AFRICAN DEVELOPMENT FUND Language: English Original: French

CHAD

NATURAL RESOURCE MANAGEMENT AND DEVELOPMENT IN

THE SUDAN REGION

APPRAISAL REPORT

NB: This document contains errata or corrigenda (see Annexes)

DEPARTMENT OF AGRICULTURE AND RURAL DEVELOPMENT OCAR WEST AND CENTRAL REGION AUGUST 2004

TABLE OF CONTENTS

Project information sheet, currency equivalents, weights and measures, list of tables, Page list of annexes, list of acronyms and abbreviations, basic data and matrix of project, and executive summary (i-xi) 1. ORIGIN AND HISTORY OF PROJECT 1

2. AGRICULTURAL SECTOR 2 2.1 Background 2 2.2 Land Tenure 3 2.3 Rural Community Structure 3 2.4 Gender Issues 4 2.5 Poverty Profile 5 2.6 Constraints And Potential of the Agricultural Sector 6 2.7 Sector Policies and Strategies 7 2.8 Institutional Framework 7

2.9 Interventions of the Main Donors 9 2.10 Rural Sector Financing 9

3. SUB-SECTORS 10

3.1 Natural Resources 10 3.2 Main Crops 11 3.3 Irrigation Schemes 12 3.4 Rural Infrastructure 13

4. THE PROJECT 13 4.1 Design and Rationale of Project 13 4.2 Project Area and Beneficiaries 15 4.3 Strategic Context 17 4.4 Project Objectives 18 4.5 Project Description 18 4.6 Production, Marketing and Prices 22 4.7 Impact on the Environment 23 4.8 Social Impact 24 4.9 Project Costs 24 4.10 Financing Sources and Expenditure Schedule 25 5. PROJECT IMPLEMENTATION 28 5.1 Executing Agency 28 5.2 Institutional Arrangements 28 5.3 Implementation and Supervision Schedule 29

5.4 Procurement Arrangements 29 5.5 Disbursement Arrangements 31

5.6 Monitoring and Evaluation 32 5.7 Financial and Audit Reports 33 5.8 Coordination of Assistance 33

6. SUSTAINABILITY AND RISKS OF THE PROJECT 33 6.1 Recurrent Expenditure 33 6.2 Sustainability of Project 34 6.3 Risks and Mitigative Measures 34

7. PROJECT BENEFITS 35

7.1 Financial Analysis 35 7.2 Economic Analysis 35 7.3 Impact Analysis of Inter-Sectoral Aspects 36 7.4 Sensitivity Analysis 36

8. CONCLUSIONS AND RECOMMENDATIONS 37

8.1 Conclusions 37

8.2 Recommendations and Loan Approval Conditions 37

This report was written by Messrs. D. KEITA, Chief Agronomist, M. BEREKOUTOU, Livestock Expert, A. DAGAMAISSA, Forestry Expert, A. DIAW, Financial Analyst, and Mrs. R. BA, Gender Specialist, following an appraisal mission to Chad in January 2004. Questions on this project should be referred to Mr. J.P. RIGOULOT, Division Manager OCAR.3 (Extension 2170) and/or Mr. C. R. SPENCER, Director, OCAR (Extension 2036).

LIST OF TABLES 4.1 Summary of project costs by component 4.2 Summary of project costs by category of expenditure 4.3 Financing sources 4.4 Expenditure implementation schedule by component 4.5 Expenditure schedule by financing source 5.1 Implementation schedule 5.2 Summary of procurement arrangements

5.3 Details of financing methods under “others” 6.1 Schedule of recurrent expenditure by financing source

LIST OF ANNEXES

Annex 1: Administrative location of project Annex 2: Organization chart of the project implementation unit Annex 3: List of goods and services Annex 4: Summary of economic analysis Annex 5: Bank Group operations in Chad Annex 6: Summary of the environmental and social management plan

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AFRICAN DEVELOPMENT FUND

P. O. Box 323 – TUNIS, Tel: 216 71 10 21 70

Fax: (216) 71 10 37 55

PROJECT INFORMATION SHEET

Date: January 2004 The information given hereunder is intended to provide guidance to prospective suppliers, contractors and all persons interested in the procurement of goods and services for the projects approved by the Boards of Directors of the Bank Group. More detailed information and guidance may be obtained from the Executing Agency of the Borrower. 1. COUNTRY : Chad 2. NAME OF PROJECT : Natural Resource Management and

Development Project 3. PROJECT AREA : The Departments of the Sudanese Zone 4. BORROWER : Republic of Chad 5. EXECUTING AGENCY : Ministry of Agriculture

P.O Box 441, N’djamena, Chad Tel.: (235) 52 24 48 / 52 98 62 6. PROJECT DESCRIPTION : The project components are: (i) capacity-building; (ii) increase of natural resource productivity; and (iii) project management. 7. TOTAL COST OF PROJECT : UA 20.42 million Foreign exchange : UA 13.02 million Local currency : UA 7.40 million 8. BANK GROUP

ADF loan : UA 4.27 million ADF grant : UA 1.60 million Foreign exchange : UA 3.73 million

Local currency : UA 214 million 9. OTHER FINANCING SOURCES ABEDA : UA 5.91 million IsDB : UA 6.10 million

Government : UA 2.25 million Beneficiaries : UA 0.29 million 10. APPROVAL DATE : September 2004 11. PROBABLE START-UP DATE AND DURATION: January 2005; six years

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12. PROCUREMENT OF WORKS, GOODS AND SERVICES

The procurement of works, goods and services shall be done in accordance with the relevant ADB Group rules of procedure as follows:

A. PROCUREMENT OF WORKS AND GOODS (i) National competitive bidding (NCB): Procurement of motorcycles, implements for rice-growing irrigation areas, computer equipment, office equipment (photocopiers, furniture, fax machines and telephones); (ii) National Shopping: Procurement of various supplies needed for project implementation; (iii) The procurement of basic seeds will be done by negotiated contract with specialized service providers. B. RECRUITMENT OF CONSULTANTS (i) The procurement of consultancy services for the conduct of systems research studies and field trips will be done by negotiated contract with specialized service providers; (ii) The recruitment of consultants for technical assistance services, short-term consultancy as well as training and sensitization, shall be done through shortlisting; (iii) The procurement of services for the production of improved seeds and fruit-tree seedlings will be done by negotiated contracts with specialized service providers.

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CURRENCY EQUIVALENTS

(Rates applicable in January 2004)

Currency unit : CFA Franc UA 1 : CFA.F 771. 750 UA 1 : US$ 1.48597 UA 1 : Є1.17654

FISCAL YEAR

1st January – 31st December

UNITS OF MEASURE Metric system (SI)

WEIGHTS AND MEASURES 1 hectare = 10 000 m² 1 hectare = 2.47 acres 1 kilogram = 1000 grams 1 metric ton = 1000 kg 1 centimeter = 0.3937 inch 1 meter = 3.3 feet

LIST OF ACRONYMS AND ABBREVIATIONS AFD French Development Agency ADB African Development Bank ADF African Development Fund ASDEC Association pour le développement de l’épargne et du crédit (Savings and Credit Development Association) ABEDA Arab Bank for Economic Development in Africa BELACD Bureau d’étude et de liaison pour les actions caritatives au développement (Studies and Liaison Office for Charity Actions to Development) CECADEC Centre chrétien d’appui au développement communautaire (Christian Community Development Support Center) DDPAP Department of Animal and Pastoral Production Development DEAFPR Department of Agricultural Education, Training and Rural Development DEPP Department of Studies, Programs and Projects DGRHA Department of Agricultural Engineering and Agricultural Water Management DPA Department of Agricultural Production DPFLCD Department of Forest Conservation and Desertification Control DPFPN Department of Wildlife Protection and National Parks DPVC Department of Plant Protection and Processing DRHF Department of Human Resources and Training SCR-SWC Soil Conservation and Restoration, Soil and Water Conservation DSSP Department of Statistics, Monitoring and Programming EDF European Development Fund FAO Food and Agricultural Organization GDP Gross Domestic Product GTZ German Cooperation HIPC Heavily Indebted Poor Country HPI Human Poverty Index IFAD International Fund for Agricultural Development

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IsDB Islamic Development Bank ITRAD Institut tchadien de recherche agronomique pour le développement (Chadian Institute of Agronomic Research for Development) KFW Kreditenstaldt für Wiederaufabau LDF Local Development Fund MEE Ministry of the Environment and Water Resources MINAGRI Ministry of Agriculture NGO Non-governmental organization. NRMP National Resource Management Plan NTF Nigeria Trust Fund OFT Observatoire du foncier au Tchad (Chad Land Observatory) OMVSD Office de mise en valeur de Sategui-Deressia (Sategui-Deressia Development Authority ONASA Office national de sécurité alimentaire (National Food Security Authority) ONDR Office national de développement rural (National Rural Development Authority) OPR Organization des producteurs ruraux (Rural Farmers’ Organization) PCVZS Projet de production cotonnière et vivrière dans la zone soudano-sahélienne (Project for Cotton and Food Crop Production in the Sudano-Sahelian Region) PRASAC Pôle régional de recherche appliquée au développement des savanes d’Afrique centrale (Regional Pole of Applied Research for the Development of the Central African

Savannah) PROADEL Projet d’appui au Programme de développement local (Local Development Program Support Project) PSAOP Projet d’appui aux services agricoles et aux organizations de producteurs (Support Project for Agricultural Services and Producer Organizations) RDIP Rural Development Intervention Program RDSC Rural Development Sector Consultation RVTC Rural Vocational Training Center SME Small and medium-sized enterprises UNDP United Nations Development Program WB World Bank

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NATURAL RESOURCE MANAGEMENT AND DEVELOPMENT PROJECT

LOGICAL FRAMEWORK (LOAN) Narrative Summary (NS)

Objectively Verifiable Indicators (OVI) Means of verification (MOV)

Assumptions and risks (A/R)

Sector Goal 1. Contribute to food security

1. A 20% increase in the primary sector GDP (currently estimated at CFA.F 328 billion in the 6th year of the project.

1.1. National economic statistics 1.2. UNDP report Household survey (ECOSIT)

Project objective 2. Sustainable increase in natural resource productivity in the Sudan region

2.1 A 10% increase in the surface area of developed and/or protected lands (irrigation areas, tree plantations, SCR-SWC, non-grazing areas, fishponds, vegetable gardens) in the 6th year. 2.2 Farm output improved by 20% on average for rain-fed agriculture and 30% for irrigation farming in year 5 of the project.

2.1Agricultural production statistics. 2.2 Project reports.

___________ Economic reforms continued. Socio-economic stability maintained

Outcomes _____________ 3.1Institutional capacity developed.

3.1.1 1,000 village natural resource management committees (VNRMC) set up and operational in the 6th year. 3.1.2 200 district natural resource management workshops organized in the 6th year. 3.1.3 3,600 officials from rural professional organizations, at least 20% of them women, trained in the 6th year. 3.1.4 1,000 village and 100 district natural resource management plans drafted and implemented in the 6th year. 3.1.5 HIV/AIDS and malaria prevention techniques disseminated. 3.1.6 4,500 farmers, 50% of them women, trained in natural resource management techniques in the 6th year. 3.1.7 100 canton natural resource management committees (CNRMC) set up and operational in the 6th year.

3.1.1 Reports on the setting up of village associations 3.1.2. Report of training workshops 3.1.3 Status, supervision, mid-term, completion and assessment reports Idem. Idem. Idem. Idem.

The financial resources earmarked for the project are available and the access conditions are satisfactory. Agriculture remains sufficiently productive to retain the labor force which risks being lured away by salaried employment in the petroleum industry.

3.2 Natural resources are protected and developed

3.2.1. 2,350 ha of rice growing areas developed and farmed in the 6th year. 3.2 2. 6,200 on-farm tests (OFT) on 37 themes and 12 studies relating to natural resource management. 3.2.3. 350 tons of basic seeds, 15,000 fruit-tree seedlings, and 5 000 tons of improved seeds produced and planted. 3.2.4. Farm output increased by 20% for dry-crop farming and by 30% for irrigation farming in the 6th year. 3.2.5. 10 fishponds developed and operational. 3.2.6. 500 ha of reforested community land, 2 000 ha of reserved non-grazing land, and a 200-km firebreak created in the 6th year. 3.2.7 100 district and 1 000 village fruit tree and forest nurseries created in the 6th year.

3.2.1 Status, supervision, mid-term, completion and appraisal reports. Idem Idem Idem Idem Idem Idem

The allotees of developed plots enjoy land security. The agro-climatic conditions are favorable.

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Narrative Summary (NS)

Objectively Verifiable Indicators (OVI) Means of verification (MOV)

Assumptions and risks (A/R)

3.2. 8. 100 biogas demonstration units and 10,000 improved stoves installed and functional in Year 6. 3.2. 9. 1,000 ha protected through SCR-SWC activities in the 6th year. 3.2.10. 7,500 ha fertilized through various biological soil fertilization techniques (organic fertilizer, green manure, agroforestry) in Year 6. 3.2. 11. 33,000 m of dykes protected through sodding in Year 6.

Idem Idem Idem

Activities 1. Recruitment of staff. 2. Signing of agreements with NGOs and ITRAD 3. Preparation of engineering designs for works

4. Award of contracts for works, goods and services.

5. Supervision of works.

Financial resources: Component A: UA 2.09 million Component B: UA 14.29 million Component C: UA 2.31 million ADF loan: UA 4.27 million Government: UA 2.12 million Beneficiaries: UA 0.29 million ABEDA: UA 5.91 million IsDB: UA 6.10 million _________ UA 18.69 million

5. Engineering designs report 6. Bidding documents, bid analysis reports, procurement contracts, and construction acceptance report. 7. Engineering designs.

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LOGICAL FRAMEWORK (ADF GRANT)

Narrative Summary (NS)

Objectively Verifiable Indicators (OVI) Means of Verification (MOV)

Assumptions and Risks (A/R)

Sector objective 1. Contribute to food

security 1 A 20% increase in the GDP of the primary

sector (currently estimated at 328 billion CFAF) in year 5 of the project.

National economic statistics

1.2 UNDP report Household surveys (ECOSIT)

Project objective 2.1 Preparation of a

project that will lead to a sustainable increase in the productivity of natural resources.

2.1.1 Project preparation report drafted within six months following commencement of the study and approved by the Government of Chad and the ADB.

2.1 Acknowledgement of receipt of the report by the ADB and notification of approval from the Bank

The financial resources earmarked for the study are available and on time

Outcomes 3.1 Institutional

development. 3.1.1 150 artisanal workers trained in Year 6. 3.1.2 52 Savings and credit cooperatives equipped in Year 6. 3.1.3 4 technical assistants totaling 96 staff-months recruited and appropriate management tools put in place in Year 6.

3.1.1 Training workshop reports 3.1.2 Status, supervision, mid-term review, completion and appraisal reports Idem.

3.2 Diagnostic study of the resource situation conducted and validated.

3.2.1 Diagnosis of the natural resource situation, agro-silvo-pastoral production systems and the socio-economic environment conducted in the first three months of the study.

3.2.1 Report of the agency conducting the study

3.3 Project preparation report drafted and validated.

3.3.1 Proposals on strategies and sustainable natural resource management actions, increase of production and agro-silvo-pastoral productivity and improvement of income levels in the sector formulated at most six months after commencement of the study. 3.3.2 Six local workshops (BONGOR, LAI, DOBA, MOUNDOU, PALA and SAHR) and one regional workshop (in MOUNDOU) organized on a participatory basis to validate the results of the diagnosis and strategies proposed to ensure a sustainable improvement in production and agro-silvo-pastoral productivity.

3.3.1 Report of the agency conducting the study 3.3.2 Coordination report of the study

Activities 1. Recruitment of

consultant 2 Recruitment of

technical assistants

Financial resources: ADF grant: UA 1.60 million Government: UA 0.13 million __________ Total : UA 1.73 million

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EXECUTIVE SUMMARY

1. Project History 1.1 Chad, a landlocked country, is classified among the poorest economies in the world with an annual average per capita income estimated at US$ 200. Agriculture remains the driving force of national economic growth, since it generates a substantial proportion of the gross domestic product (GDP) and employs 77% of the total population and 80% of the labor force. However, agricultural productivity is low and contributes only about 40% to GDP formation. The climate is extremely variable with frequent droughts. Land degradation caused by inappropriate farming practices, population and animal pressure, overgrazing, poaching, wanton deforestation, sanding, regression of the hydrographical network and bushfires have limited access to natural resources thus generating fierce competition and conflicts among the various resource users. Despite the existence of a wide hydrographical network including a lake of 12,720 km2, perennial rivers (Chari and Logone), semi-perennial streams (Batha, Bahr Azoun, Salamat and Mayo-Kebbi) and numerous ephemeral streams, only 18,000 ha, out of a potential of 5 million hectares have been developed. Such degradation of natural resources and the under-exploitation of the Sudan region’s economic development potential constitute a major source of concern in the region. 1.2 Concerned about such advanced degradation of its natural resources, the Government of Chad turned to the Bank for assistance to fund a project on natural resource management. During the multi-donor identification mission to Chad in February-March 2001, the Bank identified, inter alia, a Natural Resource Management and Development Project (NRMP) that was part of the Rural Development Intervention Program (RDIP). The RDIP is the operational outcome of the Rural Development Sector Consultation (RDSC) of June 1999. The project was designed thanks to a Project Preparation Facility (PPF) from the ADF amounting to UA 0.47 million. A team of national experts from the three ministries in charge of rural development, seconded to the project for the entire formulation period, designed the project with the assistance of international consultants and the effective participation of all stakeholders (farmers’ associations, rural communities as well as technical and financial partners). This report is based on the Government’s preparation report, the appraisal report of January 2003, the results of consultations and discussions with political and administrative authorities, social partners, civil society, donors and field trips made during the ADF re-appraisal mission of January 2004. 2. Purpose of the loan and the grant The ADF loan of UA 4.27 million will be used to finance 18% of expenses in foreign exchange and 26% of expenses in local currency, representing 21% of project cost. The ADF grant of UA 1.6 million will be used to finance 11% of expenses in foreign exchange and 3% of expenses in local currency, representing 8% of project cost. It will be used to reimburse the PPF received by the Government for preparation of this project, build the capacity of craftsmen and finance technical assistance.

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3. Project objectives

The sector goal of the project is to contribute to food security. More specifically, its objective is to ensure a sustainable increase in the productivity of natural resources in the Sudanese Zone. 4. Project description

The project will be implemented over a period of six years and comprises the

following components: (i) capacity-building; (ii) increasing the productivity of natural resources; and (iii) project management. 5. Project cost The total project cost is estimated at CFA.F 15,759 million or UA 20.42 million, net of taxes and customs duties. Of this amount, CFAF 10,046 million or UA 13.02 million is in foreign exchange, and CFAF 5,713 million or UA 7.40 million in local currency. 6. Financing sources

The project will be co-financed by the ADF (21% as a loan and 8% as a grant), ABEDA (29%), IsDB (30%), the Government of Chad (11%) and beneficiaries (1%). 7. Project implementation Project implementation will be entrusted to an Implementation Unit based in Laï, under the supervision of the Ministry of Agriculture. A coordinator assisted by seven national experts and three technical assistants shall head the Project Implementation Unit (CEP). The Unit shall invite specialized bodies to implement specific project components. A steering committee shall be set up to ensure general supervision of the project. 8. Conclusions and recommendations

8.1 Natural resource management is the focus of the rural development sector consultation in Chad. Implementation of the current project will solve one of the most disturbing development problems in Chad – namely, the degradation of productive capital, notably land. The project will also contribute to water resource development. Indeed, its implementation will also lead to an increase in the irrigated surface area, thus contributing to the attainment of Chad’s water management objective and guaranteeing the long-term profitability of natural resource use. The maintaining, increase and diversification of agricultural production, coupled with the positive effects of technical assistance and those generated by the setting up of a seed sector will lead to substantial poverty reduction in the project area and an improvement in the living conditions of the people. It is estimated that at the peak of the project, the impact of farming 2,350 ha, including at least 1,000 ha under double cropping, will generate an average increase of about 25% in agricultural incomes. Such an increase in agricultural incomes will substantially boost poverty reduction in Chad. The project is in line with the Government’s rural development and poverty reduction strategies which focus on: (i) promoting good governance; (ii) ensuring strong and sustainable economic growth; (iii) building human capital; (iv) improving the living conditions of vulnerable groups; and (v) restoring and protecting ecosystems. The project is also in conformity with the Bank’s vision, its agricultural and rural development policy, and its 2002-

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2004 operations strategy for Chad. It is deemed technically feasible and economically, financially and environmentally viable. The economic rate of return stands at 21%. 8.2 In the light of the foregoing, it is recommended that an ADF loan, not exceeding UA 4.27 million, and an ADF grant, not exceeding UA 1.6 million, be awarded to the Republic of Chad to finance the natural resource management and development project. This loan shall be awarded subject to the fulfillment of the conditions specified in the loan agreement.

1. ORIGIN AND HISTORY OF PROJECT 1.1 Chad, a landlocked country, is classified among the poorest economies in the world with an annual average per capita income estimated at US$ 200. Agriculture remains the driving force of the country’s economic growth, accounting for 40% of gross domestic product (GDP) formation. It employs 77% of the total population and 80% of the labor force. However, its productivity remains low and the climate is highly variable, with frequent droughts. Land degradation caused by inappropriate farming practices, population and animal pressure, overgrazing, poaching, wanton deforestation, sanding, the regression of the hydrographical network and bushfires have limited access to natural resources, giving rise to fierce competition and conflicts among the various users. Despite the existence of a wide hydrographical network including a lake of 12,720 km2, perennial rivers (Chari and Logone), semi-perennial streams (Batha, Bahr Azoun, Salamat and Mayo-Kebbi) and numerous ephemeral streams, only 18,000 ha, out of a potential of 5 million hectares have been developed. The advanced degradation of natural resources and the under-exploitation of the region’s economic development potential, such as the major water resources that offer an irrigable land potential of about 5.6 million ha (of which only 7,000 ha are irrigated), constitute a source of major concern in the Sudan region. 1.2 Faced with the above natural resource management and development challenges, which are compounded, inter alia, by the vagaries of climate, soil erosion and environmentally harmful farming systems, the Government of Chad organized a Roundtable of donors in Geneva (Geneva IV) in October 1998 and a Rural Development Sector Consultation (RDSC) in June 1999. At the end of this Roundtable, a logical framework for rural sector development was defined with six strategic areas that included natural resource management. Mindful of the abovementioned challenges and of the importance of natural resources in poverty reduction, the Government requested for assistance from the Bank and other donors (ABEDA, IsDB, etc.) to finance a natural resource management and development project. During a multi-donor mission to Chad in March 2001 to identify a rural development program, the Bank Group selected a natural resource management and development project in the Sudan region (NRMP) that was part of the Rural Development Intervention Program (RDIP). This project is proposed as a strategy to restore, improve and conserve productive capital, especially land, and enhance the efficacy of government and community interventions in the area of natural resource management. 1.3 A team of national experts seconded from the three ministries responsible for rural development to work on the project for the entire formulation period, designed the project with the assistance of international consultants and the effective participation of all stakeholders (farmers’ associations, rural communities as well as technical and financial partners). The project was appraised in January 2003, but could not be programmed for presentation to the Board in 2003 for want of resources. This report is based on the Government’s preparation report, the appraisal report of January 2003, the results of consultations and discussions with political and administrative authorities, social partners, civil society and donors during the re-appraisal mission of January 2004. At the request of the Government and its other donors (ABEDA and IsDB) who were ready to co-finance the project, the reappraisal of January 2004 covered all components and activities prepared within the framework of the PPF. The project is in conformity with the Government’s rural development and poverty reduction strategies whose priorities are: (i) promoting good governance; (ii) ensuring robust and sustainable economic growth; (iii) building human capital; (iv) improving the living conditions of vulnerable groups; and (v) restoring and sustaining ecosystems. It is also

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in line with the Bank’s vision, its rural and agricultural development policy as well as its 2002-2004 operations strategy for Chad. It will be funded by the ADF (21% as a loan and 2% as a grant), the NTF (11%), ABEDA (29%), the IsDB (24%), the Government of Chad (11%) and beneficiaries (1%).

2. AGRICULTURAL SECTOR 2.1 Background 2.1.1 Chad is a vast country with a land surface area of 1,284,000km², a population of 8.1 million, representing an average density of 6.3 inhabitants per km², and an annual growth rate of about 3%. The rural population makes up 77% of the total population, the annual income per capita is US$ 200 and 57% of the population lives below the poverty line on less than $1 per day. The agricultural sector dominates the economy of Chad, generating about 40% of the country’s GDP. However, it is heavily dependent on climatic conditions.

2.1.2 The arable surface area in Chad is estimated at 39 million ha, representing 30% of the national territory. About 2.2 million ha are cultivated annually, and more than half of the cultivated land (1 400 000 ha, including 1 080 500 ha of cereal crop land) is found in the Sudan region. Cotton is the main cash crop and is grown on an estimated surface area of 200 000 ha per year. Considering the country’s huge livestock population, the integration of agriculture and stockbreeding holds out great potential in terms of organic fertilizer that can be used to improve productivity levels and raise soil fertility. 2.1.3 Stockbreeding occupies an important place in the Chadian economy. In 2001, it is estimated to have accounted for more than 51% of export earnings, 12.7% of national GDP and 32% of agricultural GDP. It employs more than 40% of the national population and 80% of the rural population. Production is estimated at 87 000 tons of meat and 100 000 tons of milk, and brings in a total of 117 billion CFAF, of which 65 billion CFAF comes from exports (2001). Three major stockbreeding systems co-exist in Chad, namely: pastoral transhumance, the agro-pastoral system and sedentary stockbreeding. The first two systems are better adapted to the natural environment where the feeding of livestock depends on the extensive use of pastureland. Mobility and sometimes nomadism are strategic choices in land management to hedge against spatial and temporal fluctuations in food resources. Transhumance often gives rise to conflicts with non-migrant farmers especially in the Sudan region, which is essentially agricultural. Sedentary stockbreeding is often a way of converting agricultural earnings into stockbreeding capital, making it possible to combine stockbreeding with agriculture in order to use manure as organic fertilizer and the crop residue as feed for the animals. 2.1.4 Fishing is practised in the numerous water expanses of the country such as Lake Chad, the Logone-Chari system, land-locked lakes and flooded plains. The fishing potential is heavily dependent on rainfall and varies from 60 000 tons in the dry season to 120 000 tons per year in a good rainy season. The fisheries sector accounts for about 3% of the GDP. However, its potential has declined as a result of recurrent droughts and ill-adapted fishing practices. Chad conducted a study on the fisheries sector with ADF assistance which made it possible to assess the sector situation, define a master plan and prepare a fisheries and fish-farming development project.

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2.2 Land Tenure 2.2.1 Two land tenure systems coexist in Chad with modes of management that vary from one region to another: the customary system and the so-called modern system. The traditional land tenure system allots land to the first occupant. In certain parts of the country, the application of traditional law is quite flexible. In localities where access to land and water points is determined by Sultans, Muslim law defines the rights and conditions of access and use. Modern law classifies all virgin land or vacant land as State property. The so-called modern land tenure system, explicitly defines the criteria for allotment of land and the conditions of tenure. It requires physical evidence of land use or development in the form of investment on the said land. The above provision recognizes farming rights on land classified as State property. Furthermore, a land registration system has been instituted whereby a title deed is issued to justify private ownership. During land development, especially for irrigation purposes, Government services manage land allotment. Priority is usually given to users who accept to sign and apply terms of reference that require them to: (i) participate in the construction and maintenance of facilities; (ii) comply with the recommended farming schedule; and (iii) pay the levies for such land development. 2.2.2 The customary land tenure system essentially concerns land used for dry farming or flood recession agriculture, oases, wadis, traditional polders, ponds and streams. The right of collective ownership is exercised by village chiefs and administrative officers who manage the property on behalf of the communities concerned. Moreover, with the setting up of the Land Observatory of Chad (OFT) by Decree No. 215/PR/MES/2001 of 24/04/2001, which has a mandate to study land problems and contribute to the drafting of a land law, these constraints will be reduced. Indeed, modern land law has undergone several amendments. These include: Law No. 4 of 31 October 1956 which defines the regulations for pastureland management by nomadic stockbreeders. This law equally defines the itinerary and periods of nomadism. Law No. 23 of 22 July 1967, which lays down regulations governing State lands, defines the customary rights of attribution. Hence, the status of all land that is effectively occupied and put to use cannot be challenged under this law. However, Article 16 provides that if such land is not used for a period of 10 years then the person concerned will lose his or her tenure. Circular No. 04/PM/CAB/CASPFOEH/93 of 29 June 1993 supplements the bases of application of the above decree. The water code of 1999 defines the modalities for managing water resources and water points for human consumption, stockbreeding and agriculture.

2.3 Rural Community Structure 2.3.1 The rural sector in Chad is characterized by the existence of a wide variety of groups, including women’s groups, concentrated mainly in the Sudan region. The main legal instruments governing socio-professional organizations in Chad are Ordinance No. 27/INT/SUR of 28 July 1962 to define the regulations governing associations; Decree No. 165/INT/SUR to define the procedures and practical modalities for declaration and management of associations; and Ordinance No. 025/PR/92 to define the rules and regulations governing cooperatives. These groups may receive economic and fiscal benefits in accordance with the instruments in force. Economic interest groups (EIG) are governed by OHADA instruments that have been in force in Chad since the year 2000 and which offer advantages in terms of existing statutes, a legal personality and tax exemption.

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2.3.2 There are about 32,643 rural professional organizations (RPO) in Chad. These organizations, which intervene mainly in rural areas, sometimes come together to form apex organizations. Having participated in the implementation of various development projects, these organizations have a wealth of experience on association life and community management. However, the lack of adequate financial and material resources limits their intervention capacity. In implementing this project, it is crucial to adopt actions that will help to reduce these constraints. 2.3.3 With regard to development projects, NGOs focus their interventions on local capacity-building through support to the village planning processes, functional literacy, training, rural infrastructure development and promotion of income-generating activities. To date, 98 NGOs intervene in various development domains in Chad. Those most active in rural development are the Study and Liaison Office for Charity Development Action (BELACD), especially BELACD Pala which has more than 20 000 members; the Christian Center for Support to Community Development (CECADEC); the Savings and Loans Development Association (ASDEC) and the Support Service for Local Development Initiatives (SAILD). The international NGOs include Volunteers in Technical Assistance (VITA), World Vision, Africare, CARE, the Association for the Promotion of Community Initiatives in Africa (APICA) and French Farmers for International Development (AFDI). The women of the informal sector receive support from several NGOs (ACRA, SECADEV, PMR/FED, ACORD, Oxfam, Vita, Care Darna, DED Tchad Solution, ACODE, etc.) and development projects funded by donors (UNDP, UNICEF, UNFPA, WFP, GTZ, French Cooperation, Swiss Cooperation, ADB, World Bank, etc.). This support is generally given in the form of micro-credits to promote income-generating activities.

2.3.4 NGOs are the prime movers of local development in Chad. Their main focus is poverty reduction, especially in rural areas, and the promotion of self-management and self-reliant development. They intervene in areas where the State has had little success either because it is too weak/absent or because the problems cannot be solved through a top-down approach or centralized planning. They generally intervene by: (i) providing technical assistance to local initiatives (in this case they are technical or financial support bodies); (ii) contributing to decentralization and collaboration processes between the government and village communities; (iii) engaging in poverty reduction actions (development operators) with the conviction that poverty reduction leads to environmental protection. Through their interventions and strategies, NGOs strive to develop local potential by providing technical assistance, training and funding. Consequently, they have revolutionized rural development techniques, and accumulated a substantial capital of know-how and pedagogy in the area of project formulation and monitoring, management of development processes, planning and others. Hence, NGOs are able to rally a substantial number of people to the adoption of sustainable development strategies. As such, they are very flexible in their interventions and have attained a level of efficiency that is particularly adapted to difficult situations.

2.4 Gender Issues 2.4.1 Women make up 52% of the country’s population of 8.1 million inhabitants. Social constraints and the youthfulness of the population have given rise to a high fertility rate. Adult illiteracy affects 64.2% of women compared to 47% of men. The gross enrolment ratio is only 67.6%, with a rate of 84.6% for boys and only 50% for girls. The infant-child mortality rate is 103 per 1000, the maternal mortality rate is 150 per 1000, the HIV/AIDS prevalence rate was 3 to 10% in 1999 while malaria and tuberculosis remain endemic. About 95% of the women are illiterate compared to 87% of the men. The global illiteracy rate is

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below 60%. The gross enrolment rate was only 67.7% in 1998/1999, with a rate of 84.6% for boys and only 50% for girls. 2.4.2 From the economic standpoint, the vast majority of women work in the agricultural sector, with limited access to extension services, training and research, loans, health services and information. The gender distribution of the employed labor force shows that 86% of the women are engaged in agriculture, 7.8% in commerce and 2.7% in the administration. In the informal sector, 40% of the women are involved in petty trades and restaurant business where they are in the majority (37 men for every 73 women). They are very active in the processing and marketing of agricultural produce. 2.4.3 Although Law No. 23/24/25 of 22 July 1967 governing land tenure recognizes the right of any citizen to own land, tradition has allowed women little or no access to natural resources or land, especially fertile or irrigated land. When economic difficulties arise, men migrate in search of alternative sources of income while women stick to the land. Sometimes, by force of circumstance, women become family heads and so have to extend their working hours in order to address the needs of their families. Given such a context, it is vital to involve women in all poverty reduction actions.

2.5 Poverty Profile

2.5.1 Chad is one of the poorest countries in the world. Indeed, according to the HDI of the UNDP the country is ranked 167th out of 174 countries analyzed in the year 2000. The poverty level is estimated at 54.6%. The human poverty index (HPI) for Chad is estimated at 57%. In other words, 57% of Chadians suffer in terms of life expectancy, health, education and economic well-being. Poverty is more acute in rural areas than in the cities. In rural areas, poor households are usually characterized by their lack of adequate production means to cope in a hostile agro-climatic environment. In urban areas, poor households often belong to the unemployed, unskilled workers, war disabled, demobilized combatants, widows or divorced women. 2.5.2 The gender distribution of the employed labor force shows that 86% of women work in agriculture, 7.8% in trade and 2.7% in the administration. In the informal sector, 40% of women are engaged in petty trades and the restaurant business where they are in the majority (37 men for every 100 women). This accounts for the explosion in women’s activities in the trade, food processing and services sectors. Women are responsible for 98% of the local alcohol production. From the economic standpoint, the vast majority of the poor are engaged in agricultural and pastoral activities or activities requiring little investment or no special qualifications. Gender discrimination is still widespread in rural areas. Women have little access to extension services, training and research, loans, marketing services, appropriate technologies, health and information. They live under difficult conditions with no access to potable water, sanitation, transport and communication. Lastly, they face a lot of discrimination in land ownership and access to natural resources. The GDP per capita was about CFA.F 132000 in the year 2000, representing less than US$ 200 compared to US$ 225 in 1991. This confirms the observation that there has been a deterioration in the living conditions of the people over the last decade. 2.5.3 According to the communities consulted during preparation of the poverty reduction strategy paper, the long period of war and political instability, poor governance, the limited integration of women, environmental degradation, difficult access to quality health and

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education services, potable water, electricity, loans, HIV/AIDS and malaria are the main determinants of poverty in Chad. Chad’s health challenges, which are already very difficult to address in the short-term, have been compounded by the HIV/AIDS pandemic which is spreading at an alarming rate. Indeed, the number of declared AIDS cases, which was only 10 in 1989 spiralled to 1010 in 1993 and finally reached 1343 in 1996. In 2000, the number of cases exceeded 12,000. HIV/AIDS prevalence in rural and urban areas ranges from 4% to 10%. The rate of spread and the ensuing socio-economic damage wreaked by this pandemic has made AIDS not only a health challenge but also a development problem. Recent studies have shown that about 8000 women reportedly test positive each year, and 30 to 40% of them transmit the virus to their babies. 2.5.4 This pandemic has a direct negative impact on economic growth, since it mainly affects the working population. Persons aged 13-49, 31% of whom are women of child-bearing age, make up 56% of registered HIV/AIDS cases. One of the major constraints of HIV/AIDS control is insufficient sensitization and prevention which should logically lead to protection. More than 72% of the population still hold the opinion that they run no risk of contracting the disease. Consequently, condom use remains very low. Only 3% of women and 13% of the men interviewed declared they had used condoms. 2.5.5 The poverty reduction strategy priorities of the Chadian government, as defined in its poverty reduction strategy paper (PRSP) are: (i) to promote good governance; (ii) ensure strong and sustainable economic growth; (iii) build human capital; (iv) improve on the living conditions of vulnerable groups; and (v) restore and sustain ecosystems.

2.6 Constraints and Potential of the Agricultural Sector 2.6.1 A detailed rural sector assessment conducted during the RDSC and confirmed by the different multi-donor RDIP formulation missions revealed the following constraints: (i) poor or inadequate basic services; (ii) product sectors that are not sufficiently structured or competitive enough; (iii) massive degradation of natural resources; (iv) land erosion partly due to environmentally harmful farming practices; (v) insufficient and poor distribution of rainfall; (vi) poor water management; (vii) decline in the level of the water table ; (viii) insufficient empowerment of rural communities to take charge of their own development ; (ix) declining efficiency of State interventions due to the reorientation of State missions ; (x) the absence of an adapted rural credit system ; (xi) the inaccessibility of production areas ; (xii) the inadequacy and poor state of rural infrastructure crucial to poverty reduction; and (xiii) the limited natural resource management capacity of users. 2.6.2 The above constraints notwithstanding, there is potential for development. Main sectors such as cotton, stockbreeding, fisheries and gum Arabic have a development potential that should be supported and monitored. Many other sectors of economic interest that can find outlets on the local and export markets equally have to be developed and organized. These include the shea butter, mango, groundnut, cashew, sesame, hides and skins and spirulina sectors. Moreover, there are major ground water resources (more than 20 billion m3) and a wide hydrographical network that includes a lake of 12720 km2, perennial rivers (Chari and Logone), semi-perennial streams (Batha, Bahr Azoun, Salamat and Mayo-Kebbi) and numerous ephemeral streams, which offer an irrigable land potential of about 5.6 million ha, of which only 7000 ha have been irrigated.

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2.7 Sector Policies and Strategies The rural sector development policy is formulated within the framework of poverty reduction and rational natural resource management. The rural sector development strategy is aimed at: (i) stepping up productivity and diversifying agricultural production; (ii) restructuring and developing crop sectors; (iii) rational management and development of natural resources; (iv) promoting farmers’ organizations; and (v) building the capacity of agricultural sector institutions. The rural development intervention program (RDIP) formulated in 2001, which is being implemented with assistance from all technical and financial partners of Chad, serves as a strategic framework for the implementation of sector policy. Projects already approved under the RDIP and which are currently operational include the Pastoral Cattle Breeding System Support Project (PASEP) co-funded by the ADF, OPEC and ABEDA, as well as the Local Development Program Support Project (PROADEL), and the Support Project to Agricultural Services and Producers’ Organizations (PSOAP), both of which are co-funded by the World Bank and the Government. 2.8 Institutional Framework 2.8.1 Rural development management is ensured by three entities: the Ministries of agriculture (MINAGRI), livestock (ME) and the environment and water resources (MEE). They are responsible for designing, implementing and monitoring rural development projects and programs. The organizational structure of MINAGRI comprises a Directorate General which supervises the following five technical departments: (i) Plant Protection and Processing (DPVC); (ii) Agricultural Education, Training and Rural Development (DEAFPR); (iii) Studies, Programs and Projects (DEPP); (iv) Rural Engineering and Agricultural Hydraulics; and (v) Agricultural Production (DPA). This last department is composed of three divisions: Promotion of Agricultural Production, Food Security and Agricultural Statistics and the National Seed and Seedling Authority. Irrigation schemes fall under the Ministry of Agriculture. The Department of Agricultural Engineering and Agricultural Water Management (DGRHA) designs, coordinates and implements the irrigation policy. MINAGRI equally has supervisory authority over four government bodies: the National Rural Development Authority (ONDR), the Lake Chad Development Corporation (SODELAC), the National Food Security Authority (ONASA) and the Agricultural Research Institute for Development (ITRAD). It is represented at regional level by delegations and at the district level by sub-sectors.

2.8.2 The Ministry of livestock has a Directorate General, an Inspection Service and four Technical Departments: (i) the Department of Health Services; (ii) Department of Animal Production Development and Pastoralism; (iii) Department of Monitoring and Programming Statistics; and (iv) Department of Human Resources and Training. The rural delegations provide administrative and technical services at the grassroots. In addition to the Directorate General, the Ministry of the Environment and Water Resources has five technical departments: (i) Department of Forest Protection and Desert Control ; (ii) Department of Wildlife Protection and National Parks ; (iii) Department of Fisheries and Aquaculture ; (iv) Department of Hydraulics ; and (v) Department of Water Resources and National Meteorology. The ministry’s regional delegations provide the relevant services at the grassroots level.

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2.8.3 Agricultural extension services are provided by the ONDR all over the national territory, except in the Lake Chad region where such services are provided by SODELAC. These two bodies are in charge of all rural development activities (training, organization and guidance of farmers). Agronomic research is conducted by ITRAD whose main duties are the implementation of the national agronomic research policy, the implementation of agricultural and forest research programs, and the production and distribution of basic seeds. ITRAD has one station and four research farms where it conducts research activities and the multiplication of seeds and seedlings. Zootechnical and especially veterinary research is conducted by the veterinary and zootechnical research laboratory (LRVZ) in Farcha. Its main activities are the production of vaccines, veterinary and zootechnical research, as well as controls and tests in food technology. Furthermore, Chad is a member of the Regional Pole of Applied Research for the Development of the Central African Savannah (PRASAC). PASEP funds livestock development. PSAOP funds agricultural extension and lends support to farmers’ organizations. PROADEL funds rural infrastructure improvement identified as a priority of local development programs. 2.8.4 The political and institutional reforms implemented have led public institutions to give up certain intervention areas to the private sector (farmers’ organizations, non-governmental organizations) which henceforth undertake agricultural extension services, training, etc. The main characteristics of NGOs are the localization of their interventions and their recourse to external staff, especially staff from government services, since NGOs have a shortage of expertise. On account of the limited scope of their interventions in terms of content and geographical area, NGOs usually have better control of their basic program and obtain convincing results. Rural communities are organized into groups, most of which are informal and varied, depending on their origin and mode of creation. 2.8.5 By Prime Ministerial Order No. 027/PM/2003 of 25 September 2003, a follow-up mechanism was set up for the Rural Development Sector Consultation. The objective of this follow-up mechanism is to: (i) pilot rural sector action programs; (ii) consolidate and continue the programming and monitoring/evaluation process; (iii) create and enhance synergies between the various rural sector structures and stakeholders; (iv) involve NGOs and associations, trade unions, private operators, farmers representatives, rural communities and development partners in the programming and monitoring of interventions. It is organized at two levels: the central and the decentralized levels. The central level comprises a steering committee, a technical follow-up committee, a permanent unit, and an inter-ministerial programming commission. The decentralized level has regional action committees, regional technical committees, regional services of the ministries in charge of the rural sector, district committees of action, district technical committees, district services of technical ministries, local action committees and sub-district services of technical ministries. 2.8.6 The above-mentioned institutions have long-standing experience in the implementation of agricultural development projects and programs. They have participated in the implementation of several agricultural projects (see paragraph 2.9 for the most recent) funded by the various donors of the agricultural sector including the ADB Group. Moreover, the three ministries in charge of rural development have a sufficient number of competent national staff, about 10 of whom participated in the formulation of the NRMP (see paragraph 1.2). However, most of the rural institutions in Chad experience a shortage of material and financial resources needed to efficiently implement rural development projects and programs. In project implementation, it is important to make provision for actions aimed at addressing such constraints.

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2.9 Interventions of the Main Donors 2.9.1 As indicated in Paragraph 2.7, the Government designed a rural development intervention program (RDIP), which is the instrument for implementing results of the Rural Development Sector Consultation. It comprises sub-programs, projects or specific components identified or to be identified by the various funding institutions of the rural development sector in Chad. The RDIP is a multi-donor program that covers all interventions funded by rural development institutions in Chad. It is in this context that the World Bank (WB) supports activities to improve on agricultural services, the cotton sector and local development. The African Development Fund (ADF), the Arab Bank for Economic Development in Africa (ABEDA), the Islamic Development Bank (IsDB) and German Cooperation (GRZ), intervened in the areas of natural resource management and agricultural and pastoral development. The International Fund for Agricultural Development (IFAD) mainly supports activities aimed at promoting food security and micro-finance in marginalized areas. Swiss Cooperation funded capacity-building and rural infrastructure development. The specialized agencies of the UN system (FAO, UNDP, WFP, UNICEF) are involved in capacity-building and food security projects. NGOs (Africare, Swiss Aid, etc.) participate in the funding of rural development.

2.9.2 The country’s natural resource management experience was garnered from the following operations: (i) the Wadi Development Project, the Natural Resource Conservation and Management Project in Mayo-Kébi-Ouest, and the Micro-activities Project, all three of which were funded by the GTZ and focus on the improvement and conservation of soil fertility ; (ii) the Rural Structures Support Project and the Farmers’ Organizations Support Project funded by the AFD ; (iii) the Rural Development Project of Ouaddai funded by USAID and implemented by AFRICARE ; (iv) the local development program support project (PROADEL) funded by the World Bank ; (v) the Nord Guéra Food Security Project funded by IFAD, with the ADB as cooperating institution; (vi) the Cotton and Food Crop Cultivation Project in the Sudan regions (PCVZS) and (vii) the Surface Water Development Project, both funded by the ADF. 2.9.3 The design of the NRMP was inspired by lessons learned from the above operations, finalized or ongoing. Such lessons included the following: (i) the communities have to be sensitized, organized and trained beforehand so that they can perceive and articulate the problems and development needs of all (marginalized groups such as stockbreeders and victims of discrimination such as women, children and the aged) and define priority development actions through a participatory and consensual approach at the community level ; and (ii) the restoration and improvement of soil fertility requires the use of techniques that are simple and affordable to farmers such as the use of organic fertilizer, the improvement of food crop yields through variety and improved seeds, as well as appropriate crop rotation (cereals after cotton), tree farming, community plantations (tree plantations), life fences, hedgerow farming, other erosion control techniques (filtering bunds, sodded lines, stone lines, etc.); and (iii) the farming of irrigated valleys holds out the potential for higher yields and reduces pressure on the plateau lands which are usually highly degraded.

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2.10 Rural Sector Financing 2.10.1 There are three categories of rural sector credit systems: (i) sector credits which are strategies developed by corporations such as Cotontchad, in which the credit activity comes secondary to the main activity which is cotton production; (ii) the initiatives of public guidance structures such as the ONDR and the Rural Development Training Centers (RVTC), which operate within the context of State divestment from productive sectors; (iii) development project initiatives such as the ONDR/PCVZS partnership action, and the actions of international NGOs such as VITA. VITA’s intervention is in the form of support to SME-type structures run by women’s organizations, where credits are usually granted in kind (seed credit, fertilizer credit, agricultural equipment credit). There are highly localized or ad hoc strategies implemented by local NGOs or rural organizations. The most active structures are BELACD, especially BELACD Pala or BELACD Sarh and CECADEC. ASDEC also intervenes in the training of members of savings and loans cooperatives, and in financial intermediation. An analysis of the customer base of micro-finance structures shows that 24% of them have at least 10 members while 51.4% have more than 200 members. The average deposit per customer stands at CFA.F 28,000 at an interest rate of 3%. The amount of an average loan is 74,000 CFAF with an interest rate that varies from 12% per year for long-term credits, to 18% per year for medium term credits (agricultural equipment), 24% for crop year credits (agricultural inputs), and 30% to 36% per year for short-term credits generally granted to small and medium-sized enterprises. The sectors concerned are commerce (55%), agriculture (36%) and livestock (8%). Of all the micro-finance structures in Chad, 59 have a solvency ratio of 12% and 55 have a ratio of 30%. More than 60% of the structures have a collection ratio of 90%. 2.10.2 Chad is among the countries that benefited from the Bank’s AMINA pilot program. The AMINA program (which became the Micro-finance Central Unit – COMU) identified the micro-finance institutions operating in the country in 1998. This was followed by the selection of 8 micro-finance institutions and NGOs (notably URCOOPEC, SECADEV, ASDEC, AFTEC, UCEC, PARCEC, BELACD and ACORD) with a credit component that were to receive institutional support. AMINA organized training seminars on credit management, internal controls and inspection at the level of micro-finance institutions (MFIs) in Chad. Technical assistance missions on the field were conducted for SECADEV, ASDEC and AFTEC to enable them improve on the organization and management of their institutions and develop new financial products. 2.10.3 The conventional banks generally give short-term loans (72.5% of operations). Long-term credits are marginal (2.5% of operations). Meanwhile, the so-called informal or semi-formal credit has more formal and more adapted procedures, namely: personal savings, collective savings and joint surety. Financing structures partially cover the needs of rural farmers. In general they finance agricultural inputs, small agricultural equipment (plows, barrows, carts, etc.), certain types of processing equipment (cereal mills) manufactured locally, working material such as steel for blacksmiths trained by non-governmental organizations such as the Association for the Promotion of Community Initiatives in Africa (APICA) and French Farmers for International Development (AFDI).

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3. SUB-SECTORS

3.1 Natural Resources 3.1.1 Natural resources comprise forests, wildlife, land and water resources. Chadian forests are estimated to cover an area of 323,600 km2 representing one quarter of the country’s surface area. According to estimates, the average wood potential is 12.3m3/ha and average productivity is 1.5m3/ha/an. The forest stock is composed of 593,000 ha of classified forests, 414,000 ha of national parks (Zakouma and Manda) and 11,080,000 ha of forest reserves. Most of these resources are located in the Sudan region. The deforestation rate is estimated at 0.6% per year and the reforested area is about 15,000 ha. The gum tree (Acacia senegal) and the shea butter tree (Butyrospermum parkii) are the main forest species of economic interest. Current wood fuel needs stand at 531 000 m3 of wood in the three districts of Barh-Koh, Lac Iro and Mandoul alone. The classified forests of Djoli-Kéra, Haut Borgoto and Helibongo have virtually disappeared. Furthermore, there is major land degradation in certain areas, especially in Benoye and Kelo, due to high population density and pressure on resources, as well as the effects of gully erosion and poor farming practices used in cotton and cassava cultivation. 3.1.2 The country’s abundant and diversified fauna is most representative of the mammals on the continent like the elephant, derby elk, kudu, oryx, addax and the maned sheep. Chad has two national parks (a park in Zakouma of 300,000 ha and another in Manda with 114,000 ha), seven wildlife reserves and one biosphere reserve (Lake FITRI with 195,000 ha). Chad has wetlands of international importance for migratory bird species. Poaching is on the increase and is threatening the Manda Park, the Aouk hunting reserve and the Binder-Léré wildlife reserve. The decline in fish stocks caused by repeated droughts and overfishing is one of the major obstacles to the increase of productivity in this sub-sector. The shortcomings of the fisheries sub-sector include the absence of a development policy, ignorance of the socio-economic conditions of the operators in this sub-sector and of the volume and nature of fishery resources, the absence of research on fishing, the lack of technical guidance and organization of the fisheries sector and the absence of a common fisheries legislation for the member-states of the Lake Chad Basin Commission (LCBC). The strengths of the fisheries sub-sector include: (i) the potential to increase productivity ; (ii) the existence of a wide variety of species (135 species) ; (iii) a high number of operators (300 000 persons) some of whom have acquired an acceptable level of skill; and (iv) the existence of a major potential market (Nigeria, Cameroon, Central African Republic). Average fish production per year is estimated at 80,000 tons. 3.1.3 There are substantial groundwater resources (more than 20 billion m3) and a wide hydrographic network which includes a lake of 12,720 km2, perennial rivers (Chari and Logone), semi-perennial streams (Batha, Bahr Azoun, Salamat and Mayo-Kebbi) and many ephemeral streams which offer an irrigable land potential of 5.6 million ha, of which only 7,000 ha are irrigated. The arable land surface area in Chad is estimated at 39 million ha, representing 30% of the national territory. Only about 2.2 million ha are cultivated annually. More than half of the cultivated land (1,400,000 ha of which 1,080,500 ha are used for cereal cultivation) is in the Sudan region. 3.1.4 Natural resources in Chad are characterized by their extreme sensitivity to climate change and man-made factors, and their low productivity. Access to scarce natural resources, which has generated fierce competition and conflict between the main users, is a source of major concern all over the national territory. The resource management problems noted by the mission

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include land degradation, desertification, overgrazing, poaching, wanton deforestation, sanding, low rainfall, a narrowing hydrographical network, a decline in water table levels, degradation of natural habitats, especially protected areas (wildlife parks and reserves, classified forests, biodiversity zones such as Lakes Fitri and Léré), bush fires, etc.

3.2 Main Crops

3.2.1 The development of the main crops grown in Chad depends very much on climatic conditions. In general, the varieties cultivated are less productive with average yields of about 1.4 tons/ha compared to 1.8 tons/ha obtained in on-the field tests and 4 tons/ha obtained in trials for rice; 0.6 tons/ha compared to 1.2 tons/ha (on-farm tests) and 2.5 tons/ha (trials) for sorghum; 0.7 tons/ha compared to 1.5 tons/ha (on-farm tests) and 3 tons/ha (trials) for groundnut; 0.6 tons/ha compared to 0,9 tons/ha (on-farm tests) and 2 tons/ha (trials) for cotton; and 0.4 tons/ha compared to 1 ton/ha (on-farm tests) and 1.7 tons/ha (trials) for cowpea. These yields fall below the quantities produced under comparable conditions in the sub-region. Cereals (millet, sorghum, rice, maize) dominate in terms of sown surface areas and yield. They cover about 1.5 million ha (70% of the cultivated surface area) and account for the largest proportion of Chadian agricultural production (55%). However, annual production remains heavily dependent on rainfall and varies between 0.4 and 1.2 million tons depending on the year. Leguminous plant yields (groundnut, sesame and cowpea) vary between 280,000 and 540,000 tons per year, depending on rainfall. Fallow land covers about 2,000,000 ha and the fallow period is increasingly becoming shorter (3 years) because of population pressure on land. 3.2.2 With regard to food crop seeds, the yearly needs are estimated at 44,290 tons for selected seeds, 3,130 ton for basic seeds, and 34 tons for pre-basic seed. The national output cannot cover these needs. Organizations such as the FAO intervene from time to time to address this deficit. There is no structured seed sector that is capable of addressing these seedling needs in terms of quantity and quality. ITRAD is the only national structure responsible for seed production. Seed distribution is done by public and/or private structures (ONDR, SODELAC, various development projects and NGOs). 3.2.3 The development of the food crop sub-sector and of cash crops is undermined by the vagaries of climate, low-yielding farming practices and difficult access to quality inputs, notably seeds. These constraints have been compounded by the lack of appropriate processing and storage facilities for agricultural produce as well as marketing difficulties due to the fact that the production areas are landlocked.

3.3 Irrigation Schemes 3.3.1 Chad is among the Sahelian countries most richly endowed with water and land resources. Of the 39 million ha of arable land, more than 5 million is potentially irrigable. Paradoxically, however, the irrigated surface area (18 000 ha) is the lowest in the sub-region. It is worth noting that, only 40% this land is farmed, as a result of the advanced degradation of irrigated land. The irrigation sub-sector comprises three types of schemes, namely: the major irrigation areas, the small village irrigation areas, and the areas located outside irrigation plots as well as flood recession areas. The major irrigation areas are faced with numerous technical problems (water management, insufficient maintenance of irrigation facilities, insufficient technical supervision, etc), economic constraints (difficult access to inputs and produce markets) and organizational difficulties (weak farmers organizations).

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3.3.2 The major irrigation areas generally located in the Sudan region were created between 1950 and 1974. The village irrigation areas created by the State and NGOs produce a fairly high yield. The policy guidelines retained for the irrigation sub-sector are: (i) the promotion of appropriate technologies that are cheap and easy to maintain; (ii) local community participation in the financing of irrigation works; (iii) the drafting of irrigation norms and parameters that are adapted to the various zones ; and (iv) sensitization of users on management, maintenance of irrigation facilities and acquisition of agricultural services. 3.3.3 The advanced degradation of certain protective dykes has reduced the local communities to a state of extreme poverty. Uncontrolled floodwaters frequently destroy their homes, crops, and livestock and threaten their lives. Rice cultivation in most of the flood plains depends on climatic conditions and has suffered a decline in yields in recent years, giving rise to real seasonal scarcity. Farms are generally situated on the plateau where land degradation is most acute and where declining soil fertility is a real problem. However, there are other great expanses of land that can be flooded, which offer: (i) irrigation possibilities to diversify crops and income sources (rice, flood recession sorghum, market gardening, fishing, etc.); and (ii) a potential to reduce pressure on the highly degraded plateau lands. 3.4 Rural Infrastructure The road network in Chad comprises 4800 km of classified roads (of which 489 km are paved) and 20,000 to 35,000 km of rural roads. The limited road network, insufficient warehouses and rural markets, as well as the poor state and near-impassability of roads in the rainy season undermine food security by preventing trade. These factors also handicap rural development as a whole by limiting movement and access to education and health services. The implementation of PROADEL and the existence of petroleum resources have raised hopes of a significant improvement in rural infrastructure in Chad within the shortest time possible. Indeed, with the advent of petroleum, the Government of Chad now has enough resources for priority sectors like agriculture, education, health and infrastructure. 4. THE PROJECT 4.1 Design and Rationale of the Project 4.1.1 The natural resource management and development project was identified within the framework of the RDIP and it stemmed from the observation that sustainable development in Chad has to start with rational management of natural resources. The strategic analysis of the agricultural sector, in the broadest sense of the term, revealed the following: (i) the extreme poverty of the communities within the project area stemmed from the low productivity of natural resources ; (ii) the immediate causes of such low productivity of natural resources were the poor capacity of public and community institutions responsible for natural resource management, and the inadequate intensification and sustainment of production; and (iii) natural resource management is a cross-cutting concept whose consideration at all levels of development would help reduce the pressure on resources. Hence, in consultation with all beneficiaries, the authorities, civil society, NGOs and development partners involved in the entire NRMP (identification, preparation and appraisal) and who will also be involved in its implementation, it was decided that emphasis should also be laid on: (i) restoration, improvement and conservation of soil fertility; (ii) water management through the development of flood plains and valleys within the framework of development plans designed

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by the beneficiaries themselves; (iii) introduction of appropriate farming practices and improved varieties of the main crops grown in the project area; and (iv) building of access roads to the production areas in order to boost the marketing of inputs and agricultural produce. 4.1.2 The natural resource management plans that emerge from the district workshops to be organized, conducted and financed by the project will be used in the local development programs that will be funded by PROADEL, which is concerned mainly with rural infrastructure, including marketing infrastructure (roads, warehouses, rural markets, etc.). The project was therefore designed to take account of those actions identified as priorities. Support activities such as capacity-building for public, private and community institutions were also envisaged. Considering that several ministries are involved in project implementation, it was decided that a light coordination structure be set up to guarantee the effective participation of all stakeholders. This project implementation unit, to be set up within the Ministry of Agriculture, shall be placed under the supervision of a steering committee set up by the Government to coordinate all RDIP projects. 4.1.3 Project formulation was done through a participatory approach. The main activities were field visits to discuss with project beneficiaries, meetings and discussions with the project’s stakeholders and the organization of six regional and one national project formulation workshops during preparation. During appraisal and re-appraisal, the mission visited seven districts in the project area. It organized several meetings and discussions with administrative and political authorities in the project area and consulted all donors present in Chad. Two formulation workshops (one for the orientation of the appraisal mission and the other for project design) were organized. Hence, a wrap-up session attended by representatives of the civil society, technical and financial partners as well as rural development officials was organized at the end of the appraisal and re-appraisal missions. The re-appraisal mission addressed a meeting of rural development sector donors, organized at its request by French Cooperation, which is the leading donor in this sector. All these stakeholders deemed the project design satisfactory. 4.1.4 The strategic approach is based on empowering natural resource users. To that end, the project will set up and conduct consultation frameworks that will enable the various users, meeting within the framework of village and district natural resource management committees, to conduct a strategic analysis of their resource situation and draw up development plans which, when implemented, will ensure the sustainable improvement of natural resource productivity and minimize risk of conflict among users. Special attention will be paid to the effective participation of women and the youth in these consultations. 4.1.5 The design of the NRMP also takes account of lessons learnt from the implementation of completed and ongoing projects such as those described in Section 2.9.3. To slow down the spread of HIV/AIDS within the area, provision has been made for sensitization activities to be conducted by women’s empowerment associations, local NGOs and farmers’ organizations. 4.1.6 On the whole, the program’s relevance is evident from the following factors: (i) the agricultural sector remains a priority for the Government of Chad, and so it is crucial to implement this program to restore, improve and preserve land capital and also manage and develop water resources and flood plains; (ii) the project will contribute to poverty reduction among its beneficiaries by raising agricultural income levels and creating direct and indirect employment through the labor-intensive works involved in the development of flood plains and

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the rehabilitation of the Logone dyke and the Djoumane-Lai roads; (iii) by stepping up production, productivity and earnings from main crops, and by improving market access the project will enhance food security for the beneficiary communities; and (iv) the choice of project implementation sites has been made in such as way as to ensure complementarity between the activities of the project and those of other partners, and so bring about the balanced development of the territory. 4.2 Project area and Beneficiaries 4.2.1 The proposed project covers the Sudan region of Chad, with the exception of the districts of Kabia, Mayo Dallah and Lac Leré which benefit from the interventions of the Natural Resource Management and Conservation Project funded by German Cooperation (Annex 1). The project area covers about 127,000 km2 representing about 10 % of Chad’s total land surface area, and involves 15 districts1. The population of the Sudan region is estimated at 3,040,880, representing 41% of Chad’s total population. The project’s intervention in this region is justified by the phenomena of natural resource degradation and the evident under-exploitation of the economic development potential. 4.2.2 The Sudan region receives 600 to 1200 mm of rainfall per year and generates the largest proportion of the national agricultural output. There are about 49000 farms, the majority of which are small farm holdings (less than 2.5ha). The farming system is low-yielding extensive agriculture based essentially on traditional subsistence farming. The main crops grown are cotton, cereals (millet, sorghum, rice and main), grain legumes (groundnut, sesame, cow pea) and tubers (cassava, cocoyam, yam, sweet potatoes). The area has 5 302 villages and 1,640,000 farm workers. Of the 490,000 farms in the area, 350,000 grow cotton. The total cultivated surface area in the zone is estimated at 1 398 400 ha, of which 1,100,000 ha is devoted to cereal cultivation, and about 200,000 ha used for growing cotton. Transhumant animals spend more than half of the year in the area. 4.2.3 The rural area is organized according to a development society model based on the village and the district. The village chief or district head, assisted by the administrative officer, manages the natural resources. The organization of economic activity is based on village associations and groups. The area has 32,643 farmers’ organizations, including 4,876 village associations, 20,207 agricultural input management groups, 3,533 women’s groups, 1,628 health promotion groups, 169 cooperatives, 234 unions of farmers groups and 13 group federations. An estimated 10% of the cereal harvest is sold on the local markets. 4.2.4 Groundnut, sesame and cowpea are sold to private traders from Cameroon, Nigeria and the Central African Republic. Rice and other products are sold on the weekly market, although there are constraints in the marketing of food products. The main ones are the insufficiency and poor state of rural roads, and a shortage of collection and storage means. Cereals and protein-rich legumes such as cowpea are the staple foods of the communities in the project area. The food poverty index (the proportion of households that are unable to satisfy their food needs) is 38% and the annual average income is about CFA.F 63,000. 1 Lac-Wey, Dodje, Ngour-Kosso, Pendé, La Nya Pendé, Lac Iro, Grande Sido, Barh-Koh,

Mandoul oriental, Mandoul occidental, Bahr-Sara, Monts de Lam, Tandjilé Ouest, Tandjilé Est, Mayo Boneye.

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4.2.5 Transhumance in the project area generates conflict between migrant stockbreeders and natives for at least 6 months of the year. Rudimentary tools and inappropriate farming techniques do not make it possible to sow extensive surface areas, increase yields and/or improve on the long-term productivity of natural resources. The extreme poverty of the population undermines any possibility of productive investment. Furthermore, the following major constraints complicate an already precarious situation in the project area: human and animal pressure on resources, land degradation due to overgrazing, wanton deforestation and bush fires, the regression of the hydrographical network due to sanding and low rainfall, and the degradation of natural habitats and protected areas in particular. 4.2.6 In the project area, there are about four irrigation areas (Boxes A and B in Bongor, C in Nya and another in Satégui-Déressia) and a few small village irrigation areas situated along the Djoumane – Laï highway. These irrigation schemes, most of which were built between 1950 and 1974, need to be rehabilitated. The Government has undertaken to rehabilitate Box B of Bongor with assistance from Taiwanese Cooperation. The advanced degradation of Box A and of the Logone dyke, in particular, has placed the population in the canton of Koumi in a situation of extreme poverty. Floodwaters from the Logone regularly destroy their homes, crops, livestock and threaten their lives. The canton has 2944 households and plants about 6000 ha of sorghum, 4500 ha of flood-regression sorghum (berbéré) and 3000 ha of rice. The livestock population in the canton is estimated at 5460 cattle, 11000 sheep, 17000 goats, 386 donkeys, 35 horses, 4450 pigs, and 20000 fowls. Rice cultivation in most of the flood plains depends on climatic conditions and, in recent years, has recorded a substantial decline which has given rise to major seasonal shortages. However, apart from traditional crops like cotton and rice, flood-regression sorghum is also cultivated on the plateau where land degradation is very acute. The decline in soil fertility is a real problem on the plateau. However, certain parts of the area have a wide expanse of floodable plains which show great irrigation prospects for the cultivation of rice, flood-regression crops (berberé), market gardening, etc. 4.2.7 Currently, the village irrigation areas situated along the Djoumane – Lai highway, in Bongor and Satégui-Déressia, which have a high production potential and therefore the capacity to reduce the pressure on the plateau lands, usually experience water shortage in years when the flood waters of the Logone are low. Furthermore, the water retaining reservoir basin of Sategui–Deréssia fills up with difficulty and very slowly, requiring about 15 days to rise above the dead water mark. Dyke roads and protective dykes for the irrigation plots and separation dykes for the sub-plots are considerably eroded. The limited number of paths within the irrigation plots makes access difficult for carts, agricultural machinery and vehicles. Since the irrigated lands belong to the State, users do not feel secure enough to adopt rational resource management practices or undertake the necessary repair work on the facilities. However, they have set up associations of farmers cultivating the irrigation areas. These associations collect dues from members and carry out some repair work such as plugging holes and gaps in the dykes. Furthermore, the landlocked nature of these rice-growing areas is a major handicap to development.

4.2.8 In the Sudan region, the majority of the population is female (55% compared to 45% for men). The beneficiaries of the project are the poorest rural communities. About 92000 rural families or 552000 poor people disseminated in 100 cantons and 1000 villages in the Sudan region will benefit directly from the project. Women head many of these families and, in most cases, provide labor for food crop cultivation, processing and marketing.

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4.2.9 The annual average yield in the Sudan region is about 430,000 tons/year for cereals, 200 000 tons/year for cotton and about 253,000 tons/year for oilseed crops. Fallow land covers about 2,000,000 ha and the fallow period is becoming increasingly shorter (3 to 4 years) due to population pressure on land. The main crops are sorghum, millet, groundnut and cotton. Groundnut is often associated with cereals in proportions of 66% for cereals and 34% for groundnut. Oilseed crops are usually grown as a secondary crop. The typical farming technique in the area is crop rotation of cotton, cereals and oilseed crops. On the whole, the surface area for the various crops farmed is as follows: 26% for groundnut, 40% for cereals and 25% for cotton, with the rest taken up by tubers and other crops. Mixed cropping is a very widespread practice and the secondary crops are usually cowpea, flood-recession sorghum and tubers.

4.2.10 The various crop yields still remain relatively low, compared to the natural potential of the area (see potential yields – Section 3.3). The analysis of crop budgets shows that the level of resource capitalization is relatively low, except for cotton. Expenditure on farming operations, especially purchase of inputs, remains low. Consequently, the utilization rate of technological innovations such as improved seeds, fertilizer and pest control products is very low. On the whole, intensification levels are low and the utilization rate for selected and improved seeds does not exceed 8%. The use of mineral fertilizer is limited to NPKSB, the main fertilizer used for cotton cultivation, which accounts for more than 85% of fertilizer stocks sold per year. Production costs are low because of the type of agriculture practiced. 4.2.11 The above constraints notwithstanding, the project area offers opportunities for preserving and ensuring a sustainable increase in the productivity of natural resources. Such opportunities include the availability of large streams, extensive irrigable areas, the size of the agricultural labor force, the existence of numerous farmers’ organizations and technical assistance service providers as well as a buoyant private sector. Apart from the abovementioned opportunities, there is also the ITRAD research station in Bébédja, which has 81 employees including 11 researchers (2 of whom are expatriates working on natural resource management, with special emphasis on soil fertility), 55 technicians and research observers, as well as 15 support staff members. With regard to material and financial resources, the station has one pick-up truck, 2 motorcycles, 3 tractors, 3 power generators and 3 computers. It receives subventions from the State and other partners (Coton Tchad, Calliope, Senchim, GTZ/PROAGRI and BAD/PCVZS) through research agreements. 4.3 Strategic Context 4.3.1 The project is in line with the strategy adopted by the Government during the rural development sector consultation of June 1999, which identified the natural resource sub-sector as one of its development priorities to reduce poverty and increase food security. It tallies with the objectives of the Detailed Program for the Development of African Agriculture (PDDAA) of the New Partnership for Africa’s Development (NEPAD) whose priority objectives are: (i) a sustainable increase in cultivated areas irrigated through reliable water management systems; (ii) rural infrastructure improvement and commercial capacity-building to facilitate access to markets ; (iii) increase in food supply and reduction of hunger; and (iv) agricultural research, dissemination and adoption of new technologies. 4.3.2 The project is in conformity with Chad’s CSP for 2002-2004 and in keeping with the guidelines of Chad’s Poverty Reduction Strategy Paper (PRSP) which aims at, inter alia,

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enhancing the social environment, improving on the living conditions of vulnerable groups, restoring and preserving ecosystems, and building human and natural resource management capacity. Indeed, despite the advent of petroleum, Chad remains an essentially agro-pastoral country. Agriculture, which is the main income earner for inhabitants of the Sudan region, is undermined by institutional, organizational, technical and economic constraints such as low productivity of natural resources, low incomes for farmers and steady environmental deterioration. Rural farmers are among the 80% of the poorest people who live on less than US$ per day. They do not often have access to basic social infrastructure (9% have access to potable water compared to the national rate of 31%, 10% of the children of rural farmers are vaccinated, compared to the national rate of 33%). 4.3.3 The general orientation of the NRMP is based on certain principles that will enable the people to achieve food security through efficient management of natural resources. These principles are: (i) empowerment of local communities to take up resource management; (ii) capacity-building in natural resource management for community and public institutions; (iii) environmental mainstreaming; and (iv) involvement of women in the decision-making process. 4.3.4 The area had benefited from some projects in the past which somehow contributed to poverty reduction, but did not lead to sustainable development. State-owned investments made through a managerial and top-down approach are deteriorating rapidly. There is a burning need therefore to halt the deterioration of this infrastructure. The local communities have shown their determination and capacity to maintain and ensure the viability of this infrastructure which will enable them to improve on their income levels and quality of life. Furthermore, the project falls within the framework of the ADB Group’s 2002-2004 intervention strategy for Chad which aims at: (i) diversifying and increasing agricultural and animal production ; (ii) improving on the living conditions and hygiene of the people, especially in rural areas ; and (iii) promoting local development initiatives, including those which encourage the empowerment of women. 4.4 Project Objectives The project’s sector goal is to contribute to food security. The specific objective of the project is to ensure a sustainable increase in the productivity of natural resources in the Sudan region. 4.5 Project Description 4.5.1 The expected outcomes of the project are: (i) capacity-building in natural resource management for public, community and private institutions through the setting up of consultation frameworks and conflict settlement mechanisms, orientation, training and equipment of public and community institutions involved in natural resource management and methodological support in the drafting, implementation and monitoring/evaluation of local development programs (Component A) ; (ii) sustainment, diversification and increase of the productivity of natural resources in the Sudan region through irrigation schemes, the production and utilization of selected seeds, and the introduction of more adapted new technologies (genetic material and farming practices) ; and (iii) the restoration, improvement and conservation of soil fertility, water resources and the environment (Component B). The project shall be implemented over a period of 6 years under the following 3 components: A = capacity-building ; B = Increasing the productivity of natural resources ; and C = Project management.

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COMPONENT A: INSTITUTIONAL CAPACITY-BUILDING 4.5.2 In a bid to ensure a sustainable increase in the productivity of natural resources and reduce conflicts among users, the project intends to build the managerial capacity of public and community institutions. The institutional capacity-building actions envisaged are: (i) support in the setting up of consultation frameworks (100 canton natural resource management committees (CNRMC) and 1,000 village natural resource management committees (VNRMC)) ; (ii) the organization and conduct of natural resource management workshops for cantons; (iii) training of 3,600 officials of rural professional organizations (at least 20% of them women) in the formulation, implementation and monitoring/evaluation of village or canton natural resource management projects; to that end, the ADF will finance 200 natural resource workshops for natural resource users (TNRMW) that should lead to the formulation of 1,000 village plans and 100 canton plans for natural resource management; (iv) technical assistance in the promotion of savings and credit cooperatives ; and (v) capacity-building in the planning, implementation and supervision of natural resource management projects and programs for agricultural sector institutions by providing them with computer equipment, vehicles, etc. as well as training for their staff involved in project implementation. The ADF will also finance training in technical guidance, gender issues, management of associations, economic management techniques and production of selected seeds for about 4500 officials from rural farmers’ organizations and staff from development structures involved in project implementation. The ADF will finance the functioning of the research and development teams of ITRAD for the implementation of the activities described above. 4.5.3 With regard to the promotion of rural financing, the ADF will fund technical guidance for local savings and credit initiatives. It is worth noting that the project makes no provision for the creation of a credit line. In this context, the ADF will finance sensitization, institutional capacity-building for grassroots financial structures through training, orientation on savings and credit, equipment of savings and credit cooperatives and the establishment of relations between savings and credit cooperatives and the formal financial system. These activities will be carried out by grassroots operators (notably NGOs) recruited on a competitive basis. 4.5.4 HIV/AIDS and malaria are two major determinants of poverty in Chad, which ought to be mainstreamed into all development actions. To that end, the ADF will finance tuberculosis and HIV/AIDs control activities, notably the dissemination of preventive methods. The ADF will also finance malaria control activities, including the promotion of activities to eliminate mosquito breeding grounds and drainage of areas with stagnant water, and dissemination of information on the use of treated mosquito nets as prevention measures. The ADF will finance the entire capacity-building component. COMPONENT B: IMPROVING THE PRODUCTIVITY OF NATURAL RESOURCES 4.5.5 This component is aimed at ensuring a sustainable increase in the productivity of the main agro-silvo-pastoral farming systems of the project area through: (i) improvement of soil fertility; (ii) introduction of improved varieties ; and (iii) maintenance of agro-silvo-pastoral yields. The project will finance: (i) the rehabilitation of 2350 ha of flood plains in the irrigation areas of Bongor (1000 ha), Satigui-Deressia (1850 ha), and the small village irrigation areas along the Djoumane – Laï highway (500 ha); and (ii) an intensive

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participatory research program (6200 on-farm tests) involving rural farmers and focusing on 37 themes and 12 studies relating to the improvement of soil fertility and the introduction of varieties of the main crops grown in the Sudan region (see Section 3.2) in order to disseminate them on a large scale. The main themes and/or actions envisaged include: (i) erosion control; (ii) water and soil conservation (watershed development, protection against floods, stone bunds, earth bunds, reforestation of ravines, planting of vegetation on dykes and bunds (33000m protected through sodding), filtering bunds, quickset hedges , windbreaks, firebreaks, etc.) ; (iii) the protection and restoration of soil fertility (fertilization of 7500 ha through various biological soil fertilization techniques such as agroforestry, the integration of agriculture and stockbreeding in order to produce and use organic fertilizer, farming practices such as crop rotation between cotton, cereals and legumes, and crop association especially between cereals and legumes, rational land clearing, direct drilling on the vegetation cover, fallow land improvement with legumes, the use of cover crops, improvement of the feed value of restricted areas, etc.) ; (iv) environmental protection and development of natural resources (fish stocking of retention ponds, bushfire control, diversification of energy sources and dissemination of energy-saving technologies, reforestation of 6500 ha of community forests, 1000 ha protected through soil fertility protection and restoration, as well as water and soil conservation, etc.); (v) introduction of more improved varieties of the main crops grown in the project area; and (vi) the dissemination of post-harvest loss reduction techniques and of technologies for the conservation and processing of agricultural produce, etc.). 4.5.6 Pursuant to the collaboration agreement with ITRAD, the ADF will finance the equipment and functioning of a farming system research team (FSR) based in the agronomic research station of Bébédja and of 4 participatory research (PR) teams which will be deployed in the project area for the implementation of participatory research activities. These teams will work with village and canton committees within the framework of participatory research on the themes selected. Through this research mechanism and this agreement with ITRAD, 350 tons of basic seeds will be produced. A network of seed-growing farmers designated by each village committee, will receive technical assistance from the project for the production of 15000 fruit tree seedlings and 5000 tons of selected seeds. Furthermore, the village and canton committees will carry out reforestation on 500 ha of community land, 2000 ha of restricted areas, 200 km of firebreaks for the protection of the areas to be restricted, as well as 100 canton and 1000 village nurseries. To curb deforestation and reduce working hours for women, the project will finance 100 bio-gas demonstration units and 10,000 improved stove demonstration units for women. These units will be distributed during sensitization of the people meeting within the framework of the village committee. Lastly, the project will promote soil fertility restoration activities through biological fertilisation (organic fertilizer, green manure, agro-forestry, etc. (7500 ha)), erosion control activities (1000 ha) and the protection of dykes through sodding (33000 ha). 4.5.7 The rehabilitation of former rice ‘boxes’ in Bongor and Laï is crucial to sustainment, increase and diversification of agricultural production. To that end, BADEA and the IsDB will finance implementation studies, works and supervision of rehabilitation works on eight small village irrigation areas with a total surface area of 500 ha, in the Sategui-Deressia irrigation area (1850 ha) and in Box A of Bongor (1000 ha). The activities and rehabilitation works planned for the rice-growing irrigation areas are: (i) rehabilitation of existing ‘boxes’, irrigation facilities, protective dykes and feeder roads ; (ii) reduction of water plans in order to facilitate their management by farmers organizations ; (iii) the strengthening of existing farmers’ associations through orientation and training on group dynamics, technical and financial management of irrigation schemes, and savings and credit ; (iv) the organization of

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farmers for the management and maintenance of irrigation facilities ; and (v) technical training of farmers. The co-financing of irrigation works between BADEA and the IsDB is detailed in the working document. 4.5.8 The rehabilitation works planned for the rice-growing irrigation areas are : (i) calibration of the ceiling of the main canal and of the height of the apron to ensure that the boxes fill up as required in terms of flow and water level ; (ii) reduction of the volume of the retention pond (Satigui – Deressia) to accelerate the filling up of unusable storage and enhance flow irrigation of rice-growing plots ; this will be done through the construction of an internal dyke ; hence the basin will contain about 3 million m3 at the end of October, at a time when rice irrigation is ending ; this water would be used for the irrigation of market gardening, fisheries and livestock ; (iii) restoration of the initial profile of road dykes and protective dykes for boxes and separating dykes for sub-boxes which are heavily eroded today; (iv) the construction of new separating dykes for sub-boxes which are currently highly eroded; (v) the transformation of waste banks and secondary drains into paths that can be used by carts; (vi) rehabilitation of irrigation networks (irrigation canals, drains as well as water-intake and drainage works); this mainly entails ditch cleaning, restoration of waste banks and replacement of lifting mechanisms as well as the sluice gates themselves; and (vii) finalization of rice ‘boxes’. 4.5.9 In a bid to adequately safeguard the rights of users of irrigation facilities so that they can adopt rational management practices for such facilities, provision has been made for the issuance of a deed granting user’s rights to associations of farmers cultivating irrigation areas and the establishment of terms of reference that define the rights and obligations of the various parties. Furthermore, under its program to build access roads to the production areas to facilitate market access, the government will rehabilitate the Djoumane – laï road within the framework of the transport sector program. Feasibility studies were conducted during NRMP preparation and engineering designs are being prepared. This program concerns the setting up of a basic network of all-season internal and external access roads through: (i) completion of the rehabilitation and construction of internal and external access roads; (ii) design of a rural road network rehabilitation program; and (iii) increase of the financial means of the Road Maintenance Fund (RMF) and its capacity to program maintenance work. The use of oil revenue to develop priority areas like agriculture, the social sectors and infrastructure will contribute to the attainment of the transport sector program objectives. It is noteworthy that preference will be given to labor-intensive techniques in the execution of civil engineering work. COMPONENT C : PROJECT MANAGEMENT 4.5.10 The project will be implemented by a project implementation unit (PIU) placed under the Ministry of Agriculture and based in Laï. The PIU will be made up of a team of national experts selected on a competitive basis from the staff of the ministries in charge of rural development. The PIU will comprise a coordinator who should be a rural development expert (an agricultural engineer, agronomist, forester or agro-economist), with long-standing experience in agricultural project management; an expert in community development specialized in sensitization, group leadership and social communication; an agricultural engineer; an agronomist; an environmentalist; an expert on gender issues; an agro-economist who shall be in charge of internal monitoring/evaluation; an accounting manager and support staff. Limited technical assistance will be given to the project for the training of national counterparts. The technical assistance team will comprise a systems research agronomist (24

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staff-months), a community development expert (24 staff-months) and an administrative and financial management expert (24 staff-months). Considering the remoteness of the headquarters from the project site, a liaison office will be set up in N’djamena and manned by a procurements officer to facilitate procurement, monitoring of files, public relations and communication with the project. The project will finance the rehabilitation of the premises provided for the project implementation unit (PIU), the N’Djamena branch office and the systems research teams. It will also finance rehabilitation of the offices made available to the PIU in Laï, N’djamena, Bebedja and in the sites of the system research teams. 4.6 Production, Marketing and Prices 4.6.1 Production : The activities of the project will lead to a rise in productivity and a substantial increase in yields. Non-project yields are estimated at 230 tons for sorghum, 160000 tons for cotton, 130 000 tons for millet, 50 000 tons for maize, 60 000 tons for rice and 230,000 tons for groundnut. Yields will increase from year 2 of the project, thanks to the distribution of appropriate technological packages. Additional yields expected in year 5 of the project (peak year) will be as follows: (i) about 25 % for sorghum, 35% for cotton and maize, and 20 % for millet; (ii) rice yields will increase, thanks to efficient water management over a total surface area of 2,350 ha and average returns could reach 3 tons/ha, compared to current returns of 1.4 tons/ha. In the entire project area, paddy rice yields increased by 33% while groundnut yields grew by 25%. These estimated yields correspond to additional production in the peak year of the project of 60000 tons for sorghum, 25000 tons for millet, 17000 tons for maize, 70000 tons for cotton, 60000 tons for rice and 57000 tons for groundnut. Such additional yields will make it possible to increase coverage of the basic food needs of the inhabitants of the Sudanese Zone and raise the family incomes of beneficiaries.

4.6.2 Marketing: The marketing of agricultural produce, especially cereals, involves several operators at different levels of the commercial sector : (i) the farmer, who also intervenes as vendor in weekly markets close to the village ; (ii) the dealer, who buys on behalf of the collector ; (iii) the collector from N’Djamena acting on behalf of a wholesaler ; (iv) transporter-traders from neighboring countries like Cameroon, Central African Republic and especially Nigeria who export the cereals bought on the Chadian market to their countries of origin. The yields generated by the project will be marketed through the same channels. 4.6.3 Projected demand for the main agricultural products was estimated from the deficit of about 10% noted in the area, the population growth rate, and growing demand generated by the oil boom and neighboring countries. Upon completion of the project, demand could rise to 312,000 tons for sorghum (compared to a projected yield of 290,000 tons, representing a deficit of 7%), 178,000 tons for millet (compared to a projected yield of 155,000 tons, representing a deficit of 15%), 67,000 tons for maize (compared to a projected yield of 65,000 tons, representing a deficit of 3%), 138,000 tons for rice (compared to a projected yield of 120,000 tons, representing a deficit of 14%) and 323,000 tons for groundnut (compared to a projected yield of 287,000 tons, representing a deficit of 13%). According to estimates, the expected project output will cover only 85 to 97% of demand, and so it would be easy to sell the yield.

4.6.4 Prices : The average financial prices for the different crops in the 11 Departments are as follows : 120 CFAF/kg for sorghum/millet, 150 CFAF/kg for maize, 200 CFAF/kg for groundnut, and 300 CFAF/kg for local rice. Considering the high level of current unsatisfied

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demand (10% deficit), the expected increase in production will not have any negative impact on prices. The prices considered in the economic analysis for cereals are import-substitution prices. For legumes, which are not traded internationally, the economic price is identical to the market price. The price trends of the main agricultural products over the last five years show that there has been a certain degree of price stability which is expected to continue over the next few years.

4.7 Impact on the Environment 4.7.1 Pursuant to Bank directives on environmental assessment, the project is classified in category II. Environmental assessment conducted during the preparation mission indicated that any negative impact from rehabilitation works on irrigation facilities and from seed production could be prevented through appropriate mitigative measures.

4.7.2 Positive impact: The activities of the project are aimed at improving the living conditions of beneficiaries. Their impact will relate mainly to: (i) the increase of food security and poverty reduction in rural communities; (ii) contribution to the development of rural micro-enterprises; (iii) contribution to the improvement of the health conditions of the people and consolidation of existing sensitization actions on HIV/AIDS control in rural areas; (iv) protection of ecosystems and rationalization of local development through the various development plans that will be drawn up. 4.7.3 Negative impact: Seed production activities will be developed in a context of increasingly intensive agriculture which could lead to acidification of certain soils during years of low rainfall. Rehabilitation of the irrigation areas will not lead to the clearing of additional land, because these extensive areas date back to the period before 1957. The village areas have been created on sites that were already in use. The layout of existing roads and routes will be maintained. However, the rehabilitation works could pose a risk to aquatic fauna because of flood reduction due to the drainage of Logone waters into the seasonal streams of Balli. Control of the flooding of the plain will have an impact on fishponds and on fish catches in the Logone. Since these are fishing areas it would hamper fish migration to the plains. The resurfacing of damaged road portions would require additional material and consequently, the opening of quarries. 4.7.4 Mitigative measures: The project will take a number of mitigative measures. The choice of sites for the various installations will be guided by the concern to limit the scale of land clearing. The rehabilitation and reforestation of quarries and similar sites, as well as the adoption of environmentally friendly technical specifications will be included in the terms of reference to be followed in competitive bidding for the works. There will be systematic monitoring of the water table through regular measurement of the piezometric levels and testing of water quality. A series of channels will also be constructed to raise water table levels. Agricultural sensitization and advisory campaigns will be conducted in consultation with NGOs to promote the adoption of appropriate farming practices, efficient farm management (optimal fallow periods, crop rotation) and adapted corrective practices (grazed fallow, use of animal dung, etc.). Compliance with fertilizer and pest control product use norms will be one of the themes to be tackled during agricultural extension. Village communities will be sensitized to health education issues, with emphasis on water resources, maintenance of water points for livestock, and reforestation of the land around irrigation areas. An environmental and social management plan (ESMP) was drafted during the project design phase. This plan will be implemented and monitored by the environmentalist in the PIU, in conjunction with the Department of Forest Protection and Desertification Control in

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the Ministry of the Environment and Water resources. A provision of about CFA.F 55 million has been earmarked for the implementation of the ESMP, a summary of which is contained in Annex 6 of this report. 4.8 Social Impact 4.8.1 The envisaged project activities will lead to: (i) an increase in the income levels of farmers trained (additional annual agricultural income ranging from CFA.F 51,000 to CFA.F 110,000 per farmer); and (ii) the creation of 9,600 direct jobs through the civil works management approach based on labor-intensive techniques (HIMO). Implementation of the project will have a positive impact on the men, women and youth in the project area. Indeed, 92,000 rural families and 552,000 inhabitants living in extreme poverty in 100 cantons and 1000 villages will benefit directly from project activities. One hundred (100) canton and 1000 village natural resource management committees will be trained and close to 100,000 families will be sensitized and trained in natural resource management techniques. Ten thousand (10,000) officials, 20% of them women, will be trained in community organization and management; and at least 150 seed-producing farmers, 10% of them women, will be trained in seed multiplication techniques. Organization and training will enable beneficiaries to take control of their own lives. Thanks to the local development funds available in PROADEL, rural communities will be able to finance their socio-economic infrastructure needs (wells for market gardening, literacy halls, etc.) retained as priorities in the canton and village development plans which they draw up themselves. Through training and sensitization, the project will empower the people to conduct their own development activities. The support given to the organizations will create an ideal framework for conflict resolution. Furthermore, the sensitization drives on HIV/AIDS, tuberculosis and malaria will contribute to the improvement of the health for the people. The increased production will create more jobs in rural and urban areas and lead to an increase in the income levels for both male and female small farmers. All these improvements will contribute to poverty reduction. 4.8.2 The project will enable women who are in the majority in the agricultural sector, to improve on their production tools, marketing conditions and income levels. Furthermore, the biogas units, the improved stoves and the dissemination of animal traction technology will reduce working time for women, curb deforestation and encourage environmental protection.

4.9 Project Costs 4.9.1 The total project cost is estimated at CFA.F 15,759 million, or UA 20.42 million, net of taxes and duties. This cost is broken down into CFA.F 10,046 million in foreign exchange, or UA 13.02 million and CFA.F 5,713 million in local currency, or UA 7.40 million. Tables 4.1 and 4.2 below sum up projects costs by component and by category. The detailed costs of the project are found in the working document in volume II.

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Table 4.1 : Summary of estimated project costs by component

Component in million CFAF in UA million % L.C F.E Total L.C F.E Total F.C Capacity building 780 1,973 2,753 1.01 2.56 3.57 72Increasing productivity of resources 3,308 6,363 9,671 4.29 8.25 12.54 66Project management 972 634 1,606 1.26 0.82 2.08 39Baseline costs 5,060 8,970 14,030 6.56 11.63 18.19 64Physical contingencies 236 620 856 0.30 0.80 1.10 73Price contingencies 417 456 873 0.54 0.59 1.13 52Total 5,713 10,046 15,759 7.40 13.02 20.42 64

Table 4.2 : Summary of project cost by expenditure category

Categories in million CFAF in UA Millions % L.C F.E Total L.C F.E Total F.E 1. Works 2,651 5,623 8,274 3.44 7.29 10.73 682. Goods 166 915 1,081 0.21 1.18 1.39 853. Services 3.1Training and sensitization 259 268 527 0.33 0.35 0.68 513.2 Studies/Consultants/Audit 558 871 1,429 0.73 1.13 1.86 613.3 Agreements 337 327 664 0.44 0.42 0.86 493.4 Technical assistance 0 672 672 0.00 0.87 0.87 1004. Staff 287 0 287 0.37 0.00 0.37 05. Functioning 802 294 1,096 1.04 0.39 1.43 27Project baseline costs 5,060 8,970 14,030 6.56 11.63 18.19 64Physical contingencies 236 620 856 0.30 0.80 1.10 73Price contingencies 417 456 873 0.54 0.59 1.13 52Total cost of project 5,713 10,046 15,759 7.40 13.02 20.42 64

4.9.2 The costs were estimated from the prices applicable in Chad in January 2004. A physical contingency rate of 10% on works and equipment was applied. A price contingency of 3% on costs in local currency and of 2.5% on costs in foreign exchange was applied to all the components. The overall amount for physical contingencies (CFA.F 856 million) and price contingencies (CFA.F 873 million), totalled UA 2.23 million, representing about 11 % of the total project cost.

4.10 Financing Sources and Expenditure Schedule 4.10.1 As presented in Tables 4.3 and 4.4 below, the project will be co-financed by the ADF (21% as loans and 8% as grants), ABEDA (29%), IsDB (30%), the Government of Chad (11%) and beneficiaries (1%). The Government will pay the salaries of staff seconded to the project, part of the running costs of the project implementation unit, part of the cost of the irrigation scheme works and also provide vehicles to the project implementation unit. The beneficiaries will bear part of the cost of the irrigation works.

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Table 4.3 : Financing sources

in million CFAF in UA million % Sources L.C F.E Total L.C F.E Total

ADF loan 1,485 1,812 3,297 1.92 2.35 4.27 21ADF grant 173 1,061 1,234 0.22 1.38 1.60 8BADEA 832 3,733 4,565 1.08 4.83 5.91 29IsDB 1,373 3,338 4,711 1.78 4.32 6.10 30Government 1,634 102 1,736 2.11 0.14 2.25 11Beneficiaries 216 0 216 0.29 0.00 0.29 1Total cost of project 5,713 10,046 15,759 7.40 13.02 20.42 100

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Table 4.4 Expenditure by category and by financing source (in UA million)

ADF loan ADF grant BADEA IsDB GVT BNF TOTAL

L.C F.E TL L.C F.E. TL L.C F.E TL L.C F.E TL L.C F.E. TL L.C L.C F.E. TLCAT. Works 0.33 0.40 0.73 0.00 0.00 0.00 0.87 4.08 4.95 0.70 2.81 3.51 1.27 0.00 1.27 0.27 3.44 7.29 10.73Goods 0.10 0.54 0.64 0.03 0.14 0.17 0.00 0.00 0.00 0.08 0.38 0.46 0.00 0.12 0.12 0.00 0.21 1.18 1.39Services Training 0.15 0.15 0.30 0.01 0.02 0.03 0.00 0.00 0.00 0.17 0.18 0.35 0.00 0.00 0.00 0.00 0.33 0.35 0.68 Studies 0.24 0.38 0.62 0.16 0.26 0.42 0.09 0.14 0.23 0.24 0.35 0.59 0.00 0.00 0.00 0.00 0.73 1.13 1.86Agrmts 0.42 0.41 0.83 0.00 0.00 0.00 0.00 0.00 0.00 0.02 0.01 0.03 0.00 0.00 0.00 0.00 0.44 0.42 0.86T.A 0.00 0.00 0.00 0.00 0.81 0.81 0.00 0.00 0.00 0.00 0.06 0.06 0.00 0.00 0.00 0.00 0.00 0.87 0.87Staff 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.37 0.00 0.37 0.00 0.37 0.00 0.37Op. 0.50 0.19 0.69 0.00 0.00 0.00 0.00 0.00 0.00 0.29 0.20 0.49 0.25 0.00 0.25 0.00 1.04 0.39 1.43Baseline costs 1.74 2.07 3.81 0.20 1.23 1.43 0.96 4.22 5.18 1.50 3.99 5.49 1.89 0.12 2.01 0.27 6.56 11.63 18.19Ph. C. 0.07 0.14 0.21 0.01 0.09 0.10 0.05 0.35 0.40 0.06 0.21 0.27 0.10 0.01 0.11 0.01 0.30 0.80 1.10Price C. 0.11 0.14 0.25 0.01 0.06 0.07 0.07 0.26 0.33 0.22 0.12 0.34 0.12 0.01 0.13 0.01 0.54 0.59 1.13Total cost 1.92 2.35 4.27 0.22 1.38 1.60 1.08 4.83 5.91 1.78 4.32 6.10 2.11 0.14 2.25 0.29 7.40 13.02 20.42

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4.10.2 Details of co-financing by the ADF loan and the Government on the one hand, and by the ADF grant and the Government on the other hand are presented in Tables 4.5 and 4.6 below :

Table 4.5 : ADF loan/Government financing

(in million CFAF) (in UA million) % L.C F.E Total L.C F.E Total Total ADF loan 1,485 1,812 3,297 1.92 2.35 4.27 67Government 1,584 102 1,686 1.98 0.14 2.12 33Total cost 3,069 1,914 4,983 3.90 2.49 6.39 100

Table 4.6 : ADF grant/Government financing (in million CFAF) (in UA million) % L.C F.E Total L.C F.E Total Total ADF grant 173 1.061 1.234 0.22 1.38 1.60 93Government 100 0 100 0.13 0.00 0.13 7Total cost 273 1.061 1.334 0.35 1.38 1.73 100 4.10.3 The ADF loan will cover 21% of the total project cost, or UA 4.27 million, of which UA 2.37 million will be in foreign exchange and UA 1.92 million in local currency. It will cover 18% of the cost in foreign exchange and 26% of the expenditure in local currency. 4.10.4 The ADF grant will cover 8% of the total project cost, or UA 1.6 million, of which UA 1.38 million will be in foreign exchange and UA 220 000 in local currency. It will cover 11% of the cost in foreign exchange and 3% of expenditure in local currency. The Government benefited from a PPF granted on ADF resources to prepare the project. In accordance with Section 3.7 of the « PPF Operational Guidelines » adopted by the ADF Board of Directors on 14/02/2000 (ADF/BD/WP/99/87/Rev.3), provision is made for an endowment of UA 470,000 in the grant for reimbursement of the PPF amount. The rest of the grant will be used to fund the training of artisans and technical assistance. 4.10.5 Project expenditure will be executed in accordance with the expenditure schedules in Tables 4.7 and 4.8 below (including provisions for physical and price contingencies).

Table 4.7 : Expenditure schedule by component (in UA millions) Component 2005 2006 2007 2008 2009 2010 Total Capacity building 0.50 1.52 1.05 0.32 0.32 0.11 3.82Increasing the productivity of natural resources 0.07 5.43 5.11 2.94 0.64 0.10 14.29Project management 0.24 0.81 0.30 0.33 0.31 0.32 2.31Total 0.81 7.76 6.46 3.59 1.27 0.53 20.42

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Table 4.8 : Expenditure schedule by financing source (in UA millions) Financing sources 2005 2006 2007 2008 2009 2010 Total ADF loan 0.14 1.46 1.02 0.74 0.73 0.18 4.27ADF grant 0.46 0.66 0.48 0.00 0.00 0.00 1.60ABEDA 0.00 2.40 2.31 1.20 0.00 0.00 5.91IsDB 0.10 2.36 1.88 1.18 0.38 0.20 6.10Government 0.11 0.80 0.67 0.41 0.13 0.13 2.25Beneficiaries 0.00 0.08 0.10 0.06 0.03 0.02 0.29Total 0.81 7.76 6.46 3.59 1.27 0.53 20.42 5. PROJECT IMPLEMENTATION

5.1 Executing Agency 5.1.1 The project shall be implemented by an implementation unit set up within the Ministry of Agriculture (cf. Annex 2). The project coordinator, assisted by the other members of the project implementation unit and the 3 technical assistants retained, shall coordinate all the activities of the various components. A steering committee set up by the Government to coordinate all projects that come under the RDIP shall orient and steer the project. (cf Paragraph 5.2.1). 5.1.2 The main duties of the PIU shall include: (i) the preparation of bidding documents, invitation letters to consultants, terms of reference and the review of the entire procedure for involving the operators who will participate in project implementation; (ii) coordination, control and monitoring of all project activities; (iii) preparation of budgets and annual work programs for each unit ; (iv) drafting of disbursement requests to be submitted to donors ; (v) preparation of programs of activity, quarterly status reports and annual project implementation reports ; and (vi) drafting of financial statements and management of project accounts.

5.2 Institutional Arrangements

5.2.1 The orientation and steering of all RDIP projects, including PASEP, PROADEL, PSAOP and NRMP, shall be ensured by the Technical Monitoring Committee set up by Prime Ministerial Order No. 027/PM/2003 of 25 September 2003 as a tool of the Rural Development Sector Consultation Monitoring Mechanism (Para 2.8.5). It is responsible for approval of work programs, the budget and budget control and it receives the project audit and supervision reports from the RDIP. It is composed of representatives of the ministries and institutions involved in the program and of representatives of farmers’ organizations and rural community organizations. It shall meet at least twice a year under the chairmanship of the Secretary-General of the Ministry of Agriculture. Any person whose expertise is needed shall be invited to attend the proceedings of the Steering Committee, notably the Governors of the regions that fall within the project area. The Ministry of Agriculture, in consultation with the Department of Cooperation and Monitoring of Development Projects and Programs in the Ministry of Planning Development and Cooperation, shall conduct external monitoring/evaluation of the project. 5.2.2 The ADF will finance the adaptation of administrative, financial and accounting management procedure manuals approved for the projects underway. A procedures manual adapted for the NRMP will be available from the very first year of the project. The ADF will also finance the setting up of a computerized accounting system, the auditing of accounts, the mid-term review, external and sector monitoring by making a budget contribution to the

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financing of the rural development sector consultation monitoring mechanism, as well as the preparation of the project completion report. The decentralized structures of rural development sector ministries, acting in collaboration with NGOs selected on a competitive basis, shall implement the project. To that end collaboration protocols shall be signed between the project and such implementing agencies. 5.2.3 The project shall invite private operators, NGOs (BELACD, CECADEC, ASDEC, World vision, VITA, etc.), and State services (ITRAD) present in the area, and which satisfactorily provide the similar services within the framework of other development projects, to participate in its activities. They shall be recruited from a shortlist to implement project activities in the areas of assistance/counseling to village communities, training, infrastructure development and the provision of various goods, training and extension services, provision of pre-basic seeds as well as research and development. The intervention of ITRAD shall be based on agreements whose drafts shall be submitted to the ADF for prior approval. Such agreements shall define the rights and obligations of the contracting parties.

5.3 Implementation and Supervision Schedule The implementation of project activities will cover a period of 6 years in accordance with the projected schedule presented in Table 5.1. From the very first year, the project implementation unit (PIU) will focus on preparing the bidding documents, drafting the procedures manual, conducting a diagnosis of the groups and executing other project activities in conformity with the agreed schedule and in strict compliance with Bank rules and procedures, as well as the provisions of the loan agreement. A mid-term review shall be conducted in the third year.

Table 5.1 Projected implementation schedule of the project Activities/Actions Responsibility Start End Approval by board ADF 09/2004 09/2004Signature of loan agreement GVT/ADF 09/2004 12/2004General procurement note ADF 12/2004 01/2005Appointment of PIU and SC staff MINAGRI 12/2004 02/2005Setting up of PIU GVT 12/2004 02/2005Effectiveness and first disbursement GVT/ADF 05/2005 07/2005Launching of project/ PTBA preparation GVT/PIU/ADF 05/2005 11/2005Recruitment of TA and accounting manager PIU/ADF 11/2005 03/2006Bidding documents and execution of contracts PIU/ADF 05/2005 08/2005Commencement of all project activities MINAGRI/CEP/ADF 08/2005 10/2005Mid-term review PIU/ADF/Consultant 01/2007 01/2007Auditing of accounts Consultant 03/2005 03/2010Project completion GVT/CEP/ADF 06/2010 12/2010

5.4 Procurement Arrangements 5.4.1 The procurement arrangements are summarized in Tables 5.2 and 5.3. All procurement of goods, works and services financed with ADF resources shall be made in accordance with the Bank’s rules of procedure on procurement or, as the case may be, the Bank’s rules of procedure for the recruitment of consultants, using the relevant Bank standard bidding documents.

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Table 5.2 : Procurement arrangements (in UA million)

NCB Others Shortlist Non-ADF fin. Total 1. Works

1.1Irrigation works 10.98 10.98

1.2 Soil conservation and restoration

0.79 [0.67] 0.79 [0.67]

1.3 Construction and rehabilitation

0.15 [0.15] 0.12 0.27 [0.15]

1.4 Comm. infrastructure 0.34 0.34 2. Goods 2.1 Vehicles 0.20 [0.16] 0.27 0.47[0.20] 2.2 Equipment 0.54 [0.36] 0.19 0.73 [0.36] 2.3 Seeds 0.32 [0.32] 0.32 [0.32] 3. Services 3.1 Training/sensitization. 0.03 [0.03] 0.23 [0.23] 0.52 0.78 [0.26] 3.2 Studies/Audit 1.39 [0.79] 0.55 1.94 [0.79] 3.3 Agreement 0.93 [0.93] 0.93 [0.93] 3.4 Technical assistance 0.91[0.91] 0.91[0.91] 4. Staff 0.41 0.41 5. Operation 1.32 [1.32] 0.23 1.55 [1.32]

Total 0.89[0.67] 3.39 [3.27] 2.53[1.93] 13.61 [0] 20.42 [5.87] Note :

The use of the shortlist applies to consultants only. "Other" refers to LCB, international or national shopping. + The figures in brackets are amounts financed by the Bank/ADF/NTF, as the case may be.

ADB refers to the African Development Bank Group

Table No. 5.3 : Details of “Other” financing in UA

Procedure Goods Maximum per contract in UA

Maximum total

1. Negotiated Contract 2. National Shopping

1.Agreement with ITRAD for the production of basic seeds 2.Office supplies, fuel

50,000

75,000

320,000

480,000

5.4.2 National laws and regulations governing procurement in Chad were examined and deemed acceptable. 5.4.3 Works : Rehabilitation and construction works on buildings shall be procured for the sum of UA 0.15 million in accordance with the rules of national competitive bidding (NCB). Since the amount of the contract does not exceed UA 300,000 it will not be attractive to foreign companies. Land conservation and restoration works, amounting to UA 0.67 million, shall be procured in accordance with community-based investment procurement procedures. The procurement modalities shall be defined in a procedures manual prepared by the program and submitted to the ADF for prior approval.

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5.4.4 Goods : Considering the low contract amounts, and the existence of local suppliers who are sufficiently qualified and in good number to guarantee competition, the procurement of motorcycles for the sum of UA 0.20 million, as well as computer equipment, office equipment (photocopiers, fax machines and telephones), office furniture and sundry equipment for a total of UA 0.36 million, will be done through national competitive bidding. Pre-basic seeds shall be procured through direct contracting with ITRAD for the sum of UA 0.32 million. 5.4.5 Consultancy services: The recruitment of service providers for sensitization, mobilization, training, technical guidance of beneficiaries for a total of UA 0.23 million, studies and audit for the cost of UA 0.79 million and technical assistance for the cost of UA 0.91 million will be done through a shortlist. Recruitment of consultants for participatory research for the cost of UA 0.30 million, will be done through direct contracting with ITRAD. The procurement of services for the production of improved seeds and fruit tree seedlings for the sum of UA 0.63 million will be done through direct contracting with ITRAD. 5.4.6 Specialized services : Study trips amounting to UA 0.03 million will be procured through negotiated contracts with specialized training centres. 5.4.7 Miscellaneous : Sundry supplies needed for the functioning of the project, amounting to UA 0.08 million per year for six years of project implementation, or a total of UA 0.48 million, will be procured through national shopping, since the amount of each contract does not exceed UA 20,000.

5.4.8 The text of a general procurement notice (GPN) was adopted with the Government of Chad and will be issued for publication in Development Business, as soon as the loan proposal is approved by the Board of Directors. 5.4.9 The following documents shall be submitted for examination and approval by the Bank before they are published: (i) specific procurement notices; (ii) bidding documents or invitation letters to consultants ; (iii) evaluation reports on bids made by enterprises, suppliers or consultants, with recommendations on contract award. To that end, the prior approval of the Bank on the technical analysis report is not required. (iv) Draft contracts where the contracts in the bidding documents had been modified.

5.5 Disbursement Arrangements

5.5.1 The financial management of the project will be done in accordance with national accounting provisions and those of the ADF, using an adapted accounting software that is still to be procured. Funds from the ADB (cf. Annex 3) shall be deposited in a special account in an approved commercial bank. For the management of the working capital, an auxiliary account shall be opened at Moundou, in the project area. 5.5.2 Project funds shall be disbursed according to an expenditure schedule by component and by financing source presented in Tables 4.7 and 4.8. All disbursements shall be made in strict compliance with the disbursement rules and procedures of the Bank Group. The Government shall open a special account for the project and a local currency account in banks deemed acceptable by the ADB. The PIU shall regularly keep evidence of all disbursements made by the Fund. The provisional list of goods and services (expenditure categories) features in Annex 3. Disbursements for procurements such as works, motorcycles,

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material and equipment (photocopiers, fax machines and telephones), shall be made directly to the contractors and suppliers through direct payment. The same mode of disbursement (direct payment) shall be used for contracts on technical assistance and special services awarded on the basis of agreements. The operating expenses of the project implementation unit shall be disbursed as working capital.

5.6 Monitoring and Evaluation 5.6.1 Internal and external monitoring/evaluation : Internal monitoring/evaluation shall be done by the PIU which shall define simple specific technical and organizational indicators for the entire project. Such evaluation shall focus on: (i) the irrigation and infrastructure development rate ; (ii) the effective involvement of NGOs and socio-professional organizations ; and (iii) the use of human, financial and material resources of the project. External monitoring and evaluation shall be conducted by the Ministry of Agriculture, in collaboration with the Ministry of Planning, Development and Cooperation, and the Permanent Follow-up Unit of the rural development sector consultation, which is responsible for monitoring programs and projects financed by donors, within the framework of RDIP (3 missions per year). Environmental and gender aspects will also be monitored. Mission shall be sent systematically to the ADF. The project will also be supervised by the ADF through periodic supervision missions (2 missions per year). 5.6.2 Mid-term review: It shall be conducted at the end of year 3 of the project through an engineering consultancy firm, with a view to comparing project results and outcomes with set objectives. It will propose adjustments necessary for the attainment of objectives and, to that end, should include the concerns of the people and their perception of project activities. Accordingly, surveys and discussions with beneficiaries from the various sites will have to be conducted within the framework of this activity. 5.6.3 Reporting: The PIU shall draw up quarterly or annual status reports of the project and submit them to the Government and the ADF. The various partners intervening as technical operators in the implementation of project components shall submit periodic reports to the unit. Similarly, the Department of Forest Protection and Desertification Report shall submit half-yearly reports on environmental monitoring. At the end of the project, the Government shall draft a completion report based on the Bank format, while the ADF will organize a special mission that will also produce a completion report. 5.7 Financial and Audit Reports

The administrative and financial unit of the PIU shall keep an accounting system for

the entire project through separate accounting registers containing all expenditure committed for the project. Disbursements will be made following an annual program approved beforehand by the Government and the ADF. An external audit shall be conducted each year by an audit firm which shall, at the end of each financial year, validate the accounts and issue a relevant opinion the project’s financial management. The audit reports shall be submitted to the Bank within 6 months from the close of the financial year. Non-compliance with this provision shall lead to the suspension of disbursements. Quarterly status reports of the project shall be submitted regularly to the ADF by the PIU. The same shall apply to activity reports and annual budget reports. These documents have to be submitted to the project steering committee for examination before they are forwarded to the ADF. The PIU shall also submit the mid-term review report and the project completion report to the Bank.

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5.8 Coordination of Assistance

5.8.1 In Chad, international assistance is coordinated by the Ministry of Planning and Cooperation. However, for the RDIP, a three-tiered aid coordination framework was set up as follows: a steering committee composed of the ministers in charge of rural development and chaired by the Prime Minister; a technical committee composed of secretaries general and chaired by the Secretary General of the Ministry of Agriculture and a permanent unit responsible for monitoring the formulation and implementation of the strategy defined within the framework of the Geneva IV roundtable. The permanent unit, financed by all donors of the RDIP, shall organize periodic meetings that bring together officials of the ministries in charge of rural development and representatives of the sector’s donors, in order to fine-tune development actions and avoid duplication of interventions. It shall work in close collaboration with the 3 ministries in charge of rural development.

5.8.2 The technical and financial partners intervening in the rural development sector meet regularly to coordinate their actions. Such meetings are convened and conducted by French Cooperation which has been designated as the lead donor in the sector. Accordingly, in addition to the individual discussions held by the appraisal and re-appraisal missions with representatives of bilateral and multilateral institutions intervening in Chad’s rural development sector, the re-appraisal mission addressed a meeting of rural development sector donors organized at its request by French cooperation, which is the lead donor of the sector. These meetings enabled the mission to: (i) share its analysis of the sector; (ii) present and discuss the design of the project; and (iii) draw lessons from the experiences of other partners which it took into account in designing the project; and envisage possible cooperation areas. The actions planned under this project are complementary with those of ongoing projects that focus on the Sudan region. All stakeholders found the project design satisfactory. 6. SUSTAINABILITY AND RISKS OF THE PROJECT 6.1 Recurrent Expenditure

6.1.1 The recurrent expenditure of the project for its entire duration is estimated at UA 1.96 million. Operational costs under ADF financing are evaluated at UA 0.77 million. These costs pertain to its contribution to the operating expenditure of the project implementation unit as well as expenditure on equipment and material. 6.1.2 The project is designed to function with existing structures, notably the Departmental delegations of the ministries concerned, and the participation of beneficiaries in order to maintain recurrent expenditure at a minimum. At the end of project implementation, the Government shall defray only recurrent expenses for the maintenance of vehicles, motorcycles and equipment used by the project. Such expenditure is estimated at UA 0.57 million and can easily be financed with State resources. Staff salaries will not constitute an additional expense for the Government because they are included in the annual State budget. Expenditure on the maintenance of irrigation infrastructure (UA 0.12 million) shall be borne by beneficiaries during and after project implementation, through the levies collected. Table 5.3 presents the downward trend in recurrent expenditure financed by the ADF loan.

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Table 5.3 : Recurrent expenditure trends (in UA million)

Financing sources 2005 2006 2007 2008 2009 2010 TotalADF loan 0.18 0.16 0.13 0.12 0.11 0.07 0.77IsDB 0.10 0.10 0.08 0.08 0.08 0.06 0.50Gov’t and beneficiaries 0.08 0.09 0.10 0.12 0.15 0.15 0.69Total 0.36 0.35 0.31 0.32 0.34 0.28 1.96

6.2 Sustainability of Project

6.2.1 The project was designed following a demand-driven participatory approach. Through the training programs planned under the project, farmers and community organizations will tap into their own experience and develop their capacity to initiate their own development activities. Rural infrastructure (including irrigation facilities) shall be fully managed by a local committee that will participate in its financing through the contribution of beneficiaries. The levies collected shall be used for repair and maintenance of the infrastructure concerned. 6.2.2 The issuance of a deed granting user’s rights to farmers’ associations in the irrigation areas and the drafting of terms of reference spelling out the rights and obligations of stakeholders should be enough to protect the beneficiaries and guarantee their adoption of rational management practices for the irrigation areas as well as their effective participation in the maintenance and management of rehabilitated infrastructure. Their intervention shall be organized by the village and canton committees that will be set up and consolidated by the project. The already existing rice-growers associations and irrigation area management committees will be consolidated by the project. These committees shall define an adequate system of rates, collect levies, organize maintenance and manage the irrigation schemes. 6.3 Risks And Mitigative Measures 6.3.1 The main risks of the project relate to the continuation of economic reforms, price stability, rural-urban migration, availability of financial resources, land security for farmers in the irrigation areas and climatic conditions. 6.3.2 With regard to the continuation of economic reforms, the Government has initiated dialogue with its partners that will continue for the duration of the project. Furthermore, neighboring countries such as Nigeria and Cameroon are major importers of foodstuff and could absorb any production surpluses. The risk of agriculture losing labor to the oil industry is mitigated by the Government’s economic and social policy which includes agriculture and rural development among the priority investment sectors. The Government’s strategy is to make the agricultural sector sufficiently profitable and competitive. Financial resources for the financing of the project have to be available and easy to mobilize. This risk is even greater with regard to the national counterpart funds. Nonetheless, it is noteworthy that with the advent of oil, the Government of Chad will have enough resources to fund its priority sectors of agriculture, education, health and infrastructure. Consequently, the project will constantly sensitize the Government to include its counterpart funds in the national budget and effectively disburse such funds as required.

6.3.3 To reduce the risk of changing climatic conditions, the project will rehabilitate existing rice ‘boxes’. The compartmentalization of sub-boxes into smaller irrigation units and the technical guidance of farmers should improve water management in each plot. In dry areas, seed varieties will be chosen on the basis of their resistance to drought and their low water requirement. Concerning the risk that beneficiaries may not feel safe enough in their tenancy to

35

undertake rehabilitation work on the irrigation areas and adopt sustainable farming practices, the Government will issue a deed granting user’s rights over the 2350 ha that will be rehabilitated by the project. 7. PROJECT BENEFITS

7.1 Financial Analysis

7.1.1 The financial analysis focuses on two farming systems: (i) the irrigation system with rice and flood-recession sorghum as the main crops; and (ii) the rain-fed farming system with cotton, sorghum, millet, maize and groundnut as the main crops. Analysis of these models makes it possible to illustrate the productivity of the various crops and the diversity of situations encountered within the area. In comparison to the non-project situation, the productivity of the two systems will be improved and maintained through land restoration, improvement and conservation, the use of more high-yielding varieties and irrigation. It is assumed that farmers use family labor for all farm work. Analysis of the results obtained from the various project-situation models leads to the conclusion that farmers’ incomes will rise. 7.1.2 Judging from the estimated budget and operating result per hectare, the net margin of agricultural income will rise as a result of the project from CFA.F 320 250 to 541 800 for rice (69%), CFA.F 120 000 to 180 000 for cotton (50%), CFA.F 132 000 to 198000 for millet (50%), CFA.F 30 000 to 39 000 CFAF for sorghum (30%), CFA.F 37 500 to 50 500 for maize (35%) and CFA.F 44 500 to 67 500 for groundnut (52%). For the abovementioned farm models, the increase for both project and non-project situations would be CFA.F 111 000 (67%) for Model 1 and CFA.F 51 000 (23%) for Model 2.

7.2 Economic Analysis 7.2.1 To evaluate the economic viability of the project, the economic rate of return was calculated on the basis of conditions prevailing in January 2003. The economic analysis is conducted on the basis an overall assessment of the direct economic benefits of the project. Such economic benefits are quantified by comparing the non-project and project situations in order to identify additional benefits resulting from the implementation of project activities. The benefits considered are essentially the value of the additional cereal yields produced from improved seeds. Assessment of the project’s contribution to the national economy is based on the following assumptions: (i) evaluation of the net benefits of the project is estimated over a period of 20 years; (ii) the expenses include capital costs, infrastructure maintenance and operating costs, equipment renewal costs and additional variable costs of retained estimates; (iii) capital costs, equipment renewal costs and the crop prices used are all at constant prices (net of taxes, customs duties and price increases); (iv) the depreciation period for the irrigation schemes is 40 years, which explains their residual value at the end of the first period of 40 years; and (v) the prices used for rice are import-substitution prices. On the basis of the above assumptions, the project’s economic rate of return (ERR) is evaluated at about 21% (cf. Annex 4). This rate is acceptable, considering the other benefits of the project, notably environmental protection and improvement. 7.2.2 At its peak, the project will generate greater yields and higher incomes. The total additional income that will accrue from the project for agricultural output alone will be about CFA.F 2.9 billion per year during the peak period in 2008. In terms of employment, the project will generate 9,600 permanent and short-term jobs, equivalent to an annual wage bill of CFA.F 2.4 billion

36

7.3 Impact Analysis Of Inter-Sectoral Aspects

7.3.1 The main benefits of the project will relate essentially to greater food security and higher family incomes for the agricultural communities concerned, who make a monetary and non-monetary contribution of about 40% to GDP. By focusing on natural resource management the project will maintain production levels. Indeed, 92 000 rural families and 552 000 very poor inhabitants from 100 cantons and 1000 villages will benefit directly from project activities. More than 100 000 families will be sensitized and trained in natural resource management techniques through the 1000 village committees that will be set up. The promotion of farmers organizations and the training of 4500 farmers, half of them women, will enable them to take charge of their lives and provide them with improved production means (seeds, tools), especially in the area of market gardening, marketing and processing of their produce. Women, organized in groups, will have greater autonomy in the management of their incomes and efficiently contribute to the well-being of their families. The network of 90 artisanal workers will be trained to maintain agricultural equipment and manufacture agricultural and domestic implements (improved stoves). The project will develop synergies with other RDIP projects on food security and poverty reduction. 7.3.2 Implementation of the project will have a positive impact on the men, women and youth of the project area. The actions envisaged will lead to: (i) higher incomes for the farmers trained, ranging from 51,000 CFAF to 110,000 CFAF per farmer; and (ii) the creation of 9600 permanent and temporary jobs. New services will be created, rural exodus will be curbed and regional trade will be facilitated and developed. 7.3.3 With regard to the organization of women, the project will encourage the sharing of experiences among Chadian women, and between them and their counterparts in other countries. As concerns hygiene, the people will benefit from district health services supported by the project, especially sensitization on malaria and HIV/AIDS control.

7.4 Sensitivity Analysis

Sensitivity analysis was based on a certain number of assumptions: (i) an increase in project costs due to a rise in the cost of infrastructure, equipment and project activities; (ii) reduction of the additional benefits of the project due to a decline in the returns analyzed or a fall in produce prices; (iii) the occurrence of the above-mentioned assumptions, namely a decline in benefits and an increase in costs; and (iv) an increase in the maintenance/running costs of the structure and additional costs from estimated select expenditure items. The sensitivity analysis shows that with a 10% increase in costs, the ERR would attain 18%, while a decline in earnings will bring down the ERR from 21% to 16%; meaning that the ERR is more sensitive to a 10% fall in earnings than to a 10% increase in costs. The results of the sensitivity analysis are presented below:

Assumptions ERR (%)

Basic 21% 10% increase in costs 18% Decline in returns leading to a 10% in benefits 16% 10% increase in costs and 10% decline in earnings 13% Two year slippage on implementation schedule 14%

37

8. CONCLUSIONS AND RECOMMENDATIONS

8.1 Conclusions 8.1.1 Natural resource management is the focus of the rural development sector consultation in Chad. Implementation of the current project will solve one of the most disturbing development problems in Chad – namely, the degradation of productive capital, notably land. The project will also contribute to water resource development. Indeed, its implementation will also lead to an increase in the irrigated surface area, thus contributing to the attainment of Chad’s water management objective and guaranteeing the long-term profitability of natural resource use. The sustainment, increase and the diversification of agricultural output, coupled with the impact of technical assistance and the newly-created seed sector will lead to substantial poverty reduction in the project area and improvement of the living conditions of the people. It is estimated that at the peak of the project period, the impact of farming 2,350 ha, including at least 1,000 ha under double cropping, will generate an average increase of about 25% in agricultural incomes. Such increase in agricultural income will substantially boost poverty reduction in Chad. 8.1.2 The actions envisaged will lead to: (i) higher incomes for the farmers trained, ranging from CFA.F 51,000 CFAF to CFA.F 110,000 per farmer and (ii) the creation of 9,600 permanent and temporary jobs. Implementation of the project will have a positive impact on the men, women and youth of the project area. Indeed, 92,000 rural families and 552,000 very poor inhabitants from 100 cantons and 1000 villages will benefit directly from project activities. One hundred (100) canton and 1000 village natural resource management committees will be trained and close to 100,000 families will be sensitized and trained in natural resource management techniques. Ten thousand (10,000) officials, 20% of them women, will be trained in community organization and management; at least 150 seed-producing farmers, 10% of them women, will be trained in seed multiplication techniques. Organization and training will enable beneficiaries to take control of their own lives. The project is in conformity with the Government’s strategy, its poverty reduction strategy paper (PRSP), the Bank’s vision, its agricultural and rural development policy and its 2002-2004 strategy paper for Chad. The project is deemed technically feasible and economically, physically and environmentally viable. The economic rate of return stands at 21%. This rate is acceptable considering the project’s other advantages, notably environmental protection and improvement. 8.2 Recommendations And Loan Approval Conditions In the light of the foregoing, it is recommended that an ADF loan not exceeding UA 4.27 million and an ADF grant not exceeding UA 1.6 million be awarded to the Republic of Chad for implementation of the project, subject to the following conditions:

A. Conditions precedent to loan effectiveness The loan agreements shall become effective, subject to the Borrower’s compliance with the provisions of Section 5.01 of the ADF’s General Conditions for Loan Agreements and Guarantee Agreements. B. Conditions precedent to first disbursement Disbursement of the first loan tranche shall be subject to the entry into force of the loan agreement and the fulfilment of the following specific conditions by the Borrower:

38

(i) undertake to submit to the ADF all draft collaboration agreements to be concluded with ITRAD for the implementation of participatory research and the production of selected seeds (Para. 5.2.3) ;

(ii) undertake to forward to the ADF, the deed granting user’s rights to

associations of rice growers farming the 2350 ha to be rehabilitated in the irrigation areas of Bongor, Satégui – Déressia and the village irrigation areas along the Djoumane – Lai highway (Para. 4.5.9);

(iii) provide evidence of the creation of a project implementation unit (PIU) based

in Laï and evidence of the secondment of the key staff of the PIU (a coordinator, a agricultural engineer, a systems research and extension agronomist, a community development expert, an environmentalist, a gender expert, an agricultural economist and an accounting manager) whose qualifications and experience have been deemed acceptable beforehand by the Fund (Para. 4.5.10);

(iv) provide evidence of the allocation of buildings for the headquarters of the

project in Laï , the liaison office in N’Djamena and the system research teams (Para. 4.5.6 & 4.5.10);

(v) provide evidence to the ADF of the opening of a special account in a bank

acceptable to the ADF to receive loan resources, and an account for counterpart funds (Para. 5.5.2);

(vi) undertake to rehabilitate the Djoumane – Laï highway, no later than three

years after disbursement of the first loan tranche (Para. 4.5.9); (vii) provide proof of project financing or the commitment to finance the project

from ABEDA and the IsDB (Para. 4.10.1).

C. Other conditions Furthermore, the Borrower has to:

(i) submit to the ADF, at most six months after loan effectiveness, the draft

collaboration agreements to be concluded with ITRAD for the implementation of participatory research and the improvement of selected seeds, and with private operators selected on a competitive basis for the implementation of the institutional capacity-building component (Para. 5.2.2) ;

(ii) forward to the ADF, at most 6 (six) months after loan effectiveness, the deed

granting user’s rights to associations of rice growers farming the 2350 ha to be rehabilitated in the irrigation areas of Bongor, Satégui – Déressia and the village irrigation areas along the Djoumane – Lai highway (Para. 4.5.9) ;

(iii) forward to the Fund, at most 12 (twelve) months after loan effectiveness, the

rehabilitation program and financing plan for the Djoumane-Laï highway (Para. 4.5.9).

ANNEX 1

CHAD – NATURAL RESOURCE MANAGEMENT AND DEVELOPMENT PROJECT

LOCATION OF THE PROJECT AREA

CAMEROON

C

The staff of the ADB Group have provided this map for the excwhich it is appended. The appellations and the demarcations on ththe part of the ADB Group and its members concerning eitherapproval or acceptance of its boundaries.

LIBYA

ENTRAL AFRICAN REPU

lusive use of readers of this is map do not imply any judg

the legal status of a territor

SUDAN

BLIC

report to ment on y or the

ANNEX 2

CHAD – NATURAL RESOURCE MANAGMENT AND DEVELOPMENT PROJECT PROJECT ORGANISATION CHART

M IN A G R I

Project coordination T echnical assistance

Steering C ommittee

R ural O rganisationsD evelop ment D ivid ion Production support d ivision A dministration and F inance

D ivision

M onitoring/E valuation officer

N’djqame naL iaisonO ffic e

B eneficiaries B eneficiaries B eneficiaries

ANNEX 3

CHAD – NATURAL RESOURCE MANAGMENT AND DEVELOPMENT PROJECT:

PROVISIONAL LIST OF GOODS AND SERVICES (in UA million)

ADF loan ADF grant L.C F.E Total L.C F.E TotalCategories I. Investment 1. Works 0.33 0.40 0.73 0.00 0.00 0.002.Goods 0.10 0.54 0.64 0.03 0.14 0.173. Services 3.1. Training and sensitization 0.15 0.15 0.30 0.01 0.02 0.033.2 Studies/Consultants 0.24 0.38 0.62 0.16 0.26 0.423.3. Agreement 0.42 0.41 0.83 0.00 0.00 0.003.4. Technical assistance 0.00 0.00 0.00 0.00 0.81 0.81II. Recurrent expenditure 4. Personnel 0.00 0.00 0.00 0.00 0.00 0.004. Operating expenses 0.50 0.19 0.69 0.00 0.00 0.00Project baseline costs 1.74 2.07 3.81 0.20 1.23 1.43Physical contingencies 0.07 0.14 0.21 0.01 0.09 0.10Price contingencies 0.11 0.14 0.25 0.01 0.06 0.07Total 1.92 2.35 4.27 0.22 1.38 1.60

ANNEX 4

CHAD – NATURAL RESOURCE MANAGMENT AND DEVELOPMENT PROJECT: SUMMARY OF ECONOMIC ANALYSIS

(in million CFAF)

Years Investment Operating expenses Recurrent costs Additional Revenue Net additional revenue

1 618 0 0.00 0 -6182 5780 696 0.00 2.072 -4.4043 4433 1.045 0.00 3.108 -2.3704 2423 1.393 0.00 4.144 3285 903 1.393 0.00 4.144 1.8486 369 1.393 70.00 4.144 2.3127 0 1.393 70.00 4.144 2.6818 0 1.393 70.00 4.144 2.6819 0 1.393 70.00 4.144 2.681

10 0 1.393 70.00 4.144 2.68111 0 1.393 70.00 4.144 2.68112 0 1.393 70.00 4.144 2.68113 0 1.393 70.00 4.144 2.68114 0 1.393 70.00 4.144 2.68115 0 1.393 70.00 4.144 2.68116 0 1.393 70.00 4.144 2.68117 0 1.393 70.00 4.144 2.68118 0 1.393 70.00 4.144 2.68119 0 1.393 70.00 4.144 2.68120 0.00 1.393 70.00 6.644 5.181

ERR 21.3

ANNEX 5

Republic of Chad : Natural Resource Management Project Bank Group Operations (in UA million) as at 30/09/2002

Approval Date of Effective Closing Net Amount Disb’ment

PROJECTS BY SECTOR Entity date signature date date Status amount disbursed rate %

1 IMPROVEMENT OF POLDERS IN BOL ADF 12/12/1975 15/01/1976 12/11/1976 31/12/1992 Completed 4 142.80 4 142.80 100

2 SATEGUI-DERESSIA HYRO-AGRIC. DEVELOPMEN ADF 14/04/1986 // // // Completed 0.00 0.00 0

3 INSTITUTIONAL SUPPORT TO RURAL ENGINEERING ADF 14/04/1986 07/05/1986 13/03/1987 30/06/1994 Completed 948.70 948.70 100

4 IRRIGATION SCHEME IN MAMBI POLDER ADF 18/06/1986 17/07/1986 18/03/1988 31/12/2002 Ongoing/Effective 11 448.70 7 292.50 63.7

5 STUDIES MASTER PLAN OF LAKE CHAD REGION ADF 23/03/1987 10/06/1987 18/03/1988 31/12/1999 Completed 1 777.60 1 629.50 91.7

6 LAKE REGION DEV’T REVIVAL PROGRAM ADF 18/05/1987 10/06/1987 18/03/1988 30/06/1999 Completed 14 046.00 14 024.90 99.8

7 NATIONAL STOCKBREEDING PROJECT ADF 29/04/1988 29/05/1989 29/12/1989 30/06/2000 Completed 10 896.00 10 328.70 94.8

8 HIDES & SKINS S-SECTOR DEV’T STUDY ADF 23/02/1989 28/05/1989 15/09/1989 31/12/1996 Completed 503.00 503.00 100

9 STUDY ON SURFACE WATER USE ADF 14/05/1990 30/05/1990 11/06/1991 31/12/1999 Completed 1 155.90 1 155.90 100

10 COTTON SECTOR IMPROVEMENT PROJECT ADF 28/08/1991 22/04/1992 08/05/1992 31/12/2000 Completed 13 815.80 13 043.50 94.4

11 COTTON AND FOOD CROP PRODUCTION PROJECT ADF 02/09/1993 21/03/1995 11/07/1996 31/12/2001 Ongoing/Effective 18 950.00 11 616.00 61.3

12 BILITINE RURAL DEVELOPMENT PROJECT STUDY ADF 13/10/1993 13/01/1995 20/05/1996 31/07/2001 Completed 670.00 598.60 89.3

13 PRE-FEASIBILITY STUDY ON SPIRULINA PRODUCTION ADF 15/04/1997 29/05/1997 23/03/1998 30/06/2001 Completed 369.00 320.10 86.7

14 ENVR. IMPACT STUDY ON SURFACE WATER DEV’T ADF 29/04/1998 29/05/1998 15/09/1999 31/12/1996 Completed 510.00 0.00 0

14 SURFACE WATER DEVELOPMENT DS 4 ADF 29/04/1998 29/05/1998 15/09/1999 31/12/2005 Ongoing/Effective 11 900.00 620.00 5.2

15 RURAL DEV’T OF LAKE CHAD PREFECTURE ADF 17/03/1999 25/05/1999 04/09/2000 31/12/2004 Ongoing/Effective 3 060.00 0.00 0

16 FISHERIES/FISH FARMING STUDY ADF 08/12/1999 19/01/2000 10/07/2000 31/12/2004 Ongoing/Effective 737.20 200.60 27.2

17 BILTINE RURAL DEVELOPMENT PROJECT ADF 19/09/2001 20/12/2001 // 31/12/2007 Ongoing/Effective 9 000.00 0.00 0

18 NATURAL RESOURCE MANAGEMENT STUDY- PPF ADF 16/07/2001 19/09/2001 08/01/2002 15/10/2002 Ongoing/Effective 460.70 200.50 43.5

19 PASEP STUDY-PPF ADF 04/10/2001 11/02/2002 26/02/2002 31/12/2002 Ongoing/Effective 400.00 164.00 41

20 ROAD MAINTENANCE PROGRAMME ADF 24/08/1978 04/11/1978 31/12/1982 Completed 0.00 0.00 0

21 EMERGENCY PROGRAM ADF 04/12/1981 15/12/1981 30/09/1982 30/06/1994 Completed 12 978.00 12 978.00 100

22 ROAD REHABILITATION AND MAINTENANCE. ADF 26/10/1987 23/03/1988 30/12/1988 31/12/1998 Completed 12 194.10 12 194.10 100

23 DJERMAYA ROAD DEVELOPMENT PROJECT ADF 23/01/1997 11/02/1997 30/07/1997 31/12/2000 Completed 13 250.00 10 173.20 76.8

24 MASSAG ROAD DEVELOPMENT PROJECT ADF 27/04/2000 18/05/2000 09/10/2000 20/06/2004 Ongoing 12 000.00 0.00 0

25 SANITATION ADF 26/10/1976 02/08/1976 04/02/1977 31/12/1992 Completed 4 605.30 4 605.30 100

56 N’DJAMENA RAIN WATER DRAINAGE ADF 23/09/1986 04/11/1986 08/02/1990 30/06/1994 Completed 396.00 396.00 100

27 SATÉGUI-DÉRESSIA IRRIGATION SCHEME ( OMVSD) ADF 22/03/1974 10/05/1974 02/02/1975 31/12/1992 Completed 3 684.20 3 684.20 100

28 SATÉGUI-DÉRESSIA IRRIGATION SCHEME ( OMVSD) ADF 26/10/1976 11/11/1996 31/03/1977 31/12/1992 Completed 3 684.20 3 684.20 100

29 SUDAN REGION MASTER PLAN STUDY ADF 17/09/1990 08/01/1991 03/01/1992 31/03/2001 Completed 1 430.10 1 430.10 100

30 ELECT. SECTOR MASTER PLAN STUDY (GRANT) ADF 16/12/1991 22/04/1992 10/12/1992 31/12/2000 Completed 940.20 940.20 72.9

31 REHABILITATION OF INFRASTRUCTURE IN CHAD ADF 18/12/1986 05/02/1987 26/08/1987 31/12/2002 Completed 14 273.70 14 273.70 100

32 INSTITUTIONAL SUPPORT TO ONPT-NDJAMENA ADF 15/02/1990 09/03/1990 05/07/1990 31/03/2001 Completed 2 135.40 2 135.40 100

33 INSTITUTIONAL SUPPORT TO BDT. ADF 23/02/1989 23/02/1989 27/03/1990 31/12/1994 Completed 1590.00 1590.00 100

34 SCHOOL OF ECONOMIC SCIENCES (I.N.S.E.) ADF 22/11/1976 11/12/1976 31/07/1977 31/12/1994 Completed 3 921.80 3 921.80 100

35 HEALTH SECTOR STUDY ADF 23/03/1987 10/06/1987 21/06/1988 30/06/1994 Completed 488.40 488.40 100

36 HEALTH SECTOR STUDY ADF 23/03/1987 10/06/1987 21/06/1988 30/06/1994 Completed 963.40 963.40 100

37 EDUCATION STUDY SECTORAL STUDY ADF 23/04/1987 10/06/1987 10/01/1989 31/12/1994 Completed 500.60 500.60 100

38 REHABILITATION OF SCHOOLS IN CHAD ADF 20/09/1988 28/05/1989 30/11/1989 31/12/1996 Completed 10 776.30 9 535.50 88.5

39 REHAB. OF ELEMENTARY EDUC. IN BORKOU E ADF 18/09/1989 10/10/1989 30/05/1990 30/06/2000 Completed 8 623.80 8 543.30 99.1

40 EDUCATION PROJECT IV ADF 28/08/1991 22/04/1992 01/04/1993 30/06/2001 Completed 7 557.00 5 795.70 76.7

41 REINFORCEMENT OF PRIMARY HEALTH CARE ADF 05/05/1993 12/05/1993 12/05/1994 30/06/2002 Ongoing/Effective 9 210.50 7 893.60 85.7

42 POVERTY REDUCTION AND PROMOTION OF WOMEN ADF 04/09/1997 09/10/1997 04/02/1999 31/12/2003 Ongoing 300.00 0.00 0

43 POVERTY REDUCTION AND PROMOTION OF WOMEN ADF 04/09/1997 09/10/1997 04/02/1999 31/12/2003 Ongoing 5 300.00 806.60 15.2

44 EDUCATION PROJECT V ADF 28/02/2001 29/05/2001 21/02/2002 31/12/2005 Ongoing 1 300.00 41.50 3.2

45 EDUCATION PROJECT V ADF 28/02/2001 29/05/2001 21/02/2002 31/12/2005 Ongoing 5 431.00 0.00 0

46 CONSOLID. OF HEALTH SYS. & HIV/AIDS CONTROL ADF 21/11/2001 20/12/2001 // 30/06/2005 Ongoing 5 000.00 0.00 0

47 CONSOLID. OF HEALTH SYS. & HIV/AIDS CONTROL ADF 22/11/2001 20/12/2001 // 30/06/2005 Ongoing 1 000.00 0.00 0

481 ECON. & FIN. RESTRUCTURING OF PUBLIC SECTOR ADF 18/01/1989 23/02/1989 10/04/1989 30/06/1982 Completed 27 631.60 27 631.60 100

49 INSTITUTIONAL SUPPORT TO 3 MINISTRIES ADF 17/12/1990 08/01/1991 15/05/1991 30/06/1999 Completed 3 868.40 3 837.50 99.2

50 STRUCTURAL ADJUSTMENT PROGRAM II ADF 02/10/1997 09/10/1997 28/11/1997 31/12/1999 Completed 18 000.00 18 107.80 100.6

51 STRUCTURAL ADJUSTMENT PROGRAM III ADF 06/02/2002 08/02/2002 // 31/12/2002 Ongoing 8 700.00 0.00 0 COUNTRY TOTAL 323 825.40 223 008.30 68.9

ANNEX 6 : Page 1 of 2

SUMMARY OF THE ENVIRONMENTAL AND SOCIAL MANAGEMENT PLAN 1. SUMMARY DESCRIPTION OF PROJECT

The expected outcomes of this project are: an increase in yields through rehabilitation

of irrigation schemes, the production of selected seeds and the conduct of participatory research on natural resource management, environmental protection and restoration, assistance in the drafting and implementation of local development plans, capacity-building through training of beneficiaries and entities involved in project implementation, the setting up of a consultative framework and equipment.

2. MAIN ENVIRONMENTAL AND SOCIAL IMPACTS

NRMP activities essentially aim at restoring the productive base, setting up a conflict settlement framework, developing production infrastructure and involving rural communities in the rational management of their ecosystems through local development plans. However, the negative effects of the project on the environment are expected to be mitigated. Such negative impacts include: (i) degradation of the irrigation areas and stock watering points (due to treading) ; (ii) risk of proliferation of parasites and other diseases caused by stagnant water, pools and retention ponds ; (iii) disruption of the flora and fauna systems along the transhumance corridors and in some floodable plains between Laï and Bongor ; (iv) risk of intercommunity conflict due to incessant movements of herders looking for pasture and water, as well as incursions of their livestock into farms and protected areas; (v) disorderly extension of farms by farmers looking for fertile land; and (vi) risk of a decline in fertility and salinisation of soils due to poor management of irrigation in the irrigated areas. 3. RISK OPTIMIZATION AND MITIGATION PROGRAM 3.1 Sensitization and counseling activities conducted through the committees and farmers’ organizations will raise awareness on better natural resource management. The setting up of a consultative and regulatory framework will solve any conflicts that may arise. The village and canton committees shall draw up and implement their own local development plans. This will contribute to the adoption of strategic choices. The project will encourage participatory development of the irrigation areas and rational forest management, in a bid to reduce curb the clearing of forests for fuel wood. Reforestation, soil conservation, erosion control and the prevention of bushfires are actions that the project will develop to mitigate its negative effects on the environment.

ANNEX 6 : Page 2 of 2

3.2 The project has also made provision for the establishment of nurseries to supply seedlings for fruit tree cultivation and market gardening, in a bid to diversify production and also sustain and raise the revenue levels of the local population. Energy-saving activities will be developed, such as improved stoves and the dissemination of biogas techniques. The improvement of agricultural productivity will translate into an increase in food security and the family incomes of the agricultural communities which generate up to 34% of the country’s revenue. 4. ENVIRONMENTAL CONTROL AND MONITORING PLAN

The project implementation unit, which includes an environmentalist, shall be responsible for environmental monitoring. An environmental and social management plan (ESMP) with key indicators will be drawn up and implemented right from the beginning of the program. A database will be constituted through involvement of the village committees. These committees shall mainstream environmental aspects into their local development plans. The Ministry of the Environment and Water Resources shall provide assistance by controlling the state and quality of the environment once every three months. 5. CAPACITY-BUILDING AND INSTITUTIONAL SUPPORT

The village committees, with the support of the Ministry of Agriculture, shall implement the activities planned under the project. The project will empower users and farmers’ organizations in the irrigation areas to undertake the rational management of the facilities, settle their conflicts and undertake the restoration, regeneration and conservation of natural resources. The NGOs will play an important role in training programs and sensitization campaigns. 6. PUBLIC CONSULTATION

The project was prepared and appraised through a participatory approach whereby consultations, surveys, meetings and workshops were conducted at all levels. This method shall be continued during project implementation. Information will be disseminated through meetings, workshops and the rural radio present in the project area.

7. COST ESTIMATES

The cost of implementing ESMP activities is about 55 million CFAF.

8. IMPLEMENTATION SCHEDULE AND REPORTS ESMP activities shall be implemented right from the first year with the appointment of an

environmentalist within the PIU. A follow-up program that reviews the measures planned shall be drafted and implemented in the second year. The PIU shall produce periodic reports on the implementation status of the ESMP.

Annexe

CONFIDENTIAL

AFRICAN DEVELOPMENT FUND ADF/BD/WP/2004/107/Corr.16 April 2005Prepared by: OCAROriginal: EnglishTranslated by: CLSU (05/4/05)

Probable Date of Board Presentation:27April 2005

FOR CONSIDERATION

MEMORANDUM

TO : THE BOARD OF DIRECTORS

FROM : Cheikh I. FALLSecretary General

SUBJECT : CHAD : PROPOSAL FOR AN ADF LOAN OF UA 4.27 MILLIONAND AN ADF GRANT OF UA 1.60 MILLION TO FINANCE THENATURAL RESOURCE MANAGEMENT AND DEVELOPMENTIN THE SUDAN REGION

CORRIGENDUM*

Please find attached hereto, a corrigendum relating to the above-mentioned appraisal report.

Attch. :

Cc.: The President

* Questions on this document should be referred to:Mr. C.R. SPENCER Director OCAR Ext. 2036Mr. J. P. RIGOULOT Division Manager OCAR.3 Ext. 2170Mr. D. KEITA Chief Agronomist OCAR.3 Ext. 2486Mr. A. DIAW Financial Analyst OCAR.3 Ext. 3583

SCCD: C.H.

I. Introduction

1.1 In January 2003, the Bank sent a first appraisal mission to the Natural ResourceManagement and Development Project within the framework of the ADF IX InterimMechanism. Later on, it became evident that the resources allocated to Chad under ADF IXwere substantially less than those granted under the Interim Mechanism. The need thereforearose to look for other donors to complete project funding. Hence, ABEDA and IsDB werecontacted and they consented to co-finance the project. Although Chad was placed undersanctions, which prevented presentation of the project to the Bank’s Board of Directors in2004, the country returned to robust economic growth and that led to the lifting of Banksanctions in December 2004 as well as the conclusion of a medium-term program (2005-2007) with the IMF on 16 February 2005, supported by the Poverty Reduction and GrowthFacility (PRGF). These relatively satisfactory results led the ADF to step up the amount of itsgrant component from UA 1.60 to UA 2 million, while ABEDA, in agreement with theChadian Government, decided to raise its loan by slightly more than two million UA fromUA 5.91 to UA 7.94 million.

1.2 This corrigendum was prepared after the project reappraisal mission of February2005. The changes it makes to the initial report mainly concern project costs and theirbreakdown between the various donors cofinancing the project, especially after the above-mentioned changes were made in the amounts of the ADF grant and the ABEDA loan. Otheraspects of the project, notably its objectives and design, remain unchanged. Indeed, thedesign of the project still remains valid and is based on restoration, improvement andconservation of soil fertility; water management through the development of flood plains andvalleys according to development plans designed by the beneficiaries themselves;introduction of appropriate farming practices and improved varieties of the main crops grownin the project area; and building of access roads to the farming areas in order to boost themarketing of inputs and agricultural produce. Special emphasis will be laid on capacity-building for private operators and State experts; consolidation of the monitoring andevaluation mechanism; reinforcement of community financial services and greater control ofwater-borne diseases. Furthermore, the project also considered the need to providecommunity-based organizations with rice-processing machinery to enable them add value tothe additional quantities produced under the project, thereby facilitating marketing.

1.3 The increase in the ABEDA loan will further enhance capacity-building for privateoperators and State experts who will be trained in the drafting of local development plans thatfocus on soil management, which is a crucial component of the project. Furthermore, it willfacilitate procurement of processing machinery (rice hulling machines, small farmimplements and equipment of a small rice mill) for community-based organizations.

1.4 As for the increase in the ADF grant will be used to enhance projectmonitoring/evaluation and to build capacity within the Permanent Monitoring Unit of theRural Development Sector Consultation Mechanism which plays a central role incoordinating donor interventions in Chad’s rural sector. Such coordination shall be done inclose collaboration with the Department of Cooperation and Monitoring of DevelopmentProjects and Programs (DCMDPP) in the Ministry of Planning, Development and Cooperation(MPDC) and with the relevant regional DEPs of the Ministry of Agriculture, which shallprovide information feedback. Lastly, the increase in the grant will enable the project toparticipate in campaigns to control water-borne diseases and malaria, which particularlyaffect pregnant women and children under 5, notably through the distribution of treatedmosquito nets.

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1.5 It is noteworthy that the grant component accounts for about 50% of total ABEDAand IsDB financing to the project. This figure is close to the average rate of the loan elementin long-term public loans recently estimated by the IMF within the framework of themedium-term program (2005-2007) supported by the above-mentioned PRGF (Paragraph1.1). The concessionality of these two financing arrangements under Chad’s current contextis largely satisfactory.

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II. Corrections

2.1 Project information sheet

1.Point 7; Read: Total cost of project : UA 22.65 millionForeign exchange : UA 14.56 millionLocal currency : UA 8.09 million

2. Point 8; Read: ADF loan : UA 4.27 millionADF grant : UA 2 millionForeign exchange : UA 3.96 millionLocal currency : UA 2.31 million

3. Point 10; Read: April 2005

4. Point 11; Read: January 2006

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2.2 Logical framework of ADF loan; Read

Narrative Summary(NS)

Objectively Verifiable Indicators (OVI) Means of verification(MOV)

Assumptionsand risks (A/R)

Sector Goal1. Increase foodsecurity

1 1. A 5% increase in the agricultural sector GDP(currently estimated at CFA.F 428 billion) in Year 3and 20% in Year 6 of the project

1.1 1.1 National economicstatistics1.2. UNDP reportHousehold survey(ECOSIT)

Project Objective2. 2. Sustainable

increase in naturalresourceproductivity in theSudan region.

2.1 The surface area of developed and/or protectedlands (irrigation areas, tree plantations, SCR-SWC,non-grazing areas, fishponds, vegetable gardens)which currently stands at about 20,000 ha, increasesby 5% in Year 3 and 10% in Year 6.2.2 Farm output improved by 10% on average forrain-fed agriculture (currently 0.6 tons/ha forsorghum; 0.7 tons/ha for groundnut; 0.6 tons/ha forcotton and 0.4 tons/ha for cowpea) and 15% forirrigated farming (currently 1.4 tons/ha for rice) inYear 3 and by 20% and 30% respectively in Year 6of the project.2.3 1,000 ha of rice-growing areas developed andfarmed in Year 3 and 1,350 ha more in Year 6.

2.1Agriculturalproduction statistics.

2.2 Project reports.

___________Economicreformscontinued.

Socio-economicstabilitymaintained

Outcomes _____________3. 3.1 Institutional

Capacity Developed.3.1.1 500 village natural resource managementcommittees (VNRMC) set up and operational in Year3 and 500 more in Year 6.3.1.2 100 canton natural resource managementworkshops organized in Year 3 and 100 more in Year6.3.1.3 1,800 officials from rural professionalorganizations, at least 20% of them women, trained inYear 3 and 1,800 others in Year 6.3.1.4 Drafting and implementation of 500 villageand 50 canton natural resource management plans inYear 3, and 500 other village plans and 50 morecanton plans in Year 6.3.1.5 2000 treated mosquito nets distributed in Year3 and 3000 more in Year 6; 100 persons sensitized tomalaria control in Year 3 and 200 others in Year 6;1000 persons sensitized to HIV/AIDS in Year 3 and2000 more in Year 6.3.1.6 2,000 farmers, 50% of them women, trainedin natural resource management techniques in Year 3and 2500 more in Year 6.3.1.7 50 canton natural resource managementcommittees (CNRMC) set up and operational in Year3 and 50 others in Year 6.

3.1.1 Reports on thesetting up of villageassociations3.1.2. Report of trainingworkshops

3.1.3 Status, supervision,mid-term, completion andassessment reportsIdem.

Idem.

Idem.

Idem.

The financialresourcesearmarked forthe project areavailable and theaccessconditions aresatisfactory.

Agricultureremainssufficientlyproductive toretain the laborforce which risksbeing lured awayby salariedemployment inthe petroleumindustry

3.2 NaturalResources areProtected andDeveloped

3.2 1 3,000 on-farm tests (OFT) on 37 themes and 12studies relating to natural resource managementconducted in Year 3 and 3,200 more in Year 6.3.2.2 150 tons of basic seeds, 7,000 fruit-tree seedlings,and 2,000 tons of improved seeds produced and plantedin Year 3 and 200 more tons of seeds, 8,000 more fruittree seedlings and 3,000 more tons of improved seeds

3.2.1 Status, supervision,mid-term, completion andappraisal reports.

Idem

The allotees ofdeveloped plotsenjoy land tenuresecurity.The agro-climaticconditions are

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Narrative Summary(NS)

Objectively Verifiable Indicators (OVI) Means of verification(MOV)

Assumptionsand risks (A/R)

produced and planted in Year 6.3.2.3 Farm output increased by 10% for rain-fedfarming currently 0.6 tons/ha for sorghum; 0.7 tons/hafor groundnut; 0.6 tons/ha for cotton and 0.4 tons/ha forcowpea) and 15 % for irrigated farming (currently 1.4tons/ha for rice).3.2.4 4 fishponds developed and operational in Year 3and 6 others in Year 6.3.2.5 200 ha of reforested community land, 800 ha ofreserved non-grazing land, and a 75-km firebreakcreated in Year 3; 300 ha more of reforested land, 1,200ha more of non-grazing land and 125 km more offirebreaks created in Year 6.3.2.6 75 canton and 800 village fruit tree and forestnurseries created in Year 3 and another 125 canton and1,200 nurseries created in Year 6.3.2.7 45 biogas demonstration units and 4,000improved stoves installed and functional in Year 3 and55 more demonstration units and 6,000 more stovesinstalled in Year 6.3.2.8 400 ha protected through SCR-SWC activities inYear 3 and 600ha more in Year 6.3.2.9 3,000 ha fertilized through various biologicalsoil fertilization techniques (organic fertilizer, greenmanure, agro-forestry) in Year 3 and 4,500 ha more inYear 6.3.2.10 15,000 m of dykes protected through sodding inYear 3 and 18,000 m more in Year 6.

Idem

Idem

Idem

Idem

Idem

Idem

Idem

Idem

favorable.

ActivitiesRecruitment of staff.2. Signing ofagreements withNGOs and ITRAD3. Preparation ofengineering designsfor works

4. Award of contractsfor works, goods andservices.

5. Supervision ofworks

6. Mid-term review7. Audit

Financial resources:Component A: UA 2.05 millionComponent B: UA 16.11 millionComponent C: UA 2.30 million

ADF loan : UA 4.27 millionGovernment : UA 1.86 millionBeneficiaries : UA 0.29 millionABEDA : UA 7.94 millionIsDB : UA 6.10 million

_________UA 20.46 million

1. Engineering designsreport2. Bidding documents,bid analysis reports,procurement contracts,and constructionacceptance report.3. Engineering designs.

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LOGICAL FRAMEWORK (ADF GRANT)

Narrative Summary(NS)

Objectively Verifiable Indicators (OVI) Means ofVerification (MOV)

Assumptions andRisks (A/R)

Sector Objective1. Contribute to food

security1 A 5% increase in primary sector GDP

(currently estimated at CFA.F 428billion) in Year 3 and 20% in Year 3 ofthe project.

National economicstatistics

1.2 UNDP reportHousehold surveys

(ECOSIT)

Project Objective2.1 Preparation of a

project that willlead to asustainableincrease in theproductivity ofnatural resources.

2.1.1 Project preparation report drafted withinsix months following commencement of thestudy and approved by the Government ofChad and the ADB.

2.1Acknowledgement ofreceipt of the reportby the ADB andnotification ofapproval from theBank

The financialresources earmarkedfor the study areavailable and ontime

Outcomes3.1 Institutional

development.3.1.1 50 artisanal workers trained in Year 3and 100 more in Year 6.

3.1.2 52 Savings and credit cooperativesequipped in Year 3 and 27 others in Year 6.

3.1.3 4 technical assistants totaling 96 staff-months recruited and appropriate managementtools put in place in Year 6.

3.1.1 Trainingworkshop reports3.1.2 Status,supervision, mid-term review,completion andappraisal reportsIdem.

3.2 Diagnostic studyof the resourcesituation conductedand validated.

3.1.1 Diagnosis of the natural resourcesituation, agro-silvo-pastoral productionsystems and the socio-economic environmentconducted in the first three months of thestudy.

3.1.1 Report of theagency conductingthe study

3.1 Projectpreparation reportdrafted andvalidated.

3.2.1 Proposals on strategies and sustainablenatural resource management actions, increaseof production and agro-silvo-pastoralproductivity and improvement of incomelevels in the sector formulated at most sixmonths after commencement of the study.

3. 2.2 Six local workshops (BONGOR, LAI,DOBA, MOUNDOU, PALA and SAHR) andone regional workshop (in MOUNDOU)organized on a participatory basis to validatethe results of the diagnosis and strategiesproposed to ensure a sustainable improvementin production and agro-silvo-pastoralproductivity.

3.1.1 Report of theagency conductingthe study

3.1.2 Coordinationreport of the study

Activities

1. Recruitment ofconsultant

2 Recruitment oftechnical assistants

Financial resources:ADF grant: UA 2 millionGovernment: UA 0.19 million

__________Total : UA 2.19 million

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2.3 Executive summary

Page x Paragraph 2; Read: The ADF loan of UA 4.27 million will be used to finance 16% ofexpenses in foreign exchange and 24% of expenses in local currency, representing 19% ofproject cost. The ADF grant of UA 2 million will be used to finance 11% of expenses in foreignexchange and 5% of expenses in local currency, representing 9% of project cost. It will be usedto reimburse the PPF received by the Government for preparation of this project, build thecapacity of public and community institutions and finance technical assistance.

Page x Paragraph 5; Read: The total project cost is estimated at CFA.F 17,483 million or UA22.65 million, net of taxes and customs duties. Of this amount, CFAF 11,243 million or UA14.56 million is in foreign exchange, and CFAF 6,240 million or UA 8.09 million in localcurrency.

Page x Paragraph 6; Read: The project will be co-financed by the ADF (19% as a loanand 9% as a grant), ABEDA (35%), IsDB (27%), the Government of Chad (9%) and beneficiaries(1%).

Page xi Paragraph 8; Read:

The economic rate of return stands at about 19%.

2.4 Project Description

Page 19, Paragraph 4.5.4: The sentence “The ADF will finance the entire capacity-buildingcomponent” has been deleted.

2.5 Project Costs

Page 24 Paragraph 4.9.1; Read:

The total project cost is estimated at CFA.F 17,483 million, or UA 22.65 million, net of taxesand duties. This cost is broken down into CFA.F 11.243 million in foreign exchange, or UA14.56 million and CFA.F 6,240 million in local currency, or UA 8.09 million.

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Page 25, Table 4.1; Read:

Table 4.1 : Summary of Estimated Project Costs by Component

Component in million CFAF in million UA %L.C F.E Total L.C F.E Total F.E

Capacity building 900 2,138 3,038 1.17 2.77 3.94 70Increasing productivity of resources 3,594 7,124 10,718 4.65 9.23 13.88 66

Project management 972 634 1,606 1.26 0.82 2.08 39Baseline Costs 5,466 9,896 15,362 7.08 12.82 19.90 64Physical contingencies 322 842 1,164 0.42 1.09 1.51 72Price contingencies 452 505 957 0.59 0.65 1.24 52Total 6.240 11.243 17,483 8.09 14.56 22.65 64

Page 25, Table 4.2; Read:

Table 4.2: Summary of Project Cost by Expenditure Category

Categories in million CFAF in million UA %L.C F.E Total L.C F.E Total F.E

1. Works 2,798 5,968 8,766 3.63 7.73 11.36 682. Goods 166 1,147 1,313 0.21 1.49 1.70 883. Services3.1Training and sensitization 383 392 775 0.50 0.51 1.01 503.2 Studies/Consultants/Audit 636 1,039 1,675 0.82 1.35 2.17 623.3 Technical assistance 0 672 672 0.00 0.87 0.87 1004. Staff 287 0 287 0.37 0.00 0.37 05. Functioning 1,196 678 1,874 1.55 0.87 2.42 36Project baseline costs 5,466 9,896 15,362 7.08 12.82 19.90 64Physical contingencies 322 842 1,164 0.42 1.09 1.51 72Price contingencies 452 505 957 0.59 0.65 1.24 52Total cost of project 6,240 11,243 17,483 8.09 14.56 22.65 64

Page 25, Paragraph 4.9.2; Read:

The costs were estimated from the prices applicable in Chad in January 2005. A 10%physical contingency was applied to works and equipment. A price contingency of 3% oncosts in local currency and of 2% on costs in foreign exchange was applied to all thecomponents. The overall amount for physical contingencies (CFA.F 1,164 million) and pricecontingencies (CFA.F 957 million), totaled UA 2.75 million, representing about 12 % of thetotal project cost.

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2.6 Financing Sources and Expenditure Schedule

Page 25, Paragraph 4.10.1; Read:

As presented in Tables 4.3 and 4.4 below, the project will be co-financed by the ADF (19%as loans and 9% as grants), ABEDA (35%), IsDB (27%), the Government of Chad (9%) andbeneficiaries (1%). The Government will pay the salaries of staff seconded to the project, partof the running costs of the project implementation unit, part of the cost of the irrigation worksand also provide vehicles to the project implementation unit. The beneficiaries will bear partof the cost of the irrigation works.

Page 26, Table 4.3 ; Read:

Table 4.3 : Financing Sources

Sources in million CFAF in million UA %L.C F.E Total L.C F.E Total

ADF loan 1,465 1,834 3,299 1.92 2.35 4.27 19ADF grant 304 1,240 1,544 0.39 1.61 2.00 9BADEA 1,397 4,730 6,127 1.80 6.14 7.94 35IsDB 1,371 3,337 4,708 1.78 4.32 6.10 27Government 1,477 102 1,579 1.91 0.14 2.05 9Beneficiaries 226 0 226 0.29 0.00 0.29 1Total cost of project 6,240 11,243 17,483 8.09 14.56 22.65 100

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Page 27, Table 4.4; Read:

Table 4.4 Expenditure by Category and by Financing Source (in UA million)

ADF loan ADF grant ABEDA IsDB GVT BNF TOTAL

L.C F.E TL L.C F.E. TL L.C F.E TL L.C F.E TL L.C F.E. TL L.C L.C F.E. TLCAT.

Works 0.33 0.40 0.73 0.00 0.00 0.00 1.15 4.52 5.67 0.70 2.81 3.51 1.18 0.00 1.18 0.27 3.63 7.73 11.36Goods 0.10 0.54 0.64 0.03 0.19 0.22 0.00 0.26 0.26 0.08 0.38 0.46 0.00 0.12 0.12 0.00 0.21 1.49 1.70ServicesTraining 0.15 0.15 0.30 0.05 0.10 0.15 0.13 0.08 0.21 0.17 0.18 0.35 0.00 0.00 0.00 0.00 0.50 0.51 1.01Studies 0.21 0.36 0.57 0.18 0.29 0.47 0.17 0.34 0.51 0.26 0.36 0.62 0.00 0.00 0.00 0.00 0.82 1.35 2.17

T.A 0.00 0.00 0.00 0.00 0.81 0.81 0.00 0.00 0.00 0.00 0.06 0.06 0.00 0.00 0.00 0.00 0.00 0.87 0.87Staff 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.37 0.00 0.37 0.00 0.37 0.00 0.37Op. 0.94 0.61 1.55 0.07 0.04 0.11 0.00 0.02 0.02 0.29 0.20 0.49 0.25 0.00 0.25 0.00 1.55 0.87 2.42Baselinecosts 1.73 2.06 3.79 0.33 1.43 1.76 1.45 5.22 6.67 1.50 3.99 5.49 1.80 0.12 1.92 0.27 7.08 12.82 19.90Phys. C. 0.07 0.14 0.21 0.03 0.09 0.12 0.20 0.64 0.84 0.06 0.21 0.27 0.05 0.01 0.06 0.01 0.42 1.09 1.51Price C. 0.12 0.15 0.27 0.03 0.09 0.12 0.15 0.28 0.43 0.22 0.12 0.34 0.06 0.01 0.07 0.01 0.59 0.65 1.24Totalcost 1.92 2.35 4.27 0.39 1.61 2.00 1.80 6.14 7.94 1.78 4.32 6.10 1.91 0.14 2.05 0.29 8.09 14.56 22.65

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Page 28, Tables 4.5 and 4.6; Read:

Table 4.5: ADF Loan/Government Financing

(in million CFAF) (in million UA) %L.C F.E Total L.C F.E Total Total

ADF loan 1,465 1,834 3,299 1.92 2.35 4.27 70Government 1,327 102 1,429 1.72 0.14 1.86 30Total cost 2,792 1,936 4,728 3.64 2.49 6.13 100

Table 4.6 : ADF Grant/Government Financing

(in million CFAF) (in million UA) %L.C F.E Total L.C F.E Total Total

ADF grant 304 1,240 1,544 0.39 1.61 2.00 91Government 150 0 150 0.19 0.00 0.19 9Total cost 454 1,240 1,694 0.58 1.61 2.19 100

Page 28, Paragraphs 4.10.3 and 4.10.4; Read:

4.10.3. The ADF loan will cover 19% of the total project cost, or UA 4.27 million, of whichUA 2.35 million will be in foreign exchange and UA 1.92 million in local currency. It willcover 16% of the cost in foreign exchange and 24% of the expenditure in local currency.

4.10.4 The ADF grant will cover 9% of the total project cost, or UA 2 million, of which UA1.61 million will be in foreign exchange and UA 0.29 million in local currency. It will cover10% of the cost in foreign exchange and 3% of expenditure in local currency. The Governmentbenefited from a PPF granted on ADF resources to prepare the project. In accordance withSection 3.7 of the « PPF Operational Guidelines » adopted by the ADF Board of Directorson 14/02/2000 (ADF/BD/WP/99/87/Rev.3), a provision of UA 470,000 has been earmarked inthe grant for refunding the PPF amount. In addition to funding technical assistance and thetraining of artisans, the increase in the grant amount from UA 1.6 million to UA 2 millionwill be used to finance capacity-building for operators and State officials, themonitoring/evaluation mechanism, financial services and the control of water-borne diseases.

Page 28, Table 4.7; Read:

Table 4.7: Expenditure Schedule by Component (in million UA)

Component 2006 2007 2008 2009 2010 2011 TotalCapacity building 0.52 1.69 1.14 0.37 0.38 0.14 4.24Increasing the productivity of naturalresources 0.07 6.48 5.61 3.21 0.64 0.10 16.11Project management 0.24 0.82 0.30 0.33 0.31 0.30 2.30Total 0.83 8.99 7.05 3.91 1.33 0.54 22.65

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Page 29, Table 4.8; Read:

Table 4.8: Expenditure Schedule by Financing Source (in million UA)

Financing sources 2006 2007 2008 2009 2010 2011 TotalADF loan 0.14 1.46 1.02 0.74 0.73 0.18 4.27ADF grant 0.48 0.82 0.60 0.04 0.04 0.02 2.00ABEDA 0.00 3.52 2.88 1.52 0.02 0.00 7.94IsDB 0.10 2.36 1.88 1.18 0.38 0.20 6.10Government 0.11 0.75 0.57 0.37 0.13 0.12 2.05Beneficiaries 0.00 0.08 0.10 0.06 0.03 0.02 0.29Total 0.83 8.99 7.05 3.91 1.33 0.54 22.65

2.7 Projected Implementation Schedule of the Project

Page 30, Table 5.1; Read:

Table 5.1 Projected Implementation Schedule of the Project

Activities/Actions Responsibility Start EndApproval by board ADF 04/2005 04/2005Signature of loan agreement GVT/ADF 05/2005 8/2005General procurement note ADF 08/2005 10/2005Appointment of PIU and SC staff MINAGRI 10/2005 12/2005Setting up of PIU GVT 10/2005 12/2005

Effectiveness and first disbursement GVT/ADF 10/2005 05/2006Launching of project/ PTBA preparation GVT/PIU/ADF 05/2006 11/2006Recruitment of TA and accounting manager PIU/ADF 05/2006 12/2006Bidding documents and execution of contracts PIU/ADF 01/2007 12/2007Commencement of all project activities MINAGRI/CEP/ADF 01/2006 12/2006Mid-term review PIU/ADF/Consultant 01/2008 01/2008Auditing of accounts Consultant 12/2006 12/2011Project completion GVT/CEP/ADF 06/2011 12/2011

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2.8 Procurement Arrangements

Page 31, Table 5.2; Read

Table 5.2: Procurement Arrangements (in million UA)

NCB Others Shortlist Non-ADF Fin. Total

1. Works

1.1Irrigation works 11.55 11.55

1.2 Soil conservation andrestoration

0.79 [0.67] 0.79 [0.67]

1.3 Const. & rehabilitation 0.15 [0.15] 0.12 0.27 [0.15]1.4 Comm. infrastructure 0.81 0.81

2. Goods2.1 Vehicles 0.20 [0.16] 0.27 0.47 [0.16]2.2 Equipment 0.67 [0.36] 0.47 1.14 [0.36]3. Services3.1 Training/sensitization. 0.50 [0.50] 0.57 1.07 [0.50]3.2 Studies/Audit 1.41 [0.79] 0.86 2.27 [0.79]

3.4 Technical assistance 0.91 [0.91] 0.91 [0.91]4. Staff 0.41 0.415. Miscellaneous 2.73 [2.73] 0.23 2.96 [2.73]

Total 1.02[0.67] 3.55 [3.43] 3.52 [2.20] 15.29 [0] 22.65 [6.27]

Note :The use of the shortlist applies to consultants only._ "Other" refers to LCB, international or national shopping, negotiated contracts and community

procurement procedures.+The figures in brackets are amounts financed by the Bank/ADF/NTF, as the case may be.ADB refers to the African Development Bank Group

Page 32, Paragraphs 5.4.3; 5.4.4 and 5.4.5; Read:

5.4.3 Works: Rehabilitation and construction works on buildings shall be procured for the sumof UA 0.15 million in accordance with the rules of national competitive bidding (NCB). Sincethe amount of the contract does not exceed UA 300,000 it will not be attractive to foreigncompanies. Land conservation and restoration works, amounting to UA 0.79 million, shall beprocured in accordance with community-based investment procurement procedures. Theprocurement modalities shall be defined in a procedures manual prepared by the program andsubmitted to the ADF for prior approval.

5.4.4 Goods: Considering the low contract amounts, and the existence of local suppliers whoare sufficiently qualified and in good number to guarantee competition, the procurement ofmotorcycles for the sum of UA 0.20 million, as well as computer equipment, office equipment(photocopiers, fax machines and telephones), office furniture and sundry equipment for a total ofUA 0.67 million, will be conducted through national competitive bidding.

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5.4.5 Consultancy services: The recruitment of service providers for sensitization,mobilization, training, technical guidance of beneficiaries for a total of UA 0.50 million,studies and audit for an amount of UA 1.41 million and the procurement of technicalassistance at a cost of UA 0.91 million will be conducted on the basis of a shortlist.

5.4.6 Miscellaneous: Sundry supplies needed for the functioning of the project, amountingto UA 0.18 million per year for six years of project implementation, or a total of UA 1.08million, will be procured through national shopping, since the amount of each contract doesnot exceed UA 20,000. Incentives totaling UA 0.4 million for the entire six years of theproject will be paid to the staff of the project implementation unit. Pre-basic seeds amountingto UA 0.32 million, improved seeds and fruit tree seedlings amounting to UA 0.63 millionshall be supplied by ITRAD under contract. Participatory research for the sum of UA 0.3million shall also be conducted by ITRAD under contract.

2.9 Sustainability and Risks of the Project

Page 34, Paragraph 6.1.1; Read

6.1.1 The recurrent expenditure of the project for its entire duration is estimated at UA 3.36million. Operational costs under ADF financing are evaluated at UA 2.18 million. Thesecosts pertain to its contribution to the operating expenditure of the project implementationunit as well as expenditure on equipment and material.

Page 35, Table 5.3; Read

Table 5.3 : Recurrent Expenditure Trends (in million UA)

Financing sources 2006 2007 2008 2009 2010 2011 TotalADF loan 0.48 0.43 0.39 0.36 0.29 0.23 2.18IsDB 0.10 0.10 0.08 0.08 0.08 0.05 0.49Govt. and beneficiaries 0.08 0.09 0.10 0.12 0.15 0.15 0.69Total 0.66 0.62 0.57 0.56 0.52 0.43 3.36

2.10 Economic analysis

Page 36, Paragraph 7.2.1 (line 15); Read

……. the project’s economic rate of return (ERR) is evaluated at about 19% (cf. Annex 4)….

2.11 Sensitivity Analysis

Page 37 Paragraph 7.4 ; Read

The sensitivity analysis shows that with a 10% increase in costs, the ERR would attain 16.5%,while a decline in earnings will bring down the ERR from 20% to 14.5%; meaning that the ERRis more sensitive to a fall in earnings than to an increase in costs. The results of the sensitivityanalysis are presented below:

15

Basic assumptions 19%10% increase in costs 16.5%Decline in returns leading to a 10% fall in profits 14.5%10% increase in costs and 10% decline in earnings 13%Two year slippage on implementation schedule 13.5%

From the above sensitivity analysis, it can be concluded that the project remains viabledespite an increase in costs. Sensitivity of the ERR to a decline in revenue shall be mitigatedby constant monitoring of all project activities in order to maintain steady production at theexpected levels. The decline of the ERR in relation to the situation in August 2004 stemsfrom an increase in investment costs of irrigation system works and an increase in resourcesallocated for capacity-building of private operators and State experts. The additional benefitsthat will accrue from such institutional capacity-building are hard to quantify and were notfactored into the calculation of the economic rate of return.

2.11 Conclusions and Recommendations.

Page 38, Paragraph 8.1.2; Read

The economic rate of return stands at about 19%.

2.12 Recommendations and Loan/Grant Approval Conditions

Page 38, Paragraph 8.2; Read

In the light of the foregoing, it is recommended that an ADF loan not exceeding UA 4.27million and an ADF grant not exceeding UA 2 million be awarded to the Republic of Chad,subject to the following conditions, which were discussed and accepted by theGovernment …………………………………….

Page 38, Paragraph 8.2 ; Read

A. Conditions Precedent to Loan/Grant Effectiveness

The loan agreement and grant memorandum of understanding shall become effective, subjectto the Borrower’s compliance with the provisions of Section 5.01 of the ADF’s GeneralConditions for Loan Agreements and Guarantee Agreements and Article 4.01 of the grantmemorandum of understanding.

Page 39, Conditions Precedent to the First Disbursement, point (i); Read

- undertake to submit to the ADF all draft collaboration agreements to be concludedwith ITRAD for the conduct of participatory research and the production offoundation seeds (Para. 5.2.3);

Page 39, Conditions Precedent to the First Disbursement, point (iv); Read

- provide evidence of the allocation of buildings for the headquarters of the project inLaï , the liaison office in N’Djamena and Bebedja and the system research teams(Paragraphs 4.5.6 & 4.5.10);

16

Page 39, Conditions Precedent to the First Disbursement, point (v); Read

- provide evidence to the ADF of the opening of two accounts in a bank acceptable tothe Fund to receive loan and grant resources respectively, and an account forcounterpart funds (Para. 5.5.2);

Page 39, Other Conditions, point (i); Read

- submit to the ADF, at most six months after loan effectiveness, the draft collaborationagreements to be concluded with ITRAD for the conduct of participatory research andthe improvement of foundation seeds (Para.5.2.2).

17

2.13 Annex 3: Provisional List of Goods and Services; Read:

Chad – Natural Resource Management and Development Project: Provisional List of Goods and Services(in million UA)

ADF Loan ADF GrantL.C F.E Total L.C F.E Total

Categories

I. Investment

1. Works 0.33 0.40 0.73 0.00 0.00 0.00

2.Goods 0.10 0.54 0.64 0.03 0.19 0.22

3. Services

3.1. Training and sensitization 0.15 0.15 0.30 0.05 0.10 0.15

3.2 Studies/Consultants 0.21 0.36 0.57 0.18 0.29 0.47

3.3. Technical assistance 0.00 0.00 0.00 0.00 0.81 0.81

II. Recurrent expenditure

4. Staff 0.00 0.00 0.00 0.00 0.00 0.00

4. Operating expenses 0.94 0.61 1.55 0.07 0.04 0.11

Project baseline costs 1.73 2.06 3.79 0.33 1.43 1.76

Physical contingencies 0.07 0.14 0.21 0.03 0.09 0.12

Price contingencies 0.12 0.15 0.27 0.03 0.09 0.12

Total 1.92 2.35 4.27 0.39 1.61 2.00

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2.14 Annex 4 : Economic Rate of Return; Read:

Chad – Natural Resource Management and Development Project: Summary of Economic Analysis(in million CFA.F)

Years Investment Operating Expenses Recurrent Costs Additional RevenueNet AdditionalRevenue

1 627 0 0 0 -627

2 6,176 696 0 2,072 -4,800

3 4,728 1,045 0 3,108 -2,665

4 2,569 1,393 0 4,144 182

5 905 1,393 0 4,144 1,846

6 356 1,393 70 4,144 2,325

7 0 1,393 70 4,144 2,681

8 0 1,393 70 4,144 2,681

9 0 1,393 70 4,144 2,681

10 0 1,393 70 4,144 2,681

11 0 1,393 70 4,144 2,681

12 0 1,393 70 4,144 2,681

13 0 1,393 70 4,144 2,681

14 0 1,393 70 4,144 2,681

15 0 1,393 70 4,144 2,681

16 0 1,393 70 4,144 2,681

17 0 1,393 70 4,144 2,681

18 0 1,393 70 4,144 2,681

19 0 1,393 70 4,144 2,681

20 0 1,393 70 6,644 5,181

ERR 19.4

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2.15 Annex 5 : Read: Active Bank Group Operations

Approval Date of Effectiveness Closing Status Net Amount Disb’mt

PROJECTS BY SECTOR Entity Date Signature Date Date Amount Disbursed Rate%

1DEVT. OF AN IRRIGATION SCHEMEPOLDER IN MAMBI ADF 18/06/1986 17/07/1986 18/03/1988 31/12/2002 Current 11,448,700 11,312,249 99

2COTTON AND FOOD CROPPRODUCTION PROJECT ADF 02/09/1993 21/03/1995 11/07/1996 31/12/2001

Current18,950,000 13,049,407 69

3 SURFACE WATER DEVT PROJECT DS4 ADF 29/04/1998 29/05/1998 15/09/1999 31/12/2005 Current 11,900,000 3,979,239 33

4RURAL DEVT. OF LAKE CHADPREFECTURE ADF 17/03/1999 25/05/1999 04/09/2000 31/12/2004

Current17,300,000 2,375,553 14

5RURAL DEVT. OF LAKE CHADPREFECTURE ADF grant 17/03/1999 25/05/1999 29/05/2000 31/12/2004

Current3,060,000 1,752,478 57

6 BILTINE RURAL DEV’T PROJECT ADF 19/09/2001 20/12/2001 14/01/2003 31/12/2007 Current 9,000, 000 386,554 4

7LIVESTOCK DEVELOPMENT SUPPORTPROJECT ADF 12/12/2002 08/05/2003 17/09/2003 31/12/2009 Current 14,640,000 873,769 6

8MASSAG ROAD DEVELOPMENTPROJECT ADF 27/04/2000 18/05/2000 09/10/2000 20/06/2004

Undergoingcancellation 12,000,000 0.00 0

10CONSOLIDATION OF PRIMARYHEALTH CARE ADF 05/05/1993 12/05/1993 12/05/1994 30/06/2002 Current 9,210,500 7,893.60 85.7

11POVERTY REDUCTION & ACT/ FORWOMEN ADF 04/09/1997 09/10/1997 04/02/1999 31/12/2005 Current 5,300,000 2,911,425 55

11POVERTY REDUCTION & ACT/ FORWOMEN ADF 04/09/1997 09/10/1997 04/02/1999 31/12/2005 Current 300,000 168,474 56

13 EDUCATION V PROJECT ADF 28/02/2001 29/05/2001 21/02/2002 31/12/2005 Current 1 300,000 396,645 31

14 EDUCATION V PROJECT ADF 28/02/2001 29/05/2001 21/02/2002 31/12/2005 Current 5,431,000 748,796 14

15CONSOLIDATION OF HEALTH SYSTEMAND HIV/AIDS CONTROL ADF 21/11/2001 20/12/2001 20/11/2002 31/12/2006 Current 5,000,000 270,224 5

16CONSOLIDATION OF HEALTH SYSTEMAND HIV/AIDS CONTROL ADF 22/11/2001 20/12/2001 20/11/2002 30/06/2005 Current 1,000,000 171,797 17

17ECONOMIC MANAGEMENT SUPPORTPROJECT ADF 22/07/2003 05/09/2003 17/03/2004 31/12/2007 Current 2,320,000 56,969 2

COUNTRY TOTAL 128,160,200 46,137,672 36

CONFIDENTIAL

AFRICAN DEVELOPMENT FUND ADF/BD/WP/2004/107/Corr.27 April 2005Prepared by: OCAROriginal: English/French

Probable Date of Board Presentation:27April 2005

FOR CONSIDERATION

MEMORANDUM

TO : THE BOARD OF DIRECTORS

FROM : Cheikh I. FALLSecretary General

SUBJECT : CHAD : PROPOSAL FOR AN ADF LOAN OF UA 4.27 MILLIONAND AN ADF GRANT OF UA 2 MILLION TO FINANCE THENATURAL RESOURCE MANAGEMENT ANDDEVELOPMENT IN THE SUDAN REGION

CORRIGENDUM*

Please find attached hereto, a corrigendum relating to the amount of theADF Grant, which has been increased from UA 1.60 million to UA 2million.

Attch. :

Cc.: The President

* Questions on this document should be referred to:Mr. C.R. SPENCER Director OCAR Ext. 2036Mr. J. P. RIGOULOT Division Manager OCAR.3 Ext. 2170Mr. D. KEITA Chief Agronomist OCAR.3 Ext. 2486Mr. A. DIAW Financial Analyst OCAR.3 Ext. 3583

SCCD: C.H.