Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 3304-UNI

STAFF APPRAISAL REPORT

NIGERIA

SOKOTO AGRICULTURAL DEVELOPMENT PROJECT

May 24, 1982

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 disclose1 without World Bank authorization.

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

CURRENCY EQUIVALENTS

Currency Unit = Naira (N)US$1 = Naira 0.55Ni = US$1.818

WEIGHTS AND MEASURES

Unless otherwise stated, all weights andmeasures used in this report are metric:

1 metric ton = 0.98 long ton1 hectare (ha ) = 2.47 acre1 kilometer (km) = 0.62 mile

FISCAL YEAR

January 1 - December 31

FOR OFFICIAL USE ONLY

ABBREVIATIONS

AlI - Agricultural AssistantADPs - Agricultural Development ProjectsAPMEPU - Agricultural Projects Monitoring, Evaluation and Planning

Unit (Kaduna)ASP - Advanced Service PackageBSP - Basic Service PackageCMES - Central Monitoring and Evaluation SectionCSDTS - Central Staff Development and Training SectionFCS - Farmer Credit SchemeFDRD - Federal Department of Rural DevelopmentFCN - Federal Government of NigeriaFMA - Federal Ministry of AgricultureFO - Field OverseerFPDS - Fadama Planning and Demonstration SectionFSC - Farm Service CenterGADP - Gusau Agricultural Development ProjectLBA - Licensed Buying AgentLGA - Local Government AreaLGC - Local Government CouncilMA - Managing AGentMANR - Ministry of Agriculture and Natural Resources (Sokoto State)MLG - Ministry of Local Government (Sokoto State)MOF - Ministry of FinanceMOFEP - Ministry of Finance and Economic PlainingMR:DC - Ministry of Rural Development and Cooperatives (Sokoto State)MTU - Mobile Training UnitNC:B - Nigerian Cotton BoardNG.B - Nigerian Grains BoardRWS - Rural Water SupplySADP - Sokoto Agricultural Development ProjectSADPEC - Sokoto Agricultural Development Project Executive CommitteeSCIF - Standard Conversion FactorSLAR - Side-Looking RadarSAPMU - Sokoto Agricultural Project Management UnitSARDPC - Sokoto Agricultural and Rural Development Policy CouncilSASCO - Sokoto Agricultural Service CompanySCF - Sokoto Cooperative FederationSLAR - Side Looking Airborne RadarSRRtBDA - Sokoto Rima River Basin Development AuthoritySSG - Sokoto State GovernmentZADAC - Zonal Agricultural Development Advisory CommitteeZMES - Zonal Monitoring and Evaluation SectionZRCT - Zonal Road Construction TeamZRMU - Zonal Road Maintenance Unit

F 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.

NIGERIA

SOKOTO AGRICULTURAL DEVELOPMENT PROJECT

STAFF APPRAISAL REPORT

Table of Contents

Page No.

I. BACKGROUND ........................................................... I

A. Project Origin ................ .......................... 1B. The Agricultural Sector ...... ........................... 1

II. THE GUSAU AGRICULTURAL DEVELOPMENT PROJECT ...... ... 4

A. Objectives and Experience to Date ....................... 4B. Lessons of Experience ............. ........ . .... .... 5

III. THE PROJECT AREA.. 6

A. Physical and Social Infrastructure .. 6B. Socio-Economic Features ..... 7C. Agricultural Institutions and Support Services . 9

I;V. THE PROJECT ............ 12

A. Objectives and Summary Description ..... ................. 12B. Detailed Features .... .......................... . -.. o ............ . 13C. Cost Estimates .20D. Proposed Financing ... .. ................... .............. 22E. Procurement ........................ 24F. Disbursements ....... 24G. Budgeting, Accounts, Audit and Reporting . 25H. Implementation Schedule and Annual Review . .25

V. PROJECT IMPLEMENTATION . .... .................... 26

A. Organization and Management ..... 26B. Staffing and Training ...... . . .... 28C. Input Distribution ..... 30D. Cooperative Development and Farm Credit ..... 32E. Monitoring and Evaluation . . ... 33F. Post-Project Development . .... . . 34

This report is based on the findings of a World Bank appraisalmission comprising messrs: Saadat, Miller, des Bouvrie, Ludwig (Bank),Surinder Singh, Jackson (Consultants) who visited Nigeria in October 1980.Irn addition Mr. Ranganathan contributed to the report at Headquarters.

- ii -

Table of Contents (Cont'd)

Page No.

VI. TECHNOLOGY AND PRODUCTION SPECIFICATIONS ..................... 34

A. Rainfed Farming ....... .................................. 34B. Fadama Development ........................................ 36C. Feeder Roads ....... ..................................... 37D. Rural Water Supply ...... ................................ 39

VII. MARKET PROSPECTS, MARKETING AND PRICES ...................... 40

A. Market prospects . ....................................... 40B. Marketing ............................................... 40C. Prices .................. ........ ................. 42

VIII. FINANCIAL ANALYSIS .......................................... 43

A. Financial Implications for Farmers ...................... 43B. Financial Implications for Governments .... .............. 45C. Cost Recovery ................................................... 45

IX. ECONOMIC ANALYSIS ........................................... 46

A. Project Benefits ......................................... 46B. Economic Rate of Return ................................. 47C. Sensitivity Analysis and Project Risk .... ............... 48

X. AGREEMENTS REACHED AND RECOMMENDATIONS ........... ........... 48

TABLE IN TEXT

Table 1 Summary of Project Costs .21Table 2 Summary Financing Plan .23Table 3 Summary of Financial and Economic Farmgate Prices 43Table 4 Summary of 4.0 ha Farm Budgets .43

ANNEX 1

Table 1 Upland Crop Recommendations .. 51Table 2 Upland Crop Development Projections . .52Table 3 Upland Crop Production Projections . .53Table 4a Wet Season Fadama Crop Recommendations . .54Table 4b Irrigated Fadama Crop Recommendations . .55Table 5 Fadama Crop Development Projections . .56

Table 6 Fadama Crop Production Projections . 57Table 7 Agricultural Manpower Demand and Supply . .58Table 8 Bank Lending for Agriculture in Nigeria . .59

- iii -

Table of Contents (Cont'd)

Page No.

ANNEX 2

Table 1 Summary of Project Costs ............................... 60Table 2 Project Costs by Financing Category .. * . ................ 61Table 3 Detailed Financing Plan ........ ........................ 62Table 4 Estimated Schedule of Disbursement of Bank Loans ....... 63Table 5 Total Fertilizer Requirements and Costs 64

ANNEX 3

Table 1 Summary of Economic Analysis ................ ............ 65Table 2 Sensitivity Analysis . ........ . ........... . .. ................. . 66

ANNEX 4 Related Documents Available in the Project File ........ 67

Charts

22267 Project Organization

ZAIPS

IBRD 15065R1 - IBRD assisted Agricultural ProjectsIBRD 15424 - Sokoto Agricultural Project Zone

NIGERIA

SOKOTO AGRICULTURAL DEVELOPMENT PROJECT

STAFF APPRAISAL REPORT

I. Background

A. Project Origin

1.01 The Federal Government of Nigeria (FGN) has requested World Bankassistance for a statewide agricultural development project in Sokoto State.The project will be implemented over five years, and is estimated to costUS$498.7 million. At full development, the project is aimed to increase theproductivity, incomes and standard of living of about 482,000 rural familiesin the State by providing a range of farm support services in association withinfrastructural improvements and institutional modifications.

1.02 The proposed project originated as a follow-up of the Gusau Agricul-tural Development Project (GADP), which has been fully disbursed. A progressreport on GADP is contained in Chapter II. The statewide project proposalwias prepared by the GADP planning section, assisted by specialist consultants.Project preparation was reviewed by a Bank mission in October 1979. Theproject was appraised in October 1980.

B. The Agriculture Sector

1.03 Recent macro-economic developments and policy issues are discussedin the latest Country Economic Memorandum (Report No. 3232-UNI) dated April 7,1981, as well as in the Basic Economic Report examining the long-term economicprospects and policy options facing Nigeria (Report 3341-UNI), dated August 17,1981.

1.04 Agricultural Sector. 1/ Agriculture is the leading non-oil sectorin Nigeria, supporting 61% of the population directly, and providing 23% ofGDP, 5% of total exports and 62% of non-oil exports. Production is overwhelm-ingly by smallholders, using traditional, manual technology. In the north,cattle and annual crops predominate (grains, cotton and groundnuts), while inthe south cash income is largely from tree crops (cocoa, oil palm, and rubber)with subsistence support from root crops and grains. Since 1970 agriculturalproduction has stagnated, with annual growth rates (below 1%) less than halfpopulation growth. Domestic food prices have risen, agricultural exports havedeclined, and imports of food rose fifteenfold between 1970 and 1978. Policiesto promote agricultural development must be pursued against an admittedly dif-ficult macro-economic background. In addition to exchange rate factors, agri-culture must compete with the booming modern sector, public and private,fueled by oil revenues, and with high statutory minimum wages. These pres-sures have been particularly hard to resist in the south of the country. In

1/ A full description and policy analysis is given in Report 2181-UNI (1979),and in "The Green Revolution: A Food Production Plan for Nigeria,"Federal Ministry of Agriculture (1980).

- 2 -

the south, urban centers are more highly developed, and agriculture has tradi-tionally been based on export crops, which, squeezed between rising costs and

a relatively fixed exchange rate, are no longer able to compete in overseasmarkets. In the middle belt and north, these pressures are felt less keenly,though they are still present. Urban pull is less powerful, and given a muchsmaller modern sector, statutory wage rates are less effective in influencingprivate labor markets. The northern region's greater distance from seaportsgives some natural protection against imports of the grain products which nowform the overwhelming bulk of northern agriculture's output. In addition,administrative protection, although erratic, has generally been effective inkeeping prices of domestic foodstuffs well above international levels. Nomajor petroleum exporting country has found it easy to deal with the effectsof the 'oil syndrome' on productive sectors. In Nigeria's case, continuedprotection for agricultural commodities appears justified, and should beaccompanied, in the medium-to-long term, by measures to improve the produc-tivity of the agricultural sector, i.e., better rural roads, more efficientinput supply, and extension services. Packages of such services to improveagricultural productivity have been successfully pioneered under previouslyBank-financed ADPs.

1.05 Development Strategy and Constraints. Successive Governments haveemphasized the importance of improving agricultural performance throughnational programs such as Operation Feed the Nation, the National AcceleratedFood Production Program, and now the Green Revolution. The strategy hasbeen dualistic. On one hand, Government has attempted to introduce advancedtechnology through intensive and costly irrigation and mechanization programs;on the other, it has endeavored to expand services to small farmers throughGovernment agencies. Generally, the results have been disappointing and annualgrowth rates in production have remained low, mainly because of inappropriateplanning and allocation of financial and manpower resources. Further, agri-cultural research has not been very effective, and in some parts of the coun-try, is non-existent, and has often failed to address farmers' most pressingproblems. Links between research and the extension services have been weak,and the extension services in turn (divided between States and Local Govern-ment Councils) have been short of trained manpower and often lacking invigorous direction and coordination. The structure of government subsidies onfarm inputs, especially fertilizer, has been such as largely to preclude com-mercial involvement by the private sector in distributing such inputs, whilethe public sector has lacked both the physical infrastructure and the effec-tively managed institutions required to accomplish this task. At the sametime, the limited budgetary resources available for subsidy have imposedartificial ceilings on total input availability.

1.06 Bank Role, Key Sector Issues and Future Strategy. Between 1971and 1981 the Bank committed US$764.2 million in loans for 22 projects inNigeria's agricultural sector. The projects are listed at Annex 1, Table 8and shown in map IBRD 15065R1. They include a livestock project and a numberof area-specific Agricultural Development Projects (ADPs), mostly in the northand "middle belt." Within the ADP project areas, semi-autonomous projectmanagement units have provided strong direction to strengthened and expandedextension services, undertaken local, adaptive field trials, established

- 3 -

input distribution of Farm Service Centers (FSCs), -and constructed and upgradedrural feeder roads on force account. Where funding and management have beenadequate, these ADPs have generally achieved their objectives, and an annualproduction growth of 5% have been achieved. With Bank assistance, the Govern-ment has prepared and published a National Food Production Plan which sets afive-year target for bringing ADPs, or similar but simplified service packagesto be known as Accelerated Development Areas (ADAs), to a larger segment ofNigeria's rural population. The Bank's Agricultural Technical AssistanceProject (Loan 2029-UNI) will assist Government implement the ADA program.The present project and other statewide ADPs have provided an opportunity forFGN to address the need for improvement of fertilizer procurement and distri-bution arrangements. A study, commissioned by the Federal Ministry of Agri-culture (FMA) and completed in December, 1981, reviewed the nationwide ferti-lizer procurement and distribution system and made appropriate recommendations.FMA, in consultation with the Federal Ministry of Industry who have enteredinto a Joint Venture Agreement with M.V. Kellogg Company for setting up thefertilizer complex at Onne and for assistance in marketing, both domestic andexport, of the fertilizer produced at the Onne Plant, is now formulatingconcrete proposals to strengthen its fertilizer procurement and distributiondivision. FMA is expected to utilize the technical assistance already avail-able under ATAP (Loan 2029-UNI). For the cropping year 1982-83, FMA haveimported and supplied sufficient quantities of ferti'lizer to Sokoto State.

1.07 To initiate and support policy changes in the agricultural sectorthe Bank's strategy has been to provide FGN with data and recommendations forsupportive mechanisms to encourage the necessary changes. This has beenaccomplished, albeit slowly, through sector and subsector work and technicalassistance. Thus, during the past two years, the Bank and FGN have jointlyundertaken, where possible, studies and reviews covering food production,livestock, forestry, oil palm, agricultural marketing and prices, credit and,most recently, manpower development and training. The findings of some ofthese studies are being linked to future specific institutional actionsthrough the Agricultural Technical Assistance Project (para 1.06). Thus, forexample, technical assistance will be provided to the Nigerian Agriculturaland Cooperative Bank (NACB) and to the National Grains Board (NGB) withthe intention of implementing some of the recommended policy changes as wellas providing a lead for future Bank investments through these institutions.The findings of the recent manpower development and training sector missionshould have immediate benefit, not only to Government manpower planningstrategy, but also to ongoing Bank-assisted projects, particularly the Agri-culJtural and Rural Management Training Institute (Loan 1719-UNI).

1.08 An important tool now available to the Federal Ministry of Agricul-ture (FMA) is the capability provided under ATAP to plan and monitor thetechnical, organizational, and financial needs of the ADP/ADA programs. Itprovides an opportunity, on the basis of evaluated results, to develop appro-priate policies and incentives that will support, on a planned basis, agricul-tural growth. Thus, for example, data from existing projects evidences theneed to reduce fertilizer subsidies. Minimum basic services to the farmingcommunity can be encouraged through special and supplementary federal supportfirLancing to State Governments. The proper monitoring of these and otherprograms should provide a feedback to Government of the quantifiable progressof its development efforts, and thereby induce a more favorable flow ofresources to the sector.

II. THE GUSAU AGRICULTURAL DEVELOPMENT PROJECT (Loan 1099-UNI)

A. Objectives and Experiences to Date

2.01 The Gusau Agricultural Development Project (GADP) was among thefirst three agricultural development projects in Nigeria. The project cov-ered about 4% of Sokoto State and was appraised in 1975, and became effectivein May 1976. The project included: (a) provision of improved productionpackages for cotton, groundnuts, cowpeas, sorghum and maize grown by 68,000participating farm families; (b) construction of 600 km of feeder roads toprovide better access to markets, and to open up areas with promising agricul-tural potential; (c) provision of seasonal and medium-term credit; (d) devel-opment of a seed farm; (e) improvement of the input supply system; (f) train-ing of project staff, and (g) establishment of a monitoring and evaluationunit. The project has completed its five-year development phase, and the loan(US$19.0 million) has been fully disbursed. A PCR, dated 18 August, 1981, hasbeen prepared.

2.02 The real success of GADP can be appreciated only if its performanceis set against the relative stagnation in the rest of the country's agricul-tural sector. The overall implementation of GADP has been good, and Govern-ment fully supports the project concept. In fact the success of GADP, ona relatively small scale, has encouraged the Government to replicate thisexperience on a statewide basis. The project is very popular with farmers,who have responded favorably to project actions. Most project targetshave been achieved. Although it is extremely difficult at this stage to assessprecisely the success of project production packages, results fromthe ongoing Bank assisted research project 1/ indicate that about 60-70%of project farmers adopted some of the improved packages. However, since theimprovements were introduced in the context of a mixed farming situation actualaverage yields have been lower than those projected for sole crops. Overall,project farmer yields have been appreciably higher than on unimproved farmsand returns per hectare have significantly increased. Available evaluationdata 2/ shows that between 1976 and 1978, average project farmer yieldsincreased by about 20% and aggregate production grew 12% per annum, withparticularly significant production increases for sorghum and cowpeas. Maizeuptake in the Gusau ADP has not equalled that in the contiguous Funtua projectarea, but the crop has fully demonstrated its potential and financial attrac-tiveness. Under proper agronomic conditions, maize yields have been twicethose of traditional sorghum and millet. Groundnut production has benefittedfrom the Rosette resistant varieties made available by the project's seedfarm. The area and total production of cotton has failed to match targets,mainly due to the inefficient statutory marketing arrangements for the crop.However, due to the project's inherent flexibility, farmers were able to

1/ "Adoption of farm technology in Northern Nigeria" RPO 671-88 (June 1981)- West Africa Projects Department, IBRD.

2/ "The Monitoring and Evaluation of the Funtua, Gusau and Gombe Agricul-tural Development Projects", 1980, IBRD.

- 5 -

quickly and effectively respond to the changing environment, and to shift tomore remunerative crops. The increased food crop prices provided the farmerwith such opportunity, while assuring project viability. Despite supplydelays and shortages, fertilizer consumption by project farmers rose fromabout 2,500 tons (1976) to over 14,000 tons (1979). In addition, the project'sseed farms produced high quality seeds not only for project farmers but alsofor farmers in the rest of the state and for those in adjoining states.

2.03 The project's infrastructure program has been successful; in fact,in cases actual performance has exceeded appraisal targets. Some 760 km(target 660 km) of feeder roads, 43 FSC (target 40 FSC), 42 small dams (target60 dams), as well as numerous buildings such as offices, houses and workshopswere constructed. The project feeder roads have had a salutary impact onmarketing and input supply. On certain feeder roads, the traffic volumes haverisen to almost 100 vehicles per day. More importantly, the GADP feeder roadunit is continuing to construct feeder roads outside the project area forwhich it is being reimbursed by the concerned LGCs.

B. Lessons of Experience

2.04 Perhaps the most important lesson of the GADP is that in a riskyand relatively unknown farming environment, crop recommendations should bemade simple and flexible, so that the farmer can easily adjust his croppingpatterns to seasonal agro-climatic conditions and emerging long-term struc-tural changes. The declining interest of GADP farmers in cotton cultivation,for example, did not seriously affect project viability, because equallyatt:ractive alternative food crop production packages were readily available.One important farming characteristic was that, instead of sole crops, farmerspre'ferred to continue growing mixed crops. Future adaptive research effortsneed to be concentrated on developing better cropping systems, concentratingon the most common two- or three-crop mixtures. Moreover, in the context ofsoaring labor costs, the emphasis should be on labor-saving technology.Except possibly in the high risk northern areas, the production packagesshould be primarily designed to maximize returns per man-day. The creditoperation of the project's commercial services division has not been fullysatisfactory. Although the loan default rate has averaged around 20% ofloans outstanding, the project's commercial staff has had to spend inordinateamounts of time in administering the credit program. Future credit operationswould be institutionalized by linking them more closely to the cooperativemovement. The project's training program was successful and project manage-ment in the GADP has been transferred progressively to Nigerian personnel.There is a need, however, for a better defined management training programto be administered by specialists in this field. Finally, the project'smonitoring and evaluation effort proved to be somewhat sophisticated andresulted in delayed feedback to project management. In future, surveyswould be simplified to emphasize timely management-oriented (in contrast toresearch-oriented) information.

III. THE PROJECT AREA

A. Physical and Social Infrastructure

3.01 Physical features. The project area, (see Map, IBRD 15424) encom-passing the entire Sokoto State in northwest Nigeria, covers 102,500 km2

and includes 19 local government areas. The topography of the State isdominated by a gently rolling pene-plain which rises from an elevation ofabout 300 m in the northwest to an average of 450 m in the southeast, where itpeaks at 850 m. The southeastern half of the State is underlain by crystallinerocks of the basement complex, covered by a discontinuous layer of weatheredgranite (up to 40-50 m thick); laterite hardpans are found at variable depths.The soils of the project area are generally light textured, with a medium tolow pH, and have limited reserves of plant nutrients particularly nitrogen andphosphorus. The western part of the State is traversed by the wide and exten-sive floodplain of the Sokoto-Rima River System, with the two rivers flowingin a northeasterly-southwesterly direction through the State. The soils ofthe lower river terraces and floodplain bottom lands vary considerably intexture from sandy or silty clays to heavy clays with moderate to high organicmatter contents. They are subject to extensive flooding, but otherwise areparticularly suited for wet season cropping, and where water resources areadequate, for dry season irrigation. The climate is primarily governed by themovement of the Intertropical Convergence Zone, a monsoon rainfront. Thelength of the rainy season decreases from south to north with 1,300 mm fallingduring 170 days and 600 mm during 120 days, respectively. About 60% ofprecipitation falls between May and September, but short dry spells may occurin the middle of the rainy season, particularly in the north, with seriousadverse effects on crops. During the winter months (December through March),cold and dry northeasterly dust-laden winds known as the "Harmattan" occurfrequently. A more detailed description of the project area's physicalfeatures is given in the Project File (SWPC2).

3.02 Communications. The trunk road network in the state is relativelywell developed with about 1,600 km of paved federal roads, 430 km of pavedstate roads and 440 km of main gravel roads. A lack of road maintenance isevident on the older, more heavily trafficked paved roads, where the pavementis starting to break up. There are about 1,000 km of all-weather feeder roads,of which 760 km are concentrated in the GADP area. In addition, there areestimated to be 2,700 km of dry season motorable tracks. The overall densityof all weather roads in the state is presently about 34 km/100 km2 well belowthe average of 6.0 km/100 km2 recommended in the Food Plan Under the FourthDevelopment Plan, the State has planned to improve its feeder road network atan estimated cost of N25 million. The lack of all weather roads in thesoutheastern part of the state (Anka LGA and part of Gusau LGA) inhibit agri-cultural development. Similarly, development of the area southwest of theNiger river (part of Bagudo LGA) is constrained by the lack of a reliableriver crossing as well as poor internal communications. The State has ini-tiated measures to relieve these constraints. A railway line from Zariaand the south of Nigeria passes through Gusau to the railhead at Kaura Namoda.

-7-

The line is likely to have significance for input delivery and crop evacuation.The project area is served by the newly constructed Sokoto airport, from whereNigeria Airways operates a scheduled daily service to other parts of Nigeria.

3.03 Health Services and Schools. The medical infrastructure of theState is poor. Health services are mainly available to the urban population,while the limited rural facilities are in poor physical condition. The Bankis currently considering a rural health project for Sokoto State. Educationfacilities in the State are quite good, and have benefitted from the Govern-ment's strong commitment to universal Primary Education. The primary schoolenrollment was nearly 400,000 in 1978, representing 60% of the primary school-age population.

3.04 Power and Water Supply. Electricity is supplied to the followingfive main towns by the National Electric Power Authority (NEPA): Sokoto,Guasau, Birnin Kebbi, Argungu, and Yauri. A modest number of diesel-operatedgenerating units (800 KVA) have been installed by the Ministry of Water andElectricity. Such facilities are available at the zonal headquarters. How-ever, since considerable voltage fluctuations and frequent power failures areexperienced, the project would make provision for self-sufficient powergeneration at zonal headquarters. The water supply system is also unsatisfac-tory, with only the towns and some major villages su.pplied with pipe-bornewater. Water supplies in most rural areas still consist of unreliable andcontaminated supplies from ponds and unimproved wells. Responsibility forrural water supply has recently been transferred to the Ministry of RuralDevelopment and Cooperatives (MRDC), which has planned a construction programfor 1,000 concrete open wells, and some boreholes throughout the state. Theprcject would undertake a borehole program to improve water supplies invillages of 500-1,500 population.

B. Socio-Economic Features 1/

3.C5 Demography. Using the 1963 population census as a base 2/, andassuming a 2.3% per annum growth rate, the State's population in 1980 isestimated at 5.4 million. Of this, 90% or 4.9 million is rural. Populationis very unevenly distributed, however, with densities ranging from a low of14 per km2 in Anka LGA to 123 km2 in Gwadabawa LGA. Sokoto LGA, whichincludes the city, has a population density of 266 per km2. The averagefarm family is made up of 6.5 persons, and there are an estimated 688,000farming families in the State. Family labor is generally sufficient forfarming activities, with limited amounts of labor hired by the larger farmers.Women contribute mainly to harvesting and post-harvesting operations.

1/ A full description of the project area population, customs, land tenuresystem and farming organization is given in Project File (SWPCI).

2/ The 1973 Census has been abandoned formally by FGN.

-8-

3.06 Land use: Existing land use information indicates that about 25% ofthe State's 102,533 km2 land area, some 2.6 million ha, is under cultivation.Since the majority of the farmed area is intercropped, with an estimated crop-ping intensity of 140%, the total cropped area is some 3.6 million ha. How-ever, the proportion of land farmed varies considerably across the State,ranging from a low of 8% in Anka LGA to a high of 70% in Sokoto LGA. Goodpotential for opening up new land for rainfed agriculture exists in parts ofAnka, Zuru, Yauri and Bagudo LGAs. In these areas, considerable migration isalready taking place, and with improved infrastructure, this flow is expectedto increase (Project File SWPC1). The majority of farms range between 3.5and 4.0 ha. Farm holdings are usually fragmented into three or four plotsper household.

3.07 Cropping patterns. The majority of the State's farmed area is undermanually cultivated rainfed crops grown at subsistence levels. A fractionalarea is grown under cash crops in the dry season in the fadamas, the bottom-lands along the river and streams. Sorghum and millet are the predominantcereal crops (over 60% of the cropped area). Rice covers an estimated 2.5% ofthe State's cultivated area and is grown in fadamas. Groundnut and cotton arethe main cash crops but their cultivation declined dramatically in the mid-seventies due to marketing problems and price disparities favoring cereals.Groundnuts also suffered from Rossette disease, a virus that almost wiped outthe crop. Cotton cultivation is mainly confined to the eastern and centralparts of the State as these areas have easy access to local ginneries.

3.08 Traditional farming is characterized by mixed cropping, using localvarieties, rudimentary manual cultivation, infrequent weeding and low plantdensities. Existing yields are very low, as improved technology and inputsare hardly used outside the GADP. Mixed cropping is a hedge against risk andwithin the socio-economic environment of the farmer satisfies to a degree bothsubsistence and food security needs. Under low levels of inputs and tech-nology, mixed cropping gives higher total yields/ha than sole cropping andthus greater income (Table 5 SWPC1). Nevertheless, traditional crop mixturessuch as sorghum/millet are not always agronomically compatible as they competefor nutrients and moisture at the same time and within the same root zone.In fact, such crops have an exhaustive effect on the soil, which is aggravatedas chemical fertilizer use is limited, and the area under legumes is low.

3.09 If the prevailing low level of farm production is put in perspec-tive with the agricultural potential (as shown by results obtained at GADP andnearby research stations), it appears that significant production gains arepossible in a short period. More importantly, such production increases canbe obtained within traditional farming systems by making available, on time,improved seeds, fertilizers, and plant protection material together with basicfarm support services and simple improved technology. In Sokoto State, thefadamas offer greater potential than the uplands in improving yields, diversi-fying crops and raising farmers incomes. Here, far more impressive productiongains can be achieved by introducing improved irrigation techniques andequipment.

-9-

C. Agricultural Institutions and Support Services

3.10 Institutions. The Ministry of Rural Deve:Lopment and Cooperatives(MRDC) is the State's principal rural development agency. Created in October1979, it is charged with the responsibility for developing rural water sup-plies and feeder roads, developing cooperatives, and managing special agricul-tural projects like the Gusau ADP. MRDC comprises a general administrativesection and three operational divisions: agricultural services (includinglivestock), works division, and a cooperative and community developmentdivision headed by the Chief Registrar of Cooperatives. At present MRDCis severely understaffed at all levels, except its cooperative division whichwas inherited from the Ministry of Trade, Industry and Cooperatives (MTIC).Moreover, since agricultural extension work is the responsibility of LGCs,MRJ)C has no effective outreach to the farmers. The Ministry of Local Govern-ment (MLG) coordinates the activities of the 32 LGCs in the state. The lawestablishing the LGCs envisaged a major developmental role for them, butthey do not yet have the capacity to tackle most of their responsibilities,including extension, feeder roads, markets, rural warter supplies. The projectwould include a program to train LGC staff to take over project functions suchas feeder roads and rural water supply maintenance (paras 6.14-6.20).

3.11 The Ministry of Agriculture and Natural Resources (MANR) comprisesthe Agricultural Services, Irrigation, Livestock, Produce Inspection, Forestryand Agricultural Engineering Divisions. With the establishment of MRDC, theagricultural services of MANR have been reoriented towards advising farmerson pest control, soil conservation, and horticulture. In addition, MANRhandles seed multiplication, fisheries and forestry development. The presentarrangement of divided responsibility for agricultural development among MANR,MRIC and the LGCs is unsatisfactory, and for the project period it is proposedto unify the key elements of development under a single line of command.

3.12 Extension. In 1976, the responsibility for all extension services(except that of GADP) was transferred from MANR to the LGCs. At the LGClevel, the chief extension officer is an agricultural superintendent. Theexisting work program is usually of an ad hoc nature, with little guidanceavailable on its content, presentation or means of execution. Moreover,there is no established system of monitoring program effectiveness. The LGCagricultural staff are frequently required to perform non-extension tasksthat range from supplying farm inputs to the sale of rice. However, the mainproblems impeding extension efficiency are: lack of technical direction;inadequate in-service training; insufficient contact with farmers due toinadequate manpower and absence of well-structured work programs; weak linkswith agricultural research institutions; and poor logistic support. SSG isaware of these problems and is placing high priority on reinvigorating itsextension services. Under the project, the extension services would beconsiderably reorganized along the lines of the Training and Visit (T&V)system and rendered more efficient.

3.13 Training for field overseers is carried out at the MANR Farm Train-ing Center (35 enrollment), at Talata Mafara, and the Gusau School of Agricul-ture (150 enrollment), operated by GADP. While the Talata Mafara School offers

- 10 -

a two-year program, with heavy emphasis on basic sciences, the GADP schooloffers a one-year, practically-oriented curriculum, which is followed up byregular in-service training, once staff are posted to the field. Additionally,a two-year training program is provided for agricultural assistants at theZuru School of Agriculture. The school has adequate facilities but lacks ademonstration farm, which would be established under the project (para 4.20).Although existing courses cover a wide range of subjects, there is an urgentneed for properly organized on-the-job-training. At present, such trainingis only available for GADP staff. For its senior staff, the State relies onhigher diploma and degree programs offered at Ahmadu Bello University (Zaria)and its affiliated agricultural colleges, at the Sokoto and Kaduna Polytech-nics, and at the recently established (1980) University of Sokoto. Despitethese opportunities, the State's staff development efforts have fallenwell short of its requirements due to difficulties faced by indigenes inmeeting entrance requirements and because of inadequate administration ofstaff development programs within MANR.

3.14 Research. There is currently no research of any importance in theState. The only significant Research Station is the National Cereals ResearchInstitute's rice station at Birnin Kebbi. Although this station has beentesting rice varieties since 1972, its findings have not been tried on farmersfields, at least on any significant scale. The Institute of AgriculturalResearch (IAR) in Samaru has formulated some recommendations on crop varieties,agronomy, and fertilizer requirements. These have been field tested by GADPto some degree, and would be further tried for Sokoto State's different ecologi-cal and soil conditions. The International Institute for Tropical Agriculture(IITA) at Ibadan has made some promising research findings on cowpeas, soy-beans, and maize that can be applied in Sokoto State. Overall, the researchat the farm level has been inadequate, and there is a need to test out avail-able packages of crop mixes or relay cropping. The project's adaptive researchprogram (para 4.09) will provide the necessary research support to projectarea farmers.

3.15 Input Supplies. At present, responsibility for input supply isdivided between the MRDC and MANR. While fertilizer distribution is handledby MRDC, other agro-chemicals and improved seeds are distributed by MANR.The major source of improved seed is the GADP, which produces annually about500 tons of groundnut, 130 tons of maize, and 160 tons of cowpea seed. Thecurrent total State fertilizer consumption (excluding GADP) is 10,000 metrictons, or 4.0 kg (nutrient value) per ha. Farmers are generally aware of thebenefits to be derived from increased input use, particularly fertilizers,and experience with GADP farmers indicate a substantial unsatisfied demand.At the State level, the most serious bottlenecks relate to poor distributionplanning, inadequate storage, and transport facilities. Details of the presentinput distribution system and future proposals are in the Project File (SWPC5).

3.16 Cooperatives and Credit. The State has a fairly well establishedcooperative system. At the apex is the Sokoto Cooperative Federation (SCF)which is supported by nine Cooperative Unions in eight LGCs and a statewidenetwork of 331 multi purpose primary societies. In addition, there are 120tobacco grower and nine fishermen's societies. The cooperative movement is

- 11 -

dependent on Government support, both for its staff and financing. SSG isarxious to reduce this dependance, and measures are being introduced tostrengthen cooperatives. The project would further assist in improving theperformance of existing and new cooperatives (para. 4.17). The cooperativemovement has been actively involved in produce marketing, but its involvementwith production credit is more recent (1979). During the 1979-80 season SCFprovided seasonal production credit to 65,000 farmers amounting to N1.5million. Seasonal loans were made at a 5% interest rate. The rate ofrecovery presently stands at over 90%. The State intends to establish a StateCooperative Bank, whose authorized capital of N3.0 million would be fullypaid up, with SSG taking a 41% share. In addition, SSG is committed toprovide the Cooperative Bank with a N8.0 million long-term interest freeloan.

3.17 Apart from cooperative credit, the other major source of agricul-tural credit is the Farmers Credit Scheme (FCS). This scheme was set up in1975, and until October 1979, when it was absorbed into MRDC, was operated byits own independent board. The main source of the FCS loanable funds has beenNACB, which to date has provided FCS with N5.8 million, under State Govern-ment guarantee. Since 1975 FCS has made about 23,000 loans, amounting toN13.4 million. The recovery performance of the FCS has been poor (on average60% of loans disbursed) with the result that in 1979 it did not extend any fur-ther loans. Further details of the existing cooperative system and the agri-cultural credit operations are given in the Project File (SWPC5).

3.18 Marketing. Foodcrop marketing in the State is on an almost "laissezfaire" basis with prices largely determined by supp]Ly and demand. The recentWorld Bank Agricultural Prices and Subsidy Mission 1/ found producer pricesto be a high proportion of market prices. The farmer is estimated to obtainabout 70% of the retail price, with about 4% going to the transporter, and thebalance being shared by intermediaries. The marketing chains for domesticallyproduced foodstuffs, as measured by the number of times foodstuffs changehands, are surprisingly short. Typically, the number of transactions betweenthe producer and final consumer averages between three or four. The mostcommon chain is producer-assembler-wholesaler-retailer-consumer. ProducersaLes usually occur on the farm, in the farmer's village or in rural markets.In Sokoto State there are some 350 small, periodic, LGC-controlled, villagemarkets which form the main channel for the farmers output, but some interstatetrading is also reported to occur. The village markets have generally poorinfrastructure and are able to handle limited quantities of merchandise. Ifinc:reased throughput is to be expected, there would be a need to rehabilitateand expand certain important LGC markets.

3.19 Three statutory boards, namely, the Nigerian Grains Board, the Cot-tort Board and the Groundnut Board, deal with crops grown in the project area.With the exception of the Cotton Board--which enjoys monopsony powers--the

1/ Agricultural marketing and prices in Nigeria - Recent developmentsand Policy Issues dated December 15, 1980.

- 12 -

boards have virtually no share of the produce, due to the low level of offi-cial prices. Official marketing intervention is likely to remain confined tothe operation of strategic stocks. However, limited, short-term price supportoperations in area-specific markets could be highly useful. For example, expe-rience in the earlier northern ADPs has shown that introduction of improvedtechnology can lead to surpluses which, in the short run, local markets havedifficulty clearing. Under such circumstances, an efficient, official buyingoperation could effectively act as a safety net. The existing marketingarrangements and proposals in the project area are more fully described in theProject File (SWPC6).

IV. THE PROJECT

A. Objectives and Summary Description

4.01 In full accord with FGN and SSG policies, the primary objectives ofthe proposed project are to: increase agricultural production; improve farmincomes; and rationalize and strengthen state institutions in the agriculturalsector, particularly the Ministry of Rural Development and Cooperatives (MRDC).The project which would be implemented over five years, (1982-86), wouldbenefit some 482,000 farm families cultivating on average 4.0 ha. To achievethese objectives the project would provide for:

(a) Farm and Crop Development

- increased production of the major rainfed and fadama cropsthrough the introduction of improved farm practices witha parallel improvement in extension work, farm input supply,and credit;

- operation of a farm management advisory service to assistmore advanced group and individual farmers in their opera-tions, and improving the State land use planning capability;

- strengthening of existing seed multiplication facilitiesand establishment of a 150 ha seed farm, to produce rice andvegetable seeds;

- establishment of an applied research program to test cropvarieties, farm systems, farm implements and crop proces-sing equipment.

(b) Infrastructural development

- construction of about 1,700 km of feeder roads, and trainingof LGC staff in their subsequent maintenance;

- improvement in rural water supplies by drilling some 1,200boreholes and training LGC staff in their maintenance;

- 13 -

construction of project offices, workshops, stores, staffhouses and 68 Farm Service Centers (FSCs) and upgrading of28 existing fertilizer stores into FSCs;

improvement of 18 rural markets, and construction of additionalcooperative storage facilities to handle farm inputs andcrops.

(c) Institutional Support and Training

- project management, technical and administrative staff, includinglogistical support;

- establishment of a monitoring and evaLuation unit to evaluateproject progress and provide guidelines for future projects;

- pre- and in-service training for project and SCF staff andtraining for farmers;

- strengthening of cooperative unions and their primary societies,by providing financing, staff and constructing stores;

- establishment of the Sokoto Agricultural Services Company (SASCO)to supply essential farm inputs and services to farmers.

(d) Technical Assistance

- recruitment of suitable staff to assist in program execution,and training of managerial and technical staff for MRDC andSCF;

- consultant services to assist in the implementation of thetraining programs, rural water supply, land use planningand socio-economic studies.

B. Detailed Features

On-Farm Development

4.02 Project intervention would improve agricultural practices of approxi-mately 482,000 smallholders, cultivating about 1.9 million ha (2.7 million hatotal cropped area, allowing for intercropping) in upland areas and on some25,000 ha of fadama land. This represents 70% of the upland farmers, who,on the basis of GADP experience, would be expected to adopt partly or whollyimproved cultural practices. A relatively higher adoption rate is envisagedfor fadama farmers, who would be carefully selected and would receive closeextension supervision. Expected increases in improved areas and productionfrom these areas are detailed in Annex 1, Tables 2 anid 3. Production in-creases would be achieved by offering farmers improved upland and fadama crop

- 14 -

production packages. The rainfed package would include a simple and inexpen-sive Basic Services Package (BSP) and a slightly more elaborate AdvancedServices Package (ASP). The two crop packages are discussed below.

4.03 The Rainfed Crop Production Packages are relatively simple and aredirected toward increasing yields (and income) per hectare and per unit oflabor input. By using high-yielding varieties with adequate fertilizer,suitable plant populations and appropriate crop protection measures, combinedwith timely sowing and weeding practices, there is scope for large increasesin food and cash crop production without unduly changing existing farmingsystems. Under the BSP, farmers would be expected to apply these practicesto both sole and intercropping farm systems. The more innovative farmers,including the group and larger farmers, would be offered the ASP involvinghigher levels of farm inputs, such as pesticides, in combination with improvedland preparation and weeding practices. Technical details are further dis-cussed in Chapter VI, while a fuller description of the State's agronomicpotential is in Project File (SWPC2).

4.04 Fadama Crop Package. Although upland farming occupies the majorityof the State's cultivable area (over 85%), fadama development offers betterlong-term development prospects. Over the five-year period, 40,000 farmerswould be assisted in improving cultivation on 10,000 ha and developing afurther 15,000 ha with minor irrigation during the dry season. The fadamapackage would consist of improved cultivation practices and water managementtechniques. The latter would include the introduction of modern water liftingdevices--including 2,000 diesel and 10,000 handpumps--improved plot layout,and land levelling. Since some of these techniques and practices are new tothe target farmers, the rate of progress of this component would be slowinitially, concentrating during the first year on demonstration activitiesusing volunteer farmers' fields. Such demonstrations would be undertaken by aspecial Fadama Planning and Demonstration Section (FPDS), which would providetechnical advice to fadama farmers. The project would also provide limitedamounts of grants (para 5.19) to promote proper land preparation and the useof mechanical pumps. Technical details are discussed in Chapter VI, (andSWPC2) while the estimated area and production are given in Annex 1, Tables 5and 6.

4.05 Extension. An efficient extension service is critical to thesuccess of the project. Under the project, the entire agricultural extensionservices, currently with LGCs, would be seconded to the project managementunit (SAPMU). More importantly, existing and new staff would be retrained sothat they are able to operate through the Training and Visit (T&V) system oforganized, closely supervised agricultural extension. The success of theT&V system would, however, depend greatly on the choice of contact farmers,who would be carefully selected in consultation with LGCs. Such selectionwould be regularly reviewed by farmers as well as by extension staff, and thesystem would be flexible enough to allow the contact farmers to be replaced.Contact farmers would be advised by the Field Overseers (FO) at fortnightly ormonthly intervals. The content of the fortnightly extension programs and thebriefing and training meetings would be prepared by the project's training andsubject matter specialists. The exact method of extension and the field

- 15 -

wiork/farmer ratio must be viewed with a considerable flexibility until theclemands and the needs of the farmer are properly evaluated. The aim wouldbe to reduce the existing extension worker/farmer ratio from the current1:4,000 to 1:600 by PY5. The project would finance the incremental salariesof extension staff and the cost of necessary vehicles, equipment and buildings.While the agricultural staff requirements are shown in Annex 1, Table 7 theextension costs are in the Project File (SWPC9).

4.06 Input Supply and Credit. The adequate and timely supply of farminputs, and other farm services would be the responsibility of the project'sSokoto Agricultural Services Company (SASCO) to be established under theproject. This Company would distribute farm inputs through a network ofASCs, FSCs, and cooperative retail outlets. The estimated input requirementsin PY 5 are: 210,000 tons of fertilizers, 4,500 tons of improved seeds, and50 tons of various plant protection chemicals. SASCO would also stock andsell animal-drawn implements, diesel pumps, hand pumps, fast-moving spares andother requirements. SASCO would sell seasonal farm inputs on a cash basis butwhen necessary, deferred payment would be allowed. Medium-term credit forpumps, implements, and draft animals is expected to be provided by the SokotoCooperative Federation and/or commercial banks. The detailed organization ofthe input supply and credit system is in Chapter V. SASCO's financial projec-tions are in the Project File (SWPC5). The project would finance SASCO's five-year capital and operating costs, including buildings, equipment, vehicles,and technical assistance.

4s.07 Farm Management Service and Land Use Planning. To assist the moreinnovative ASP farmers (para. 4.03), including large scale and group farmers,the project would provide a farm management advisory service. In additionto specialized extension advice, the SADP farm management team would assistinterested farmers to prepare farm plans for commercial bank financing. Loca-lized population pressure combined with poor land use planning and overgrazing,is leading to a gradual degradation of farm and range land within the state.This is particularly the case in the north and west. The project-establishedland use section would bring together all available land use and capabilityinformation, and supplement this through remote sensing imagery and fieldsurveys. It would advise project management on land development opportunitiesand problems, and assist in sighting project-financed infrastructure. Incollaboration with local governments, it would develop small-scale conserva-tion areas to test and demonstrate conservation principles. Road constructionequipment could be used for this purpose during slack construction periods.

4.08 Seed Production. Foundation seed would be obtained through theNational Seed Services Center at Zaria, while cotton seed will continueto be supplied by the Nigeria Cotton Board. The project seed multiplica-tion program would be kept flexible to meet the seed demands for varietiesaccepted by the farmers. The existing GADP seed farms produce high-qualitygroundnut, maize, cowpeas and millet seeds. Under the project, the GADP seedmultiplication facilities would be further strengthened and expanded tosatisfy the increased needs of the project. For this purpose, the projectwould finance additional staff, seed grading/cleaning equipment and a smallseed testing laboratory. To meet the project's seed requirements for rice,vegetables and sugarcane, two seed multiplication farms would be established,

- 16 -

a 100 ha farm in the Western Zone and a smaller (50 ha) farm in the NorthernZone. During negotiations, assurances were obtained that Government wouldmake available suitable farm land to establish the proposed seed farms. Theproject would finance the services of a specialist seed production managerfor the western zone farm. In addition, financing has been provided forlimited importation of high-quality vegetable seeds including Irish seedpotatoes. The project's seed multiplication farms could produce seed forapproximately 50,000 ha each year. In case of increased demand, outgrowerswould be involved. The seed production program is detailed in Project File(SWPC2).

4.09 Applied Research. The project's applied research program would aimat integrating new technology acceptable to the local community in the existingfarming system, and would cover all the agro-ecological areas through zonalcenters. Three main areas of concentration would be: farming systems, fer-tilizer use and soil-water management. Farming systems and intermediatetechnology would focus on increasing production per unit of land, and wouldinclude determining the agronomically compatible and economically viablecrop combinations for the different ecological zones. Research on animaltraction and tractor cultivation will aim at solving the labor constraints incrop production. Fertilizer research would focus on the appropriate NPKfertilizer mix for different crop mixtures. For this purpose, a soil testinglaboratory would be established in the project to determine the nutrientstatus of the state's soils. Soil and water management research would focuson simple soil erosion prevention techniques, optimizing the use of residualmoisture for crop production, and improving irrigation efficiency by adaptingthe layout of farmer's fields and irrigation methods to the higher wateryields of pumped irrigation. Annual plans for adaptive research would beprepared by SAPMU in consultation with zonal agronomists. Initial trialswould be carried out both on the existing GADP seed farms and on those to beestablished (para 4.08). Successful research findings would be furthertested and later demonstrated on farmer fields.

4.10 The applied research program would be coordinated by SAPMU's centralagronomy section. The section would provide for two-way assimilation anddissemination of information with the zonal centers. Linkage with outsideresearch organizations such as IAR, IITA, ICRISAT, would be the responsibilityof SAPMU's senior agronomist, who would be supported by two research officers.Project financing would include construction of two applied research centers,at Bunza and Wurno; facilities for the other two exist. In addition, thesalaries and other costs of research officers, junior agronomists and supportstaff would be provided. Further details of the applied research programare given in the Project File (SWPC2).

Infrastructure Development

4.11 Feeder Roads. The project would finance the construction of 1,700km of feeder roads linking important agricultural areas to the existing mainroad network, including access to FSCs and agricultural markets. Particularemphasis would be given to providing improved access to the agriculturallyimportant Sokoto-Rima, Zamfara and Gulbin Ka fadama areas. In addition,simple improvements would be made to some seasonal access tracks within the

- 17 -

fadama areas, which are subject to annual flooding. The project road con-struction program is much less intensive (1.7 km per 100 km2) than that ofthe GADP (15.8 km per 100 km2). Construction would be organized on a zonalbasis, with an average of 100 km per zone being completed annually. Roadconstruction equipment (40% of construction costs) would be procured by theproject under ICB. Execution of the program would be by project engineersrecruited through a consultant firm. Petty contractors would undertake suchtasks as delivery of laterite and construction of culverts. The annual feederroad development program including justification, length and location would becarefully considered with MRWC and the various LGCs, and would be part of theannual Action Plan to be agreed with the Bank prior to the beginning of eachcalendar year (para 4.36).

4.12 Project road maintenance units would be established in each zone.Erom the outset, the objective would be the gradual transition of feeder roadmtaintenance responsibility from the project to the LGCs. Each zonal roadmaintenance unit would, as far as possible, be distinctly separate from theconstruction unit, and would be established with its own equipment, workshopand staff. By the end of the project, these road maintenance units would formthe basis for the establishment of a LGC Joint Board for feeder road mainte-rnance in each zone. LGCs would be encouraged to provide staff for on-the-jobtraining in road maintenance and repair to prepare for assuming these res-ponsibilities. To ensure full LGC involvement, the project would include aroad maintenance training engineer in SAPMU who would identify LGC trainingneeds, arrange secondment of LGC road staff and draw up annual trainingprograms.

4.13 Rural Water Supply. The project's rural water supply (RWS) com-ponent would aim at making potable water available to some 0.8-1.0 millionrural dwellers. For this purpose the project would finance the drilling ofabout 1,200 boreholes, 700 of which are expected to be in hard rock forma-tions, and 500 in sedimentary (mainly sandstone) strata. Drilling would beundertaken by contractors under ICB. Areas deficient in drinking water havebeen identified and preliminary priorities have been set, based on availabledata of watering point densities. However, further detailed surveys would beundertaken on a yearly basis, well in advance of drilling, to yield informa-tion on the current water supply situation, hydrogeological conditions andthe siting of new watering points. Water quality tests would be conducted onselected sites. Water supply maintenance would be organized on a three-tiersystem at village, LGA and zonal level to ensure proper, long run functioningof the RWS system (para 6.20). While the technological and organizationalaspects of the project's RWS program is discussed in Chapter VII, details arein Project File (SWPC3).

4.14 Buildings. The project would contract for a large amount of civilworks to house staff and support operations. Facilities would include morethan 1,100 staff houses of varying standards, 210 offices, 68 farm servicecenters, upgrading of 28 existing fertilizer stores into FSCs, 40 stores, 8workshops, various training facilities, and site improvements consistinglargely of electrical and water reticulation. The building program would be

- 18 -

executed by an internationally recruited civil engineer in project headquar-ters, assisted by the senior engineer (usually the road engineer) and build-ings supervisor in each zone. Standard designs based on other ADPs or MOWdesigns are available and would be used in most cases. Buildings sections ineach zone, headed by the buildings supervisor, would be responsible formaintenance.

4.15 Marketplace Improvements. A large part of expected incremental foodcrop production is expected to be marketed. Existing infrastructure is notfully able to handle increased throughput (para 3.18), and crop losses couldbe high. Therefore, it is proposed to finance the improvement of 32 LGCwholesale markets. Improvements would include provision of simple ameni-ties for produce handling and reception, lorry parks, covered vendor stalls,scales, water supplies and concrete floors. Most LGCs have the financialmeans to undertake market improvements on their own, but at present theyappear to attach a relatively low priority to this type of investment.Consequently, project financing for this component would be provided on amatching basis, with 50% of the costs to be borne by participating LGCs. EachLGC would prepare a plan for market improvement, which would be evaluated bySAPMU's Rural Infrastructure and Agricultural Development (RIAD) Committee(para 5.03). Once plans were approved, the participating LGC would make anadvance financial contribution, equal to its share, into a "Market ImprovementFund" to be established under the project.

Institutional Support

4.16 The institutional development features of the project relatingdirectly to the project management unit and associated committees arediscussed in detail in Chapter V of this report.

4.17 Cooperative Development. The SSG is fully committed to involvingmore actively the State's cooperatives in input supply, credit, and cropmarketing. If cooperatives are to play a more active role, their financialbase and management needs further strengthening (SWPC4). The project willtherefore include financing for: (a) the salaries of (19) union managers andprimary society secretaries (200); (b) the construction of about 10,000 tonsof storage for produce and inputs. The proposed storage sites would bereviewed by the RIAD to be established under the project; (c) technicalassistance for the Sokoto Cooperative Federation (SCF), which will employ anexperienced agricultural credit specialist who would help streamline itscredit scheme; and (d) training cooperative sales staff (para 5.11). Further,to ensure that cooperatives have an adequate capital base to effectivelyengage in the project's marketing and credit operations, assurances wereobtained at negotiations that SSG would provide a matching grant amounting toN5,000 for each union, and N500 per society totalling NO.5 million total.

4.18 Monitoring and Evaluation (M&E). To help establish an efficientproject management information system and to evaluate the impact of projectactivities, the project would finance the establishment of a state levelCentral Monitoring and Evaluation Section (CMES) with four zonal M&E sections(ZMES). Specific project investments for M&E would include the services ofan internationally recruited evaluation specialist, three local M&E officers

- 19 -

and the necessary logistic support for a core of zonal enumeration teams.The scope and organization of the project M&E Unit is discussed in Chapter V,para 5.20, and details are in Project File (SWPC7).

4.19 Training. The project itself would be a massive training effortin improved agricultural methods, infrastructure development, communications,and rural administration. It would provide a sound basis for on-the-jobexperience and training under competent senior staff, where the objectivesof management and rural development would be clearly laid out. This init:self, however, is not sufficient, and the project would supplement on-the-job experience with formal staff development programs. The trainingcomponent would aim both to meet the project's immediate manpower require-ments and serve the state's long-term manpower development needs. Theprojects training activities would be coordinated by SAPMU's Central StaffDevelopment and Training Section (CSDTS).

4.20 Field overseers (FOs), whose numbers would be greatly increased,would continue to be trained at the Gusau School of Agriculture, whose presentcurriculum and capacity are adequate for the State's upland extension needs.To supplement the new training facilities at the Zuru school of Agriculture(which trains Agricultural Assistants), the project would finance the develop-ment of a 20 ha demonstration farm on or near the existing school site.Furthermore, a new training center would be established at Bunza to trainFOs and AAs specialized in fadama irrigation practices. Aside from thesecentralized training facilities, the project would establish zonal trainingunits to provide continuous training to field staff through mobile trainingunits. Residential training, for staff and farmers, would be available at theTalata Mafara, Zuru and Bunza centers. To support the training and extensionactivities, a Media Center would be established under SAPMU, which woulddevelop training materials, including audio-visual presentations and a radioprogram. A training program would also be developed to upgrade the basiceducational qualifications of FOs in order to qualify them for diploma coursesat. Zuru and elsewhere. Facilities and staff for this purpose would be locatedat. the Talata Mafara Farm Training Center, whose FO training functions wouldbe ended. Training for other project staff including commercial, works andaccounting staff would also be carried out at the Talata Mafara trainingcenter. The organization and implementation of the project's training programis discussed in Chapter V, and further details are contained in the ProjectFile (SWPC6).

Technical Assistance

4.21 Sokoto Agricultural Project Management Unit (SAPMU). The SAPMUwould be principal project implementation agency. The project would providefor the international recruitment, through consultant firms, of 125 staff-yearsof key technical and managerial staff for SAPMU (details are in paras 5.08-5.09).

4.22 Consultancy and Studies. The project would finance 108 expert-monthsof- short-term consultant services to assist in specific areas where localskills are unavailable, or where SAPMU needs short-term supplementation.Specifically, the consultants would provide:

- 20 -

(a) specialized training services including a review of managementtraining (26 expert-months);

(b) specialized skills to plan the project's water supply compo-nent, in particular in the interpretation of side-lookingradar imagery and hydrogeological data (22 expert-months);

(c) advice on land use planning including services in remote sensing,air photography interpretation, soil surveys and cartography(20 expert-months);

(d) support for the project's monitoring and evaluation study inthat selected farm level studies would be undertaken to assessthe project's impact on farm incomes and its distribution(20 expert-months); and

(e) help in drawing up post-project development plans, includingarrangements for maintenance of feeder roads and rural watersupply (20 expert-months).

4.23 The consultants would be hired individually or through firms at anestimated cost of US$11,000 per expert-month. It is expected that internationalconsultants would provide the main input, but efforts would be made to encou-rage local firms to participate. Assurances were obtained at negotiationsthat consultants would be engaged with qualifications, experience and termsand conditions satisfactory to the Bank and Government would promptly submitconsultants' reports to the Bank for review.

C. Cost Estimates

4.24 Project costs during the five-year development period 1982-86,are estimated at N274.3 million (US$498.7 million). N121.5 million(US$220.9 million) or 44% would be foreign exchange costs, and N152.8million (US$277.8) local costs, of which N15.4 million (US$28.0 million)would be taxes. The costs are summarized in table 1 below.

- 21 -

Table 1: SUMMARY OF PROJECT COST

Percentageof

Base TotalLocal Foreign Total Loca:L Foreign Total Cost Cost-----(N Million)----- ----(US$ Million)----

Project Management 5.5 4.0 9.5 10.0 7.3 17.3 5 3Staff Development 7.8 3.9 11.7 14.2 7.1 21.3 6 4

Land ULse Planning 1.1 0.9 2.0 2.0 1.6 3.6 1 1Applied Research 1.7 0.6 2.3 3.0 1.2 4.2 1 1Seed Multiplication 1.2 0.9 2.1 2.2 1.6 3.8 1 1Monitoring and Evaluation 3.0 1.0 4.0 5.5 1.8 7.3 2 2Extension 21.4 7.5 28.9 38.9 13.6 52.5 15 10Fadama Development 6.2 4.0 10.2 11.3 7.2 18.5 5 4

Engineering Services 2.5 2.1 4.6 4.6 3.8 8.4 2 2Mechanical Workshops 4.4 2.6 7.0 8.0 4.7 12.7 4 3Road Construction 14.8 10.7 25.5 26.9 19.5 46.4 13 9Road Maintenance 7.7 5.5 13.2 14.0 10.0 24.0 7 5Water Supplies 4.8 7.5 12.3 8.8 13.6 22.4 6 4

Marketing and Coops 3.2 1.2 4.4 5.8 2.2 8.0 2 2Sokoto Agric. ServicesComlpany (SASCO) 10.2 3.3 13.5 18.5 6.0 24.5 7 5

Fertilizer 18.8 30.6 49.4 34.2 55.6 89.8 25 18Chemicals and Implements 6.4 10.7 17.1 11.7 19.4 31.1 8 6

Subtotal 120.7 97.0 217.7 219.6 176.2 395.8 110 79

(Non-Incremental Costs) (17.9) (2.2) (20.1) (32.7) (3.8) (36.5) (10) (7)

TOTAL BASE COST 102.8 94.8 197.6 186.9 172.4 359.3 100 72

Physical Contingencies 5.5 5.5 11.0 10.0 10.0 20.0 6 4Price Contingencies 44.5 21.2 65.7 80.9 38.5 119.4 33 24

TOTAL PROJECT COSTS 152.8 121.5 274.3 277.8 220.9 498.7 139 100

4.25 Project base costs are calculated using prices obtained duringappraisal and updated to levels expected to prevail in October 1981. Costsinclude physical contingencies equal to 5% of base costs, except on civilworks which have 10%, and 25% for borehole drilling. Price contingenciesare calculated on base costs plus physical contingencies and are compoundedannually using the following annual rates: on local salaries and allowances,

- 22 -

10%, on all other local costs, 15%; and on foreign costs, 8.5% in PYI, 7.5% inPY2-PY4 and 6% thereafter. Total contingencies are equivalent to 28% of totalcosts or 39% of base costs. Details of project costs are presented in Annex 2,Table 1, and the Project File (SWPC9).

4.26 The costs summarized in Table 1 are incremental, covering thoseinvestments and operational costs over and above the present MRDC and MANRrecurrent budget covering comparable areas. This annual current level ofexpenditure is estimated at approximately N4.0 million. An assurance wasobtained during negotiations that SSG would maintain at least that level ofspending, adjusted as necessary for inflation, in addition to its contributionto incremental costs. For annual farm inputs, the table includes those annualquantities which are incremental over the preceding year's estimated consump-tion. In the case of fertilizer, which is the key input, FGN has initiatedsatisfactory fertilizer supply arrangements and is currently establishing aNational Fertilizer Marketing Company (para 1.08).

D. Proposed Financing

4.27 Of the total project cost of N274.3 million (US$498.7 million),the Bank would finance N80.9 million (US$147 million) at the lending rateof interest current at the time of loan approval and for a period of 20years including a five-year grace period. The Bank loan would represent 30%of project costs or 32% of costs net of taxes, and would be approximately67% of the foreign exchange component. FGN's contribution (N77.6 million)would consist of 25% of project costs exclusive of input costs (N44.6million), plus the fertilizer subsidy (N33.0 million), equivalent to 48%of the farmgate price. SSG would contribute N85.4 million plus N3.5million as equity contributions to SASCO and the cooperatives (not part ofproject costs). Farmer contributions amounting to N30.4 million wouldfinance seasonal inputs. A detailed project financing plan is in Annex 2Table 3, and summarized on page 22.

4.28 Under the current subsidy practices FGN subsidizes 50% of the costof fertilizer delivered to Sokoto, the farmer pays a fixed cost (approximatelyequal to 18% of the cost to the State) and SSG pays the remaining cost includ-ing distribution costs to the retail level. If current subsidy practicescontinue, with the projected levels of fertilizer usage (para 4.06), the totalcost to FGN and SSG of fertilizer subsidies over the project period would beN181.4 million. The Bank would not finance the foreign cost of incrementalfertilizer requirements, as the Government is able to finance the subsidies tothe rural sector from its oil revenues. However, if due to Government'ssubsidy policy SASCO (the State's input distribution agency) were unable torecoup its operating and handling charges from the buyers, SSG would beobliged to cover such deficits. At negotiations it was agreed that SSG,FGN and the Bank would annually review and agree on SASCO's cost recoverypolicies and practices to ensure that the cost of any input or service isfully recovered.

- 23 -

Table 2: SUMMARY FINANCING PLAN(N million)

Total IBRD FGN Farmers SSG

Civil Works 34.2 17.1 8.5 - 8.6Plant, Vehicles, Equipment 44.3 29.5 11.1 - 3.7Borehole Drilling 7.9 5.4 1.4 - 1.1Chemical & Implements 25.2 14.6 - 22.7 (-12.1)Fertilizer 71.2 - 33.0 7.7 30.5International Staff & 14.3 14.3 - - -Consultants

Local Staff 39.1 - 10.0 - 29.1Operating Expenses 38.1 - 13.6 - 24.5

Total (N million) 274.3 80.9 77.6 30.4 85.4

(US$ million) 498.7 147.0 141.1 55.3 155.3

4.29 The Bank loan of US$147.0 million would be made to the FederalGoverment which would onlend to SSG on the same terms and conditions under asubsidiary loan agreement drawn up between FGN and SSG. The signing of thesubsidiary loan agreement is a condition of effectiveness. As many projectshave suffered from inadequate and untimely inflows of funds from Governmentsources, FGN and SSG agreed, during negotiations, to a flow of funds mechanismto address this problem. More specifically, SAPMU would submit at least fourmonths prior to each fiscal year the project's proposed annual budget asapproved by the SARDC to FMA and the Bank. SAPMU would be authorized toestablish overdraft facilities equivalent to three-months' expenditure, N5million, and the overdraft would be guaranteed by SSG. A condition of effec-tiveness requires SSG to provide evidence satisfactory to the Bank that theguaranteed overdraft facilities had been established with a commercial bank.SSG and FGN would each pay their contribution into the project's bank accountquarterly and in advance in accordance with the approved annual budget. Itwas agreed at negotiations that, in the event of SSG's being delinquent inpaying its contribution to project costs, FGN would pay the State's contribu-tion directly from SSG's statutory allocation into the project's bank account.This would be specified in the subsidiary loan agreement between FGN and SSG.Conditions of effectiveness are: (a) that FGN and SSG had made their initialquarterly contributions for SAPMU, estimated at N3 million each into SAPMU'scomimercial bank account (para. 4.33); (b) that SSG had contributed Nlmillion to SASCO, as payment for cash equity to its commercial bank account(paras 4.32 - 5.13); and (c) Bank reimbursement would be made directly to theSAPMU's commercial bank account.

- 24 -

E. Procurement

4.30 Chemicals and agricultural implements valued at N25.9 million(US$47.1 million), of which N25.2 million (US$45.8) is incremental; vehicles,road construction equipment, tractors and other equipment and spare partsvalued at N44.3 million (US$80.5 million); and civil works including build-ings, boreholes, and materials for road construction valued at N42.0 million(US$76.3 million) would be procured through international competitive bidding.Services of consultants and internationally recruited staff valued at N14.3million (US$26.0 million) would be obtained in accordance with proceduresacceptable to the Bank. Contracts for civil works valued at less than US$2million and other contracts for less than US$200,000 would be awarded followinglocal competitive bidding procedures acceptable to the Bank. For contractsof less than US$60,000 direct competitive shopping would be employed. Itemsfor procurement would be bulked to permit optimum use of competitive bidding.Domestically manufactured goods would be allowed a 15% preference or theapplicable import duty, whichever may be lower, when comparing bids withthose of foreign manufacturers in procurement under ICB. Fertilizer valuedat N203.5 million (US$370.0 million) would be procured by the NFMC and wouldnot be reimburseable under the loan.

F. Disbursements

4.31 The Bank loan would be disbursed from 1982 to 1986 as follows:

Category I 50% of the cost of buildings and other civil works(US$28.0 million);

Category II 100% of the foreign expenditures for directly importedgoods for vehicles, tractors, heavy plant, generators,road-equipment, and spare parts, or 85%, if locallyprocured (US$48.3 million);

Category III 100% of the cost of salaries and allowances ofinternationally recruited staff and cost of consul-tant services, studies and overseas training (US$23.0million);

Category IV 100% of the foreign costs or 70% of the total costs ofcontracted borehole drilling for rural water supply,(US$9.0 million);

Category V 100% of the foreign expenditure on directly importedincremental chemicals and other farm inputs, excludingfertilizers, or 70%, if locally procured (US$23.9million); and

Category VI An unallocated amount of US$14.8 million.

- 25 -

Al:L expenditures would be fully documented and disbursements for all cate-gories would be made only against authorized contracts. Provision has beenmade for up to US$1.0 million of retroactive financing as of May 1, 1981 forkey internationally recruited staff, to assist in project start-up activities.A schedule of Bank loan disbursements is given in Arnex 2, Table 4.

G. Budgeting, Accounts, Audit and Reporting

4.32 Annual budgets would be prepared by SADP management based onappraisal estimates but amended where necessary to reflect changes in costsan(d project development policies. These budgets would be approved by SARDPC.The approved SADP annual budgets would provide the guideline for preparingmore detailed quarterly cash flows which would be approved by the SADPEC, andwhi.ch would form the operational basis of project activities. SSG would usethe approved SADP annual budget as a basis for making budgetary allocations tothe project. All necessary funds for SADP would be provided quarterly and inadvance into two separate commercial bank accounts to be established for SAPMUand SAS¢O (para 4.29).

4.33 SAPMU and SASCO would keep financial records in accordance withsound accounting practices to reflect their operational and financial posi-tion. All project accounts and financial statements would be audited annuallyby independent auditors who would also review the proposed accounting systemat project initiation. During negotiations assurances were obtained fromGovernment that (a) SAPMU and SASCO's accounts would be audited by independentauditors acceptable to Bank; (b) the audit report would be submitted to theBank within four months of the end of the fiscal year; and (c) the report ofthe auditor would be of such scope and in such detail as Bank may reasonablyrequest, including a statement as to whether or not Bank funds had been usedfor their intended purpose. The Federal Agricultural Support Unit (Kaduna)being set up under the Bank-assisted Agricultural Technical Assistance Project(ATAP) (para 1.06) would monitor the accounting and financial system of SADP,as well as provide generalized technical support services.

4.34 Both SAPMU and SASCO would submit quarterly progress reports toGovernment and to the Bank showing actual and budgeted expenditures, state-ments of progress achieved and objectives for the forthcoming quarter by eachproject component. The quarterly reports would contain summary expendituresand use of funds.

H. Implementation Schedule and Annual Review

4.35 Overall project implementation would take five years (Chart 22301).However, several components--feeder roads, water supply, farm service centers,market development--are expected to be substantially completed by the endof the fourth year. Experience with earlier ADPs showed that a good project

- 26 -

start-up is critical to the overall speed of project implementation. Con-sequently, retroactive financing (US$1.0 million) has been provided to financesome key pre-project implementation activities.

4.36 The project covers a broad range of related activities, the timingand scope of which would undoubtedly require adjustment as experience isgained. Flexibility in project implementation would therefore be needed.It is proposed that each year SAPMU prepare an Action Plan (AP), detailingproposed investments and project activities during the following fiscalyear. The AP would also detail arrangements for training and for road andwater supply maintenance, including, where appropriate, supplementary fundingarrangements from SSG and LGCs (e.g., for road maintenance). The AP wouldinclude a budget for the following year and SAPMU's annual report, includingits audited financial statement. The annual APs, as reviewed and approved bySADPEC, would be submitted to the Bank for review and comment by September 30of each year commencing 1982; assurances to this effect were obtained at nego-tiations. The AP would be reviewed by SSG, FGN and Bank at an implementationreview to be held in October of each year. The Implementation Review andagreed AP would form the basis for Bank supervision of the project. Thesubmission to the Bank for approval of the first AP for the year 1982 is acondition of effectiveness.

V. PROJECT IMPLEMENTATION

A. Organization and Management

5.01 Project Coordination. The project embraces a wide range of activi-ties which are at present the responsibility 6f different ministries, agenciesand institutions (paras. 3.10 and 3.11). These agencies would continue to beresponsible for undertaking their project components, but since many of theseactivities are interdependent, it is important to ensure proper coordination,and to provide overall policy guidance. Under the project, this is to beachieved by establishing a single management unit (para 5.05) with a largedegree of autonomy, but which would operate under the general policy guidanceof a state level coordinating and policy-making body, the Sokoto Agriculturaland Rural Development Policy Council (SARDPC). The main purpose of SARDPCwould be to coordinate and define the state's rural development policy andoversee project execution. SARDPC would be chaired by the Governor or DeputyGovernor with the Commissioners of MRDC, MANR, MOF, MOEP and MLGC as itsmembers. Other members would be the Director of Budget, the Governor'spolitical and economic advisor, the Chairman of the State Green RevolutionCommittee, the General Managers of SRRBDA and SASCO, the SADP program managerand the SADPEC chairman. SARDPC would meet once or twice per year and wouldbe responsible for reviewing project implementation and agreeing to the SADP'sannual AP (para 4.36) and budget. It would also assess the role of thevarious participating ministries and agencies in SADP.

- 27 -

5.02 To coordinate the operational aspects of the project, SSG wouldestablish a high-level executive committee: the Sokoto Agricultural Develop-ment Project Executive Committee (SADPEC). While the Chairman of SADPEC wouldbe appointed by the Governor, its other members would be the Permanent Secre-taries of the Ministries of Rural Development and Cooperatives, Agriculture,Economic Planning, Finance, LGC, the Program Manager, the Managing Director ofSASCO and a representative from the Federal Department of Rural Development.Coopted members would be the four zonal managers, representatives of theMinistries of Works, and the Budget Directorate. SADPEC would be responsiblefor: (a) determining policy in respect of project execution; (b) coordinatingrelevant activities between ministries (both state and federal), and liaisewith parastatals and federal bodies like the SRRBDA; (c) formulating andapproving project training policies, and overseeing training programs; (d)approving contracts over N100,000, 1/ and (e) appointment of senior projectstaff. The establishment of SARDPC, SADPEC and SAPMU are conditions ofeffectiveness.

5.03 SADPEC would have a technical sub-committee: the Rural Infrastructureand Agricultural Development Committee (RIAD). The sub-committee would bechaired by the Permanent Secretary MRDC. The RIAD would monitor and coordi-nate the project's infrastructure activities including its water supply andLGC road training program and market place improvements. It would alsomonitor project-wide agricultural matters like applied research, seed multi-plication, and extension training.

5.04 To encourage popular participation and mobiLize grass roots supportfor the project, a Zonal Agricultural Development Advisory Committee (ZADAC)would be established at each zone. ZADAC would consist of the Chairman and/orsecretaries of the Zonal LGCs, a representative of the traditional council inthe areas, the zonal project manager and his financial controller, and SASCO'szonal sales manager. The LGC chairman would chair ZADAC meetings on a rota-tional basis. ZADAC would advise on the annual zonal development program andbudget; more specifically, it would advise project management on the siting ofroads, FSCs and other civil works, establish guidelines for land allocation(wlaere necessary) and payment of land compensation by LGs. The ZADAC wouldalso promote the establishment of LGC Joint Boards as per Section 52 of theLocal Government Edict.

5.05 Project Management. The project would be managed on a four zonebasis, with the Sokoto Agricultural Program Management Unit (SAPMU) as theapex organization. Establishment of SAPMU would be a condition of effective-nesS. The four development zones would comprise the following LGCs:

1/ Contracts valued at less than N100,000 would be the responsibility ofSAPMU.

- 28 -

Eastern Zone - Gusau, Anka, Talata Mafara, Kaura Namoda,Chaffe, Maradum, Zurmi (headquartered at Gusau)

Northern Zone - Wurno, Silame, Gwadabawa, Isa, Sokoto,Tangaza, Gada Rabah, Kware, Sabon Birni,(headquartered at Wurno)

Western Zone - Bunza, Argungu, Birnin-Kebbi, Bagudo,Koko Berse Brewa-dandi, Yauri, Jega(headquartered at Bunza)

Central Zone - Gummi, Bodinga, Yabo, Zuru, Sakaba-Wasagu,Dange, Tanmal (headquartered at Gummi)

5.06 The proposed organization of SAPMU is shown in World Bank Chart No.22267. During the five-year development period SAPMU would take over theresponsibilities of the present agricultural services division of MRDCtogether with all existing staff and would be fully integrated in the minis-tries structure. Assurances were obtained during negotiations that theexisting agricultural services of MRDC, selected MANR staff, and all existingLGC extension staff, would be seconded to SAPMU for the project period. TheSAPMU would provide centralized support services to the Zonal sub-projects inthe fields of training, civil engineering, water supplies, applied research,seed multiplication, land use planning, fadama development, and monitoring andevaluation. Although the managers of SASCO and Cooperative Bank would co-ordinate through SADPEC, for day to day operations they would liaise closelywith the program manager.

5.07 Four zonal project managers would be responsible to the programmanager for the full implementation of the program within their respectiveagricultural zones. In particular, they would be responsible for the zonalextension effort, training and infrastructure development. In consultationwith ZADAC, they would draw up the annual zonal work program and budgetwhich, once they were approved by SADPMU, would be implemented with a largedegree of autonomy.

B. Staffing and Training

5.08 Staffing. There continues to be a critical shortage in SokotoState, and in Nigeria generally, of trained staff with experience in manag-ing a development program as proposed in the present report. Experience fromongoing projects indicates that the shortage is particularly evident atsenior and middle levels of management. Since Sokoto State faces relativelysevere manpower constraints, project implementation would be phased, par-ticularly for the extension and road construction programs. Furthermore, anintensive preproject training program would be initiated to achieve balancedgrowth in all zones. Despite the phasing and training, however, a relativelylarge number of experienced senior level and managerial staff will have to berecruited internationally. The project has therefore provided funds for about

- 29 -

125 staff years (about US$110,000 per staff year) 1/ for international recruit-ment of experienced and highly qualified staff. Internationally recruitedtechnical staff would include the program manager, four zonal managers, agrono-mists, land use planners (2), irrigation engineer, and manpower and mediaspecialists. Financial staff would comprise the financial controllers, zonalchief accountants, and the SASCO financial controller. Engineering staffwould consist of a mechanical engineer, senior water supply engineer, seniorhydrogeologist, and four zonal road and mechanical engineers. Commercialstaff would include a marketing specialist, the SASCO managing director andsales manager, and a credit specialist for the Cooperative Federation. Theappointment of the program manager and the financial controller would be acondition of Board presentation.

5.09 The Bank's Agricultural Project's Management Unit (APMU) for WesternAfrica would assist in recruiting the project's key staff, which includes theprogram manager, financial controller, land use planner, roads engineer andsenior staff development coordinator, all of whom would be expected to bein place before Board presentation. The other internationally recruited staffwould be engaged through a recruiting firm, Nigerian-based where possible, inorder to allow Nigerians from the private sector, as well as expatriates, tobe considered. Existing GADP staff are obvious candidates for some of theposts. The individually recruited staff and consultants to help in projectexecution would be engaged with qualifications and experience, and accordingto terms of reference and contracts, satisfactory to the Bank. The establish-ment of a project recruiting agency and a managing agency for SASCO, which aresatisfactory to the Bank, is a condition of effectiveness.

5.10 Training. Sokoto State faces unusally severe constraints in thesupply of trained and experienced manpower. While in the project design aconscious effort has been made to minimize manpower requirements, at thesame time an exceptionally intensive staff development and training programhas been included. As part of their terms of reference, expatriate employeeswould be required to participate in the training of their deputies as de-sixgnated successors and by the end of the project most, if not all, of thekey managerial and supervisory positions should be in the hands of Nigerians.Candidates for future management positions would undertake individuallytailored work programs, which would be systematically evaluated by SADPEC.Aside from on the job training, the project would include a well-designed andsystematic training program which would be implemented by a Central StaffDevelopment and Training Section (CSDTS) headed by a Senior Staff DevelopmentCoordinator in the program headquarters. Principals of project-operatedtraining facilties at Gusau, Bunza, Zuru and TalataL Mafara and the project's

1/ Includes salary, allowances, gratuity, medical, education benefits,settlement costs, international travel and company overheads includingfee.

- 30 -

Media Specialist would report directly to the coordinator. CSDTS will beresponsible for all aspects of staff development and administration, includingthe keeping of personnel records; identifying and arranging places in trainingprograms in Nigeria and abroad; identifying staff eligible for training andsupervising them while they are attending their courses; manpower planning;course development and assessment; and assistance to other state agriculturaltraining institutions. The Staff Development Coordinator would also beresponsible for: (a) working with State and Local Government officials indeveloping adequate training programs in areas related to project activities,e.g., feeder road and water supply maintenance; and (b) the development ofNigerian counterpart staff including regular management training courses.

5.11 With the exception of the Zuru school of Agriculture, all trainingfacilities would be run by the project. The Zuru School will remain underMANR. The project will operate the farm training center to be built as partof the demonstration farm at the school. The project and the school willjointly operate the demonstration farm. In-service training for field staffwould be mainly provided through mobile training units (2 per zone). Theseunits would be staffed by training officers and subject matter specialists,who will visit extension staff on a bi-weekly schedule to teach new practiceswhich field workers will immediately pass on to farmers. The subject matterspecialists, posted to the training unit from the extension services, willdevelop the course content, while the training officers will package theinformation in such a way that it will be best received by the field staff.Zonal training staff will be supported by materials developed by the MediaSpecialist. Farmer training will similarly be handled through mobile units.Zonal staff will also train evaluation, cooperative, and commercial staff,using materials centrally developed for these purposes. Field training willbe supplemented by residential courses, designed by zonal staff, at the threefarm training centers. The zonal training unit will be responsible for iden-tifying candidates from the zone for further training.

C. Input Distribution

5.12 The establishment of an efficient and dependable mechanism forthe procurement and distribution of farm inputs throughout the project area isfundamental to the success of the project. Existing input distributionarrangements are highly unsatisfactory (Project File (SWPC5)), and a majordeparture from this arrangement is warranted. Consideration was given toestablishing a centralized commercial input unit, similar to that operated inthe GADP, but it was concluded that for a statewide project a self-financing,commercially oriented parastatal, providing a wide range of farmer services,would be more appropriate. Such a parastatal will actively support coopera-tive development, so that ultimate responsibility for input distributioncould be transferred to farmer organizations. With these objectives in mind,it is proposed to establish a Sokoto Agricultural Services Company (SASCO)similar to the companies established for the statewide ADPs in Bauchi andKano States. Due to the critical importance of having an efficient inputdistribution system, the establishment of SASCO would be a condition ofeffectiveness.

- 31 -

5.13 SASCO would be established as a limited liability company under the1.968 Companies Act, with an authorized share capital of N25.0 million ofwhich N2.0 million would be initially paid up. In addition, SASCO wouldtake over existing MRDC stores valued at N2.0 million. The major share-h,older of the Company would be the SSG, with the Sokoto Cooperative Federation(SCF) subscribing Nl.O million to SASCO's share capital. SCF participationis considered important to ensure an eventual takeover of the company by thecooperative movement, and would be a condition of effectiveness. The mainobjectives of SASCO would be: (a) the efficient and timely procurement of farminputs required to support the State ADP; (b) distribution of essential farminputs and provision of other essential support services to farmers throughoutthe state; (c) assistance with grain marketing by entering, whenever necessary,into bulk grain contracts with agencies like the Grains Board and other majorbuyers such as feed and oil mills.

5.14 The detailed organization of SASCO including its draft Memorandumand Articles of Association is given in the Project File (SWPC5). SASCO'sBoard of Directors would initially consist of the State Commissioner forFinance (Chairman), the Permanent Secretaries of MRDC, MANR, MOF and MOFEP,the SADP Program Manager, Chairman of SADPEC, Managing Director (SASCO),Chairman of the Cooperative Federation, and a representative of FMA. Theday-to-day operations of the Company would be the responsibility of a ManagingDirector, who would operate three main divisions: Finance and Administration,Operations, and Internal Audit. The senior managerial and commercial staffrequired to establish and operate SASCO would be provided under a managementcontract (originally for five years with an option to extend) with an estab-lished commercial concern. Further, to provide an incentive to effectivemtanagement, a profit-sharing scheme has been proposed for the managing agent(MA). Under the scheme the MA would, each year, earn a commission which wouldbe tied to the Company's net profit. The contract would also specify MA'sresponsibilities in the training of indigenous staff at all levels. It wouldbe a condition of effectiveness that a draft management contract had beenprepared and that its terms and conditions were acceptable to the Bank. It isintended that as far as possible SASCO would be run on commercial lines, withstrict control over costs, and accountability of each operating unit. To theextent that government input pricing policies may continue to make certainoperations non-viable financially, satisfactory arrangements for the paymentof specific subsidies to SASCO will need to be agreed (para 4.28). SASCO'sprojected balance sheets, profit and loss accounts and cash flow statementsare in the Project File (SWPC5).

5.15 Sales Policy. SASCO would distribute and sell farm inputs on azonal basis. Retailing would be organized through the 19 existing agroservice centers, the 68 proposed smaller farm service centers and the 28 newlyconstructed MRDC fertilizer stores. SASCO would actively support cooperativeinvolvement in input distribution, and suitable cooperatives would be selectedon a trial basis to retail farm inputs. In the event that any cooperatively-mianaged FSC should not perform satisfactorily, the entire input supply opera-tions of the concerned FSC would revert to SASCO. Fertilizers would be solda.t official subsidized prices (para 4.28), while chemicals and implementswould be sold at cost plus a 25% mark up. All inputs would normally be soldon a cash basis, but occasionally seasonal credit would be provided for

- 32 -

inputs. The diesel pumps would be sold at their full sale price, for whichSASCO would be reimbursed by SCF (70% of the cost) and by FPDS (30% of thecost). To prevent any large-scale involvement by SASCO in seasonal creditits draft Articles of Association are to include a requirement that at anytime SASCO's outstanding loans would not exceed 10% of its paid-up capital.

D. Cooperative Development and Farm Credit

5.16 Cooperative development. The growth of the cooperative movement inSokoto State has been principally in the development of marketing and creditcooperatives. A number of structural and technical constraints have inhibitedthe proper development of existing cooperatives and also the establishment ofnew societies. Lack of professional staff and a low capital base is a commonproblem facing all cooperatives. While the project would assist in redressingthese constraints (para 4.17), there would be no major reorganization of theCooperative Department. The Chief Registrar of Cooperatives would act asthe executing agent for the cooperative development proposals. SAPMU would,however, release project funds for the cooperative component only on theapproval of SADPEC.

5.17 Farm Credit. The two major sources of farm credit are the FarmerCredit Scheme (FCS) and the Sokoto Cooperative Federation (SCF). The FCS isan extremely weak organization (para 3.16), and is not expected to play animportant role under the project. The SCF, on the other hand, operates afairly well-managed credit system (loan recovery is about 90% of disbursements)which reaches about 60,000 farmers throughout the state. Credit administra-tion, however, is largely in the hands of the cooperative department staff.This highly unsatisfactory arrangement is expected to improve, with theproposed strengthening of cooperatives which would enable loan administra-tion responsibility to pass on to the cooperative movement.

5.18 At present high levels of input subsidies, and given that projectrecommendations are largely based on low-cost technology, the need forproject credit would be minimal. Limited credit would include: (a) seasonalshort-term credit to help cover costs of inputs and in some cases, for hiredlabor, and (b) medium-term credit for irrigation pumps, implements, draftanimals, and land preparation. Although credit needs for project farmerswould differ depending on the type and level of operation, at full developmentthe average credit need for a 4.0 ha advanced farmer would be N350. Tostimulate development in new areas where cooperatives are not immediatelyavailable, SASCO would provide seasonal input credit and some medium-termcredit for farm implements excluding diesel pumps. All other credit needswould be met by SCF. Assurances were obtained that SSG would take allnecessary steps to ensure the annual availability of adequate seasonal andinvestment credit funds to SCF.

5.19 Fadama Development Grants. To stimulate the uptake of improvedirrigation practices, the project will provide grants for land improvements

and for purchase of diesel pumps. To help administer the grant scheme, a

- 33 -

special Fadama Development Fund (FDF) would be established, administered bySAPMU's Fadama Planning and Demonstration Section (FPDS). The pumps would bestocked by SASCO and would be sold at 70% of their cost, for which medium-termcredit would be provided by SCF. Credit would, however, only be provided tofarmers recommended by FPDS, which will also assist in identifying potentialborrowers and in the preparation of their loan applications. To encourageproper land levelling and bunding, some 10,000 fadama farmers would be offereda grant equal to N100/ha for the first hectare developed. This is equiva-lent to 30% of the individual (fadama) farmers landL development cost. Firstpriority would be given to farmers adopting diesel pump irrigation techniques.However, to spread the benefits of the grant scheme over as many fadamafarmers as possible, grants are to be restricted to one hectare per farmer.The total amount of grants for land development and diesel pumps over theproject period is estimated at US$7.7 (N4.3) million. During negotiationsit was agreed that, by January 1982, SSG would establish FDF with an initialdeposit of US$1.5 (NO.9) million, which represents the first year's grante:Lement.

E. Monitoring and Evaluation (M & E)

5.20 The project M & E effort has been designed keeping in mind the GADPexperience (para 2.04), which has shown the need for minimal data collection,s:Lmple analytical techniques, and quick feedback. Overall responsibility forM&E would be with a state-level Central Monitoring and Evaluation Section (CNES)which would be headed by an internationally recruited evaluation specialist,reporting directly to SADPEC. Field implementation would be through fourzonal M&E sections (ZMES), headed by evaluation officers and a team of fieldenumerators. CMES would provide information to three users: SSG (throughSAPMU), FDRD through APMEPU, and the Bank. The main aim of the project's M&Esection will be to provide project management with information to aid imple-mentation and ongoing planning. Monitoring would be concentrated on data ofkey importance to the project progress, giving special attention to costelements including plant and vehicle utilization and civil works cost. Forthis purpose, the monitoring staff would work closely with the project costaccountant. Evaluation would focus on finding solutions to implementationproblems, and helping project management to adapt the project to changingcircumstances. Given the uncertainty surrounding data on farming in theproject area, there is a particular need for gathering reliable project levelagronomic and socio-economic data. The initial task of the M&E unit, would beto collect baseline data, particularly in the northern, western and centralzones, on population, cropping patterns, farm systems, yields and farm incomes.The M&E unit would also conduct, possibly with the collaboration of localuniversities, selected farm level micro studies to help analyse changes due toproject intervention and other exogenous factors. Specific surveys would beundertaken to monitor and evaluate the project's fadama development efforts.Although the M&E unit would be largely self-contained with its own micro-computer support and staff, it would be closely linked to APMEPU for technicalsupport for standard surveys, processing SADP evaluation data, and trainingproject M&E staff.

- 34 -

F. Post-Project Development

5.21 During the project, SSG staff would be increased and trained todeliver a wide range of agricultural services and support to the rural popula-tion, all under the coordination of SAPMU. At the end of the project, SAPMU'soperating divisions, technically stronger and accustomed to operating in acoordinated way, would be absorbed into the MRDC. SADP's junior agriculturalstaff would probably revert to LGs, leaving a smaller group of higher levelprofessional staff in MRDC. This staff, including the Program Manager and hisevaluation staff, would continue as a coordinating office, to be responsibleto the Commissioner of MRDC. It would plan and monitor the State Government'srural development activities assigned to the executing ministries. The LGCsand/or Joint Boards would take over the responsibility for rural infrastructureincluding the maintenance of feeder roads and water supply facilities. CSDTSwould be returned to MANR, which would continue to train new staff for replace-ment purposes and program expansion. Beginning at the fourth annual Implem-entation Review (para 4.36) the Bank and SSG would discuss training and anyreorganization or management changes needed to reintegrate the project activi-ties into the ministries at the end of the project. At the Year 4 implementa-tion Review, or not later than January 1, 1985, SSG should submit to the Bankand FGN detailed proposals for post-project organization (including training ofad itional staff and managers) and finance. Assurances to this effect wereobtained at negotiations. The project provides consultancy funds to assistSSG and SAPMU in formulating such proposals (para 4.22).

5.22 As regards the State's cooperative movement, it is expected that bythe end of the project, the institutional strengthening of SCF and the estab-lishment of additional cooperative unions and societies would improve coop-erative performance at all levels. Similarly, the establishment of theCooperative Bank (para 3.16) with an agricultural-credit section may lead tothe establishment of a state Agricultural Credit Bank. The Sokoto Agricul-tural Services Company (SASCO) would continue to provide essential farmerservices, but its ownership is likely to become more broad-based with a majorshare owned by the cooperatives.

VI. TECHNOLOGY AND PRODUCTION SPECIFICATIONS

A. Rainfed Farming

6.01 Farmers have responded well to the GADP agronomic recommendations.It is therefore proposed to extend these to the remaining rainfed farmingareas of the state. Future development proposals would, however, give con-sideration to zonal differences in agro-ecological conditions and socio-economic factors including prevalent cropping systems (SWPC1 and 2). Theproposed technology, which is simple, relatively inexpensive and adapted tolocal conditions would involve the timely and adequate use of fertilizers,improved planting material, timely planting and increased planting density.

- 35 -

Special attention would be given to the cultivation of appropriate cropmixtures. Although certain known crop combinations would be proposed, moreappropriate intercropping packages would be tested under the project's appliedresearch program (para 4.09). Detailed crop recommendations and yields/ha forrainfed crop development are given in Annex 1, Table 1.

6.02 Improved seed produced by the project's seed farms would be madeavailable for varieties already accepted by GADP farmers. The majority offarmers, particularly those cultivating millet and sorghum, would continueproducing their own seed requirements. Phosphatic fertilizer would be givento all crops as a base application before planting and side placed below theseed. Nitrogen fertilizers on cereals would be applied at the appropriatetime in the growing cycle. Potash fertilizers would be used on soils andcrops with favorable response. Fertilizer doses will vary with crops butin the northern zone, with less rainfall, crops will generally receive smallerdoses to lessen the risk of drought years.

6.03 The majority of farmers are expected to apply improved practices totheir mixed-crop farms. The project would encourage crop combinations thatcomplement each other, thereby improving soil fertility. For example, theproject would emphasize the intercropping of a legume crop like cowpea orgroundnut with exhaustive crops like sorghum and millet. The area underlegume crops is expected to increase from 28% to 33% of cropped area, and thecropping intensity from 140% to 147%. Groundnut cultivation would be mainlypromoted by providing farmers with Rossette-resistant varieties, fertilizersand improved agronomic practices. Cowpea intercropping would require limitedamounts of fertilizer. In areas of 1,000 mm rainfall stretching to 170 days,two short-duration (100-120 days) relay crops would be recommended; forexample, cowpeas would be relay cropped with sole-cropped maize. In all cases,due care would be taken that the mixed or relay crops do not compete witheach other for nutrients and moisture from the same soil depth. Efforts wouldalso be made to ensure that the recommended crop combinations permit optimumutilization of fertilizer inputs: for example, a succeeding crop shouldbenefit from the residual effect of phosphatic fertilizers used on an earlycrop. Similarly, nitrogenous fertilizers, which are prone to leaching effectsof rain, would benefit a deep-rooted crop.

6.04 More sophisticated technology is proposed for farmers participatingin the ASP. Advanced recommendations would cover maize, groundnut, cotton andrice crops. Apart from higher levels of fertilizer use, farmers would improvecrop mixtures and, where possible, grow sole crops, at higher levels of manage-ment. Better weed control practices including low volume spraying would berecommended. Farmers would be encouraged to make use of animal and tractordrawn implements, mainly to reduce labor peaks and to facilitate better andtimely sowing of crops. Overall, the yield estimates for advanced farmers areconservative and they allow for a gradual transformation from BSP to ASP. Itis expected that BSP and ASP would, by the end of five years, have improved cropproduction on up to 44% of the total cultivated area, including 600,000 ha ofsorghum, 340,000 ha of millet, 430,000 ha of cowpeas, 165,000 ha of groundnuts,98,000 ha of maize, 45,000 ha of cotton and 58,000 ha of rice. Net productionincreases from the foregoing areas are estimated at an annual compoundedproduction growth rate of about 4% during the five-year project period.Detailed production projection are shown in Annex 1, Table 3.

- 36 -

B. Fadama Development

6.05 Sokoto State's most valuable agricultural asset is its vast fadamaareas estimated to total 300,000 ha. Traditional irrigation is practiced ononly a fraction of those lands. Rice is grown on the Rima riverflood plainsunder uncontrolled or semi-controlled flooding; dry season vegetables arecultivated by tapping water from the rivers, reservoirs and shallow watertables by means of the hand operated water lifting device known as "shadoof".

6.06 Much of this land will be or is already affected by the large-scaleirrigation schemes of the SRRBDA. Its storage reservoirs are expected toradically alter the river basin's hydrological balance, its ecology and thusthe traditional fadama cropping systems. The project, therefore, wouldassist farmers both to intensify their existing rainfed fadama crops andpromote the production of a second (dry season) crop, through small-scaleirrigation. Crop production would be increased by providing fertilizers,better seeds and pesticides and by promoting timely planting, appropriateplanting techniques, and other improved agronomic practices. But the greatestemphasis would be laid on adapting growing cycles (of rice in particular) tochanges in flooding patterns, and on making optimal use of the dry seasonwater resources. Some 25,000 ha would be thus developed: 12,400 ha in thewestern, 6,400 ha in the northern, 2,200 ha in the eastern and 4,000 ha in thecentral zone. The crops to be grown and estimated yields are detailed inAnnex 1, Table 4a, 4b, and 5.

6.07 Rainfed Fadama Crops. The improvement of wet season fadama cropswould be undertaken on 10,000 ha, involving 7,000 ha cereals (rice, maize andsorghum), 1,000 ha rootcrops (cassava, yams, and sweet potatoes) and 4,000 hasugarcane. Improvements in wet season rice production would be limited to theintroduction of new rice (Oryza sativa rather than 0. glaberrina) varieties,adapted to the change in flood levels. Fertilizer application would onlybe recommended where adequate water level control could prove feasible.Fertilizer-responsive, high-yielding varieties of maize (both for grain andgreen cobs) and dwarf sorghum would be promoted for planting at the tailend ofthe rains, making use of residual moisture. Likewise, rootcrops would beplanted during the wet season for harvesting in December through March. Theproject would also aim at intensifying wet-season sugarcane production onsome 2,000 ha.

6.08 Irrigated Fadama Crops. By helping improve and expand small-scaleirrigation, the project would enable the economic exploitation of some 13,000ha of fadama lands, including 3,000 ha dry season rice, 2,000 ha green maize,1,000 ha wheat 2,000 ha sugarcane, and 7,000 ha of assorted vegetables inter-cropped with 1,000 ha fruit crops. Supplemental irrigation would be madepossible by providing farmers (against credit) both motor-driven and hand-operated pumps. The proposed technology would be relatively inexpensive andeasy to implement.

-37 -

6.09 Fertilizer-responsive, high yielding rice and maize varietieswould be grown on selected lands under advanced water management practices.Irrigated wheat production would be promoted. A wide variety of vegetableswould be produced during the dry season. Some deep--rooted vegetables liketomatoes, okra, eggplant, water melon and tobbaco are able to benefit fromsoil moisture at greater depth and hence require only supplemental irrigation.In contrast, shallow rooted vegetables, like onions, squashes, Irish potatoes,carrots and cauliflower would depend entirely on irrigation. Project recom-mendations would maximize the foregoing features, and promote both the inten-sification and expansion to 7,000 ha of these valuable dry season crops,making optimal use of residual moisture as a supplement to pumped irrigation.The 2,000 ha of sugarcane production to be developed through supplementalirrigation would have its harvesting and marketing season extended fromOctober to March.

Irrigation Techniques and Practices

6.10 Improved flood irrigation would be undertaken on selected landsin the major river flood plains, where land preparation currently consists ofrudimentary systems of bunds, ridges and brushwood diversion structures.Improvements would include construction of more permanent protective bunds atlocations which would be less exposed to floods, and provision for the removalof excess water. For pumped supplemental irrigation, a supply ditch andperipheral distribution ditches with check structures would be provided.

6.11 Pumped Irrigation would allow for the replacement of the "shadoof"by more efficient low-lift, (manual or motorized) water lifting devices.The purchase of 3-4" diesel driven pumps with a capacity of up to 75 m3 perhour would be promoted among groups of from 3 to 5 farmers allowing them toundertake cultivation on about 5.0 ha of land during the dry season. Thecriteria for selecting the 5.0 ha area is discussed in the Project File(SWPC2). In view of their innovative nature, pumps would not be introducedon a large scale during PYI.

6.1.2 Technical Assistance. To help fadama farmers make maximum useof their irrigation investments, and to further develop the state's fadamapotential, it is proposed to set up a separate Fadama Planning and DevelopmentSection (FPDS). FPDS's staff would include a senior irrigation agronomist, afadama development planner and a specialist in small-scale irrigation. Themajor task of FPDS would be to undertake surveys in close association with theland use planning unit, to locate fadama lands best suited for the developmentenvisaged, and to assist interested farmers in adapting the layout of their"shadoof" irrigated gardens to the yield of modern water lifting devices.FPDS would also conduct a program of farmer field trials and demonstrations tointroduce the proposed new technology, techniques and practices.

C. Feeder Roads

6.13 The tentative work program for the construction of about 1,700 km offeeder roads is in the Project File (SWPC3). The implementation of the feederroad program would be the direct responsibility of SAPMU. Road construction

- 38 -

would be carried out by four Zonal Road Construction Teams, (ZRCTs) includingthe existing GADP road team. Each ZRCT would be headed by an experiencedroads engineer supported by a mechanical engineer responsible for the zonalworkshops, and other support staff. The feeder road engineering team wouldbe recruited internationally, through a consulting firm. To overcome theshortage of experienced road construction operators and mechanics, the programwould be phased to allow for pre-construction training.

6.14 Based on the experience of GADP, the feeder roads would be built towithstand axle loads of 10 tons and a traffic density of up to 100 vehiclesper day (vpd). In most areas, the road section would incorporate a 7.3 mcarriageway with 3% falls to "V" shaped side drains. However, in the lesspopulous areas of the state, a narrower 5 m carriageway would be adopted. Therunning course would be surfaced with gravel to a compacted depth of 15 cm.In fadama areas subject to seasonal flooding, simple grading and compactionwould be carried out to improve dry season access. With the exception of theexisting motor scraper unit at GADP, all ZRCTs would be based on tipper units.Watershed alignment would be adopted wherever possible, to minimize drainageand subsequent maintenance requirements. Watershed alignments would createthe need for secondary connecting spurs to those villages cut off from the newroads. The project would assist LGCs in undertaking these roadworks withtheir own resources. In this way, LG would benefit from project expertiseand gain valuable experience and a sense of involvement in carrying outtheir own road construction program. Drainage structures would be simple andinexpensive.

6.15 Since at present LGCs have a limited road maintenance capability,during the project period, SAPMU would have full responsibility for main-taining the project feeder roads. SAPMU would carry out road maintenancethrough four zonal road maintenance units (ZRMUs) to be established one yearafter road construction. It is envisaged that in the post-project period, theLGCs would take over the responsibility for the maintenance of project roads.Local Government staff would therefore be trained under the project in roadconstruction and maintenance (para. 6.14), but individual LGCs would bediscouraged from establishing their own road construction/maintenance units.Instead, LGCs would be encouraged to make full use of potential economies ofscale, so that road construction, resurfacing, grading and major drainagerepairs could be carried out by SADP and/or joint boards on a zonal basisunder LGC funding. It is expected, that by the end of the project, the fourZRMUs would be upgraded into formal joint LGC boards--the 1976 local govern-ment edict provides for such joint local government activities. The residualwork life of the SADP plant and equipment would be sufficient for the jointroad boards to launch their initial, periodic and routine maintenance opera-tions. Moreover, in their road construction and maintenance operations, theboards could contract out many specific tasks such as hauling gravel andconstructing of culverts.

6.16 The length of the roads which would require maintenance each year isin the Project File (SWPC3). Hired tippers would be used for resurfacing, andlabor and hand tools for routine maintenance. Each ZRMU would be largelyself-contained with regard to staff, equipment, buildings, including fuel

- 39 -

storage and simple mechanical facilities. These facilities would be used forpreventive maintenance and repairs. More sophisticated mechanical serviceswould be provided by zonal workshops under the control of SAPMU's engineer.The Head of SAPMU's engineering section would advise on workshop design andequipment, and would establish a unified mechanical stores system throughoutthe zones. He would also develop a central mechanical spares procurementorganization relying on both local and overseas sources.

D. Rural Water Supply

6.17 The project would assist in the preparation of a statewide RuralWater Supply (RWS) strategy collaborating with the MRDC's rural water supplydivision, the State Water Board and thc SRRBDA and in consultation with LGCs.At SAPMU level a RWS Planning and Management Section would be established.The RWS section would have full responsibility for executing the project'srural water supply program. It would be staffed with experienced and well-qualified personnel in rural water supply planning, groundwater development,and large-scale drilling operations. The RWS section would undertake anupdated survey of all communities to be served, their user requirements,quantity and quality of available water resources, orders of priority and therelative cost-effectiveness of alternative water supply systems. Moreover, animplementation schedule would be worked out annually to clearly establishindividual responsibilities of the agencies involved in rural water supply.

6.18 The project's water supply program would consist of some 1,200strategically located 4-6" boreholes equipped with handpumps, as well as100 medium size 7-8" boreholes, to be equipped with motorized pumps, storagetanks and stand pipe reticulation systems. The proposed program represents anapproximate order of magnitude only, and would be subject to amendment duringimplementation, without changing the total capital funds provided.

6.19 Boreholes. Sites would be selected by the RWS planning team, wellin advance of mobilization of drilling operations. In the hard rock areas ofthe eastern half of the state, boreholes would be sited under a specializedcontract with hydrological consultants, who would make use of existing Side-Looking Airborne Radar (SLAR) and other remote sensing imagery, while in thesedimentary and alluvial strata electric resistivity depth probing would beapplied. The use of SLAR has proven effective in locating major joints andlineaments in the hard rock formations and in the process has increased thesuccess rate in siting boreholes of satisfactory yield (1.0-2.0 m3/hr) fromthe current 60% to over 90%. Borehole drilling, therefore, would be under-taken with modern and versatile rigs, capable of rapid drilling using down-the-hole percussion in the hardrocks of the Basement complex, and compressedair/rotary drilling techniques in the sedimentary rocks and river alluvium oraeolian deposits of the northern and western zones. Drilling would be under-taken by qualified firms contracted under ICB. Further technical details arein Project File (SWPC3).

- 40 -

6.20 Maintenance. Drilling contractors, pump suppliers and project staffwould be expected to organize and supervise maintenance during the projectperiod following construction. They also would train LGA staff in boreholedrilling, pump installation and maintenance. The RWS maintenance programwould be organized on a three-tier basis to ensure its proper long-termfunctioning: the village, LGA and zonal levels. The maintenance cost of allRWS facilities, once commissioned, would be borne by the Sokoto State MRDCand LGCs as appropriate, since direct cost recovery from users would not becontemplated at this stage.

VII. MARKET PROSPECTS, MARKETING AND PRICES

A. Market Prospects

7.01 Almost all studies of Nigeria's future food needs predict a wideningfood deficit for the country over the 1985-1990 period. The Nigerian Agricul-tural Sector Review projects the 1985 food deficit at around 6.6 million tonsof cereal equivalent increasing to 10.6 million tons in 1990. Food importshave already soared from US$98.0 million in 1970 to about US$1.3 billion in1978. Moreover, due to the increased migration of the rural population to thetowns, urban food demand is predicted to increase enormously in the future.

7.02 Estimates of the food balance within the project area must beregarded as highly speculative since all the variables--population, culti-vated area, yields and consumption per head--are subject to wide margins oferror. At an aggregate level, the State appears capable, in a typical year,of feeding itself and perhaps generating a modest export surplus of foodover its own requirements. The estimated production of food crops (excludingminor vegetables) in 1980, was 1.3 million tons grain equivalent. Based on anestimated total population of 5.4 million, and a per capita consumption of180 kg grain equivalent per annum, total consumption would be 1.0 milliontons, leaving a theoretical net production surplus of 300,000 tons. Extend-ing the analysis to 1987, with a projected population of 6.1 million and atargeted consumption level of 200 kg per capita, another 220,000 tons would beadded to gross consumption. Improved technology introduced under the projectshould increase production by about 770,000 tons of cereal equivalent, leavinga incremental marketable surplus of some 550,000 m/tons. This surplus wouldbe merely 5% of the 1990 national deficit. The demand for foodcrops is likelyto remain firm, in view of the growing urbanization and the increasing incomelevels.

B. Marketing

7.03 The foodcrop marketing system in the State (para 3.17) is adapted toexisting production conditions and is thought to function quite efficiently.The bulk of the state's output would be marketed within the state, with excessproduction exported to food deficient states like Kano and Kaduna. Whereas

- 41 -

the existing marketing arrangements are adequate to handle modest increases inproduction, they may prove inadequate in cases of large surpluses. Selectiveacl:ion through market infrastructure improvements to be financed under theproject (para 4.15) would improve marketing efficiency.

7.04 Some problems of localized surplus are likely to arise for maize,wh:ich enters only peripherally into the local diet. About 80% of incrementalproduction may be considered marketable and would most likely be exported tothe south. Past experience on ongoing projects has shown that the paucity ofinformation on prices and supplies increases the risk associated when movingcoramodities like maize and sorghum at long distances. Such risks could bereduced with effective support from the Nigerian Grains Board (NGB) whichis in the process of streamlining its buying operations. To ensure propercoordination between NGB and the project, it was agreed during negotiationsthat SASCO would be empowered, as a LBA, to organize, when necessary, tem-porary buying markets on behalf of NGB, in the main producing areas. SASCOwould receive a nominal commission for acting as NGB's marketing agent. Theobjective should be to provide support to the market (at a preannounced floorprice) rather than to buy a predetermined tonnage on behalf of NGB at anyprice or regardless of market conditions. Although price security to farmersis the main reason for the proposed intervention, it is expected that NGBwould buy only at the minimum guaranteed price. For the farm budgets andeconomic analysis, the farmgate price for maize has been taken to be thatwhich is expected to prevail in the main maize-consuming centers of the south.Despite its relatively lower market price, farmers are likely to prefer maizeover sorghum, since it has higher overall returns. Improved maize yields are1500 kg/ha as compared to 800 kg/ha for sorghum. Price differentials do notcompensate for lower sorghum yield.

7.05 The project's incremental rice production is estimated to reach70,000 m/tons by PY5. Rice is a highly preferred staple and given thatNigeria currently imports 550,000 m/tons of rice per annum, project productionwould be effective import substitution. In a competitive situation, however,much would depend upon the quality of local rice. The existing hand-poundedlocal variety rice is of poor quality, and there would be the need to introducesmall-scale rural rice husking mills, with a 0.5-1.0 tpd capacity. Since theBank's Agricultural Technical Assistance Project (Report 3207-UNI) includesprovisions for identifying future agro-industries, no specific provision isbeing made for agro-processing. However, SAPMU's marketing officer wouldreview annually the project's agro-industrial processing needs, and inform theKaduna FASU where and when new installations are needed.

7.06 Given that Nigeria is dependent on cotton imports with domesticconsumption running at 300,000 bales annually, any incremental project produc-tion should be easily absorbed by the textile industry. The statutory market-ing arrangements for the crop remain unsatisfactory, however, and despiteincreased prices farmers are reluctant to grow the crop. SASCO should, likethe GADP, be gazetted as a cotton LBA and work with the NCB to improve localcotton marketing practices. Assurances to this effect were obtained duringnegotiations.

- 42 -

7.07 Vegetable production would be mostly for consumption within thestate. However, non-perishable vegetables such as chillies, potatoes andonions would be sold in the major cities outside the state. With increasingincomes, and growing urbanization, no problem is foreseen in marketingproject-related surplus. However, in view of the specialized nature ofvegetable marketing, it is proposed that the project's marketing section wouldtake a lead role in monitoring vegetable production, and in promoting coopera-tives or group marketing schemes to reduce marketing costs and coordinatesales.

C. Prices

7.08 The two most important factors determining agricultural pricesin Nigeria are the Government's fiscal and trade policies. Over the lastthree years the following pattern has emerged: the massive public investmentand trade restrictions prior to 1978 contributed to domestic inflation thatkept local food prices rising well above world market levels. Subsequent cutsin government spending accompanied by an unprecedented level of food importsled to economy-wide price declines in 1979. The renewed level of spending in1980 is now expected to spark a new round of inflation, which has alreadycaused an upward movement in domestic food prices. In the midst of thisrather erratic price behavior, one conspicuous feature has been the highratio of domestic to world market prices for tradeable commodities like maizeand sorghum. Even in 1979, a year of declining prices, domestic prices formaize, sorghum, groundnut were one half to two-thirds higher than importparity prices. Given the predicted food deficits, quantitative trade restric-tions, and logistic difficulties in obtaining imported food, it is quitelikely that high domestic food prices would continue for sometime.

7.09 Financial prices for farm budgets are based on observed 1980 local(Sokoto State) market prices and do not take account of projected real priceincreases of main outputs. More conservative assumptions were made for maize,however, since marketable surpluses would be disposed outside the immediateproject area. The financial price for cotton is taken to be the 1980 NCBofficial buying price. Groundnuts are assumed to be marketed privately,and the prevailing local market price has been used. Economic prices forpotentially traded goods have been based on import parity assumptions usingIBRD world price forecasts for maize, sorghum, rice, wheat, groundnuts andcotton. The economic price for millet (which is not extensively tradedinternationally) is based on that for sorghum since the two are near sub-stitutes. Detailed calculations of financial and economic farmgate pricesof various agricultural commodities are in Project File (SWPC8) and aresummarized in the following Table 3.

- 43 -

Table 3: SUMMARY OF FINANCIAL AND ]ECONOMICFARMGATE PRICES

(Constant 1982 prices N/ton)

Product Financial EconomicActual 1980 1982 1985

Sorghum 290 202 205Millet 290 202 205Maize 200 90 94Cowpeas 500 345 345Paddy Rice 335 224 234Groundnut 320 364 319Wheat - 250 255Cotton 400 555 622

VIII. FINANCIAL ANALYSIS

A. Financial Implications for Farmers

8.01 Two rainfed farm models have been constructed to represent uplandcultivation. These models are based on likely crop combinations and assume100% adoption of improved or advanced practices on the family's entire holdings.Given the wide variation to be expected in cropping patterns and adoptionrates , however, the models should be taken as illustrative only. The first4.0 ha farm model represents farming in the relatively wetter upland areas ofthe three southern zones, where sorghum, millet, cowpeas, and some maize andcotton are grown. The second model depicts farming in the drier northernzone where, under traditional practices, millet is the main crop, with sorghum,cowpea, and groundnut intermixed. The financial returns to farmers and farmbudgets are detailed in the Project File (SWPC2, table 1) and summarizedbelow:

Table 4: SUMMARY OF 4.0 HA FARM BUDGETS

(Unsubsidized Prices)

Southern Zone Northern ZoneW/Op W/P W/P W/OP W/P

Traditional Improved Advanced Traditional Improved

Family Farm Income 647 1,141 1,481 593 1,014Income Per Capita 100 176 228 91 156Income per labor-day 2.16 2.70 3.L7 2.44 2.61

- 44 -

Most project area farms would be manually cultivated rainfed units. If themodels are calculated with subsidized fertilizer prices, the farmers' income(in constant 1982 prices) for both models would increase by about 10%. Adop-tion of improved practices would considerably increase labor requirementsin the southern zones (from 300 m/day to 527 m/day), but labor use would bespread more evenly over the season, thereby keeping down the cost of hiredlabor. Some peak labor requirements in May and June, largely for thinning andweeding, would be met by hiring labor of up to N5.00 per day to supplementthe available 60 family labor days/month. Overall the benefits appear suffi-ciently attractive to encourage adoption.

8.02 Comparisons of per capita incomes based on farm budgets with incomedata based on national accounts aggregates must be interpreted with cautionunder most circumstances. The unavailability of recent national accounts,the unreliable population estimates and the often conflicting GDP deflatorsmake this especially true for Nigeria. It is possible to give some roughindication of the relative economic position of project beneficiaries. Bankestimates place Nigeria's 1979 per capita income at N367 or US$670, therelative rural poverty level at N98 (US$162) and the absolute rural povertylevel at N125 (US$207). GADP evaluation results indicate that 70 to 80% offamily income can be imputed to crops raised for consumption on the farm. Forthe subsistence farmer of Sokoto State, represented by the traditional cultiva-tion model, this would mean per capita incomes of N128 (US$233) in thesouthern zones and Nlll (US$207) in the northern zone. Under improvedpractices, and assuming no drop in other income, per capita income couldincrease to N219 (US$398) in the southern zones and N189 (US$343) in thenorthern zone. These represent income gains of nearly 70% in each case, butare still well short of the national average.

8.03 To illustrate the potential returns from small-scale irrigation, ahypothetical model has been developed of a 5 ha plot farmed by 5 farmerseach owning 1 ha of fadama land. The farm would be irrigated by a 3" dieselpump. Initial land development costs and the cost of the pump would be sub-sidized, with the unsubsidized portion financed by a medium-term loan (paras5.15-5.19) The farm budget takes account of the farmer's labor needs forupland crops. Accordingly, most labor for the first two months of cultiva-tion, September and October, would be hired at N5/day. Estimated returnsper manday from a 5.0 ha irrigated farm rise from N3.48 in the first year ofadoption to N1O.50 in the fifth year, by which time the farmers have gainedexperience in this new type of cultiivation. Net income per farmer wouldincrease from N456 to N1,541. Relative to rainfed farming, returns toirrigated cultivation are quite high. Even in the first year, when the farmeris still learning this practice, returns are higher than those achievable fromadvanced manual upland cultivation. The overall financial rate of return forinvestment in a 5.0 ha irrigated farm is estimated to be over 50%. The risksinvolved are quite high, however. A 25% decline in producer prices, orexpected production, would reduce net income 50% in the first year and 34% inyear 5. Further, the farmers would face overhead costs of N818 p.a. torepay their loan plus N425 in labor costs at the beginning of the seasonbefore harvest prospects are known; thus, the farmers would face real hardshipif production or prices dropped below expected levels. Given the inherentrisks of this type of investment, a high rate of return is necessary, toattract uptake.

- 45 -

B. Financial Implications to Governments

8.04 The project will generate little direct Government revenue, asfarmers' output is not taxed and the Cotton, Groundnut and Grains MarketingBoards are not revenue producers for FGN at present price levels. Therewill, however, be some spin-off of incremental farm income in expanded non-agricultural activities and increased spending by project beneficiaries onconsumer goods and imports subject to tax. A precise quantification of suchincreased tax revenue is not possible. Small amounts of additional revenuemight be generated at the State or Local Government level through increasedpayments of market-related fees.

8.05 Financial costs to the SSG during the project period may be dividedinto three categories: (a) the State's share of project costs, which incurrent price terms would be about N58.4 million over the five-year period,excluding input subsidies, but including N3.0 million equity contribution toSAiSCO and NO.5 million equity contribution to cooperatives; (b) the State'sresponsibility to maintain existing non-incremental services, estimated atN20.5 million in constant base terms, or N28.8 million in current termsover the five-year period; and (c) the State share of farm inputs, for whichthe total cost to the State is estimated at N87.2 million (current prices)irn fertilizer subsidies. Total State expenditure in current price terms wouldcome to about N174.4 million (US$317 million), an average of N34.9 millionper annum. In addition, the State would be obliged to prefinance expenditureseligible for IBRD reimbursement in the early stages of project implementation.The precise amounts involved would depend on the speed and efficiency withwhich disbursement applications were submitted and much of this prefinancingcould be taken care of through the project's overdraft facility. The State'sexisting level of budgetary allocations for agriculture are considered ade-quate to meet project expenditures. In its Fourth Plan SSG has allocatednearly N200 million for the proposed project and related activities (feederroads, water supplies, fertilizer subsidies) out of a development budget ofN1.0 billion.

8.06 Direct FGN input would amount to N138.8 million (current prices)or an average N27.8 million annually, assuming the continuation of existingsubsidy policies. Fertilizer subsidies represent N94.2 million. In 1987prices, federal fertilizer subsidies in the post-project period would be aboutN44.0 million a year. The project's subsidy elements are relatively small inoverall fiscal terms and within Government's financing ability. Moreover, itis Government's declared policy to transfer its oil revenues to the ruralsector.

C. Cost Recovery

8.07 SASCO would recover all costs for procurement and distribution ofseeds, chemicals, sprayers and agricultural implements through adequate mark-ups. SASCO's cost recovery practices would be reviewed annually by SSG, FGNand the Bank in the light of SASCO's annual report audited accounts and

- 46 -

operations program to ensure that costs are fully recovered. Calculation ofthe mark-ups that would be required are shown in the Project File (SWPC5). Inthe case of irrigation (fadama) development the project would provide technicaladvice, including basic surveying, to farmers, without charge. But actual landdevelopment, including land levelling and field bunding, would however be thefarmers' responsibility.

IX. ECONOMIC ANALYSIS

A. Project Benefits

9.01 The project's two main benefits are closely related. Improving themanagement and staffing, and hence the effectiveness of the State Ministry ofRural Development and Cooperatives, the cooperative institutions and the LGCs,and the establishment of the new SASCO, will enable a large number of SokotoState's 688,000 farm families to raise their productivity and incomes. Theeffects of project packages on farm incomes are quantified in Chapter VIII.

9.02 As a third in a series of Bank-assisted statewide agriculturaldevelopment projects, the project will attempt to introduce, on a largerscale, many of the successful management and organizational techniques adoptedin the limited area ADPs already in progress. This strategy has been adoptedby the Government in its efforts to meet Nigeria's projected food deficit andchannel more resources, more efficiently, to the rural sector.

9.03 There are an estimated 688,000 farm-families in the project area,and assuming (on experience from existing ADPs) that 70% of farmers adopt someof the project recommendations, then some 482,000 families (3.1 millionindividuals) will benefit directly from the project's agricultural components.Others will benefit from infrastructural components (rural roads and watersupplies, paras. 4.11, 4.13). The project is not designed primarily toincrease the number of persons employed in agriculture, and there is nothingin the technological packages to inhibit their adoption within the presentlabor supply, although economic analysis assumes an increased labor input ofsome 53 million labor days per annum at full development. In view of thepresent highly uneven seasonal pattern of labor utilization, emphasis will beplaced on eliminating bottlenecks and raising productivity of off-seasonlabor. The adaptive research program, simple on-farm mechanization andoxenization, fadama upgrading and the water supply program are all amongproject components which would help realize this aim.

- 47 -

9.04 Formal analysis of the economic return on the rural water supplyprogram would not be meaningful because of the practical impossibility ofquantifying and then internalizing the different forms of benefits into anindicator like the rate of return. Further, a substantial but uncertainamount of benefits will be qualitative, due to an iimprovement in the safetyof water supply. Also, additional labor will be released for other produc-tive tasks. The subcomponent was thus designed on a cost-minimization basis,as the lowest cost means of bringing safe perennial water supplies to a sub-stantial number of rural people in a reasonable time. Once the cost advantagesof a large competitive borehole tendering approach have been demonstrated,the state might well choose to replicate the program for other communities.However, in view of non-quantifiability of benefits, the subcomponent isexcluded from the calculation of project rate of return. Benefits from theroad subcomponent are only partially quantifiable. In some cases poor com-mLanications may otherwise impede participation in the project altogether; onthe other hand, no specific benefits are imputed to reduced transport costsand ensuing improvements in farmers' terms of trade. A survey of locallyproduced food prices in the Bauchi ADP project area (1968) found differences,in the extreme, of up to 1000% depending upon accessibility, while differencesof 100% were typical.

B. Economic Rate of Return

9.05 The project's economic rate of return (ERR) is about 20%, and itsnet present value (NPV) discounted at 11%, the estimated opportunity cost ofcapital in Nigeria, is about N99.1 million.

9.06 The ERR was calculated on the basis of incremental costs and output.Project life was assumed to be 25 years, including a five-year investmentperiod during which statewide develpment activities would be substantiallycompleted. For the calculation of project costs, farm inputs were costed atfull, unsubsidized economic cost. Incremental on-farm labor was costed atNL.75 per day, representing the average daily productivity in unimprovedagriculture when all outputs are valued in economic terms. Other local costswere converted to border naira using a standard conversion factor (SCF) of0.83 for costs, and 0.69 for economic prices of non-traded outputs. Thisadjustment allows for distortions to local costs resulting from import duties,quotas, and similar factors. Local costs used base period prices, on thegrounds that continued disparity between domestic and international inflationwill at some stage result in either an exchange rate adjustment or increasedtrade restrictions (hence a fall in the SCF), while a delay in such adjustmentwould represent a political choice to apply oil "rent" to consumption.Project benefits comprise the value of incremental crop production, priced atborder farmgate prices derived from import parity for internationally tradedgoods and their immediate substitutes; and from domestic prices of non-tradedoutputs. Import parity prices were based on IBRD forecasts for 1981-1990 inconstant 1982 dollars, converted at the official exchange rate. Because oft'he inherent time lags between inputs and outputs in agriculture, half thebenefits arising from production in any given year are assumed to accrue inthe following year. See Project File (SWPC8) for detailed assumptions behindthe economic analysis.

- 48 -

C. Sensitivity Analysis and Project Risks

9.07 Sensitivity Analysis: The sensitivity of the ERR to changes in costor benefit streams was tested using switching values--the percentage in astream or streams which would reduce the ERR to its minimum acceptable valueof 11%. Total project benefits would have to decline by 9%, or total costsincrease by 10%, for the ERR to drop to 11%. The switching values for uplandcrop benefits, -68%; and for grain crop benefits, -18%. The switching valuefor the cost of project services (excluding farm labor and inputs) was 87%;for on-farm labor costs, 17% and for fertilizer costs, 31%. Analysis ofsensitivity to adoption rates showed that a 50% decline in the expectedadoption of the upland crop package would reduce the ERR to 15%; while a 50%decline in adoption of the fadama crop package would reduce the ERR to 16%.A 2-year lag in adoption of either the upland package or the fadama packagewould reduce the ERR to 17%.

9.08 Project Risks. Although the project's sensitivity analysis indicatesthat the project can tolerate some latitude in projected values, it is importantthat divergences in costs, yields and timing be minimized. From past experience,the risks most likely to affect project success would be irregular and untimelylocal funding, and an inefficient input supply system. These risks were fullyrecognized during project preparation, and adequate assurances would be soughtin each area (Chapter X). There is practically no risk associated with theproject's upland crop developmment proposals, since the recommended practicesare fairly simple and well tested both at research station and farm level.Nevertheless, further refinements, particularly in the area of mixed cropping,would result from the project's applied research program. The adoption ofdiesel pump irrigation is a potential risk. In spite of its financial attrac-tiveness, farmers may be reluctant to experiment, as it could prove risky inthe absence of adequate maintenance and repair services. The project emphasison a reliable advisory and back-up service (para 6.12) would allay the farmersfears. Despite such measures however, the development period for this componentcould take longer than anticipated. The sensitivity analysis shows that evena substantial reduction of benefits from the 10,000 ha under advanced irrigatedareas is unlikely to affect project viability.

X. AGREEMENTS REACHED AND RECOMMENDATION

10.01 During negotiations for the proposed loan, the following principalissues were discussed and agreements reached with FGN and SSG and specified asconditions in the Loan and Project Agreements:

Financial Conditions

a) SSG would maintain current levels of expenditure for agriculture,adjusted for inflation, in addition to its contributions to projectcosts (para 4.26);

- 49 -

b) SSG would provide SASOD, in advance on September 1 of each year,equity payments as working capital, totalling N3 million duringthe first two years of the project period, and would annually reviewand agree with the Bank, SASCO's cost recovery policies and practicesto ensure that costs of any input or services be fully recovered(paras 4.28, 4.29 and 8.07);

c) FGN and SSG would each provide its share of project costs to theproject quarterly and in advance, these sums to be paid into theSAPMU's bank account. Bank reimbursements would also be madedirectly to the SAPMU commercial bank account (para 4.29);

d) in the event that SSG were delinquent in paying its quarterly shareof project costs into the project account, FGN would be authorizedto pay SSG's contribution directly from the State's statutoryallocation (para 4.29);

e) SSG would further agree to contribute N 0.5 million towards theworking capital of cooperative unions and primary societies (para4.17);

f) SSG would take all necessary steps to ensure the annual availabilityof agricultural credit funds to SCF;

g) not later than January 1, 1982, SSG would establish a Fadama Devel-opment Fund, with an initial contribution of US$1.5 million (para5.19);

Project Administration Conditions

h) SSG would make available suitable land measuring 100 ha for theestablishment of a seed farm in the Western Zone (para 4.08);

i) responsibility for all agricultural extension work in the Statewould be transferred to SAPMU and existing agricultural staff ofLGCs, MRDC, and (selected) MANR would be seconded to SAPMU (para5.06);

j) SSG would review annually with SAPMU and the LGs arrangements forthe maintenance of roads and water supply facilities, and for stafftraining, providing as necessary the funds required for thesepurposes (paras 6.16 and 6.17);

k) procurement (para 4.30), budgeting, audit and reporting (para 4.22)requirements would be satisfactory to the Bank;

1) consultants (para 4.20) and senior SAPMU staff (listed in para 5.08)with qualifications and experience acceptable to the Bank, would beappointed on satisfactory terms and conditions, and according toagreed recruitment procedures (para 5.09);

- 50 -

m) not later than January 1, 1985, SSG would make recommendations forthe future of project activities and the post-project organization(para 5.22);

n) SSG would gazzette SASCO as a LBA of the Nigerian Cotton and GrainsBoard (paras 7.04-7.06);

Conditions of Loan Effectiveness

o) a subsidiary loan agreement between FGN and SSG, acceptable to theBank, had been signed (para 4.29);

p) FGN and SSG had each made its initial contribution of N3.0million to SAPMU's bank account (para 4.29);

q) overdraft facilities for SAPMU, equivalent to N5.0 million,had beenarranged in a commercial bank and guaranteed by SSG (para 4.29);

r) an Action Plan detailing the first project year implementationprogram acceptable to the Bank had been drawn up (para 4.36);

s) SSG had established SARDPC, SADPEC and SAPMU (paras 5.02 and 5.05);

t) SSG had established SASCO with an initial equity payment of N2.0million of which SCF would contribute N1.0 million (para 5.13);

u) SSG has prepared a draft managing contract for supply of staff toSASCO which is agreeable to the Bank (para 5.14); and

v) SSG has established a project staff recruiting agency satisfactoryto the Bank (para 5.09).

10.02 On the basis of the above assurances and conditions, the project issuitable for a Bank loan of US$147.0 million.

Table 1.

NIGERIA

SO'OTO AGRICUT'URA'L DEVELOPMENT PROJECT

Upland Crop Recomesndations

SeedRate -ertili-ero (kg/ha) Muri.te of Yield

Crop Zone Technology Varieties Crop Mieturee (kg/ha) Spacing Comp. SSP CAN Urea Potash Crop Protection (kl/ha) (kg/ha)

1/Sorghum North Traditional Traditional Moltifario.s crop mix (nondescript) I.di.crimioat. Nil 500

Ip-ooed (50%) Traditional Sorghum/Cowpea- 12 I.Om x 0.5O S 00 Nil 800Improved (50%) YC 5760 Sorghum/Cowpeas .lO O O .5m 100 Nil

E,C,W, Traditional Traditional aMltifarioua n.ode-cript crop mio 500

Improved (50%) Traditienal Sorghum/Cowpeas 12 100 900Improved (50%) Traditional Sorghum/Ground nut 12 100 900Advanced So-ghum 1499 Sorgfoo/Gr..nd nut 15 150 50 1,200

Millet N,E,C,W Traditional Traditio.l Multifarious mixes (nonde-cript) 300Improved (50%) Cx Berne- Millet/Ceop.as 8 100 600

(50%) N.C.A. Millet/Ground not 8 100 50 600

Cowpea N Traditional Traditional mix Multifarious crop mixes (nondescript) 10 150Improved I.F.E. Breve Cowpeas/Millet 20 100 0.5 lit/hn

Malathion equivalent 500

E,C,W Traditional 5O 200Improved VITA 5 Covpea/Relay with Maiee 096 25 10 0

Cop.peas/Millet mix or Relay

Groundnut N Traditional Traditional mix G'nt/Millet/Sorghum/Cotton 30 200Improvad F 452-4/G153 or 561 G'nrt/Mil1et 45 10O 500

E,C,W Traditional Traditional mix G'nCt/Millet/Iorghum/Cotten/Veg. 30 ' 300Improved Sana.ru 61 or Groundnut/Sorghum 50 100 600Advanced 69-101 G'not/Moi-e qr G'nut/Millet 60 200 1,000

Cotton E,C,W Traditionel Cotton mix with maize 10 150Improved S 72 or Cotton/Gnut or cotton relay after/ 20 75cm x 50m 100 400Advanced S 77 Solo cotton or Cotton/coopeas 25 75cm x 25cm 100 500 One lit Malathion/HN av. 800

Maiec E,C,W Traditional Tr.dition.l vacrity 10 600UIproved TZB or 5123 Maize/Groundnut 15 60cm x 45cm 150 50 1,200Advanced TZB Sole maioe followed by cowpeas Cotton 20 30cm x 30cm 250 100 2,000

Paddy N,C,W Traditional Globorina mi. Mixture of rice varieties depth 40 600Rice Improved Faro Sin.le pore variety suiting vater/ 60 1,200

Advanced Faro 15/Fare 12 80 100 1,800Irrigated IR.8 80 150 100 50 2,500

1/ Fertilizer differences only depending on soil -nIlysis (Comp. or SSP)

2/ E. Rorno especially for Northern Zone

JCMiller/pa 12/18/80

NIGERIA

Sokoto Agricultural Development Project

Upland Crop Development Projections

State TotalHA'000

Yr. 5Incremental Yr. 5

0 1 2 3 4 5 I + A % I + A

Sorghum - Traditional 1,332.0 1,245.0 1,130.0 1,012.0 870.0 703.0Improved 50.0 116.0 202.0 288.0 386.0 506.0Advanced 8.0 24.0 43.0 70.0 100.0

Total 1,382.0 1,369.0 1,356.0 1,343.0 1 326.0 1 1OQ n 556 46%

Millet - Traditional 1,109.0 1,061.0 996.0 899.0 797.0 686.0Improved 21.0 64.0 112.0 186.0 264.0 343.0

Total 1,130.0 1,125.0 1,108.0 1,085.0 1,061.0 1,029.0 322 33%

Maize - Traditional 13 12 14 16 18 22Improved 8 14 24 36 51 68Advanced 2 4 9 14 20 30

Total 23 30 47 66 89 120 88 82%

Cowpea - Traditional 873 847 807 741 668 570Improved 40 103 191 300 430

Total 873 887 910 932 968 1,000 430 43%

Groundnut - Traditional 138 138 132 126 120 111Improved 25 26 43 65 95 137Advanced 13 14 16 19 23 28

Total i 76 178 191 210 238 276 100 60%

Cotton - Traditional 77 75 72 68 62 55Improved 7 10 15 21 27 34Advanced - - - 1 5 11

Total 84 85 87 90 94 100 38 45%

Rice Traditional 91 88 79.5 69.5 57.4 43.0Improved 1 4 12.5 22.2 36.0 52.0 -3Advanced - - - 1.3 3.6 6.0 f

Total 92 92 92.0 93.0 97.0 101.0 57 57% M

Total Cropped Area 3,760.0 3,766.0 3,791.0 3,819.0 3,873.0 3,935.0Cropping Intensity 2,679.1 140% 141% 142% 1437. 145% 1477.Improved Area 127.0 300.0 560.5 887.5 1,280.6 1,745.0 1,706 444%% Improved Area 3% 8% 15% 23% 33% 44%

Nigeria

Sokoto Agricultural Development Project

Upland Crop Production Projections

State Totals

Tons '000

%Increase Average Yield0 1 2 3 4 5 Yr. 5 Yr. 0 Yr. 5 % Increase

Sorghum Total 711.0 734.9 772.4 812.0 860.0 917.3 514 700 36%Incremental 23.9 61.4 101.0 149.0 206.3 29%

Millet Total 345.3 356.7 367.0 381.3 397.5 411.6 305 400 317.Incremental 11.4 21.7 36.0 52.2 66.3 19%

Maize Total 21.4 32.0 55.2 80.8 112.0 154.8 930 1,290 39%7Incremental 10.6 33.8 59.4 90.6 133.4 623% >

Cowpea Total 191.6 205.9 228.4 257.9 296.4 340.2 219 340 55%Incremental 14.3 36.8 66.3 104.8 148.6 78%

Groundnut Total 65.2 66.8 77.1 91.4 111.3 138.3 370 500 35%Incremental 1.6 11.9 26.2 46.1 73.1 112%

Cotton Total 14.3 15.3 16.8 19.4 24.0 30.7 170 307 80%Incremental 1.0 2.5 5.1 9.7 16.4 115%

Rice Total 56.1 58.8 67.0 79.8 100.0 123.3 610 1,220 100%Incremental 2.7 8.2 23.7 44.3 67.2 120%

mxLo~ I-'

54 -

ANNEX 1Table 4a

NIGERIA

SOKOTO AGRICULTURAL DEVELOPMENT PROJECT

Wet Season Fadama Crop Recommendations -

Year of Adoption 0 1 2 3 4 5

Cereals 2ielr d 2/ tons/ha 0.8 1.0 1.2 1.6 2.0FertilizerCompound 15:15:15 kg/ha - 150.0 175.0 200.0 250.0Urea kg/ha - 50.0

ChemicalsSeeA dressing kg/ha - 0.05 0.05 0.05 0.05

Seed iy kg/ha - 20.0 20.0 20.0 20.0

Root CropsYield tons/ha 5.0 7.0 9.0 11.0 13.0 15.0FertilizerCompound 15:15:15 kg/ha - 100.0 150.0 200.0 250.0 250.0Urea kg/ha - 50.0 50.0 50.0 100.0 125.0

ChemicalsMalathion or equiv. 1/ha - 0.3 0.4 0.5 0.7 1.0

Seed !/

SugarcaneYield tons/ha 20.0 30.0 35.0 40.0 45.0 50.0FertilizerCompound 15:15:15 kg/ha - 200.0 300.0 400.0 400.0 400.0Urea kg/ha - 50.0 75.0 100.0 125.0 150.0

ChemicalsMalathion or equiv. 1/ha - 1.0 1.0 1.0 1.0 1.0

Seed kg/ha - 3,000.0 3,000.0 3,000.0 3,000.0 3,000.0

1/ Crops dependent on rain or residual moisture available during at least part ofthe dry season, requiring no supplemental irrigation.

2/ Yields are weighted averages of yields for rice, maize and sorghum.3/ Seed required for incremental hectarage only.4/ Seed will be mainly farmers' own; project will make available disease-free

varieties.

JMiller:esf11/25/80

- 55 -

ANNEX 1Table 4b

NIGERIA

SOKOTO AGRICULTURAL DEVELOPMENT PROJECT

Irrigated Fadama Crop Recommendations -/

Year of Adoption 1 2 3 4

Cereals 2/Yield tons/ha 1.5 2.0 2.5FertilizerCompound 15:15:15 kg/ha 150.0 200.0 200.0Urea kg/ha - - 50.0

ChemicalsSeed dressing kg/ha 0.05 0.05 0.05

Seed 3/ kg/ha 20.0 20.0 20.0

Suga rcaneYield tons/ha 30.0 35.0 40.0 50.0FertilizerCompound 15:15:15 kg/ha 200.0 300.0 400.0 400.0Urea kg/ha 50.0 75.0 100.0 150.0

ChemicalsMalathion or equiv. 1/ha 1.0 1.0 1.0 1.0

Seed 3/ kg/ha 3.0 3.0 3.0 3.0

VegetablesYield tons/ha 15.0 18.0 22.0 25.0FertilizerCompound 15:15:15 kg/ha 200.0 225.0 250.0 300.0Urea 50.0 75.0 75.0 100.0

ChemicalsMalathion or equiv. 1/ha 1.0 1.0 1.5 1.5

Seed 4/ - - - -

1/ Crops dependent on supplemental or full irrigation throughout the year.2/ Mainly rice in western zone, wheat in northern zone, and maize/rice in eastern

and central zones..3/ Seed required for incremental hectarage only.4/ Produced by farmers or imported as needed.

JMiller:esf11/2.5/80

- 56

ANNEX 1Table 5

NIGERIA

SOKOTO AGRICULTURAL DEVELOPMENT PROJECT

Fadama Crop Development Projections(hectares)

PYO PY1 PY2 PY3 PY4 PY5

Wet Season Crops 1/

Cereals

Traditional 7,000 6,300 5,325 3,925 2,025 -Improved - 700 1,675 3,075 4,975 7,000

Rooterop s

Traditional 1,000 1,900 770 545 250 -Improved 100 230 455 750 1,000

Sugarcane

Traditional 2,000 1,800 1,505 1,080 565 -Improved - 200 495 920 1,435 2,000

Irrigated Crops 2/

Cereals 3/ - - 600 1,750 3,425 6,000

Vegetables - 300 1,000 2,150 4,275 7,000

Sugarcane - 200 500 1,000 2,000

TOTAL

1/ Crops dependent on rain and/or residual moisture available during at least part ofthe dry season. No supplemental irrigation required for development, onlyfertilizer and improved planting material.

2/ Crops dependent on full on supplemental irrigation throughout the dry season.Requires introduction of pumps and land preparation as well as fertilizer and improvedplanting material.

3/ Ma or cereal crops by zone: Western - rice; Northern - wheat; Central and Eastern -maize and rice.

12/09/80JMiller:sg

NIGERIA

SOKOTO AGRICULTURAL DEVELOPMENT PROJECT

Fadama Crop Production Projections(tons'000)

PYO PYi PY2 PY3 PY4 PY5 PY6 PY7 PY8 PY9

Cereals

Total 5.6 5.7 7.0 9.8 14.5 22.1 25.3 28.1 29.0 29.0Incremental - 0.1 1.4 4.2 8.9 16.5 19.7 22.5 23.4 23.4

Sugarcane

Total 40.0 42.0 52.0 69.6 95.9 144.8 164.2 181.8 197.2 200.0Incremental - 2.0 12.0 29.6 55.9 104.8 124.2 141.8 157.2 160.0

Root Crops

Total 5.0 5.2 5.7 6.6 8.1 9.8 11.9 13.4 14.5 15.0Incremental - 0.2 0.6 1.6 3.1 4.8 6.9 8.4 9.5 10.0

Vegetables

Total - 4.5 15.9 36.4 75.5 129.4 149.6 166.8 175.0 175.0

JMiller:sg O'H

11/25/80

NIGERIA

SOKOTO AGRICULTURAL DEVELOPMENT PROJECT

Agricultural Manpower Demand and Supply

PYl PY2 PY3 PY4 PY5 PY6

Agricultural Officers (GL08-15)

Requirement 72 74 74 74 74 74

Available 35 40 46 53 64 74

International Staff 20 20 20 20 20 -

Net Surplus (Deficit) (17) (14) (8) (1) 10 -

Agricultural Superintendents (GL07-08)

Requirement 44 50 50 50 50 50

Available 38 41 44 48 55 60

Net Surplus (Deficit) (7) (9) (6) (2) 5 10 U

Agricultural Assistants (GL06)

Requirement 156 167 187 201 222 222

Available 173 188 208 238 268 293

Net Surplus (Deficit) 17 21 21 37 46 71

Field Overseers (GL04-05)

Requirement 405 473 534 588 650 650

Available 370 460 510 555 595 635

Net Surplus (Deficit) (35) (13) (24) (33) (55) (15) X

m M4

Surpluses assumed to cover deficits in other positions or to fill needs outside of project.

Source: Working Paper C6, Tables 2 and 3.

JMiller:sg01/16/81

- 59 .ANNEX 1Table 8

NIGERTA

SOKOTO AGRICULTURAL DEVELOPMENT PROJECT

Bank Lending for Agriculture in Nigeria

Loan Number Year Project Loan Amount US$mn.

764 1971 Western State Cocoa 7.21045 1974 Second Cocoa 20.01091 1975 Livestock 21.01092 1975 Funtua ADP 29.01099 1975 Gusau ADP 19.01103 1975 Rice 17.51164 1975 Gombe ADP 21.01183 1975. Mid-West Oil Palm 29.5

(Bendel State, Nucleus Estate/Smallholder)

1191 1976 East-Central Oil Palm 19.0(Imo State, Smallholder)

1192 1976 Western Oil Palm 17.0(Ondo State, Nucleus Estate/Smallholder)

1454 1977 Lafia ADP 27.01455 1977 Ayangba ADP 35.01591 1978 Rivers Oil Palm 30.0

(Nucleus Estate/Smallholders)1667 1979 Bida ADP 23.01668 1979 Ilorin ADP 27.01679 1979 Forestry 31.01719 1979 Agricultural and Rural Management

Institute 9.01838 1980 Oyo North ADP 28.51854 1980 Ekiti-Akoko ADP 32.51981 1981 Bauchi State ADP 132.01982 1981 Kano State ADP 142,02029 1981 Agric. Technical Assistance Proj. 47.0

764,2Note: For location of existing and proposed projects,

see Map IBRD 15065.

- 60 -

ANEX 2¶ Table 1

NIGERIA

SOKOTO AGRICULTURAL DEVELOPMENT PROJECT

SUMMARY OF PROJECT COSTS

(NAIRA '000]

1 2 3 4 5 TOTALS

MANAGEMENT 4812.40 1072.90 1100.90 1405.10 1128.90 9520.20STAFF DEVELOPMENT 3432.80 2600.50 1735.70 2027.70 1916.20 11712.90

LAND USE PLANNING 827.00 261.30 291.30 330.30 261.30 1971.20APPLIED RESEARCH 915.10 364.20 376.20 475.00 341.20 2471.70SEED MULTIPLICATION 864.80 271.40 306.20 380.50 325.80 2148.70EVALUATION 1414.30 644.40 644.40 693.00 644.40 4040.50

EXTENSION 11173.20 5455.40 4121.40 3835.50 4266.70 28852.20FADAMA DEVELOPMENT 2126.70 1929.90 1660.10 2334.00 2152.00 10202.70

ENGINEERING 1528.20 1113.10 748.30 653.90 560.90 4604.40MECHANICAL WORKSHOPS 3115.30 1185.40 1129.10 870.70 711.70 7012.20ROAD CONSTRUCTIDN 4438.60 7992.20 4392.60 4574.90 4115.70 25514.00ROAD MAINTENANCE 2243.30 1893.90 3752.10 2469.40 2837.00 13195.70WATER SUPPLIES 2577.30 351 2.60 1862.20 2542.80 1821.40 12316.30

MARKETING & COOPS 713.80 1049.10 1095.10 933.10 741.10 4532.20SASCO 4379.00 2189.90 2103.30 2664.50 2122.10 13458.80

FERTILIZER 4739.60 7618.80 9B36.00 11990.70 15251.10 49436.20CHEMICALS & IMPLEMENTS 677.40 2110.30 3033.30 4645.30 6585.40 17051.70

SUBTOTAL 49978.80 41265.30 38188.20 42826.40 45782.90 218041.60LESS NON-INCRMNTAL COSTS 4755.70 3725.90 3988.70 3898.30 3725.90 20094.50

TOTAL BASE COSTS 45223.10 37539.40 34199.50 38928.10 42057.00 197947.10

FOREIGN 21930.30 18180.90 15757.80 18954.60 20214.30 95037.90LOCAL 23292.80 19358.50 18441.70 19973.50 21842.70 102909.20

PHYSICAL CONTINGENCIES 2298.41 2374.71 1890.55 2188.61 2278.42 11030.70PRICE CONTINGENCIES 2728. 42 7240.94 10739.42 17805.20 27196.38 65710.36

TOTAL PROJECT COSTS 50249.93 47155.05 46829.47 58921.91 71531.80 274688.16

FOREIGN 24022.24 21862.37 20169.45 26097.92 29629.17 121781.15LOCAL 26227.69 25292.68 26660.01 32824.00 41902.63 152907.01

- 61 -

ANNEX 2Table 2

NIGERIA

SOKOTO AGRICULTURAL DEVELOPMENT PROJECT

PROJECT COSTS BY FINANCING CATEGORY

[NAIRA 000)

1 2 3 4 5 TOTALS

BUILDING" 19816.02 5470.93 2421.23 741.08 1228.09 29677.35OTHER CI\IIL WORKS 635.81 1110.71 876.13 895.72 902.62 4420.99VEH.,EOU]P.,SPARES 14428.62 9504.42 6090.35 8524.33 5760.34 44308.06BOREHOLE DRILLING 66.38 3334.34 1192.57 1858.37 1432.51 7884.16CHEMICALS & IMPLEMENTS 753.99 2628.72 4113.60 6908.56 10759.34 25164.22FERTILIZER 5249.17 9424.43 13334.79 17975.89 25242.35 71226.63CONSULTANCIES 416.35 373.01 340.59 311.47 284.05 1725.47INTERNATIONAL STAFF 2229.53 2581.92 2716.98 2793.31 2617.05 12938.79LOCAL STAFF 3645.42 6379.07 8023.49 9293.84 11776.51 39118.33VEHICLE OPERATION 1666.34 2977.91 3539.12 4245.10 4903.71 17332.18GENERAL EXPENSES 1342.31 3369.60 4180.62 5374.23 6625.22 20891.98

TOTAL PROJECT COST 50249.93 47155.05 46829.47 58921.91 71531.80 274688.16

FOREIGN 24022.24 21862.37 20169.45 26097.92 29629.17 121781.15LOCAL 26227.69 25292.68 26660.01 32824.00 41902.63 152907.01

FOREIGN PROJECT COSTS BY FINANCING CATEGORY

(NAIRA 0003

1 2 3 4 5 TOTALS

BUILDINGS 7795.99 2053.63 881.00 256.76 405.08 11392.47OTHER CIVIL WORKS 277.51 394.25 311.45 310.31 297.73 1591.25VEH.,EQUIP.,SPARES 9495.28 6575.47 4099.51 5782.99 3488.48 29441.73BOREHOLE DRILLING 26.06 2182.33 843.82 1317.39 970.73 5340.34CHEMICALS & IMPLEMENTS 340.76 1396.06 2371.01 4137.72 6320.02 14565.56FERTrLIZER 3228.71 5582.70 7712.82 10125.02 13720.11 40369.37CONSIJLTANCIES 331.01 291.32 263.25 236.96 212.20 1334.74INTERNATIONAL STAFF 1910.89 2191 .63 2286.52 2317.77 2395.97 11102.77VEHICLE OPERATION 311.84 526.75 598.63 678.09 734.27 2849.58GENEI2AL EXPENSES 304.20 668.24 801.43 934.89 1084.60 3793.35

FOREIGN 24022.24 21862.37 20169.45 26097.92 29629.17 121781.15

- 62 -ANNEX 2Table 3

NIGERIA

SOKOTO AGRICULTURAL DEVELOPMENT PROJECT

Detailed Financing Plan(N Million)

Bank LoanDisbursement

PY 1 'PY 2 PY 3 PY 4 PY 5 Total US$ ScheduleWorld BankBuilding & Civil Works 10.3 3.3 1.6 .8 1.1 17.1 31.1 28.0Vehicles Equipment Spares 9.5 6.6 4.1 5.8 3.5 29.5 53.6 48.3Borehole Drilling .1 2.2 .8 1.3 1.0 5.4 9.8 9.0Chemicals & Implements .4 1.4 2.4 4.1 6.3 14.6 26.5 23.9International Staff & Counsul. 2.6 2.9 2.9 3.0 2.9 14.3 26.0 23.1

- 14.7 UnallocatedSubtotal 22.9 16.4 11.8 15.0 14.8 80.9 147.0 147.0

FGNShare of Project Costs 11.1 8.8 7.3 8.5 8.9 44.6Fertilizer Subsidy

Incremental 2.4 4.4 6.2 8.3 11.7 33.0Non-incremental 2.1 5.1 10.3 14.4 29.3 61.2

Subtotal 15.6 18.3 23.8 31.2 49.9 138.8

FarmersFertilizer

Incremental .7 1.2 1.5 1.9 2.4 7.7Non-incremental .6 1.3 2.5 4.1 5.9 14.4

ChemicalsIncremental .1 .1 .1 .2 .1 .6Non-incremental - - .1 .2 .4 .7

ImplementsIncremental l/ .7 2.3 3.6 6.0 9.5 22.1

Subtotal 2.1 4.9 7.8 12.4 18.3 45.5

SSGIncremental Project Costs 12.3 13.9 16.1 18.9 24.2 85.4Non-incremental Activities 5.5 4.8 5.7 6.3 6.5 28.8Non-incremental Fertilizer 1.8 4.5 9.4 13.0 28.0 56.7SASCO Equity 3.0 - - - - 3.0Cooperative Share Capital .1 .1 .1 .1 .1 .5

Subtotal 22.7 23.3 31.3 38.3 58.8 174.4

Total Program Cost 63.3 62.9 74.7 96.9 141.8 439.6Of Which Project Cost 50.2 47.1 46.6 58.8 71.6 274.3

1/ Less grants for pumps equalling 30% of pump costs grants financed in SSG share of project costs.

6/23/81

- 63 -

ANNEX 2Table 4

NIGERIA

SOKOTO AGRICULTURAL DEVELOPMENT PROJECT

Estimated Schedule of Disbursement of Bank Loans(US$ Million)

FY82

FY83 2.5 2.510.0 12.516.1 38.616.0 44.6

FY84 7.6 52.210.8 63.04.6 67.64.2 71.8

FY85 5.7 77.510.0 87.53.5 91.03.9 94.9

FY86 6.7 101.614.1 115.73.4 119.12.9 122.0

FY87 5.0 127.015.8 142.8

3.4 146.20.8 147.0

04/14/82

ANNEX 2Table 5

NIGERIA

SOKOTO AGRICULTURAL DEVELOPMENT PROJECTTOTAL FERTILIZER REQUIREMENTS AND COSTS

(N '000)

Unit Cost PYl PY2 PY3 PY4 PY5Per ton Quantity Cost Quantity Cost Quantity Cost Quantity Cost Quantity Cost TOTAL

Base C&F CostCompound NPK 178.5 17655 3151.4 20519.5 5447.3 46211.1 8248.7 65625 11714.1 88774.1 15846.2 248784.7 44407.7SSP 94.0 14250 1339.5 29650.0 2787.1 50400.0 4737.6 75100 7059.4 X07100.0 10067.4 276500.0 25991.0CAN 132.5 1550 205.4 3120.0 413.4 5030.0 666.5 7380 977.8 10552.0 1398.1 27632.0 3661.2UREA 174.5 35 6.1 126.2 22.0 421.2 73.5 999.7 174.4 2678.5 467.4 4260.6 743.4Muriate of Potash 137.5 250 34.4 450 61.9 750 103.1 1450.0 199.4

TOTAL 33490 4702.4 63415.7 8669.8 102312.3 13760.7 149554.7 19987.6 209854.6 27882.2 558627.3 75002.7

Base Costs to SokotoPort Charges 35.0 1172.2 2219.5 3580.9 699.6 7344.9 15017.1Transport 70.0 2344.3 4439.1 7161.9 10468.8 14689.8 39103.9

SUBTOTAL 3516.5 6658.6 10742.8 11168.4 22034.7 54121.0

Base Costs at Sokote 8218.9 15328.4 24503.5 31156.0 49915.9 129123.7/Foreign 5405.7 10001.5 15909.3 23128.1 32289.1 86734.7Local 2813.2 5326.9 8594.2 8027.9 17626.8 42389.0

Base Cpsts within StateHandling 3.0 100.5 190.2 306.9 448.7 629.6 1675.9Transport 14.0 468.9 887.8 1432.4 2093.8 2938.0 7820.9SUBTOTAL 569.4 1078.0 1739.3 2542.5 3567.6 9496.8

Total Base Cost 8788.3 16406.4 26242.8 33698.5 53483.5 138619.5Foreign 5546.4 10267.8 16339.0 23756.2 33170.5 89079.9Local 3241.9 6138.6 9903.8 9942.3 20313.0 49539.6

Financing

Total Cost1/ 9730.2 20280.3 35546.1 49520.6 88440.6 203517.8

FGN- 4546.3 9444.8 16522.4 22688.0 40926.7 .70140.7

Farmer3/ 1346.9 2527.1 4052.9 5909.2 8265.0 22101.1SSG 3837.0 8308.4 14970.8 20925.4 39248.9 87288.5

1/ Includes physical and price contingencies

2/ 50%-<of cost delivered to Sokoto

3/ Ni44/ton for NPK; N 36/ton for others.

NIGERIA

SOKOTO AGRICULTURAL DEVELOPMENT PROJECT

Summary Economic Analysis

Total Variable 1/ Variable 2/ Total NetUpland Crop Fadama Crop Incremental Project Upland Fadama Incremental Incremental

Periods Benefits Benefits Benefits Services Costs Costs Costs Benefits

1 7,129.9 265.9 7,395.8 3,450.0 13,125.3 430.3 48,056.6 - 40,660.92 26,526.0 1,402.2 27,928.1 21,925.2 34,220.9 1,958.4 58,104.5 - 30,176.43 55,020.6 3,869.3 58,889.9 17,451.9 17,451.8 61,220.4 3,874.9 - 23,657.14 92,302.5 8,292.3 100,594.8 17,685.9 96,832.2 7,253.7 121,771.8 - 21,177.05 138,544.5 15,397.1 153,941.6 16,342.3 138,021.6 9,468.3 163,832.3 - 9,890.66 163,733.1 21,463.3 185,196.4 10,734.8 136,280.2 7,295.0 154,310.1 30,886.37 163,733.1 24,739.6 188,472.7 8,752.5 136,143.1 7,595.2 152,490.7 35,981198 163,733.1 27,081.2 190,814.3 6,770.2 136,050.4 7,764.7 150,585.2 40,229.19 165,451.7 28,088.5 193,540.2 5,580.8 137,378.1 7,913.1 150,872.0 42,668.210 167,170.2 28,242.8 195,413.0 5,485.9 137,378.1 7,913.1 150,777.1 44,635.911 167,170.2 28,242.8 195,413.0 5,391.0 137,378.1 7,913.1 150,682.2 44,730.8 f

12 167,170.2 28,242.8 195,413.0 5,296.1 137,378.1 7,913.1 150,587.3 44,825.7 '

13-25 167,170.2 28,242.8 195,413.0 5,239.2 137,378.1 7,913.1 150,530.4 44,882.6

1/ Cost of incremental fertilizer, chemicals, equipment and labor need-d to achieve incremental upland benefits.2/ Cost of incremental fertilizer, chemicals, pumps and labor needed to achieve incremental fadama benefits.

Note: See Working Paper C8 for further details.

01/23/81

I D

- 66- ANNEX 3Table 2

NIGERIA

SOKOTO AGRICULTURAL DEVELOPMENT PROJECT

Sensitivity Analysis

Net Present Value (NPV) at 11%: N99.1 millionEconomic Rate of Return (ERR) 20%

Switching Values 1/ % Change

Total Benefits -8.7%Total Costs +9.5Upland Crop Benefits -10.0Fadama Crop Benefits -67.7Grain prices (or production) -18.5Variable Upland Costs +11.3Variable Fadama Costs +190.3Project Services +87.4Fertilizer Costs +30.7Farm Labor Costs +16.6

Changes in Adoption Rate ERR

Upland: Down 10% 18.7%Down 20% 17.9%Down 50% 15.2%

Fadama: Down 10% 18.7%Down 20% 18.0%Down 50% 15.8%

l/ Percentage change in variable which would reduce the NPV to zero(reduce ERR to 11%).

01/23/81

- 67 -

ANNEX 4

NIGERIA

SOKOTO AGRICULTURAL DEVELOPMENT PROJECT

Related Documents available in Project File

A. Preparation Reports

A.1 Sokoto State Rural Development Programme.Preparation Report. July 1980.

A.2 Gusau Zone Rural Development Programme.Preparation Report. July 1979.

B. Other Documents

B.1 Sokoto State. Recurrent and Capital Estimates 1979-80.B.2 Sokoto State, Ministry of Information.

Introducing Sokoto State. June 1979.B.3 Sokoto State, Ministry of Economic Development.

Quarterly Report on the Prices of Selected Commodities inSome Towns in Sokoto State, July - December 1979, nd.

B.4 Sokoto State, Ministry of Information.Focus on Ministry of Agriculture. nd.

B.5 Sokoto College of Technology. Draft Syllabi in AgriculturalMechanization and Irrigation Engineering, nd.

C. Working Papers

Cl Socioeconomic Features of the Project areaC2 Agricultural Background and PotentialC3 EngineeringC4 Cooperative Development, Marketing, Farm Credit, and Fadama

GrantC5 Input SupplyC6 Staff Development and TrainingC7 Monitoring and EvaluationC8 Economic AnalysisC9 Project Cost Tables.

I

NIGERIAORGANIZATION OF SOKOTO AGRICULTURAL DEVELOPMENT PROJECT

POLICY Govemor's Council for

Agricultural and RuralDevelopment

EXECUTIVE Sokoto Agricultural Development

Project Excutive Committee(Chairman Commissioner MRDC)

PROGRrNM IMPLI-MENtATION Prga Maaemnurga Mnaema a

(Program Managerl

Adinnstration FinanceIanDeosrtnI~~~~~r~~~~~~~~~~~~~~Pann i8 IIE auaon II1

Semn cv ~~~~~~~~~~~~~~~~~~~~~~Services

A'pp iad SSdSeirStfpPpelie Meynca ah Mana9emnte Mu |viplito on| Training T raining rrnmn PY||Tann

g ~~~~~~. .. h M

Eastern Northern Ci 7 entrl e se1Zone Zone Zone Zone

ZONAL IMPLEMENTATIONZonal MatagementIUnit

(Project Manager)

Training n Sngineering Agriculs r Evaluation DevelopmServices SOrs LNo

Extension Civil Works Extension aline Survey Land PlanningFarmers Mechanimi Workshop Farm Management Agronomic Survey Land Development Grant

*Commercial Feeder Roads *Applied Research Price Data DemonstrationsEvaluation atar SutIly Adhoc Surveys

World Benk - 22267

I B R I0 150 65 RI

is 5.0,00 ~~~~~~~~---E K '' NI 4, ½ ~~~~~~~~~~~~~ R t- ~~~NIGER A

I tvtLt te~, IBRD Assisted Agricultural Projects~~r-----* N G~~~~~~~~~t c/tao ~~~~~Completed and Apprased

SCROTS Kareita "'~~~~~~~~~~~~~N. . ~~~~~o~~- Sgt. ~ ~ ~ ~ ~ ~ Ag,icoliurol Deveopment Pro!ects.I , , J N ~~~~~~~~~~~~~~~~~~ LI~~~~~~~~~ ~COMPLETED.

y Poarvo (Loan 1OP2-UN~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~..uL 19 -)I

0 il~~~~~~~~~~~~~~~~~~~~dtJ8 ~~~~~~~~~~~~~~~~~~EXIST NO

S I ) >~~~~~~~~~~~~~~~~~~~~~'- I ~~~~~~~~~Lafia (Loan1454 -UNJI)

U 0K OTO6 KiAND N)/ /CA-ogbo (Loan455-UNII

S .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~UIBido (Loon 1667 L Ull1\y ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ioti 7.oar 1668 -UN1

j~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~TT / REin Aoko ko-1854-L,NI(

Ranh, Store

/ ~~~~~~~Kern State

APPRAISED:

SIENtK D N A4 K-da- State

K ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Me-billeconregare .- , / 1 S~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~NDER PREPARATION.

Ionb Staret

N G E 4r 15.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~edel North

\ftlAD Rome~B. State

MINNA~~~~~~~~~~~~~~~~~~~~t- Riner StateLag-e S,tar

P L A I E A ~ ~ ~ ~ ~ ~ ~ NTrainig ProjeotsT Agiaarled Rura

f~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Ma..agee-t T- -tg letitate

A/olv W ~ ~ S', Tree Crap Projects

ES STING (. 6 N -

Cocoa DI (Loan 1045 -UNI(

1endel 0, Pee~ (oon 1183- UN

r N D_ 0 I..~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~a Oil P.. (Loan1191-UNI(

ABFOKIJ R,,.,, St.t. 0 P. ~~~~~~~~~~~~~~~~~~~~~~~~~~ (L..n 1525 - LJetNItrn Pm(oaISS-NI

C ' I W:uWs ~~~~~~~~~~~~~~~Fntettrv (Loan 167 -UN

2' ~~~~~~~~~APPRA SED

eaaegri ENXCo , <I . . . tao a ioo.vo.-a.nr no ta.iio Crate R net Stare Estote Oil PaIeC(, R- St., E,tt. OdP.I~-uo J~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~aaaacO .0 o,at n'cifn rn oot

ITY Q ~~~~~~~~~~~~~~~~~~~~~~ 7~ncit7Zn~o rrgotion Project,

N vi'ccra L cnv 1mXS err ~Ric (Loan Il103-UN 1)

eon n7 ~~~~~~~~ ~~~~~\'~~~I , ~~~~~~ . -S4 ._ . _ I iLivestock Developmnent Project-

U. ) - , ~~~~~~~~~~AFreNa 4MOL 7Loan 1091 -UN I)~ ~~~~~~~'1 ~ ~ ~ ~ / I tItSBc .e$rnvvn~~~~~~~~~~~~~~~~~~'n/ ~ ~ ~ ; evAro EXISTING

itI I LnP( ji~~&o. 5* Nnrth-Eaatern Co Ran-hee

0 RE of tones a~ A to in to .io,n ~ A-~. ofinttta ZAIPT [117] GtainaEeeeraar-PaA-n.Gr-apl-an-h-

-a, a' a. Noon U~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ , -gR e -, -FI - G pR

_IBRB 15424

9- B rn Koll :agrt -- ; ~~~~~~~~~~~~~~ _ ~N I G E P I A

A. '- i <) GW/ADABAWA ~ - _ _SOKOTO AGRICULTURALorD // N O R T H E R N1 §X jOBO St, S8ar DEVELOPMENT PROJECT

N E R N/,05/|S I I A M EG// //wc os <.\

N ) .S>1G P. PRSOPO'ED

_ Cdo,M o? TA _____eLnePoe

I ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Zo..IH-0ds,-,,

0 N ;> & _ > -- \ A 1-- C.-,

\8~~ ~~ + ^ ,4 ~ '

02t / A

: <z~~~~~~~SK_ ¢ / _ N I G E R /=r4vilq@;l/S < N I G E R ST A T E § KADU A STATE j I,,

-A~~~~~~~~A

Z 10 N E ~ ~ ~ ~ ~ ~ ~ ~ ~~oe

O ~~~~~~~~~~~~~~~TA _, SA T9 A) R I-f <A !S

A~ ~ ~~ ~~~~~~~~~~~~~~4

|~~~~~ M A F AR

IA , <.=,@ < RAv t Y D-W L' v-d

- ~~~~~~~~~> **.Jf ... RON _l~r. 0DL l9et -~SA,vRuDflS) 000 I

o r - - z ti ; 4gN: amp ~ iS _ M '! b' : t <. .. U . I..L.. = -

~7-J ROOS APA 5~X0 P- Z