Forestry Project (Credit 883-Mli)

Document of The World Bank

FOR OFFICIAL USE ONLY

Report No. 7953 Public Disclosure Authorized

PROJECT PERFORMANCE AUDIT REPORT

MALI Public Disclosure Authorized

FORESTRY PROJECT (CREDIT 883-MLI)

JUNE 30, 1989 Public Disclosure Authorized

Operations Evaluation Department Public Disclosure Authorized

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

Currency Unit a CFA Franc (CFAF) aJ At appraisal (May 1978) a USS1 a CFAF 228 Intervening years average (1911-1985) a US21 a CFAF 864

*J At appraisal the local curroncy was the Mallan Franc (USS1 a MF 446) which wee replaced by the 'AF en June 1, 1984 (1S111 CFAF 22M).

WEIGHTS AND MEASURES Metric System

1 stAre of firewood = 1 a3 of stacked wood or 226 kg of dried wood

1 m3 of firewood from natural forest = 2 st&ros or 450 kg of dried wood

1 m3 of firewood from plantation = 1,67 stAres or 58 kg of dried wood

ACRONYMS

CCCE - OCaisse Central* de Coop6ration Economiquow CFAF - OCommunaut6 Financi&re Africain* (Franc) DNEF - wDirection Nationale des Eaux at For&ts' (National Directorate of Water and Forests) ERR - Economic Rate of Return FAC - lFonds d'Aide et do Coop6rationO FA0 - Food and Agriculture Organization FAO/IBRD/CP - FAO/IBRD Cooperative Program GNP - Gross National Product COM - Government of the Republic of Mali IBRD - International Bank for Reconstruction and Development IDA - International Development Agency MF - Malian Franc MAE - Monitoring and Evaluation MRNE - OMinist4re charg6 des Rossources Naturelles et de I'ElevagnO OAPF - 0p6ration Am6nagement et Productions Foresti4resw (Forestry Management and Production Operations) OED - Operations Evaluation Department OPNBB - *Op6ration Parc National de Ia Boucle du BAOULEO PCR - Project Completion Report RMU - Project Monitoring Unit PPAM - Project Performance Audit Memorandum t ONLY THE WORLD BANK FOR OFFICIAL Washington, D.C 20433 U.SA

O1ce o ouectoc.eeral Opeam iveatlon

June 30, .1989

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Performance Audit Report Mali: Forestry Project (Credit 883-MLI)

Attached, for information, is a copy of a report entitled "Project Performance Audit Report: Mali: Forestry Project (Credit 883-MLI)" prepared by the Operations Evaluation Department.

This document has a restricted distribution and riay be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. FOR OFFICIAL USE ONLY

PROJECT PERFORMANCE AUDIT REPORT

MALI

FORESTRY PROJECT (Credit 883-MLI)

Table of Contents

Page No.

Preface ...... i Basic Data Sheet ...... ii Evaluation Summary...... iv

PROJECT PERFORMANCE AUDIT MEMORANDUM

I. PROJECT BACKGROUND ...... 1

Country and Sectoral Setting ...... 1 Context ...... 1 Objectives ...... 2 Design ...... 3 Finance and Implementation ?lans ...... 3

II. PROJECT IMPLEMENTATION AND OUTCOME -...... 4

Management Capacity and Monitoring ...... 4 Physical Outcomes ...... 4 Outcomes and Design ...... 6 Economic Performance ... 8-o-o-...... 8 Sustainability ...... 10 Environmental Effects ...... 12 Financial Aspects o ...... 12

III. FINDINGS AND ISSUES ...... 13

Overview ...... 13 Findings, Lessons and Issues Arising ...... 13

PROJ2CT COMPLETION REI-ORT

I. Summary ...... 21 II. The Forestry Subsector ...... 22 III. Project Formulation ...... 27 IV. Implementation ...... 32 V. Forestry Impact ...... 0...... 0...... 41 VI. Rates of Return ...... *.- 42 VII. Institutional Performance and Development ...... 43 VIII. Special Issues 0...... 0...... 44 IX. Changes in the Second Phase Project ...... 45 X. Bank Performance ...... 46 XI. Conclusions ...... 47

Annexes ...... 48

Maps:

IBRD No. 13713 IBRD No. 13714 PROJECT PERFORMANCE AUDIT REPORT

MALI

FORESTRY PROJECT (Credit 883-MLI)

PREFACE

This is a performance audit of the first forestry project in Mali, for which Credit 883-MLI was approved on March 6, 1979, in the amount of USS9.4 million. The loan was closed on June 30, 1985.

The audit report consists of an audit memorandum (PPAM) prepared by the Operations Evaluation Department (OED) and a Project Completion Report (PCR), dated October 30, 1987, prepared by the Ai-ica Region. The audit memorandum is based, in addition, on a review of the Appraisal Report (No. 2148a) of January 10, 1979, the President's Report (No. P2463) of February 13, 1979 and the Credit Agreement of May 25, 1979. Corresponden,., with the Borrower and internal Bank memoranda on project issues as contained in relevant Bank files have also been consulted, and Bank staff associated with the project have been interviewed.

An OED mission visited Mali in May 1988. Discussions were held with project and other Government officials, including field staff who were interviewed during visits to the project sites. The information obtained during the mission was used to test the validity of the conclusions of the PCR.

The audit concurs with most points made in the PCR. However, several sectoral issues and others related to the economic impact of the project have been selected because of their importance for this and other Bank-supported projects.

The valuable assistance provided during the audit mission in- country review by the Government of the Republic of Mali and the executing agencies is gratefully acknowledged.

Following standard OED procedures, copies of the draft PPAR were sent to the Government, the Borrower, and the cofinancing agencies. No comments were, however, received. - I -

PROJECT PERFORMANCE AUDIT REPORT

MALI

FORESTRY PROJECT (Credit 38-MLI)

BASIC DATA SHEET

KEY PROJECT DATA

Actual or Actual as X Appraisal Estimated of Appraisal Estimate Actual Estimate

Total Project Cost (USS million) 9.4 6.8 a/ 72 Credit Amount (USS million) 4.5 4.5 1n Cofinancing-Total (USS million) FAC 1.3 6.7 64 CCE 1.4 6.9 64 Date Physical Components Completed 8/3/85 Economic Rate of Return 9.6 6/ 6.6 S/ 78 Institutional Performance Good Good - Forestry performance Good Fair -

CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS (USS million) FY81 FY82 FY83 FY84 FY8S Appr. Estimate (USS m) 1.8 2.8 2.9 8.8 4.6 Actual (USS million) 0.9 1.9 2.7 3.9 4.6 Actual as X of Revised Est. 89 88 98 18 106 Date of Final Disbursement: August 13, 1986

PROJECT DATES

Negotiations 1/79 Board Approval 8/66/79 Credit Agreement Date 5/24/79 Effectiveness 6/27/8 dJ Closing Date 6/80/85

a/ FAC, CCE a.d 00M participations in FF and CFAF estimated in US$ with US21 = 854 CFAF while US31 = 226 CFAF at appraisal.

b/ Bamako rainfed tree plantation component excluding indirect benefits.

c/ This ERR is representative of the plantation component. The audit rates this project as a success (see paras. 23-38).

d/ Practically 7/1/80 in order to avoid any overlapping with the previous FAC pilot project. - III -

STAFF INPUT (Staffweke)

FYTS FY79 FYNg FY81 FY*2 FYIX FY84 FY*5 FY86 FY87 TOTAL

Pre-Opr. 2.6 2.8 Appreisal 54.4 16.2 44.7 Negotle. 4.7 4.7 Supervis. .7 5.2 6.8 9.8 5.2 7.6 3.7 2.8 2.8 44.6 Other .1 .1

TOTAL 87.2 15.7 5.2 6.6 9.3 5.2 7.6 8.7 2.8 2.8 96.3

MISSION DATA

Staffdays Specializa- Date No. of In tions q/ Performance Types of Mission (mo./yr.) Persons Field Represented Rating Trend Problems b/

Identificat1on c/ 8/77 2 1 A,F MA NA NA Preparation g/ 11/77 2 17 F,I,E NA NA NA Appraisal 3/ 7/78 4 27 F,I,E NA NA NA Supervialon 1 1/8e 1 6 F 1 1 - Supervision 2 9/81 1 8 F 2 1 F,M,T Supervision 8 4/82 1 9 F 1 1 - Supervision 4 1/63 1 7 F 1 1 T Supervision 6 12/88 2 8 F,FA - 1 T Supervision 6 f/ 12/84 2 8 F 1 2 T Supervision 7 f/ 1/85 p.m. p.m. p.m. p.m. p.m. p.m. Completion TOTAL g/ 16 1en

OTHER PROJECT DATA

Borrower: Republic of Mali Executing Agency: OAPF (0p6ration Am6nagement et Productions Forestibras") Follow-on Prolect: Name: Second Mali Forestry Project Credit Number: Cr. IC4-MLI Amount (US$ million): 8.3 Approval Date: 1/23/86

Aa Agronomist; E = Economist; F = Forestry specialist; I = Irrigation specialist; FA a Financial analyst. b/ F Financial; M = Managerial; T = Technical; P = Political; 0 = Other. c/ Joint mission. 4/ FAO/IBRV/CP. s/ Joint mission with FAC and CCCE. fY Combined with appraisal and post-appraisal missions. g/ Excluding FAC and CCE participation (most supervision missions were in fact carried out jointly with FAC and CCCE). - iv -

PROJECT PERFORMANCE AUDIT REPORT

MALI

FORESTRY PROJECT (Credit 883-MLI)

EVALUATION SUMMARY

Introduction

1. This project was the first forestry operation to be financed by IDA in Mali. Increasing preoccupation with natural resource degradation in the Sahel and with structural imbalances between the demand and the supply for fue3wood are at the root of thi3 operation. The project was part of Government policy which emphasized all aspects of forestry development, including the prevention of further environmental deterioraticn in heavily populated urban areas.

Objectives and Design ii. The principal objectives of the project were to solve the energy/ environmental degradation problems in a selected number of fragile regions. Subsidiary objectives were the formulation of rural forestry programs and institutional development. Accordingly, the project was designed to improve the fuelwood and building pole supplies to the Bamako, Mopti and Segou regions by establishing plantations. In particular, the project consisted of five principal components: the establishment of 3,400 hectares of rainfed plantations in two forest reserves near Bamako, the application of management techniques on a trial basis to over 1,000 hectares of natural forests near Bamako and 200 hectares of natural forests near Segou, the establishment on a trial basis of 60 hectares of rainfed tree plantations near Segou and of 70 hectares of irrigated plantations near Mopti; the establishment and rehabilitation of tree nurseries and the execution of sectoral studies.

ProJect Cost iii. The effective cost of the project was CFAF 2.4 billion, or an equivalent of US$9.4 million. This is 14% higher than it was estimated at appraisal, i.e., CFAF 2.1 billion. The project was cofinanced by IDA, FAC, CCCE, and GOM, with an original commitment of 48%, 14%, 15%, and 23%, respectively. As pointed out in the PCR, the project benefited from a favorable exchange rate (and thus its expenditures in dollars were less than appraisal estimates) which favorably compensated substantial increases in the prices of labor and petrol. It is important to note that the total cost of plantations in Bamako exceeded appraisal by 30% and the cost of - v -

tree nurseries by 242. Overall, the project was implemented during the time provided. This project was immediately followed up by a second forestry project which is still under implementation.

Implementation Experience iv. The plantation near Bamako which was the principal component in terms of size and costs, achieved 67% of the defined plantation goals, which is not unsatisfactory considering the climatic, economic and social problems encountered during implementation. The plantations in Segou and Mopti regions were partially implemented. The irrigated plantation was completely abandoned due to soil quality and institutional related problems. The management of the natural forest was partially carried out but major progress was achieved in understanding this type of activity. The tree nursery and studies were implemented in full.

Project Impacts v. The economic returns of plantations near Bamako will be less than estimated at appraisal; however, the overall economic impact of the project will be positive. Several implementation problems were faced primarily due to the size of this component and its timetable, the intensive management it required, the inadequate allocation of scarce resources and the pressure to comply with appraisal targets. Physical targets were achieved at the expense of maintenance activitiL at will greatly determine the quantity and quality of high-value . In addition, net benefits from plantations were less than at apk. aisal because of the inability to recover and profitably market secondary woods during the early stages of the project. vi. Despite the above, this project i considered satisfactory given the level of indirect benefits (i.e., positive externalities), the overall impacts in preserving the natural forest and the achievements in institution building.

Sustainability vii. Sustainability is important 'n this project because of the long- term nature of its net benefits. To achieve the expected result as defined by the appraisal report, sustainability will depend on the following factors: the quality of maintenance, the availability of counterpart financing, the capacity to arrive at a consensus among users regarding alternative uses of forest lands, the ability to integrate the project with final users, the efforts made to eecrease existing institutional imbalances and the ability to resolve land tenure problems.

Findings and Lessons viii. This forestry project was successful in accomplishing several objectives and its principal determinants of success were the high quality management and the effectiveness in coordinating efforts among co- - vi -

financiers and expatriates who psrticipated in the implementation of the project. More particularly, the project made a significant contribution in the following areas: the capacity to generate a solid government commitment during implementationg the consolidation of existing forestry research and technology; thi testing of a concept of forestry development (industrial plantations) under Sahelian conditions; the development of an institution within the sector.

ix. Because of the scope of this project and the nature of the sectoral pol!:y dialogue, this audit makes reference to the following issues. First, the need to set realistic objectives and to assess the extent to which the means provided are capable and effective in achieving those advocated objectives. Second, the importance of determining the optimal size of the project so the accomplishment of plantation targets does not become the sole engine of the project, and resources spent are not disproportionately high by comparison to other activities within the project. The project plantation component was too large and ambitious in terms of targets and aims. Experience demonstrated that it is important to limit the size of the zone of intervention. Third, the presence of expatriate technical assistance did play an important role; however, this technical assistance was mostly concentrated on financial management, reporting and management of heavy equipment rather than on development aspects of the project. Fourth, the fact that the lack of a sectoral policy framework limited the effectiveness in achieving the objectives as well as to find alternative solutions to problems which clearly go beyond the sector.

x. The audit recommends (i) that the Bank assess its future participation in the sector (this recommendation implies neither endoxsement of past approaches nor of existing sectoral policies); (ii) that, as the sector evolves, new institutional and human resources policies have to be developed and (iii) that the development of a comprehensive sectoral policy should be a necessary condition to future involvement in the sector. - 1 -

PROJECT PERFORMACE AUDIT 0MRA)DU

FORESTXY PROJECT (Credit 883-HLI)

I. PROJECT BACKGkOUND

Country and Sectoral Setting

1. Increasing preoccupation with natural resources degradation in the Sahel, and with structural imbalances between the demand and supply for fuelwood in the seventies, made i.t imperative to establish the basis for sustainable development in Mali. Though there was no apparent environmental crisis at the time of project appraisal, the Government of the Republic of Mali (GOM) and the Bank agreed on a strategy to prevent the potentially negative effects of high rates of forest resources depletion. This forestry project was at the center of this strategy. At the time of preparation, the Malian economy was chara-cterizel by high population gcowth rates particularly in the urban sector, low per capita income, dependency on agricultural development, and ecological fragility. in the late seventies, about 90% of the population depended on agriculture for their livelihood, and had a per "pita income of only UG$110 per year, which clessified the country as one of the 25 poorest in the world.

2. In 1975, the forestry seclor accounted for MF 5 billion or the equivalent to 1.9% of GNP. Vegetation was of varied nature including 30% of desert lands, and the gazetted forest reserves and parks covered some four million hectares representing about 3% of Mali's total area. Al- though, on average, the availability of forest products was sufficient to satisfy consumption, two zones were identified as having use rates much higher than desirable. These were the region of Bamako, the capital city, and the region surrounding the Niger River's inner delta (i.e., Mopti and Segou). In both regions demands exceeded supplies, particularly for fuelwood. The composition of this demand included individual households (family consumption), industries (ceramic, matches), primary processing activities (fish smoking and drying) and public sector services (armed forces, hospitals). The project was implemented between July 1, 1980 and June 30, 1985. (See PCR, pares. 2.01-2.08.)

Context

3. As the first operation in the forestry sector, the project concept responded to the constraints faced by the sector, to the Bank policy imper- atives at the time, and to the long-term needs for forestry development and institution building. It was probably the most far-reaching in terms of - 2 -

institutional development, social desirability and sectoral impacts. (See PCR, paras. 2.09-2.12.) The key concern was with taking stock of available technology and forestry research, enhancing national institutions, and finding opportunities to formulate a sustainable development wtrategy. Within this context, the Bank nade a major effort to become an effective catalyst of dispersed resources and actions within the sector.

4. The Bank, the donor community and GOM adopted a strong forward- looking approach and thus the desire to prevent an eventual environmental crisis. The Bank's role in mobilizing government and donor support was central to at least three aspects of the project. First, and most important of all. in establishing the institutional basis for a balanced development of the "Op;ction Amenagement et Productions Forestieres" (OAPF) that, under the teL..aical and administrative supervision of the Forestry Department, became the implementing agency of the project. The institutional framework seemed strong and the leadership, at both the OAPF and the Forestry Deiartment levels, included two very outstanding individuals. Second, in reinforcing that leadership by requesting the assistance of a leading research forester, who had been in charge of the previous plantation efforts for continuity, and of a consulting firm to take charge of the monitoring and financial accounting systems of the project. Finally, and equally important, in joining forces with principal donors operating in the sector and in creating the milieu for their participation at every stage of the project cycle.

5. This project represents an example of prompt and positive response by the Operational Complex to the policy framework advocated by the Bank. In particular, the project concept, as originally conceived, was very close to the type of forestry sector strategy advocated by the Bank in the late seventies. A central theme of that policy was the recognition of the multiplicity of "products" coming out of forests, including its environmental and energy related linkages to the rest of the economy. Forestry policy was clearly distinguished from "tree" policy, by explicitly recognizing the economic and social dimensions of forestry development. Another theme of this policy that, to some extent, came to haunt this project, was the lesser emphasis on the industrial aspects of forestry development, including marketing and trade (see PCR, paras. 3.09-3.11 and Section II of this report).

Objectives

6. The principal objectives of the project were to solve the energy/environmental degradation problems in a selected number of fragile regions and to prevent degradation in the rest of the country. Accordingly, the project was designed to improve the fuelwood and building pole supplies to the Bamako, Mopti and Segou regions by establishing tree plantations. These plantations were to reduce the pressure on the natural forest cover around those towne Because of the importance fuelwood had for household consumption, the objective was also to prevent environmental deterioration while greatly benefiting the urban poor. Existing technology for the establi,hment of those plantations was assessed to be suitablt and replicable on a larger scale. - 3 -

7. Subsidiary objectives of this project were the formulation of rural forestry programs and institution building. Rural forestry issues countrywide were an important component of Mali's strategy (e.g., development of village woodlots, bushfire prevention), although the extent of Bank involvement was not clearly defined. Institution building was considered essential, since both the plantation-related objectives and those linked to social forestry could not be achieved without a national forestry institution capable of managing the sector. Institutions required major revitalization and improvements.

Design

8. The project consisted of five principal components: the establishment of 3,400 hectares of rainfed plantations in two forest reserves near Bamako; the application of management techniques on a trial basis to over 1,000 hectares of natural forest near Bamako, and 200 hectares of natural forest near Segou; the establishment, on a trial basis, of 60 hectares of rainfed tree plantations near Segou and of 70 hectares of partially irrigated tree plantations near Mopti; the establishment of three forestry nurseries at Bamako, Segou and Mopti, and the rehabilitation of an existing one at San to provide trees to villagers through established ext,ision services; and the execution of studies to investigate more efficient uses of wood, to examine the set up of rural forestry activities and to examine the scope of a possible follow-up project. (See PCR, paras. 3.04-3.08.)

9. OAPF, the executing agency, is a semipublic institution in charge of an autonomous operation under the administrative and technical supervision of the National Directorate of Water and Forests. At appraisal, the OAPF had a national mandate which soon after was drastically reduced to the Bamako region. This institutional change explains the limited extent of implementation performance of c' :.cain project components, details of which are outlined below.

Finance and Implementation Plans

10. The effective cost of the project was CFAF 2.4 billion, or an equivalent of US$9.4 million. This is 14% higher than it was estimated at appraisal, i.e., CFAF 2.1 billion. The project ias cofiaanced by, IDA, FAC, CCCE, and GOM, with an original commitment of 48%, 14%, 15%, and 23%, respectively. As pointed out in the PCR, the project benefited from a favorable exchange rate (and thus its expenditures in dollars were less than appraisal estimates) which favorably compensated substantI4l increases in the prices of labor and patrol. (See PCR, paras. 4.26--4.29.) It is important to note that the total cost of plantati.Ps in Bamako exceeded appraisal by 30% and the cost of tree nurseries by 24%. Overall, the project was implemented during the time provided. This project was immediately followed up by a second forestry project which is still under implementation. II. PROJECT IMPLEMENTATION AND OUTCOME

Manatement Capacity and Monitorins

11. The Bank was careful in finding a suitable management scheme for the project. The management included some outstanding individuals who provided the necessary milieu for implementation, and in the opinion of the audit this project shows that local leadership can be mobilized if proper conditions are met. Management was capable of understanding the intri- cacies of the sector and the most effective ways to mobilize support at the government level.

12. The reporting and monitoring system of the project was very sophisticated. The way the system was designed and maintained should be highlighted as an other achievement of the project. Important financial and accounting information was provided to managers although the monitoring system was less efficient in warning about resource allocation issues at the plantation level. There was no framework for adequately recording input use at the plantation plot level. It is difficult to know the extent to which management nsed the available information from the M&E system to make decisfo.rs; -.rever, evidence strongly suggests it did not do so to the fullest extent. For example, while quarterly reports repeatedly showed that overhead, transport and labor costs were very high, little was done to reduce them.

13. Despite the above the existing financial monitoring and cost accounting control system should be thought of as an example for many other projects within the country and in neighboring countries. Since many policy-makers now want to monitor developmpnt impacts of forestry projects (e.g., cost, benefits, rate of forest depletion), it would be necessary for the the feedback system to be improved. In particular, much more should be done about its short-term sustainability, since the system has been designed and managed mostly by expatriates. A necessary condition to improve effectiveness is a proper forestry inventory system. The audit believes that the work necessary to carry out proper forestry inventories and to monitor allocation and use of land in and outside the forests, is yet to be done The present system is not adequate to fully evaluate the development performance of the project.

Physical Outcomes

14. The plantations near Bamako, which were the principal component of the project in terms of size and cost, achieved 67% of the defined targets (i.e., 2,273 hectares of productive plantations instead of 3,400). This achievement should not be considered unsatisfactory, given that this was the first major industrial plantation project in the country, that the targets were several times higher than those achieved in the past, and that implementation constraints were rat',r severe. - 5 -

15. The plantations in the Segou region were not lmspmented as expected. After initial attempts to implement 40 hectares, the national mandate of the OAPF was greatly modified. This project component became outside 0APF's jurisdiction and very costly to implement. This component is now being financed by bilateral aid.

16. The irrigated plantations in the opti region were abandoned during the course of the third year of the project. The reasons were mul- tiple; however the most important one was that the land allocated to the plantations was of very poor quality. Pedological studies showed that there was a minima' probability of success under those conditions. Simi- larly to the plantation in the Segou area, due to the change in the mandate of OAPF, the cost of transporting and maintaining equipment (e.g., bull- dozers) would have been prohibitive, and the capacity to closely supervise the operations, inefficient. (The PCR does not present details on the abovementioned issues.)

17. The management of natural forests component was very partially met. At the origin this component included the delimitation of forests, the construction of roads and firebreak protection, sarrying out inventories of different tree species, studying and monitoring impacts on growth and application of silvicultural practices. The major reason for the limited success was the lack of a readily available framework (technology) for the management of forest under those ecological conditions. This was in addition to the fact that the OAPF gave priority to the plantations, that serious labor constraints were faced and that the appraisal objectives were over ambitious (see PCR paras. 4.13-1.14). A necessary condition to the proper implementation of a component like this is to have a comprehensive inventory of ecological variables, soil types, water availability, tree varieties, and vegetation, none of which were available at the time of implementation. It is worth repeating that the project authorities and the policy makers in the sector were more interested in the plantation components than in the management of the natural forest. Only recently has the GOM brought, in a practical way, forest management related activities to the top of its agenda.

18. The tree nurseries of the project were established. There was very little evidence showing that this component really integrated with the rest of the project. The audit attempted to assess the performance of two aspects of those tree nurseries: production of seedlings and quality of the genetic material. As regards the quantities of seedlings produced, hard and reliable data were not available, although it is the opinion of the audit mission that producing the quantities of seedlings envisaged was not really a problem. The quantity or the quality of the genetic material collected for the nurseries was not monitored until the second project was implemented, and it remains a matter of judgment if this component fulfilled the original objectives. In this regard, the audit mission found that the quality of the material produced was not very high or uniform. The cause of this was mainly related to nursery design and management, the way in which seeds were collected and the way in which activities in the nurseries were monitored. (See PCR, paras. 4.19-4.20.) - 6 -

19. The studies envisaged at appraisal were carried out. These were conceived as an important part of the project in that they would improve the sectoral knowledge and would formulate alternative strategies. The following studies were carried out: Management and Administration of OAPF, including its information systems related to finance and accounting; Technical Feasibility of Irrigated Plantations in the Mopti area; Options and Alternatives for Development of Rural Forestry; and Inventory of Natural Forests particularly applicable to the Sahelian region. In the opinion of the audit, these studies were to a large extent instrumental to the proper management of the project, and particularly useful for decision making at the government level.

Outcomes and Design

20. A few additional comments on project outcomes are worth mentioning here. First, the rhythm of tree planting proposed by the project was several times higher than the country had ever achieved in the past. The consequences of this target were far-reaching. On the positive side, management of the project proved to be extremely able to respond to those targets, to mobilize the necessary resources and to improve as much as possible the efficiency in implementation. The capacity to respond im- pressed the donor community, and several began channelling funds into the GAPF, and some of them even now do so. OAPF is believed to be the most efficient implementation agency in the public sector. On the negative side, the achievement of planting targets became a "disease" (called "malaise du tableau de bord") in the sense that the GOM as well as the Bank measured the performance of the project mostly on its ability to plant a given number of hectares. And both put tremendous pressure on OAPF to reach those targets. The result, which is in part described in the PCR, was that planting was done at the expense of maintenance (i.e., quantity was more important than quality). This approach greatly affected the economic impact of this project: mobilization of an excessive amount of resources, plantation of trees in areas where there was limited knowledge about the soils or other ecological factors, competition with the natural forest, and decisions to plant during a period of the year where the survival rate of trees was close to zero (it is said that after August 15 there is no point in planting trees around Bamako because of the erratic rainfall patterns).

21. Second, change in rainfall patterns exercised a great influence on the project outcomes. Major droughts occurred very early during implementation causing changes in the migratory patterns of livestock. These changes could not have been predicted at appraisal and, thus, the discus- sion here is not meant as a criticism of the design chosen for this project. However, and as it is well known now, this forecast proved to be wrong, and the implications were many: the time allocated for planting not only was reduced but it became very variable, the survival rate of young trees substantially decreased, the risk of fires was unusually high, and the competition for land and water resources became a nightmare. Manage- ment did respond effectively. 22. Third, the sudden and permanent movement of livestock to the forests surrounding the region of Bamako was, and it appears to be, an intractable problem. Lack of rainfall in the north forced herders to move their livestock south. One of the places of their choice was the forest surrounding Bamako. Persistent drought meant also lower incomes and famine, and herders were forced to sell their cattle to higher income urban dwellers. Those residents of Bamako who bought most of the cattle, perma- nently left it close to where they lived. A major peri-urban livestock economy developed without much planning or management. The cattle stayed in the project area and has damaged a significant part of the plantations. This is disturbing since replanting or enabling trees to naturally regrow requires much more resources than the original plantings (i.e., the total cost per hectare planted increases several fold) and the quality of trees is not necessarily the same as expected at appraisal (e.g., in terms of quality for woodpoles or logs for export). The conflict between forestry and livestock is now a permanent problem and the GOM needs to take proper action in this regard. Solutions to this problem might require some dif- fi,ult political decisions.

23. Fourth, choice of tree variety. The choice of tree variety was based mainly on the experimental research that existed at the time. Efforts to replicate those experiments were to a significant extent successful, and the GOM should be commended for that. However, the objectives of those experiments were not necessarily the same as those advocated by the sector. Tree varieties were chosen in response to how well they would respond to existing ecological conditions prevailing at the time of preparation (e.g., where no major conflict existed between forestry and livestock). In the future, however, projects of this nature should seriously consider finding a portfolio of tree varieties that would minimize conflicts across users, marrying forestry with livestock and with crop production. This approach is particularly necessary in areas of low rainfall. The objective should be one of maximizing the benefits from the natural resources in a sustainable way. Within this context, indigenous tree varieties should be given higher priority thus enhancing conservation efforts in the natural forest. The choice of trees in the portfolio is a science in itself. A multicriteria framework would be necessary to find varieties that will, for example, achieve faster growth, be fire resistant, produce high quality wood for industrial uses, be an adequate source of animal feed, be income attractive for the population living at the edge of forests, be a net contributor to the preservation of genetic diversity, and the like. This is something the government is beginning to address in the context of its social forestry program.

24. Fifth, quality of maintenance. Other things being equal, future productivity of the project's plantations will be highly correlated with the quality of maintenance. This correlation is particularly important during the first few years of the plantation when, unfortunately, the project emphasis was on the establishment of new plantations. Available data are too limited to determine quantitatively how much the lack of maintenance is and will be responsible for not achieving the expected yields. -8

Economic Performance

25. Because the audit mission finds that the PCR is relatively weak in analysing the economic performance of this project, a few additional remarks will be outlined here (see PCR, par&. 6.01). The appraisal report estimated only the ERR for the plantation component of the Baako region. The ERR was estimated at 112, if beneficial external effects to agricultural production were included, and of 92 if those external effects were excluded. The PCR recalculated the ERR at 6.62 for the same component. The audit could not recalculate the ERR because the data were very deficient, particularly pertaining to the allocation of resources at the plantation plot level. The audit found that the average rate of return was not representative of what this project accomplished in terms of efficiency gains (i.e., returns) in the establishment of plantations. This is due to the fact that plantation projects have a rather long learning curve and gestation period and, therefore, the smount of resources spent on the average plot was much higher than those of the plantations that were established last. From the country's perspective, and as a future reference to options and investments in the sector, the last several plantation plots are more representative of what OAPF is capable of doing. This issue should be picked up during the evaluation of the second project.

26. The economic contribution of this project was and will be related to several important factors. First, quantity and quality of the wood produced, i.e., fuelwood, building poles, and timber wood. Today, the only component that is amenable to ex-post analysis is the plantation near Bamako. Benefits from fuelwood (i.e., retailed as a final product),I/ on which the project depends in the short term, are not being realized. People do not collect wood at the plantation level and transporting it to the city is extremely costly. Recent estimates on transport costs show that these costs represent at least 65% of the total cost. To pass judgment on either the quantity or quality of higher value products from the plantation is very difficult since the plantations will yield these products very far in the future. It is the opinion of the audit that yields from the plantations will be lower than those assumed in the PCR. However, the intertemporal distribution of net benefits is such that the ERR is not very sensitive to these changes.

27. Second, time distribution of benefits and costs. Two dimensions are important to highlight. (a) Generation of benefits. An important assumption in the estimation of the ERR at appraisal was that as plantations grow, the quality of maintenance and silvicultural practices would be such that the extraction of fuelwood and other minor wood products would

1/ In terms of market value sold for direct household consumption. However, as stated later on, indirect benefits of fuelwood for high value added, export oriented, industries has been much higher than expected. - 9 -

take place all along the life of the project (i.e., a way to generate benefits as early as possible since high value products will come very far in the future). This never materialized and experience shows that the cost of recovering the wood from the plantation plots was simply too high. But this is not only an economic issue. OAPF is reluctant to have people coming to gather wood in the forest. This is a perfectly legitimate concern, and to lift this constraint will require a completely new view on the role of OAPF, particularly as regards extension, rural development and marketing. These aspects were never considered during preparation. This was to some extent justified in this first project since OAPF "needed to produce the trees first, before getting involved in marketing". This certainly cannot be the approach for the future. Since the OAPF only controls 5% of the total market for fuelwood used for household consumption, its role in that market is marginal if not nil. (b) The value of key factors of production. Most of the project's activities, except for land clearance and preparation, are very labor intensive. During the life of this project, the price of labor has significantly increased and labor mobilization was a cumbersome process due to competition and peak demands.

28. The performance of this project should also be evaluated by reference to the contribution to non-directly quantifiable bene Lts and to indirect benefits in general. In particular, the presence of this project and of the OAPF has clearly decreased the rate at which the two classified forests were exploited. Without this project there would probably be no forests in the Faya and the Mandangues. This is in itself a major accomplishment. Moreover, this project generated momentum at all levels by institutionalizing the development and management of forests at the regional and national level. Today, forestry sector issues are central to the policy dialogue and, as the government gets into such programs as desertification control, the nucleus of this project clearly represents the starting point.

29. Another major economic and social contribution of this project has been on the development of other sectors and on the urban poor. B cause the price of fuelwood that OAPF charges its industrial clients is much lower than the economic value, large industries in Mali have been heavily subsidized by the forestry project. There are some positive impacts, like keeping these companies competitive in financial terms, and some rather negative impacts like decelerating the process of technological change. The forestry project in this case has been a major contributor to growth, employment and export revenues. Similarly, the project has been very instrumental in subsidizing the urban poor since a large part of the plantations, products have been used in satisfying the energy needs of hospitals, schools, army, and other services that benefit the poor. Finally, the project also demonstrated the impact of the forest on the ecological stability of farming systems in the surrounding areas. The preservation of the two gazetted forests has created a very favorable micro-climate for those farmers adjacent to the forests. A net productivity effect as well as a user cost effect for those consuming those products in Bamako are important economic benefits. These benefits were not explicitly accounted for in the PCR and demonstrate the very important - 10 -

role played by forests in development. Based on the above and on existing data, the audit concludes that the ERR of this project will be at least equal to the opportunity cost of capital; i.e., ERR - 10%.

Sustainability

30. The PCR does not address this issue in any great length. The audit will make reference to determinants of sustainability at different points in time. Some determinants of sustainability will refer to the time span soon after final disbursement (a very narrow definition of sustainability) and other determinants will refer to a period which goes beyond the time frame used in the original design (this is done with the view to distinguish the determinants of viability from those of sustainability). The most important determinants of sustainability are: proper ratio between the resources allocated to planting and to maintenance, availability of counterpart financing in the short term and capacity to accumulate capital in the long term, capacity to generate consensus on the role of forests across sectors and across users of the forest, elimination of existing institutional imbalances, vertical integration of the project with end users, and solution of land tenure issues. This project will only be sustainable if a few critical conditions are met. First, the planting/maintenance ratio. The real value-added of the plantations will come very far in the future when existing trees reach maturity. Within the growth cycle, maintenance and silvicultural practices are essential in determining the quality and quantity of wood produced, particularly practices implemented in the first few years. Unfortunately, most of the efforts of the project were allocated into new plantations and little to maintenance. As new plantations are put in place, the need for maintenance grows almost geometrically. If the project continues allocating resources in favor of new plantations, benefits will not be sustained.

31. Second, counterpart financing. This project is very local currency intensive, making this project risky when recurrent costs cannot be met. Today, the planning office of the Ministry of Plan considers the proportion of recurrent costs to total costs as an important criterion in project selection within the National Investment Plan. Data given to the audit mission show that recurrent costs represent 60% of the total cost in forestry projects. This ratio is a major problem in a country which is adopting stringent policies to balance the budget by cutting down public expenditures. At appraisal, Bank policy was not to finance these costs and, when the funds would dry up, a new project would be prepared to bridge the gap. In the opinion of the audit, the policy mood in Mali is such that the chances of maintaining such a high level of recurrent cosc is minimal unless some specific measures are taken. This is an issue that deserves more careful attention and analysis since it is not unique to the forestry sector. It is a matter of national policy. However, decision makers must seriously consider looking into all possible instruments to finance this project; e.g., full pricing of fuelwood for the industries as well as for the public services. If this is not feasible, it is important to note again that the forestry sector is subsidizing the rest of the economy. - 11 -

32. Third, reaching consensus among users. In practice, there is no consensus on the role of forests among different users. One group of users is represented by the livestock owners who have used the gasetted forests as a buffer sone for feeding their animals. This has, and will continue to result, in significant damage to the plantations and to the forest in general. More damages imply more replacement cost or the abandonment of certain areas, both affecting the sustainability of this project. The project has already been instrumental in establishing some mechanisms for consensus: a very constructive dialogue is going on between the National Directorate of Livestock and the National Directorate of Water and Forests, to find alternative solutions. However, immediate actions are needed.

33. Fourth, institutional imbalances. The sustainability of this project is in great jeopardy if the institutional imbalances the project has created are not resolved. Internal imbalances have been created because since the very beginning, the project hired extremely competent people, several of whom are in leaving the project. These people were key to the accomplishments of this project's objectives. As donors have not made themselves clear as regards their future commitment with the "plantation approach" to forestry, uncertainties have turned the attention of key personnel to seek opportunities elsewhere. External imbalances were created by this project since OAPF got a major portion of the resources devoted to the sector for quite a long period of time. This allocation not only made OAPF very visible but it also found itself in an institutional island which the policy makers of today are trying to correct. Any correction scheme will necessarily mean less resources to OAPF relative to the rest of the Ministry. This institutional change, which is already taking place, can only be attenuated if major savings are generated by improving efficiency in operations. Clearly GOM needs to have a more balanced institutional structure as policy aspects of the sector become essential to sustain development.

34. Fifth, vertical integration. This project has no clients of its own as far as high-value wood is concerned. The project has not yet devised the proper mechanism to integrate itself with the rest of the economy. OAPF was rever conceived as a marketing agency, and what it does today in marketing will be a very major contribution to the future. This project was conceived without clients, something that to some extent can be understood since the output of the project was to be available two to three decades after completion. However the time is coming and no mechanism has yet been put in place, either to sell the wood domestically or inter- nationally, or to process the wood in any defined way.

35. Finally, land tenure conflicts. Land tenure-related issues are limiting the ability the country has to maintain its forests. The two gazetted forests in question are very close to the capital city, and protecting them depends heavily on the resolution of land tenure disputes. This determinant of sustainability is related to both ownership of the land and to the right of use. Conflicts will become more acute in areas where protection of the existing forest in its purest form will take place. - 12 -

Environmental Effects

36. This project has already had some significant environmental effects, most of which have not been quantified in traditional economic terms. From a 'without" project situation there is no doubt that without the project the process of forest depletion and land degradation would have been much worse. Thus the project did become a buffer zone in the accelerated process of encroachment. More particularly, in the absence f 0APF, the massive, spontaneous aad disorganized move of people and cattle into those pasture lands would havQ been disastrous.

37. As pointed out earlier, the project has had positive effects on the yields of food crops of farms located near the forest and on the climate in Bamako. It seems that where plantations are large in size and are sufficiently mature, these have created a micro-climate, which minimizes risks from prolonged droughts; have increased moisture capacity in the air and in the soils; have diminished evapotranspiration, and the like. Finally the plantations have had a reinforcing effect on the tree plantation schemes developed and implemented for the city of Bamako. Anecdotal evidence shows that in the last decade the temperature is one or two degrees less than it was without these programs.

Financial Aspects

38. Several financial aspects of this project need to be properly highlighted. First, that this is a multi-product and multi-client project. Its products have different costs of production, resource requirements and economic and financial prices. These are joint products, and since the degree of complementarity and substitution in consumption varies a great deal, careful consideration should have been given to the recovery of costs and, why not, the maximization of profits. The market for these products is not unknown and thus some reference prices could be used to set prices. Since the financial costs incurred may be somehow calculated from the data coming from the second project, OAPF could clearly have a better financial policy. The clients of the project are many, some low income and some higher income, with different abilities to pay for the forestry products they get. There has never been a macro-financial strategy for the project that would be consistent with GOM established country objectives and with the need for sustainability and financial soundness of OAPF. In particular, charging the full opportunity cost of fuelwood to the industry and public services will be feasible if OAPF becomes truly efficienc and competitive. Decrease overhead costs and the cost of transport may be actions that would contribute to OAPF competitiveness. The financial health of OAPF requires that it be paid the full value for the services it provides.

39. Donors may take advantage of future public expenditure reviews to assess the financial issues and constraints facing the forestry sector in Mali. - 13 -

III. FINDINGS AND ISSUES

Overview

40. This forestry project was successful in accomplishing several objectives and its principal determinants of success were the high quality management and the effectiveness and coordinating efforts among cofinanciers and expatriates who participated in the implementation of the project.

41. Areas where this project made a substantive contribution weres

-- the capacity to generate a solid government commitment during implementation, which made this project, in the eyes of some experts, one of the best, in comparison with other projects, in Mali.

-- the consolidation of existing research and technology, allow- ing for a project concept which was not foreign to the actors in the sector.

-- the testing of a concept of forestry development (industrial plantations) under Sahelian conditions at a scale much larger than had ever been tried in the past.

-- the development of an institution within the sector that learned how to manage large quantities of physical and financial resources in a rather complex and demanding project.

Some of these gains have been consolidated in the second forestry project.

42. Unfortunately, the successful elements of this project were limited by the very high cost of plantations. In this context, the audit addresses three major issues which may be useful in setting sectoral strategies in the future. These are related to project design, failure by objectives, and macro-economic incentives.

Findings, Lessons and Issues Arising

43. Issues Related to Prolect Design. The project plantation component was too large and ambitious in terms of targets and aims. Experience demonstrated the importance of limiting the size of the zone of intervention if a project as complex as this is to succeed. Part of the complexity comes from the constraints imposed by weather conditions during the planting season, the demand for effective allocation and management of resources at the field level, and the large number of subsidiary activities required to maintain the quality of the plantations. Thus, to accomplish the project targets, management, under pressure from GOM and the Bank, tried to achieve them without much regard to costs. This was done at the expense of both the financial and economic returns and of maintenance (where most of the future value-added lies). - 14 -

44. 0APF had to acquire experience in new areas in a learning-by-doing exercise. The presence of expatriate technical assistance did play an important role; however, this technical assistance was mostly concentrated on financial management, reporting and management of heavy equipment rather than on the purely forestry development aspects of the project. As a consequence losses occurred at the plantation level due to difficulties in organi-Ing labor, optimizing the use of equipment and carrying out maintenance, preventing and controlling fires, monitoring and evaluating resource use and carrying out essential silvicultural practices. The plantation schedule was very strict because of weather conditions. Adequate planting practices that are achieved now have a survival rate of 952 compared to 60% when a planting delay of only two weeks takes place. The higher survival rate implies faster coverage, less production of weeds and other vegetation, and less risks from fires during the dry season. Most of the activities after land preparation are fairly labor intensive, and the government should seriously consider mobilizing labor from adjacent villages. GOM has already begun major efforts in identifying ways and means to improve villager participation without sacrificing the attainment of sectoral objectives. Recently GOM has allowed nearby farmers to cultivate the areas reserved for firebreaks, and this has shown to be an attractive slternative.

45. Success of industrial plantations, measured by potential yields, will materialize if good soils are allocated to these plantations, other things being equal. Unfortunately, good soil is a very scarce factor and, therefore, competition for this high-quality land is and will be a major issue in the future. An effort should be made to maximize the economic value of the land (spatially and intertemporally) across alternative uses.

46. Finally, studies in Mali were too crude to establish the necessary basis for the management of the natural forest. This presents a serious dilemma to a government that sees its forest being overexploited. Though there are no immediate financial gains from that forest, it is important that effort be devoted to its proper protection. In this regard, industrial plantations should not replace the natural forest unless it is proven that no negative effects will result in terms, for example, of genetic diversity, wildlife preservation, or other ecological benefits. The substitution of the natural forest by artificial plantations would be a disastrous policy, even if the soils under natural forest have a greater yield potential. In the future, natural forest management schemes should be developed, and they should include research and experimentation regarding indigenous varieties of trees.

47. Although the Malian economy has paid a disproportionately high price for the plantation component of this project, this price was in part paid learning how to do it. As explained earlier, the average rate of return is not representative of what OAPF can do now after the first and part of the second project. - 15 -

48. Have We Failed By Objective. Was this the right project concept to achieve the advocated objectives?

49. The reason for evoking this question is two-fold. First, because it is iuportant to determine the extent to which vestment in industrial plantations is an economically viable proposition and second, because a decision has to be made regarding future support to the first and second forestry projects. Discussions with policy makers at the national level revealed that there Is some reluctance to continue financing the same project concept. This was shared by several donors, i.e., the project cost too muchi To answer the abovementioned question requires analyzing the extent to which (a) the objectives of the project were achievable given the means chosen, and (b) industrial plantations were the best means to achieve them.

50. The objectives were unrealistic, particularly as regards the extent to which a project of this nature could either solve the fuelwood energy needs of Bamako or decelerate the process of environmental degradation. The lack of a sectoral policy framework limited the effectiveness of achieving the cbjectives as well as finding alternative solutions to problems which clearly go beyond the sector. Protection and management of the natural forest, proper management of the land, and finding the necessary balance between the supply and demand for fuels, require a very comprehensive and practical strategy which is still absent. Within this context, this project shows that industrial plantation projects are not the most appropriate vehicle to solve the fuelwood problem under Malian conditions. Recovery of secondary wood from clearing the land proved to be extremely expensive.

51. Under these conditions, GOM has decided to engage in a massive program of village forestry. Clearly the emphasis is in the right place if satisfaction of fuel needs and desertification control are the principal objectives. However, the tendency today is to swing the pendulum away from industrial plantation activities in favor of new ways to attain the abovementioned objectives. If this new policy is translated by the abandonment of these projects, the results will be extremely undesirable. It is the audit's view that resources should be mobilized to maintain the forest plantation assets already in place. By providing at least the equivalent of the average variable cost of maintaining these plantations, and given . the already high sunk cost, this policy may prove to have a very high pay- off in the future. In addition, and as explained earlier, the average ERR of the plantation component of this first project is no proof that indus- . trial plantation projects are, by definition, economically not feasible in Mali. A study of Mali's comparative advantage in producing wood should be carried out. This study should assess the extent to which this type of project represents a window of opportunity in a country whose production possibilities appear to be very limited. Industrial plantation projects should not be seen necessarily as mutually exclusive from other types of forestry projects. - 16 -

52. Therefore, in the future, the Bank should be more realistic in setting project objectives and realise that the implementation of a comprehensive forestry strategy requires that donor agencies stay in the sector for longer periods of time. A time-slice approach, based on an agreed long-term strategy, and on a time-frame for Bank participation is badly needed.

53. Macroeconomic Issues. The attainment of such objectives as control of desertification, keeping the balance between supply and demand for fuels, and institutional development in the sector, could be accelerated if the right policies are in place. An example is that of fuelwood pricing. Higher prices for fuelvood are necessary to reflect its real scarcity value, and to send signals to consumers about user efficiency. Higher prices would, in addition, create incentives for private entrepreneurs to "produce trees". However, increasing the price of fuelwood, when the majority of consumers are low income and when there is not a comprehensive sectoral management policy, may result in a significant increase in the rate of forest depletion.

54. Prices should also reflect other aspects of forestry development. Today, GOM policy is such that the whole forestry program may be completely unattainable from a financial point of view. As long as the sector is conceived as providing a "social" service, pricing and recovery policies will not be put in place. If OAPF is to improve its efficiency and to become a self-sustained proposition, a new price policy has to be developed. In the present system, the entrance fee to the forest is so low that major economic rents are accrued to a few. This policy will put more pressure in exploiting the forest resources that are Lear Bamako. This problem is compounded by the very high cost of transport and by the fewer areas amenable for indiscriminate exploitation.

55. Sectoral policies should become the center of Bank policy dialogue, to allow the incorporation of environmental concerns in macroeconomic policy.

56. Final Considerations. There are three main considerations this audit would like to emphasize. First, the Bank should consider remaining very active in the forestry sector and consolidates the gains already achieved. In this particular case, Bank involvement does not mean endorsement of either past approaches or of existing sector policies. The positive role of the Bank and other donors is clearly recognized and felt at all levels of decision making. The Bank's role has to be deepened particularly as regards policies in respect to land use and to the protection of natural forests.

57. Second, the government should consider formulating a new institutional development and human resource policies have to be developed. On the institutional side, as sectoral policies are formulated and as other non-industrial plantation activities are designed and implemented, the role of existing national and regional agencies has to evolve. The experience of OAPF cannot be overlooked, although a major emphasis should be given to - 17 -

GOM's aims to expand the planning and programming capacity at the ministerial levels. In addition, the character of the institutions needs to be evaluated to take stock of the new emphasis given to the control of desertification, village forestry schemes, and to the mobilization of scarce resources into high-risk operations.

58. Finally, it is indispensable that a sectoral policy be developed. This policy should establish priorities and would require a set of intra- and intersectoral actions that will maximize the social value of the natural resource base for this and future generations. Public expenditure reviews and formulation of sectoral or structural adjustment operations should provide the right fora for discussing the trade-offs outlined in this audit. - 19 --

MALI

FIRST FORESTRY PROJECT (Credit 883-MLI)

COMPLETION REPORT

October 30, 1987

Africa Region 21

I. SUMMARY

General

1.01 The First Forestry Project (Credit 883-MLI), jointly financed by IDA, FAC, CCCE and the Malian Government, was designed to implement a five-year program (1980-1984) with the aim of (a) improving the supply of fuelvood and building poles, especially in urban areas, (b) promoting rural forestry techniques, (c) managing natural forests. Total project costs, which were estimated at appraisal at CFAF 2.1 billion (US$ 9.4 million equivalent, of which US$ 4.5 million as IDA credit) amounted to CFAF 2.4 billion upon completion (of which IDA disbursement totaled US$ 4.5 million).

1.02 The project, which was appraised in April-May 1978, should have become effective on August 23, 1979, but due to delays in completing the previous FAC-financed pilot forestry project, it instead became effective May 27, 1980. Except for components to be implemented on a trial/experimental basis in the S6gou and Mopti areas, activities under the project were concentrated in the Bamako area. Project completion, which had been foreseen for June 30, 1984, was accordingly postponed one year to June 30, 1985.

1.03 There were no major revisions of the project during implementation except in the small (70 ha) partially irrigated experimental tree plantation component. Due to price increases provoked by the second energy crisis and technical difficulties, it was decided in 1982 to phase out this relatively complex component. The project established 2358 ha of rainfed tree plantation in the Bamako area (of which 2273 ha are considered productive), compared with the appraisal estimate of 3400 ha.

Special Issues

1.04 The most important issues that arose during project implementation were:

(a) Large/medium scale rainfed tree plantations. There is a crucial need to make this type of plantation more profitable by placing them in better sites, by developing more adapted technical packages, and by reducing establishment and maintenance costs through better planning and monitcring of forestry works.

(b) Management of natural forests. Little is known about the feasibility of managed natural forests and there is a dearth of research on the species and dynamics of natural woodlands in the Sudanian and Sahelian zones. Given the magnitude of wood shortages in the future, the increased productivity that is expected under the more intensive management techniques is not likely to be very significant in these zones - (the potential of natural forests is rather limited (0.5 - 1.5 ms/ha/year) - on the contrary the impact of sound natural forest management will be very significant in the field of environmental protection. - 22 -

(c) Rural forestry. Technical themes need to be critically reviewed and approaches redefined in order to improve the offtake of rural forestry activities. There is also a crucial need for more adapted and attractive technical packages, and for more participatory and multisectoral approaches. As for the natural forests, given the poor performance of the available woody planting stock, the impact of rural forestry is not likely to be very significant in the field of production, while it will be quite significant in the field of environmental protection.

(d) Price of local wood products. There is a crucial need to increase the currently low prices of local wood products.

Benefits

1.05 One of the project's main achievements was to create a capacity for planning, management and monitoring within the Forestry Department and thus to enable Mali to better develop its forestry activities. Project activities played a significant role and led to increased awareness on the part of government and the population of the importance of forest cover and, hence, of the impending environmental crisis.

The Second Forestry Project

1.06 The proposed Second Forestry Project has been designed to address problems brought to light by the first project and to take advantage of the opportunities it revealed. The second project thus expands on the activities of the first and tests new methods and techniques to improve forestry in drought-prone Mali.

II. THE FORESTRY SUBSECTOR

Resources

2.01 Official statistics, which impute less than 2% of GDP to the forestry subsector, do not adequately reflect the important role it plays in providing fuelwood, building poles, and other products. Fuelwood (firewood and charcoal) accounts for about 95% of both rural and urban energy resources for cooking and heating. The forest cover is a significant dry season grazing reserve and supplies much of the fodder required for livestock. Subsidiary products such as gum, shea nuts, various fruits and nuts, as well as thatching and weaving materials, are widely used by the rural population. In addition to providing a habitat for a wide range of animals and plants, the forest cover has a profound ecological impact. Under the traditional system of shifting cultivation, trees, shrubs and bushes fix the soil, protecting it against wind and rain erosion and, in the form of bushfallow, serve to regenerate soil fertility.

2.01 Natural forest covers some 14% of Mali's territory (about 17.4 million ha), of which 12.9 million ha are natural forest stands, and 4.5 million man-induced forests (bush fallows: 2.5 million ha; forest parks: 2 million ha). Natural growth rates average 0.4 m3 /ha/year and range from 0.75 m 3 /ha/year in the well-watered Sudano-Guinean zone to only - 23 -

0.05 ms/ha/year in the arid northern zones. Total growth is over 7 million ms/year, but only some 30% of this is currently accessible and exploitable, given population distribution, infrastructure, marketing conditions, and endemic human disease problems (river blindness, sleeping sickness,...). The accessible proportion of these resources can and will increase over time under the pressure of demand and resulting higher prices.

2.03 Areas classified by Government and legally protected against encroachment include forest and fauna reserves, national parks and controlled forestry areas, and cover 25% of the forested area. Owing to limited government resources and growing population pressure, however, many of these are "reserved" in name only, and have no management plan. There are some 5,000 ha of dense tree plantations (mostly achieved under the First Project), and some village woodlots in the southern region of the country.

2.04 For a population estimated at 7.4 million inhabitants in 1982, total annual fuelwood consumption was some 6.7 million m (3 million tons) of dried wood, compared to an accessible supply of annual natural regrowth estimated at 2.7 million ms (see para 2.02). Of this, about 80% was consumed in rural areas and 20% in urban areas. For the country as a whole, annual consumption is over twice the annual accessible natural growth. Wood is traded only in the urban areas: in the countryside, each family collects directly what it needs for its own consumption and, in some cases, for sale to the towns. By far the greater part of fuelwood consumption is in the form of firewood, with charcoal used only for ironing and making tea. Building poles and local timber amount to an additional 5-10% of total wood consumption. Most demand for industrial and construction wood is met by imports.

2.05 Without a major shift in demand and supply patterns, Mali will face a fuelwood crisis in the next two decades. In areas of concentrated demand (around the towns), the effects of the deficit are already highly visible. While the bulk of the deficit is in rural areas, its less obvious effects are spread over vast areas. The FAO has estimated the current demand-supply situation by comparing consumption to accessible (i.e., easily exploitable) natural production by ecological zones. Not surprisingly, the balance is worst in the northern, arid areas, where demand far outstrips natural growth, and where little can be done to improve the situation. The balance improves as one goes south, but only in the well-watered Sudano-Guinean zone is there a satisfactory ratio. Given the current overall population increase of 2.8% p.a., and urban population increases of about 7% p.a., annual demand by the year 2000 will reach 7.9 million m 3 of fuelwood, compared with an accessible annual supply of 2.7 million m3 (see para 2.02). This assumes that there will be no increase in accessibility, a pessimistic assumption since scarcity and higher prices can be expected to provoke greater efforts to exploit wood currently classified as inaccessible: the impact on supply is impossible to predict. If current urbanization and consumption patterns continue, annual fuelwood consumption in Bamako, estimated at 0.3 million m3 in 1982, may reach 1.5 million m3 by the year 2000. - 24 -

2.06 Wood is currently viewed by the population as a free good, a perception reflected in, and encouraged by, the very low price of permit fees for cutting (stumpage fees). Current prices do not encourage individuals to plant trees for wood sales. Therefore, unlike the first forestry project, the second IDA/FAC/CCCE forestry project is dealing more closely with the taxing/pricing/marketing aspects.

2.07 Wood capital depletion is, by its very nature, a self-accelerating phenomenon. In an attempt to alleviate this process, attention and resources are to be focussed in the second forestry project on the management of renewable resources to give sustained yields.

2.08 In order to achieve long-term results, both sides of the demand/supply problem must be tackled. However, a distinction must be made between the options and policies to be pursued in the urban and rural areas, respectively. For urban areas, where wood is traded, the pricing mechanism makes it possible to encourage more efficient use and substitution by alternative fuels, and to provide resources for increased investment, by raising prices through taxation. This option is not available in the rural areas, where wood is not a traded commodity. Here demand can be influenced only through self regulation, itself the result of education concerning the very real threat at hand, and of the broader movement to place responsibility for environmental management in the hands of local populations. Externally imposed controls, i.e., strict enforcement in every village of a stringent Forestry Code, have proved unfeasible in many countries. On the supply side, the rural population offers the only long-term hope: wood supply can be increased by planting, whether in state-managed or private rural schemes, but the costs of industrial plantations makes them, at best, a very partial solution to the problem. Supply can be increased in the short-term by increasing accessibility to existing forest, but this needs to be done after careful planning of the ways and means to make the existing natural forest cover more accessible without any further disruption of the environment (to be studied under the ongoing Second Forestry Project). Much can be done in the area of management of the existing natural forest, and a major effort in adaptive research is needed. The impending crisis cannot be resolved by planting alone: the answer is a combination of increased supply, reduced demand and fuel substitution. These actions all imply immediate action as well as long-term commitment from the Government in addition to the participation of the population as a whole.

Institutions

2.09 The Forestry Department (Direction Nationale des Eaux et Forts - DNEF) is one of the technical departments of the Ministry of Natural Resources and Livestock (Minist re charg4 des Ressources Naturelles et de 1'Elevage - MRNE). The DNEF has seven divisions at its Bamako headquarters responsible for:

(a) environment;

(b) projects and programs; - 25 -

(d) natural forest management and re-forestation;

(e) hunting and national parks;

(f) inland fishing; and

(g) personnel and equipment.

Mali is organized into seven forestry "Regions", and the DNEF also oversees five semi-auto iomous "operations" (or parastatal agencies), including the Forestry Management and Production Operation (Op6ration AmAnagement et Productions ForestiAres - OAPF).

2.10 The training of forestry personnel by the Institut Polytechnic de Katibougou and the field training center of Tabocoro is, on the whole, technically sufficient. Nevertheless, some additional training is needed for key personnel in planning, management, monitoring and extension.

2.11 Forestry research is the responsibility of the National Institute for Zoological, Forestry, and Hydrobiological Research (Institut National de la Recherche Zootechnique, Foresti6re, et Hydrobiologique) located at Sotuba but formally linked to the Rural Economic Institute (Institut d'Economie Rurale). Due to a lack of personnel and funding, forestry research is presently limited to small-scale trials (with the exception of promising Canadian-financed trials in the swamps of the Office du Niger area). Knowledge is severely lacking on local and exotic species and techniques suitable for arid and semi-arid zones throughout the region. The effort required to set up an appropriate research program lies well beyond the means of any individual country, and will have to be tackled at the regional level.

2.12 Unlike other Sahelian countries, Mali has a relatively large forestry staff, mostly trained at the Polytechnic Institute of Katibougou and at the field training center of Tabacoro. In 1983, total staff consisted of 761 agents, an appropriate number for the country. However, given the magnitude of the forestry problems, the Forestry Department faces huge difficulties that are made worse by inadequate funding. There is little planning or monitoring of projects, and inventory control and management of field operations are generally weak. The Forestry Department is unable to provide the necessary surveillance and protection of the forest cover against poaching, overgrazing, overclearing and bushfires, nor can it carry out the necessary re-forestation, forest management and erosion control programs on a significant scale. The Department is supported by the national budget, supplemented by the receipts from stumpage fees and fines imposed for illegal cutting. The latter have become far more important than stumpage fees in recent years. These revenues replenish the Forestry Fund, which finances the bulk of the Forestry Department's investment program. Overall funding must be increased if any sustained and meaningful actions are to be undertaken. - 26 -

Given the constraints on government spending, extra resources can only come from within the sector itself; this implies a much greater degree of cost recovery and beneficiary contribution, which have been agreed upon under the current second project.

Government Policy and Recent Experience

2.13 Starting with the severe drought of 1972-1973 and throughout the subsequent dry decade, Government and donors have become increasingly aware of the importance of an effective forestry program. In 1982, the Forestry Department issued a "Forestry Policy" document and an "Action Program" containing its overall objectives for the rural sector. The goals are broad and unobjectionable and form the foundation for the proposed Government development program to be funded by both internal and external sources. The main program elements are:

(a) institution-building in the forestry subsector;

(b) forestry research;

(d) better integration and cooperation between services and agencies dealing with forestry;

(e) training of forestry agents and farmers; and

(f) policy reform (adoption of appropriate legislation).

2.14 Apart from the IDA/CCCE/FAC First Forestry Project, a number of other donors (Swiss, German, French, American, Canadian and Dutch) have financed projects of various kinds throughout the country. The results of this first generation of forestry projects have not been encouraging: technical constraints in the Sahel are formidable and are complicated by socio-economic factors. A major problem is the lack of technical packages well-adapted to arid and semi-arid conditions. Experience with semi- industrial plantation has shown it to be expensive with the currently available planting stock, though technically feasible; in time, unit costs will fall and production will increase as better planting stock is introduced. Natural forest management has proved elusive, since knowledge of natural growth patterns is insufficient to develop a management plan. Rural re-forestation has been even less successful wherever the classic top-down village woodlot approach has been tried. Farmers are more interested in planting, on an individual/family basis, traditional species, including fruit trees, and demand is high for such seedlings from nurseries. However the Swiss-financed project in the Sikasso region has been quite successful, benefitting from the high rainfall in the zone, but the replicability of its technical approach in drier areas and of its strict administrative set-up is limited. A FAC/CCCE-financed rural forestry project in the Fana-Dioila-Koulikoro region has been badly affected by the most recent drought. The lack of success should not be surprising: these are first attempts in a very difficult sector, and Z0 top-down village level interventions in particular confront many institutional, political and traditional obstacles. There is a crucial need for a participatory approach in rural forestry. There are no instant panaceas, and progress can only be gradual given the population's and Government's limited absorptive capacity. Forestry projecte must therefore be seen as long-term investments.

2.15 IDA's overall strategy thus far in the forestry subsector has been threefold:

(a) to reduce the gap between demand fur forestry products (both fuelwood and others) and supply. This is to be attempted by increasing supply (management of natural forests, better access, state-managed and rural forestry plantations, cultivation of fast growing species) while reducing demand through the pricing mechanism, thereby inducing more efficient use of wood (improved stoves, efficiency in harvesting) and substitution (mainly by commercial fuels).

(b) to improve overall knowledge of the sector. This includes further research into the role played by forestry products in traditional production systems, as well as research into improved traditional spncies and adaptive techniques.

(c) to improve the policy environment. Given the limited impact of direct demand and supply measures, any large scale intervention will, of necessity, involve the participation of the rural population. To achieve such participation, the incentives with regard to forestry and land utilization need to be improved and made more explicit; this involves the forestry code as well as price/taxation policy.

2.16 It must be recognized that the scope for anything more than marginal gains in all these areas remains very small in the medium-term. The technical constraints have already been discussed (para 2.13); to these must be added the fact that pricing policy can only affect the small portion of consumption that is commercially traded, and the fact that a major shift in consciousness must take place not only on the part of the farmer/consumer, but also on the part of the forestry agent. Should rainfall levels and population growth remain unchanged, it will be difficult to arrest the process of degradation. Assuming planting stock can be improved (see para 4.10), industrial plantation offers at least some scope for alleviating the problem in the area of Bamako where it is most critical.

III. PROJECT FORMULATION

Background

3.01 In 1974-1975, the Bank carried out a West Africa Regional Forestry Sector Study that covered most of the timber-rich West African countries 2/ . It was decided in early 1976 to complement that study by producing a short Bank report on the role of forestry in rehabilitation of Sahelian countries stricken by severe drought in the early 1970s. The report, prepared by a consultant 3/ with the help of Bank forestry staff, dealt with the major policy issues and constraints in the arid and semi-arid zones of West Africa and identified a number of areas in which the Bank could play a useful role. The report was largely based on documentation and conclusions of an April 1976 CILSS/UNSO/FAO conference in Dakar, Senegal. The eight countries 4/ attending the conference submitted summaries of their forestry development programs and indicated specific projects for which they were seeking external funding. Following this conference, the Bank sent a FAO/IBRD/CP forestry reconnaissance/identification mission to Mali, Burkina Faso and Niger in February/March 1977 to identify projects suitable for Bank support.

Reconnaissance/Identification

3.02 The reconnaissance/identification mission, which visited Mali in March 1977, identified a five-year forestry project of possible Bank interest. This project was tc improve production of fuelwood and building poles and to strengthen the Forestry Department, mainly through:

(a) selection of plantable lands around Bamako, Segou and Mopti;

(b) establishment and management of 3500 ha of Gmelina arborea plantations for fuelwood and industrial purposes in the Bamako area;

(d) establishment and management of 300 ha of experimental irrigated tree plantations in the Mopti area;

(e) expansion/establishment and management of tree nurseries to provide seedlings to villagers through established rural development programs.

3.03 The main issues to be addressed during project preparation were:

2/ Cameroon, Zaire, Ghana, Ivory Coast, Central African Republic, Gabon, Liberia and Nigeria.

3/ Dr. C.W. Holloway.

4/ Chad, Cape Verde Islands, Mali, Mauritania, Niger, Sudan and Burkina Faso. - 29 -

(a) the need to reach an agreement with FAC on follow-up financing of this first three-year phase of a long-term tree plantation program started in 1977 at the same sites as the proposed tree plantation component in the Bamako area;

(b) the experimental character of the proposed irrigated tree plantations in the arid area of Mopti;

Preparation

3.04 A project brief was issued in June 1977 and sent to Mali in July 1977. Early in August 1977, the Government requested that Bank prepare and then appraise the proposed project with FAC and CCCE.

3.05 A FAO/IBRD/CP preparation mission 5/ visited Mali in December 1977. Following its visit, and in agreement with the Government, the mission proposed in March 1978 a five-year program that was essentially the same as the main proposals contained in the initial project brief, except for the areas to be planted as rainfed and irrigated tree plantations, and the addition, on a trial basis, of natural forest management components in the Bamako and Segou areas.

3.06 Except for the components to be carried out on trial/experimental basis in the Segou-Mopti areas, the main forestry activities of the proposed project (62% of total project costs) were to be carried out in the La Faya and Monts Mandingues forest reserves near Bamako as a follow-up to the pilot OAPF/FAC tree plantation project started in 1977.

3.07 The project was to be implemented by OAPF (Opgration Am6ragement et Productions Foresti6res - see para. 2.08) under the supervision of the Forestry Department, and was to require two expatriates (a mechanic and a forestry officer in charge of the PMU) and short term consultants, as well as Malian counterparts and support staff.

3.08 Following the preparation mission, the main issues were:

(4) the financial rate of return would be, due to the harsh condizions prevailing in the project area, only about 5% (economic rate of return would be 12% for the Bamako tree plantation component and 9% for the project overall);

(ii) the justification of management of natural forest in the Segou area due to the apparent small resources to be provided by natural forest in such an arid area.

5/ Consisting of a tropical forestry specialist and agronomist, a forestry economist and an irrigation specialist from FAO/IBRD/CP. - 30 -

Appraisal

3.09 At the request of the Malian Government, a joint IDA/FAC/CCCE appraisal mission visited Mali in April-May 1978 6/. The mission proposed, in agreement with the Government, a five-year forestry project essentially the same as that described in the preparation report, except for the areas to be planted or managed under the different components of the project.

3.10 At appraisal, the three main issues were:

(a) the need to improve the managerial capacity of OAPF;

(b) the low returns, because of their experimental character, of the tree plantation and natural forest management components in the environmentally endangered Segou and Mopti areas;

Concerning (a) above, the mission proposed:

(iii) the reinforcement of OAPF with three expatriates (two mechanics and an accounting and finance specialist) to be financed under the project by a FAC grant;

(iv) the continued employment, under a separate FAC grant, of an expatriate forestry advisor to the general Director of the Forestry Department during the project period;

(v) a two-month FAC-financed consultant mission to OAPF to reorganize its accounting system and internal control procedures before project start-up.

Concerning (b) above, the mission proposed, due to the crucial need to investigate ways to avoid any further disruption of the forest cover in the Segou and Mopti areas, to implement on an experimental basis under the proposed project, the tree plantations and natural forest management components in these drought-stricken areas.

Concerning (c) above, the mission confirmed the necessity of complementary FAC and CCCE cofinancing given the need to implement a sufficiently large- scale operation as a follow up to the former pilot FAC La Faya and Monts Mandingues projects.

6/ Appraisal mission consisting of a tropical forestry specialist and agronomist, an economist (IDA), an irrigation specialist and a tropical forestry specialist (IDA consultants) and a tropical tree crop specialist and agronomist (FAC/CCCE). - 31 -

3.11 A decision meeting (May 1978) to consider the issues raised by the appraisal mission found the mission's proposals adequate. Nevertheless, the meeting noted that 85% of the project's cost would be used to provide fuelvood to only 10% of the population through the Bamako rainfed tree plantation component, and questioned whether the project could be modified to reach more people in rural areas. The mission replied that (i) the immediate problem was mainly in the urban centers and that the scarcity of fuelwood was not yet acute in the rural areas; and (ii) that the project included pilot operations and studies to identify possible actions in the rural areas.

Negotiations and Approval

3.12 No changes were made in the draft credit agreement during negotiations held in January 1979. At the negotiations, the FAC representatives confirmed FAC and CCCE cofinancing as proposed at appraisal. Draft terms of reference for the expatriates to be provided under the FAC grant were agreed upon.

3.13 Since the Government of Mali had fulfilled the condition of Board presentation by presenting, as requested at appraisal, a satisfactory preliminary report on the financial situation of OAPF, the project was approved by the Board on March 6, 1979. The related Development Credit Agreement was signed on May 25, 1979.

Targets and Goals

3.14 Over a five-year period, the project aimed to:

(a) improve the supply of fuelwood and building poles to urban areas by establishing tree plantations;

(b) promote forestry techniques among the rural population; and

Project Description

3.15 As approved by the Board, the project included, as OAPF activities:

(i) the establishment and management of 3,400 ha of rainfed tree plantations in two forest reserves near Bamako;

(ii) the application of modern management techniques, on a trial basis, over 1,000 ha of natural forest near Bamako, and 200 ha of natural forest near Segou;

(iii) the establishment and management, on a trial basis, of 60 ha of rainfed tree plantations near Segou and of 70 ha of partially irrigated tree plantations near Mopti; - 32 -

(iv) the establishment and management of three forestry nurseries at Bamako, Segou and Mopti, and the rehabilitation of an existing one at San to provide seedlings to villagers through established extension services; and

(v) studies to investigate more efficient wood uses, to examine the set-up of rural forestry activities with a view to providing incentives for the population to participate, and to examine the scope for a possible follow-up project.

3.16 Total project costs, net of duties and taxes, were estimated at US$ 9.4 million (US$1 - MF 440/CFAF 220) including contingencies, i.e., MF 4,150 million or CFAF 2,075 million. IDA was to finance 48% of the total costs (CFAF 997 million or US$4.5 million); FAC was to provide the three expatriates through a grant equivalent to 14% of the total costs (CFAF 286 million); CCCE was to contribute 15% of the total costs (CFAF 304 billion); and GOM 23% of the total costs (CFAF 484 billion). Of the GOM counterpart funding, CFAF 90 million was to be directly appropriated from the national budget to pay the salaries of civil servants, with the remainder coming from revenue accruing to GAFF from the sale of wood obtained by clearing forest areas to be planted under the project.

3.17 The main quantifiable benefits were to be fuelwood and building poles resulting from the rainfed tree plantation component near Bamako (85% of the total project costs). The economic rate of return of this component was estimated at appraisal at about 11%, including indirect benefits from longer bushfallow periods. Excluding these indirect benefits, tne estimated economic rate of return was 9%. There rates were in line with rates of similar forestry projects in arid and semi-arid areas.

3.18 Given the special conditions involved in such a forestry project, IDA and CCCE were to disburse, immediately after credit effectiveness, an initial amount of US$ 0.25 million as a revolving fund to finance project expenditures (70% IDA, 30% CCCE).

IV. IMPLEMENTATION

Effectiveness and start-up

4.01 The project, which was approved by the Board on March 6, 1979, should have become effective, according to the credit agreement, by August 23, 1979. Additional conditions of effectiveness had been set as follows, however:

(i) opening of a special account;

(ii) confirmation by FAC that all conditions precedent to the assignment of expatriates for the first two years of the project had been met;

(iii) signature of a financing agreement between the borrower and OAPF; - 33 -

(iv) approval by the Board of Directors of OAPF of a report, satisfactory to the Association, on the financial position of OAPF as of December 31, 1978.

4.02 These condition were fulfilled in May 1980, and the project officially became effective on May 27, 1980. In fact, due to delays in completing the previous FAC-financed pilot forestry project, GOM had not been in a hurry to make the project effective. For practical purposes in order to avoid any financial overlapping with the previous FAC pilot project, the project really became effective on July 1, 1980 once all FAC funds provided under the previous pilot project were committed. Since OAPF was already fairly well managed as executing agency of the previous FAC pilot project, the project was able to become immediately operational after credit effectiveness.

Revisions

4.03 Due to price increases provoked by the second energy crisis, and to certain technical and organizational difficulties, it was jointly decided with OAPF, FAC and CCCE in 1983 to phase out the partially irrigated tree plantations component in the Mopti area. The particular conditions of the plantation site were not technically suitable (see complementary soil study SRCVO-1982), and OAPF, the national forestry agency at the time of appraisal, had become, following a territorial reorganization of the semi-autonomous agencies ("op6rations") reporting to the forestry department, the regional forestry agency of the second region (Bamako area) in the early 1980s, it would have been difficult for OAPF to implement and monitor this experimental component in the remote Mopti area. Attention was shifted to more rural and replicable forestry activities in the context of the Mopti Area Development Project (Credit No. 159 7-MLI), then under preparation.

4.04 The completion date of the project was pushed back one year to June 30, 1985. The final project completion report established by OAPF was issued late in June, 1986.

Implementation

4.05 Bamako rainfed tree plantations (see annex 5). By June of 1985, . 2679 ha of rainfed tree plantations had been established under the project in the Bamako area, compared with the appraisal estimate of 3400 ha. Of this number, 2538 ha (1426 ha in the La Faya forest reserve and 1112 ha in the Monts Mandingues reserve) remain because 141 ha were either abandoned or replanted. Moreover, overbrowsing by wandering cattle and uncontrolled bushfires have rendered a further 265 ha unproductive, so a total of 2273 productive hectares, (67% of the appraisal estimate) remains.

Given the difficulties encountered with this state-managed tree plantation component (see para 4.07), the area planted under the project should be considered satisfactory. - 34 -

4.06 The distribution of species planted over the 3054 ha established as of October 10, 1986 (if we include 516 ha planted in 1985/86 mainly under the PPF of the Second Forestry Project) is as follows:

- Gmelina 72% - Gmelina with Azadirachta (Neem) or Eucalyptus 12% - Azadirachta (Neem) 12% - Eucalyptus 4%

4.07 The main difficulties encountered with the Bamako rainfed tree plantations component were:

(a) unsuitability of some first plantation sites, due to the partial inaccuracy of the soil survey, undertaken under the FAC pilot project;

(b) use of inadapted semi-industrial species (especially Neem, which does not appear to be a "sociable" tree and consequently does not lend itself to planting in pure stands);

(c) poor quality of seedlings (inavailability of good seeds and the poor OAPF performance in seedling p:oduction in the early stages);

(d) insufficient and poorly distributed rainfall during the last severe droughts which shortened planting times and consequently affected development of seedlings and management of plantations;

(e) inadequate weeding in the early stages due to the lack of suitable equipment (resulting in severe competition between weeds and trees and difficulty in protecting the plantations from running bushfires); and

(f) overbrowsing by uncontrolled cattle.

4.08 It is important to note that the overly ambitious appraisal objectives have aggravated the problems encountered in managing the Bamako tree plantation component. Experience has shown that, given the conditions prevailing in the Sudanian zone, there is an optimal amount of acreage to be planted annually, and that it is very difficult to manage and monitor plantations any larger than this for a parastatal agency like 0APF. It was therefore decided under the Second Forestry Project that, to enable OAPF to fully control the Bamako rainfed tree plantations, the area to be planted annually would be limited to 600 ha instead of 1000 ha as foreseen in PY4 and PY5 under the First Forestry Project.

4.09 Concerning 4.07 (f), one of OAPF's main difficulties was its inability to prevent ever-increasing cattle from neighboring localities or, more often, belonging to prominent persons, from wandering in the newly planted areas. This was mainly due to the dramatic increase of cattle around Bamako as a direct result of the last severe droughts as well as the - 35 -

lack of political will and support from the officials concerned. It was therefore recently decided to fence the tree plantations to be established under the Second Forestry Project. This operation will be financed under an additional Norwegian grant with the World Bank as executing agency.

4.10 Concerning (b) and (c) the Norwegian grant will also finance a special unit with an expatriate technical assistant responsible for improving the quality of the plantations through better choice of planting stock and better forestry techniques.

4.11 Concerning (e) it should be underlined that the total Government ban on using prescribed/controlled bushfires makes it difficult for OAPF to prevent tree plantations from uncontrolled running bushfires at the peak of the dry season.

4.12 Given the difficulties faced by OAPF in managing the plantations in the Bamako area, a fourth expatriate specialized in the management of semi-industrial tree plantations was assigned to the PMU under a complementary FAC grant in 1984.

4.13 Bamako natural forest management (experimental activity). This component experienced delays and on the whole did not proceed very satisfactorily. 445 ha of natural forest to be managed were delimited in the La Faya forest reserve and protected from bushfires by a network of firebreaks (compared with the appraisal estimate of 1000 ha). The inventory of these 445 ha has recently been completed, and from the results of this inventory, OAPF will prepare the management plan. The main reasons for the delays in implementation were:

- the fact that OAPF gave priority to implementing the Bamako rainfed tree plantation component;

- chronic lack of labor;

- lack of technical knowledge in management of tropical forest;

- lack of experience on the part of forestry staff with this new type of operation; and

- overly ambitious appraisal objectives.

4.14 It is important to note that very little is known about the feasibility of various modes of natural forest management and research is lacking on the species and dynamics of natural woodlands in the Sudanian and Sahelian zones. Under the second forestry project, OAPF will be responsible for:

- general management of the forest reserves in the Bamako area (forest reserves of La Faya, Monts Mandingues and Soussan); - 36 -

- natural forest management on a experimental basis of part of these reserves, taking into account the mixed results of the natural forest management components of the first projects.

In addition to these OAPF activities in the forest reserves of the Bamako area, the Forestry Department will carry out, under the Second Forestry Project, a general study of Mali's forest and fauna reserves as well as national parks and will propose a long term national development plan for these reserves (DNEF component). Moreover, under the Second Forestry Project, two pilot schemes of agro-sylvopastoral management of the unreserved forest (rural forestry component) will also be implemented in close collaboration with the rural population and the established extension agencies.

4.15 It should be underlined that, since many trees and shrubs have died in the recent drought, OAPF has recently started, within the framework of the Bamako natural forest management component, to gather, transport and sell all of this dead wood through its marketing unit.

4.16 Sigou natural forest management (experimental activity). This component did not proceed very satisfactorily due to technical difficulties (transport of heavy duty equipment and marketing of wood) and managerial problems ("rugionalization" of OAPF). As a result, OAPF phased out this experimental component in 1984-85, after having marked out 47 ha in the Dioforongo forest reserve in 1983 (compared with the appraisal estimate of 200 ha), inventoried 20 ha and constructed 20 km of firebreaks. The Malian forestry department is negotiating the management and monitoring of this component through Dutch aid, which is very active in forestry in the Segou area.

4.17 Segou rainfed tree plantation (experimental activity). OAPF established 47 ha of tree plantations (mainly Neem and Eucalyptus) in the Dioforongo area near Segou in 1982-83 (compared with the appraisal estimate of 60 ha). Due to the "regionalization" of OAPF which led to managerial difficulties, it was decided in June 1985 that the Dutch-financed project in the Segou area would manage and monitor these experimental rainfed tree plantations. Given the harsh conditions in the semi-arid area of S6gou, preliminary results, though not uniform, have been encouraging, and should be closely monitored.

4.18 Mopti partially irrigated tree plantation (experimental activity). As indicated in para 4.03, this experimental component was phased out in 1983 due to technical and managerial difficulties.

4.19 Rural forestry nurseries. Under the project, OAPF rehabilitated three rural forestry nurseries (Mopti, San and Segou) and established three new ones in the Bamako area (Farabama, Thien, La Faya Pont). Nearly 500,000 seedlings (mainly Eucalyptus, Gmelina and Neem) were produced and distributed to the forestry department and administrative districts. Since seedlings were mainly distributed by the forestry districts and administrative institutions, it is difficult for OAPF to get a clear picture of the achievements of this component. In many cases, survival rates were low, particularly with the initial distributions which consisted - 37 - mainly of excessively fragile young seedlings. Competition from weeds, bushfires and browsing by cattle were also problems. Based on the mixed results of this component, it would seem that rural re-forestation operations should focus increasingly on total participation by the rural population (family tree plantations) rather than on community plantations, and that the "top down" approach should be avoided. "Special" planting operations (such as "fite de l'arbre", "mois de 1'arbre", etc.), often resorted to under the project, should be avoided since the plantations created in this way disappear rapidly once the "special" operation is over. Nevertheless, it should be underlined that the rural populations are doing more tree planting and that more recent rural tree plantations are promising, as indicated in the OAPF study on rural forestry (see para 4.19). Based on this participatory approach, assistance to tree/shrub/bush plantations will be provided to the rural populations in the area of Fana, Dioila, Koulikoro under a specific component of the Second Forestry Project.

4.20 Upon completion of the project, the forestry nursery of Mopti was transferred to the USA-financed forestry project in the Mopti area due to the "regionalization" of 0APF. The forestry nurseries of San and Segou were transferred to the Dutch-financed forestry project in the Segou area.

4.21 Studies. Several studies were carried out under the project:

(a) Organizational aspects of OAPF (ECTI/GLIGNEY 1980);

(b) Complementory implementation scheme for the partially irrigated tree plantation in the Mopti area (BDPA 1981);

(d) Soil survey of the selected partially irrigated plantation sites in the Mopti area (SRCVO 1982);

(e) Possibilities of forestry development in the rural areas (OAPF 1983);

(f) Possibilities of improving natural forest in the Bamako and Segou area (Notes - J. MOREL 1983);

(g) Preparation of a possible Second Forestry Project and complementary papers on the production of La Faya and Monts Mandingues forest reserves (OAPF/FAO/IBRD/CP - J.MOREL 1984);

In addition to the above, a FAC mission (J. CLEMENT) studied the possible design of a forest inventory in natural for-st reserves in the Bamako area, and OAPF studied the computerization of its accounting and financial system (R. PARQUET). On the whole, these studies were carried out satisfactorily. Annex 1 (A) contains a list of studies carried out by OAPF/FAC/FAO/IBRD/CP and the World Bank prior to project implementation. - 38 -

Procurement

4.22 OAPF's accounting and financial unit was particularly efficient garages, warehouses in purchasing equipment and in building offices, homes, on and workshops, and had no difficulty in following the Bank's guidelines procurement. OAPF asked for some minor changes in the type of machinery, performances. It equipment and vehicles, but these did not affect project were should be underlined that, as decided at negotiations, light vehicles purchased under the CCCE credit.

Costs

4.23 Actual costs, excluding:

(a) CFAF 218 million (US$0,8 million with US$1 - CFAF 221 1980-81) contributed by the previous FAC pilot project (without taking into account the value of existing plantations); and

(b) CFAF 160 million (US$ 0,4 million) for preparation of the 1985-86 plantation season in 1984-85 tbrough PPF 321 MLI of the Second Forestry Project;

amounted to CFAF 2,4 billion, or about 114% of the appraisal estimates. The cost overrun in CFAF, which was financed through savings from better exchange rates and elimination or partial implementation of experimental components, was mainly due to price increases provoked by the second energy crisis and underestimation of some basic costs at appraisal. On the other hand, mainly because of the "regionalization" of OAPF (see para 4.03), some costs were overevaluated at appraisal e.g., salaries and operating costs to be financed from GOM counterpart funding. This explains the relatively low participation of GOM (para 4.26). GOM's participation was timely and adequate, however.

4.24 The total actual costs by component, compared to appraisal estimates, are as follows (see annex 2):

Actual A E (E) Estimates (A)

million CFAF % million CFAF % %

96.U 129 - Bamako rainfed tree plantations 1763 85 2280 15 0.7 15 - Bamako & Segou natural forest management 97 5 19 0.8 95 - Segou rainfed tree plantations 20 1 8 0.3 9 - Mopti partially irrigated tree plantations 89 4 19 0.8 6 - Rural forestry nurseries 34 2 3 33 1.4 46 - Studies ... 72 2075 100 2374 100 114 - 39 -

4.25 Cost overrun is attributable to the Bamako rainfed tree plantations, which exceeded cost estimates by a little under 30%. Based on the actual costs per category of expenditures, building and nursery establishment exceeded appraisal estimates by 24Z, forestry field works by 43% and consultants by 271 (see Annex 3). Actual basic costs per hectare planted (excluding depreciation and supervisory costs) ranged from CFAF 159,000 in 1980 (133Z of appraisal estimate) to CFAF 166,000 in 1984 (1092 of appraisal estimate). Basic actual maintenance costs per ha for the years following the plantation year (excluding depreciation and supervisory costs) ranged from CFAF 208,000 in 1980 (162% of appraisal estimate) to CFAF 166,000 in 1984 (1092 of appraisal estimate). On the whole, maintenance and transportation costs (transportation of wood from clearing sites to Bamako) were much higher than calculated at appraisal. Concerning the rural forestry nurseries component, the actual cost of seedlings was CFAF 72 (US$0,20 - US$1 - CFAF 354) including depreciation and supervisory costs.

4.26 Disbursement and financial sources. Total actual costs were disbursed as follows in CFAF (see Annexes 2 and 3):

(E) Estimates (A) Actual A E

million CFAF % million CFAF % %

IDA 99' 48 1563 66 157 FAC 286 14 255 11 89 CCCE 308 15 308 13 100 GOM 484 23 248 10 51

2075 100 2374 100 114

4.27 Based on the average rate of the dollar over the intervening years (US$1 - CFAF 354), the distribution of the total actual costs disbursed was as follows, compared to appraisal estimate (US$1 - CFAF 220): - 40 -

Estimates Actual A E

million US$ %

IDA 4.5 4.5 100 FAC 1.3 0.7 54 CCCE 1.4 0.9 64 GOM 2.2 0.7 32

9.4 6.8 72

4.28 All IDA funds (US$4.5 million) were disbursed as of June 30, 1985. IDA disbursements were satisfactory in comparison to the appraisal estimates (see details in basic data sheet).

4.29 The project did not have any dffficulty getting counterpart funds on time and in full from OAPF and GOM as scheduled at appraisal (see para. 3.16). As explained in para 4.23, due to overevaluation at appraisal of salaries and operating costs to be paid by GOM, GOM participation in CFAF was lower than foreseen (51%). These counterpart funds, CFAF 248 million (appraisal estimate: CFAF 484 million), were distributed as follows:

Total OAPF GOM (Nat'l Budget) ...... in MCFAF......

1. Cofinancing with IDA/FAC/CCCE (4%) 98.6 98.6 - 2. Support staff (100%) - civil servants 62.0 - 62.0 - other staff 51.4 51.4 - 3. Staff operating costs (100%) 36.0 36.0 -

248.0 186.0 62.0

This was adequate for its participation in the project, since supervisory costs (staff and operating costs) had been overestimated at appraisal (para 4.23). Total project OAPF revenues, accruing mainly from wood sales, amounted to CFAF 426 million during the project of which 287 million was collected.

Performance of expatriate consultants, contractors, suppliers and borrowers

4.30 Performances were satisfactory for the four expatriates provided under FAC grants: two mechanics, an accounting and finance specialist, and a forestry management specialist. The accounting specialist was especially useful in setting up and monitoring the cost accounting system and the forestry works program, as well as in computerizing OAPF's accounting and - 41 - financial system. Due to overevaluation of FAC salaries, FAC participation in CFAF was slightly lower than expected (89%).

4.31 There were no problems with consultants appointed by the project to carry out the different complementary studies (partially irrigated tree plantation in the Mopti area, management of natural forest, rural forestry and preparation of a possible second phase project, etc.). Performance of contractors and suppliers was also satisfactory.

4.32 Despite difficulties encountered by the project (see para 4.07), the borrower's technical and managerial competence was, on the whole, satisfactory. This is mainly due to the efficiency and capability of the project director and his staff, especially in the OAPF marketing unit.

V. FORESTRY IMPACT

Production (see annex 6)

".01 It is too early to assess accurately the production potential of the rainfed tree component. Nevertheless, barring unexpected calamities and assuming regular maintenance and exploitation of the plantatiors over 30 years, 5otal production would be in line with the appraisal estimate (780 000 m ), despite the reduction in planted area. Judging by initial results, average production per ha and per year would be 9.3 n over 30 years (with appraisal estimate of 9.6 m3 over 24 years).

5.02 Wood obtained by clearing forest arppe planted under the project totaled about 142.000 st res, with average production per ha of 53 steres in the La Faya forest reserve and 39 steres in the Monts Mandingues forest reserve (compared with appraisal estimate of 55 steres/ha of firewood plus 2 m3 he of timber wood).

Environment

5.03 The project was beneficial to the environment, especially in the endangered urban area of Bamakc. Due to the dispersal and limited size of the other activities (natural forest management and rural forestry) it would be difficult to quantify their impact. Nevertbeless, the project played a significant catalytic role and has led to increased awareness on the part of Government and the population on the subject of forest and environmental protection.

Technological changes

5.04 The main technical themes involved planting Gmelina, Neem and Eucalyptus on a relatively large scale in semi-industrial and rural plantations. Except for some rather poor performance in raising young seedlings and lack of protection from wandering cattle, these themes were applied correctly. However, technical packages were sometimes ill-adapted to the harsh climatic conditions prevailing in Mali. A critical review of existing technical packages is therefore needed in the near future (better adapted planting stock, and improved tree nursery techniques, planting and - 42 - maintenance). Practical experiments and studies conducted under the project cast some doubt on whether even sophisticated packages will be able to meet the re-forestation needs of a country like Mali. Rural forestry should therefore concentrate more on increased and sustained participation of the rural population in re-forestation. Packages should be developed which would integrate forestry into the traditional production systems (multisectoral and participatory approach including agriculture, livestock, forestry and wood-based energy activities). A start would be made under the Second Forestry Project (improvement of planting stock and management of unreserved natural forest).

VI. RATES OF RETURN (see annex 6)

6.01 Without taking into account indirect benefits and eliminating part of the costs of forestry field works 7/ as well as technical assistance 8/ (on the grounds that this represents the portion devoted to the training function), the preliminary economic rate of return (based on 1984/85 constant prices) for the only quantifiable component of the project, i.e., the Bamako rairfed tree plantation is 6.6%, based on the same assumptions as the SAR of the Second Forestry Project (Report No. 5787-MLI) 9/.

This result is in line with the appraisal estimate (9%) given price increases provoked by the second energy crisis (wr.ich led, in particular, to drastic increases in investment and operating costs for heavy duty equipment used to establish and maintain industrial tree plantations, while the price of fuelwood did not increase at the same pace) as well as the difficulties encountered by the project in implementing this component (see para. 407). Calculation of the ERR takes into account all the actual costs (corrected into 1984/85 constant prices) involved in establishing the plantations and projected exploitation and maintenance costs. The production and cost estimates assumptions for the post project period (1986-2022) are similar to the OAPF assumptions (OAPF-PCR annexe 6).

7/ PY1 - 25%, PY2 - 20%, PY3 - 15%, PY4 - 10% and PY5 - 5%.

8/ 60%.

9/ In particular, assumptions for economic prices of wood products delivered to Bamako are as follows (in CFAF):

Fuelwood/st6re 3,750 x 1.55 = 5,812.5 Building pole/unit 463.1 Timber wood/m3 22,968. - 43 -

VII. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT

Institutional Performance

7.01 In terms of institutional design and growth, project performance was satisfactory. 3APF's project management unit, set up under the previous FAC pilot project, was fully operational at an early stage and functioned in a timely and efficient manner due largely to the dynamism and capability of the project direction. This made it possible to set up, staff and equip the Project Mouitoring Unit (PMU) early, despite the lack of experienced forestry officers. Studies carried out under the previous FAC pilot project on OAPF accounting system gave the PMU, and especially its accounting and finance unit, a good start. The secondment -of an additional FAC-financed expatriate as forestry works planning and monitoring specialist also improved the efficiency of OAPF. One of the project's main achievements was to create a capacity for planning, management and monitoring (including the creation of a valuable cost accounting system) within OAPF and consequently the Forestry Department.

Supporting services

7.02 The project maintained satisfactory relations with departments, services, and agencies dealing with forestry and rural development.

Cost recovery

7.03 As foreseen at appraisal, OAPF receives regular income directly from the project through (a) sales of wood (timber wood, building poles, firewood and charcoal) obtained by clearing areas planted under the project or from plantations established under previous projects, and (b) the provision of services. These returns were sufficient to cover the counterpart funding to be provided by GOM (see par 3.16), even though the market price of wood does not reflect the true cost of wood from plantations or natural forests. The average price of the stare of firewood delivered to Bamako ranged from CFAF 1,100 in 1980 to CFAF 1,500 in 1985 (compared with the appraisal estimate of CFAF 1425 in 1978). Since June 30, 1986, the pri. of the st&re of firewood sold by OAPF has been CFAF 2,000.

Staffing and training issues

7.04 The project provided on-the-job training to forestry officers both at headquarters and in the forestry districts. Nevertheless, the lack of forestry officers with experience in innovative techniques is still an issue.

Accounting and Reporting (see Annex 1)

7.05 With the assistance of the expatriate in charge of the accounting and financial aspects of the project, OAPF set up an efficient computerized cost accounting system. Annual audits showed that project accounts were satisfactorily kept. -44 -

7.06 OAPF fulfilled the Bank's reporting requirements consistently and on time.

7.07 OAPF's accounting and finance unit has proved to be effective and has been maintained and expanded into a central financial management unit under the Second Forestry Project. OAPF's viability and reputation as one of Mali's most efficient agencies is one of the project's greatest achievements.

VIII. SPECIAL ISSUES

Large/medium scale rainfed tree plantation

8.01 The implementation of large/medium scale state-managed tree plantations for fuelvood and building poles in the Bamako area has pointed up the technical and economic difficulties associated with this type of "peri-urban/semi-industrial" plantation in semi-arid zones. These plantations must be made more profitable in order to develop them further and to curb the ongoing urban energy crisis. Major lessons learned (and reflected in the design of the Second Forestry Project) concern:

(a) the need to choose plantation sites carefully and in particular to avoid marginal lands systematically;

(b) the need to improve planting stock and forestry techniques;

(c) the limitation of the annual area to be planted to that which can be easily maintained and supervised by the managing entity;

(d) the reduction of costs for planting, maintenance, exploitation and marketing through better planning and monitoring, and the reduction of wood transportation costs by selling wood preferably on the plantation sites;

(e) the need for the price of wood to reflect its economic value and consequently to increase the current low prices of wood in agreement with government.

Management of natural forest

8.02 Where natural tropical forest is concerned, little is known about the feasibility of state-managed and community/village-managed management schemes, and there is a dearth of research on the species and dynamics of natural woodlands, especially in the Sudanian and Sahelian Zones. The Second Forestry Project should provide valuable information on this.

Rural forestry

8.03 Given the variable and sometimes disappointing results in rural forestry, technical themes must be critically reviewed and approaches redefined in order to improve the offtake of rural forestry activities. As underlined in para. 5.04, there is a crucial need for better adapted and - 45 - more attractive technical packages and for a more participatory and multisectoral approach, i.e., increased and sustained participation of rural populations in the management of their natural resources. This approach will be promoted under the Second Forestry Project.

IX. CHANGES IN THE SECOND FORESTRY PROJECT

9.01 The Second Forestry Project is based in large part on the lessons learned from the first project. This follow-up project has been designed to avoid problems mentioned previously and to take advantage of opportunities pointed up by the first project. The Second Forestry Project is designed to:

(a) prevent further degradation/disruption of the natural unreserved forest cover of the second region by implementing pilot community/village based management schemes (including bushfallows and forest parks), by assisting the planting of trees, shrubs and bushes (such as live fencing, shelter belts, woodlots...) in the farmlands;

(b) improve supplies of local wood products for Bamako while avoiding any further degradation/disruption of the natural reserved forest cover of the second region, through the development of state-managed semi-industrial tree plantations and management of the forest reserves in the Bamako area based on better adapted technical packages and management techniques;

(c) prevent further degradation/disruption of the vast National Park of the "Boucle du Baoule" close to the Bamako area by providing assistance to OPNBB ("op6ration Parc National de la Boucle du Baoule";

(d) strengthen the national forestry department's ability to identify, design, plan, implement and monitor its development and control activities;

(e) improve the knowledge of the forestry sector through a series of national studies.

(f) bring about changes in the policy environment, particularly price policy.

9.02 The project would achieve these objectives by financing the following main components:

(a) pilot rural forestry activities in the Second Region;

(b) assistance to the "Boucle du Baoul6" National Park (OPNBB);

(d) support to the Forestry Management and Production Operation (OAPF) in the Bamako area; and

(e) creation of and support of a Central Administrative and Financial Management Unit, through expansion of the OAPF unit.

X. BANK PERFORMANCE

10.01 The Bank's interpretation of the problems and priorities for the forestry subsector were appropriate, as were the resultant project and credit conditions. Except for the partially irrigated tree plantation component in the Mopti area, the project components were appropriate although their implementation schedules were sometimes too ambitious. Experimental components were delayed or dropped due to technical and managerial difficulties (regionalization of OAPF).

10.02 OAPF's implementation capacity. The Bank overestimated the OAPF's implementation capacity, especially for the components to be carried out or a trial/experimental basis. This was mainly due to the newness of such activities and the lack of Bank knowledge.

10.03 Scheduling for implementation of civil works and procurement. The Bank's procurement procedures did not adversely affect the project in any way because of the efficiency of the borrower and of OAPF, especially the lattar . iccounting and financial unit.

10.04 Special covenantc and supplementary conditions. The borrower complied with credit conditions in a timely manner and with no particular problems.

10.05 Bank supervision. The schedule of joint supervision missions (IDA/FAC/CCCE) was adequate in view of the borrower's and 0APF's managerial and technical competence. Due to the difficulty in implementing the partially irrigated tree plantation in the Mopti area, the Bank decided to have this component reviewed in February 1981 by an IDA irrigation specialist. The supervision missions contributed significantly to the resolution of most of the major problems that arose during project implementation.

10.06 Working relationships. Working relationships between the Bank r.nd the borrower were good, especially with OAPF. The Bank was effective in helping OAPF and the Forestry Department in its dealings with the Government. The Bank's reporting requirements were acceptable to OAPF, which did not hesitate to provide numerous .omplementary and supporting documents. - 47 -

10.07 Implications. In terms of Bank policy on forestry and improved management of natural resources in Mali, the issues raised by the project have suggested a need to investigate better adapted and more profitable/attractive technical packages and new approaches in rural forestry. The follow-up project expands on this project by trying to improve the techniques tested under the project and by promoting new ones.

XI. CONCLUSIONS

11.01 On the whole, given the status of the forestry subsector before the project, the results of the IDA/FAC/CCCE forestry project are promising. The government and the population are now more involved in forestry activities. Planning, management and operational capacities were emphasized through on-the-job training, and this was successful. The project aLso helped Mali to better develop its forestry activities. Nevertheless, it should not be forgotten that, as a result of exponential population growth, increased wood consumption and the expansion of grazing and farming areas, the fragile forest cover in Mali is gravely endangered. Thus, the country must focus on the protection and development of its forest cover by means of attractive and innovative forestry techniques, and by pursuing new approaches in environmental protection and development (including more rational use of wood and increased use of substitutes). -48- ANNEX 1A Page 1

Main notes, reports and documents issued prior to project implementation

- The Role of Forestry in the Rehabilitation of the Sahelian Zone

Countries (C. Holloway WB 1976)

- Central Sahel - Forestry Reconnaissance mission (FAO/IBRD/CP - WB

May 1977)

- Rapport de la Mission de Pr6paration d'un Projet Forestier au

Mali (FAO/IBRD/CP - February 1978)

- Mali Forestry Project. SAR and Supporting Documents (WB January

1979)

- Project President's Report (WB February 1979)

- 0APF Syst6me Comptable - Comptabilit6 G6nCrale et Analytique A

Compter de Janvier 1979 (FAC/FIPEC 1979)

- OAPF Analyse et Diagnostic de Gestion (FAC/G. LIGNEY 1979)

- OAPF Bilans et Comptes 1977, 1978, 1979 et au 30.06.80 (FAC/FIPEC

- 1978-1980)

- Maps of Soil and Vegetation of La Faya and Monts Mandingues,

forest reserves (FAC/ORSTOM 1975-1980)

- OAPF Progress Reports (prior to 1980) - 49 - ANNEX 1B Page 1 of 2

Main notes, Reports and Documents issued under the Project

1. OAPF Annual Progress Reports 1980, 1981, 1982, 1983, 1984, 1985

2. OAPF Bilan et Comptes au 31.12.80 OAPF Bilan et Comptes au 31.12.81 OAPF Bilan et Comptes au 31.12.82 OAPF Bilan et Comptes au 31.12.83 OAPF Bilan et Comptes au 31.12.84 OAPF Bilan et Comptes au 31.12.85 (FIPEC)

3. OAPF Rapport d'Exécution financière 01.07.80 - 31.12.81 OAPF Rapport d'Exécution financière 01.07.80 - 31.12.82 OAPF Rapport d'Exécution financière 01.07.80 - 31.12.83 OAPF Rapport d'Exécution financière 01.07.80 - 31.12.84 OAPF Rapport d'Exécution financière 01.07.80 - 31.12.85

4. OAPF Etude d'Organisation 2ème mission (ECTI/G. LIGNEY 1980) OAPF Etude d'Organisation 3ème mission (ECTI/G. LIGNEY 1981)

5. Projet Forestier - Plantation Forestière partiellement irriguée près de Mopti - Programmation (OAPF/BDPA/B. FAYE 1981)

6. Projet d'Irrigation Localisée sur plantation forestière/unité démontable de 25 ha - Note Technique de Présentation - CoÛts (SETI 1981)

7. Etude Pédologique des périmètres de Sévaré et de Togonrogo en vue d'une implantation forestière (OAPF/Ministère Agriculture/SRCVO 1982)

8. Compte Rendu de Mission au Mali. Note Complémentaire en liaison avec le projet forestier conjoint AID-CCCE-FAC-MALI (CTFT/J.P. Goudet 1982).

9. Rapport d'un voyage d'études au Mali - OAPF (ENGREF - F. GOSSET 1982)

10. Etude du Développement Forestier en milieu rural et définition d'un avant- projet pour la région de Koulikoro (OAPF/J. THOMSON, G. TAYLOR, P. MONTAGNE, D. SYLLA, M. KEITA, A.B. KONATE - 1983)

11. Volet amélioration des forêts naturelles (OAPF - Notes de . MOREL 1983)

12. Mali - Préparation du second projet forestier (OAPF/FAO-CP J. MOREL et J. J. GARIGLIO 1984)

13. Forestérie rurale IIe Région - Amélioration du matériel végétal et des techniques sylvicoles, les pare-feu arborés (World Bank appraisal working papers/CTFT/M. MALAGNOUX 1985)

14. Aménagement des forêts classées de La Faya et des Mts Mandingues (World Bank appraisal working paper/J. MOREL 1985) - 50 - ANNEX IB Page 2 of 2

15. Projet Forestier conjoint IDA/FAC/CCCE 883/MLI - Rapport d'achèvement (OAPF/J. MOREL 1986) - 51 - ANNEX 2

Project Costs and Financing per Component (in million CFAF)

Source - "Rapport d'Ex6cution Financi6re 0APF"

Camponnt Appraisal Estimate Actual Actual total as S of Total total approval estimate total

1. Bamako Rainfed Tree Plantation 1,763 2,280 (b) 129 2. Bamako Natural Forest Management 77 12 16 3. Segou Natural Forest Management 20 3 15 4. Segou Rainfed Tree Plantation 20 19 95 S. Mopti Partially Irrigated Tree Plantation 89 8 9 6. Rural Forestry Nurseries 34 19 56 7. Studies, Training and Audit 72 33 46

TOTAL 2075 2374 114

Financing m. CFAF m. US$ m. CFAF m. US$ m. CFAF m. US$ (c) (d)

(1) IDA 997 4.5 1.563 4.5 157 100 (2) FAC 286 1.3 255 0.7 89 54 (3) CCCE 308 1.4 308 0.9 100 64 (4) GOM 484 1.2 248 0.7 51 32 2075 9.4 2374 6.8 114 72

(a) Excluding: (1) CFAF 218 million (US$ 0.8 million in 1980-81) as contribution of the previous FAC pilot project. (2) CFAF 160 million (US$ 0.4 million in 1984-85) as preparation of 1985-86 plantation season in 1985-86 through PPF 321 MLI of the second forestry project. (b) Including total costs of PAC expatriates (CFAF 255 million). (c) Exchange rate at appraisal - US$ 1 - CFAF 220. (d) Intervening years average estimate rate - US$ 1 - CFAF 354. of Expenditure Project Costs per Category (in million CFAF)

Financit-re OAPF" Source - "Rapport d'Exicution Distribution by Cofinaciers Actual total as % of CON S Appraisal Actual % FAC % CCCE % Category appraisal estimate IDA Estimate Total Total

0 16 11 0 124 125 89 - 141 80 17 19 4 establishment 114 376 79 - 0 1. Building and nursery 101 62 5 468 475 78 - 0 212 17 2. Machinery and vehicles 143 966 866 1240 3. Forestry fieldwork 100 0 - 0 113 staff (civil servants - 0 - 4. Supervisory 76 - 0 149 113 0 255 100 - - and support staff) 89 - 14 286 255 0 - 0 17 FAC, 96 76 - 5. Expatriates 114 127 36 100 89 0 - 0 - - 6. Consultants 114 - 103 36 255 308 2148 7. Staff operating costs 114 1563 2073 2374

"I - 53 - ANNEX 4 Page 1 of 2

Project Organization and Objectives

Appraisal Actual Planted Productive

Project Objectives or Focus - Bamako rainfed tree plantation (ha) 3,400 3054/2789 - Segou rainfed tree plantation (ha) 60 47 - Bamako natural forest management (ha) 1,000 445 - Segou natural forest management (ha) 200 47 - Mopti partially imported tree plantation (ha) 70 - - Rural forestry nurseries ('000 seedlings) 200/400 470 - Training - -

Studies - Better uses of wood I (see Transenerg Study/EGYS1) - Rural forestry probabilities 1 1 - Preparation of a second phase project 1 1 - Completion report 1 1 - Mopti partially irrigated tree plantation - programmation -1 - irrigation system -1 - soil survey - 1 - Natural forest management - 2 - Cost accounting system - 2 - Organization and management - 2 - Audits 5 5 - Construction 2 - PMU (Bamako) m - 1500 - on plantation sites (La Faya, Monts 2 Mandingues) m 1000 - Tube well dwellings - 8 - Nursery establishment - inside the Bamako area 1 3 - outside the Bamako area 3 3

Project organization and performance - PMU (establishment and organization) good - Liaison/coordination with the existing forestry department and districts good - Liaison/coordination with other departments and agencies concerned by the project good - Collection of data and setting up of a cost accounting system excellent - Order and supply of inputs and equipment good - 54 - ANNEX 4 Page 2 of 2

Institution Building - Subsector of forestry districts adequate - Assistance to rural forestry good - Assistance to research adequate - On job training excellent - Training in criteria services NA

Consultant use and Performance Identification (FAO/IBRD/CP - WB) good Preparation/appraisal (FAO/IBRD/CP) good Project director (Malian forestry officer) excellent Project executives (Malian forestry officers) good Project advisors (expatriates) good Main special studies - Rural forestry possibilities (independant consultants) good - Feasibility studies (FAO/IBRD/CP and OAPF) good - Completion report (OAPF) good KEY INDICATORS

Bamako Rainfed Tree Plantation (in ha)

1980 1981 1982 1983 1984 1985 E A E A E A E A E A E A

Monts Mandingues per year 65 191 226 282 348 283 cumulative 65 256 482 764 1112 1395

La Faya per year 150 313 272 356 335 233 cumulative 150 413 735 1091 1426 1659

Planted: per year 600 215 800 504 1000 498 1000 638 - 683 - 516 cumulative 600 215 1400 719 2400 1217 3400 1855 3400 2538 3400 3054 1/ Unproductive (265) (265) 2273 2789

1/ of which GMELINA 72% GMELINA with EUCALYPTUS 12 NEEM 12 EUCALYPTUS 4

TOTAL 100 - 56 - ANNEX 6

Economic Analysis of the Bamako Rainfed Tree Plantation Component mI - FOESTRYi

RAIlFEDPLfAM IffS

ECOIINICAMLSIS

000 CIF

1980 1981 1982 1983 1984 1905 1986 197 19, 199 990 99 992 1993 194 1995 1%

KHEFItiTS

9l fifLWooB (F91EDuftu!' 3949.00 21906.00 49342.00 38689.00 35m59.00 - - - - - DA FIEfOOD (STERES)- - 4730.00 7993.00 1L551.00 28535.00 32181.00 42717.0 571.0 854.0 4a.vu~ n. B2- x 5.813 27495.49 46463.31B654.06 16573.96 1070 .15 20313.92 694.5 2m~3.hO 237067.% 804N69.66 12152.N l BILDINGPOLES (LIITS) - 30940.00 39900.00 69850.00 194300.00147440.00 76500.18 14650.0 061M0.00 223620.n.0 23IA MM* O.00 03 - Bx0 .463 - 14325.22 18473.70 32340. 5 09960.908264.72 l22699.63 76i9m12 45.44 a93m.t6 17221.54 44744.32 K0 LITRV001 143)------å15.sa. sM. 94 = X 22.918 ------t3^63.26 65.70 @900.57 DYK&k 18027.00 35739.00 40556.06 72504.00 '048.00 ------

TOTALKNlEF11% t M P2 t ' t p4 t 851 21975.00 57545.00 89898.00 111193.00 114907.00 - 4t820.71 64937,0£I20994.61 255834.6 255332.07 3/1013.55 242706.1731295.44 35467.5 3M046.90 800371.20

fA BU'IL-14 I NiSERT EE'A. 72728.00 38493.00 119L0.00 1233.00 63=.00 1000.00 1000.00 1000.00 I000.00 000.00 1000.00 10S0.0 .M0.1* ~§ iM tm IM.N. ti - CA1 0.98 71273.44 37723.14 £1720.80 £20.34 62610.24 900.00 990.00 9M0.00 9M.00 9M.00 900.00 9M.00 9M.00 M,fi 90.M M, M. Ck MHALNIERY1 VEKICLES 26471?.00 I19054.00 43870.00 202148.00 7272.00 ------12 :9 1 0.995 263393.42 118458.73 430.s5 201137.26 7235.64 - - - et IokSIky FIELIU~R0S £980.00 218396.00 325074.00 318315.00 311968.00 49531.00 65200.00 60056.00 69744.00 12106.00 10110.00 f6åf7.00 119678.0 1^4. 1527.00 1 92.U @~ (3 = C 6.985 195581.60 215120.06 320397.89 313540.28 307200.48 4970.04 64229.f8 59155.16 d8697.04 120067.56 107473.3 15454.00 10017.3 100.10 1663.10 146166.12 I001. C§ SufPEVISRTSTAff 5099.00 215f5.00 22896.00 24790.00 29150.00 10000% 10000.N lo .00 N 0.00 000 10000.0010lmN00.00 . e .00 00.0 tese.nM9 te . C4 CD1 0.95 14344.05 20439.25 21751.20 23550.50 27692.50 9500.00 9500.00 9500.00 9500.00 9500.00 9500.00 9500.00 00 .0 95=.60 950 .0 W50.e t STAFFOPERAINS COSTS 3876.00 i318.00 8692.00 9401.00 5747.00 5000.00 5000.00 5000.00 500M 5000.00 5 0 ^000.0 50.0 5M.40 M0.0 £5 C= 1 0.975 3779.10 8110.05 8474.70 9165.98 503.33 4875.00 0«n.00 475.00 4975.00 4875.00 873.00 07.00 If5.0 75.0 07.0 0M5.0 05.0 ef C^NSIK.iMT15 13945.00 14270.00 11355.00 10404.00 30478.00 - - -- C6 -f 1 0.4 5578.00 5711.20 4542.00 4161.60 15391.20 - - - - - ch EXPA1RIItS 39950.00 42500.00 47500.00 62500.00 .2500.90 - - - - - C?£ Cii 1 0.4 15900.00 17000.00 19000.00 25000.00 25000.00 ------SUBTOTALC[CtC2tC3C4tCStMC73 U69929.41422562.43 429337.24 577763.95 45021.39 64143.04 79584.8074510.16 84052.04135422.56 12202.» 17/M9.0092372.3 1453.l 164010.t016t521.12 95..

CH EUKTIOS 82140.00c-/43669.20!d1497±1.I /31831.50fll9,598.405439187. / - - - - - CU - C 1 0. 995 90907.90 43014.16 40029.68 31354.03 15364.42 629599.20 ------.

SUBTOTAL i1 409021.71 379548.27 361367.56 54409.92 4,456.96 - å5456.1679504. 8 74510.6 0~4052.0°135422.5 92228.b 17M9.00 124372.83 1453.10 16400. 0 161521.12 ^ 856.9

INFLATI[ONRATES 1.15 1.10 1.05 1.03 1.00 1.00 1.00 1.00 00 1.00 l.00 1.00 0.00 1. 00 9. 00 l." 1.0

f10 L51 562374.96 417503.09 400372.93 562832.22 43,45 .96 -56545.16 7954.8 74510.16 04052.84 13b422.56122020.35 17^89.00 1243712.83 2~3..t 61.0 161521.12 90^56.N

M 19N115 540399.96 -359958.09 -310474.93 -451609.22 -320549.96 565456.16 -37764.17 -9573.15 36941.77 120412.30 13M04.52 197204.4 110413.31 169111.07 1904.19 157325.78 61414.4t ------^------It a/ Fuelwood from clearing of plantation sites e/ 0.15 of CC. bl Provision of services. f/ 0.10 of CC. e/ 32500 as contribution to the previous pilot FAC project + 0.25% of CC. /l 0.05 of CC. -- 0.20 of CC. b/ Contribution to the Second Forastry Projec (6ee tåilan et Cofptes 19859 - M l Forestry II). ―私！&i；歟；鼾‘排；;&ij.. ’饑黜－ ’難離’1．辭’難“&&I&I’義― -&!!!&1!’雖轎‘i’難’&11茹‘&&i&&i&11! 俗乓寫攤賽’ 整整整” 整唱徑警整整” ” 也 ’‘ 些里整豐！！劊 I· 攤辭” 鳥灑萬華‘ -&!--&-― ‘戰造寥豐矓華蘇遜”弓i 榦””11藝豐茹 ’&&i&&i&11! -&!-’矓矓‘i 蘇‘&11誹I&&‘計 i&11, !&-!’讖粹’！辭”!I群 ‘&&;&;&;; !&!-’業矓：辭”;：誹：&&&I&i整；1. !&-!’矓矓‘i 辭”矓識”&i&i&i:, !,!:!;!!!,!.!!!！〔〔〕！〕．!!-！〕！.！〕〕！〕 ,&,!i 〕11霆1 11 華”111111&11’〔i .&,-:1 11華i ！箠基”:11暮I:&&: ：各：〕 -&-,:1 11華i 〕華華‘i:i韋i:&i:&:i ，藝、 111 〕華i ；薑暴’：〕i韋11 〕〕邑i 〕莖！：〕11;;i 薑華；11華i;&i 〔盔i 〕 !&&:i〕；華i;i 華：11 11 【： :&:i ! ．常 , ：〕！！〕：誹＊喜！:!：華：!:!:!!:,，、： ------1W 1016 1017 lig 2019 20,10 2VI 102? ------

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PI fullwmP 411D MLUD M FtIftWOOP(SYER[S) igteg.oo i974.oo tn.oo 5314.00 14%.00 5UP-90 U31.00 9.1 ý M K 5.813 tilm.6. 11414.eé1"79.41 MM.28 B173.OØ 34.23.M 32733.00 r* PURDING5MES (UNITS) lo"O.00 13m .0013100.00 1870.00 In".00 6200.00 11108.00 BI = » X .463 W124.38 6426.44 6U5-30 B&SØ.10 ¥167.40 1979.60 ~ .30 K TIKKRUUDDM) 34750.00 3M0.00 629.00 2~ - - 24M.00 B4 - K X 22.918 796400.% 4n4.00 141,09.16 436U.O0 M936.64 - OTNER-hl - - - -

IDIALKNEMS [91 1 #2 + $3 1 §4 ý 95) 95705.50 Ur,3.30 321b3.67 B5W.30 17340.4 6,94.46 9u34.94

COSTS

C& 9U1LDINGt MUMRYfSTM. ION.oo IM.00 IM.90 IM.00 IM.00 IM.00 IM-00 IM-90 Cl CA 1 0.98 M.00 M." 9".90 M.00 M.00 M.00 M.00 m." C* n"lom i VERICLES C2 Cll 9 LM CC FMSTRY FIELKMS øni.co 15423.00 lå77.K 367å4.80 9101.08 31".00 37841-ff C3 CC X O.M 417794.65 4112.16 15191.66 1651.05 36212.54 "64.49 3141.17 36M-19 eg MW~ STAFF l~." IOM.00 IDM.00 INN." IOM.00 IM.N IN"." IOM-00 C4 C» X §.95 ~.00 ~.Oe ~.00 ~30 ~.00 ýM. m ""m" "",0* Ct STAFFOPEMIING COSIS SM.00 SNO.CO SM.00 5M.00 WD.OD sm." M ." sm." CS C[ X 0.975 4e75.eo 4675.00 en.00 407!>.00 4675.00 4975.00 4075.00 4075.00 a CONSKTAKTS C& CF X 0.4 CG EXPATRIATES C7 CG x 0.4 5180.39 »10tAL [Ci#C2<34C4#M#Có«Yl 431149.65 ' 5447.ti »546." 17N6.55 SIU7.54 24119.49 1106.17

- CH KPUCIlms cg = em ý 0. M

NETSUfTrTAt 433149.å5 5W7.16 M46.66 1~ .95 SIU7.54 24319.49 18496. V Si940.39

INFLAIION RATES 1.00 1.00 l." t." 1.00 1.00 1.00 1.8*

IDTALCOSTS 433149.65 55467.16 39546." 170K.eS SIU7.54 21119.49 104%.17 518".39

NETKNIFITS 524453.95 311M-15 1907.2? -InU.65 33616J4 -6979.01 43794.U

------~ I l I I I

MALI - FORESTRY PROJECT A L G E R I A PROJET FORESTIER PROJECT AREA I ZONE DU PROJET

M Rainfed Tree Plantation / Plantation forestiere en sec A Irrigated Tree Plantation / Plantation forestiere irriguée Ø Natural Forest Management / Amenagement forêt naturelle Rural Forestry Nursery I Pepiniåre forestiere rurale s. Isohyets in mm / Isohyetes en mm Rivers I Fleuves MA L I- G Regional Coptals I Chef - lieux de region National Capital / Capitale Region Boundaries I Limites de r'gion - - International Boundaries I Frontières d'Etet -T Goo 0 100 200 30 400 - KILOMETERS

Kayes Mopri T KyesN I G E R SENEGAL?

NaA. Segou

1 MAURITANIA an MALI -U - U K N FA SO

så GUINEA ' -j o \~ G U l N E A Sikasso-

5<50 BE N IN -A G H A N A -- S-E RR A - .~"".T 51 LEONE\ . OGO* EONE_._COTE D'IVOIRE < I I., 5 IBRD r 3' r•r r3 rb/o,, -,sede. ieo ø,v JULT MAIi' T sØ ,as bae priterd b ,oirilrWlin weir' tH aani,afr the1 oenzrec aiT.brOf j.aunders attoatn.cuan, en a ea,wH- FORESTRY PROJECT PROJETFORESTIER myt'"-'''°tInie,asWpen,d1..,weæ I

FORESTRESERVES UNDER PROJECT FORETSCLASSEES INTERESSEESPAR LE PROJET Bonombo

Boaolko od Segou- Ranfed Tre BomakoerSgou PIootao Foreslre Plontaoo and NoIsrol ForestManagemet/ .e **c et amenag.ment fort naturøllø

Other Ciass,f.ed Forest Reservesi Atres foret cIossées SE FCla idi Primary Ali - we,ther Roods I Roules principales, tout lemps de Nio-.ot det NCl~un4.- Secondary All -weather Roads I Routessecondoires, tout temps Tome -- --- Secondary Dry -season Roads / Roures secondaires, sasen mche kra Konod -- racks / Pistes d-Gar.

Rodway / Chenrmd,, før icl.ss< RiveraI Fleuvesd.

Ric- - a- N/z- Ik.4 Rice fids/ R,aieres N-F.rit Clasde deKoualo F D,arorngo Flood,ý -J.e /zn mrdb e Knn iFr., -. -- - Inlerrao nal Boundoane i/ F'onr,dres nerno, ornes- C ltaude Forêt Clauadie - Boroue1l de Dioforongo3 1ede Kdn N ,

Fr CI, 0 10 20 30 40 50 de Bossofola SILOoETERS-$-non~~-0, Negala Koukko,o

Fl Ci de NegIlo Vero

F C . 'F, Ci de Gurin Kati Fort clasee

-- -. Nangola, ret Classe BAMAKO Krnydbooble'

M-dýngu D,od Båléko - Sobo

ForIF Ciassde de So~sa i ( SANANKORO Mornt Mord ngyes -d o io aue 0

NARENA A L

Banko -

re/0 Kourouba s- /r irs S,gwr, z ,0 s 7307ø0'6 Kong.b.o 7 30' 7 00 To /a Maaaegzi 6*30'