APPRAISAL REPORT SOUM PROVINCE LIVESTOCK DEVELOPMENT PROJECT PHASE II BURKINA FASO

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1 AFRICAN DEVELOPMENT FUND APPRAISAL REPORT SOUM PROVINCE LIVESTOCK DEVELOPMENT PROJECT PHASE II BURKINA FASO COUNTRY DEPARTMENT OCTOBER 1999 WEST REGION

2 AFRICAN DEVELOPMENT FUND 01 BP 1387 ABIDJAN 01 Tel. : (+ 225) PROJECT BRIEF Date : October 1999 The information given hereunder is intended to provide guidance to prospective suppliers, contractors and all persons interested in the procurement of goods, works and services for projects approved by the Boards of Directors of the Bank Group. More detailed information should be obtained from the Executing Agency of the Borrower. 1. COUNTRY : BURKINA FASO 2. NAME OF PROJECT : Soum Province Livestock Development Project, - Phase II 3. LOCATION : Soum Province 4. BORROWER : Burkina Faso 5. EXECUTING AGENCY : Project Management Unit at the General Secretariat of the Ministry of Animal Resources: Tel : (226) / PROJECT DESCRIPTION The principal project components are: A. development of production, B. development and management of natural resources, C. sensitization, extension and research & development, D. restructuring and strengthening of OPAs, E. support to marketing and to the supply of inputs, F. producers credit and G. project management. 7. PROCUREMENT OF GOODS AND SERVICES: ADF-financed goods, works and services will be procured as follows: i) competition on the basis of a shortlist will be used for the recruitment of the consultants, consulting firms and NGOs responsible for the engineering designs of infrastructure, the mid-term-reviews, the post evaluation, sensitization and extension, training, supervision of the beneficiaries of credit, the establishment of accounting and financial systems for the project and OPAs, and the audit of the project and OPA accounts; ii) limited international competitive bidding will be used for the contract for the procurement of pumps; 2

3 iii) iv) international competitive bidding will be used for the civil works concerning the deepening of 6 ponds, the drilling of 30 boreholes, 40 stock watering wells, 6 small temporary reservoirs and 35 kilometres of feeder roads; national competitive bidding will be used for the civil works for the construction of buildings and livestock development contracts; v) national shopping will be used for the procurement of vehicles, equipment, office furniture and supplies, and various other items; vi) vii) small items of equipment and supplies for the operation of the Project Management Unit will be procured in conformity with well-established commercial practices considered acceptable to ADF; and goods and services for the Credit Fund will be procured in conformity with wellestablished commercial practices considered acceptable to ADF. 8. TOTAL COST : UA million. - F.E. : UA 6.24 million. - Local Currency : UA 5.59 million. 9. ADF LOAN : UA 9.99 million. 10. OTHER SOURCES OF FINANCING - Government : UA 1.84 million. 11. DATE OF APPROVAL : March ESTIMATED PROJECT STARTING DATE AND DURATION : September 2000, 6 years. 13. CONSULTANCY SERVICES REQUIRED : Technical assistance for sensitization, and training services, accounting and financial management and audit.

4 CURRENCY EQUIVALENTS UA 1 = CFA.F (October 1999) UA 1 = US$ 1 = WEIGHTS AND MEASURES Metric System FISCAL YEAR 1 January - 31 December ACRONYMS AND ABBREVIATIONS ABP ADF AIBP ALR AMTA BUNASOLS CAS CASIV CBPP CIVGT CNCA CNIA CONAGESE COOPEC CTIV CVECA DPRA ECLR FAO ICIPE ICDR IFDC-AFRIQUE INERA LTSA MRA OPA PMU PNGT Agricultural By-Product African Development Fund Agro-industrial By-Product Agricultural and Land Reform Agricultural Management Training Programme for Africa Bureau national des sols (National Soils Board) Comité d appui spécifique (Specific Support Committee) Comité d appui spécifique inter-villageois (Intervillage Specific Support Committee) Contagious Bovine Pleuropneumonia Comité inter-villageois de gestion des terroirs (Intervillage Land-Use Management Committee) Caisse nationale de crédit agricole (National Agricultural Credit Fund) Centre national d insémination artificielle (National Artificial Insemination Centre) Conseil national pour la gestion de l environnement (National Environmental Management Council) Coopérative d épargne et de crédit (Savings and Credit Cooperative) Comité technique inter-villageois (Intervillage Technical Committee) Caisse villageoise d épargne et de crédit autogéré (Self-administered Village Savings and Credit Fund) Direction provinciale des ressources animales (Provincial Animal Resources Directorate) Erosion Control and Land Reclamation Food and Agriculture Organization of the United Nations International Centre of Insect Physiology and Ecology International Centre for Development and Research International Fertilizer Development Center-Afrique Institut de l'environnement et de la recherche agricole (Environmental and Agricultural Research Institute) Livestock Technical Support Area Ministère des ressources animales (Ministry of Animal Resources) Organisation professionnelle agricole (Agricultural Organization) Project Management Unit Programme national de gestion des terroirs (National Land Use Management Programme) 2

5 PNPDL PSB RCPB RFI SPEEF SPLDP SRCP TLU UNCDF UNDP WSC Programme national pilote de développement laitier (National Pilot Dairy Development Programme) Programme Sahel burkinabé (Burkina Sahel Programme) Réseau des caisses populaires du Burkina (Burkina Faso Credit Union Network) Rural Financial Institution Service provincial de l'environnement des eaux et des forêts (Provincial Forestry and Environment Service) Soum Province Livestock Development Project Small Rural Credit Project Tropical Livestock Unit United Nations Capital Development Fund United Nations Development Programme Water and Soil Conservation

6 LIST OF ANNEXES No. DESCRIPTION 1. Map 2. Active Bank Group Operations 3. Zootechnical Parameters 4. Project Cost and List of Goods and Services 5. Estimated Operating Accounts 6. Economic Analysis (Rate of Return) 7. Project Environmental Impact

7 TABLE OF CONTENTS Page SUMMARY, CONCLUSIONS AND RECOMMENDATIONS i-v 1. INTRODUCTION Origin and History of the Project Performance of Similar Projects 2 2. AGRICULTURAL SECTOR Main Features Land Tenure Systems Agricultural Institutions 4 3. LIVESTOCK SUB-SECTOR Main Features Project Area Constraints and Potential Other Donors Operations Livestock Subsector Policy 8 4. THE PROJECT Design and Formulation Objective Description of Project Outputs Detailed Description of Activities and Components Assumptions and Risks Project Cost Sources of Financing Environmental Impact Impact on Women Impact on Poverty Reduction PROJECT IMPLEMENTATION Executing Agency Organization and Management Procurement of Goods and Services Implementation Monitoring and Evaluation Recurrent Costs Project Sustainability Donor Coordination 25

8 TABLE OF CONTENTS (cont d) Page 6. TECHNICAL AND ECONOMIC JUSTIFICATION Technical Justification Project Benefits Financial and Economic Justification CONCLUSIONS AND RECOMMENDATIONS Conclusions Recommendations 28 This report was prepared by Mr. M. DIKOMBE, Agricultural Economist, OCDW 4, Mission Leader, Mrs. V. DOGBE Livestock Expert, and a Consulting Sociologist, following their mission to Burkina Faso from 30 November to 19 December Further information on this report may be obtained from Mr. O. AW, Division Manager, OCDW. 4 (Extension 4110).

9 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 1. BORROWER : Burkina Faso 2. EXECUTING AGENCY : Project Management Unit at the General Secretariat of the Ministry of Animal Resources, located in Djibo. 3. LOAN a) Amount : UA 9.99 million. i b) Terms i) Duration : Fifty (50) years including a grace period of ten (10) years; ii) Service Charge : 0.75 % per year on amounts disbursed and outstanding; iii) Commitment Charge : 0.50 % on the undisbursed portion starting one hundred and twenty (120) days after signing of the loan agreement; and iv) Repayment : One per cent (1%) per year of the principal loan amount from the 11 th through the 20 th year and three per cent (3%) thereafter. 4. PURPOSE OF THE LOAN The loan will be used to finance the totality of the project foreign exchange costs and part of the local currency costs, representing 31.70% of the total project cost. The ADF contribution represents 84.45% of the total project cost. 5. THE PROJECT a) Sector Goal: the Soum Province Livestock Development Project- Phase II aims to improve food security and reduce poverty in Soum Province. b) Specific Project Objective: more specifically, the Soum Province Livestock Development Project - Phase II aims to increase production of animal products and by-products, as well as incomes in Soum Province. c) Description of Project Outputs: the principal project outputs will be as follows: i) distribution of 75,000 doses of breeder seed, 40 improved cattle breeding stock and 840 improved goat breeding stock; ii) improved health, feed and habitat; iii) distribution of UA 1.16 million in credit; iv) reforestation of 2,500 ha. with local forest species; v) development of 4,500 ha. of erosion control sites; vi) deepening of 6 multi-purpose ponds; vii) the drilling of 40 stock watering wells, 30 solar boreholes and 6 small temporary reservoirs; viii) development of 3,000 ha of natural grazing land and the rehabilitation of 200 km of cattle tracks; ix) bush fire control; x) control of water pollution; xi) rehabilitation of 3,500 hectares of deteriorated land ; xii) environmental monitoring and control; xiii) establishment of a multi-disciplinary team for the participatory approach; xiv) establishment of a supervisory team comprising 9 livestock advisers, area heads, 9 veterinarians, heads of veterinary posts

10 ii 6. PROJECT COST and 6 agricultural advisers ; xv) restructuring of the 400 OPAs and 9 departmental unions and the establishment of village and intervillage grassroots committees; xvi) rehabilitation of 35 km of feeder road from Nassoumbou to Djibo; xvii) construction of a 10 ha enclosure for livestock at night and a 10 ha. grazing area for the Djibo livestock market; xviii) construction of a 1,000 litre dairy. The total project cost is estimated at CFA.F 10, million, i.e. UA million, net of taxes and customs duties. The foreign exchange element is estimated at CFA.F million, i.e. UA 6.5 million, and the local currency element at CFA.F 4, million, i.e. UA 5.83 million. A summary of the costs by component is shown in the table below. Summary of Estimated Project Costs by Component Components In million CFA.Fs In million UAs % in F.E. L.C. Total F.E. L.C. Total F.E. A. Development of Production B. Development and Management of Natural Resources C. Sensitization, Extension and Research & Development D. Restructuring and Strengthening of OPAs E. Support to Marketing and to Supply of Inputs F. Producers Credit G. Project Management Base Cost Physical Contingency Price Contingencies T O T A L SOURCES OF FINANCING The project will be jointly financed by ADF and the Government of Burkina Faso, in conformity with the table below: Sources of Financing In million CFA.Fs In million UAs Sources F.E. L.C. TOTAL F.E. L.C. TOTAL (%) ADF Government T O T A L

11 iii ADF will cover 80.52% of the total project cost, i.e. UA 9.9 million. It will, therefore, cover 100% of the foreign exchange costs and part of the local currency costs representing 28.06% of the total project cost. The Government s contribution is CFA.F million, i.e. UA 2.42 million, part of which will be borne by the beneficiaries. The Government s contribution will permit the financing of part of the local currency costs of all components with the exception of equipment. 8. PROJECT IMPLEMENTATION The Executing Agency will be the Project Management Unit, under the supervision of the General Secretariat of the MRA. It will be based in Djibo, in the facilities established under the Soum Province Livestock Development Project Phase I. This unit will be headed by a coordinator, assisted by 8 national staff. The coordinator will be responsible for project administration and management. More specifically, he/she shall coordinate, control and monitor all project activities. He/she will engage the services of specialized organizations to implement the project components. Regional coordination will be the responsibility of the Regional Coordination Committee. 9. EXPENDITURE SCHEDULE Project-related expenditure will be made in conformity with the schedule set out in the table below, which is based on the implementation plan. Expenditure Schedule by Component (in million UAs) Components Total % A. Development of Production B. Development and Management of Natural Resources C. Sensitization, Extension and R&D D. Restructuring and Strengthening of OPAs E. Support to Marketing and to Inputs F. Producers Credit (0.24) (0.12) (0.13) (0.13) (0.13) (0.06) (0.81) (6.83) G Project Management (0.15) (0.61) (0.19) (0.18) (0.15) (0.04) (1.33) (11.25) TOTAL PROJECT COST The project will be jointly financed by ADF and the Government in conformity with the expenditure schedule below: Expenditure Schedule by Source of Financing (million UAs) Sources Total % ADF Government Total

12 iv 10. PROCUREMENT All procurement of goods, works and services procured by the Bank will be in accordance with the Bank s rules and procedures for the procurement of goods, services and works or, as appropriate, the rules of procedure for the use of consultants, using the relevant Bank standard bidding documents. 11. CONCLUSION The Soum Province Rural Development Project Phase II will be implemented in an area with the appropriate natural conditions for such activities. It is in keeping with the Government s policy, and its implementation will make it possible to restore sustainable livestock breeding adapted to the natural and economic environment of the area. The recommended improvements will result in higher production and incomes, the creation of new jobs and an improvement in the population s living conditions. In that respect, the project will help to improve food security and reduce poverty. It is considered to be technically achievable and viable from the economic, financial and environmental standpoints. The economic rate of return is 14.8%. 12. RECOMMENDATIONS In light of the foregoing, it is recommended that a loan, not exceeding UA 9.99 million, be granted to Burkina Faso from ADF resources, subject to the following conditions: a) Conditions Precedent to Loan Effectiveness Prior to Loan Effectiveness, the Borrower shall: i) provide the Fund with evidence of the establishment of a Project Management Unit at the General Secretariat of the Ministry of Animal Resources located at Djibo in Soum Province (ref. section 5.1); ii) iii) iv) provide the Fund with evidence of the appointment of the Coordinator of the Project Management Unit, whose CV, in particular the experience and qualifications, must have received the prior approval of the Fund (ref. section 5.1); provide the Fund with evidence of the recruitment or assignment to the Project Management Unit of the following national staff : a financial expert, a rural engineer with a background in water engineering, a communication expert, a livestock expert, an agricultural economist, a sociologist, an accountant and a management comptroller. These experts, whose qualifications and experience must have received the prior approval of the Fund, will form part of the Management Unit (ref. paragraph ); provide the Fund with evidence of the establishment of a committee for the selection of rural financial institutions which could benefit from the onlending of credit funds planned under the project; (ref. paragraph 5.2.7); v) provide the Fund with evidence of the opening of a) a special account for the payment of the proceeds of the loan, and b) four (4) accounts in commercial banks as follows, the first for the payment of credit funds, the second for the

13 v guarantee fund, the third for the repayment of loans granted to RFIs and the fourth for the payment of funds relating to project operating costs (ref. paragraph 5.2.8); vi) vii) submit to the Fund for prior approval, the draft agreements to be concluded between the Project and specialized organizations responsible for the implementation of the project components, namely : DPRA, the Provincial Agricultural Directorate, the Veterinary Services Directorate, BUNASOLS, INERA, ICIPE, IFDC-AFRIQUE, CONAGESE and AMTA (ref. paragraph ); submit to the Fund for prior approval, the draft onlending agreements with at least two rural financial institutions (ref. paragraph 5.2.7). b) Other conditions The Government shall also: i) within six (6) months of the signing of the Loan Agreement, submit to the Fund the Agreement concluded with the specialized organizations responsible for the implementation of the project components, namely : DPRA, the Provincial Agricultural Directorate, the Veterinary Services Directorate, BUNASOLS, INERA, ICIPE, IFDC-AFRIQUE, CONAGESE and AMTA (ref. paragraph ) ; ii) iii) within six (6) months of the signing of the Loan Agreement, submit to the Fund the action programmes on environmental management, and the control and monitoring of environmental aspects, the drafts of which will have received its prior approval (ref. paragraph 4.4.4); within six (6) months of the signing of the Loan Agreement, submit to the Fund the onlending agreements signed with a least two rural financial institutions (ref. paragraph 5.2.7).

14 1. INTRODUCTION 1.1 Origin and History of the Project Burkina Faso is a developing country, the economy of which is based mainly on agriculture and livestock breeding. Mindful of this reality, the Authorities have implemented structural and sectoral agricultural reforms aimed at improving the competitiveness of the economy and laying the foundations of sustained and lasting economic growth. The intensification of animal and animal by-product production has been selected as a strategic component of the reforms aimed at restoring strong economic growth. The Burkina Sahel is one of the areas identified for the intensification of animal production The Burkina Sahel comprises 4 provinces (Seno, Oudalan, Yagha and Soum) and is now the subject of a vast development programme which includes the first phase of the Soum Province Livestock Development Project (SPLDP) financed by ADF in The key objective of this Programme was to improve the living conditions of the population of the Burkina Sahel. More specifically, the first phase of the SPLDP aimed to i) increase milk and meat production; ii) develop fodder crops and improve fallow land; iii) encourage 6000 stockraisers families to group together to benefit from technological innovations and certain services; and iv) train breeders in animal husbandry techniques. Implementation of the first phase of the SPLDP was followed by a completion report which concluded that it had helped to strengthen the potential of Soum Province. Its efforts focused mainly on animal husbandry techniques and infrastructure. The main outputs of the first phase are presented in paragraph Despite the efforts made under the first phase of the SPLDP, the PCR emphasized that the foundations had not been laid for a return to sustainable livestock breeding in Soum Province. Livestock breeding remained extensive. Several shortcomings were revealed during this first phase of the project. They relate to the organization and functioning of groupings and their unions, as well as to the approach adopted by the project for transferring ownership of the project to the beneficiaries. (ref. paragraph 1.2.5) The Authorities are planning a second phase of the SPLDP in order to consolidate the achievements of the first phase, as well as to protect, promote and develop natural resources and lay the foundations for lasting and sustained livestock development. They have, therefore, once again requested Bank Group assistance to finance a second phase. This appraisal report is the outcome of the ADF appraisal mission to Burkina Faso from 29 November to 19 December It refers to the conclusions and recommendations of the FAO preparation mission in July 1998, which focuses on land use management through a participatory approach. The second phase of the project is in keeping with the Bank Group s operations strategy for Burkina Faso, which aims to: i) diversify and promote agricultural production; ii) develop human resources; iii) improve the fragile living conditions and hygiene of the population, especially in rural areas and promote micro-enterprise initiatives including those in favour of women; and iv) limit the deterioration of the rural environment. It also complies with the conditions of ADF VIII in so far as it contributes to improving food security, reducing poverty and maintaining the balance of the natural ecosystems. It is also in keeping with the Government s policy.

15 Performance of Similar Projects To date, the Bank Group has financed several projects in the rural development sector, namely: i) the Comoe Integrated Rural Development Project; ii) the Piela-Bilanga Development Project; iii) the Bazega Natural Resource Management Project; iv) the Soum Province Livestock Development Project Phase The Comoe Integrated Rural Development Project: despite slippage on loan effectiveness, several of the project activities were carried out, including the dissemination of technical packages, seed production, credit distribution, the construction of cereal banks and warehouses, research and development, land use management, the training of project personnel and smallholders, the construction of health centres. The project has also made it possible to increase production and rehabilitate feeder roads. It has fostered and ensured the integration of the region into economic circuits. An analysis of the general situation shows that there have been many upsets in the project due to frequent personnel changes and the approach adopted. This situation has impacted on the performance of the executing agency The Piela Bilanga Rural Development Project started 2 years behind schedule but its institutional, operating and financial performances were satisfactory. In fact, a 514-hectare irrigation area, 21 market gardening wells, 12,572 hectares of reforestation, livestock facilities, 15 boreholes, the rehabilitation of 105 km of feeder roads and the Sirba and Kompienga Irrigation Development Study were all completed. 367,000 seedlings were distributed for reforestation and credit through the CNCA. The project effectively contributes to improved food security in its area by increasing production. Its success is linked to the active participation of the beneficiaries in its activities and the Government s involvement in the entire implementation and preparation process The Bazega Natural Resource Management Project: performance was satisfactory from the financial and operating standpoints. All the planned activities were carried out, namely : development of irrigation areas using run-off water, bottomland development, reforestation, development of cattle grazing land, land reclamation, mixed farming, the development of reservoirs and ponds, the construction of rural water supply facilities and cereal banks, the rehabilitation of feeder roads. It also aroused special interest in production and had a positive impact on the region for it helped to improve food security and the economic and ecological environment by involving all the players The Soum Livestock Development Project Phase 1: The project was affected by staff mobility. This limited its effectiveness at start up and impacted on its implementation plan. In fact, the project took 11, instead of 5 years to complete. It focused on livestock breeding techniques and infrastructure through the following activities: improved feeding through the promotion of fodder crops, the introduction of graminaceous plants and legumes (cowpea), reforestation, the development of stock watering and village water supply facilities (digging of ponds, the drilling of 16 boreholes, 43 wells and 7 small temporary reservoirs), functional literacy education and training of smallholders, construction of warehouses, livestock inoculation centres, 10 slaughtering areas and an artificial insemination laboratory. It also encouraged the establishment of 400 groupings and 9 departmental unions of groupings. The project had a considerable impact on production and the economic and ecological environment of the province However, some shortcomings were identified. In fact, the organization of the groupings and unions is still weak. These institutions do not function correctly. Monitoring and evaluation, sensitization and research activities have not been fully developed. The approach adopted has not enabled the project to make the population more accountable. It is, therefore, essential to

16 3 consolidate and safeguard the achievements of the first phase and rationally manage the natural resources of the province by ensuring the involvement of the beneficiaries and authorities in the preparation and implementation of the project The Government also received assistance from other donors for the financing of the projects listed in paragraph Overall, the performance of all projects implemented in Burkina Faso is satisfactory. Among the lessons drawn from those projects are the failure to involve the beneficiaries in the project identification, preparation and implementation process and the poor performance of professional organizations and the inadequacy of the Government s project monitoring mechanisms. However, those experiences have enabled the Government to obtain highly diversified national expertise in development management and to improve its rural activities management and coordination capacities. 2. AGRICULTURAL SECTOR 2.1 Main Features The agricultural sector is dominated by subsistence farming, carried out on small family farms (2 to 7 hectares). It is rainfed, uses traditional, manual methods and is still little diversified. Traditional cereals (millet, sorghum and fonio), and more recently maize and rice, are the principal crops. Tubers (yams and sweet potato), and to a lesser extent cassava, are only secondary crops. Cotton, groundnuts and sesame are the principal cash and export crops Forest resources cover 35,000 km². Fuelwood is the main source of energy for rural and urban households. National wood consumption is 3 to 6 million m3 per year. Fisheries are poorly structured. However, over the past decade, the spectacular increase in surface water supply through the construction of many reservoirs has turned fisheries into an increasingly common professional activity in rural areas. Burkina Faso currently produces 7,000 tonnes of fish for an estimated potential of 12,500 tonnes. 2.2 Land Tenure Systems In Burkina Faso, access to the land is governed by the Law on Agricultural and Land Reform (ALR) promulgated in 1984 and amended in 1994 and The ALR grants land ownership to the State. This law is little known and rarely enforced in rural areas, for customary rules are applied with regard to land tenure. In fact the communities give precedence to customs. They consider that the land belongs to families. Thus, the search for farm lands by farmers, and for grazing land and water by stockraisers increases the number of disputes which the ALR and traditional systems are unable to settle. The basic dilemma lies in the lack of facilities which would foster consultation among the different players. The settlement of disputes on the basis of legal and institutional frameworks prepared by the population following consultations has been effective. This approach has been adopted in the implementation of development projects.

17 4 2.3 Agricultural Institutions The rural sector at present falls within the purview of the following Ministries: i) the Ministry of Agriculture, which at present controls the bulk of plant production-related activities. In the field, the most important structures are the Regional Directorates (12); ii) the Ministry of Animal Resources, which operates through its Livestock Technical Support Areas (LTSA) and the veterinary posts; it controls animal production-related activities; iii) the Ministry of the Environment and Water, which covers all rural and agricultural water supply activities, is responsible for issues relating to the environment, forests, wildlife and fisheries. It operates through its regional directorates (12) and specialized organizations; and iv) the Ministry of Secondary and Higher Education and Scientific Research which is responsible for agricultural and environment research In the performance of their duties, the Ministries seek the support of specialized organizations, namely: i) the Environmental and Agricultural Research Institute (INERA), which is responsible for agricultural research, including livestock; ii) the Water and Rural Infrastructure Fund (FEER), which is a public institution oriented towards the management and coordination of funds, intended for operations involving the development of land and water resources and rural infrastructure ; iii) the Caisse nationale de crédit agricole (CNCA), which is a limited liability company responsible for the distribution of agricultural credit ; iv) the National Soils Agency (BUNASOLS), which is responsible for soil analysis; v) the National Council for Management of the Environment (CONAGESE), which covers environmental aspects, is responsible for management of the environment ; vi) the National Artificial Insemination Centre (CNIA) for the implementation of the Genetic Programme; viii) agricultural organizations (OPAs) for the organization and functioning of the rural community; ix) rural financial institutions (RFIs) for the financing of rural agriculture. The different administrative organizations and services listed in paragraphs and operate effectively in the field. They have varied expertise and competent personnel. 3. LIVESTOCK SUBSECTOR 3.1. Main Features The livestock subsector in Burkina Faso is of considerable importance. It provides 40% to 45% of primary sector exports and contributes to the improvement of the population s living conditions. The country s livestock is estimated at 4.5 million head of cattle, 6.2 million sheep, 7.9 million goats, pigs, million donkeys and horses, million camels and million poultry. Milk production is estimated at 175,555 tonnes Livestock breeding in Burkina Faso is extensive, and comprises four main systems: i) transhumance of the extensive type, with varying degrees of movement depending on the seasons and rainfall; ii) semi-transhumance with more limited movement over time and space. This has resulted from the settlement of some herdsmen and the purchase of herds by farmers; iii) the sedentary system where the animals no longer leave the village land ; and iv) the fattening system carried out by several stockraisers and women, and which concerns mainly sheep The livestock subsector is affected by the vagaries of the weather, which, in turn, raise problems concerning the availability of water, impose a rainfed production system and create problems of instability of production and food insecurity. There are 13 million hectares of natural grazing land, i.e. 45% of the country s total area, which constitute the food base of large and small ruminants. It is estimated that the animal density has reached critical levels. In fact, in 1991, the carrying capacity was estimated at 3.8 million tropical livestock units (TLU) for an effective density of 3.5 million TLUs.

18 5 The livestock subsector utilizes a small proportion of agricultural by-products (cereals) and agroindustrial by-products The animal health situation remains critical. In 1997, there were 372 outbreaks of contagious diseases. The principal diseases are: blackleg, pneumonic pasturellosis of small ruminants, contagious bovine pleuropneumonia (CBPP), foot-and-mouth disease and anthrax. Vaccination campaigns have mainly concerned pleuropneumonia (1.8 million head), blackleg (0.7 million head), bovine pasturellosis (0.6 million head), and pasturellosis of small ruminants (0.2 million head) Livestock are sold through traditional channels by private operators. Several players are involved in the sale of cattle. These are the owners themselves, retailers and intermediaries. The buyers are: i) producers, generally farmers, seeking animals for fattening or breeding stock ; ii) local butchers and livestock dealers. Purchases are made at local and regional markets. Milk marketing has not yet been organized Since 1996, exports of cattle, goats and sheep have, on the whole, risen. They have concerned four coastal countries : Côte d Ivoire, Ghana, Togo and Benin. In 1997, Côte d Ivoire accounted for 60% of cattle, 75% of sheep and 51% of goat exports. Ghana accounted for 35% of cattle, 18% of sheep and 34% of goat exports. This level could be maintained if the problem of billing (in the foreign currency) is resolved. Togo has reduced imports from Burkina Faso. This is offset by uncontrolled exports. Benin accounts for 2% of cattle, 2% of sheep and 3% of goat exports. Meat consumption is still low and is estimated at 3.5 kg per head per year, whereas the recommended standard is 15 kg. Milk production is mainly for on-farm consumption. An estimated 37,392 tonnes were sold in 1997 in the principal towns. Demand for milk is mainly covered by imports estimated at 21,790 tonnes in 1996, 26,718 tonnes in 1997 and 105,999 tonnes in The total value of imported milk is estimated at CFA.F 6.6 billion in 1996, CFA.F 7.2 billion in 1997 and CFA.F billion in Over 90% of imported products are intended for the large urban markets of Ouagadougou and Bobo Dioulasso The banking system, which manages major deposits (CFA.F 145 billion) and concerns 200,000 to 300,000 people has shown little interest in livestock breeding. Credit is distributed in the subsector through the CNCA and the rural financial institutions comprising: i) savings and credit cooperatives (COOPEC), ii) the Burkina Union of Savings and Credit Cooperatives (UCEC-B); iii) the Bam Regional Union of Savings and Credit Cooperatives (URC-Bam) ; iv) self-administered village savings and credit funds (CVECA). Those institutions deal principally with the mobilization of rural savings. Credits granted by CNCA attained CFA.F 36 billion in Around 94% of the credits granted are short-term credits. Total credits granted by the RFIs amounted to CFA.F 1.2 billion in In general, the RFIs grant short-term credits. The rate of recovery averages 95%. These credits are guaranteed by savings. The interest rates applied by the RFIs are between 10% and 25%. 3.2 Project Area Location and Physical Setting The project area covers Soum Province in the north of the country (ref. Annex 1). The province comprises 9 Departments and covers 12,666 km 2 (5.1% of the country s area) and has a population of 254,000 (2.3% of the country s population). Soum has a Sahelian-type climate, with many variations. Average rainfall over a ten-year period ( ) attained 353 mm per year. Soum province is watered by temporary watercourses stemming from the Niger river basin. However, it has the fewest stock watering facilities. Overall, the area has considerable pedological resources because of the predominance of deep soils, a flat terrain and little leaching. The principal

19 6 plant formations of the province are tree or shrubby steppes, with forest stock, and grasslands comprising annual gramineceous species combined with a woody species. Main Livestock Features Livestock breeding is the principal activity in Soum province. There are 158,000 head of cattle, 231,000 sheep and 461,000 goats. Estimated milk production, virtually all of which is consumed on farm, is 6,800 tonnes. Health cover is fairly wide. The province has the support of a private veterinarian based in Djibo and livestock assistants (98) working in villages and without resources. Animal feed is mainly provided by grassy and woody grazing lands. Overgrazing is a feature of the area. The carrying capacity is TLU 143,000 while the present density is TLU 180,000. The four main systems described in paragraphs are widespread in Soum. The total number of farmers is estimated at 48,000. They are divided into three groups depending on their livestock activities and their willingness to adopt the technical packages disseminated under the project: i) progressive breeders (10%); ii) improved traditional breeders (70%); and iii) traditional breeders (20 %). Sensitization and Extension Activities Sensitization and extension, as well as information, education and communication activities are not developed in Soum. This communications gap is related to the poor acceptance by the population of the project activities noted during the first phase. Extension and supervision have long been the domain of the SPLDP. They are now the responsibility of the DPRA, which has 9 advisers, LTSA heads and 4 veterinarians, heads of veterinary posts. Extension activities are in keeping with the National Programme established with World Bank assistance, which recommends the use of versatile extension workers who adhere to the training and visits principle. The extension topics concern agriculture, livestock breeding, and natural resource management. Structuring of the Rural Community The agricultural organizations (OPAs) play a key role and now serve as interlocutors for structures specialized in technical support, animal health care and the provision of water and inputs. Soum Province now has 400 groupings and 9 departmental unions of groupings. These institutions operate through Village Technical Committees (CTVs). The CTVs organize village work. Each CTV comprises several specific support committees (CAS). Each CAS is responsible for a special area (production, land use management, water point, credit, AIBPs). The same organization is to be found in intervillage bodies (CTIV) where work is organized by intervillage technical committees (CTIV), which depend on intervillage specific support committees (CASIV). Marketing of Livestock Products Marketing is carried out in an area which is inaccessible in the rainy season. Animals are herded to the local markets and Djibo market. The latter presently receives 25,000 cattle (20,500 sold), 93,000 sheep (79,300 sold) and 86,700 goats (75,350 sold) per year. The size of the market attracts cattle dealers, retailers and intermediaries who devote an increasing part of their time to animal collection. Djibo market was developed under the first phase of the SPLDP. The sheltering of animals before and after the opening of the market requires the establishment of an overnight enclosure and a grazing area. The structure responsible for the management of Djibo market is not efficient. It does not involve the breeders and cattle dealers in the management and development of market activities. It is essential to propose another, more appropriate structure. Women are responsible for the sale of small ruminants. The sale of milk is not yet organized. Production is

20 7 consumed on farm. The processing of milk is still artisanal and is carried out by women grouped together in an association. Credit and Savings Credit in Soum Province is distributed by the CNCA, the projects and rural financial institutions mentioned in paragraph Despite the presence of those numerous institutions, the volume of credit distributed is fairly limited. The amount of credit granted by the CNCA was estimated at CFA.F 46 million in 1994 and CFA.F 150 million in The CVECA network is the largest in the province. It has 43 branches in the project area and 7,500 members. In 1997, it collected CFA.F 75 million in deposits, almost CFA.F 22 million of which were fixed-term deposits. The Small Rural Credit Project (PPCR) allocated around CFA.F 30 million to solidarity groups for sheep fattening and small trading activities. The food security and nutrition project has granted CFA.F 19 million to women s groupings. Between 1994 and 1996, the Women s Income- Generating Activities Support Fund (FAARF) granted over CFA.F 100 million in credit to the women of Soum Province to finance fattening activities and the marketing of agricultural produce (ref. paragraph 3.1.7). 3.3 Constraints and Potential The constraints to the development of livestock breeding are: i) its extensive nature; ii) overgrazing, which leads to environmental change; iii) the large number of authorized groupings which have not displayed any special interest in productive activity ; iv) the organizational and management weaknesses of OPAs; v) the poor integration of producers into economic circuits and the market economy in general; vi) the preference given to short-term strategies; vii) the failure to give adequate consideration to the environmental impact of the agricultural systems adopted; viii) the lack of both physical and media communication channels; ix) insufficient water points; x) inadequate supervisory structures; xi) the lack of any sensitization structure; and xii) declining rainfall Despite those constraints, Soum Province has a number of assets which will ensure the sustainable development of its livestock breeding, especially the motivation of the population, the high nutritional value of the cut grasses which provide high quality hay, the virtual non-existence of bush fires, and the dissemination of several new production methods. The high proportion of breeders who are open to innovation and the mastery of techniques represent opportunities available to all development projects in the province 3.4 Other Donors Operations Burkina Faso has benefited from the assistance of other donors and NGOs in the financing of projects in the livestock subsector, the most important of which are: i) The Livestock Sector Support Programme financed by the European Union; ii) the Gourma Animal Resources Development Project financed by the Arab Bank for Economic Development in Africa (ABEDA); iii) the Italian-financed Nouhao Valley Development Project; iv) the French-financed Village Livestock Development Programme; v) the Burkina Sahel Support Programme financed by UNDP and the UNCDF, established in 4 Burkina Sahel provinces; vi) the Burkina Sahel Programme financed by the Kingdom of the Netherlands; vii) the Burkina Sahel Programme or the Seno and Yagha Natural Resource Development Fund financed by the Kingdom of Denmark; and the viii) German Government-financed Burkina Sahel Project Those different projects have gained a wealth of experience, rich in lessons. They are oriented towards accountability of the population, self-reliance, production techniques, land

21 8 management, poverty reduction, and project management and coordination. The SPLDP Phase II will draw on those achievements to define its strategy The SPLDP is in keeping with the objectives of the Burkina Sahel Programme. Only the UNDP and UNCDF Burkina Sahel Programme Support Project partially covers Soum Province. Its objectives are to (i) provide support to ongoing projects under the Programme; (ii) see to the coordination of such projects; and (iii) with regard to Soum, establish water points and provide the population with a credit fund to finance income-generating activities. The assistance amounts to US$ 4.72 million divided among the four provinces of the Burkina Sahel. The measures proposed under this project complement those envisaged under the Burkina Sahel Programme Support Project (ref. paragraph 5.8.4). 3.5 Livestock Subsector Policy The main orientations of livestock subsector policy concern the liberalization of domestic and foreign trading in livestock products, State disengagement, promotion of the private sector and professional organizations, and rational management and conservation of natural resources. They will be pursued through the implementation of measures concerning i) animals (genetic improvements); ii) the environment (feeding, animal health) and iii) livestock developments and land security (creation of livestock areas, cattle tracks, stock watering facilities, cattle markets). 4. THE PROJECT 4.1 Design and Formulation The design and formulation of the SPLDP, Phase II is based an approach involving greater participation of the population in the activities to be carried out. Thus, consultations with the local and regional populations and authorities were organized during the project preparation and appraisal missions. The aim of this approach is to foster the emergence and practice of community resource management. It will comprise five stages described in paragraph To better tap the opportunities for growth available in Soum Province, to optimize the impact of the operations and to fight against poverty, the focus will be on the intensification of animal production and its by-products. To that end, the project will carry out the restructuring and strengthening of groupings and village and intervillage grassroots committees focused on needs identified by the population and a related series of activities. Women will receive financial support for income-generating activities. The project will recruit an expert in rural law who will use the participatory approach in assisting the population to design, prepare and adopt a regulatory and institutional framework which will facilitate land use and natural resource management. Furthermore, the project will encourage the establishment of consultative structures to resolve land tenure disputes. It will take the necessary steps to ensure that the ecological environment of the project is safeguarded and will focus its efforts on poverty reduction measures.

22 The project design and formulation also took into consideration the outcomes of the first phase of the SPLDP set out in the completion report and confirmed by socio-economic surveys during the first phase. They incorporated environment and natural-resource-management-related aspects. They also referred to past and ongoing experiences set out in paragraphs to The project stems from consultations with the donors during its preparation and appraisal. These consultations will be pursued during its implementation. Furthermore, the accountability of the population with regard to management of their land and the establishment of the credit system through decentralized structures are guarantees of the sustainability of the project activities. 4.2 Project Objective Sector Goal: the Soum Province Livestock Development Project Phase II aims to improve food security and reduce poverty in the province Specific Project Objective: more specifically, the Soum Province Livestock Development Project - Phase II aims to increase production of animal products and by-products as well as incomes in the province. 4.3 Description of Project Outputs The principal project outputs are as follows: with regard to production - improved animal performance by phenotypic selection and the distribution of 75,000 doses of breeder seed from Girolando Zebus imported from Brazil, 40 cattle breeding stock and 840 goats of improved breeds; - improved stockraising conditions, (health, feeding and habitat); with regard to the development and management of natural resources : - reforestation of 2,500 hectares with local forest species; - development of 4,500 hectares of erosion control sites; - deepening of 6 multi-purpose ponds; - drilling of 40 stock watering wells, 30 solar boreholes and 6 small temporary reservoirs; - development of 3,000 ha of natural grazing land and the rehabilitation of 200 km of cattle tracks; - reclamation of 3,500 hectares of deteriorated land; - preventive public health measures and specific mother and child health care measures; and - monitoring and control of environmental impacts; with regard to sensitization, extension and research & development: - the establishment of a multi-disciplinary participatory approach team; and - the establishment of a network comprising 9 livestock advisers, area heads, 9 veterinarians, heads of veterinary posts, and 6 agricultural advisers; with regard to restructuring and strengthening of the different smallholder organizations: - restructuring of the 400 groupings and 9 departmental unions of groupings; - the establishment of grassroots village and intervillage committees; - support to income-generating activities through the distribution of UA 1.16 million in credit; with regard to support to marketing and to inputs: - rehabilitation of 35 km of the Nassoumbou-Djibo road;

23 10 - development of the Djibo cattle market by the construction of a 10 hectare overnight enclosure and a 100 ha grazing area; and - the construction of a private 1,000 litre dairy; with regard to credit - financing of income-generating activities; - construction of 3,300 enclosures for animals at night; - distribution of doses of breeder seed, cattle and goat breeding stock, fodder and food crop seeds and forest species; and - the establishment of a revolving fund for the supply of inputs. 4.4 Detailed Description of Activities and Components The principal project components are: A. development of production; B. development and management of natural resources; C. sensitization, extension and research & development; D. restructuring and strengthening of OPAs; E. support to marketing and to the supply of inputs; F. producers credit; and G. project management. Component A : Development of Production The project will focus on the intensification of animal production and its by-products (milk and meat) through genetic improvement (artificial insemination and phenotypic selection) and livestock breeding conditions. To that end, the measures recommended will focus on: i) the selection within the local herds of the best meat producing animals on the basis of phenotypic criteria; ii) genetic improvement by crossing different breeds of cattle and different breeds of goats; this will either be done by artificial insemination (distribution of 75,000 doses of Girolando Zebu breeder seed from Brazil to progressive breeders) or by natural insemination (introduction into progressive farms of 40 breeder Zebus from Brazil and 840 breeder goats from Niger); iii) strengthening of animal health care; iv) improvement of the habitat by building 3,300 enclosures for animals at night, and 600 stables for milking cows; v) improved feeding by supplementing animal feeding in all seasons, crop residues, mineral supplements, and the construction of 2,000 hay storage barns; the development of natural grazing land and fodder crops; vi) the distribution of food and out-of-season crop seeds (ref. paragraph ). Implementation of the recommended measures will be reflected in improved zootechnical parameters. (ref. Annex 3). Component B : Development and Management of Natural Resources The activities planned under this component will concern: i) the development of water points (deepening of 6 ponds and the drilling of 30 boreholes equipped with solar pumps, 40 wide diameter stock watering wells and 6 small temporary reservoirs); ii) the development of 3,000 hectares of natural grazing land and the rehabilitation of 200 km of cattle tracks; iii) the development of 3,000 hectares of natural grazing land and the rehabilitation of 200 km. of cattle tracks; iii) the rehabilitation of 3,500 hectares of deteriorated land using machines, through erosion control and land reclamation (ECRL) work, and water and soil conservation (WSC) work; iv) soil erosion control; v) desertification control through the reforestation of 2,500 ha of tree plantation, bush fire control, the distribution of improved stoves, training in efficient methods of charcoal processing and participatory management of natural forests, as well as the promotion of agroforestry; to that end, 50,000 seedlings of woody species will be distributed (ref. paragraph ); vi) the reseeding of some endangered species; and

24 11 vii) an improved living environment through the implementation of preventive public health measures and specific mother and child health care measures The project will also see to the organization of close, ongoing environmental control and monitoring to prevent negative impacts and ensure that the mitigative measures are effectively implemented with the desired outcomes. This will be done by a consulting firm which will work closely with CONAGESE. The consulting firm will have to prepare action programmes on environmental management, and on environmental control and monitoring, prepare the environmental control and monitoring indicators, and submit them for the prior approval of ADF. The consulting firm will require the procurement of a four-wheel drive vehicle, 2 motorcycles, computer hardware, a batch of special equipment and small items of field equipment. The activities planned under the natural resource development and management component will contribute significantly to the attainment of sustained and lasting livestock breeding in Soum. Component C : Sensitization, Extension and Research & Development To encourage the active participation of the beneficiaries in the recommended activities and make them more accountable, the project will focus on sensitization, extension, and information, education and communication activities to encourage them to express their needs and formalize them in specific programmes to be implemented under the overall Programme. To do so, the services of a consulting firm or NGO will be used for sensitization, extension and information, education and communication activities. The consulting firm will form a multidisciplinary team comprising: a sociologist, an agricultural economist, a livestock expert, a regional planner, an environmentalist and 18 departmental extension workers. The multidisciplinary team will operate in the field on the basis of a five-stage participatory approach, as follows: i) meeting the population; ii) participatory diagnostic review; iii) ranking of the activities to be carried out; iv) scheduling of activities; v) implementation of activities and self-evaluation by the population at village, camp site, and intervillage levels. A wrap-up workshop or seminar will be held following the completion of each stage. The multidisciplinary team will also rely on rural radio to be set up under the project. It will assist the OPAs in establishing departmental service centres whose principal duties will be to: i) establish a financial and accounting management system; ii) organize and manage OPAs ; iii) monitor and advise on financial and accounting management; iv) investigate credit applications; and v) provide specific support (legal and other advice). The centres will have autonomous management, comprising an accountant, a sociologist and a credit expert. These centres will be established with financial assistance from OPAs and will provide services to breeders, OPAs and small enterprises in Soum Province The extension activities begun during the first phase will continue in the form of advisory services to breeders. The topics to be discussed will be identified by the population through the participatory approach and will be contained in the Programme to be prepared by the beneficiaries. The sensitization and supervision of breeders will be the responsibility of the Provincial Animal Resources Directorate (DPRA). It will set up a supervisory team comprising 25 members, including a provincial director, 9 livestock advisers, LTSA heads (one per department), 9 veterinarians, heads of veterinary posts, and 6 agricultural advisers under the Provincial Agricultural Directorate. The supervisory team will work closely with the multidisciplinary team (ref. paragraph 4.4.5). The advisers will, therefore, be involved in the participatory approach process prepared and implemented with the support of the multidisciplinary team. Women will be included among the supervisory and extension officers Research activities will refocus on the following principal themes : i) genetic improvement with the support of INERA and CNIA ; ii) animal feeding with the assistance of INERA ; iii) animal health with support form ICIPE; the latter will work closely with the Veterinary Services Directorate based in Ouagadougou; iv) improved soil fertility and mixed farming with the support of IFDC-

25 12 AFRIQUE and BUNASOLS. The above-listed research topics are indicative and stem from consultations prior to, and during, the project appraisal mission. The final list of research topics will be determined by the beneficiaries on the basis of a participatory approach. To facilitate the interpretation of the research findings by the population, it is planned to establish a scientific committee comprising representatives of the institutions which carried out the research. Component D : Restructuring and Strengthening of OPAs The project will use the services of a second consulting firm and NGO for the restructuring and strengthening of OPAs and unions of groupings. The project activities planned under this component will concern: i) the conduct of a diagnostic review of the OPAs with the participation of the population; ii) the restructuring of 400 village groupings and 9 unions of groupings, as well as the merging of some groupings in keeping with the laws of Burkina Faso; iii) the effective establishment by the population of different Village Technical Committees (CTV) and Intervillage Technical Committees (CTIV); iv) the establishment by the population of Specific Support Committees (CAS) at village level, as well as Intervillage Specific Support Committees (CASIV) as required; these Specific Support Committees will be the respective organs of the CTVs and CTIVs (ref. paragraph 3.2.4) ; v) the creation of horizontal interaction and exchanges between groupings and their unions following the definition and implementation of grassroots activities by the CASs and corresponding CASIVs; vi) the organization of workshops around a specific common theme with the participation of representatives of the OPAs, grassroots committees, partner services and similar projects; vii) the establishment of a self-evaluation system by the CTVs, CTIVs, CASs, CASIVs, groupings and unions; viii) the establishment of the financial and accounting management system for groupings and their unions and the organization of audits of their management; ix) the training of 36 trainers from the OPAs; x) functional literacy education of 2,000 breeders, followed by post-literacy education and the training of 2,720 breeders; xi) the training of OPA officials; xii) the provision of local advisory services. Component E : Support to Marketing and to the Supply of Inputs It is planned to establish a private dairy with a capacity of 1000 litres which will organize the marketing and collection of milk in conformity with technical standards. It will establish two collection centres and assembly points where milk will be collected in metal cans distributed to the population. The milk collected will be conveyed to the dairy in tankers. For that purpose the dairy developer will receive a loan for the construction of the dairy, the procurement of the necessary equipment, and the establishment of a revolving fund. The project will also help breeders to organize the sale of cattle throughout Soum province. To that end, it will become involved in the organization and strengthening of commercial channels through its local advisory services. It will finance the development of the Djibo cattle market through the establishment of a 10 ha overnight enclosure and a 100 ha grazing area. The market will be entrusted to an OPA which will set up an autonomous structure for its management. The project also proposes to construct 10 slaughtering areas to improve slaughtering conditions. To facilitate the sale of its products, the project will rehabilitate 35 km of feeder road between Djibo and Nassoumbou. The rehabilitation work will be carried out following the completion of engineering designs It is also intended to establish an observatory which will provide assistance in the search for outlets. The observatory will have to prepare and establish a policy for the distribution, monitoring and promotion of project products, and create a data bank for OPAs and economic operators. To that end, it will conduct a study on supply and demand for livestock products by determining future market trends, assessing possible storage and distribution capacities and organizing an information system on markets upstream and downstream from production. It will put producers into contact with wholesalers and buyers in touch with consumers. The different information will be

26 13 disseminated to OPAs and economic operators through the press, TV and national radio, as well as the rural radio set up under the project, and electronically The project will also strengthen the input supply system to enable the OPAs to ensure distribution throughout Soum Province. To that end, the project will train stockraisers and administrators of OPAs specialized in procurement. It will finance the initial stock estimated at CFA.F 10 million (ref ), which will comprise veterinary and zootechnical inputs. The OPAs will assume responsibility for the supply of breeder seed on completion of the project. Component F : Producers Credit To facilitate the intensification of animal production and its by-products, the project will provide breeders with a credit fund of UA 1.22 million intended to finance: i) income-generating activities (a dairy with a capacity of 1000 litres of milk, slaughtering areas, the development of the Djibo cattle market, etc); ii) artificial insemination equipment (75,000 doses of imported Zebu breeder seed); iii) 30 imported breeder bulls, 840 imported breeder goats, artificial insemination kits); iv) construction of 3,300 overnight enclosures; v) the construction of 10 slaughtering areas; vi) fodder and food crop seeds; vii) forest species; and viii) a revolving fund for inputs. The credit fund will be managed through a decentralized system based solely on the rural financial institutions selected to which the credit will be onlent. Details of the management and operation of the credit component are given in paragraphs to Component G : Project Management The project will be managed by a unit comprising the following 9 national staff: a coordinator with confirmed experience in project management, a livestock expert, a veterinarian, a rural engineer with experience of water engineering, and agricultural economist, a sociologist, a financial expert, an expert in communication and a management comptroller, for whom training will be provided by the ADB-based Agricultural Management Training for Africa (AMTA) Programme. To that end, the project will bear the costs of air tickets and the fees for consultants recruited by AMTA The project will also finance the procurement of equipment for the Management Unit and will bear its operating costs. It will pay the project officers allowances. Since the communication expert, the financial expert, the management controller and the accountant are not available, they will be recruited on the open market by an interministerial commission comprising the project coordinator and representatives of the Ministry of Agriculture, the MRA, the Ministry for the Civil Service and Institutional Development, and the Ministry of the Economy and Finance. The remaining staff will be assigned by the MRA. The salaries of the project support staff comprising a secretary, clerk, two drivers and two security guards will be covered by the project The project also intends to secure the services of some organizations specialized in areas, which could help to improve its performance. It will, therefore, use the services of the organizations listed in paragraph Assumptions and Risks Rainfall is a limiting factor for livestock breeding since many other essential factors depend on it such as feeding and stock watering. This risk will be lowered by the establishment of additional water points (30 boreholes, 6 small temporary reservoirs and 40 wells) and the deepening of 6 ponds which will guarantee water supply throughout the year, will offset the lack of rainfall and ensure fodder production. Furthermore, an improved habitat will reduce the impact of temperature variations on young animals and will increase herd numbers in Soum Province.

27 Credit itself may be considered a risk if the beneficiaries do not repay. This is minimized, for credit will be managed by the competent rural financial institutions with considerable experience of credit in Burkina Faso. Repayment will also be guaranteed by savings, joint sureties and the usual guarantees. Furthermore, the marketing of project products will not raise any major problems. The sale of produce will provide producers with sufficient income to guarantee the repayment of credit as there is sufficient demand. It is solvent and the prospects are good Project Cost The total project cost is estimated at CFA.F 10, million, i.e. UA million, net of taxes and customs duties, broken down as follows: CFA.F 5, million in foreign exchange, i.e. UA 6.24 million and CFA.F 4, million in local currency, i.e. UA 5.59 million. Table 4.1 gives a summary of the costs per component, details of which are presented in Annex 4. Table 4.1 Summary of Estimated Costs by Component Components In million CFA.Fs In million UAs F.E. L.C. Total F.E. L.C. Total As a % in F.E. A. Development of Production B. Development and Management of Natural Resources C. Sensitization Extension and Research & Development D. Restructuring and Strengthening of OPAs E. Support to Marketing and to Supply of Inputs F. Producers Credit G. Project Management Base Cost Physical Contingency Price Contingency T O T A L

28 The costs were revised in October 1999 following investigations carried out by the Bank with the assistance of the Management Unit of the first phase. A 10% physical contingency was added to all base costs with the exception of personnel costs, service charges and credit. A provision for price escalation was made for all components. The following compound rates were applied: 3% for foreign exchange expenditure and 5% for local currency expenditure. Total physical (UA 0.60 million) and price (UA 0.98 million) contingencies amount to UA 1.58 million, i.e % of the total project cost Table 4.2 below gives a summary of project costs by expenditure category: Table 4.2 Summary of Estimated Project Costs by Category In million CFA.Fs In million CFA.Fs % in Category F.E. L.C. Total F.E. L.C. Total F.E. A. Works B. Equipment C. Services D. Credit E. Training F. Operation G. Personnel Base Cost Physical Contingency Price Contingency T O T A L Sources of Financing The project will be jointly financed by ADF and the Government of Burkina Faso, in conformity with Table 4.3 below: Table 4.3 Sources of Financing In million CFA.Fs In million CFA.Fs Sources F.E. L.C. TOTAL F.E. L.C. TOTAL (%) ADF Government T O T A L ADF will cover % of the total project cost, i.e. UA 9.9 million. It will, therefore, cover 100% of the foreign exchange cost. The local currency part covered by ADF represents 31.70% of the total project cost The Government s contribution is CFA.F million, i.e. UA 1.84 million, part of which will be borne by the beneficiaries in the form of work related to livestock development and environmental management. The Government s contribution will make it possible to finance a part of

29 16 the local currency costs relating to all categories with the exception of the equipment component (ref. Table 4.5) The breakdown by source of financing and by component is given in Table 4.4 below: Table 4.4 Expenditure by Source of Financing and by Component COMPONENT ADF Government TOTAL % A. Development of Production B. Development and Management of Natural Resources C. Sensitization, Extension and Research & Development D. Restructuring and Strengthening of OPAs E. Support to Marketing and to the Supply of Inputs F. Producers Credit G. Project Management TOTAL PROJECT COST The sources of financing by categories of goods and services are presented in Table 4.5 below: Table 4.5 Expenditure by Category and by Source of Financing (in million UAs) Sources ADF Government Total % ADF Category F.E. L.C. Total A. Works B. Equipment C. Services D. Credit E. Training F. Operation G. Personnel Base Cost Physical Contingency Price Contingency Total Project Cost Under this project, ADF will finance 31.70% of the local currency expenditure. This is justified by: i) the type of expenditure which primarily concerns the payment of local labour and the procurement of local materials for the development and management of natural resources; ii) the need to reduce poverty and improve food security; and iii) the need to prevent further nonconcessional debt for budgetary reasons and because of commitments to donors under structural adjustment. 4.8 Environmental Impact

30 The project is classified in Environmental Category 2. It is, therefore, considered as having some limited negative impacts. However, the proposed implementation of the planned measures and control and monitoring of the environmental impacts will offset any negative impacts, and conserve natural resources. The activities planned under the project relating to the Development and Management of Natural Resources component may impact directly on the physical, human and biological environment of the project operating area. These activities stem from an analysis of the environmental impact assessment conducted prior to, and during, project appraisal. The aim of the analysis was to determine the nature and extent of such impacts and possible mitigative measures. It was conducted with the support of CONAGESE, officials of Soum Province, the SPLDP management team, staff of ongoing projects on the Burkina Sahel, non-governmental organizations (NGOs) and the OPAs The measures recommended are likely to effectively improve the physical and ecological environment of the project area. The approach adopted includes action programmes and performance indicators concerning the following components: i) sustainable management of wetlands; ii) soil erosion and water pollution control; iii) containment of silting following deepening of the 6 ponds; iv) development of natural grazing land; v) reclamation of deteriorated land; vi) improved soil fertility; vii) development of catchment areas; viii) limiting access by animals to unstable areas; ix) reforestation ; xi) preventive public health measures and specific mother and child health care measures. Following sensitization of the population to environmental issues, the project will adopt a community participatory approach for the control and monitoring of environmental impacts. The details of the proposed environmental measures are presented in Annex Impact on Women The role of women as players in development is thus consolidated. In fact, women will be involved at all levels of project implementation (production, supervision, sensitization, the Project Management Unit). They will participate in training (literacy, post-literacy education, technical and farm management training). The introduction of decentralized credit will enable women to finance income-generating activities and increase their families incomes and make investments which will facilitate integration into the market economy. For information, the net return on a fattened sheep is CFA.F 18,000. The return on 1 hectare of erosion control development work averages CFA.F 43,000. Credit will be granted in the following areas : animal, in particular sheep, fattening, the harvesting and storage of fodder, fodder crops, the utilization of crop residues and agro-industrial by-products, food and out-of-season crops, product processing, improvements to livestock accommodation. These activities will be scheduled in keeping with the timetable for household work. The development of milk collection and processing activities already introduced on a minidairy scale will be expanded with the establishment of a private, 1000-litre dairy in which the participation of women is already guaranteed. Finally, the establishment of mills and water points will help to free the time devoted to pounding millet and fetching water and provide women with greater leeway in organizing other activities.

31 Impact on Poverty Reduction The intensification of animal production and its by-products will reduce poverty by raising incomes above the existing poverty line of CFA.F 51,700 per person per year in Soum Province. In fact it will lead to an increase in the incomes of breeders and women involved in animal fattening activities, small-scale livestock raising, and food and out-of-season crops (ref. paragraph 6.3.2). Income will rise above the poverty line. The project will also contribute to job creation upstream and downstream, for its implementation will require the intervention of several economic operators (suppliers of factors of production, executing agencies, traders and processors of the project products). The distribution of project-generated-income could in turn lead to increased household spending on food, education and health and improved living conditions for the population of Soum. At present, the contribution of household incomes to those three categories of spending are respectively 57.7% (with 35.2% for on-farm consumption and 22.5% for the purchase of products), 2% and 0.6%. 5. PROJECT IMPLEMENTATION 5.1 Executing Agency The project will be managed by the already existing Project Management Unit under the supervision of the General Secretariat of the Ministry of Animal Resources at Djibo within the facilities established during the first phase. The Project Management Unit is headed by a coordinator whose CV, in particular qualifications and experience, will have received the prior approval of the Fund. It will be assisted by specialized and experienced organizations. These different organizations will perform their duties on a contractual basis. 5.2 Organization and Management The project management structure comprises a Regional Coordination Committee (RCC) chaired by the Soum High Commissioner, a Technical Committee (TC), a Project Management Unit (PMU), specialized organizations and the OPAs. Regional Coordination Committee The Regional Coordination Committee already exists. It is located in Djibo and was established under the first phase. It will be beefed up and will comprise representatives of: i) the Ministry of Secondary and Higher Education and Scientific Research; ii) the Ministry of Animal Resources; iii) the Ministry of the Environment and Water; iv) the Ministry of Basic and Literacy Education, v) the Ministry of Agriculture; vi) the Ministry of Health; ii) the Ministry of the Economy and Finance; viii) the beneficiaries; and ix) rural financial institutions. Under this project, the Committee will see to the coordination, monitoring and steering of project activities. It will also verify the conformity of the project objectives with national policies, identify any inconsistencies and propose improvements in the activities. It will review and approve project activity programmes and budgets. Secretarial services will be provided by the Project Management Unit, and the Committee will meet twice a year.

32 19 Technical Committee In the field, activities will be coordinated through the Technical Committee, which will group together all national project staff and the heads of the different structures involved in the implementation of the specific project components. The Technical Committee is a consultative forum, which will regularly take stock of the project status. It will inform the project coordinator of any difficulties encountered in the performance of specific duties, of any contradictions and inconsistencies, and will propose concrete solutions. The Committee, which will meet quarterly, will be chaired by the coordinator of the Project Management Unit. Project Management Unit The duties of the Project Management Unit will be to: i) coordinate, control and monitor all project activities; ii) prepare project activity programmes and budgets, iii) prepare bidding documents and disbursement requests for submission to ADF; iv) prepare financial statements and monthly project status reports. The coordinator will be assisted by 8 national staff. The Project Management Unit will be assisted by Government-recruited support staff. (ref. paragraph ) In a concern to further improve the performance of the Project Management Unit, each of the national staff will coordinate and monitor project activities concerning one or more specific areas, grouped together under the following eight categories: i) sensitization, extension and restructuring of OPAs, and monitoring-evaluation; ii) extension and research & development; iii) administration, finance and accounting; iv) development and management of natural resources; v) environmental management and monitoring; vi) product marketing; vii) supply, distribution and processing of products; viii) credit and savings. For reasons of efficiency, the different project components will be implemented by experienced and specialized bodies. They will operate on a contractual basis subject to agreements submitted for the prior approval of ADF. The project will establish a scientific committee to validate the research findings before communicating them to the population. This committee will be chaired by the coordinator and will group together officials of the institutions involved in the research The project activities will be implemented by the OPAs and grassroots committees (CTV, CTIV, CAS and CASIV). To encourage the effective participation of the population, the project will establish a multidisciplinary team and an appropriate supervisory team who will work closely together. (ref. paragraph and 4.4.6). Organization and Management of Credit As mentioned in paragraph , credit will be distributed through the Rural Financial Institutions (RFIs) approved by the Ministry of the Economy and Finance following selection by a Commission comprising representatives of the Ministry of the Economy and Finance, the MRA and the BCEAO. Selection is intended to bring competition into play in order to retain the most efficient RFIs. It will be made on the basis of prudential standards. An annual audit will be conducted on the financial institutions retained. Those which no longer meet the standards will be suspended and will only be reinstated when their performance improves. Credit will be onlent to those institutions on the basis of onlending agreements, the drafts of which will be submitted for the prior approval of ADF The resources earmarked for credit will be disbursed and deposited in an account, and each institution will make drawings on the basis of the requirements of the crop year and as credit files are approved. To that end, a special account will be opened in a commercial bank for the payment of the proceeds of the loan, and four other accounts will be opened in commercial banks, the first of which is intended for payment of the credit onlent to the RFIs; the second for the guarantee fund, the third for repayments on loans granted to Rural Financial Institutions, and the fourth for the payment of funds relating to project operating costs.

33 There will be two types of credit: short-term credit (12 months) and medium and long-term credit (over 12 months). Each type of credit will have its own rate. The interest rate must take into account the country s economic situation, the beneficiary s repayment capacity, the RFI onlending conditions and revenues, and PMU credit management-related operating costs. It will be at least equal to the market rate and will have to allow a sufficient margin to cover operating costs. Prior to the start up of the actual credit activities, a circular will be prepared by the Project Management Unit for the attention of the financing institutions to provide them with all the requisite information for their applications. Once a credit file is approved by an RFI, it is forwarded to the project which will verify its conformity with the agreed criteria and crops, following which the Ministry of the Economy and Finance will release the funds. The RFIs will be required to monitor the beneficiaries' credit and will establish quarterly credit monitoring and control reports. In turn, the project will carry out regular monitoring visits. The exchange risk will be borne by the State It will comprise a Credit Guarantee Fund which will be regularly replenished by part of the repayment of interest on loans to the beneficiaries. This Guarantee Fund could also be replenished by other State and donor funds. It is thus planned to establish a committee to manage the Guarantee Fund. The Committee will comprise a representative from Ministry of the Economy and Finance, the MRA, the RFI, OPA and the project. The Government will prepare the terms of reference for the organization and management of the fund for submission for the prior approval of ADF. The Fund would only be used after all other channels have been exhausted. The guarantee could consist of the beneficiaries savings, a joint surety of the members of the grouping and the usual guarantees (pledge, mortgage). Specialized Organizations As mentioned in paragraphs and Section 5.1, the project will make use of specialized organizations, namely i) the DPRA for extension and supervision activities in the livestock sector; ii) the Soum Provincial Agricultural Directorate for agricultural extension and supervision; iii) INERA for research in the following areas: genetic improvement, feeding, reforestation and seed multiplication; iv) IFDC-AFRIQUE for the improvement of soil fertility. It will work closely with BUNASOLS; v) BUNASOLS for the reclamation of land in collaboration with FAO; vi) ICIPE for the control and monitoring of the animal health component in collaboration with the MRA Veterinary Services Directorate; vii) CONAGESE for the supervision of the environmental component; vii) Consulting Firms/NGO for the participatory approach, advisory support and training; ix) private enterprises for the supply of goods and services; x) Rural Financial Institutions for credit (ref. paragraphs to ); xi) Planning and Studies Directorate (DEP) of the MRA for external monitoring and evaluation (ref. paragraphs and 5.5.2); xii) Agricultural Management Training for Africa (AMTA) Programme accommodated at the ADB for the management training of project officers Procurement The procurement arrangements are summarized in Table 5.1 below. All procurement of goods, works and services financed by the Bank will be in accordance with the Bank s Rules of Procedure for Procurement of Goods, Works and Services or, as appropriate, Rules of Procedure for the Use of Consultants, using the relevant Bank standard bidding documents. Table 5.1 Procurement Arrangements Expenditure Categories Million UAs ICB NCB Shortlist OTHERS TOTAL 1. WORKS

34 Feeder Roads 1.2 Stock Watering Development 1.3 Other Works Works Sub/Total ( (0.85) 0.89 (0.17) 0.28 (2.55) GOODS 2.1 Pumps 2.2 Tractors 2.3 Vehicles 2.4 Motorcycles 2.5 Other Equipment 2.6 Credit 2.7 Operation Equipment Total (0.07) (0.15) (0.26) (0.14) (0.21) (1.09) 1.22 (1.32) 1.51 (2.76) SERVICES 3.1 Sensitization 3.2 Training 3.4 Personnel 3.5 Other Services Services Total (0.93) ) 1.30 (0.10) 0.57 (2.35) 4.48 (3.47) UNALLOCATED (1.28) 1.58 TOTAL (2.99) ( ) ADF share The Project Management Unit will be responsible for the award of contracts for goods and services with the exception of goods on credit. The Unit s resources, capacity, expertise and experience are adequate to ensure successful procurement as follows: i) competition on the basis of a shortlist will be used for the recruitment of the consultants, consulting firms and NGOs responsible for the engineering designs of infrastructure, the mid-term-reviews, the post evaluation, sensitization and extension, training, supervision of the beneficiaries of credit, the establishment of accounting and financial systems for the project and OPAs, and the audit of the project and OPA accounts; ii) iii) limited international competitive bidding will be used for the procurement of pumps for a total amount of UA 0.07 million ; this procedure is justified in view of the specificity of the equipment concerned and the limited number of suppliers; international competitive bidding will be used for the civil works concerning the deepening of ponds, the drilling of 30 boreholes, 40 stock watering wells and 6 small temporary reservoirs as well as the rehabilitation of 35 km of feeder roads;

35 22 iv) national competitive bidding will be used for civil works concerning the construction of buildings and livestock developments which are below UA 300,000. There are sufficient enterprises in Burkina Faso to guarantee competition. Furthermore, the works will be implemented in different places concurrently and will be grouped together in several bid packages; v) national shopping will be used for the procurement of vehicles, equipment, office furniture and supplies and other materials not exceeding UA 50,000 per contract. In Burkina Faso, there are sufficient local suppliers and representatives of foreign firms to guarantee competitive prices; vi) vii) small items of equipment and supplies for the Project Management Unit, not exceeding UA 20,000 per contract, will be procured in conformity with well- established and generally recognized commercial practices; goods, works and services for the credit fund will be procured in conformity with wellestablished and generally recognized commercial practices. General Procurement Notice The text of a General Procurement Notice will be agreed with the Project Management Unit of the Ministry of Animal Resources during negotiations and will be issued for publication in Development Business, upon approval by the Board of Directors of ADF of the Loan Proposal. Review Procedures The following documents are subject to review and approval by the Bank before promulgation: i) Specific Procurement Notice; ii) Bidding Documents or Requests for Proposals from Consultants; iii) Bid Evaluation Reports including recommendations for contract award; and iv) draft contracts, if different from the drafts included in the bidding documents. 5.4 Implementation Plan and Expenditure Schedule Implementation Plan The project will be implemented over a period of 6 years as from September This period is justified, for the project will begin by a preparatory stage which will consist of putting in place the necessary management expertise and organizing the participatory approach. The preparatory stage will be completed in one year. The tentative implementation plan is summarized in Table 5.2.

36 23 Table 5.2 Implementation Plan Activity/Action Initiators Start Duration Board Approval ADF March days Assignment and Recruitment of Unit Staff MRA Sept months Expansion of CRC and Specifications MRA Sept month Recruitment of a Multidisciplinary Team MRA October months Initiation of Participatory Process and Preparation of the First Annual Programme MRA Nov months Restructuring of OPAs PMU/NGO/Consulting Firms October years Preparation of Environmental Action Plan PMU/CONAGESE Nov months Finalization /implementation of the Annual Project Programme. EPD/PMU/NGO Nov months Development of Infrastructure PMU Dec months Management of Natural Resources PMU / O P A Dec years Training of Producers and Project Officers PMU/NGO Consulting Firms Dec years Credit Onlending Agreements/Conventions to SOs RFI Oct month Mid-term Review and Workshop PMU Sept days Post Evaluation and Workshop Consulting Firms/PMU and MRA August days Expenditure Schedule Project expenditure will be made on the basis of the schedule in Table 5.3 below, based on the implementation plan. Table 5.3 Expenditure Schedule by Component (in million UAs) Components Total % A. Development of Production B. Development and Management of Natural Resources C. Sensitization, Extension and R&D D. Restructuring and Strengthening of OPAs E. Support to Marketing and to the Supply of Inputs F. Producers Credit G Project Management TOTAL PROJECT COST Expenditure to be made by ADF and the Government will be in conformity with Table 5.4 below:

37 24 Table 5.4 Expenditure Schedule by Source of Financing (million UAs) Sources Total % ADF Government Total Disbursements: disbursements on the credit component will be released in annual tranches on the basis of the Annual Programme approved by the Government and ADF. Further disbursements will also be authorized on justification of expenditure. To that end, the Project Management Unit will present a summary table of the details of each credit granted. 5.5 Monitoring and Evaluation Two types of monitoring and evaluation are planned: i) ongoing monitoring and evaluation carried out by the PMU with the support of the consulting firm or NGO responsible for sensitization and extension and ii) external monitoring and evaluation carried out by the Designs and Programming Directorate (DEP) of the MRA. The ongoing monitoring and evaluation team will comprise the multidisciplinary team beefed up by staff from this project and the Burkina Sahel Support Project in Soum Province. It will conduct socioeconomic surveys at project startup to establish a benchmark position External monitoring and evaluation is intended to: (i) monitor project implementation and (ii) ensure conformity between national and project objectives and propose adjustments where necessary. The two monitoring and evaluation teams will prepare a report, copies of which will be submitted to ADF and the other donors concerned The Project will be closely monitored by ADF and the Government. It will also be the subject of consultations with the other donors concerned. A mid-term review is planned after three years of implementation, and a post evaluation. The conclusions and recommendations of those two evaluations will be submitted to ADF for approval following their validation by two respective workshops. The conclusions of those 2 workshops will also be submitted to the other donors. A consulting firm will be recruited to carry out the two types of evaluation and independent audit firms selected to audit the project accounts. 5.6 Recurrent Costs On project completion, estimated recurrent costs will be UA 1.0 million excluding the maintenance cost of the water points regularly paid by the population. Following completion of the project, recurrent costs will be covered. In fact, the maintenance and upkeep of livestock facilities will be covered by the beneficiaries through the management committees. Each water point will be managed by a grassroots committee. The latter will have an initial amount of CFA.F 150,000. This will be secured from contributions by the beneficiaries of the water points. It is intended for the upkeep and maintenance of the facility concerned. The gradual transfer of responsibilities from the Unit to the groupings would considerably reduce recurrent costs. The sensitization and extension activities will be taken over by the beneficiaries on completion of the project, as will supervisory, extension, research and development and training activities. Such an approach will encourage selfmanagement and self-reliance among the beneficiaries. On completion of the project, the personnel will be reassigned to other positions.

38 The marketing units (livestock and dairy market) will be owned by groupings. These will see to their maintenance through the community spirit, improved management capacity, and the resultant cash surplus (ref. paragraph 6.3.2). Feeder roads will be maintained by the Ministry of Public Works as part of those activities. 5.7 Project Sustainability The sustainability of the project activities is guaranteed by the project design based on the participatory approach. This makes the beneficiaries more accountable and encourages their participation. The two factors are at the origin of the ownership process which is necessary to ensure self-reliance and the long-term management of the ecological and socioeconomic environments. The development of organizational and institutional capacities through the gradual transfer of technical skills and increased ability to negotiate and work together to defend common interests will become part of everyday life with the players endeavouring to solve their own problems State disengagement in favour of the private sector and agricultural organizations will also encourage breeders to organize themselves in order to form a more integrative part of trading which requires a sound grasp of market mechanisms. The establishment of a market observatory disseminating information through the local radio also established under the project as well as local advisory services and the establishment of a credit fund will make it possible to meet the requirements of the breeders economic initiatives. The preparation and adoption of a legal and institutional framework by the population in collaboration with the local and regional authorities will prevent disputes and ensure the sustainability of the project activities. 5.8 Donor Coordination The Soum Province Livestock Development Project - Phase II was designed as a permanent consultative framework to improve the living conditions of the population of Soum. To that end, consultations were organized during the preparation and appraisal of the project with the different development partners, the population, provincial officials and the Authorities. Meetings were organized with the World Bank, the European Union, the FAO, the UNDP, UNCDF, UNICEF, WHO, GTZ, French Technical Assistance, the Embassy of Denmark and The Royal Embassy of the Netherlands. These meetings led to an in-depth understanding of the problems of Soum, the drawing of lessons from the experiences of the other donors, and the proposal to the Government of appropriate solutions In view of the relevance and urgency of the problems in the project area and the interest expressed by the players in development in resolving them, it is essential that the consultations and meetings continue with the other donors throughout implementation of the project. To that end, the donors will be consulted and informed of the outcomes of supervision missions through their involvement in them. The outcomes of the mid-term review and post evaluation will also be submitted to them for opinion.

39 Discussions were also held between the Bank UNDP, and UNCDF as part of the coordination of activities under this project and the Burkina Sahel Support Programme Project, financed by UNDP and the UNCDF, which partly concerns Soum Province. The outcome of the discussions was as follows: i) the participatory process will be organized by the multidisciplinary team of this project; ii) both projects will take advantage of the outcomes of this process. Following preparation of the programmes of the beneficiaries of both projects in keeping with the different stages of the participatory process, a coordination meeting will be organized to enable each project to identify its activities and included them in its Annual Programme; iii) a single team will be responsible for ongoing monitoring and evaluation (ref. paragraph 5.5.1); iv) joint coordination meetings will be regularly organized concerning the monitoring and coordination of all activities of both projects Assistance is coordinated by the General Directorate for Cooperation at the Ministry of the Economy and Finance. It organizes frequent meetings of those donors represented in Ouagadougou. In addition to ordinary meetings, Burkina participates in UNDP-organized roundtables. Coordination and assistance are further strengthened by the increase in the number of formal and informal meetings among donors. Efforts have been made by the Government to ensure the complementarity of operations, thus avoiding duplication. 6. TECHNICAL AND ECONOMIC JUSTIFICATION 6.1 Technical Justification The basis for the intensification of production is through selection and genetic improvement by crossbreeding Girolando Zebus imported from Brazil and goats from Niger, the zootechnical parameters of which are presented in Annex 3. The techniques used for genetic improvement are simple. They have been tried and tested in Burkina Faso and elsewhere. They consist of phenotypic selection for meat and the crossbreeding of imported dairy stock with local cows and goats. The imported animals selected (Zebu bulls from Brazil and red goats from Maradi) from Niger adapt easily to ecological conditions in Burkina Faso. Their selection also took into consideration local materials and the traditions of Soum breeders. The implementation of the genetic programme is reflected in improved zootechnical parameters, significant gains in terms of weight and a high milk yield for cattle and goats (ref. Annex 3). The developments planned under the project are simple and make considerable use of local materials. 6.2 Project Benefits In its present form, the project will boost activities in Soum Province. In fact, the activities planned will make it possible to intensify animal production and its by-products and develop Soum Province which has a difficult ecological, economic and social environment. The development and management of natural resources, management of the environment and its close monitoring will consolidate the land structure in the area. The additional production of carcass meat will attain 16,472 tonnes, comprising 11,410 tonnes of beef, 1,532 tonnes of mutton and 3,530 tonnes of goat meat. The additional milk production sold will be 13.2 million litres comprising 7.7 million litres from cows and 5.5 million litres from goats. This additional production will lead to rising incomes and improved purchasing power for the 28,800 farmers supervised under the project The participatory approach, considered as the ideal base for achieving self-management, could encourage the emergence of an ever-increasing number of socio-professional groups capable of taking over from the project and developing sustainable livestock breeding adapted to the natural and economic environment of Soum Province. This method involves all the players in the rural community (smallholders and breeders above all) in the activities to safeguard, improve and manage

40 27 natural resources. The provision of those players with appropriate materials will enable them to step up production, thus gradually shifting away from extensive farming methods The more efficient and rational use of production capacity and available resources will create a more production-oriented environment, which will improve the country s food security. The project will focus on self-management, technological transfer and assimilation of techniques, which will improve productivity, yields and limit the impacts of natural disasters. 6.3 Financial and Economic Justification Financial Justification The financial analysis of the different models in paragraph points to a successful outcome for the 28,800 farmers supervised under the project. Strong demand for their products will ensure their sale. The proportion of milk marketed is negligible in comparison with domestic demand. Indeed, there is strong domestic demand for dairy and meat products. Demand for milk is growing at 7.5% in Ouagadougou and 4.5% in Bobo Dioulasso. It is reflected in an increase in imports of dairy products. External demand for meat remains high. It is sustained by strong demand from neighbouring countries (ref. paragraph 3.1.6). In view of the low level of additional marketable production as a result of the project, this could be easily sold on the domestic and external markets As mentioned in Table 1 of Annex 6, the profits generated by the implementation of this project will be CFA.F 512,006 for a progressive farm comprising a medium size herd of 15 cattle, 42 sheep and 30 goats. It will be CFA.F 226,213 for an improved traditional farm with an average herd of 15 traditional cattle and 20 sheep. It will be CFA.F 182,688 for a traditional farm with a with an average herd of 11 traditional cattle and 11 sheep. The return on the erosion control development works is CFA.F 43,000/ha. The average return on a fattened sheep is CFA.F 18,000. The improvement is very substantial in the case of progressive farms. The project objective is to encourage the transformation of traditional farms into progressive farms. The later will increase from 10% to 30% on project completion and improved traditional farms will fall from 70% to 60% over the same period. On the other hand, traditional livestock farms will fall from 20% to 10%. At full development, the breakdown of farms will be as follows; progressive farms 25%, improved traditional farms 25% and traditional farms 50% The dairy s operating account shows a surplus as from year one. It will rise from CFA.F million in year one to CFA.F million from year 5 ( ref. Table 2, Annex 5). With the cash flow achieved, the dairy will be able to finance the replacement of its equipment, diversify its activities, make profitable investments and improve supplies In the short term, the project will be exempt from duties and taxes and will have no significant impact on State tax revenue. However, in time, State revenue will increase through improved recovery of duties and taxes. Indeed with the dissemination of the research findings, livestock breeding will be modernized and intensified. Consequently, exports of meat and cattle will rise, as will revenue from taxes and duties from the marketing of project products. In addition, higher milk output will lead to a 13.2 million litre reduction in imports (ref. paragraph 3.1.6). The project will, therefore, have a positive impact on public finances since the farms selected and the dairy could be self-financing on completion of the project. Economic Justification The economic analysis is based on a comparison of the without and with project situations. The assumptions made are presented in Annex 5. At full development, the economic

41 28 benefits from the project will be CFA.F million, mainly from increased production. A cost benefit analysis gives an economic rate of return of 14.8% (ref. Annex 6) The sensitivity tests have been carried out and concern a reduction and increase in costs and a reduction in benefits. This analysis shows that the rate falls to 12% if benefits fall by 10%. The analysis shows that the project is not very sensitive to falls in product prices or cost increases. 7. CONCLUSIONS AND RECOMMENDATIONS 7.1 Conclusions The Soum Province Rural Development Project Phase II will be implemented in an area with the appropriate natural conditions for such activities. It is in keeping with the Government s policy, and its implementation will make it possible to restore sustainable livestock breeding adapted to the natural and economic environment of the area. The recommended improvements will result in higher production and incomes, the creation of new jobs and an improvement in the population s living conditions. In that respect, the project will help to improve food security and reduce poverty. It is considered to be technically achievable and viable from the economic, financial and environmental standpoints. The economic rate of return is 14.8% Recommendations In light of the foregoing, it is recommended that a loan, not exceeding UA 9.99 million, be granted to Burkina Faso from ADF resources, subject to the following conditions: a) Conditions Precedent to Loan Effectiveness Prior to Loan Effectiveness, the Borrower shall: i) provide the Fund with evidence of the establishment of a Project Management Unit at the General Secretariat of the Ministry of Animal Resources located at Djibo in Soum Province (ref. section 5.1); iv) iii) iv) provide the Fund with evidence of the appointment of the Coordinator of the Project Management Unit, whose CV, in particular the experience and qualifications, must have received the prior approval of the Fund (ref. section 5.1); provide the Fund with evidence of the recruitment or assignment to the Project Management Unit of the following national staff: a financial expert, a rural engineer with a background in water engineering, a communication expert, a livestock expert, an agricultural economist, a sociologist, an accountant and a management comptroller. These experts, whose qualifications and experience must have received the prior approval of the Fund, will form part of the Management Unit (ref. paragraph ); provide the Fund with evidence of the establishment of a committee for the selection of rural financial institutions which could benefit from the onlending of credit funds planned under the project; (ref. paragraph 5.2.7); v) provide the Fund with evidence of the opening of a) a special account for the payment of the proceeds of the loan, and b) four (4) accounts in commercial

42 29 banks as follows, the first for the payment of credit funds, the second for the guarantee fund, the third for the repayment of loans granted to RFIs and the fourth for the payment of funds relating to project operating costs (ref. paragraph 5.2.8); vii) vii) submit to the Fund for prior approval, the draft agreements to be concluded between the Project and specialized organizations responsible for the implementation of the project components, namely : DPRA, the Provincial Agricultural Directorate, the Veterinary Services Directorate, BUNASOLS, INERA, ICIPE, IFDC-AFRIQUE, CONAGESE and AMTA (ref. paragraph ); submit to the Fund for prior approval, the draft onlending agreements with at least two rural financial institutions (ref. paragraph 5.2.7). b) Other conditions The Government shall also: i) within six (6) months of the signing of the Loan Agreement, submit to the Fund the Agreement concluded with the specialized organizations responsible for the implementation of the project components, namely : DPRA, the Provincial Agricultural Directorate, the Veterinary Services Directorate, BUNASOLS, INERA, ICIPE, IFDC-AFRIQUE, CONAGESE and AMTA (ref. paragraph ) ; ii) within six (6) months of the signing of the Loan Agreement, submit to the Fund the action programmes on environmental management, and the control and monitoring of environmental aspects, the drafts of which will have received its prior approval (ref. paragraph 4.4.4); v) within six (6) months of the signing of the Loan Agreement, submit to the Fund the onlending agreements signed with a least two rural financial institutions (ref. paragraph 5.2.7).

43 BURKINA FASO SOUM PROVINCE LIVESTOCK DEVELOPMENT PROJECT PHASE II ANNEX I Page 1 of 1 This map has been drawn by the ADB Group staff exclusively for the use of readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the ADB Group and its members any judgement concerning the legal status of a territory nor any approval or acceptance of its frontiers.

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