Document of The eo gorank FOR OFFICIAL USE ONLY FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 2034 Report No. 2034 Public Disclosure Authorized Profect Performance Audit Report Profect Performance Audit Report BENIN ZOU-BORGOU COTTON PROJECT BENIN ZOU-BORGOU COTTON PROJECT (Credit 307-BEN) (Credit 307-BEN) April 20, 1978 April 20, 1978 Public Disclosure Authorized Public Disclosure Authorized Operations Evaluation Department Operations Evaluation Department Ths document has a restricted distribution and may be used by recipients only Inthe performance of the r oiUa" Si IbIis adyadMi diStz h ad olipInsfthpdeimancef of t their official duties. Its contents may not otherwise be disclosed without World Bank authoriatims. CURRENCY EQUIVALENTS Currency Unit = CFA Franc US$1 = CFAF 245 CFAF 1 = US$0.0408 CFAF million = US$40,800 See Annex 2, Table 6 for variations through life of project WEIGHTS AND MEASURES 1 millimeter (mm) = 0.039 inch (in) 1 meter (m) = 1,000 mm 3.2808 feet = 1.0936 yards 1 hectare (ha) = 0.01 spkm = 2.47 acres 1 kilogram (kg) = 2,2046 pounds (lb) 1 metric ton (t) = 1,000 kg = 0.9842 long ton = 2,205 lb ABBREVIATIONS CARDER - Centre d'Action Regional pour le Developpement Rural CCCE - Caisse Centrale de Cooperation Economique CFDT - Compagnie Francaise pour le Developpement des Fibres Textiles FAC - Fonds d'Aide et de Cooperation FAS - Fonds Autonome de Stabilisation et de Soutien des Prix des Produits a l'Exportation FED - European Development Fund IRAT - Institute de Recherches Agronomiques Tropicales et des Cultures Vivrieres IRCT - Institute de Recherches du Coton et des Textiles Exotiques IRHO - Institut de Recherches pour les Huiles et Oleagineux OCAD - Office de Commercialisation Agricole du Dahomey RMWA - IBRD's Resident Mission to Western Africa SATEC - Societe d'Aide Technique et de Cooperation SEDES - Societe' d'Etudes pour le Developpement Economique et Social SOCAD - Societé Nationale de Credit Agricole et de Commercialisation SONACEB -. Societé Nationale de Commercialisation et d'Exportation SONACO - Societé Nationale Agricole pour le Coton SONADER - Societé Nationale pour le Developpement Rural du Dahomey SONAGRI - Societé Nationale d'Agriculture SORGEM - Societé d'Organisation, de Gestion et de Marketing UNDP - United Nations Development Program FOR OFFICIAL USE ONLY Project Performance Audit Report BENIN ZOU-BORGOU COTTON PROJECT (Credit 307-BEN) Table of Contents Page Preface Basic Data Sheet Highlights PROJECT PERFORMANCE AUDIT MEMORANDUM I. Project Summary 1 II. Main Issues 3 General 3 Suspension of Disbursements 4 The Cotton/Maize Competition 5 The Role of Expatriates 9 PROJECT COMPLETION REPORT 1. Background A 1 2. From Identification to Board Approval A 3 3. Implementation A 4 4. Institutional Development and Performance A 12 5. Agricultural and Social Impact A 18 6. Rates of Return A 22 7. Special Issues A 23 8. Bank Performance A 24 9. Future of the Project A 26 10. Conclusion A 26 Map 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. Project Performance Audit Report BENIN ZOU-BORGOU COTTON PROJECT (Credit 307-BEN) PREFACE This report presents the results of an audit of accomplishments under Credit 307-BEN, signed in May 1972 for US$6.1 million, to promote cotton production in the departments of Zou and Borgou. The credit has been fully disbursed with the exception of a yet unprocessed claim amounting to US$27,000. The project demonstrated the need for strength- ening of the administrative infrastructure and consequently a Technical Assistance Project was signed in June 1977. The report consists of the Audit Memorandum and a Project Com- pletion Report prepared by the Western Africa Regional Office in July 1977. The Memorandum is based on the PCR, a summary review of project supervision reports, the appraisal report and other relevant Bank documents, and discussions with Bank staff. The PCR adequately covers major project developments and highlights the difficulties encountered during project execution. The Audit Memorandum expands the discussion of some of the reasons which contributed to the failure of most project components and to negative returns on project investments. PROJECT COMPLETION REPORT BASIC DATA SHEET BENIN ZOU-BORGOUCOTTON PROJECT (CREDIT 307-BEN) KEY PROJECT DATA Appraisal Actual or Item Expectation Current Estimate /1 Total Project Cost (US$ million) 12.678 12.27- Overrun (% 7)/2 Credit Amount (US$ million) 6.1 Disbursed 6. Cancelled October 1977' Repaid to ) Outstanding to ) 6.1 Date Physical Components Completed 12/74 12/75 Proportion Completed by Above Date (%) 100 100 Proportion of Time Overrun %)- 25 Economic Rate of Return (%) 34 negative OTHER PROJECT DATA Original Actual or Item Plan Revisions Est. Actual First Mention in Files or Timetable - - 3/02/66 Government's Application - - 10/02/69 Negotiations 9/20/71 9/20/71 & 3/72 Board Approval 12/15/71 2/15/72 5/22/72 Credit Agreement Date 12/15/71 2/72 5/24/72 Effectiveness Date 8/31/72 9/30 10/31 11/30/72 C 4/04/73 1/31 3/31/73 ( Closing Date 9/30/75 /5 11/30/77 3/31/78 /6 Borrower Government Executing Agency SONACO Fiscal Year of Borrower January 1 - December 31, 1977 Follow-on Project Name /7 Technical Assistance Project Credit Number 716-BEN Amount (US$ million) 1.7 Credit Agreement Date 6/03/77 MISSION DATA Sent Month, No of No of Date of Item By Year Weeks Persons Manweeks- Report files IdentiationPrearaionBank Bank I066/70 No information available in Appraisal Bank 1-2/71 4 5 20 1/21/72 Supervision I Bank 4-5/72 1.5 1 1.5 6/05/72 Supervision II Bank 10-11/72 1.5 2 3.0 11/24/72 Supervision III Bank 12/72 0.5 2 1.0 1/26/73 Supervision IV Bank 6/73 1.0 2 2.0 8/13/73 Supervision V Bank 9/73 0.5 1 0.5 10/10/73 Supervision VI Bank 5/74 1.5 2 3.0 6/26/74 Supervision VII Bank 10/74 4.0 4 16.0 L 2/75 Supervision VIII Bank 1-2/75 1.0 4 4 .0 /12 2/26/75 Supervision IX Bank 2/75 1.5 2 3.0 5/29/75 Supervision X Bank 5/76 2.0 3 6.0 /13 6/24/76 Supervision XI Bank 9/76 2.0 2 4.0 - 11/02/76 Completion Bank 2/77 3.0 2 4.0 7/29/77 Total 38.0 COUNTRY EXCHANGE RATES Name of Currency (Abbreviation) Communaute Financiere Africaine Franc (CFAF) Year: Appraisal Year Average Exchange Rate: US$1 = 277 Intervening Years Average US$1 = 241 Completion Year Average US$1 = 247 /1 At exchange rate of US$1 - CFAF 245 /2 Project was scaled down. /3 US$27,000 not yet disbursed. 7_ Most recent month available. /5 As shown in Credit Agreement. Remaining US$27,000 not yet disbursed. /7 Continuation of project concerned. T Number of 5-day weeks shown in the mission report plus travel time. 79 Number of weeks times number of persons. /10 Supervision mission took place before signature of the Credit Agreement because IDA financing was to be applied retroactively to January 1, 1972. /11 Including time spent on appraisal of follow-up project. /12 Including time spent on follow up project. /13 Mission focussed primarily on preparation of a technical assistance project. Project Performance Audit Report BENIN ZOU-BORGOU COTTON PROJECT (Credit 307-BEN) HIGHLIGHTS The Zou-Borgou Cotton Project provided funds for expanding and improving cotton and rice production, processing and marketing in two major departments of Benin. The credit also financed applied research and studies for an eventual crop diversification project. The project did not achieve the principal institutional and produc- tion objectives set at appraisal; in fact, cotton production is now below pre-project levels. The disappointing project performance was a result of organizational and administrative changes introduced by the Government as well as market forces which led farmers to abandon cotton production in favor of maize cultivation. The appraisal had estimated a 34% rate of return, but as a result of reduced cotton acreage and yields, and despite increased maize production, the rate of return is now estimated to be negative. The following points may be of special interest: - Government's curtailment of successful work of expatriate managing firms (PCR, paras. 1.06, 1.07, 3.02, 3.05-3.06, 4.02, 4.04, 4.19-4.22) - Suspension and untimely resumption of disbursements (PPAR, paras. 12-16; PCR, paras. 3.05-3.07, 3.29, 3.31, 3.04) - Inappropriate price and marketing policies leading to reduced cotton output and losses to the economy (PCR, paras. 3.09, 3.18-3.20, 4.05-4.07, 4.12-4.14, 5.09-5.12, 6.02) - Decline in cotton production due to increased competition from maize (PPAR, paras. 17-26) - Positive work of newly established village groups (PCR, paras. 3.17, 4.10, 5.14-5.15) Project Performance Audit Memorandum BENIN ZOU-BORGOU COTTON PROJECT (Credit 307-BEN) 1/ I PROJECT SUMMARY-- 1. The project, carried out from 1973 to 1977, was intended to increase seed cotton production in the Zou-Borgou area - occupying more than half the country and the source of most domestic cotton production - from 25,000 tons in 1970 to 56,000 tons by 1974. Other objectives were to increase the output of food crops grown in rotation with cotton and to develop rice production. 2. The project was to include: (a) staffing and equipping the Societe Nationale Agricole pour le Coton (SONACO) to assume all cotton development work in the project area after 1974; (b) establishing a revolving fund to provide cotton growers with seasonal and medium-term credit; (c) constructing two ginneries and six small rice hullers; (d) rehabilitating feeder roads; (e) carrying out field trials; and (f) preparing an agricultural diversification project in Zou and Borgou.