report no: 19038-mor

Document ofThe World Bank

Report No: 19038-MOR

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED LOAN

IN THE AMOUNT OF USD 5.0 MILLION

TO THE

KINGDOM OF MOROCCO

FOR A

PILOT FISHERIES DEVELOPMENT PROJECT

April 13, 1999

Rural Development, Water and Environment GroupMiddle East & North Africa Region

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CURRENCY EQUIVALENTS

Currency Unit = MADMAD = US$0.108US$1 = MAD 9.23

FISCAL YEAR

July 1 - June 30

ABBREVIATIONS AND ACRONYMS

ADB African Development Bank/Banque africaine de developpementAFD French Development AgencylAgencefran,aise de d6veloppementCAPI Industrial Fish Quality Counter/Comptoir d 'agr6age du poisson industrielCCGC Joint Management Commitee/Comite consultatif de gestion conjointeCIDA Canadian International Development Agency/Agence canadienne de developpement internationalCLP Local Fisheries Committees/Comites locaux de pgcheDANIDA Denmark Ministry of Foreign AffairslMinistere des affaires etrangeres du DanemarkDFC Financial and Accounting Division/Division.financiere et comptableDFMPSP Training Department/Direction de laformation maritime et de la promotion socio-professionnelleDIP/FID Fisheries Industry Departnent/Direction des industries de la pecheDPMA/MFAD Marine Fisheries and Aquaculture Department/Direction des peches maritimes et de I 'aquacultureDRHAG Human Resources and Administration Department/Direction ressources humaines et affaires generalesEEZ Exclusive Economic Zone/Zone economique exclusiveEU European Union/Union europeeneFAO Food and Agriculture Organization/Organisation des nations unies pour I 'alimentation et l 'agricultureFENIP National Fisheries Industry Federation/Federation nationale des industries des produits de la pgcheHACCP Hazard Analysis Critical Control Point/Methode d 'analyse du risque et contr6le des points critiquesIG General Inspectorate/7nspection generaleINRH National Research Institute for FisherieslInstitut national des recherches halieutiquesJICA Japan International Cooperation AgencylAgence japonaise de cooperation internationaleMOA Ministry of Agriculture/Ministere de I 'agriculture, du developpement rural et des peches maritimesMOF Ministry of Finance/Ministere de I 'economie et desfinancesMOMF Ministry of Marine Fisheries/MinistWre charge des peches maritimesMOPW Ministry of Public Work/Ministere de I '6quipementODEP Port Management Authority/Office d 'exploitation des ports-ONP National Fisheries Authority/Office national des pechesPPU Planning and Policy UnitlCellule de planification sectorielleSG General Secretariat/Secretariat g6nralUNDP United Nations Development Program/Programme de developpement des nations unies

Vice President: Kemal DervisCountry Director: Christian DelvoieSector Director: Doris KoehnTask Leader: Laurent Msellati

KINGDOM OF MOROCCOPILOT FISHERIES DEVELOPMENT PROJECT

TABLE OF CONTENTS

PROJECT DATA SHEET

A. Project Development Objective ........................................................ 2

1. Project development objective and key performance indicators ......................................................... 2

B. Strategic Context ............................................ 2........ 2

1. Sector-related CAS goal supported by the project ................. 2.......................................22. Main sector issues and Government strategy . ........................................................ 23. Sector issues to be addressed by the project and strategic choices .........................................................3

C. Project Description Summary ......................................................... 4

1. Project components ......................................................... 42. Key policy and institutional reforms supported by the project ......................................................... 43. Benefits and target population ........................................................ 44. Institutional and implementation arrangements ......................................................... 5

D. Project Rationale ........................................................ .6

1. Project alternatives considered and reasons for rejection ......................................................... 62. Major related projects financed by the Bank and/or other development agencies ..................... 6....I .......63. Lessons learned and reflected in proposed project design ......................................................... 74. Indications of borrower commitment and ownership ................... ...................................... 75. Value added of Bank support in this project ......................................................... 8

E. Summary Project Analyses ......................................................... 8

1. Economic ........................................................ 82. Financial ...................... 83. Fiscal .. . . . . . . . . . . . . . . . . . . ... 94. Technical ...................... 95. Institutional ...................... 96. Social ...................... 97. Environmental ...................... 98. Participatory approach ..................... 109. Other key stakeholders ..................... 10

F. Sustainability and Risks ...................... I1

1. Sustainability ..................... 112. Critical risks ..................... -113. Possible controversial aspects .................... I 11

G. Main Loan Conditions ...................... 12

1. Negotiations Conditions ...................... 122. Condition of Board Presentation ...................... 123. Effectiveness conditions .12,,...................................................,, .. 124. Other .......................... .. 12

H. Readiness for Implementation ,..,,..,....., 12

1. Compliance with Bank Policies ...................... 13

ii

Annexes

Annex 1: Project Design SummaryAnnex 2: Detailed Project DescriptionAnnex 3: Estimated Project CostsAnnex 4: Cost-Benefit Analysis SummaryAnnex 5: Financial SummaryAnnex 6: Procurement and Disbursement Arrangements-Table A.: Project Costs by Procurement Arrangements-Table B: Thresholds for Procurement Methods and Prior Review-Table C: Allocation of Loan ProceedsAnnex 7: Project Processing Budget and ScheduleAnnex 8: Documents in Project FileAnnex 9: Environmental Impacts and Mitigation PlanAnnex 10: Sectoral Policy NoteAnnex 11: Statement of Bank Group Operations in MoroccoAnnex 12: Morocco at a Glance

Maps: Proposed Sites for Fish Auction Halls (IBRD 29372)Fishing Areas (IBRD 29373)

Kingdom of MoroccoPilot Fisheries Development Project

Project Appraisal Document

Date: April 13, 1999 Task Leader: L. Msellati

Country Director: C. Delvoie Sector Director: D. Koehn

Project ID: MA-PE-52247 Sector Fisheries Project Objective Category: Environmentally Sustainable Development.

Lending Instrument: Specific Investment Loan Program of Targeted Intervention: Yes I X] No

Project Financing Data [XI Loan [ I Credit ( I Guarantee [1 Other [Specify]

For Loans/Credits/Others:

A m o u n t (U S $ M ) . ............ ............ ...... ..... .........__ - ... - --- ........... ................ ................. ... ........... .. ..........._...........

Proposed Terms: 1 Multicurrency [X 1 Single currency, specify: US$

Grace period (years): 5 [1 Standard Variable [ I Fixed [XI LIBOR-based

Years to maturity: 20

Commitment fee: 0.75%

Service charge: N/A

Front-end fee: 1.0%

Financing Plan (USSM):

Source Local Foreign Total

Government 0.9 - 0.9IBRD 3.0 2.0 5.0ONP 5.0 2.0 7.0

Total 8.9 4.0 12.9

Borrower: Kingdom of Morocco

Guarantor: N/A

Responsible Agencies: Ministry of Marine Fisheries (Minzsisre des pOches maritimes, MOMF)

Estimated Disbursements (Bank FY/USSM): 2000 2001 2002 2003

Annual 1.0 1.5 1.5 1.0

Cumulative 1.0 2.5 4,0 5.0

Expe.ted effectiveness date: October 15,1999 Closing date:..December 31,2002............. ......... .. ....................... ........ _ _ __ _..._......................._ _Expected effectiveness date: October 15, 1999 Closing date: December 31, 2002

Project Appraisal Docunent Page 2Kingdom of Morocco Pilot Fisheries Development Project

A. Project Development Objective

1. Project development objectives and key performance indicators (see Annex 1):

The proposed project has been designed as a vehicle for furthering the Bank's policy dialogue with MOMF while trying outways to enhance value added and competitiveness of the fisheries sector. More specifically, the project aims to:

* strengthen MOMF capacity to manage and develop the fishing sector, mainly by improving sector planning andinformation systems; and

* test on a pilot basis new approaches to improve fish product quality, upgrade landing infrastructures. and consolidatedialogue with the industry at the local level.

Indicators of performance will be:

* the preparation of a medium-term investment program reflecting Government priorities and ministerial strategy; and

* an increase in the ex-vessel price of some targeted fish species.

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project (see Annex 1):

CAS document number: 16219 -MOR Date of latest CAS discussion: 01/30/1997

The proposed project will contribute to the following CAS objectives:

* to support private sector development by encouraging faster growth and increasing competitiveness in the fisheriessector;

* to support public sector reform, through decentralization and encouragement of private sector initiatives; and

* to strengthen social and rural development, through expansion of labor intensive "small-scale" and "coastal" fisheriesdevelopment, thereby reducing poverty and the rural-urban gap.

2. Main sector issues and Government strategy

Background. The fisheries sector plays a key role in Morocco's economy. Morocco is Africa's second largest fishproducer and the world's leading producer and exporter of sardines. With a long coastline, the waters of the ExclusiveEconomic Zone (EEZ) in the Eastern Central Atlantic Ocean and in the Mediterranean Sea are among the richest in theworld, holding large stocks of schooling surface-swimming pelagic, or blue fish (European sardine, anchovy, mackerel andtuna), and of demersal, or bottom-dwelling fish and cephalopods (various white fish, squid, octopus and cuttlefish). Annualfish catches from Moroccan waters are estimated to have increased steadily reaching about I million tons in 1996. Anactive private sector developed at the beginning of the century. In 1918, the private fishing fleet numbered 20 motor boatsand around a hundred smaller boats with an annual capacity of 350 tons of fish. In 1998, the fleet consists of some 3,068vessels, of which 2,609 for inshore fishing, 459 for deep-sea fishing and 12,000 small boats for small-scale fisheries. Inaddition, some 400 foreign vessels are operating in Moroccan watcrs under international fisheries agreements.

The fisheries sector is socially and economically important. The annual catch has increased by an estimated 15 percentduring the last five years. Current estimates suggest a sustainable average annual yield of about 1.5 million tons, of which700,000 tons of sardines and 100,000 tons of cephalopods under prcsent environmental conditions. Fisheries contributesroughly 19 percent of total exports (200,000 tons in 1997 for a total value of US$710 million), 60 percent of agriculturalexports, and employs about 75,000 full time and 20-30,000 part-time persons. The sector has also assumed politicalimportance, as evidenced by the latest Fisheries Agreement with the European Union (EU), signed in November 1995. Thisaims to: (a) achieve a sustainable level of resource exploitation for white fish and cephalopods over a period of four years,mainly by reducing fishing rights for EU registered vessels; (b) provide Morocco with about US$750 million incompensation paymnents over a four year period; and (c) phase-out tariff based quotas for canned fish imports (sardines,mackerel and anchovy) from Morocco into the EU by 1999. The Agreement is expected to have a major impact onMorocco's external trade, sector investment funding and sustainability of fish resources.

Project Appraisal Document Page 3Kingdom of Morocco Pilot Fisheries Development Project

Sector Issues. Despite the pro-active policy of MOMF, fisheries sector development faces four critical issues:

* improving fish resources management to reduce pressure on several species: demersal fish and cephalopods areoverfished, while the situation for small pelagic is more complex due to stock mobility and related annual fluctuations inthe biomass. It is estimated that the northern and central stocks (Zones A and B) are heavily exploited, while the stocksin the South (Zone C) are under-utilized;

* delivering cost-effective fisheries services by strengthening public sector capacity in strategic planning, fishing portdesign and management, and fish product quality management, and supporting the private sector in assuming sectoralresponsibilities for service delivery;

* increasing sectoral competitiveness to effectively adjust to ongoing liberalization, including reduced trade tariffs onimported fishmeal, fish oil and related substitutes and eased price controls on small pelagics; and

* creating alternative sources of employment by exploring labor intensive development opportunities in coastal and small-scale fisheries and improving the competitiveness of the labor intensive, export oriented canning industry.

Governnent Strateg . The long-terrn objective of the Government is to ensure sustainable use of fish resources by thenational fleet and to promote social and economic development of the sector by improving competitiveness and efficiencyalong the marketing chains. Since its creation in 1982, MOMF has developed its sector strategy to address these issuesthrough four specific activities:

- improving knowledge of fish stocks and pursuing sustainable resource management, while increasing the share ofMoroccan vessels fishing in its EEZ;

* improving existing port infrastructure and expanding infrastructure available for small-scale fisheries while promotinginstitutional reform by targeting and strengthening the public role in areas such as technology development, training andpolicy analysis;

- reducing direct public intervention (prices, tariffs) in coastal fisheries and the processing industry while promotingprivate investment and restructuring; and

- supporting private sector empowerment by establishing Maritime Chambers and launching joint activities such as thefleet modernization programs and the insurance scheme Addamane Al-Bahri.

Regarding employment, MOFM, in light of the difficulties of reconciling the conflicting objectives of improving thecompetitiveness of the traditional canning industry and protecting employment, recognizes the need to prepare a thoroughand comprehensive strategy for the development of the sector. Overall employment levels in the sector can be increased bylimiting the introduction of modem seiners to what is incrementally needed to fully supply the canning industry and activelypromoting small-scale fisheries expansion, including by reallocating fish resources from coastal and industrial exploitationto small-scale fisheries.

A Sector Policy Note, dated February 26, 1999, was submitted to the Bank and discussed at negotiations. It describes a setof objectives and measures which define the main directions of the Government's strategy for the development of thefisheries sector.

3. Sector issues to be addressed by the project and strategic choices:

Within its limited means, the project would be a vehicle to maintain a policy dialogue on fish resource management issuesand liaise with the technical assistance program supported by FAO (UTFIMOR/ 1I 7/MOR) which is already working onstock assessment and fisheries management. It would support MOMF efforts to prepare a sector development strategy andinvestment programn, notably by strengthening planning capacity within the Ministry. The strategy comes at an opportunetime, since the new Government is preparing the Economic and Social Development Plan (1999-2003) and becauseinternational fisheries agreements, notably with the EU, will terminate at the end of 1999. On service delivery and publicsector performance, the project would help the Ministry to refocus itself on policy analysis and design and sectoralplanning. Through studies, the project would also assist the National Fisheries Authority (ONP) and National ResearchInstitute for Fisheries (INRH) to restructure to achieve greater financial viability, and develop a comprehensive informationsystem to support MOMF decentralization.


The project would also try out, on a pilot basis in three fishing ports, new ways of increasing sector competitiveness andefficiency, by developing landing point facilities (fixed and mobile) for small-scale fisheries, by improving the managementand operation of fishing ports, by strengthening local dialogue with the fishing industry, by upgrading marketing andprocessing facilities for fisheries products, and by redefining public and private financing mechanisms for port services. Asuccessful pilot would provide the basis for extension to other fishing ports.

C. Project Description Summary

1. Project components (see Annex 2for a detailed description and Annex 3for a detailed cost breakdown):

The proposed project is a pilot which will be implemented over a period of three years. Though limited in size compared toother donors' activities, it would assist the Government to prepare and implement its medium term strategy to enhancesector value added and competitiveness. The project would therefore aim to address the most pressing sector issues throughtwo main components:

* institutional development to strengthen the ability of MOMF to manage and develop the fishing sector; and

• pilot operations to enhance value added and competitiveness in the fishing sector, through intervention in three pilotsites at critical points in the production/marketing chain.

The project will be executed by MOMF. The pilot operations will be executed in conjunction with three pilot fish auctionhalls which will be built by ONP with its own budgetary resources. The sites selected for the three auction halls are Nadorfor year 1, Tan Tan for year 2, and provisionally Tangier for year 3. Following successful discussions concerning thehanding over to MOMF of four fish auction halls currently managed by the Port Management Authority (ODEP), MOMFcould choose another location for the third pilot fish auction hall, probably Agadir or Casablanca.

Component Category Cost Incl. % Bank- °Contingencies Total financing Bank-

(US$M) (USSM) financing

A. Institutional Development 1.0 7.8 0.9 901. Supportfor institutional reforms Physical and 0.2 1.5 0.2 1002. Information Systems Institution- 0.5 3.9 0.4 803. Support for sectoralplanning building 0.3 2.4 0.3 100

B. Pilot Marketing Chain Development 11.9 92.2 4.1 371. Fishingfleet upgrading Physical and 0.4 3.1 0.4 1002. Improved landing conditions Institution- 3.3 25.5 2.6 793. Improved marketing conditions building 7.8 60.5 0.7 104. Improved processing conditions 0.4 3.1 0.4 100

Total 12.9 100.0 5.0 39

2. Key policy and institutional reforms supported by the project

Within its limnited scope, the proposed project will be a vehicle for advancing policy dialogue with MOMF. Activities willbe confined to monitoring the measures presented in the Sectoral Policy Note, including trade protection for fish meal,pricing issues, tariff and tax regimes applicable in fishing ports, and cost-sharing mechanisms in marketing infrastructureoperations.

The project will also support certain institutional reforms, notably through two studies concerning decentralization andrestructuring of the fisheries sector: (a) a study of administrative reorganization; and (b) a study of the financing of thesector, including support for restructuring ONP and INRH to achieve greater financial and management autonomy.

3. Benefits and target population:

The main benefits from the three pilot areas would be: (a) higher quality fish and improved productivity for the processingindustry resulting in higher value added, increased income for fishermen, and greater job security; (b) enhanced qualitycontrol and port infrastructure management; (c) reorganization and development of a more competitive fish processing

Project Appraisal Documnent Page 5Kingdom of Morocco Pilot Fisheries Development Project

sector, better oriented to export markets; and (d) a strengthened small-scale fisheries sub-sector focusing on high value,fresh fish products, and enhancing rural income and employment opportunities. The project will not directly support anyincrease in production.

The target population consists of about 24,000 fishermen (most of them involved in small-scale and coastal fisheries), 6,400workers in the processing industry (most of them seasonal female workers), and 7,000 persons ashore, including merchants.Although employment data are not reliable, it is estimated that the project will involve about 35 percent of the peopledirectly employed in the sector.

The project will be mainly targeted at the population dependent on the fishing industry in the three pilot areas. Tan Tan,located on the Atlantic coast, is the biggest fishing port in Morocco in terms of landings with about one third of total catch(34 percent in 1997), while it represents only 12 percent of total catch value for the same year. Tangiers, situated on theStrait of Gibraltar, and Nador, a Mediterranean port with privileged access to the Spanish market, are export-oriented.specializing in high quality landings and valuable migratory species such as swordfish.

4. Institutional and implementation arrangements:

Implementation Period: 3 years, 1999-2002

Project Implementation

MOMF's Inspectorate General (IG) will be responsible for overall project implementation. Implementation of individualcomponents will involve central departments within MOMF, mainly the Marine Fisheries and Aquaculture Department(DPMA), Fish Industries Department (DIP), and Training Department (DFMPSP). At the port level, the National FisheriesAuthority (ONP) will be responsible for the construction of and equipment for the pilot fish auction halls from its ownbudget.

Project Coordination -Monitoring and Evaluation Arrangements

A Project Manager will be appointed by ministerial decision for the duration of the project. The Project Manager will beresponsible for coordinating, planning, supervising and monitoring project activities with assistance from a Planning andPolicy Unit (PPU). This unit will be established within the General Secretariat (GS) and staffed by a team of threespecialists, in economics, statistics and fisheries. The head of this unit will be the Project Coordinator who will establishprocedures for monitoring and evaluating project performance. The PPU will also be responsible for designing andmonitoring sectoral strategy and development programs.

TIhe Steering Committee, established in March 1997 to guide project preparation will provide overall supervision andmonitoring throughout execution. It is chaired by the MOMF's Secretary General, and comprises technical specialists fromthe various departments. Officials from the Ministries of Economics and Finance, General Government Affairs, PublicWorks, Agriculture, and Environment will be invited periodically to discuss gcneral project progress and ensure inter-ministerial coordination.

Accounting, Financial Reporting and Auditing Arrangements

Progress reports, as well as Financial management reports (FMR), will be prepared by the PPU. Project accounts will bemaintained by the Finance and Accounting Division (DFC) of MOMF. MOMF follows the rules of public accounting,relying on good procedures and competent staff. In addition, the installation of a computerized management informationsystem is being studied by MOMF. Given the modest size of the Loan and the limited number of financial operations, itdoes not make sense to develop specific software applications for consolidating project accounts and preparing the financialstatements. The Project Implementation Plan describes current systems, accounting arrangements required for projectmanagement. It also contains an outline for the FMR prepared on the basis of the information currently available form theHuman Resources and Administration Department (DRHAG). The monitoring system for physical and financial progressreflecting the new requirements of LACI in terms of disbursements forecasts and control mechanisms will be put in placeaccording to an action plan approved by MOMF.

Each year independent auditors acceptable to the Bank will audit the project accounts maintained and prepared by theFinancial and Accounting Division (DFC) in MOMF. Audit reports, including statements of expenditure and specialaccounts reconciliation, will be submitted annually to the Bank within six months of the end of Government's financial year.


D. Project Rationale

1. Project alternatives considered and reasons for rejection:

The speed and scope of adjustment of this complex, traditional sector is well suited to a pilot approach. A full-fledgedinvestment project in the first instance has been rejected for the following reasons:

* Besides allocating its own funds, Morocco has received EU and bilateral funds for a major, ongoing, infrastructureinvestment program in the fisheries sector. This will be completed in 1999 and the proposed project will help prepare fora follow up program;

* Current sector policies that maintain non-market pricing of raw material and fishmeal import tariffs have a politicallyinfluential lobby; adjustment will require some change in the political consensus, and therefore major adjustment up-front has been rejected as politically unfeasible and a more gradual adjustment process is being proposed. The necessarylegislation for pricing and tariff reforms essential for long term effectiveness of the small pelagic sector will be processedduring the project implementation period;

* While the knowledge necessary for rapid strearnlining of fish quality control and port management is available,competency issues and staff training need to be carefully prepared and implemented so as to avoid institutionalresistance; and

* The transition period offered by a pilot operation will be used to build trust and strengthen professional associations toprogressively increase their responsibilities and participation in sector development.

2. Major related projectsfinanced by the Bank and other development agencies:

Sector Issue Project Latest Form 590 RatingsIP DO

Bank-financedDevelopment program of the port subsector and of Port Sector Project (Ln. 3283/3284) (Project 0) HS SODEP

Infrastructure rehabilitation and technical assistance Port Project (Ln. 2657) (Project C) S Sto ODEP in the commercial ports of Casablanca &Mohanedia

Other DevelopmentAgenciesPrivate sector development, industry restructuring, CIDA: Private Sector Development Funds (Project 0) N/Aand fish quality management

Fish resources management, technology development FAO: Technical Assistance Program (Project 0) N/A

Infrastructure development (Ports et villages de FADES and JICA (Project P) N/Apeche) and fisheries training.

[Note: IP/DO Ratings - HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory), C (Completed),0 (Ongoing), P (Planned)]

In addition to these projects, a share of the fisheries agreement funds with the EU (about 10%) is being allocated toMOMF's investment budget, and some of these are then transferred to ONP and INRH. The EU funding representedMAD148 mnillion in FY96-97, MAD143 million in FY97-98 and MAD149 million (estimate) in FY98-99, respectively84%, 77% and 90% of MOMF's investment budget. The amount transferred to ONP represents on average MAD2Smillion a year to ONP mainly for the fleet improvement program, MAD20 million a year to INRH for stock assessmentand MAD6 million a year to the training institutes. These figures are presented in the Project Implementation Plan. It isalso to be noted that the port infrastructure program is being carried out by the Ministry of Public Works. Given thissituation, the investment program which will be developed over the next two years will have to focus on sustainabilityissues.


3. Lessons learned and reflected in the project design:

World Bank experience in Marine Fisheries Projects indicates that:

* Development of labor intensive catching technologies can be highly effective in a situation such as that of Morocco, assuggested by experience from Yemen, Maldives and Indonesia. Altemative strategies favoring the introduction of capitalintensive, but labor saving industrial fishing technology, which is currently being tested in Morocco, would have adverseimplications for rural employment and reduce local value added;

* Development of specific fisheries technologies requires targeted public research support (development costs are high andmay not be recoverable; outcomes are uncertain), especially for labor intensive small-scale and coastal fisheries.Structured preparation and training and close cooperation with fishermen's groups are essential precursors for thesedevelopments;

* Fishing ports have specific funding, design and operational management requirements, in order to meet the needs ofcoastal fleets and to ensure that port users play an integral role;

* Effective fish quality control requires a well balanced synergy between public control mechanisms and private sectoroperations in the area of HACCP. Extensive experience in upgrading fish quality control shows the need for acombination of sufficient central and local laboratory capacity, staff training, and close coordination with the privatesector. Quality management improvement is a long-tern process;

• In planning fishing port infrastructure, the entire fisheries system needs to be explicitly considered; and

• Decentralized control and direct participation of communities in design, financing and implementation of programsimprove cost-effectiveness and ownership. In addition, local participation can release resources and managerial talents.

The proposed project will take the above lessons into account in its design, organization and implementation, by testinglabor intensive technologies, supporting small-scale fisheries, improving quality management, and promotingdecentralization and local participation.

4. Indications of borrower commitment and ownership:

The Ministries of General Government Affairs and Fisheries have requested Bank support for their sector program afterintense dialogue based on economic and sector work over the last three years which resulted in a Draft Fisheries SectorStrategy Note, which was circulated and discussed in December 1996. Because of its importance, the Fisheries sector hasbeen included in the portfolio discussions between the Bank and the Government of Morocco.

A delegation from MOMF and ONP visited the Bank in March 1997 to discuss the basis for a Bank financed operation anda very active Steering Committee was established that took the leadership role in project preparation.

MOMF is committed to restructuring ONP so as to disengage from direct commercial and production activities and toconcentrate on improving services, supporting professional association development and participation in service delivery,including fish auction hall management. MOMF's commitment to decentralization is also illustrated by the establishment offour Marine Chambers in July 1997, active participation of the newly created Professional Federations in implementing fleetmodernization programs and the insurance scheme Addamane Al-Bahri.

With the fishing sector's export performance exceeding that of the agriculture sector, the Government is increasingly awarethat such performance depends on heavily exploited demersal stocks. At the same time, while production volume isvirtually static, export growth mostly relied on price increases of demersal species. The authorities realize that futureexport growth can only continue at current levels if fish resources remain exploited in a sustainable way, Moroccoincreasingly produces high quality and high priced fish products, and most importantly, the traditional fish canning andfishmeal sectors, which absorb more than half of Morocco's fish products have become more competitive and exportoriented.

MOMF and ONP are financing 60 percent of the total project costs which shows their commitment to project objectives andtheir willingness to benefit from Bank assistance in the sector.

Project Appraisal Docurnent Page 8Kingdom of Morocco Pilot Fisheries Development Project

5. Value added of Bank support in this project:

The Bank is the only donor working with MOMF on policy and institutional issues. A modest-size project is seen byMOMF as the vehicle for continued dialogue with the Bank and as an instrument to involve other donor partners in a jointprogram underpinning and coordinating the country strategy for fisheries development and institutional capacity building.In addition, the Bank is involved in Morocco in a wide range of activities which, unlike other donors, allow constructiveinter-sectoral dialogue including social aspects.

Analytical and strategy work conducted by the Bank, mainly for the canning industry with support from the Danish andFrench Trust-funds, concludes that the current sector policy framework, although acceptable in the short-run, hasopportunity costs in terns of fish resource allocations, value added, employment and export incomes. During preparationof the Draft Strategy Note, Bank staff provided critical intemational experience to the new Ministry to assist in designing astrategy for promoting sustainable use of fish resources, sector development and policy reforms. The Bank has contributedto this strategic planning process, and MOMF has expressed an interest in having continued access to such analyticalsupport which is lacking in the current multilateral and bilateral aid it receives which focus on investments, mainlyinfrastructure.

The Bank has developed close relationships with key bilateral donors and FAO to ensure that the proposed project createssynergy with related technical assistance activities in Morocco.

E. Summary Project Analysis (Detailed assessments are in the Project File, see Annex 8)

1. Economic (supported by Annex 4):

[XI Cost-Benefit Analysis: NPV=US$ 9.5 million; ERR=19.6% [ ]Cost Effectiveness Analysis: [ ] Other

In economic terns, the benefits of the project are based essentially on higher quality of fisheries products. Economicanalysis indicates a 19.6 percent Economic Rate of Return (ERR). The project net present value, at 10 percent OpportunityCost of Capital (OCC), is US$ 9.5 million. The economic viability of the project is therefore satisfactory, especially sinceall investment and recurrent costs have been taken into account in the analysis, even those of components such as supportfor institutional reforms, the benefits of which have not been estimated. Analysis shows that if the cost of support forinstitutional reforms is not included in the calculations, the ERR rises to 21.1%.

Switching values (at 10% OCC) indicate that the project could withstand a 77 percent increase in costs or 43 percentreduction in benefits. These tests indicate that overall project viability is not very sensitive to declines in performance.However, since it is a pilot project which, over a period of three years, will support the development of certain activities bytesting new approaches to increase the quality of fisheries products, special attention should be paid during implementationto keeping costs under control and respecting the agreed timetable.

2. Financial (see Annex 5):

NPV = US$ 6.6 million; FRR = 15.4%; [XI (list issues below, e.g.,, cost recovery, tariff policies, financial controls)

The financial rate of return for the project is 15.4% with all investment and operating costs having been taken into account,even those related to the institutional development component, for which no benefit could be quantified. The net presentvalue at the presumed opportunity cost of capital of 10% is US$ 6.6 million.

Financial analysis has also been used to estimate the profitability of the two main commercial activities under the project:the improved landing sites and the pilot fish auction halls, in order to evaluate their sustainability. For the pilot halls, theanalysis was carried out on the basis of the estimated increase in marketing resulting from the progressive reduction ofoutside sales and greater auctioning capacity which makes it possible to absorb seasonal peaks, all together representing anincrease of about 15% in the quantities of fish going through the auction over a period of seven years. Two technicaloptions were also tested, the construction of refrigerated and non-refrigerated halls, which give respectively rates of return


of 13.1% and 16.6%, and net present values of US$ 0.6 million and US$ 1.1 rnillion at an opportunity cost of capital of10%. In order to refine these estimates and eventually extend the halls to other ports, the project will rigorously monitortheir receipts and costs of operation and maintenance.

The second analysis concerns the improved landing sites, the estimated profitability of which should also be checked by aclose monitoring of receipts and expenses during the three years of the project. This analysis is based on an averagequantity of 600 tons of quality white fish which would be brought annually to each of the sites by about 100 fishermen.The internal rate of return is estimated at 11%, and the net present value at an opportunity cost of 10%, is estimated atMAD 425,000. This rate of return hardly exceeds the opportunity cost of capital, but can nevertheless be consideredsatisfactory in view of the social nature of the sites. Small-scale fishermen are in fact classified among the least favoredsocio-economic groups, and any profitable action which could increase their incomes sustainably should be consideredfavorably. The volume and prices of the landed fish have been conservatively estimated.

3. Fiscal:

The project size is relatively modest with a total cost of MAD 118.5 million. In addition, it will be partially fimded by ONP(MAD 64.6 million). The impact on the budget of MOMF will be MAD 53.9 million for the entire implementation period,which represents annually about 11% of the investnent budget in 1998-99. Moreover, the recurrent costs of the project aremarginal for MOMF since they total annually about MAD 1.0 million during the first three years after the end of the projectand decline progressively thereafter to MAD 150,000, or less than 2.0% of the operating budget of MOMF.

4. Technical:

Two key, related technological issues affect the project and future sector strategy: (a) the choice of future fisheriesdevelopment in the South, in particular whether to encourage the fish canning industry to move to where fish are currentlybeing caught and landed (with all related issues of transfer of labor, public infrastructure requirements etc.), or to move thecatch to existing canneries (either by land or sea, in which case a number of industrial fishing vessels would be needed, withthe risk of substantially reducing employment in the coastal fishing fleet); and (b) the choice of new more appropriatevessels, both for the traditional coastal fleet and for the small-scale fleet, which would allow to improve the quality offisheries products and to exploit other fisheries. These technological issues have major economic, financial, social andpolicy implications; market based solutions may have negative social implications.

5. Institutional:

Although MOMF and ONP staff has demonstrated, during preparation, strong ownership and adequate managerialcapacity, institutional issues are critical to the success of this operation. Key institutional constraints include the need to:(a) complete the transfer to ONP of the four auction halls currently managed by the ODEP which will improve ONP overallprofitability and enable the implementation of divestiture plan in favor of the private sector. A transfer program is beingnegotiated between ONP and ODEP which could be implemented starting July 1, 1999; (b) define the respective roles ofpublic, mainly ONP, and private sectors in service delivery; (c) strengthen the capacity of MOMF in planning and analysisof sector policies; and (d) clarify the division of responsibilities at the local level between DIP, ONP and private sectororganizations.

6. Social:

The canning industry provides (part-time) employment to a large group of women. Any action to move the location andcapacity of the canning industry therefore has an immediate and major impact on female employment in the coastal zonewhich will be assessed during project implementation and an action plan for promotion of women's activities prepared.

7. Environmental (see Annex 9):

Environmental Category: []A [XI B [I C

The project has been rated in the environmental screening category "B". it will comply with Morocco's and the Bank'slegal environmental requirements. No major environmental issues are foreseen, instead, the environmental impact of theproject is expected to be strongly positive, especially in the field of food safety and quality management since quality


assurance activities to meet EU standards for sea food exports will be financed under the project. In addition, the projectwould strengthen INRH's existing managerial and programming capacities for stock assessment. However, the project willmonitor possible environmental drawbacks in the pilot sites and propose adequate mitigation measures including: (a) use ofozone depleted substance (ODS) free refrigeration equipment complying with the Montreal Protocol in new designs forcoastal vessels using refrigeration technology; (b) connection of wastewater discharge from the rehabilitated auction halls tourban waste water; and (c) inclusion, in the feasibility study, of a waste management plan which will address any increasein solid waste at the fish auction halls and landing facilities, including the monitoring of water quality according to themitigation plan in Annex 9.

8. Participatory approach:

Primary beneficiaries and other affected groups:

There was extensive consultation during preparation of the Fisheries Strategy Note through a two-day Roundtable Meetingorganized in December 1995 during a Bank Mission with the major stakeholders involved, including representatives fromthe private sector (e.g., fishermen, boat-owners, fish traders, meal producers and cannery owners) as well as from the publicentities (e.g., MOMF, MOF, MOA, MOPW, ONP and ODEP). The outcomes from such meetings have been taken intoaccount in the design and have helped MOMF and ONP to initiate a program with existing professional associations withspecific actions such as the fleet modernization program and the insurance scheme Addamane Al Bahri for fishermen andboats.

The project will also specifically target: (a) small-scale fishermen around Tan Tan and Agadir with the construction ofImproved Landing Points and (b) seasonal female workers at fish processing factories in the three pilot areas through on-the-job training and literacy programns

9. Other key stakeholders:

Linked with these efforts are the creation of the Confd9ration Nationale de la Peche Co6tre (CNPC) and the FedirationNationale des Industries des Produits de la Peche (FENIP). Other activities, supported by the project, will promoteprivate sector participation in providing services at auction halls through the establishment of Joint ManagementCommittees. Moreover, the recent establishment of Marine Chambers in each of the four fishing zones aims at enhancingprivate sector participation in sector policy and regulations at regional level. Aware of the need to increase private sectorownership and responsibilities, ONP with FAO support has undertaken a study to develop an action plan to strengthenprofessional organizations, and this is included in the project.

Participatory Approach: Preparation Implementation Operation

Beneficiaries/Professional Organizations CON COL COL

Fisheries Research Institute (INRH) CON CON CON

Ministry of Public Works COL COL COL

Ministry of Agriculture and Rural Development COL COL COL

Local Govermnent COL COL COL

Other donors: FAO, CIDA, DANIDA COL COL COL

Other donors: ADB, AFD, JICA IS IS IS

[Note: information sharing (IS), consultation (CON); and collaboration (COL).]

Project Appraisal Docwment Page 11Kingdom of Morocco Pilot Fisheries Development Project

F. Sustainability and Risks

1. Sustainability:

From a purely fiscal perspective, recurrent costs count for less than 1% of total project costs and, therefore, do notrepresent a heavy burden on MOMF operating budget. Project sustainability will mainly depend on: (a) administration andbeneficiaries ownership; (b) continued economic reforms; and (c) profitable new technologies. The institutionalstrengthening component explicitly promotes beneficiaries' involvement in decentralized development and supports reformsfor establishing financing mechanisms to ensure greater autonomy of ONP and INRH, and ensure the contributions ofprofessional associations in various service delivery and infrastructure management activities. The pilot scale of the projectaims at testing options and technologies to improve fish product quality at all critical point and enhance value added in theproduction/marketing chain. Beside, the Government is highly commnitted to sustainable use of fish resources, and althoughthe project is not tackling these issues they are, nonetheless, addressed under an FAO project.

2. Critical Risks (reflecting assumptions in the fourth column of Annex 1):

Risk Risk Risk Minimization MeasureRating

Project outputs to Current institutional arrangements do not allow M Dialogue will be consolidated indevelopment objectives dialogue between the various stakeholders the three pilot areas

Inefficient resource management threatens the N Technical Assistance support fromsustainability of the industry FAO will continue

Price distortion against the canning industry will M Monitoring of gradual removal ofoffset benefits resulting from quality management protection on fish meal

Project components Inadequate fish resource monitoring and N Increase in INRH budget and moreTo outputs evaluation secure financing sources

M Agreement of credit union schemeCredit is not available for fleet improvement and with Banque Populaire (Societesindustiy restructuring de cautionnement mutuel) and

support from the FleetModernization Fund

H Consolidate dialogue at the portInadequate collaboration of stakeholders level between the Administration

and industry local representatives

Overall Risk Rating M

[Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk))

3. Possible Controversial Aspects:

None

Project Appraisal Document Page 12Kingdom of Morocco Pilot Fisheies Development Project

G. Main Loan Conditions

1. Negotiations Conditions:

* Preparation of a Sector Policy Note, which would indicate the Government's intentions on policy and institutionalreforms (see para. B.2).

* Appointment of a Project Manager (see para. C.4).

2. Condition of Board Presentation:

* Establishment of a Planning and Policy Unit (PPU) in MOMF, staffed with a team of three specialists (para. C.4).

3. Effectiveness Conditions:

* Standard Conditions

4. Other [classify according to covenant types used in the Legal Agreements]:

Accounts and Audits

* Standard auditing covenants will apply

* GOM will open and properly maintain, in US dollars, a Special Account

Management

* The PPU to be established by Loan Effectiveness will be equipped with the personnel and other means necessary tocarry out its responsibilities under the project. The head of this unit will be in charge of project coordination andmonitoring and will establish procedures for monitoring and evaluating project performance (see para. C.4).

* The Steering Committee shall be maintained throughout the implementation period of the project (see para. C.4).

Monitoring, review and reporting

* Standard reporting covenants will apply

Project Implementation

* The project will focus on three sites where ONP is building new pilot fish auction halls under its own budget, i.e. Nadorin FY99 and Tan Tan in FY00. The third site in FY01 is currently identified as Tangier, however Agadir orCasablanca may replace it if it is decided at the inteniinisterial level to return them to ONP (see para. C.3).

* Define management mechanisms for pilot fish auction halls within an informal Joint-Management Committeeassociating all users to be established for each pilot auction halls (see para. C.4).

* Procurement will be carried out by the executing agencies in accordance with Bank Guidelines.

H. Readiness for Implementation

[XI The engineering design documents for the first year's activities are complete and ready for the start of projectimplementation. [ I Not applicable.

[ I The procurement documents for the first year's activities are complete and ready for the start of project implementation.

[X] The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality.

[ The following items are lacking and are discussed under loan conditions (Section G):


I. Compliance with Bank Policies

[X] This project complies with all applicable Bank policies.

Task Leader: Laurent Msellati

Sector Director: Doris Koehn

Country Director: Christian Delvoie

Project Appraisal Document Annex 1MOROCCO: Pilot Fisheries Development Project Page 1 of 2

Annex 1

Project Design Summary

Narrative Summary Key Performance Indicators Monitoring and Critical AssumptionsI |ISupervision

CAS Objective* Increase growth and * Sector growth rate * MOMF annual * Implementation of effective

competitiveness * Degree of satisfaction among statistics (La Mer en resource managementstakeholders in the sector Chiffres)

* Support public sector reform * Share of small-scale and * MOMF client survey * Stability in major world productcoastal fisheries landings markets

* Strengthen social and rural * Marketing * Political will to continue publicdevelopment Information System sector reform

(MAIA)Project Development Objectives* Strengthen MOMF capacity * Establishment of a medium * Semestrial Progress * Opportunities for dialogue

to manage and develop the term investment program Reports between the administration andfishing sector reflecting Government * Bank Supervision the fishing industry on

priorities and Ministerial Reports developing the sectorstrategy

* Support development of * Increase in ex-vessel fish * MOMF annual * Implementation of effectivefishing sector at three pilot prices statistics (La Mer en resource managementsites * Increase in quantity of fish Chifres) * Gradual removal of import

auctioned in Pilot Halls * Marketing protection on fish and fish mealIncrease in quantity of fish Information Systemlanded at improved facilities (MAIA)

Project Outputs* Redefined tasks/mission for * Regionalization and * Semestrial Progress * Strengthening fishery resource

MOMF at the central and decentralization programs Reports evaluationregional levels established

* Functioning integrated * ONP transitional * Bank Supervision * Credit is available for fleetinformation system for organizational structure and Reports improvement, and industryfisheries sector INRH statutes approved restructuring

* Planning and monitoring * Decision Support System * Completion reports * Adequate collaboration of allsystem for MOMF in place available at MOMF stakeholders

* Quality Management in place * Three pilot auction halls andat all levels at three pilot sites five landing points (PDAs)

operational* Five guides to best practice

available and network offreshness measurementoperational

Project Components _ ___ _A. Institutional Development US$ 1.0 M * Progress reports * Continued MOMF comnitment* Institutional reforms (MOMF) to decentralization* Information systems * Bank Supervision * Adequate ministerial* Sectoral planning Reports coordination

B. Pilot Operations to Support US$ 11.9 M * Procurement * Mechanisms in place forDevelopment of Marketing documents dialogue with the industry atChain o Audit reports local level* Upgrading the fleet* Landing condition* Marketing conditions* Processing conditions


List of Monitoring Indicators

The following performance indicators have been established, based on technical documents presented duringnegotiations, for each one of the two development objectives.

* Obiective N° 1: Strengthen MOMF capacity to manage and develop the fishing sector

1. Establishment of a medium term investment program reflecting Government priorities and Ministerial strategywithin the general framework of the preparation of the Plan quinquennal 1999-2003 (December 31, 1999)

2. Implementation of the Fisheries Information System (December 31, 2000)

* Obiective N° 2: Support development of fisheries sector at three pilot sites

1. Increase in quantity of fish auctioned in Nador, Tangier and Tan Tan Pilot Halls:

Average quantities auctioned in YEARS IN OPERATIONCurrent halls (T) 2 3 4 5 6

NADOR 10,000TANGIER 6,000 1+2% +5% +8% +12% +15%TAN TAN 2,000

2. Increase in quantity of fish landed at improved facilities : 600 tons per year in each PDA after 5 years ofoperation:

YEARS IN OPERATION Average Quantities landed per PDA (T)

2 3003 4204 5405 600

3. Increase in ex-vessel fish prices in pilot auction halls:

Current Prices (MAD/KG) YEARS IN OPERATION

TANGEER NADOR TAN TAN2 3 4 5

HAKE 28.13 30.82 -

WRASSE 12.49 - 7.59MULLET - - 15.90

CROAKER 67.15 20.86 53.76 1Z ZSNAPPER - 26.58 - + + + +CUTILEFISH 25.25 16.63 21.07SQUID 28.04 - -

RED SHRIMP 21.19 29.21 I4. Improved quality management and hygiene conditions: Publication of 5 guides to best practice

(December 31, 2000)

5. Establishment of three Joint Management Committees which will be operational by December 31, 1999 inNador, by December 31, 2000 in Tan Tan, and by December 31, 2002 in Tangier.


Annex 2

Project Area

1. Three ports have been chosen as sites for pilot operations with upgraded fish auction halls: (a) Tan Tan, thebiggest fishing port on the Atlantic coast with major landings of small pelagic species from fishery stocks in the southemzone presently considered under-exploited; (b) Nador, a Mediterranean port where privileged access to the Spanishmarket encourages landings of high quality, including sardine intended for fresh consumption (sardine de bouche); and(c) Tangier, a port situated on the Strait of Gibraltar with easy access to export markets and a local fishery targetingvaluable migratory species such as swordfish. The main fisheries characteristics of the three ports are summarized inthe table below.

Key Characteristics of the Pilot Areas

Tan Tan Nador Tangier

Total landed, tons 1995 293,072 15,060 6,7991996 136,376 13,789 6,1801997 225,648 9,110 5,984

Value, MAD thousand (MAD/kg) 1995 247,129 (0.84) 101,468 (6.74) 48,367 (7.11)1996 155,532 (1.14) 122,260 (8.87) 67,348 (10.90)1997 216,059 (0.96) 84,571 (9.28) 117,217 (19.59)

Number of vessels Coastal trawlers 168 58 20Coastal sardine purse seiners 208 40 9

Coastal long-liners (palangriers) 66 10 163Deep sea trawlers 42 . 19Small-scale boats 120 700 350

Processing & ice, no. plants (capacity ton/day) Canning 1 (120) 1 -Fishrneal 7 (3,000) .Freezing 2 (<200) 5 3

Ice 3 (350) 2 (100) 1 (120)Quayside fish pumps for discharging small pelagics 8 (3,400)

Employment Fishing 11,700 8,000 5,000Industry 1,700 1,500 3,200

Total ashore including merchants 2,000 3,000 2,000

Tan Tan

2. The port of Tan Tan is situated on the Atlantic coast some 350 km south of Agadir at the northern edge of thesparsely populated Sahara region. The port started operation in 1982, but problems of vessel access and siltation havenecessitated major improvements to the infrastructure. The new jetty provides a 77% increase in total quay length: theoriginal 750m (150im at 8m, 250m at 6m, 350m at 4m) is joined by a further 580m at 6.5m depth which will shortly beready for use. The total sheltered water area has increased from 74ha to 92ha. Eight large fish pumps which dischargesmall pelagics intended for fish meal will be moved from their present position on the quay adjoining the market hall tothe new quay. This will provide better access for vessels landing fish for auction.

3. Major constraints to port development include: (a) shortage of labor making it impossible to expand high value-added production from smaU pelagics without bringing in labor, so local processing capacity is mainly for fish meal;(b) limited local market so that white fish and most small pelagics for human consumption must be taken elsewhere(white fish to Agadir and Casablanca, small pelagics for processing at Agadir and Safi); (c) limited local water supplyforces the port and all its users to depend on an unreliable supply of fresh water piped from Goulimime (a distance of


150 kIn), with none of the waste treated or recycled. Other constraints include: (d) extreme random variation in dailvsupplv typical of small pelagic fisheries but on a large scale at Tan Tan, frustrating efficient use of unloading, transportand processing capacities, although the new quay will reduce port congestion especially during the peak fishing season;(e) erratic ice supplv caused partly by inconstant fresh water supply but compounded by insufficient ice storagecapacity (only two days' production), will need improvement if local sardine vessels start to use ice; and(f) monopsonistic situation with few buyers visiting Tan Tan at present, prices are relatively low, leading sellers ofwhite fish to by-pass the local auction by sending their catch directly to Agadir or Casablanca.

Nador

4. The port of Nador has a unique advantage in its proximity to the Spanish enclave of Melilla, from which ferriesdepart daily for Spanish ports such as Malaga and Almeria. Exporters thus have convenient access to the Spanish andother European markets. The coastal fleet landing at Nador consists mainly of trawlers and sardine seiners, but there isalso an unusually large number of small-scale craft. Apart from the very exacting needs of the Spanish market inmatters of quality, grading and presentation, there is a local preference for fresh sardine (sardine de bouche).

5. As a result, all fish landed at Nador is carefully handled both at sea and ashore. On board vessels it is stowedwith ice in wooden boxes. Some sardine vessel owners have followed the practice of trawlers and palangriers byinsulating their holds. Scrupulous care is taken when unloading vessels to avoid damaging fish. Boxes can be rentedfrom a pool maintained, repaired and cleaned by a local service company dedicated to the purpose. This feature atNador anticipates future planned requirements for new or upgraded auction halls, except that plastic boxes will be used.All fish landed at Nador is sold by auction, with the entire white fish catch plus representative samples of small pelagicspassing through the hall.

6. Constraints in Nador include: (a) impracticability of improving the present auction hall which would be readilyupgradeable to satisfy modem standards of efficiency, hygiene and fish quality assurance were it not for problemscaused by vehicular traffic which must pass close by; (b) exposure of the present fish unloading quav to seasonaleasterly winds strong enough to compromise the safety of vessels alongside; and (c) a ban by local vessel owners on fishlanded elsewhere (poisson de transit), which they perceive as inferior, from being sold in the auction hall, for fear thatprices would be destabilized.

Tangier

7. Tangier's location on the Strait of Gibraltar gives its fishing fleet opportunities not found elsewhere in Morocco.Nearby fishing grounds are rocky and therefore not suitable for trawling or seining, but large valuable migratory fishspecies such as tunas and swordfish pass regularly through the strait. As a result, a large fleet of palangriers hasdeveloped at Tangier, targeting its efforts particularly on swordfish, now the dominant species landed for export (about10% of total value). As in the case of Nador, all fish landed at Tangier are boxed at sea with ice. Another advantagefor exporters is the proximity of the Spanish mainland, easily accessible by frequent ferries to Algesires.

8. Constraints to development of fishing activities include: (a) congestion with the existing auction hall too close tothe quay in this very congested port, making vessel unloading extremely difficult; (b) insufficient capacitv of the existingauction hall which is too small to handle all the required throughput - some boxes of fish must wait outside in the sun,thereby losing quality before being admitted to the hall, and causing even more congestion at the quayside;(c) inadequate facilities for preserving swordfish which because of its shape cannot easily be iced and is thereforedependent for preservation on air conditioning - absent in the present hall; (d) inadequate vehicle access to the existingauction hail; and (e) too many peoDle in the fish auction hall.

9. In all of the three pilot ports, the project will: (a) help to enhance fish quality in a properly chilled environmentparticularly important for swordfish, by providing unloading equipment, lift trucks, conveyors and facilities for smallmerchants to prepare and pack fresh fish; (b) improve management, especially of the new auction hall, throughincreased participation of al stakeholders in managing fish marketing operations and in providing services; (c) provide


potential buyers with better and rapidly updated market information, which can be expected to assist prices in all portsto reach equilibrium, enabling poisson de transit to be sold at the Nador and Tangier auction without prejudice tolocally landed fish; (d) improve awareness and practice of good hygiene and environmental protection; (e) set up asystem for objective measurement of fish quality and freshness on unloading from vessels; and (f) increase assurance ofcontinued access to EU markets, in particular the Spanish market served by Tangier and Nador.

Project DescriptionInstitutional Development - US$ 1.0 million

10. The objective of this component is to strengthen the ability of MOMF to manage and develop the fisheries sector,with three lines of intervention: (a) support for institutional change; (b) development of an integrated informationsystem; and (c) setting up sectoral planning.

11. Support for institutional change. This component will help redefine the objectives of central and peripheralbodies and support the administration in decentralizing and restructuring organizations under its supervision - INRHand ONP- so as to put decision-makers in closer contact with real local conditions. The project will finance two basicstudies to define a general framework for overall regionalization policy:

* Study of Administrative Reorganization. The objectives of this study are : (a) to define the main lines ofintegrated regionalization policy taking account of all administrative and consultative bodies in the sector;(b) revising allocations between central and regional administrative services, bearing in mind the need to make theprivate sector aware of its responsibilities and to refocus activities in the public sector; and (c) drawing upproposals for internal reorganization of MOMF.

* Study of Sector Financing. The purposes of this study are to: (a) analyze the fiscal situation of the sector,including the system of levies within the fish halls and the charges for services within the fishing ports;(b) examine the financial profitability of each fish hall and audit ONP's accounts to determine its borrowingcapacity on financial markets; and (c) analyze the financing mechanisms of INRH in order to put in place asystem of planning which is responsive to the requirements of research and exploitation of fisheries resources,ensure a continuity in the financing of research in the long-term, improve the efficiency of budget execution ofresearch programs and adapt the internal organization of INRH to its new mandate.

12. Information System Development. Project activities will help to speed up the decentralization process and toimprove and better integrate management information systems in MOMF, INRH and ONP. Activities financed by theproject include: acquisition of computer equipment for three regional delegations (Tan Tan, Nador and Tangier); and astudy on the needs for aids to decision-making and development of specific decision-making aids for MOMF.

13. Support for Sectoral Planning. Major changes characteristic of the sector and socio-economic developmentimperatives argue for setting up within MOMF a sectoral planning unit which will also have overall responsibility forcoordinating project execution, as well as for a support unit for the advancement of women. The project will finance thefollowing activities:

* Setting up a Planning and Policy Unit. This unit will be set up within the SG at MOMF with functional links toother ministerial departments. The head of the unit will be responsible for monitoring and coordinating theproject, assisted by a fisheries economist and an economist-statistician. The project will finance: (a) technicalassistance to set up systems for sectoral planning, monitoring and appraisal; and (b) basic computer equipment.One of the main tasks of the PPU will be to analyze the issues of future fisheries development in the South andnew more appropriate vessels discussed above (Section E. para. 3)

* Setting up a Unit for Women's Advancement. MOMF will recruit a head for the women's advancement unit, whowill concentrate during the first year on quantifying the economic role of women in the sector, and on setting up amedium term action plan for their social and economic development. The project will finance equipment forsetting up this unit.


Pilot Operations to Support Development of the Sector - USS 11.9 million.

14. The project will support pilot activities aimed at strengthening value added and competitiveness in the fishingsector, through intervention in three pilot sites (Tantan, Nador and Tangier) at all critical points in theproduction/marketing chain. The project will finance the following sub-components:

15. Support Towards Upgrading the Fleet. Through its "Program of Modernization of Coastal Fisheries," MOMF istrying, through financial support using incentives, to encourage over the next five years: (a) the modernization of theproductive apparatus; (b) the improvement of handling and storage of the catch on board; (c) the introduction of newfishing technologies; (d) the adoption of new technologies in boat construction; and (e) the optimization of workingconditions and security of the fishing community. This program, which began in 1996, is implemented by ONP whichhas a modernization fund of MAD 200 million at its disposal for this purpose. Moreover, growing competitiveness onforeign markets and the additional importance given to quality norms make it necessary to accelerate the process ofupgrading the coastal fisheries fleet and improving the conditions of handling and storage aboard the vessels. Within theframework of the component, the project will contribute to the objectives of upgrading the coastal fleet in the followingareas:

e Evaluation of the Modernization Program and Implementation of a Technico-Economic Monitoring System. heproject will finance a study to evaluate the ongoing program and make proposals as to the future direction ofcoastal fleet upgrading. Based on the technico-economic validation of the options, the study would not beundertaken until the second year of the program

* Promotion of Small-Scale Fisheries. The project will support: (a) the DPMA in establishing a permanent andunchangeable registration procedure for small-scale fisheries landings. This registration and identificationoperation will also handle the monitoring and control aspects of the construction of artisinal units as well asmanagement systems for their seasonal movements. The latter could be coupled with the installation of radarreflectors (metallic bands allowing for the detection by nights of such units) which would allow for a diminutionof the frequency of collisions and would increase the security of the fishing community who exercise a professionin the field; and (d) the establishment, around the improved landing sites, of cooperative sources of supply toprovide small-scale fishermen with adequate fishing equipment, commonly used spare parts for motors, basic on-board safety equipment small everyday supplies of foodstuffs and other items for shipboard life. This requiresahead of time the formation of service cooperatives, the management of which should be entrusted toprofessionals.

* Quality Assurance On-Board Vessels. The project will put in place tools for managing quality at all levels of themarketing chain and demonstrating their effectiveness. These tools concern all the actors in the chain, whether onthe boats, upon landing, during marketing, transport or processing. In this framework, a guide of good practicesaboard vessels will be prepared and distributed to the professionals concerned.

* Strengthening of DPMA. The project will support DPMA in the following areas: (a) Upgrading of the fishingfleet, by redeploying two staff in charge of technical monitoring of the ongoing program, in collaboration withINRH and ONP. The project will finance their training in the area of naval construction, refrigeration and fishingtechnology; (b) Diagnosis and support for the fight against marine pollution, by financing a study concerning thediagnosis of measures and existing means for combating marine pollution. The project will also help DPMA todevelop the capacity and necessary means in order to take over this responsibility; (c) Support to security on-board fishing vessels and in fishing communities, an aspect to which the MOMF attaches special importance.The project will finance technical assistance for the preparation of guidelines concerning security on vessels andimprovement of the qualifications of the agents and inspectors in charge of making technical visits; and(d) Issuance of procedural manuals which will complement the actions concerning security aboard vessels and thefight against marine pollution.

16. Improvements in landing fish. The project will contribute to supporting small-scale fisheries and employmentcreation by building four permanent fishing centers, or Improved Landing Facilities. It is also planned to develop acontainerized (or mobile) landing site which would offer the possibility of "moving" infrastructure after several years ifimportant changes in the socio-economic environment and in the state of resources made it necessary. Each Improved


Landing Facility will comprise: (a) a chilled store; (b) an ice maker with store; (c) a fish store for small merchants; (d)an office for the employees. Those centers should be located so as to link up with a pilot auction halls, particularly in thesouth around Tantan and Agadir.

17. Inmprovements in Marketing. Fish auction halls are the starting point for value in all variants of the marketingchain and form the interface between producers and merchants. Quality management and involvement of users in thehalls are both vital to improve effectiveness of the marketing chain. This sub-component will finance activities in fourareas:

* Pilot Auction Halls. On the basis of recommendations made in the ONP master plan of fishing ports, three pilotsites have been identified, Tan Tan, Nador and Tangier (or Agadir or Casablanca) for initiating the program tomodernize auction halls in response to new constraints on quality. Feasibility studies have been completed for allthree sites. ONP will finance from its own resources construction and equipment of the new halls. The projectwill finance the purchase of equipment for unloading and handling fish, such as fork lifts and conveyors, outsidethe halls.

* Pilot Hall Management. One project objective is to increase participation amongst users and professionalassociations in managing public infrastructure and providing main services in the halls. To promote thisapproach, a joint consultative management committee comprising local representatives from MOMF, ONP andfrom the industry (vessel owners, fishermen, merchants and factory proprietors including canners and fish mealproducers), will be established at each of the three pilot sites. The duties of this committee, within which theadministration and professional associations will be equally represented in accordance with existing legislation(comite paritaire), will be to organize commercial operations in the auction halls, define the role of CAPI,manage the auction itself, and decide on investments in construction and equipment. More precisely the projectwill assist in: (a) the redefinition of the statutes and mission of the Local Fishing Committees (LFC) and of theCAPI; (b) the preparation of guidelines and of internal regulations for the pilot halls; (c) defining institutionalmechanisms to establish the CCGC and ensure equal representation; (d) a study of the operation andmaintenance costs and options for cost sharing; and (e) impact evaluation.

3 Operation to SRread Good Hygienic Practice. Staff recruited by ONP to popularize good practice will receivesuitable training to provide interactive encouragement to users of the three pilot halls in adopting a moreresponsible attitude towards using and maintaining public infrastructure. This work will progress outward fromthe halls to introduce good hygienic practice to fishing vessels, mobile salespeople and premises of merchants andfish shops.

* A Network of Quality and Freshness Measurement. This will be set up at vessel unloading points. The networkwill depend on bringing local ONP staff up to standard (a logical extension of tasks undertaken by CAPIpersonnel) under supervision of DIP. Introduction at all three sites will enable an assessment of progress in thesector towards quality improvement.

18. Improvements in Processing. To increase value added in processing factories the project will focus on:(a) training to enable women working in factories to obtain qualifications; (b) producing a good practice guide specificfor hygiene in processing plants; and (c) developing a "Morocco Label" for final products.


Annex 3Estimated Project Costs

(US$ million)

Project Component Local Foreign Total

A. Institutional Development 0.7 0.2 0.91. Support for Institutional Reformn 0.1 0.1 0.22. Information System 0.4 0.1 0.53. Support for Sectoral Planning 0.2 - 0.2

B. Pilot Marketing Chain Development 7.0 3.3 10.31. Fishing Fleet Upgrading 0.2 0.1 0.32. Improved Landing Conditions 2.0 0.8 2.83. Improved Marketing Conditions 4.6 2.2 6.84. lmproved Processing Conditions 0.2 0.2 0.4

Total Baseline Cost 7.7 3.5 11.2

Physical Contingencies 0.7 0.3 1.0Price Contingencies 0.5 0.2 0.7

Total Project Cost 8.9 4.0 12.9

NB. Some discrepancies may exist due to rounding

Estimated Project Costs(US$ million)

Project Component Nador Tan Tan Tangier Central Total

A. Institutional Development 0.9 0.91. Support for Institutional Reform 0.2 0.22. Information System 0.5 0.53. Support for Sectoral Planning - - - 0.2 0.2

B. Pilot Marketing Chain Development 2.9 3.5 2.9 1.0 10.31. Fishing Fleet Upgrading - - - 0.3 0.32. Improved Landing Conditions 0.6 1.6 0.6 - 2.83. Improved Marketing Conditions 2.3 1.9 2.3 0.3 6.84. Inproved Processing Conditions - - - 0.4 0.4

Total Baseline Cost 2.9 3.5 2.9 1.9 11.2

Physical Contingencies 0.3 0.3 0.3 0.1 1.1Price Contingencies 0.1 0.2 0.1 0.2 0.7

Total Project Cost 3.3 4.0 3.4 2.2 12.9

NB. Some discrepancies may exist due to rounding


Annex 4Cost Benefit Analysis Summary

(Million MAD)

Economic Flows Fiscal ImpactYears Investments Incremental Benefits Incremental Net Flows Taxes Subsidies

Costs1 27.0 -27.0 2.62 42.9 2.0 2.5 -43.5 3.73 18.1 7.7 3.3 -13.7 1.14 13.3 4.8 8.55 19.7 5.6 14.26 24.8 5.6 19.37 28.3 5.4 23.08 30.9 5.2 25.69 31.7 5.1 26.6

10-30 31.8 5.1 26.7IRR = 19.6 %NPV = MAD88 million (Opportunity Cost of Capital estimated at 10%)

The project will have significant direct and indirect benefits. A comprehensive economic analysis is presented inAnnex 7 of the Project Implementation Plan and summarized below.

Summary of Benefits and Costs

In economic terms, benefits will result mainly from improved quality management at each critical step of theproduction/marketing chain (fiWzere). Hence, the project activities aim at improving the quality of fish products on theboats, at the landing points, in the fish auction halls and during processing and marketing stages, allowing fisherrnen toget a premium price. More specifically, pilot fish auction halls will improve marketing of landed fish, absorb the peaksduring the high season and attract informal sector merchants. Moreover, small-scale fishermen will have an opportunityto access official markets in the improved landing points and increase market integration of high value products. It isalso expected that the project will contribute to improve quality and reliability in cannery raw material supply, while theimplementation of auto-control procedures in the processing industry will enhance value added and substantially reducethe costs of laboratory analysis requested by the Veterinary Services. However, no estimate has been made of the long-term, nationwide benefits to overall fisheries sector management, that would accrue from investments under the projectfor institutional strengthening and enhanced quality management.

In the economic analysis, all investment, recurrent and production costs are computed on the basis of incrementalexpenditures. More specifically, investment and operating costs include activities financed under the itstitutionaldevelopment and pilot marketing chain development components. Recurrent costs linked to sectoral planning activitiesfor the whole project life have been included because of their long-term outreach. Production costs relate to pilot fishauction hall incremental operating costs compared to existing ones, operating costs of new landing points andincremental costs for auto-control inside the canneries.

Main AssumDtions

* Exchange rate: US$1.0=MAD9.23;* Present exchange rate is equivalent to economic cost of foreign exchange;* Project life: 30 years;* Investment period: 3 years;* Fish prices at auction halls, excluding marketing costs, are equivalent to economic prices; and* Taxes and price contingencies have been deducted from the financial costs presented in the COSTAB.


Sensitivity analysis I Switchine values of critical items:

Economic analysis indicates a 19.6 % Economic Rate of Return (ERR). The project Net Present Value, at10 percent Opportunity Cost of Capital (OCC), is MAD 88 million (about US$9.5 million equivalent), which iseconomically acceptable since all investments and recurrent costs have been included in the analysis, while somebenefits, such as those derived from overall improvement in the fisheries sector management, have not been includedbecause they are not easily quantifiable.

Switching values (at 10% OCC) indicate that the project could withstand a 77 % increase in costs or a 43 %reduction in benefits. These tests indicate that overall project viability is fairly robust and not very sensitive to declinesin performance. Detailed analysis indicates that to maintain a minimum 10% ERR, investment, recurrent andproductions costs would need to increase by 120 %/o, 3,756 % and 226 % respectively, or benefits to decline by 115 % inpilot auction halls or 100 % in improved landing points for small-scale fishermen. Sensitivity tests based on 20%increase in investment and production costs indicate that the ERR would decline to 17.1 % and 18.8 %, respectively,while a 10% decrease in recurrent costs would not affect the ERR. Similarly, a 20% decline in benefits would result ina decline of the ERR to 15.6 %. Finally, the ERR would still amount to 12.5 % with a simultaneous 20% cost increaseand 20% benefits decline.

Some pilot activities might be delayed or partially meet their objectives. These include the activities which air s1the reduction in informal marketing of fish products in auction halls and the increase in quantities of fish trad d.Ii

improved landing points. Sensitivity tests show that lower objectives would not affect substantially project ec.tor -):profitability. Thus, the ERR would be 19.3 % and 18.2 %, respectively, if the quantity of informal fish r6'decreased by 25% and if only 500 tones instead of 600 are traded in improved landing points.

Financial Analysis

Detailed financial analyses have been undertaken for two of the project's pilot activities: improvemeint ofmarketing facilities for Fish Auction Halls and Landing Facilities. These preliminary analysis show that the fozoncial.viability of these two activities is satisfactory. However, given the pilot nature of these activities, a monitoring systemwould be established during project implementation to assess financial costs and benefits and to verify the prfitailbtyof the proposed activities.

Improved Landing Facilities (PDA). Each improved landing facility is expected to be used by abow- 1,5Cfishermen. Based on annual catch estimates of 4-10 tons of demersal fish per boat, the total quantity of fish laud'-`.'each PDA is conservatively estimated at 600 tons a year. The situation of fishermen, who currently have diffivuw- -

selling their fish due to lack of reliable intermediaries and low prices, should substantially improve, and there shouldstrong incentives for them to use the PDAs since ex-vessel prices are expected to increase as a result of greatercompetition among fish buyers and improved quality of the products. The price premnium should allow the fishermen torecover their additional marketing costs, currently estimated at MADl .5 per kg. The rate of return would be 11 %, andthe net present value (NPV), MAD425,000, at a 10% opportunity cost of capital. Given the positive social effects ofthe improved landing facilities, this somewhat marginal rate of return is considered satisfactory. The modest investmentin PDAs under the project will thus benefit small-scale fishermen who do not have access to fish auction halls and whoare considered among the poorest in the country.

Pilot Fish Auction Halls. The financial profitability of constructing the pilot fish auction halls will be acceptable,since preliminary analysis shows this activity to have a 13.1% FRR and a NPV of MAD 5.2 million. These results arebased on a conservative 15% increase in throughput, even though it is expected that the better marketing facilities willattract more buyers and thus raise prices, leading in turn to higher volumes of fish transiting through the auction halls.The FRR and NPV would be even higher if the auction halls were not air conditioned, assurming ONP's chargesremained the same as for the air conditioned facility. Further details of the expected costs and benefits of the pilot fishauction halls facilities are given in the Project Implementation Plan.


Annex 5

Financial Summary

(Years Ending June 30, 1999 through 2030)

Implementation Period Operational Period

99/00 00/01 01/02 Total 2003 2030

.1roiect Costs (MAD '000)Investment Costs 35.8 57.1 24.5 117.4 -

Recurrent Costs 0.1 0.3 0.6 1.0 0.3 0.3Total 35.9 57.4 25.1 118.4 0.3 0.3

Financing Sources (% oftotal project costs)

IBRD/IDA 41 46 17 39 -

Government 8 7 6 7 100 100ONP 51 47 77 54

Total 100 100 100 100 100 100

Because of the pilot nature of the project, a detailed financial summary is difficult to establish. Nevertheless thefollowing points can be made:

* Incremental recurrent expenditures resulting from the project activities after completion of implementationwould average MAD 30,000 per annum. This includes sectoral planning and information system activities.

* The pilot fish auction halls are expected to collect 5% of the value of the fish passing through them to covertheir costs. Improved Landing Facilities (PDA) should also become financially viable after a start-upperiod.

Project Appraisal Document Annex 6MOROCCO: Pilot Fisheries Development Project Page I of 4

Annex 6

Procurement and Disbursement Arrangements

Procurement

Procurement methods (Table A)

Procurement under the project will be in accordance with the Guidelines for Procurement under IBRD Loansand IDA Credits, January 1995, using standard bidding documents and contract forms agreed with the Bank. Contractthresholds, modalities, and Bank financing ratios are indicated in Tables A, B, and C of this Annex. Consultants willbe selected in accordance with Bank's Guidelines on the Selection of Consultants, January 1997, using standardcontract forms agreed by the Bank.

Prior review thresholds (Table B)

Procurement Plan

A Procurement Plan is included in the Project Implementation Plan.

Disbursement

Allocation of loan proceeds (Table C)

Allocation of the proceeds by disbursement categories and percentage financed by the loan are presented inTable C

Use of statements of expenses (SOEs):

* All works and goods contracts exceeding US$300,000 equivalent, and Consultants contracts exceedingUS$ 100,000 for firms and US$50,000 for individuals will be fully documented.

* All other expenditures will be made against statements of expenditures (SOEs).

Special account (SA):

The initial authorized allocation would be limited to US$400,000. The maximnum authorized allocationwould reach US$600,000 when disbursements reach US$2 million.

Retroactive Financing:

Retroactive financing in the amount of US$500,000 would be provided to help cover project expendituresbetween July 1, 1998 and the anticipated date of loan signing.


Table A: Project Costs by Procurement Arrangements

(in US$ million equivalent)

Expenditure Category Procurement Method Total Cost(including

contingencies)ICB NCB Other N.B.F

1. Works1.5 5.6 7.1

(1.2) (1.2)

2. Goods1.2 1.2"' 1.4 2.8

(1.0) (1.0) (2.0)

3. Services1.8(2) 1.8

(1.8) (1.8)

4. Recurrent Costs0.2 (3) 0.2

Total2.7 3.0 7.2 12.9

(2.2) (2.8) (5.0)

Note: N.B.F. = Not Bank-financed (includes elements procured under ONP budget)

Figures in parenthesis are the amounts to be financed by the Bank Loan.

(1) Goods procured under local or international shopping procedures(2) Consultant services financed under Bank's Guidelines for Consultants(3) Recurrent costs financed by Government.


Table B: Thresholds for Procurement Methods and Prior Review

Expenditure Contract Value Procurement Contracts Subject toCategory (Threshold) Method Prior Review / Estimated Total

Value Subject to Prior Review

1. WorksAll contracts NCB All contracts equal to or above

US$300,000

2. GoodsUp to 100,000 IS No prior review100,000 to 300,000 NCB No prior reviewabove 300,000 ICB All

3. ServicesFirms > US$100,000 Consultants guidelines TORs, Short list, LOI and

contracts< US$100,000 Consultants guidelines TORs only

Individuals > US$50,000 Consultants guidelines TORs, Short list, LOI andcontracts

<U S$50,000 Consultants guidelines TORs only


Table C: Allocation of Loan Proceeds

Expenditure Category Amount in US$ million Financing Percentage

Works 1.10 80%

Goods 1.80 100% of foreignexpenditures, 100%local expenditures(ex-factory costs),and 80% of localexpendituresfor other itemsprocured locally

Consultant Services and Training 1.60 100%

Front-end Fee 0.05

Unallocated 0.45

Total 5.00


Annex 7Project Processing Budget and Schedule

A. Project Budget (US$000) Planned Actual(At PCD stage) (As of 03/29/99)

302.7 305.9

B. Project Schedule Planned Actual(At PCD stage)

Time taken to prepare the project (months) 4 9First Bank mission (identification) 06/23/97 06/23/97Appraisal mission departure 02/09/98 07/13/98Negotiations 04/06/98 03/01/99Planned Date of Effectiveness 07/01/1998 07/01/99

Prepared by: MOMF, ONP

Preparation assistance: World Bank - FAO/CP, French Trust Funds

Bank staff and consultants who worked on the project included:

Mimes/Messrs. L. Msellati (Sr. Operations Officer/Task Team Leader, MNSRE), G. Van Santen (Sr. FisheriesSpecialist, MNSRE), I. Pswarayi-Riddihough (Natural Resources Management Specialist, MNSRE),M. Bromhead (Prin. Natural Resources Management Economist, MNSRE), N. Glineur (Sr. EnvironmentalSpecialist, MNSRE), D. Lister (Sr. Agricultural Economist, MNSRE), M. Nightingale (Sr. AgriculturalSpecialist, ECSRE), C. Curr (Fisheries Specialist, Consultant), F. Henry (Fisheries Specialist, Consultant),C. Lauwers (Agro-economist, FAO-CP), A.Waddell (Financial Analyst, Consultant), H. van Ruymbeke (QualityManagement Specialist, Consultant), M. Gress (Sr. Procurement Specialist, MNAVP), F. Belhaj (LegalSpecialist, LEGMN), T. Nguyen (Disbursement Officer, LOAEL), S. Creger (Sr. Team Assistant, MNSRE).Peer reviewers are Messrs. B. Berman (Sr. Agribusiness Specialist, ECSRE); L. Brefort (Prin. PublicEnterprises Specialist, PSDEN). At the time of appraisal, the Sector Leader was M. Mark Wilson and theActing Sector Director was Salah Darghouth (MNSRE).

Project Appraisal Document Annex 8MOROCCO: Pilot Fisheries Development Project Page I of I

Annex 8Documents in the Project File*

A. Proiect lmplementation Plan

A Project Implementation Report has been prepared

B. Bank Staff Assessments

Pre-appraisal BTO Report and Aide Memoire

World Bank, March 1997. "The Kingdom of Morocco - Rural Development Strategy - Integrating the TwoMoroccos (1997 -2010)". Report No. 16303-MOR (3 Volumes), March 28, 1997 (Green Cover).

World Bank, February 1996. "Morocco: Vision for the year 2010"

Banque mondiale, Decembre 1996. "Le secteur de la pgche aux petits pelagiques, Note d'orientationstrategique ". Division des ressources naturelles et de l'environnement, 26 decembre 1996.

C. Other

FAO-CP, January 1998. "Programme d'appui 6 la valorisation des produits de la peche". Rapport depreparation, Draft.

FAO-CP, August 1997. "Programme d'appui a la valorisation des produits de la peche". Rapportd'identification, No. 97/069 CP-MOR, 8 aot2t 1997.

MPMMM, 1996. "Strategie de developpement du secteur des peches maritimes - Horizon 2000".

Pousse, E., Septembre 1997. "Organisations professionnelles du secteur des peches au Maroc". Document detravail, Rapport d'etape. ONP/FAO.

Ramboll - Promoconsult, Avril 1997. "Etude de faisabilite concernant 1'exploitation des ressources pelagiquesdans la zone maritime sud du Maroc ". Rapport final. Ministere des peches maritimes et de la marine marchande.

*Including electronic files.


Annex 9

Environmental Impacts and Mitigation measures

Environmental legislation and regulatory framework

I. The project complies with Morocco's and the Bank's legal environmental requirements. Pertinent to the projectare the wastewater and solid waste management regulations. Within the existing legislation for marine fisheries, Article19 outlaws the "intentional destruction" of marine waters by releasing wastewater into the sea, and demandsauthorization of the Minister of Fisheries for approval for any installation on the shore that would emit waste water intothe coastal waters. In practice, this law is difficult to enforce.

International conventions and adoption of environmental quality standards

2. MoTocco has ratified the following relevant Conventions, 1976 Barcelona Convention on the Protection of theMediterranean Sea against Pollution and its related protocols (MALPOL), the 1972 London Dumping Convention andBasel Convention. Despite discussions on the possible role that environmental management systems, such as ISO 14000could play in improving both industrial competitiveness and environmental performance, Morocco has not taken stepstowards ISO 14000 certification, or any other management system standards such as the British BS7750 or EMAS, theEuropean Eco-Management and Audit Scheme.

Project Impacts

3. No major environmental issues are foreseen, instead, the environmental impact of the project is expected to bestrongly positive. The anticipated impacts under the project are summarized in the attached Table.

4. An analysis of the situation, regarding water availability and wastewater treatment at the three sites is brieflypresented below, together with mitigating measures to possible impacts from increased water use and the resultingwastewater discharge.

(a) In Nador there is no wastewater treatment infrastructure serving the port. However, the system servicing Nadortown is reasonably close as to be linked to a future port/fish auction hall system. Wastewater networks in theport are the responsibility of the Port Management Authority (ODEP), and the National Fisheries Authority(ONP) will ensure that there is integration of water discharges from the fish auction hall/PDAs to the existingwastewater treatment networks. The possibility of pre-treating and disinfecting wastewater before it enters thecentral system will also be considered. Coordination with ODEP/local authorities/Ministry of Environrment willbe essential to ensure this.

(b) In Tangier, there is no wastewater treatment infrastructure. However, a study, to plan for water managementresources both in the local municipality and the port is currently under way. The study is being carried out withthe participation of the municipality, ODEP and the water company. The study is also designed to assessadditional demands (quantitatively and qualitatively) by the fish auction hall and PDA in terms of water supplyand wastewater treatment which will be integrated where possible.

(c) In Tan Tan, there is no wastewater treatment infrastructure and the process of a water strategy formulation,which will include availability and waste management, will have to be initiated by ODEP and ONP togetherwith the local authorities and the Ministry of Environment. The result should be the preparation andimplementation of an Integrated Water Management plan, in cooperation with the municipality. If this shouldnot be feasible, a decentralized water management approach should be followed by ODEP in collaboration withONEP, on maximum pollution/emission levels developed in consultation with the Ministry of Environment


taking into account potential beneficial uses of the coastal waters. Adequate treatment levels and technologywould be identified and detailed costs calculated together with the implementation plan (discharge limits for thefishery industry are proposed in the World Bank environmental guidelines of 1988. A new section on the Fishand Shellfish Processing Industry, regarding the amount of water used at various stages of the processing cycle,BOD, Total Nitrogen, total phosphorous and suspended solids, is currently under preparation for the WorldBank Pollution Prevention Abatement Handbook (Part III) and will be used.

5. If new refrigeration equipment is purchased, as may be the case under the construction of landing points (PDAs)for small-scale fisheries, it will be ODS free and will be required to comply with the Montreal Protocol, and/or usealternative technology following publication of the World Bank's Pollution and Prevention and Abatement Handbook,Part III, "Ozone Depleting Chemicals, presently under preparation.

6. The degree of contamination from fish washing and cleaning, the main use of water in fish auction halls, as wellas from filleting (which only involves limited amounts of fish) is generally considered small2. Nevertheless, in order toproperly address any presence of solid waste at the pilot fish auction halls and the PDAs, a waste management plan willhave to be prepared making use of, to the extent possible, viable solutions to further process the fish waste. Wherefishmeal plants are present near the fish auction halls it should be possible to make this an economically viableoperation.

7. To enhance the positive environmental impacts of the project, the minimum waste management principles thatwill be included as part of the planning for the upgraded/new fish auction halls are presented below. Where possible,notes indicating the status of the design for these principles in the proposed fish auction halls, have also been included.

(a) Minimization of water consumption through elimination of all solid waste and concentrated liquids from enteringthe wastewater stream. For Tan Tan a semi-automated grid system to collect solid waste is planned, while forthe other fish auction hall the system may remain manual.

(b) Maximum dry pre-cleaning of equipment such as conveyor belts and containers, where possible, prior tocarefully programmed and controlled wet cleaning of production areas equipment and containers. In all threefish auction halls, wood boxes which are more difficult to clean, are programmed for replacement with plasticones, which will be easier to clean.

(c) Equipment for outlets of wastewater channels should have screens and fat traps, to recover and reduce theconcentration of fats, suspended and settled solids and any other coarse material in the combined wastewaterstream.

(d) Provision of adequately cold, closed, and well-ventilated storage facilities for fish waste and daily transportationto processing facilities. Refrigeration equipment for preserving fish quality is proposed for the fish auction halland some space could be dedicated to the storage of solid waste before transportation to processing facilities.

(e) Absolute cleanliness to minimize odor generation.

8. Positive impacts on the environment and the management of the Moroccan fish resources are to be expectedfrom strengthening in sector planning, which will provide important inputs for the work being undertaken by the INRHand the UTF project in fish stock evaluation and formulation of resource management policies and regulations.

9. Although not directly linked to the environment, the project is expected to have a strong positive impact in thearea of food safety and quality management since a quality assurance management component that meets EU standardsfor sea exports will be supported by the project. The compliance with EU standards will increase the threshold of foodsafety and quality management in general. However, these standards do not mention environmental issues, such as wastewater and solid waste treatment.

" 'Wastewater treatment in the fishery industyx' - FAO Fisheries Technical Paper - Rome 1996.


Water Quality and Solid Waste Monitoring

10. There are several studies in Morocco dealing with water quality issues, including the Second EnvironmentalProtection Project, specifically looking at the Sebou River basin, Sewage and Water Reuse II Project, Water Suprly VProject and the Oil Pollution Management Project for the South-west Mediterranean Sea. Water quality is influence notonly by the discharge from the fishing halls, but also by the discharge from all the other port users, however the pi ectwill limit its monitoring only to the direct discharges from the fish auction halls. For each of the pilot fish auction 11,MOMF will monitor the amount of the solid matter entering the sea. Filters will be purchased which, together with ..tegrill systems that will be installed in the auction halls, will largely reduced the solid waste entering the bay.

11 To ensure that the quality of water entering the system is of an acceptable standard, the amount of dissolved ionsentering the bay will be sampled, at the beginning of the project and thereafter twice or three times a year. INRH, will beresponsible for carrying out the measurements and sharing the results with the Bank. It will also be the responsibility ofINRH to ensure that the results are of the standards recommended in the draft Chapter of the Pollution Prevention andAbatement Handbook prepared by the Bank. MOMF will also ensure that solid waste collected by both the grill and thefilter systems will be disposed of in such a way that it will not pollute the bay. Options for disposal will de discussedwith ONP to ensure that they meet the guidelines for pollution prevention as recommended by the Bank.

Fish Resources Monitoring and Evaluation

12. The National Research Institute for Fisheries (Institut National de Recherche Halieutique INRH). Monitoringand evaluation of fish stocks is carried out by INRH, which plays a key role in the efforts of the Government ofMorocco to assess and manage its fisheries resources. The Institute is responsible for the biological, oceanographic andeconomic research underlying regular stock assessment and management recommendations to the MOMF. The Institutehas five regional centers and is currently expanding its operations with the assistance of the European Union.Historically, the priority on data collection was targeted mainly at those resources exploited by the Moroccan fleet, andthose resources exploited by foreign boats were poorly monitored. There is more emphasis now on data collectioncovering, equitably, all regions and boats. The Institute has recently become independent, and although public fundingwill continue, levels may decline in the future. The Policy Note, discussed with the government stresses the importanceof resource monitoring and evaluation. Consequently, the government has assured supplemental resources for theInstitute to ensure adequate capacity to carry out its activities.

13. International Cooperation. To date, the research programs of the Institute have benefited and continue to benefitfrom the UNDP/FAO program and the regional FAO projects, mainly in the evaluation of stocks and the study of small-scale fishing. The research has also benefited from bilateral cooperation with Russia and others, and through projects incooperation with Universities and other Moroccan research centers.

14. Data Collection. Three main elements support the collection of data on fisheries in Morocco.

(a) Reporting System. Data conceming the level at which fish resources have been exploited has generally beenobtained through a reporting system, by Moroccan boats and certain foreign ones operating under the fishingaccord. Unfortunately, this system is problematic in that: (i) reporting of fish catches is weak and the poor portcontrol cannot address it; (ii) the system does not take into account fish catches off-loaded by small-scalefishermen, who are often questioned through inquiries done on land; and (iii) the data is generally too aggregatedto permit in-depth studies which require a better separation by species, zones, and the time of capture.Furthermore, data collection is not equitably distributed between zones and boats.

(b) Research Vessel. A research vessel dispatched annually by INRH assesses, directly, the cephalopods, coastalshrimp, and dermesal stocks. The data, when analyzed, yields an annual index of abundance. Direct estimates


of abundance (and biomass) and pelagic stocks of the central and the southern zones are also estimated by aregional FAO program with N/O Fritjof Nansen and a bilateral program of cooperation with N/O AtlantNIRO.

(c) GIS System. A GIS system, funded through the FAO project, has been installed, and a significant quantity ofhistorical data concerning cephalopods is being captured. It is expected that, in the near future, annualevaluations of the state of stocks and preparation of an annual management plan of the stocks will take place -before the fishing season, and eventually with the possibility of defining and developing methods which permitthe prediction of biomass in place and that which can be exploited each year.

15. Although the project will not itself be undertaking any resource assessment and management, it will ensure thatthe World Bank is kept informed on the status of resources and their management efforts by concerned parties. Theproject progress reports to be prepared twice a year by the PPU will include a section on resource management andmonitoring and specific indicators for target species will be established.

16. Institutional Strengthening. The project will support INRH restructuring effort by financing a study tostrengthen financial management and reasearch programming capacities. Uncertainty surrounding the future funding forINRH has become critical and its research program strategy, management of operations, funding strategy andinstitutional structure require adjustment to face the new funding environment. Specific TORs were prepared during pre-appraisal.


Table: Environmental Impacts and Mitigation Measures

Pt t tlPotentE iromentot Ipacts . tigttlgon Mea-s-s.,

1. Marketing Chain Development

Support to the fleet modernization program and Increased water use and wastewater discharge * Integration into existing wastcwater treatment networks where possible; plan forimproved landing and marketing facilities waste handling and treatment; wastewater treatment; and enhancement of

coordination of ODEP/local authorities/Ministry of Environment where neitherexists

* Monitor the amount of dissolved organic material entering the bay

Increased solid waste * Plan for waste handling and treatment, development of viable solutions for furtherprocessing of fish waste (e.g., through fishmeal factories),

* Monitor the amount of dissolved organic material entering the bay* Ensure proper disposal of solid waste material from the halles

New refrigeration technology * Introduction of altemative technology (use of ODS in refrigeration)

Odor generation * Plan for waste handling and treatment, development of viable solutions for furtherprocessing of fish waste (e.g., through fishmeal factories);

2. Institutional Support

Support for institutional reforms * No notable environmental impacts anticipated

Information systems * No notable environmental impacts anticipated

Strengthening of sector planning * Positive environmental impact: thoughresearch on fishery resources basis forimplementation of sustainable managementof fish stocks.

Project Appraisal Document Annex 10MOROCCO: Pilot Fisheries Development Project Page I of 8

Annex 10Sectoral Policy Note

PROJET D'APPUI A LA VALORISATIONDES PRODUITS DE LA PECHE

NOTE DE POLMQUE SECTORIELLE

LES PECHES MARITIMES

Conscient des defis imposes par le nouveau type de societe, fond6 sur des realitessociales, politiques, &conomiques et culturelles en perpetuelle mutation, le Royaumedu Maroc s'engage dans une dynamique de changement et de progres.

Le Gouvernement de SA MAJESTE LE ROI, considerant les efforts consentis etl'ampleur de la tache qui reste a accomplir, a opte pour une strategie de croissanceeconomique forte, durable et generatrice d'emplois.

La politique des peches maritimes prend ses fondements dans ce nouveaucontexte national qui plaide pour la sauvegarde des ressources halieutiques,l'exploitation durable et la valorisation des potentiels generes par le patrimoinebiologique marin national. Cette meme politique prendra en charge la mise a niveausociale des gens de mer.

Elle se place egalement dans un contexte international qui devient de plus enplus sensible aux problemes d'amenagement des pecheries, et dans un marchemondial liberalise, mais exigeant au niveau de la qualite.

Le Gouvernement, a la lurinre de ces realites, est en train de mettre en ceuvreune strategie de developpement a moyen et a long terme qui privilegie lapreservation des ressources et entreprend la mise a. niveau globale du secteur.


I - LES CONTRAITES UT LES FADBLzsEse

Malgre ses atouts, le secteur des peches maritimes affronte un certain nombre decontraintes et faiblesses, dont les principaux sont:

Au niveau de 1'6tat de la resource:

* La faiblesse des moyens accordes a la recherche et les lacunes dans le dispositif de suivi,d'evaluation et de gestion des ressources halieutiques;

* La surexploitation des stocks halieutiques, tels ceux des cephalopodiers qui connaissentun essoufflement certain dui a l'effort de peche excessif amplifie par la presence desflottilles etrangeres ; et

* La diminution de la biomasse des ressources pelagiques en raison particulierement desfacteurs hydroclimatiques.

Au niveau de la composante sociale:

! Le faible niveau de qualification et d'encadrement des gens de mer et de la main d'oeuvreemployee dans les usines de transformation, qui se traduit par une perte sensible auniveau de la productivite du travail et de la qualite du produit;

- Les conditions de travail difficiles et le manque de mesures de s6curit6 et dhygi6ne a borddes bateaux et a terre, en raison notamment du deficit en infrastructure de base dans lescentres de peche ; et

- La faible couverture par des systemes d'assurance et de prevoyance sociale adaptes A laspecificite de l'emploi dans ce secteur.

Au niveau des filieres:

* La vetuste des outils de production notamment de la flotte c6tiere et artisanale;

- Le peu d'actions concernant la prospection et le developpement de filieres nouvelles;

- La faiblesse de coordination inter-professionnelle ; et

* L'opacite des marches de poisson, des systemes d'information commerciaux et deformation des prix en raison de la multiplicite des intermediaires.

Au niveau du cadre incitatif et de la politique sectorieli.:

* Le manque d'incitation destinee a promouvoir les flottiUes c6tieres et artisanales et lesinnovations techniques qui privilegient a la fois l'emploi, la valeur ajoutee et la protectionde l'environnement marin ; et

* Le manque de moyens destines a ameliorer la petite et moyenne infrastructure au niveaulittoral pour securiser et accroltre les revenus de la peche artisanale.

Au niveau institutionnel et r6glementaire:

* Des carences du systeme actuel de planification et de progranmmation des investissementsqui ne refl6tent que partiellement les objectifs prioritaires de la politique sectorielle;

* Du manque d'instrument performant pour analyser l'impact financier, dconomique socialet environnemental des differentes strategies envisag6es et des investissements ou projetsrealises;


* Des insuffisances dans les systemes de planification et de financement de la recherche ;et

* L'eclatement du systeme de concertation au niveau local, d'ou l'affaiblissement du r6leinitial du Comite local de peche.

Au niveau du systeme d'information:

* La defaillance au niveau du systeme de collecte des statistique en raison de l'importancede l'informel et de l'eloignement de certains points d'activites de peche artisanale;

* Le manque de moyens humains et materiels au niveau des Delegations des PechesMaritimes; et

* Le manque de complementarite et dharmonisation entre les composantes du systeme auniveau du Ministere, de l'ONP et de lINRH.

II - LES OBJECTIFS STRATEGIQUES

Le plan de developpement du secteur des peches maritimes s'integre dans les nouvellesorientations gouvemementales en matiere de developpement economique et social du Royaume.

La contribution du secteur a la realisation de ces objectifs se fera dans le cadre d'unepolitique de preservation des ressources qui tient compte, de l'arrivee a echeance des accords depeche, notamment celui avec l'Union Europeenne, et des opportunites qu'offre un marchemondial des produits de la mer structurellement demandeur. Cette contribution passe par:

, Le developpement de la valorisation industrielle des produits de la mer a traversF'amelioration des taux d'utilisation des unites industrielles existantes et la creation denouvelles unites de traitement des produits de la mer;

* L'augmentation de la consommation locale par diverses mesures qui ameliorent la qualite,la disponibilite du poisson ainsi que l'efficacite des circuits de distribution sur l'ensembledu territoire ; et

* La diversification des march6 a l'exportation par une politique dynamique de promotion duLabel Maroc, le developpement de nouveaux produits et le niveau de qualite.

III - LES PRIORITIES DE LA STRATEGIE DU MINISTERE DES PECHES MARITIMES

La vision strategique du secteur des peches maritimes repose sur la necessite de mettre enavant la souverainete nationale sur les ressources marines disponibles dans la Zone EconomiqueExclusive ainsi que sur la maximisation des retombees de l'exploitation du patrimoinehalieutique sur les conditions socio-economiques du citoyen marocain.

Dans le cadre de la preparation du plan quinquennal 1999-2003, la Ministere a elabore unprogramme d'investissement global pour la promotion economique et sociale de l1ensemble de lafiliere peche.


Ce programme retient les axes de developpement suivants:

1. La preservation des ressources halieutiques;

2. La promotion sociale;

3. La mise a niveau des filieres ; et

4. Le developpement du cadre incitatif et institutionnel.

1. Pr6servation des ressources halieutigues

La nouvelle politique du Ministere des Peches Maritimes s'articule autour:

* D'une legislation actualisee des peches privilegiant la preservation des ressources etrenforcant les instruments juridiques et de contr6le de l'exploitation des stocks, y comprisla mise en place d'un systeme du contr6le des peches centres sur la surveillance parsatellite;

* De l'laboration de plans d'amenagement des pecheries sur la base d'une meilleureconnaissance de l'etat des ressources halieutiques par pecherie et ou par espece ; et

* Du renforcement des moyens dintervention de llnstitut National de RechercheHalieutique (INRH), notamment au niveau regional.

2. La promotion sociale

Le point d'ancrage retenu pour la promotion sociale des gens de mer s'appuie sur laconstruction de villages de pecheurs et de points de debarquement amenages le long de littoral.Ces micro-p6les de developpement seront dotes d'infrastructures technique, conmmerciale,administrative et sociale aL meme de stabiliser les communautes des pecheurs locaux.

Par ailleurs, le programme d'action du Ministere des Peches Maritimes en matiere socialerepose sur le renforcement des activites d'alphabetisation, de vulgarisation et de formationmaritime, et une politique active de promotion sociale des gens de mer.

L'infrastructure de formation maritime sera renforcee par la construction d'6tablissementsde formation a Safi, a Laayoune, a Larache, a Dakhla, et la construction d'un bassin desauvetage a lISTPM d'Agadir et lITPM d'Al Hoceima et d'un centre de securite a Tan-Tan.

Le programme de couverture sociale ic Addamane El Bahri * sera renforce et adapte auxexigences et conditions de l'emploi dans le secteur des peches maritimes, en se basant enpriorite sur l'assurance maladie.

3. DWvelovRement des filieres

Le developpement des filieres peches passe par la modernisation de la flotte c6tiere etartisanale, l'extension des equipements portuaires, la construction et l'am6nagement de villagesde pecheurs et de points de debarquement, la promotion des industries de valorisation,l'extension de l'infrastructure et des circuits de commercialisation, la promotion de nouveaumetiers et des services annexes a la peche.


* Le programme de mise a niveau de la flotte de peche c6tiere, a pour objet de faire beneficierle secteur, des progres techniques les plus adaptes au contexte national, en matiere demanutention et de manipulation des captures dans une premiere etape et de la technologienavale dans une seconde etape.

Ce programme sinteressera en outre a la generalisation de lutilisation de caissesnormalisees et a l'installations de cales isolees ou refrigerees a bord des navires c6tiers.

* L'effort public devra etre maintenue pour le fmancement des infrastructures etequipements portuaires en vue d'achever les grands chantiers en cours comme le port deDakhla et de lancer de nouveaux projets notamment le port Boujdour. Des extensionsseront utiles dans d'autres ports comme a Essaouira, a Tarfaya et a Mehdia.

La construction de 5 villages de pecheurs et de 60 points de debarquement amenages estprevue sur la periode 1999-2003.

* La mise a niveau des unites industrielles de valorisation des produits de la mer s'articuleraautour de:- L'amelioration de la competitivite des entreprises;- La promotion des investissements;- La promotion des exportations ; et- La promotion du marche local.

- L'amelioration de l'infrastructure et des circuits de commercialisation beneficiera de:- La mise a niveau des halles en vue de leur certification;- La construction de nouvelles halles normalisees a Nador, Tanger, Tan Tan, La&youne et

Dakhla;- La construction de marche de gros et de d6tail, conformes aux normes de la qualite et de

la salubrite des produits de la peche.

* Le Ministere visera la promotion de nouveaux metiers et l'encouragement desinvestissements createurs d'emploi. Ces investissements concemeront particulierement, leschantiers navals, les activites d'avitaillement des navires ainsi que l'industrie de materiel depeche et les activites liees aux structures d'accueil destinees a la flottille de peche (calesseches, systeme de halage, ateiers d'entretien specialises etc. ).

* L'aquaculture et les autres activites littorales representent des opportunites importantes decreation d'emplois dans le secteur. Le Ministere procedera a l'assainissement del'environnement institutionnel et reglementaire en vue d'encourager les investissementsdans ces activites.

4. D6velopvement du cadre incitatif et institutionnel

Cadre incitatif

L'investissement public sera maintenu en fonction des besoins exprimes par le secteur. LeMinistere poursuivra ses efforts de rationalisation des depenses en analysant les possibilites desous traiter certains services et en etablissant des contrats programmes avec les organismessous-tutelle.


Le Ministere des Peches Maritimes s'active pour creer un environnement favorable al'investissement dans la filiere des peches maritimes, plus particulierement dans le secteur detransformation et de valorisation des produits de la mer.

Au niveau du mode de formation des prix, le Ministere entreprendra la reforme du systemeen vue d'une meilleure repartition des captures vers des utilisations valorisantes, rendre plusliberal le systeme de fixation du prix du poisson industriel a l'instar des prix des autres produitsfrais. Dans ce cadre, le r6le du CAPI sera redefini vers un plus grand respect des forces dumarche et de 1'encouragement des professionnels a reguler leurs relations dans un cadrecontractuel concerte et un systeme d'information commercial plus transparent qui sera mis enplace au cours de trois prochaines annees.

Au niveau de la liberalisation du commerce exterieur, I'accord conclu avec l'UE, de libreacces des conserves de sardine au marche europeen est en vigueur depuis le 01-01-1999.Toutefois, les produits d'origine marocaine doivent etre en conformite avec les normes etstandards de qualite requis par l'UE. En outre, les autorites marocaines ont admis undemantelement progressif de 9 taux de droit de douane, y compris ceux relatifs a la farine et1huile de poisson, a raison de 2,5% par an.

Cadre institutionnel

En application des directives gouvernementales visant la deconcentration del'Administration Publique, le Ministere se dotera d'une nouvelle organisation, tant au niveaucentral que regional.

Le Conseil Superieur pour la sauvegarde et l'exploitation du patrimoine halieutique seramis en place dans ses structures reglementaire et operationnelle.

Les Chambres des peches maritimes et de leur Federation b6neficieront du renforcement deleur structure et de leurs moyens afin qu'elles puissent jouer pleinement leur r6le.

Les delegations de credits budgetaires seront ameliores pour atteindre un minimum de 20% du budget de fonctionnement a partir de l'an 2000. Le taux d'encadrement des servicesexterieurs sera porte a 45% en I'an 2000 contre 29% actuellement.

Les relations du Ministere des Peches Maritimes avec les etablissements publics sous satutelle, notamment l'ONP et 1INRH, seront regies dans le cadre de contrat-programmes.

Le Ministere des Peches Maritimes renforcera egalement ses capacites de planificationsectorielle et de programmation des investissements. A cet effet, une cellule de planification seraerigee au sein du Ministere.

* *


2 Composautts - > .. rr '::- * ;Actions ProposEe . Indictun 'Obser,--tlos-.'

I Gestion des ressources * Renforcement des capacites d'evaluation des stocks * Augmentation du budget d'equipement et de * Extension du reseau regioal de recherche et dehalicutiques fonctionnement de l'INRH. surveillance des salubrite (en cours)

* rationalisation de 1'effort de pche * Elaboration des plans d'amenagement des p2cheries. * Pecheries prioritaires: pdlagiques, cephalopodes et* Mise A jour du registre d'immatriculation des cervettes.

navires. * Y compris l'inventaire des embarcationsartisanales.

* mise en place du nouveau cadre legislatif .La loi peche. * Projet en discussion.

1. Actions sociales en * Promotion de la peche artisanale par l'amenagement des centres * Construction de 5 villages de pecheurs et de 60 PDAfaveur des gens de mer de peche sur les 5 prochaines anndes

* Construction d'antennes medicales dans les ports de peche. * 2 antennes par an

* Formation et alphabetisation * 300 A 400 laureats de formation initiale par an * Actuellement 7.000 marins couverts sur 50.000* 500 certificats par an pour l'alphabetisation * Actuellement 5% des marins formrs

fonctionnelle.

* Reforme et adaptation du systeme de couverture sociale"Addamane El Bahri"

3. Developpement des * Poursuite du programme de mise A niveau de la flotte * 150 millions MAD sur la periode 1999-2003 * Programme en cours de revisionfilieres

* Construction de villages de pecheurs et de points de * 5 villages de pecheurs et 60 PDA pour les 5debarquement amenages prochaines annees

* Mise A niveau de l'industrie de valorisation

* Programme de mise A niveau des circuits de commercialisation * unification des halles * Projet de texte en cours* certification des halles aux normes intemationales

* Simplification du systeme de preltvement et de taxe au niveau * Construction de halles normalisees A Nador, Tangierdes ports de peche et Tan Tan

* Construction de marche de gros et de detail.* Statut des mareyeurs

* Developpement de nouveaux metiers * Encouragement des investissements dans l'industriedes chantiers navals, d'avitaillement des navires, demateriel et engins de peche, de l'aquaculture et desactivites littorales

* Augmentation de la participation de la profession dans la * Redynamisation du rdle des Comites locaux deplanification et gestion des activites du port de peche peche


Ac !' ,.-,, ,< tions.> y t: X AC PropoSEes v , J ; nudicateurs - Ob-;ti

4. Cadre incitatif etpolitique sectorielle Cadre incitatif

* Domaines prioritaires et evolution du budget en fonction des * Preparation du Plan du MPM pou, la Loi de * Projet dtabli enjuin 1998prioritds Finances 2000-2001 * Extcnsion du projet pilote d'Agadir

* Discussion du plan quinquenal de l'ONP* Informatisation des proc6dures comptables du MPM

* Rationalisation de la depense publique * Analyse de l'opportunite de sous-traiter certains * Exemples: sdcuritd des navires

services

* Lib6ralisation du commerce extdrieur * Abolition des quotas et des tarifs * Application des accords avec l'UE, deja applique

pour les autres produits de la peche

* DEmantelement des mesures de protection de la farine de * Calendrier de demantelement - 5 % sur 3 ans * Actuellement 10%DD+ I 5%PFI pour farine nonpoisson consommable

* Reforme de la politique de fixation des prix des petits * Refonte du role du CAPI * Revoir les catEgories usinables et non usinables etpElagiques etudier possibilitE de taxation diffdrenciEe

Cadre institutionnel

* Mise en place du Conseil SupErieur pour la sauvegarde et1'exploitation du patrimoine halieutique

* Dynamisation et renforcement des Chambres des PechesMaritimes et de leur FEdEration

* Poursuite de l'effort de dEcentralisation * Augmentation de ia delEgation de crEdit aux Actuellement 60%

services exterieurs de 15% sur 3 ans* Augmentation de la dElEgation de crEdit aux

Etablissements de formation de 20% sur 3 ans

* Restructuration des organismes sous-tutelle * Nouvel organigramnme de l'ONP approuve par leConseil d'administration

* Nouveau statuts du personnel de l'INRH* Contrats-programme pour ONP et INRH

Project Appraisal Document Annex I IMOROCCO: Pilot Fisheries Development Project Page I of 2

ANNEX 11

Status of Bank Group Operations in MoroccoOperations Portfolio

As of 29-Mar-99

Difference Betweenexpected

Original Amount in US$ Millions and actual

Fiscal disbursements a/

Project ID Year Borrower PurposeIBRD IDA Cancellations Undisbursed Orig Frm Rev'd

Number of Closed Projects: 104

Active ProiectsMA-PE-5519 1999 GOV'T OF MOROCCO LAKHDAR WATERSHED MG 4.00 0.00 0.00 4.00 0.00 0.00MA-PE-5524 1999 GOVERNMENT FES-MEDINA REHAB. 14.00 0.00 0.00 13.73 0.00 0.00MA-PE-5525 1999 GOV.OF MOROCCO HEALTH MANAGEMENT 66.00 0.00 0.00 67.20 4.67 0.00MA-PE-40566 1998 GOVT OF MOROCCO RURAL W.S.& SANITATN 10.00 0.00 0.00 9.95 3.67 .84

MA-PE-5521 1998 GOVT OF MOROCCO WATER RESOURCE MGMT. 20.00 0.00 0.00 19.90 2.00 0.00MA-PE-5523 1998 FEC MUNICIPAL FINANCE II 70.00 0.00 0.00 57.72 24.98 0.00MNA-PE-38978 1997 GOVERNMENT OF MOROCCO PSD III-VOC TRG. 23.00 0.00 0.00 19.76 10.97 2.30MA-PE-43725 1997 ONCF RAILWAY RESTR & PRIV 85.00 0.00 0.00 67.23 7.68 0.00MA-PE-42414 1996 GOVT OF MOROCCO COOR/MON SOCIAL PRO 28.00 0.00 0.00 23.72 2.16 0.00MA-PE-42415 1996 GOVT OF MOROCCO SPI - HEALTH 68.00 0.00 0.00 52.48 -.54 0.00MA-PE-5501 1996 GOV. OF MOROCCO SPI - EDUCATION 54.00 0.00 0.00 36.20 7.60 0.00MA-PE-5503 1996 KINGDOM OF MOROCCO SEW.& WATER REUSE II 40.00 0.00 0.00 39.11 7.91 0.00MA-PE-5489 1995 KINGDOM OF MOROCCO SECONDARY ROADS 57.60 0.00 0.00 51.44 41.36 0.00

MA-PE-5435 1994 KINGDOM OF MOROCCO/ONEP WATER SUPPLY V 160.00 0.00 40.00 71.57 67.87 12.84MA-PE-5499 1994 GOV. OF MOROCCO IRR. AREAS AGR. SERV 25.00 0.00 7.99 10.56 15.66 1.05MA-PE-5504 1994 KINGDOM OF MOROCCO ENVIRONMENT MANAGEME 6.00 0.00 2.54 1.54 3.80 1.39MA-PE-5462 1993 GOVERNMENT SECOND LSI IMPROVEME 215.00 0.00 71.12 59.65 55.44 14.31MA-PE-5514 1993 GOV. OF MOROCCO LAND DEVELOPMENT 130.00 0.00 24.00 41.39 62.81 39.35MR-PE-5517 1993 GOV.OF MOROCCO/FEC MUNICIPAL FINANCE I 104.00 0.00 4.00 1.33 5.34 -1.16

Total 1,179.60 0.00 149.65 648.48 323.38 70.92

Active Projects Closed Proiects TotalTotal Disbursed (IBRD and IDA): 372.32 6,014.14 6, 386.46

of which has been repaid: 4.75 3,081.21 3,085.96Total now held by IBRD and IDA: 1,025.20 2,953.72 3,978.92Amount sold 0.00 20.11 20.11

Of which repaid : 0.00 20.11 20.11Total Undisbursed 648.48 8.36 656.84

a. Intended disbursements to date minus actual disbursements to date as projected at appraisal.

Note:Disbursement data is updated at the end of the first week of the month and is currentLy as of 28-Feb-99.


MoroccoSTATEMENT OF IFC's

Committed and Disbursed PortfolioAs of 28-Feb-99

(In US Dollar Millions)

Committed DisbursedIFC IFC

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic1987/90 CIH 19.96 0.00 0.00 1.07 19.96 0.00 0.00 1.071987/93 SETAFIL 2.98 1.20 0.00 0.00 2.98 1.20 0.00 0.001990 ENNASR .94 0.00 0.00 0.00 .94 0.00 0.00 0.001994/96 Mediafinance 0.00 1.16 0.00 0.00 0.00 1.16 0.00 0.001995 Attijari 0.00 .49 0.00 0.00 0.00 .26 0.00 0.001999 Settavex 5.04 9.00 0.00 0.00 5.04 9.00 0.00 0.00

Total Portfolio: 28.92 11.85 0.00 1.07 28.92 11.62 0.00 1.07

Approvals Pending Commitment

Loan Equity Quasi Partic

Total Pending Commitment: 0.00 0.00 0.00 0.00

Project Appraisal Document Annex 12MOROCCO: Pilot Support Project for Fisheries Development Page 1 of 2

Morocco at a glance 3/M9

M. East Lower-POVERTY and SOCIAL & North middle- . . .....

Morocco Africa Income Dtopmantdim ' -1997Population, mid-year (nillions) 27.5 283 2,285 .. . .... . .......GNP per capita (Atlas method, USS) 1,240 2,060 1,230GNP (Atlas rethod, USS billions) 34.1 583 2,818 ..... .....

Average annual growth, 1991-97

Population (%) ..- 1.9 2.3 1.2Labor force (X) 2.5 3.2 1.3 GNP Gro$

Per pr"0Z immaryMost recent estimate (latest year available, 1991-97) erollmet

Poverty(%ofpopulationbelownationalpovertyline) 13Urban population (% of total population) 53 57 42Life expectancy at birth (years) 67 67 69Infant morlality (per 1,000 live births) 51 48 36Child malnutrition (% of children under 5) 10 10 .. Aceesstsar.wattAccess to safe water (% otpopulation) 52 71 84Illiteracy (% otpopulatIon age 15+) 56 39 19 . ...... -Gross primary enrollment (% ofschool-age population) 83 97 111i . .. . .

Male 94 102 116 -..uLw m - mUpFemale 71 91 113 ___________________________________

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1976 1986 1996 1997

GDP (iSSbIllions) 9.3 17.0 36.0 35.6Gross domestic investment/GDP 28.1 22.8 19.8 20.6 ... - .............Exports of goods and services/GDP 18.5 22.1 25.9 27.9 .... .. .. .. .....

Gross domestic savings/GDP 8.7 16.7 16.1 16.8Gross national savings/GDP 14.6 17.4 20.0 20.4 ............

Current account balance/GDP -14.9 -1.0 -1.2 -0 3Interest payments/GDP 1.2 3.8 3.7 3.6 . wl'' '''Total debt/GOP 33.2 103.6 60.3 5317 , iTotal debt servicelexports .......Present value of debt/GOP . .. 54.8Present value of debtexports 169.7 ..........

S seso L .Js shAL. E s s s - s s............... ........

1976-86 1987497 1996 1997 1998-02(average annual growth) . .. ,, .. .......GDP 4.3 2.6 12.1 -2.0 4.1 'M08CC-GNP per capita 1.6 0.7 10.9 -4.0 2.4 ._. ...Exports of goods and services 4.3 6.9 8.2 6.3 6.7

STRUCTURE of the ECONOMY1976 1986 1996 1997 @ r5te f tp , , s,t ,t

(% of GOP)......Agriculture 19.2 19.1 19.3 15.3Industry 32.5 32.3 31.0 33.2

Manufacturing 16.5 17.2 17.0 17.6Services 48.3 48.6 49.7 51.5 W

Private consumption 68.9 68.0 67.3 65.3General government consumption 22.5 15.4 16.7 17.9 .............Imports of goods and services 37.9 28.2 29.6 31.7

1976-86 1987-97 1996 1997 6 WpWo *x p*(average annual growth)Agriculture 3.6 -0.2 78.2 -25.6 Industry 2.5 3.1 4.8 6.0

Manufacturing 4.3 3.3 3.0 3.1Services 5.6 3.2 2.8 1.8 '

Private consumption 3.1 3.7 14.6 -11.6General government consumption 5.0 1.1 -15.0 4.9 4 92Gross domestic investment 0.6 2.1 12.1 2.2 l -S. X.

Gross national product 3.9 2.7 13.0 -2.2 ~.~

Note: 1997 data are preliminary estimates.

The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond willbe Incomplete.

Project Appraisal Document Annex 12MOROCCO: Pilot Support Project for Fisheries Development Page 2 of 2

Morocco

PRICES and GOVERNMENT FINANCE__ ______________

Domestic pilces 1~~~~ ~~976 1986 1996 1997

(% change)Consumer prices . .. 3.0 1.0 Implicft GDP deflator 1.5 10.3 1.2 2.0

4Government finance 2

(%of GDP, Includes currTenti grants) ICurrent revenue 20.3 1 8.8 24.3 26.2 I Ust *4 S5 De 5.7Cuffent budget balance 0.8 -1.7 0.9 1.6 I - D Overall surplus/deficit .18.1 -8.6 -3.4 -3.7 __________________

TRADE

(USS ~~~~~~~II ~~~1976 1986 1996 1997 Export and Import levels (US milns

Total exports (fob) .. 2.608 6,893 7,039 ¶2

Other agricuflure .. 792 1.646 1,374 KoX Phosphorus .. 412 348 435 IEManufactures .. 654 1,531 1 469

Total imports (cii) .. 395 9.728 9,521 8(j J, J flFood .. 476 1,287 1,065 '

Fuel and energy .. 596 1,294 1.296 ZLEO

Capital goods .. 906 1,781 1,660

Export price index (1995=100) .. 67 80 84Import price index (1995-100) .. 76 95 89 UNxpW1 w*oportTerms of trade (1995=1 00) .. 89 85 95

BALANCE of PAYMENTS

(USS ~~~~~ ~~~~~ ~~1976 1986 1996 1997 conb GO (%

Exports of goods and services 1.696 3,757 9,433 9,483 Imports of goods and services 3,450 4,796 10,991 10,632Resource balance -1,754 -1,039 -1,559 -1,1148

Net income 17 M 121 119Net current transfers 499 1.549 2,352 2,205

Current account balance 132 17 48 13

Financing Raems (net) 1,365 545 465 679 Changes in net reserves 18 -367 -47 -556

memo:Reserves including gold (US$ mVlions) . .. 3,968 4,376Conversion rate (DEC. locat/USS) 4 4 9.1 8 9 9.0

EXTERNAL DEBT and RESOURCE FLOWS _______________

(USS mIllIons) ~~~~~ ~~1976 1986 1996 1997

Total debt outstanding and disbursed 3,084 17,601 21.710 19,096IBRD 289 1,859 3,732 3.271 ......IDA 35 42 32 31 k~7

Total debt service F,504... .. .....4 ,

IBRO 34 233 599 627IDA .

Composition of net resource flowsOfricial grants 47 57 356Ofricial creditorsPrivate creditors_XoForeign direct investment 38 89 397 120Portfolio equity . .. 134 .......

World Bank programCommitments 150 366 213Disbursements 64 363 380 213Principal repayments 15 109 342 356 ~. Not flows 49 254 38 .143 ..........___ ___ __

Interesl payments 20 125 258 272Net transfers 29 128 -220 -415

Development Economics 3/&jg9

MIAP SECTION

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