Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 9606

PROJECT COMPLETION REPORT

LIBERIA

RUBBER DEVELOPMENT PROJECT(LOAN 1544-LBR/CREDIT 786-LBR)

MAY 24, 19S1

Agriculture Operations DivisionCountry Department IVAfrica Regional Office

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

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CURRENCY

Currency Unit - United States Dollars

WEIGHTS AND MEASURES

1 acre (ac) 3 0.405 hectares (ha)1 mile m 1.61 kilometers (km)1 square mile 640 acres - 259 ha1 metric ton - 0.98 long ton

ABBREVIATIONS

AETC Agricitltural Extension and Training CenterAHT Agrar-und-Hydrotechnik GMBHACDB Agricultural and Cooperative Development BankBWI Book Washington InstituteCDC Commonwealth Development CorporationCTO Chief Technical OfficerGOL Government ot LiberiaGDP Gross Domestic ProductIDA International Development AssociationIBRD International Bank for Reconstruction and DevelopmentLRPC Liberia Rubber Processing CorporationMA Ministry of AgricultureMLM Ministry of Lands and MinesODM Overseas Development MinistryPRS Pilot Rubber SchemePSC Project Steering CommitteeRAS Rubber Advisory ServiceRPAL Rubber Planters Association of LiberiaSwA Senior Rubber AdvisorUSAID United States Agency for International DevelopmentUL University of Liberia

FISCAL YEAR

July 1 - June 30

FOR omci"L urn otnyTHE WORLD IIANK

Washington. D.C. 20433U.S.A.

Oic* of Okctv.GwauOp0aa na Eva)wgn

May 24, 1991

MEMORANDUH TO THE EXECUTIVE DIRECTORS AND THE PRESIDE

SUBJECT: Project Completion Report on Liberia RubberDevelooment Proiect (Loan 1544-LBR/Credit 786-LBR)

Attached, for information, is a copy of a report entitled "FrojectCompletion Report on Liberia Rubber Development Project (Loan 1544-LBR/Credit786-LBR)" prepared by the Africa Regional Office. No audit of this proje:t hasbeen made by the Operations Evaluation Department at this time.

Attachment

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

FOR OFFICIAL USE ONLY

PROJECT COMPLETION REPORT

LIBERIA

RUBBER DEVELOPMENT PROJECT

(LOAN 1!44-LBRICREDIT 786-LBR)

TABLE OF CONTENTSPaWe No.

Preface . . . . . . . . . . . . e * * . * * * * * * Evaluation Summary .................. ii4

PART I PROJECT RF.VIEW FROMBANK'$ PERSPECTIVE . . . . . . . . . . ... 1

Project Identity . . . . . . . .BackgroundetIdet ..... 0..... 1Project Objectives and Description . . . . . 2Project nesign and Orgaiiization . . . . . . . 3Project Implementation . . . . . . . . . . . 4Project Results . . . . . . . . . . . . . . . 6Project Sustainability . . . . . . . . . . . 7Bank Performance . ............. 7Borrower Performance . . . . . ....... 8Consulting Services . . * * a I . 9Project Documentation and Data . . . . . . . 9

PART II PROJECT REVIEW FROMBOEROWER'S PERSPECTIVE . . . . . . . . . . . 10

* See Note Below

PART III STATISTICAL INFORMATION . . . . . . . . . . .11

Related Bank Loans/Credits . . . . . . . . . 11Project Timetable . . . . . . . . . . . . . . 12Loan/Credit Disbursements . . . . . . . . . . 12Project Implementation .. ...... .. 14Project Costs and Financing . . . . . . . . . 15Project Results . . . . . . . . . . . . . . . 16Status of Covenants . . . . . . . . . . . . . 16Use of IBRD/IDA Resources . . . . . . . . . . 16Mission Data .. . .. . . . .. . ... . 17

MAP IBRD NO. 13114R

* NOTE: Part II was not provided aLnce Government collapsed due to ongoing civil var.

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

PROJECT COMPLETION REPORT

LIBERIA

RUBBER DEVELOPMENT PROJECT (Loan 1544-LBR/Credit 786-LBR)

PREFACE

1. This is the Project Completion Report (PCR) for the RubberDevelopment Project in Liberia, for which Loan 1544-LBR in the amount ofUS$7.0 million and Credit 786-LBR in the amount of US$6.0 millionequivalent were approved on March 30, 1978. The project was co-financedby the Commonwealth Development Corporation (CDC), which provided a loanequivalent to US$7.0 million. The United Kingdom Ministry of OverseasDevelopment (ODA) made a technical assistance grant equivalent to US$1.4million for eight British rubber experts. The Credit was fullydisbursed before its extended Closing Date of December 31, 1985. TheClosing Date for the Loan was also extended to December 31, 1985.However, in order to honor withdrawal applications the Loan was keptopen until October 7, 1986 when, after the last disbursement, it wasclosed. An amount of US$1.0 million of the Loan remained undisbursedand was cancelled. Including this amount, and the earlier cancellationof US$3.5 million, total cancellations of the Loan were equivalent toUS$4.5 million.

2. The PCR was prepared by the Agricultural Operations Division(AF4AG) in the Western Africa Department of the Africa Regional Office(Preface, Evaluation Summary, Parts I and III). The Borrower was notsent Parts I and III, nor could they provide Part II because thegovernment collapsed as a result of the ongoing civil war. Preparationof this PCR is based on the Staff Appraisal Report; the Credit and theLoan Agreements; supervision reports; correspondence between the Bankand the Borrower; and internal Bank Memoranda.1/

1/ A Project Completion Mission visited Uberia In June, 1986 to collect data. 'he Government also caried out itsown review of the project. However, most of these materials are not traceable in the Bank's records.

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PROJECT COMPLETION REPORT

LIBERIA

RUBBER DEVELOPMENT PROJECT (LOAN 1544-LBRICREDIT 786-LBR)

EVALUATION SUMMARY

Introduction

1. Liberia has a dualistic economy. Its agricultural economycoexists with an enclave sector which is export-oriented and producesbesides iron ore, rubber and forest products. The enclave sectorprovides about 701 of export earnings, generates about 25Z of GDP andabout 151 of all government revenues. Total population is about 1.7million. About 601 of the population is classified as agriculturalhouseholds. Soils are generally fertile and tne climate is suitable fora variety of field and tree crops. With the decline in demand for ironore, which was a dominant product for export earnings, government beganto make serious efforts to diversify the economy and emphasizedevelopment of its export oriented tree crop production. However, withthe collapse of the government, the continuing civil war situation islikely to have serious impact on the tree crop sector.

2. Obiectives: The aim of the project was to increase Liberia'sexport earning from natural rubber and to improve income distributionwithin the country. As designed originally the project included aprogram to replant abandoned small rubber farms and rehabilitate mature,but untapped rubber trees. Small and medium sized rubber farmers wereto be helped to achieve higher productivity and incomes by providingthem with better extension services and credit for farm inputs. Theproject also aimed at strengthening the institutional capability to planand carry out further development of Liberia's rubber industry byestablishing the Liberian Rubber Development Unit (LRDU) and traininglocal staff. Funds were also provided to enable the Government to carryout a rubber pricing study and a feasibility study for a second stageproject.

3. ImRlementation Experience: Project performance was belowexpectation throughout. During a review of the project in June 1980, itwas found that only 800 acres had been replanted compared to a targetfor that date of 6,000 acres, and only 2,500 acres had beenrehabilitated, against a target of 8,500 acres. The only trainingprovided had been to some field staff, and the building program was a

year behind schedule. There were three main reasons for poorperformance: (a) inadequate management; (b) insufficient capacity toprocess rubber; and (c) low producer prices resulting from hightransport and handling costs and the low quality of rubber. Farmers'low interest because of inadequate support services for purchase ofsmallholder rubber, inadequate management and unrealistic tarAetsprompted the revision of the project in March 1982. The objectives

iv - 4

remained the same and there was a drastic reduction in theplanting/rehabilitation targets. Other significant changes were theaddition of a processing component and a rubber collection unit toservice the project farmers. Even the revised planting/rehabilitationprogram wae under-fulfilled, and at reappraisal in August 1983, theproject was found not to be viable economically *.r financially. Theagricultural program was then phased out and only the processingcomponent was pursued. When the Rubber Corporation of Liberia (RCL)factory was established after a long delay, it suffered from financial,technical and operational problems. Bank staff relationship with theexpatriate project management appeared to undergo stresses and strains,particularly during the later years.

4. Results: The project objectives of increaning rubber productionfrom Liberian-owned small farms and productivity tnd income ofsmall/medium farmers were not realized. Only about 25Z of the originalappraisal target of 40,000 acres of planting and 23,500 acres ofrehabilitation was achieved. Actual project costs (US$18.1 million)were about 601 of the Appraisal Cost (US$29.6 million). However, theproject Unit and the RCL accounts show 100l and 25Z cost overrunsrespectively. The project's economic rate of return (ERR) which wasoriginally estimated at 13%, was re-estimated at 16% at the time of theproject revision (1982). At reappraisal in 1983, the ERR was estimatedto be 5.51 and the financial rate of return to be 4.12. The mainreasons for the reduction in ERR were the reduction in rubber yields(from 1450 lbs/acre to 1200 lbs/acre and the lengthening of the periodto maturity (from 6.75 years to 7.5 years). The resulting overallreductions in yield were not offset by a proportional reduction in realproduction cost. Due to insufficient data re-estimation of ERR was notdone at the time of preparing the PCR.

5. Sustainabilitv: The project, even with the 1982 revisions, wasnot sustainable. Lack of farmers' interest and inadequate extension,training, marketing and processing facilities led to a situation in 1983when it was considered imprudent to pursue the project's agriculturalprogram. The farmers were not getting an adequate prico for rubber andconsequently did not have sufficient incentive to produce and selltheir raw rubber. The ERU to incremental planting at the time ofreappraisal was estimated at only 5.5Z. Liberia had natural comparativeadvantage in the rubber sub-sector but required a much stronger effortin reaching its objective of putting outgrower rubber on a viablefooting. The institutional format that could handle this task needed tobe carefully examined together with a different target group (largerfarmers) before Liberia could proceed with a follow-on project.

6. Findings and Lessons Learned:

(a) A project of this type can not be successful on the basis ofagronomic possibilities alone; complex sociological andinstitutional issues also need to be thought through (pera22).

(b) Small farmers need intensive extension and trainingassistance which impose a burden on any project management;

.V.

inveostment of scarce funds and management resources in theearly stages of sectoral development on such farmers, whoare often scattered over a wide area, may not be fruitful(para 26).

(c) Production and output efforts require road andtransportation network as well as marketing and processingfacilities; in far-flung rural areas, unless these mattersare given equal attention, farmers' profitability andconsequently incentives are bound to diminish (paras 16 and 18).

(d) Timely availability of adequate funds is important forproject implementation but equally important is themanagement's ability to plan and execute a project. Lack o:funds can often be a weak management's cover to hide lack ofdirection and efficiency (para 14).

(e) Project mid-term reviews are desirable in some cases. Theycan be beneficial only if an examination is made of theproject's fundamental shortcomings. Adjustments in thetargets and project costs can prove to be illusory (para25).

PROJECT COMPLETION REPORT

LIBERIA

RUBBER DEVELOPMENT PROJECT (Loan 1544-LBR/Credit 786-LBR)

PART I

PROJECT REVIEW FROM BANK PERSPECTIVE

PROJECT TDENTITY

Project Name: Rubber Development ProjectLoan No.: Loan 1544-LBR/Credit 786-LBRRVP Unit: AfricaCountry: LiberiaSector: AgricultureSubsector: Tree Crops - Smallholder Agriculture

Background

L. The Development Plan of Liberia attached high priority toagriculture as the corner stone of the Sovernment's diversificationstrategy. The objective was to diversify and modernize agriculturalproduction, increase productivity, improve associated rural economicactivities such as marketing and processing, and provide social andphysical infrastructure to promote income distribution and improve thequality of life in the rural as well as urban areas. Agriculture is thesecond largest productive sector in the economy and provided one-quarterof gross domestic product. About 54.5% of the total population ofLiberia work in agriculture. With low average population density, landis not a constraint to agricaltural development. The criticalconstraints are trained manpower and efficient institutions.

2. The Plan earmarked about one-fifth of total investment resourcesfor developmant of agriculture. Based on general ecological conditions,factor endowments and market prospects, agriculture had greaterpotential for efficient diversification of the economy than any otherproductive sector. It could also provide a continuing source of thecountry's growth and development to supriement earnings from iron-orewhich was likely co gradually decline. Within this framework, theGovernment had adopted two basic strategies: development of smallholderagriculture and development of industrial tree crop plantations.

3. A distinctive feature of Liberian agricultu-e is the existence ofa dominant rubber industry, accounting for 702 of all agriculturalexports and employing one third of the national labor force. The rubberindustry is divided into foreign-owned concessions and Liberian-ownedrubber farms. Two decades of d_elining rubber prices had led manyLiberian planters to abandon and neglect their plantations. As aconsequence, only 143,000 acres (382 of the total acres planted) were inproduction in 1978, and about 502 of the plantations were estimated tobecome over-aged by 1984. Poor planting material and low management

2-

standards were responsible for the low yields -- 150 to 500 lbs./acrecompared with over 1000 lbs./acre on the foreign-owned concessions.While Liberian-owned farms accounted for 72% of the total rubberacreage, they produced only 31% of the total output estimated at 83,000tons. Except for the Liberian Rubber Processing Company (LRPC) whichwas owned by the Government, all the five companies which purchasedrubber from Liberian farmers for processing and exporting wereforeign-owned. Fireitone buying 70Z of Liberian-owned farm production,was the largest and effectively set producer prices.

4. The most critical constraint to rapid expansion in theagricultural sector was shortage of trained manpower. Another majorconstraint was the institutional deficiencies in the delivery ofessential Ministry of Agriculture (MOA) was aware of the need to developan effective structure for servicing smallholders. The Bank supportedthe MOA's efforts through consultants provided under previousBank-financed projects. The Government also consulted closely with theBank regarding the appropriate organization and operating policies forinstitutional credit for the traditional agricultural sector andestablished the Agricultural and Cooperative Development Bank (ACDB).

Proiect Obiectives and DescriRtion

(i) Objectives

5. The principal objectives of the project were to increase Liberia'sincome and export earnings from rubber through an intensive program ofreplanting of old rubber and rehabilitating of mature untapped rubber.This was to be the first phase of a long-term effort to increase andsustain production from Liberian-owned rubber farms. The project alsoaimed at improving productivity and the incomes of about 6,300 small andmedium size rubber farms (70% of total Liberian holdings) throughprovision of credit, better extension services and assistance foron-farm processing and marketing. In order to strengthen theGovernment's capability for the further development of Liberian-ownedrubber industry, the project made provisions for establishing a LiberianRubber Development Unit (LXDU), staff training and technical assistance.

(ii) Components

6. The project included the following:

(a) creation to rep! 9 the existing Rubber Advisory Servicesand provide a permanent extension service;

(b) provision of financial assistance to farmers for replanting40,000 acres of old rubber with high-yielding varieties andrehabilitating 23,500 acres of mature untapped rubber;

(c) training project headquarter and field staff, managers,overseers, headmen, budders, tappers and farmers in modernrubber production techniques;

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(d) providing marketing assistance to smallholders in on-farmprocessing and transportation;

(e) providing farm planning advice to large farmers and helpingthem to prepare investment proposala for commercialfinancing; and

(f) provision of funds for hiring consultants to assist theAgricultural and Cooperative Development Bank, conduct arubber pricing study, prepare a follow-up project, adviseLRDU on smallholder marketing and train instructors.

Proiect Desizn and Organization

7. The Project was designed to increase the productivity ofLiberian-owned rubber farms by providing credit, extension services andtraining. Arrangements for collection and purchase of rubber from thefarmers at prices profitable to the farmers was recognized by the Bankpreparation team to be vital to maintaining farmers' interest inincreasing production. The insufficiency of processing capacityavailable to the stuallholder rubber was also known to the team.Therefore, it should have been quite obvious to the preparation teamthat there had to be a radical change in the purchasing and processingof rubber, if an equitable return was to be ensured to the smallfarmers. In this context, designing and financing of a primarilyagricultural project aimed at increasing the production of raw materialsinstead of a manufacturing (processing) project was clearly inadvisableand untimely. The high cost per beneficiary of the project had alsobeen raised by the Bank's senior manageme,=.

8. Since its inception in 1978, the project faced many difficultiesin implementation. The Bank, however, continued to focus mainly on theshortfalls in achieving the planting and rehabilitating program. TheJune 1980 Bank and CDC (Commonwealth Development Corporation) projectreview mission found that inadequate sanagement and low farmers'interest were the main reasons for the project's poor perfkrmanco. Theproject management failed to provide planting material and organize aneffective training program and extension service. Low farmers' interestwas caused by insufficient producer prices to cover labor, input andtransportation costs. Inadequate processing capacity and delays by the%enclave plantation factories in payment to farmers compounded thefarmers' difficulties in keeping labor as farmers were unable to paycash-wages on time.

9. Changes in project design, revision in the agricultural programand modifications in organization were discussed with the Goverr.ment in1981-82. Project amendments were approved by the Executive Directors onMarch 16, 1982. Although the aims of the project remained the same,five significant changes to the original project were made. The.aplant'ng and rehabilitation targets were scaled down from 40,000 acresto 20,uOO acres and from 23,500 acres to 14,000 acres respectively. Toserve project farmers and provide adequate processing capacity, aprocessing component under a new agency -- the Rubber Corporation ofLiberia (RCL) with an initial capacity of one ton/hr was added. Other

changes were the incorporation of a small land survey and roadconstruction unit into LRDU, and organization of rubber collectionserv.ice to assist farmers in marketing. The project implementationperiod was extended by 18 months until June 1985.

10. The Bank along with CDC showed considerable flexibility andrealism in making the above changed. However, there were delays insetting up the processing plant, rutbber collection services did not workwell, and even the revised planting and the rehabilitation program couldnot be fulfilled. In September 1983, the project had to be reappraised.It was found to be unviable economically or financially (ERR and FRRboth below 6%), due mainly to lower than expected yields, drop ininternational prices, high mortality of new plantings, and poor fieldmaintenance by the farnmers. In light of the reappraisal mission'sconclusions, and after discussionis with the Government, the Bank decidedto continue with the factory rehabilitation program while phasing outthe planting program in such a way as to minimize unnecessary losses anddamage to the LRDU operations and the project farmers.

11. The Bank begun to realize that the project was inappropriate andwrongly designed. It as recognized that rubber was not attractive tosmall farmers with limited land. It was introduced as the sole crop.Food crops could only be cultivated by inter-planting during the first2-3 years; thereafter, farmers had no means of subsistence or resourcesto bring the rubber crop to maturity at year 8. The Liberian conditionscalled for a different strategy with an adequately designed system toachieve project objectives. It appeared that larger farmers who hadother sources of income should be involved with such developmentprojects, and nucleus estates with satellite block plantations should beincluded. The Bank also realized that what was needed were facilitiesto process an internationally accepted grade of rubber that couldcommand a higher price. Farmers would then rehabilitate their rubberareas to enjoy good income.

Prolect Implementation

12. Since the time of appraisal in mid-1977, changes in economic andpolitical climate in Liberia had adversely affected project performance.Equipment, building and transport costs increased 3ubstantially and thegovernment-set agricultural wage rose from US$1.50 in 1978 to US$2.00per day. Despite an increase in rubber prices on the world marketbetween 1975 and 1979, the higher transport and labor costs which theLiberian farmer faced decreased his returns. Processing capacity forLiberian rubber declined significantly and by the end of 1980, theBank's Review Mission concluded that unless adequate collection andprocessing facilities could be provided to the farmers in the project,there was no point in continuing with the planting and rehabilitsationprogram. The Government's suspension of land transactiors following theApril 1980 coup resulted in delays in deeding and this affect;ed projectoperations in the subsequent years.

13. From the commencement of the Project in 1978, project performancewas routinely poor. Successive Bank superviuiion missions reported onproject problems and recommended actions to alleviate them, including

adversely affected the execution of a project which already had a hostof other problems.

Prolect Results

17. The project's main objectives of doubling rubber production fromLiberian-owned farms and bringing about a substantial increase inproductivity and the income of small and medium farmers were notrealized. In July 1986, a Bank project completion mission found thatonly about 252 of planting and 242 of replanting of the appraisaltargets were achieved. Only 402 of the rehabilitated area was beingtapped at the time, bringing down the actual rehabilitated area to only102 of the appraisal target. Farmers' interest could not be raised andsustained due to a number of complex reasons - high transportation andcollection costs, inadequate processing capacity and above all thefarmgate price was insufficient to provide a strong incentive.

18. Following a major review of the project in June 1980, changes wereformally introduced in 1982 but the project objectives remained thesame. The changes were in respect of the agricultural targets (whichwere lowered) and processing capacity (expansion). Certaininstitutional changes were also introduced through the establishment ofthe Rubber Corporation of Liberia (RCL) which was to be in charge ofcollection and processing of project farmers' rubber output. As aresult of a reF.ppraisal in 1983, the agricultural component, which wasfaltering, was agreed to be gradually abandoned. Meanwhile, it wasconsidered expedient to proceed with the rehabilitation of an existingpublic sector processing plant.

19. The particular socioeconomic situation of the smallholders inLiberia (e.g. low economic capacity, and necessity for intensiveextension and training, and price incentive) explains the project's poorperformance. In addition, the poor selection of participants, poor farmmaintenance and high proportion of absentees among project farmers and avery low credit recovery rate of less than 62 among rehabilitationfarmers contributed to the project's shortcomings. The extensive areacovered by the project required higher input of lower base contactpersonnel which was not provided, and resulted in higher transportationcost and poor supervision. The inadequate project management compoundedthese difficulties.

20. Pricing of rubber and receipt by the farmers of a fair price weremajor issues identified during project appraisal. Farmgate price wasexpected to be increased as economies were realized in the marketing andprocessing stages between the farmgate e'nd international markets. Apricing study financed by the project was completed through consultantsbut the report was not acted upon by the Government which was notsatisfied with it. At the time of the project's revision it was agreedthat a pricing formula based on international prices and updatedproduction costs of farmers, and transport and processing costs would beadopted by the Government within six months of the start-up of therehabilitated processing plant. Farmgate price was to be reviewed andadjusted regularly. Various methodologies were discussed between theGovernment and the Bank, but the matter was not finalized until the

the removal of the first project manager in June 1979 and thescaling-down of field targets. Despite increase in the factory-gateprice of rubber in early years, the project continued to experiencedifficulty in attracting participants. The non-achievement of targetswere due to managerial problems within LRDU and problems in smallholdermarketing, processing and rubber pricing resulting in low farmer returnsand a lack of farmer response. Other problems such as poor farmmanagement and knowledge of modern rubber production techniques andseasonal and regional shortfalls in labor supply for tapping alsoaffected farmer response. The latter (i.e. labcr shortage) was clearlyidentified as a risk by the Bank's appraisal mission. Loan recovery,particularly from the rehabilitation farmers was unsatisfactory. Byend-1983, all 211 such farmers had defaulted. This was to some extentdue to a steep fall in rubber prices.

14. The supervision missions during 1983-85 had mentioned the lack offunding, particularly for LRDU, as a major problem requiring commercialbank overdraft facility. This was attributed to the Government'sdesperate financial situation and the Bank and CDC suspension ofdisbursement from time to time. However, the Bank mission forcollection of project implementation data in July 1986 concluded thatthe financial problems faced by the project during its implementationwas not a serious constraint in project development activities; donors'contributions, along with overdraft facility granted by ACDB which wasused to bridge gaps caused by delays in releasing funds, met all projectfinancial requirements.

15. The actual project cost estimated in July 1986 was US$18.1 millionwhich was about 60X of the appraisal estimate (US$29.6 million).However, RCL :jad cost overrun of 25% compared to its estimated cost;LRDU had cost overrun of 1002 with only 25% achievement of its revisedplanting/replanting target. The original appraisal estimate of aneconomic rate of return of 13% was not achieved. At the time ofrevision of the project in 1982, the rate of return was optimisticallyestimated to be 162 on the expectation of higher efficiency of RCL andhigher rubber prices. This, however, could not be achieved in thecircumstances that the revised project found itself. In 1983, aspointed out earlier under Evaluation Summary (para 3), the economic rateof return to incremental planting was estimated at about 5.5%.

16. The project management was inadequate. The high turn-over rate ofpersonnel in top management had its toll on project productivity andperformance. During the implementation period (1978-1985), threeproject managers were appointed and about 12 expatriates worked in theproject for an average of 2 1/2 years. Some of them were foundunsuitable for the tasks and as a result, the project failed toeffectively provide the materials, extension services and training. Theproject management did not appreciate the expertise of the supervisionmission staff, nor the quality of their advice. While both projectmanagement and Bank staff were in agreement that rubber made goodecological and economic sense in Liberia, their views on the appropriatedevelopment strategy and the sequence of required actions differedconsiderably. Also, their relationship was often strained. This

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completion of the project. Prices meanwhile were being determined bymarket forces, as in the past.

Project Sustainabilitv

21. The project as originally approved was not sustainable due to lackof farmers' interest, and marketing and processing shortcomings. Therevised project was an improvement in the sense of a more realistictarget of planting and rehabilitation areas, and the recognition ofprocessing inadequacy through provision of a processing plant. However,at the time of reappraisal in 1983, it was found that pursuing theagricultural program was not prudent due to the very low rate ofeconomic return to incremental planting. During the subsequent years,even the scaled-down agricultural targets were not reached and thecomponent was gradually abandoned. Only the rehabilitation of theprocessing facility was actively pursued towards the end of the project.

22. The sustainability issue for this project involves the fundamentalquestion faced during implementation--whether in the Liberian socio-economic situation for smallholders it was possible to increase therubber yield through a high-input high-output approach. Thesmallholders could theoretically reach a higher yield than they achievedunder the project, but that would have required a more favorablefinancial condition for the farmers, better farm management, higherprices received by them, and a much better management of input supplyand extension and training efforts. These conditions were notattainable in Liberia at the time and even with all the good intentionson every side, the project as conceived was not viable and could not besustained.

23. Perhaps a different strategy was needed for the subsector -- thatof working with the larger farmers who had greater financial strengthand crop management skills. Advisability of utilizing available landfor nucleus estate and block plantations could also have beenconsidered. This, in conjunction with the development of access roads,collection systems, effective training and adequate processing capacitycould have been considered for future development. In fact, the Bank'sthinking was moving in that direction when, in conjunction with theGovernment, terms of reference were drawn up and proposals sougut fromconsultants to prepare a possible follow-up project for the rubber sub-sector. However, because of the suspension of Bank operations inLiberia on debt service grounds, the matter could not be furtherpursued.

Bank Performance

24. The most positive element in the Bank's performance on thisproject was its flexibility in dealing wlth the problems as theysurfaced. This was amply demonstrated by its readiness to undertake areview of the project contents early in the project execution period andan agonizing reappraisal of the project towards the end. The Bankopenly acknowledged the project's shortcomings, and by closely workingwith CDC and the Government, it successively modified the project.After the reappraisal, the Bank was realistic enough to be ready to

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abandon the project save the one element (processing capacity) v'.Ichstill made economic and practical sense. The Bank's pragmatism helpedin avoiding further misdirected efforts and minimizing financial andinvestment losses (project expenditures in the end were well belowappraisal estimates).

25. The main weakness of the Bank was that it went too quickly intotoo big a program. It did not fully appreciate the situation of thesmallholder rubber farmer and their low yielding old rubber trees onwhich the project concentrated and the shortcomings of the marketing andprocessing capacity in r - f the smallholder output. The pricingissue was recognized from the ou set and the Bank required that apricing study be completed and acted upon. The Bank was, however,unable to effectively deal with it, complex as it was with thetransportation costs, price setting by Firestone (largestconcessionaire) and the international rubber price movements. Thequality aspect of rubber in price determination was not fully taken intoaccount by the Bank at appraisal and the output/yield increase estimateswere out of line with the Liberian reality. Consequently, therealization that probably the project design was inappropriate anduntimely did not come to the Bank staff until the evaluation of thereappraisal mission's findings (close to the project's originallyscheduled completion time). It was clear that during discussion onamending the project in 1980-82, the Bank either did not appreciate thatthe project design was flawed or was not ready to accept it at thatstage. It did recognize the need for a fundamental review of the rubbersub-sector and a sector review as subsequently undertaken by the Bank inSeptember 1984. On hindsight, it may be said that a sector reviewshould have preceded launching of the project. The Bank naturallyrelied on the Malaysian experience and staff were sent there fortraining. These could not, however, mitigate the conceptual and designdeficiencies in the project arising from the fundamental differences inthe Malaysian and Liberian situations, particularly in respect of thesmallholder farmers.

26. The lesson that the Bank can draw from the project experience isthat preconceived notions of agricultural development strategies andpriorities, particularly when it involves the uneducated poortraditional rural sector, should be very critically examined at the timeof project preparation. It would be prudent to consider more cost-effective investments in extension, demonstration and training-intensiveways of assisting the small farmer. Also there are stages ofdevelopment in every sub-sector. It is essential to resolve credit,transportation, marketing and processing issues while planning anincrease in agricultural production. A project design, which may beappropriate at one time, can be premature at a different or earliertime. This is particularly so where the private sector (as in Liberia)is incapable, or slow in its response to meet the deficiencies in themarket.

Borrower Performance

27. The Borrower had show commitment at the outset by completingstart-up actions on time e.g. acquiring of land for nursery and project

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headquarters and establishing of the Project Steering Committee beforethe negotiations. It also showed sufficient flexibility in dealing withthe project issues. For example, when it came to dismissing the firstProject Manager due to his ineffectiveness, it was quick to do so; whenit came to shuffling project staff to more appropriate positionsmatching their expertise, the Borrower acted wisely. The ProjectSteering Committee functioned well at an appropriate level ofrepresentation. However, the Borrower's handling of the importantpricing study was dilatory and when it decided not to follow therecommendations of the expatriate consultants, it delayed agreement onalternative ways of producer price determination. Project staffperformance was generally satisfactory but there were problems at thelower levels mainly because of lack of discipline and agronomic skills.

28. The funding of the project was often inadequate, caused by theGovernment's own financial difficulties. But remedial measuresrecommended by the supervision missions were acted upon, e.g. arrangingthrough the ACDB bridging funds (overdraft facilities). In any event,either due to slow project implementation and/or inadequate management,iii the end the funding issue was not considered to have been the majorconstraint. The Borrower was slow in arranging the rehabilitation ofthe processing plant which was a critical matter. It did set up the RCLand through it the rubbar collection service which was functioningsatisfactorily. The last Bank mission is 1986, however, found thatafter a year and a half of the RCL factory coming on stream and eightmonths since management was taken over by Liberian staff, RCL'sfinancial, technical and operational situation was deteriorating.Factory maintenance was inadequate causing operational problems andreducing productivity. Lack of spare parts and poor maintenance alsocaused near collapse of the rubber collection system. If the RCLfactory collection system was not introduced as an alternative to theforeign concessionaires' facilities, one would have ventured to suggestthat perhaps these RCL activities could have been given to the privatesector. However, in the Liberian situation, this might not have been afeasible alternative particularly if one looked for Liberianentrepreneurs.

Consulting Services

29. Project consultants provided valuable assistance to the ProjectManagement in project implementation including training of local staff.A good relationship existed between the consultants and the ProjectManagement and the Borrower.

Project Documentation and Data

30. The documentation for the project was adequate. The Loan andCredit Agreements were quite adequate for achieving project objectives.The appraisal report provided a useful framework for review of projectimplementation.

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PART II - PROJECT REVIEW FROM BORROWER'S PERSPECTIVE

Part II was not provided since Government collapsed due to ongoing civilwar.

- 11 -

PROJECT CfMPLETION REPORT

LIBERIA

RUBBER DEVELOPMENT PROJECT (Loan 1544-LUR/Credit 786-LBR)

PART III

STATISTICAL INFORMATION

1. Related Bank/IDA Loans/Credits

Year ofLoanLCredit Title Purpose Auproval Status

A. Cr. 306-LBR To assist the Government to 1972 Cuipleted.Liberia Agricultural determine means ofDevelopment & Tech. improving the Liberian-Assistance Project owned rubber industry in

the context of implementingits plans for agriculturaldevelopment.

- 12 -

2. Project Timetable

Date DatePlanned Revised Actual

Identification )Preparation ) 9/76 9/76Appraisal 5/77 5/77

Credit/Loan Negotation 2/78 2/78Board Approval 3/78 3/78Credit/Loan Signature 4/78 4/78Credit/Loan Effectiveness 10/78 10/78Completion 12/83 6/85Credit Closing 6/84 12/85 12/85Loan Closing 6/84 12/85 10/86

This project was identified by GOL and prepared by consultants, Agrar-UND-Hydrotechnic (AHT), financed under Liberia Agricultural Development andTechnical Assistance Project (Credit 306-LBR). The Pilot Rubber Scheme (PRS)also financed under Credit 306-LBR, has provided useful organizational,financial and technical lessons beneficial to the project. The project wasrevised in March 1982 and reappraised in September 1983.

3. Loan/Credit Disbursements

Cumulative Estimated and Actual Disbursements SUS$'000)

Z Actual/FY Estimate Actual Estimate

79 2300 93 480 5800 574 1081 9400 1173 1282 12400 2153 1783 13000 2830 2284 -- 4415 3485 -- 6106 4786 -- 8431 6587 -- 8500 65

Date of Final Disbursement: October 7, 1986.Comments: No follow-on Project.Disbursement data for cofinanciers not available.

LIBERIA RUBBER DEVELOPMENT PROJECTEstimated and Actual Disbursements

13 -

12 -

11

E~~7 808828 48 88

z~~~~~~~~~~~~PRO 7F

10

5 9

2p

1

7 o~~7 80I-2a38 8 6~

6~~~~~~~~~~EID(Y

5~~0 Ata pria simt

- 14 -

4. Pho0e,t IMlMtlotion;

Indlcator s

Appraisil Revised &I S Actual S ActualEstim ht te Actual Ashr-iaal Rvised

------------ w----- acres --------------

Replanting 40,000 20,000 9,615 24 48Reh.biltation 23,500 14,000 5,640 24 40

(29300) (10) (16)

Note flgures ) Indicate area of trees actually topped.

Al Estimates of Rapl ating and Rehabilitation were scaled doun duting 1982 supervision mis*lon,recognizing the factors affectlng project implementation.

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5. Pro1ect Costs and Flnancin.

A. Proiect Costs

1983Appraisal 1982 Revised Reappraisal 2 Actual 2 Actual 2 ActualEstimate Proaram Eat. Estimate Actual Appraisal Revised Reappraisa1

------------------US$ million ----------------

TOTAL 29.6 28.3 22.2 18.1 60 64 82

Building, Equipment & Vehicles 4.5 2.8 2.6Salaries & General Services 7.6 12.3 10.0Training & Studies 2.8 0.4 0.3 NAReplanting 14.2 8.2 5.0Rehabilitation 0.5 1.4 1.2Factory Rehabilitation -- 3.2 3.1

B. Proiect Financing

PlannedLn./Cr. Revised atAgreement Revised Reapgraisal Final

--- _---------- USS million --------------

Bank/IDA 13.0 442 13.0 462 9.3 422 8.5 472CDC ,.0 232 7.0 252 5.5 252 3.5 192ODA 1.4 52 1.4 52 a/Govt. 8.2 282 6.9 242 7.4 332 6.1 342

TOTAL 29.6 100 28.3 100 22.2 100 18.1 100

a/ ODA Provided technical assistance but actual figures not available.

16 -

6. Project Results

It is over four years since the project was completed. Datafor assessing direct benefits awi evaluating economic and financialimpact are not available.

7. Status of Covenants: N.A.

8. Use of Bank/IDA Resources

A. Staff Inputs (Staff Weeks):

FY PreaDpraisal ApRraisal Negotiation SuRervision Total

75 2.0 -- -- -- 2.076 -- -- --77 8.6 33.4 -- -- 42.078 -- 54.2 28.4 4.3 86.979 -- -- -- 11.9 11.980 -- -- -- 19.3 19.381 -- -- -- 30.1 30.182 -- -- -- 24.8 24.883 -- -- -- 11.6 11.684 -- -- -- 19.7 19.785 -- -- -- 9.2 9.286 -- -- -- 3.5 3.587 -- -- -- 11.2 11.2

TOTAL 10.6 87.6 28.4 145.6 272.2

17

B. MISSION DATA:

Month/ No. of Days in Specializat{ton Performance Rating Types ofYear Persons Field Reresonted j. 9,tavua2u Tret 3/ Prob1.-s 4

Identification/Preparation 3/75 3 3

5/75 1 2 f9/76 1 2 -2/77 1 4 c

Appraisal 5-6/77 4 28 c,e,o -Supervision 1 5/78 1 3 c 1

2 10-11/78 1 5 e I __3 5/79 2 4 c,f 2 2 N4 7/79 1 5 c 2 2 N5 11/79 2 6 c,f 2 1 T,F6 4/80 4 14 e,f,o 2 1 T,F7 6/80 5 21 e,f,o 2 2 r,F8 9/80 3 6 e,f,o 3 1 M,T,O9 4/81 1 7 c 3 1 T,F,O

10 5/81 5 3 e,f,C,g,o 3 1 >,F,o11 11/81 4 2 0,g 3 1 .F,O12 3/82 2 9 c,e 3 1 T,7,O13 9/82 1 9 c 3 1 T,F,O14 2/83 2 4 c 3 1 T,O15 9/83 3 10 c,f,e 5/ 3 3 T,ti,O16 1-2/84 1 1 a 3 3 T,M,O17 2/84 2 8 c,f 3 3 T,M,F,O18 9/84 2 6 c,f 3 2 M,F,O19 2/85 1 1 c 3 2 M,F,O20 7-8/85 1 3 f 3 3 M,F,O21 4/86 1 4 f 3 3 M,F,O22 7/86 2 10 f,g 3 3 M,F,O

1/ a = Division Chief; c a Agriculturalist; e = Economist; f = Financial Analyst;g - Operations Assistant; o - Other.

2/ 1 - No significant problem; 2 - Moderate problems; 3 - Major problems.

2/ 1 Improving; 2 - Stationary; 3 - Deteriorating.

4/ M - Managerial; F - Financi4l; T - Technical; 0 = Other.

5/ Agriculturist from CDC and the Economist from ODA.

IBRD 13114R

I / 00,o 9 00,ttOO ,f./ ~~~~~~~~~~~~~~~~~~~~ rn~~~~T'S "oP hISS ipo ProP.s, ilth LIBERIA

) K- ,~INJA ~ .2O~ RUBBER DEVELOPMENT PROJECT~~d~h - - '0000. co~~o of Th. us.lo 84,,A F R I C A /KliI 8koo oo,io h notnio.LIII

% it hjl otenD I'll ti 0 Ont Rubbser BeltLIBERIA / P*~~~~~~~~~~~~~~~~~~~~~~~~~~~~VI 0' rh. Wor,d osh "n Moo%LIBERIA 010mo/ -' tuy ma ...,0 Pilot Rubbei Scheme

t,0O,,Oothnt 0' CCC 00 iOnCO iS Conce%s,onis and Rubber (5

I ~~~~~~~~~~~~~~~~~~~~~~~~~~~~I'ROJECTSL 0 F A ~~~~~~~~~~~~~~~~~~~~~~Protect A 0po foundary

* Prooos,rodmr ing (renterS IE R RA . '(r* Proposrsd H-eadquartersLEONE ~~~~~~~~~~~~~~~~~,, ~ ~ ~ C 0 U/N T\Y.AI Piopo%(r'd Bort, Brainch

0 NE R A N D 7Pcwved RoadsMiNt dt, ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Loose Surfoce Roadis

Bendaia --u .r Road, under Construction

OUNT ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ to~~~~~~ kAtBAIternational Airport:':Kf>,~~~~~~~~, 8apok, - ~ ~ ~ ~ ~ ~ LpcAirfields and Airstrips

COUNTY Sa'ono COPA Motor Ports 70.S". ~~~~~~~~~,n ,,.Minor Ports

( Trobnranborg ~~~~~~~~~~~ + -i +-- -.-- ~~Goi, uRailroads$Oloto u T Y (b~ ~~~~~~~~~~~~~~~~ Capitol City

ROftERTSPOIt1' ® ~leDRCH ALL UBERCounty CapitalsGbaigbon CouT ~ - nteraioa Boundories

Broewovittev~Blp

MONROVIAGRANDA SA

+ ~~~~~~~6'00'-

BUCHANAN LAC

COMPACOUNY

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MAY 1990