Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4362 PROJECT COMPLETION REPORT CAMEROON - PLAINE DES M'BO RURAL DEVELOPMENT PROJECT (CREDIT 672-CM) March 9, 1983 Western Africa Regional Office Agriculture 2 Projects Division This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Transcript
Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No. 4362
PROJECT COMPLETION REPORT
CAMEROON - PLAINE DES M'BO RURAL DEVELOPMENT PROJECT
(CREDIT 672-CM)
March 9, 1983
Western Africa Regional OfficeAgriculture 2 Projects Division
This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.
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CAMEROON
PLAINE DES M'BO RURAL DEVELOPMENT PROJECT
(Credit No. 672-CM)
Currency Equivalents(average for project)
Currency Unit CFA Francs (CFAF)US$1 CFAF 230CFAF 1 million US$4,348
Weights and Measures
(Metric System)
1 ha 2.47 acres1 km 0.624 milesI kg 2.204 pounds1 metric ton 2,204 pounds
Abbreviations
CCCE CaisseCenitrale de Cooperation Economique(French Economic Cooperation Agency)
CENEEMA Centre Nationale d'Etudes et d'Experimentation du Mechinisme Agricole(National Center for Development of Agricultural Mechanisation)
FAC Fonds d'Aide et de Cooperation(French Development Agency)
IITA International Institute of Tropical Agriculture
ISH Institut de Sciences Humaines
(Institute of Human Sciences)IRAF Institute de Recherche Agronomicue et Forestiere
(Institute for Agronomic and Forestry Research)MIDERIM Mission de Developpement de la Riziculture dans la Plaine des M'Bo
(M'Bo Plain Rice Development Program)SODERIM Societe de Developpement de la Riziculture dans la Plaine des M'Bo
(M'Bo Plain Rice Development Company)WARDA West African Rice Development Association
FOR OFFICIAL USE ONLY
PROJECT COMPLETION REPORT
CAMEROON PLAINE DES M'BO RURAL DEVELOPMENTPROJECT
(CREDIT 672-CM)
TABLE OF CONTENTS
Page No.
Preface i
Basic Data Sheet ii
Highlights iii
PROJECT COMPLETION REPORT
Summary 1
I. Background 6
II. Formulation 7
III. Implementation 12
IV. Agricultural Impact 17
V. Rates of Return 18
VI. Institutional Performance and Development 18
VII. Special Issues 20
VIII. Changes in Repeater Projects 20
IX. Bank Performance 21
X. Conclusions 23
Addendum 27
Annexes: I 28II 29
Attachment 30
Map
This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.
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PROJECT COMPLETION REPORT
CAMEROON: PLAINE DES M'BO RU-RAL DEVELOPMENT PROJECT(CREDIT 672-CM)
PREFACE
This is a performance audit of the Plaine des M'Bo Rural DevelopmentProject in the United Republic of Cameroon for which Credit 672-CM was approvedin December 1976 in the sum of US$2 million. The final disbursement in respectof this loan was made on February 13, 1981.
The audit report consists solely of a Project Completion Report (PCR)dated June 3, 1982, which was selected by the Operations Evaluation Departmentfor a pass-through audit. The PCR was prepared by West Africa Projects, Agri-culture 2.
The completion mission visited Cameroon in March 1981, and the PCRis based on a review of the relevant documents, discussions with government andwith officials at the project site, where field observations were made.
Copies of the French translation of the draft report were sent to theBorrower on November 18, 1982; however, no comments have been received.
The valuable assistance provided by the Government during the prepara-tion of this report is gratefully acknowledged.
A copy of the draft report was also sent to the co-financier of theproject from whom comments have been received. A translation of these commentsis reproduced as an attachment to this report.
I
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PROJECI COMPLETION RELPOR
C.AEROON
PLAINE DES M'BO RURAL DEVELOPMENT PIAASE I(Credit 672-CM)
BASIC DATA SHEET
KEY PROJECT DATA Appraisal Estimate Actual Actual as 7 of popra-sal es-timat
Date Phvsical Componests Co-pleted NA - TA projectProportion then Completed NA - TA project _
Closing Date 06.30.1980 06.30.1981 129% 1/Econo:ic Rate of Return NA - TA projectFinancial Rate of Return NA - TA prolectInstitutional Performance Adeqtate to RoodAgronamic Perforoance NA - TA projectNumber of Direct Beneficiaries NA - EA proiject
CLUULATIVE DISBURSEMENTSFl 78 FY 79 FY 80 FY 81
Appraisal Estimates (US$ million) 1.0 1.5 2.0 -Actual (US$ million) 0.4 1.D 1.6 2.0 1/Actual as 7. of Appraisal 40°4 73°/ 80/. __Date of Final Disburse-ent 02-13-1981Principal Repaid to 12-31-81 NIL
MISSION DATA
Mission Date No. of M-ndays Specialization Performance Types of(mo./yr.) Persons in Field Represented Rating Trend Problems
Borrower ULcted Republic of CameroonExecution Agency Societe de Developpement de Na Riziculture dons la Plaine des M'Bo (SODERIM)Fiscal Year July I to June 30
Nane of Currency rFAFCurrency Exchange Rate:
Appraisal Year Average US $ 1,00 = CFAF 245Intervening Year Average US $ 1.00 = CFAF 230Completion Year Average US $ 1.00 = CFAF 220
Follow-on Project: NONE
I/ Cost overrun due to need to extend project period by oce year to obtain -orthwhile results from studios.2/ Extension largely d-e to delays in establishment of e-c-uting agency (SODERIM)
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PROJECT COMPLETION REPORT
CAMEROON: PLAINE DES M'BO RURAL DEVELOPMENT PROJECT(CREDIT 672-CM)
HIGHLIGHTS
The credit was granted to support the Government's efforts to in-crease and diversify agricultural production by investigating the technicalproblems involved in the development and settlement of the largely empty30,000 ha Plaine des M'Bo, which is located near the over-populated WesternHighlands of the United Republic of Cameroon (Republique Unie de Cameroun).The project was contemporary with, and financed technical assistance personnelfor, a Government initiated 800 ha mechanized rice cultivation scheme on theplain. The project was financed by an IDA credit of US$2 million equivalentand a loan of French Francs approximately equivalent to US$0.5 million grantedby the Caisse Central de Cooperation Economique (CCCE) , the French Government'seconomic cooperation agency.
Owing to delays in starting the project, the 1977 season was missedand it became necessary to extend the project for one year, which was financedby Government. This, together with the need to achieve meaningful resultsfrom the revised trial program, coupled with the effects of inflation, resultedin a total cost overrun of 38%. No follow-on project was approved due todifficulties in justifying economic development of the plain by large scalemechanization or by settlement. Lessons to be learned from this project are thata progressive approach, with true-scale and sufficiently prolonged experimentation,is needed when trying to introduce technical innovation into a rural environmentthat is physically and socially poorly known and a working hypothesis must bereadily rejected when the evidence shows that it is out of line with reality.
The following points are of special interest:
- premature investment in equipment for mechanized rice production andlarge scale processing based on exaggerated yield projections, re-sulted in heavy operating losses (para 3.04(b)iii);
- the lack of agreement on the real objectives of the project placedthe project management at a disadvantage (para 6.01);
- the project's demonstration that large scale mechanized rice productionwas not feasible. This avoided a proposed substantial expansion ofthe area so cultivated (para 10.08(iii)); and
- the correctness of the appraisal mission's conclusion that the areahad development potential but that technical and economic problemsremained to be resolved was amply demonstrated (para 9.02).
CAMEROON
PLAINE DES M'BO RURAL DEVELOPMENT PROJECT
(Credit 672-CM)
PROJECT COMPLETION REPORT
SUMMARY
Background
(i) At the time of appraisal (1976), agriculture provided a liveli-hood for 85 per cent of Cameroon's population, accounted for 35-40 per centof GDP and for over 75 percent of the value of exports. The traditionalsubsector, producing food crops for subsistence with varying surpluses forthe local market, as well as cocoa, coffee, cotton and groundnuts forexport, accounted for 85 percent of agricultural output; the balance beingproduced by the industrial plantations, the largest being state-owned,producing mainly palm oil and rubber.
(ii) Cameroon was mostly self-sufficient in foodstuffs largely due toa rapid growth of non-traditional crops, such as vegetables, beans andpotatoes. But stagnation in production of traditional staples (plantains,millet, sorghum, maize and cassava) and the growth of urban populations hadled to increasing imports of rice and wheat.
(iii) In line with Bank Group strategy to support Government in itsefforts to increase and diversify agricultural production and to focus onrural development to improve income distribution and to achieve a betterbalance in regional development, proposals for development and settlementof the largely empty Plaine des M'Bo, one of the few plains around theover-populated Western Highlands, merited priority consideration.
(iv) The plain may have been reasonably well settled in the past butcomplete depopulation occurred early in this century, partly due tosleeping sickness, malaria and onchocerciasis. However, because ofincreasing population pressure in the surrounding highlands, some 10,000inhabitants had recently settled along the foothills of the plain wherethey were growing traditional crops for cash (coffee) and for food(plantain, cassava, sweet potatoes). Some 13,000 ha of unoccupied landappeared suitable for development without expensive land clearing,offering settlement possibilities for 5,000 to 7,000 farm families.
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Formulation
(v) The project stemmed from promising results from the doublecropping of rainfed rice on the foothills of the Plaine des M?Bo achievedin 1971-73 at the local research station of the Institut- de RechercheAgronomique et Forestiere (IRAF). These were followed by a pilot projectunder the Mission de Developpement de la Riziculture dans la Plaine desM'Bo (MIDERIM) established by Government and partially financed by theFrench Aid Agency - Fonds d'Aide et de Cooperation (FAC) - under which aconsulting agency was engaged to prepare a feasibility study for a fulldevelopment project based on rice. On the insistence of IDA and the CaisseCentrale de Cooperation Economique (CCCE), its proposed scale was re!ducedto 5,600 ha and its design altered from a fully mechanized state farm to asettlement scheme for 2,000 farm families highly depedent on a nucleusestate of some 600 ha for comprehensive mechanized operations. Projectcosts in then current prices were estimated at US$22.6 million (orUS$5,000/ha) for a five-year project (1976-80).
(vi) This project was appraised in February/March 1976 by an IDAmission with CCCE participation which concluded that the project was notyet suitable for IDA financing because of the unusually high technicalrisks involved, notably as regards cropping patterns and yields and thedegree of mechanization envisaged with resulting high costs and unduedependence of settlers on the nucleus estate. However, without waiting forthe appraisal process to be completed, Government early in 1976 committeditself to investments in farm equipment, in infrastructure for theimmediate development of 800 ha for mechanized rice cultivation and in arice mill with a capacity of 5 tonnes/hour together with storage facilitiesfor 5,000 tons of rice, at a total cost of US$5.5 million financed bysuppliers credit under guarantee of a bilateral export credit.
(vii) Convinced that the Plaine des M'Bo could and should bedeveloped, the appraisal mission recommended that the Bank agree tofinance with CCCE a two-year technical assistance project aimed at solvingthe technical problems involved. If implemented at once this could, it wasfelt, hopefully lead up to a full development project starting in 1979.After further discussion this approach was agreed by Government and CCCEwith the project period extended to three years.
(viii) In its final form, the project financed technical assistancepersonnel (General Manager, Research Officer and Administrative andFinancial Officer of Societe de Developpement de la Riziculture dans laPlaine des M'Bo (SODERIM), equipment and operating expenses required overa three year period mainly to:
(a) complete soil tests and analysis of the area to be developed onthe plain and carry out further agronomic trials with a view tofinding a suitable cropping pattern and defining relatedfertilizer application requirements;
(b) organize the settlement of farmers on 300 ha to test promisingmechnization systems and different types of equipment andsettlement schemes;
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(c) study:
(i) the domestic marketing of soya;
(ii) health control measures, particularly tsetse eradication;and
(iii) migration problems; and
(d) incorporate the results of the above trials and studies into afeasibility report for the full scale development and settlementof the Plaine des M'Bo.
(ix) The total cost of the three-year project, based on mid-1976prices and including contingencies, amounted to US$2.5 million net oftaxes, and of this 80 per cent or US$2.0 was estimated to represent foreignexchange costs. The IDA credit (672-CM) totalling US$2 million was grantedon standard terms and was complemented by a loan of US$0.5 millionequivalent by CCCE thus covering the total cost of the project net oftaxes. The IDA credit was to cover 75 percent the cost of consultants andexpatriates, local personnel and operating costs, equipment and buildings.
(x) The project was managed by SODERIM, whose General Manager wasproject manager. At the same time, utilizing equipment already ordered byGovernment, SODERIM was responsible for carrying out mechanized ricecultivation on 800 ha; its operational costs for this purpose, estimated tototal US$3.5 mn equivalent during the project period, being provided byGovernment with some assistance (US$1.5 mn equivalent) from CCCE. Toassist in carrying out project trials and studies, SODERIM entered intoagreements approved by the Bank with existing research institutions inCameroon, viz. IRAF, CENEEMA (Centre Nationale d'Etudes et d'Experimen-tation du Mechanisme Agricole) and ISH (Institut des Sciences Humaines)and provision was made for consultants to carry out the soya marketingsurvey and to provide supporting services for other studies (notably byIITA and WARDA in agronomic fields).
(xi) The project's main benefit was to be the provision to Governmentof solid technical and economic grounds on which to base a decision on aninvestment project estimated at US$35.0 million in 1976 prices. ThePresident's Report stressed that the ultimate risk was that the agronomictrials would demonstrate the impossibility of obtaining the minimum yieldsnecessary to justify this level of investment; but this was considered arisk worth taking given the development potential of the Plaine des M'Bo,where it was estimated that some 13,000 ha could be developed to provideadequate income for 5,000 - 7,000 families (some 30 - 40,000 inhabitants inall) presently living at minimum subsistence level in the neighbouringover-populated Bamileke Plateau.
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Implementation
(xii) The effective date had been set for June 28, 1977, but because ofdelays in formally constituting SODERIM (its statues were only approved byDecree No. 76/1 of January 3, 1977), the credit did not become effectiveuntil August 29, 1977. This, and in particular the late arrival of theproject management team meant that it was not possible to keep to the tightschedule which envisaged the commencement of meaningful agronomic mechani-zation and settlement trials during the 1977 season, and an additionaltrial period - and with it an extension of the project - became necessary.In 1978, Government agreed to finance the additional cost involved,estimated at CFAF 210 mn (US$950,000) in extending the project by one yearto June 30, 1981, and to maintain Bank involvement throughout the extendedperiod, its rate of disbursement of approved SODERIM expenditure wasreduced from 75 percent to 59 percent.
(xiii) Results of project trials and studies may be summarised asfollows:
(a) because of inter-season harvesting difficulties, weed aggressi-veness and time constraints only one crop of rainfed rice perseason was feasible;
(b) decline in upland rice yields over time from 2.5 t/ha to 1 t/haor less due to soil fragility called for further pedologic andagronomic investigations;
(c) irrigated rice production needed further investigationparticularly as regards "blast" disease problems;
(d) manually cultivated bottomland rice could achieve yields of 2.5t paddy/ha making it economically viable;
(e) under mechanized cultivation average yields of 2 t paddy/ha werewell below breakeven level of 3.7 t paddy/ha necessary to meethigh production costs;
(f) settlement studies covering traditional crops were beginning toyield interesting results; and
(g) health and migration studies threw light on the problems to befaced with any large-scale settlement on the plain.
Conclusions
(xiv) The decision to confide responsibility for both trials andstudies and commercial production to the same agency (SODERIM) paperedover the crack of the differing views of Government and the Bank as to themain objective of the project. To justify its premature equipmentinvestments, Government placed its emphasis on maximum early mechanized
rice production regardless of cost; whereas the Bank regarded the projectpre-investment studies as of paramount importance. As a result, SODERIM'smanagement was in the position of serving two masters, or attempting tolook two ways.
(xv) On the financial side, the project co-financers (IDA and CCCE)covered the full cost of the management team and not solely that related toproject studies and trials thus providing a degree of subsidy to SODERIM'scommercial production, while CCCE separately contributed to the cost ofthese production operations, thus blurring any distinction between the twoobjectives. Losses incurred by SODERIM on commercial production, althoughpartially met by Government subsidies led to a progressive weakening of itsfinancial position.
(xvi) From the Bank point of view, it was relatively easy to recognizethat as project results became apparent, they meant that mechanized riceproduction was not viable, that the plain's potential was more limited thanoriginally anticipated and that the best method of developing the plain'spotential lay in the implementation of an integrated rural developmenttype project in its foothills. Because of its early hopes and itspremature rice mill and equipment investments, Government clung to thehope that some form of mechanized production would succeed and it was notuntil after the end of the project period that Government announced a re-orientation of its policy and expressed its willingness to have theintegrated rural development approach examined.
(xvii) The main lessons to be learnt from this project experienceinclude:
(i) premature investment in equipment for a production system basedon non-representative initial research results, incomplete fieldtrials and wishful thinking inevitably lead to misuse of scarcecapital resources;
(ii) expenditure exceeding US$10 million over the last ten years is ahigh price for Government to pay for the main finding thatmechanized rice cultivation in the Plaine des M'Bo is neithereconomically nor financially justifiable;
(iii) project expenditure of US$3.6 million was not a high price to payto show that the original proposals for investment of ten timesthat amount were unjustified and to provide some bases forsounder future project operations.
(iv) the need for particular care and special safeguards, especiallyas regards management, whenever the Bank participates in aproject where there can be any major divergence between itsviews and those of Government as to the project's main aims; and
(v) in this particular case, the technical consistency of the Bankapproach and persistence in its presentation to Government seemultimately to have proved successful.
CAMEROON
PLAINE DES M'BO RURAL DEVELOPMENT PROJECT
(Credit 672-CM)
PROJECT COMPLETION REPORT
I. BACKGROUND
1.01 At the time of appraisal (1976), agriculture provided a liveli-hood for 85 percent of Cameroon's population, accounted for 35-40 percentof GDP and for over 75 percent of the value of exports. The traditionalsubsector, producing food crops for subsistence with varying surpluses forthe local market, as well as cocoa, coffee, cotton and groundnuts forexport, accounted for 85 percent of agricultural output; the balance beingproduced by the industrial plantations, the largest being state-owned,producing mainly palm oil and rubber.
1.02 Cameroon was mostly self-sufficient in foodstuffs largely due toa rapid growth of non-traditional crops, such as vegetables, beans andpotatoes. But stagnation in production of traditional staples (plantains,millet, sorghum, maize and cassava) and the growth of urban populations hadled to increasing imports of rice and wheat.
1.03 Farm incomes and services to farmers were unevenly distributed.In the central savannah and western and coastal lowlands, per capitaincomes were in the order of US$130-140, whereas in the northern plains andin the densely populated western highlands they were only US$70-80 and inthese poorer areas extension and credit services were particularly weak.
1.04 Government's Fourth Five-Year Plan (1977-81) gave increasedemphasis to agriculture for which a total capital outlay of US$383 millionwas allocated as compared with US$168 million (at 1974/75 prices andexchange rates) during the previous five-year period. Several projectsfor the over-populated western highlands were envisaged. Settlement ofthe few plains around the highlands, of which Plaine des M'Bo is one, couldhelp reduce population pressures. Measures were also being taken tostrengthen Government's ability to choose, prepare and implement projects.
1.05 As of end 1976, the Bank Group commitments in Cameroon amountedto US$245 million covering eighteen projects: six in agriculture, seven intransportation, three in education, one in public utilities and one smalland medium-scale enterprise project. In agriculture, Bank Group strategywas to support Government in its efforts to increase and diversify agricul-tural production and to focus on rural development to improve incomedistribution and to achieve a better balance in regional development.
1.06 The Plaine des M'Bo, located about 200 km north of Douala at thebase of the Bamileke Plateau, comprises the Plaine itself (30,000 ha : meanaltitude 720 m) surrounded by a piedmont area (85,000 ha, altitude 750 -
1,000 m) and by higher hills. Administratively the area lies within thethree Sous-prefectures of Santchou (Departement de la Menoua), Kelem(Departement du Haut-Nkam) and Melong (Departement du Moungo). Totalpopulation is estimated at 110,000 with 90 percent living in the piedmontarea. Inhabitants of the Plaine are mostly M'Bo, while those in the higherareas are largely Bamileke. Rainfall averages 1,800 mm/year, with peaks inMay and September and a dry season lasting from mid-November to February,when temperatures can fall below 15°C. Soils in the central part of thePlaine are hydromorphic with only 15-20 cm good arable horizon and theterrain is divided into permanently flooded, seasonally flooded and nonflooded areas.
1.07 The plain is said to have been reasonably well settled in thepast but complete depopulation occurred early in this century, partly dueto sleeping sickness, malaria and onchocerciasis. However, because ofincreasing population pressure in the surrounding highlands, some10,000 inhabitants had recently settled along the foothills of theplain where they were growing crops for cash (coffee) and for food (plain-tain, cassava, sweet potatoes). Some 13,000 ha of unoccupied landappeared suitable for development without expensive land clearing, offeringsettlement possibilities for 5,000 to 7,000 farm families.
II. FORMULATION
Origin and preparation
2.01 The project stemmed from experiments begun in 1971 by theInstitut de Recherche Agronomique et Forestiere (IRAF) at its localagronomic research station in a non-representative area of the foothillsof the plain which initially suggested the possibility of double croppingrainfed rice in the Plaine des M'Bo. Given the positive results of threeyears IRAF experiments, Government set up the Mission de Developpement dela Riziculture dans la Plaine des M'Bo (MIDERIM) in 1973 to implement apilot operation partially financed by the French Aid Agency - Fonds d'Aideet de Cooperation (FAC), classified as state-owned 4,000 ha out of thetotal identified potential of 13,000 ha and engaged a consulting firm toprepare a feasibility study for a full development project based on rice.Their mid-1975 report proposing a highly mechanized state farm on 8,000 hato grow two crops of rice per year was submitted to IDA and the CaisseCentrale de Cooperation Economique (CCCE) who together recommended thatthe project be reduced in size and amended to include a settlement programto alleviate existing population pressure in the neighbouring highlands.This was accepted by Government and the final feasibility report recom-mended a full development program running over 8 years (1976-83), with aproject financing period of 5 years (1976-80), to clear and develop 5,600ha of non-inundated soils for intensive double cropping of soya followed byrice and the clearing and developing of 500 ha of seasonally flooded landfor one annual crop of rice. Of these areas, 5,200 ha non-inundated soils
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would be settled by about 2,000 farm families and the balance wouldcomprise the nucleus estate, which would provide settlers with improvedseed, fertilizer and pesticides, and with mechanized assistance for landclearing, land preparation, harvesting and crop transport, milling, dryingand storage. Project costs for the period 1976-80 (in then current prices)were estimated at US$22.6 million or US$5,000/ha.
Appraisal
2.02 Although there had been delays in the publication of thepreparation report, Government pressed the Bank to appraise the projectnot later than the last quarter of 1975 because it was concerned about thetimely ordering of the mill and equipment considered necessary for a large-scale production scheme. From Government's point of view, the project wasmost attractive because of the prospects it offered of reducing riceimports and utilizing modern production methods which would minimizeethnic problems involved in the settlement of the plain. vhen it becameclear that because of Bank staff constraints, the appraisal mission couldnot be mounted until February/March 1976, Government provided the Bankwith details of its rice mill bidding procedures since it was proposing aninitial purchase of a 2.5 tonnes/hour mill with possible addition offurther units that might be financed under the proposed project. Latetr andbefore the appraisal mission process was complete, Government decided ongrounds of overall economy to invest straightaway in a 5 tonnes/hour mill.However, the IDA appraisal mission, in which CCCE participated concludedthat the project was not yet suitable for IDA financing because of theunusually high technical risks involved, notably:
(a) Crop Yields. Initial yield expectations (3.2 t/ha paddy arnd 2.2t/ha soya) based on IRAF test plot results had not been realizedby MIDERIM in 1974 and 1975 either on its own farm or among the43 existing settlers, and test plot yields in 1975 also showed asharp and as yet unexplained fall.
(b) Degree of Mechanization. From the beginning, the project hadbeen rigidly conceived in terms of heavy mechanization for landpreparation, considered essential to achieve two crops of riceper year but resulting in:
(i) a high level of operating costs for mechanized operations;and
(ii) farmers being permanently and totally dependent upon thecentral estate for the preparation of their soils,leaving little scope for initiative or furtherdevelopment on either an individual or group basis.
(c) Crop Rotations. On account of soil fertility problems, weedaggressiveness and time constraints on harvesting the first: cropand preparing land for the second, double-cropping of rice wouldhave to be replaced by a cropping pattern where rice would bepreceded by a legume for which soya offered the best prospects.
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While this permitted an alternative and less costly form ofmechanized crop production, it meant that domestic soya marketprospects needed to be confirmed.
2.03 The high level of risks attaching to the project as prepared wasborne out by economic rate of return calculations. While the best estimatewas 12 percent, this was highly sensitive to changes in the balance betweenon going costs and receipts. A fall in yields/prices of 20 percent and anincrease in costs of 20 percent were each sufficient to reduce the rate ofreturn to between 3 and 5 percent. If all the soya had to be sold on theworld market the rate of return would fall to 5 percent and if correctivelime and phosphate applications were required on all the land, the ratewould be reduced to 10 percent.
2.04 However, as stated above, without waiting for the appraisalprocess to be completed, Government early in 1976 committed itself to invest-ment in farm equipment, in infrastructure for the immediate developmentof 800 ha for mechanized rice cultivation and in a 5 t/h rice mill togetherwith storage facilities for 5,000 tons of rice at a total cost ofUS$5.5 million financed by suppliers credit under guarantee of abilateral export credit agency.
2.05 Convinced that the Plaine des M'Bo had development potential,the appraisal mission recommended that the Bank agree to finance with CCCEa two-year technical assistance project aimed at solving the tech-nical problems involved. If implemented at once this could, it was felt,hopefully lead up to a full development project starting in 1979.
2.06 Discussion at the first Decision Meeting held in April 16, 1976,centered around whether the surrounding technical and organizationaluncertainties could be effectively clarified by the proposed two-yeartechnical assistance project, and a technical session between CPS andWAPA2 was held on April 22, 1976 to examine these further. The possibilityof the project being made a component of either the Western HighlandsDevelopment project or the Technical Assistance project (both of whichwere then under preparation) was rejected mainly because of the specialfeatures and possibilities of the Plaine des M'Bo and the politicalimportance attached by Government to its early and separate development.At the concluding Decision Meeting on April 27, 1976, it was decided toproceed on the basis of the Appraisal Mission recommendation.
Negotiations
2.07 At a meeting held in Paris on June 30 and July 1, 1976 called bythe Cameroon Government, and attended by representatives of the Bank andCCCE, these recommendations were agreed in principle by all three partiesbut the project period was extended to three years and the total cost ofthe project was provisionally established at US$2.7 mn of which CCCE wasprepared to finance 25 percent leaving US$2 mn or 75 percent for possibleBank financing. Government was prepared to share the larger part ofMIDERIM's operational costs as well as investment costs in equipment
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already ordered for the development of 800 ha farm and in facilities formilling, drying and storing 5,000 tons of rice annually. A follow-upappraisal mission visiting Cameroon in September, 1976, found thatGovernment was reluctant to accept the Bank approach because its priority,as evidenced by the equipment it had already ordered, was to produce riceimmediately and at any price. In view of this, the Bank made it clear thatan essential condition of the project would be that Government agreed thatno further development in the Plaine des M'Bo outside the 1,l10 hacomprising the 800 ha to be exploited with the equipment already purchasedand the 300 ha required for pre-investment trials and agronomic trials,would be undertaken until the project had provided the necessaryguidelines.
2.08 Loan Committee review in October 1976 gave rise only to textualrevision of parts of the report. Negotiations on the draft CreditAgreement took place between November 15 and 17, 1976, and also covereddrafts of (a) financing agreement between Government and SODERIM (Societede Developpement de la riziculture dans la Plaine des M'Bo) - the agencybeing established by Government to take over from MIDERIM; (b) betweenSODERIM and research agencies; and (c) between SODERIM and an agency to bedetermined to provide technical assistance to SODERIM.
2.09 The proposed project was presented to the Board in the form of aPresident's Report on December 21, 1976 and approved under SpecialProcedures and the Development Credit Agreement (672-CM) was signed onFebruary 28, 1977.
Project Description
2.10 The project financed technical assistance personnel (GeneralManager, Research Officer and Administrative and Financial Officer ofSODERIM), equipment, and operating expenses required over a three yearperiod mainly to:
(a) complete soil tests and analysis of the area to be developed onthe plain and carry out further agronomic trials with a view tofinding a suitable cropping pattern and defining relatedfertilizer application requirements;
(b) organize the settlement of farmers on 300 ha to test promisingmechanization systems and different types of equipmerLt andsettlement schemes;
(c) study:
(i) the domestic marketing of soya;
(ii) health control measures, particularly tsetse eradi-cation; and
(iii) migration problems; and
(d) incorporate the results of the above trials and studies into afeasibility report for the full scale development and settlementof the Plaine des M'Bo.
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2.11 The total cost of the three-year project, based on mid-1976prices and including contingencies, amounted to US$2.5 million net oftaxes, and of this 80 percent or US$2.0 was estimated to represent foreignexchange costs. The IDA credit (672-CM) totalling US$2 million was grantedon standard terms and was complemented by a loan of US$0.5 millionequivalent by CCCE thus covering the total cost of the project net oftaxes. The IDA credit covered 75 percent the cost of consultants andexpatriates, local personnel and operating costs, equipment and buildings(see Table I in para 3.07).
2.12 Since the equipment (US$0.4 million) and the contract forbuildings (US$0.3 million) were not large enough for internationalcompetitive bidding, the relevant contracts were to be awarded on the basisof competitive local bidding under local procedures acceptable to IDA. Theservices of expatriate management staff and consultants (US$1.0 million)were to be obtained according to IDA's normal procedures.
2.13 The project was to be managed by SODERIM, whose General Managerwould be project manager. At the same time, utilising equipment alreadyordered by Government, SODERIM would be responsible for carrying outmechanized rice cultivation on 800 ha. Its operational costs for thispurpose, estimated to total US$3.5 mn equivalent during the project periodbeing provided by Government with some assistance (US$1.5 mn equivalent)from CCCE. To assist in carrying out project trials and studies, SODERIMwas required to enter into agreements approved by the Bank with existingresearch institutions in Cameroon, viz. IRAF, CENEEMA (Centre Nationald'Etudes et d'Experimentation du Mechanisme Agricole) and ISH (Institutdes Sciences Humaines) and provision was made for consultants to carry outthe soya marketing survey and to provide supporting services for otherstudies (notably by IITA and WARDA in agronomic fields).
Targets and Goals
2.14 The project's main benefit was to be the provision to Governmentof solid technical and economic grounds on which to base a decision on atotal investment for a follow-up project estimated at US$35.0 million in1976 prices. The President's Report stressed that the ultimate risk wasthat the agronomic trials would demonstrate the impossibility of obtainingthe minimum yields necessary to justify this level of investment. But thiswas considered a risk worth taking given the development potential of thePlaine des M'Bo, where it was estimated that some 13,000 ha could bedeveloped to provide adequate income for 5,000 - 7,000 families (sone 30 -40,000 inhabitants in all) presently living at minimum subsistence levelin the neighbouring over-populated Bamileke Plateau.
Other Donor Agency Roles
2.15 As co-financer, CCCE assumed responsibility for 20 percent ofproject costs, its share totalling US$0.5 million equivalent. Inaddition, CCCE contributed some US$1.5 million equivalent towards the costof SODERIM's mechanised rice production and processing operations,including in particular the cost of the provision by the consulting agency
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of an expatriate rice mill manager. In so doing, CCCE could be s(een assupporting the objective preferred by Government viz. maximum mechanizedproduction of rice as soon as possible regardless of cost.
III. IMPLEMENTATION
Effectiveness and Start-Up
3.01 Conditions of credit effectiveness provided in the DevelopmentCredit Agreement (section 6.01) were that:
(a) initial disbursement conditions under the CCCE loan had beenfulfilled;
(b) the General Manager, the Research Officer and the Administrativeand Financial Officer of SODERIM had been appointed; and
(c) the financing agreement between Government and SODERIM had beenconcluded.
3.02 The effective date had been set for June 28, 1977, but because ofdelays in formally constituting SODERIM (its statutes were only approvedby Decree No. 76/1 of January 3, 1977), the credit did not become effectiveuntil August 29, 1977. This, and in particular the late arrival of theproject management team meant that it was not possible to keep to the tightschedule which envisaged the commencement of meaningful agronomic,mechanisation and settlement trials during the 1977 season.
Revision
3.03 The lack of technical progress in 1977 meant that the first yearof the proposed three-year program had been lost and an additional trialperiod - and with it an extension of the project - became necessary. In1978, Government agreed to finance the additional cost involved, estimatedat CFAF 210 mn (US$950,000) in extending the project by one year to June30, 1981, and that to maintain Bank involvement throughout the extendedperiod, its rate of disbursement of approved SODERIM expenditures shouldbe reduced from 75 percent to 59 percent.
Physical Progress
3.04 These are summarised below:
(a) Agronomic Trials
(i) Rainfed rice with a target ef two crops a year with an averageyield of 3 t/ha. Because of inter-season harvestingdifficulties and time constraints only one rice crop per yearwith initially promising yields of 2 to 2.5 t paddy/ha was foundto be feasible (see Annex 1). Declining yields over time weremainly due to soil fragility and weed aggressiveness aggravated,
- 13 -
it was suspected, by latent soil-toxicities and/or nutrientdeficiencies not yet finally determined. Soya as a comple-mentary crop was not found suitable to conditions in the plain.
(ii) Irrigated rice. Because of the set-back under (i), attentionwas switched in 1979 to possibilities for irrigated riceproduction, which might reduce weed problems, but further workhas yet to be done to determine optimum varieties, replantingdates and fertilizer requirements. Blast proved to be aparticular problem in 1980.
(iii) Bottomland rice on seasonally flooded land. Here trials showedthat an average 2.5 t/ha of paddy can be achieved under manualcultivation which should make this a viable proposition.
(b) Mechanization
(i) Minimum mechanization. Trials were limited to five test farmsand were well-monitored.
(ii) Light mechanization. In 1979 and 1980, trials were carried out ontwo experimental farms using a power-tiller and four-wheel mini-tractor. Until the basic agronomic production problems havebeen solved, no real lessons can be drawn from these trials.
(iii) Medium and heavy mechanization. For SODERIM force accountoperations estimated production costs implied a break-evenyield of 3.7 t/ha of paddy but average yields achieved were below2 t/ha, leading to heavy losses of over US$300/ha sustained bySODERIM's mechanized upland rice cultivation.
(c) Settlement
The proJect envisaged settlement of about 100 farm families on200 ha but the start up of this program was delayed until 1979 because ofearly management difficulties; and limited availability of candidates forsettlement in the plain. In 1980, the study covered 73 families livingexclusively in the foothills of the plain and cultivating some 50 ha ofwhich 14 ha were for irrigated rice. The survey on five simulated farmsinstalled in 1979 was beginning to yield useful basic data.
(d) Studies
(i) Soya marketing. In view of production difficulties with soyaand the fact that Government had commissioned a general study byconsultants for soya production and processing, this projectstudy was not proceeded with.
(ii) Health control measures. Difficulties were experienced gettingISH to implement this study, which only started effectively withthe arrival in May 1980 of an expatriate volunteer specialisingin tropical diseases. His initial conclusions were as follows:
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malaria was the main endemic disease and could best becombatted by making nivaquine available to children andpregnant women and generalising the use of mosquito nets;
solutions to the problems posed by diseases linked tofecal contamination would require important civil works(such as culverts, drainage, provision of drinking waterand privies);
monitoring of any suspected cases of sleeping sickness;and
- to prevent bilharziosis, a sanitary belt should be set upand all farmers should be examined (and treated ifnecessary) prior to their settlement in the Plain.
(iii) Migration studies also carried out by ISH were completed in1979.
3.05 In view of preliminary findings of these studies, particularlyin the agronomic and mechanization fields, no attempt was made to prepare afeasibility report for the full-scale development and settlement of thePlaine des M'Bo along the lines envisaged in the President's Report ofDecember 9, 1976, i.e. based primarily on rice production.
Procurement and Construction
3.06 As indicated in para 2.11, because of the smallness of theequipment and building components (total cost approximately US$1 million),relevant contracts were awarded on the basis of competitive local biddingunder procedures acceptable to IDA. Technical assistance personnel wereprovided under a contract with a consulting organization.
Costs and Disbursements
3.07 Projected and actual project costs and their financing aresummarised in the following table:
Table I: Comparison of Actual and Projected
Proiect Costs and Financing Plans
A. PROJECTED B. ACTUAL
2/IDA CCCE Government Total IDA CCCE Government Total
US$ Zof US$ %of US$ % of US$ US$ % of US$ % of US$ 7 of US$
Million Total Million Total Million Total Million Million Total Million Total Million Total Million
3.08 Extension of the project time-span because of the loss of thefirst year (1977) and the need to achieve meaningful results of revisedtrial programs was the main cause of total cost overrun of 38 percenlt. Thecost of consultants and internationally recruited staff represented 50per cent of actual total costs as against a projected 36 per cent largelybecause of inflation and changes in the dollar/CFAF exchange rate.
3.09 The following table compares actual and projected disbursementsunder the IDA credit:
Table 2: Actual and Projected DisbursementsUnder Credit 672-CM
Accumulated Disbursements(US$ Thousands)
Actual as %Fiscal Year Appraisal of Appraisaland Quarter Estimate Actual Estimates
1978
34 1.0 0.4 40%
1979
1 0.42 1.2 0.7 58%3 0.74 1.5 1.1 73%
1980
1 1.12 1.7 1.3 76%3 1.44 2.0 1.6 80%
1981
1 1.82 1.93 2.0
3.10 Unfamiliarity with Bank procedures coupled with late start up bySODERIM accounted for actual disbursements falling behind schedule in theearly stages, while the extension of the closing date by one year to June30, 1981, explains the late completion of disbursements.
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Covenants
3.11 As noted in the President's Report, the Development CreditAgreement contained an unusual covenant (section 3.08) under which theGovernment agreed that agricultural development and settlement in thePlaine des M'Bo should be limited to an area of 1,100 ha until the projecthad been completed or the Bank and Government had agreed that an expansionof the area was justified in view of the results obtained under theproject.
3.12 This and three other normal covenants were complied with. Thecovenant to engage consultants not later than June 30, 1977, to assistSODERIM in various studies (section 3.02(h)) was modified in that the soyamarketing study was not proceeded with (para 3.04) and that no agreementcould be reached with Government during the project period as to the basisfor any follow up program for agricultural development in the plain. Alsoconsultants to carry out the migration and health studies were not engageduntil 1978 and 1980 respectively; but, in the absence of a follow upagricultural settlement scheme, these delays were not damaging.
3.13 Section 3.07 required Government to ensure that SODERIM wasprovided with adequate liquid funds to cover all its expenditures"including without limitation expenditures on account of commitmentsentered into before (the project) period by or for the account of SODERIM".In fact, outstanding liabilities of its predecessor (MIDERIM) totallingCFAF 261 million (US$1.1 million) paid by SODERIM were not reimbursed byGovernment until end 1979 when part settlement of CFAF 200 million (US$0.85million) was made. There were also instances from time to time when therewas non-compliance with Section 3.01(b) under which Government was toensure that SODERIM should always have available liquid funds of not lessthan CFAF 70 million (US$0.3 million) to pre-finance project expenditures.Bank supervision missions drew attention to these financial short-comingsand achieved some success in putting them right.
IV. AGRICULTURAL IMPACT
4.01 The project as finally conceived involved the financing of pre-investment studies and agronomic trials to prepare a settlement schemeappropriate for the full development of the plain. As such its impact waslimited to a narrow front and the extent to which it achieved itsrestricted targets has already been described in para 3.04 and is assessedin Chapters IX and X.
4.02 At the same time, as the first large-scale mechanized riceproduction project in West Africa, it was hoped that any positive resultswould have a wider regional importance. The conclusion from projectstudies that mechanized rice production in the plain was not a viableproposition was reflected in the discussions at a Regional conference on"Rice Development Strategies for West Africa" held in Monrovia, Liberiafrom October 15-20, 1978, hosted by the West African Rice Development
- 18 -
Association (WARDA), which found inter alia that large scale ricemechanization was uneconomic in all cases although intermediate scalemechanization offered possibilities to reduce costs of production iand toraise farm revenue by increasing output per person.
V. RATES OF RETURN
5.01 In the President's Report of December 9, 1976, it was statedthat, on the basis of very preliminary calculations, it was expected that,if the project was completed successfully and a follow-up investmentproject implemented, the economic rate of return on the full project wouldbe some 15 percent, but agronomic and mechanization trials carried out underthe project showed that feasible crop patterns, rice yields and costs madelarge-scale mechanized rice production in the plain a non-viableproposition.
VI. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT
Institutional Design
6.01 The performance of MIDERIM, the Government agency established in1973 to implement pilot stage operations, was unsatisfactory from bothadministrative and technical points of view and its management supportedunproven large scale mechanized state farm operations. When, early in1976, without waiting for the conclusion of the appraisal process,Goverment invested some US$5.5 million in farm equipment for the immiediatedevelopment of a 800 ha mechanized rice farm, in a 5 tonnes/hour capacityrice mill and in storage facilities for 5,000 t rice, it also decided tocreate a commercial production agency (SODERIM) to replace MIDERIM. Thisgave the Bank the opportunity to be consulted on the new management:. Butit also meant that SODERIM had two differing objectives: to maximisecommercial production of rice to justify the equipment already ordered andto carry out pre-investment studies under the project. The fact thatGovernment was mainly interested in the first objective while the Bankemphasised the second demonstrates the dichotomy that plagued thisproject.
Financial Performance
6.02 A detailed financial and economic analysis made by the Super-vision Mission of March 1980 concluded that with yields achieved of around2 t paddy/ha at then current ex-mill buying prices fixed byGovernment at US$476/ton rice, and with processing costs put at US$86per ton paddy (estimated on the basis of full mill utilization)there would be a loss of US$200 per ton rice produced. Due to less than10 percent mill utilization, actual processing costs reached US$199per ton paddy, bringing the loss under mechanization to US$375/ton rice.
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6.03 For manually produced bottom-land rice, there was an estimatedloss of US$123 ton rice at current actual processing costs but when thesewere reduced to reflect full mill utilization, a profit of US$51 ton ricecould be expected.
6.04 In economic terms, the analysis showed a loss of US$189/ton onupland rice for mechanized rice production and a gain of US$60/ton rice formanually produced bottomland rice. For mechanized rice to break even ineconomic terms, yields would have to rise to around 3 t paddy/ha whereas infinancial terms breakeven yield levels would be higher at about 3.7 tpaddy/ha as against achieved yelds of 2 t paddy/ha.
6.05 These findings were confirmed by the progressive deteriorationof SODERIM's financial position because of production losses that as atJune 30, 1981 totalled some CFAF 700 million (US$3.2 million).
Foreign Technicians
6.06 The first SODERIM management team supplied by the consultingagency contracted by Government after consultation with the Bank had torectify the administrative shortcomings of its predecessor (MIDERIM),extend the area of mechanized rice production, instal and operate the ricemill, as well as set up the agronomic and other trials and studies underthe project. In so doing with perhaps undue flexibility, the team wasaccused of insensitivity in cooperation with Cameroonian institutions and,in September 1978, Government informed the Bank that it had requested thereplacement of the entire management team. The Bank accepted thisdecision.
6.07 The General Manager, Financial Officer and Workshop Chief werereplaced at the beginning of 1979; a temporary replacement ResearchOfficer supplied in March proved unsuitable for health reasons and a newone acceptable to the Bank joined the project in May 1979.
6.08 This change of management came at an opportune time when thevalidity of the Bank's contention that the emphasis should be on theconduct of studies to provide solutions to changing technical problemsrather than the production of rice at any cost was becoming apparent. Thenew team set up good work organisation, paid more attention to SupervisionMission recommendations and to the training of Cameroonian staff.
Accounting and Reporting
6.09 Accounting and reporting procedures were adequate but weredesigned primarily to reflect SODERIM's commercial operations rather thanthe carrying out project trials and studies. The accounting systemutilised a mini-computer for which Cameroonian operators were trained.After some delay, a cost accounting system was also installed toprovide a useful tool to management. Audit arrangements were satisfactory.
Institution Building
6.10 During Decision Meeting discussions (April 1976), importance wasattached to the value the project could have in enlarging the experience of
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Cameroonian research institutions which, it was thought, should benefitfrom the external guidance and financial support provided under projectstudies. Terms of reference for these studies drafted by the Bank formedthe basis of contracts between SODERIM and the agencies involved: IRAF foragronomic studies, CENEEMA for mechanization trials and ISH for migrationsurveys. (All three agencies operate under the jurisdiction of the thenNational Research Organisation - ONAREST).
6.11 These contracts which were approved by the Bank were in generalterms calling for the formulation of agreed annual programs. Difficultywas experienced in ensuring a proper division of responsibility betweenthe research organisations and SODERIM, particularly as regards theagronomic and mechanization studies, and Bank supervision missions had todevote much time to providing detailed technical assistance and guidancenot only in the formulation but also in the evaluation of the results ofthese annual programs. Economic evaluation of results was particularlyweak and had eventually to be undertaken by a Supervision Mission (para6.03 -6.05).
VII. SPECIAL ISSUES
7.01 The main issue was the fact that the main purpose and objectiveof the project was open to differing interpretations. For Government themain end was the maximum mechanized production of rainfed rice at any costsince it had already committed itself prematurely to heavy investment forthat purpose including a rice mill with a capacity of 20,000 t per annum (5t/h); for the Bank, the chief object was the solution of technical problemsto pave the way for full development of the Plaine des M'Bo throughalternative mechanization and other settlement systems to help relievepopulation pressures in the neighbouring highlands. These ambiguitieswere reflected in the various titles given to the project: TechnicalAssistance at appraisal, Phase I and Rural Development at Boardpresentation.
VIII. CHANGES IN REPEATER PROJECTS
8.01 No follow-up project has yet been approved because of the timeneeded to resolve these conflicting viewpoints. For the Bank, it wasrelatively easy to conclude from the results of project trials and studiesthat the only viable development strategy for the plain lay in anintegrated rural development project on the lines of the successful Bank-financed Western Highlands Rural Development project and in which ricewould be one of several crop promotion possibilities. Acceptance byGovernment of this approach meant admission that its previous emphasis onall-out mechanized rice production was ill-founded and that most of thecorresponding investments it had already made would have to be written off.
- 21 -
8.02 In 1980, based on a study by the consultants providing projectmanagement, Government, SODERIM and CCCE prepared a program for anotherthree years of experimentation (Julv 1981 through June 1984) expected tocost about US$10 million and aimed at the eventual development of at least2,100 ha irrigated rice, obviously endeavouring to justify in one way oranother the premature heavy investment in rice production and processingequipment. In view of:
(a) the difficulties already encountered in SODERIM's irrigated ricetrials (notably, blast losses);
(b) optimistic yield assessments 8 t paddy/ha in two seasons parti-cularly in view of double-cropping difficulties;
(c) less favorable soil, topography and climatic conditions thanthese experienced in the SEMRY project in North Cameroon;
(d) likely need for expensive and sophisticated cultivationtechniques that would be difficult for farmers to follow;
(e) settlement problems arising from difficult living conditions inthe wet plain proper; and
(f) likely heavy cost of considerable civil works (dams, irrigationand pumping) required for the development stage;
the Bank could not agree to participate in this proposed extension of theproject.
8.03 However, in November 1981 the Ministry of Economy and Planstated that Government had decided on a re-orientation of its policyregarding the development of the Plaine des M'Bo and agreed that any newproject should be based on settlement and integrated development in theplain "with rice constituting one crop among others" and invited FAO/CP toundertake the identification and preparation of such a project early in1982.
8.04 As a result, it has been agreed that support to agriculturaldevelopment in Santchou and Kekem districts would be provided under theSecond Western Highlands Agricultural Project currently under preparation.That part of the Plaine des M'Bo covered by the administrative district ofMelong could benefit from an agricultural development project based oncoffee cooperatives now under consideration for the Moungo Department ofwhich Melong district is a part.
IX. BANK PERFORMANCE
9.01 A RMWA identification mission that visited Cameroon in late 1972recommended consideration of the Plaine des M'Bo project, then conceivedas being based on private farmers rather than a large-scale state farm.
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Susbsequently some six Bank missions endeavoured to monitor thepreparation process but were unable to restrain Government's growingenthusiasm for immediate large-scale mechanised rice production. This wasincreased by the proposals contained in the preparation report submittedby the consultant appointed as part of the pilot stage and led to thepremature ordering of equipment, rice mill and storage facilties.
9.02 The correctness of the conclusion of the appraisal mission ofFebruary 1976 that the project area had development potential but thattechnical and economic questions had not been resolved to the degreenecessary to justify a large-scale development project has, as this reportshows, been amply demonstrated by subsequent events. The fact that,without waiting for completion of the appraisal process, Government wentahead to invest some US$5.5 million in farm equipment and infrastructurefor the immediate mechanized production of rainfed rice complicated theissues arising from appraisal. On the one hand, the Bank could have saidthat it so disagreed with such premature investment that it withdrew fromthe project, on the other, it could seek a form of participation that wouldenable it to influence further development. The decision to take thissecond alternative was largely influenced by the following factors:
(a) the apparent development potential of the Plaine des M'Bo;
(b) the contribution this might make to provide settlement opportu-nities almost in situ for about 5,000 - 7,000 industrious butlandless farmers from the over-population neighbouringhighlands;
(c) the apparently good prospects for a project based on a soya/ricecrop pattern coupled with reduced mechanization and settlement;
(d) the opportunity to give technical assistance and guidance inadaptive research to emerging Cameroonian research institutions;and
(e) the wider regional interest that would stem from any successfulmechanized rice production scheme.
9.03 Because it badly needed financial backing for a costly schemeGovernment accepted the Bank's proposals, as did the CCCE. The Boardpresentation (President's Report No. P-1904-CM of December 9, 1976)realistically outlined the risks involved and drew attention to a specialfeature of the draft Development Credit Agreement (Section 3.08) underwhich Government agreed that there would be no extension of development inthe plain until the project had provided the necessary guidelines for suchdevelopment. This restrictive covenant implied the possibility of adifferent approach by Government.
9.04 The fact that such a different approach posed special managementproblems was not, however, discussed, even though Government had announcedits intention of replacing MIDERIM, which had previously been responsiblefor early pilot operations, by SODERIM - an entity geared to the commercialproduction of rice. A weakness of the project design was that the project
- 23 -
financed not only well defined trials and studies but also the cost ofproviding the management team (General Manager, Research Officer andFinancial and Administrative Officer) responsible for the execution ofproject trials and studies and mechanized rice cultivation on up to 800 hatogether with the processing and sale of the output. Given the differingemphasis placed on these two sets of operations by Government and the Bank,project management had the difficult task of serving two masters. Analternative would have been for project-financed trials and studies to becontrolled by a separate entity or at least a separate unit within SODERIMbut this was not considered feasible and from the Bank's point of view itwould have weakened its oversight of force account operations. Governmentalso preferred the design adopted because it gave a form of hidden subsidyto SODERIM's commercial operations, in that the whole of the cost of themanagement team and not just that part devoted to carrying out projecttrials and studies was borne by outside lenders as "technical assistance".
9.05 In view of these inherent weaknesses, close project supervisionwas called for and given. In all, ten supervision missions spending 121mandays in the field were mounted with a considerable degree of continuityof staff (see Basic Data Sheet for details). In the first two years (1977and 1978), these missions rightly concentrated on ensuring that trials andstudies were correctly mounted and in the process themselves provided aconsiderable amount of technical assistance. In the remaining period (toJune 30, 1981), with trials and studies better organised under the secondmanagement team (para 6.06 and 6.07), supervision mission concentrated onthe evaluation of results and on endeavouring to persuade Government thatthese showed that mechanized rice production was not viable and that thebest method of developing the plain's potential lay in the implementationof an Integrated Rural Development type project, particularly in thefoothills of the plain.
X. CONCLUSIONS
10.1 For Government, the apparently very promising results of IRAF'searly mechanized rice production experiments seemed to offer goodprospects for introducing modern cultivation techniques on empty land toproduce rice as an import subtitution crop. Such development of the Plainedes M'Bo would also be in accord with its political and ethnic priorities.Its decision early in 1976 to make major investments in mechanized riceproduction and processing equipment costing US$5.5 million, financed bysuppliers credit, assumed that all the technical and economic questionshad been solved.
10.02 Bank project appraisal did not support this view and consideredthat alternative systems of mechanization, greater emphasis on settlement(to help relieve population pressure in the neighbouring highlands) aswell as alternative cropping patterns needed to be studied in depth beforethe appropriate form of development for the plain could be decided. Ratherthan withdraw completely from what it considered to be an unduly risky
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project as prepared the Bank decided to participate in a compromise projectin which together with CCCE it financed the necessary trials and studiesand, in particular, the technical assistance these demanded. However, atthe same time, to utilise the equipment already ordered, large--scalemechanization rice production was to be carried out. Recognising apossible conflict of interest, the Bank insisted on an unusual covenant inthe Credit Agreement (Section 3.08) under which no development beyond the800 ha already earmarked for large-scale mechanized rice cultivation wouldtake place until the results of the project studies were known. in theevent, this covenant did not have to be invoked because disapppointingproduction results and financial constraints confined mechanized croppingto a maximum of less than 500 ha.
10.03 The decision to confide responsibilty for both trials andstudies and commercial production to the same agency (SODERIM) paperedover the crack of the differing views of Government and the Bank as to themain objective of the project. To justify its premature equipmentinvestments, Government placed its emphasis on maximum early mechanizedrice production regardless of cost; whereas the Bank regarded the projectpre-investment studies as of paramount importance. As a result, SODERIM'smanagement was in the position of serving two masters, or attempting tolook two ways.
10.04 On the financial side, the project co-financers (IDA and CCCE)covered the full cost of the management team and not solely that related toproject studies and trials thus providing a degree of subsidy to SODERIM'scommercial production, while CCCE separately contributed to the cost ofthese production operations, thus blurring any distinction between the twoobjectives. Losses incurred by SODERIM on commercial production, althoughpartially met by Government subsidies led to a progressive weakening of itsfinancial position.
10.05 Results of project trials and studies may be summarised as
follows:
(a) because of inter-season harvesting difficulties and time cons-traints only one crop of rainfed rice with initially promisingyields of 2 to 2.5 t paddy/ha was feasible;
(b) declining yields over time due to soil fragility called forfurther pedologic and agronomic investigations.
(c) irrigated rice production needed further investigationparticularly as regards "blast" disease problems;
(d) manually cultivated bottomland rice could achieve yields of 2.5t paddy/ha making it economically viable;
(e) under mechanized cultivation average yields of 2 t paddy/ha werewell below breakeven level of 3.7 t paddy/ha necessary to meethigh production costs;
(f) settlement studies covering traditional crops were beginning toyield interesting results; and
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(g) health and migration studies threw light on the problems to befaced with any large-scale settlement on the plain.
10.06 From the Bank point view, it was relatively easy to recognisethat, as these results became apparent, they meant that mechanized riceproduction was not viable and that the best method of developing theplain's potential lay in the implementation of an integrated ruraldevelopment type project. Because of its early hopes and its prematureequipment investments, Government clung to the hope that some form ofmechanized production would succeed and it was not until after the end ofthe project period that Government announced a re-orientation of itspolicy and expressed its willingness to have the integrated ruraldevelopment approach examined.
10.07 The project results should provide some basic data previouslylacking for the preparation of any integrated rural development project inthe area but problems still remain, notably:
(a) definition of the project area;
(b) relationship to existing and proposed projects in neighbouringareas;
(c) the need for more information as to the viability of coffee andfood production and methods for their improvement; and
(d) settlement problems particularly those related to ethnicdifferences - fostering of Bamileke migration to land tradition-ally belonging to the M'Bo (hence the title of the Plaine) may bepolitically unacceptable.
10.08 The main lessons to be learnt from this project experienceinclude:
(i) premature investment in equipment for a production system basedon non-representative initial research results, incomplete fieldtrials and wishful thinking inevitably lead to misuse of scarcecapital resources;
(ii) expenditure exceeding US$10 million over the last ten years is ahigh price for Government to pay for the main negative findingthat mechanized rice cultivation in the Plaine des M'Bo isneither economically nor financially justifiable;
(iii) project expenditure of US$3.6 million was not a high price to payto show that the original proposals involving investment of tentimes that amount were unjustified and to provide some bases forsounder future project operations;
(iv) the need for particular care and special safeguards, especiallyas regards management, whenever the Bank participates in a
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project where there can be any major divergence between itsviews and those of Government as to the project's main aims; and
(v) in this particular case, the technical consistency of the Bankapproach and persistence in its presentation to Government seemsultimately to have proved successful.
- 27 - Addendum
CAMEROON
PLAINE DES M'BO RURAL DEVELOPMENT PROJECT
Credit 672-CM
PROJECT COMPLETION REPORT
The following tables cannot be completed because of the technicalassistance character of the project:
Annex III Key Indicators
IV Price
V Beneficiary Incomes
VI Beneficiaries
VII Project Incremental Crop Production
VIII Project Incremental Livestock Production
IX Financial Performance of Main Credit Intermediary.
CAMEROON: PLAINE DES M'BO RURAL DEVELOPMENT PROJECT (Credit 672-CM)
1/ Differences between areas cultivated and areas harvesteddue mainly to pest losses and weed aggressiveness making
it uneconomic to harvest some areas.
2/ Primarily for seed production.
-19 -A L
- CANEROON - PLAINE DES M'BO DEVELOPMENT PROJECT (Cr. 672-CM)
PROJECT COMPLETION REPORT
Project Organization and Objectives~ Appraisal Actual
A. Project objectives or Focus:Increased acreage or herdIncreased cropping intensityIncreased productivity - yield orlivestock offtake.
Shift to higher value crops .......Reduced production cost .........Technological Innovation.Estate/Large scale farming ........Integrated Rural development ......Other (specify) Technical assistance in trials X X
and studies to solve production development problems.
Use Performance-/B. Project Organization (indicate whether
new or existing) and performance _ _Project Unit ......................Coordinating or other committeeGovernment agency .................. New Gooc but aesign
Government corporation ........... weakness reducedOther (specify) project effectiveness
C. Consultants Use and Performance 1/Identification ...................Preparation ....................Appraisal ......................... _2_Sp_____low
Project executives ................ _ood_
Project advisers ........... GoodSpecial studies ............... /_eJe LowResearchers.Other (specify) ...................Focus of effort.Means .....Achievement of Objective .........Wider sector effort...............
D. Institution building and wider sectorefforts; __
Sector efforts;Focus of effortMeansAchievement of Objective
Wider sector effort;Focus of effortMeans
Achievement of files
1/ Indicate excellent, good, adequate or inadequate.
Caisse Centrale de Cooperation Economique Paris,(Central Fund for Economic Cooperation) November 16, 1982233 boulevard Saint-Germain75340 PARIS, France
Ref: DAO/PSE D1143
Mr. Shiv S. KapurDirector, OEDWorld BankWashington, D.C.
Subject: Comments on your evaluation report:"Plaine des M'Bo," Cameroon
Dear Mr. Kapur:
I thank you for transmitting to me the evaluation report on theM'Bo Plain project prepared by your department.
I have forwarded the document to our office in Cameroon and tothe geographical department concerned. Their comments are favorable. Thereport faithfully relates the course of events.
This project is a fine example of what should not be done in the areaof rural development: lack of knowledge of the physical and human environment,activism on the part of the consultancy firms and the suppliers, presumptuous-ness and obstinancy on the part of the experts, hastiness then weakness on thepart of the suppliers of funds toward ill-considered local initiatives.
The World Bank is absolutely right about the lesson that must bedrawn from this unfortunate experience, the consequences of which could havebeen much more serious in a country less able than Cameroon to bear itsfinancial consequences.
This lesson is, above all, the necessity of a progressive approach,with true-scale and sufficiently prolonged experimentation, whenever it issought to introduce technical innovation into a rural environment that isphysically and socially poorly known. It is also to look again at a workinghypothesis when the evidence shows that it is out of line with the realitiesof the situation.
The above are a few comments suggested by reading your department'sevaluation report on the M'Bo Plain project.
Yours sincerely,
|sJ R. BailhacheAssistant Directorpp. the Director General
noss' iuouoo ) NIGER. ]CAMEROON A F ,I C Ak aC
M'BOS PROJECT AREA To CAMERoOi 21.Prolect area boundary OnchuogPilot scheme -.- Internationnl
Main roads boundariesNIGERIAEarth roads I (
Rivers A,/
Areas surveyed and mapped: .- '''' t /-5'20' Suitoble for rainfed rice 5J20- .CENtRAL
(D cho ~ AFRICAN[ D Suitable for 'owland riceo 2r 0 S REPUBLIC
N VVillages /ombap AMEROONI[ Bridges Ta wa n I' Yo.undr
