Document of

The World Bank 'WA#

FmIBLE COPYtFOR OFFICIAL USE ONLY

Report No. 2859-YAR

YEMEN ARAB REPUBLIC

FISHERIES DEVELOPMENT PROJECT

STAFF APPRAISAL REPORT

April 15, 1980

Projects DepartmentEurope, Middle East and North AfricaRegional Office

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

US$1.00 Yemeni Rials (YRls) 4.50YR1 1.00 = US$0.22YRls 1 million = US$222,222

WEIGHTS AND MEASURES(Metric System)

1 meter (m) = 3.28 feet1 kilometer (km) = 0.62 milesI hectare (ha) = 2.47 acres1 metric ton (ton) = 2,205 pounds

ABBREVIATIONS

YAR Yemen Arab RepublicDOF = Department of FisheriesMOA = Ministry of AgriculturePIU = Project Implementation UnitGCDFR = General Corporation for the Development of

Fish ResourcesMOM Ministry of MunicipalitiesHA = Highway AuthorityACB = Agricultural Credit Bank

FISCAL YEAR

July 1 - June 30 (Prior to 1980)July 1 - December 31 (1980)

January 1 - December 31 (From 1981)

FOR OFFICIAL USE ONLY

YEMEN ARAB REPUBLIC

FISHERIES DEVELOPMENT PROJECT

STAFF APPRAISAL REPORT

Table of Contents

Page No.

I. BACKGROUND .......................................... 1

A. Project Origin ................................. 1B. Fisheries in the National Economy .... .......... 1C. Government Policy and IDA Lending Strategy ...... 2

II. THE FISHERIES SECTOR ..... .................. 3

A. General Characteristics ........................ 3B. The Fishermen .................................. 3C. Fish Resources ................................. 4D. Fishing Technology ............................. 5E. Fish Production ................................ 5F. Fishermen's Income ......... . .................... 6G. Fish Distribution and Marketing .... ............ 7H. Use of Ice .................................... 8I. Fish Exports and Imports ....................... 8J. Jizan in Saudi Arabia .......................... 8

III. THE PROJECT AREA .................................... 9

IV. THE PROJECT ......................................... 10

A. Project Rationale, Objectives and Concept ...... 10B. Detailed Features .............................. 12C. Cost Estimates ................................. 19D. Financing Plan ................................. 21E. Procurement .................................... 21F. Disbursement ................................... 22G. Environment .................................... 23

V. ORGANIZATION AND MANAGEMENT ......................... 23

A. Project Organization During Implementation ..... 23B. Organization and Management of Project

Operations ................................... 24C. Accounting and Auditing ........................ 28D. Monitoring and Evaluation ...................... 28

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

Table of Contents (Continued)

Page No.

VI. PROJECT PRODUCTION, MARKETING PROSPECTS AND PRICES .. 28

A. Fish Production ................................ 28B. Marketing .............. 29C. Prices .......................................... 30

VII. BENEFITS, JUSTIFICATION AND RISKS ................. .. 30

A. Project Designed Simulation Model .... .......... 30B. Beneficiaries .................................. 31C. Financial Benefits ............................. 32D. Recovery of Costs .............................. 33E. Economic Benefits .............................. 33F. Economic Rate of Return ........................ 34G. Risks .......................................... 35

VIII. AGREEMENTS REACHED AND RECOMMENDATIONS .... .......... 36

ANNEXES

1. Detailed Characteristics in YAR's Fisheries Sector

2. Detailed Cost Estimates

3. Estimated Schedule of Disbursements

4. Agricultural Credit Bank - Project Cash Flow5. Schematic Representation of Model Structure Used in the

Economic Analysis

6. Selected Documents and Data Available in the Project File.

MAP S

IBRD Number 14749IBRD Number 14750IBRD Number 14751IBRD Number 14788

LIST OF TABLES AND CHARTS IN THE MAIN TEXT

Table No. t

4.1 Technical Assistance Provided Under the Project

4.2 Summary Cost Estimates

CHART NO.

21585 Organization Chart21354 Implementation Schedule

21383 Sambuk Trawler21384 Improved Sambuk

YEMEN ARAB REPUBLIC

FISHERIES DEVELOPMENT PROJECT

STAFF APPRAISAL REPORT

I. BACKGROUND

A. Project Origin

1.01 The Government of the Yemen Arab Republic (YAR) has requested anIDA credit to assist in financing the development of the country's fisheriessector. A project was identified by a FAO/World Bank CP mission in 1975.Subsequently the Fisheries Department of FAO has sponsored three individualfeasibility studies covering fish marketing in YAR, surveying the country'sshrimp resources and identifying suitable fish and shrimp landing sites in-cluding designs for marine and shore facilities. Because of funding problems,it took four years to complete the three studies.

1.02 On the basis of the three studies and a FAO/World Bank CP prepara-tion report, the project was appraised during September/October 1979 byMessrs. U. Kiermayr, D. Grant Duff (part time) (IDA), M. Gunawardena (FAO/World Bank CP), G. Maffini and J. Traung (Consultants).

B. Fisheries in the National Economy

1.03 The fisheries sector of YAR has the potential to supply substantialamounts of high quality, inexpensive animal protein. For a country whichdepends heavily on imported livestock products and which is extremely poor inexportable commodities, access to a large marine fish resource holds avaluable development potential. YAR's 3,150 full time fishermen land about11,600 tons of fish annually, which has an ex-vessel value of YRls 66.8million (US$14.8 million equivalent). The country's sustainable yield hasbeen estimated at about 30,000 tons annually which allows for a substantialincrease over present fish production. Fish distribution and marketing in thecountry's interior is very limited as the existing fish delivery system isinadequate for the country's climatic conditions. The sector's principalconstraints are:

(a) lack of fisheries related infrastructure;

(b) low productivity of applied fishing technology; and

(c) lack of financial, technical and educational services.

C. Government Policy and IDA Lending Strategy

1.04 So far Government involvement in fisheries in YAR has been negli-gible, mainly because of low priority in development planning and lack ofcompetent staff. A growing awareness among Government officials of thesector's potential to provide substantial amounts of badly needed animalprotein has changed this neglecting attitude and has led to some initial stepstowards setting up an institutionalized development capability. In late 1979a Department of Fisheries (DOF) was established within the Ministry of Agri-culture (MOA). The DOF will formulate policy guidelines for the sector'sgrowth and development and will serve in an advisory capacity to the Ministerof Agriculture in all fisheries related matters. In addition, the Governmenthas passed legislation for the establishment of a financially and administra-tively independent General Corporation for the Development of Fish Resources(GCDFR). The GCDFR will be the MOA's executing agency for all fisheriesdevelopment activities; as such it will hold ownership of all publiclyfinanced installations and facilities in the fisheries sector and will beresponsible for their proper operation and maintenance. Although theseinstitutional efforts are an encouraging development, it will however, taketime before these facilities become fully operational.

1.05 With assistance from FAO/UNDP a Fishery Demonstration Training Centerwas established in Hodeidah. For more than two years since its completion in1977 the center has remained unused as no funds for any training activitycould be mobilized. Since early 1979 FAO has assigned a master fisherman tothe center who together with some local staff provide some rudimentary trainingto at present 13 young Yemenis. The center which neither has any dormitoryfacilities nor any fishing equipment has only very limited value as a trainingfacility for Yemeni fishermen.

1.06 Under the country's First Five-Year Plan (1976/77-1980/81) thefisheries sector has been allocated YRls 90 million (US$20 million equivalent)in development funds which represents 6% of the agricultural subsector alloca-tion of YRls 1,440 million (US$320 million equivalent). The Government'sdevelopment strategy for the fisheries sector is part of the overall strategythat is directed towards the goal of minimizing dependence on imported food.The underlying principle of the Government's development strategy for thefisheries sector is to mobilize the full potential of the country's skillfuland energetic small scale traditional fishermen rather than to rely on highlevels of imported technology which can be utilized only with massive supportfor foreign provided technical assistance.

1.07 IDA's lending strategy for YAR is aimed at the creation of aninstitutional framework for development through strengthening institutions andmanpower capabilities. To meet basic needs of the country's population,projects would include components covering health, nutrition, rural watersupply and other social areas. In the field of rural development, projectsare envisaged that raise production and incomes to meet the needs of thepoorest part of the rural population. An overall lending objective is todevelop attractive income-earning opportunities as alternatives to migration.

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1.08 The proposed project would well fit into IDA's lending strategy andwould be its first lending operation for fisheries development in YAR. Thepro; ect would be the first organized development effort ever to be undertakenin this sector in YAR. It is designed to meet the principal developmentobjectives for the sector which are:

(a) to improve its overall productivity through development ofits manpower capabilities and introduction of more advancedfishing technologies;

(b) to increase and improve fish supplies throughout the countryand to neighboring export markets; and

(c) to raise the level of income and well-being among fishermen,primarily through more equitable income distribution.

II. THE FISHERIES SECTOR

A. General Charateristics 1/

2.01 YAR has a mainland coastline of approximately 600 km along theeastern shore of the Red Sea with a continental shelf of about 9,100 km2.Between Bab el Mandeb in the south and Midi in the north there are about fortyfishing communities ranging in size from a substantial town like Hodeidah tosmall fishing hamlets consisting of only a few palm straw huts. There are anestimated 3,150 full time fishermen. In addition, several hundred Yemenifishermen migrate north for most of the year to fish from Saudi Arabianfishing bases.

2.02 The fisheries sector of YAR is made up of individual or small scaleoperations mainly concentrating on pelagic species with indian and spanishmackerel dominating the catch. The sector is characterized by strictlytraditional fishing technology, marketing patterns and forms of organizations.Until recently, the fisheries sector in YAR was in equilibrium with regard tofishing effort, boat building, manpower and demand. As any other sector inYAR, fisheries is presently undergoing substantial changes that were promptedby increased demands for labor from outside the sector and increasing demandfor fish at the same time.

B. The Fishermen

2.03 The Yemeni fishermen are a hardworking, skillful and energetic groupwho traditionally have held a low position in the country's social structure.rneir customs and their way of living has altered very little for generations.

I/ A statistical breakdown of the sector's main characteristics is given inAnnex 1.

However, structural economic changes undergoing in the fisheries sector,are beginning to influence the traditional system of relationships betweenshore-based entrepreneurs, traders, vessel owners and skilled and unskilledfishermen. The increasing shortage of manpower on the one side and the risingdemand for fish on the other side are changing the traditional tenure system.Land-based vessel owners are finding it increasingly difficult to recruitcrews for their vessels; this situation is particularly evident in the town ofHodeidah which offers varied alternative job opportunities. A trend can beobserved of vessel ownership shifting from shore-based entrepreneurs tofishermen operating the vessel themselves. The manpower shortage also ishaving its effect on income distribution in the sense that the crew membersclaim higher shares of the catch than was traditionally the case.

C. Fish Resources

2.04 Reliable information on the fish resources in YAR waters are scarce.Efforts to base fish stock estimates on catch rates, number of fishing vessels,number of fishing days, etc. are complicated by the strong movement of Yemenifishermen north towards fishing bases in Saudi Arabia, mainly Jizan which islocated just north of the border. However, from the limited research effortsthat have been undertaken to evaluate the Yemeni fish resources and fromintermittent observations, it has been concluded that the annual sustainableyield is in the order of about 30,000 tons.

2.05 Exploratory fishing and other survey works conducted over the lastfour years indicate that the trawlable area in YAR waters are more than 6,000km2 of which about 550 km2 are considered good shrimp grounds with higherconcentrations in areas north of Hodeidah. The potential yield of demersalfish over the trawlable area is estimated at about 7,800 tons. Conservativeyield estimates per km2 of non-trawlable area add another 5,000 tons, bringingthe total demersal fish resources to between 12,000 and 13,000 tons. Basedon these calculations and estimates of present landings, the exploitation ofdemersal fish could be increased by an approximate 8,000 tons per annum.

2.06 About 70% of YAR's national catch consists of pelagic species withclupeids and scombroids clearly dominating. Resources of herring, mackerel,sardines, anchovies and tuna would allow a doubling of presently observedcatches of 8,000 tons. So far the most systematic survey in YAR waters hasbeen undertaken for the assessment of shrimp resources for commercial exploita-tion. During 1970-74 FAO/UNDP undertook survey work and during 8 months in1977 Continental Sea Foods of the USA shrimped under simulated commercialconditions in YAR waters. As a result, the total shrimp biomass has beencalculated at 1,700 tons within an area of 1,060 km2. The annual sustainableyield has been estimated at 850 tons. Continental Sea Foods, during itssurvey in YAR waters, registered the highest catch rate at 110 kg/hour inDecember and the lowest at 23 kg/hour in June.

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D. Fishing Technology

2.07 There are two types of fishing vessels in operation in YAR, the 11to 15 m long sambuk and the smaller 6 to 10 m long houri. The sambuk, devel-oped as a sailing craft offers little resistance and has very good coursekeeping qualities; it is sufficiently stable when empty and has good stabilitywhen loaded. The sambuk is well adapted to the marine conditions prevailingin the Red Sea. Today, sambuks are mostly powered by 22 to 33 hp inboardengines and have a crew of 6 to 8 fishermen. The keel, sterns, stern postsand side planking are made of hard wood imported mainly from Malaysia. Thevessel's frames are made of domestic naturally bent wood shaped into therequired form. The sambuk does not have a watertight deck, instead loose deckplankings are placed around the engine at the aft. Tightening of seams isdone by caulking, using cotton with tar as sealing material. On the outside,below the water line, camel fat or shark oil is applied to keep the hullwatertight and to prevent formation of underwater growth. The houri is aplanked canoe that today is frequently powered by a 6 to 10 hp engine and isoperated by a crew of usually two fishermen.

2.08 Boat building is done by individual boat builders who build theordered vessels right on the beach in their village or migrate to wherevera contractor wants a vessel to be built. Fishing vessels are still beingconstructed without the help of power tools or other mechanical devices.Only primitive hand tools are employed. About 20 to 25 experienced boatbuilders, with the help of three to four assistants each, can build aboutforty new sambuks every year. Usually the contractor purchases the timber,engine and other materials and enters into a contract with a boat builderfor the construction of the vessel either on the basis of a lump-sum paymentor on a predetermined daily wage rate. The cost of a vessel varies widelyaccording to location and exact specification; the most frequently quotedprice is about YRls 130,000 (US$29,000 equivalent) for a 15 m sambuk completewith engine. The cost for a fully equipped houri ranges from YRls 20,000to 25,000 (US$4,500 to 5,500 equivalent).

2.09 The main fishing techniques employed by the Yemeni fishermen aregill netting with nylon fabricated imported nets that are rigged locally andsingle hooks and lines. Sambuks usually carry 10 to 15 gill nets with meshsizes varying from 1.5 to 6 inches. The handling of the gill nets is donemanually. The houris generally use handlines with two to three baited hooks.In most villages, beach seines are used during the season to catch sardinesand anchovies.

E. Fish Production

2.10 Fishing is generally done at night or during early morning hours.The larger fishing vessels usually leave for the fishing grounds beforesunset and return after sunrise. The smaller fishing vessels stay out atsea for only a few hours from before to after sunrise. At times of strongwinds during the northeast and southeast monsoons fishermen adjust their

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time at sea to the most favorable hours. Fishing which takes place mostlyinshore close to the landing sites and around offshore islands along thenorthern coastline seems to be generally good throughout the year with onlyminor seasonal fluctuations.

2.11 The average number of fishing days is about 200 for houris and 225for sambuks per year. Catch rates vary considerably according to locationand size of fishing vessel. A houri catches an average of 5 tons per yearwhile the larger sambuk lands about 49 tons annually. The best approxima-tion for the size of the national fishing fleet is 972 1/ vessel units com-prising 815 houris and 157 sambuks. Based on the number of fishing vessels,catch rates and number of fishing days per year, total fish landings in YARamount to approximately 11,600 tons per year. The value of the catch to theYemeni fishermen has been estimated at YRls 66.8 million (US$14.8 millionequivalent).

2.12 Fish landings are concentrated at Hodeidah where fishermen land40% of the national catch. Of the remaining fish catch, 26% is from northof Hodeidah and 34% is from the south. About 64% of the national catch ismade up of mackerel type fish with 46% of indian mackerel and 19% spanishmackerel or kingfish. According to observations made over a number ofyears, the catch in YAR's northern waters is dominated by demersal specieswhile the fishing grounds in the south are richer in pelagic fish.

F. Fishermen's Income

2.13 Traditionally in YAR the catch of a fishing vessel is dividedinto three equal shares of which the owner of the vessel claims one forhimself and one for the vessel. The remaining share is divided among thecrew. The average income earned by Yemeni fishermen is about YRls 11,000/year (US$2,440/year), which amounts to a per capita income of about US$430 inthe fishing community, but this varies considerably depending on the vesseltype used and on the geographic location of the landing site. Because ofthe vessel's higher productivity, the catch per fisherman on a sambuk isabout double that of a houri fisherman, 9 tons and 4 tons per year respec-tively. The higher productivity of the sambuk is to some degree offset by thehigher prices the houri catch usually receives in the market. Because of thedifference in fishing methods, the houris land their fish usually in muchbetter condition. The quality price differential that has been observed isabout 15% for the same species. Fish prices in remote landing places with noor only very limited access to outside markets tend to be lower than incentrally located landing sites. The highest incomes are earned by fishermenworking on motorized sambuks, YRls 16,100/year (US$3,580/year), while afisherman working on a sail houri will only earn YRls 3,300/year (US$730).Geographically, the highest incomes for fishermen are earned at Hodeidah,

1/ It is estimated that an additional 60 sambuks owned by Yemeni fishermenoperate exclusively from Saudi Arabian fishing bases.

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YRls 14,800 (US$3,300), and the lowest are earned along the coast north ofHodeidah between YRls 5,400-10,600/year (US$1,200-2,360/year). Assuming thatan average fisherman supports a family of five, the average income per capitafor a fisherman's household is YRls 2,200/year (US$490), somewhat lower thanthe GNP per capita of YRls 2,340/year (US$520).

G. Fish Distribution and Marketing

2.14 Of the fish landing sites in YAR, 10 have some regional importancewhile the remainder, mainly smaller fishing hamlets, catch fish only fortheir community's own consumption. After returning from the fishing grounds,the sambuks normally anchor outside the surf zone and the catch is unloadedand carried ashore by special carriers or the crew who wade through the water.At times of rough sea this way of unloading the catch is not without problemsand losses are sometimes substantial. The houris land their catch directlyon the beach from where it is carried in baskets or by the piece (in thecase of bigger fish) to the auction site. The fish auction site in a YARvillage is typically located within short distance from the main landing siteand usually does not offer any protection against the intensive sunshine.The fish, once landed, is thrown onto the sand for inspection by potentialbuyers. Sometimes the sold fish lie around for hours exposed to sun and heatbefore it is removed by its buyers from the site. The site's conditions arewithout exception most unhygienic, since fish remains are often litteredthroughout the market area. None of the fish landing sites has any sea orfreshwater facilities for cleaning. It is right at the auction site where thefish suffers its worst handling and where the loss in its nutritional value isthe highest.

2.15 Once the fish has arrived at the auction site it is auctionedand sold to the highest bidder. The number of auctioneers varies with thevolume of fish landed at the landing site. At the Hodeidah fish market, thecatch is handled by up to 10 auctioneers while in smaller places their numberis not more than two. The auction commission fee is uniformly 5% of thevalue of fish sold with the exception of Hodeidah where the commission is 10%.The established auction system is quite efficient as fishermen can disposeof their catch quickly without losing a lot of time after a night at sea. Theauction system is however not always conducive to secure the fishermen thehighest possible price, as it allows the auctioneer to take advantage of adepressed market when he buys the fish himself at low price to resell it athigher prices at times of active trading which frequently occurs at latermarket hours when out of town traders buy fish once the local market issaturated.

2.16 Once the auctioned fish is removed from the trading floor, it istaken by various forms of transportation to its ultimate destination. Thereis no uniform organizational pattern of fish retail marketing in YAR. Theconditions of retail marketing are not much better than those at the initialauctioning and the fish's rapid deterioration continues. Fish is sold outo. baskets placed right on the sidewalk, from makeshift fish stalls and,

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at best, at overcrowded municipal run fish markets like those in Taiz andSanaa which lack basic facilities like running water for cleaning and wastedisposal. One characteristic all fish retail outlets in YAR have in common isthat their conditions are all far below acceptable hygienic standards, thefish is exposed to intensive heat, dust, dirt and flies. Once fish reachesits inland destinations, it has lost much of its high nutritional value.

H. Use of Ice

2.17 After motorization of most of the country's fishing vessels, theuse of ice as a means of fish conservation is the only major change in anotherwise century old fishing technology. Taking ice on fishing vessels andon fish transport vehicles has started only recently and still is a rathersporadic feature in YAR's fisheries. However the demand for ice by fishermenand fish merchants seems to increase rapidly. This development is stimulatedby a keen competition among ice producers who operate ice making facilities inHodeidah, Khawbah, Hoda, Zabid and Taiz. The joint capacity of these iceplants is 340 tons/day with individual capacities ranging from 20.5 tons/dayto 150 tons/day. A new plant with a designed capacity of 60 tons/day isnearing completion in Hodeidah. Ice in blocks ranging from 25 to 125 kg isavailable at all major fish landing sites at prices ranging from YRls 240 to400/ton. Prices for ice have recently started to decline as a result ofunused capacities. No additional ice making facilities are foreseen under theproject with the exception of Khawbah where, because of logistical problems,ice supply is limited and irregular.

I. Fish Exports and Imports

2.18 Although there is evidence that substantial amounts of fish caughtby Yemeni fishermen in YAR waters are exported by sea and even by land toneighboring Saudi Arabia, no data or information are available which wouldallow at least an approximation of the quantities crossing the border.

2.19 For a country with a relatively rich and underexploited fishresource, YAR's import bill for fish is substantial. Fish imports haveincreased from 200 tons in 1972 to 3,800 tons in 1977. In 1979, YAR hasimported fish to a value of YRls 28.0 million. Almost the entire fish importis in the form of canned fish. Recently, shipments of frozen fish have beenbrought into the country from the People's Democratic Republic of Yemen.

J. Jizan in Saudi Arabia

2.20 Jizan, a fishing village located about 50 km inside Saudi Arabianorth of YAR's border, exerts strong influences on YAR's fisheries sector.Higher fish prices, better supplies of ice, marine engines, spare parts and

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all sorts of fishing gear and lower prices for diesel and lubricants makeJizan a highly attractive fish landing place for YAR fishermen. No reliableinformation exist as to the quantities of the catches landed there by YARfishermen. However, there is every indication that a substantial part ofYAR's fishing fleet concentrates its fishing efforts towards this market.Jizan, as an important external factor, has been fully integrated into theproject's development concept which is designed to counter balance Jizan'sstrong influence on the YAR fishermen and offer them better opportunitieswithin the country.

III. THE PROJECT AREA

3.01 The project proposes to invest in two distinct areas, along thecountry's 600 km of mainland coastline and at inland consumption centers alongthe Sanaa-Taiz road. The proposed locations for project investments have beenstrategically selected so they will serve either a number of neighboringfishing villages on the coast or substantial populated areas in the case ofinland fish markets. As a national fisheries development effort, the project'sinvestments will be spread over relatively large areas of YAR, benefittingmajor parts of its population either directly or indirectly.

3.02 The project's main investment will be undertaken in Hodeidah, thecountry's main fisheries center where 40% of the national catch is landed.The proposed fishing port will be located 250 km from the Saudi Arabian borderin the north and 350 km from the People's Democratic Republic of Yemen borderin the south. This relatively centralized location will offer adequateaccess to fishing vessels migrating to Hodeidah from the north and southseeking shelter against strong monsoon winds or wishing to utilize the port'sbunkering, marketing and vessel repair facilities.

3.03 On the coast north of Hodeidah a fish landing pier with relatedshore facilities, including shrimp processing will be established at Khawbah,the most important fishing village on the northern coast. Khawbah, a fishingvillage entirely surrounded by desert, has the second largest fishermencommunity in the country. Present land access is extremely difficult overcoastal desert tracks crossing extensive stretches of Sabkha-tidal salinemarshes-which often become impassable, requiring long detours through thedesert causing prohibitive transportation costs. The lack of ready access tothe country's main consumption centers has prevented the Khawbah fishermenfrom fully exploiting their productive potential, has prompted them to landsubstantial amounts of their catches in Saudi Arabia and has caused a numberof them to leave the village in search for employment in neighboring oil richcountries. A 32 km road proposed under the project will link Khawbah with theJizan-Hodeidah road, presently under construction. This road link will breakKhawbah's commercial isolation as it will provide it with access to thecountry's major fish markets. A substantial increase in fish landings canbe expected in Khawbah as fishing vessels from neighboring villages likeLuhayyah and Midi in the north and Ibn Abbas, Salif and from Kamran Island inthe south will be attracted by the proposed integrated landing and marketing

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facilities. Khawbah can well become a real alternative to the presentlymuch preferred Jizan in Saudi Arabia, once the integrated facilities areinstalled.

3.04 South of Hodeidah, two locations have been selected for projectinvestments, namely Khawkhah and Mocha. Khawkhah is located 155 km southof Hodeidah and has the largest fishermen community on the country's southerncoast. Its location on an entirely unprotected straight coastline thatis fully exposed to the open sea does not justify major marine facilitiesas construction costs would be prohibitive. Mocha, the country's formerlyfamous coffee export harbor, will be the location of a second fish marketing

center in the south.

3.05 As operating basis for the project's fish marketing developmentstrategy, four main consumption centers in the country's interior will beselected for investments. As fish marketing in the Tihama and along the coastis relatively well developed, no investments in marketing facilities arerecommended there. Sanaa, Taiz, Ibb and Dhamar, located along the interior'smain highway are regional marketing centers serving large hinterlands. Itwill mainly be from these centralized locations that the project will concen-trate its efforts to stimulate and expand fish consumption in YAR.

3.06 As a result of the project, the geographic center of YAR's fishingindustry will shift from Hodeidah northward. Project investment at Khawbah,supported by the proposed road connection with the Jizan-Hodeidah road, willlead to an increase in that area's share of national fish landings from 25%to almost 40%, while Hodeidah's share will decline from 40% to 32%. Althoughthe fishing industry in Hodeidah is not anticipated to retain its relativedominance, it will experience an absolute growth of 35% over its presentcatch volume. From a regional development point of view, this project-inducedrelocation of the country's geographic fisheries center into the economicallydepressed northern region will be of great benefit. Hodeidah, as the coun-try's main service center, has more varied economic opportunities than thenorth where fish is the only alternative to marginal agriculture.

IV. THE PROJECT

A. Project Rationale, Objectives and Concept

4.01 YAR's national fish resources hold the potential to considerablyreduce the country's increasing dependence on foreign supplied animal pro-tein for its growing population. More efficient exploitation and distri-bution of its readily available fish resources can free large amounts offoreign exchange funds that urgently would be needed for capital formationin the country but instead are being spent abroad for the importation oflivestock products and to an increasing extent for the importation of fish.Existing catch capacities and distribution facilities limit the level of fish

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production which is insufficient to meet present demand. The proposedproject will enable the country to make better use of its valuable butunderexploited fish resources.

4.02 The project will also provide the capabilities for the exploita-tion of the country's shrimp resources. Initially shrimp will be suppliedto the domestic market where a certain demand exists as the ContinentalSea Foods study has confirmed. Ultimately, shrimp will however be producedprimarily for export. In neighboring oil rich countries excellent marketsexist for shrimp.

4.03 For YAR, which is poorly endowed with exportable commodities, toreduce dependence on imported food is of vital importance and has beenassigned highest priority by the Government particularly so as the futuredemand for its labor force in neighboring oil rich countries is uncertain.Demand for mainly unskilled labor in these countries seems to have peaked astheir infrastructure development programs stabilize and competition from otherlabor exporting countries like India, Pakistan and South Korea is steadilyincreasing. The proposed project will directly support the country's drivefor reduced reliance on imported food as it will increase food productionfrom a domestic resource base.

4.04 Although the project's activities will be closely integrated, threemajor sub-objectives can be distinguished. First, the project will strengthenthe sector's productive base. Improved fishing vessels of higher productivitywill increase the fleet's catch capacity. Marine facilities at Hodeidah willprovide large numbers of fishing vessels shelter and safe mooring during theperiods of strong monsoon winds, presently the greatest danger to the country'ssmall fishing vessels. Adequate, shore-based repair, maintenance and supplyfacilities will increase the fleet's operational time at sea. Second, theproject will improve the quality and increase the delivery capacity of thepresent market distribution system. The objective of the system will be toregulate the flow and extend the consumption of fish into areas which presentlyare not or only irregularly reached by the existing fish distribution system.Third, the project will begin the exploitation of the country's valuableshrimp resources.

4.05 The project will be based primarily on the existing system ofartisanal fisheries. The organizational concept will be, to rely to theextent possible on the sector's existing productive forces with a minimumrequirement for scarce and already overextended public sector resources andforeign technical assistance. The new equipment and technology to be intro-duced under the project will be designed so that they can be easily adoptedand directly utilized by the traditional fishermen. In the context of YAR,the safest way to assure the efficient utilization of project-providedfacilities will be to make use of the energetic private sector. All thosefacilities that are of commercial interest, like fish and shrimp processing,will therefore be made available under adequate arrangements for the use byYemeni businesses. In instances where fisheries related cooperative societiesdevelop into viable business enterprises, they also will be encouraged to getinvolved in the operation of these facilities.

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B. Detailed Features

4.06 The project's objectives will be achieved by providing the facili-ties listed below and by implementing the proposed organizational measures.

(a) An artisanal fishing port at Hodeidah with facilities forfish handling, marketing and storage and a small boatyard.

(b) An artisanal landing pier at Khawbah with facilities ashorefor fish and shrimp receiving, processing and storage.

(c) Shore based fish handling, marketing and storage facilitiesalong the remainder of the coast.

(d) Inland fish distribution and marketing facilities.

(e) Credit facilities for sambuk trawlers, fishing vessels andtransport vehicles.

(f) A coastal road link.

(g) Technical assistance and training.

Artisanal Fishing Port at Hodeidah

4.07 At Hodeidah, an artisanal fishing port will be constructed toprovide a sheltered anchorage for sambuks, a berth at which the vesselsmay unload their catch and obtain supplies of ice, water and fuel togetherwith facilities for fish handling and storage as well as a small boatyardand related facilities ashore. The site for the new port adjoins the existingfishing market and village, where presently sambuks are moored and the catchis laboriously hand carried ashore.

4.08 Rock rubble breakwaters armoured with selected rock or concrete unitswill be constructed to ensure protection from the waves, largely from thesouth and southeast, which presently restrict fishing activities especiallyduring the months of October through March. The breakwaters will provide asheltered entrance with a minimum depth of about 2.5 m below datum. A berthwill be constructed in the lee of the main breakwater, approximately 140 mlong, with depths of about 2.0 to 2.5 m below mean water level which issuitable for sambuks including the improved sambuks to be provided under theproject. The existing beach between the two breakwater arms of the port willbe reclaimed and enlarged using nearby dredged material in order to create anarea adjoining the existing roadway where the fish handling building, theservice building and the boatyard will be located. Trucks taking the fishfor inland distribution will park in this area. A layout of the proposedport is shown on Map IBRD 14788.

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4.09 A review of several alternative sites was conducted in the vicinityof Hodeidah in an attempt to find one with better natural shelter from thesea but all of these sites were found to be unsuitable for various reasonssuch as the distance from the presently established fishing community andthe risk of interference with commercial operations at the Port of Hodeidah.

4.10 The fish catch from sambuks will be landed at the berths and imme-diately taken by carts to the fish auction and processing buildings ashore.Small houris will unload their catch directly on to the reclaimed area. Theberth is suitable for handling the catch from about 90 sambuks and is also ofsufficient length to enable vessels to move to the service area to obtain ice,water and fuel. The port layout provides for the possible construction at afuture date of additional berths alongside the breakwater and within the port.Rock suitable for breakwater construction and for other building work isavailable from quarries about 50 km from Hodeidah. Sand will be obtainablelocally while steel piling and other materials would be imported. Governmentacquisition of the land for the Hodeidah fishing port and related shorefacilities will be a condition of credit effectiveness.

Artisanal Fish Landing Pier at Khawbah

4.11 At Khawbah, a pier will be constructed for the landing, handlingand processing of both fish and shrimp, as well as a service building anda boat shed. Khawbah, which is at present the second most important sitefor fishing activities, lies within the shelter of Kamran islands and conse-quently expensive breakwater protection is not as essential. The pier wouldenable the catch to be unloaded efficiently during almost all seasons andwill greatly improve the present method of hand loading and unloading frommoored sambuks. The catch will be immediately brought ashore to the fish andshrimp handling facilities.

4.12 The pier will extend to a depth of about 3 m and offer berthingspace of about 45 m on each side of the pierhead in depths from about 2.5to 3.25 m below mean water level for the operation of about 70 sambuks. Itwill be constructed of steel piling and will be equipped with a shelter toprovide protection during the unloading of catch and when taking aboardsupplies of ice. A light duty access trestle will link the berthing area withthe shore. The catch will be distributed inland by truck. Government acquisi-tion of the land for the Khawbah fish landing pier and related shore facilitieswill be a condition of credit effectiveness. A layout of the proposed fishlanding pier is shown in Map IBRD 14751.

Shore Facilities at Khawkhah and Mocha

4.13 At Khawkhah and Mocha, the two most important fishing centers southof Hodeidah, shore-based facilities will be established. Each will be fur-nished with a handling and auction hall; chill storage for fish and ice;facilities for gutting, cleaning, washing and icing of fish; a water supplyand waste disposal system; and electric power generation. These facilitieswill be designed to handle about 1,700 tons of fish at Khawkhah and about1,550 tons at Mocha per year at full development. Fish from Khawkhah will

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mostly be channelled into the market centers of the Tihama while Mocha willbe the principal source of fish for the markets in Taiz, Ibb and Dhamar.Government acquisition of land for the shore facilities at Khawkhah andMocha will be conditions of credit effectiveness.

Inland Fish Markets

4.14 Fish Market at Sanaa. At Sanaa, a central fish market will beestablished which will consist of a wholesale area and 12 retail stallseach equipped with a deep freezer cabinet, weighing scale, chopping blockand display tables. The market will have an adequate flake ice plant, icebin and a chill room for overnight storage of fish and ice. The necessarysupplies of water and electricity will be provided as well as proper wasteremoval and sanitary facilities. Acquisition of land by the Sanaa Municipal-ity for the proposed fish market will be a condition of disbursement.

4.15 Fish Market at Taiz. At Taiz, a wholesale market will be estab-lished at the site of the present combined wholesale and retail market. Thenew wholesale market will be provided with a chill room for overnight storageof fish and an improved water supply system. Further, the approach to themarket will be improved. About ten retail fish stalls will be establishedalongside the meat markets which are planned by the Taiz municipality atdifferent locations throughout the city. Each individual fish retail stallwill be equipped in a similar fashion to the outlets proposed for Sanaa.Acquisition of land by the Taiz Municipality for the proposed fish marketswill be a condition of disbursement.

4.16 Fish Markets at Ibb and Dhamar. Simple market structures willbe provided in these two communities located along the Taiz-Sanaa road. Themarkets will have about three individual retail stalls properly equippedfor fish marketing and a small wholesale area. The acquisition of land bythe Municipalities of Ibb and Dhamar for the proposed fish markets will be acondition of disbursement.

Credit Facilities for Sambuk Trawlers, Fishing Vessels, Outboard Engines,Fishing Gear and Fish Transport Vehicles

4.17 Credit facilities for fishing vessels, shrimp trawlers and vehiclesfor fish transport will be made available through the Agricultural CreditBank (ACB).

4.18 Sambuk Trawlers. The project will finance thirty fully equipped15 m wooden hull shrimp trawlers of a design based on the standard traditionalYemeni Sambuk. Modifications like a wide transom stern and a stronger enginebase to accommodate a 60 hp water cooled engine will provide the vesselwith proper trawling capabilities. The vessel will be equipped with a fulldeck with a hatch to a shrimp hold. The vessel will have a crew of 7 to8 and is intended primarily for one day fishing trips. A drawing of theproposed shrimp trawler is shown in Chart 21383.

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4.19 Improved Fishing Vessels. The catch capacity of the traditionalfleet will be increased through financing 60 fully equipped sambuks of animproved type. The structure and design of the standard sambuk will bemodified to properly equip the vessel for gill netting. The improved sambukwill have a stronger wooden hull to accommodate a 45 hp air cooled engineand a net hauler. Fish will be collected in an insulated fish box of 6 m3capacity. A drawing of the improved sambuk is shown in Chart 21384.

4.20 Houris. In areas where marine conditions presently allow onlyhouri fishing, the project will finance 30 of these small canoe-type tradi-tional fishing crafts. The vessel will be powered by a 15 hp outboard enginemounted on a stern transom. The relatively small unit of investment willalso allow some very low income and new fishermen to become vessel owners.

4.21 Fishing Gear and Marine Engines. To alleviate the present shortageof proper fishing gear and marine engines, financing will be made availablefor netting of different mesh sizes, long lines and hooks, handlines andhooks of varying size, floats, swivels, ropes, twines, etc. as well as about100 outboard engines ranging from 9 to 15 hp.

Fish Transport Vechicles

4.22 To facilitate the transport of increased quantities of fish ofsubstantially improved quality to inland market centers, the project willprovide six insulated and three refrigerated trucks with capacities varyingfrom 1.5 to 3 tons.

Road Link Between Khawbah and New Jizan-Hodeidah Road

4.23 The project will provide a 32 km road link between Khawbah and thenew all-weather road presently being constructed between Jizan in SaudiArabia and Hodeidah. Once this new main road is completed, the transportpattern in the northern Tihama is bound to change. Without a proper con-necting road, however, Khawbah and its neighboring coastal villages will onlymarginally benefit from the new north-south road. The proposed gravel roadwill establish the link between Khawbah, the most important fishing center inthe north, and the country's main consumption centers.

Technical Assistance and Training

4.24 Technical assistance will be provided during two phases of theproject: before and during implementation.

4.25 Technical Assistance Before Project Implementation. A firm ofengineering consultants will be appointed to prepare detailed designs forthe project's civil works facilities, to prepare tender documents and toassist the Government to evaluate the bids received and to award contracts.To initiate and organize the building of the newly designed sambuk trawlerswell ahead of the shrimp processing facilties becoming operational, a navalarchitect will be appointed who will supervise the construction of two of thenewly designed sambuk trawlers for which local funds are available in the

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Ministry of Agriculture's regular budget. The construction of two prototypetrawler sambuks and their demonstration at sea will be a condition of disburse-ment. Once the suitability of the proposed sambuk trawler for shrimping inthe Red Sea has been fully established, construction of these vessels canthen begin right at the inception of the project and commercial shrimptrawling, one of the project's economically and financially most importantcomponents, can get underway without delay. Expenses incurred for thepreparation of detailed designs for the project's civil works and for hiringthe naval architect, will be eligible for retroactive financing, providedsuch costs were not incurred prior to March 1, 1980.

4.26 Technical Assistance During Project Implementation. To implementthe project, a well qualified, internationally recruited fisheries specialist,acceptable to the Association, with experience in management of fishing portsand shore facilities will be engaged as project manager for a period of fiveyears. Together with the other internationally recruited experts and localsupport staff, the project manager will be responsible for coordinating allproject activities, in particular, the construction of the marine and shorefacilities, procurement of vessels, engines, fishing gear and fish transportvehicles.

4.27 A firm of consulting engineers will be appointed to assign tworesident engineers to supervise the construction of all civil works, instal-lation, commissioning and start up of equipment and machinery carried out bycontractors at various construction sites. These engineers will be respon-sible to ensure quality of construction, machinery and equipment, adherenceto designs and recommend payments to contractors.

4.28 During the early phase of project implementation, a boat builderwith experience in small boat construction under operational conditionssimilar to those in YAR will be appointed for a period of three years.He will establish and equip a demonstration boatyard where he will organizeand supervise the construction of a number of all three types of projectvessels with locally employed carpenters and boat builders. He will trainthe local craftsmen in the use of power tools and other more advanced boat-building equipment. Once the initial batches of project vessels are avail-able for demonstration, the boat builder will prepare tender documents forlocal competitive bidding for vessel hulls and coordinate the procurementand installation of engines and other equipment. During appraisal at leasttwo major local entrepreneurs have expressed interest in building largernumbers of project fishing vessels. These entrepreneurs as well as experi-enced individual boat builders will be eligible to bid for the construction ofvessels. The proposed 30 sambuk trawlers, 60 improved fishing vessels and 30houris will be in addition to the normal boat building activities in YAR.This will call for an increase in the country's boat building capacity. Basedon the strong interest expressed by the private sector in this component nomajor implementation problems are foreseen for the project's boat buildingprogram. Once contracts are signed with local companies for the constructionof project vessels, the boat builder will supervise construction to ensurethat construction conforms to design and contract specifications.

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4.29 A master fisherman will be provided for a period of three years.He will assist the project manager in the procurement of fishing gear,train local fishermen in rigging of nets and trawling gear. He will trainfishermen in new and more productive fishing techniques as well as in betterhandling and preserving of the catch.

4.30 One of the project's key objectives is the exploitation of thecountry's shrimp resources. Bottom trawling, the technique employed incoastal shrimping, is almost unknown in YAR. Although the vessel to be usedfor shrimping will not be new to Yemeni fishermen, demonstration and trainingin bottom trawling will be needed. The most suitable way of introducing theYemeni fishermen to this new fishing technology will be to bring a crew ofabout six experienced fishermen to YAR for about one year from a developingcountry like India or Pakistan which have long established traditions ofsmall boat bottom trawling. The foreign fishermen will spend the necessarytraining period among the Yemeni crews and demonstrate to them every aspect ofsuccessful trawling for shrimp on several project trawlers.

4.31 The success of the project will depend to a large degree on thedevelopment of an expanded domestic fish marketing system which will beexpected to absorb a doubling of present fish supplies. This will requirea systematic intensification and expansion of the existing fish marketingpattern in YAR. To assist in such a major market expansion, the project willprovide the service of an experienced fish marketing expert for a period offour years. He will advise in establishing new wholesale and retail marketsas well as the improvement of existing facilities. He will also advise inthe operation and maintenane of auction halls, markets and processing facili-ties. His advice in improved techniques in handling, storing, transportingand distributing of fish will also be available to private fish merchants.He will assist the GCDFR and the municipalities in preparing and implementinga code of hygienic standards and practices to be followed in these operations.

4.32 Institutional credit for shrimp trawlers, fishing vessels, refriger-ated and insulated fish trucks, marine engines and fishing gear will be anew feature in the fisheries sector of YAR. The ACB, the institution proposedto handle the project's on-lending operations, so far has only limited exper-ience in the field of lending to the fisheries sector mainly in the field ofvessel repair. To develop ACB's capability for large scale lending to thefisheries sector, the project will provide a credit advisor with experiencein lending to fisheries for a period of three years. The credit advisor willdevelop a lending policy for this sector, he will develop procedures andprovide training to his Yemeni counterpart staff in the appraisal of loanapplications for investments.

4.33 Training. One of the factors that will most critically affect thesuccess of the project will be the availability of technically qualifiedpersonnel to administer, operate and maintain the various project operations.As the private sector has much larger resources in the required fields ofexpertise than the public sector has or can acquire in the foreseeable future,the project is designed in a way that will allow all commercially exploit-able operations to be undertaken by the private sector. It will be the

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responsibility of those who become engaged to make the proper staffing arrange-ments. The private sector of YAR has demonstrated convincingly that it canrecruit the expertise required to meet their commercial objectives. Irrespec-tive of the private sector's engagement in the project, a number of Yemeniswill need to be recruited to handle those aspects of the project that lieoutside the scope of private sector interests. It will most likely be thissmall group of project recruits from which the country's future governmentmanagers and administrators of the fisheries sector will be recruited.Special training arrangements will therefore be made under the project forthose Yemenis who will be assigned to the DOF and the GCDFR. The projectmanager will develop a training program for Yemeni staff members that willinclude specialized on-the-job training as well as overseas assignmentsto commercial fisheries operations and formal training institutes. Each ofthe internationally recruited experts will, as part of their terms of reference,be engaged in training activities. Besides on-the-job training of their localcounterparts, this engagement will include wherever feasible active trainingsupport to the Fisheries Training Center at Hodeidah.

4.34 Special training arrangements have been made for the Yemeni fisher-men who will participate in the project, utilizing more productive fishingvessels, particularly those who will engage in bottom trawling, using thenewly introduced sambuk trawlers. A crew of six experienced fishermen from adeveloping country will be recruited and assigned under the direction of amaster fisherman to the sambuk trawlers instructing their fellow Yemenifishermen in this new technique.

Establishment of the General Corporation for the Development of Fish Resources

4.35 The project will provide US$100,000 for GCDFR's initial set offurnishings and equipment.

State of Engineering

4.36 The Danish consulting firm, Hostrup-Schultz and Sorensen, hasprepared the feasibility study for the Hodeidah and Khawbah marine and shorefacilities including preliminary designs and bills of quantities on thebasis of which the costs for these project components have been calculated.To allow project implementation to begin shortly after credit effectiveness,additional soil investigation, detailed designs and the necessary tenderdocuments are presently being prepared. The costs incurred for these consul-tant services of US$400,000 will be eligible for retroactive financing,provided such cost were not incurred prior to March 1, 1980.

4.36 The following table provides a breakdown of the technical assistanceprovided under the project:

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Table 4.1: TECHNICAL ASSISTANCE PROVIDED UNDER THE PROJECT

Assignment in Project Years DurationProject Phase Beginning Ending man-months

Before Project ImplementationFirm of Consulting Engineers(Preparation of Detailed Designs) 0 0 23

Naval Architect 0 0 3

During Project ImplementationProject Manager 1 5 60Firm of Consulting Engineers(Construction Supervision twoengineers) 1 4 96Boat Builder 2 4 36Master Fisherman 2 4 36Crew of Fisherman 3 4 72Fish Marketing Advisor 2 5 48Credit Advisor 3 5 36

Total Technical AssistanceProvided Under Project 410

C. Cost Estimates

4.38 Total project cost is estimated at YRls 136.4 million (US$30.3million equivalent) including contingencies. The foreign exchange componentis YRls 94.5 million (US$21.0 million equivalent) or 69% of total projectcost. Annex 2 shows details of the cost estimate and a summary is givenin Table 4.2.

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Table 4.2: SUMMARY COST ESTIMATES

ForeignExchange

Project Local Foreign Total Local Foreign Total % ofComponent -----YRls ismlion---- -----UST milio…n----- Total

Hodeidah Fishing Portand Khawbah FishLanding Pier 9.53 32.23 41.75 2.12 7.16 9.28 77

Khawkhah and MochaShore Facilities 0.15 1.31 1.46 0.03 0.29 0.32 90

Inland Fish MarketFacilities 0.55 2.18 2.73 0.12 0.49 0.61 80

Sambuk Trawlers andFishing Vessels 5.90 14.98 20.88 1.31 3.33 4.64 72

Fish Transport Vehi-cles 0.05 0.92 0.97 0.01 0.20 0.21 95

Khawbah Roadlink 1.35 3.15 4.50 0.30 0.70 1.00 70

Technical Assistanceand Training 0.45 11.45 11.90 0.10 2.54 2.64 96

Base Cost 17.98 66.21 84.19 3.99 14.71 18.71 78

ContingenciesPhysical 2.06 7.52 9.58 0.46 1.67 2.13 78Price 21.83 20.79 42.62 4.85 4.62 9.47 48

Subtotal 23.89 28.31 52.20 5.31 6.29 11.60 54

Total 41.87 94.50 136.35 9.30 21.00 30.30 69

4.39 The cost of the marine and associated shore facilities at Hodeidahand Khawbah is estimated at approximately YRls 64.4 million (US$15.2 millionequivalent). Estimates are based on those prepared in 1979 by consultantsHostrup-Schultz and Sorensen (Denmark) with revisions by the mission.Physical contingencies of 20% have been applied to the marine works and 15%to other components. Price contingencies for these project components amountto approximately 43%. The cost estimates were based on the consultant'spreliminary engineering designs which were undertaken after initial soilinvestigations and study of sea conditions at a number of possible sites forfishing development. Additional soil investigations and wave propagationanalyses are required at the sites now selected, namely Hodeidah and Khawbah,to corroborate the layout of marine works. Detailed engineering design andthe preparation of tender documents are to be undertaken by the consultantsin accordance with terms of reference prepared by the Association.

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4.40 An average price contingency of 50% has been allowed for the entireproject cost based on an annual rate of domestic inflation in YAR of 30%during 1980, 27% during 1981, 22% during 1982 and 20% thereafter and oninternational rates of 10.5% during 1980, 9% during 1981, 8% during 1982and 7% thereafter.

4.41 Since the YAR Government exempts import components of developmentprojects from import taxes, the cost estimates exclude such taxes.

4.42 Total cost of the project's technical assistance component has beenestimated at US$2.35 million excluding price contingencies. US$1.28 millionwill be required for individual consultants services, US$400,000 for prepara-tion of detailed designs including soil investigation and US$0.9 million forconstruction supervision. Five experts with assignments ranging from threemonths to five years will spend a total of 219 man-months in the project at aman-month cost of US$5,350, including all direct personnel and company over-head costs, reimbursable items like overseas travel, subsistence and otherallowances. In addition, six fishermen from a developing country will spend atotal of 72 man-months in the project at a man-month cost of US$1,500. Thecontracts for the preparation of detailed designs and construction supervisionwill be negotiated on the basis of estimated inputs of personnel.

D. Financing Plan

4.43 Financing for the project will be arranged in the following way:an IDA credit of US$17.0 million, a US$4.0 million parallel loan from theGovernment of Denmark, a contribution of US$1.3 million equivalent by par-ticipating fishermen and a contribution of US$8.0 million equivalent by theGovernment of YAR.

4.44 The IDA credit which will be made on standard terms will finance56% of total project cost or 81% of foreign exchange cost. The parallelloan which will be made on conditions similar to those of the IDA creditwill finance the balance of the foreign exchange cost. The fishermen con-tribution will represent 20% of the total value of the fishing vessels andrelated equipment to be provided under the project, the remainder of whichwill be credit financed. The Government's contribution will finance 27%of total project cost, all of which would be in local currency.

4.45 Condition of effectiveness of the IDA credit will be the signingof a co-financing agreement with another external financier for the balanceof the foreign exchange component.

E. Procurement

4.46 Under the proposed IDA credit, procurement will be as follows:Construction of the Hodeidah fishing port and the Khawbah fishing landing pier

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(US$15.6 million) will be subject to international competitive bidding.Construction of the shore facilities at Khawkhah and Mocha, as well as theinland fish markets at Sanaa, Taiz, Ibb and Dhamar, (US$1.3 million) willbe subject to local bidding as no international contractor is likely to beinterested in building these widely scattered small and simple structures.The local bidding procedure is well established and has been found acceptableto the Association. Under this procedure bidding documents are not onlyreviewed by the project authorities but also by the procurement committee with-in the MOA and any contract to be awarded in excess of YRls 300,000 (US$67,000)is subject to the approval of the interministerial Supreme Committee forTendering and Procurement. Construction of the Khawbah road link (US$1.7million) will be carried out by the HA under force account, as no internationalcontractor is expected to bid for this low cost, low grade road that is to bebuilt in a very remote area of the country. The wooden hulls of the fishingvessels (US$2.1 million) will be built on the basis of local bidding throughPIU. Consultants (US$1.0 million) who will be recruited internationally haveto be acceptable to the Association. A contract to carry out additional soilinvestigations and to prepare detailed designs and tender documents has beenawarded to consulting engineers Hostrup-Schultz and Sorensen of Denmark whohad prepared the preliminary designs. The cost of this contract up to US$0.4million will be eligible for retroactive financing. A contract for construc-tion supervision (US$0.9 million) will be awarded to consulting engineersacceptable to the Association. Goods and services required for the establish-ment of GCDFR (US$100,000) will be procured locally following local procurementprocedures. All project equipment, marine engines and fish transport vehicles(US$4.0 million) will be procured on a parallel basis following DANIDA'sprocurement guidelines. Local goods and services (US$8.0 million) will beprocured in accordance with the Government's procurement procedures which areacceptable to the Association.

F. Disbursement

4.47 Disbursement under the proposed credit will cover 81% of theforeign exchange cost of the project. The cost of engineering servicesfor the preparation of detailed designs and tender documents and the evalua-tion of bids for the Hodeidah fishing port and the Khawbah fish landing pierof approximately US$400,000 would be payable retroactively, as these serviceswill need to be carried out before credit signing in order to avoid anydelay in awarding the contract. Another US$30,000 for services of a navalarchitect for preparing and supervising the construction of two prototypesof the newly designed wooden shrimp trawlers will be payable retroactively.The entire IDA credit is expected to be disbursed over five years. The esti-mated disbursement schedule is shown in Annex 3 and is summarized hereunder:

Estimated Disbursements

IDA FY 1981 1982 1983 1984 1985--------------US$ million---------------

Annual 2.20 4.70 6.50 3.00 0.60Cumulative 2.20 6.90 13.40 16.40 17.00

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G. Environment

4.48 Development of the fishing port at Hodeidah and the fish landingpier at Khawbah do not interfere with any known plans for the respectiveareas. Land based collection and disposal systems for fish heads, guts,etc. would be provided at the landing sites and near the fish markets.Associated with trawling operations will be the discarding of trash fishinto the fishing grounds which can lead to minor increase in the sharkpopulations in the area. No major problems caused by excessive dumping oftrash fish and other waste are however foreseen, as the shrimp operation isbased on the use of a relatively small number of artisanal crafts. Theproject will therefore be expected only to have insignificant effects on thecoastal fishing grounds. Increasing pollution of the fishing grounds can becaused by commercial freighters anchoring off the coast of Hodeidah anddumping oil wastes into the sea. Signs of oil pollution have been evidencedby shrimp caught in these waters that were contaminated with oil. The Govern-ment will be requested to take adequate steps to monitor and control excessiveoil pollution off the coast of Hodeidah.

V. ORGANIZATION AND MANAGEMENT

A. Project Organization During Implementation

5.01 The project will be implemented over a period of five years. 1/ Thenewly established GCDFR with headquarters in Hodeidah will be responsible forall fisheries development activities in the country and as such will be theexecuting agency for the project. 2/ Within GCDFR a special Project Imple-mentation Unit (PIU) will be set up from which all project implementationactivities will be directed. Head of the PIU will be an internationallyrecruited project manager with qualifications and experiences as described inpara. 4.26. During project implementation, the project manager will also actas GCDFR's general manager (chief executive officer). As such he will bedirectly responsible to GCDFR's Chairman who in turn reports directly to theMinister of Agriculture. The PIU will have an administrative support staff,including an experienced accountant. US$100,000 has been included in theproject to finance GCDFR's initial set of equipment and furnishings. Duringnegotiations an assurance was obtained that the PIU staffed and equipped asdescribed above will be established not later than September 30, 1980. TheDOF will continue to serve in a policy making and advisory capacity; it willnot carry out operational function.

1/ An implementation schedule is shown in Chart IBRD 21354.

2/ An organization chart for the project is shown in Chart IBRD 21585.

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5.02 The PlU's responsibilities will include coordination between variousgovernment departments, construction companies, consultants, etc.; it willsupervise the various construction components of the project including inlandfish markets; it will initiate and supervise the construction of fishingvessels, procure marine engines, fishing gear, fish transport and fish market-ing equipment as well as other machinery and supplies.

5.03 The project manager, in addition to his local technical supportstaff will be assisted by an engineering consulting firm in constructionsupervision, an internationally recruited boat builder, a master fishermantogether with a crew of six fishermen experienced in small vessel shrimptrawling, and a fish marketing expert. Qualified local technical staffsupporting the master fisherman and the fish marketing expert will beappointed. The consulting firm will assign two resident engineers to theproject who will directly supervise all construction work to be carrried outunder the project. The boat builder will establish and operate the demonstra-tion boatyard where local boat builders will be trained in more advanced boatbuilding technology and will be familiarized with the construction of thenewly designed project shrimp trawlers and fishing vessels. Once the con-struction of project vessels has been contracted to local entrepreneurs hewill supervise the actual construction of those vessels. The master fishermanwill deploy the six fishermen on project vessels so they can demonstrateefficient trawling to the Yemeni fishermen. He will establish the cooperationof the fishermen in the project by advising and assisting them in all relatedproject activities. In addition, he will be responsible for the procurementof fishing gear to be provided under the project. The fish marketing expertwill be responsible for designing and implementing an efficient fish deliverysystem with particular attention to the supply of fish to inland consumptioncenters. During negotiations assurances were obtained that an engineeringconsulting firm for construction supervision, a boat builder, a master fisher-man with a crew of six fishermen and a fish marketing expert will be appointed.It was further assured that local technical support staff for the masterfisherman and the fish marketing expert will be appointed.

B. Organization and Management of Project Operations

5.04 The organizing principle of project operations is determined byYAR's weak public sector administration and management on the one hand andthe vigorous and enterprising private sector on the other hand. Althoughthe project financed facilities and installations will be owned by the publicsector, i.e. GCDFR, their commercial use will be offered on a competitivebasis to private commercial interests actively engaged in the fisheries sector.Contract awards for the utilization of facilities like shrimp and fish pro-cessing, bunkering, production and storage of ice and boat building will bemade to the highest bidder taking into consideration experience and businessreputation. With revenues received from the lease of these facilities, theGCDFR will finance the operation and maintenance of those facilities forwhich no private sector interest exists, like the fishing port facilitiesin Hodeidah and the fish landing pier at Khawbah. Its establishment law

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assures the GCDFR that possible deficits from its operations will be coveredby budgetary allocations from the MOA. The proposed arrangement of publicsector investments being commercially utilized by the private sector issuccessfully practiced in YAR. All internationally recruited project staffwill lend their advice to the establishment of GCDFR's operations. A pro-jected income statement for the GCDFR is contained in the project file.

The Ministry of Municipalities

5.05 The Ministry of Municipalities (MOM) will have the overall respon-sibility for the establishment of the inland fish markets proposed for Sanaa,Taiz, Ibb and Dhamar. Actual execution of the works, as well as operation andmaintenance of the proposed fish markets will however rest with the respec-tive local municipalities which, because of their local authority, will be ina much stronger position than the GCDFR to supervise and enforce the hygienicand quality standards set for the marketing of fish. The municipalities'acknowledged legal authority also will facilitate the collection of rents andservice charges from the fish merchants utilizing the market facilities. Themunicipalities would appoint inspectors who will maintain strict supervisionover the quality of fish sold and the maintenance of hygienic standards setfor these markets.

The Highway Authority

5.06 The Highway Authority (HA) is an autonomous Government organizationwith its own capital (mainly road equipment) and controlled by a Council ofex-officio Government Directors, with the Ministry of Public Works acting aschairman. The HA is responsible for the design, construction and maintenanceof public roads in rural areas. Under contract with the MOA, the HA willundertake to design, construct and subsequently maintain the proposed 32 kmroad link between Khawbah and the new Jizan-Hodeidah road. An assurance tothat effect has been obtained during negotiations.

The Agricultural Credit Bank

5.07 The Agricultural Credit Bank (ACB) is a well-established specializedlending institution which is the onlending channel for all five IDA-financedagricultural development projects. ACB was founded in 1975 with an authorizedcapital of YRls 100.0 million. ACB's main fields of operation are short-termloans for recurrent agricultural production requirements and medium-term loansfor well development, land reclamation, livestock and agricultural machinery.ACB is governed by a Board of Directors consisting of the Deputy Minister ofthe Ministry of Agriculture, Ministry of Economy, Ministry of Finance and theCentral Planning Organization, the Deputy Chairman of the Central Bank, theGeneral Secretary of the Confederation of Yemeni Development Associations, andthe President of ACB as Chairman of the Board. ACB operates eight branchesaside from its Sanaa head office. The total volume of lending during 1978/79reached approximately YRls 40 million of which YRIs 15 million were forshort-term loans and YRls 25 million were medium-term loans up to four years.ACB's loan recovery performance on average is quite satisfactory; during1978/79 it collected 89% of its due loans. Still weak are ACB's operating

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results. It reported its third straight loss during 1978/79 and now carriesan accumulated loss of YRls 3.4 million. ACB's losses are not too serious asthey occurred during a phase of rapid expansion and rising operating cost.During 1978/79 ACB received YRls 22.3 million in medium-term loans from theCentral Bank on which it was allowed only a 2 point spread (borrowing rate 4%on lending rate 6%).

5.08 As of June 30, 1979, 92.5% of ACB's authorized capital had been paidin and its medium-term borrowings had risen sharply over the last 12 months.Unless ACB's equity base is strengthened and its profitability is improved, itwill not be in a position to maintain its present rate of expansion which ishighly desirable. YAR's agricultural sector is in the process of being trans-formed from a traditional, subsistence oriented sector towards a more produc-tive, capital intensive sector which is to support the country's growingnon-agricultural sectors. This development process is dependent on a steadyand increasing supply of investment funds for which ACB is the prime source.It is therefore recommended that the YRls 20.0 million that ACB will channelinto the fisheries sector under the proposed project be provided to ACB inthe form of equity. A cash flow statement of the project's onlending operationis shown in Annex 4. An assurance has been obtained during negotiations that,not later than December 31, 1980, the authorized capital of ACB will beincreased from YRls 100.0 million to YRls 200.0 million and that the loanfunds for the project be made available to ACB as equity capital. Thedoubling of ACB's authorized capital will allow further equity contributionsto be made which will be required if the projected increases of ACB's overalllending operations for this and subsequent projects are to be realized. More-over, ACB's capital requirements will be reviewed at intervals not exceedingtwo years concurrently with the review of its interest rates (para. 5.11).

5.09 In 1978, ACB diversified its lending operations by extending loansto the fisheries sector. By making loans for vessel repair and the purchaseof marine engines, ACB ventured into a credit market which is traditionallydominated by merchants and middlemen with strong vested interest in thefisheries sector. Through loans for domestic and productive purposes fisher-men are tied to their creditors who usually claim a first right on themarketing of their catches. After a period of resistence by the traditionalsources of credit in this market and occasional cases of intimidation, ACBseems to have established itself as a welcome source of medium-term loans atlow interest rates. During its first year of lending to the fisheries sector,ACB's Hodeidah branch made 44 loans totalling more than YRls 0.5 million whichis quite a satisfactory start given the tight control the influential middle-men exert over the fishing community.

5.10 In the case of fisheries the base of production, the fishing vessel,is extremely mobile and elusive which poses particular problems for securingany loan in this sector. ACB has adopted a realistic and flexible approach tothis problem. Instead of being excessively security-oriented, ACB has estab-lished a close working relationship with a small group of prominent andreliable representatives of the fishing community who recommend potentialborrowers to ACB and provide it with needed information about the applicant,for example, whether he is a full-time fisherman and has permanent residence

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in the community. Naturally, wherever possible, ACB tries to secure its loansthrough mortgages of tangible assets including fishing vessels but it reliesmore on its close cooperation with the fishermen and careful selection of itsborrowers. At present ACB makes loans up to three years with repaymentschedules based on quarterly interest and principal payments.

5.11 The ACB together with the Industrial Bank of Yemen and the HousingCredit Bank make up YAR's system of specialized financial institutions whichoffer preferential lending rates to their customers reflecting the Govern-ment's intention to foster development of agriculture, industry and housing.YAR has a long tradition of negative real rates of interest including lendingin the commercial sector. However, as a result of a continuous dialogue inwhich IDA stressed the undesirability of highly negative interest rates, theGovernment has recently raised those rates drastically. Effective February14, 1980, short-term lending rates were raised from 7% to 10.5% and medium-term rates were raised from 6% to 9.5%. Given the high rate of inflation(about 30% during 1980) prevailing in YAR, real rates of interest to agri-culture are still sizably negative, but substantially less so than in thepast. The situation should further improve as the rate of inflation slowsdown over the next few years as projected. The new rate of 9.5% for medium-term loans should be accepted as the Government has decisively moved in theright direction and more drastic action than the one just taken, i.e. raisingthe medium-term rate by almost 60%, can hardly be expected at any one time.During negotiations, an assurance has been obtained that interest rates of ACBfor short and medium-term loans will periodically be reviewed at intervalsnot exceeding two years following the next review which will be made not laterthan February 28, 1981.

5.12 The project's total credit requirement excluding contingencieswill be about YRls 20.0 million which will represent approximately 80% oftotal investments made by the fishermen under the project. Borrowers will berequired to contribute an average of 20% of the investment cost from their ownresources. An equity contribution of 20% by the fishermen will be advisableto ensure the borrowers' utmost effort to prevent loss of or damage to theircredit-financed fishing vessels and related equipment. ACB is presentlydiscussing with several insurance companies the possibility of insuringcredit-financed fishing vessels. It is still uncertain whether this can bedone at an acceptable cost. Loans for fishing vessels will be made for fouryears without grace period and loans for fisheries related equipment likeoutboard engines and fishing nets will have to be repaid after one year.These relatively tight payment terms which are in accordance with cash flowprojections, will reduce ACB's risk exposure in this line of lending. Never-theless, ACB will make special provisions for bad debts against uninsuredvessels and related equipment. An internationally recruited credit advisorwith experience in lending to fisheries will assist ACB in developing itslending capability in this field. During negotiations, an assurance to thateffect has been obtained.

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C. Accounting and Auditing

5.13 All project entities using project funds, namely the MOA, the GCDFR,the MOM, the HA and the ACB will keep separate accounts for the project.These accounts will be subject to regular internal audits and annual externalaudits carried out by independent auditors acceptable to IDA. Copies of suchannual audit reports which will include an opinion on the use of funds dis-bursed for works executed or equipment purchased will be sent to IDA withinsix months of the close of each fiscal year. An assurance to that effect hasbeen obtained during negotiations.

D. Monitoring and Evaluation

5.14 The project manager will be responsible for monitoring projectimplementation. Baseline data for fish catches and fishermen's income at themost important fish landing sites have been established during project prep-aration and confirmed during appraisal. These baseline data will be used formonitoring the various project activities. The staff of the PIU will collectand analyze sufficient technical and analytical data on the project's majorcomponents to properly evaluate the effects of the project and to follow itsprogress against the project implementation schedule as shown on IBRD Chart21354. In addition to special monitoring records, routine records on allproject actions, programs, budgets and expenditure will be kept. The projectmanager will submit quarterly progress reports, including a summary of theproject accounts to IDA through the MOA. The reports will be received by IDAwithin two months from the end of the report quarter. In addition to thequarterly progress reports, the project manager will prepare a draft comple-tion report for submission to the Association within six months after theclosing date of the project. An assurance to this effect has been obtainedduring negotiations.

VI. PRODUCTION, MARKETING PROSPECTS AND PRICES

A. Fish Production

6.01 With the project, total fish production will be expected to reachabout 21,200 tons annually at full development which will represent anincrease of more than 83%. The fishermen in Khawbah will benefit most fromthe project as their catch at full development will be expected to increaseby about 260% to 5,000 tons annually including 560 tons of shrimp. This farabove average increase will reflect the full utilization of the presentlyunderutilized productive potential of this industrious fishing community. Itwill be expected that the fishermen from Khawbah will redirect some of theircatches presently landed in Jizan towards their own market, once the mainbarrier caused by the lack of land access to larger inland marketing outlets

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has been removed by the proposed 32 km road link. The proposed landingfacilities and processing terminal will also be an important contributingfactor. With better marketing facilities some fishermen, who left the tradeto find more rewarding occupations, might return to their earlier profession.

6.02 Fish landings at Mocha will increase from their present level of735 tons per year to 1,550 tons per year at full development. This increaseof 110% will be expected mainly as a result of the fish marketing developmentefforts of Taiz, Dhamar and Ibb. Fish landings at Hodeidah and Khawkhah willalso increase but at less dramatic rates, as their existing marketing outletsare already relatively well developed. Annual catches landed at Hodeidah willincrease from 4,670 tons annually to 6,600 tons annually at full development(+41%) and at Khawkhah fish landings would increase from presently 1,100 tonsto 1,700 tons annually at full development (+55%).

B. Marketing

6.03 Demand for fish in YAR is strong. Rapid increases in fish prices,fish imports and domestic fish landings over the last several years stronglysupport this. During 1976-1979 fish prices have climbed at about twice therate of the prices of other consumer goods, i.e., 48% versus 22% annually.Fish imports have increased from 200 tons in 1972 to 3,800 tons in 1977 andthe fish import bill for 1977/78 has reached about YRls 21.0 million (US$4.7million equivalent). Information on the development of annual fish landingsare rather scarce in YAR; there are however strong indications that fishermenhave responded positively to rapidly climbing fish prices and have increasedfish production within their limits. Demand for fish has similarly increasedin neighboring Saudi Arabia where, traditionally, a substantial portion of thefish caught in YAR waters are landed. With disposable income continuouslyrising in YAR and a sustained strong demand for fish, the marketing prospectsfor the project's incremental fish production will be very good. Even bettermarket prospects can be expected for the project's shrimp production both inYAR and abroad.

6.04 There is a considerable variation in the present annual per caputconsumption of fish in YAR, ranging from more than 60 kg in the fishermencommunities along the coast to practically zero in the more remote interiorprovinces. To increase fish consumption in YAR would be one of the principaldevelopment objectives of the project. Fish marketing development effortswill be directed primarily towards areas where fish consumption at presentis particularly low and irregular. The urban centers along the Sanaa-Taizroad which command large hinterlands will be suitable targets for an inte-grated fish marketing strategy. Their location along the country's mainhighway system will facilitate expeditious fish transport and distribution.Fish marketing along the coast and in most parts of the Tihama are relativelywell developed and the existing marketing infrastructure in this area will beadequate to handle increased fish supplies.

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C. Prices

6.05 Fish prices although relatively high by international standardscompare favorably in YAR with prices of other forms of animal protein. Thenational average retail price for fish is about YRls 14/kg which is consider-ably lower than the price of 60-70 YRls/kg for mutton, of YRIs 45/kg for veal,of YRIs 30/kg for beef and YRls 30-40/kg for domestically produced chicken.The only meat which is within the same price range with fish is importedbroiler which sells at about YRls 10 to 15/kg.

6.06 Fish prices in YAR vary considerably according to species, locationof market and daily volume of catch. Indian Mackerel, which make up 45% ofthe average national fish landings, sells at YRls 4/kg in Hodeidah and at YRIs10/kg in inland markets. King fish, the most favored species, sells at YRls22/kg in Hodeidah and YRls 29/kg in inland markets; and shrimp, which atpresent is only caught as by-catch, is sold to hotels in Hodeidah at YRls 30/kg. The short term supply/price relationship for Hodeidah indicates thatprices vary between 80% and 120% of the median price level. In Khawkhahprices vary between 50% and 188% while in Mocha price variations of between71% and 143% have been observed. These short term supply/price relationshipsreflect the differences in flexibility of these various markets to accommodatevarying supplies of fish. Hodeidah, thanks to its central location and itslarger marketing area, has the least problem in handling varying suppliesof fish. The Tihama markets absorb more fish in the case of above averagecatches while neighboring fishing villages supply more fish than usual if fishlandings at Hodeidah are below average. In general, however, the wide dailyprice fluctuations reflect the general lack of fish storage facilities whichregulate the quantities of fish supplied to the market. It will be one objec-tive of the project to stabilize fish prices through the provision of properstorage facilities. To properly reflect the observed price fluctuationscaused by short term supply variations in calculating the project's financialand economic benefits as well as the fishermen's income, a price elasticity of-.15 for the country as a whole has been assumed. That means a nationwidedoubling of fish landings will reduce the average wholesale price by 15%.This assumption should be considered conservative given the fact that fishprices have increased faster than the YAR consumer price index.

VII. BENEFITS, JUSTIFICATION AND RISKS

A. Project Designed Simulation Model

7.01 To deal adequately with all financial and economic aspects of theproject and to assess the impact of possible adverse variations in some keyassumptions a computer simulation model was designed for the project. Themodel is made up of three separate programs. The first program calculatesthe project cost by year, the foreign exchange component as well as provisions

for price contingencies. The second model calculates average wholesale fish

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prices for the country as a whole and by vessel type. The third and finalprogram is used to estimate on an annual basis the catch, revenues and costsexperienced by the fishing industry at each of the eleven main coastal loca-tions. In addition to calculating the anticipated changes to the fishingindustry the program also estimates the expected distribution of the catchthroughout the country as three market areas. Finally, the model. extractsall the relevant financial cost and benefit streams and adjusts these byshadow prices and taxes to arrive at the economic cost and benefit streamswhich are then used to calculate the project's economic internal rate ofreturn and its net present value. A detailed description of the overallstructure of the model, the interrelationships between input assumptions,programs and output results are contained in the Project File. A schematicrepresentation of the model structure is given in Annex 5.

B. Beneficiaries

7.02 As a major national development effort, the project will benefitdirectly and indirectly large segments of the country's population. Theprincipal beneficiaries will be among those who are actively engaged infish production, distribution and marketing. The benefits of the projectwill however be shared by the masses of consumers who will be provided withsubstantially increased quantities of inexpensive animal protein of highquality. Total employment created by the project has been estimated atapproximately 1,000 new full time jobs. About 650 jobs will be createdamong fishermen as vessel owners and employed fishermen. The remaining350 new jobs will be created in various occupations associated with theoperation and maintenance of physical infrastructure, construction of fishingvessels and the flow of fish from landing to ultimate consumption. Thecoastal zone will benefit most from the project-induced employment as morethan 85% of the new jobs will be created there. The remaining 15% of thenewly created employment opportunities will accrue to the inland provinces.

7.03 It will be very difficult to realistically quantify those Yemeniswho will benefit from the nutritional value of the almost 10,000 incrementaltons of fish that will be supplied to the market annually. In terms ofnutrition, the 10,000 tons of fish will meet the entire animal protein require-ment of about 190,000 people, based on the FAO defined requirement level. Asfish will represent only part of the animal protein requirement in a balanceddiet, the number of people benefiting from the project will be much largerthan 190,000. The project's incremental fish production will cover 26%of YAR's present animal protein deficit.

7.04 In the case of fisheries in YAR, the creation of a substantial numberof employment opportunities will not necessarily be in conflict with theincreasing manpower shortages prevailing everywhere in the country. The lackof economic opportunity within the fisheries sector has caused many Yemenifishermen to leave their profession and their country when more attractive jobalternatives became available at home and in neighboring oil rich countries.It will be the project's overriding objective to rectify the sector's struc-tural deficiencies and through the creation of new investment opportunities

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to reverse the present trend of emigration out of the sector as it holds thepotential of becoming a major supplier of domestically produced animal protein.The project will therefore aim primarily at reintegrating those manpowerresources who left the fisheries sector earlier because of lack of economicopportunity and concentrate on mobilizing the resources presently employed inthe sector to higher levels of productivity.

C. Financial Benefits

7.05 Fishermen Income. Fishermen income in YAR is determined by thetype of fishing vessel used, the location where the fish is landed and bythe custom according to which the catch is divided among the crew, the vesselowner and the vessel itself. Because of the vessel's higher productivitythe catch per fisherman on a sambuk is about double that of a houri fisherman,i.e. 9 tons and 4 tons per year respectively. The higher productivity ofthe sambuk is to some degree offset by the higher prices the houri catchusually receives in the market. Because of the difference in fishing methods,the houris land their fish often in much better condition than the sambuks.The quality price differential that has been observed is about 15% for thesame species. Fish prices in remote landing places with no or only verylimited access to outside markets tend to be lower than in centrally locatedlanding sites.

7.06 Traditionally in YAR, the catch of a fishing vesel is divided intothree equal shares of which the owner of the vessel claims one for himselfand one for the vessel. The remaining share is divided among the crew. Atpresent, the lowest annual income among hired fishermen is received by thoseworking on a houri out of Midi while the highest income is earned by thoseworking on a sambuk out of Hodeidah, they receive YRls 5,300 and YRls 17,300respectively. On average, non-owner fishermen in YAR earn about YRls 11,000per year. Similar income variations exist among vessel owners whose averageannual gross income has been estimated at YRls 20,270.

7.07 Based on the assumption that at the time of full development theexisting share allocation system will still remain in force, the averageincome of the Yemeni hired fishermen will increase by 30% to YRls 14,200annually. The gross income of vessel owners, who are favored by the existingsharing system, will increase by about 60% to YRls 32,400 annually. If thepresent trend of structural changes caused by increasing labor shortagescontinues, then it will be realistic to assume that by the time of fulldevelopment of the project the system of income distribution in the fisheriessector of YAR will be forced to change. If that occurs, then some of theproductivity gains that will have been obtained from introducing more effi-cient fishing vessels under the project would have been redistributed from thevessel owners to the hired fishermen.

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D. Recovery of Costs

7.08 The project will provide facilities that will benefit individualproject participants directly and exclusively, like fishing vessels, marineengines or fish transport vehicles. The costs per unit of investment willbe recovered directly from those beneficiaries through the credit facilityadministered by the ACB. It will be a much more complex undertaking to estab-lish a similar relationship between the costs of project infrastructureinvestments like the Hodeidah fishing port, the Khawbah fish landing pieror the Khawbah road link and their immediate beneficiaries. To recover theinvestment cost of jointly used major infrastructure facilities that representhigh percentages of total project cost like the fishing port in Hodeidah willbe very difficult to organize and practically impossible to enforce. Insist-ing on strict cost recovery of the marine facilities will cause the fishermento bypass project financed infrastructure and return to their traditional wayof landing and handling of fish. The economy will loose from such a develop-ment as the investments will be underutilized and fish quantity and qualitywill not reach projected levels. Since the project will generate sufficienteconomic benefits that will recover those investment costs several timesthroughout the life of the project and the operating and maintenance costs ofthese facilities will be covered by revenues obtained from the leasing ofshore facilities to the private sector, it is recommended that no user chargesbe imposed on the use of the public infrastructure.

E. Economic Benefits

7.09 The project will produce a variety of economic benefits some ofwhich can be clearly identified and quantified while in the case of othersit would be less meaningful to express them in any quantitative form.

Direct Benefits

7.10 The project's principal economic benefit will be an increase infish production from presently 11,600 tons to 21,200 tons at full developmentwhich represents an increase of 83%. The retail value of the annual incre-mental fish production has been estimated at YRls 75.5 million or US$16.7million equivalent. This benefit will be realized through the combinedeffect of the following development activities:

(a) investments in port and fish landing facilities, improvedfishing vessels and shrimp trawlers and processing andstorage facilities to increase the sector's catch capacity;

(b) investment in handling and marketing facilities to accommodatehigher throughput, increase product quality and to reducespoilage losses; and

(c) upgrading the composition of the catch through introducing com-mercial exploitation of the shrimp resources.

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7.11 Other benefits will accrue mainly in the form of cost savings.Better protected off-loading.and berthing facilities to be provided by theproject will save the fishermen of Hodeidah and Khawbah an estimated YRls1.0 million (US$0.2 million equivalent) annually in operating and mainte-nance costs. Another minor benefit will result in the form of road-usesavings from the secondary road that will link with the Jizan-Hodeidah mainroad.

Indirect and Unquantifiable Benefits

7.12 As the first organized development effort ever undertaken in thecountry's fisheries sector, the project can be expected to benefit the sector'sperformance in many ways. Probably the most important of the indirect andunquantifiable benefits will be that it will make the country less dependenton imported animal protein. For a country like YAR which has a very smallexport potential, an efficient domestic food production base is vital to thecountry's economic stability. There will be substantial improvements in theinstitutional support systems like organized lending of medium and long terminvestment capital. The sector's operational capabilities like building,repair and maintenance of improved fishing vessels, etc. will be raised tomore adequate levels.

F. Economic Rate of Return

7.13 The key assumptions model and input data used in the economicanalysis are contained in the project file. For the purpose of calculatingthe project's return to the economy, fish has both been treated as a tradableand non-tradable commodity.

7.14 Based on these assumptions and data, the economic rate of returnfor the project is 22% (considering fish a tradable commodity and using borderprices, the rate of return improves to 28%). The sensitivity of the rates ofreturn to variations in some key assumptions has been tested and switchingvalues have been determined for key variables susceptible to change.

7.15 The results of the sensitivity analysis show that the projectremains a sound investment even with substantial variations in key assump-tions and parameters.

7.16 The results of the switching values analysis suggests that beforethe rate of return of the project will drop below the opportunity cost ofcapital (10%) that:

- project infrastructure costs will have to increase by 98%;

- vessel and truck operating costs will have to escalate byover 39%;

- the price/supply elasticity will have to increase -.22(a 49% increase in negative slope); and

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the increased catch anticipated from the project will haveto fall to only 5,000 tons instead of the forecast of 9,600tons.

7.17 It is reassuring to see that infrastructure cost can practicallydouble before the project will become uneconomic. Given the technical assis-tance provided for the project and YAR's recent private sector performancerecords, it is unlikely that increases in operating cost of 39% will beincurred. The likelihood that fish prices will drop 22% with a doublingof production also seems unlikely given the fact that in recent years fishprices have continuously increased much faster than the consumer price indexin YAR. According to OECD projections, fish prices at international marketwill continue to increase faster than general inflation. Finally, the like-lihood that with the additional catch capacity fish landings only will increaseby 5,000 tons also seems low, since the annual catch of these vessels willhave to be significantly below what is already being achieved by existingsambuks.

G. Risks

7.18 As a result of the limited administrative resources of the publicsector and the explicit wish by the Government to minimize its intervention inthe free market, some aspects of this project can only be realized with thepositive response of the private sector. In the past the fishing industry inYAR has shown a reassuring sense of initiative and entrepreneurship. Effortswill have to be made throughout project implementation by the GCDFR and theACB to ensure that the lending programs to the fishermen are well publicized.In addition, the GCFDR should actively promote the new fish marketing facili-ties in the inland cities and encourage the development of improved transportto these centers.

7.19 Although interest was demonstrated by a private company to operatethe proposed shrimp and fish handling facility at Khawbah, difficulties mayarise in negotiating an acceptable arrangement. If this were to occur, it mayseriously impede the market for the shrimp landed by the new sambuk trawlers.Every effort should be made to seek a suitable operator for the Khawbahfacilities well before construction completion. In the event that a suitableentrepreneur does not emerge immediately it may become necessary for the GCDFRto operate these facilities on an interim basis till one is found.

7.20 A second potential risk of the project relates to the introductionof new fishing methods. Trawling by the artisanal sector has only been triedon a limited basis. Both fishermen and boatbuilders will have to see thebenefits that can be derived from this new fishery. Given the usually conser-vative nature of traditional trades a good effort must be made to expose thenew crafts and the techniques for trawling. The boat building componentof the project should be distributed to ensure that all of the major boatbuilders have an opportunity to see and possibly participate in the construc-tion of these new vessels.

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7.21 A third potential risk concerns the marketing of the project'sincremental fish production will be two-phased. The initial phase will beselling more fish to established fish eaters in the country. No problems areforeseen in marketing more fish to such consumers who at present cannot obtainall the fish they wish to consume. Once this existing demand is fully satis-fied, the marketing of the project's incremental production will enter thesecond phase, where fish will have to be introduced to those consumers whohave had very little or no exposure to fish consumption at all. As with anychange in dietary habits, a certain amount of resistence will have to beovercome. This second phase is mainly concerned with marketing of fish in thecountry's interior. The project's marketing development strategy will concen-trate its efforts in these areas. With the help of women extension workerswho work under bilateral health and nutrition projects, it is expected tosuccessfully penetrate these markets and overcome the initial resistence. Thenutritional value of the fish and its price competitiveness with other sourcesof animal protein will eventually overcome the anticipated initial resistence.

7.22 The final set of risks of the project relate to the anticipatedincrease in productivity. First, although improved port, shore and marketingfacilities are constructed, the fishermen may not increase the length oftheir fishing season appreciably and thus erode some of the potential benefitsof this investment. There are obviously no measures which can force selfemployed labor to work any more than it wishes, however, the GCDFR and theACB should (especially amongst those purchasing new vessels) point out theimportance of achieving a certain number of productive fishing days per yearand translate this added productivity into increased income. With an expand-ing domestic market and improved marketing facilities the risks to fishermenshould be reduced providing greater incentives for increased productivity.Secondly, the expected increase in catch rates resulting from the use ofimproved vessels and equipment may not materialize. The DOF and the GCDFRshould carefully monitor the catch rates of new and old vessels to ensurethat improvements are being realized. In the event that increased catchingproductivity seems to be falling below target, investigations should beundertaken to identify the causes of the low productivity and increased fieldtraining provided to ameliorate the situation.

VIII. AGREEMENTS REACHED AND RECOMMENDATIONS

8.01 Agreement having been reached on the various issues referred to inChapters IV and V of this report, and subject to the conditions of effective-ness in paragraphs 4.10, 4.12 and 4.13, the project is suitable for an IDAcredit of the equivalent of US$17.0 million to the Government of the YemenArab Republic on standard terms.

YEMEN ARAB REPUBLIC

FISHERIES DEVELOPMENT PROJECT

Detailed Characteristics of YAR's Fisheries Sector

-------------------------------------------------------------------- __-------__--------------------------------------------

YEhEN ARAB REPUBLIC - FISHERIES DEVELOPMENT PROJECTFISHINO CHARACTERISrICS LOCATIONt ALL LOCATIONS

AVG CTCH nf---- ==== n=====c= uinn TONNE. ---s--s-- s-n =n minafina

NO. UF'. /DAY TOT -------------------- CATCH COMPOSITION /1-…-------CONS NET(VESSEL TY8E VESS DAYs (KG) CTCH 1 2 3 4 :3 6 7 8 9 LOSS FMEN LNDU

YEAR 1901

I 8tIURI (SALL) 46 200 10 95 43 6 5 12 11 18 16 792 HIJURI (MOTOR) 769 200 25 3872 1742 232 194 503 46t 736 8 260 36053 SAMtPtK (sAtL) 1 200 40 a 4 2 1 1 1 74 S911'HllK (MOTOR) 156 225 217 7614 3502 1904 381 685 2218 914 381 147 70865 HO8TIF. !HAMIOUK

6 T RAWL StAM!It(O

TtOTAL NOW 972 204 58 11509 5291 2144 579 1202 705 1660 389 423 10777TOtrAl. AT START 972 204 58 11589 5291 2144 579 1202 70S 1668 389 423 10777NET l f ff-f-REi;CEN04ow.lRI, (3)HOUDl/FOTAL Cz) 04 90 42 34 34 11 34 43 611 45 2 65 34

----------- 4

1 lOalJRl (Strt .)2 HOURI (MOTOR) 003 214 28 4781 2152 287 239 622 574 908 . a 271 45033 SAM.hUK (SAIL)4 SAMPUN (morOR) 157 252 219 8660 3983 2165 433 779 260 1039 433 148 80785 h1Ji1 *. sAtIBUK 60 .252 200 4241 2035 1060 297 297 127 424 42 57 4141

6 TRAWL sAMIIUK 30 200 318 1908 95 57 496 134 420 57 458 191 38 28 1041

TOT6L NOW 1050 222 84 19590 8266 3569 969 2194 1094 420 -57 2030 191 521 504 18564TOTAL AT SrART 972 204 5H 11589 5291 2144 579 1202 70r; 1668 3r9 423 10777NEI D:VFERENCE 78 18 26 8001 2975 *1426 3s9 Y92 390 * 420 57 1161 191 132 81 7787N0W/STA.RT (Z) 8 9 44 69 56 67 67 s3 5i 70 34 19 72H8tJRI/TOTAL (Z) 76 97 33 24 26 a 25 28 52 32 1 54 24

YEAR 1990 Pz

I HO;IRI (S41L) t2X2 H08URI (MOTOR) 794 214 28 4733 2130 284 237, 615 560 899 7 268 4458 FI3 SAM8NU1 (SAIL.) 'H

4 S4MAIUK (MOTOR) 99 252 218 4899 2254 1225 245. 441 147 588 245 84 45705 bOOOIlF. GAMBUK 127 255 278 9001 4321 2250 630! 630 270 900 90 120 8791

6 Ti.AWL S'IMBUK 40 200 318 2544 127 76 , 661 170 560 76 611 254 51 38 2455,~~~~~-- ---- --- _ --- ____ __ _ _-- ---- --- ---- ---- - --- ---- ---- ----- ---- ---- ----

T.rAL NOW 1050 222 91 21170 6831 31335 1112 2340 1163 560 76 2990 254 393 510 20275TOTAL AT START 972 204 50l 1 157 5291 2144 579 1202 705 1668 389 423 10777

i:r JJIFFi-RENCE 78 1 8 32 95is9 3540 1692 532 1146 45U 560 76 1330 254 4 86 9498IJOW/6TArF 1X3 0 9 56 83 67 79 92 95 6' t]0 1 20 su!:JuuNIJTOlIL CX) 76 97 31 22 24 7 21 26 4'. 30 2 53 22

|1 1 - Indian Mackerel; 2 - King Fish; 3 - Tuna; 4 - Jacks/Barracuda; 5 - Emperor, Mullet,Snapper; 6 - Shrimp; 7 - Lobster; 8 - Other Mixed; 9 - Scrap Fish

--------- ------------------------------------------ ---- -----------------------------------

YEMEN ARAB REPUBLIC - FISHERIES DEVELOPMENT PROJECTFISHING INDUSTRY COSTS (YROOO) LOCATIONI ALL LOCATIONS

REPLACEMENTS TOTAL ADDED TOTAL INVESTMENT EXPENSE8 CO9TS OF OPLRATION------------- NEUP ------------- ---------------------- -

VESSEL TYPE IES ENO OR UNT VES ENO OR VESS ENOS OEAR TOT FIXD VAR MANP TOT--- -- -- -- -- - - -- -- - - -- -- - - -- - -- -- - -- - ------ ---- ----

YkAR 1901____.___________

I HOUR1t (OAlL.) 3 23 3 25 62 12 74 99 284 3922 HOURI (MOTOR) 69 195 385 .69 195 385 1415 1733 192 3339 2000 4464 1;:69 193343 SAIDUK (SAIL) 7 16 244 CAS'UK (MOTOR) 10 19 53 10 19 53 900 1325 477 2702 1317 2970 1i895 211815 .MI)XF. DAIIBUK6 TkhWL SAMIUK

TOTAL NWJU 02 214 463. 82 214 463 2376 3058 682 6116 3423 7434 30064 40921TOTAL AT START 02 214 463 82 214 463 2376 3059 682 6116 3423 7434 30064 40921NLT iIFrrrkcNCElt0U/GTAkT 'tZXHOUIRI/TOTAL (X) 88 91 99 89 91 89 62 57 30 56 61 60 44 48

YEA.R ; 98SI

0,I HOURI (SAILs *2 tl&WUF (tiOTOR) 69 196 394 1 87 214 412 .1794 1854 206 3-843 2089 499S 14349 214333 SAtiIaUK (SAIL)4 SCKtWK (fMUT(IR) 10 19 53 10 19 53 900 1325 477 2702 1325 33!7 17165 218485 tOI.uIf. fiPt1rIUK 1 6 13 .18 19 24 31. 2128 1240 977 4345 815 1007 E0G1 11503*6 TRiAWL SAHPUK 2 3 15 7 9 10 22 1350 1760 594 3704 739 924 4806 6469

…____ --.. _____ _ .…-- --- --- --- --- --- --- ___ ---- ---- ---- ---- ---- ----

TOTAL NOW 82 224 475 43 125 267 518 8162. 6179 2253 14594 4968 11084 45201 61252TOrAL AT START 92 214 463 . 82 214 463 2376 3058 682 6116 3423 7434 30064 40921NET DIFFERENCE 10 12 43 43 St 55 3786 3122 1571 8479 1545 3650 15137 20331Now/SrA1T (Z) 5 3 52 2i 12 159 102 230 139 45 49 50 SOPOIg/Ir'OdTAL (X) 84 88 03 42 70 80no 80 29 30 9 26 42. 45 32 35

YLAR 1990

1 VOMRI (SAIL)2 NOURI tMt1T0iR) 71 198 398 . 71 198 398 1456 1791 199 344S 2065 4939 13826 208313 SA.-.BIt (SAIL.)4 SAh1UK (MOTOR) 1 20 1 20 500 180 680 7S1 1901 9444 120965 MODIF. SAMBUK 5 14 38 13 18 27 51 2016 2040 1607 5663 1726 3855 18218 237986 7RAWL SAMUK 3 5 25 2 5 7 27 750 2160. 729 3639 985 1233 6236 8454

TOTAI. NOW 79 210 481 15 94 233 496 4222 6491 2714 13427 5527 11927 47725 65179 XTOTAL AT SrART 82 214 463 82 214 463 2376 3058 682 6116 3423 7434 30064 40921NEI DIFFERENCE -3 .4 18 15 12 19 33 1045 . 3433. 2033 7311 2104 4494 17661 24258N:OW/START (%) -4 2 4 15 9 7 70 e 112 298 12tl 61 60 59 59He!'RI/TOTAL (X) 90 91 83 76 85 n0 34 , 2E8 7 26 37 41 29 32…_ -------------------------------- _ _ _ _

YEMEN ARAB REPUBLIC - FISHERIES.DEVELOPMENT PROJECTFISHING INDUSTRY RENENUES (YROOO) LOCATIONt ALL LOCATIONS

REVEN TO FISHERMEN REVENUES TO OWNERS NUMBER OF MEN AVERAGE REVtAUC JltS -- - - - - - - -- - - - -

UESSEL TYF'E KIND MONEY TOT KIND MONEY TOT REV VAL FMN OWN TOT FuN OWN

YEAR 1981

I ttOURI (SAIL) 60 167 226 . 40 339 370 31 536 69 46 115 ::.3 8.220 1i$Jrd (MOtOR) 993 7570 8563 662 15370 16032 1429 24369 1154 769 1923 7.4 20.8

!;8Mi';JK (!;-IL) 5 14 19 1 28 29 2 44 6 1 7 3.1 28.84 ShAT1.I( (Ili)TOR) 774 14277 15051 129 20987 29116 3573 46836 936 156 1092 16.1 186.6S MOLsIF. SAIILUK 0* o0 0.06 TRAWL SAhl[:'N 0.0 0.0

------ ------ -- --- ---- -- --- ---- ---- - - - -

1)I'AL NtOU 1831 22028 23059 831 44724 45555' 5035 71787 2165 972 3137 11.0 46.Y.,r:.L tAT START 1031 22028 23859 831 44724 45555 5035 71787 2165 .972 3137 11.0 46.9fit r 8 IFTF;RLNCE 0.0 0.0ttU:J, sr,:r r'(X) 0.0 .* 0.0HOUJI/Tnl'6L CZ) 57 35 37 84 35 36 29 35 56 84 65 65 2 43*0

YEAR 1985

1 W,Ur.I (S4IL) 0.0 0-02 HOUn' c,4rJrOR) 925 8441 9365 616 17137 177S4 1562 27140 1205 803 2008 7.8 22.13 CArl;UK (SAIL) 0.0 0 °0

SAlr:lUK (iMrJtJ0) 694 14506 15200 116 29451 29567 3653 47609 942 157 1099 16.1 188.3'i IOL;IF. SfAMLUK 267 7505 7772 44 15237 15202 1482 24223 360 60 420 21.6 254.76 TF.hUL SAMIUK 160 4005 4165 27 0131 0157 639 12774 180 30 210 23.1 271.9

TdT,;L NOW 2046 34456 36502. 803 69956 70759 7335 111747 2607 1050 3737 13.6 67.4lTi4L AT START 1831 22020 23059 031 44724 45555 5035 71787 2165 972 3137 11*0 46.9NLI DIFFI;REN(E 215. 12428 12643 -20 25232 252D4 2300 39960 522 78 600 Z.6 20.5Now/srART (X) 12 56 53 -3 56 55 46 56 24 .8 19 23.3 43.8HUU1I/lOTALL (X) 45 24 26 77 24 25 21 24 45 76 54 5?*2 32.8

YEAR 1990

I HOURI (SAIL) 0.0 0.02 HllOtJJ I(MofTR) 0 090 8133 9023 593 16513 17106 1507 26153 1191 794 1905 7.6 21.53 br,;1iUK (LA1L) 0.0 0.04 I c l Wr t iUf OR) 383 7981 8364 64 16204 16268 2030 26215 534 89 623 15.7 182.85 r.OLI1F. VtMTAJK 546 15395 15942 91 31257 31340 3393 .50046 762 127 889 20.9 246.86 TRAL S,AMDUN 209 5197 5405 35 10551 10506 829 16577 240 40 200 22.5 264.6 0

--------- -- -- --- -- -- --;----- ---------- --- ---- ---- x' TOTAL NOW 2027 36706 30733 783 74525 75308 ;7759 118'991 2727 1050 3777 14.2 71.7 *TOTAL AT START 1831 22028 23859 831 44724 45555 ,5035 .71707 2165 972 3137 11.0 46.9NET DIFFLRENCE 196 1-4670 14074 -49 29802 29753 t2724 47204 563 70 641 2.2 24,9NCiU/START (X) 11 67 62 -6 67 65 54 66 26 8 20 28.9 53.0HULPI/TOTAL (Z) .44 22 23 76 22 Z3 19 22 44 76 53 53*3 30*0

--------------- -------------- --------- -------------- ____________

-40 - ANNEX 2Page 1

YEMEN ARAB REPUBLIC

FISHERIES DEVELOPMENT PROJECT

Detailed Project Cost Estimates

Yf MthN AABF ,.iL - f iSHi9IE'; 0DEEL POME 1.7 P.UJ[CTF'4UJ I CT CO5 i (US i 10

Rtf- Okl PRICf CU:4T INfFNCI ES AFTER PPICE CONTINGENCIES

PVOJFCT I Li .i'NT jltAE XiZJ FJKuN C0M 1 19b1 1982 199'1 1'184 1985 i7TAL FORGN DO'5ST XFOR

HODFICAH t ANDhDIlh FAC[LITI S8RFAKicATfR 2520 70 176.4 75h 0 1386 1134 0 0 3733 2217 1516 59OUAY 1'69 30 .575 39A4 0 10Y3 8as 0 0 27h9 1980 790 7'1FUEL i. WAFER FACILITIES 30 77 23 7 0 15 15 0 0 4'3 29 1'4 68AUCTION HALL 1s5 . 103 55 0 0 158 0 0 257 135 123 52CHILL PflM 8O 80 5 .8 12 0 0 80 0 0 116 89 2? 77POWER SUPPLY 100 7? 77 23 0 50 5J 0 0 144 97 47 68ICE CRUSiFRS 8 90 7 1 0 G 8 0 0 11 9 2 84WASTF DISPCSAL 20 77 15 I 0 0 10 10 0 32 ZI 11 65RDxFS E S9ARf 13 '35 12 1 0 0 13 0 0 18 16 1 92PROJFCT HOUSING 115 73 b4 31 115 0 0 d 0 140 94 46 67PHYS CONT 977 75 733 Z'4.4 20 49f 4'5) 0 0 1411 921 490 65MO8ILIZ&TION 1320 79 .04' 277 58 198 198 396 0 1859 1306 553 70

SUB-TOTAL 7310 75 5504 160b 663 3230 3J11 406 0 10532 6914 3618 66

KHAWRAH LAN'OING FACILITIESPIER 1,2C0 80 1056 264 0 726 594 0 0 1856 1327 529 71ICE PLANT Ž4o0 35 204 36 0 -20 120 0 0 330 257 73 78SHRIMP HANOLING 333 85 283 SC 50 167 11 0 0 445 349 96 79AUCTION HALL 120 85 102 18 0 60 60 0 0 165 129 36 78WASTE OISEOSAL 1l 85 14 2 0 0 16 0 0 23 18 5 77FUEL E WATER 35 85 30 5 0 18 I 0) 0 a 48 38 11 78GENERATOR E POWFR 110 aS 93 17 0 33 77 0 0 154 120 35 78ICE CRUSHER 4 90 4 0 0 0 4 0 0 6 5 1 84MISCELLANEOUS 22 80t 18 4 7 7 9 0 0 30 22 8 72W0ORKSHOP 30 t80 24 6 0 6 24 0 0- 4i 31 13 71PROJECT H0USINeG 58 73 42 16 58 0 0 0 0 71 48 23 67PHYS CONT - 409 60 327 82 ZO 205 184 0 0 572 410 163 72MOBILIZATION 65b 7v 520 138 263 99 99 19 7 0 927 651 276 70

Su8-TOTAL 335s 81 271o 639 398 1439 1321 197 0 4671 3403 1268 73

KHAtKAH SHOCRE FACILiTIESSALES HOLL 36 90 32 4 i8 18 0 0 0 44l 38 6 86INSULATED STCttAGE 43 90 39 4 13 30 0 0 0 53 4.6 7 86FACILITIFS (OTHFR) 1 90 ;3 2 0 15 0 0 0 19 16 3 86WATER E WASTE 12 S0 11 1 0 12 0 0 0 15 13 2 86POWER 56 90 50) 6 22 34 0 0 0 69 59 9 86PHYS EnNT 24 *l3t 22 2 7 7 10 0 0 31 26 5 85

SUB-TOJAL 18b 90 167 19 60 116 10 0 0 231 199 32 86

MOCHA SiHORE FACILITIESSALES HALL 36 90 32 4 i 8 18 0 0 0 44 38 6 86INSLILATFP ST.AGE . 1 43 au 3) 4 13 30 0 f0 0 53 46 7 86FACILITIfS iOTHER) IS 90 13 2 U 15 0 0 0 19 16 3 86WATER E WASTE 12 90 11 1 0 12 0) 0 0 15 13 2 86POwER 4.. 9o ,0 6 22 34 0 0 0 f4 S9 9 86PHIS CONT -. '. 2? 2 7 7 10 0 0 31 26 5 85

SuB-TOTAL IS6 lo0 147 19 'I0 116 10 0 0 231 199 32 86___________________________ - - - - - - - - - - - - --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - -_

-41 - ANNEX 2Page 2

INLA'.0 MAPYIT 1

5ANAA 28V 1*) 231 68 47 202 0 0 ' 3t4 274 .100 73TAI7 14Z 80) 154 3e8 5 134 0 0 0 24E 1.R2 66 7318H 6hl hO 50 13 11 44 0 0 0 a2 60 Z2 73OHAMAR th3 A) 511 13 1' 44 0 0 0 8a 60 2Z 73PIfYS CONT *,0 L i' 48 12 L 4 4 3) U 0 78 57 21 73

__ _ __ _ _ __ _ _ __ _ _ -- -- -- - -- -- -- - ----- _____ ----- ----- ----- ----- ----- ----- ----- -- - - _ --- _ --- - __-

SUB-TOTAL 667 Pv 634 133 Z00 467 J 0 0 863 633 230 73

VfSSFtS E FLUIPPFNTMOD SAhMUK HULLS 1493 5 $ e$0' . 7 2'ii 29Y ZJ9 249 2)9 2625 1062 1562 40ENCINtS I45tHP) 533 95 506 27 107 107 IC7 107 107 728 657 61 92MOD) FISHING GEAR 180 95 i71 9 36 3h 3 36 36 ?4lo 225 2`0 92NET HAWLERS 240 91 228 12 4d 4b 4' 48 48 32t 300 27 92SAMBUK TRAWLER HQULLS 1000 54 540 460 2G0 200 2 00 200 200 1758 712 1046 40FNGINES tbOHP) 534 95 507 27 107 10C 101 107 107 729 669 61 92TRAWLING GEAR 180 95 1i7 9 3b 3b 36 3J 36 246 225 2t 92HOURI HULLS 137 5 4 74 t3 Z7 27 27 27 e7 241 97 143 *40ENGINES (1tSHp) 30 95 ZS 2 b 6 6 6 6 41 38 3 92HOURI FSHNG GEAR 3 95 3 0 L. 1 1 1 1 4 4 0 92ADD FISHING GEAR " 200 95 190 10 40 40 40 40 40 273 250 23 92ADD ENGINES 100 I % 95 .5 20 20 25 20 2O 137 125 11 92SPARE PARTS 10 95 9 1 2 2 2 2 2 14 13 1 92PHYS COUT: 464 85 394 70 93 93 Y3 93 93 678 520 158 77

SUB-TOTAL 5104 .73 3724 1380 1021 1021 1021 1021 1021 8047 4908 3139 61

TRANSPORTINSULATED TPUCKS 90 95 85 5 0 23 23 23 23 128 117 11 91REFRIOGF*RATED TRULKS 120 95 114 6 O 30 30 30 30 171 156 15 91SPARE PAQTS 5 95 5 0 0 1 1 1 1 7 -b 1 91PHYS CONT 22 95 21 I 0 6 6 6 6 31 29 3 91

SU8-TOTAL 237 95 225 12 0 - 59 59' 59 59 337 308 29 91

TECH ASSIST E CTHERTRAINING 200 100 200 0 100 100 0 0 0 234 234 0 100

TRANSPR2TINSULATED TRUCKS 90 95 85 5 0 23 23 23 23 128 117 11 91RtfRIUGfQATFD TRUCKS 120 915 114 6 0 30 30 30 30 171 156 15 91SPARE PARTS 5 95 5 0 0 1 1 1 1 7 6 1 91PHYS CONT 22 95 21 1 0 6 6 6 6 31 29 3 91

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ - - - - - - - - - - - - _ _ _ _ _ - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - _ - - -_ - - - -_ _-

SU6-fOTAL 237 95 225 12 0 59 59 59 59 337 308 29 91

TECH ASSIST 8 OTrIERTkAINING 200 100 200 0 100 100 C 0 0 234 234 0 ICOTECHNICAL - 1275 100 1275 .0 0 0 4S5 459 332 1791 1791 0 100ESTABLISHMENT OF YfC 100 60 60 40 0 0 50 30 20 185 83 102 45SOIL INVFSTIGATIONS 130 100 130 0 65 65 0 0 0 152 152 0 100EETAILED DESIGN 220 100 220 0 Z20 0 0 0 0 247 247 0 100SUPERVISION 720 100 720 0 346 94 281 0 0 870 870 0 100

Sul-TUTAL 2645 93 2b05 40 731 259 815 489 352 3478 3376 102 97

TOTAL iROJfCT (NO ROAD) 19690 79 15644 4046 3133 6706 _246 2172 1432 28390 19939 8451 70……__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _.__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

PkICE CONTINGENCIES (hO ROAD) 583 2344 3119 1421 1233 8700 4296 4404 49

YEARLY TnTAt INCL CONTINC (NO ROAO) 3716 9051 9165 3594 7605

KHA.FRAH ROAEt LINKCONSTRUCTICN i32xh) 1000 70 700 300 0 500 5O0 0 0 1490 883 607 59

PHYS CnNT 1SO 70 105 45 0 75 75 0 0 224 132 91 59

SU8L-TUTAL 1150 10 805 345 0 575 575 0 0 1714 1016 698 59___________________________ ----- ---- -- __ _ -- - ---- _ --- - _ -- - ---- ----- ---- -__ -- _ _ _ _ - -

I,)TAL PR)Jit CT I wITH RUA() Z0340 79 16449 4391 3133 72E11 6821 2172 1432 30104 20955 9149 70______________________------_--_ -_- - --- ___------ - - - - - - - -- - - - - - - - - -- - - - - -- - - -- - - -- - - - --- ___---__________ -_____-

PR ICE CONrI NCt NC ILS (wITH T 53ROAJ 3 2574 3453 1421 1233 9264 4,506 4758 49_ Y_ _ _ _ _ _ _ _ _ _ _ - -_ - - ---- ---- - _- - _ I _ 7 -85 _ -- ---- -_-- -665

YE ARl Y TlT AL INCI CON114 ING T RO'AD) 171h 985> 10;So?. 9 2h----- ---- ---- ----- ---- ---- ----- ---- ---- ----- ---- ---- ---- -_-_ _ ____- _ _ _______,---_____________ - -------------- __ -

- 42- ANNEX 3

YEMEN ARAB REPUBLIC

FISHERIES DEVELOPMENT PROJECT

Estimated Schedule of Disbursement

IDA Fiscal Year Disbursed Cumulativeand Semester During Semester Disbursements

…------------------ US$ 000…

Fiscal Year 1981

First 750 750Second 1,450 2,200

Fiscal Year 1982

First 2,000 4,200Second 2,700 6,900

Fiscal Year 1983

First 4,300 11,200Second 2,200 13,400

Fiscal Year 1984

First 1,800 15,200Second 1,200 16,400

Fiscal Year 1985

First 400 16,800Second 200 17,000

YEMEN ARAB REPUBLIC

FISHERIES DEVELOPMENT PROJECT

Agricultural Credit Bank

Project Cash Flow(YRls'000)

1 2 3 4 5 6 7 8 9Cash Inflow -- ------ Years -------------------------------------

Paid in Capital /1 1,500.00 3,500.00 5,200.00 5,600.00 4,200.00 - - -

Principal Payments on Project Loans- medium term /2 - 278.39 977.08 2,059.70 3,256.46 3,849.16 3,248.37 2,133.97 898.85- short term /3 - 152.00 228.00 380.00 713.00 836.00 - - -

Interest Payments on Project Loans- medium term /4 - 128.25 410.11 768.41 1,023.28 4,253.04 628.12 303.28 89.98- short term /5 - 16.80 25.20 42.00 78.70 92.40 - - -

Total Inflow 1,500.00 4,075,44 6,840.39 8.850.11 9,271.44 9.030.60 3.876.49 2.437.25 988.83

Cash Outflow

Project Loans- medium term 1,350.00 3,260.00 4,800.00 4,850.00 3,320.00 - - -- short term 160.00 240.00 400.00 750.00 880.00 - - --

Investments 45.00 35.00 45.00 - - 45.00 - - 35.00Operating Expenses 145.00 235.00 250.00 250.00 250.00 250.00 270.00 270.00 270.00

Total Outflow j1,700.00 3.770.00 5,495.00 5850.00 4.450.00 295.00 270.00 270.00 305.00

Ceash surplus (deficit) (200.00) 305.44 1,345.39 3,000.10 4,821.40 8,735.60 3,606.50 2,167.30 683.80Cumulative cash surplus (deficit) (200.00) 105.44 1,450.83 4,450.90 9.272.30 18,007.90 21,614.40 23,781.70 24,446.50

/I Capital Contribution made under the project./2 Four year repayment without grace period.

/3 One year repayment.

/4 9.5Y%./5 10.5%.

-4 4 - ANNEX 5

YEMEVN ARAB REPUBLI C

FIS'-ERIES DEVERLOMENT PROJECT

Schematic Representation of: Model Structure

| Project,

r {~~~~~~~~~~~~~~~~PoImpctcn. of 9ro-1 t Pr 9c Iot ;nopact ofPr

_ ng an, In tgr. ndu Fishing %

_ Distribution IEIAA _ - Ldut-ry_

RKP5DAT) (F'5i}DAT)_

Cost Benefit Project Cost Wholesale Prices

and .tarketing by Year rith by Vessel rype

Assuaptions: f Contingencies (E.Xl 2)

Fshi-ag Catch

Characteristics

by Location.

Vessels ar.d

Species

Fishermn, Own.ers | Pshing industry

and 14holesaler Costs by Locat- on

Reevenue by :,ccatica a nd vessel r-ype

ar.d vessel lype EXH 51

(Ea 4i'.

_ atcn, Renrenue

and Costs for

allocatIons_

Average Annual itibto

Rv nue and Coses ~~~~~~~of Catch to by Vessel Type .Markets

(EXH 7) (EE91

71Fihing ZIqdustry T ransportationX TDt-Al and Incre-|

Total and Incre- | Requiramen-s |m rental Value of

mental Sales and 1 ar.d cc;szs ||Consumptcion by j

Costs (2mi ) MarketI

|(EXH S) _ iI XR 1O)

e 1 j~~~~~~~~cnm~| c.knaiysls

- 45 - ANNEX 6Page 1

YEMEN ARAB REPUBLIC

FISHERIES DEVELOPMENT PROJECT

Selected Documents and Data Available in the Project File

A. Selected Reports, Studies and Documents Relating to the Project

Al "Fisheries and Marketing in the Yemen Arab Republic" - FAO TechnicalReport No. 13, IOP/TECH/77/13, Indian Ocean Programme, Rome 1977.

A2 "Study to Establish the Viability of a Shrimp Fishing Industry" FAO/TF/YEM/11, Rome 1978.

A3 "Development of Landing Places and Minor Fishery Harbours in theYemen Arab Republic" by Consultant Hostrup-Schultz and Sorensen,Copenhagen Denmark, for FAO Revised Draft, November 1979.

A4 "Report of the Preparation Mission for Yemen Arab Republic, FisheriesDevelopment Project" by FAO/World Bank Cooperative Programme, ReportNo. 39/79YAR6, Rome 1979.

B. Selected Working Papers Prepared by IDA Staff and Consultants

Bi Field Notes on Meetings and Observations.

B2 Computer Simulation Model Designed for the Project.

B3 Price Structure and Mechanism for Fish.

B4 The Importance of Fish as a Source of Animal Protein.

B5 Regional and Development Impacts.

B6 Present and Future Income of Fishermen and Others.

B7 Employment Effects of Project.

BS Project Cost, Phasing and Price Contingencies.

B9 Detailed Estimates of Fishing Characteristics, Sector Revenue andIndustry Costs by Location.

B1O Assumptions Regarding Vessel and Truck Costs Including ForeignExchange Component.

Bll Assumptions Regarding Retail and Wholesale Costs and Revenues.

B12 Cash Flow and Financial Analysis of Vessel Operations.

-46- ANNEX 6

Page 2

B13 Road Benefits.

B14 Other Economic Port Benefits.

B15 Detailed Sensitivity Test Results.

B16 Accommodation Requirements and Costs.

B17 Processing Industry Cash Flow.

B18 General Corporation for the Development of Fish Resources:Cash Flow.

B19 Catch Estimates and Maximum Sustainable Yield.

B20 Program Listing and Data File.

YEMEN ARAB REPUBLICFISHERIES DEVELOPMENT PROJECT

ORGANIZATION CHART

MINISTRY OF HHMUNICIPA LITIESMi, YOAGICTRHIHYAUOIY

DEPARTMENTOF FISHERIES

FISHERIESTRAINING

DEMONSTRA- T ION CENTE R G ENER A LCORP OR ATION|

FOR THE DEVELOPMENT OF|

FISH RESOURCES

POECT IMPLEM EN-

_ -- _ _- _ _ _ _ _ _ _ _,TATION UNIT -

I~~~~~ AGRICULTURALMUNICIPALITY AGRIT KHAWBAH

FISH MARKETS C HODEIDAH BANK ROAD LINK_ _IZ r FISHING PORT ON LENDING TOSANAA SHORE FACILITIES

T*IZ U KHAWBAHIBB CL FISHING PIERDHAMAR PRIVATE SHORE FACILITIES FISHERMEN

SECTOR FISH MERCHANTSENTERPRISES KHAWKHAHr SHORE FACILITIES

IL J MOCHA

_WSHORE FACILITIES

World Bank -21585

YEMEN ARAB REPUBLICFISHERIES DEVELOPMENT PROJECT

IMPLEMENTATION SCHEDULE

CALENDER YEAR 1980 1981 1982 1983 1984 1985

Activity … … … … … … … … … … … … … … … … … … … …-

_ 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

A. MARINE AND SHORE FACILITIES

1. Additional Site Investigation

2. Preparation of DetailedDesigns and Tender Documents

3. Tendering and Bid Evaluation

4. Contract Award

5. Mobilization

6. Construction- - - - -

B. BOAT BUILDING

1. Modified Sambuks _ = = = - = = = _ _ _

2. Houris _ - _ - _ _ _ =

3. Shrimp Trawlers _ -_ _ _ _ _

C. INLAND FISH MARKETS

1. Sanaa = = - _

2. Taiz

3. Ibb

4. Dhamar

D. KHAWBAH ROAD LINK _ -_ _ _

E. TECHNICAL ASSISTANCE

1. Project Manager _ _ = = = = = - -_ _ = _

2. Boat Builder _ _ = = - - - = =

3. Master Fisherman _ - _ _ _ - -

4. Crew of Fishermen

5. Fish Marketing Advisor _ = = _ _ - _ _ _

6. Credit Advisor _ _ ---I------ -

World Bank -21354

YEMEN ARAB REPUBLICFISHERIES DEVELOPMENT PROJECT

SAMBUK TRAWLER

GILL NET HAULER

9I

2 3 _ _ _ __~~2

______ - ~ - ncreased _ r f y_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

FULLER SECTIONS TO PERMIT OUTLINE BODY PLAN SECTION AT GILL NET HAULERENGINE POSITION MORE AFT World Bank-21383

YEMEN ARAB REPUBLICFISHERIES DEVELOPMENT PROJECT

IMPROVED SAMBUK

CON L TT TIINSULATED NETHAULINGPLACE FORE PEAK

~~~~~ 5

CONTROL THAT THERE ISISPACE FOR THE STRONGER OUTLINE BODY PLAN SECTION AT GILL NET HAULERENGINE

World Bank-21384

I

I

IBRD 14749

\5rtz)s 1RAO \ $0* 599 te 44 YEMEN ARAB REPUBLIC FEBRUARYI190

S A U D I A R A B I A FISHERIES DEVElOPMENT PROJECTzt0r55.= Z , > \ MAJOR INFRASTRUCTURE

_O OAOAE 'V < VDHAHRANBY LOCATION

PROJECTIsi5tESrAJ Rj [. Ports ond Loading Facilihtes p.j nlWad Morkets

~~~ 0 N NARAN ~~~~~~~~~~~~~~~O Sho-e F-cliies ,ncl,cding SOP Sh-inp PoessVrsN ,'-' weAraNUg,1A:rx Fo-FgZ ./ \ > ONAJRAN Wholesale Markets Processing

U- --.--- N. J Malsiog -Road

Kir, rlH,otlA \ 508¢.14 5 8 NON-PROJECT*0. / ~~~~~~~~~~~~~~~~~~~Pavd Primay Roads

______________________-_______|__ SAMARA --- Primary Roads Under Constructios

JIZAN i Other Roads

SAADAF\ Airports~~~~BANI ~~~~~~~~~~~0 Cities, Ton,ns a,,d Villages

UWAIR ° National Capilals

rcJ \C°BERAT Moan Wadis

Internot-oal Boundalries

C HARAD

MAIDI SH HARA

HOTH |

)HAMER 0 20 KILOMETERS 40 100AL

ABS 0

MAHABISHA NC 20 40 M0

MILES

LUHAIYA uLUHAIYA,/ eOH AN HAJJA -- MRIAN -A

KHAWBAH 0 AL W A TOOR 10

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$~~o~ n-~~ .1 SAUDI ARABIA ~~~YEMAEN ARAB REPUBLIC:30''ft Nr ,,;,-(lr- S A U D I A R A B AFISHERIES DEVELOPMENT PROJECT

L_ NE SUWAT \FISH LANDINGS AND DISTRIBUTIONDHAHRAN

LIOITEOArS% 00 r

00 .7 - ~~~~~~~~~ ~ ~~~NAJRAN 0

- 10.- Paved Pr mary Roods', / ! ---Pr I`ory Ro od s Under C onstruction

S % t o5AMARA Other Roads

JIZAN Mo,n Wadis

\" ~- SAADAH / A.sportsO Caies, To-ss ond Vdiloges

. \ r \'vUWAIR I ' * Not-anal Copitils

\ [ ~ '\ r °BE RAT | _ Regianal Boundrn s

- .-. reat-aiona Boundories

396

+ 3 1 ~~~~~~~~~SHIHAR \/

' \ / } - ' ', } ~~~~~~~~~~~~~~~~~~~~~0 20 AO 50 80 1100

-16' - 0Bj 20 °OAHABISg [HAMER KILOMElERS

-16- 0 OA~~~~~~~~~~~~~~~~~~~~~~~~~~~2 2 0n2,618~~~~~~~~~~~~~~~~~~~~~~~05

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YEMEN ARAB REPUBLIC

FISHERIES DEVELOPMENT PROJECTKhowbah Fishing Quay

\This ntap has been prL *red bY the World Bank s staff soc/sively fort t2conconietno

soundarcies sh?own on this p do not imply, on the p oan dgotent Ott legal stu ofnritory oranden t Project area

- Project buildings

1111111111 \Existing buildings

Shoreline

Boni Sherl -- 2-- Bothymetric contours

\ / / . 1 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~i n meters

'Shrima ~~~~~~0 20 40 60 80 100

Ls 7-- liLandirng Grocer METERS

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RtP OFEGYPT .U

\~ \ISAUDI ARABIA

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'---0f t SAUDI ARABIA FISHERIES DEVELOPMENT PROJECT-20- ~ ~ ~ ~ ~ ~ ~ *'20' -. H r o

t6MAN Hodeidah Fisheries HarborSUDAN/ O EE

Ho hida~A?; a ARA.......... ....... /AEfH ___-> ....... E Project area Shoreline

! DJIBOUjJ AiMlf 2' AdN SEA EEi'. i Project buildings 2- - Bathymetric contours in meters

ioS E IO'- -- T7-F l 7-r Embankments -- 7 Elevation contours in meters

ETHIOPIA .-SMAI

7 Existing buildings

I-Internat,onalboundories

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Ii [t .1 7 J-q-- JI I

Fish

\4\ ̂ > ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~it[u ngJ|X//t\ F ~~tsh Landing |-___IJ_____|_|_f________

This map has been prepared by the World Bank's staff eaclssively for the convenienceof the readers of the report to which it is attached The denominations used and the > i

boundaries howa on this map do not imply, on the part of the World Bank and ,ts 0 20 40 60 80 100affiliates, any judgment on the legal status of any termtory or any endorsement or , ./

acceptnce of such boundarns. METERS _/ COacc __ _ _ __ _ __ _ _ __ptan_ __ _ __ _ _ __ _ __ _ _002