The World Bank FOR OFFICIAL USE ONLY Report No. P-4446-ET REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN AN AMOUNT EQUIVALENT TO SDR 5.9 MILLION TO ETHIOPIA FOR A SMALL-SCALE IRRIGATION AND CONSERVATION PROJECT February 4, 1987 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 1/ Currency Unit - Ethiopian Birr (Br) US$1.00 - Br 2.07 Br 1.00 = US$0.48 FISCAL YEAR (FY) Government: July 8 - July 7 WEIGHTS AND MEASURES Metric System 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) = 0.62 mile (ml) 1 kilogram (kg) = 2.20 pounds (lb) 1 metric ton (m.ton) = 2,205 pounds (lb) 1 Sq. Kilometer (sq.km) = 100 ha = 0.39 sq. miles 1 hectare (ha) = 2.47 acres 1 quintal (qu) = 100 kilograms (kg) LIST OF ABBREVIATIONS AND ACRONYMNS USED AFDB - African Development Bank AIDB - Agricultural and Industrial Development Bank AISCO - Agricultural Inputs Supply Corporation AMC - Agricultural Marketing Corporation CBE - Commercial Bank of Ethiopia CFSCDD - Community Forest and Soil Conservation Development (MOA) CPADD - Cooperative Promotion and Agricultural Development Department ESC - Ethiopian Seed Corporation IAR - Institute of Agricultural Research IDD - Irrigation Development Department of MOA IFAD - International Fund for Agricultural Development ILCA - International Livestock Center for Africa MOA - Ministry of Agriculture MOF - Ministry of Finance NCCP - National Committee for Central Planning NWRC - National Water Resources Commission PPD - Planning and Programming Department of MOA WRDA - Water Resources Development Authority 1( The currency equivalent between the US dollar and the Ethiopian birr has been constant from 1973 to the date of this report. FOR OMCIAL USE ONLY ETHIOPIA SMALL-SCALE IRRIGATION AND CONSERVATION PROJECT Credit and Project Susmarn Borrower: Ethiopia Amount: IDA Credit SDR 5.9 million (US$7.0 million equivalent) Terms: Standard IDA terms Cofinancinus IFAD Loan SDR 9.3 million (US$11.0 million equivalent) OPEC US$4.0 million equivalent VFP US$1.0 million equivalent Project Description: The project would address the problems caused by frequent drought and increasing desertification. The project would consist of small-scale irrigation schemes serving areas of up to 200 ha each, in drought affected areas of Arsi, Bale, Northern Sidamo and Hararghe regions, and conservation and agricultural support in Hararghe region. The small-scale irrigation subproject would include (a) strengthening the Ministry of Agriculture's Irrigation Development Department and irrigation departments in the project regions; (b) strengthening of agricultural support services; and (c) provision of funds for construction or rehabilitation of irrigation schemes; and (d) provision of credit to rural women for small Income-generating projects. The conservation and agricultural subproject would include (a) strengthening of the Ministry of Agriculture's Comunity Forest and Soil Conservation Development Department; (b) providing agricultural support services in the Hararghe highlands for establishing conservation-based trials, bund stabilization, and improvements in the extension system; and lc) supporting a development program for rural women focussing on the introduction of vegetable gardens and nutrition education. Benefits and Risks: The main benefits in the project area would be increased production of cereals, pulses, and vegetables, as well as prevention of further soil deterioration and improvement of productivity. The main risk is a delay in implementation due to inadequate institutional strength and experience particularly during the early stages of the project. The project Includes provisions for an expeditious start, strong institution building and preparation of annual work programs thereby minimizing these risks. Although import parity pricing for cereals would provide added incentives, the project is not significantly affected by the present price level. 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. - ii - Estimated Cost: Local Foreign Total -US$ million !i A. Small-Scale Irrigation 1. National Support 0.7 2.1 2.8 2. Zonal Support 0.9 0.9 1.8 3. Agricultural Support Service 1.0 1.0 2.0 4. Scheme Construction 5.9 3.3 9.2 Subtotal 8.5 7.4 15.9 B. Conservation and Agricultural Support 1. National Conservation Support 0.2 1.0 1.2 2. Conservation Based Agro Trials 0.8 0.3 1.1 3. Bund Stabilization 0.3 0.5 0.8 4. Extension 1.8 2.5 4.3 5. Rural Women Support 0.2 0.6 0.8 Subtotal 3.4 4.8 8.2 C. Monitoring and Evaluation 0.5 0.6 1.1 Total Base Cost 12.4 12.8 25.2 Physical Contingencies 1.0 0.7 1.6 Price Contingencies 4.7 2.1 6.9 Total Costs 18.1 15.6 33.7 Financing Plan: Local Foreign Total --- USS million ------- IFAD Loan 3.8 7.2 11.0 IFAD Loan 131-ET 0.3 0.7 1.0 IDA 2.1 4.9 7.0 OPEC 1.2 2.8 4.0 WEP 1.0 - 1.0 Government 6.4 - 6.4 Beneficiaries 3.3 - 3.3 18.1 15.6 33.7 11 Apparent inconsistencies due to rounding. Estimated Disbursements from IDA Credit: (US$ million) __ 87 88 89 90 91 92 933 Annual 0.1 0.9 1.2 1.0 1.3 1.0 1.5 Cumulative 0.1 1.0 2.2 3.2 4.5 5.5 7.0 Economic Rate of Return: A. Small-Scale Irrigation Subproject: 19 percent B. Extension Component: minfimum 15 percent (indicative) MAP: IBRD No. 20028 INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO ETHIOPIA FOR A SNALL-SCALE IRRIGATION AND CONSERVATION PROJECT 1. I submit the following report and recommendation on a proposed development credit to Ethiopia for SDR 5.9 million (US$7.0 million equivalent) on standard IDA terms to help finance a Small-Scale Irrigation and Conservation Project. PART I - THE ECONOMY 2. The last economic report on Ethiopia (No. 4683s-ET), entitled 'Ethiopia, Recent Economic Developments and Future Prospects," was circulated to the Executive Directors on May 31, 1984. The report's findings, and the conclusions of an economic mission that visited Ethiopia in March and April 1985, are reflected in the following paragraphs. Data have been updated on the basis of a follow-up mission in June 1986. Structural Characteristics 3. The boundaries of Ethiopia embrace a wide diversity of cultures and have contained a long history. Centuries of tradition have been overtaken recently by fundamental social and political change. With a population of about 43 million in 1985, Ethiopia is the thLrd most populous country in Africa (after Nigeria and Egypt). It is alsc one of the poorest and, in terms of social indicators, one of the least developed. About 89 percent of the total population is rural. The country's land area extends over 1.2 million square kilometers and may be broadly divided into two main geographical zones--the highland plateau of central Ethiopia and the surrounding lslands. Its capital city, Addis Ababa, located in the central highlands, has a population estimated at 1.5 million. 4. Agriculture accounts for about 41 percenr of GDP, 90 percent of exports, and 85 percent of total employment. Crops account for about 80 percent of the gross value of production and livestock for most of the rest. The main food crops are tef (a locally consumed cereal), maize, barley, sorghum, wheat, pulses, and oilseeds. Coffee, the principal export crop, generates over 60 percent of the country's export earnings. Other export crops include oilseeds, pulses, cotton, sugarcane, fruits and vegetables. The country's livestock herd is the largest in Africa; the official export of live animals has begun to increase in recent years but is still very low compared to the potential. Ethiopia's known natural resources include gold, platinum, copper, soda ash, and potash. Some petroleum exploration has taken place in the past, but no petroleum reserves have yet been proven. None of these minerals has been exploited on a large scale, and in most cases the potential for commercial exploitation rmnAins to be established. There are prospects for the - 2 - exploitation of geothermal energy. The country's main potential lies in agriculture, for which the natural conditions of several areas are favorable. Nearly 95 percent of the land under cultivation is operated by individual farmers who have user rights to landholdings averaging two hectares or less. Manufacturing industry, which accounts for about 10 percent of GDP, is heavily dependent on agriculture; agro-based industry constitutes around 70 percent of large- and medium-scale Industry. Public sector control and ownership cover almost all large and medium- scale manufacturing, banking and insurance, shipping, railway, airways, utilities, and a large proportion of construction. Handicrafts and small industry are operated by private owners. Domestic trade, especially retail trade, and road transport are still largely in private hands. 5. GNP per capita is estimated at around US$110 (1984), and an estimated 60 percent of the population lives below the absolute poverty level. Health services are limited and require major improvements to combat high rates of morbidity and infant and maternal mortality, worsened by the drought. Life expectancy is still only about 46 years. Housing and sanitation facilities, especially in the towns, are poor and need urgent attention. Despite Ethiopia's rich endowment of fertile land and substantial agricultural potential, its wide variation in topography and extremely rugged terrain have been serious obstacles to internal transportation, and economic development in general. Nearly three- quarters of Ethiopia's farms are more than half-a-day's walk from all- weather roada. The Drouzht 6. The drought and famine in 1984/85 caused human suffering on an unprecedented scale--nearly 8 million people. In response to the Government's appeals for assistance and its efforts in dealing with the crisis, UN agencies, bilateral donors, multilateral agencies and non- government organizations have provided a record US$470 million in relief assistance, more than in previous years (para. 8). The Government's hopes for some respite from the drought situation have been raised by improved rainfall in 1985/86, but actual food production proved well below expectations. It is too early to say whether the increased interest of donors in Ethiopia due to the drought will be successful in generating significantly increased concessionary aid for long-term development. The drought relief effort, as well as the Government's programs to rehabilitate drought-prone areas and to resettle drought victims in the western provinces, has severely strained the Government administration and temporarily directed manpower and financial resources away from other development activities. Recent Macroeconomic Developments 7. Since the 1974 revolution, Ethiopia has made considerable social progress, as reflected by significant increases in literacy and school enrollment and a modest rise in life expectancy. The literacy rate rose from 7 percent in 1973 to more than 40 percent in 1981, and the primary school enrollment rate increased from 19 percent to 47 percent over the same period. These achievements, however, have not been accompanied by commensurate economic growth. During the decade ending 1983184, GDP grew at an average annual rate of only 2.5 percent in real terms, compared to an estimated population growth rate of 2.9 percent. - 3 - 8. The economy witnessed a setback during the three years from 1980/81 to 1982/83, with GDP growth declining to an average rate of around 3.1 percent per annump compared with the highs of around 5.5 percent per year during 1978179 and 1979/80. This adverse trend became more pronounced during the past two years owing to the recent drought. GD? declined by 2.4 percent in 1983/84 and by 6.8 percent in 1984185. The principal causes for the setback in economic growth in recent years were droughts and inappropriate policies (para. 14) that affected agri- culture, and capacity constraints (notably in industry), owing to low rates of investment in the past. The ratio of total investment to GDP has remained for many years at around 11 percent, due largely to constraints on domestic as well as external resources. Domestic savings have averaged around 3.4 percent of GDP during the four years ending 1983184, partly reflecting the basic consumer needs of a low-income country and the higl. expenditure on defense and security. Domestic savings turned negative in 1984185 with total consumption exceeding output. Apart from the recent increase in emergency aid arising from the drought disaster, official development assistance averaged only around US$9 per capita per year as compared to over US$20 per capita for developing countries in Africa. 9. The external current account deficit has continued to widen; it reached US$416 million in 1983184, equivalent to 8.6 percent of GDP. The situation further deteriorated in 1984185 with depressed exports and increased imports; the current account deficit reached the equivalent of about 13 percent of GDP--the highest in the past decade. Meanwhile, net external reserves turned negative during 1984185, owing to heavy draw- downs, but ended with a positive balance in June 1985. The external debt service ratio increased significantly to about 22 percent. 10. Notwithstanding these recent adverse trends, the Government's fiscal and monetary management has been generally prudent. The country has a relatively competent public service and, in general, its ministries, departments, and most public enterprises are reasonably well managed. The overall budget deficits remained below 5 percent of GDP for the period 1978/79 to 1981/82, and modest current account surpluses were achieved in these years. But since then the fiscal deficit has followed an uneven path. During 1982/83, the overall budget deficit rose to a level equivalent to about 13 percent of GDP, principally due to a near doubling of capital expenditure and an increase in current expenditure, reflecting in large part a Government decision to settle arrears due to parastatals in one year. The overall deficit was brought back to a level equivalent to 6.2 percent of GDP in 1983184. Despite heavy drought- related expenditures in 1984185, the Government controlled the fiscal deficit to the equivalent of about 7.7 percent of GDP, imposing cutbacks on current expenditure and special drought levies. 11. The inflation rate (as measured by the Addis Ababa retail price index) had dropped from an average of 13 percent during 1978/79 and 1979180 to about 5 percent during the five-year period ending 1983184. But during 1984/85 it rose to an annualized rate of about 16 percent, largely reflecting food price increases caused by food shortages, which became more pronounced after July 1984, owing to the drought. - 4 - 12. Despite the growing internal and external distortions noted above, there has been little or no change in Ethiopia's economic policy fraework. Official pronouncements have stressed from time to timo the need to: revitalize agriculture through increased investment, guaranteed producer prices, and diffusion of Improved technology to farmers; restore confidence among entrepreneurs engaged In smll-scale industry; and, attract foreign investment and technology to develop the country's resources. Other noteworthy steps include a Joint Venture Code introduced in January 1983 to promote joint ventures between foreign investors (public or private) and Ethiopian public enterprises, and the formulation of proposals to simplify and rationalize the system of direct and indirect taxes and to make the tax system more income-elastic. But actual progress in these directions has been very slow. 13. There are a number of issues that require urgent attention. It is yet unclear whether the projected levels of investment can be financed, given the low domestic savings rate, the claims of the drought and other priorities for recurrent expenditures, and the limited inflow of official development assistance (para. 8). While overall budgetary deficits reflect prudent financial management from an economic growth perspective, they also indicate the need to strengthen efforts in attracting more external concessionary assistance for investment. Likewise, with the value of merchandise imports running at double the value of merchandise exports, a major expansion in exports and/or import substitution and restraints on imports are called for, in order to reach a more sustainable external current account deficit. Higher coffee prices in the short term anC projected lower oil prices in the medium term have improved the prospects in this regard, but Ethiopia's real effective exchange rate has appreciated by more than 40 percent against the trade-weighted basket of currencies during the five years ending January 1986. The overvalued exchange rate and the lack of an effective package of export incentives have tended to reduce margins for producers of export commodities in local currency and have inhibited the growth of exports. 14. As regards sectoral issues, several other factors apart from the drought appear to have Impeded agricultural growth. Some initiatives have been made toward improving the Government's agricultural and marketing policies, and a serious dialogue with the Bank is in process. Other constraints include the low use of improved seeds and fertilizer, inadequate agricultural extension and research, and restrictions on inter-regional grain movement by private operators. The precise role of the private sector is yet unclear--the business climate does not appear to be conducive to savings and investment, particularly in industry. Although there has been a remarkable increase in literacy and general education, economic growth in all sectors is constrained by a shortage of managerial, technical and professional skills, indicating the need for stepping up higher education. Medium-Term Prospects 15. The Ethiopian economy remains hampered by its weak infra- structure (notably roads), low productivity in agriculture, heavy dependence on one export comuodity (coffee) subject to international - 5 - export quotas, a small industrial base, and shortages of skilled manpower. Apart from this met of unfavorable initial conditions, the availability of domestic resources for investment is constrained by the Governrmnt's outlays on internal security, while import capacity is constrained by stagnating exports and by low levels of external resource transfers. The drought has caused a major setback to the economy. 16. Ethiopia's rapid population growth also poses severe problems for the future. Population growth, currently estimated at around 2.9 percent per annum, implies a doubling of Ethiopia's population in 26 years or less and threatens to absorb most of the gains in economic growth and social welfare foreseeable in the next decade. The demand for food, energy, and social services would increase dramatically and would lead to adverse consequences in the ecological balance. The net impact could be stagnation or possibly a decline in the living standards of the Ethiopian people. Unless steps are taken to reduce fertility through an expansion of family planning services, there will be little significant improvement in per capita income or living standards. Ethiopia needs a multisectoral population policy; this implies an expansion and strengthening of basic maternal and child health services, into which family planning must be integrated. 17. Three areas of policy reform warrant Fmmediate attention: improving agricultural pricing and marketing policies, adjusting the exchange rate to reduce external imbalance, and financing the fiscal deficit through non-inflationary sources insofar as possible. Ethiopia needs to orient economic policy toward expanding the directly productive sectors, particularly agriculture and industry, and to increase economic efficiency in the use of resources. The incentive structure in the agricultural sector needs to be Improved in order to step up agricultural growth, and the business climate for private small-scale enterprises, particularly in industry, should be made more favorable for increased investment, output, and exports. In generalt the authorities have to make greater and more flexible use of macro-level policy instruments (e.g., exchange rate and price policies) and less use of direct, administrative controls. The attainment of higher growth rates would also depend on raising the operational efficiency of public enterprises and on alleviating skilled manpower shortages through better incentives and greater emphasis on higher and technical education. There is also a need to develop a more realistic macroeconomic framework for the Government's proposed three-year plan (beginning mid-1986) within the framework of the Ten Year Perspective Plan and to present a well-balanced portfolio of viable projects. The financing of increased public investment would call for greater efforts in domestic as well as external resource mobilization. Despite several constraints and limited room for maneuverability on the part of Ethiopia's economic policymakers, conditions exist for a GDP growth rate of about 3 percent per annum over the medium term, provided the Government makes a concerted effort to increase savings and investment and to pursue policies that foster accelerated growth. PART II - BANK GROUP OPERATIONS IN ETHIOPIA 18. Bank Group lending to Ethiopia since 1950 has totaled about US$962 million (less cancellations) as of September 30, 1986, consisting of 39 IDA credits totaling about US$853 million, 12 Bank loans totaling about US$109 million, and 5 IFC commitments totaling US$15.7 million. Much of the lending (US$228 million) was committed between fiscal years 1974 and 1978. Subsequently, the compensation issue led to a two-year interruption in new lending. Since FY1973, lending has been on IDA terms only. IBRD's share of total public debt outstanding and disbursed as of December 31, 1984 is estimated at about 3 percent, and IDA's at 27 percent. Their shares of total debt service in FY1985 are estimated at 9 percent and 6 percent, respectively. Bank lending focused on the construction of trunk roads, power, and telecommunications facilities until the late 1960s, when Bank lending gradually shifted to agriculture and education. Since 1973, 12 credits totaling US$238 million have supported agriculture, and some have attracted cofinancing or other complementary assistance. Credit 1088-ET of February 2, 1981, together with cofinancing from Sweden and the International Fund for Agricultural Development, assisted the agricultural minimum package program, a major part of the Government's efforts to assist peasant agriculture. The proposed project would be the second in FY1987; a forestry project was approved July 3, 1986. 19. Project implementation in Ethiopia, although subject to some difficulties, is generally quite satisfactory. Ethiopia's overall record compares favorably with other countries in the Eastern Africa Region. Financial problems, rising labor costs, and occasional shortages of construction materials have detracted from efficient project implemen- tation on occasion. However, the Government and the project management units generally have been successful in resolving these problems. Efforts to recover from the drought and to implement the resettlement and villagization programs have recently placed a particularly heavy burden on the administration. Ethiopia's disbursement performance on projects assisted by the Bank Group has also been generally satisfactory. The ratio of disbursements to undisbursed funds in Ethiopia for 1985 was 22 percent, about equal to the Bank-wide average and above the average for the Eastern Africa Region. Assistance Strategy 20. We are assisting the Government to: (a) improve its policy frraework with a view to increasing agricultural production and exports through economic and sector studies, advice on agricultural pricing and marketing policies, and assistance in implementing its Drought Action Plan; (b) Improve the policy framework and institutional structure for domestic and external resource mobilization and allocation through advice on tax reforms, as well as better planning and monitoring of foreign aid; - 7 - (c) improve the policy framework and institutional structure for public and private sector efficiency, through advice on price policy reforms and a clearer role for the existing private sectorj and (d) accelerate human resource development through advice on population policy, education, and skilled manpower development. In our economic work, we are focusing on resource mobilization issues, public investment reviews, export incentive issues, and human resource development. We have been carrying out studies of the agricultural sector, including a joint study vith the Government on farmers' incentives and marketing efficiency, and also studies of the industry, education, and population, health and nutrition sectors. In our lending work, we plan to continue emphasizing the productive sectors and essential infrastructure to help address the country's capacity constraints and deteriorating terms of trade. A peasant agricultural development project is being considered to help increase the productivity and incomes of small farmers. We are making concerted efforts to arrange coficancing for proposed projects. Informal discussions are underway, but no decision has been taken concerning a possible donor conference on Ethiopia, either a UNDP Round Table or a resumption of the Consultative Group. PART III THE AGRICULTURE SECTOR 21. With a per capita GNP of about US$110, Ethiopia is probably the world's poorest country. Absolute poverty characterizes life for the majority of Ethiopia's predominantly rural population. Agriculture is paramount, and its satisfactory growth is critical, not only for Improving and stabilizing food supply, but also for accelerating export and industrial growth. The role of agriculture in Ethiopia's economy has remained largely unchanged for the past two decades of otherwise dramatic social, political and economic transformation. It has accounted for roughly half of GDP, around 85 percent employment and virtually all exports. While GDP growth averaged about 2.3 percent annually during the last decade, agriculture grew by a little over 1 percent annually, significantly less that the annual population increase of nearly 3 percent. Agriculture's share of GDP has shown a downward trend from around 49 percent in 1976177 to 41 percent in 1984/85. Preliminary indicators point to some recovery in 1985186 both in economic and agricultural growth and, with good rains throughout the 1986 growing period, this trend Is expected to continue into 1986/87. 22. The environment for agriculture is highly diverse. Crop production and livestock populations, are concentrated in the highlands where systems -f traditional livestock and crop farming are conducted. Crop and livestock activities are somewhat inter-related rather than integrated. The production possibilities for agriculture in the highlands range from good to poor. Stabilizing and gradually restoring the potential in these areas would be a long-ternm process. Only a small part of the highlands are densely settled and farmed. Moreover, about one-third of the highlands have slopes exceeding 30 percent and are not - 8 - suitable for cropping. The highlands do not have reliable rainfall1 drought is cfmon, and soil degradation is severe. In this situation the Government Is givlng high priority to investments aimed at reducing soil degradation and of increasing productivity. Ths Irrigat ion Subs ecto r 23. Development of modern irrigation systems has been a relatively recent phenomenon in Ethiopia. Past Irrigation development concentrated on large-scale scheme in the Awash Valley, the Rift Valley and the lower Wabe Shebolle Valley to irrigate sugarcane, cotton and some cereals. Reliable statistics on the extent of small-scale irrigation schemes are unavailable. Recent sources indicate a total area of 5,000-10,000 ha. More recently, small-scale irrigation development has been increasing in areas such as North Bale, primarily through the initiative of farmers' groups, Peasant Associations (PAs) and Producer Cooperatives (PC.). Most schemes are based on seasonal diversion structures and a system of earth channels distributing water to field outlets. Distribution and other structures are rarely seen and field irrigation is usually based on a system of uncontrolled flooding. 24. In 1981 the Government established the National Water Resources Commission (NWRC) 'to give central guidance in, and to ensure, the (ptimum utilization of the nation's inland water resources.' Under NWRC four new authorities were formed, of which the Water Resources Development Authority (WRDA) and the Ethiopian Water Works Construction Authority (EWWCA) are concerned with irrigation development. A standing agreement between WRDA and Ministry of Agriculture (MOA) provides a framework for the allocation of responsibilities for the development of irrigation as follows: (a) small schemes involving less than 200 ha are the responsibility of the Irrigation Development Department (IDD) in MOA; (b) schemes of between 200 ha and 3,000 ha are planned and designed in cooperation with the MOA. Execution of the irrigation infrastructure is undertaken by EWWCA whilst the IDD is responuible for land development; and (c) schemes of over 3,000 ha are the responsibility of WRDA. Small- scale irrigation development (less than 200 ha) was previously carried out by the surface water division of the Soil and Water Conservation Department (SWCD) of MOA. In 1984 the Division was separated from SWCD and upgraded to the Irrigation Development Department (IDD). The Department is still in its early development phase and relies on technical assistance from various sources. At present IDD is concerned with the construction of schemes commanding approximately 4,270 ha. 25. The Ten-Year (1984-93) Perspective Plan, issued in January 1983,included plans for a sizable expansion of large-scale irrigation. The recent drought required some changes of the Government plans. Presently, the Government is pursuing a program of expanding all thiee types of irrigation: large-scale schemes for cash crop production and small- and medium-scale schemes for food production by farmers and cooperatives. 26. Constraints and Potential. Although MOA has almost ten years of experience with small-scale irrigation, there is a lack of experienced irrigation staff in the zones; furthermore, general shortage of transport considerably hinders the ability of field staff to visit schemes. This constraint is greatly exacerbated by the mountainous nature of most of the country and the scarcity of road access to many of the areas. The other constraints area (a) shortage of materials; (b) lack of technical and physical resources to proceed with land development; and (c) lack of knowledge of irrigated agriculture due to inadequate research findings and extension services, etc. The practice of cost recovery from beneficiaries is not applied where grant funds are available. In addition, credit for small irrigation works provided under the IFAD Agricultural Credit Project (Loan No. 131-ET), through the Agricultural and Industrial Development Bank (AIDB), has not been utilized. While these constraints are substantial, the potential for development of small-scale irrigation is attractive. It is estimated, based on the limited data, that 130,000 ha of low cost, gravity-fed irrigation (20 percent perennial; 80 percent seasonal) could be developed without storage. With storage, the potential could be raised to over 220,000 ha. About 30,000 ha of this total are thought to exist in the low rainfall, drought affected areas. The Soil and Water Conservation Subsector 27. As a result of serious deforestation and poor conservation practices, about 15 million ha of the highlands are In a seriously eroded condition, and a further 13 million ha are showing moderately accelerated erosion. The balance of 26 million ha includes some 15 million ha of land with erosion-susceptible soils which could become the problem area of the future if not properly managed. Of the originally forested area, Gamo Gofa has 30 percent left, but in the rest of the highlands only 2 percent to 4 percent remains. A combination of deforestation and soil loss has led to an increase in the frequency and severity of floods and a decrease in dry season river flows. 28. Little attention had been given to the problems of degradation prior to the 1973174 drought. Today, the Government is actively pursuing developmsant strategies to slow the process and begin repairing the damage.Two major activities in the area of soil and water conservation are: the World Food Program, Food For Work (FFW) Program officially referred to as 'Rehabilitation of Forest, Grazing and Agricultural Land' and the World Bank-sponsored and FAO-executed Ethiopian Highlands Reclamation Study. The first has been in operation in one form or another for ten years but it was only in 1982 that the current, considerably expanded program was initiated. The primary objective of this program is to make food available where it is badly needed; to achieve soil conservation is a secondary aim. The positive effects are: (i) achieving a considerable amount of terracing and bunding; (ii) creating a national aware--ess of soil conservation; and (iii) laying a foundation for biological soil -conservation. The negative effects are: (i) the program is restricted to food-deficit areas, so the high production, food surplus areas are left out' (ii) as the program depends on external funding, it must be -seen as temporary end thus cannot become a sustainable activity of Government; (iii) there is li:tle farmer involvement or - 10 - motivation which results in problems of maintenance; and (iv) to achieve the target, it is necessary to use oversimplified designs and specifications without sufficient evaluation of the problems and solutions in each area. The Ethiopian Highlands Reclamation Study was concerned with assessment of the erosion problem, consideration of conservation methods, and development of a strategy for a conservation program. A complementary activity also undertaken by FAO has been the provision of technical assistance to the previous Department of Soil and Water Conservation, now the Department of Community Forests and Soil Conservation Development. The main input has been a large training program. It is anticipated that a third phase will be completed shortly. Other externally supported conservation activities are: the Soil Conservation Research Project supported and staffed by the University of Bern, Switzerland, in operation since 1980, and the applied research programs of the International Livestock Center for Africa. 29. Constraints and Potential. The combination of present population growth, limited good agricultural land and mountainous terrain, will result in increasing degradation, even with a greatly expanded program of physical measures, unless the farmers are taught the importance of soil and water conservation to the productivity of their owbn farms and they respond by taking measures to counteract erosion and build up soil productivity. The dissemination of available information is a major problem. At present farmers receive practically no advice except in terms of physical construction measures. The extension service has few specialists trained in conservation practices. The project activities proposed for the Hararghe region would bridge the gap through conservation-based trials, demonstrations and strengthening of the extension service. Institutional Setting 30. HOA in 1984 was decentralized to form eight zones encompassing from one to three provinces. At headquarters, departments are grouped into four main departments each headed by a Vice-Minister. These four main departments are: Rural Infrastructure Development, Cooperative Promotion and Agricultural Development, Animal and Fishery Resources Development, and Natural Resources Conservation Development. Each zonal office of MOA is headed by a General Manager, supported by four technical departments corresponding to those at headquarters. Bank Group Assistance in the Agriculture Sector 31. The Bank has considerable experience in lnnding for agricultural development in Ethiopia. Two minimum package projects (Cr. 416-ET and Cr. 1088-ET) were aimed at increasing agricultural production in the highlands. Coffee projects (Cr. 290-ET and Cr. 1429-ET) supported processing to increase value added to the traditionally sundried crop. The Agriculture Marketing Corporation's storage and marketing activities were strengthened under Cr. 789-ET. Other projects were for Drought Rehabilitation and Land Settlement (Cr. 485-ET), Irrigation (Cr. 1337-Et), Agricultural Research (Cr. 1521-ET), and Drought Recovery (Cr. 1576-ET). An IFAD project, supervised by IDA, (Loan 131-ET) is strengthening the operational capacity of AIDB and channeling funds for on-farm development through cooperatives. - 11 - While physical implementation of agricultural projects has been generally satisfactory, these projects have in some cases fallen short of their overall objectives due to inadequate incentive policies. In recent months, the Government has recognized the need to increase economic benefits by adjusting its policy framework and is discussing the introduction of measures to reduce grain marketing barriers and increase producer prices. PART IV - THE PROJECT 32. The proposed project was appraised in MaylJune 1986, and the IFAD Staff Appraisal Report No.6393-ET dated January 14, 1987, is being circulated separately. A supplementary project data sheet is attached as Annex III. Negotiations were held from November 25 to December 1, 1986, in Rome. Objectives and Rationale for Support from IDA 33. The proposed project would address the problems caused by severe and recurring drought and increasing desertification. The project is based on proposals by a mission which visited Ethiopia in. November/December 1985. The main objective of the small-scale irrigation subproject is the improvement of food production in those areas particularly susceptible to drought. Conservation based agricultural development (a term used to describe a broader approach in which biological soil conservation is combined with structural soil conservation) would be introduced in the highlands of the Hararghe region, one of the most severely eroded regions in the country. Since conservation based farming systems would involve large numbers of farmers, the extension service would be strengthened through the introduction of a modified training and visit system. The project would also help to improve protein intake and nutrition in the family through the introduction of family vegetable gardens. Project Area 34. The project area comprises the highland districts of Arsi, Bale, Sidamo and Hararghe regions. Of the small-scale irrigation subproject, rehabilitation of existing schemes would cover the whole projec. area, while construction of new schemes would be implemented in Northera& Sidamo, Northern Hararghe, Western Arsi and Northwestern Bale. The Conservation and Agricultural Support subproject, including extension, would be confined to the Hararghe region In the first phase and depending on achievements, other areas would be covered in future. Project Description Small-Scale Irritation Subproject 35. National Level. To support the development of a national irrigation program, the Project Studies and Preparation Division of the Irrigation Development Department (IDD) of MOA would be strengthened to undertake the preparation of: (a) a cohesive national strategy and policy framework for small-scale irrigation; (b) guidelines for scheme selection, planning, implementation, supervision and monitoring; and (c) manuals and designs. Assurances were obtained during negotiations that (a) by August 31, 1987, the Division would be adequately strengthened to undertake the above - 12 - tasks; (b) qualified counterpart staff would be employed for all consultants;(c) incremental staff would be recruited well in advance of the relevant activities; and (d) staff receiving overseas training would be required to serve not less than two years on project activities. An Irrigation Support Unit would also be established at AIDB headquarters, dedicated to the loan administration of small-scale irrigation schemes executed through AIDB credit. Office equipment, vehicles and training would be provided for the unit. 36. Zonal Level. The project would provide support for the strengthening of IDD zonal offices in Asela and Harrar by establishing units to plan, design, support and supervise rehabilitation and construction of small irrigation schemes and the construction of office buildings, procurement of construction equipment, vehicles, office equipment, furniture, books and technical manuals, training for staff, skilled laborers, and technical assistance. An assurance was obtained that by December 31, 1987, the support units would be established. 37. Agricultural Support Services. The project would provide support to MOA's Cooperative Promotion and Agricultural Development Department zonal offices in Asela and Harrar for training, equipment, vehicles and the establishment of demonstration plots and technical assistance. 38. Scheme Construction. Funding for the rehabilitation and construction of small irrigation schemes would be made available through MOA financing and AIDB credit (para 48). Financing would be provided for construction materials, construction equipment operation, skilled labor and construction supervision, while unskilled labor would be provided by the beneficiaries. New schemes to command about 1,650 ha and rehabilitated schemes to command about 2,750 ha would be developed. Technical and economic criteria agreed at negotiations, would be used as a basis for selecting beneficiaries. Construction of access roads would be carried out by unskilled labor financed by the World Food Program through the Food-for- Work Program. Conservation and Agtricultural Support 39. National Conservation Support Unit. The programming and planning capacity of MOA's Community Forest and Soil Conservation Development Department would be strengthened through the provision of technical assistance for the collection and evaluation of information concerning conservation techniques and conservation-based agricultural systems on the basis of which a cohesive national strategy would be developed. 40. Conservation-based Agronomic Trials. The component would provide for the establishment of about six sites of about 15-20 ha each, about 30 on-farn plots of about 5 ha each, and about 100 farmer demonstration plots on sloping terrain, representative of the highland crop areas in Hararghe for conservation-based trials. Financing would be provided for the construction of store-cum-office buildings,the acquisition of tools and meteorological equipment and incremental local salaries. - 13 - 41. Agricultural Extension. The extension system would be closely linked to the trials program through the involvement of the development agents in the supervision of on-farm trials and farmer demonstration plots. Support for the extension service would include incremental staff salaries, bicycles/mules, motorcycles, vehicles, furniture, field tools, equipment, staff and farmer training, and technical assistance. 42. Bund Stabilization. To strengthen the capacity of HOA's Animal Husbandry and Feed Development Department to establish suitable vegetation on bunds, three nurseries would be developed and financing provided for technical assistance, incremental staff, vehicles, tools and equipment. 43. Rural Women's Development Support. This component would be implemented in Hararghe on a pilot basis, kept flexible and monitored closely through annual work programs. It comprises two main elements: family vegetable gardens in villages and a women's rural development credit line. About 370 vegetable gardens measuring on average 200 m2 would be supported through provision of an inputs package. About US$300,000 equivalent would be made available to rural women through AIDS to finance small income-generating projects. Also, MOA's Rural Women's Team would be strengthened through provision of vehicles and technical assistance. 44. Monitoring and Evaluation. Support for monitoring, evaluation and surveys by MOA and AIDB would be provided, including office equipment, vehicles, incremental operating costs, training and technical assistance. Project Implementation 45. The Irrigation Development Department under the Vice Minister for Rural Infrastructure Development would be responsible for the national support component of the Small-scale Irrigation Subproject and the zonal managers at Asela and Harrar for zonal support and scheme construction. AIDB would be responsible for financing the scheme construction component where credit would be utilized. The Community Forest and Soil Conservation Development Department under the Vice-Minister for Natural Resources and Conservation would be responsible for the national conservation support unit component. 46. Central Coordinating Committee. Not later than August 31, 1987, the Government would establish a Central Project Coordinating Committee to ensure smooth coordination among the various departments. The Committee would be responsible for coordination among the implementing departments and AIDB. The Committee would be serviced by the Technlical Support Unit of the Planning and Programming Department (PPD) of MOA and assurances were obtained at negotiations that the head of the Unit would be appointed to act as project coordinator. The Project Coordinator would be responsible for (a) operating the special accounts, (b) coordinating disbursement and withdrawal applications, and (c) coordinating procuremenc as far as possible and assist the various project agencies. At zonal level, the MOA zonal general managers would be responsible for coordinating the work of participating MOA departments and for ensuring effective implementation at field level. They would be responsible for (i) the review and adjustment of annual work programs and budgets; (ii) the coordination of procurement and recruitment of consultants; and (iii) the review of progress reports and cnsuring agreement on joint action that may be needed. - 14 - Small-scale Irrigation Subproject 47. To guarantee maximm commitment and participation of the farmers in the development and maintenance of the schemes, the project would adopt the principle of farmer initiative as the basis of development. Responsibility for identifying and selecting irrigation schemes to be financed under the project would rest with MQA's Irrigation Development Department. Decisions would be made in consultation vith MOA field staff, proposed irrigation beneficiaries, and AIDB represent.tives where credit funds would be utilized. All construction work would be supervised by MOA staff. To expedite construction, it would be desirable to have funds available at the zonal level for Immediate procurement needs. Therefore, imprest accounts would be established in the zonal headquarters with initial deposits of about US$ 100,000 equivalent by MOA from a Special Account to be established. 48. Financint Scheme Development. So far, virtually all small-scale irrigation construction has been funded by MOA. Credit, although available (para. 26), has not been utilized, mairly because IDD has lacked resources to provide the technical support needed by AIDB. By strengthening IDD and establishing the AIDB Irrigation Support Unit (paras. 35 and 36) this project is designed to overcome past constraints. Funds from IFAD Loan 131-ET would be used to explore the role of credit in financing small-scale irrigation, in areas agreed between IDD and AIDB, where construction would only be financed by AIDB. Expansion of the role of credit would depend on the success of the operation and would be the subject of special focus during the mid-term review. Since close IDDIAIDB collaboration would be crucial to the success of irrigation lending, AIDB would conclude a Cooperation Agreement with IDD for implementing the credit component. IDD would be responsible for the technical aspects while AIDB would be responsible for overall appraisal of schemes, for the financial aspects and for bearing the credit risk. The Cooperation Agreement would also specify the areas where AIDB would target its funds. Completion of a Cooperation Agreement satisfactory to IFAD would be a condition of disbursement of the credit component. Should the credit mechanism prove a bottleneck to rapid implementation of these small schemes, the Government would complete the construction program through MOA. Conservation and Agricultural Support Subproiect 49. Conservation-based Agronomic Trials. The proposed conservation- based agronomic trials would be implemented within the framework of the existing National Field Trials Program being carried out by the Agricultural Development Department of MOA. Technical service units from each MOA department involved and Alemaya Agricultural University would collaborate to plan, coordinate, supervise and evaluate the operation of the trials. Promising results would be subjected to on-fanm testing and would then be widely demonstrated by extension staff. 50. Agricultural Extension. The extension service would be reorganized to provide more systematic and regular extension visits by better trained and equipped staff. Concepts of the successful Training and Visit System would be adapted to Ethiopian conditions. Assurances were obtained during =gotiations that such as system would be introduced. A - 15 - total of 22 of the medium to higher potential subdistricts of the Hararghe agricultural zone with all weather road access would be covered during the six-year project period. The Hararghe zonal management would organize relevant training programs for zonal and district technical staff in which Alemaya University would be expected to participate. 51. Rural Women Development Support. The head of MOA's Rural Women's Team in Hararghe would be responsible for implementing the component. Suitable areas for irrigated vegetable gardens would be selected and assistance provided in introducing appropriate cultivation techniques and in teaching women how to improve family nutrition with the vegetables. The Rural Women's Team would also identify small income-producing projects suitable for submission to AIDB for financing. Annual Work Progran 52. Annual work programs would be prepared by MOA and AIDB, which would include: (i) a review of project implementation in the current year; (ii) detailed description of the work to be carried out in the forthcoming year; (iii) requirements for additional staff, equipment and inputs; and (iv) a budget and a financing plan. Preparation of the first annual work program for review by IDA would be a condition of Credit effectiveness. In subsequent years draft plans would be submitted to IDA for review and the final work Program would reflect the comments received. Project Cost Estimates and Financing 53. The total estimated project cost, including physical and price contingencies, taxes, and duties is at USS 33.7 million equivalent of which the foreign exchange cost is US$ 15.6 million equivalent, or about 46 percent of total project costs. Costs have been estimated at prices prevailing in June 1986, and adjusted to allow for the price escalation of imported andlor locally produced items expected in November 1986. Physical contingencies of about 6 percent of the base costs have been provided. Price contingencies have been provided for local costs on the basis of projected annual increases of 9 percent from 1987 to 1988 and 10 percent from 1989 to 1995 and for foreign costs at the following annual rates of 6.8 percent, 6.8 percent, 7.0 percent, 7.1 percent for FY87 through FY90 and 4.0 percent from FY91 through FY95. 54. The proposed credit of US$7.0 million equivalent would finance US$4.9 million equivalent of the foreign exchange costs and about US$2.1 million equivalent of local costs, or about 21 percent of the total costs. The Government would provide US$6.4 million equivalent, including duties and taxes. IFAD would finance US$7.2 million equivalent of the foreign exchange costs and about US$3.8 million equivalent of local costs. OPEC would finance US$2.8 million equivalent of foreign exchange costs and about US$1.2 million equivalent of local costs. The project would be parallel financed by IFAD (IFAD, Loan 131-ET and World Food Program) and IDA. The proceeds of the proposed credit and the proceeds of the OPEC loan would be disbursed on a joint basis by IDA. The fulfillment of the conditions precedent to the effectiveness of the IFAD Loan Agreement and OPEC Loan Agreement, and to the release of the WFP Grant would be conditions of effectiveness. - 16 - 55. The Government with proceeds of IhAD funds would pass on to AIDB US$600,000 as a grant for institutional support and would onlend US$0.3 million equivalent for productive micro-projects (para. 43) under the rural women's development component. In addition, US$1.0 million of IFAD Loan 131-ET would be used by AIDB to finance project irrigation development. Further funding for that purpose, from the new IFAD loan, may be channeled through AIDB. Since project appraisal in June 1986, the Government has lowered interest rates for agricultural lending, but the change has not been applied to lending supported by IFAD Loan 131-ET. The onlending terms and conditions for the new loan would form part of a Subsidiary Loan Agreement to be concluded between the Government and AIDE. The completion of this Agreement satisfactory to IFAD, would be a condition of disbursement of the credit component. It would also be a disbursement condition of that component that US$1.0 million of the Loan 131-ET had been fully committed for small-scale irrigation lending. To monitor the appropriateness of the interest rate to be applied to AIDB loans, it was agreed during negotiations that AIDB would review the rates with IFAD during the mid-term project review and that the Government would take necessary measures to ensure that the interest rates are appropriate. Reportinz. Monitoring and Evaluation 56. The Planning and Progrnmming Department of HOA and AIDB would prepare quarterly progress reports on physical and financial progress, such as procurement, construction, staff employment and training and expenditure in a format acceptable to IDA which would reach IDA not later than two months after the end of the reporting period. The first report would be due four months after loan signing. Within six months of completion of the project, MOA would prepare a Project Completion Report acceptable to lFADIIDA. Procurement and Disbursement 1 57. Procurement methods by major project elements are summarized in Annex IV. All procurement of the components to be jointly financed by IDA and OPEC shall be in zccordance with IDA guidelines. Procurement of heavy construction equipment amounting to about US$850,000 and of two prefabricated houses amounting to about US$80,000 would be subject to international competitive bidding (ICB). Vehicles, spare parts, motorcycles, office equipment and materials would be grouped into contracts valued at US$100,000 or more and would also be procured by ICB. Local competitive bidding would be used for contracts for goods estimated to cost between US$20,000 and US$100,000. Under ICB procedures qualifying domestic manufacturers would receive a preference in bid evaluation of 15 percent of the CIF price of imported goods or the actual customs duties and import 1/ The basic framework for all procurement, uncer the components to be financed by IFAD, shall be in accordance with IhAD procurement guidelines with the exception that the developing member states and those member states of the Fund, as shall have deposited instruments of contribution to the special resources for Sub-Saharan Africa prior to the date the contract is put up for tender, shall be eligible territories for procurement purposes. - 17 - taxes whichever is lover. Some equipment or tools may need to be procured directly from manufacturers after obtaining quotations from at least three qualified manufacturers. Small off-the-shelf itema costing less than US$20,000 each and needed urgently for project execution would be purchased by "prudent shopping" with at least three price quotations. The total value of items purchased this way should not exceed USS 0.5 million without prior IDA agreement. Contracts for civil works would not be suitable for ICB because the work would be done in dispersed locations and would be too small to attract international interest. These contracts would, therefore, be awarded following local competitive bidding (LCB). The LCB procedures and the 'Instruction to Bidders' document were reviewed during appraisal and found to be adequate. Irrigation works construction would be carried out by IDD through force account, or where possible, by sma 11 contractors whose contracts would be awarded following local competitive bidding or, in the case of very small contracts, according to negotiated contracts with grouzps of skilled workers. Consultant services would be procured according to IDA guidelines. Internationally recruited technical assistance staff would, wherever practical, be grouped into teams and procured through consulting firms acceptable to the Government and IDA. Overseas training would be subject to IDA approval. For all civil works contracts exceeding US$200,000 and for purchases of equipment and supplies exceeding US$100,000, proposals for advertising, draft tender documents, bid evaluation and award proposals would be sent to IDA for review before contract award. 58. Disbursements under joint IDA/OPEC lending would be in the ratio of 65 percent IDA to 35 percent OPEC. Under this arrangement, disbursements under the IDA credit would be mde against 50 percent of expenditure for civil works, 65 percent of fcreign expenditure for vehicles, equipment,furniture, and materials if directly imported, 65 percent of ex- factory price, if manufactured locally and 40 percent of other locally procured items; 65 percent of technical assistance, training, and gradually falling percentages (starting at 75 and ending at 35 percent) of operating costs. To reduce the number of applications to be sent to IDA and the payments to be made by all cofinanciers, two foreign exchange special ac_ounts totalling US$1.5 million (corresponding to about four months of expenditure) would be established and maintained with a commercial bank authorized to deal in foreign currencies or with the Central Bank. One of these accounts would be funded by IAD, the other by IDA. Disbursements would be fully documented except for disbursements against small contracts, purchase orders and operating costs of less than US$80,000 equivalent where certified statements of expenditure would be used. The credit would be disbursed over a period of six years ending December 31, 1993. Even though standard disbursement profiles for IDA-financed agricultural projects in Ethiopia show an average disbursement period of ten years, more rapid disbursement is expected under this project due to plans for procuring equipment and beginning construction at an early date. Accounts and Audit 59. All the concerned national agencies of MOA, the two MQA zonal general managers and AIDE would maintain separate records of project accounts. Each institution would have the project accounts including statements of expenditure as well as the Special Account audited by an - 18 - independent auditor satisfactory to IDA. The audited accounts would be sent to IDA within six months after the end of the Ethiopian fiscal year and not later than December 31 of each calendar year. Mid-Term Review 60. Assurances were obtained that the Government would, not later than 30 months from the date of credit effectiveness, prepare a mid-term review report in accordance with terms of reference prepared in consultation with IDA, which would be presented to IDA for review and com.'ents. Within 33 months from the date of credit effectiveness, the Government and IDA plan to conduct a joint follow-up to the review, including field visits, if needed, to determine how the project might be modified to increase its impact during the remainder of the implementation period. Irrigation Cost Recovery 61. The Government accepts in principle the desirability of introducing a system of cost recovery for irrigation development, but has not yet formulated a policy for that purpose. The Government indicated during negotiations that it would initiate a study to explore the issues related to and collect data needed for formulating such a policy; and the study would be reviewed by IFAD and IDA. The study would, inter alia, explore sector-wide applicability of irrigation cost recovery, irrespective of sources of funds; the method and level of cost recovery; and the compatibility of cost recovery between beneficiaries of MOA-financed schemes and those who have used credit to help them to develop irrigation. Environmental Impact 62. The project is designed to reduce and arrest environmental degradation through soil and water conservation. Small-scale irrigation projects would increase agrilcultural productivity and, through land levelling and/or terracing, contribute to soil conservation. A possible localized negative effect could appear where inexperienced irrigators would overwater their fields and cause some erosion on steep terrain. Training in field water management included in the project would address this potential problem. International Water Rights 63. New schemes to be constructed under the project would be situated in drainage basins belonging exclusively to Ethiopia. Rehabilitation of existing schemes would extend to the Juba and Wabe Shebelli rivers drainage basins. These are international waterways shared by Ethiopia and Somalia. However, riparian water rights issues would not arise, because scheme rehabilitation would not involve the use of additional water or a change in water quality. Benefits 64. The main quantifiable benefits stemming from the Small-scale Irrigation Subproject would be an increase in the production of crops and - 19 - vegetables by about 18,000 beneficiary farmers on an irrigated aree of about 4,400 ha and on rainfed land of about 18,000 ha. Bund stabilization representing 9,500 ha of bunds would directly benefit about 50,000 to 100,000 families, through introduction of more productive and nutritious grasses and legumes thereby Improving the fodder available to livestock. More than 300,000 would benefit from the improved extension service. 65. A 19 percent economic rate of return has been calculated for the irrigation subproject, and a 15 percent economic rate of return for the conservation and agricultural support subproject. With irrigation, extension, field trials and soil conservation work, the expected production increases should be easily obtainable and sustainable over the expected 25- year life of the project. Tests show relatively little sensitivity to reduced benefits, increased costs or delayed implementation. Risks 66. Delays in Implementation during the early stages could occur due to inadequate institutional strength and experience. Heasures against such risks are provisions to encourage an expeditious start, strong institution t'ilding and preparation of annual work programs. Overall, given the prevailing environment in Ethiopia, the risks for the proposed project are considered low, and given the potential benefits, fully justifiable. PART V - RECOMMENDATION 67. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve the proposed credit. Barber B. Conable President February 4, 1987 Washington, D.C. - 20 - ANNEX I 1986 SOCIAL INDICATOR DATA SHEET P 1 6 ETHIOP IA Reference Groups (MRE) Most Recent Low-income Mid-income 1965 1973 Estimate S-S Africa S-S Africa LABOR FORCE Total Labor Force (thou) 11047.3 13176.3 16583.1 Female (%) 35.8 35.3 33.2 35.7 37.5 Agriculture (%) 86.3 83.6 79.8 a 7B.9 59.4 Industry (M) 5.3 6.4 7.8 a 7.6 14.8 Participation rate (X) Total 43.5 42.1 39.3 38.9 36.2 Male 57.0 55.6 52.0 50.4 45.8 Fomale 30.5 29.2 26.4 27.5 26.7 Age dependency ratio 0.9 0.9 0.9 1.0 1.0 HOUSING Average size of household; Total 4.5. Urban 3.5 4.2 Rural 4.5 Percentage of dwellings with electricity: Total Urban 58.2b Rural EDUCATION Enrollment rates: Primary: Total 11.0 16.0 46.0 60.1 98.5 Male 16.0 23.0 58.0 69.6 107.8 Female 6.0 10.0 34.0 51.3 90.7 Secondary: Total 2.0 4.0 13.0 12.5 21.0 Male 3.0 6.0 17.0 16.5 28.5 Female 1.0 2.0 9.0 9-0 16.9 Pupil-Teacher ratio: Primary 41.5 46.1 59.3 45.1 42.5 Secondary 20.1 27.7 , 23.0 27.7 Pupils reaching grade 6 (%) 59.6 80.8 INCOME. CONSUMPTION. ANO POVERTY Energy consumption per cap. (kg of oil equivalent) 9.7 20.9 16.7 54.6 530.7 Percentage of private income received by: Highest tO% of households Highest 20% Lowest 20% Lowest 40% Est. absolute poverty Income level (USS per capita): Urban 115.0 190.0 c 689.6 Rural 65.0 338.1 Est. pop. below absolute poverty income level (%) Urban 60.0 Rural 65.0 Passenger cars/thou pop. 0.9 15 36.0 Newspaper circulation (per thousand population) 1.3 1.0 0.9 3.6 7.4 EPO July 1986 Net awailahi MM: Group aveorage are popuWlan weighted. Country coeerag deoends an data avgilethlltv sed is not unriorm. Unless otherwise *et 1915 reft to any yer between 19M and 196; 1973 betwen 1970 and 197t and most rent estimate betwe-n 1982 and 195. n 19I. b. Addls Abebe only. c- 1961. -21- ANNJEX I Page 2 of 6 1986 SOCIAL INDICATOR DATA SHEET ETHIOPIA Reference Group. (MRE) Moat Recent Low-income Mid-income 1965 1973 Eatimate S-S Afrtca S-S Africa AREA Total land area (thou sq km) 1221.9 1221.9 t221.9 Agrtcultural (% of total) 48.0 48.7 48.4 9NP PER CAPITA (US$) 110.0 219.9 1025.3 POPULATION ANO VITAL STATISTICS Total population (thou) 25409.0 31284.0 42169.0 Urban pop. I% of total) 9.7 15.2 20.4 33.1 Population growtn rate(%): Tota l 2.6 2.8 2.9 2.8 Urban 7.4 6.1 6.2 4.8 Life expect, at birth lyra) 42.7 43.6 44.5 48,2 51.0 Population projections: Pop, in 2000 (mill) 65.1 Stationary pop. (mill) 204.0 Population density per sq km oF agricultural land 43.3 52.6 71.3 55.9 45.6 Pop. age structure (1): 0-it yrs 44.9 A5.3 46.0 46.7 46.2 15-64 yrm 52.5 52.1 51f3 50 4 51.0 65 and above 2.6 2,7 2.7 2.9 2.8 Crude birth rate (per thou) 43.5 43.2 41.0 46 8 46.3 Crude death rats (per thou) 20.3 19.5 24.0 18.3 15.6 Total fertility rate 5.8 5.8 6.1 6.6 6.4 Infant mort. rate (per thou) 166.0 155.0 172.0 128.5 103.2 Child death rate (per thou) 37.0 35.0 39.0 25.7 17.6 Family planning: Acceptors. annual (thou) Users (% of married women) 2.0 4.5 7.1 FOOo. HEALTH AND lUTRITION Index of food production per captta (1974-76 * 100) 117.1 tO6.3 90.0 89.5 88.3 Per capita supply of: Caloreso (% of requirmnts) 93.1 81-2 92.8 90.0 94.2 Proteins (grams per day) 73.9 63.7 72.7 52.6 50.6 Pop. per physician (thou) 70.2 83.6 88.1 a 39.2 11.3 Pop, per nurse (thou) 5.8 6.4 5.6 a 3.3 2.6 P6p. per hospital oea (tnou) 2.7 3.7 3.8 a 1.7 1.4 Access to safe water (% of population): Total 6.0 14.5 25.2 45.8 Urban 61.0 82.0 61.6 70.S Rural . .. 1.0 3.9 i7.1 35.0 Population Growth Infant Mortality Primary School Enrollment x x 5 200 1 120 ISO - - .-- 3-~~~~~~~~~~~~~~~~-8 100- 2-~~~~~~~~~~~~~~~~~£ 0. 0~~~~~~~5 1I05-7 1973-84 1960 1965 1970 1275 1980 1960 1965 1970 1975 1980 IW ErsICOPA G ETHIOPIA CM FIRST REr CRDUP a FIRST RtEf_Ggour - 22 - ANNEX I 3 Definitions of Social Indicators Page 3 of 6 The definilion of a particular social indicator may Infant (age 0-1) mortal/ty rate - Number of infants vary among countries or within one country over per thousand live births who die before reaching one time. For instunce, diffcrcnt countries dcfinc "urban year of age, in a given year. area" or "safc watcr" in diffcrcnt ways. Child (age 1-4) mortality rate - Number of deaths of children, age 14, per thousand children in the AREA (thousaind squarc kilometers) same age group in a given year. For most developing Total - Total surfiace area comprising land arci and countrics thesc data are derived rrom models using inland waters. information on infant mortality rates. Agricultural (perenliage of total) - Estimate of ugri- Family planning - acceptors, (thousands) - Annual cultural area used for crops, pastures, market and number of acceptors of birth-control measures re- kithcdn gardens or to lic fallow, Ias percentagc of ceived under the auspices of a national family plan- total. ning program. Family planning - users (percentage of married wor- GNP PER CAIPITA (USS) - GNP per capita esli- en) - Percentage of married women of child-bearing mates at current market prices. calculatcd by the age who arc practising, or whose husbands are conversion mcthod used for the World Bank At/ar, practising. any form or contraception. Women of 1986. child-bearing age are generally women aged 1549. although for some countrics contraceptive usage is POPULATION AND VITAL STATISTICS measurcd for another age group. Total population - mid-year (n illions) Urban population (per.e" -e of total) - Diffcrent FOOD, HEALTH AND NUTRITION countrics follow diffcrcnt definitions of urban popu- Index offoodproductionper capita (1974- 76 - JOJ) lation. Such diffcrences may affect comparability of - Index of per capita annual production of all food data among counLries. commodities. Production excludes animal feed and Population growth rore (percent) - toral and urban - seed for agriculture. Food commodities include pri- Annual growth rates of total and of urban popula- mary commodities (for cxample, sugarcane instead tions. of sugar) which are edible and which contain nu- Life expectancy at birth (years) - Number or years a trients (for example, tca and coffee are excluded). newborn infant would live if prevailing patterns of Commodities include nuts, fruits, pulses, cereals, mortality for all pcoplc at the lime of its birth werc vegetables. oil sceds, sugarcane and sugar beets, to stay the same throughout its life. livestock. and livestock products. Aggregatc produc- Population projections tion of each country is based on national average Population in 2000 - The projection of population producer price weights. given total population by age and sex. fcrtility and Per capita supply of calories (percentage of require- the demographic parameters of mortality rates, and ments) - Computed from energy equivalent of net migration in the base year 1980. until the population food supplies available in country per capita per day. reaches a stationary statc. Available supplies comprise domestic produclion, Stationary population - The projectcd population imports less cxports, and changes in stock. Net level when zero population growth is achieved: i.e.. supplics cxclude animal fecd, seeds for use in agri- the birLh rate is constant and equal to the death rate, culture. quantities used in food processing, and loss- the age structure is stable, and the growth rate is es in distribution. Requirements werc csLimated for zero. 1977 by the Food and Agriculture Organization Population density, agricultural land - Population per (FAO) based on physiological nceds for normal square kilometer (100 hectares) of agricultural area. activity and health considering body weights, cnvi- Population age structure (percent) - Children 0-14 ronmental temperature, age and sex distribution of years, working age 15-64 years, and people of 65 population. ycars and ovcr as percentages of population. Per capita supply of protein (grams per ecy) - Protein Crude birth rate - Annual live births per thousand content of per capita net supply of food per day. Net population. supply of food is defined as above. Requirements for Crude death rate - Annual deaths per thousand all countries established by Unitdd States Depart- population. - ment of Agriculture provide for minimum allow- Totalfertility rate - The average number of children ances or 60 grams of total protein per day and 20 that would be born alive to a woman during her grams of animal and pulse protein. These standards lifetime if during her childbearing years she were to are lower than those of 75 grams of total protein and bear children at each age in accordance with prevail- 23 grams of animal protein as an average for the ing age-specific fertility rates. world, as proposed by FAO. - 23 - ANNEX I Page 4 of 6 Population per physician - Population divided by group of individuals who share living quarters and number of practising physicians qualified from a main meals. A boarder or lodger may or may not be mcdical school at university level. included in the household for statistical purposes. Population per nursing person - Population divided Percentage of dwellings with electriciry - total, urban. by number of practising grduate nurses, assistant andrural- Conventional dwellings with electricity in nurscs, practical nursr.. and nursing auxiliaries. living quarters as percentage of all dwellings. Population per hosp.al bed - Pbpulation divided by number of hospitr4 beds available in public and pri- EDUCATION vate, general and specialized hospitals, and reha- Enrollment Rates bilitation centers. Hospitals are establishments Primary School Enrollment - rotal, mule andfemale permanently saffed by at least one physician. Es- - Gross cnrollment or all ages at primary level as a tablishments principally providing custodial care are percentage of primary school-age children. While not included. - . many countries consider primary school age to be Access to sofe warer (percentage efpoputltion) - total, 6-11 years. others have wider age groups. Differ- urban, and rural- eople{total, urban, and rural) with ences in country practices in the ages and duration reasonable accessto safe fc wax Apaly (indiudes treat- of school are reflected in the ratios given. For some ed surface watcls or untreated bult uacontaminated countries with universal education, gross enrollment water such as aat from springs, simitMiy wells, itd may exceed 100 percent since some pupils are youn- protected boreholes). In an urban area apublic foun- ger or older than the country's standard primary- tain or standpost locatzd not more than 200 mentrs school age. from a house may ae conidered within reasonable Secondary School Enrollment - total. male and access of that house. In run3l areas reasonable acess female - Computed in a similar manner, but includes would imply that mreinbers of the household do not pupils enrolled in vocational, or teacher training have to spend a disproportionatc part of the day secondary schools, for pupils usually of 12 to 17 fetching water. Absent and incompictc rcsponses, and years of age. largc variations between counries, may affect the. Pupil-reacher ratio - primary, and secondary - Total validity of the overall results of the country and rtudents enrolled in school divided by the total regional comparisons. In addition, certain definitions numtber of teachers. and classifications such as urban and ruraL reason- P£'rcen:age pupils reaching grade six - The percen- able access to safc water in rural areas, safe water tage of a cohort of 1,000 pupils starting primary sources (when they arc not subject to laboratory school that persist into grade six. control) vary considerably ftrom country to country - and thus affect comparability of the data. INCOME, CONSUMPTION, AND POVERTY LABOR FORCE Energy consumptionper capita (kilograms of oil equi- Thtsl labor force (millions) - . Eonoricafy active -yakent) - Annual consumption of commercial pri- persons, including anned forces and unemployed but mary energy (coal and lignite, petroleum, natural ecluding housewives and . D.inition . gas, and hydro, nuclear and geothernal electricity). Priatae income distribution - Income (both in cash various countries are not comparable. and Female' (percenr) - Female labor force as a percen kd) accrug to percentile groups f h tagc of total labor force. - holds ranked by total household income. Agicudture (percent) - Labot force in farming, Passenger cars (per thousandpopulation) - Includes forestry, hunting and fishing as a percentage of total motor cars seating fewer thai. cight persons; cx- labor force. cludes ambulances, hearses and military vehicles. Indusirv (percent) - Labor force in mining, construc- Newspaper circulation (per thousand population) - tion, manufacturing and electricity, water and gas as Average circulation of "daily gencral interest news- a percentage of total labor force. paper," defined as ' periodical publication devoted Participation rate (percer.rJ - total, male, andfemale primarily to recording general news. It is considered - Participation rates are crnmputed as the peroentage to be 'daily" if it appears at least four times a week. of population of all ages in the labor force. These are Estimated absolute poverty incorne level (USS per based on International Labour Office (ILO) data on capita) - urban and rural - Absolute poverty income the age-sex st:ucture of the population. level is that below which a minimal nutritionally Age dependency ratio - Ratio of population under 15, adequate diet plus essential nonfood requirements and 65 and over, to the working age population (age are not affordable. These estimates are very approx- 15-64). imate measures of poverty levels, and should be interpreted with considerable caution. HOUSING Estinated population below absolute poverty income Average si:e of household (persons per household) - level (percent) - Percentages of urban and rural tool. urban, and rural - A household consists of-a populations who live in "absolute poverty." - 24 - ANNEX I Page- 6 OF S ETHIOPIA - ECONOMIC INDICATORS GNP Per Capita = 11060 (1984) APHUAL RATE OF GROWTH OF GDP GROSS DOMESTIC PRODUCT IN FY 1986 1/ AT CONSTANT FACTOR COST 01) (Feoml Year.) US Min. X 1981-83 1983 1984 1986 CDP at Market Prices 4835.9 100.0 3.1 5.1 -3.7 -8.6 Investment 622.5 10.8 Gross Domestic Savings -261.5 -5.2 Resource Balance -774.0 -18.0 Exports of Goods and NFS 567.9 11.5 Imports of Good. and NFS 1331.9 27.5 OUTPUT IN 1989 V/ Value Added us: Mln. s Agriculture 1921.8 44.3 Industry 894.6 16.0 Services 1722.7 39.7 Total at Factor Cost 4338.8 10.0 GOVERNMENT FINANCE Central Government Br. MI4 Xof CDP FY 198S 1/ FY ldi6r79`2-84 Current Receipts 2401.1 24.0 20.9 Current Expenditures 2364.6 23.6 21.2 Current Surplus 36.6 3.4 -0.3 Capital Expenditures 1275.8 12.7 8.3 MONEY, CREDIT AND PRICES 1980 1981 1962 1983 1984 1985 (Fiscal Years) (Millon Br. outstanding end period) Money and quasi-money 2332.1 2377.6 2643.7 3040.5 33Q3.7 3540.1 Bank Cre-it to Central Government 968.1 1187.9 1180.8 1980.8 2293.4 2620.7 Bank CrJdit to Private Sector and Financial Institutions 1644.2 1721.3 1944.3 1741.7 1881.9 1902.8 (Percentage.) Money ns X of CDP 27.3 26.7 28.8 30.4 33.7 38.8 Annual percentage changes in: General Price Index 4.5 6.1 5.6 -0.4 8.4 19.0 Bank Credit to Public Sector 12.3 14.4 6.6 67.8 15.8 14.3 Bank Credit to Private Sector 34.S 4.7 12.9 -10.4 8.9 2.2 Note: All conversions to dollars in this table are at tie official exchange rate of USt1.00 = Birr 2.07 All Fiscal Years are from July 8 to July 7. Aj Provisional Data for 1986. - 25 - Annex I Page 6 of 6 BALANCE OF PAYMENTS ESTIMATES 1963 1994 1986 MERCHANDISE EXPORTS (Mi iTlons US) (Fiscal Year Average 19B8-85) US Min. X Exports Goode, NFS 551.8 611.9 649.2 Coftfe r4 68e4.3 Imports of Goods, NFS 961.7 1116.8 1082.0 Pulses 10.8 2.6 Resource Gap (deficit -) -409.9 -S0L9 -632.8 O;l-edu 9.9 2.4 Hide. nt Skins 48.4 11.9 Investment Income (not) -13.6 -19.2 -35.6 Oilsed cake 5.5 1.4 Private Transfers (not) 84.9 167.2 144.9 Other 87.5 21.4 Balance on Current Acct. -39.86 -4165. -420.9 Total 408.6 1W.0 Official Transfers (net) 92.6 161.9 296.4 Private ILT Capital (net) 0.0 6.6 0.6 Public MLT Borrowing (net) 20396 264.1 159.6 Disburseents (263.8) (2f8.6) (256.1) EXTERNAL DEBT Amortization (49.8) (64.7) ( 90 6) DECEMBER al, 1985 US S Min Short-term Capital -9.6 15.9 42.3 Total outstanding A Disbursed 2908.6 Changes in reserves (- = increase) 71.6 42.3 -46.3 DEBT SERVICE RATIO Minor Item (incl. errors) -19.4 -3.3 -83.1 FOR FY 1985 Not For. Asset. (end year) 107.3 64.8 112.4 % Petroleum Imports 154.4 156.2 a1.7 Total Outotanding Petroleum Product Imports 7.3 28.2 51.5 Disbursed 21.5 Rate of Exchange Since 1973 USS1.UO = Br. 2.67 Br.1.00 = USUS.48 rBRD/rDA LEMtING, (March 31. 1986) (Million USE) 1330 IDA Outstanding and Disbursed 39.8 428.4 Undisbursed - 304.8 Outstanding incl. Undisbureed 733.2 5 = not available January 1987 - 26 - Annex II Page 1 of 2 A. STATUS OF BANK GROUP OPERATIONS IN ETHIOPIA STATEMENT OF BANK LOANS AND IDA CREDITS (As of September 30, 1986) A m o u n t Loan or (US$ MillLon) Credit Less Cancellations Undis- Number Year Borrower Purpose Bank IDA 1 bursedl Twelve loans and twenty five credits fully disbursed 108.6 388.6 Cr. 707-ET 1977 Ethiopia2 Revised Ahnibara 25.0 3.0 Cr.1275-ET 1982 Ethiopia Agric. & Indust. Dev. Bank 30.0 22.5 Cr.1366-ET 1983 Ethiopia Urban Development 20.0 15.2 Cr. 1386-ET 1983 Ethiopia Petroleum Exploration 7.0 2.6 Cr.1404-ET 1983 Ethiopia Second Road Sector 70.0 53.1 Cr.1429-ET 1984 Ethiopia Coffee Processing & Marketing 35.0 28.0 Cr.1509-ET 1984 Ethiopia Sixth Telecommunications 40.0 36.5 Cr.1520-ET 1984 Ethiopia Sixth Education 70.0 67.B Cr.1521-ET 1984 Ethiopia Agric. Research 22.0 21.2 Cr.1522-ET 1984 Ethiopia Technical Assistance 4.0 3.5 Cr.1576-ET 1984 Ethiopia Drought Recovery Program 30.0 12.8 Cr.1676-ET 1986 Ethiopia Port Eng'g & Construction 5.5 5.5 Cr.1704-ET3 1986 Ethiopia Energy 62.0 62.0 Cr.1722-ET3 1986 Ethiopia Forestry 45.0 45.0 Total 108.6 854.1 of which has been repaid 71.0 10.9 Total now outstanding 37.6 843.2 Amount sold 6.0 of which has been repaid 6.0 Total now held by Bank & IDA (prior to exchange adjustments) 37.6 843.2 Total Undisbursed 378.7 1/ Credit 1275-ET and higher are denominated in SDRs and are shown in US$ equivalents, based on the exchange rate in effect at the time of negotiations. 2/ US$1.7 million disbursed under former Cr.418-ET, Amibara Irrigation, has been repaid ou out of the proceeds of the new Credit. 3| Signed but not yet effective. - 27 - Annex II Page 2 of 2 B. STATEMENT OF IFC INVESTMENTS (As of September 30, 1986) US$ Million Fiscal Type of Amount Year Obligor Business Loan Equity Total 1965 Textile Mills of Dire Dawa I Textiles 1.5 1.0 2.5 1966 Ethiopia Pulp & Paper Co. Paper - 1.9 1.9 1968 HVA Metahara, S.C. Sugar 5.5 3.5 9.0 1970 Textile Mills of Dire Dawa II Textiles 0.4 0.2 0.6 1973 Textile Mills of Dire Dawa III Textiles 1.5 0.2 1.7 Total Gross Commitments 8.9 6.8 15.7 Less cancellations, terminations, repayments and sales 8.9 6.8 15.7 Total Commitments now held by IFC - - - Total undisbursed - 28 - ANNEX III Page 1 of 2 ETHIOPIA SHALL-SCALE IRRIGATION AND CONSERVATION PROJECT Supplementary Data Sheet Section I - TimLetable of Key Events (a) Time taken to prepare the Program : Fifteen months (b) Program prepared by : IFAD through a Preparation Mission in February, 1985 and a Formulation Mission in NovemberlDecember, 1985. (c) Appraisal Mission : May-June, 1986 (d) Negotiations s November 25, to December 1, 1986 (e) Planned date of effectiveness : 120 days after credit signing Sec-ion II - Special Implementation Action IFAD has financed a Special Operational Facility Fund of US$500,000 to finance project start-up activities. Section III - Special Conditions Conditions of Effectiveness (a) For Program Year 1, the work program would be prepared and furnished to IDA for review and comment (para. 52); (b) The fulfillment of the conditions precedent to the effectiveness of the IFAD Loan Agreement and OPEC Loan Agreement, and all conditions precedent to release of the RFP Grant (para. 54). Other Conditions (a) The Project Studies and Preparation Unit would, by August 31, 1987, be adequately strengthened to undertake the tasks described (para. 35); (b) IDD would establish, by December 31, 1987, the zonal Support Units responsible for planning, design, technical support and supervision of rehabilitation and construction of irrigation schemes (para 36); ANNEX III - 29 - Page 2 of 2 (c) Selection of farmers to benefit from small-scale irrigation would be based on technical criteria agreed at negotiations (pars. 38); (d) The Government would establish a Central Project Coordinating Committee, not later than August 31, 1987, and appoint the head of the Technical Support Unit of MOA to be the project coordinator (para. 46); (e) The =3A Hararghe zonal management would organize adequate training programs for zonal and district technical staff which is to be carried out with the cooperation of Alemasys University of Agriculture (para. 50); (f) A comprehensive draft annual work program would be prepared by MOA and AIDB each year, to be submitted to the Association for review. The final program, would reflect the comments of the Association (para. 52); and (g) The Government, not later than 30 months after credit effectiveness ,would present for IDA comnents a mid-tern review of the progress of the project, of such scope as the Association shall reasonably request (para. 60). - 30 - ANNEX IV Procurement Schedule (US$ Million) Project Element ICB LCB Other NA Total Civil Works 0.10 1.00 1.10 (0.10) b/ (0.10) a/ (0.90) (0.70) b/ Vehicles 1.50 1.50 (0.60) a! (1.50) (0.90) b/ Equipment & 1.50 1.00 2.50 Furniture (0.80) a/ (0.60)a/ (2.20) (0.60) b/ (0.20)b/ Material 2.00 2.00 (1.10) a/ (1.10) T.A. & Training 9.40 9.40 (4.15)a/ (9.40) (5 .25) b/ Skilled Labor 1.80 1.80 (0.90)a/ (0.90) Unskilled Labor 4.50 - 4.50 (1.00)cI (1.00) Women's Credit 0.30 0.30 (0.30)aI (0.30) Construction and Operating Cost 2.20 2.20 (1.10)a/ (1.10) Incremental 8.40 8.40 Recurrent Cost (1.40)a/ (4.60) (3.20)b/ Total 3.10 1.00 12.40 17.20 33.70 (1.40)aI (0.10)a/ (5.85)a/ (3.70)aI (23.00)d/ (1.60)b&, (0.70)bI/ (5.45)-bl (3.20)b5/ (1.00)c/ a/ Financed by IFAD b/ Financed by IDA including OPEC cl Financed by WFP di US$1 million from Loan 131-ET not included since its procurement procedure is different. 'I N~~~~~~~~~~~P S~~~~~~~~~~~~~~~~0 ~~K. & I 'K.~~77 IRD 20028 ETHIOPIA IFAD SPECIAL COUNTRY PROGRAM -j >9Program Area * MOA Zone Oilices AIDB Offices- - - * Head Oftice A Branch Offices ' ~ - ^ Representative Offices Agro-Ecological Zones of the Central Highland-s fAbove 1500 Meters)- .... \ 5 ;i High Potential *s!51 Low Potential - Isohyets in Millimeters ;-A All-Weather Roads -. u -Dry-Weather Roads Rivers . - \| Presently Irrigated Areas International Boundaries -- 4 _f/;DJIB OUTI BOUT1 t~~ ~ ~~ ~~~~~~~~~~~~~ . w xDo 3DD KJIOMEERS l 1 >0 150 MD MIES N. S- OMALIA J ~~~~~~~~~~~~~~~~~~~~~. ; _ __._ Ft / / t t si | ~~~~~~~~~~~~~~~~~~~~~~~AVA1R REP ^D| -l- {_- 7-h fiANABI . P.h r~~~~~~~~~~~~~~~~~~~~OM a.0T .--~~~~S S M A L I A Ig >. / ~ ~~~ ~ ~ ~~~~~~~~~~~~~~~~~~~~ - "'MS * -~- Y A zeT .. - eIQ . H At __ ~~ / 4°A SEPTEMA ER 1986