -3924 -3924 -3924 -3924 -3924 -3924 Natural pasture (actual) 0 0 0 -138 -294 -498 -636 -690 -690 -690

For the calculation of the rate of return: all the fodder is consumed on the agro-industrial complex ANNEX 6 Page 2 of 4 TUNISIA

GHEZALA-MATEUR AGRO-INDUSTRIAL COMPLEX

Increases in Output (in T)

Crop 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Sprinkler Forage Crops Estimates Oat/field beans 12000 12000 12000 12000 12000 12000 12000 12000 12000 12000 Sorghum 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 Ray-grass/clover 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 Actual Green fodder 16.846 6162 14760 14760 15120 15120 15120 15120 15120 15120 Cereals 225.5 358.8 500 500 500 500 500 500 500 500 Beet 2647.5 2428.8 3250 3250 3250 3250 3250 3250 3250 3250

Rainfed Orcharding Wine grapes (estimates) 1750 2000 2000 2000 2000 2000 2000 2000 2000 2000 Wine grapes (actual) 0 0 0 0 0 0 0 0 0 0

Irrigated Orcharding Apple trees/pear trees (estimates) 1200 1400 1500 1500 1500 1500 1500 1500 1500 1500 Apple trees/pear trees (actual) 2941.2 209.84 1892 1892 1892 1892 1892 1892 1892 1892 Peach trees (actual) 10.32 3.6 8 8 16 16 24 24 32 32 Table grapes (estimates) 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 Table grapes (actual) 1949.5 1093.7 1400 1400 1400 1575 1575 1575 1750 1750

Reduction of area under rainfed cereals for the growing -1629 -1629 -1629 -1629 -1629 -1629 -1629 -1629 -1629 -1629 of irrigated crops

Rainfed Forage Crops Fescue pasture (estimates) 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 Fescue pasture (actual) 897 897 897 897 897 897 897 897 897 897 Natural pasture (estimates) -3924 -3924 -3924 -3924 -3924 -3924 -3924 -3924 -3924 -3924 Natural pasture (actual) -690 -690 -690 -690 -690 -690 -690 -690 -690 -690

For the calculation of rate of return: all the fodder was consumed on the agro-industrial complex ANNEX 6 Page 3 of 4

Item 1984 1985 1986 1987 1988 1989 1990 1991 1992

Chicks

Estimates 114.800 229.600 229.600 229.600 229.600 229.600 229.600 229.600 Actual 0 0 0 0 0 0 0 0 Pullets

Estimates 104.000 208.000 208.000 208.000 208.000 208.000 208.000 208.000 Actual 0 0 0 0 0 0 0 0 Layers

Estimates 100.000 200.000 200.000 200.000 200.000 200.000 200.000 200.000 Actual 13.068 15.000 11.241 110.000 190.243 360.229 251.134 265.000 Eggs (million)

Estimates 12.50 39.50 54 54 54 54 54 54 Actual 2.20 3.10 2.75 7.43 30.2 51.61 63.21 65.10 Culled hens (tonnes)

Estimates 0 200 400 400 400 400 400 400 Actual 16.51 0 15.92 18.82 27.12 216.9 232.17 250 ANNEX 6 Page 4 of 4

Item 1984 1985 1986 1987 1988 1989 1990 1991 1992

Cows

Estimates 400 756 872 776 850 1.059 1.170 1.170 Actual 548 1.306 1.226 1.175 1.240 1.277 1.156 1.200 Milk (litre)

Estimates 2.200.000 4.158.000 4.796.000 4.268.000 4.675.000 5.824.500 6.435.000 6.450.000 Actual 2.296.910 4.362.113 5.774.916 5.883.574 5.858.223 5.813.586 6.257.017 6.246.000 Calf (tonne)

Estimates 162 306 353 315 345 430 430 Estimates 0 0 0 0 0 0 0 Ewe

Estimates 1.750 2.611 2.497 2.726 2.868 3.032 3.200 3.200 Actual 0 0 0 0 0 0 0 0 2 Ewe milk (litre)

Estimates 175.000 287.210 299.640 327.000 344.160 363.840 384.000 384.000 Actual 0 0 0 0 0 0 0 0 Cheese (tonne)

Estimates 19.4 31.9 33.2 36.3 38.2 40.4 42.6 42.6 Actual 0 0 0 0 0 0 0 0 Manure (tonne)

Estimates 28.000 tonnes at full development Actual 18.000 tonnes ANNEX 7 Page 1

FINANCING SCHEDULE (UA million)

Component Total Cost ADB ADB Updated OTD. Government

Irrigation works 2.88 - - - -

Agricultural equipment 2.06 1.75 0.95 - -

Livestock buildings 2.54 1.33 1.30 - -

Livestock procurement 3.25 2.78 1.32 - -

Pasture improvement 0.28 0.09 0.09 - -

Poultry farming 6.40 4.29 5.39 - -

Agro-industry 2.22 1.56 2.36 - -

Orcharding 2.36 0.99 0.99 - -

Operating costs 15.56 2.16 2.55 - -

Total 37.55 14.95 14.95 21.65 0.95

ANNEX 7 Page 2 TUNISIA CHEZALA-MATEUR AGRO-INDUSTRIAL COMPLEX Output by Component

Estimated Quantity Actual Quantity Remarks

Irrigation works Borehole 3 3 Drip irrigation 400 ha 137 ha Sprinkler irrigation 500 ha 550 ha Controlled submersion - 220 ha

Agricultural equipment 45 HP tractors 11 6 75 HP tractors 31 38 110 HP tractors 6 13 5 of whom left the project Crawler tractors 0 2 M 145 tractors 0 4 Not mentioned in the OTD list Liquid manure tank 3 5 Trailers 10 29 Power shovels 3 3 Animal scale 5 0 Light vehicle 10 10 OTD figures. Trace of 3 in the records

Lorry 2 for 40 T 6 for 47 T

Livestock buildings Fattening Centre 1 0 Cattle sheds 5 5 Heifer Centre 1 1 Housing unit 0 12 Cement mixer 0 3 Dumper 0 2

Livestock procurement By ICB Heifer 1000 750 By force account 250 By force account Ewe 3000 1500

Pasture Improvement fodder. cereal. beet Pasture 500 230 ha along sprinkler irrigated blocks Fodder 500 ha 550 ha Windbreak 0 50 km

Poultry farming High pressure washer 0 3 Henhouse (20.000 h) 10 20 Objection Supervisory Ministry Egg Storage Centre 0 1 Incubator 1 0 Objection Supervisory Ministry Housing unit + administ. block 0 1 Hatchery 3 0 Fork-lift truck 0 1 66KVA Generator 0 1 Transformer 0 1 Refrigeration lorry 0 2 Crates 0 1500

Agro-industry Metal framework 1 1 Civil works 1 1 10 Weighbridge 1 1 Cold store for 8000 T for 1500 T Palox (5100) 1 1 (4 T/h) Transformer 1 1 Packaging line (8T/h) 1 1 Fork-lift truck yes 3 250 KVA Generator 2 1 270 tonnes Cheese factory (55/yr) 1 0 Egg Storage Centre 0 1

Orchardiing Apple trees NA 400.000 stocks Pear trees NA 182.000 stocks Grapes NA 167.000 Italian Muscat stocks 10.000 Aledo stocks Wine grapes 250 ha 0 ha Table grapes 300 ha 175 ha Incl. 1 ha uprooted Apple trees 100 ha 167 ha Incl. 2 ha uprooted Pear trees 5 ha Peach trees 0 ha 10ha ANNEX 8

LIST OF OTD CONTRACTS WITH VARIOUS SUPPLIERS FOR THE IMPLEMENTATION OF INVESTMENT ACTIVITIES OF THE ADB PROJECT IN GHEZALA-MATEUR

COMPONENTS AND BENEFICIARY FIRMS DATE INVESTMENTS COST QUOTA OF ADB PROJECT 1 Equipment P.I : CCGC 18/12/1986 G to G iirrigation equipment 81.856 65.490.2

Sotradies 08/06/1987 Two machines 76.300 14.824 2 Equipment A. : Complexe Mécanique Tsie 30/01/1985 Tractors 251.484 23.512 Complexe Mécanique Tsie 24/08/1987 Tractors 234.740 18.779 Complexe Mécanique Tsie Complexe 04/03/1986 Tractors 660.049 424.399.2 Mécanique Tsie 07/05/1986 Tractors 504.515 15.987.7 Sté Renault Tsie 02/04/1985 Tractors 117.200 117.200 Sté Moeur Diesel 1985 Crawler tractors 19.232 19.232 Sté Delmas 1985 Pull shovel 59.987 59.987 Sté S.A.M. 1985 Pull shovel 34.500 34.500

Sté Ennaki 23/04/1986 A Berliet lorry 33.168 33.168 Sté Ennaki 08/01/1986 A Berliet lorry 26.269.5 26.269.5 Sté Ennaki 22/04/1986 A Berliet lorry 57.094.6 48.798.8 STAFIM 24/04/1986 Pick-up trucks 120.861 5.279.5 3 Livestock buildings Camillieri-Electricité 27/10/1986 Generators Sté Mine – Usine 26/09/1986 Corner irons 786.588.4 142.998 4 Livestock: Firme Scaap (Hollande) 14/06/1986 750 heifers 877.946.3 877.946.3 Improvement 0 0 Poultry farming: Sté Fouledh 26/04/1986 Metallic frames 1.012.000 975.198.8 Sté Grands A. du Nortd 11/09/1985 Poultry equipment 1.515.642.6 1.363.509.7 S.E.E.E.M. 04/03/1988 Electrical equipment 38.361 30.652.8 STAFIM 24/04/1986 Pick-up trucks 120.861 15.838 Complexe Méca. de Tsie - Tractors - 28.749 SOTAVI 27/04/1989 100.000 pullets 296.492.4 269.492 Nutrimix 30/05/1990 300.000 pullets 975.000 325.000

Agromec 26/06/1990 Tanks and trailers 32.469.8 18.030 Sté Fouledh 15/09/1987 Metallic frame 28.290 16.181.7 Sté Supervise 03/10/1990 Studies and supervision 4.900 4.900

7 Agro-industry: Sté F.T.I. (Italie) 09/11/1989 Egg cold store 329.621.6 299.515.4 Sté Foodimpianti (Italie) 02/03/1990 Fruit cold store 905.051.2 905.051.2 Sté Métal 09/07/1991 Metallic frame for the cold store 125.486 125.486 Ets. Louis Montenany 01/03/1991 Fork-lift trucks 91.316.9 46.571.7 Sté Supervise 31/05/1990 Studies and supervision 2.535 2.535 Serift 29/04/1990 Electric installation 58.743.1 37.301.9 Sté Elect-Security 23/12/1993 Standby generator 49.582 44.656.6 Sté Trayvou (France) 19/01/1993 Weighing bridge 28.925.8 28.925.8 Sté Agricultor 29/04/1992 Tractors 106.178 106.178 8 Tree Farming: Socodef 24/05/1985 Deep ploughing 19.494 19.494 Sté Domaine Karim 30/10/1986 Apple and pear plants 111.500 36.288 Sté Richter Tunisie 31/10/1986 Italian muscat grapes plants 88.800 24.152 Sté Richter Italie 22/11/1985 Grapes plants FF 739.810 TD 70.144 Sté Costa Brava (Espagne) 06/10/1984 Fruit plants FF 595.000 TD 31.201 Sté Costa Brava (Espagne) 14/10/1985 Fruit plants FF 2.178.000 TD 85.822.8 Sté Costa Brava (Espagne) 14/10/1985 Grapes plants FF 53.000 TD 6.478.5 ANNEX 9 TUNISIA GHEZALA-MATEUR AGRO-INDUSTRIAL COMPPLEX - ORGANIZATION CHART OF OFFICE DES TERRES DOMANIALES (1983)

BOARD OF DIRECTORS

MANAGING DIRECTOR

SECRETARIAT

DEPUTY MANAGING DIRECTOR - Inspection - Continuous training - Planning Organization DIRECTION - Legal Analyses COORDINATION - International Cooperation Audit ET AUDIT INTERNE

COMMERCIAL DEPARTMENT OF DEPARTMENT OF DEPARTMENT OF IRRIGATION DEPARTMENT DEPARTMENT DEPARTMENT DEPARTMENT POULTRY LIVESTOCK PLANT DEVELOPMENT OF MANAGEMEN PLANT PRODUCTION PRODUCTION PRODUCTION DEPARTMENT EQUIPMENT CONTROL PRODUCTION

- Programming - Programming - Control - Long-term crops - Pasture improvement - Civil works - Programming - Transit - Supply and - Health control ……………… - Arboriculture - Irrigated blocks - Machinery - Budgets - Accounting marketing - Zootechnology - WSC and windbreaks - Agro- food - Performance - Land loan and - Health control Fodder crops - Monitoring - - Water points industries analysis recovery Management - Zootechn. - Export (all products - Silk growing - Outputs - Staff claims (culled hens, layers, - - Management monitoring - Payment orders ….. markets ………. And - - Farm beekeeping) management analysis

SFAX REGIONAL GROMBALIA REGIONAL OFFICE SBEI REGIONAL OFFICE OFFICE

- Agro-complexes and pilot farms - .Agro-complexes and pilot - .Agro-complexes and pilot farms assistance and inspection farms assistance and assistance and inspection inspection

A/C A/C A/C A/C A/C A/C A/C A/C A/C A/C A/C A/C A/C A/C A/C A/C and and and and and and and and and and and and and and and and F/2 F/2 F/2 F/2 F/2 F/2 F/2 F/2 F/2 F/2 F/2 F/2 F/2 F/2 F/2 F/2 ANNEX 10 TUNISIA GHEZALA-MATEUR AGRO-INDUSTRIAL COMPLEX ORGANIZATION CHART OF OFFICE DES TERRES DOMANIALES (1993)

BOARD OF DIRECTORS

MANAGING DIRECTOR

DEP. MANAGING DIRECTOR

INSPECT. DEPT. INT. AUD. DEPT.

DEPT. MAN. CONTROL INF. TECH. S/D

S/D S/D PROGRAM. CONTROLE & ANALYSE

DEPT. ADMIN. FINANCIAL MARKETING PRODUCTION EQUIP. DEPT. AFFAIRS DEPART. DEPT. DEPARTMENT DEPT. STUD. & EV

ANIMAL S/D PLANT PROD. RUR. ENG. AGRO- HEALTH PRODUCTION S/D S/D FOOD S/D

………. O.A. ….. CLAIMS EQUIP. SOCIAL ACCOUNT. FINAN. LIQUID. MECH LIVEST. MINOR CROP ARBOR. CIVIL WORKS MACHIN SCE. SERV. SERVICE SERVICE SERV. SERVICE SERVI. SERVI. SERVICE LIVEST. SERVICE SERVICE & IRRIG. SCE. SERVICE SCE

AGRO-INDUSTRIAL AGRO-INDUSTRIAL AGRO-INDUSTRIAL AGRO-INDUSTRIAL AGRO-INDUSTRIAL AGRO-INDUSTRIAL COMPLEXES UNITS COMPLEXES UNITS COMPLEXES UNITS ANNEX 11

TUNISIA

Project Completion Report Ghézala-Mateur Agro-Industrial Complex OTD Operating Account for 1983 and 1987-1993 (in TD million)

1983 1987 1988 1989 1990 1991 1992 1993

Operating income Sales 35470 33354 37236 35996 46113 55745 75609 56951 Other income 6135 9947 9849 6088 6141 8364 8043 7581 Income 681 1343 374 3836 - - - 3332 Total 42285 44644 47459 45920 52254 66109 83652 67864

Operating costs Purchases 23525 16305 18655 17746 19364 21980 27911 23793 Personnel expenditure 11897 14952 15214 14600 17289 19065 21680 21371 T.F.S.E. 1643 3249 3679 2858 3627 5173 8008 6270 Financial costs 182 462 288 187 85 55 106 26 Transport and travel 145 92 93 127 268 256 2456 275 Sundry operating costs 297 282 487 565 627 400 5076 6362 Taxes and duties 480 888 1019 1333 1489 1452 1480 1548 Depreciation allowance 3861 5653 6990 7653 7360 9156 6976 7298 Appropriation s to the 255 2761 1034 851 538 92 633 921 reserve Income - - - - 2140 6480 11506 - Total 42285 44644 47459 45920 52254 64109 83652 67864

Self-financing 4339 5491 7105 3439 7065 7343 9191 2594 Capital to fixed assets -0.33 -0.40 +2.45 +1.32 +0.39 -0.26 0.13 1.68 ratio Operating ratio 1.02 1.03 1.01 1.09 0.96 0.92 0.86 1.05 ANNEX 12

TUNISIA

Project Completion Report Ghézala Mateur Agro-Industrial Complex (TD million)

OTD Balance Sheets for 1983 and 1987-1993

ASSETS 1983 1987 1988 1989 1990 1991 1992 1993

Initial expenses 479 6278 9143 20222 20126 21318 2794 1710 Gross fixed assets 53922 8976 98718 103490 110385 116759 123568 127956 Amortization 18473 34370 40052 45096 30915 55264 6-552 65484 Net fixed assets 34970 55205 58665 58393 59469 60495 63034 61772 Other fixed assets 1302 784 764 839 683 910 1506 772 Fixed assets 36272 55989 59429 59232 60152 61405 6-540 62544

Working assets 15431 23901 21134 21973 23610 28115 2-058 28658 Customers 3557 3542 3799 3602 4092 4387 3140 5053 Other debtors 5060 6247 6800 5006 5943 6626 6047 7542 Cash and bank 12531 23099 23003 23083 24148 25261 3-381 38385 Current assets 36579 56791 54736 53664 57792 64389 77626 79638 Loss - 2923 919 5065 833 555 - 5626 TOTAL 73330 121981 124227 138183 138904 147667 14-959 149518

LIABILITIES

Capital 30100 39162 36704 36454 33020 33623 33299 34287 Reserves ------Prov. Liab. and charges 3418 7434 8598 20214 21541 23532 1-417 11364 Subvention/Other reserv. 633 1918 2891 3101 3085 3042 3039 2938 Borrowings above 1 year 20959 39615 39937 40022 42171 41906 37156 35886 Suppliers 2273 3152 3240 3665 4239 4422 4581 4123 Sundry creditors 2169 5630 4400 3003 3461 3953 5005 3680 Short-term debts 13555 25070 28457 31824 31387 37189 49909 57240 Profit 223 - - - - - 1553 - TOTAL 73330 121981 124227 138183 138904 147667 14-959 149518

Working capital 14787 22788 17212 17244 15039 13528 5915 7633 Liquidity ratio 2.70 1.69 1.92 1.68 1.84 1.73 1.55 1.39 Leverage ratio 0.70 1.01 1.09 1.69 1.28 1.25 1.11 1.04 ANNEX 13

TUNISIA

Ghézala Mateur Agro-Industrial Complex

OTD Income Statement for 1983 and 1987 to 1993 (TD million)

1983 1987 1988 1989 1990 1991 1992 1993 Debit

Operating income 681 1343 374 3837 3332 Losses/ previous years 2323 1038 1402 2641 5672 13585 1802 Extraordinary losses 1528 735 820 710 755 739 1406 Appropriation to the reserve 1094 1047 4558 922 2459 225 892 Company tax 1 Profits for the year 232 1553 TOTAL 904 6288 3194 10617 4273 8886 16102 7433

Credit

Operating income 2140 6480 11506 Profit /previous year 643 2695 923 851 872 310 4126 1071 Extraordinary profits 251 397 226 213 350 382 344 571 Profits from equip. subsidies 10 273 306 108 78 119 116 133 Losses/previous year 820 4380 1040 10 32 Loss for the year 2923 919 5065 833 555 5626 TOTAL 904 6288 3194 10617 4273 8886 16102 7433

ANNEX 14

TUNISIA

Ghézala Mateur Agro-Industrial Complex

`Accounts of the Agro-Industrial Complex for 1983 and 1987 to 1993 (TD million)

1983 1987 1988 1989 1990 1991 1992 1993 Operating income

Sales 2358 1832 2034 3233 4680 6761 7770 7334 Other income 493 4967 1839 1517 2207 1701 1577 1427 Income 259 505 1147 460 1513 1152 755 TOTAL 2851 7058 4378 5897 7357 9975 10499 9516

Operating costs

Purchases 1525 2148 1917 1614 1727 3061 3398 2566 Personnel expenditure 677 1421 1165 1116 1259 1324 1636 1719 T.F.S.E. 45 192 189 230 395 427 467 523 Financial costs Transport and travel 2 6 6 11 14 17 15 26 Sundry operating costs 172 2737 539 1976 2916 4105 4217 3819 Taxes and duties 23 18 15 26 90 37 47 170 Depreciation allowance 199 525 525 656 941 982 982 693 Reserve allowance 11 22 20 21 22 37 Income 208 TOTAL 2851 7058 4378 5897 7357 9975 10499 9516

ANNEX 15

TUNISIA

Ghézala Mateur Agro-Industrial Complex

Accounts of the Agro-Industrial Complex for 1983 and 1987 to 1993 (in TD million)

Assets 1983 1987 1988 1989 1990 1991 1992 1993

Initial expenses 10 26 26 4 3 2 1 Gross fixed investment 2085 12200 12592 13299 14147 15751 16617 Depreciation 896 2153 2859 3720 4626 5483 6425 Net fixed investment 1189 8836 10047 9733 9579 9521 10269 10192 Fixed asset 1199 8862 10073 9737 9582 9523 10270 10192 Operating assets 1357 2098 1874 2551 3037 3812 3424 3463 Customers 118 205 173 217 311 255 473 303 Other debtors 135 193 122 79 86 112 84 284 Cash and bank 138 86 43 539 764 1063 1805 2365 Current assets 1748 2582 2212 3386 4198 5242 5786 6406 Loss 539 601 1346 2815 6336 5887 3697 TOTAL 2947 11983 12886 14469 16595 21101 21943 20301

Liabilities

Balance carried forward 160 1243 704 104 -1243 -4059 -10396 -16283 Liaison accounts 2204 9881 11486 13622 17159 24514 31648 35777 Equipment subsidies 9 23 22 21 19 18 26 23 Provisions for liab. and charges 87 87 87 88 88 88 88 88 Long and medium-term debts 3 Short-term debts 81 278 201 275 275 292 333 413 Suppliers 145 389 247 242 242 186 186 224 Sundry creditors 52 82 139 64 64 62 58 59 Profit 206 TOTAL 2947 11983 12886 16595 16595 21101 21943 20301 ANNEX 16

TUNISIA

Ghézala Mateur Agro-Industrial Complex

Accounts of the Agro-Industrial Complex for 1983 and 1987 to 1993 (in TD million)

Debit 1983 1987 1988 1989 1990 1991 1992 1993

Operating income 259 505 1147 461 1513 2001 2732 Losses/previous year 6 216 32 209 30 75 14 5 Extraordinary losses 16 80 88 63 69 62 116 104 Extraordinary appropriation to the reserve 1 23 1 2579 6497 3805 924

Company tax Profit for the year 206 TOTAL 229 578 625 1420 3139 8147 5936 3765

Credit

Operating income 208 Profit /previous year 9 12 12 37 242 112 22 6 Extraordinary profits 10 23 10 35 80 52 25 17 Profits from equipment subsidies 1 1 1 1 3 3 Loss/previous year 2 3 1 1 1644 1 45 Loss for the year 539 601 1347 2816 6338 5885 3694 TOTAL 229 578 625 1420 3139 8147 5636 3765 ANNEX 17 Page 1 of 3

TUNISIA

Ghezala Mateur Agro-industrial Complex Assumptions for the Calculation of Financial and Economic Rates of Return i) Assumptions considered:

At appraisal. no assumptions were mentioned for the calculation of the various rates. However. in principle. we consider the fact that the investment and operating costs did not vary from the FIRR to the EIRR. ii) Investment costs corresponds to the base cost taking into account physical contingencies (15%) and inflation (5%). The basic elements were the disbursements and operating costs. iii) Recurrent costs concern the consumption of TFSE. staff and overhead costs incurred by the agro-industrial complex. These project costs compare with OTD averages recorded in other agro-industrial complexes operating under normal conditions. The TFSE item accounts for 5% of the production cost. The personnel expenditure and sundry costs are calculated on the basis of the average between 1987 and 1993. taking into account the staff of the agro- industrial complex and current management costs. iv) Sales were tripled in 1992. the year during which the agro-industrial complex was supposed to actually start operating. Such increase can only be progressive and should take into account investments downstream such as transport and satisfaction of new latent demand. The highest tax on the sale of the produce of agro-industrial complexes is 15%. ANNEX 17 Page 2 of 3

TUNISIA

Ghézala Mateur Agro-Industrial Complex Development Project Calculation of the Project’s Internal Rate of Return

Year Investments Operating Total Cost Agriculture Livestock Total Cash Flow Costs Income 1985 1.596 989 2.585 - 440 440 (2.145) 1986 1.669 2.298 3.967 - 219 219 (3.748) 1987 1.49 1.260 3.009 140 584 724 (2.285) 1988 11.834 252 2.086 54 690 744 (1.342) 1989 1.927 110 2.037 387 1.040 1.427 (610) 1990 2.027 118 2.145 465 1.087 1.552 (593) 1991 2.136 118 2.245 643 1.223 1.856 (398) 1992 1.539 118 1.657 801 1.279 2.080 423 1993 602 118 720 910 1.306 2.216 1.496 1994 901 118 1.019 379 1.446 1.825 806 1995 801 118 919 806 1.538 2.344 1.425 1996 740 118 858 806 1.538 2.344 1.486 2000 683 118 801 826 1.538 2.364 1.563 2001 736 118 854 833 1.538 2.371 1.517 2003 736 118 854 840 1.538 2.378 1.522 2004 736 118 854 840 1.538 2.378 1.524 2005 736 118 854 845 1.538 2.383 1.529 2006 736 118 854 845 1.538 2.383 1.429 2007 736 118 854 845 1.538 2.383 1.429 2008 736 118 854 845 1.538 2.383 1.429 2009 736 118 854 845 1.538 2.383 1.429 2010 736 118 854 845 1.538 2.383 1.429 2011 736 118 854 845 1.538 2.383 1.429 2012 736 118 854 845 1.538 2.383 1.429 2013 736 118 854 845 1.538 2.383 1.429 2014 738 118 854 845 1.538 2.383 1.429 2014 738 118 854 845 1.538 2.383 1.429 2014 738 118 854 845 1.538 2.383 1.429 2014 738 118 854 845 1.538 2.383 1.429 2014 738 118 854 845 1.538 2.383 1.429 2014 738 118 854 845 1.538 2.383 1.429 ANNEX 17 Page 3 of 3

TUNISIA

Ghézala Mateur Agro-Industrial Complex Development Project EIRR Update Table

Investments Operating Total Cost Agriculture Livestock Total Income Cash Flow Costs 1.596 989 2.585 - 506 506 -2.079 1.669 2.298 3.967 -161 252 252 -3.715 1.749 1.260 3.009 62 671 832 2.177 1.834 252 2.086 445 793 855 -1.231 1.927 110 2.037 785 1.196 1.641 -396 2.027 118 2.145 739 1.250 1.784 -120 2.136 118 2.254 921 1.406 2.134 735 1.539 118 1.657 1.046 1.470 2.392 1.828 602 118 720 435 1.501 2.548 1.079 901 118 1.019 926 1.662 2.098 1.775 801 118 919 926 1.768 2.694 1.836 740 118 858 949 1.768 2.694 1.916 683 118 801 957 1.768 2.717 1.872 736 118 854 966 1.768 2.726 1.880 736 118 854 971 1.768 2.734 1.880 736 118 854 971 1.768 2.734 1.885 736 118 854 971 1.768 2.739 1.885 736 118 854 971 1.768 2.739 1.885 736 118 854 971 1.768 2.739 1.885 736 118 854 971 1.768 2.739 1.885 736 118 854 971 1.768 2.739 1.885 736 118 854 971 1.768 2.739 1.885 736 118 854 971 1.768 2.739 1.885 736 118 854 971 1.768 2.739 1.885 736 118 854 971 1.768 2.739 1.885 736 118 854 971 1.768 2.739 1.885 736 118 854 971 1.768 2.739 1.885 736 118 854 971 1.768 2.739 1.885 736 118 854 971 1.768 2.739 1.885 736 118 854 971 1.768 2.739 1.885 ANNEX 18

TUNISIA

Ghézala Mateur Agro-Industrial Complex Development Project

List of Documents Consulted

1. Appraisal Report 2. NARD Archives 3. NCPR Archives 4. FDIS Archives 5. Archives Documentation Centre 6. Completion Report by Borrower 7. OTD Annual Reports (1984 to 1994) 8. OTD Operating Account and Balance Sheets (1984 to 1992) 9. OTD Archives on Ghézala Mateur