Docunnt of

The World Bank

FOR OFmaCiAL USE ONLY

Rqeet No.835 7

PROJECT COMPLETION REPORT

ZAIRE

KWANGO-KWILU TECHNICAL ASSISTANCE PROJECT(CREDIT 1152-ZR)

FEBRUARY 7, 1990

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Agriculture Operations DivisionSouth-Central and Indian Ocean DepartmentAfrica Regional Office

Mles docu_mnt has a restricted stribuion and may be sed by reipients only In the performance oftbir offki duties. Its oontents may not otherwise be disclosed without World Bank authorization.

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IABBREVIATIONS

CODAIK - Compagnie de D6veloppement Agripastorale Integr; deKikwit (Kwango-Kwily Integrated AgriculturalDevelopment Program)

FAO - United Nations Food and Agricultural Orgmnization

GTZ - Geselachaft fur Technische Zusammenarbeft (GermanTechnical Assistance Agency)

IDA - International Development Association

INADE - African Institute for Economic and Social Development

NGO - Non-governmental Organization

OED - Operations Evaluation Department

PAI - Perimetres d'Action Intensive(Areas of Concentration)

PCR - Project Completion Report

PLZ - Plantations Lever au Zaire(Lever Plantations in Zaire)

PRONAM - Programme National de Manioc(National Manioc Program)

PVO - Private Voluntary Organizations

SAR - Staff Appraisal Report

UNDP - United Nations Development Program

USAID - United States Agency for International Development

CURRENCY EXCHANGE RATES

At appraisal average = US$1 - Zaire 2At establishment of CODAIK = US$1 - Zaire 5.75Intervening years average - US$1 - Zaire 33Completion year Average - US$1 - Zaire 60

FISCAL YEAR

January 1 - December 31

FM OFF7CIAL U GMLYTHE WORLD BANK

Wa0mmton. D.C. 20433US.A.

Opatmm £VuAtuu

February 7, 1990

MEMORANDUM TO THE EXECUTIVF nIRECTORS AND THR PRESInPNT

StTBJECT: Project Completion Report on 7aire Kwango-Kwilu TechnicalAssistance Project (credit 1152-7R)

Attached, for information, is a copy of a report entitled"Project Completion Report oa Zaire - Kvango-Kwilu Technical AssistanceProject (Credit 1152-ZR)"prepared by the Africa Regional Office. Noaudit of this project has been made by the Operations Fvaluation Departmentat this time.

Attachment

This document has a resuicd disuibutin and may be _d by nxPsts onl the PefonnaoOof their offcial duties, ts content may not othwwise be dkimoed withot Wodd Bank auw lbwuL

* ' 4 AL ,

ZAIRE

XWANGO-KWILU TECHNICAL ASSISTANCE PROJECT(CREDIT 1152-ZR)

PROJECT COMPLETION REPORT

Table of Contents

Pate No.

Preace.................. ...................... iBssic Data Sheet ..................... Lii

Evaluation Summary ............. . vi

I. Background... . 1................. ... 1II. Project Objectives and Desription...p..i........o... 2III. Project Design and Organization-ooo.................. 2

IV. Project Implementation..o ... ... 9..o. . . . .. .o. ..o . 4V. Project Resls.. s u...l ts000*.... .. .. 7VI. Proi1 t Sustainability ........ 9VII. Performance of Participants.. ........ .......... 9

VIII. Follow-up Action ..O..... 00*0000**6................ ....... 11

Appendix I: Financial Statements of CODAI................. 12

Appendix II: Statistical Annexes .............................. 14

MAP: IBRD 14469R

This document has a festricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be discksed without World Bank authorization.

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ZAIRE

KWANGO-KWILU TECHNICAL ASSISTANCE PROJECT(CR. 1152-ZR)

PROJECT COMPLETION REPORT

PREFACE

This is the Project Completion Report (PCR) for the Kwango-KwiluTechnical Assistance Project in Zaire, for which Credit 1152-ZR in theamount of US$2.6 million was approved on February 26, 1981. The Credit wasclosed on June 30, 1986, three years behind schedule. It was fullydisbursed and the last disbursement was on July 10, 1987.

The PCR was prepared by the Agriculture Operations Division,South-Central and Indian Ocean Department, Africa Regional Office. It isbased, inter alia, on the Staff Appraisal Report, the Loan Agreement,Supervision Reports, correspondence between the Bank and the Borrower, andinternal Bank memoranda.

The PCR was read by the Operations Evaluation Department (OED).The draft PCR was sent to the Borrower and cofinancier, German TechnicalAssistance Agency (GTZ), for comments but no comments were received.

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ZAIRE

XWANGO-KWILU TECHNICAL ASSISTANCE PROJECT(CREDIT 1152-ZR)

PROJECT COMPLETION REPORT

BASIC DATA SHEET

Project Identity

Project name Kwango Kwilu Technical Assistance ProjectCredit number Cr. 1152 ZRRVP Unit AF3AG, South-Central and Indian Ocean DepartmentSector AgricultureSubsector Rural Development

Key Prolect Data

Item Appraisal ActualExpectation Situation !

Total cost (US$ mm) 5.6 5.6Credit amount (US$ mm) 2.6 2.6Disbursed (US$ mm) 2.6 2.6Date project completed 6130/83 6/30186Date pbyellcel C mnnente phyvnie1 com_onents not completed

completedProject time overrun 100XFinancial Performance poorInstitutional Performance 2OQr

Other Prolect Data

Item Original Revision ActualPlan

First mention in files 7/14/77Government Application Nov. 78Appraisal Oct. 79Negotiations 2/24/81Board Approval 2126/81Signing Date 7/23181Date of effectiveness 7/07/82Closing Date 6/30183 6/30/86 6/30186Last disbursement 7110187Total staff inputs in weeks 154.2Number of supervisions 7

Borrower Government of ZaireExecuting agency CODAIK (Compagnie d Developpement Agro-

Pastora-e Integre de Kikwit)

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CREDIT DISBURSEMENTS

A. Disburs-emnts ppr ynar

(UsS million)

1061 102 1_ 3 10 L984 I1S i 0e 987 S/

(Credit 1162-ZR)

Cumulative estimate 0.1 1.0 2.2 2.6 2/ 2.6 2.6 2.6Total Actual .0 0.28 0.7 1. 8 2.84 2.64 2.66Actual an U of est!mate .0 23.0 81.0 48.0 60.7 98.0 100.0Total disbursed .0 9.0 18.8 26.7 87.7 90.0 100.0

(PPF P 417-ZR) 4/ 1987/88

Cumulative estImate 0.6Totai actual 0.19Actual as X of estimate 46.6

1 The elosing date war twice revised, see pars 8.08.4 The credit amounted to 2.4 million SDR, which was at appraisal estimated at ^.9 dollarsS/ Lst payment made July 10, 1987. t/ The PPF has been approved March 1981. The disbursements under the PPF are mentioned,

because some costs directly related to the pilot project have been financed by this PPF,such as preparation of follow-up project, final payments of equipment with delayeddelivery. After concellation of the follow-up project, the disbursed amount will berepaid over a five year period.

B. Disbursements per category.

The following disbursements were miade:

Catesory Estimate Revised ActualEstimate

*..;**.*.thousand SDR9e. . .

1. Experts services 680 750 6662. Vehicles, equipment CODAIK 1) 380 850 1,2243. Civil works CODAIK 240 50 344. Construc:ion Aquaculture Center 110 0 05. Studies follow-up project 100 250 626. Studies viability Ec. Recovery Fund 25 25 07. Consultant fees/equipment part 2) 250 298 2878. Refunding PPF 152 250 127 1279. Unallocated 365 50 0

-------------------------------------.--------------------------------

Total 2,400 2,400 2,400

1) Trucks, tractors and implements, jeeps, motorcycles, radio phonie andoffice equipment.2) For the ministry of planning. Financing of Mr. Lulaney, consultant, andICTAD experts; including car and equipment.

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USE OF BANK RESOURCES

STAFF IrVTfiat ffweek%

PY 74 767 8 77 77 78 79 80 81 82 83 84 85 86 87 88 TotalP.rapprleals I1 --- -a-Appreissl 1.10 .1 24.8 -- -- 25.9N.tlatlon 1.0 - - 2.8 8.8 - - - 7.1Supervision - 1.6 24.1 48.1 31.1 11.4 7.4 .7 119.4Other 1.1- - - - - - .2 - .6 - ., - - - - 1.7

…--- ------- …-- -- ------- ---- -------------- --------------- -

TOTAL 8.2 - - - - - .1 27.8 6.4 24.6 43.1 31.1 11.4 7.4 , - 154.2

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Missions.

Stage ofProject Month/ Nr. of Days in Expertise Performance Types ofCycle Year Persons Field Represented Ratinz Problems

Through Appraisai

1. 07/77 2 3 EC, Agr n.a. Pre-Ident.

2. 10/77 2 2 EC, LV n.a It

3. 10/78 1 7 EC n.a. Preparation

4. 11/78 4 18 EC, Agr, LV n.a. AppraisalPM, GTZ

5. 10179 1 5 EC n.a. Post-Appr.

Aypraisal through Board Approval,

1. 02/81 1 3 EC n.a.

Board Approval through Effectiveness1. 11181 2 9 EC 2 PF, Recr.

wmmminnin=ea3_ a_= _-=__um =In=mm_S mt___C mlm mm__m

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Supervision

1. 05/82 2 2 EC, LO 2 PF, hecr.PA2. 10/82 4 15 EC, PA, FA, 2 PS, PM, FM

LO IM.3. 05/83 4 9 FA, EC 2 PM, IM.

Repr. GTZ4.* /1183 3 12 FA, Agr. 2 PM, FM, TC

Repr. GTZ5. 11/84 2 11 FA, MS 2 PC, PF, PM

Repr. GTZ ME6.** 04/85 1 3 Agr. - Follow-up

mission7. 11/86 2 4 EC, Agr. 2 PM, PF.

* This mid-term review mission proposed extension closing date to 6130/84** Mission propoaed extension closing date to 6/30186

Preparation and appraisal follow-up project

1. 06/85 6 26 Agr, LV, EC - Pre-appr.CE

2. 09185 2 3 Agr. EC - PreparationInstitutionReform

3. 11/85 3 10 Agr, EC - Evaluationpreparationprogress

4. 03/86 5 17 Agr, LV, EC - Appraisal

5. 05/86 1 10 Agr, PH Post appr.

KEYS: Expertise: FA (fin.analyst), Agr. (agriculturist), Recr. (Staff andconsultant recruitment), EC (Economist)MS (man.specialist),LO (loan officer) LV (livestock)

Status: 1 (problem free), 2 (minor or manageable problems),3 (major proltlems)

Type of PM (proj.management) PF (proj.funding) PS (proj.scope)problems: FM (fin.management) ME (mon.& eval.) ID (implementation)

TP (techn.performance) PA (proj. administration)Co-financier GTZ

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PROJECT COHPLETION REPORT

ZAIREKWAMGO-ExIILU TECHNICAL ASSISTANCE PROJECT

_1152-ZR)

EVALUATION SUMMhR!

Objectlve

1. After the hihly regulatory agricultural policies of theseventies, Government followed in the eighties a path of priceliberalization, decentralization and greater partielpation of the privatesector in the economy. In line with the new policies the Project. alming toincrease agricultural productivity, and Improve agricultural services in theKwango and Kwilu sub-regions of the Bandundu province, sought participationof the private sector by *stablishing a mixed capital development company,the Compagnie de Dveloppeument Agripastoral Integre de Kikwit (CODAIK). AnImportant objective in the company was to develop its own reaource e&rningactivities, so as to become less dependant on undependable Governmentfundlng. The company was established in May 1982, with a share capital of2.5 million Zaire (US$440,000). Forty percent was owned by Government andsixty percent by thirty private shareholders. The statutes gave the companythe status of Development Authority in the region with a broad mandate foragricultural development. It received external financial support from IDAand the Pederal German Oovemret.

Implications

ple e_tatlotift of the progrn was delayed dne to staff igproblems. The cattle ranch and aquaculture center were not impllmented.Other activities (credit, marketing and research) were reduced or stopped,because CODAIK was not equipped to further develop them. The Projectachieved its best results in carrying, out those activities that wouldnormally have been carried out by a Government managed project authority: itworked out and succesfully introduced a cassava cultivation package; It laidthe basis for Improved extension systems; and it proved that manual roadmaintenance could be satisfactorily carried out, if properly organized andcontrolled.

Results and Pactors Affecting

3. The Project'e maWI failglre Wm to prove that in the region amixed capital development company could be mounted, that could succeafullydevelop revenue earning activities. First, both revenue earning and non-revenue earting public activities were Included in CODAIK's mandate, butwithout clear separation as to their funding; most of CODAIK's funding wasmade available as a loan, thus putting the company on a weak financialbasis. Also, part of the revenue earning marketing activities CODAIRK didcarry out, brought it into conflict with private traders, complaining aboutunfair competition. Furthermore, the decision making process was ambiguous,leading to serious internal tensions. Finally, CODAIK's shareholders weresharply devided between those supporting CODAIK's development role and thoseseeking to obtain short-term benefits from the company in their privilegedposition as shareholder.

4. Other factors also played a role in the failure of CODAIK. Thequality of consultant service. we mited and In the end proved to be

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disappointing, causing Implementation delays, weakening the company'seffectiveness and contributing to internal tensions. German bilateral aid,which provided technica'. assistance under a co-financing agreement with theproject, had its doubts on the concept of a mixed-capital developmentcompany and felt that too much eazention was given to CODAIK's institutionaldevelopment and capability to raise its own fumds, at the cost of attendingto small farmer needs. Finally, lack of continsuity in supervising staff andof a decisive mid-term evaluation reduced the Bank's effectiveness in itseffort to solve institutional problems.

Lessons learned and Sustalnability

5. The lessons learned from thLis project are that:

- the idea of inviting private interests to participate in ruraldevelopment is a valid one, but very complex and time consuming, inparticular in the situation of economic crisis that prevailed in Zaireduring project implementation.

- when establishing a development company, a clear separationneeds to be made between revenue earning and non-revenue earning activities.This distinction is essential to determine how the company should be fundedand what will be the responsibilities placed on the company and its dailymanagenent.

- it is not sufficient to promote the idea of a developmentcompany carrying out revenue earning actvities as a means to generatefunding; at least some of these activities need to be well defined,evaluated and judged attractive at the start of implementation for thecompany to have a chance of being succesful. Such a company should have aless rigid juridical structure, promote new private enterprises in the areathrough temporary or minority participation and provide services on astrictly contractual and commercial basis.

- the relative success of the agricultural extension, animalhusbindry and rural roads maintenance components have laid a baiis forfollow-up action. However, their implementation should be sought throughreinforcement of the local government services. Th.a vet-up of a separateproject authority to carry out these functions wiL be unsustainable in thelong term, and would lead to serious competition for scarce resources.

- more attention needs to be paid during project design processto the possibility of contracting-out specific activities. In the Zairiancontext, this is especially important because of the lack of managementcapabilities in the government services and the need to make use of existingexpertise in already established organisations in the area. In the projectcontext thl's could have led to increased cost recovery, and reduced cost toGovernment.

ZAIRE

KWANCO.KWILU TECV1NICAL ASSISTANCE PROJECT(CREDIT 1152-ZR)

PROJECT COMPLETION RE-POIT

I. BACKGROUND

1.01 Sector development obiectives. In the 1970's Government hadset up various specialized development organisations for food, industrialand export crops. Their functions varied, and included agriculturalservices, and input distribution. Their performance remained belowexpectation, due to a lack of funds and technical capability. In additionGovernment sought to regulate prices of many agricultural commodities.These measures had generally a negative impact on production and marketing.The Government dissolved several of these organisations and followed since1980 a path of price liberalization, greater participation of the privatesector in and deceatralisation of development activities. It also set outto formulate overall production targets in its First Agricultural RecoveryPlan (82-84). The experience in this plan laid the basis for the five yearplan development (86-90), which maintained the same agricultural ol'jectives.

1.02 Policy context. The Government repeatedly reaffirmed thepriority of agriculture within the framework of the overall economicplanning. Major areas of action were: improving agricultural services andtransportation in rural areast increasing agricultural productivity; priceliberalisation and reviewing marketing policies. Given the limited capacityof the public sector to revive the agricultural sector and in order tostimulate the participation of the private sector in the economic recoveryeffort, Government established in 1978 an Economic Recovery Fund. The Fundwas to be used to finance priority development projects, engaged in aproductive activity. Private enterprises could implemeant such projects ontheir own or sub-contract them tc oths- entities, under implementationagreements with the Government's Executi7 Council. Under the arrangementsof the recent (1987) Structural Ajustment Credit the recovery fund has beendissolved, with a view to improve the anagement of the national budget.

1.03 Prolect links to sector obiectives and policies. The projectwas the result of an extended dialogue with Government in the 1970's aboutpossible Bank support for agricultural development projects. The discussionon a Bandundu project started in 1974, considering a possible livestockproject. Later on in 1977 Government requested the Bank to evalv te aregional development project with broader objectives, aiming at increasedfood production; strengthening agricultural extension methods anddevelopping better marketing services, including road improvement. Atappraisal in 1979 the project sought, in line with Government policies, toincrease participation of the private sector in rural development, byestablishing a mixed capital development company, and also to rely on theEconomic Recovery Fund for financing of specifis activities. The Creditbecame effective in July 1982, and the Company was established in May 1982,with a capital of Z. 2.5 million (about US$ 440,000). Government owned 402of the shares, and 60Z was owned by private shareholders, consisting ofi^0's, commercial companies or individuals active in the region.

II. PROJECT OBJECTIVES AND DESCRIPTION.

2.01 Government original project proposals for a mixed farmingproject and a cattle ranch project were not accepted by the Bank. Instead,the Bank proposed, and Government ac,epted, to prepare a pilot projectcombining the objectives of the two proposals. The Bank did not press forfurther preparation work but decided to send a preparation/appraisal missionto work out the pilot project, in collaboration with Government and donors.

2.02 The Project was conceived as a pilot project, constituting anexperimental phase of a long-term integrated agricultural and livestockdevelopment program, to be implemented over a 15-20 year period throughvarious follow-up projects. The program aimed to: (1) develop the productionpotential of the Kwango-Kwilu sub-regions of Bardundu province; (2) improvethe standard of living of their population; (3) improve the food supply toits main consumption market, Kinshasa; and (4) increase food production inZaire in order to save the country's scarce foreign exchange by replacingimports of staple food by local production. The program's concept wasessentially production-oriented; given the limited managerial capabilityavailable locally, it was meant to remain simple. Initially, the programwas to be limited to crop, livestock and aquaculture development in threezones of Rw_.lu, and it would be gradually extended to other zones in Kwiluand Kwango.

2.03 The principal objective if the innovative Pilot Project was toestablish and develop an institutional and managerial environment in whichthe integrated program for the long term agricultural development of theKwamgo and Kwilu sub-regions could operate. The project concept was that ofa small pilot effort to test a technical package and an implementationstrategy for future follow-up projects, within the broad developmentprogram. The institutional arrangements tested would also provide experiencethat would assist In the design of projects elsewhere in Zaire.

2.04 The project's six main components weret (1) the establishmentof a development authority for the Kwango-Kwilu sub-regions; (2) technicalassistance for project design and management; (3) a training and extensionsystem for the zones where the project would be active; (4) development of acattle breeding ranch and an aquaculture center; (5) establishment ofsupporting services and infrastructure for marketing and agriculturalcredit; and (6) applied research and studies for the project area. It alsoincluded funds to finance technical assistance to the Ministry of Planningand to study the viability of the Economic Recovery Fund. These provisionsamounted to about 102 of the total credit.

III. PROJECT DESIGN AND ORGANIZATION

3.01 The project essentially aimed from the outset at two majorgoals: (a) to test technical agricultural packages and plan for possiblefollow-up efforts; and (b) to test and establish a development organizationwhich by bringing in p ivate capital would be oriented more towards revenueearning activities, this generating substantially to its own funds. Thepilot effort represented a significant departure from the traditional

institutional approach to rural development, which was to set up Governementmanaged and staffed development authorities. By encouraging the involvementof NGO's and the private sector in the area, it aimed to Improve theprospects for a self-sustaining development process. This was particularlyimportant, since the region as well as the country in general faced everdwindling public funds for agricultural services.

3.02 The project was conceived in two steps: first, to establish amixed capital company and second, for the company to undertake its ownprogram of activities as well as to coordinate ongoing rural developmentactivities in the project area. The company created was CODAIK (Compagniede Developpement Agri-Pastoral Integre de Kikwit). Its statutes wereapproved in 1982, after Bank review. The company would have eight boarddirectors, with a three year term, with three members appointed byGovernment, and four by the private shareholders. The General Manager, theeighth member, would be elected by the board upon Government'srecommendation. The social objectives of CODAIK were the development ofagriculture, in the widest sense, and the planning and coordLnation of allagro-pastoral activities in the Kwango-Kwilu area as the recognized regionaldevelopment authority. CODAIK could undertake marketing, agriculturalcredit, and agricultural services.

3.03 The company's sharecapital of Z. 2,5 million was owned 402 byGovernment and 60Z by private shareholders. The first 30 groups ofindividuals able to invest each Z. 50,000 or US$ 8,800 became the privateshareholders. Despite this arbitrary procedure, these shareholdersrepresented fairly the sub-regions, including the private sector, politicalrepresentatives and development agencies. The expectation that moreshareholders would be attracted was not realized, and instead interestgroups with different views on CODAIK's role emerged within the small groupof private shareholders, leading to delays in decision making andinterference in day-to-day management.

3.04 The corporate structure gave Government a dominant role,leading to the perception that the project was basically a traditionalgovernment project. The board of directors had wide executiveresponsibilities, which led to frequent interference in management. Thestatutes attributed responsibilities for day-to-day management both to thegeneral director and to the management committee, leading to internaltensions. While the SAR paid attention to many organizational points,including the formation of company departments and divisions as well aszonal offices, it did not elaborate on decision making processes and thepotential or possible earning capacity of a mixed-capital developmentcompany.

3.05 CODAIK concluded in 1982 a Subsidiary Lcan Agreement with theExecutive Council of Government. The proceeds of the credit would bepartially granted (for financing expert services and studies) and partiallyallocated as payment of Government's shares in CODAIK. The proceeds of thecredit to finance investments and Government's counterpart funds forCODAIK's activities would be provided as a loan, carrying a 62 interestrate, a 5 year grace period and a 15 year repayment period. Repayment of

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interest and principal would only take place if and when CODAIK would make aprofit. CODAIK also received budgettary support. However, it was not clearwhat activities would remain a public responsalility, to be financed by non-repayable counterpart or budgettary funds, ane what would constitute aprivate activity, to be financed by CODAIK's own funds or by loan funds.kl0so the different activities were not properly reflected in CODAIK'saccounting system. As a result Government financed sometimes certainprivate activities (e.g. on the seedfarm) and CODAIK included expenses forpublic services (e.g. on extension) in the loan, repayable to Governement.

3.06 The project expectations for institution building were basedon the assumption that: (a) participation of shareholders influential in theregion would lead to further participation by the private sector; (b)private shareholders would bring about efficient operation of CODAIK; and(c) technical assistance would provide the necessary managerial capability.These expectations were not realised, because shareholders had differentperceptions on the role of a development company, important shareholders(e.g. PLZ) retracted before project effectiveness and hiring of competentconsultants was delayed.

3.07 CODAIK was asked to develop its own work program as well ascoordinate all ongoing development antivities in the region, since it wasconceived as the Regional Development Authority in the region. Itscoordinating efforts caused much controversy in the area, because it lackedas a recently established company the credibilty for such an authority. Inaddition, less attention was given during implementation to the pilot natureof the institution bu.tilding effort and the functioning of CODAIK as aprivate development company. CODAIK in fact operated as a classicalintegrated rural development project, depending on public funding.

3.08 In retrospect, the assumption that a mixed-capital developmentcompany by its very creation would operate as a private company led to afocus on technical matters and a declining control of institutional matters.As a result, support to create a minimal earning capacity for CODAIKremained weak, and hence CODAIK became increasingly dependant on Governmentfunding, contrary to the original project objective (para 3.01-3.02).

IV. PROJECT IMPLEMENTATION

4.01 Two components were not implemented through the project: thedevelopment of a cattle breeding ranch and an aquaculture center. Theselected cattle ranch was privatised early on, and transfered to a privateentity, which discontinued cattle breeding activities. Other alternativeswere not available, due to the lack of funds and expertise. Thisdevelopment did not affect project results, because a breeding ranch withouta complementary distribution program of livestock to small farmers would nothave had much effect. The main development in aquaculture was carried outby the USAID supported 'Projet de Pisciculture Familiale".

4.02 Components with limited implementation were: Input suDplY,credit and marketina. The project initiated cash sales of agriculturaltools and veterinary products, at competitive prices. The major clients

were NGO's, while private traders purchased inputs to stock their up-countrystores. The project thus provided the foreign exchange to maintain thesupply of essential inputs. Sales were supposed to be made at a profit, butstore administration and cost accounting were weak. CODAIK developed aseedfarm but this effort developed unsatisfactory and seed cost calculationsremained incorrect. Limlted credits (about Z. 100,000 in total) were givento stock inltial input supplies at the collectivity level, and to establish

* fish ponds. In response to a critical need for access to foreign exchange,a new line of credit was establlshed for the purchase of trucks. This creditwas granted at the prevaillng interest rate with the foreign exchange riskborne by the borrower. Six (repaid) loans were made to CODAIK'sshareholders. Finally, CODAIKRs credit activities were stopped, becauseCODAIK was not equipped to develop and control such activities.

4.03 The marketing operation of CODAIK included both the purchaseof rice and maize from farmers living in a 50 km radius of Kikwit, as wellas the sale of cassava and cereals from CODAIK's seed multiplication farm.The lack of buyers in areas where farmers increased their production as aresult of extension efforts were an important reason for CODAIK to expandits marketing activities (50-100 tons at the end of the project period).However, its marketing activities in easily accessible areas brought them indirect competition with private traders and CODAIK shareholders, and provedcontentious. While competition was welcomed, the traders of the regionbelieved that CODAIK had certain advantages, given its project financing andclose contact with farmers through extension activities. Complaints aboutbelow-cost pricing were not easy to refute. CODAIK's cost calculations wereweak and some costs, normally considered marketing costs, were charged toCODA-^' ' general costs. While the concept of establishing and implementinga marketing program was correct, only a few tests were made (e.g. creatingvillage markets and testing collection systems). A comprehensive programproved in the end to be beyond CODAIK's capability. CODAIK should havetested first its viability as a private trader, before accepting the task ofdevelopping a regional marketing program.

4.04 The g2vlied research component was hardly implemented. Thefew experiments that were carried out did not produce lasting results. Mostapplied research was carried out under PRONAM (Programme National de Manioc)and during extension activities. The project did cooperate with FAOIUNDP lnpublishing in 1984 the bi-lingual extension booklet 'Techniques AgricolesAmeliorees pour le Kwango-Kwilu", and with INADES (African Institute forEconomic and Social Development) a booklet for livestock extension to thesmall farmers :'eleveur et son betail".

4.05 The areas with more success were asricultural extension andanimal husbandry, as well as road maintenance. Consultant support has beeneffective in this area. The following activities in these areas werecarried out:

a. In cooperatior. with an ongoing FAO Project and agronomistsof PRONAM the africultural extension division of CODAIK developped, testedand introduced a cassava cultivation package and a system to supply improvedcuttings to farmers in selected PAI's (Perimetres d'Action Intensive). In

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*ach PAI villag a farmer wa assigned part of a communal field end taughtto plant the new cassava variety, using Improved husbandry techniques; therest of the field was planted in the traditional way. At hervest allfarmers retained cuttings of the new veriety to be planted on a wider areain the next season. Since 80S of farm work is carried out by women, thesystem was organized and controlled by elected woman leaders. These alsotook charge of follow up actions and demonstration, and thus evolved intofront line extension agents. The system replaced that of compulsory cropplanting. The project won the farmer's confidence, which was absent underprevious extension practice. About 3,000 farmers (men and women,representing 5-102 of the PAI population) were reached with the cassavatechnical package, and yields increased by 50 percent on assisted plots.

b. Livestock extension work started in 1983 by trainingadditional veterinary staff. Under CODAIK's guidance, 25 corrals were builtand payed for by the farmers and spraying was organized by project-trainedveterinary staff. Groups of 15-20 small livestock farmers were formed, whoelected a farmer in charge of the supply of medical products and mineralsupplements. The project would sell to those elected farmers the necessaryinputs. The livestock test program performed well, and about 2,500 head ofcattle were treated yearly. It also identified the need to include a systemto supply trypanotolerant N'D-a cattle to small farmers as an essentialcomponent in a follow-up development project for the region.

c. CODAIK was designated by the Governor of the region as amajor recipient of road maintenance funds, which were channeled via theregional administration. By sub-contracting to NGO's and local privatecompanies, CODAIK maintained roads (about 1,800 km) at lower costs withbetter supervision. Although work was severely delayed on several occasionsdue to the Government's undependable release of funds, CODAIK managed toimplement the planned programs for manual road maintenance. Itsintervention identified as major follow-up priority actions: the need tostrengthen the coordination of the agencies involved in road maintenance(Office de Routes, Departmental-, Regional administrations, and privatecompanies); to sharpen the criteria for selection and identification ofroads to be maintained, and to establish standard contracts.

4.06 CODAIK interpreted its role as coordinator of regionaldevelopment activities in a narrow sense: rather than work through existingorganizations involved in development activities, CODAIK concentrated itsefforts on expanding its own activities. CODAIK carried out some surveys onNGO's and PVO's activities and the socio-economic status of the region, butthey were superficial and did not contain recommendations for action.CODAIK realized later on that development has to be promoted from the locallevel upwards. This led to the strengthening of coordinating committees(commites de parrainage , where CODAIK and other private and public entitiescould discuss local development issues.

4.07 CODAIK's orRanization was implemented as planned, with asenior management bureau, and departments for administration and finance,extension and training, commercial actvities and a department for planningand applied research, each with a director and several divisions as needed

(e.g. livestock division, roads division) headed by a division chief. Themonitoring and planning division never started effectively. Zonal officeswere not established, because the project did not work on a zone-wide basis,but tested first its programs in selected areas (para 4.05a). Thedepartment directors and the general director formed the managementcommittee.

4.08 The full staffing of departments was delayed until 1983. Theorganization appeared to be top-heavy, and its staff un-experienced. Sometraining was provided by consultants, and training abroad was also given toadministrative staff and one director. The first general manager, who wasan expatriate, was in place in 1982. The experts were line-managementofficers, and as a result became involved in the internal frictions, whichdevelopped In CODAIK (para 3.04). Unfortunately, the experience with thegeneral manager and the planning expert unsatisfactory, which led in 1984 totheir replacement and the eaployment of a Zairian general manager. Thismidterm change of command only exacerbated the tension, leading ultimatelyto the replacement of another expert in 1987. Focus on personnel mattersreduced the effectiveness of technical activities. While the performance ingeneral accounting Improved, proper cost accounting was not carried out, andthe quality of auditing became less satisfactory.

4.09 Given the internal difficulties, the construction of CODAIKoffices and housing was postponed. The planning department was expected toprepare guidelines for the long term development plan of the region (para2.01) and proposals for follow-up activities. Since its output wasunsatisfactory, CODAIK prepared a preparation report for a follow-up projectwith outside assistance early in 1965. The proposed project was appraisedIn August, 1?85, but not negotiated, because no agreement could be reachedon solving the major managerial issues, including the selection of thegeneral director (para 8.02). The Bank decided therefore to exclude theproposed project from the lending program, and Government consideredthereafter to transform CODAIK into a Government regional developmentproject.

V. PROJECT RESULTS

5.01 The Project achieved its best results in carrying out thoseactivities that would normally have been carried out by a project managementunit of a regional development project: it worked out and successfullyintroduced a package for cassava cultivation, a basic foodcrop and aninportant cash crop in the area; it laid the basis for Improved extension inlivestock husbandry, and it proved that manual road maintenance could becarried if properly organised and controlled (para 4.05 c). CODAIK created aseedfarm, which operated successfully as a multiplication center for the F-100 cassava variety. While CODAIK's organization had many deficiencies, itestablished after initial problems a good working accounting unit. Theefforts in the areas of input supply, marketing and development coordinationremained inconclusive.

5.02 The Project failed to prove that a mixed-capital developmentcompany could be mounted, that could successfully develop revenue earning

- 8 -

activities and progresbively become less dependent on Government funding.The development of CODAIK as a mixed-capital corporation suffered from thestart from some inhaerent shortcomings (paras 3.04 and 3.06): first, bothrevenue earning and non-revenue earning activities were included in CODAIK'smandate, but most funding was made available either as a loan or as aparticipation in the share capital, and budgetary support was highlyuncertain, thus giving the company a poor financial basis; second, there wasno clear separation of commercial and public activities; and finally thecompany statutes attributes the responsabilities for day to day managementboth to the general director and the management committee, thus contributingto increasingly serious management difficulties. Therefore, the developmentCODAIK as a financially independent company was handicapped from thebeginning and proved unsustainable in the end.

5.03 The financial statements of 1984 to 1986 (Appendix I) showincreasing deficits, and cash flow problems. CODAIK had to reduceoperations substantially from 1986 onwards, and deficits were financed bybudgetary support and PPF funds, provided for the planned follow-up project(para 8.02). None of CODAIK activities were financed by The EconomicRecovery Fund. Government funding, remaining the same in nominal terms,were inadequate to maintain CODAIK's activities under inflationaryconditions. The long-term Government loan of Z. 57.4 million (1986) was,with CODAIK's board approval, mainly used for public development activities,but there was no proper contractual basis defining Government's and CODAIK'sresponsabilities in carrying out these activities and the accounting oftheir costs. Only about Z. 10 million were used for commercial activities.Governement is considering to make an ex-post evaluation of the amount to berepaid by CODAIK under the terms of the subsidiary loan agreement (pare 1.18of the subsidiary Loan agreement). In any case, repayment is unlikely givenCODAIK's poor commercial results.

5.04 Project objectives did not change during Implementation. Thepositive results in the extension and road components led to the extensionof the closing date from June 30, 1983 to June 30, 1986, with the objectiveto enable uninterrupted transition from the pilot project to the anticipatedfollow-up project (pare 4.09, and chapter VIII). The lack of results inother components (in particular organisation, credit and marketing, andlivestock breeding) should have led to a reorientation of the project duringa mid-term review (para 7.01). The impact of the more successful componentswas partially lost during the period of CODAIK's decline since 1986. Theproject maintained however the interest of Government and donors indevelopment of the Bandundu region.

5.05 The Project correctly identified as risks that the project washighly dependent on Government's commitment to the project and itsmobilization of private sector partners, the coordination of variousbranches of Government involved in the project, the enthousiasm of the staffand most importantly the continuity of the Economic Recovery Fund (pars1.03). it did not identify the risks involved in creating a new mixedcapital development company nor did it dwell on the difficulties inhaerentin finding sucessful revenue earning activities. The seriousness of theinstitutional problems, experienced during implementation, and the

- 9 -

disappointing results with consultant services could not be foreseen. Underthese eircumstances, the project took an effective course In limiting itsaetivities to specific subjects and areas, leading to results - limited asthey may be - which could be carried forward under follow-up actions, in-particular concerning cassava cultivation, small farmer livestock raising,and manual road maintenance.

VI. PROJECT SUSTAINABILITY

6.01 The extension efforts gave the best results. The testedsystems (pars 4.05) would need to be adapted under possible follow-upprojects, because the extension cost wero excessively high andunsustainable, due to a high extension agent/farmer ratio (1140) and highcosts of mobility for extension agents. However, given the success of thiscomposent and Its acceptance by farmers, a lower cost organisation,Involving the collectivity and village organisations, could have beenattained if the project had been continued.

6.02 The experience obtained in institutional development wasdisappointing. This should not lead to a denunciation of the concept of adevelopment company. The concept was hardly tested In the Pilot Project,because it started unprepared, was exposed to unjustified cttsideinterference and encountered unexpected staffing problems.

6.03 Whlle the development of a mixed capital development companyw±ulin the project perlod failed, the relative successful components areexpected to receive continued support under other projects e.g. marketingunder a USAID assisted project; agricultural extension under a Bank assistedpilot extension project; research in a multldonor agrleultural researchproject, and road maintenance under a special Government road Improvementprogram. Small farmer livestock development (a crucial factor for smallfarm development) will be delayed and the coordination of all the ongoingactivities in the region remains weak and inefficient. However, thesustainabilty of continuing efforts Is not assured, unless the existingproblems of the regional administration can be solved and regionalinstitutions strengthened.

VII. PERFORMANCE OF PARTICIPANTS

7.01 Bank performance. The Bank made a serious effort duringpreparation and appraisal to seek an alternative approach to ruraldevelopment, because experience with the classical form of integrated ruraldevelopment project in Zaire had been la.gely unsuccessful. It alsoidentified during early supervisions the major institutional problems anddiscussed these with Government, leading to a mid-term evaluation mission inNovember 1983. However, this mission did not lead to any conclusive actionto solve the problems that had arisen (para 5.04). It was hoped that thechange in general manager would Improve Institutional performance, andconsiderable delays in Implementation did not permit firm conclusions on thetechnical aspects of the project. Also the lack of continuity insupervising staff and the focus of attention to technical rather than

_ 10 -

institutional issues affected ultimately the Bank's effectiveness In copingwith the project's problems. The focus on technical questions may havecaused supervision missions to continuously give the project a 02" status.This qualification contrasted with the opinion of the pro-appraisal andappraisal missions of the follow-up project, proposing major reforms.

7.02 Borrower performance. The Government had a major impact onproject Implementation and results. Insufficient and unreliable projectfunding caused changes and reductions in the annual work programs.Government also had a dominating role in project management, creating thegeneral perception that CODAIK was a government agency. In spite of itsInfluence, Government reprosentativas in the Board of Directors could notprevent undue interference by the board in CODAIK's day to day managementand excessive use of time and funds by board meetings. These factorsreduced the efficiency in deploying staff and consultant resources.

7.03 Cofinanciers oerformance. The German Government participatedin the proje-t, through the German Technical Assistance Company (GTZ), byfunding the technical assistance components, including housing, equipmentand recurrent costs for consultants. Requiring an oxecutive role for theconsultants in CODAIK's organization, GTZ became unavoidably involved inInternal management problems. It also strengthened their doubts on theconcept of a mixed-capital development company, and their feeling that toomuch attention was given to CODAIK's capability for raising Its own funds,at the cost of attending to small farmer needs.

7.04 Relationships between interested parties were notsatisfactory. The Borrower, the outside financiers and the shareholders ofCODAIK had all different expectations of the project and of CODAIK's role inthe project. Government expected CODAIK to generate funds to reduce thebudgetary burden in providing agricultural services. The Bank's main goalwas twofolds to seek revenue generating activities and to make the projectless dependant on irregular public funding, as well as identifyingagricultural development packages. Most shareholders expected short termprofits, through dividends or Indirectly through CODAIK's privilegedservices to shareholders. A small group of shareholders did fully supportCODAIK's development role, but they gradually lost influence in CODAIK.Since CODAIK could only respond to the various expectations in the mediumand long term, it appeared difficult to shape a common view on how tooperate CODAIK during the project period. In addition, the discussions oninstitutlonal developments were side-tracked by unsatisfactory performanceof some consultants, and tensions between shareholders.

7.05 The performance of consultant services remained belowexpectation. The lack of competence of some experts caused implementationdelays and their replacement contributed to Internal tensions in the company(para 4.08). The consultants engaged in the extension activities performedwell, but could not extricate themselves, as executive officers, from theorganizational problems of CODAIK. The short term consultants for marketingand livestock development presented their reports In time. The Impact oftheir work was minimal, due to lack of follow-up. The Project Identifiedcorrectly consultant requirements, but the selection of consultants wa on

- 11 -

the whole not successful, causing extra risks under the difficult managerialcircumstances of the Project.

7.06 Proiect documentation. The credit documents indicated a verytight schedule for implementation, mid-term review and completion, given thecomprehensive work program included in the project description. Assubstantial lmplementation delays occured (paras 4.01-4.03), the midtermreview was inconclusive (par. 7.01). Whlile the credit documents gave theproject the necessary flexibility, guidance for cost-accounting should havebeen included, given tho objective to establish a self-sustaining privatecompany. The statutes of CODAIK helped to shape the Idea of a developmentcompany. Unfortunately, external interests diminished the chances togradually improve CODAIK's institutional performance. In hindsight, morethought to the formulation of the statutes, or their internal regulation,could have helped to counterbalance such outside influences, in particularin relation to CODAIK's coordinating role, its management procedures, thedefinition of CODAIK's responsabilities in carying out public services andespecially, a better definition and appraisal of its revenue earningactivities. The appraisal report described well the objectives and goals,but wa short on guidance for the establishment of a maxed-capitaldevelopment company and on Indications of criteria for monitoring andevaluation.

VIII. FOLLOW-UP ACTION

8.01 The borrower did not prepare its own completion report,because it considered the preparation report of the proposed follow-upproject as an assessment of the results obtained during the pilot period.The preparation report, prepared by outside consultants, was notsatisfactory, as it made no specific proposals on how to solve theinstitutional issues. A pre-appraisal mission of August 1985 required CODAIKto carry out additional preparation work, in particular on the structure andorganisation of CODAIK, the analysis of potential revenue er-ning activitiesand the preparation of the roads component.

8. 12 The improved proposal was appraised in March 1986, andagreement was reached on the reform of CODAIK: the revision of its statutes,the capital subscription, and the management and accounting procedures, aswell as the strategy for the implementation of the technical components.Also, a PPF of US$ 600.000 (P 417 ZR) was approved to finance the projectactvities during the transition periJd between the two projects (section 3of the annex). Given the experience of the Pilot Project, however, the Bankinsisted on proper execution, before negotiation, of procedures concerningpreparation and approval of the revised statutes, and the selection andappointment of board members and the companies director. Since by the endof 1987 no such progress was obtained, and the delay in negotiations wouldrequire reappraisal, the Bank decided to drop the proposed follow-up projectfrom the lending program. It informed Government of this decision by letteron January 13, 1988.

APPENDIX I

- 12- Page 1 of 2

ZAIREs FINANCIAL STATEMENTS OF CODAIK

I. CODAIK SUMMARY BALANCE SHEETS (Z' million) *)

1986 1985 1984

Fixed Assets 9.8 11.5 4.0

Current AssetsESocks 20.2 16.2 1.5Debtors 10.5 9.0 3.4Advance to Suppliers 14.4 16.0 7.3Cash 0.2 0.4 7.0

(a) 45.3 41.6 19.2

Current Liabilities (b) 14.5 7.6 6.4Net current assets 30.8 34.0 12.8

Total Assets 40.6 45.5 16.8

Financed bysCapital 2.5 2.5 2.5Provisions fortaxes - - 0.5Deficits blfwd (21.6) (7.5) (1.2)Subsidies for equipment 2.3 2.4 2.7Longterm loans 57.4 48.1 12.3

40.6 45.5 16.8

Current ratios sIb 3.1 5.5 3.0

II. CODAIK SUMMARY INCOME & EXPENDITURE ACCOUNTS (Z' million)

IncomeSales of goods 4.4 3.1 1.5less costs of sale 3.0 2.3 0.9Gross margin 1.4 0.8 0.6

Government contributions 16.7 18.0 20.4Interest 0.2 0.7 0.4Other income 2.5 2.4 _1.3

19.', 21.9 22.7

*) First audit prepared for 1984 fiscal year; 1987 and 1988 statements notavailable

APPENDIX IPage 2 of 2

- 13 -

Les Expenditures/chargesSalaries and social charges 9.3 7.2 4.5Materials and supplies 4.8 4.3 3.3Transport 2.1 1.9 1.6Rent, Electricity & other charges 7.9 7.2 8.4Other charges 4.6 4-3 3.0

28.7 24.9 20.8

Interest paid 3.3 1.6 0.3Depreciation 3.8 _.0 1.3

35.8 29.5 22.4

Net Surpulus/(Deficit) for yr. (14.9) (7.6) 0.3

APPENDIX II- 14- Pae1Of9

STATISTICAL ANNEXESLo the

PROJECT COMPLETION REPORTRWANGO KWILU TECHNICAL ASSISTANCE PROJECT

1. RELATED BANK CREDITS

The following projects are related to rural development in Zaire:

YearTitle Purpose approved Status Comments

1. PMKO Maize Increase maize 1980 3 Severe managementCr. 1040 ZR production and and procurement

rural dev. problems

2. North East Rural Continuation 1983 1 Focus on livestock,Development of 2 previous ag. services, InputCr. 1325 ZR livestock proj. supply, marketing.

3. Lulua Maize Increase maize 1985 3 ManagementCr. 1540 ZR production and weaknesses.

rural dev.

4. South Shaba Rural develop- 1987 - Became effectiveProject ment, increase 10/15188

maize production.

2. PROJECT TIME TABLE

Item Date Planned Date Revised Actual Date

- Identification/ Nov. 1978 n.a. Nov. 1978Appraisal

- Appraisal/ Dec. 1978 n.a. Oct. 1979Post-appraisal

- Negotiations Sept.1979 n.a. 02/24/81

- Board Approval Dec. 1979 n.a. 05/26/81

- Credit signing n.a. 06/15/81 07/23/81

- Effectiveness 10/15/81 11/23/81 07/07/82

- Completion 06/30183 06130/85 06/30/86

- Credit closing 12/31/83 12131/86 07/10/87

APPENDIX IIPage 2 of 9

The following issues were raised at the various stages of theproject cycles

During appraisal: The length of implementation period; project organizationand management; staffing and technical *ssistance; the technical package;agricultural pricesg projects costs and financing.

The decision meeting agreed that a pilot project would better demonstratethe Bank's commitment to lending to agriculture in Zaire than a PPF, thusminImizing the risks of repayment in case a second stage project would notcome through (see below). It decided on a two year pilot period. Itformulated the project objectives as:

a. obtain guarantees of Government's comitment to theProject.

b. to test the institutional arrangements;

c. to start the extension program and collect further datafor a full scale project.

At negotiations: The Goverrment delegation insisted on an early evaluationof the follow-up project, It was agreed that it could take place witbin 10months after effectiveness. It was also agreed that CODAIK would coordinateall agricultural development activities in the region, and that extensionactivities would expand at an early stage.

Durin* supervision: Supervision mission raised repeatedly management issues(e.g. lack of managerial coherence -nd efficiency, lack of experience,overstaffing in some areas, intern-! tensions and board interference in day-to-day management), the lack of project funding, the absence of propermonitoring.

3. CREDIT DISBURSEMENTS

A. Disbursements per year.

The disbursements in millions of US$ were made as follows:

Cummulative Total Actual as 2 ofCredit FY Year estimate actual estimate total

disbursed

Cr.1152 ZR 1981 0.1 0.- 0.- 0.-1982 1.0 0.23 23.- 9.-1983 1) 2.2 0.70 31.- 18.31984 2.6 2) 1.38 48.- 26.71985 2.6 2.34 80.7 37.71986 2.6 2.54 98.- 98.-1987 3) 2.6 2.55 i00.- 100.-

PPF.P 417-ZR 4) 1987188 0.6 0.19 46.5

APPENDIX II U-16 - Page 3 of 9

1) The closing date was twice revised, see para 3.08

2) The credit amounted to 2.4 million SDR, which wa at appraisal estimatedat 2.9 dollars.

3) Last payment made July 10, 1987

4) The PPF has been approved March 1987. The disbursements under the PPF arementioned, because some costs diectly related to the pilot project have beenfinanced by this PPF, such as preparation of follow-up project, finalpayments of equipment with delayed delivery. After cance?ation of thefollow-up project, the disbursed amount will be repaid over a five yearperiod.

B. Disbursements per catsgorv.

The following disbursements were made:

Catetorv Estimate Revised ActualEstimate*

........ .thousand SDR. ... .

1. Experts services 680 750 6662. Vehicles, equipment CODAIK 1) 380 850 1.2243. Civil works CODAIR 240 50 344. Construction Aquaculture Center 110 0 05. Studies follow-up project 100 250 626. Studies viability Ec. Recovery Fund 25 25 07. Consultant fees/equipment part 2) 250 298 2878. Refunding PPF 152 250 127 1279. Unallocated 365 50 0

----------------------------------------------------------------------

Total 2.400 2.400 2.400

1) Trucks, tractors and implements, jeeps, motorcycles, radio phonie andoffice equipment.2) For the ministry of planning. Financing of Mr. Lulaney, consultant, andICTAD experts; including car and equipment.

4. PROJECT IMPLEMENTATION

At the time of appraisal the following indicators wereincluded:-------------------------------------------------------------- __---------

Indicator Avoraisal Estimate Actual

Preaaratorv Phase.

1. Recruitment consultants ready by August 1980 February 1982

APPENDIX IIPage 4 of 9

- 17 -

2. Establishment of CODAIK by June 1980 May 1982

3. Recruitment of General by July 1980 March 1982Manager

Implementation Phase.

4. Recruitment of management by November 1980 mid 1982staff

5. Establishment of admini- by October 1980 mid 1983stratison of CODAIK (financial advisor

not appolnted)6. Recruitment of short term

consultants: marketing,credit, fishery and December 1980 June 1983*livestock.

7. Training Program planning ready by Not developped.February 1981 Included in annual

work programs.

8. Farmer Associations Organisation starting Attempts were madeApril 1981 since 1983. InformalFirst Unit operational associations of live-June 1981 stock farmers were

formed, but no formalassociations becameoperative.

----------------------------------------------------------- __---------------

Note: The fishery and livestock activities were later on eliminated from theproject.

9. Aquaculture Center Start by February 1981 not executed*

lO.Establisment of CODAIK's Ready Oct. 1981 establishment inoffice and house 1982; constructionsconstruction postponed to follow

up project.

5. PROJECT COSTS AND FINANCING

A. Proiect Costs

Project costs are not precisely known (see below sub B).However, the total costs are about $ 5.5 million, as compared to theestimated $ 5.6 million. It remAined slightly below estimate due to reducedcounterpart funding. The cost distribution over the various components was

APPFNDIX IIPage 5 of 9

- 18 -

very different from the appraisal estimate. Since no records were kept percomponent, only an estimated comparison is given below:

estimated* actual0...... US$ million

Preparatory phase (orly PPF expenses) 0.25 0.13Establishment of Development Authority 1.24 2.46Buildings, equipment, operating costsof CODAIK. 1)

Technical Assistance 2) 2.00 1.95includes TA to Ministry of Planning,GTZ support aMd Gen.Director paid underthe IDA project.

Training and Extension 3) 0.90 0.22Breeding Ranch 0.17 O.-Support services and Infrastructure 4) 0.54 0.24Aquaculture center 0.24 0.-Applied Research and Studies, including 0.26 0.60studies for follow-up activities

Total 5.60 5.60

Base costs plus 22Z contingencies(physical and price)1) Disbursements by IDA for vehieles, equipment and civil works, andGovernment financing. Some vehicles worked exclusively for extension.2) GTZ also covered some operational costs under very criticalcircumstances, and the cars provided to consultants contributed to extensionwork.3) The actual costs excludes vehicles and vehicle operating costs.4) Reserach activities have been minimal. Road maintenance has beenpartially financed with funds from the Governor of Bandundu, who receives inprinciple all rural road maintenance funds, whereafter he distributes fundsto the private sector and projects.

The emphasis on administration and operating costs is alsoillustrated in the follwing estimate per cost centers (prepared by the 1986audit):

Expenses made for: 1983 1984 1985 1986 TotalPeriod

* .****percentage of total expenses.......

Direction and 65 45 45 64 54Administration

Extension and 11 15 11 11 12Development

Studies and Planning 16 29 23 7 18

Commercial activities 8 11 21 18 16

Total 100 100 100 100 100

APPENDIX IIPage 6 of 9

There are serious doubts whother the lputation of costs havebeen correctly made (e.g. little overheads have been charged to commercialactivities, and no transport operating costs have been charged toextension). Nevertheless, the table illustrates the lopsided management ofthe project activities.

B. Proiect Financing

Project costs were financed as follows:

Estimate ActualUSS million Z USS million I

IDA 1) 2.6 46 2.7 49West German Goverment 2) 1.0 18 1.0 18Zaire Government 3) 2.0 36 1.2 22Self financed 4) 0 0 0 6 11

Total 5.6 100 5.5 100

1) Actual payment includes the about US$ 100.000 from the PPF P 417 ZR,disbursed in 1987 for outstanding payments, committed under the projectbefore June 1986.2) GTZ does not provide the CODAIK administration with exact cost data. Bymid 1986 GTZ urged IDA to prepare a follow-up project, because it hadpractical disbursed its first 3 year trache. The amount of $ 1 million isassumed.3) Based on the long term loans of 1984-1986, converted to dollars based onaverage exchange rates ( 84: 33.75; 85: 4975; 86: 60.0 ). The budgetarysupport in 1987 may have paid for expenses made before June 1986.4) Based on gross margin of marketing activities. In fact they representGovernment financing, because working capital for commercial activities wereborrowed from Government, and still have to be repaid.

APPENDIX IIPaRge 7 of 9

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6. PROJECT RESULTS

A. Direct Results

The Project did not define specific indicators for themonitoring of project results. Also the monitoring unilt to be established,was supposed to identify these criteria. However, this unit never performedwell. The supervision missions recorded the following results:---------------------------------------------------------- __---------------

a. Number of extension agents employed by CODAIR 65

b. Ratio of farmers to one extension agent 40

c. Farmers reached with technical package for 3,000 1)cassava cultivation

d. Yield increase of cassava in assisted plots up to 50X

e. Corrals for cattle treatment built 25

f. Number of small farmers cattle treated yearly 2,500 2)

g. Kilometers of roads maintained 1,800 3)-------------------------------------------------------------------- __-----

1) about 0.5 promille of total small farmer population in the project area;and about 5-102 of farmers of the PAI population.2) an estimated 10 X of the herd of cattle owned by small farmers.3) about 14Z of total length of rural roads, and about 501 of the mostimportant roads.

B. Economic and Financial Impact

7. The appraisal report did not calculate an economic rate ofreturn for the project, nor a financial rate of return for the proposeddevelopment company. No such returns were calculated after project closure,but if carried out, would in all likelyhood have been negative.

C. Studies.

Purpose as definedStudy at appraisal Status Impact

1. Marketing Study* Review existing structure Consultant noneand pricing system; make receivedproposals for a marketing June 1984program by November 1981.

2. Credit study* Review existing credit sys- Consultant credittems; estimate needs for report activitiescredit and prepare a credit received minimalprogram by November 1981. June 1984

APrFmnTY TT

- 21 - " 0 o

3. Follow-up Prepare proposals for proposal for a proposalProject follow-up programs. second CODAIK appraised

project ready but notin May 1986 negotiated

------------------------------------------------------------- __------------

* Government never commented or approved the consultant reports.

CODAIK's staff with assistance from GTZ consultants carried out the follwingsurveys.

7. STATUS OF COVENANTS

Section No. in Summary StatusLoan agreement Description

3.01 (c) The Borrower shall make the Complied with.proceeds of the Credit availableto CODAIK under a subsidiaryagreement on terms and conditionsto be approved by IDA.

3.02 (c) By the end of the first quarter Contributions released withof each year the Borrower shall delays in early stages anddeposit its share of Project insufficiently in laterfinancing for that year in stages. Condition notCODAIK's account satisfied.

3.03 CODAIK shall employ experts in Management positions largelymanagement, aquaculture, marke- filled. Short term experts re-ting, agricultural credit, live- cru'ted and reports receivedstock and six technicians (for July '84. Financial managementCODAIK management) assistance provided on a

recurrent basis.

3.05 (a) CODAIK will furnish promptly It was agreed that six-monthto IDA quarterly and annual reports would be prepared.reports, contract documents, Contract documents andand work and procurement schedules received promptlyschedules for the Project. until June 1986.

3.05 (d) CODAIK will prepare and furnish Not complied with.to IDA a Project completion reportno later than six months afterclosing date

3.06 CODAIK's General Manager will pre- Complied with until 1986.pare an annual work program byNovember 1 each year. (Programmust be acceptable to IDA)

3.08 The Borrower shall employ a con- Government agreed to carrysultant to evaluate the economic out the studies at a later

A'PF!MTX II

- 22 - Tage q of 9

recovery fund, and shall furnish date. Recovery Fund has beenthe consultant's report to IDA abolished in 1987.by AUGUST 31, 1982.

3.10 The Borrower, IDA and GTZ shall Partially carred out in thejointly complete a mid-term review Oct. 1983 evaluation mission.by October 15, 1982 or such later Not completed due to delay indate as may be acceptable to the implemention.Borrower, IDA and GTZ.

4.01 CODAIK will maintain records in After initial difficulties,accordance with appropiate complied with.acccounting practices, and willretain all documentary evidencenecessary for verifying the SOE'suntil one year after closing date.

4.02 CODAIK will have its accounts and Complied with, but withfinancial statenents audited by in- delays.dependant audit'3rs and will submitto IDA certifi.d copies of suchstatements and the auditors reportswithin four months of the end ofthe fiscal year.

16 17 ~~~~~~~~~~~~~~~~ZAIRE 194SDANZAJRE CAMEROON%P

KWANGO- KWILU TTn_INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT iP0

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