Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-6186 TUN MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN THE AMOUNT EQUIVALENT TO US$27.5 MILLION TO THE REPUBLIC OF TUNISIA FOR A NORTHWEST MOUNTAINOUS AREAS DEVELOPMENT PROJECT December 6, 1993 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its cntents may not otherwise be disclosed without World Bank authorization. (September 1993) Currency Unit = Tunisian Dinar (DT) US$1.00 = D 0.987 D 1.00 = US$1.01 FISCAL YEAR January I - December 31 GLOSSARY OF ABBREVIATIONS ASAL Agricultural Sector Adjustment Loan ASE Agricultural Sector Investment Loan BNA Banque Nationale Agricole CDA Centre de D6veloppement et d'Animation CRDA Commissariat R6gional do D6veloppement DDC Douar Development Committee DDP Douar Development Plan DCU Douar Credit Union DG Direction G6nrale DR Direction R6gionale EDA Extension-Development Agents EEC European Economic Community FAO-CP Food & Agricultural Organization - Cooperative Program FA Force Account GIS Geographic Information System GOT Government of Tunisia GTZ Deutsche Gesellachaft fUr Technische Zusammenarbeit (German Technical Assistance) IRD International Bank for Reconstruction and Development ICB International Competitive Bidding IDA International Development Association IkBSA Institut do la Recherche et de I'Easeignement Sup6rieurs Agricoles KtW Kredifanstalt fir Wiederautbau of the Federal Republic of Germany LCB Local Competitive Bidding M&E Monitoring and Evaluation NGO Non-Governmental Organization NWMADP Northwest Mountainous Areas Development Project NWRDP Northwest Rural Development Project O&M Operations and Maintenance ODESYPANO Ofice du D6veloppement Sylvo-Pastoral du Nord-Ouest RF Research Fund SMS Subject-Matter Specialist WD World Bank WFP World Food Program FISCAL YEAR January I - December 31 FOR OFFICIAL USE ONLY REPULC OFTUIA NORTHWEST MOUN'AINOUS AREAS PEVELOPMENT PROJECT Loa ad Protec Summary Republic of Tunisia Amont: US$27.5 million equivalent Repayable in 17 years, including a five-year grace period, at the Bank's standard variable interest rate Financina Plan: USsMillion Government of Tunisia 19.5 Beneficiaries 3.7 IBRD 27.5 Total 50.7 Rate of Return: 14 percent PRty C M: Program of Targeted Interventions Environmental Category: B Staff ADRaisal Repor: No. 12431-TUN Ma No. IBRD 25128 IBRD 25129 This document has a restricted distribution and may be used by rmepients only in the performance of their offlicial duties. Its contents may not otherwise be disclsed Yithout World Bank authorztion. MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$27.5 MILLION TO THE REPUBLIC OF TUNISIA FOR A NORTHWEST MOUNTAINOUS AREAS DEVELOPMENT PROJECT 1. I submit for your approval the following memorandum and recommendation on a proposed loan to the Republic of Tunisia for the equivalent of US$27.5 million to help finance a project for the development of the mountainous areas. The loan would be at the Bank's standard variable interest rate, with a maturity of 17 years, including five years of grace. Bacgrund 2. Despite significant improvements in the incomes and living conditions of its population, about 7 percent of Tunisia's population or an estimated half-million people still live in poverty. The majority of the poor live in rural areas and the concentration of the poor is significantly higher in the Northwest region where 33 percent of the poor live. Average household expenditures in this region are less than 60 percent of the national average. The cause of this poverty is both low productivity and lack of essential infrastructure and basic social services. Agricultural yields are low -the result of inappropriate farming practices, soil erosion, limited adoption of new technologies, and low levels of investment. Soil degradation is widespread lowering agricultural productivity and causing siltation of important dams in the region. Moreover, the region lacks such basic infrastructure as feeder roads, potable water, health centers and schools. Unemployment is high resulting in large outmigration of male heads of household, further contributing to the ranks of the poor in urban areas and other regions. To increase the income and improve the living conditions of the population of the region and to reduce further degradation of its natural resource base, the Government prepared a 15-year program and launched in 1982, the Bank-funded Northwest Rural Development Project (NWRDP) (1997-TUN). The project supported the first part of this program and was completed in 1989. The Bank also provided financing through ASAL 1 (3078-TUN) for the interim period 1990-93. 3. Poverty reduction and development of the Northwest region remain Government priorities. At a Government-organized conference in Tunisia in July 1992, participants-including government officials, farmers, NGOs, and external development agencies-discussed poverty reduction strategies for the region and agreed on the need for: (a) an integrated approach which recognizes the .interrelationship between decline in agricultural productivity, natural resource degradation, and rural poverty; (b) a participatory approach to ensure the involvement of beneficiaries in project selection, preparation, execution; and (c) provision of enabling infrastructure and essential support services. The proposed Northwest Mountainous Areas Development Project (NWMADP) was prepared by the Government with the assistance of the FAO/CP and is based largely on the successful experience of GTZ- financed pilot activities in the same geographic region. It was pre-appraised by the World Bank in January 1993 and appraised in June 1993. Rationale for Bank Involvement 4. The proposed project fits well with the Bank's Country Assistance Strategy discussed in the Board in May 1993. This strategy identifies poverty reduction and natural resource management as key developmental issues for Tunisia in which the Bank will play a leadership role, helping the Government through lending, analytical work, and donor coordination. The Government requested that -2- the Bank support a project that builds on the experience of the NWRDP and follows the principles agreed at the above cited conference. Because of its broad experience with poverty reduction and natural resource management projects, the Bank is well-placed to assist the government in guiding and supporting a rural poverty reduction project with a strong emphasis on natural resource improvement. The Bank's participation has, moreover, served as a catalyst in mobilizing funds and assistance from other sources (eg. GTZ, KfW, EEC, WFP) in financing complementary activities in the same geographic region. Finally, this project complements the Bank's operations under the on-going Research and Extension Project (Loan 3217-TUN), the Second Forestry Development Project (Loan 3601-Tun), as well as the Agricultural Sector Investment Loan (approved by the Board on November 18, 1993) and the Rural Finance and the National Rural Roads Projects which are at an advanced stage of preparation. Each of these would support complementary activities in the region. The Prolect 5. Project Objectives. The principal objectives of the Northwest Mountainous Areas Development Projct (NWMADP) are to improve the living conditions of the region's population and to arrest degradation of the natural resource base with the active involvement of the population. To this end, it would: (i) promote measures to increase farm productivity and off-farm income supporting activities; (ii) support measures to reduce erosion, run-off and reservoir sedimentation; (iii) improve the management and productivity of range and farm land; (iv) improve social conditions of the disadvantaged population by providing essential infrastructure and basic social services; and (v) foster increased responsibility and involvement of the local population in the planning and management of sustainable development. The project is also expected to serve as a model for a participatory strategy in poverty alleviation and natural resource management for possible replication in other regions of Tunisia and elsewhere. 6. Project Description. The project would finance the following components: (a) Agricultural development which would enhance farm productivity through improved crop production practices and increased emphasis on livestock; it would also support land titling through land surveys; (b) Watershed and rangeland management which would involve measures to reduce erosion, run-off, and reservoir sedimentation, and to improve rangelands' management by restoring and sustaining vegetative cover with the full participation of village communities; (c) Income-supporting activities which would support, on a pilot basis, the establishment of credit unions for "douars" (groups of settlements) to promote financially viable on- farm and off-farm rural enterprises with the support of local NGOs which would establish, manage and supervise these credit unions; (d) Applied research which would support demand-driven short-term research on key technical and socio-economic development constraints of the region; -3- (e) Basic inkastructure which would involve the construction of rural roads to provide access to isolated villages, schools, health centers and potable water sources including farm ponds to improve the social conditions of the disadvantaged population; and (f) Iustitutional strengthening which would strengthen the technical and implementation capability of the executing agency and the planning capability of village committees through technical assistance and training. 7. Project Implementation. The Northwest Sylvo-Pastoral Development Authority (ODESYPANO), established under the Bank-financed Northwest Rural Development Project (NWRDP), would be responsible for the coordination, management and monitoring of the project. ODESYPANO would be reorganized and appropriately staffed to ensure effective execution of the project with active beneficiary participation. The reorganization would involve strengthening of its technical and planning capability. The project would adopt a participatory approach, which grew out of the lessons learned from a pilot scheme under the completed Northwest Rural Development Project (NWRDP). The participatory strategy involves a partnership between the project's executing agency and the beneficiaries who would be organized into groups of settlements or "douar." The project's extension agents would provide help in organizing village associations and electing their Douar Development Committees (DDCs). These DDCs, comprised of elected village members, would be responsible for articulating the community's development needs. Based on discussions with the executing agency, a Douar Development Plan (DDP) would be prepared which would set the development priorities, define actions and specify investments. An action plan between ODESYPANO and the DDC would be prepared on the basis of the DPP and would define the obligations of each party in the execution of selected sub-projects. Project staff would be responsible for the project's technical supervision, procurement and overall coordination, and the village groups would participate in the selection of sub-projects, construction and maintenance of rural infrastructure works. 8. Cost and Financing. The total cost of the project is estimated at about US$50.7 million. The proposed loan of US$27.5 million would finance about 55 percent of total project costs (or 100 percent of the estimated foreign exchange cost and 40 percent of the local cost portion of the project cost net of taxes). The Government would finance US$19.5 million equivalent in local currency, including taxes and duties estimated at US$8.2 million (16 percent of total project costs). Beneficiaries would participate by contributing in the form of their labor an estimated US$3.7 million equivalent. A breakdown of project costs and the financing plan are shown in Schedule A. Amounts and methods of procurement, disbursements categories, and the disbursement schedule are shown in Schedule B. Since most sub-projects would be small, remote, and dispersed both geographically and over time, it is unlikely that they would be of interest to foreign bidders. Therefore, LCB procedures have been provided for civil works. The experience of the completed NWRDP confirms this approach. Soil conservation works and other civil works in difficult terrain, would not be of interest to the contracting industry, and therefore would likely need to be carried out through force account by ODESYPANO, which has established a capacity for this purpose with Bank support under the NWRDP, and has experience in these types of works. Force account, however, would result when there is no local contractor identified to do the work and requires the Banks prior approval. 9. Actions Agreed. During negotiations, assurances have been obtained that ODESYANO would (a) put in place key project staff essential for project implementation in accordance with an agreed timetable; (b) prepare, by December 31 of each year, an annual work program for the following year -4- detailing project activities covering training, procurement, formation of village groups and DDCs and DDPs, studies, on-farm demonstrations and research; and will review the plan annually jointly with the Bank; (c) engage at least one local NGO, not later than December 31, 1994, to establish, manage and supervise the Douar Credit Unions (DCUs) on the basis of terms of reference satisfactory to the Baok;(d) carry out, not later than December 31, 1994, in accordance with terms of reference satisfactory to the Bank: (i) a study to define lending terms and conditions of operations of the DCU and review the results of this study with the Bank to determine DCU lending terms and conditions; (ii) a study to identify potential for, and existing constraints to the development of rural enterprises in the project area and formulate a suitable action plan; and imp!iment the recommendations of such studies not later than June 30, 1995; (e) ensure that farm ponds to be constructed under the project shall not: (i) exceed ten meters in height above stream bed; (ii) create a reservoir exceeding 50,000 n?; (iii) involve expropriation of property or any resettlement of local population; and (iv) present unusual design features inv( iving difficult geological conditions; and prepare a feasibility study for Bank prior review and approval; (f) carry out two interim reviews jointly with the Bank, the first not later than June 30, 1996 and the second not later than March 31, 1998, to assess progress in project implementation. As a condition of effectiveness, the Borrower would establish a Research Committee to manage the Research Fund created under the project in accordance with terms of reference satisfactory to the Bank. As a condition of loan disbursement for construction of farm ponds only, ODESYPANO would carry out the aforementioned feasibility study covering technical and environmental aspects and present the study to the Bank for its review and approval before construction of farm ponds. 10. Lessons Learned from Previous Bank Involvement. The main lessons are: (a) sustainable development of resource-poor areas can only be achieved through beneficiary participation in project planning and implementation; (b) projects which depend on a participatory approach through promotion of village groups require a longer preparation period; (c) the need for a thorough understanding of prevailing farming practices and the importance of testing technologies before they are introduced on a large scale. Four features derived from the lessons on a Bank-wide basis and specifically from a pilot operation under the completed NWRDP have been incorporated in the design of this project. First, a participatory approach has been adopted since the early stages of preparation of this project, as evidenced by the participation of beneficiary representatives, government officials and donors in a workshop organized by the Government. To include as wide a participation as possible, the project was prepared over a four-year period of intensive discussion and reflection. Second, in view of the executing agency's centralized structure, it has been reorganized into a more decentralized system more adapted to the participation of village communities. Furthermore, a plan and timetable has been agreed with the Government for the disengagement of ODESYPANO from certain activities (e.g., input supply, credit, milk collection) to meet the challenges of participatory development. Third, to improve the chances of adoption of improved farming systems, the project would promote technological packages that have already been tested in the project area. The experience under a pilot scheme provided valuable experience in integrated farming systems linking crop, animal production and soil conservation activities, which has been successful. Fourth, to promote the participation of women, the project would recruit and train women extension-development agents, and would support specific actions to improve their social conditions (e.g., access to potable water, school and health services) and promote on-farm and off-farm income supporting activities (e.g., bee-keeping, cottage and handicrafts). -5- management works, agro-forestry, and on-farm soil and moisture conservation works. The increase in fodder availability is expected to reduce pressure on the rangeland, thus contributing to better conservation of natural resources. In the construction of rural infrastructure (i.e., rural roads, water supply system etc), environmental guidelines and checklists satisfactory to the Bank, would be followed to screen and mitigate potentially adverse environmental effects. The project would promote environmentally friendly interventions with minimal negative environmental side effects. The project has been reviewed and rated in category B. 12. Project Benefits and Sustainability. The project would sustainably improve the living conditions of the population of the impoverished mountainous Northwest region by increasing their incomes and employment opportunities and by making critical investments in physical infrastructure and natural resource conservation measures. The main project benefits would be: (i) increasci in on-farm and off-farm incomes; (ii) improved environment; (iii) improved social conditions of the disadvantaged population; and (iv) enhanced popular participation. The project would also increase off-farm income by supporting viable rural enterprises. The main beneficiaries are expected to be landless farmers and women. The rural roads would provide isolated villages access to markets, which would induce higher levels of agricultural production and marketing. In addition, through construction of labor-intensive basic infrastructure, the project would generate about 300 person-years of direct employment to area inhabitants. 13. The planned investment in basic social services such as schools, water supply and health centers would provide basic education, health services and potable water thus improving the quality of life of the population of the region. They would reduce the burden on women by providing access to markets, health services, and-most iraportantly-drinking water, reducing the time and labor which women are forced to expend. The rangeland improvement works in the long run would reduce the burden on women by providing larger quantities of fuel and fodder closer to home. In the project design, particular attention has been given to ensuring that women are actively involved in the project and derive positive benefits. The project would strengthen grassroots organizations (village organizations and local NGOs). The village funds, once established and consolidated, could become a key factor in rural savings mobilization, and delivery of informal credit to their members. The project's success could also serve as a model for a participatory poverty reduction and natural resource management for possible replication in other regions of Tunisia and North Africa. 14. Project Risks. The project addresses difficult problems of rural poverty and natural resource degradation and, as such, carries both institutional and technical risks. The project depends on the beneficiaries' involvement in sub-project planning and implementation. Project success also requires the integration of farming system changes including improved integration of crop and livestock production and resource conservation. Therefore risks include the possibility of: (i) weak beneficiary participation in project activities; (ii) a slower than expected adoption of improved farming practices; and (iii) lack of sustainability of project actions. The project has been designed to minimize these risks. Lessons derived on a Bank wide basis and specifically from the NWRDP have been taken into account in the design of the project in three particular areas. First, the project's participatory strategy is designed to gain the trust and involvement of the beneficiaries and to generate a sense of ownership in project activities. This approach has been successfully tested in the project area in a NWRDP pilot program. The intervention technologies have already been successfully introduced in the project area on a pilot basis. Second, many of the improved techniques are well integrated with the local farming practices and require limited material inputs. The project's emphasis on strengthening the extension service through technical -6- technologies have already been successfully introduced in the project area on a pilot basis. Second, many of the improved techniques are well integrated with the local farming practices and require limited material inputs. The project's emphasis on strengthening the extension service through technical assistance for the subject-matter specialists and training of the development agents should minimize the risk of slow adoption. Third, beneficiary participation in the design and preparation has already raised interest at the grassroots level. This would be sustained through continuing with the participatory strategy and through further decentralizing and institutional strengthening. 16. Recommendations. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve the proposed loan. Lewis T. Preston PresiJent Attachments Washington, D.C. December 6, 1993 -7- Schedule A REPULIC OF TUNISIA NORTHWEST MOUNTAINOUS AREAS DEVELOPMENT PROJECT Estiuated Costs and Finafni Plan Components Local Foreign Total -US$ Million-- Agricultural Development 3.1 1.8 4.9 Watershed & Rangeland Mgt. 7.7 1.2 8.9 Income Generating Activities 1.0 0.1 1.1 Applied Research 0.5 0.7 1.2 Institutional strengthening 2.1 2.4 4.5 Rural Infrastructure 9.6 7.2 16.8 Unallocated 1.3 1.0 2.3 Total Base Costs 25.3 14.4 39.7 Physical Contingencies 2.2 1.4 3.6 Price Contingencies .9 115 7.4 Total Proj§cCosts 2 /Al 17.3 50.7 L includes US$8.2 million taxes and duties F cng Pl Local Foreign Total US$ Million World Bank 10.2 17.3 27.5 Beneficiaries 3.7 - 3.7 Government 11.3 - 11.3 Net Project Costs 25.2 17.3 42.5 Taxes and Duties 8.2 - 8.2 Total Project Costs 33.4 17.3 50.7 Schedule B Page 1 of 2 REP JLIC OF TUNISIA NORTHWEST MOUNTAINS AREAS DEVELOPMENT PROJECT Summary of Proposed Procurement Arrangements (US$ million equivalent) Procurement Method Project Elements ICB LCB LS/FA Other NBF Total 1. Works 1.1 Soil Conservation 12.3 12.3 (7.3) (7.3) 1.2 Buildings 1.1 2.0 3.1 (0.8) (1.0) (1.8) 1.3 Roads 4.7 8.2 12.9 (3.6) (4.0) (7.6) 1.4 Water Supply 4.2 1.0 5.2 (3.1) (3.1) 2. Goods 2.1 Vehicles 1.2 0.3 1.5 (0.8) (0.1) (0.9) 2.2 Materials & Equipment 2.7 2.2 4.9 (1.8) (0.5) (2.3) 3. Consultancies 3.1 Consultants 3.3 3.3 Ia (1.0) (1.0) 3.2 Training 1.3 1.3 (1.0) (1.0) 3.3 Studies 0.2 0.2 4. Unallocated 3.0 3.0 /b (2.5) (2.5) 5. Recurrent Cost 5.1 Incremental Staff 1.1 1.1 5.2 Operating Costs 1.9 1.9 Total 3.7 10.0 26.0 7.8 3.0 50.7 (2.6) (7.5) (12.9) (4.5) (-) (27.5) Note: figures in parentheses are the amounts financed by the Bank loan. N.B.F: Not Bank-Financed. Works and Goods shall be procured in accordance with World Bank Guidelines: Procurement under IBRD and IDA credits; and Services should be procured in accordance with World Bank Guidelines: Use of Consultants by World Bank Borrowers and by World Bank as Executing Agency. a! includes US$1.1 million for contract research and US$1.1 for income supporting activities component under contract with NGO. b/ use of funds to be determined during the interim-evaluation period. -9- Page 2 of 2 Cumulative IUBRD Amount Amount Fiscal Year (US$ Million) (US$ Million) Percent' FY94 June 94 0.04 0.04 1 FY95 December 94 0.8 0.8 3 June 95 2.7 1.9 10 FY96 December 95 3.8 1.0 14 June 96 6.0 2.2 22 FY97 December 96 9.3 3.3 34 June 97 11.5 2.2 42 PY98 December 97 13.7 2.2 so June 98 15.9 2.2 58 FY99 December 98 18.1 2.2 66 June 99 21.4 3.3 78 FY00 December 99 23.6 2.2 86 June 00 25.8 2.2 94 FYO1 December 00 26.4 0.5 96 June 01 26.9 0.5 98 FY02 December 01 27.5 0.5 100 The standard disbursement profile for countrywide agricultural projects. The completion date is estimated to fall in the 32nd quarter, and the closing date in the 34th quarter. - 10- Schedule C REPUBLIC OF TUNISIA NORTHWEST MOUNTAINOUS AREAS DEVELOPMENT PROJECT Key Project Events and Responsibilities (a) Time taken to prepare: 48 months (b) Prepared by: Government with assistance assistance from FAO/CP (c) First Preparation Mission: February 1990 (d) Appraisal Mission Departure: July 1993 (e) Planned Date of Negotiations: November 1993 (f) Planned Board Date: December 23, 1993 (g) Planned Effectiveness: April 31, 1994 (h) Responsibiliy for Preparation: Task Manager: Mathewos Woldu, MN1AG Division Chief: Odin Knudsen, MNIAG Country Director: Daniel Ritchie, MN1 Regional Vice-President: Caio Koch-Weser, MNA Peer Reviewers: Cornelis de Haan, AGRTN Raymond Noronha, AF6AE Willem Zijp, AGRTN i!!,,,;:::,，、：：。。。、。：。：:,:::;:;; 待，！〕〕！！砂跚〕〔！、！-! 斤 teýoo, TUNISIA NORTHWEST MOUNTAINOUS AREAS Bi rte DEVELOPMENT PROJECT SUB-PROJECT AREAS (MICROZONES) 91 1 Z E R' E A R i 7. A ... b. jo UNIS TUN t 5 0 8-i Mtil Beja N OUBA ZA P, A -3 i.. B. Jendoub. Zaghouan J TE G,- 0 U A N,, 5 < Et Kef Y 36.001- Siliana A Lu E ýK E F S,1 L I A t4 V/ Y K AIR 0 bÅN Kcirou 35'30'7 K A 5 E R I N EV 35'30' s i D i S,0 u' z i bm Kelý 52E S.N - / I M d i t e llserine S e E7,3 PROJECT AREA BOLINDARY - EXPRESSWAYS NORTHWEST REGION BOUNDARY - MAIN ROADS TUN1(91A SUB-PROJECT BOUNDARJES SECONDARY ROADS SUB-PROJECT AREAS (MICROZONES): RAILROADS l PHASE l (1981-1989) 0 SELECTED CITIES, AND TOWNS CONSOLIDATION(19NI-1993) j GOVERNORATE CAPITALS NEW AREAS 11994-2000) NATIONAL CAPITAL. GOVERNORATE BOLINDARIES A L G E R l A SALT LAKE INTERNATIONAL BOLINDARIES PORT L l 8 Y A z RIVERS 0 10 lp lp 4,0 5,0 SEASONAL RIVERS 0 KILOMETERS DAMS 8.301