I. INTRODUCTION

II. NEW PROJECT PROPOSALS

A. Raw Hides and Skins Grading and Pricing Systems in Selected African Countries

B. A Hides and Skins Recovery and Export Development in Selected African Countries

III. MECHANISM TO FACILITATE THE SUPERVISORY FUNCTION OF THE SUB-GROUP AS AN ICB

I. INTRODUCTION

1. Since its Third Session in 1992, the Sub-Group has maintained an active interest in obtaining the assistance of the Common Fund for Commodities (CFC) for commodity development activities. At its Fifth session in Bologna in May 1995, it reviewed efforts which had been made to secure support from the Fund for a project on hides and skins improvement in West Africa. The Sub-Group noted that efforts to interest the CFC in this project had not been successful. It recommended that other sources of finance be sought for this proposal, and also that efforts be made to identify other projects which might attract CFC support.

2. Since then, no alternative source of finance has been found for the proposed hides and skins improvement programme in West Africa. However, two new related proposals have been made, one of which has now been taken to an advanced stage of development and appears likely to meet the requirements of the Fund. The other exists only as a brief project concept.

3. As indicated in the Provisional Agenda, members of the Sub-Group were invited to send any additional project profiles to the Secretariat by 9 October 1998.

II. NEW PROJECT PROPOSALS

A. RAW HIDES AND SKINS GRADING AND PRICING SYSTEMS IN SELECTED AFRICAN COUNTRIES¹

4. This proposal has as its objective the improvement of the quality of African raw hides and skins and the expansion of the trade volume of African hides, skins, leather and leather products in international markets. These objectives are expected to be reached through:

• (a) the introduction of improved grading systems, with certification by the Eastern and Southern Africa Leather Industries Association (ESALIA), so that buyers can be assured that uniform quality criteria have been applied to African material and that the quality corresponds to internationally accepted norms. The grading system to be introduced will be that developed by UNIDO and endorsed by the Sub-Group at its Third Session in 1992;
• (b) the introduction of appropriate price schedules for the various grades of raw hides and skins which would be expected to encourage primary producers to improve quality, and at the same time would boost the incomes of grass-root level operators in the hides and skins trade.
• (c) the introduction of improved techniques of slaughtering and hide treatment in order to assist producers improve the quality of material produced.
• (d) assistance for the establishment of a training institute in order to contribute to capacity building in the longer term by upgrading technical standards, operational methods and skills of operators in tanneries.

5. It is proposed that these activities will be conducted on a pilot basis in four African countries, Ethiopia, Kenya, Tanzania and Zambia, and that the methods developed could subsequently be applied to other countries.

6. The total cost of the proposed project is US$3.2 million, of which US$1.4million would be sought from the Common Fund, and US$1.8 million from co-financing sources. The project would be executed by ESALIA. The Sub-Group on Hides and Skins, as the International Commodity Body (ICB) for hides and skins, would be expected to assume responsibility for project supervision, having agreed at its Third Session in 1992 that it would act as Supervisory Body for Common Fund projects. The Sub-Group should now determine how it would discharge this duty if the project is approved by the CFC, and a mechanism is proposed under Section III below.

7. It is understood that this proposal is likely to meet the requirements of the Fund, but a proposal cannot be formally considered by the Fund until it has been endorsed by the designated International Commodity Body (ICB). The Sub-Group, as the ICB, may now wish to endorse this project for formal submission to the Fund. It may also wish to charge its Bureau (the Chairperson and Vice Chairpersons), together with the Secretariat, with responsibility for any follow-up action which may be required by the CFC in connection with its consideration of the proposal.

B. A HIDES AND SKINS RECOVERY AND EXPORT DEVELOPMENT IN SELECTED AFRICAN COUNTRIES

8. This proposal, which has not yet been developed in detail, is to study those African countries which have significant livestock populations but which export little or no hides and skins, with a view to formulating programmes which might lead to the development of an export market for this material. Countries selected for study and possible project activities might include countries such as Benin, Ghana, Madagascar, Mauritania, Democratic Republic of the Congo and Zambia. The Sub-Group may wish to endorse this project concept for development and for subsequent submission to the Fund, and may wish to charge its Bureau, together with the Secretariat, with the actions needed to comply with eventual CFC comments and views.

III. MECHANISM TO FACILITATE THE SUPERVISORY FUNCTION OF THE SUB-GROUP AS AN ICB

9. At its Third Session in 1992, the Sub-Group agreed that it would act as Supervisory Body for projects which it sponsored. It did not discuss the manner in which it would fulfil that function, as it has had no operational project and the need had not arisen. With the possibility that one or more projects may be approved by the Fund and become operational before the Sub-Group next meets, it might now be appropriate for the Sub-Group to consider how it will carry out this function.

10. Project agreements with the Common Fund typically specify that the Supervisory Body should carry out regular supervision, and submit a formal supervision report at least once in each twelve-month period. The Supervisory Body is required to examine information submitted to it by the Project Executing Agency (PEA), assess whether the actions undertaken, the expenditures made and the results achieved by the PEA conform with the provisions of the agreement. It may need to obtain information additional to that supplied by the PEA. It should assess the continued relevance of the project activities and the prospects for the successful implementation of the project. The Supervisory Body should cooperate with the project monitoring missions which the Fund would normally conduct annually, and with a project evaluation mission conducted towards the end of the project.

11. In order to ensure the continuity of supervisory functions between sessions, other ICBs have temporarily delegated these supervisory responsibilities to a small expert group, normally consisting of two or three members with suitable expertise in each project area as well as in project monitoring and evaluation procedures. One member of this group would normally be an FAO staff member performing technical secretarial functions. Should the Sub-Group wish to delegate these supervisory functions to such an expert group, the Secretariat could, in consultation with the Chairperson, identify suitable experts to serve on it. This expert group would would be required to prepare an informative supervision report for review and approval by the Sub-Group in its capacity as Supervisory Body.

1 Copies of the full proposal will be made available at the Session as CCP: ME/HS 98/CRS .1