PROJECT: THE GAMBIA ARTISANAL FISHERIES

DEVELOPMENT PROJECT COUNTRY: THE GAMBIA SUPPLEMENTARY LOAN PROJECT APPRAISAL REPORT Date: March 2009

APPRAISAL TEAM

Team Leader : J.-L. Kromer, Fisheries Specialist. OSAN.4 Team Members : O. Oladapo, Agricultural Economist, OSAN.4 A. Nyong, Climate change Specialist, OSAN.4

M. B. Ceesay, Consultant, Agricultural Economist Sector Manager : Ken B. Johm (OSAN.4) Sector Director : A. Abou Sabaa (OSAN) Regional Director : F. Perrault (ORWB)

Peer Reviewers

M. Wa-Kyendo : Transport Engineer, OINF.2 Y. Dejene : Gender Specialist, OSHD.0 L. Gbeli : Agricultural Economist, OSAN.4 K. Mfalila : Environmentalist, OSAN.4

TABLE OF CONTENTS

Page ÉQUIVALENTS, ABBREVIATIONS, LIST OF ANNEXES, UPDATED MATRIX i-viii 1. ORIGIN AND BACKGROUND OF THE INITIAL PROJECT 1 2. THE INITIAL PROJECT 2 2.1 Objectives and Description of the Components 2 2.2 Initial Costs and Financing Conditions 2 2.3 Initial Loan Conditions and status of implementation 3 2.4 Implementation Status of Initial Project Activities 4 3. APPRAISAL OF THE SUPPLEMENTARY LOAN 7 3.1 Rationale for the Supplementary Grant 7 3.2 Objectives and Description 9 3.3 Revised estimated project costs 10 3.4 Sources of Finance 11 3.5 Revised Implementation Schedule 12 3.6 Cross Cutting issues 12 3.7 Executing Agency 13 3.8 Management of the Port Infrastructure 14 3.9 Procurement of Goods and Services 14 3.10 Disbursement Arrangements 15 4. JUSTIFICATION IN RELATION TO THE BANK POLICY FOR 15 SUPPLEMENTARY LOANS 4.1 Justification in relation to general conditions 15 4.2 Justification in relation to specific conditions 15 5. SUSTAINABILITY AND RISKS OF THE PROJECT 16 5.1 Recurrent charges and program sustainability 16 5.2 Main risks and mitigation measures 16 6. ECONOMIC ANALYSIS 17 6.1 Economic analysis 17 6.2 Sensitivity analysis 17 7. CONCLUSION AND RECOMMENDATION 18 7.1 Conclusion 18 7.2 Legal documentation 18 7.3 Compliance with Bank Policies 18 7.4 Recommendation 18

LIST OF TABLES Page 2.1 Initial Overall Project Cost Estimate by Component 3 2.2 Initial Overall Project Cost Estimate by Source of Finance 3 3.1 Revised Overall Project Cost Estimate by Component 10 3.2 Revised Overall Project Cost Estimate by Expenditure Category 10 3.3 Comparative Analysis of Initial and Revised Overall Cost Estimates 11 3.4 Expenditure Schedule by Component 11 3.5 Revised Overall Financing Plan by Source 11

LIST OF ANNEXES Number of pages Annex 1: Project Area 1 Annex 2: Summary of the economic analysis 2 Annex 3: Revised Implementation Schedule 1

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CURRENCY EQUIVALENTS

EXCHANGE RATES Dalasi Unit of Account (UA) Supplementary Loan (January 2009) Appraisal (April 1999)

1 32.72 15.34

WEIGHTS AND MEASURES

Metric System 1 nautical mile = 1852.184 meters

FISCAL YEAR

1 January - 31 December

ACRONYMS AND ABBREVIATIONS ADB African Development Bank ADF African Development Fund BADEA Arab Bank for Economic Development in Africa EU European Union EEZ Exclusive Economic Zone GAFDP Gambia Artisanal Fisheries Development Project GDP Gross Domestic Product GMD Gambian Dalasi GoTG Government of The Gambia GPA Gambia Ports Authority ICB International Competitive Bidding KMC Kanifing Municipal Council LRR Lower River Region NBR North Bank Region NCB National Competitive Bidding NTF Nigerian Trust Fund PRSP II Poverty Reduction Strategy Paper PIU Project Implementation Unit PSC Project Steering Committee SL Short List UA Unit of Account USA United States of America

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Loan Information

Client’s information BORROWER: Government of The Gambia EXECUTING AGENCY: Department of State for Fisheries and Water

Resources Financing plan

Source Amount (UA million)

Instrument

NTF

5.00

Loan

GOTG 0.50 Counterpart funds TOTAL COST 5.50

ADB’s key financing information

NTF Loan

UA 5.0 million

Service Charge (fixed): 0.75% Interest rate spread* N/A Commitment fee* 0.5% Other fees* (type, b. points) Repayment period 20 Years Grace period 7 Years NPV (base case) 14 million GMD EIRR (base case) 29%

Timeframe - Main Milestones (expected)

Concept Note approval: January 2009

Project approval : Board approval: 03 June 2009

Effectiveness : June, 2009 Completion : June, 2011 Last Disbursement: June, 2011 Last repayment : June, 2036

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V. Revised Results Based Logical Framework

HIERARCHY OF OBJECTIVES

EXPECTED RESULTS AND TIMEFRAME

REACH (TARGET POPULATION)

PERFORMANCE INDICATORS

INDICATIVE TARGETS

TIMEFRAME

ASSUMPTIONS

/RISKS

Goal: To contribute to the strengthening of food security and poverty reduction.

Impact: Increase in value added of fish products and in exports.

Population of The Gambia

Impact Indicators: Fisheries’ contribution to GDP.

Contribution of artisanal fisheries to GDP increased from 4.2% to 4.5% by 2011.

PRSP II is on track, there is political stability and no deterioration in macro-economic conditions.

Project Objectives To increase fish production and income of fisher folk and to contribute to the improvement of nutritional standards of the population.

Outcomes 1.1 Increase in incomes of artisanal fisher folk. 1.2 Improved access to fish for the population

Beneficiaries 1.1 Fisher folks using the jetty and landing sites estimated at 4,000 (60% women) 1.2 Rural and urban consumers estimated at 1.5 million.

Outcome Indicators 1.1.1 Average incomes of fishermen and fish traders especially women. 1.1.2 Statistics on fish landings and exports. 1.2 Availability and access to fish in the markets

Target Indicators 1.1.1.1 Annual landings of “bonga” increase by 2,500 tons and industrial fishing landings by 1,500 tons, by 2011. 1.1.1.2 Annual income of fisher folks increase from their 2008 levels of GMD 15,000–30,000 to GMD 17,000–36,000 by 2011. 1.1.2 Quantity of fish exported increase from the 1.500 tons in 2008 to 3.000 tons by 2011. 1.2.1 100 (80% women) traders and 100,000 consumers (70% women) are using the market and . 1.2.2 Fish per capita consumption increases from 25 kg in 2008 to 27 kg by 2011

Risks: Natural disasters, particularly those brought about by climate change could destroy fisheries facilities. Mitigation measure: Design of landing facilities and jetty will take this into consideration.

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HIERARCHY OF OBJECTIVES

EXPECTED RESULTS AND TIMEFRAME

REACH (TARGET POPULATION)

PERFORMANCE INDICATORS

INDICATIVE TARGETS

TIMEFRAME

ASSUMPTIONS

/RISKS

Input and Activities Component 1: Improvement of fisheries facilities/ infrastructure 1.1 Banjul jetty construction. 1.2 Construction of Bakoteh fish market. 1.3 Rehabilitation of three inland fish landing sites at Bintang, Tendaba and Albreda including access roads.

Outputs 1.1. The Banjul jetty is operational and used both by artisanal and industrial operators. 1.2 A proper market is constructed to sell and buy fish and fish products in good quality conditions. 1.3 Three inland fish landing sites at Bintang, Tendaba and Albreda are rehabilitated and effectively managed by Community Fisheries Centre committees.

Beneficiaries 1.1.1 Banjul area population estimated at 360.000 1.1.2 Fishermen, women fish mongers and private operators estimated at 2,000. 1.2 Market used by fishing communities, fish processors (80% women), traders (50% women) and consumers estimated at 100,000. 1.3 Fisher folks at the 3 inland landing sites estimated at 2,000.

Output Indicators 1.1.1 Improved Infrastructure and facilities constructed and operational. 1.1.2 Number of fishing vessels using the jetty. 1.2.1 Market constructed and managed by Kanifing Municipal Council (KMC) and used by fish traders. 1.2.2 Volume of fish traded in the market 1.3.1 Three landing sites rehabilitated and operational 1.3.2 Quantity of fish landed.

Target Indicators All indicators are 2011 targets. 1.1.1 Construction of Banjul fishing jetty. 1.1.2 Provides access to at least 20 industrial fishing vessels and 150 canoes which catches are systematically monitored . 1.2.1.1 Construction of fish market 1.2.1.2 Fish market managed by KMC and used by fishing communities and 100 traders (80% women). 1.2.2 950 metric tonnes of fish annually traded in the market. 1.3.1.1 Rehabilitation of 3 landing sites with a total of 11 km of access roads. 1.3.1.2 Landing sites are managed by Community Fisheries Centers members 1.3.2 Quantity of fish landed increases by 1.500 t

Risk: Costs overruns and unsatisfactory quality of works. Mitigation measure: Detailed studies have been conducted and there will be stricter monitoring to ensure timely implementation. Risk: Poor operation and maintenance of markets and landing sites. Mitigation measure: Process to delegate management to KMC has been initiated. Fish landing sites are already managed by Community Fish Centers committees.

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HIERARCHY OF OBJECTIVES

EXPECTED RESULTS AND TIMEFRAME

REACH (TARGET POPULATION)

PERFORMANCE INDICATORS

INDICATIVE TARGETS

TIMEFRAME

ASSUMPTIONS

/RISKS

Component 5: Project Management and Coordination

Timely implementation of operations within budget.

PIU with DFSWR

Number of activities implemented within time and budget.

Implementation of project activities on time and within budget.

Risk: No qualified staff to manage the project. Mitigation measure: Inducement allowances and career development measures implemented for the PIU.

1 ORIGIN AND BACKGROUND OF THE INITIAL PROJECT 1.1 With a population estimated at 1,500,000 inhabitants, The Gambia has one of the highest population density on the continent. It is endowed with pelagic fish resources whose potential is currently under-exploited. The fisheries sector has many significant and pressing development opportunities, with an exploitable potential of 80,000 tonnes of fish per year. The total national fish production is estimated at approximately 30,000 tonnes per year, with 25,000 tonnes from artisanal fisheries and dwindling catches from industrial fishing undertaken mainly by foreign vessels. Fish is the principal source of animal protein; contributes 3 percent of GDP and employs 3 percent of the population. The major constraints on fisheries development are: poor development of infrastructure and lack of basic equipment, and inadequate institutional and private sector capacities. As a result of these constraints, the presence of industrial vessels currently 40, is only of very little benefit to the country’s economy, as the vessels do not land or process their catches in The Gambia. Illegal fishing, which did constitute a serious threat to the resource in the last decade, has been effectively addressed by the Authorities and can now be considered to be minimal. Recent reforms initiatives undertaken include the review and update of the Fisheries Act of 2007 and the Fisheries Regulations of 2008 to reflect current reality with a strong focus on the sustainable use and management of marine resources. The Fisheries policy is expected to be reviewed and updated in 2009. 1.2 In order to address the above constraints, and in line with the long-term development framework of the Gambia Vision 2020 and the medium-term strategy PRSP II, 2007-2011; the Government formulated a Strategic Plan with the objective of promoting the fisheries sector to enable it make a significant contribution to poverty reduction and socioeconomic development. Consequently, the GoTG sought the assistance of the African Development Bank (ADB) Group to finance the Gambia Artisanal Fisheries Development Project (GAFDP). This project was appraised in April 1999 and approved on 17 May 2001. The total cost of the original project was UA 10.15 million with funding from the Bank through the Nigeria Trust Fund (NTF) window amounting to UA 2.9 million and co-financing of UA 6.17 million from the Arab Bank for Economic Development in Africa (BADEA) and UA 1.08 million from the Government of The Gambia. The NTF loan was intended to finance the capacity strengthening and operation of the project while the BADEA funding was meant for the civil works. The Loan Agreement was signed by the Bank and the Government on 19 January 2001. The Loan Agreement entered into force in 22 October 2001. 1.3 The project comprises five components: (A) Improvement of fisheries facilities and Infrastructure; (B) Strengthening of the Fisheries Department; (C) Monitoring, Control and Surveillance; (D) Credit Programme; and (E) Project Management. In the implementation of the component “Improvement of fisheries facilities and infrastructure", the design, supervision and construction of a fisheries jetty (Lot 1), central fish market (Lot 2) and inland fish landing sites at Bintang, Tendaba and Albreda (Lot 3) were planned to be undertaken. This component was designed to be fully funded by BADEA. However, due to cost escalations resulting from price rises and initial lags in commencement of implementation (first disbursement of NTF in February 2003 and of BADEA January, 2005) BADEA funds were insufficient even to fully finance Lot 1 i.e. construction of a fisheries jetty. Consequently, UA 0.83 million from the NTF resource were reallocated to complement the BADEA funds in the implementation of Lot 1. The Government of the Gambia (GoTG) also committed UA 0.281 million to Lot 1. 1.4 However, GoTG is still desirous of the total implementation of the project as designed at appraisal. The total cost of all the civil works, if they were to be fully implemented as appraised

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was estimated to be USD 9.5million. This translates into a total financing gap of about UA5.5 million in order to build all the required facilities of the jetty and for the construction of the fisheries market at Bakoteh in the urban area and 3 inland fish landing sites in the rural areas. All these are very critical infrastructure necessary to the achievement of the project objectives. The Bank has been approached by GoTG for a supplementary loan of UA 5.0 million to carry out the said activities. The issue was discussed during the last Bank mission in February 2009, and a formal request was subsequently submitted to the Bank. 2. THE INITIAL PROJECT The initial project was identified, within the framework of the 1999-2001 Country Strategy Paper, to support GoTG in its poverty reduction efforts. 2.1 Objectives and Description of the Components 2.1.1 Objectives: The sector goal of the project is to contribute to improved food security through increased employment and foreign exchange earnings and to achieve sustainable exploitation of fish resources. Its specific objective is to increase fish production and income of fishermen and women and to contribute to the improvement of nutritional standards of the population. 2.1.2 Description of the Components: The project comprises five components: (A) Improvement of Fisheries Facilities and Infrastructure; (B) Strengthening of the Fisheries Department; (C) Monitoring, Control and Surveillance (D) Credit Programme; and (E) Project Management. Component A: Includes (i) rehabilitation and extension of the Banjul fisheries jetty and associated facilities; (ii) construction of an office space for managing the Banjul jetty; (iii) rehabilitation of two access roads (11 km) and a jetty deck, construction of sanitation facilities and installation of potable water supply at the CFCs in Albreda, Bintang, and Tendaba and (iv) construction of a central market in the Serekunda area at Bakoteh; Component B: Provision of training for staff and beneficiaries and also includes the acquisition of equipment and vehicles for the collection and analysis of fisheries statistics and the operation of the quality control laboratory; Component C: It consists in establishing a monitoring, control surveillance mechanism through the rehabilitation of a marine patrol boat and a river boat, supplying communication equipment to improve fish resource management and reduction of illegal fishing; Component D: Establishment and distribution of a line of credit for the fishing activities in The Gambia aimed at facilitating the procurement of fishing gear, the development of fish processing and marketing; Component E: For the operation of project implementation unit (PIU) to manage the project and a co-ordinating committee to oversee the implementation of the project. 2.1.3 The main expected outcomes of the project are: (i) improvement of fisheries infrastructure and facilities; (ii) strengthening of the fisheries department; (iii) monitoring, control and surveillance of Gambian territorial waters; (iv) credit programme; and (v) project management.

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2.2 Initial Cost and Financing Conditions The entire project was estimated at UA 10.15 million (or GMD 163.39 million), net of duties and taxes. The summary project cost by component and the financing plan are presented in the tables below: Table 2.1: Initial Overall Project Cost Estimate by Component

GMD Million UA Million COMPONENTS

FE LC Total FE LC Total % FE

A. Improvement of Fisheries Infrastructure 57.35 8.80 66.15 3.56. 0. 55 4.11 87

B. Strengthening of Fisheries Department 9.93 4.90 14.83 0.62 0.30 0.92 67

C. Monitoring, Control and Surveillance 1.05 31.00 32.05 0.07 1.93 2.00 4

D. Credit Programme 8.77 9.53 18.30 0.55 0.59 1.14 48 D. Project management 5.72 8.38 14.10 0.36 0.52 0.88 41 BASE COST 82.82 62.61 145.43 5.16 3.88 9.04 100 Physical contingencies 7.08 0.04 7.12 0.44 0.00 0.44 100 Price escalation 5.30 5.55 10.84 0.33 0.34 0.67 51 TOTAL 95.20 68.19 163.39 5.93 4.22 10.15 58

Table 2.2: Initial Overall Project Cost Estimate by Source of Finance

GMD Million UA Million SOURCES

FE LC TOTAL FE LC TOTAL %

TOTAL

BADEA 51.52 0.00 51.52 3.20 0.00 3.20 31.50 Kuwait Fund 20.56 27.23 47.79 1.29 1.68 2.97 29.30 NTF 23.12 23.54 46.66 1.44 1.46 2.90 28.60 Government 0.00- 17.42 17.42 0.00 1.08 1.08 10.60 TOTAL 95.20 68.19 163.39 5.93 4.22 10.15 100

2.3 Initial Loan Conditions and Status of Implementation 2.3.1 There were six conditions precedent to first disbursement: i) to provide evidence to the Bank of the establishment of a Project Implementation Unit and the appointment of a full-time Project Coordinator; ii) to provide evidence to the Bank of the management agreement to be signed between the Social Development Fund and the Department of State for Finance and Economic Affairs; iii) to provide evidence that agreements are signed with GPA for the management of the Banjul fisheries jetty, KMC for the management of the Central fish market and with NARI for the implementation of the research sub-component; iv) to provide evidence that a Project Co-ordination Committee is established; v) to provide evidence to the Bank of opening of the special account with the Central Bank of The Gambia to receive the proceeds of the loan and vi) to provide evidence satisfactory to the Bank of the establishment of the Credit Review Committee. 2.3.2 The Loan Agreement for the project was signed in January 2001 but the realization of these conditions particularly the opening of a special account and receipt of first disbursement were the main reasons for the delay in commencement of project implementation. The project was declared effective in July 2002 but it took twelve months to fufill all these conditions. The first

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disbusement was done in February 2003 and access to special account (Self Accounting Status) was approved by Government only in July, 2003. Thus project implementation did not really commence until three years from the date of signing of the agreement. 2.4 Implementation Status of the Initial Project Activities 2.4.1 Initially, project costs for the GAFDP were expected to be shared by three co-financiers namely NTF, Kuwaiti Fund and BADEA. However, in 2000 after the Board approved the project, GoTG proposed to limit project co-funding to NTF and BADEA to reduce likely complications in the event of multi-donor financing. This was a cause of significant delays to negotiate and sign the necessary loan instruments. By the time BADEA was forthcoming in January, 2005 the project implementation had suffered delays and the results were cost escalations resulting from price rises. The on-going project has since been implemented without any major problem and most of the planned appraisal activities aimed at strengthening the Fisheries Department have been concluded, including a valuable contribution to the fisheries research program. The current project has already achieved significant results which are presented below. The project is currently rated as Satisfactory by the Bank. 2.4.2 Improvement of fisheries Facilities and Infrastructure. The contract for the construction of the fisheries jetty has been awarded and work has commenced. The contracts for the fish market and the three inland landing sites will be signed as soon as availability of supplementary loan funds is confirmed. The Consultant’s initial cost estimates for these infrastructures (i.e. for Lot 1 Fisheries jetty, Lot 2 Fish market and Lot 3 Three inland fish landing sites) is US$ 9.5 million. This was against an approved budget of US$ 5.34 million expected from BADEA. The first option left to the GoTG was to prioritize the construction works. Following critical review of the budget, the project decided to go ahead with the Construction of Banjul fisheries jetty i.e. Lot 1 due to the consideration that this required the most specialized work which could cost even more in the future. Given the cost overruns, due to underestimates of the maritime civil works and to significant increases in prices of cement and fuel1, funds allocated by BADEA were insufficient for the construction of the infrastructures and facilities of this Lot. The full implementation of this Lot is estimated at US$ 8.9 million. With the implementation of the Bank’s earlier component at about 95% physical implementation and about 67% disbursement, on 15 September 2008 the Board of the Bank approved the reallocation of UA0.83 million that is not committed to supplement the shortfalls in the implementation of Lot 1 in the first instance. This amount represents some savings made in the Services category. This amount represents the balance of 33% which has been committed to the payment of civil works for the jetty and therefore it is expected that 100% of the resources on the initial loan will have been used by disbursement closing date. 1 Trends of Price changes of major construction items Item Price 2000 Price in 2008 % change Remarks Cement (Retail Price of 50 KG bag)

(GMD) 90 250 155%

Steel (12 millimeter rod of 12 meters long)

(GMD) 200 395 87.5%

Petroleum ( barrels) 35 USD 125 USD 357%

The procurement process has been completed and the real cost of award now known. The contractors cost is guided by the Consultants costing of the project and sufficient provisions have been made for contingency. There is therefore no likely cost increase that could not be accommodated.

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2.4.3 Strengthening of the Fisheries Department. All the planned appraisal activities under this component were fully implemented with 94 staff and 340 Community Fisheries Centers members beneficiaries. These exceed the targets of 91 and 320 set at appraisal. Specifically four middle level staff completed training to MSc level (Food Science and Technology, Food Inspection and Quality Control, Fisheries Economics and Community Resource Management) and eight to ND level have completed and returned to strengthen the sector. In addition 94 fisheries staff have benefitted from various on-the-job training with 340 fishers. Three TAs were recruited and successfully completed their assignments. These comprised a Quality Control expert for 3.5 years (1 year extension) and a bio-statistician for 3 years (term extended by 1 year after successful tenure of 2 –year contract). Five follow-up training workshops with the Department of Fisheries staff were conducted as well as three follow-up environmental management trainings and three follow-up workshops subsequently and various training sessions conducted by Department of Fisheries staff. 2.4.4 This component also included the Fisheries Research Program which comprises conduct of a socioeconomic survey, biostatistics and stock assessment. In this regard, the TA conducted training for the enumerators and the fisheries census frame and 1st and 2nd year catch assessment surveys to determine state of stocks (30 enumerators and data processors with 15 paid by the project). The intervention also included the provision of equipment (procurement of 6 computers with accessories and a heavy duty photocopier) for fisheries data collection and analysis. A national frame survey was conducted in 2006. Other relevant activities conducted under the component include the recruitment of an M&E Consultant to assist the Department set up/design monitoring and evaluation format and procedure and the design of a website for the Department of fisheries. A 100% of the activities planned at appraisal have been implemented. 2.4.5 Monitoring, Control and Surveillance: Under this component, the tender for rehabilitation and upgrading of communication equipment2 and radar for monitoring fishing boat positions by the 2 existing patrol boats has been concluded. The process experienced delays due to non-responsiveness to the previous bid necessitating the need to restart the process. The project also trained fisheries and Navy MCS staff which has contributed in curbing of illegal fishing in the territorial waters. From 2000 to 2008 there has been a steady decline in the number of vessels arrested from about 12/year to 1 or 2/year and this can be attributed to effective surveillance. The total fines collected from 2001 to 2008 is about GMD 19.1million dalasis It is estimated that 70% of the activities planned have been attained. 2.4.6 Credit Programme. This component has been managed by the SDF (Social Development Fund) which has received US$ 927,373.70 (77.45% of 1,197, 434) from the NTF Loan equivalent to GMD 25,886,775.24. It has in turn disbursed GMD 28,200,875.70 equivalent to 109% (due to inclusion of repayments) to Micro Finance Institutions and stakeholder beneficiaries. Credit funds have been provided for the procurement of fishing gear (canoes, outboard engines and nets), engine repairers, boat builders and promotion of fish mongering activities. Project data indicated that 21.5% of funds went to fish mongers, 31.5% to transportation and 47% to the purchase of fishing gear. Average loan repayment rate stands at 92%, which can be considered very satisfactory for the fisheries sector, compared to an expected 95% at appraisal. In terms of target group break down, 58% of the 4,373 beneficiaries are women, indicating an increase over the appraisal target of 20% women and 3,496 beneficiaries. The credit program is currently increasing its reach of beneficiaries. Proceeds from the loan recovery are to revolve with all earmarked funds at appraisal utilized, over 90% of the targets have been attained. 2 VHF Communication equipment at 11 sites

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2.4.7 Project Management. Day to day project management has been vested in a streamlined Project Implementation Unit (PIU) which has been stable since project commencement and has performed efficiently. Audit reports were submitted in time and annual workplanning and budgeting were efficient and led to the overall rate of 95% of physical implementation for the Bank funded activities. The PIU has procured 4 vehicles, 15 motor cycles, 16 computers and accessories, office furniture and running costs were provided. These equipement have significantly contributed to the strengthening of the operationnal capacity of the Department of Fisheries. The project has conducted regular annual audits since inception and submitted quarterly and annual project progress reports timely to BADEA and ADB. In addition to its own monitoring, it contracts the Department of Planning to undertake monitoring and evaluation services. The PSC3 tasked with providing policy guidance as well as approving work plan and budgets has been effective conducting 24 meetings. The activities under this component planned at appraisal have, over 90% been achieved despite the initial implementation delays. 2.4.8 There are currently (3) three ongoing projects in the agricultural sector in The Gambia, including GAFDP, and one project has been recently approved but is not yet effective i.e. the (Livestock and Horticulture Development). Ongoing agriculture operations (Participatory Integrated Watershed Management Project and Farmer Managed Rice Irrigation Project) are performing very well and will be completed in due time (2011). There is no outstanding Project Completion Report. Lessons learned from previous and ongoing projects show that reasons for success include active Government support and participation, simplicity of intervention packages, implementation design that mobilize communities and utilize community labor and local material, detailed studies to precede the project preparation and flexibility in project design. The commitment of PMU and good PMU leadership has also been essential to the smooth implementation of these projects. 2.4.9 The project has achieved some remarkable results, particularly in the implementation of the credit component and in strengthening the participatory management of fish landing sites. As a result, numerous exchange visits have been organised to learn from experiences in these areas. Staff and beneficiaries from three Bank funded projects, namely from Angola, Chad and Sierra Leone have visited the Gambia to learn about the management functions and systems in place for the fisheries infrastructure facilities. Similarly the FAO and JICA have organised exchange visits for fisheries staff from most of the countries in West and Central Africa to understudy the management systems in place in these fisheries facilities. The GAFDP carried out a series of training in management skills, fish quality control assurance and environmental training for operators in the artisanal and industrial fisheries respectively. This has enabled the operators in both the artisanal and industrial fisheries to manage their businesses better in particular the management of the fisheries infrastructure provided for community fisheries centres (CFCs)). These fish landing sites are provided with a fisheries complex housing ice plants, chill storage facilities, smoking ovens, drying racks and insulated/refrigerated vans for fish distribution and marketing. Revenues from these facilities cover the expenditure and operations of the CFCs and thus the operations are self sustained. The CFCs are managed by the fisher-folk and fishing communities in which they are built including youth. The Bank will be able to draw from these experiences in the design of future fisheries projects.

3 PSC is synonymous with PCC ( Project Coordinating Committee) and Comprises 12 members including: PS Department of Fisheries and Water Resources (Chairperson); Director Department of Fisheries; Director General, NARI; President , Association of Gambian Artisanal Fishermen ;President Association of Industrial Fishing Companies; Executive Director, NEA; Managing Director, GPA, Chief Executive Officer, KMC, Fund Manager, SDF; Gambia Navy and Project Coordinator, GAFDP (Secretary).

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2.4.10 One of the lessons learned with respect to on-going cum past operations in the Gambia’s agricultural sector is that implementation is fast-tracked for projects that have staff who are familiar with the Bank’s rules of procedure as the turn around time of project activities is minimized. This was the experience with the successful Lowland Agricultural Development Project (LADEP). The follow-up project (which is an expansion of the earlier one) and called Participatory Integrated Watershed Management Project (PIWAMP) has benefited from this lesson as its implementation (both in terms of field activities as well as disbursement) shows positive trends. The lesson is being brought to bear for the Artisanal Fisheries Development Project as the PIU of the current project has demonstrated sufficient knowledge of the Bank’s rules of procedure in carrying out project activities. 3. APPRAISAL OF THE SUPPLEMENTARY LOAN 3.1 Rationale for the Supplementary Loan 3.1.1 The on-going project has implemented most of the planned appraisal activities for four out of five components. This includes a valuable contribution to the strengthening of the Fisheries Department and the organizational capacity of fisher folks as well as the fisheries research program. The monitoring, control and surveillance of fishing activities along The Gambia coast has also been improved and the credit program has been successful and is currently increasing its reach of beneficiaries, particularly women. Results achieved in the participatory management of fish landing infratructures and in delivery of credit to the fisheries sector can be considered as success stories. The Project Implementation Unit (PIU) has been stable since project commencement and has performed efficiently. However, the project has not been able to implement most of what was expected in relation to the improvement of fisheries facilities and infrastructure. As explained in paragraph 2.4.2 above the backing out after Board approval by the initial co-financier (Kuwaiti Funds) threw the implementation of the critical civil works into disarray. The signing of the loan agreement with BADEA took some time to come into effect. All these led to the delays and the eventual cost overrun that has now warranted this supplementary loan. 3.1.2 The fisheries sector has considerable economic development potential, but the lack of appropriate onshore facilities and absence of fisheries port constitutes a major constraint to the development of the sector. Its current contributions to the economic development of the Gambia are far from the potential that it possesses. For example one of the potentials is to serve as foreign exchange earner taking its product to countries in the West African sub region. This constraint will be addressed by the rehabilitation of the Banjul jetty, the construction of a fish market and the rehabilitation of three fish landing sites. These infrastructures will allow for an increase in the quantity of fish landed and contribute to reduced fish spoilage, stabilise fish prices and increase opportunities for fish mongers to get higher incomes. Without these infrastructures the project will not be able to achieve its goal of increasing revenues for the fisheries sector, including foreign exchange earnings. Furthermore, the Gambia Fisheries sector has versed successful experience in the community management of fisheries infrastructures hence the sustainability of the fisheries infrastructures can be greatly improved. 3.1.3 More specifically, these infrastructures will help to achieve the following results:

- Improved access to inland fish landing: The rehabilitation of the three landing sites will comprise the improvement of two access roads at Bintang and Tendaba, construction of sanitation facilities and installation of portable solar water supply at the Community Fisheries Centres (CFCs). The rehabilitation of these landing sites will contribute to

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increase the economic returns of the shrimp and fish production and introduce standards of hygiene compatible for export to foreign markets for about 2,000 fisher folks at the 3 inland landing sites. The construction of improved fish processing devices on these sites will also contribute to reducing post-harvest losses through the availability of potable water, cold storage and better hygiene standards.

- Improved marketing of products: No specialized fish market exists in the urban area where

there is the highest demand by consumers (households, hotels and restaurants and processing plants). Fish sellers and buyers operate unsanitary makeshift structures scattered about. The construction of the central market will improve the fish marketing system and result in significant improvement of fish distribution and marketing. It will contribute to improve the sanitary quality of the products and increase incomes of fishermen and women traders. In addition, more traders will operate at the market with the construction of the West Field/Sukuta road opening up opportunities particularly for coastal fishing operators. It is expected that 100 (80% women) traders and 100,000 consumers (70% women) will be using the market.

- Improved Landing Infrastructure: Operation of the jetty and the landing sites will lead to a

significant increase in the quantities of fish landed, of about 4.000 tonnes by 2011. Indeed, about fifty industrial fishing vessels are granted fishing licenses annually in the Exclusive Economic Zone (EEZ) and they land their products in the ports of neighboring countries, which generates substantial annual losses in terms of taxes and fees, added value and employment. These facilities will also incite private operators to invest in processing facilities, including fish packaging units, which will contribute to developing fish exports.

- Rational management of stocks: The infrastructure established will provide the Department

of Fisheries with an appropriate framework for the statistical monitoring of landings and the fishing effort. It will facilitate stricter management of fishing licenses, and catches, and more rigorous monitoring of management measures.

3.1.4 It is expected that the project will contribute to the Government of Gambia’s priority of reducing poverty and ensuring food and nutritional security for both the urban and rural populations. It is in line with the PRSP II, the JAS and Millennium Development Goals (MDG). It contributes to the implemention of pillars II of the PSRP “Enhancing the capacity and output of productive sectors including Agriculture and Fisheries” and of the JAS platform for 2008-2011 “Enhancing productive capacity and accelerating growth and competitiveness”. It is also in line with the Bank, and the Agriculture and Agro-Industry Department, strategic priority given to the construction of infrastructure. The project has also been designed to address the main constraints to the development of the sector identified in the Strategic Plan for the Fisheries sector of the Gambia enacted in 1994 and which is in the process of being updated. The Gambia is significantly affected by the current global food crisis and the project is expected to increase fish landing by 4.000 tons/year, consisting mostly of “Bonga”, which is sold in local markets at low prices. The project will therefore contribute to the current Bank initiative in supporting RMCs in addressing the food crisis. The project will improve the livelihood of an estimated 6.000 people engaged in artisanal fisheries. It will contribute to increased incomes for fishers from their current levels of GMD 15,000-30,000 to GMD 17,000 to 36,000 per year depending on fishing activity, as well as for people indirectly engaged in the fisheries sector and its ancillary works such as boat building, engine repairing, marketing and provision of other services. 3.1.5 The Bank is currently the main aid donor in Africa in the fisheries sector and project design can draw from the experience of other ongoing and past operations. Synergy of intervention with

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BADEA is straightforward as they are co-funding the project for an amount equivalent to UA 6.17 million. Government has set up an Aid Coordination Directorate under the Department of State for Finance and Economic Affairs. This new directorate is currently supported by the AfDB-financed Institutional Support Project for Economic and Financial Governance and will oversee the AfDB portfolio and coordination of donor activities in the country. Several donors have funded projects focused on enhancing production and marketing in the artisanal fisheries sector. Ongoing projects include the FAO supported Sustainable Aquatic Systems Project, which is aimed at developing viable and sustainable aquaculture as a programme for diversification of livelihood in rural areas, improving nutritional status, increasing income generating capacity. The Japanese Government is providing bilateral assistance in the construction of a fish market in Brikama which will also contribute to improve the marketing of fish products. 3.2 Objectives and Description 3.2.1 The sector goal and specific objective of the project as originally designed will not be modified. The sector goal is to contribute to strengthening food security and poverty reduction. The specific objective of the project is to increase fish production and income of fisher folk and to contribute to the improvement of nutritional standards of the population. The project matrix has been revised to conform to the current results-based format. There will be no additional works to those envisaged initially; the supplementary loan will contribute to completion of financing of the jetty, the fish market and the three inland fish landing sites. 3.2.2 While the ongoing activities will continue under the existing 5 components, the supplementary loan will only provide funding for components: A) Improvement of fisheries facilities and Infrastructure and E) i.e. (supprimé) Support to Project Management. Specifically, the supplementary financing will be used for:

- Component A) Improvement of fisheries facilities and infrastructure: The supplementary loan will be used to make up for the financing gap to build the Banjul fisheries jetty which will provide modern landing facilities for at least 20 industrial fishing vessels and 150 canoes and directly benefit up to 2,000 fishers, fish mongers and private operators. A fish market will be constructed at Bakoteh. It will be used by about 100 traders (80% of which will be women) to buy and sell fish and fish products in good hygienic conditions to an estimated 100,000 consumers. Inland fish landing sites will be rehabilitated at Bintang, Tendaba and Albreda as well as 11 km of access roads. These landing sites will be used by about 2,000 fishermen and fish mongers and it is estimated that they will contribute to a production increase of 1,500 tonnes of fish. The final detailed engineering designs for the various works and tender process are ready and the firm to carry out the construction activities has been selected. In order to ensure sustainability and rational use of project established infrastructure, agreements have been entered into with the Gambia Ports Authority (Jetty), Kanifing Municipal Council (Bakoteh Fish Market) and management committees of Community Fisheries Centres (inland landing sites) for the management of the infrastructure.

- Component E) Project Management: The existing PIU will continue to be utilized to

provide continued effective planning, management, coordination, implementation and monitoring of project activities. The project will finance the operational and staff cost of the PIU in addition to some sector-specific studies/consultancies where necessary. The project management team will be adequately funded to ensure that effective supervision is carried out on all the construction works. Under this component some limited training

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activities, especially for women and youth, will also be conducted to ensure an efficient use of the facilities.

3.3 Revised estimated project costs 3.3.1 The revised overall project cost, net of taxes and duties, is estimated at GMD 179.96 million, equivalent to UA 5.5 million, comprising 4.27 UA million in foreign exchange and 0.73 UA million in local currency. The foreign exchange represents 78% of the total project cost. Tables 3.1 and 3.2 respectively give the breakdown of the total project cost by component and expenditure category. The costs are estimated on the basis of current prices in January 2009. Average rates of financial contingencies of 10% and 15% were applied respectively to building works and equipment costs to take into account the consequences of the upsurge in market prices. Table 3.1: Revised Project Cost Estimated for the concerned Components

GMD Million UA Million

Component FE LC Total FE LC Total FE% LC%

A. Implementation of Fisheries Infrastructure 130.55 21.60 152.15 3.99 0.66 4.65 85.81 14.19

E. Project Management 0 16.36 16.36 0 0.84 0.84 0 100

Physical Contingency 9.16 0.98 10.14 0.28 0.03 0.31 90.32 9.68

Price Contingency 0 1.31 1.31 0 0.04 0.04 0 100

Total 139.71 40.25 179.76 4.27 1.23 5.50 77.64 22.36

Table 3.2: Revised Overall Project Cost Estimate by Expenditure Category

GMD million UA million %

CATEGORIES LC FE Total LC FE Total LC

% FE

Works 40.45 332.90 373.35 1.23 10.17 11.75 13.45 88.58

Goods 2.94 12.76 15.70 0.09 0.39 0.48 18.75 81.25

Services 11.12 71.00 82.12 0.34 2.17 2.52 13.91 19.58

Staff 16.03 0.00 16.03 0.49 0.00 0.49 100 0.00

Operating Costs 3.92 20.95 24.87 0.12 0.29 0.41 29.26 70.74

Total 74.46 437.61 512.07 2.27 13.02 15.65 14.50 83.19

3.3.2 A comparative analysis of the cost estimates at appraisal and at re-appraisal in Table 3.3 below shows clearly that the project cost has risen from UA 10.15 million (approximately GMD 332.11 million) to UA 15.65 million (about GMD 512.070 million), hence a financing gap of UA 5.5 million. This amount represents an increase of approximately 52 % compared to the initial cost estimate at appraisal.

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Table 3.3: Comparative Analysis of Initial and Revised Overall Cost Estimates

Total Cost (GMD million ) Total Cost (UA million )

COMPONENTS Initial Revised Gap Initial Revised Gap

Improvement of Fisheries Facilities and Infrastructure 134,4792 308,2224 173,7432 4,77 9,42 4,65

Strengthening of Fisheries Department 30,1024 35,6648 5,5624 0,92 1,09 0,17

Monitoring, Control and Surveillance 65,44 63,4768 -1,9632 2 1,94 -0,06

Credit Programme 37,3008 37,3008 0 1,14 1,14 0

Project Management 28,7936 51,0432 22,2496 0,88 1,56 0,68

Physical Contingency 14,3968 15,0512 0,6544 0,44 0,46 0,02

Price Contingency 21,5952 1,3088 -20,2864 0,0 0,04 0,04

TOTAL PROJECT COST 332,108 512,068 179,96 10,15 15,65 5,50

3.4 Sources of Finance 3.4.1 While the remaining on-going activities will be fully financed from resources of the existing NTF loan, as well as from the Government of Gambia, the supplementary loan will be financed mainly through the NTF source. The revised project financing plan can be summarized as reflected in the Table 3.4. below: Table 3.4: Expenditure Schedule by Component

Component 2009 2010 2011 Total

A. Fisheries Infrastructure 1.155 2.109 1.386 4.65

E. Project Mgt 0.095 0.66 0.095 0.85

Total 1.25 2.769 1.481 5.50

Table 3.5: Revised Overall Financing Plan by Source

GMD Million UA Million

Sources FE LC Total FE LC Total FE% LC% Total%

NTF 139.71 23.89 163.60 4.27 0.73 5.00 85.4 14.6 100

Govt - 16.36 16.36 0 0.50 0.50 0 100 100

Total 139.71 40.25 179.96 4.27 1.23 5.50 22.36 77.64 100

3.4.2 The NTF supplementary loan will cover about 91 % of the total project cost, net of taxes and customs duties, that is, UA 5.00 million. This NTF financing represents 85% of the foreign exchange cost and 15 % of the local currency cost.

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3.5 Revised Implementation Schedule The implementation schedule of the modifications is given in Annex 3. Construction works will cover about 18 months and the establishment of the management mechanisms to operate the jetty, market and inland landing facilities will require 6 months. Therefore, the supplementary loan will be implemented within 24 months (July 2009 - June 2011). 3.6 Cross cutting issues 3.6.1 Environmental impact assessment: 3.6.1.1 The original project was classified at appraisal as Environmental Category II according to the Bank Group’s environmental and social guidelines. This classification will not be changed by the supplementary loan because the loan will not generate new activities that are outside the nature and scope of the original project. An environmental and social management plan was prepared by a consultant in 2005 and includes a comprehensive set of mitigation measures to monitor and offset any negative impacts likely to occur during the construction and operational phases of the project. These mitigation measures are valid for the supplementary loan. 3.6.1.2 The construction of the fisheries jetty, the inland landing sites and fish market will help ensure practices of sustainable management that are environmentally friendly and sustainable by improving the monitoring of fish landings. The potential negative impacts of the project concerning the construction phase will be as a result of the construction of the facilities. The impacts of construction work associated with fisheries jetty and landing site infrastructure include sand movement and risk of erosion, impacts on the coastal currents and resulting effects on sedimentation. To mitigate these impacts, siltation containment devices will be used at the jetties/breakwaters areas and appropriate marine structures i.e. gabions will be designed to accommodate the impact of waves and erosion. Also, habitat destruction can result from construction works on the land based structures and jetty – particularly dredging (which can disturb aquatic fauna), and disposal of dredged materials. The jetty structures will be designed on existing piles to minimise impacts on the environment and limit sea bed disturbance in the required areas. For the landing sites, vegetation clearing will also be limited to the areas deemed strictly necessary. Occupational safety during construction and operation of project infrastructure will be addressed by providing workers with protective gear and train employees on occupational hazards. In relation to public health concern from the unsafe and unhygienic disposal of sewage and solid waste, appropriate waste disposal structures will be provided and the feasibility of converting fish waste into fish meal will be examined. 3.6.1.3 As planned at appraisal, the Department of Fisheries is the focal point for monitoring of environmental impacts and with the National Environment Agency they have been organizing workshops to sensitize the beneficiaries on environmental impacts and mitigation measures. Mitigation measures for civil works will be carried out as soon as they start. The project has set up a working group that will be responsible for the implementation of the ESMP. Already implemented mitigation measures include ongoing efforts of woodlot plantation and wood saving “chorkor” ovens promoted at the fisheries centres. Furthermore, the construction of these infrastructures will enhance use of ice for preservation and therefore reducing the need for smoking using wood. The implementation of the ESMP and the activities of the committee responsible for its implementation have already been integrated into mainstream activities of the Fisheries Department. The Department supported by the project has recently carried out follow-up training and sensitization activities on the ESMP in anticipation of the commencement of the

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construction of the fisheries infrastructure. Thus the implementation of the ESMP has commenced and will be implemented in tandem with the implementation of the construction of the fisheries facilities. 3.6.1.4 As referred to in the section below on risk management, the infrastructural facilities are designed to be climate-resilient. Current expectations are that the highest sea level rise projected by the International Panel on Climate Change should not have any negative impacts on the facility when constructed as the maritime infrastructure will still be operational even in case of the predicted 0.7 m increase of sea level by year 2100. The current design of the jetty includes the construction of floating pontoons, which makes it particularly appropriate to adjust to sea level increase. 3.6.2 Gender issues 3.6.2.1 Women in The Gambia play a very active role in the fisheries sector as about 80 % of fish processors and 50% of small-scale fish traders are women. Positive impacts for women are expected mainly from the infrastructure and credit components of the project. This is because the fisheries infrastructure will lead to prolonged shelf life of fish catches and improve the quality of fish that would be marketed by the women, which in turn leads to better pricing of their outputs. GAFDP has already had a significant impact on women, in particular by improving access to credit. Out of a total of 3,596 credit beneficiaries to date, 2,160 (60%) are women, therefore significantly exceeding the target of 20% of credit to be disbursed to women. The appraisal target of 3,496 loans to be disbursed by the end of the project has already been achieved. 3.6.2.2 There is currently no dedicated fish market in the country. The structure to be built under the supplementary loan will provide auction hall/shed, fish retail stalls, portable water, ice plant, chill storage facility, fish boxes, sanitary facilities, water storage tanks and waste disposal. Thus women fish traders will for the first time operate from a well-equipped dedicated fish market with all the necessary facilities to market high quality fish products. Traders will pay rent for the stalls as it is the revenue generated from the facilities provided that will be used to maintain the market operations and facilities/equipment. As a result the fish market will improve the bargaining power of women fish traders especially as there will be ice and storage facilities which will allow fish traders to hold fish stock for longer periods in good condition allowing them time to get the best prices for their products. Thus the market will improve trading and trading conditions for women fish traders which will result in higher earnings and incomes. The fish market is also to be located in the greater Banjul area in Bakoteh Serrekunda one of the most densely populated areas in the country where incomes of consumers are relatively high compared to the inland areas, thus higher earnings for fish traders are expected. Fish processing factories are also located in the area and will positively benefit from easy access to raw fish for further processing and exports. The construction of the proposed infrastructure will improve the working conditions of women and boost their production and income. It is expected that 100 (80% women) traders and 100,000 consumers (70% women) will be using the fish market.

3.7 Executing Agency As designed, the executing agency will continue to be The Department of State for Fisheries and Water Resources. The PIU is fully integrated within the Ministerial set-up and is headed by a Coordinator who is directly under the supervision of the Director of the Department of Fisheries. The PIU staff are all nationals and have undergone various training courses. They have the required qualifications and experience and are familiar with Bank’s rules of procedures. The performance of the PIU is satisfactory. The PIU has been guided by a PSC whose performance

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was also deemed satisfactory. The project implementation arrangements have not changed and the existing management mechanisms will remain in force. 3.8 Management of the Infrastructure and Facilities 3.8.1 Stakeholders were widely consulted during project design through various participatory meetings. Some of the key issues and findings during the consultations comprised the need for trainings on fisheries resource and environmental management which were then conducted by the project. Beneficiaries also expressed a strong need for the construction/rehabilitation of key infrastructures such as jetty, market and inland landing facilities which constitute the core of the supplementary loan. During the initial project, sensitization and trainings were conducted with management contracts already signed with key stakeholders as the Gambia Ports Authority for the management of the fisheries jetty, Kanifing Municipal Council for the management of the Bakoteh Fish market; and Community Fisheries Centres at all 3 inland sites at Albreda, Bintang and Tendaba. The implementation of the management contracts will ensure direct and lead roles for stakeholders even after project completion.This private-public partnership will contribute to guaranteeing the sustainability of the facilities. With respect to the maintenance of the jetty, the project has conducted a comparative study of fisheries jetty landing fees and tariffs of Senegal and The Gambia. The study had the objective to compare port landing fees, the tariffs and fuel prices applied to fishing vessels in Senegal as a basis of comparison with what prevails in The Gambia to enable The Gambia Government and the Gambia Ports Authority to apply appropriate and competitive tariffs and prices that will attract the optimal number of fishing vessels to keep the Jetty fully utilized and profitable. 3.8.2 The results of this study were approved during a workshop organized for this purpose in November 2007 and comprising all the sector stakeholders. During implementation of the Supplementary Loan the recommendations of this study will be put into force. In this regard consultations will be conducted with the relevant stakeholders to ensure rational and optimal utilization of the infrastructure. The Gambia has an internationally recognized positive experience in the management of Community Fisheries Centers (CFC). Beneficiaries are represented in the Project Steering Committee where policy decisions are taken including approval of annual budgets and work plans. 3.9 Procurement of Goods and Services

There would be no new procurement of any good, works or services. The procurement process of the civil works which necessited the request for the suplementary loan have been completed. The firms selected were picked on the basis of an open International Competitive Bidding (ICB) which although supervised by the BADEA followed a similar process as that of the Bank. The Bank reviewed all the procurement documents at every stage of the process and found them compatible with its Rules of Procedure. The selected firms are from the Bank’s member countries. Furthermore, contracts have been initialed and the firms selected have extended the bid validities. They will execute the works at the costs stated in their Bills of Quantities as submitted in the tender, therefore, no further cost escalation is anticipated. The supplementary loan activities will be implemented in line with the Bank Group policy on Eligible Expenditure.

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3.10 Disbursement Arrangements The payment for civil works contracts will be through direct payment in accordance with the relevant Bank rules. Other project related expenses for operating costs and allowances will be made using the current project’s special account. 4. JUSTIFICATION IN RELATION TO THE BANK POLICY FOR

SUPPLEMENTARY LOANS 4.1 Justification in relation to general conditions 4.1.1 The proposed supplementary loan is in conformity with Bank Group Policy and Procedures relating to supplementary financing, Ref No. ADF/BD/WP97/90 of 11 August 1997 which states that “the Bank may consider supplementary financing for cost overruns; a) when it is believed that a Bank-assisted project cannot achieve its objectives without additional Bank intervention and; b) when the reasons for the cost overruns are clearly beyond the control of the borrower and the borrower, despite genuine efforts, is not in a position to provide additional financing.” 4.1.2 The project is at an advanced stage of implementation; however the project will not be able to fully achieve its development objectives if the infrastructures planned are not put in place. The amount of UA 5.0 million requested for the supplementary loan is being sourced from the Nigeria Trust Fund (NTF) window which has an estimated grant element of 51.40%, making it favorably comparable to the 45% threshold set by the government to preserve the country's debt sustainability. In other words, the NTF option meets the Debt Sustainability Assessment (DSA) requirements for the Gambia. The availability of the requested amount from the NTF is confirmed. The interest and commitment charges for the Supplementary Loan will be those applicable to NTF. 4.1.3 The major pillars identified for Bank support in the AfDB/WB Joint Assistance Strategy for Gambia (2008-2011) are: (i) Strengthening the institutional framework for economic management and public service delivery, and (ii) Enhancing productive capacity and accelerating growth and competitiveness. The project is in line with pillar 2 of the PRSP II 2007- 2011 and pillar 2 of the JAS (2008-2011), both related to enhancing the capacity and output of productive sectors (agriculture, fisheries, industry, trade, tourism and infrastructure). The project aims to contribute to Government’s goal of accelerated GDP growth and poverty reduction and sustainable livelihoods through efficient use of the water resources and provision of rural infrastructure. Furthermore, the project remains technically sound, socially attractive, economically viable and sustainable from the environmental perspective. Its implementation will enable the Bank and the Government of The Gambia to achieve the major development objective set at appraisal as well as the expected outcomes. 4.2 Justification in relation to specific conditions The present Supplementary Loan financing is in conformity with the specific conditions for considering supplementary financing:

- the project has an overall “satisfactory” supervision rating (2.75); - the cost overruns are caused by: i) costs underestimates at project appraisal, as there were no

feasibility studies and limited available baseline data to determine the real cost of the construction of the jetty; ii) global inflation levels especially for building materials and crude

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oil; iii) delays in procurement procedures and iv) exchange rate fluctuations. These costs overrun are beyond the control of the Government of The Gambia;

- BADEA had been approached to cover these extra costs, however their country budget allocation did not allow for an increase of funds allocated to AFDP;

- it has not been possible to reduce total cost of the project through changes of specifications. A reallocation of funds, from services to works, for an amount of 0.83 million was approved by the Board on September 15, 2008 in order to undertake only one of the five lots (i.e. part financing of the contract for Lot 1 construction of the fisheries jetty);

- the project is technically, economically, and financially viable even with the cost overruns as demonstrated by the revised EIRR;

- the construction of the infrastructure to be financed by the supplementary loan is essential to achieve the project objectives;

- there are no other exogenous constraints foreseen that could hinder the completion of the project.

5. SUSTAINABILITY AND RISKS OF THE PROJECT 5.1 Recurrent charges and project sustainability The recurrent cost of the fishing infrastructure was estimated at approximately UA 3.033 million or GMD 99.24 million at full development of the project. These costs will be entirely covered by the revenues generated by the management of the fishing port, fish market and inland landing sites. The Gambia has useful experience in community management of such facilities including ice plants. Support in this area has been provided by FAO and the Japan International Cooperation Agency (JICA). The results of the study on tariffs referred to in Paragraph 3.8 above will also contribute to ensure a profitable and sustainable management of the said infrastructures. 5.2 Main risks and mitigation measures 5.2.1 A number of lessons were learned in the implementation of the project which should allow for better planning and mitigation of identified risks for activities to be implemented with the supplementary Loan. Some of the risks identified include the following:

i) Natural disasters, particularly those brought about by climate change could destroy fisheries facilities. The infrastructural facilities are designed to be climate-resilient. Current expectations are that the highest sea level rise projected by the International Panel on Climate Change should not have any negative impacts on the facility when constructed. ii) The possibility of cost overruns. Detailed design studies have been conducted and there will be stricter monitoring to ensure timely implementation. The Procurement Plan is at an advanced stage where contractors have been identified, prices agreed and contracts though yet to be signed have been initialed. The Bank’s Field office in Dakar will also be more actively involved in the project to facilitate quick feedback on all matters that pertain to the Project, especially procurement and disbursement requests; iii) The non-allocation of adequate funds for supervision of works to ensure that the designed standards are complied with. This will be addressed with the inclusion of an appropriate budget for the supervision of works. To consolidate this, an experienced project management firm will also be hired to oversee the supervision of the construction activities.

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iv) Poor operation and maintenance of the jetty, markets and landing sites. The Gambia has an internationally recognized positive experience in the management of Community Fisheries Centers (CFC). CFC are already in place in the three inland landing sites and agreements have been entered into with the Gambia Ports Authority and Kanifing Municipal Council for the management of the jetty and the market.

v) Lack of qualified staff to manage the project. The PIU team is now quite familiar with the Bank’s procedures. With the hands on experience of the PIU staff, their retention on the project will ensure continuity and therefore enhance speedy implementation.

5.2.2 The recent Bank’s portfolio review report showed that the performance of the Bank Group Portfolio in The Gambia is generally satisfactory. However there are challenges identified that need to be addressed to improve the quality of the portfolio. The Senegal Field Office will continue to play an important role in monitoring, and project implementation to improve portfolio performance to even healthier levels. 6. ECONOMIC ANALYSIS 6.1 Economic analysis 6.1.1 An analysis of the economic benefits that the country will draw from the construction of the market and inland landing sites was conducted on the basis of the reference prices method, i.e. in the case of market efficiency, excluding distortions generally resulting from interventions in the form of taxes, subsidies and any measure preventing the free play of market forces. Under the same conditions, the transfers and externalities making it impossible to effectively measure the economic impact or benefit on the society were left out of the analysis. The analysis is also based on the tangible benefits and tradable goods which are the fishing products and the costs of the project and the operation of the project outputs during their lifespan, estimated at 25 years. Thus, the economic benefits of the project were estimated in terms of the incomes generated from the incremental production of fish as a result of additional catch from artisanal and industrial fishing. The Economic Internal Rate of Return of the project is 29% with a net present value of about GMD 14 million at 12 % discount rate i.e. cost of capital. Although the figures are slightly lower that what obtained at appraisal the difference is insignificant. The rate of return is therefore deemed satisfactory. 6.1.2 The project also comprises social benefits through job creation for approximately 6,000 people, of which 60% are women, as a result of the infrastructure and improvement of the living environment of the populations living directly and/or indirectly on the fishing activity. The direct beneficiaries are estimated at about 6,000 people, with an economic impact that can contribute positively to poverty reduction. Indirect employments gains are estimated at an additional 2,000 engaged in various services activities related to the operation of the infrastructure. 6.2 Sensitivity analysis

The results of the sensitivity analysis indicate that with 5%, 10% and 15% decrease in production, the EIRR decreases to 23%, 19% and 12% respectively as indicated in Annex 3. Also a 10% increase investment decreases the EIRR to 26%, the switching value being -12%.

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7. CONCLUSION AND RECOMMENDATION 7.1 Conclusion The project cost overrun is due mainly to an underestimate of maritime civil works and unforeseen rise in the price of construction material and the price of petroleum which weighed heavily on the cost of construction works. Despite this overrun and the delay incurred in the implementation, the Gambia Artisanal Fisheries Development Project is technically judicious, economically viable, environmentally sustainable, and socially desirable. In the specific case of the Jetty, the fish market and inland landing sites, their construction will provide the country with an economic and social development pole of paramount importance, as well as increase fish exports and private initiative. The foreign exchange inflows and tax revenues expected will be substantial and will create new jobs allowing for further income distribution. 7.2 Legal Documentation The Supplementary Loan, in an amount not exceeding UA 5 million, shall be documented by a Loan Agreement between the NTF and the Government of the Republic of The Gambia.

7.2.1 Condition precedent to Entry into Force of the Loan Agreement: Entry into force of the Loan Agreement shall be subject to its signature. 7.2.2 Condition precedent to the first disbursement of the Supplementary Loan: The first disbursement of the Loan shall be subject to the entry into force of the Loan Agreement as described in Section 7.2.1 above. 7.2.3 Undertaking of the Borrower: The Government of the Republic of The Gambia will undertake to implement the recommendations of the tariffs study described in Section 3.8.1 of this report to ensure the sustainability of the structures by catering for maintenance costs.

7.3 Compliance with Bank Policies The Supplementary Loan complies with the: (i) Bank Group Policy and Procedures for Supplementary Financing, Ref No. ADF/BD/WP97/90 of 11 August 1997; (ii) PSRP II (2007-2011) and the JAS for 2008-2011. 7.4 Recommendation It is recommended that the Bank should extend a Supplementary Loan not exceeding UA 5 million from the NTF resources to the Government of the Republic of The Gambia to cover the additional financing required for the improvement of facilities and infrastructure as described in this report.

Annex 1

THE GAMBIA

SUPPLEMENTARY LOAN FOR THE ARTISANAL FISHERIES DEVELOPMENT PROJECT Project area

20

THE GAMBIA SUPPLEMENTARY LOAN FOR THE ARTISANAL FISHERIES DEVELOPMENT PROJECT- Annex 2

Summary of the Economic Analysis (in ‘000’GMD ) Situation with project Years Item Situation without the

Project 1 2 3 4 5

6-20PRODUCTION Industrial marine Fish 50,000 66,000 66,000 66,000 66,000 66,000 66,000

Industrial Marine shrimp 32,000 40,000 40,000 40,000 40,000 40,000 40,000

Artisanal Bonga 20,000 33,000 66,000 75,000 100,000 100,000 100,000

Artisanal Shrimp 20,000 20,000 20,000 20,000 20,000 20,000 20,000

Artisanal River Fish 44,000 3,000 3,000 3,000 3,000 3,000 3,000

Less Consumption of wood 0 2,250 2,250 2,250 2,250 2,250

REVENUE Banjul Jetty 0 0 3,506 3,722 4,163 4,824 5,375 Fish Market 0 0 3,733 3,806 3,733 3,733 3,806 Monitoring Control nd Surveillance 0 6,290 6,290 6,290 6,290 6,290 Credit 0 0 0 0 0 28201 SUBTOTAL Benefits 166,000 162,000 210,779 220,068 245,436

239,807 240,431 COSTS Banjul Jetty and Landing sites 0 34,211 1,795 495 1,132 1,636 1,532

Market 0 65,500 6,714 3,769 3,769 3,769 3,769 Inland Landing Sites 29,857 7,739 917 917 917 917 Monitoring Surveillance and Surveillance

8,745 4,602 4,756 4,910 4,910 3,083

Institutional Strengthening 4,694 4,748 3637 882 770 0

Credit 25,887 0 0 0 0 0

SUBTotal Cost 168,893 25,598 13,574 11,610 12,002 9,301

Net Benefit with Project -6,893 185,181 206,494 233,826 227,805 231,130

Net Benefit without Project 166,000 166,000 166,000 166,000 166,000 166,000

-172,893 19,181 40,494 67,826 61,805 65,130 EIRR 29% NPV at 12% GMD 13,833.33

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Variation in Production ERR -5% 23 -10% 19 -14% 12 -15% 11 Switching Value -14% 12

SENSTIVITY ANALYSIS

23

19

1211

0

5

10

15

20

25

-05 -10 -14 -15

Variation in Production

ERR

22

Annex 3

THE GAMBIA

SUPPLEMENTARY LOAN FOR THE ARTISANAL FISHERIES DEVELOPMENT PROJECT

Revised Implementation Schedule

23

REPUBLIC OF THE GAMBIA

ARTISANAL FISHERIES DEVELOPMENT PROJECT –SUPPLEMENTARY LOAN

OUTCOME OF LOAN NEGOTIATIONS The loan negotiations for the above-cited project were held in the ATR Tunis on 18 May 2009, between a Delegation from the Government of the Republic of the Gambia and representatives of the African Development Bank Group. Following the review of the documents relating to the loan, namely, the Appraisal Report, Draft Loan Agreement and the Disbursement Letter, the Gambian Delegation expressed its satisfaction and agreed on the project components, financing plan and the terms of the NTF loan as outlined in the appraisal report.