FILE COPY Document of rUL bu XThe World ]Bank FOR OFFICIAL USE ONLY Report No.p-2057-BEN REPORT AND RECOMMENDATIONS OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE PEOPLE'S REPUBLIC OF BENIN FOR A FEEDER ROADS PROJECT May 5, 1977 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currency Unit: CFA Francs (CFAF) US$1.00 CFAF 245 CFAF 1 million US$4,081 Fiscal Year January 1 - December 31 System of Weights and Measures: Metric Metric US Equivalents 1 meter (m) 3.28 feet (ft) 1 square meter ) 10.8 square feet (sq. ft) 1 cubic meter (m ) 35.3 cubic feet (cu ft.) 1 kilometer (km) 2 0.620 mile (mi) I square kilometer (km ) 0.386 square mile (sq. mi) I hectare (ha) 2.47 acres 1 metric ton (t) 2,204 pounds (lb) Abbreviations and Acronyms CARDER Centre d'Action Regionale pour le Developpement Rural DLT Directorate of Land Transport CRB Directorate of Roads and Bridges FAC Fonds d'Aide et de Cooperation FED Fond Europeen de Developpement ME Ministry of Equipment MRD Ministry of Rural Development OCBN Organisation Commune Benin-Niger des Chemins de Fer et des Transports SONACO Societe Nationale pour le Developpement du Coton SONAGRI Societe Nationale pour le Developpement Agricole SONICOG Societe Nationale Industrielle pour les Corps Gras STI Services des Techniques Industrielles USAID United States Agency for International Development v.p.d. Vehicles per day FOR OFFICIAL USE GNLY INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION B,F THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE PEOPLE'S REPUBLIC OF BENIN FOR A FEEDER ROAbS PROJECT I submit the following report and recommendation on a proposed development credit to the People's Republic of Benin for the equivalent of US$5.5 million on standard IDA terms to help finance a feeder roads con- struction project. PART I - THE ECONOMY 1. There has not been an economic mission to Benin recently although a mission to review Benin's next plan is scheduled for later this year. The last economic report (Report No. 191a - DA) entitled "Economic Situation and Prospects of Dahomey" was issued on August 20, 1973. The following analysis is based on information gathered by the 1975 IMF Article XIV consultation mission and by various Bank missions that visited Benin in the course of 1976 and early 1977. Annex I contains basic country data. Past Development 2. With a GDP per capita of only US$140, Benin is classified by the UN as one of the world's 25 least developed countries. It is an overwhelmingly rural nation: 80 percent of the population is dependent on agriculture which accounts for 30 percent of GDP and 90 percent of foreign exchange earnings. Insufficient and irregular rainfall limits the production of high value tree crops. Seventy percent of the total agricultural output consists of sub- sistence low-value root crops (yams and cassava). Palm oil, cotton and groundnuts are the country's major export crops. GDP per capita in the rural sector is very low, averaging about US$50. 3. Transport and commerce are the second most important activities in Benin. The port of Cotonou has traditionally been the door to the sea for landlocked Niger and a transit port for the western part of Nigeria. A large share of the imports of consumer goods (beverages, tobacco, radios, etc.) and exports of agricultural products registered as Benin trade, is in fact unofficial border trade to and from Nigeria. Due to the recent conges- tion of the port of Lagos, the transit function of the Cotonou port has further developed. In 1976 it is estimated that about half of the port's total traffic (960,000 tons) originated in or was destined for neighboring countries (30 percent to Niger and 20 percent to Nigeria). Transport and commerce generate about one third of Benin's GDP (at factor cost), account for 10 percent of its foreign exchange earnings, and employ about 12,000 persons. This document has a rtrictod distribution and may be used by recipionts only in the perfonnce of their offical dutie. Its contents may not otherwise be disclosd without Worid Bank autbhoniatio. - 2 - 4. The country has an embryonic industrial sector and the known mineral resources - limestone and phosphate - have not yet been exploited. There are plans to start exploiting the Onigbolo limestone deposit in the near future. There are also indications of the existence of oil offshore. Political Situation and Recent Economic Development 5. Since independence in 1960, there have been numerous changes of Government. This instability has been due in part to regional and ideological differences. A major turning point occurred at the end of 1974, when the military Government that had been in power since 1972 decided to establish a Marxist-Leninist system. The declaration of the new regime was accompanied by measures aimed at decreasing foreign influence and increasing the country's self-reliance. Nationalization of foreign private interests in key sectors (banking and credit, gasoline distribution, services related to the port and industry) took place and the various technical assistance programs were scaled down. These measures disrupted the economy, since there was an inadequate number of Beninese to replace the departing expatriates. The situation was further aggravated by drastic changes in the public service which resulted in further losses of productivity. 6. The agriculture sector was affected by these developments which led to a deterioration of support services, especially input distribution. Fur- thermore, the Government's pricing and marketing policies did not provide enough incentive to the farmers, being mainly guided by the Government's desire to keep the cost of living and the level of salaries low in the urban centers. Production of most agricultural products stagnated during 1974-76 and cotton production dropped sharply from 50,000 tons in 1972/73 to less than 20,000 tons in 1975/76. Maize production was also affected by the Government's decision to prohibit maize exports by private traders to Nigeria, a tradi- tional outlet for Benin. The Government intends to establish a state grain trading monopoly. 7. The Government decided in 1976 to implement measures aimed at encouraging farmers to produce more. Farmgate prices were increased to generally more satisfactory levels for the 1976/77 season. Farm inputs were distributed on time for the first time in four years. Preliminary results for the 1976/77 season are, however, not encouraging. The farmers' response has been limited. Low rainfall also contributed to a further decrease in output. 8. In the modern sector, transport and other economic activities have been stimulated by the rapid growth of transit trade with Nigeria. Transport was the only growing sector in Benin over the 1971-75 period. In 1976, the Government took further measures to improve the port's handling capacity which had fallen to a low 12 tons/hour in 1975 as opposed to 23 tons/hour in 1972/73. To attract Nigerian traffic away from the congestion at the Lagos Port, border formalities are being simplified. The ad valorem - 3 - transit tax of 2.08 percent on the Nigerian traffic has been dropped. 1/ A study of the feasibility of extending the port facilities is underway. The Government of Nigeria is financing the coastal expressway linking Cotonou with the Nigerian border, to be completed in early 1977, and is planning to build several other roads linking the western part of Nigeria to the Benin- Niger axis. 9. Public investment in recent years has been at a low level. Total gross investment is estimated to have stagnated at about US$50 million/year over the 1971-75 period, (i.e. to a low US$16 per capita compared with US$32 in neighboring Togo and US$89 in the Ivory Coast), while public investment is estimated to have averaged about US$25 million per year, (i.e. also a low US$8 per capita compared to US$27 and US$55 in Togo and the Ivory Coast respec- tively). Public investments were concentrated in road infrastructure and agriculture. Benin has not had a national plan since 1972, but the Government is now working on the preparation of an interim 3-year plan covering the 1977-79 period. 10. While Benin has not been successful recently in spurring economic growth, it has maintained a strict financial orthodoxy. The Central Govern- ment's current budget, which was in chronic deficit during the sixties (requiring support from France until 1970), has been in equilibrium since then, even generating a small surplus of about 7 percent of current revenues between 1971 and 1975. This was achieved through an austerity policy of freezing civil servants' salaries, which have not been increased for 10 years, and limiting expenditures on materials. Revenues (in real terms) increased very little due to the zero growth of the economy. 11. Benin has succeeded in maintaining the equilibrium of its balance of payments despite the sharp deterioration of its trade balance, the deficit of which increased to US$40 million in 1974/75 (11 percent of GDP). The improve- ment of the service account, due to increased transit shipments to Nigeria, helped to compensate for this. At the end of the first quarter of 1976, Benin's net foreign exchange reserves amounted to only US$16.5 million, i.e., the equivalent of one month of imports. 12. Recent trends in the agricultural sector have inevitably resulted in a growing gap between the incomes of the urban population and the farmers, some of whom shifted back to subsistence crops. The cash income of the farmers is estimated to have declined by 50 percent between 1972 and 1976. Prospects 13. Benin's economic prospects are for only limited growth. GDP is not expected to grow by more than 3 to 4 percent per annum over the next decade, 1/ The resulting loss of tax revenues is negligible compared with the incremental value added created by the development of the Nigerian traffic. assuming perseverance with the recent efforts to improve the economic situ- ation. The measures taken in 1976 mark an improvement in economic policies. The proposed technical assistance project, which would help the Government strengthen the institutions and prepare a long-term development program for the Zou-Borgou area, is a reflection of this. 14. Cooperation with Nigeria could become a major factor for Benin, since Nigeria could provide what Benin lacks most, a neighboring large market and a financial base. The two countries are already associated in the exten- sion of the Cotonou clinker grinding plant (100,000 tons) to be completed in early 1978. They are also considering joint investment in a project to produce 40,000 tons of refined sugar at Save for the Nigerian market; and a cement plant based upon the Onigbolo limestone deposit, producing between 500,000 and one million tons per year. The implementation of these projects could considerably improve the balance of payments outlook for Benin given adequate price and marketing guarantees by Nigeria. 15. The stimulation of Benin's economy implies increasing public invest- ment to at least US$50 to US$60 million per year, in constant 1977 prices, in the late seventies and early eighties. Such a program, in view of the limited local financial resources, will have to be financed, as in the past, mostly by foreign aid. Public savings will continue to be limited, especially in view of Government's decision to increase civil service salaries starting January 1977, which will result in a 15 to 20 percent increase in the Govern- ment's wage bill. 16. Benin's total external debt was relatively high at the end of 1975, amounting to US$160 million including undisbursed, or about 40 percent of the country's GDP. External public debt service amounted to about 10 percent of the country's exports in 1975. This constitutes a relatively high burden for Benin considering its poverty and limited foreign exchange earning pos- sibilities. Debt service as a share of Government revenues is probably substantially higher. 17. Given Benin's extreme poverty, limited development prospects, difficulty in mobilizing domestic resources, and relatively high debt ratio, foreign donors should continue to provide aid to Benin on the softest possi- ble terms and also to cover a high proportion of local costs if necessary. PART II - BANK GROUP OPERATIONS IN BENIN 18. To date the Bank Group has extended 5 credits to Benin, totalling US$39.6 million. Two of the Credits were for agriculture (29 percent of total lending) and two for highway construction and maintenance (61 percent). The fifth and most recent operation was an education project with a large rural training component. Annex II contains a summary statement of Bank Group operations in Benin as of March 31, 1977, as well as notes on the execution of ongoing projects. 19. The Hinvi Agricultural Development Project (1969) which provided for the construction of an oil palm mill and maize storage silos as well as for palm plantings and food crops development, was IDA's first operation in Benin. The project has been completed satisfactorily although three consecutive years of drought have irreparably affected the grow.h of palm trees, probably reducing prospective yields 20 percent below appraisal es- timates. The Second Agricultural Credit was the Zou-Borgou Cotton Project (1972). This operation, co-financed by FAC, aimed at expanding cotton and food crop production in the Zou and Borgou provinces. Due to organizational and managerial problems in the agricultural sector, insufficient producer prices and low rainfall, the project failed to achieve its main objective, resulting in a severe setback to Benin's cotton industry. A technical assistance project to help prepare for a possible follow-up project has been prepared and is expected to be presented to the Board at the same time as this project. It would finance the services of six experts to strengthen the institutions concerned. 20. The Bank Group's involvement in the transport sector in Benin began in 1969, when the Bank acted as Executing Agency for a UNDP "Land Transport Study". This study led to the financing of a four-year highway maintenance project in 1970, successfully completed in 1974, followed by a Second Highway Project in 1973. The Second Highway Project co-financed by USAID which comprises principally the reconstruction of 320 km of the Parakou- Malanville road, Benin's most important North-South trunk road, and the continuation of the road maintenance program, is progressing satisfactorily. However, severe costs overruns due to inflation led the Association to provide a supplementary credit of US$9 million in March 1976. 21. The First Education project which became effective in 1976, provides for the improvement of ongoing rural youth training programs and the construc- tion and equipping of a skills upgrading center in Cotonou. The project also includes a pre-investment study for a follow-up training/education project. 22. Other IDA operations at a fairly advanced stage of preparation are a Third Highway Project and a project for the extension of the port of Cotonou, for the preparation of which the Association has already advanced US$500,000 under the Project Preparation Facility. PART III - AGRICULTURE AND THE RURAL ROAD SECTOR Agricultural Background 23. Agriculture plays a central role in Benin's economy, being the country's main employer and its major source of foreign exchange earnings. Agricultural production falls into two categories, food crops grown mainly for domestic consumption and crops grown for export, mainly palm products (150,000 tons), groundnuts (40,000 tons) and cotton (20,000 tons in 1975). 24. The Ministry of Rural Development (MRD) is responsible for policy and overall coordination in the agricultural sector. MRD is also responsible for coordinating the seven state enterprises which are involved in specific fields of agricultural development. The central staff of the Directorate of Agriculture is small and the Ministry functions mainly through the Centres d'Action Regionale pour le Developpement Rural (CARDERs). The CARDERs are responsible in their respective regions for all aspects of agricultural development including extension services and marketing of crops. 25. The Government policy in agriculture is directed towards encouraging development of industrial crops to expand foreign exchange earnings. To capitalize on the country's good farming tradition and ample land 1/ suitable for food crop cultivation, the Government also aims at substantially increas- ing cereal production in order to meet growing demand from urban centers and the large market in neighboring Nigeria. To support this policy, the Govern- ment has since 1969 carried out a number of agricultural development schemes. These were successful at the outset, but since 1972/73 agricultural produc- tion has declined. Some of the reasons for this were discussed earlier. An important factor limiting growth in agricultural production is the lack of feeder roads and the poor condition of those that do exist. This has been a concern for the Government for a long time, and led to the inclusion of a large feeder road component in the Zou Borgou Cotton Development Project in 1972. The Government also requested the Association in 1973 to carry out a study of feeder roads needs which forms the basis of the present project. Marketing and Transport 26. About 80 percent of food crops are consumed on the farm but, until 1976, the balance was freely marketed. Since then, producer and consumer prices are, in principle, controlled by the Government. The responsibility for marketing cereals and other cash crops has been transferred to the CARDERs, which operate through village cooperatives, and a number of state enterprises involved in the development of specific crops. However, due to too low official producer prices, the Government has not been able to buy large quantities of cereals which are mostly traded unofficially. 27. The transport facilities used in marketing agricultural output and in supplying inputs have traditionally been in the hands of private operators. However, recent Government policy calls for the use of state owned transport in association with the CARDERs, with private transporters being used only when the former is not available. This tends to limit competition, although bush buses and taxis compete to carry people and produce to local markets. Highway Network and Traffic 28. Benin's primary transport system is relatively well developed and is being improved. Cotonou is the focal point of a route which begins at 1/ Benin has an estimated 9 million ha of land suitable for cultivation of which less than one million arn cultivated, mostly for food crops. - 7 - the port of Cotonou and extends the length of Benin to landlocked Niger, and comprises 440 km of railway and the Parakou-Malanville road (320 km). Benin's road network totals approximately 7,200 km of classified and unclassified roads and tracks of which 760 km are paved. The size and distribution of the primary and econdary road network generally meets the country's needs. Maintenance on this network has improved during the past years as a result of the two IDA financed highway projects, but is still hampered by lack of equipment and funds. 29. There are about 3,800 km of tertiary and unclassified roads and tracks which serve villages and agricultural areas. They are often impass- able to wheeled traffic during critical phases of cultivation. Local author- ities, for lack of resources, have failed to make any significant improvements in this network, and many of the roads and tracks have deteriorated. The proposed project addresses itself to the economically most important of these tracks. Highway Administration 30. The Directorate of Roads and Bridges (DRB) of the Ministry of Equipment is responsible for the construction and maintenance of 4,900 km of roads. The remaining 2,300 km unclassified feeder roads and tracks are the responsibility of the Ministry of Interior and local authorities. The Gov- ernment intends to create a special Feeder Roads Division within DRB (see para 35 below), which would be responsible for the construction, improvement and maintenance of feeder roads. The existing General Studies Division of the DRB is restricted in its activities to a drafting and design office function and there is a need to develop a sound evaluation and planning capability within the DRB. It is therefore proposed to include a planning unit within the new Feeder Roads Division. Road Engineering and Construction 31. A Chief Engineer heads the Division of Construction (Travaux Neufs) in DRB. He is, in principle, responsible, with assistance from the General Studies Division, for the preparation and supervision of new projects. In practice, most projects financed by foreign aid agencies are prepared and supervised by consultants. Since there are few local contracting organiza- tions of sufficient capability, major works are undertaken by foreign con- tractors. However, improvements to secondary roads under the Second Highway Project and feeder roads under the Zou Borgou Cotton Project have been car- ried out satisfactorily by force account by DRB. Thus the same procedure would be proposed for this project. Road Development and Financing 32. Road expenditures more than tripled, between 1970 and 1975, from US$3 million to US$11 million and more than doubled in 1976 with the con- struction of a coastal link with Lagos, and the construction of the Parakou- Malanville road under the Second Highway Project. Feeder roads development has been limited to the 425 of the projected 620 km of roads completed under the Zou-Borgou Cotton Project. Most of the remaining roads would be improved under the proposed project. 33. While the road network has been expanding and the cost of main- tenance increasing, expenditures for recurrent road maintenance have declined since 1972, when they averaged about US$400 per km of major road. It is estimated that expenditures of about US$700 per km of major road and US$100 per km of feeder road would be justified. The Government has agreed to improve its road maintenance performance in general (Development Credit, Section 4.02). To this effect the Government would prepare and thereafter carry out a five-year (1978-1982) road maintenance program providing for maintenance of primary, secondary and feeder roads, in a balanced proportion. This program, which would be submitted to the Association for review and comments by November 30, 1977, would establish gradually increasing physical maintenance targets for each year, and would include a plan of action for the mobilization of the resources necessary for its execution. For the feeder road network in particular, in addition to maintaining the proposed project roads to a specified minimum standard after project completion, the Government would, beginning in 1978, maintain a minimum of 600 km of other priority feeder roads not included in this project. For the 1,300 km of project roads, annual maintenance costs would be about US$130,000. This includes equipment depreciation, but excludes periodic regravelling which should take place every 8 years at US$800 per km. The Government has agreed to explore the possibili- ties of ensuring the participation of local communities in the feeder roads improvement and maintenance program (Development Credit Agreement Section 4.03). PART IV - THE PROJECT 34. A report entitled "Appraisal of a Feeder Roads Project No. 1411-BEN", dated May 10, 1977 is being circulated separately. A credit and project summary is contained in Annex III. The project is based in part on a study financed by IDA under the Second Highway Project (Credit 415-DA), and carried out by the consultants Lamarre Valois International (Canada). A supplemen- tary list of high priority feeder roads was also prepared by the Ministry of Rural Development. The project would in addition include a part of the roads outstanding from the Zou-Borgou Cotton Project. Appraisal took place in July 1976 followed by a post-appraisal mission in October, 1976. Negotia- tions were held in Washington in April, 1977. The Beninese delegation was led by Mr. R. Rodriguez, Minister of Equipment. Project Description 35. The proposed project would consist of a three-year program for the improvement and subsequent maintenance of about 845 km of feeder roads and maintenance of another 425 km previously improved under the Zou-Borgou Cotton Development project. It would create a specialized division for Feeder Roads in the Ministry of Equipment. The main components of the project would be: - 9 - (a) purchase of highway maintenance equipment and spare parts, materials and supplies; and (b) technical and general assistance to the Ministry of Equipment for civil works, project monitoring, developing a long term plan for feeder road improvement and maintenance, and training. Implementation of the project is scheduled to start at the beginning of 1978 and to be completed in three years. 36. The Ministry of Equipment would be responsible for the overall execution of the project through a Feeder Roads Division that the Government has agreed to establish within the Directorate of Roads and Bridges. This Division would consist of a Headquarters Unit based in Cotonou and three subdivisions, each initially in charge of one construction brigade to be increased, if warranted, to a total of four brigades. The construction brigade's major equipment needs would be met by the central mechanical work- shop in Cotonou and its annex in Parakou. 37. The feeder roads to be included in the first year's improvement and maintenance program have been selected by the Government with the approval of IDA. Programs for the second and third years are still tentative. They would be prepared by the new Feeder Roads Division and presented to an Interminis- terial Technical Committee (ITC) which the Government plans to create shortly. It is intended that ITC would include representatives from the Ministries in charge of equipment, rural development, finance, plan, as well as agencies with a direct interest in agricultural development. The Government has pro- vided assurances at negotiations that ITC would be established not later than October 31, 1977 (Development Credit Agreement Section 3.04(a)). Once the annual program is adopted it would be submitted to the Association for approval not later than 3 months before the scheduled start of the works (Development Credit Agreement Section 3.03(b)). 38. The works would be carried out using different techniques. Where unskilled labor is not readily available and engineering considerations warrant, a fully mechanized brigade would be used; where reasonable supplies of labor are available and engineering conditions permit, a less mechanized brigade would be employed; where labor is readily available and the volume of works are suitable, a labor-intensive brigade would be used, to be increased, if warranted, to two such brigades after one year. 39. The Feeder Roads Division would be assisted by a seven-man consul- tants team consisting of two road engineers (one as chief of the technical assistance team, and the other to direct labor intensive works), one trans- port/development economist and four road technicians for the mechanized and light brigades, for about two years. The Feeder Roads Division would monitor such items as the performance of the different construction brigades and the appropriateness of different road construction and maintenance standards; it would also prepare a long term feeder roads development plan. - 10 - 40. Technical assistance would be provided for on-the-job training for local staff. Technical assistance to be provided by consultants would amount to six man-years of civil engineers/economist and seven man-years of senior technicians (i.e. a total of 134 man/months). The average man-month cost is estimated at US$6,200 corresponding to rates of consulting firms working under similar circumstances. The possibility of reducing the cost of technical assistance by making use of voltnteers (from UN or other organizations), for some of the positions, wouldi be actively examined with Government. Project Costs and Financing 41. The project is estimated to cost US$6.1 million net of taxes and duties, with a foreign exchange cost of US$4.0 million (66 percent). Taxes and duties are estimated at US$0.6 million equivalent. The proposed Credit of US$5.5 million would finance 90 percent of total project cost net of taxes, i.e. all the foreign cost and 1.5 million equivalent in local costs. The government's contribution would be US$0.6 million or 10 percent of total project cost net of taxes. Cost estimates are based on 1976 prices. The financial cost, net of taxes, of improving roads is about US$3,900 per km including equipment depreciation. Maintenance costs excluding regravelling are estimated at about US$100 per km per year. 42. Expenditures to be financed by IDA in the first year of the proj- ect would amount to about US$1.2 million. The interim financing requirement, assuming a lag of three months between the time the Government incurs the expenditure and the time it is reimbursed by IDA, would be about US$300,000. In view of Benin's present poor liquidity situation, it is proposed that IDA makes an advance payment of US$300,000 to the Government to be deposited in a special project account, the opening of which would be a condition of effectiveness of the credit (Development Credit Agreement Section 5.01(b)). Procurement and Disbursement 43. Virtually all civil works would be carried out by force account (about US$5,000,000). Local contractors may be used for constructing small drainage structures. Since Government has indicated that they intend to use contractors only in exceptional cases, it is expected that the amount would not exceed US$100,000. Equipment, vehicles, materials and supplies amounting to about US$3.2 million, would be procured on the basis of international competitive bidding in accordance with Bank Group Guidelines. Contracts for equipment, vehicles, materials and supplies costing under US$50,000, and for spare parts would be awarded on the basis of competitive bidding advertised locally in accordance with the applicable local procedures. The total amount of such purchases would not exceed US$400,000. Contracts for selected civil works would be awarded on the basis of competitive bidding advertised locally in accordance with the applicable local procedures. Consultants for tech- nical assistance would be retained under terms of reference and conditions satisfactory to the Association. - 11 - 44. The IDA Credit would be disbursed to cover: (a) 100 percent of the foreign expenditures and 70 percent of the local expenditures of equipment, spare parts, supplies and materials; (b) 70 percent of road improvement and maintenance works by force account; (c) 75 percent of total expenditures of civil works done by contractors; and (d) 100 percent of foreign expenditures and 70 percent of local expendi- tures for consulting services and technical assistance. Benefits and Justification 45. The economic justification of the project rests on two types of benefits: the value added of increases in the production of cash crops following improvement in accesssibility but assuming no significant comple- mentary investments; and secondly, savings in transport costs accruing to normal traffic. The benefits derived from induced production represent about 80 percent of the total quantified benefits. They are estimated at about US$8.5 million equivalent over the life of the project and are expected to go directly to the farmers. Benefits derived from vehicle operating costs savings would, in the case of private transporters, largely be retained by them but would also be reflected in a higher standard of transport service; in the case of Government transport, these benefits provide resource savings which in part would be passed onto the rural community via the CARDERs, through more efficient social and agricultural extension services and supply of inputs. 46. In the evaluation of the project, 562 km of the identified feeder roads, were found yielding an overall average rate of return of 27 percent. Also identified under the program are 160 km of feeder roads outstanding from the Zou-Borgou Cotton Project. These were not reanalyzed, but when appraised in 1971/72 they were found yielding an 11.5 percent rate of return, based on vehicle operating cost savings only. In addition, about 120 km of feeder roads yielding a minimum rate of return of 10 percent would be selected for inclusion in the second and third year programs. The project is only mod- erately sensitive to variations in project cost, and the assumptions used in estimating benefits are cautious. 47. Institution building is of primary importance and the project provides benefits in this area which cannot be quantified. The establishment of the Feeder Roads Division and of the Interministerial Consultative Committee would ensure that development of agriculture and feeder roads is effectively coordinated and carried out. The possible participation of rural communities in maintaining feeder roads may help reduce the burden of these recurrent expenditures on the national budget. Social benefits would also represent a significant addition to the quantified economic benefits. The project would improve access to social services for about 200,000 rural inhabitants. - 12 - Project Risks 48. It is axiomatic that the Government should pursue policies which put pricing policies for farm inputs and products on a sound basis, and similarly ensure the timely supply of these inputs. The Government should also provide adequate extension services to the farmers served by the proposed project. Discussions on these matters will continue to be held between Government re- presentatives concerned and the Association in the context of the ongoing agricultural projects and the proposed Technical Assistance project. But it remains clear that?should the Government follow an economic policy as little growth-oriented as in the past, agriculture would continue to stagnate or decline even further. The sensitivity analysis shows, however, that with a drop in net added value of cash crops of as much as 40 percent, the project would still yield an economic rate of return of 15 percent. Also there are signs that the Government is determined to improve the situation. Furthermore to reduce the risks under the project, only the first year's construction program has been finalized. The programs for subsequent years would be subject to revision by the monitoring and planning unit of the Feeder Roads Division. PART V - LEGAL INSTRUMENTS AND AUTHORITY 49. The draft Development Credit Agreement between the People's Republic of Benin and the Association, the Recommendation of the Committee provided for in Article V, Section 1 (d) of the Articles of Agreement of the Association and the draft resolution approving the proposed Develop- ment Credit, are being distributed separately to the Executive Directors. 50. The following will be special conditions of effectiveness: that the Feeder Roads Division shall have been created; and that the Special Account shall have been opened as provided for in Section 2.02(b) of this agreement (Development Credit Section 5.01). Features of the draft Development Credit Agreement of special interest are referred to in Section III of Annex IV. 51. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association. PART IV - RECOMMENDATIONS 52. I recommend that the Executive Directors approve the proposed Credit. Robert S. McNamara President May 5, 1977 Attachments Page 1 of h pagea TABLE 3A BENIN - SOCIAL INDICATORS DATA SHEET LAND AREA (THOU KK2) ------------------------------------------- BEN IN REFERENCE COUNTRIES (1 970) TorAL I12.6 MOST RECENT AGRIC. .. 1963 1970 ESTIMATE TOGO LBhUIA *7uT OCST** GNP P-R CAPITA (US1) o.0 1oo0.0 140.0 180.0 290.0 340.0 POPULArION AND VITAL STATIS(ICS POPULATION (h1ID-YR, MILLINO z2.1 2.1 3.1 2.0 1.3 5.4 POPULATION DENSITY PER SQUARE KM. 18.0 24.0 28.0 36.0 12.0 16.0 PER SO. KM. AGRICULTURAL LAND 114.0 La .. .. .. 30.0 VlTAL STATISTICS AVERAGE sIRTH RATE (/THJU) 51.4 50.6 49.9 51.0 42.8 46.1 AVERAGE DEATH RATE (/TH)U) 31.5 26.6 23.0 26.6 23.5 23.3 INFANT MORTALITY RATE (7THOU) 110.0 .. .- *. 137.3 LIFE EXPECTANCY AT 810TH (Yh5) 34.3 38.5 hl.8 38.5 41.0 41.0 GROSS REPROCUCTION RATE 3.3 3.3 3.3 3.3 2.6 3.1 POPULATION GROWTH RATE (I) TqTAL 3.1 2.8 Z.7 2.7 3.3 La 3.4 JRaAN .. 6.0 5.9 / 6.0 .. . JRd4N POPULATION (2 OF TOTAL) 9.3 .. 13.1 13.0 26.2 28.0 AGE STRUCTURE (PERCENT) 0 TO 14 YEARS 46.0 44.9 45.4 45.0 40.1 42.5 15 TO 64 YEARS 50.2 52.6 52.1 52.0 56.0 54.8 65 YEARS AND OVER 3.8 2.5 2.5 3.0 3.3 2.7 AGE DEPENDENCT RATIO 1.0 0.9 0.9 0.9 0.6 0.8 ECONOMIC DEPENDENCY RATIO 0.9 If 1.o LA I.Ob 1.0 0.9 9k FAMILY PLANNING ACCEPTORS (CUMULATIVE. HO) .. .. ..HO JSERS (Z OF MARRIED WOMEN) .. .. .. EMPLOYrENT TOTAL LABOR FORCE (THOUSA40) 1100.0 1300.0 1500.0 720.0 580.0 2600.0 LABOR FORCE IN AGRICULTURE (Z) 55 .0 52.0 .. 78.0 72.0 82.0 UNEMPLOTED (I OF LABOR FORCE) . . .b. .. .. 20.0 6.0 INCOME DISTRIBUTION X OF PRIVATE INCOMIE REC D BY- HIGHEST sx OF HOUSEHOLDS 31.4 /c .. .. .. 61.1 / H16HEST 20 OF HOUSEHOLDS 51.1 : .. .. .. 72.6 6 LOWEST 201 OF HOUSEHOLDS 5.5 j .. .. .. 5.3 3 LOWEST 40D OF HOUSEHOLDS 15.8 B8 . . .. .. 10.9 a .. OISTRIBUTION OF LAND OWNERSIP Z OWNED BY TOP IOZ OF OWNERS .. .. .. I OWNED BY SMALLEST IO OWNERS .. .. .. .. HEALTR AND NUTRITION POPULATION PLh PHYSICIAN . 2. 29260.0 30050.0 Z Z8140.0 10450.0 15320.0 POPULATION PEh NURSING PERSON . . 440.0 2360.0 / 4200.0 4140.0 3130.0 / POPULAT 10 PEA HOSPITAL B-D . . 870.0 /b 880.3 820.0/b 530.0 850.0 PER CAPITA SUPPLY OF - CALORIEN (I OF REQUIREM-NTS) 96.0 98.0 98.0 94.0 V8.0 108.0 PROTEIN (GRAMS PER DAY) 54.0 55.0 56.0 51.0 36.0 60.0 -0' WHICH ANIMAL ANn 'ULSE . . 18.0 .* 19.0 1 0 .0 o d 18 I 0 DEATH RATE (/THOU) AGES 1-4 45.0 .. .. .... EOJ CAT ION ADJUSTED ENRULLMENT RATIO PRIMARY SCHOOL 26.0 40.0 .. r6.0 43 . 16 .0 SECONDARY SCHOOL 2.0 5.0 .. 8.0 12. 0 11. 0 Ie YE4RS OF SCHOLLING PROVIO-D (FIRST AND sECOND LEVEL) 13.0 13.0 13.0 13.0 12.0 13.0 VOCATIONAL ENhOLLMENT (Z OF SECONLARY) 13.0 .. .. 10.0 5.0 7.0 ADULT LITURPCY RATE 1() 20.0 Le .. .. .. 15.0 20.0 HOUSI MG PERSO0NS PER RLOM ( AVERAGE) .. .. .. OCCUJPIEG DWELLINGS WITHOUT PIPE) WATC X .. .. .. .. ACCESS TO ELECTRICITY (I UF ALL DOELLINGS) .. . .- RURAL DWELLINGS CONNECTED TI ELECTRICITY (Z) .. .. .. CONSJM PTI ON R9D01 RECEIVERS (PER THOU POP) 13.0 32.0 52.0 22.0 132.0 1 .0 PASSENGER CARS (PER THOU POP) 1.0 4.0 5.0 4.0 11.0 10.0 ELE-TRICITY (VWHIYR PER CAP) 5.0 12.0 17.0 33.0 330.0 120.0 NEWSPRINT (AG/YR PER CAP) .0. .. .. .0.1 0.2 SEE N0TES AND OEFINITIONS 3N REH&RSE ANNEX S Page 2 of 4 pages NOTES Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961, for 1970 between 1968 and 1970 and for Moot Recent Eatinate between 19 73_ad 1975. fl The Ivory Coas t has bee selected as an objective country because of its geographic proxioity and its more advanced stage of econnomic developomet. BENIN 1960 0 1963; /b African popolation only; /0 Population, Id Based on deaths reported for 12 onotho period, /e Prior to 1965; 77f Ratio of population onder 15 and 65 and over to total labor force. 1970 /a Ratco- of population onder 15 and 65 and over to total labor force; lb Government hospital establiashmcntu only, Ic 1964-66. MOST RECENT EST L.4ATE' I a 1961-73; /b Ratio of population under 15 and 65 and ov~er to total labor force, Ic 1971, /d Governmoent hospital eatab-lishnents only. TOGO 1970 / Ratio of population under 15 and 65 and over to total labor force; lb Goversmient hospital establishments only, /c 1964-66; /d 12-li 3e ara of age. LIBERIA 1970 I Ratio of population under 15 and 65 and over to tatal labor force; lb Ulnmployed and partially employed; Ic Population, higher income calculated as residual, includea empatriatee; Id 1964--66; /e Due to migration, growth rate is higher than the rate of natural increase. IVORY COAST 1970 I 1965-75; lb Ratio of popalatian under 15 and 65 and over to total labor force; Ic Goversnment only, Id 1964-66; Ie 12-18 years of ago; If DSue to imsigration, population growth rate is higher th-an the rate of natural in-crease. R3, May 10, 1977 DI5EINITIONSB OP 1OCt.4L INDIICATORS Lid Area ithon ks2) Population per nursina parson - Population, divided by cnkber of praccising Total- Total surface area comprising land area and island watera. mlal and femal graduate curses, 'trained" or "o-rtified" nuss,-d agi.-Most recent eatloate of agricultural area used temporarily or perma- asailisry personnel with training or sep.ter inos nently for crops, posturesa, market k kitchen gardens or to lie fellow. Population oar hossital bed - Population divided by num.ber of hospital beds available in public and privats general and spscialised hospital and GNP' per capita (US25) - GNP per capita estimates at current market prices, rehabilitation centers, eacludea nursing home and establisisnets for calculated by same con,versior method as World Bank Atlas (1973-75 basis); cus todial and prevetive cars. 1960; 1970 and 1975 data. Per casita supply of calories (% of rasuiremntal - Com~puted from energy equivalent.of net.food suapplies available in country per capita per day; Population and vital statistic' available supplies comprise donsatic production, imports less emparts , and Population (mid-year million) As of July first: if not avilable, avrage changes in stoek, net supplies seclude anImal feed, seeds, quan.tities used of two end-year estiaates; 1,60, 1970 end 1975 data. in fond processing and lasses in distribution; requirements acre estima ted by PFA0 based on physiological needs for normal scrivicy and health conid- Ponulation densicy -pnr 5550- I.. - Mid-ysar population par square kilanecar or ig environmental temperature, body weights, age and sea ditstrbutiome of (100 hectaren) of total area. population, end allowing 10% for uaster at hsusehold leve. Population density- per square he of axric. land - Computed as above for Per capita supply of protein (grams per day) - Protein content of per capita agricultural land only. net supply of food per day; net supply of food is defined as above; require- ments for all coontries etblished by USDBA Economic Re search lervine VItal statistics provid~~~~~~~~~~ ~~~~~~~e for a iima alwac of 60 grams of total p rotein per day, and Crods birth race per thousand, aveage - Ansnual live births per thousa.nd of 20 grams of animal and pulse protein, of which 10 grams should he animal old-year population, ten-year arithmetic averages ending in 1960 and 1970, protein; these standards are lower than those of 75 gram of total protein and five-year average ending in 1975 for most recent estima te, and 23 grams of animal protein as am average for the world, proposed by PAl trude death rate per thousand, vavrage - Annual1 deaths per thousand sf mid-year in the Third World Food Barney. Population ; ten-year arithme tic averages ending in 1960 and 1970 and five- Per capita pro tein supply from, animal and pulse - protein supply of fosd year average ending in 1975 for moat recant estima te, derived from animals and pulses in gram per day. Infant mortality rate i/thou) A-.Anua deaths of infants under one year of age Beech rats f/thou) ages 1-4 - Annual deaths per thoossod in age grop 1-4 per thousand live birtha. years, to children in this age group; suggested an an indicator of Life ampectancy at birth (yra.) Average unabar of years of life remining at malnutrition. birth; uaually five-year rvrages ending in 1960, 1970 and 1975 for develop- ing countries. Education Cross reproduction rats - Average somber of live daughters a woman will bear Adjusted enrollcment ratio - primary school - Enrollment of all ages as per- in her normal reproductive period if she enperiences present age-specific centage of primary echoal-age population; includes children agsd 6-11 years fertility rates usual..ly five-year averages ending in 1960, 1970 and 1975 bat adjusted for different lengths of primary edacatuom; fur countries with for deva1apiug countries universal educa.tion, enrollment may emneed 100% since sag pupils are below Population growth rats (%) - total - Compound annual growth rates of mid-year or above the official school age. population for 1950-60, 1960-70 and 1970-75, Adjusted enrollment ratio - asecondaory school - Computed as above, secondary Population growth rate (7.) - urban - Computed like growth rote of total education requires at least four years of approved primary mnmatruccion, population; diffesent dafinitiona of urban armas may affect comparbility of provides gene.ral, vonaional or teac.her training instroctiono for pupils data among cmastries. of 12 to 17 years of age; corespondenc.e courses are generally eucluded. Urban population (7. of total) - Ratio of urban to total popu,lation; diffarent Yeses of schooling provided (frst and second levels) - Total years of definitions of urban areas may affect comparbility of data among countries. schooling; at secondary level, voca.tional instruction may ha partially o campletely excluded. Age trutur (pecen) -Children (0-14 years), working-ago (15-64 years), fVcatianal entIlment (% of secondasy) - Vocat-1sa institutions include sod retired (6) years and over) as percetages of mid-year population, technical, industrial or other program which operate independestly or a AR. dependency ratio - Ratio of population under 15 and 6) and soaer to those departments of secondary institationg. of seen 15 through 64 Adult literacy rate f%) - Literte adolin fable to reed aed write) an pe- fusomc epndsc rti - Roct of popula.tion under I) and 6) and over to centage of tota adult Population aged 15 years ond over. the labor force in age irou,p of 15-64 fears. Paull plauine- aceptor (cuulatve, hou)- Cuoulative somber of acceptor Housing ofbirth-contro devices under a-pi-au of ntional family plaoosg program Persona one room (urban) - Average nonbes of persons per room is occpied since inception.- conventional dwellings in urben areas, dwellings eat lade so-permanent fomily planciuc-users(7. of mPrraud womef - Pecnae fnrried women of structures and unoncupied parts. child-heaing age (15-44 year) who one bsrth-control devices to all married Occupisd dwellings without Pioad_water 52) - On-pied conventional dwelin.gs women ins:atme ago grop. in urban and rural areas aithoat isside or outside piped water facilities as percentage of all occupied dwellings. gmclo,ast ACcess ta electricity f% of all deIligas) - Convenct-nal dwellings with Total labor force (thousand) - Economi-a1y active per..s., including armd electricity in living quarters as percent of total dwellings in urban and fortes and unem ployed Lo.t eIoldcng housewives, students, etc., definitions rural areas. in various countries ate ent coparable. Rural dwellings connected to electricity 11 - Ccomputed as above for rural Lahurforc In gricltur (2)-ASuico1tora1 labor forco (is faring, forestry, dwellings only. hunting and fishsng) as perces-tga of -tota labor force fnmpoed(7 f abrfue - Unmployed are usnaIly defined an persona who tonsomPtion, are able sod willing to tabs ohb, out of a Job on a gives day, remimed out Radio receivecs (per thou pap) - All types of reneivers far radio broadcasts of a job, and seeking work for a specified misimom period sot estesding one to general public Per thousand of population; esnlude unlicensed receivers week, may sot be coparble between coutries due to diffire-t definitions in countries and is years whe. registratiom of radio sets was in effect; of unemployed and source of data, e.g., employment office statistics, sample data far recent year may sot be comparble since mast cowetries abolished scvys opulaury onmploymnt inuac.licensing. Passengrl eats leer tho pop) - Passe nger cars comprise macor cars seating Inccse diatribtio - Perecentage of private income (both in cash and bind) les than eight Persan; e-eldes ambulances * heiress ad military r.csivsd by riches 0%, riohbar 202., poorest 20%, and pooest 40% of hous- vehicles. holds. Electricity (kwh/yr per cap) - Annual nonatoption of industrial, coneereial, Biatiboton o lau owerah e-Prcsorage of andowne by ealtiest10%publin and private electricity in kilowatt hours Per capita, generally Di.t_ b.i__ of r.e..g. ofI.n_owed b welthest10 base.d on production data, without alwnefar lasses in grids but allo-- and poorest 10% of land owners. tag for imparts and exports of electricity. Newsprint (ksg/yr per cie) - per capita .-muaI coausmption is kilograms Health and Nutrition estimated fram domestic prdu-tion plus net imparts of mewe,prist Populatios per physician - Population divided by nomber of practicing Physiciasa qusisfied from a medical school at universfty leve. Paee 3 of 4 pages ECONOMIC INDICATORS GROSS NATIONAL PRDUCT IN 1975 ANNUAL RATE OF GROWTH (%. current prices) US$ mln. 1970 -75 GDP at Market Prices 403.6 100.0 7.9a Gross Domestic Investment 60.9 1S.1 decrease Gross Domestic Saving 13.5 3.3 decrease Current Account Balance -47.4 -11.7 Exports of Goods, NFS 125.6 31.1 1c0a Imports of Goods, NFS 17. 2g1.0 Imports ~~~~~173.1 42.9 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 197 Value Added Labor Force V. A. I%r Worker US[-Mln. % Hn iU8 s Agriculture 111.0 34.6 Industry 44.0 13.7 Services )1660 51.7 Unallocated ) 1 Total/Average 321.0 _ GDP at factor cost 110. GOVERNMENT FINANCE General Goverrment Central Goverrnarnt ( Hln.) % of OP (CFAF Bln.) 5of W 1975 197 1970-75 1975 195 n Z Current Receipts 15.7 17.4 17.9 Current Expenditure _ 15.0 16.7 16.6 Current Surplus --7 0.7 =.3 Capital Expenditures 5.8 6.4 8.1 External Assistance (gross) 5.1 5.7 6.8 MONSY. CREDIT and PRICES 1970 1971 1972 U-11 1974 jP5 (Billion CFAFoutstanding end periodT Money and Quaci Money 7.26 7.71 9.90 11.59 14.03 29.66 Bank credit to Pablic Sector -0.14 -0.82 -0.51 -1.16 -2.42 -2.94 Bank Credit to Private Sector 7.40 8.53 10.41 12.73 16.45 32.60 (Percentages or Index Numbers) Money and Quasi Honey as % of OGP 11.8 11.6 14.4 15.9 18.0 32.9 General Price Index (1969 - 100) Annual percentage changes ins 117.3 130.9 144.0 If General Price Index Bank credit to Public Sector Bank credit to Private Sector 19% 15% 22% 22% 29% 98% NOTEt All conversions to dollars in this table are at the average exchange rate prevailing during the period covered. 1! Total labor force; unemployed are allocated to sector of their normal occupation. 5Unallocated5 consists mainly of unemployed workers seeking their first job. not available 2/ February 1975 not applicable ANNEX I Page 4 of 4 pages TRADE PAYHENTS AND CAPITAL FLOWW BAIANCE OF PAYMENTS hRCHMIANDSZE XPORTS (AVEBAGE 1971-74) 1970 1973 1975 (Recorded) U8S Mln Z ?i4illions US $) Exports of Goods, NFS 72.2 115.5 125.6 Cotton 10.5 27.0 Imports of Goods, NFS 9T.2 157.5 173.0 Cocoa 8.2 21.0 Resource Gap (deficit - -) Palm products 4.4 11.4 -23.0 -42.0 -47.5 Other 15.7 40.6 Interest Payments (net) 1 Workers' Remittances 12.9 16.2 Other Factor Payments (net)| 12 20.2 Net Transfers J Balance on Current Account -10.1 -25.8 -27.3 Total 38.8 100,0 Direct Foreign Investment 6.8 3.3 gXTERNAL DEBT. DECEMER 31. 197- Net M4LT Borrowing Disbursements - - US $ Mln Amortization - - - Subtotal 0.3 10.8 9.9 Public Debt, incl. guaranteed Capital Grants 8.3 8.9 10.7 Non-Guaranteed Private Debt Other Capital (net) 3 1.0 -2.9 Total outstanding & Disbursed 93.7 Other items n.e.i _ 1/ Increase in Reserves (+) 6.8 -5.7 -6.7 DEBT SERVICE RATIO for 1975- March 1976 % Gross Reserves (end year) 20.6 38.2 74.2 78.8 Net Reserves (end year) 12.9 16.4 20.8 16.4 Public Debt. incl. guaranteed 7% (1971) (1974) Non-Guaranteed Private Debt - Fuel and Related Materials 2.8 6.2 8.6 Total outstanding & Disbursed Imports 76.2 108.6 146.4 7% of which: Petroleum 3.7% 5.7% 5.9% Exports - - - of which: Petroleum - - - IDA LENDING, March 31t 76 (Million US $): RATE OF EXCHANGE IBRD IDA 1975 - US $ 1.00 . CFAF 223 Outstanding & Disbursed 25.0 1974 - US $ 1.00 - CFAF 240 Undisbursed 14.6 1973 - US $ 1.00 = CFAF 230 Outstanding incl. Undisbursed _ 39.6 1972 - US $ 1.00 = CFAF 256 1971 - US ' 1.00 = CFVF 278 1970 - US $ 1.00 = CFAF 278 1/ Ratio of Debt Service to Exports of Goods and Non-Factor Services. not available not applicable May 5, 1977 ANNEX II Page 1 of 3 pages THE STATUS OF BANK GROUP OPERATIONS IN BENIN A. STATEMENT OF IDA CREDITS (as of March 31, 1977) Credit /1 Number Year Borrower Purpose Amount Undisbursed (US$ million) 144-DA 1969 Dahomey Oil Palm 5.2 /2 0.0 /4 215-DA 1970 Dahomey Road Maintenance 3.5 - 307-DA 1972 Dahomey Cotton 6.1 1.1 415-DA 1973 Dahomey Roads 20.8 /3 9.5 583-DA 1975 Dahomey Rural Education and Training 4.0 4.0 TOTAL 39.6 14.6 of which has been repaid 0.0 TOTAL now outstanding 39.6 TOTAL now held by IDA 39.6 TOTAL undisbursed 14.6 /1 Prior to Exchange Adjustment. /2 Including a Supplementary Credit of $.6 million made in 1974. /3 Including a Supplementary Credit of $9 million made in 1976. /4 Balance $24,448.00. ANNEX II Page 2 of 3 pages B. Projects in Execution 1/ Credits No. 144 Hinvi Agricultural Development Project; US$4.6 million and 144-2 Credit of March 5, 1969 and US$0.6 million Supplementary The Project was satisfactorily completed and maintenance is ade- quate. There will be a permanent reduction in yields on the 6,000 ha of oil palm caused by inadequate rains during the establishment period. The oil palm mill is now working at about 70 percent capacity. Credit No. 215 Highway Maintenance Project; US$3.5 million Credit of September 9, 1970; Closing Date: December 31, 1974 The Project was satisfactorily completed in 1974 and its main objec- tive of improving the quantity and quality of road maintenance was achieved. Credit No. 307 Zou-Borgou Cotton Project; US$6.1 million Credit of May 24, 1972; Closing Date: September 30, 1975 The Project was to comprise the provision of staff and equipment to the National Agricultural Society for Cotton (SONACO) to administer agricul- tural extension, credit and primary marketing services; the establishment of a revolving fund to supply credit to cotton growers; construction of two cotton ginneries; rehabilitation of 620 km of feeder roads; applied research; and a feasibility study for agricultural diversification in the project area. The project initially reached appraisal production estimates (42,000 tons of cotton in 1973), but production has fallen considerably in the past three years (20,000 tons in 1975/76). This was due to a combination of deficiencies in project management, input supply and extension services, unfavorable Government pricing policy and unfavorable climatic conditions. Since cotton production never reached the expected level, only one ginnery was built instead of two as provided under the credit. The other components of the project were implemented more successfully, although because of cost overruns, the feeder roads construction program had to be reduced from 620 km to 425 km. A non quantifiable but important benefit of the project has been the organiza- tion of effective farmers groups which have demonstrated their ability to handle primary cotton marketing, to organize the distribution of farm inputs, to market household items and to invest their savings in rural community dev- elopment (schools, wells, dispensaries). The project has also been successful in expanding production of rice and hybrid maize and introducing ox-drawn cultivation. 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any prob- lems which are being encountered, and the 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 weaknesses in project execution. ANNEX II Page 3 of 3 pages Credit No. 415 Second Highway Project: US$11.8 million Credit of July 3, 1973; Closing Date: December 31, 1977 Due to inflation and currency realignments, project cost estimates increased to US$23.2 million or 77 percent above the original cost estimates. The Association provided a supplementary credit of US$9.0 million on March 10, 1976, which became effective on October 5, 1977. All contracts for improve- ment of the southern section (151 km) of the Parakou-Malanville road and two sections (20 km) of the Godomey-Bohicon road, as well as for consultants' ser- vices for supervision of construction and for technical assistance have been awarded, and work is proceeding on schedule. Credit No. 583 Rural Education and Training Project; US$4.0 million Credit of September 5, 1975; Closing Date: June 30, 1981 This project consists of two main components ti) buildings and equipment for a skills upgrading center in Cotonou; and (ii) technical assist- ance, buildings and equipment for an ongoing rural youth training program. The project is proceeding well, about on schedule despite some delays in declaring the credit effective. Bids for buildings and equipment have been called. Tenders are expected to be returned by June 1977. The technical assistance team is being recruited. The chief of the skills upgrading center has taken post and the one for the rural youth training program will do the same in December, 1977. ANNEX III Page 1 of 2 pages BENIN Feeder Roads Prolect Credit and Project Summary Borrower: People's Republic of Benin Amount: US$5.5 million equivalent in various currencies Project Description: The project would comprise: (a) Improvement and subsequent maintenance of about 845 km of rural roads, and initial maintenance of 425 km improved under the Zou-Borgou Cotton Project; (b) strengthening of the DRB in the Ministry of Equipment by the creation of a new Division for Feeder Roads; and (c) technical assistance to DRB for the imple- mentation of the above program and for the training of local staff. Estimated Costs: US$ '000 equivalent (net of taxes) Local Foreign Total A. Equipment and Materials 340 1,820 2,160 - Equipment 140 1,660 1,800 - Materials 200 160 360 B. Spare Parts and Supplies 80 890 970 C. Staff 1,110 620 1,730 - Technical Assistance 130 620 750 - Local Staff 980 - 980 D. Works contracted 10 30 40 TOTAL 1,540 3,360 4,900 E. Contingencies 520 640 1,160 - Physical 150 250 400 - Price increases 370 390 760 GRAND TOTAL 2,060 4,000 6,060 (rounded) 2,100 4,000 6,100 Percent 34 66 100 ANNEX III Page 2 of 2 pages Financing Plan: The proposed credit of US$5.5 million would finance 90 percent of total project cost net of taxes, i.e., all the foreign cost and US$1.5 million equivalent in local costs. The Government would -ntribute US$0.6 million equivalent or 10 percent of total cost net of taxes. Estimated Disbursements: (In US$ millions) FY78 FY79 FY80 FY81 Yearly 2,300 1,100 1,200 900 Cumulative 2,300 3,400 4,600 6,000 Procurement Arrangements: Virtually all civil works would be carried out by force account (about US$5,000,000). Local con- tractors may be used for constructing small drainage structures. Since Government has indicated that they intend to use contractors only in exceptional cases, it is expected that this amount would not exceed US$100,000. Equipment, vehicles, materials and supplies amounting to about US$3.2 million, would be procured on the basis of international competitive bidding in accordance with Bank Group Guidelines. Contracts for equipment, vehicles, materials and supplies costing under US$50,000, and for spare parts would be awarded on the basis of competitive bidding in accordance with the applicable local procedures. The total amount of such purchases would not exceed US$400,000. Contracts for the construction of selected civil works would be awarded on the basis of competitive bidding advertised locally in accordance with the applicable local procedures. Consultants for technical assistance would be retained in agree- ment with, and under terms of reference and conditions satisfactory to the Association. Consultants: Total consultants' services would amount to about six man-years of civil engineers/economist and seven man-years of senior technicians services at an average cost of US$6,200 per man/month. Estimated Completion Date: December 1980 Economic Rate of Return: About 27 percent for 562 km of roads identified under the program. A minimum rate of 10 percent for any individual road project to be subsequently selected (about 280 km). Appraisal Report: No 1411-BEN ANNEX IV Page 1 of 2 pages SUPPLEMENTAL PROJECT DATA SHEET Section I Timetable of Key Events a. Project Identification i. RMWA identification mission December 1973 ii. Valois under the Second Highway Project 1974-75 iii. Zou-Borgou Cotton Project b. Project Preparation Agencies i. Ministry of Equipment ii. Genie Rural of the Ministry of Rural Development c. Pre-appraisal i. Pre-appraisal mission April, 1976 d. Appraisal Mission Departure June 23, 1976 e. Negotiations Completed April, 1977 f. Loan Effectiveness Planned September, 1977 Section II Special Bank Implementation Actions Special Bank activities in implementing the project are to assist the Government in the review of consultant's proposals for technical assis- tance to DRB for the establishment of a Feeder Roads Unit and for training of local staff. Section III Special Conditions A summary of the special conditions included in the Credit Agree- ment are that the Government will: ANNEX IV Page 2 of 2 pages (i) Conditions of Effectiveness (a) create a Feeder Roads Division in the Directorate of Roads and Bridges (para. 35); and (b) open a Special Account in a bank of its territory for the purpose of prefinancing project expenditures (para. 41); (ii) Other Special Conditions (a) establish an Interministerial Technical Committee to be operative no later than October 31, 1977, for the selection of feeder roads to be improved each year (para. 36); (b) submit to the Association for approval the annual work programs no later than 3 months before the beginning of each working year (para. 36); (c) explore the possibilities of ensuring the participation of local communities in road improvement and maintenance (para. 32). IBRD 12709 2. N , G E R' FEBRUARY 1977 PEOPLE'S REPUBLIC OF BENIN \\ t FEEDER ROADS 1 PROJECT M E Goroj E R 4°° ( t;/ J 3rnyomoyo t 0 D.I~~~~~~~~- ) rXTANGUIETA G) q /NUIi _- /To_iunc Žo;bOKocarl I /. C) ' NAITIIINGO /od' K.,o.o_go Pdh-- 3e-bd,dk a\ R r n no B N .s R. lo- T. Lomo K o_DOGU < X~~~~~~~~~~~~~~~~~,s F gh oo .11 Xl 2 -~~~~SVE Baade,Itto P onod5 eodHih AU Gsoca % Froposed 3rd H5gh5 A y > ° ( 02M80nle > 7 Reg-ovelh.ng -nd B.1unA Ae Rousneobd.tory i t () 4 y yyyXyyyy....... Dt.ol dz F -c e-r g -nd., Fhr H.gJh-o S!h n o Er snorn,Ir C , 4 15nD Ar | ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~g ut, \..c A,..o go-d-y / it - i ) A~~~~~~d.k-mb, D R B Ds,t,ct j\j 1 l Sdokplome 2 * ~D R B S.bdlvso i \ ° Zo~~~~~K1. n T d o Ab -t-ow . M-o Ro.d, N.t.o,k IVOaadraJan )c .mElgb-Oa S '° > , | * nentonlBudre \_J~~~~~. P- R .1 dA.do , IOMr coto em>1ttY j8 rand lPoe T-k, hO orrdB:F :gd r R =._ & 10ME w 7 < '/ zfF S X f ,~~~~~~11 0 " I