AFRICAN DEVELOPMENT FUND

PROJECT : LIVESTOCK INFRASTRUCTURE SUPPORT PROJECT

COUNTRY : ZAMBIA

APPRAISAL : REPORT

OSAN DEPARTMENT

June 2013

Appraisal Team

Regional Director : Mr. C. OJUKWU, Director, ORSB

Sector Director : Mr. A. BEILEH, Acting Director, OSAN

Division Manager : Mrs. J. MWANGI, Division manager, OSAN.3

Team Leader : Mr. J MENG-LIHINAG, Principal Agricultural Economist,

OSAN.3

TABLE OF CONTENTS

Page

Currency Equivalents, Fiscal Year, Weights and Measures, Acronyms i

Loan Information ii

Project Summary iii

Results Based Logical Framework (Project Matrix) iv

Project Time Frame/Implementation Schedule v

I. STRATEGIC THRUST AND RATIONALE 1

1.1 Project Linkages with Country Strategy and Objectives 1

1.2 Rationale for Bank’s Involvement 1

1.3 Donors Coordination 2

II. PROJECT DESCRIPTION 3

2.1 Project Objectives and Components 3

2.2 Technical Solutions Retained and Other Alternatives Explored 4

2.3 Project Type 4

2.4 Project Cost and Financing Arrangements 4

2.5 Project Target Area and Population 6

2.6 Participatory Process for Project Identification, Design and

Implementation

7

2.7 Bank Group Experience and Lessons Reflected in Project Design 7

2.8 Project Performance Indicators 7

III. PROJECT FEASIBILITY 7

3.1 Economic and Financial Performance 7

3.2 Environmental and Social Impacts 8

IV. IMPLEMENTATION 10

4.1 Implementation Arrangements 10

4.2 Monitoring 13

4.3 Governance 13

4.4 Sustainability 14

4.5 Risk Management 14

4.6 Knowledge Building 15

V. LEGAL INSTRUMENTS AND AUTHORITY 15

5.1 Legal Instruments 15

5.2 Conditions Associated with Bank’s Intervention 15

5.3 Compliance with Bank Policies 16

VI. RECOMMENDATION 16

LIST OF APPENDICES

Appendix 1.

Zambia - Comparative Socio-economic Indicators

Appendix 2. AfDB’s Active Portfolio in Zambia

Appendix 3. Projects Financed by the Bank and Other Development

Partners in the Country

Appendix 4. Map of Project Area and Definition of Livestock

Infrastructures

Appendix 5. Calculation of Economic and Financial Internal Rate of Return

i

Currency Equivalents

(March 2013)

1 UA = 1.535 USD

1 UA = 1.1538 Euro

1 UA = 8,127.94 ZMK

1 UA = 8.12794 ZMW (Rebased)

1 USD = 5,295.07 ZMK

1 USD = 5.29507 ZMW (Rebased)

[Note: The Zambian currency (ZMK) was rebased on 1st January 2013 to the new alphabetic ISO Code ZMW.

The ZMK will cease on 30th

June 2013. Consequently, the rebased currency (ZMW) is used in the cost tables]

Fiscal Year

1st January to 31

st December

Weights and Measures

1 metric tonne (t) = 2,204 pounds (lbs)

1 metre (m) = 3.28 feet (ft)

1 millimetre (mm) = 0.03937 inch

1 kilometre (km) = 0.62 mile

1 hectare (ha) = 2.471 acres

Acronyms and Abbreviations

ADF ………… African Development Fund

AfDB ………… African Development Bank

ASF ………… African Swine Fever

CAADP ………… Comprehensive Africa Agriculture Development Programme

CBPP ………… Contagious Bovine Pleuro-pneumonia

FMD ………… Foot and Mouth Disease

GoZ ………… Government of Zambia

LIMS ………… Livestock Information Management System

LISP ………… Livestock Infrastructure Support Project

M&E ………… Monitoring & Evaluation

MAL ………… Ministry of Agriculture and Livestock

NALEIC ………… National Livestock and Epidemiological Information Centre

NCD ………… Newcastle Disease

NGO ………… Non-Governmental Organization

PCT ………… Project Coordination Team

PS ………… Permanent Secretary

PY ………… Project Year

SESA ………… Strategic Environmental and Social Assessment

SNDP ………… Sixth National Development Plan

UA ………… Unit of Account

USD/$ ………… United States Dollars

ZMK ………… Zambian Kwacha (Old)

ZMW ………… Zambian Kwacha (New/Rebased)

ii

Loan Information

Client’s information

BORROWER: Republic of Zambia

EXECUTING AGENCY: Ministry of Agriculture and Livestock

IMPLEMENTING AGENCY: Ministry of Agriculture and Livestock

Financing plan

Source Amount (UA million) Percentage Instrument

ADF 12.001 87.6% Loan

GoZ 1.69 12.3% N/A

Beneficiaries 0.02 0.1% N/A

Total Cost 13.71 100.0%

Important Financial Information (ADF Loan)

Loan Currency UA

Interest Type N/A

Interest Rate Spread N/A

Commitment Fee 0.5% per annum, on undisbursed portion of loan.

Service Charge 0.75% per annum, on outstanding balances.

Tenor 600 months (50 years)

Grace Period 120 months (10 years)

FIRR, NPV (base case) 20%, NPV at 12% = USD 4.02 million

EIRR (base case) 22%, NPV at 12% = USD 4.38 million

Timeframe - Main Milestones (expected)

Concept Note Approval

14

th March 2013

Project Approval 19th June, 2013

Effectiveness August, 2013

Completion July, 2018

Last Disbursement December, 2018

Last Repayment July 2073

1 The proceeds of the ADF loan will also be used to reimburse the PPF advance of UA 300,000.

iii

PROJECT SUMMARY

1.1 Project Overview: The Livestock Infrastructure Support Project’s (LISP) objectives

are to improve smallholder livestock production and productivity, create market linkages and

increase household income. LISP will be implemented in 9 Districts in Northern and

Muchinga Provinces. LISP comprises 3 components (1) Livestock Infrastructure

Development, (2) Capacity Building, and (3) Project Management. The main outputs are (i)

177 livestock service centres2 (LSC) tier 1, 1+ & 2 at community level, (ii) 2 livestock

service centres tier 3, (iii) 3 milk collection centres, (iv) 2 livestock markets, (v) 8 livestock

slaughter facilities, (vi) 80 km of feeder roads, (vii) 2 Regional and 7 District veterinary

laboratories, (viii) 2 veterinary quarantine stations, and (ix) 5 veterinary check points.

1.2 The LISP will be implemented over a period of 5 years (2013-2018) and the executing

agency is the Ministry of Agriculture and Livestock (MAL). Project activities will be

coordinated by a Project Coordination Team (PCT) using the existing Government structures.

The Project cost is estimated at UA 13.71 million of which ADF Loan is UA 12.00 million

(87.6%), Government’s contribution is UA 1.69 million (12.3%) and the beneficiaries’

contribution is UA 0.02 million (0.1%). A Project Preparation Facility (PPF) of UA 300,000

has already been granted and will be repaid from the said loan amount.

1.3 LISP is expected to directly benefit 100,000 livestock keeping households including

33,600 female headed households. LISP will mobilise participating farmers into fully trained

and empowered farmer groups. It will increase employment opportunities in livestock

husbandry and marketing, and livestock products value chain. Public service capacity for the

delivery of livestock services mainly disease prevention and control will be enhanced. The

Project will also facilitate participation of the private sector through leasing out some of the

structures within the LSC which will be used as outlet for veterinary drugs and livestock

feeds supplements. About 800,000 people, including 400,000 women, will indirectly benefit

from increase in supply of quality livestock products.

1.4 Needs Assessment: In line with its strategy of economic diversification, GoZ has

launched a nationwide programme to scale-up the development of the livestock sub-sector

and enhance its contribution to the national economy. The GoZ has requested the Bank’s

financial support for the implementation of LISP. The livestock sub-sector is an important

source of economic growth and job creation to foster poverty reduction.

1.5 Bank’s Added Value: The Bank’s Agricultural Sector Strategy (AgSS: 2010-2014)

Pillar I focuses on agricultural infrastructure. The Bank, as a result of its long term

involvement in the livestock sub-sector, has developed sound experience in satisfactory

development of rural infrastructures. Lessons learned include the need to involve intended

beneficiaries in infrastructure selection, siting, construction and management inorder to

enhance ownership and sustainability which have been mainstreamed in the design of LISP

and would be instrumental during implementation.

1.6 Knowledge Management: Knowledge gained through implementation of previous

projects has been used in designing LISP. Knowledge that will be generated through

implementation of LISP will be helpful during design and management of future projects.

Lessons learned will be documented through quarterly and annual progress reports, mid-term

review report, beneficiary impact assessment survey report and project completion report.

2 Description of livestock infrastructures is in Appendix 4b of this report (Volume I of II).

iv

RESULTS-BASED LOGICAL FRAMEWORK (PROJECT MATRIX)

Country and Project Name: Zambia – Livestock Infrastructure Support Project (LISP)

Purpose of the project: To improve smallholder livestock production, productivity, market linkages and household income.

RESULTS CHAIN

PERFORMANCE INDICATORS MEANS OF

VERIFICATION

RISKS /MITIGATION

MEASURES Indicator (including CSI) Baseline Target

IMP

AC

T

1.1 Contribute to poverty reduction

1.1 Proportion of population living in poverty

Baseline 2012

1.1. 70%

Target 2020

1.1. 65%

Poverty Reduction Strategy Paper

Household surveys

OU

TC

OM

ES

2.1 Decreased prevalence of

the main diseases

2.1. Prevalence rates for CBPP, FMD, ASF

and NCD (%)

Baseline 2012

2.1. CBPP (0.03), FMD (0.35), ASF (0.10) and NCD (0..25)

Target 2019

2.1. CBPP (0.02), FMD (0.30), ASF (0.09) and NCD (0.20)

Periodical epidemiological

surveys (for

prevalence rates).

Project reports.

2.2 Improved livestock

performance.

2.3 Improved income of livestock farmers

including women/youth

2.2.1 Average population increase rate (%) for

cattle, goats and chickens

2.2.2 Carcass weight (kg) for cattle and goats 2.2.3 Milk production (litres/year) per cow

2.3 Average annual income of livestock

farmers

2.2.1 Cattle (6.3), goats (12) and

chickens (15)

2.2.2 Cattle (126) and goats (18) 2.2.3 Milk (1,500)

2.3 USD 364

2.2.1 Cattle (10), goats (15) and chickens (22)

2.2.2 Cattle (168) and goats (23)

2.2.3 Milk (2,500)

2.3 USD 512

OU

TP

UT

S

3. Livestock Infrastructure

Development

3.1 Rural Community Infrastructures improved

3.2 Public infrastructures

improved

4. Capacity building 4.1 Farmers and staff

empowered/trained

5. Project Management

5.1 Project properly

managed.

3.1.1 Number of LSCs Tier 1, 1+ & 2

3.1.2 Number of milk collection centre

3.1.3 Number of livestock marketing centres

3.1.4 Number of slaughter facilities

3.2.1 Length (km) of all-weather feeder roads

3.2.2 Number of laboratories

3.2.3 Number of small quarantine stations 3.2.4 Number of LSC Tier 3

3.2.5 Number of veterinary check points

4.1.1 Number of farmers & staff trained. 4.1.2 No of livestock cooperatives formed.

4.1.3 Number of rural households reached.

4.1.4 No. of women/youth livestock groups (pass-on scheme) formed.

4.1.5 No. of women/youth hides/skins

processing groups formed. 5.1.1 Number of quarterly progress reports

5.1.2 Number of mid-term review reports

5.1.3 Number of audit reports per year 5.1.4 Number of procurement plans per year

5.1.5 Number of work plans per year

5.1.6 Disbursement rate (average per year)

Project Area – Baseline 2013 3.1.1 30

3.1.2 2

3.1.3 0

3.1.4 2

3.2.1 0

3.2.2 2 3.2.3 0

3.2.4 0

3.2.5 1

4.1.1 0

4.1.2 0

4.1.3 0 4.1.4 0

4.1.5 0

5.1.1 0

5.1.2 0 5.1.3 0

5.1.4 0

5.1.5 0 5.1.6 0

Project Area - Target 2018 3.1.1 177

3.1.2 3

3.1.3 2

3.1.4 8

3.2.1 80

3.2.2 9 3.2.3 2

3.2.4 2

3.2.5 5

4.1.1 100,000 farmers & 120 staff (>50% female)

4.1.2 248 by year 5

4.1.3 190,000 HH (33,600 Female HH) 4.1.4 27

4.1.5 18

5.1.1 4 per year

5.1.2 1 (project life) 5.1.3 1

5.1.4 1

5.1.5 1 5.1.6 20%

Project reports

Risk: Incompetent Contractors

Mitigation: (i) use

stringent evaluation

process, and (ii) follow-

up contract execution.

Risk: Low Livestock

Population Mitigation: Continued

GoZ restocking programme.

Risk: PCT base in

Lusaka.

Mitigation: The core PCT staff will be based

in the project area

(Kasama District), about 800km from Lusaka for

effective project

supervision.

KE

Y

AC

TIV

ITIE

S

Components Inputs

Component 1: Livestock Infrastructure Development (UA 9.31 million, 67.9%)

Component 2: Capacity Building (UA 3.42 million, 25.0%) Component 3: Project Management (UA 0.98 million, 7.1%)

Total: UA 13.71 million

Project Total Cost: UA 13.71 million

ADF loan: UA 12.00 million (87.6%).

Government: UA 1.69 million (12.3%).

Beneficiaries: UA 0.02 million (0.1%).

v

PROJECT TIME FRAME/IMPLEMENTATION SCHEDULE3

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

1 Appraisal Mission

2 Loan Negotiations

3 Board Approval

4 Signature

5 Appointment of Government Staff for the Project

6 Fulfilment of Loan Conditions

7 Project Launch/Start Off

8 Project Preparation - Infrastructure Design

Component 1: Livestock Infrastructure Development

9 Rural Community Infrastructure Support

9.1 Preparatory Activities

9.2 Construction of LSC Tier 1

9.3 Construction of LSC Tier 1+

9.4 Construction of LSC Tier 2

9.5 Rehabilitation of Milk Collection Centres

9.6 Construction of Livestock Market Centres

9.7 Construction of Livestock Slaughter Houses

10 Public Infrastructure Support

10.1 Preparatory Activities

10.2 Rehabilitation of Rural Feeder Roads

10.3 Construction of Regional Veterinary Laboratories

10.4 Construction of District Veterinary Laboratories

10.5 Establishment of Quarantine Stations

10.6 Construction of LSC Tier 3

10.7 Construction of Vet Check Points (Full Model)

10.8 Construction of Vet Check Points (Boom Gate)

Component 2: Capacity Building

11 Support to Participating Institutions

12 Women/Youth Empowerment

Component 3: Project Management

13 Project Management

14 Bank: Supervision Missions

15 Bank: Mid-Term Review Mission

16 Bank: Project Completion Mission

Notes: Q1 = First Quarter (January, February, March); Q2 = Second Quarter (April, May, June); Q3 = Third Quarter (July, August, September) and Q4 = Forth Quarter (October, November, December)

PY1 = Project Year 1

PY1 PY2 PY3Description of ActivitiesNo PY5

Financial Year = Calendar Year

PY4PY0

3 This is a general implementation schedule. Consequently, the detailed annual work schedule will be developed by the Project Coordination Team (PCT) before the beginning of each fiscal year, based on the

component activities and the associated detailed cost tables.

1

REPORT AND RECOMMENDATION OF THE MANAGEMENT TO THE BOARD

OF DIRECTORS ON A PROPOSED LOAN TO FINANCE THE ZAMBIA LIVESTOCK

INFRASTRUCTURE SUPPORT PROJECT

Management submits the following Report and Recommendation on a proposed ADF Loan for UA

12.00 million to finance the Livestock Infrastructure Support Project (LISP) in Zambia.

I – STRATEGIC THRUST & RATIONALE

1.1. Project Linkages with Country Strategy and Objectives

1.1.1. The GoZ development agenda is articulated in the National Vision 2030 which reflects the

aspirations and determination to be a prosperous middle-income country by year 2030. The Sixth

National Development Plan (SNDP: 2011-2015) and Medium Term Expenditure Framework

(MTEF: 2013-2015), which operationalize the National Vision 2030, have prioritised agriculture

among the key growth sectors of the economy. With regard to the livestock sub-sector, the main

thrust is to improve livestock production and productivity mainly through infrastructure

development, creation of Disease Free Zone (DFZ), and processing of livestock products.

1.1.2. The Bank’s Results-Based Country Strategy Paper (CSP: 2011-2015) for Zambia focuses on

(i) support to economic diversification through infrastructure development (Pillar 1) and (ii) support

to economic and financial governance (Pillar 2). The LISP aims at development of various livestock

infrastructures, mainly for disease control, and is in line with Pillar I of the CSP (2011-2015) Mid-

Term Review (MTR) Productive Sector. It is also in line with the Bank’s AgSS (2010-2014) and

the Ten Year Strategy (2013-2022).

1.2. Rationale for Bank’s Involvement

1.2.1. The agriculture sector is well liberalised. Government sector policy has focused on reforms

to the maize production and market subsidies that consume more than 8% of the national budget.

Major stakeholders have been urging government to rationalize food reserve management and

reform the way the input subsidy is managed to encourage private sector participation. In the

livestock sub-sector, Government’s presence is mainly in the control of diseases of national

economic importance. Livestock sub-sector has potential to stimulate the Zambian economic

growth and create jobs. However, inadequate livestock infrastructures, high disease incidence and

poor livestock service delivery have been identified as main bottlenecks for sustainable growth of

the sub-sector. Consequently, the Bank’s strategy is to contribute to the Government’s drive to

enhance the contribution of the livestock sub-sector to the national economy and poverty reduction.

1.2.2. The Bank’s focus on infrastructure fills a vital but missing financial gap not fully covered

by other partners and is urgently required to support economic diversification. The 2012 Country

Portfolio Performance Review (CPPR) assessed the overall portfolio performance as satisfactory,

with implementation objectives and development outcomes of 2.19 and 2.52 respectively. The

invaluable portfolio implementation experience and lessons learned were mainstreamed in the

design of the LISP and would be instrumental in its implementation. The agriculture project (Small-

scale Irrigation Project-SIP) has attained physical completion rate of 60% of the planned 3

irrigation schemes and the performance rating is satisfactory. The SIP is now setting up institutional

management mechanism and the timely establishment of management arrangements for

infrastructure projects is a useful lesson for LISP. Appendix 2 presents the Bank’s active portfolio

2

in Zambia. The closed Agriculture Sector Investment Programme (ASIP: 1996-2008) had a

significant component of livestock development. The project completion report indicated

satisfactory progress on completion of most outputs. However, the livestock markets were not fully

completed and operationalized by the time the project ended due to (i) delay in start-up when ASIP

implementation was entrusted to the MAL, (ii) lack of designs/drawings at project start-up which

resulted in delay in implementation, and (iii) inadequate consultation of stakeholders in selection of

sites for the infrastructures. In this regard, LISP will be implemented using the Project Coordination

Team whose capacity will be enhanced by recruitment of professional staff and the Project Preparation

Facility will be used to produce detailed drawings and tender documents for the infrastructures. There

has been wide consultation with stakeholders.

1.3. Donors Coordination

Table: 1.1

Donor Support to Agriculture (2012)

Sector or subsector*

Size

GDP Exports Labour Force

Agriculture 13 20 67

Players - Public Annual Expenditure (average) : 2012 Budget

Government Donors AfDB 3.4% FAO 1.1% Finland 4.4%

UA m UA 229.4 m UA 68.9 m WB 36.3% JICA 3.4% USAID 7.9%

% 70.0% 30.0% EU 4.7% WFP 9.3% Norway 7.0%

DFID 5.1% IFAD 17.4%

Level of Donor Coordination

Existence of Thematic Working Groups (this sector/sub-sector) [Y]

Existence of SWAps or Integrated Sector Approaches [N]

ADB's Involvement in Donors Coordination [M]

Key: L: Leader. M: member but not leader. None: no involvement. Y: Yes. N: No

1.3.1 Donor contribution to the agriculture budget was about 30% in the 2012 fiscal year, with an

active portfolio totalling UA 68.9 million. The Development Partners (DPs) percentage

distributions are indicated in Table 1.1. The DPs’ contributions are coordinated by the Ministry of

Finance. The Agriculture Cooperating Partner Group (Ag-CP), whose current chair is USAID, has

been coordinating activities in the sector and engaging Government in dialogue on key policy

developments. The Zambia Field Office (ZMFO) chaired the Ag-CP in 2012 and has played a

pivotal role in donor coordination activities and overall portfolio management. The current DPs’

activities are indicated in Appendix 3. The national livestock development programme that

Government has embarked on is coordinated with various CPs who are funding different aspects or

specific geographic zones. The World Bank is covering Southern Central and Eastern provinces.

IFAD is covering livestock disease control throughout the country. EU is providing institutional

capacity building within the MAL. AfDB is covering the northern part of the country. The WB and

AfDB projects are quite similar in design, focusing on disease control, though WB’s project has

small infrastructure component. The Government is also funding some livestock development

programme from its own resources.

3

II – PROJECT DESCRIPTION

2.1. Project Objectives and Components

2.1.1. The Project objectives are to improve smallholder livestock production, productivity, create

market linkages and increase incomes of livestock farmers. The LISP has 3 components as

indicated in Table 2.1.

Table 2.1

Description of Project Components

No Component

Name

Total Cost

(UA million)

Component Description4

1 Livestock

Infrastructure

Development5

9.31

(67.9%)

Sub-component 1: Rural Community Infrastructure Support

156 demand-driven livestock service centres tier 1 constructed.

16 livestock service centres tier 1+ constructed/rehabilitated.

5 livestock service centres tier 2 constructed.

3 milk collection centres constructed/rehabilitated.

2 livestock market centres constructed.

8 livestock slaughter facilities constructed.

Project Preparation Facility – Detailed Designs

Sub-component 2: Public Infrastructure Support

80 km of feeder road rehabilitated.

2 Regional veterinary laboratories rehabilitated.

7 District veterinary laboratories rehabilitated.

2 veterinary quarantine stations established.

2 livestock service centres tier 3 constructed (within existing

Government livestock ranches/breeding centres).

2 veterinary check points constructed.

3 veterinary check points (with boom gate only) constructed.

Assorted equipment for CVRI’s Public Health Laboratory.

2 Capacity

Building 3.42

(25.0%)

Sub-component 1: Support to Participating Institutions

Consultancies (including NGO services) on pilot livestock-pass on

scheme and biogas digesters, forage production and management

and local training-institutions.

Community mobilisation activities and formation of groups and

cooperatives.

Procurement of office equipment and furniture.

Staff and farmer training on livestock management (at least 50%

women).

Support to Livestock Information Management System (LIMS)

under National Livestock and Epidemiological Information Centre

(NALEIC).

Pilot livestock stocking (cattle and goats).

Livestock management-field demonstration centres.

Pasture and rangeland management (within LSC Tier 3).

Environmental and social management.

Sub-component 2: Women/youth Empowerment

Formation/strengthening of 45 women/youth groups.

4 The details have been provided in the Technical Annexes (Volume II of II). 5 Description of livestock infrastructures is in Appendix 4b of this report (Volume I of II).

4

No Component

Name

Total Cost

(UA million)

Component Description4

Income generating activities (small-stock pass-on scheme) for 27

participating women and youth groups.

Training and empowerment of 18 women and youth groups in skin

and hides processing units (leather and leather products - mini

backyards vegetable tanneries).

Nutrition, HIV/AIDS and malaria awareness (at least 50% women)

Artisan (youth) training for maintenance of LSC tier 1.

3 Project

Management 0.98

(7.1%)

Project management including supervision.

Progress review meetings including MTR and PCR.

Financial management including audit.

Support to PCT - recruitment of professional and support staff.

Participatory monitoring and evaluation (M&E).

Total 13.71

2.2. Technical Solutions Retained and Other Alternatives Explored

The Project will promote investments in public and community livestock infrastructures

since they mutually enforce each other. This will cultivate a sense of ownership and sustainability

during and beyond the Project lifespan. Most of the investments are in animal health area due to the

extensive production system and the exposure to potential sources of diseases from Tanzania and

Democratic Republic of Congo. Table 2.2 indicates other alternatives which were explored.

Table 2.2

Alternatives Considered and Reasons for Rejection

Alternative Name Brief Description Reasons for Rejection

Installation of spray

races

Use of spray races

for control of

ticks.

High operation and maintenance costs and also uses a lot of water for

the spray race which is not readily available in remote rural areas.

Discharges chemicals into the environment.

Improved feeding Provide higher

quality feed to

livestock to

enhance growth

The initial performance is low (126 kg carcass). The potential for cattle

production in the area can be higher by improving reproductive, health

management and genetics. The ecosystem is dealt with as an extensive

type of production system but still its potential is not attained.

2.3. Project Type

LISP is a stand-alone Investment Project funded by the ADF XII Loan resources.

2.4. Project Cost and Financing Arrangements

2.4.1 The total Project cost is UA 13.71 million, at year 2013 price level, including average 7.0%

physical and 6.4% price contingencies, which will be financed by (i) ADF Loan6: UA 12.00 million

(87.6%) covering all major activities, (ii) the Government contribution: UA 1.69 million (12.3%)

through value for Government office space rental, salaries for Government staff and utilities such as

electricity and water, and (iii) beneficiaries’ contribution: UA 0.02 million (0.1%) in form of

6 The ADF Loan information is provided on page (ii), PAR volume I of II.

5

operation and maintenance of the LSC tier 1 and 1+ as per Government’s policy to ensure

sustainability. The Bank is the lead financier. The cost details are indicated in Tables 2.3 to 2.7.

2.4.2 Project Preparation Facility (PPF): The Government was provided with a Project

Preparation Facility (PPF) from ADF resources to produce detailed designs for the livestock

infrastructures. Pursuant to Section 3.7 of the “PPF Operational Guidelines” adopted by the ADF

Board of Directors on 14/02/2000 (ADF/BD/WP/99/87/Rev.3), a provision of UA 300,000 has been

earmarked in the Project cost to repay the PPF amount.

2.4.3 Justification for Local Cost Financing: The ADF Loan will finance about 80.4% of the total

local costs (UA 7.01 million) and 100.0% of the total foreign costs (UA 4.99 million). The local

cost is 80.4% because the project is oriented towards development of rural infrastructures using

locally available materials.

Table 2.3

Summary of Project Cost by Components

Component Name

(ZMW '000)7 (UA million)

Foreign Local Total Foreign Local Total %

Foreign

1. Livestock Infrastructure

Development 31,028.2 34,040.2 65,068.4 3.82 4.19 8.01 48

2. Capacity Building 4,381.0 19,803.0 24,184.0 0.54 2.44 2.98 18

3. Project Management 700.0 6,144.0 6,844.0 0.08 0.76 0.84 10

Total Baseline Cost 36,109.2 59,987.2 96,096.4 4.44 7.39 11.83 38

Physical Contingencies 3,135.3 4,121.4 7,256.6 0.38 0.50 0.88 43

Price Contingencies 1,359.0 6,714.3 8,073.3 0.17 0.83 1.00 17

Total Project Cost 40,603.5 70,822.8 111,426.3 4.99 8.72 13.71 36

Table 2.4

Sources of Financing, Amount (UA million) and Percentage Contribution (%)

Source of Finance Amount (UA million) and Percentage Contribution (%)

Foreign % Local % Total %

ADF Loan 4.99 100 7.01 80.4 12.00 87.6

Government 0 0 1.69 19.4 1.69 12.3

Beneficiaries 0 0 0.02 0.2 0.02 0.1

Total 4.99 36.4 8.72 63.6 13.71 100.0

7 Exchange rates/currency equivalents are provided on page (i).

6

Table 2.5

Project Cost - Categories of Expenditure (Summary)

Category of Expenditure (UA million)

% Foreign Foreign Local Total

A. Works 3.34 3.64 6.98 48%

B. Goods

1. Vehicle 0.24 - 0.24 100%

2. Equipment 0.35 - 0.35 100%

B sub-total 0.59 - 0.59 100%

C. Services

1. Training - 0.76 0.76 0%

2. Contractual Services 0.44 - 0.44 100%

3. Audit 0.07 - 0.07 100%

C sub-total 0.51 0.76 1.27 40%

D. Operating Cost

1. Personnel - 0.75 0.75 0%

2. Daily Subsistence Allowance - 0.81 0.81 0%

3. General Operating Costs - 1.43 1.43 0%

D sub-total - 2.99 2.99 0%

Total Baseline Cost 4.44 7.39 11.83 38%

Physical Contingencies 0.38 0.50 0.88 43%

Price Contingencies 0.17 0.83 1.00 17%

Total Project Cost 4.99 8.72 13.71 36%

Table 2.6

ADF Loan - Categories of Expenditure (Summary)

Category of Expenditure ADF Loan Amount (UA million)

Foreign Cost Local Cost Total

A. Goods 0.64 - 0.64

B. Works 3.82 4.34 8.16

C. Services 0.53 0.30 0.83

D. Operating Costs - 2.37 2.37

Total Project Cost 4.99 7.01 12.00

Table 2.7

Expenditure Schedule by Component

Component Name Amount (UA million) including Contingencies

Percentage PY1 PY2 PY3 PY4 PY5 Total

1. Livestock Infrastructure

Development 0.51 5.74 2.66 0.21 0.19 9.31 67.9%

2. Capacity Building 0.98 0.84 0.61 0.50 0.49 3.42 25.0%

3. Project Management 0.26 0.18 0.19 0.17 0.18 0.98 7.1%

Total Project Cost 1.75 6.76 3.46 0.88 0.86 13.71 100.0%

7

2.5. Project Target Area and Population

The Project will be implemented in the Northern and Muchinga Provinces covering 9

Districts, as indicated in Appendix 4a and 4b. The human population within participating Districts

is 1,338,456 out of which 51% are women whilst the total number of households (HH) is 233,300

with 33,600 female headed HH. The Project will directly benefit 248 registered groups with a total

of 100,000 HH who have fully-paid-membership status (33,600 female headed HH). In addition,

90,000 livestock keeping HH, within participating Districts, will indirectly benefit from improved

livestock services. About 800,000 people, including 400,000 women, will indirectly benefit from

increase in supply of quality livestock products. The main anticipated Project related outcomes

include increase in incomes of small scale livestock farmers and empowerment of livestock farmer

groups/organisations to deliver services.

2.6. Participatory Process for Project Identification, Design and Implementation

Consultations with the main stakeholders were done during the identification, preparation

and appraisal phases. During each phase, the Mission held discussions with GoZ officials, potential

beneficiaries, DPs and the private sector, on the Project design including definition of key project

activities, implementation and sustainability arrangements. This participatory approach will be

enhanced during the implementation phase. The LISP will be implemented through the GoZ

existing structures and farmer organizations. Opportunities for cooperation and parallel financing

were discussed with IFAD although they were not conclusive.

2.7. Bank Group Experience and Lessons Reflected in Project Design

2.7.1. Lessons learnt from Bank’s past operations include (i) inadequate consultation with

stakeholders in selection of sites and types of infrastructures leading to non-utilisation or lack of

ownership, (ii) weak project M&E system resulting in poor assessment of implementation progress

and impacts, (iii) weak implementation capacity of Ministries, mainly in the area of procurement,

and (iv) lack of infrastructure drawings at project start-up leading to implementation delay.

2.7.2. The weaknesses highlighted were addressed and mainstreamed in LISP design as follows (i)

development of community infrastructures will be demand driven, (ii) through the use of Project

Preparation Facility, detailed designs/drawings and tender documents for livestock infrastructure will

be ready when LISP starts-off, (iii) LISP design has ensured that MAL implementation and M&E

capacities will be enhanced with the external recruitment of the Project Coordinator, Procurement

Specialist, Project Accountant and M&E Specialist.

2.8. Project Performance Indicators

The logical framework has identified a number of outcome indicators. They include increase

in livestock productivity in terms of carcass weight and milk production and reduction of

prevalence rate of the main livestock diseases (CBPP, FMD, ASF and NCD) in the Project area.

The rate of physical and financial implementation of planned activities, including infrastructures,

will measure the trend towards the achievement of Project’s objective. The impact indicator against

which the Project development objective will be measured is the percentage increase in the income

of the beneficiary livestock farmers. A baseline study has been included as part of the Project

Preparation Facility in order to fine-tune performance indicators. Quarterly and annual progress

reports, supervision missions and mid-term review reports, impact assessment survey report and

project completion report will record data on project progress and impacts. The Project’s M&E unit

will be responsible for data collection, analysis and dissemination.

8

III – PROJECT FEASIBILITY

3.1. Economic and Financial Performance

3.1.1 The Economic and Financial Analyses have been carried out on the assumption that, for any

business to flourish, it requires incentives and conducive environment which will be provided by

LISP. In this regard (i) facilities such dip tanks, spray races, crush pens for vaccination and other

veterinary services, feeding and watering infrastructure will enable farmers to raise healthy animals,

(ii) breeding centres will aid in the stocking programme resulting in increase in livestock numbers,

(iii) marketing structures, slaughter facilities, milk collection centres and connecting feeder roads

will give farmers incentive to keep livestock and feed them appropriately for high prices, while

accessibility will encourage private traders for both inputs and livestock products to operate in the

area, (iv) infrastructure facilities will also attract private operators such as health inspectors and

veterinary officers to invest in livestock development in the area, (v) the small-stock pass-on

scheme for women and youth will hasten livestock multiplication, (vi) capacity building will train

farmers to raise healthy fattened animals. The Project will, through infrastructure for disease

control, reduce livestock mortality resulting in higher livestock numbers. Improved animal growth

rate through better feeding practices and breed improvement for growth and milk production will

improve carcass weight and also milk yields. All these aspects will, in the final analysis increase

livestock production and productivity.

3.1.2 The project is also expected to generate a number of indirect economic benefits. They

include (i) enhanced food security with overall increase in the supply of good livestock products,

(ii) increased demands for livestock related services accruing to service providers, fostering the

development of animal related business and job, and (iii) empowerment of livestock farmer

organizations to provide adequate services to their members. The main assumptions underlying the

calculations of EIRR and FIRR are: (i) cattle, goat and chickens’ average annual population will

increase from 6.3% to 10%, 12% to 15%, and 15% to 22% respectively; (ii) livestock off-take will

increase from the current 12% to 16% for cattle and 31% to 38% for goat by year 6; (iii) average

weight will increase from the current 126 kg to 168 kg for cattle and from 25 kg to 33 kg for goats;

and (v) milk production from 1,500 to 2,500 litres per year (cow). The EIRR and FIRR

computations are provided in Appendix 5. Summary output is tabulated below:

FIRR, NPV (base case) 20%, NPV (12%): USD 4.02 million

EIRR (base case) 22%, NPV (12%): USD 4.38 million

NB: detailed calculations are available in Appendix 5 and also Technical Annex B.6

3.2. Environmental and Social impacts

3.2.1. Environment: The Project is classified as Environment Category 2 according to the Bank’s

Environmental and Social Assessment Procedures (ESAP) which was validated by the Quality

Assurance and Results Department (ORQR.3) on 8th

May 2012. The infrastructure investments

supported by the Project (LSC, livestock market centres, milk collection centres, slaughter houses

and rural feeder roads) will generate site-specific and short-term negative environmental impacts

which will mainly occur during the construction phase and will include: soil erosion particularly in

degraded lands, increased turbidity in water sources from soil run-off, limited reduced vegetation

cover due to cleared land to pave way for construction activities, increased localized noise and dust

due to earthmoving equipment and machinery. During the operational phase the likely impacts

would include solid waste and effluent from slaughter houses, milk collection centers, LSC and the

9

markets, bio-medical waste from veterinary activities and hazards to workers. MAL has prepared a

Strategic Environmental and Social Assessment (SESA) report describing measures to mitigate the

negative impacts which include re-vegetating cleared land, restoration of borrow-pits, appropriate

drainage systems to control erosion, installation of systems for solid waste and effluent

management and providing appropriate Personal Protective Equipment (PPE) to the workforce. The

SESA (which includes the Environmental and Social Management Plan - ESMP) was cleared for

disclosure, by ORQR.3, on 23rd

April 2013. The cost of environmental activities including

mitigation measures is UA 165,300 (from the ADF resources) in addition to amounts incorporated

in the civil works and to be reflected in contractors’ bidding documents (details are in Technical

Annex B.6). Environmental monitoring is one of the LISP activities.

3.2.2. Climate Change: The Project activities will promote climate change adaptation and foster

livelihoods diversification which will ultimately enhance the climate change adaptive capacity of

the pastoralists and the livestock production systems. The Project will support (i) sustainable

management of rangeland and pasture, and (ii) adoption of biogas digesters that will promote use of

livestock dung for generation of energy for lighting and cooking. In building capacity of the

livestock farmers and the livestock production systems, a complementary GEF project support

breeds that are resilient to climate change and develop models for community management of

endemic livestock and habitat (pasture and grazing management techniques), strengthen adaptive

capacity of communities through training and mounting of demonstration sites for feed

conservation during the dry seasons, restoration of degraded pasture and increased vegetation cover

with different drought tolerant plants.

3.2.3. Gender: Zambian women comprise 51% of the population. In the Project area, cattle are

predominantly owned by men whilst women own small livestock (goats, sheep and chickens). The

major constraints faced by women in the livestock sub-sector include livestock diseases, low

productivity and slow growth rates, poor access to livestock services and credit. The Project will

address many of the challenges through interventions targeted at women including access to

livestock services, information and training in modern livestock management. Immediate benefits

to women will be increased livestock production and improved productivity which will lead to

increased household incomes. Review of the on-going and closed projects implemented by MAL

with regard to gender impact have lessons including (i) a detailed engendered log frame with a

robust set of gender sensitive indicators is critical for monitoring gender impact (ii) the need to

promote gender friendly technologies in particular labour saving technologies; (iii) empowerment

programmes directed at women and youth to access resources to improve their economic status.

The lessons have been incorporated into the LISP design by (i) reviewing and updating the LISP

log frame indicators to accommodate gender issues; (ii) promoting labour saving technologies like

biogas digesters and also draught power which have the benefit of reducing workload for women;

(iii) incorporating a youth and women empowerment schemes.

3.2.4. The Project will support a youth and women empowerment programme aimed at training

them in value addition skills (such as skins/hides processing) and skills training to run Income

Generating Activities (IGAs). This will have significant potential in reducing poverty among

women and youth by increasing their access to new employment opportunities and developing

women as contributors to economic growth. Women will comprise at least 50% of the beneficiaries

of the LISP. Women and youth participation to livestock development will also be enhanced

through pilot small stock pass-on scheme. The Project will establish a gender monitoring, results

and impact tracking system. The gender audit will be part of the beneficiary impact assessment

which will be carried out in PY5 to access the progress made in achieving gender equity.

10

3.2.5. Social: The social impact of the LISP is expected to be positive since it will provide income

and better livelihoods to participating communities. The Project will help participating communities

to diversify agricultural output. Other positive effects will include an improvement in nutritional

and food safety status of the population through consumption of wholesome meat and milk products

rich in proteins and also supply of draught power for crop production. Livestock dung will enhance

crop yields and also used to generate energy (para 3.2.2). Rehabilitation of feeder roads will

facilitate sale of livestock and related agro-products which will generally improve trade. The

increased economic activities will significantly boost local development. Value addition training

will improve skills and provide employment to women and youth. The anticipated economic well-

being resulting from higher family incomes will generate positive multiplier effects on social

stability which will help curb rural exodus by retaining local population especially youth within the

participating Districts. The Project will mitigate the risk posed by HIV/AIDS, malaria and

malnutrition through awareness campaigns.

3.2.6. Involuntary Resettlement: There will be no involuntary resettlement. The community

infrastructures will be developed on demand driven basis, consequently they will be located in areas

which have already been identified by the local communities requiring no resettlement. Most of the

public infrastructures will be rehabilitated and where new ones will be constructed they will be on

public land requiring no resettlement. The feeder roads earmarked for rehabilitation will follow the

existing alignment requiring minor adjustment within the road reserve.

3.2.7. Value Addition and Entrepreneurship: During appraisal, it was noted that very little is done

in terms of value addition. Livestock products are mostly consumed fresh and milk is consumed

raw due to (i) inadequate investments in processing equipment, (ii) inaccessible milk collection

networks, and (iii) the culture of consuming raw milk prevails. This leads to considerable loss due

to spoilage and disincentive to production. The proposed livestock infrastructures and the capacity

building will enhance value addition and improve produce-shelf-life. The Project will facilitate

beneficiaries’ study tours to existing dairy cooperatives within Zambia, especially where the dairy

industry is more developed. Livestock and agro-industry skill development, as envisioned under the

Project, will promote self-employment and service provision at community level. IFAD has

expressed interest in supporting small scale enterprises in processing and value addition, in their

next fiscal year, through training and credit provision which are good ingredients for small and

medium enterprises creation. The Project area has low commercial livestock population and milk

production. Consequently, the activities will concentrate on value added processing of available

livestock products and entrepreneurship development through investment in milk collection centres

and slaughter houses. The pilot livestock stocking will improve the livestock population which will

generate employment to the participating farmers. Currently, rearing of cattle provides incomes for

cattle-owning households and also for people herding cattle, transporting livestock and livestock

products within the value chain although much of this employment is informal and limited.

Through pilot livestock stocking and also IGAs for rural women and youth, the Project will increase

the number of informal jobs by raising the number of households that keep livestock.

11

IV – IMPLEMENTATION

4.1. Implementation Arrangements

4.1.1. Executing and Implementing Agencies: Based on past experiences, the Project will be

implemented under the Project Coordination Team (PCT) using the existing MAL structures. The

PCT will be established for day to day management of LISP, comprising a Project Coordinator

(PC), a Procurement Specialist, an M&E Specialist, a Project Accountant, a Civil Engineer, 2 Focal

Points (1 from Northern Province and 1 from Muchinga Province), 2 Gender Specialists (1 from

Northern Province and 1 from Muchinga Province), and 2 Accountants (1 from Northern Province

and 1 from Muchinga Province). The PC, Procurement Specialist, Project Accountant and M&E

Specialist will be national experts recruited competitively and will be based in Kasama District

(provincial headquarters of the Northern Province, except for the Project Accountant who will be

based in Lusaka - MAL Hq) . The GoZ will appoint, within the existing structures, the rest of the

PCT members who will be attached to the Project. The assigned Civil Engineer from Ministry of

Works (MoW) will supervise the construction of livestock infrastructures. The Provincial Focal

Points will submit progress reports to the PC. The PCT will be under the MAL’s Director of

Livestock Development (DLD). The MAL Chief Accountant and Procurement Officer will also

facilitate the LISP implementation. A Project Steering Committee (PSC) will be set-up by GoZ

with a maximum of ten members who will have oversight responsibility and oversee project

compliance with sub-sector National Policies and Strategies. The PSC will consist of (1) Secretary

to Treasury (Ministry of Finance) - Chairperson, (2) Permanent Secretary (PS) - MAL, (3) PS -

Northern Province, (4) PS - Muchinga Province, (5) PS - Ministry of Works, (6) representative

from Zambia Environment Management Authority, (7) 2 livestock farmers’ representatives from

Muchinga and Northern Provinces, and (8) 2 representatives from the private sector (beef and dairy

industries). The PC shall be the Secretary of PSC. At the Provincial level, the responsibility for

delivery rests with the existing institutional structures of MAL under coordination of the PACO.

ZMFO will support LISP through regular supervision missions, informal meetings, and processing

of all fiduciary documents.

4.1.2. Procurement Arrangements: The Bank’s assessment of the country’s National Procurement

Procedures (NPP), dated June 2011, identified areas of weaknesses which are yet to be fully

addressed by GoZ within the overall country dialogue with DPs. Therefore, the NPP cannot be used

and all procurement of goods, works and acquisition of consulting services to be financed by the

Bank will be in accordance with the Bank’s Rules and Procedures for Procurement of Goods and

Works”, dated May 2008, revised July 2012; and “Rules and Procedures for the Use of

Consultants”, dated May 2008, revised July 2012 and as amended from time to time, using the

relevant Bank Standard Bidding Documents, and the provisions to be stipulated in the Loan

Agreement. The Bank assessment of MAL’s procurement capacity was found to be adequate and

the necessary agreed measures to mitigate against the identified weaknesses are indicated in Annex

B.5 (Technical Annexes8). The MAL will be responsible for procurement activities under the

Project. A procurement plan is indicated in Annex B.5 of the Technical Annexes. The procurement

arrangements under LISP are summarised in Table 4.1.

8 Technical Annexes = Project Appraisal Report Volume II of II.

12

Table 4.1

Procurement Arrangements (UA million9)

Item Description NCB Short List10

Other11

N.B.F. Total

A. GOODS

Vehicles - - 0.26 (0.26) - 0.26 (0.26)

Equipment - - 0.38 (0.38) - 0.38 (0.38)

B. WORKS 7.99 (7.99) - 0.17 (0.17) - 8.16 (8.16)

C. SERVICES

Training - - 0.08 (0.08) - 0.08 (0.08)

Contractual Services - - 0.38 (0.38) - 0.38 (0.38)

Project Preparation Facility (PPF) - 0.30 (0.30) - - 0.30 (0.30)

Audit - - 0.07 (0.07) - 0.07 (0.07)

D. PERSONNEL - - 0.57 (0.57) 0.31 0.88 (0.57)

E. OPERATING COSTS - - 1.80 (1.80) 1.40 3.20 (1.80)

Total 7.99 (7.99) 0.30 (0.30) 3.71 (3.71) 1.71 13.71 (12.00)

4.1.3. Civil Works: Contracts of works valued at less UA 3 million will be carried out under

National Competitive Bidding (NCB) procedures, and using the Bank Standard Bidding

Documents. Works procured under this method, estimated in aggregate at UA 8.10 million would

include all livestock infrastructures. Goods: Contracts for goods valued below UA 300,000 will

procured under shopping procedures. Goods procured under this method, would include: vehicles

(UA 0.23 million) and equipment (UA 0.39 million). Consulting Services: Procurement of

consulting services valued at UA 0.57 million covering consulting firms and individual consultants

will be under shortlisting using Selection Based and Consultants Qualifications (CQS) and Least

Cost Selection (LCS). Training amounting to UA 0.13 million will be carried out on the basis of

approved annual training programmes and work plan that will specify the training needs and nature

of activities which will be prior reviewed and approved by the Bank.

4.1.4. Operation Costs: amounting to UA 4.35 million will be undertaken using existing GoZ

operational systems to cover office space, staff salaries, staff allowances, operation and

maintenance of office blocks, equipment and vehicles.

4.1.5. Prior Review: the following documents will be subject to prior review and approval by the

Bank before promulgation (except for those indicated under Post Review, below): (i) general

procurement notices; (ii) specific procurement notices; (iii) prequalification invitation documents;

(iv) tender documents and requests for proposals from consultants including shortlist; (v) tender

evaluation reports or reports on evaluation of consultant proposals, including recommendations for

contract awards; (vi) draft contracts, if these have been amended and differ from the drafts included

in the tender documents; and (vii) modification of signed contracts. Post Review: Post procurement

review procedures will be applied for individual contracts of value less than the following

thresholds (i) Civil Works: UA 100,000, (ii) Goods: UA 50,000, and (iii) Services: UA 20,000.

4.1.6. Financial Management: The Bank carried out a financial management assessment of MAL

as the executing agency, in accordance with the Bank’s Guidelines for Financial Management and

Financial Analysis of Projects (2007) and ORPF FMS Tool Kit (Provisional, June 2010) to

9 Figures in parenthesis are the respective amounts financed by the ADF Loan. 10 Shortlist procedures in compliance with para 2.6 of the Bank rules. CQS = QBS applies to both Firms and Individual Consultants. 11 Other may be Shopping, identification of national/regional training institutions, recruitment of individual consultant and use of

approved Government procedures (Detailed methods for “other” are provided in the Annex B.5, Volume II of II).

13

determine whether MAL has acceptable financial management arrangements in place to ensure

judicious use of Project resources for the intended purpose. The overall residual risk for the Project

was assessed as moderate. The assessment therefore concluded that MAL’s financial management

capacity satisfy the Bank’s minimum requirements. The Bank will therefore use the existing

country financial management systems for managing LISP with appropriate mitigation measures.

4.1.7. Financial Reporting and External Audit: The overall responsibility for financial reporting

rests with the MAL Chief Accountant, as the head of the Finance Department. The Project

Accountant will work hand in hand with the Chief Accountant. Provincial and District Accountants

will provide the necessary backstopping at the local levels. In accordance with the Bank’s financial

reporting and audit requirements, the Project will be required to prepare and submit to the Bank

Interim Quarterly Progress Report (IQPR) not later than 30 days after the end of each calendar

quarter. Annual financial statement prepared and audited by the Office of the Auditor General

(OAG), including the auditor’s opinion and management letter will be submitted to the Bank not

later than six (6) months after the end of each fiscal year. The audit of the Project can be

subcontracted as necessary to a private audit firm to be procured through short-lists (with the

involvement of OAG) using the Bank rules and procedures. The cost of audit will be financed from

the loan if carried out by a private firm. Detailed financial management, disbursement and auditing

arrangements are included in Annex B.4 of Technical Annexes.

4.1.8. Disbursement Arrangement: The Project will use the Bank’s disbursement methods

including (i) Direct Payment, (ii) Special Account (SA) and (iii) Reimbursement methods in

accordance with rules and procedures as stipulated in the Disbursement handbook. A foreign

currency denominated Special Account in the Bank of Zambia (BoZ) and a local currency account

(ZMW) in the BoZ will be opened to be operated by MAL and used for financing eligible operating

and other recurring costs under the Project. To facilitate payment of eligible operating costs in

Lusaka as well as the PCT to be based in the Northern Province, two sub-accounts to be managed

by MAL as per the existing financial rules and regulations would be opened at two local

commercial banks (1 in Lusaka and 1 in Kasama) acceptable to the Bank.. Preparation of

withdrawal applications for funds into the SA, and documentation for all direct payments would be

under the overall responsibility of the MAL Chief Accountant. The Bank will issue a Disbursement

Letter of which the content will be discussed and agreed during negotiations.

4.2. Monitoring

Monitoring and Evaluation (M&E) will enable the PCT, MAL and key stakeholders to track

project implementation using indicators and targets as presented in the Result Based Logical

Framework (RBLF) at community (beneficiary), District, Provincial, PCT and MAL levels. The

M&E specialist will be responsible for the establishment of an M&E system using a participatory

approach in data collection, analysis and dissemination that will provide intermittent

methodological backstopping at the design, implementation and completion phases. The M&E

system will monitor physical and financial implementation progress while providing insights on

Project impact on beneficiaries. The GoZ has set up, within the NALEIC, the LIMS in animal

health, animal production, livestock and livestock products marketing and trade. LIMS aims at

serving as an effective tool for monitoring progress towards the livestock policy objectives. The

M&E system will be linked to LIMS. The Project will provide financial resources to facilitate the

required training, proper data gathering and processing. The generated LIMS reports will be

annexed to the LISP annual reports. The Project will provide funds for mid-term review, project

completion report and annual external audits, as indicated in the table below. The PCT will submit

to the Bank quarterly progress reports and annual work plans and budgets using Bank’s format. The

14

Bank will supervise the implementation of the Project through regular supervision missions which

will track implementation progress using key indicators including gender specific ones.

Time-Frame Milestones Monitoring Process (Feedback Loop)

Year 1 Baseline Survey/PPF – (Separate Activity) MAL, Provinces, Districts, NALEIC and

Consulting Firm (short-term consultancy).

Years 1 to 5 Project Implementation Communities, Districts, Provinces, PCT and MAL.

Years 1 to 5 Quarterly Progress and Annual Financial

Audit Reports PCT and External Audit Firm (Annually).

Year 3 Mid-Term Review Communities, Districts, Provinces, PCT, NALEIC

and Consultant.

Year 5 Beneficiary Impact Assessment Beneficiaries, PCT, NALEIC and Consultant.

Year 5 Project Completion Review Communities, Districts, Provinces, PCT and

Consultant.

4.3. Governance

Zambia has made significant progress in the area of accountability and transparency and has

relatively improved on key indicators of governance including control of corruption, rule of law,

regulatory quality and Government effectiveness. However, weaknesses remain in ensuring budget

credibility, non-fully compliance with internal control regulations, timely follow-up and

implementation of both internal and external audit recommendations. Mitigation measures to

address these issues include: (i) production of tailor-made financial management procedures manual

that will provide guidance to staff; (ii) using MAL Internal Audit to undertake pre-audit of Project

transactions; and (iii) procurement of off-the-shelf accounting software to record and process

transactions and interface it with IFMIS to facilitate timely project financial reporting given the

operational challenges with IFMIS, and (iv) enforcing a system of submitting interim quarterly

progress report (IQPR) not later than 30 days after end of each quarter.

4.4. Sustainability

LISP falls within the framework of the Government nationwide programme to enhance the

diversification of its economy through among others, development of livestock sub-sector. The

participatory approach adopted by the Bank in the design and the implementation of LISP is an

important step towards ensuring the relevance of the investments made and laying of an

institutional capacity at community level for sustainability of planned activities. To address critical

issue of poor maintenance services, the beneficiaries will be mobilised, organised into viable self-

reliant groups, trained and empowered to fully operate and maintain community infrastructure

developed by the Project. Community infrastructures will be wholly operated and maintained by the

beneficiaries through either registered cooperatives or leased out to the private sector after extensive

training, as per Government’s policy to ensure sustainability. The beneficiaries will be sensitized to

assume ownership of the community infrastructure. Public infrastructures will be managed by

District Councils or where appropriate by the Government Department which will include them in

the annual budget. Mechanisms will be put in place to collect fees from the use of infrastructures in

order to generate revenue for use during operation and maintenance.

15

4.5 Risk Management

4.5.1. Incompetent contractors: LISP will (i) pre-qualify contractors based on past performance,

(ii) use stringent evaluation methods and, apart from the technical details which the contractors and

suppliers will submit, before signing the contract, the contractors will be scrutinised through

contacting the previous employers and physical verifications, (iii) determine how many on-going

contracts the bidding contractors have, (iv) strictly follow-up contract execution, and (v) provide

contract management training to staff to ensure adequate capacity to execute signed contracts.

4.5.2. Low livestock population will result in underutilisation of the infrastructures: MAL/GoZ

has commenced the stocking programme to assist beneficiaries to increase livestock numbers and

performance with participating Provinces. LISP will enhance this programme through (i) building

capacity of livestock breeding centres, in LSC tier 3, to scale-up livestock production (ii) strategic

siting, design and prioritisation of proposed infrastructures to ensure their relevance and optimal

use by beneficiaries, (iii) building capacity of livestock owners in improved animal husbandry

practices, and (iv) the small-stock pass-on scheme and the pilot livestock stocking programme.

4.5.3. PCT base in Lusaka as opposed to the Project area: Lusaka is about 800 km from the

Project area, consequently PCT (core team) will be based in Kasama District (headquarters of

Northern Province) for proper monitoring of planned activities, on daily basis.

4.6 Knowledge Building

4.6.1. The Project is expected to generate considerable knowledge which will add value to the

overall design and management of similar future interventions. Lessons and experiences will be

shared within the Bank and other institutions interested in implementing projects. The Project will

promote the community participation and management of the livestock infrastructures. For

sustainability, the rural community infrastructures will be constructed or rehabilitated by the

community, either using their own workforce (cooperatives) or recruiting an artisan, with full

support from the Project. The Project will demonstrate that the livestock infrastructures can be ably

managed by the community if given the necessary support including start-up capital for the

livestock pass-on scheme which will revolve with time. The process of community engagement and

participation will be a learning pilot intervention point for the success and sustainability of LISP

and also useful database for other potential development projects being planned by GoZ. The

Project will work closely with gender related organisations (NGOs) and key stakeholders for

purposes of sharing information and learning materials on gender and women empowerment in

relation to livestock development.

4.6.2. LISP will also focus on capacity building for key staff and farmers (beneficiaries) who will

be fully involved in the planned activities based on the training needs assessment. Such activities

will be conducted throughout the Project period and is aimed at enhancing the knowledge transfer.

At LSC tier 3, the Project will construct a training centre mainly for smallholder farmer-courses.

The Project will also mount demonstrations on the use of biogas digesters, pasture development and

rangeland management. LISP has made adequate provision for periodic meetings of technical staff

and other livestock stakeholders to jointly review progress of implementation. This will provide a

good learning opportunity to the implementing communities. Scheduled PSC annual meetings and

also the quarterly meetings between PCT and Provincial/District staff will be conducted. DPs and

NGOs that plan to establish similar livestock infrastructures will benefit from the quarterly and

annual progress reports which will be produced and distributed by the PCT as these will form part

of the knowledge transfer and dissemination tools.

16

V – LEGAL INSTRUMENTS AND AUTHORITY

5.1. Legal Instruments

5.1.1 ADF Loan to the Republic of Zambia

5.2. Conditions Associated with Bank’s Intervention

5.2.1 Conditions Precedent to Entry into Force: The entry into force of the Loan Agreement shall

be subject to the fulfilment by the Borrower of the provisions of Section 12.01 of the General

Conditions of the Fund.

5.2.2 Conditions Precedent to First Disbursement: The obligation of the Fund to make the first

disbursement of the Loan shall be conditional upon entry into force of the Loan Agreement and the

following conditions, namely, the Borrower/Recipient shall have provided evidence in form and

substance acceptable to the Bank:

a. of having opened one (1) foreign currency Special Account and one (1) local currency account

at the Central Bank of Zambia for the deposit of the proceeds of the Loan, and two (2) sub-

accounts to be managed by MAL in accordance with the Fund’s financial rules and

regulations at two (2) local commercial banks that are acceptable to the Fund in Lusaka and

in Kasama (para 4.1.11).

5.2.3 Other Conditions: The Borrower shall have:

a. provided evidence of recruitment of the local experts in form of Project Coordinator,

Procurement Specialist, M&E Specialist (to be based in Kasama District) and Project

Accountant (to be based in Lusaka, MAL Hq) with skills and qualifications acceptable to

the Bank (para 4.1.1), within six months upon signature of the loan agreement; and

b. provided evidence for the establishment of the Project Steering Committee (para 4.1.1),

within six months upon signature of the loan agreement.

5.3. Compliance with Bank Policies

This Project complies with all applicable Bank policies.

Non-standard conditions (if applicable): N/A

VI – RECOMMENDATION

Management recommends that the Board of Directors approve the proposed ADF Loan not

exceeding an amount of UA 12.00 million to the Government of Zambia to finance the Livestock

Infrastructure Support Project (LISP), subject to the conditions stipulated in this report.

I

Zambia - Comparative Socio-economic Indicators (June 2012) Appendix 1

II

ADB’s Active Portfolio in Zambia (January 2013) Appendix 2

No Sector Long name Finance

Source

Loan Number Approval

Date

Signature

Date

Effective

Date

Closing

Date

Approved

Amt. (UA)

Disbursed

Amt. (UA)

Disb.

Ratio

IP DO PFI STATUS Age (Yrs)

National Operations (Public)

1 Agriculture COMMUNITY WATER

MANAGEMENT IMPROVEMENT

AWTF 5600155001751 12-Nov-09 23-Apr-10 23-Apr-10 31-Dec-13 659,218 527,769.66 80.1% 2.33 3.00 NON PP / NON

PPP 3.05

2 Agriculture FINISH SUPPORTED SMALL

SCALE IRRIGATION

Trust

Fund

2100150001106 28-Dec-09 30-Oct-10 30-Oct-10 5/30/2014 8,137,881 3,857,355.7

9

47.4% 2.29 2.75 NON PP / NON

PPP 2.93

Sub-Total (Agriculture) 8,797,099 4,385,125 49.8%

3 Water &

Sanitation

NKANA WATER SUPPLY

AND SANITATION PROJ.

ADF 2100150018345 27-Nov-08 22-Dec-08 12-Jun-09 31-Dec-13 35,000,000 11,130,000.

00

31.8% 2.57 2.67 NON PP / NON

PPP 4.01

4 Water &

Sanitation

RURAL WATER SUPPLY &

SANITATION PROGRAM

ADF 2100150013198 31-Oct-06 17-May-07 15-Nov-07 30-Jun-13 15,000,000 4,543,500.0

0

30.3% 2.50 3.00 NON PP / NON

PPP 6.09

Sub-Total (Water & Sanitation) 50,000,000 15,673,500 31.3%

5 Power ITEZHI-TEZHI POWER

TRANSMISSION PROJECT

ADF 2100150027396 13-Jun-12 TBD TBD 31-Dec-18 30,000,000 0.00 0.0% 0.00 0.00 NO

SUPERVISION 0.47

NTF 2200160000989 13-Jun-12 TBD TBD 31-Dec-18 6,400,000 0.00 0.0% 0.00 0.00 NO SUPERVISION

0.47

Sub-Total (Power/Energy) 36,400,000 - 0.0%

Multi-National Operations

6 Multinational PROG. D'AMENAG. LAC

TANGANYIKA(ZAMBIA)

ADF 2100150009044 17-Nov-04 18-May-05 29-Sep-09 30-Sep-13 3,260,000 1,070,258.0

0

32.8% 1.50 1.75 NON PP / NON

PPP 8.04

7 Multinational BOTSWANA/ZAMBIA-

KAZUNGULA BRIDGE PROJECT

ADF 2100150025694 7-Dec-11 10-Feb-12 3-Sep-12 31-Dec-18 51,000,000 0.00 0.0% 2.50 2.33 NON PP / NON

PPP 0.99

8 Multinational NACALA CORRIDOR

PROJECT PHASE

II(ZAMBIA)

ADF 2100150022945 27-Sep-10 20-Jan-11 10-Jun-11 31-Mar-15 69,369,000 194,233.20 0.3% 2.31 3.00 NON PP / NON

PPP 2.18

Sub-Total (Transport) 123,629,000 1,264,491 1.0%

Private Sector Operations

9 Power ITEZHI-TEZHI POWER PROJECT

ADB 2000130008981 13-Jun-12 TBD TBD 31-Dec-18 23,174,818 0.00 0.0% 0.00 0.00 NO SUPERVISION

0.47

10 Power ITEZHI-TEZHI POWER

STAND BY PROJECT

ADB 2000130009331 13-Jun-12 TBD TBD 31-Dec-18 1,986,413 0.00 0.0% 0.00 0.00 NO

SUPERVISION 0.47

11 Finance PFSL- FAPA TA - ZAMBIA FAPA 5700155000601 13-Jul-09 13-Jul-09 4-Sep-09 31-Dec-14 935,000 805,035.00 86.1% 0.00 0.00 NA 3.39

Sub-Total (Finance/Private Sector) 26,096,231 805,035 3.1%

Portfolio Summary 244,922,330 22,128,152 9.0% 2.42 2.86 2.71

III

Projects Financed by the Bank and Other Development Partners Appendix 3

Donor

Agency Program Title Project Coverage

Total Budget

(USD)

Implementation

Organisation

Project

Status

AfDB

Lake Tanganyika Regional

Development Programme

(PRODAP)

Mpulungu, Kaputa 5,004,100

Ministry of Lands,

Environment and natural

Resources

On-going

Community Water

Management Improvement

Project for traditional Farmers

Mkushi, Kapiri

Mposhi, Masaiti

and Chingola

942,140 Development Aid from

People to people (DAPP) On-going

Finland Small-scale Irrigation Project

(SIP)

Chongwe,

Mazabuka,

Sinazongwe

12,600,000 Ministry of Agriculture

and Livestock On-going

Norway

Conservation Agricultural

Program Phase II AEZ 1&2 28,000,000

Conservation Farming

Unit (CFU) On-going

Expanded Food Security Pack AEZ 2 2,571,429

Min of Community

Development. Mother and

Child Health

On-going

Community Markets for

Conservation - COMACO Eastern Province 8,600,000

Wildlife Conservation

Society/COMACO On-going

European

Union

Agricultural Sector

Performance Enhancement

Programme

Nationwide 11,659,000 Ministry of Agriculture

and Livestock On-going

FAO

Integrated Land Use

Assessment II Nationwide 3,953,096

Ministry of Land, Natural

Resources &

Environmental Protection

Forestry Department

On-going

UN-REDD Programme –

Zambia Quick Start Initiative Nationwide 2,180,000

Ministry of Land, Natural

Resources &

Environmental Protection

Forestry Department

On-going

IFAD

Smallholder Livestock

Investment Project (SLIP)

North-Western,

Western, Southern,

Eastern and

Northern

14,990,000 Ministry of Agriculture

and Livestock On-going

Smallholder Agribusiness

Promotion Programme (SAPP) 20-30 districts 24,500,000

Ministry of Agriculture

and Livestock On-going

Smallholder Productivity

Promotion Programme (S3P)

(co-financed by Finland)

Luapula and

Northern Provinces 39,900,000

Ministry of Agriculture

and Livestock On-going

JICA

Rural Extension Service

Capacity Advancement Project

(RESCAP)

Northern, Western

and Lusaka

provinces

9,000,000 Ministry of Agriculture

and Livestock On-going

Rural and Agriculture

Development Advisor Nationwide 1,300,000

Ministry of Agriculture

and Livestock On-going

Food Crop Diversification

Support Project Focusing on

Rice (FoDiS-R)

Muchinga, N/P&

WP and follow up

in EP, SP, WP &

Lusaka P

3,100,000 Ministry of Agriculture

and Livestock On-going

Technical Cooperation Project

for Community based

Smallholder Irrigation (T-

COBSI)

Main Luapula,

Northern and

Muchinga,

Copperbelt and

North Western

Provinces

5,800,000 Ministry of Agriculture

and Livestock On-going

USAID

Production, Finance &

Technology (PROFIT +) Eastern Province 24,000,000 ACDI/VOCA On-going

Food Security Research Project

(FSRP), Phase III Nationwide 12,499,501

Michigan State University

(MSU), Indaba

Agricultural Policy

Research Institute

(IAPRI)

On-going

IV

Donor

Agency Program Title Project Coverage

Total Budget

(USD)

Implementation

Organisation

Project

Status

Expanding Impact in USAID

Supported Value Chains Eastern Province 1,998,519

Action for Enterprise

(AFE) On-going

Horticulture Global

Development Alliance

Eastern Province

and Peri-urban

Lusaka

4,800,000

ASNAPP, Freshmark,

Freshpikt, Stellenbosch

University and CETZAM

On-going

Zambia Agriculture Research

and Development Project Eastern province 18,000,000

CGIAR: IITA, CIMMYT,

ICRISAT, CIP, CIAT,

World Fish Center,

Harvest Plus,

On-going

Better Life Alliance Global

Development Alliance (GDA) Eastern Province 6,626,605

COMACO; General Mills

and Cargill. On-going

World

Bank

Agriculture Development

Support Program National 37,200,000 MAL On-going

Irrigation development and

Support project 3 Sites 115,000,000 MAL On-going

Livestock Development and

Animal health project Selected provinces 50,000,000 MAL On-going

WFP

Home grown school feeding

programme

Western, Southern,

North-Western,

Northern, Luapula,

Muchinga, Central

And Eastern

Provinces

34,672,210 MoE, MAL On-going

Milk for schools Nationwide 629,412 MAL On-going

Disaster Risk Management Nationwide 780,000 DMMU, FAO On-going

Food Security for vulnerable

groups Nationwide 15,480,006 UNHCR, On-going

DfID

Support to Musika - Making

Agricultural Markets Work for

Zambia

Nationwide 7,144,000 Musika on-going

Access to Finance (includes

rural finance) Nationwide 21,432,000 Bank of Zambia and FIs on-going

V

Map of the Project Area Appendix 4a

Muchinga

Northern

LISP Provinces

VI

Project Provinces and Districts12

with Tentative List of Livestock Infrastructures Appendix 4b

No

Pro

vin

ce

District

Rural Community Infrastructures (Qty = Number) Public Infrastructures (Number, unless stated)

1 2 3 4 5 6 7 8 9 10 11 12 13

LSC13

Tier 1

LSC

Tier 1+

LSC

Tier 2 Mil

k

Co

llec

tio

n

Cen

tres

Liv

esto

ck

Ma

rket

Cen

tres

Liv

esto

ck

Sla

ug

hte

r

Fa

cili

ties

Fee

der

Ro

ad

s

(km

)

Reg

ion

al

Vet

erin

ary

La

bo

rato

ries

Dis

tric

t

Vet

erin

ary

La

bo

rato

ries

Qu

ara

nti

ne

Sta

tio

ns

Liv

esto

ck

Ser

vic

e

Cen

tre T

ier

3

Vet

erin

ary

Ch

eck

Po

ints

Vet

erin

ary

Ch

eck

Po

ints

(Bo

om

Ga

te)

1

Mu

chin

ga

1. Mafinga 18 1 1 0 0 1 5 1 0 0 0 0 114

2. Isoka 9 1 0 0 0 0 5 0 0 0 0 0 0

3. Mpika 12 3 1 1 0 1 10 0 1 0 0 115

0

4. Nakonde 21 2 1 0 1 1 5 0 1 1 0 0 116

5. Chinsali 15 2 1 0 0 1 15 0 1 0 1 0 0

Sub-total 75 9 4 1 1 4 40 1 3 1 1 1 2

2

No

rth

ern

1. Mbala 24 3 1 1 1 1 10 0 1 1 0 117

0

2. Kasama 18 1 0 1 0 1 10 118

119

0 0 0 0

3. Mungwi 18 2 0 0 0 1 5 0 1 0 0 0 0

4. Mporokoso 21 1 0 0 0 1 15 0 1 0 1 0 1

Sub-total 81 7 1 2 1 4 40 1 4 1 1 1 1

Project Total 156 16 5 3 2 8 80 2 7 2 2 2 3

12 The Districts were selected on the basis of livestock population, potential growth trends, despite the current low population, animal movements/routes to and from Tanzania and Malawi and also high marketing potential in the

border Districts leading to demand for livestock infrastructures for disease control. 13 LSC = Livestock Service Centre. 14 Check point located at Katanga on the Chama-Muyombe road. 15 Mpika check point will be located at Kanona (existing ZAWA Check Point) in Chitambo District (Central Province), junction Great North Road and Mpepetwe Road. 16 Check point located at Nteko at Chozi Turn Off on the Mbala-Nakonde road. 17 The Mbala check point will be located along Mbala – Kasama Highway. 18 The Government (2013) has made provision for construction of Regional Laboratory in Kasama District. LISP will provide additional equipment only, if need be. 19 Misamfu Livestock Feeds Mini-Laboratory and Equipment (Kasama District).

VII

Basic Definition of Livestock Infrastructures Appendix 4c

Rural Community Infrastructure

Construction of 156 livestock service centres Tier 1, each with basic structures including

crush pen, holding pen, water trough, feeding trough, water supply (borehole & overhead tank)

and improved pit latrines.

Construction of 16 livestock service centres Tier 1+, each with basic structures as for Tier 1

plus either a dip tank or spray race.

Construction of 5 livestock service centres Tier 2, each with structures as for Tier 1+, in

addition loading and off-loading bays, resting-shelter, 2 low cost staff houses, office/store

room, office-equipment, Artificial Insemination (AI) mini-kit, and electricity (national grid,

solar or wind-power).

Construction of 3 milk collection centres with reception hall, office/store room and

appropriate equipment (like cooler tank, lactoscan), water supply (borehole & overhead tank),

electricity, waste management area and improved pit latrines.

Upgrading of 2 livestock market centre in Nakonde and Mbala Districts through provision of

modern facilities including off-loading and loading bays, holding pens, cages/shelves, ablution

(waste room/garbage yard), office block, store room, drainage system, borehole & overhead

tank, pit latrines, gravel-access road, security fence and parking area.

Construction of 8 slaughter facilities/houses each with office block/store room, external

drainage system, waste management area, separate hygienic slaughter facilities (for cattle and

small-stock) with amenities, hides and skins treatment and storage sheds, water supply

(borehole & overhead tank), electricity (national grid, solar or wind-power), improved pit

latrines, gravel-access road, security fence, parking area, sewage reticulation and septic tank.

Public Infrastructures

Rehabilitation of 80 km (total length) of existing rural feeder roads with proper drainage

system and crossing points like culverts.

Construction/rehabilitation of 3 livestock service centres (Tier 3), each with structures

including crush pen, holding pen, water trough, feeding trough, dip tank, weighing scale,

loading and off-loading bays, marketing unit, 1 high, 2 medium, and 7 low-cost camp/staff

houses, office & store room, appropriate equipment, training centre/dormitories, biogas

digester (for demonstration), demonstration structures (goat housing, pig pens and poultry

pens/housing), borehole & overhead tank, improved pit latrines, proper landscaping, external

drainage system and waste management area. Tier 3 facilities shall be constructed in Mbesuma

and Kalungwishi Livestock Ranches.

Upgrading of 2 Regional and 7 District Veterinary Laboratories involving renovation of

buildings and improvement of external works, water reticulation system or borehole &

overhead tank, provision of essential laboratory furniture and equipment.

Establishment of 2 Quarantine Stations with holding area, office block, 3low cost staff

houses, and borehole & overhead tank and power source.

Construction of 3 veterinary boom gate check points each with 1 boom gate, a guard house,

1 low cost staff house, borehole & overhead tank, electricity (national grid, solar or wind-

power) and improved pit latrines.

Construction of 2 Veterinary Check Points each with loading/offloading bays, holding pen,

mini-quarantine station, crush pen, 1 office block including store room, 2 medium and 3 low

staff houses and a block of 3 self-contained rooms, borehole & overhead tank, electricity,

provision of essential equipment and communication facilities.

VIII

Calculation of Economic and Financial Internal Rates of Return Appendix 5

2013 1 2 3 4 5 6 7 to 20

Inventory growth rate without project 1,063 1,063 1,063 1,063 1,063 1,063 1,063 1,063

Inventory without project 68801,2 73 136 77 743 82 641 87 847 93 382 99 265 105 519

Offtake without project 0,12 8 776 9 329 9 917 10 542 11 206 11 912 12 662

Inventory growth rate withproject 0,1 1,06 1,06 1,06 1,10 1,10 1,10 1,10

Inventory with project 68801,2 73 136 77 743 82 641 90 905 99 996 109 995 120 995

Offtake with project 0,16 8 776 9 329 9 917 14 545 15 999 17 599 19 359

Incremental offtake - - - 4 003 4 793 5 687 6 697

Incrmental carcasse weight (kg) 168 - - - 640 501 766 958 909 992 1 071 509

Economic Price 50 50 50 50 50 50 50 50

Economic value - - - 16 012 529 28 760 929 45 499 618 53 575 468

Inventory growth rate without project 1,12 1,12 1,12 1,12 1,12 1,12 1,12 1,12

Inventory without project 63772,15 71 425 79 996 89 595 100 347 112 388 125 875 140 980

Offtake without project 0,31 22 142 24 799 27 775 31 107 34 840 39 021 43 704

Inventory growth rate withproject 1,15 1,12 1,12 1,12 1,15 1,30 1,30 1,30

Inventory with project 63772,15 71 425 79 996 89 595 150 541 195 703 254 414 330 738

Offtake with project 0,38 22 142 24 799 27 775 57 205 74 367 96 677 125 680

Incremental offtake - - - 26 098 39 527 57 656 81 977

Incrmental carcasse weight (kg) 23 - - - 600 254 909 115 1 326 088 1 885 462

Economic Price 45 35 35 35 35 35 35 35

Economic value - - - 21 008 875 31 819 012 46 413 086 65 991 187

Additional poultry production - - - 20 408 621 30 909 897 45 086 998 64 105 724

Economic value - - - 6 897 106 16 208 199 28 571 261 44 775 149

Incremental heifers 0 - - - 1 835 3 968 6 438 9 286

Additional milk production (l) 2500 - - - 4 586 578 9 920 768 16 095 536 23 214 290

milk cash flow 4,5 - - - 20 639 601 44 643 458 72 429 913 104 464 307

Total incrimental cash flow - - - 64 558 111 121 431 596 192 913 877 268 806 110

Production costs

catlle 0,45 - - - 7 205 638 12 942 418 20 474 828 24 108 960

goats 0,65 - - - 13 655 769 20 682 357 30 168 506 42 894 272

poultry 0,6 - - - 4 138 263 9 724 919 17 142 756 26 865 089

Milk 0,6 - - - 15 479 701 62 248 530 105 295 861 158 489 052

Total incrimental costs - - - 40 479 371 105 598 224 173 081 951 252 357 373

Investment costs 13 910 969 56 719 204 27 355 395 7 163 966 6 824 218

Recurrent cost -

Total costs 13 910 969 56 719 204 27 355 395 47 643 338 112 422 443 173 081 951 252 357 373

Project cash flow 13 910 969 - 56 719 204 - 27 355 395 - 16 914 774 9 009 154 19 831 926 16 448 737

NVP (12%) 4.38 million

EIRR 22%

ECONOMIC ANALYSIS

IX

2 013 1 2 3 4 5 6 7 to 20

Inventory grow th rate w ithout project 1,06 1,06 1,06 1,06 1,06 1,06 1,06 1,06

Inventory w ithout project 68 801 73 136 77 743 82 641 87 847 93 382 99 265 105 519

Offtake w ithout project 0,12 8 776 9 329 9 917 10 542 11 206 11 912 12 662

Inventory grow th rate w ithproject 0,10 1,06 1,06 1,06 1,10 1,10 1,10 1,10

Inventory w ith project 68 801 73 136 77 743 82 641 90 905 99 996 109 995 120 995

Offtake w ith project 0,16 8 776 9 329 9 917 10 909 15 999 17 599 19 359

Incremental offtake - - - 367 4 793 5 687 6 697

Incrmental carcasse w eight (kg) 168 - - - 61 644 805 306 955 492 1 125 085

market Price 30 30 30 30 30 30 30 30

gross income - - - 924 654 18 119 385 28 664 759 33 752 545

Inventory grow th rate w ithout project 1,12 1,12 1,12 1,12 1,12 1,12 1,12 1,12

Inventory w ithout project 63 772 71 425 79 996 89 595 100 347 112 388 125 875 140 980

Offtake w ithout project 0,31 22 142 24 799 27 775 31 107 34 840 39 021 43 704

Inventory grow th rate w ithproject 1,15 1,15 1,15 1,15 1,15 1,15 1,15 1,15

Inventory w ith project 63 772 71 425 79 996 89 595 103 035 118 490 136 263 156 703

Offtake w ith project 0,38 22 142 24 799 27 775 29 365 45 026 51 780 59 547

Incremental offtake - - - 1 743 - 10 186 12 759 15 843

Incrmental carcasse w eight (kg) 23 - - - 40 080 - 234 272 293 452 364 395

Price 35 35 35 35 35 35 35 35

gross income - - - 1 402 816 - 8 199 512 10 270 834 12 753 821

Additional poultry production - - - 1 362 735 - 7 965 240 9 977 381 12 389 426

gross income - - - 6 897 106 16 208 199 28 571 261 44 775 149

Incremental heifers - - - - 1 835 3 968 6 438 9 286

Additional milk production (l) 2 500 - - 2 981 276 6 448 499 10 462 099 15 089 289

milk cash flow 4,50 - - - 13 415 741 29 018 247 47 079 443 67 901 799

Total incrimental cash flow - - - 19 834 685 71 545 343 114 586 297 159 183 314

Production costs

catlle 0,65 - - - 601 025 11 777 600 18 632 093 21 939 154

goats 0,55 - - - 771 549 - 4 509 731 5 648 959 7 014 602

poultry - - - 4 138 263 9 724 919 17 142 756 26 865 089

Milk 0,60 - - - 8 049 445 17 410 948 28 247 666 40 741 080

Total incrimental costs - - - 12 017 185 43 423 199 69 671 474 96 559 925

Investment costs 13 910 969 56 719 204 27 355 395 7 163 966 6 824 218

Recurrent cost 23 143 400

Total costs 13 910 969 56 719 204 27 355 395 19 181 151 50 247 418 69 671 474 119 703 325

Project cash flow 13 910 969 - 56 719 204 - 27 355 395 - 653 534 21 297 925 44 914 822 39 479 989

NVP (US$ 12%) 4.02 million

EIRR 20%

Catlle

Goats

Milk

FINANCIAL INTERNAL RATE OF RETURN

Poultry