CIRCULATING COPY FILE LOP l (U BE RETURNED TO REPORTS DESK DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Not For Public Use Report No. P-1423a-BT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE BOTSWANA DEVELOPMENT CORPORATION WITH THE GUARANTEE OF THE REPUBLIC OF BOTSWANA June 7, 1974 This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. CURRENCY EQUIVALENTS Currency Unit - South African Rand (R) US$1.00 a Ro.67 R1.00 - US$1.h9 FISCAL YEAR Govennment of Republic of Botswana: April 1 to March 31 Botswana Development Corporation: July 1 to June 30 INTERNATIONAL BANK FM RECONSTRUCTION AND DEVEIOPMENT REPORT AND RECOMMENDATEON OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE BDTSWANA DEVELOPMENT CORPORATION WITH THE GUARANTEE OF THE REPUBLIC OF BOTSWANA 1 I submit the following report and recommendation on a proposed loan to the Botswana Development Corporation with the guarantee of the Republic of Botswana for the equivalent of $4.0 million to help finance the import component of sub-loans and investments made by this development finance company. The loan would bear interest at 7-1/4 pereent per annum and the repay- ment schedule would conform substantially to the aggregate of the amortization schedules for sub-loans and the fixed repayment schedales for investments. A 3/4 of one percent commitment charge would be applied only on the amounts not withdrawn after sub-loans or investments have been authorized by the Bank. PART I - THE ECONOMY 2. Although no economic report has been produced on Botswana since 1971 (Report No. AE-18), the staff has been following economic developments and the following is based on current information. A special creditworthiness mission visited Botswana in February 1974, and an economic mission began work in the country in May. Country data are presented in Annex I. 3. The population of Botswana is currently estimated at 640,000, with approximately 50,000 citizens absent, mainly as migrant laborers in South Africa. Domestic wage employment is estimated at approximately 30,000, and is projected to grow to 60,000 by 1978. The majority of the population remains dependent for their livelihoods on subsistence agriculture with household incomes frequently supplemented by remittances from relatives in wage employment. 4. The climate of Botswana is semi-arid, with erratic and inadequate rainfall. In recent times the country has experienced drought seven years out of ten, and suffered a major loss of livestock at least once a decade. Nevertheless, the country's semi-arid range lands are well suited for extensive ranching, and cattle are the mainstay of the rural economy. Arable farming is a hazardous occupation, although with sound crop husbandry a subsistence yield can almost always be obtained and in good years crop production can even be highly profitable. 5. The country is well endowed with mineral resources, particularly diamonds, nickel, copper, and coal, which have only recently been discovered. A major obstacle to their exploitation is the shortage of water. There are no perennial rivers, except in the north-west, where the Okavango spreads out in a wide delta. Possibilities for the exploitation of the large water potential of the Okavango are being studied through a major technical assis- tance project funded under the United Nations Development Program. Most of the population and livestock presently depends on underground water, which in many instances is not being sufficientlyrecharged from rainfall. - 2 - 6. Together with Lesotho, South Africa and Swaziland, Botswana belongs to the Southern African Customs Union. Under this union, which has been in existence from 1910, all customs, excise and sales duties collected in the customs area are paid into a common revenue pool administered by South Africa. In 1969, the customs union agreement between the four countries was renego- tiated; this provided the three smaller countries with substantially increased revenues. Under the customs agreement, there is also a free flow of funds and goods within the area, which allows Botswana's industries duty free access to the large South African market. Few industries have been started so far, but the Botswana Development Corporation, created in 1970, is making advances in this direction. A number of projects have been identified, and a few are ready for implementation. 7. The country's infrastructure is poorly developed. The main roads have gravel or unmade surfaces, to which most villages are linked by sand tracks. A railway runs only from north to south through the populated eastern side of the country, linking South Africa with Southern Rhodesia, and the nearest port is over 1,000 miles away. Power is available only in the main urban centers and is expensive, being produced locally from small generators. 8. Botswana's economic position has improved remarkably during the past five years. The gross domestic product has risen from $64 millior. in 1967/68 to $132 million in 1971/72. Gross national product is tentatively estimated at $109 million for 1971/72. For the 1968/72 period it is estimated that the real rate of growth of GNP has been approximately 15 percent per annum. The growth in the value of exports during the past four years was nearly 50 percent per annum, rising from $19.5 million in 1969/70 to $64.5 million in 1972/73. These high rates of growth in production and exports are largely attributable to two factors. First, there has been a rapid growth in the value of livestock production, stimulated by a highly favorable inter- national market for beef, with export sales rising from $10.5 million in 1966 to $30 million in 1972. Second, a large mining sector has been developed. The De Beers diamond mine at Orapa (developed with an investment of approxi- mately $33 million) went into full production in 1972 with total sales of approximately $30 million per annum. The Shashe mining complex at Selebi- Pikwe (developed with an investment of about $270 million in mining and processing facilities and infrastructure) commenced production in 1973. The mine will produce nickel, copper and sulphur. The value of annual production is likely to be over $75 million at present prices. Although mining develop- ment is very capital intensive and is not expected to absorb the natural increase in the labor force, a substantial portion of the expected benefits will accrue to the Government through royalties, taxes, and dividends which the Government will be able to use for general development purposes. 9. In recent years there has been a dramatic improvement in Botswana's public finances. In 1967/68, the first full year of independence, the total recurrent expenditure amounted to $18.75 million of which $8.85 million was financed by Britain. In 1972/73, although recurrent expenditure had climbed to $43.4 million, there was sufficient domestic revenue to generate a surplus of $4.4 million. Botswana is therefore now able to devote a portion of its domestic resources to funding the public sector investment program. - 3 - 10. Botswana has pursued a progressive economic and social program, with a major effort being made to implement well-defined policies for rural development and a more egalitarian income distribution. The Government has a well-staffed and effective planning organization. Botswana has recently adopted a National Development Plan (N.D.P. 1973-78), which provides a comprehensive statement of national policy and priorities. The Plan has two central aims: (a) to create 30,000 new jobs by 1978, equivalent to a 9 percent per annum growth in wage employment; (b) to improve the welfare of the mass of the population who live in the rural areas. The Plan places particular emphasis on agricultural development and on improving rural services (e.g., roads, education, health, water supplies). The Plan provides a comprehensive assessment of resources and specifies their proposed uses. 11. The Plan projects GNP (at factor cost in constant 1973 prices) to reach $239 million in 1978, representing a real rate of growth of 14 percent per annum. This high growth rate is forecast primarily on the basis of pro- spective mining developments together with related increases in public utilities, civil construction, and services, and implies that GNP per capita will rise from $176 in 1971 to almost $330 in 1978. These estimates for future growth, however, are considered to be very conservative, and a more realistic assessment could imply that GNP per capita will exceed $500 in 1978. The NDP contains a total investment program of $350 million (1973 prices) over the next five years of which about two-thirds ($231 million) is expected to be contributed by the public sector. The Plan estimates that $67 million will be provided from domestic revenue for public investment during 1973/78 (about 29% of the total requirement), and that a further $164 million is to be sought from external sources. The likelihood is strong, however, that Botswana will be able to finance almost half of the public investment program from domestic revenue. The main bilateral sources of assistance are expected to be Britain, Sweden, and Canada, who will finance a wide variety of projects. In addition, Germany, USAID, and Denmark have agreed to provide finance for road development and Norway for rural development. 12. The major constraint to the implementation of the Plan is the shortage of trained and experienced manpower. Botswana reached independence with very few citizens possessing any post-primary education. Ten years ago less than 30 pupils completed five years of secondary education each year. A remarkable expansion of secondary education has taken place with total enrollment rising from some 1,500 in 1966 to 5,500 in 1972. Vocational training, however, has lagged behind and only recently has an adequate plan been prepared for the training of artisans and technicians. Although a Vocational Training Institute was established in 1973, it is still doubtful whether sufficient job-oriented training can be undertaken through existing facilities. 13. Despite the large borrowing for the infrastructure for the Shashe complex, the overall public debt burden of Botswana is not great. Total disbursed public debt amounted to $69 million in mid-1973, or approximately 50 percent of GDP, and is expected to rise to $120 million by 1978. Taking into account the estimated income effects of the :.mbitious public sector investment program, this would represent 42 percent of GDP. The estimated cost of servicing the public debt is 3.6 percent of domestic revenues and 2 percent of export earnings in 1973/74 and Ls projected to amount to 6 percent of domestic revenues and 2.7 percent of export earnings in 1977/78. As a result of Botswana's consistently high level of economic management and the country's favorable export prospects, the Bank has reviewed Botswana's ability to service debt on conventional terms and considers the country creditworthy for Bank loans. PART II - BANK GROUP OPERAIIONS IN BOTSWANA 14. Bank Group operations commenced in the territory that is now Botswana, before it became independent in 1967, with a road project in 1964. To date there have been seven projects, financed by six IDA credits amounting to S16 million, and a loan of $37.5 million. A $3.0 million credit for an urban development project in Francistown was signed in May 1974; this project will be a major step towards coping with the rapid rate of urbanization. The IDA credits have also financed two road projects, a water supply project, a livestock project, and engineering studies on the infrastructure relating to the Shashe mining complex. The latter credit was partially refinanced by the subsequent Bank loan for the Shashe Infrastructure Project. As of December 31, 1972, the Bank Group's share in Botswana's total debt (disbursed and undisbursed) was 54 percent, while its share in Botswana's total debt service payments in 1973 was 53 percent. A summary statement of the Bank loan and IDA credits to Botswana is given in Annex II, together with notes on the execution of on-going projects. No IF C loans or investments have been made in Botswana. 15. The overall performance of Botswana in the planning and execution of development projects has been satisfactory. The completion on schedule of the major parts of the large Shashe mining complex (para 8) has been a remarkable accomplishment, although a substantial cost over-run has been encountered. A supplementary loan of US$5.5 million to help finance the cost over-run of the Shashe Infrastructure project was signed in June 1974. The progress on the Gaborone-Lobatse road is ahead of schedule although the execu- tion of the Gaborone-Lobatse water supply project has been slow due to poor performance by the civil works contractors. The credit for the livestock proj- ect became effective in April 1973, and implementation is now underway. 16. We propose to continue our active support for the Government's strategy for social and economic progress as spelled out in the National Development Plan. We propose to concentrate our future lending in three areas (a) the raising of rural income levels by improving livestock production, which is the major occupation, (b) the linking up of population centers by helping to develop the transportation system, and (c) the establishment of light industry to provide employment. The Government, assisted by the Bank Group and other agencies, is preparing suitable projects in these sectors. PART III - THE INDUSTRIAL SECTOR 17. Botswana has, as yet, few industries. In the past, the lack of knowledge of the country's resources, the poorly developed infrastructure, the absence of services and trained manpower, and the small size of domestic markets have all impeded investment in industry. Since independence, however, Botswana has made a major effort to promote industrialization. Furthermore, with the revision of the Southern African Customs Union Agreement (1969), the earlier arrangements which gave the products of South African industry un- restricted entry into Botswana without any reciprocal arrangements, were largely removed. 18. The contribution of manufacturing to the gross domestic product is approximately $12 million per year, of which nearly 80 percent is derived from the operations of the Botswana Meat Commission (BMC). It is estimated that the value added of the manufacturing sector doubled in the past five years and employment grew from about 2,000 in 1969 to about 2,700 in 1972. 19. In April 1973, there were 29 manufacturing enterprises licensed under the Industrial Licensing Act (1968), which requires licensing of all manufacturing establishments either employing over nine workers or using 25 horsepower or more of energy. In addition, however, there were a number of small non-manufacturing enterprises such as service industries, construc- tion firms, quarries, mines, and mills. Most of these industries are located in three towns: Lobatse, Gaborone, and Francistown. 20. Tne Botswana Government gives the highest priority to the creation of new job opportunities. As the scope for increasing employment in the agricultural sector is limited by the semi-arid climate and the scarcity of water, emphasis has to be on the mining, industrial, commercial and related sectors. The National Plan envisages the creation of over 3,000 new jobs during 1973/78 by the expansion of manufacturing and processing industry. This is estimated to require an investment of over $22 million. Scope for Industrial Development 21. Botswana's small population and low income levels limit the local market available to new industries. The Southern African Customs Union Agreement, however, provides for unrestricted access by industries that may be established in Botswana to the rich South, Africa market. Therefore, there is a potential market for a variety of goods which Botswana firms could manufacture. The fact that about $900 million worth of manufactured goods were imported into the Southern African Customs Union during 1971, indicates the gap between local demand and production. 22. The development of mineral deposits is bringing about a transformation in the Botswana economy which should provide the stimulus for industrial and commercial development. The diamond mine at Orapa is of necessity an enclave development, which will induce little further development. The copper-nickel - 6 - mine at Selebi-Pikwe, however, should form a focus for secondary and tertiary development and the proposed development of further mineral deposits will provide additional foci for such development linkages. There is scope for the creation of industries linked to mineral production such as a jewellery industry for the production of industrial abrasives and semi-precious gemstones, a chemical industry using sulphur, brine products and coal, and a glass industry based on soda-ash deposits. There are also known to be resources of clay, gypsum, limestone and silicacious earths. The United Nations Industrial Devel- opment Organization has been asked to assist in planning for a group of indus- tries to use these materials to manufacture such products as low-tension electrical insulators, tiles, crockery, refractories, tablewares and building materials. 23. The agricultural sector also offers opportunities for industrial development. Using the by-products of the meat industry, it is proposed to develop a tannery and other processing industries such as those for the manufacture of wax and candles, soap and brushes. Milling enterprises could be established using locally-produced agricultural products. 24. Some scope also exists for the establishment of labor-intensive manufacturing enterprises such as ready-made garment industries and light assembly plants for bicycle and agricultural implements. Some of the other sectors which hold promise for industrial development are referred to in the later sections dealing with the Botswana Development Corporation (para. 45). 25. The Government is aware of the need to design a strategy for industrial development which would allow it to take full advantage both of its resources and the Customs Union Agreement of 1969. The Bank Group is attempting to assist the Government in this task by including an industrial economist in its 1974 economic mission who would try to analyze and advise on an appropriate policy framework and identify priority areas for external technical and capital assistance. Incentives for Industrial Development 26. The Government has taken significant steps in the last few years to establish the institutional and legal framework, provide incentives for investment, and develop the necessary infrastructure for attracting and inducing the growth of enterprises. In 1970 the Botswana Development Corporation (BDC) was set up to promote industrial and commercial ventures and to manage the Government's existing investments in industry, commerce and tourism. In 1972 the Batswana Enterprises Development Program was initiated with the goal of assisting in the creation and development of enterprises owned and managed by local entrepreneurs. The program is now being carried out by the Batswana Enterprises Development Unit (BEDU) which is providing capital, technical expertise and training. The Unit is located in the Ministry of Commerce and Industry, which was created in April 1973 to formulate industrial and commercial policy. -7- 27. Another development-oriented institution, the National Development Bank (NDB), was established in May 1964 to lend for the development of agri- culture, livestock, and housing. At the end of 1972, NDB had granted approxi- mately 3,000 loans totalling R 1.3 million. In 1968 and 1969, before the establishment of BDC, NDB made loans totalling R 250,000 to small businessmen in commerce and industry, but since then its lending has been directed towards agriculture and housing. It is expected, however, that NDB will provide financial assistance to Batswana entrepreneurs under the Batswana Enterprises D vlopment Program. NDB loans are made at 8% per annum (p.a.) for a maximum o1iU years. 28. There are two London-based commercial banks, Barclays Bank and Standard Bank, that operate in Botswana. Most of their loans are short term in nature, with lending rates ranging between 9% and 11% p.a. Most loans are extended to cattlemen on a fluctuating overdraft basis at 10% p.a. Until now, these commercial banks have not been active in providing term finance to the economy. 29. Botswana's tax system offers generous incentives to prospective investors. For instance, (a) new manufacturing plant qualifies for a 25% free investment allowance, (b) capital expenditure may be written off imme- diately and any tax losses incurred may be carried forward to future years, and (c) the rate of income tax on companies is only 30%. In addition, to further Government's policy of localization, 125% of the costs of approved training schemes can be charged as an expense for tax purposes. Moreover, Botswana is permitted (under the Customs Union Agreement) to protect infant industries by applying duties to imports from South Africa, as well as from countries outside the Customs Union. At the same time, if any industry in Botswana is able to supply over 60% of the demand in the entire Customs Union for a particular commodity, it can apply for protection against imports from outside the Union. Such protection, if granted, would apply to imports into the whole of the Customs Union. 30. The Government is also attempting to provide sufficient serviced land for the location of industry: over 250 hectares of serviced land is being provided for industrial use during 1974-78 at Gaborone, Francistown, Lobatse and the new township at Selebi-Pikwe. PART IV - THE PROJECT 31. A report entitled "Appraisal of the Botswana Development Corporation" (394a-BT) is being circulated separately to the Executive Directors. A Loan and Project Summary is provided as Annex III. Background 32. An identification mission visited Botswana in March 1973 for dis- cussions with BDC, and concluded that given BDC's important role and need for resources, Bank assistance would be desirable. An appraisal took place in October 1973 and negotiations were held in Washington in mid-May 1974. The Botswana delegation was led by Mr. H.C.L. Hermans, Permanent Secretary, Ministry of Finance and Development Planning and inlluded Mr. Ralph C. Stephens, Managing Director of the BDC. 33. The Botswana Development Corporation (BDC) was established in April 1970, as a limited liability company whose share capital is wholly owned by the Government, to promote and facilitate the development of indus- trial, commercial, and agricultural enterprises within the framework of the Government's plan for economic development. BDC's Memorandum of Association gives it considerable flexibility in determining the scope of its operations. It states that BDC "shall conduct its business affairs upon a commercial basis, and in a prompt, efficient and economic manner. It shall exercise special care and give due regard to the economic and commercial merits of any undertaking it promotes, assists, finances or manages, so that, taking one year with another, it shall not be allowed to operate at a loss; however, though each such undertaking should be evaluated on its strict merits, never- theless such evaluation should include consideration of the overall, long-term economic interests in and benefits to Botswana." By necessity, BDC performs a basic entrepreneurial role in conceiving and developing projects and is the principal instrument of the Government for accelerating the development of commercial business enterprises in a variety of sectors. Unlike most develop- ment finance companies, BDC has had to develop many of its operations through subsidiaries for which it endeavors to find external management. Capital Structure and Resources 34. As of March 31, 1974, BDC had a net worth of about R 2.9 million. The Botswana Government owns 100% of the paid-in share capital of R 1.95 million, which was subscribed with cash, a transfer of Government assets (mostly in tourism), and capitalization of revenues from the sugar trade. With respect to the sugar trade, BDC is acting as the Government's agency for purchasing sugar, and is receiving the revenues resulting from the dif- ferential between the market price and the import price. The Government has also made available to BDC a loan of R 160,000 to help finance BDC's office building, and a loan of R 2.5 million, mainly for development of the commercial center of Selebi-Pikwe. A Commonwealth Development Corporation (CDC) loan of R 430,000, was also made for the office building, and represents BDC's only foreign debt. Management and Organization 35. BDC is managed by a Board of eleven directors including the Chairman, who is the Permanent Secretary of the Ministry of Finance and Development Planning, and the Managing Director. All the Board members are appointed b.y the Government. Besides the Managing Director there are five official members who represent various Governmental agencies and five who are professional men engaged in agriculture, banking and commerce. - 9 - 36. The Board has delegated all its operational responsibilities to an Executive Committee of four directors, which has been meeting every two months and is performing well. At present, BDC's activities are primarily carried out by its investments department, but it intends to move progressively towards an organizational structure comprising various sector divisions under the overall direction of a Management Committee made up of the Managing Director, the Chief Accountant, the Administration Officer, and two senior investment officers. 37. The Managing Director is an able investment banker. He has been with the BDC since 1972 on a two-year contract which has recently been re- newed for another two years. He has developed an effective and very enter- prising staff of eleven professionals, of whom two are Batswana. Attempts are also being made by BDC to further localize its staff through a program of training and scholarships. Operating Policies and Procedures 38. BDC's original policy statement, adopted in April 1972, specified only two investment limits and did not provide sufficient guidelines for all of BDC's proposed activities. Based on Bank recommendations,BDC has agreed to adopt a more comprehensive policy statement. The salient provisions of this statement are: (i) BDC will not normally invest more than 25% of its net worth in the form of loans or share capital in any one project, and will not, except in the case of subsidiary companies, finance more than 50% of the project's cost; (ii) BDC will not normally manage enterprises; although it will take special care to ensure sound management arrangements for the projects it finances; (iii) BDC's aggregate equity investments will not exceed its net worth; (iv) BDC shall protect itself against foreign exchange risk and charge lending rates which are compatible with the market rates and which will enable it to earn a reasonable return. 39. So far, BDC has either acquired or set up subsidiaries for commercial property development, housing construction, transport, and leas- ing operations. Financial and insurance subsidiaries are also planned (para. 46). Since BDC either manages its subsidiaries directly, or at least super- vises them closely, they could become a fairly heavy administrative burden as additional subsidiaries are set up. Where necessary, steps would need to be taken to acquire additional managerial expertise for these subsidiaries, in accordance with the new policy statement. - 10 - 40. Most of EDC's lending until now has been to its own subsidiary companies in the form of loans on demand, for which no loan agreements have been drafted. These arrangements are now being modified. In future, BDC's subsidiaries will be capitalized with adequate equity and loans with fixed amortization schedules. Moreover, prior to its first submission of a project to the Bank, EDC will submit for approval a draft standard loan agreement. 41. To date, most BDC loans have been made at an interest rate of 9% p.a. So far, no loans have been made in foreign currency. In accordance with its Policy Statement, BDC has decided to raise its annual lending rate to 10% p.a., which is in line with interest rates currently charged by commercial banks. lTe only exception relates to projects which are economically and socially desirable but have low financial rates of return. In these cases, BDC will charge less than 10% p.a., but will limit the total amount of such loans to 10% of its net worth. 42. Given BDC's promotional role, BDC initially relies on feasibility studies made by experts--most of whom are paid under foreign technical assistance--or by foreign sponsoring firms. BDC reviews the feasibility studies and prepares memoranda for the Executive Committee, assessing the alternatives and the financial and economic merits of project proposals. It also reports on the development of the projects so that the Executive Committee is informed of the evolution of each project. Since BDC is a young and small institution, with a prominent role in promotion, this procedure appears adequate for BDC's present activity. BDC has been informed, however, that the Bank would need full appraisal reports on each project to be financed out of the Loan at the time of authorization, and BDC has agreed to prepare such reports. 43. The financial analysis of projects has been done well but the economic analysis has been less satisfactory. Because of this, BDC's Board decided in 1973 that all projects should be the subject of a thorough cost/ benefit analysis, including an economic rate of return analysis. The Bank is assisting BDC in developing its skills in this area. On the technical side, BDC has relied on foreign consultants, either to make feasibility studies or to check technical studies submitted by its potential foreign associates. Operations and Pbrtfolio 4h. As of March 31, 1974, BDC'c portfolio comprised loans and investments in 24 enterprises, with loans totalling about R 2.1 million in 12 enterprises and investments totalling about R 220,000 in 21 enterprises. About 26% of BDC's portfolio comprised former Government loans and investments in tourism (hotels) which were passed on to EDC during FY73. Loan size has averaged about R 200,000 with the largest loan (R 58o,000) being made to its commercial - 11 - property subsidiary. Most enterprises in which BDC has made loans or investments are profitable. BDC's profits after taxes amounted to 29% of average net worth in FY73. Net worth increased by about 100% between FY72 and FY73, primarily because of the capitalization of revenues from the sugar trade. This increase in net worth, combined with a forecast reduction in sugar revenues, is expected to cause profits after taxes and provision for losses as a percentage of average net worth to decline to a low of 2.5% in FY75, after which the percentage will start increasing with loau and investment income. Revenues from the sugar trade (para. 34) represented 79% of all income in FY73, but are expected to decline to 16% in FY76 and 11% in FY78. However, expenses in all years from FY73 to FY78 are expected to be covered by income from sources other than the sugar trade. Total assets are forecast to in- crease substantially during the period FY73-FY78, from R 2.5 million in FY73 to R 11.6 million in FY78. The debt/equity ratio is also forecast to rise from zero in FY73 to 2.3/1 in FY78. BDC has agreed to a maximum debt/equity ratio of 3/1 as a borrowing limit. BDC's debt service capacity will be adequate; interest and principal coverage will reach a low of 1.4/1 in FY75, increasing to 1.7/1 in FY78. 45. BDC's loans and investments cover the rather varied fields of transport, tourism, real estate development, industry, construction and financial serv- ices such as insurance and leasing. At the Government's request BDC has also recently purchased four farms and has taken over the Government's sharehold- ings in an irrigation company. In particular, BDC has achieved significant progress in three main areas: (a) identifying loan and investment opportunities in the manufacturing sector. It has conducted studies, identified and developed specific projects, and contacted potential investors and sponsors (abroad and in Botswana), resulting in a consider- able pipeline of potentially viable projects; (b) developing commercial properties, primarily in Selebi-Pikwe where, at the request of the Government, it took charge of the development of the commercial center; and (c) promoting the development of tourism including the taking over of the Government's investments in hotels. Recently BDC has sponsored a feasibility study on tourism possibilities in Botswana to determine investment opportunities. The annual number of foreign visitors is excpected to increase from an estimated 57,000 at present to 100,000 in 1977. Because of the acute shortage of good accommodations in the south-eastern part of the country, BDC is also developing hotel projects in that area. 46. In keeping with the Government's objectives, the BDC has increasingly focused its attention on the identification of loan and investment opportunities. Most of the proposed ventures are still at the planning and negotiation stage, but a few are quite advanced. These include a tannery (estimated cost R 1 million), - 12 - a ceramics project (estimated cost R 2.5 million), a beverage project (estimated cost R 2 million), a bicycle assembly plant, hotels at Selebi-Pikwe (estimated cost R 875,000) and Francistown, and further development of a tire plant (which was promoted by BDC). BDC also has plans to create new institutions, such as a full line insurance company and a finance company. The latter would likely be developed in association with Standard Bank, Barclays Bank, the NDB, and the Sardanis Group (Zambia) for the purpose of performing financial services that the commercial banks do not offer at present. At the start, this new institution, whose total resources are expected to amount to R 1 to 1.5 million, will focus on hire purchase schemes for vehicles and provide loans for construc- tion of houses and buildings. Projected Operations and Resource Requirements 47. Projections of BDC's operations envisage commitments totalling R 11.3 million between FY1974 and FY1978. The largest proportion of these commitments are forecast to be made in commercial property (32%), followed by industrial enterprises (23%), and tourism (15%). Commitments in agricultural enterprises, industrial estates, transport, and residential property account for the remainder (30%). BDC's portfolio is expected to consist of 70% loans and 30% equity. BDC anticipates that commitments will amount to R 2.85 million in FY75, R 2.65 million in FY76, and R 2.0 million thereafter. In FY75 and FY76, 56% of its commitments are expected to be in productive enterprises, 33% in property development, and 11% in industrial estates. The import component of the commitments is estimated to average 75% and, since BDC will not normally finance more than 50% of a project's total cost, its commitments would usually finance less than the import component. 48. The proposed Bank loan of $4.0 million would be used to finance approx- imately 70% of BDC's foreign exchange requirements (50% of its total requirement) through FY 1976, including $800,000 for the commercial development of Selebi-Pikwe. The other major projects would include the tannery, the beverage project and the hotel in Selebi-Pikwe. These projects are expected to be profitable, and have satisfactory economic rates of return. The remaining financial requirements would be met by the Government through its recent R 2.5 million loan, or by new borrowings. Terms of Proposed Loon 49. The proposed Bank loan would be to EDC on the normal terms and conditions for lines of credit to development finance companies. In line with Bank policy regarding relatively new institutions, BDC would be allowed concessional treatment for the commitment charge (i.e., the charge would only apply from the date sub- loans or investments are authorized by the Bank). The sub-borrowers of the Bank loan would normally assume the foreign exchange risk except for small loans (below $75,000) t,ich are typically made to small enterprises and which are expected to absorb only a small portion of the Bank loan proceeds. The Government has indicated that it intends to protect BDC against any substantial net financial losses resulting from exchange rate fluctuations on BDC's sub-loans. The amortization schedules for BDC's sub-loans would not normally extend beyond 15 years from the date of approval by the Bank. The Bank would require prior approval for each project using $75,000 or more' of the proposed loan. The aggregate free limit would be $800,000. The pro- posed loan would be used to finance the c.i.f. cost of imported goods, the foreign exchange cost of ancillary services, and the foreign exchange component of civil works and imported goods purchased locally through normal trade channels. The loan would not be used for property development projects, except - 13 - for a maximum axount oif $800,000 to help finance the commercial development in Selebi-?ikwe (para. 48). 50. Since commitnents for some sub-projects to be financed from the Bank loan proceeds have already been made by EDC and since disbursements were started after the sub-projects had been reviewed by Bank staff during the appraisal nrssian, the proposed loan includes an amount of up to $300,000 for retroactive financing of B)C's expenditures since February 1, 1974, subject to the prior approval of the smb-projects by the Bank. Benefits and Justif ication 51. The size of the Botswana economy and the lack of private entre- pretneurs required the creatlon of a multi-purpose development agency which would identify investment possibilities, evaluate their economic and finan- cial merits, attract foreign enterprises by offering participation and support, assist potential business ventures by providing financial and management assistance, and take over and manage the Government's existing investments in productive enterprises. In 1970, the Botswana Development Corporation was set up to perform these functions. 52. Although the BDC is a young organization, it has already made a significant contribution to the economy through its investments in 24 enter- prises, many of which were also promoted and established by the BDC. The organization has good prospects to expand its operations and to possibly assume an even larger role in channeling productive investment into the industrial sector by assisting in the creation of new financial institutions. BDC's relationship with the Bank Group should also enable it to improve its economic appraisal and investment skills, resulting in improved resource allocation in the Botswana economy. PART V - LEGAL INSTRUMENTS AND AUTHORITY 53. The draft Loan Agreement between the Bank and the Botswana Develop- ment Corporation, the draft Guarantee Agreement between the Republic of Botswana and the Bank, the Report of the Committee provided for in Article III, Section 4 (iii) of the Articles of Agreement and the text of a resolution approving the proposed loan are being distributed to the Executive Directors separately. 56. Except as regards the special features referred to in paras. 44 arnd 50, the draft aKreements conform to the normal pattern for loans to development finance companies. - 14 - 55. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 56. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments Washington, D.C. June 7, 1974 ANN I Pas I of 3 aPges ODUII RTY DAT - DVLtI AM PoPUnTTON cEiSIfl 600,370 b. 0 6 wilitor (sid-1971) 37 Per halof !opbl* land SOCIAL 7iDICA8ORs BotswanassRsfrseesnoiCsiriw 196 190 97 1.°7D 97 iMP PR CAPTA U54 (ATIAs bS IS) a 11o 1n10 210 /t 400 DlFiC;RAPIIC Cruds bith rat. (pt thootand) 45 Is 38 /a.h 42 50I Cruds haah rats (per thousand) ,,.14 t 16I7 11 21 Infant ortalltY rats (Per thousand 11. births) 126 j120-140 J,h 50 Llfe .ctnyat birth (years) ..o I9 56 Isi 41d/ Stuns teprudcctcon rats a . 3.2 / 2.9 2.9 3 3/9 opulation gowth r-t s I 2.0 2.0 2.3 3.0 2.5 Population growth rats - urban .. 16 Ibc 3 j.5 5 /. b14 / Ag. tructure (parosot) 0-14 d 4444/h 4S/ 2 43 46/s 15-66 52 7 s7 55 53 517; 65 noor 4 7a 4 7; 3 4 3 7; DIsndOncy ratio 1 o 7a c 0o9 7j c 1.2 /c.I 1.3 /.. 1.3 7; Urban populaton an perostt of total 4 /I.d 9 Ic 20 35 I.. 30 /n.r Poily plotnina. No of secosputs ceilattne (thous) t 7,400 7 . 409 No of ussrf (S orf arrind waeon) , ,, 8 Y7;tfl lior terr, (thousands) 250 /d f 280 /a f 221,000 I/ 13,220 /s 1,600 P*ro-stags -epley-d *n egriculturn 87 7 82 7; 71 Ta. 56 7; 69 Psrosniagw un neepyloynd .. -. 7 7; 10 IMC00tE DIsTRISUrION Percent cf estionul income -reec-d by highb.t 0% 54 Percent of ntiIonal hors r..ni-ed by low-et 20% 4 Percent of estionul mouse reunited by les-at 40% , 124 OITh IBllTION IF LAND oOINg'IP o dby top lS of comrs 8 nod by _llI.t 10% ofcnts HEALTH AND NUgTITION PoPulation per phytin , 15,a50 4,800 2,820 13,580 /n Population p nr ocentog person 2,340 A.b 1,280 5,110 2,050 2.94O 7i; Population par hospital bed 280 c 370 1,623 910 300 7; Potr captte calorin Icpp1 on S o8 reqirsnts /5 84 /J 87 In 92 /n Per capita protelin upPply total (grene per dayV/4 .. . 40 22 571 69 71 Ofuhc, nia so ule7. . 15 22 7; 25 7 South rote l-b yners /7 7.. 77; ED0UCATION djustsd /8 poinary scbool noroieLwnt retto 42 78 79 /bk 119 /k 85 Adjustsd L nsooruary school ecs-olont ratio 1 8 28 k b9 12 Test, of nohoolln pronided, flnt and second Inel1 12 12 12 10 12 PotsIlonal nrollect as S of soc. chool enrollment 4 19 6 /1 10/d 15 /1 Adult Ittarsy r.to S 36 ..b 727 hOUSI)O 6N-" 7 4 -. Ahstage No. of peaeons per roow (urb-n) Perrcent of oc_pied units tithbot pipud oatsr 277/s 49 i Aces.. to electricity (en 9 of total populition) .7.497 20 Percent of tural pIpNistiun connsctsd to electricity 10 0 h PTW- eisers fer 1000 population 6 13 21 45 /srb 18 lnotr tr pos_er 100ptio (kpob . 2p/) 3 1.1 8 14 Xlnct.t po_ pt conrnurptlon (kg p, c_ )82 /a 100 /n 229 932 Nuewprint coonsuspticn p.c. bg put ynar .. .. 0.3 1.8 /si 0.5 Notes Flgorns refor sfther 1o bs Intesi period or to cout of neIropntal arptare, body esibta, sd ihb loiest ynsr. Latnet potodns rofor in pricnlplr to distribution by age sad sa of rati_sel pepulatto the ynror 1956-60 or 1966-70; the 1bent Ys--s Ln prlo- A P?-otein stodrdo (rr,quirwsent) for all scootriba a. rsthb- ciple to 1960 sod 1970. 1sthd by USD Eoonr.i. o idseu.roh Ser.on provids for o wsl.,. a2 The Por Cypiti e NP h etiuobs is ut okrhot priece for ulloeoncs of 60 gram of total protsin pur day, su 20 gs of yo a thtor than 1960,-cloulotod by the user coceroc seal and pulse protein, of vhich 10 gra should be animal i n .queu ib.he 1912 world Rob ilos.o protein. Those t.und. "an -asht las thi thee of 75 Annruge timber of daughtsro per ooon, of rspscdicilor V of total protein and 23 rrse of anisal protoin - an uge. arerago for the oorld, propou..d by PAO in tho Third World Feud Po bp.lI.lec grt s-otto n-r for the dc-sdon -ediog in Sus-'Y' 1960 cod 1970. /7 I tn atudios hos- soggueted that o-ode dOAth rst.e of rhildrrm & Rtilo of coder 15 cod 65 cod onto oge brucket. to ape 1 through ay be u.sd on o first ppmos-latton indso of thee In hubor forcr breoket of ugos 15 through 64 . olootritin. a FPo rofereoco utuodurde rsp res-nt phyn.ological - /8 Porcstago enrell1d of -oreopooding populotion of school age quirrrnint fr- neornl ociity cod herlth, tinIg an defined for noh country. Ia 1971; A 1964-71 Ie Cdties of lahoress and ths os-a. agglinsatim of Fraeeiatao; /d 1961.; /a Ratio of peosulatteon sd-r 1rarud 65 ad ese-r to total labor torus; /f labor fers- defined as tbs sossieally et- 1 s9ds4t popRi tis oes- thn gs f 10 suluding hooalerri , eubstitse.o 7intsr.s ad gathearrs; Zi 1963; A Yt ata; Ai Ratio of pepalatios under 15 and 65 sod one to labr focus is 15-59 ago brakbts; a l968-69i /kA noldee oearga stod.st; A 1965; /. Pp.- lotion of 10 las-s sod -rs baood 00 1% sap1. data of 197I~ /a 1969; I4 1971, AM5 ssti-sts of labor f-eros in age poop 15-59. IBRD report fignri is 180.4 dllion bhand so 1971 cusao. DiffarsCs is due to ehanges in the d.nfitito of soskr-. . 1971 ceosus, persons war classified only on the basis of their sain aetivty; this ld to the fswlusle ef eerol ostsrts rsudh as hosasreen; /P 1965-70 UN estlete; /q 1965-69; /r his toen sa d a sasy i al towobhips as ceuld b ssparately identified; In R etio .2 populatios under 15 d 65 ad oer to total labor erose; /t i9n srstiaatsd per .opita Ol(P of 240 based os rsvod oatiOnal accounts ad imulodes U.S. inflati.n; /u Psesons sskg go-rk; /n 1964-66; Ih 15 ysars nd 0550; Ia Definition usolowo; /4 Os-ha ad rural, /0 Pss-osotsj of dwslltogw with pipd wator inside; /ci 1962; /ob Relates to nurea 6ith aldifery qoalltfioatmos ad aesatant ouros. to govsrnasnt ssrnl..e only; Iao rncluding cottage or ror-l ospitals sd "'dial cattars; /6 1965-70; /la Por dsfiniti.n of urbs - e UN Dregs-phic T-srbook, 1971, p. 156; /sf Household; /eg 1967; /ah 1%M; /si Imports only. 0 S.lsotio of Zlbia as objsctil eounstry ie based 00 thL ieportanos of tha *lulng entor in both o-tri0s, a-d the policy of utilising -rsnu obtalind fr this asqtor in daslop.g other sectors, partieularly thL rur-l osoter. June 6, 1974 ANNEX I Page 2 ECONOMIC INDICATORS GROSS NATIOINAL PRODUCT IN 1971/72 (a) ANNUAL RATE OF GROWTH (%, CON{STANT PRICES) US$ MIn. _ % 1965-68 1969-72 GNP at Market Prices 113.h 100.0 12.0 15.0 Gross Domestic Investment 71.h 63.0 Gross National Saving 1102 9.9 Current Account Balance -60.2 -53.1 Exports of Goods, NFS 51.8 h5.7 Jmports of Goods, NFS 91.0 80.2 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1971/72 1/ Value Added Labor Force- V. A. Per Worker US$ __1n _ % OOO's _ US$ -_-% Agriculture 35.6 31.2 225.0 83.9 158 3.2 Industry 4L.0 38.6 11.9 4.4 3,695 74.6 Services 3h44 30.2 31.2 11.7 1,101 22.2 Unallocated . . - - - Total/Average - 100.0 50572 lOQO. 100.0 GOVERNWENT F1NANCE Central Government (Rand Mln. % of GDP 1971/72 1971/72 Current Receipts 16.3 17.0 Current Expenditure 18.2 19.0 Current Surplus I77t Capital Expenditures 12.0 12.5 External Assistance (net) 13.9 14.5 Y,ONEY, CREDIT AND PRICES 1967 1968 1969 1970 1971 1972 (Milli on Rand outstanding end period Money anr. Quasi Money .O .. Bank Credit to Public Sector O. 7075. 2.52 2.99 1073 1.70 P-rnk Cred-t to Private Sector .. 2.76 h.4l 9.80 l0.h6 13.70 NOTE: All conversions to dollars in this table are at the average exchange rate prevailing during the period covered. 7/ Total labor force; unemployed are allocated to sector of their normal occupation. 'Unallocated"? consists mainly of unemployed workers seeking their first job. (a) Year commencing July 1 oo not available not applicable ANNEX I Page 3 TRADE PAYMENTS AND CAPITAL FLOWS BALANCE OF PAYMENTS MERCHANDISE EXPORTS 1971/ 2(a) 1969/70 1970/71 1971/72(a) U S$ Xn s (Millions US$) Exports of Goods, f.o.b. 18.3 28.0 44-6 Livestock Products 23.8 515 Imports of Goods, c.i.f. 48.0 62.7 83.8 Minerals 16.4 37.8 Balance of Recorded Trade -29.7 17T -39.2 Interest Payments (net) .. .. .. All other commodities >2 7 Workars' Remidttances .. Total 10-4 lOu.U Other Factor Payments (net) Net Transfers *- EXTE3NAL DEBT, DECEfSER 31 1972 Balance on Current Account .. .. Private Foreign Investment & Loans 50-4 USS mln Net MLT Government Borrowing .. .. 1 :ubtotal .. .. Public Debt, incl. Ouaranteed 48.o Capital Grants .. .. 7.0 Non-Guaranteed Private Debt .. Other Capital (net) .. .. .. Total Outstanding& Disbursed Other Items n.e.i. .. .. *. Overall Balance of Payments (+) .. .. DEBT SERVICE RATIO FOR 1971/72-- Gross Reserves (end year) .. Net Reserves (end year) *- Public Debt, incl. Guaranteed 2.25 Non-Guaranteed Private Debt . RATE OF EXCHANGE Total Outs tandingh& Disbur-sad. Th;-ough - 1971 IBRD/IDA LENnrNG, APRIL 30, '974 (Million US$'- U 1.00 = RO.71 Rl.OO = U5$l.4O IBRD iT,' Since - 1971 till Jan. 1973 US$1.00 = RO.79 Outstand4.ng & Disbursed 27.- Rl.OO = US$1.26 --. -:zarrsed Since Jan. 1973 _U-:,; ndingincL TJndistA2- ' '2. 1n h US$1.00 - RO.67 Rl.0O = US$1.49 1/ Ratio of Debt Service to Exports of Goods and Non-Factor Ser-ices. (a) Year commencing April 1 (b) Year commencing July 1 .. not available not applicable ANNEX II Page 1 STATEMENT OF BANK LOANS AND IDA CREDITS IN BOTSWANA AS AT APRIL 30, 1974 Amount (less cancellations, refundings, and terminations) (US$ million) No. Year Borrower Purpose Bank IDA Uidisbursed 63 1964 Bechuanaland Road Project 3.60 o 172 1970 Botswana Engineering Design & 1.59 - Preliminary WAbrks for the Shashe Project 233 1971 Botswana Gaborone-Lobatse 3.00 0.9 Water Supply Project 776 1971 Botswana Shashe Infrastructure 32.0 4.1 Project 19741- Botswana Shashe Supplementary (5.5) (5.5) loan 303 1972 Botswana Second Road Project 2.00 0.9 325 1972 Botswana Livestock Development 1.65 1.6 Project 2/ 471 1974-/ Botswana Francistown Urban (3.0) (3.0) Development Project Total 32.0 11.84 of which has been repaid 0.0 0.0 Total now held by Bank and IDA 32.0 11.84 Total undisbursed 4.1 3.4 7.5 1/ Signed on June 7, 197X, but not vet effective. 2/ Signed on May 9, 1974 but not yet effective. 3/ Prior to exchange adjustments. ANNEX II Page 2 B. PROJECTS IN EXECUTION-- Credit No. 233 Gaborone-Lobatse Water Supply Project: $3.0 million credit of February 10, 1971; Closing Date: March 31, 1975 The Project is expected to be completed shortly - almost 2 years late - primarily because of the poor performance of civil works contractors. The closing date has been extended to March 31, 1975. Because of exceptional rains in 1971/72, no major water supply problems are expected at Lobatse as a result of the construction delays. The provisional arrangement under which the khter Utilities Corporation's Gaborone- Lobatse Division was staffed through agency agreements has now been replaced by permanent staffing arrangements. Loan No. 776 Shashe Infrastructure Project: $32 million loan of June 31, 1973; Closing Date: November 1, 1975. $5.5 million supplemental loan of June 7, 1974. Work on the Infrastructure Project has proceeded satis- factorily with the main aspects nearing completion. Power and water were made available to the Mining Company (BCL) on various dates well ahead of the agreed target date of October 1, 1973. A net increase in the cost of the project is to be met in part by a supplemental Bank loan signed on June 7, 1974. Credit No. 303 Second Road Project: $2.0 million credit of April 27, 1972; Closing Date: March 31, 1976 The construction of the Gaborone-Lobatse road is ahead of schedule. The quality of the contractor's work and the consultant's supervisory services is good. 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any pro- blems which are being encountered and action being taken to remedy them. They should be read in this sense, and with the understanding that they do not purport to present a balanced evaluation of strengths and weak- nesses in project execution. ANNEX II Page 3 Credit No. 325 Livestock Development Project: $1.65 milliol credit of June 30, 1972; Closing Datet June 30, 1977 The Project was declared effective on April 30, 1973 and implementation is now getting underway. Some delays were experienced in recruiting the requisite key personnel but they have now taken up their positions and are recruiting staff, purchasing equipment, and developing a work program. Credit No. 471 Francistown Urban Development Project: $3.00 million credit of May 9, 1974; Closing Date: December 31, 1978 The project is not yet effective. ANNEX III Page 1 of 2 BOTSWANA WAN AND PROJECT SUMMARY Borrower: Botswana Development Corporation Guarantor: RepubLic of Botswana Amount: US$4.0 million equivalent Terms: Repayable substantially in conformity with the aggregate of the amortization schedules for sub- loans and investments for which withdrawals from the loan amount are made; interest at 1-1/4 percent per annum; commitment charge of 3/4 of one percent on the amount of each sub-loan or investent to accrue as from their various dates of approval by the Bank. Relending Terms: BDC would normally lend at prevailing market rates, currently 10 percent per annum. BDC would normally pass on the foreign exchange risk to its borrowers, except in cases of small loans (below $75,000). The Government has indicated that it intends to protect BDC against any substantial net financial losses resulting from exchange rate fluctuations on BDC's sub-loans. Purpose: The loan would assist EDC in meeting its estimated commitments for financing the import component of its sub-projects. Free Limit: Us$75,ooo for individual sub-projects; US$800,000 aggregate linit. Debt Covenants: Maximum debt/equity ratio of 3:1 Estimated Disbursements: Fiscal year 1975 1976 1977 1978 US$ million 1.8 1.2 0.9 0.1 Procurement: Through normal commercial channels. ANNEX III Page 2 of 2 Financial Statements: Year ending June 30 1974 1975 1976 1977 1978 …_.__----…(R '000) - ------- Projected Commitments Loans 1,155 1,995 1,855 1,435 1,435 Equity 495 885 795 615 615 Total 1,650 2,850 2,650 2,050 2,050 Projected Income Statements Total revenue 943 659 819 1,064 1,205 Financial and adminis- trative expenses 291 471 602 744 859 Provision for losses 35 56 47 30 26 Income tax 196 5? 62 96 105 Net profit 421 75 108 194 215 Projected Balance Sheets Net current assets 2,096 692 127 220 26 Net investments 3,477 6,221 8,459 10,035 11,309 Net fixed assets 240 240 240 240 240 Total assets 5,813 7,153 8 10,495 11,575 Long-term debt 2,908 4,073 5,738 7,203 8,068 Total equity (net worth) 2,915 3,080 3,088 3,292 3,567 Total liabilities and equity 5,813 7t153 8,826 10,495 11,575 Debt/equity ratio 1.0/1 1.3/1 1.8/1 2.2/1 2.3/1 Appraisal Report: Report No. 394a-BT, dated June 6, 1974. 20'~~~~~~~~~b °- -2-0> _5.AUA MOUNTAINS _ i _ 9< co HILLAAt HILLS~~~~~~~~~~~~~~~~~ IL |~ ~~~ I '1 '=°oEo Ke;wn'/6gSHUL*HONfl HILLS! :-(T"et I. SkABELEAHVL~~~WS.UIL8~ LS ' ML I -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~e I,,.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~F - - ICdL 6-LAaL, !- 0 e TLLTL*0 BMH. D,-T 22 r U; a J \ g g 8> 2!~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~PUOP.UM !5 L i TI.S 2e - 24'~~~~~~~~- T,obL ! ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~- -------- --- TRA!CKS. .g , I .\% / Y \ SOEATSI R~~~~~~~~~d AIELWAYS | \ / , JZ \< RIVERS -.- -INTERNATIONAL BOUNDARIES E LXISTING AND PROPOSED GAME RESERVES 2 ~~~~~~~L ! / - - Ub -o k SOUTHERN 0 I b X _ I'SJ tJdg \d \ |REPUBLB} 441~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~REUEIRHDEI !V - fTS O U 1 b-V S AAT 0 L I .S t \ C O : t A 50UIH A R - U EOTHO j~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~L H -LSOHO' . 1 E P U THE BOUNDARIES SHOAL ON THIS MAP DO NOT * IMP ENDORSEBK ENT OR ACCEPTANCE RY TIE WOUL RU AND LS AFFILIATES. 23- ~~~~ ~~251 2Dr