Documt of

The World Bank

FOR OFFCIAL USE ONLY

Repwt No. P-3627-UNT

REPORT AND RECO1(NDATION

OF THE

PRESIDENT OF TP!

i TERKATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED LOAN

IN AN AMUNT EQUIVALENT TO US$122 MILLION

TO THE

FEDERAL REPUBLIC OF NIGERIA

FOR A

KADU'A. STATE IN;TEGRATED AGRICULTURAL DEVELOPMENT PROJECT

-May 18, 1984

This doemmet his ret i kt,huio ad may be med by redlpieuts omay is the penfw_me oftheir oMil dute Ins otet may not oderwise be dislmd width Wld Bank autherntim

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CURRENCY EQUIVALENTS

Calendar 1983 March 1984

Currency Unit = Naira (N) NUS$1 = N 0.72 0.75Ni US$1.38 US$1.34

WEIGHTS AND MEASURES

1 metric (m) ton = 0.98 long ton1 hectare (ha) 2.47 acres1 kilometer (km) = 0.62 mile

ABBREVIATIONS

ADP - Agricultural Development ProjectASP - Advanced Service PackageBSP - Basic Service PackageFARA - Federal Agricultural Recruitment AgencyFASCOC - Farmers Supply CompanyFUA - Federal Ministry of AgricultureFMG - Federal Military GovernmentFPP - Food Production PlanICB - International Competitive BiddingIRDP - Kaduna State Integrated Rural Development ProjectKDADP - Kaduna Agricultural Development ProjectKDSG - Kaduna State GovernmentKDAPNL - Kaduna Agricultural Project Management UnitKDADEC - Kaduna Agriciltural Development Project Executive CommitteeLGC - Local Government CouncilLNC. - Liquified Natural Gasmbd - million barrels per day14OA - Kaduna State Ministry of AgricultureZDC - Zonal Development Committee

FISCAL YEAR

January 1 - December 31

FOR OFFICIAL USE ONLY

NIGERIA

KADUNA STATE INTEGRATED AGRICULTUJAL DEEL0PMENT PROJECT

LOAN AND PROJECT S1TRR!AlRy

Borrover: Federal Republic of Nigeria

Beneficiary: Kaduna State of Nigeria

Amount: US$122 million equivalent, including capitalizedfront-end fee.

Terms: Payable over 17 years including 4 years of grace at thestandard variable interest rate.

Relending Terms: The full amount of US$122 million wOuld be onlent to theKaduna State Government on the Same terms as the Bankloan. The Kaduna State GOvernment would carry theforeign exchange risk.

Project Description: The project would seek to apply statewide the successfulexperience of the Funtia Agricultural DevelopmentProject (Loan 1092-UNI) which was located in the centralzone of Kaduna State. SiIilar to its predecessor, theproject would consist of a package of farm supportservices and physical infrastrucrture designed to benefitsome 430,000 smallholder farn1 fsilies throughout theState. Support services would include extension advice,improved seeds, farm inPut supply and crop protectionmea-ures. Physical infrastructure would include theconstruction of feeder roads and small dams for wateringcattle.

To implement the project, the State iinistry of Agricul-ture would be reorganized to accommOdate four zonalunits of management, each modeled along lines similar tothe Funtua management jait. & number of senior postswould be filled initiallY by Internationally recruitedstaff and a training program would be undertaken toupgrade local managerial and technical skills. TheFederal Agricultural Recruitment Agency would recruitsenior staff, and consultant services -4u.ld be engagedto support the project man'agement with Ipecializedskills and services.

The technical risks of prOject implementation are notgreat because the basic agricultural package is simpleand well tested. To reduce the risk of project progressbeing imDaired by finanCial or managerial problems.arrangements have been made to improve the flow ofcounterpart funding and to furnish the project withproper staffing.

This dcocument has a restricted distributoon and may be used by recipient only in the performance Oftheir official duties- Its contents may not otherwise be discI'sed without World Bank authorization.

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Estimated Cost:(including taxes and duties)

Local Foreign Total-CS(US$mi llion)--

4anagement, Planning and Evaluation 16.2 9.2 25.4Training and Staff Development 5.1 4.2 9.3Extension 27.0 4.7 31.7Agricultural Research 4.5 2.2 6.7Civil Works and Maintenance 47.9 26.0 73.9Fadama Irrigation 3.8 2.2 6.0Seed Multiplication 4.2 1.5 5.7Forestry 3.8 1.9 5.6Farmers Supply Company

and Farm Inputs 19.8 13.0 32.9

Subtotal 132.3 64.9 197.2

Less pre-project level ofexpenditure on staff salaries -51.0 - -51.0

Total Baseline Costs 81.3 64.9 146.2

Physical contingencies 4.8 3.9 8.7Price contingencies 27.2 11.6 38.8

Total Project Costs 113.3 80.4 193.7

Front end fee - 0.3 0.3

Total Financing Requirements 113.3 80.7 194.0

Financing Plan:

IBRD 41.3 80.7 122.0Federal Government 39.0 - 39.0Kaduna State Government 24.0 - 24.0Farmers 9.0 - 9.0

Total 113.3 80.7 194.0

Estimated Disbursements:

Bank FY 1985 1986 1987 1988 1989 1990---- US S million----

Annual 47.7 27.5 18.0 17.0 9.0 2.8Cumulative 47.7 75.2 93.2 110.2 119.2 122.0

Rate of Return: 16 percent

Staff Appraisal Report: 4512-UNI dated September 20, 1983

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

REPORT AND RECOMMENDATION OF THE PRESIDENTTO THE EXECUTIVE DIRECTORS ON A

PROPOSED LOAN TO THE FEDERAL REPUBLIC OF NIGERIAFOR A KADUNA STATE INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT

1. I submit the following report and recommendation on a proposed loanto the Federal Republic of Nigeria for the equivalent of US$122 million tohelp finance a statewide project for agricultural development in Kaduna Stateof Nigeria. The loan would have a term of 17 years, including 4 years ofgrace, with interest at the standard variable rate. The proceeds of the loanwould be onr-lent to Kaduna State on the same terms as the Bank loan and theState would carry the foreign exchange risk.

PART I - THE ECONOMY

2. The civilian government of Nigeria was replaced by a militarygovernment on December 31, L983. The assessment of the Nigerian economicsituation in this report is based largely on the work of an economic updatingmission of February/March 1984, a Structural Adjustment Loan Appraisal Missionof October 1983 and a Public Expenditure Review mission of May 1983. Thefindings of a 1982 economic mission were reflected in a Country EconomicReport (No. 4506-UNI) which was distributed to the Executive Directors onAugust 15, 1983. Annex I presents selected social and economic indicators forNigeria.

Background

3. Nigeria, with a population of over 90 million in 1983, is the mostpopulous country in Africa. Among sub-Saharan Bank members, Nigeria accountedfor about 45 percent of gross output and more than 60 percent of regionalinvestment in 1980. Its GNP per capita is estimated at about US$860 in 1982,which is twice the average for sub-Saharan Africa. While Nigeria, as a majoroil exporter since the early seventies, enjoyed a substantially improvedresource base from increased oil revenues, it still remains at a very earlystage of development in terms of socio-economic indicators, in which itcompares with other sub-Saharan countries.

4. Following a civil war and 13 years of military rule, a new federalconstitution w.s adopted, and an elected civilian government came into powerin 1979. This government (led by President Shagari) was reelected in August1983. The Nigerian military took over the government in December of the sameyear. The new military government is led by General Buhari.

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Macro-economic Developments

5. Nigeria has been undergoing a rapid socio-economic transformationsince the upsurge of oil prices in 1973-74, which dramatically altered thecountry's resource position. During the seventies, Nigeria's developmentstrategy was based on sustaining a high rate of growth and diversifying theeconomy through the resources generated by the oil sector. The principalobjective of the policies pursued by the Nigerian decision-makers was totranslate the large oil revenues accrued-about US$1 00 billion in currentprices during the 1973-81 period--into invsestments in economic, social, andphysical infrastructure. While there have been some 'non-economic invest-ments and waste, significant development gains were made in both economic andsocial infrastructure. Transport infrastructure, particularly roads andports, expanded considerably. Power generating capacity tripled, and refiningcapacity has more than quadrupled since 1973. Manufacturing grew at anaverage annual rate of 10 percent during the 1973-82 period although there wasa highly distorted investment structure. There also has been a rapid spreadof education at all levels; in particular, the primary enrollment ratio, whichwas about 35 percent in the early seventies, has more than doubled.

6. Developments were not as positive in some other ar-eas. In agricul-ture, overall output remained virtually stagnant during the 1973-83 period,with the production of grains increasing at the same rate as the populationgrowth rate, but with the production of root and export crops decliningsubstantially. Within a decade, Nigeri- became a major food importer (US$2.7billion of imports in 1982). This was caused partly by a sudden and rapidgrowta of public expenditures, which outpaced the growth of public revenue,and which, along with a dramatic expansion in domestic demand, resulted inhigh rates of inflation. Inflation coupled with an appreciating domesticcurrency pushed up domestic costs of production, thus putting the commodity-producing sectors at a disadvantage vis-a-vis imports and non-traded goods.This encouraged diversion of resources from commodity production to services(including trade and construction). Both agriculture and industry became"high-cost producers. Trade and exchange rate policies, which were formu-lated in response to frequent swings in oil export earnings, were largely usedto dampen inflationary pressures or ration imports rather than to provideappropriate incentives to domestic production. This was partly due to thefact that, as a result of the fluctuations in thie world oil markets and theirimpact on the balance of payments and government revenues, Nigerian policy-makers were preoccupied with short-term crisis management. This divertedattention from the formulation of longer term policies to reduce the country'sdependence on oil and to strengthen the domestic productive sectors.

7. The Fourth Development Plan (1981-85) was prepared in 1980 when theworld oil markets presented a favorable outlook, Nigeria's oil exports for theyear amounted to US$25 billion and foreign exchange reserves exceeded US$iObillion. The Plan, accordingly, reflected an ambitious investment program.It envisaged total investment of N80 billion (US$120 billion) over the period1981-85, half of which was to be invested directly by the Federal Governmentand a quarter directly by the states - with the remaining quarter to beinvested by the private sector. Emphasis was placed on the development of

agriculture (through statewide agricultural support programs and massive

irrigacion schemes) and the creation of a substantial heavy industrial basebased on cheap energy (steel, petrochemicals etc.) both supported by sub-stantial investments in infrastructure. Nigeria's development plans, however,were overtaken by adverse developments in the oil sector which started in 1981and have continued to date. In large part Nigeria's economic problems during1981-83 were a reflection of the inability of Nigerian decisionmakers to cutback on the momentum generated by embarking upon a massive public investmentprogram and a continued belief that oil markets (and Nigerian oil revenues)would recover.

8. In mid-1981 the world oil markets began to deteriorate sharply.Nigeria's oil production fell by one third from its 1980 level of 2.06 mbd to1.44 mbd in 1981, and subsequently declined further to 1.23 mbd in 1983.Coupled with a decline in the oil price from a peak of US$39 per barrel in1981 to US$29.91 per barrel in 1983, oil exports declined from US$25 billionin 1980 to US$17.4 billion in 1981 and to only US$10 billion in 1983. TheGovernment was at first reluctant to come to grips with the situation,counting, along with many other analysts, on a quick recovery in the world oilmarket. Imports of goods continL d to rise to a peak of US$18 billion in1981, resulting in a current account deficit of US$6 billion, which had to befinanced largely through the drawing down of foreign exchange reserves andexternal borrowing. Confronted by a worsening balance of payments situation,the Government reacted in April 1982 by introducing a number of austeritymeasures aimed at stabilizing the domestic and external financial situation.These measures failed to achieve the stabilization objective; imports of goodsin 1982 declined marginally to US$17 billion while resulting in a widercurrent account deficit of US$7.3 billion. Reserves declined further to onlyUS$1.4 billion by the end of 1982, while trade payment arrears of US$4 billionwere accumulated.

9. By 1983, however, previous measures in the form of quantitativerestrictions together with a growing reluctance of the trading partners toextend further trade credits to Nigeria led to a reduced import level ofUS$12.2 billion. Even so the current account deficit remained high at US$5billion. This was largely financed by further accumulation of trade paymentarrears (US$3.8 billion), a process which had already begun during 1982.Discussions with major overseas creditor banks resulted in the rescheduling ofthe arrears owed to these institutions (for confirmation of letters of credit)of about US$1.9 billion accumulated prior to August 31, 1983. Repayments areto be made over a period of 31 months starting January 1984. In April 1984,the Government completed negotiations to reschedule US$3-3.5 billion of theremaining arrears incurred under 'open-account' inter-company import financing.This agreement includes only those arrears which were not covered by exportcredit insurance and reschedules the payments over a period of six yearsincluding a grace period of two and a half years at an interest rate 1 percentover LIBOR. The only outstanding arrears at this point are US$2-2.5 billioninsured by export credit agencies. It is likely that these remaining arrearswill be rescheduled on the same terms as uninsured debt.

10. The deterioration in the external financial situation had a severeimpact upon the fiscal position of the Federal and State Governments as wellas on growth. Federally collected revenues fell from N15.2 billion in 1980 to

NI12.0 billion in 1983, because oil revenues account for an average of about60 percent of total revenues. Until 1984, the Federal Government did not re-duce expenditures in line with the reduced revenues, thus large budget deficitsappeared over the period 1981-83, with the deficit/GDP ratio 8 percent. Inorder to finance these deficits, the Government borrowed from the Central Bankand this coupled with the physical shortages of many imported commodities ledto an acceleration in the inflation rate, which soared to over 30 percent in1983. As a result of a 30 percent decline in imports in real terms, domesticoutput contracted ir 1983. In addition to the decline in manufacturing, theconstruction sector suffered from an almost one-third decline in gross fixedinvestment. In 1983, the decline in non-oil GDP is estimated at five percent,while the GDP declined at an average rate of five percent per annum over the1981-83 period.

11. The prospects for the Nigerian economy in 1984 remain uncertain.With oil export revenues estimated at US$11.1 billion (i.e. projected oilexports of 1.04 mbd at US$30 per barrel), imports will have to be reducedfurther from 1983 levels to accommodate higher debt service payments of aboutUS$4.3 billion in 1984. The adverse effects of a severe drought in the northon agricultural production will place a further burden on imports. So far,the Federal Military Government (FMG) has tightened import controls whilefiscal and monetary policy is predicated on the outcome of the budgetaryreview process. The Government proposes to make reductions in publicexpenditures and to this end has instituted a Project Review Committee whichis currently reviewing projects funded under the capital budget. All projectswill be categorized as core" or non-core , the former receiving fullfunding, the latter being shelved pending future availability of funds orabandoned. While an increase of 0.1 mbd in Nigeria's OPEC oil production quotawould generate US$1.0 billion annually in additional export revenues andimprove the economic outlook, in the medium term, real economic improvementwill depend upon the outcome of the negotiations with the IMF concerning anExtended Fund Facility (EFF) and the adoption by the Government of policiestowards economic stabilization and the longer term goals of structuraladjustment and diversification of the economy.

Adjustment Policy Issues

12. At present, the Nigerian economy faces two critical issues: first,management of the short-run financial crisis and stabilization of the economy;and second, longer-term structural adjustment of the economy by stimulatingproductive sectors, lessening dependence on oil, and developing a wider re-source base. With regard to the short term, the additional measures that theFMG took in January 1984 to control imports and domestic expenditures may helpto arrest a further deterioration of the external and internal financialsituaticn. However, the external arrears need to be eliminated now, particu-larly in view of the requirement for substantial external borrowing in thenear future. The IMF, which has been asked .o examine the possibility ofassisting Nigeria through an EFF, is taking the need for such reschedulinginto account in putting together a financing package to meet Nigeria's minimalexternal financing requirements.

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13. While a rebound in oil revenues would help Nigeria to overcome thecuirent crisis, it will not resolve the structural issues facing the economy.More vigorous and consistent policies, beyond the measures taken to restore'inancial stability; will be needed to bring about structural change. Thechief requirements comprise: (i) further incentives for efficient exportpromotion and import substitution, including appropriate exchange rate,tariff, and credit policies; (ii) complementary steps to strengthen thebalance of payments through judicious management of foreign borrowing andexternal reserves; (iii) continued control of aggregate demand throughprudence in monetary, fiscal, and wage policies; (iv) improving the com-position and implementation of public investment to increase its 'fficiency;and (v) taking steps such as raising interest rates and improving taxcollection, to increase private and public savings and investment. Thesepolicy areas accordingly form the basis of both the IMF's EFF and a proposedBank Structural Adjustment Loan (SAL).

Prospects and Financing of Development

14. Although Nigeria's exportable crude oil surpluses are expected to besignificantly reduced well before the turn of the century, the bulk of itsforeign exchange resources will continue to come from the hydrocarbon sectorsduring the next twenty years. This will probably include liquified naturalgas (LNG) for which a major production facility is estimated to come on streamnear the end of the decade and some petrochemical as well as oil exports. Tomaintain economic growth, major structural changes are needed in order toadapt the economy to lower levels of oil export earnings. In the short-run,the volume of Nigeria's oil exports is likely to be determined by theuncertain conditions of the world oil markets rather than by the deliberateextraction policies of the Government. It is projected that oil productionwould rise to 1.6 mbd in 1986, from its level of 1.23 mbd in 1983.

I5. Terms of trade are expected to deteriorate somewhat in the short runand then to improve beyond 1986. However, gains from terms of trade will notsubstantially alter the longer-run resource picture or the need for structuraladjustment.

16. External borrowing requirements in the short- and long-term will besubstantial in view of slow improvements in oil export revenues, the need toclear payment arrears, and the requirements of major ongoing projects. Tnsubsequent years the overall deficit is likely to remain large. Thus, thebalance of payments prospects for these years are particularly troublesome.Large claims on foreign exchange earnings are due in the next six years,essentially on account of trade arrears and repayment of public guaranteeddebt. Under conservative assumptions with respect to imports, borrowingrequirements for the period 1984-86 are estimated at about US$13.4 billion(excluding the financing needs of a proposed LNG project). Even at this levelthe investment program would have to be highly constrained. Since the levelof reserves is already quite low, further drawdowns cannot be used to financethe deficit as happened in 1981 and 1982. Thus, quick disbursing externalborrowing is needed to fill the gap. Estimates of future debt service ratioshave had to be revised upwards in the light of lower forecasts of oil pro-duction and prices and, more importantly, of the arrears. The debt service

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ratio, which has been low until recently (around 9.6 percent in 1982 and 19.5percent in 1983) will increase substantially. Under the terms of the recentand proposed agreements to reschedule the trade arrears the debt service ratiowould jump to 35 percent in 1984, 39 percent in 1985, and thereafter graduallydecline to 22 percent by 1990. Nigeria's external financial situationreflects a short-term liquidity crisis rather than a long-term insolvencyproblem. While recognizing that Nigeria has a severe short-term debt problem,especially over the period 1984-88, Nigeria is creditworthy for medium- andlong-term borrowing, provided sound economic policies are pursued by theGovernment. Indeed, increased lending that would disburse over the next fewyears when the debt service ratio is sharply increased and thus importcapacity sharply reduced, would be a vital component of the economic reformand recovery program.

PART T - BANK GROUP OPERATIONS IN NIGERIA 1/

17. BatiK and IJA lending to Nigeria as of March 30, 1984 amounted toUS$2,428.3 million (,.et of cancellations). The amount of these loans andcredits disbursed as of March 30, 1984 was US$1,181.4 million, leaving anundisbursed balance of US$1,221.9 million. Agriculture accounts for about47 percent of total commitments; transport, power, gas and water supplytogether for about 38 percent; and education, industry, urban, and the post-war rehabilitation loan for the remaining 15 percent. There have been onlytwo IDA credits to Nigeria, for US$35.3 miillion; both are fully disbursed.IFC has made five loans to borrowers totalling US$17.3 million, and six equityinvestments totalling US$4.9 million. Of these amounts, US$5.8 million havebeen repaid, cancelled., or sold. Annex II contains a summary statement ofBank loans, IDA credits, and IFC investments.

18. As a result of the abrupt decline in earnings from oil, public reve-nues have fallen sharply, causing many of the ongoing projects to run intoserious counterpart funding problems. This issue is particula-ly acute forsome of the state-level agricultural projects. The Bank, the Federal Govern-ment, and the relevant state governments have taken various measures to alle-viate the situation. The Bank has agreed to the reallocation of proceeds andrevisiol of disbursement percentages to speed up disbursements, and theFederal Government has established a development loan stock scheme providingsupplementary loans for agricultural development projects in the states. As aresult, the prospects for state funding of Bank-assisted projects are nowbrighter.

19. In view of the efforts made by the Nigerian authorities and theserious foreign exchange constraints projected for the coming years, wepropose to continue to respond positively to the Government's request foradditional financial and technical assistance. However, such assistance would

1/ This section is substantially unchanged from the President's Reportfor the Gas Technical Assistance Project approved by the Board on March20, 1984.

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not be fully effective without changes in the country's macro-economic andsectoral policy framework. The Bank is therefore considering non-projectassistance aimed at supporting specific macro-economic and sectoral policyinitiatives; this included, in the first instance, the Fertilizer Loanapproved by the Executive Directors on September 13, 1983. The Bank is alsoconsidering a request from the Government for a Structural Adjustment Loan.

20. Provided appropriate policy changes are undertaken, an expanded Banklending program would aim primarily at the urgent diversigication of Nigeria'seconomy to reduce its excessive dependence upon petroleum as a source offoreign exchange and fiscal -evenue. At the same time, the Bank would con-tinue to support efforts to raise the productivity of the lowest income groupsand thereby diminish the incidence of absolute poverty in Nigeria. As inrecent years, the Bank would continue to provide major support to agricultureand rural development, with particular emphasis on institution-building andtransfer of technology. These objectives are in line with the Federal Govern-ment's priorities under the Fourth Plan, which places considerable emphasis onagriculture, and on the need to use the proceeds of the country's oil revenuesto increase the productive capacity of the ecoromy, thereby raising thestandard of living of its population, particularly the rural poor. The Bankwould similarly support efforts to stimulate a well-balanced and integrateddevelopment of Nigeria's industrial sector. This approach would entail acombination of intensive sector work, policy dialogue with the Government, aswell as Bank assistance for industrial projects in crucial subsectors.

21. Projects in agriculture and industry together should account for alarge share of Bank lending in the coming two or three years. Effectivesupport for the commodity producing sectors will also require strategicinvestment in production-related infrastructure. There are opportunities forthe Bank to make a significant contribution in energy, water supply, andhighway maintenance. Similarly, there is a strong case for continued lendingfor education. In this context, vocational, technical, and teacher trainingwould be given special emphasis. Finally, the Bank would support the Federaland state governments' efforts to spread the benefits of growth to the socialsectors. It is envisaged that some of the pressing problems of rapid urbani-zation will continue to be addressed through a number of urban developmentprojects focussed on the needs of the urban poor. The Bank is also con-sidering a reques- from the Federal Government to assist in overcoming thecountry's health prcblems and has started a dialogue with the Government onpopulation issues.

22. Although annual disbursements have increased from US$52 million inFY1978 to nearly US$167 million in FY1983, Nigeria's disbursement performancehas lagged behind that of other countries in the region. In the last threeyears, undisbursed balances have progressively increased and now stand at55 percent of the USS2.4 billion in loans and credits approved. One of thereasons for this development is the rapid expansion of the Bank's loan port-folio since 1979 as well as the fact that a number of large loans, withrelatively large, planned disbursements during the early years, were extendedduring this period, mainly for agricultural projects. In many cases, however,disbursements have been slowed by long delays in loan effectiveness and insti-tutional and management problems. Recently, the inadequate counterpart fund-

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ing of projects by Federal and state governments, resulting from lower oilrevenues, has further slowed disbursements. Tne disbursement record in agri-culture has been mixed. At least until recently, disbursements have beengenerally faster in the case of integrated agricultural development projects,but substantial shortfalls compared to appraisal projections have been regi-stered in the tree crop, forestry, and livestock subsectors. Similarly,education and power projects have been particularly slow in disbursing. TheFMG, with the assistance of the Bank's Resident Mission, is now carefullymonitoring loan disbursements with a view to identifying problems early andtaking corrective action. Also, the Bank's measures to accelerate disburse-ments under both ongoing and new projects are beginning to show results (para.18) .

PART III - THE AGRICULTURAL SECTOR

23. Agriculture continues to play an important role in the Nigerianeconomy despite the prominence of the petroleum sector. Approximately 60 per-cent of Nigeria's population is dependent upon agriculture for its principalsource of employment and income. Value added by agriculture accounts foralmost one-quarter of GDP, and almost 40 percent if petroleum production isexcluded. Although the volume of agricultural exports has suffered a majordecline in recent years, they still constitute the only significant source offoreign exchange earnings apart from petroleum.

24. Agricultural production is almost entirely in the hands of small-holders, with the typical unit being a family farm of 2-4 hectares. The useof modern inputs, such as fertilizer and improved seeds, or of aechanizedtechniques is quite limited. As a result, yields are very low, and in somecases have even declined because of deteriorating soil fertility. Rapiddevelopment in the non-agricultural sectors and rising standards of education,both of which contrast sharply with the poor returns to labor and drudgery oftraditional agriculture, have encouraged the drift of young people away fromrural areas. Consequently, there has been hardly any real growth in the valueadded by agriculture during the past decade. At the same time, food priceshave risen precipitously as demand outstripped domestic supply. In the longrun, a prosperous agricultural sector capable of reducing the rural-urbanpopulation drift can be achieved only through the application of more advancedfarming techniques that would provide significant increases in agriculturalincomes.

Country Policies and Performance

25. Successive governments have emphasized the need to improve perfor-mance in the agricultural sector. In the Third Five-Year Development Plan(1975-80) the growth rate for agriculture was targetted at 5 percent perannum; the estimated actual rate, however, did not exceed 1 percent. Annualimports of food rose from about US$300 million in 1974 to US$2.7 billion by1982, while agricultural exports declined steadily. If this trend were tocontinue, it could result in a food deficit in 1990 of 11 million tons ofcereal equivalent, or about 40 percent of demand.

26. The disappointing perforwance of the agricultural sector can beattributed in large part to earlier policies which placed strong emphasis onlarge-scale irrigation and intensively mechanized government-run schemes withgenerally disappointing production results. At the same time, little was doneto develop essLatial support services aimed at the farming community a- awhole. Despite the declared intentions in the Plan, smallholders, who produce90 percent oE total agricultural output, were not the principal focus of theagricultural stategy. The few government sponsored programs for the develop-ment of smallnolder agriculture have suffered from poor management, a shortageof funds, and from being stretched too thinly in order to cover all states.Against this background, Bank-suppcrted agricultural development projects(ADPs) have succeeded in achieving significant advances in smallholder agri-culture.

27. In October 1979, the government of President Shagari announced thatit would give high priority to agriculture and established a food strategycommission in which the Bank was invited to participate. A final reportentitled the The Green Revolution: A Food Production Plan for Nigeria- waspublished in ,May 1980 and the principal recommendations were accepted by theGovernment.

28. This Food Production Plan (FPP) recommended the adoption of a4 percent annual growth target as the maximum that could be applied realisti-cally to the agricultural sector. It is particularl,- noteworthy that, inweighing the alternative strategies of large-scale mechanization againstsupport for smallholder agriculture, the FPP came down squarely in favor ofthe latter. To supplement the program of Bank-supported ADPs, the FPP pro-posed the immediate implementation of a concurrent smallholder program for theresidual areas not yet covered by ADPs. Ine nation-wide program would containmost key elements of the ADP concept but in a less intensive package and withlower managerial demands. The program was endorsed by the Government early in1981 and, to support its implementation, the Bank made a loan (2029-UNI) foran agricultural technical assistance project. The Bank has been asked toassist further with a program of phased ADPs.

Development Constraints

29. While ADPs have been successful -n achieving an impressive growth inagricultural production (over 6 percent per annum in ADP areas between 1975and 1980 against the national average of 1 percent), the implementation ofmany ADPs has been significantly impaired during the past year by seriousshortfalls of local funding, particularly from the state governments, occasionedby the steep downturn in oil revenues. This has led to delays in the expan-sion of infrastructure and agricultural services, as well as an under-utili-zation of project plant, equipment, and expertise. During the last severalmonths, the Bank has worked closely with the Federal and state governments,and explored various avenues to alleviate the funding problems. In thecontext of the Fertilizer Loan (2345-UNI), which was approved by the ExecutiveDirectors on September 13, 1983, the Federal Government agreed to providespecial loans in 1983, 1984, and 1985 to assist state governments in meetingtheir financial obligations to the ADPs. The Bank, for its part, has alsotaken measures to improve the flow of loan funds to ADPs (para. 18).

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30. One of the principal constraints to the development of the sector isthe lack of effective agricultural support services. The transport of produceis hampered by a lack of feeder roads. Many farmers have to travel longdistances to obtain fertilizers and other basic farm inputs which, in manycases, are supplied only irregularly. Consequently, even with the prevailinghigh levels of subsidies on farm inputs, farm production has not increasedsigniticantly and has actually declined in some areas. Extension services aregenerally deficient and the new technologies that are available are notreaching farmers in remote rural areas. A greater effort is also required,particularly by the agricultural research institutions, to improve the tech-nical, economic, and financial analysis of farming innovations and adapt themto the diverse socio-ecological conditions of Nigeria.

31. Shortcomings in the efficiency of commercial support services toagriculture have- also constrained growth. Agricultural supply services remainalmost entirely in the hands of the public sector, where administrative capa-bilities are already overstrained. The marketing of food crops is usuallydone by private traders, and is on the whole fairly competitive. The FederalGovernment's Technical Committee on Producer Prices determines the guaranteedminimum prices for the major grain crops every year. Since their prices aregenerally much lover than prevailing market prices, state intervention througathe Grains Board has seldom been necessary. A Bank mission recently visitedNigeria to review the whole issue of agricultural product pricing, and it isexpected that the missionus recommendations will figure prominently in ourfuture dialogue with the Federal Government on structural adjustment.

32. Government policies for the subsidization of farm inputs have notalways worked to the advantage of the farmers and, in the case of fertilizers,have served to remove the incentive for private sector participation in thedistribution system, thereby creating problems of availability. This is nowbeing improved within the context of the Fertilizer Loan. Subsidies are to besubstantially reduced so that constraints on the availability of fiscalresources will no longer limit the supply of fertilizer. Responsibilitv forthe procurement and distribution of fertilizer is to be transferred from theFederal Ministry of Agriculture to an autonomous public company which, withthe assistance of consultants, is expected to handle the matter much moreeffectively.

33. An emerging constraint relates to agricultural credit. As fertilizersubsidies decline and retail prices rise, farmers' financing requirements willrise significantly. Furthermore, the farier will also need to finance anincreased use of pesticides to provide the necessary plant protection to safe-guard his greater cash investments in fertilizers. Seasonal credit is alsorequired to pay for the high-cost hired labor that is progressively replacing 9traditional low-cost family labor. A study to examine this issue is beingfinanced under the Fertilizer Loan.

Development Prospects and Bank Role

34. Given an appropriate policy framework, adequate institutional andinfrastructural support, and measures to overcome some of the constraintsmentioned above, Nigeria has the potential to achieve significant agricultural

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production increases over the coming years. In this respect, the Bank willcontinue to have a major role to pla,. Agriculture forms the core of theBank's lending to Nigeria: since 1971, 24 loans for agriculture totallingUS$1,133.4 million have been approved, and loans to this sector constitutealmost one-third of the proposed lending program for FY84-88. There have, sofar, been nine loans for the development of specific crops, forestry, andlivestock, three loans for the establishment of an agricultural managementtraining institute, an agricultural technical assistance project, and theimportation of fertilizer, and 12 loans for the comprehensive agriculturaldevelopment of target areas. A Project Performance Audit of the first threeADPs, dated June 16, 1982, concluded that those projects had been implementedsatisfactorily, but that there was, in particular, a need for improvedadaptive research; perhaps the most important lesson of the earlier ADPs hasbeen that, in a relatively unknown farming environment, crop recommendationsshould be simple and flexible, so that farmers can easily adjust their crop-

* ping patterns to seasonal agro-climatic conditions and structural changes.The proposed project takes account of the findings and recommendations of JED,and would be an integral part of the Bank's efforts to stimulate a well-balanced and integrated development of Nigeria's agricultural sector. Thisapproach entails a combination of intensive sector work, policy dialogue withthe Federal Government, as well as Bank assistance for agricultural projectsin crucial subsectors.

PART IV - THE PROJECT

35. The genesis of the proposed statewide project is to be found withinits predecessor, the Funtua Agricultural Development Project (Loan 1092-UNI of1975) which applied the same fundamental concepts of farm development to anarea in the central zone of Kaduna encompassing about one-tenth of the State.The Funtua ADP had a significant impact upon farming in the project area.Physical infrastructure was substantially improved with the construction of520 km of all-weather feeder roads and 45 small dams. A network of 77 farmservice centers was established to provide inputs and extension services tosome 90,000 farm families. It is estimated that about 84 percent of thesefarmers have responded positively to at least part of the package of servicesoffered by the project and have improved their farming practices with the useof better seed varieties and with modest applications of fertilizer and pesti-cides. As a result, total crop production increased by some 36 percentbetween 1977 and 1980 and household real incomes by an estimated 40 percent.This is lower than the projection made at the time of appraisal but nonethe-less significant when compared with the previous static production pattern.It is anticipated, moreover, that further increases will materialize duringimplementation of the second stage state-wide project.

36. During the mid-term review of the Funtua ADP in 1977, it was alreadyapparent that the basic goal of increased farm production was being achievedand the Kaduna State Government asked the Bank to support a second-stageproject that would extend these benefits throughout the entire State. Pre-paration of the statewide project was done by staff of the Funtua ADP inconjunction with the Kaduna State Ministry of Agriculture (MOA). The project

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was appraised in April 1979, but project process,-g was delayed afterappraisal because it took time to reach full agreement with the State Govern-ment on key matters of project organization. Furthermore, we had doubts aboutthe affordability of the project to Kaduna State because of the high fiscalburden of fertilizer subsidies and these doubts were dispelled only recentlywhen the Federal Government agreed to phase out those subsidies. The post-appraisal of trie project took place In March 1982, and negotiations were heldin July 1983. In the last two years,(Kaduna State has attempted to implementa statewide Integrated Rural Development project on its own. Progress hasbeen slow, however, because of insufficient funding. This project will beabsorbed into the proposed Kaduna State ADP. Supplementary project data arepresented in Annex III and the Staff Appraisal Report (4512-UNI) is beingcirculated separately to the Executive Directors.

Pro_ect Area

37. Kaduna State comprises seven percent of Nigeria's total land area andhas a marked climatic variation from north to south. The entire State popula-tion is estimated at about seven million of which more than half derive theirprincipal livelihood from farming. The distribution of land among farmfamilies throughout Kaduna State is quite egalitarian and large farms arerare. Most farmers cultivate between three and seven hectares held under thetraditional land tenure system. For an average family of between five andsix, smallholdings of this size yield an annual income that ranges from aboutUS$820 in the more arid north to some US$1,300 in the central and southernparts of the State.

Project Objectives and Description

38. The primarv objective of the proposed statewide project is to extendto the whole State the benefits that accrued from the Funtua ADP. The samevehicle would be employed for accomplishing the goal of increased produc-tivity: a package of services to assist farm and crop development togetherwith strategic investment in supporting infrastructure such as feeder roadsand dams.

39. In terms of farm and crop development the project would increaseproduction of both subsistence and cash crops on some 650,000 ha of land.Farming practices would be improved by providing fertilizers, improved seedsand crop protection measures. A key element of the project-which was notpart of the Funtua ADP--would be to strengthen the extension service byimproving its organization and effectiveness through the introduction of acarefully structured training and visit system. The training of extensionworkers themselves would also be a major focus of the project with the objec-tive of upgrading their effectiveness in the field. However, there would beno substantial increase in their numbers.

40. Experience has shown that most farmers in Nigeria are quite conserva-tive in their adherence to traditional farming systems. New techniques thatcan be applied profitably within those systems are readily adopted but innova-tions that require more radical change have only limited acceptance within afive-year project period. Accordingly the project is structured in such a

- 13 -

way as to offer both a Basic Service Package (BSP) and an Advanced ServicePackage (ASP). Benefits from the BSP would accrue as a result of modestapplications of inorganic fertilizers, the use of improved seeds, increasedplanting densities, and better control of disease, pests and weeds. Par-ticipants in the ASP, in addition to using BSP inputs more intensively, wouldalso use oxen- and tractor-drawn implements, a wider application of sole-cropping and improved crop storage. It is expected that some 70 percent offarmers will adopt either one or the other of these packages.

41. Special provisions would be made to encourage the better use of thelow-lying valley areas, known as fadamas, that are subject to seasonal flood-ing. More efficient use of run-off water would be made through bunding andridging. Using simple and relatively inexpensive technologies, on-farm testswould be made of small-scale irrigation equipment. In particular, low-lifthand pumps and small motor-driven pumps would be employed to replace theshadoof. Such an innovation would entail an adaptation of the traditionalshadoof gardens to accommodate a greater water supply. This would be achievedwith technical advice from the extension service.

42. Civil works in support of the overall agricultural development effortwould include the construction of 1,400 km of feeder roads. In addition, some75 small earth dams would be built for watering cattle. Agreement was reachedat negotiations that the Kaduna State Governm-at (KDSG) would ensure that theproject roads would be adequately maintained and repaired and detailedproposals for the long term maintenance of the roads would be furnished to theBank not later than December 31, 1986 (Section 2.13(b) of the Project Agree-ment). Project buildings would include housing for 178 senior and intermedi-ate staff together with offices and stores.

43. Staff training and development would figure prominently among theproject objectives. On-the-job training would be supplemented by staff devel-opment programs for individual staff in key positions and for groups of staffat medium and lower levels. The services of the Bank-supported Agriculturaland Rural Management Training Institute would be engaged for this purposetogether with specialized consultancy services. Overseas training would alsobe provided wheze no comparable Nigerian facilities exist.

44. The proposed project would also provide for 125 man-months of con-sultant services in the areas of project accounting, marketing, and coopera-tive development, agricultural research and post project development. Amongthe studies to be undertaken by these consultants would be an early socio-economic assessment of the effectiveness of project activities. Thesebenchmark studies would provide a basis for the subsequent project monitoringto be undertaken by the monitoring and evaluat.on unit.

Project implementation

45. The proposed statewide project would seek to utilize as fully aspossible the managerial and implementational experience gained under theFuntua ADP. The management unit concept that has proved so effective underthat and other similar projects would be conserved. On the basis of igro-ecological conditions, the projecc would establish four zones, each with its

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own management under the overall coordination of a Kaduna Agricultural ProjectManagement Unit (KDAPMU) centrally positioned within the MOA. The formalestablishment of KDAPMU would be a condition of loan effectiveness (Section6.01(c) of the Loan Agreement). Such an organizational arrangement wouldentail a carefully structured hierarchy of responsibilities from state levelauthorities through authorities at the zonal level to local level authorities.

46. The present Agricultural Division of the MOA under the leadership ofan internationally recruited program manager, would be reorganized to form thecore of a project management encompassing key financial, administrative andtraining functions. KDAPMU would provide centralized technical services tozonal subproject units in overall planning as well as in the specializedfields of civil engineering, land use planning, agricultural extension,research and farm management. It would also provide a focal point of coordi-nation and guidance for the management of the Kaduna State Farmers SupplyCompany Ltd. (FASCOM) that has recently been established to supply inputs toproject farmers. To provide a coherent framework for project implementation,KDAPMU would submit to the Bank and the FMG at least four months before thebeginning of each fiscal year, an annual work program including budgetestimates duly approved by KDADEC (Section 2.03(e) of the Project Agreement).

47. Reporting to the program manager would be four zonal managers whowould have a large degree of operational autonomy in discharging their respon-sibilities for project planning, budgeting and implementation within therespect.ve zones. The responsibility for effective liaison with Local Govern-ment Councils (LGCs) would lie principally with the zonal management units.To fortify the skills both of zonal management as well as of central programmanagement, consultants specialized in management and accountancy trainingwould be engaged.

48. The Farmers Supply Company (FASCOM) that the State has recentlyestablished separately to handle the commercial activities of the projectwould operate a chain of about 200 farm service centers to retail inputs andagricultural equipment. A condition of loan effectiveness would be that theBank be provided with evidence to substantiate Kaduna State Government's(KDSG's) cash equity contribution of at least N3.0 million to the capital ofFASCOH (Section 6.01(f) of the Loan Agreement).

49. Staffing of both the specialized project activities and overallmanagement functions at state and zonal levels will be important for thesuccess of the project. Experience shows that in Nigeria there is a scarcityof manpower with the capability and experience necessary to manage a projectof this nature. In twelve other ongoing agricultural development projects,the Bank has encouraged state governments to recruit qualified Nigerians for 9senior positions, but it has proved difficult to find suitable candidates. Inorder to upgrade local skills, a program of intensive training is envisaged-particularly at the start of the project-to ensure that a full complement ofmanagerial, technical and administrative staff can be mobilized at all levels.The project also makes provision for the international recruitment of some36 key managerial and technical staff, totalling 157 man-years. The recruit-ment would be undertaken on behalf of the KDSG by the Federal AgriculturalRecruitment Agency (FARA) that was established by the Federal Government and

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financed under the Agricultural Technical Assistance Project (Loan 2029-UNI).The appointment of a project manager, financial controller, chief engineer andfour zonal managers for KDAPMUJ as well as a managing director and financialcontroller for FASCOM would be conditions of loan effectiveness (Section6.01(d) of the Loan Agreement). To facilitate the recruitment of inter-national project staff by FARA and the timely servicing of staff contracts, arevolving fund would be established in a London commercial bank account(Section 2.03(b) of the Project Agreement). The Bank would make an initialdeposit of US$500,000 into this account from the proceeds of the proposedloan.

50. The prominence of the project within the development effort of KadunaState warrants policy guidance at a high level of state government. For the

a purposes of policy-making, coordination and review of the operational aspectsof the project, a Kaduna Agricultural Development Project Executive Committee(KDADEC) would be established. The Deputy Governor would chair this Commit-tee, and the membership would comprise commissioners of pertinent ministriesand co-opted representatives from selected agencies, as well as the programmanager. Its responsibilities would include the review of project evaluation;the review and approval of the annual work program and budget of KDAPMU; theco-ordination of both State and Federal ministries' project-related activi-ties; the approval of training policies; the approval of contracts valued atN 60,000 or more; and the appointment of senior project staff. The estab-lishment of KDADEC would be a condition of loan effectiveness (Section 6.01(c)of the Loan Agreement).

51. At the zonal level also there would be established Zonal DevelopmentCommittees (ZDC) which would bring together the senior zonal project staff andrepresentatives from local governments and from traditional councils. TheseZDCs would provide a forum for consultation and coordination to expediteproject implementation.

52. It is envisaged that project implementation along these lines wouldpermit a smooth transition towards self-sustained development in the post-project period. To facilitate this transition, agreement was reached atnegotiations that by June 1, 1987, KDAPMU would draw up and submit proposalsfor the continuation of project activities beyond the project period in KadunaState for review by the Bank and FMG (Section 2.13(a) of the Project Agree-ment). The project would provide consultancy funds to assist in formulating

* such proposals.

Project Costs

53. Total costs are estimated at US$194 million (including taxes andduties of US$10 miLlion and the front-end-fee) 1/, of which the foreignexchange component would account for 42 percent or US$81 million. A breakdownof costs by major expenditure category is given in the loan and projectsummary. An allowance has been made for physical contingencies equal to 5

1/ Excluding the cost of fertilizer, which is being financed partly

under the Fertilizer Loan (2345-UNI).

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percent except for civil works where experience with other similar projects inNigeria indicates that 10 percent would be more appropriate. Pricecontingencies are calculated on base costs plus physical contingencies and arecompounded annually using the following annual rates: on local salaries andallowances 10 percent; on all other local costs -- 1983 - 15 percent, 1984 -

13 percent, 1985 - 12 percent, 1986/88 - 10 percent; and on foreign costs1983 - 8 percent, 1984 - 7.5 percent, 1985 - 7 percent, and 1986/88 - 6percent. On the basis of these considerations, total contingencies areestimated at US$47 million - some 32 percent of base costs.

Project Financing

54. The proposed loan of US$122 million would finance 66 percent of totalproject costs net of taxes and duties and would be equivalent to the entireforeign exchange cost of the project plus 36 percent of local costs. The fullUS$122 million would be onlent by the Borrower to Kaduna State on the sameterms as the Bank loan and the State would carry the foreign exchange risk.The execution of a Subsidiary Loan Agreement between the Borrower and KadunaState would be a condition of loan effectiveness (Section 6.0L(a) of the LoanAgreement). The Federal Government would finance 20 percent of total projectcost, amounting to US$39 million. Of the remaining US$33 million totalproject cost, the Kaduna State Government would contribute USS24 million andthe participating farmers another US$9 million by way of purchasing farminputs. Their respective share in total project costs, therefore, wouldamount to 12 percent and 5 percent respectively. These contributions arebased on incremental cost estimates. In addition, Kaduna State would maintainits present expenditures in the project area, estimated at about N45.3 millionin current prices over the project period (Section 2.03(d) of the ProjectAgreement) as well as any expenditures required to ensure the supply ofadequate and timely amounts of fertilizer, estimated at not more than 1242.0million in current prices over the same period.

55. A number of on-going Bank-supported agricultural development projectsare suffering from a failure of state governments to provide adequate counter-part funding in a timely manner, largely because state reventes have fallendue to lower oil prices and productivity. In some cases there have also beenadministrative delays in passing Bank funds to the project unit. The finan-cing plan for the proposed project recognizes the current resource problems ofthe State by limiting its contribution to 12 percent of total project cost.In addition, the disbursement profile is such that the cash contributions fromthe State rise through the project period to a level sufficient to sustain thecost of the continuing project requirements after 1990. A Bank analysis ofKaduna State finances indicate that this pattern of expenditures should beaffordable.

56. In order to further minimize the possibility of counterpart fundingproblems, agreements were reached during negotiations that: (a) as a condi-tion of loan effectiveness, a commercial bank account would be opened forKDAPMU with an initial deposit of ff4.7 million--equivalent to about fivemonths average counturpart funding during the first year of the project(Section 6.01(b) of the Loan Agreement); (b) also as a condition of loaneffectiveness, the Bank would be provided with evidence to substantiate KDSG's

- 17 -

cash equity contribution of N3.0 million to the capital of FASCOM (Section6.01(f) of the Loan Agreement; (c) KDAPMU would submit to FMG, KDSG and theBank, at least four months prior to the beginning of each fiscal year, anannual work program including budget estimates duly approved by the KDADEC(Section 2.03(e) of the Project Agreement); (d) both the FMG and the KDSGwould provide their quarterly financial contribution to the project at leastthree months in advance in accordance with the approved annual budget ofKDAPMU (Section 2.03(c) of the Project Agreement and Section 3.02 of the LoanAgreement); (e) in the event that the project does not promptly receivefunding from the KDSG, FMG would pay directly to the project's commercial bankaccount that part of the State's statutory allocation corresponding to itsapproved annual budget for the project (Section 2.11 of the Project Agree-ment); (f) the audited accounts of KDAPHU and FASCOM would be submitted to theBank within six months after each fiscal year together with statements fromthe auditors certifying that Bank funds have been used for their intendedpurposes (Section 3.02(b) of the Project Agreement).

Procurement

57. Contracts for plant, vehicles and equipment valued at US$300,000 ormore would be procured through international competitive bidding (ICB) inaccordance with Bank guidelines. The aggregate value of such items procuredthrough ICB is estimated at about US$61 million. Local competitive bidding inaccordance with procedures satisfactory to the Bank would be employed forequipment contracts of US$60,000 or more but less than US$300,000. Forcontracts of less than US$60,000, local competitive shopping would beemployed. Domestically-manufactured goods would be allowed 15 percentpreference or the applicable import duty, whichcver is lower, for purposes ofbid evaluation. Civil works contracts of less than US$3 million would beexempted from ICB because experience shows that they would not be attractiveto foreign bidders. Roads and dams would be constructed on force account, butthe heavy equipment required for this work (valued at some US$12 million)would be procured by ICB in accordance with Bank guidelines. The recruitmentof consultants and internationally-recruited staff and the provision ofoverseas training (valued at some US$16 million) would be undertaken inaccordance with procedures satisfactory to the Bank.

Disbursements

58. Disbursements would be made against 100 percent of foreign exchangeexpenditures on vehicles, equipment and farm inputs other than fertilizer.Where items are manufactured locally or purchased off-the-shelf, disbursementswould be made against 90 percent of local expenditures. For buildings, di:-bursements would be against 90 percent of total expenditure. The salaries andallowances of internationally-recruited staff, consultant services, and over-seas training would be fully reimbursed. Local expenditures incurred for roadbuilding and dam building would be reimbursed to the extent of US$15,500 foreach kilometer of road constructed and US$35,000 for each dam. Certifiedstatements of expenditure would be required as a condition of disbursementtogether with certification from an independent consultant engineer that therequisite roads and dams had been completed satisfactorily. On this basistotal disbursements are estimated at US$26.5 million against buildings,

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US$39.6 million against vehicle and equipment and US$12.3 million for inter-nationally-recruited staff, consultancy services, studies and overseas train-ing, US$8.3 million against farm inputs other than fertilizer and US$22.3million against local costs pertaining to road and dam construction. Arevolving fund would be established in a commercial bank account in London, inorder to make funds available for the early financing of salaries of interna-tional staff and the allowances of overseas trainees that are reimbursableunder the loan. An initial deposit of US$500,000 would be made into thisaccount from the proceeds of the Bank loan (Section 2.03(b) of the ProjectAgreement). Provision has also been made for retroactive financing of up toUS$500,000 to reimburse the cost of key internationally recruited staff thatmay be engaged to assist in project start-up activities.

Economic Benefits

59. The overall economic rate of return is estimated to be 16 percent.Sensitivity tests show that, even if farmer adoption rates are only 70 percentof targeted levels, the rate of return would still be an acceptable 10 percent.

60. Most of the project beneficiaries would be drawn from the lowest in-come groups in Nigeria. The level of farm income in the project area amountedto an average of only US$220 per capita in 1982---little more than the relativerural poverty level which is estimated at US$207 for that year. If the projectachieves its target of raising farm incomes by about 35 percent in real terms,it will have a major beneficial effect upon nutritional standards in the Stateand will contribute significantly to raising the living standards of the430,000 farm families directly benefiting from the project.

61. In addition, the project is expected to yield a number of othermajor, albeit non-quantifiable, benefits. The training of technical staff andthe development of appropriate institutions would strengthen the capabilitiesof the MOA. This would facilitate the planning and implementation of futureprojects in the State and set the stage for a smooth transition towards self-sustained development in the post-project period. The project would alsodemonstrate the viability of commercial development of support services andthe benefits of decentralizing public sector operations in agriculturaldevelopment, all of which may have a far-reaching and profound impact upon thebroader policies and programs of the Government in the agricultural sector.

62. Other benefits are relatively modest. Direct employment generationwould amount to some 33,000 man-years by project year 5 and would involve, forthe most part, a more intensive use of family labor. Some non-farm employmentin otl-r sectors would be induced, however, by the higher level of economicactivity in the project area.

Project Risks

63. Smallholder agricultural development projects are inherently complexand the full attainment of project benefits may conceivably be jeopardized bydelays in implementation and inadequate staffing. These risks will be reducedby having as a condition of effectiveness the appointment of key projectpersonnel. Risks of a technical nature are not great because the technologi-

- 19 -

cal packages are simple and are supported by research data and experienceobtained from Funtua ard elsewhere in Nigeria. A major advantage for projectimplementation will be the experience to date on the earlier Bank-assistedFuntua ADP. Experience has shown that a common risk with this kind of projectrelates to the insufficient or untimely provision of counterpart funding. Itis expected that this risk will be minimized in the case of the proposedproject because: (a) Kaduna State's share of project cost has been reduced toan affordable level; (b) the pre-financing of project expenditures eligiblefor reimbursement from the proposed Bank loan would be facilitated by makingan initial deposit of N4.7 million into KDAPMU's account; and (c) in order toassist in project start-up costs, the project implementation schedule is suchthat those items with higher disbursement ratios are implemented earlier.Another risk experienced by some ADPs relates to the failure of fertilizer

b supplies. This risk would be reduced because the Fertilizer Loan (2345-UNI)will permit an increase in the supply of fertilizer and will provide for itstimely procurement and delivery.

PART V - LEGAL INSTRUMENTS AND AUTHORITY

64. The draft Loan Agreement between the Federal Republic of Nigeria andthe Bank, the draft Project Agreement between the Bank and the Kaduna State ofNigeria, and the Report of the Committee provided for in Article III, Section4(iii) of the Articles of Agreement have been distributed to the ExecutiveDirectors separately.

65. Special conditions of the project are listed in Section III ofAnnex III to this Report. Additional conditions of loan effectiveness arethat: (a) a Subsidiary Loan Agreement between the Borrower and the KadunaState shall be executed; (b) a commercial bank account shall be opened forKDAPMU with an initial deposit of N4.7 million; (c) the Bank shall be providedwith evidence that a commercial bank account has been opened for FASCOM withan initial deposit of N3.0 million from KDSG by way of cash equity contri-bution; (d) arrangements shall be made with the Federal Agricultural Coordi-nating Unit to improve the accounting and internal control system andprocedures for monitoring project expenditures and to assist in bringing up todate the accounts of KDAPMU and FASCOM; (e) KDAPMU and KDADEC shall beestablished; (f) a project manager, chief engineer, financial controller andfour zonal managers shall be appointed to KDAPMU; and (g) a managing directorand financial controller shall be appointed to FASCOM.

66. I am satisfied that the proposed loan would comply with the Articlesof Agreement of the Bank.

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PART VI - RECOMMENDATION

67. 1 recommend that the Executive Directors approve the proposed loan.

A. W. ClausenPresident

Attachments

Washington, D.C.May 18, 1984

- 21 - ANN EX IPage 1 of 5

T A * L E IA

NIGERIA - SOCIAL INDTCATORS DATA SHEETNICERIA REFCREKCE CiOUPS (irItHTED AVERAGES) 7.

HOST t(uMST RECENT ESrIMATE) /bRECENT MIDDLE INCOM MIonLE INCIME

IY60- 1970- ESTINATh- AFRICA S. or SAHARA N. AFRICA & MID LASTAREA (TROUSAPD 51. M)

TOTAL 923.8 923.8 921.8.ACRICULTURAL 412.8 497.4 512.9

GCP PER CAPITA (9S$) 200.0 130.0 810.0 1147.9 1340.0

ENERGY CONS TION MRE CAPITA(KILOGRAMS OF COAL EQUIVALENT) 29.0 51.0 169.0 724.2 811.4

PONLATI0H AMW VITAL STATISTICSPOPULATION,MID-YEAR (THOUSANDS) 51598.0 66182.0 87603.0UREZ POPULATION (c CF TOTA-) 13.1 16.4 2C.9 28.5 47.4

POPULATION PROJECTINISPOPULATION IN YEAR 2000 (HILl.) 169.1STATIONARY POPULATION (MILL) 623.4YUAR STATIONAR POP. REACHED 2140

POPULATION DENSITYPER SQ. EM. 55.9 71.6 91.7 56.5 36.0PER SO. KN. ACRI. LAND 125.0 133.0 165.2 131.8 449.0

POPULATION AGE STRUCTURtE (2)0-14 YRS 45.4 46.6 47.7 45.9 43.9

15-64 YRS 52.3 51.0 49.9 51.2 52.865 AND AMOVE 2.1 2.4 2.4 2.8 3.3

POPULATION GROUTH RATE SI)TOTAL 2.4 2.5 2.5 2.8 2.9URJA 4.7 4.7 4.8 5.3 4.6

CRUIDE BIRrH RATE (PER THOUS) 52.0 50.7 49.6 47.6 42.5CRUDE DEATH RATE (PER THOUS) 25.3 20.8 16.6 15.2 12.0GROSS REPRODUCTION RATE 3.4 3.4 3.4 3.2 3.0

FAHILY PLANNINGACCEPtORS, ANN4UAL (THOUS) .. 7.6 33.2/cUSERS (: OF MARRIED WOVE) .. ..

INDEX OF FOOD PROD. PER CAPITA(1969-71-100) 100.0 102.0 92.0 95.7 97.5

PER CAPITA SUPPLY OFCALORIES (2 OF REQUIREMENTS) 83.0 U2.G 91.0 97.1 102.3PROTEINS (GRAMS PER DAY) 45.0 44.0 49.0 56.0 72.0OF WHICH ANAL AND PULSE 10.0 10.0 11.0/d 17.2 17.8

CHILD (ACES 1-4) DEATH R.TE 42.4 35.0 27.8 23.6 15.2

HEALTHLIFE EXPECT. AT BIRTH (YFARS) 38.7 43.7 49.1 51.9 57.ZINFANT MORT. RATE (PER THOUS) 183.4 158.0 133.0 117.6 104.2

ACCESS TO SAFE WATER (2POP)TOTAL .. .. .. 25.4 59.3URBAN . . . 70.5 84.9RURAL .. .. .. 12.3 37.5

ACCESS TO EXCRETA DISPOSAL(2 OF POPrLATION)

TOTAL .. ..URBAN .. ..RURAL .. ..

POPULATION PER PHYSICIAN 73210.0 24670.0 12550.0 12181.6 3536.0POP. PER NURSINC PERSON 4040.0/e 5070.0 3010.0 2292.0 1820.7

r POP. PER HOSPITAL REDTOTAL 3020.0/h 2220.0 1370.0/f 1075.4 643.3URBAN 430.D7e 490.0 370.d7T 402.3 545.0RURAL 25630.0Wo 18490.0 5490.07f 39Z6.7 2462.0

ADMISSIONS PER HOSPITAL BED .. .. .. .. 26.4

NOOSIIICAVERACE SIZE OF HOUSEHOLR

TOTAL .. ..URBAN ..

RURAL .. ..

AVERACE NO. OF PERSONS/ROWETOTAL .. ..URBAN 3.0 2.2/ ..

RURAL .. ..

ACCESS TO ELECT. (? OF DVELLINGS)TOTAL .. .. .. .. 46.2URBAN 81.3 42.4 .. 77.6

RURAL .. .. .. .. 16.1

- 22 - ANNEX I

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iVUII- IY7U- LStIIAAr- AV ILA S. JF SAAHKA ... AFRICA & 'lI L1\.Nr

EDUCATION

.%LJtSrLSlj LNKILLI.M'lr drlrisILRl.lA1Y: TOTAL Io.u 17.U 9J.IJ g7.: B9.

IALf 46.U 41.0 .. IUJ.I LU4.DFL;.%,%Li. .1 7.u 27.0 .". n. 72.4

SECOMNAgY: rOTAL 4.U 4.U It.U 17.2 41.7:IALE: (i..0 U.U .. J3. 52.

FEnfALL .u 3.U .. 14.2 31.2

VOCATIONAL (Z OF SECIINDAKY) 4.8 d.S 1.L/1 5.2 IU.3

PupIL-rEACIIER gAlro

PRIMARY 30.0 34.0 .. 4Z.9 31.YSLCONDARY 19.U 21.U .. 2J.7 23.3

ADULT LIrEKACY RATE (J) 15.41e .. 34.0 37.1 43.3

CONSUMPTION

PASSES iSN CAilS/TaIUUSANU PUP O.e. 0.9 1.4L1 15.8 Id.0

KAlU IUtCr.:VEKS/THOUS.NDU POP 1.d 19.J hb.1 97.8 135.1

TV KECEIVECS/THOUSAIJO POP O.U 1.1 5.3 18.6 45.b.EcuseSAPLN ("DAILY UENLRAL

ilLEsuRsl) CIRCULATIONPER rlUusAND POPULATILO 5.5 4.8 b.9/f id-, Jl.U

CI;L1A AJ.L;UAL ArTL:J;UAHC/ICAPITA .. .. 0 .4 U. I.7

LABOR FIIRCE

rurAL LAIOR IUKCL ( rHUUs) 2171C.0 25992.U 31635.uFEIIALC (PELcE:.r) 41.3 4u.5 J9.6 J4.1 IU.7AiiilCULTUNE (PERCEJT) 71.U b62.U 54.U 50.d 4Z.5lL,uUSray (PESCENT) 1U.U 14.1 19.u 17.5 Z7.8

PAAlIcIrAfILUt KArE (PERCEAT)[IUrAL 42._ J39.3 34.1 37.u 25.blALE 5U.J 47.3 44.U 47.1 45.4

FEtIALE 34.4 31.5 28.4 7.u 5.b

ECUNOMIC DEPEXDS:CY dATIO 1.1 1.2 1.4 1.3 1.8

INCOhC DISTRIWTIONPERCEST OF PRIVATE IXCOlIERECEIVED BY

IIICIIEST 5; OF HIOUSEIIOLDS ..IiC.IdST ZO OF HOUSCIIOLDS ..

LI)IEST 20: OF HIOUSEIIOLJS ..LOWESr 40% OF IIOUSEiIOLDS ..

POVERTY TARGET SROUPSEssirLuATED ABSOLUTE POVERTY ICOMELEVEL (UiS 1-EK CAPITA)

URBAN .. .. b96.0/k 534.2 276.1RUKAL *- *- 341.0/k 2n5.9 177.1

ESTiLtArEu RtELATIVE POVERTY l.JCUHE

LEVEL (USs PER CAPITA)URBAN .. .. 621.0/k 491.5 4W2.OAUL .. .. 2K.U7k 188.1 263.3

CSTIlLATEO POP. BELOW ADSOLUTEPOVESrY iNCUtIE LEVEL (Z)URtBA .. .. .. .. ZZ.URURAL .. .. .. .. 30.8

. OT AVAILABLE

NOT APPLICABLENlO T E S

/a rhe group averzges for each indicator are population-weighted arithmetic edns. Coverage of countries among the

indicators depends on availability of data and is not uniLform.

lb Unless otherwise noted, -DaLa for 1960 refer to any year between 1959 and 1961; -Data for 1970 between 1969 and1971; and Aata for flost Recent Estimate between 1979 and 1981.

Ic 1914; /d 1977; Ie 19b2; /f 1976; /g 1972; /h Including ex-North Cameroon under British administration; / Certainfields of study previously clamsifled under other second level educatLion of vocational or technical nature are nowreported under general education; LI 1978; /k 1982.

lay 1983

-23- "TMEIPage 3 of 5

rIesfacC It t.TC .w?at.o-.. eSrf t-a- ea ee ia leetst! y tst tie~Z " ~& -In eektrtt e -I s -i,a ttt . saae ae .e e.-a.sa

satitbe Itet attieeata eeat.ttt aicatos tssl at-ittnasaE' ' .. trsa1tdt %dta- settt ta

annie ....... .ot'ta.. lates. titeca. Ma 'tttetts. rattl ea...c aeCSe sse'. '.aelW_t - .jt_- Cs.tisa k ,a e ss..-i etlfe tt5-te"i. et5 seti i it?a4fa a

REtltettes i -. 1 Pasn ?¶ s.--a ltettsatt tiett eft~s~aCeredessOt.eta. tut ra ateer e

rates. itan~~~~~~~~~~~~~~~~~~~~~ito -L& .

Sa (stastaes ataka.-) * itata' - nitiettet Otttdt-2 t CS-F4" teatirtiaYS-s-lae ,atSts eSa ae, l ace. te.aaL stare 'to.Itr rZ-LrT.......r t-a*senesris-ta~ee5:et~ eaattta ae es taaatttr t .ettr gaaeis er erte trea FeLttt iset fMeI. fmetste

tlIS 0 4I-aae.mt ate -aea t .le n..rse'oaete,atr'atte~patttfte s

tall. 595 .- 1 "-_&IILC C'CI IC .. do15CCftatattI.e i-i p.ett CI.e W-tes e-e e .. - L1- rt.d.ts- 1 tt

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is's. tttt leetattid~~~~~~~~~~~~~~~~~~~~~~~~~~~W P t- Irtat tsstfit dtcdL

ea~astske. te. re. .. ~ea et '~ a s..'s'eVt: tties a. e...tt p- tte - r*- inst

Fe-ealattaes eat. Z - Cersit tawlaele rngestta sea eats- it Va S s: sae ata tte4

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ilsallatttileS5tt. Iste eeOt9 It t -. stist ift atII flt -aCe.tt511 tit iltS ttttratgC Stias.arft aie

IngsCtte ef eiesli ', " -. aeftaaetti i lCaS e12i wa.- atesi ante J-- 9-ee datilsa L-e.-asr.

etete teat bars-as-sit Ic e1.sl a.t a-at'.-ratr. eftt lasZe--.LW-ft

deans us sta ntace.wea oteast at rettCLI,, sie rtasiheae fleet. .t'-C-ttt adC fel - ite taat taa,tsS teet

.%e C.atds etati a. 5. st-a 1 iaese Cerkec tae tetes ratale: saeiratIs. etteea yi

fahai ttlt to., as it`ZIsi it-i.tte ntI rIaetedotaar.tee feect teinanor trattaeats gt-a'at'e It s-.ez'ttt fa -t6er a'. osttepeat it e6fea.t-sa- a.M a"hda-laa tae a

tsmatetta -a _ tst tostet-tt at,est- tat.?. edtte 1.5.1.-Cltt ass ies

~~rs~~; .nt. :s'o. arc ea sat.. anSL CS bileV aietr.11 a i-raa *.-e-. trttts .aa st.te e

c- as. I-S.- atolts last Catd s te ts ttetste tedea-t-ass"i - ---C.-ii -. r-ltilet. Itatse- etelees(t-ret a ateasetALIsetas teaitalee

isesatt. M rce- atat - Ctatart 40-tS were). It-D.~fl . ii tetlts-C -LtO. aetit. W'Ct h atr -t1 -a- . .ar ars-s.ad.st

rareisatat sart test 'ni--'- t-al- ea eCtsata-tl- tIrat tts.iei ttlet et att7z 9 tsltcr555 L stetata t -rdt?.t rae-ie

ieaierase retetat- a~ . t - r-ss - net steab tte etslitddt it-te ttat -ha set)- tlt ttttsait telsZatSesS S Srie]_aioeiatsea sr ;t-, -- a t-. eeC at'-aCt._ ZC itilatlesa ti- ti-si-. I -1etfttateI e., 'ISat e see

Cr --Sn httt er t.etl s.I 11.. It t ttM 51 etA-, Alt -AIh C`I``gte- CIeallta.; ,5' - -ta setqL t s. II.LIIII . _ . m hanl.eCL

esea -tt t-t-h ; et1-see -et-iMa 1 arth See w.5 tld est teea eete teeitslte)-Fsesrtncsls e

frees ttteett. a. Mr. Wst ?dssatt e sa di bet t ettsrefts-'-

atI lstcesreatels- .559ase h.et terait felt tesle -fte sata'f aait- taeI at - ts-te e.wed.)- W .edi LtttSre W it. en-1 eail eaatt p,-Cq reEttt tat iteecteet %S .

tartl Vt:T- -L -CS P .. na-eer peere feSatrtsesa. srsrts a-e. '.reedT sre

- airs atI- Is te e . S r-- ~ .- toattaser r ra, Is-f -t t-sea atst. 'l Ss tieaarats IC . `L. -0 g. wtr -earaetee5 i -i ter lest. .c'..E~-e -arttlt

in- a? L F..* nS.---e ea ttas ls4e 4l- Itte - eio ~ eLasaetee sraaa tnfat esei- LSte it is resde

Chlet Id tae tai-as sat- Ista- 7teal. 4CeeSt W,let gaece Cs- flea- Crt taetrtCet at-a taea ra

ceits a ss an tslesit savatss 'recetle atl assk tict. Leam-f slats flatt-I.

Af.t. snaCeei a Ia trete eareae (staedOtatfet-L *atatiICL! l6-ttessdsl p- Ita-ali iattflar rn titae stee

a~tnt. eed lw ss-ti. f eat -ittetitss essd natalteed eae.t-eeLs:z t:Ied tr See- tllC - IVt..tlsi* teed I tied frsa- s eilaa t tePlste -et. (itrsttta - Fau-i hels lets at rraasae es et en

taCleat'te wi eise s a se srlittlsd tarwL a. - Lf eslarsats-rstl-Ztlstis'I lenin tItar 5 bets CL. eat IF - Sltrst. at C easte tt. CM aita.tsisc sats teeaeIaett-lts e. aCet.eat-tet ee staCl,- ?. tette .- s::a.$ sf t e os ecteaatr itrascta itnra se atrfn:It

atsS5.lstatt t 5 9 tt a tsi ntl- etIist-ea Ltatutrs ttclr.e a. r _Fas. a tagtttatat

24 - ANNDEX IPage 4 of 5

ECONOMIC INDICATORS

GROSS NATIONAL PRODUCT rg 1982 AUNUAL RATE OF GROWTHS. Constant Prices)

USS Iln. /1/ S 1975-80 1981 /21 1982 /1I

GNP at Market Prices 70,106 100.0 3.1 -7.6 -4.2Gross Doamestic Inve3tuent 16,815 21.0 1.3 7.6 -18.8Gross National Saving 9.070 12.9 5.2 -31.4 -24.0Current Account Balance -7.341 -10.5Exports Of GooCs.llFS 13.590 19.4 2.0 -34.4 -19.1imports or GoodS,uFS 19,989 28.5 15.6 -7.1 -31.9

OUTPUT. LABOR FORCE ANDPRODUCTIVITY IN 1982

Value Added /Il Labor Force /31 V.A. PER Worker

USS Iln. s in. S US S s

Agriculture 152464 2T.8 19.6 59.8 87 W0.6Industry & Mining 27.709 39.0 6.2 18.9 4,320 199.5Services 27,847 39.2 7.0 21.3 3,975 183.7

Total/Average 71,020 100.0 32.8 100.0 2,165 100.0

GOVERNMENT FINANCE

General Goverment Central Governuent

(N Win.) S of GDP (1 InO.) S of GDP

1982 /I/ 1982 /I/ 19T9-8l 141 1982 /Il 1982 /11 19T9-81 /is

Current Receipts 12,620 26.4 29.5 7.320 15.3 21.3Current Expenditure 9.612 20.1 20.1 4,878 10.2 10.8

Current Surplus 3.008 6.3 9.4 2.442 5t1 10.5Capital Expendituare 9.54T 20.0 18.0 6.270 13.1 12.9External Assistance(net) 261 0.6 0.6

ON-TI. CREDIT AND PRICES 1976 1977 1978 1979 1980 1g98 1982

(Million N Outstanding End Period)Noney and Quasi Money 5,843 7.813 7.521 9.849 11,390 15.239 16,694Bank Credit to Public Sector(net) 551 2,309 3,143 3.313 3,539 6,299 10,328Bank Credit to Private Sector 2,382 3,459 4.485 5.126 6,741 8,917 10.567

(Percentages or Index Numbers)Money & Ouasi Money as S of GDP 21.6 21.7 22.2 24.3 30.9 32.3 34.9General Price Index(197S=100, 123.9 143.0 166.7 186.3 204.9 247.5 266.5

Annual Percentage Changes in:General Price Index 21.7 15 4 16.6 11.8 10.0 20.8 7T7Bank Credit to Public Sector - 319.1 36.1 5.1 6.8 78.0 64.0Bank Credit to Private Sector 34.8 45.2 29.7 14.3 31.6 32.2 18.5

Note: All conversions to dollars In this table are at the average exchange rate prevaillng during periodcovered.

/I/ Revised estimates. /21 Orficial estimates. /&1 Provisional.13/ The data is derived from planning documents and refers to the number of 'gainfully employed'.

-Not Available.April 18. 1984.

-25- ANNE IPage 5 of 5

TRADE PAYMENTS AND CAPITAL FLOVS

BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1981-1983) 141

1981 /I/ 1982 121 1983 131 USS Wln. S

(Millions US S)Caports of Goods r-o-b- 17.718 12.930 1O.T30 Crude Oil 13.421 96.Tof which:Petroleuu 17.162 12.751 10,350 Cocoa Products 225 1.6

Imports of Goods r.o.b. 18,390 16.838 12,254 Palm Products 85 0.6Services & Income -4.803 -3,060 -3,208 Tin 25 0.2get Transfers -567 -373 -260 Other Commodities 127 0.9

Current account Balance -6.042 -7.341 -4,992 Total 13,582 100.0

EXTERNAL DEBT, DECEMBER 31, 1983 /5/Dlrect Forelgn InVestennt 165 358 365

Ret Official RLT Borrowing 811 758 980 US$ Mln.of which: Amortization -583 -477 1200

Public Debt, lnel. Undisbursed 15,504Other Capital(Short-Teru) 409 496 -643 Non-Guaranteed Private Debt

Net Errors & Omissions -1543 -689 0 Total Outstanding & Disbursed 11,756

Overall Balance -6200 -6418 -4290

Financing 6200 6418 4290====- - - - - --- DEBT SERVrCE RATIO For 1983 /6/

Reserve Movements(Incr.-) 6.200 2.367 518 __Arrears 0 4,051 3.770 tReserve Levels 4,261 1,429 1,0929Reserve as Month of Imports 0.18 O.OT O.OT Public Debt, inl. Guaranteed 17.9

Non-Guaranteed Private DebtImports 18.390 16.838 12.254of whleh: Food 3.154 2.786 1,875 Total Outstanding & Disbursed 17.9

Consumer Zoods 4,612 4,141 3.259Intermediate Goods 4,682 4,342 3,13TCapital Goods 5,942 5.569 3,983 IBRD/rDA LENDING (Feb. 29,1984) (Mililona S)

tATE OF EXCHANGEIBRD IDA /7/

197T: £1.00 = tISS1.57T1979T N1.00 = USS1.56 Outstanding & Disbursed 848.0 36.71980: 31.00 = US$1.83 Undisbursed 1,091.4 -1981: 11100 = USSt-63 ---1982: 11.00 = USS1.49 Outstanding incl. Undisbursed 1,939.4 16.71983: NI.00 = USS1.39

/1/ Provisional. 12f Orriclal estimates. /3/ Stafr etiMate3./4/ OfficiaL estZa3tes for 1981 Jnd 1982./51 Excluding $5.9 biLlion short-term arrears.J61 Ratio of NLT debt service to exports of goods and non-factor services.171 As of February 1984... Not AvalIable

April 18. 1984

- 26 - AIMIE I

THE STATUS OF BANK GROUP OPERATIONS

A. STATUIEN OP BASK GROUP OPERATIONS IS NIGERIA 1/ 3/tAs of March 7s. '931 IJ

loan Or USS MilltonCredit Amount (leor cancellation) 2/Suaber Year Borrower Purp:oe Bank IDA Urdlaburaed

Twenty four loas and two credits fully d±abuned 62c.0 35.3

929 '973 S:geria Educatton 37.7 0.61091 1975 Ntgeria LI wtock 21.C 0.81191 '976 Niger-a S.C. State Ol1 Pula '9.0 '0.91454 1977 Ntger-a Agrie. Dew. taft. 27.0 0-71455 '97 NigerIa AgrlSc. Dea. Ayuzgbe 35.0 0.21591 '978 SNgeri-a uc. Est. Sallholder 0±1 50.0 5.7t 59T 97m 5_3B IndustrIal Developrmnt 60.0 22.01667 '979 Nig -a Agrrc. Dew. Bide 25.0 4.9 a'566 1979 Stgert-a Agi-. Dew. :lortf 27.0 '1.71679 1979 P-Ngria Forestry 3'.0 7.11711 1979 Nigeria Water Supply - Kaduna 92.0 73.3'79 '1979 NIgeria Agrc. & Rural Mg--t. Inst. 9.0 6.6'766 '980 SEPA Power Lavo 'Doo 74.91767 '980 Nger'-a Urban Develoment - hucSh '7.8 ".41838 '90 igegria Agrl-c. Det. - Oyo-North 2a.0 24.'1854 '90 Sigeria Agri4c. bet. - Eki±t-Akoker 32.5 22.9'883 '980 N±ger!M Roads '08.0 60.619e1 '8' N.geria Agritc. flew. B-ucha '7320 69.0'982 '9' S±ger_a Ag4l-c. Dew. - Kano '42.0 '05.52029 9S' Nigeria Tech. Asu±staene-Agrlc. 47.0 34 .72036 '9_2 t±ger-a Water Supply - Aasmbra 6T.0 60.32e05 '982 N1EPD Powr - Distribution '00.0 96.22185 '962 :Igeria Agilc. Dew. - Selksn '47.0 ¶29.02299 '983 !IDB Industrial Dewelopent '20.0 120.02345 1984 Nige--a Fert±ilzer Import 250.0 227.82376 '984 Nigwria Smal & loed-m Scale Industry 4.0 41.0

Total 2368.0 35 3 ',22'.9Of whtch has been repaid 272.2 3.8Total OutstandIng 2.095.8 31'5

2mount sold 16.8Of whicb 3h been repstd 16.8 0-0

Total now held by Bank & IDA 2/ - 2,0°_.8 31.5

Total un3tsbursed ,22' 9

B. SZA.,.r.7 OF -FC ISVESflClS,A e?f March 3'. '984)

Fiscal Type of Amount In USS N±l21±nYear BusIness Loan E ;quIty Ttal

'964. '967. Arewa Textiles Ltd. tertile Wfg. '_0 0.6 '.6

'954 Nigerla Industrial Dew. tIn. Ce. '.4 '.4Developaent Bank Ltd.

'973 Funtua C'ttonseed Veg. Oil 1.6 '.6Crushing Ltd. Cresting

'973 Nigerian klunintu= Alcmtnia 3.0 0.3 '.3Extrusten Ltd. Processutg

'974 If'-tga Sugar Sugar 0.' 0.'Estate

'g9o TT! -extiles 6.2 0.7 6.9

98' Ike~a ijHtel Touria 7.5 '.8 9.3

Total Cross Commtments '7.3 4.9 22.2

Less cancellattlns '.4 0.' '5Less sold and repasd 2.8 '.5 4.3

Total Commitment now held by :rZ '3.' 3.3 '6.4

Und±sbursed 0.5 '.8 2.3

SoJt yet effecItwe.I/ ahestau1 of the projects l±sted in Part A ta described in a separate report on all Bank/IDA

financed projects In execution. whteh updated twice yearly and cIrculated to the ExecuttteYXrecters on April 30 and October 3'.

2:' Prior to exchange rate adjustments.3/ Mhta list does not include the Gas Techateal Assistance Project '525 ctllton) appr"ved bt the

Bank but not yet signed.

- 27 - ANNEX IIIPage 1 of 2

SUPPLEMENTARY PROJECT DATA SHEET

Kaduna State Integrated Agricultural Development Project

Section I: Timetable of Key Events

(a) Time taken to prepare the project: 12 months.

(b) Project prepared by: Funtua Project Management Unit for KadunaState.

a (c) First presentation to the Bank: July 1977.

(d) First Bank mission to consider the project: November 1977.

(e) Departure of the Post-appraisal Mission: February 1982

(f) Completion of negotiations: July 1983

(g) Planned date of effectiveness: September 1984

Section II: Special Bank Implementation Actions

(a) The Bank will make an advance payment of US$500,000 from theproceeds of the proposed loan into a special commercial bank accountfor use by FARA to assist in the early financing of the salaries ofinternationally recruited project staff and the allowances ofoverseas trainees eligible for reimbursement by the Bank (para. 49).

Section III: Special Conditions

(a) Execution of the Subsidiary Loan Agreement between the Borrower andthe Kaduna State Government would be a condition of loaneffectiveness (para. 54).

(b) As a condition of loan effectiveness KDAPMU and KDADEC shall be dulyestablished with terms of reference satisfactory to the Bank (paras.45 and 50).

(c) As conditions of loan effectiveness, a separate commercial bankaccount shall be opened for KDAPMU with an initial deposit of

4 N4.7 million (para 56); and the Bank shall be provided with evidenceto substantiate KDSG's cash equity contribution of at leastN3.0 million to the capital of FASCOM (paras. 48 and 56).

- 28 - ANNEX IIIPage 2 of 2

(d) No later than June 1, 1987, KDSG would provide the Bank and FHG fortheir review details of proposals for the continuation of projectactivities beyond the project period (para. 52).

(e) In the event that KDAPMU does not promptly receive funding fromKDSG, FMG would pay directly to the commercial bank account of theproject that part of the Statets statutory allocation correspondingto the State's approved annual budget for the project (para. 56).

)

N i G E R

.r~~~~~~~~~~~~~~~~U

BENIN

*2 f~~~~~~~~~~~~~~~~~~~~~~~~

j hr~~~~~~~~~~~

*0 A~~~~~~~~~~~~~~~~~~~~~~~

:,j~. ,. , iSE-1-

, W ,p^J/,, \ ' H ^ R t _ R ___ ~~~~~~~~~~~~~~~~~~~Stoe f Pro.ne C;

L T E. o_ts _ _ sch& -

U ORIA( -I? -'AFI

4. 6. 5. _ _,o.

IBRD 15065R4*i- ir APRIL 19U

Rj r ,,. IBRD ASSISTED

,.1 K AGRICULTURAL PROJECTS

Aaricultural Developmnent Proiects:

COMPLETED:

wr7i ~ ~~-. Eqlu.-,~ untuc (Loan It092-UNI)L_ru jJ _ 1 {t 5 Gusau (toon 1099-UNI)

Gannbe (Loan 1164-UNIIf - / t_ \ Aywrgba (Loan 1455-UNIN

- 0/.,- Fo4 jia X [ Ia EXISTING:

§~ 1N 7/ITS 3 0 R N 2 Lafic(Laaon454-UNI)

-- Shu MA IDGUR- Bido (Loan 1667- UNI),k XfAl Dari (Loan 1668-UNI]

Lis r ca2,tjG_ STATEF wJyOyo North (Loan 838 -UNI)'O STA 61.~~~~~~~~~~~~~~~~Elr Akoko (LoanI854-UNQ)-~~~ Saudi.Bc,h Sltat (Loon 1981-UNI)

__ - / / ~ k- - Sokolo State (Loan 2185-UNI)} > / -: _ t/SOt rHEgRNV / Kona Store (Loan 1982-UNI)

Kaduna State (loon80\ } ORIVO ^ ! Jf zW APPRAISED

3 A U / H I g _ ! v E Soumnern Bw-no

Moaobillo

19AUCHI W 0 UNDER PREPARATION(ADF):

Anambrsa Stare'maBendel

< CHAD Cross River StateC. Rivers State

Ogun SktatPlateau State

L A LT EN: , ,\ L.C-r Benue StateL5 LIAEA -- NT Training Projects:; E, r,r, L/ <2) S Agricultural and Rural

Management Training Institutee- ~~~~~~~~~~~~~~~(Loan 179-UNI)

r ) / Tree CroPrpjects'COMPLETED:

Xx *r - -- 6 | - - - ' Cocoa I I Loan 76G-UNI] orld-. 1.I > / i - Cocoa U (Loon O145UNI)

-Jr, CANCELLED:C ~~~~~~~~~~~~~~~~Ondo OilPalmn(LoonI1192 UNI)

Son"el 0.1 Polm (Loon 1183-UNI)ICa?s,nO Ala $ * . EXISTING:

; *__ Imo Oil Palm(Loonl919-UNIQ!NK 'i \ _ . | Riven State Oil Poln (Loa m1591-UM)

I -- 1 : l , :::::,. Foresr (Loon 1679-UNI)

r- I -- I (,4 > ? APPRAISED-

~ R ji~ , S* ..... zt S n rS2 C : -f~ Soc Ett (ml am\ J 0Wfd^_ff~~~~~~~~~~~~~~~~~~~~~~~~roc,ss R"mr Stlel EmoWOil Polm)

sohiyets .n r.11.merers ,Igin re69 No.ocl CooI.l COMPLETED:

Ste - Pte foInce CoaplaIs r L AIGERI LIBYA * Rmce(LoonIl03-UNI)A_roarts with schedul serv.ces ALGERIA lot f- .TMc,n Roads 31 _ - LeLo

* Rad.ays MAL NIGCR ILwtock D R.vers ',AL I oA CHAD - (Loon 1091-UNI)

UPFS VOL?-"'% L!: SuDAN EXISTING:Stare Boundor,e; -V5;'Ch NI5ERIA I L 3C

Internareonal Saundones 1t~~~~~J. =. Westen LUvestock Co RonchesWernar.onal Boundar> -tisrv....e '-North-Eastern Cot Ranches

KttO"E Tf R5 1 O ,0 CO 80 00 170 220 140 160 AniaC -e 3 , A nml X Pasture Investigato Cents0 20 40 CO EJv lOt 120 -4 ISO RE RUi_ ILOMETERS ,uwdaNJ~jnr ci ZAIRE Grazing Reseves-Fulani Giro Rance

r0 20 40 60 so lt 2-.. _r'4