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         Cocoa Rehabilitation

The Cocoa Rehabilitation Project, supported by Loan 2912-CM in the amount of US$103 million, was approved in FY98. The loan agreement was substantially amended and resubmitted to the Board on March 4, 1991, at which time the amount of the loan was reduced to US$61.7 million. After a one year extension , the loan was closed in FY96. An undisbursed balance of US$29 million was canceled. Co-financing was provided by the Caisse Centrale de Cooperation Economique, now the Caisse Francaise de Developpement (CFD), in the amount of US$8 million; and the German Government (GTZ) in the amount of US$3 million. The Implementation Completion Report (ICR) was prepared by the Africa Region. The Borrower prepared its own evaluation of the project, which is briefly summarized in annex to the ICR. No comments were received from the co-financiers.

The objective of the project was to help modernize the Cameroonian cocoa industry through the alleviation of producer constraints, and the strengthening of the Cocoa Development Agency (SODECAO). The economic justification of the high cost project was a substantial increase (60%) in cocoa production through new plantings and yield increases. However, even before effectiveness it became apparent that the project was too ambitious given deteriorating economic circumstances and lack of counterpart funding. The project was redesigned in 1990 and emphasis put on liberalization of cocoa marketing and prices, elimination of subsidies, privatization (substitute independent planter groups for government cooperatives and gradual withdrawal of SODECAO from the sector). The redesigned project had five components: supporting the importation and distribution of chemical inputs; supporting the development of 1,500 farmer groups; supporting research on cocoa, coffee, foodcrops and fruit trees; supporting road maintenance and construction; and supporting the redeployment of SODECAO staff.

Physical objectives were partially achieved: almost 15,000 ha were newly planted out of a revised target of 18,000 ha; 40 km of new feeder roads were built out of a revised target of 275 km; 1,113 km of existing roads were rehabilitated out of a revised target of 1,380 km; and the maintenance of 479 km was transferred to the Ministry of Public Works out of a revised target of 1,375 km. No research results are available, but the project had some success on policy aspects, as subsidies were canceled, trade was liberalized, and SODECAO was no longer providing free services to farmers. However, the project failed to achieve its objective of modernizing the cocoa industry and raising farmer’s productivity in cocoa production. Cocoa yields actually declined in the project area due to sharp price decreases, increasing difficulties in obtaining inputs, lack of support services, inadequate feeder road construction and maintenance, and the growing age of the cocoa trees and the planters themselves. Insufficient data prevented calculation of the ex-post ERR, but it is likely that economic impact is negligible or even negative. Development impact on the intended beneficiaries was negative.

The ICR rates the outcome as unsatisfactory, sustainability as unlikely, institutional development impact as negligible, and Bank performance as unsatisfactory. The Operations Evaluation Department (OED) endorses these ratings.

The ICR identifies some familiar lessons of which the most important are: project preparation must involve an in-depth stakeholder assessment to identify political and other vested interests, as well as the Borrower’s and beneficiaries’ ability to pay; the option of closing or redesigning poorly performing projects should be more actively considered when it becomes clear that a project’s development objectives are no longer achievable; projects focusing on export promotion should involve a risk assessment of exchange rate fluctuations, especially when these are overvalued; privatizing input supply will not generate a private sector response in the absence of producer incentives to use these inputs.

The ICR is satisfactory, providing especially sound analysis of reasons for project failure during implementation. However, it would have been improved if further insights had been provided on why such a highly demanding, complex and risky project was approved, especially given the similar problems experienced by the previous Cocoa Project (L1039-CM). Also, more discussion would have been useful on reasons for the failure of the M&E system to provide adequate information.

No audit is planned.

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