Document of t v 7 p . .P The World Bank i FOR OFFICIAL USE ONLY Report No. P-3294-RW REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE RWANDESE REPUBLIC FOR A FIFTH HIGHWAY PROJECT May 3, 1982 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 US$1.00 = Rwandese franc (Rf) 91.91 RF 100 = US$1.09 FISCAL YEAR January 1 - December 31 GLOSSARY OF ABBREVIATIONS AfDB - African Development Bank BADEA - Arab Bank for Economic Development in Africa FED - European Development Fund KFAED - Kuwait Fund for Arab Economic Development MC - Ministry of Communications MPW - Ministry of Public Works PED - Planning and Engineering Department of the Roads Branch RB - Roads Branch of the Ministry of Public Works STIR - Societe des Transports Internationaux du Rwanda UNDP - United Nations Development Programme voc - Vehicle Operating Costs vpd - Vehicles per Day WD - Works Department of the Roads Branch WEIGHTS AND MEASURES Metric System Metric British/US Equivalents 1 meter (m) 3.3 feet 1 hectare (ha) 2.47 acre 1 kilometer (km ) 2 0.62 miles 1 square kilometer (km ) = 0.39 square mile (sq. mi.) 1 kilogram (kg) 2.2 pounds (lb) 1 liter (1) 0.26 US gallon (gal) 0.22 British gallon (imp gal) 1 metric ton (m ton) 2,204 pounds (lb) FOR OFFICIAL USE ONLY (i) RWANDA FIFTH HIGHWAY PROJECT Credit and Project Summary . Borrower: Rwandese Republic Amount: SDRs 23.3 million (US$25.9 million equivalent) Terms: Standard Project (i) Objectives: To foster economic integration of the Description: southwestern region with the rest of the country, to facilitate agricultural development in this region and to improve overall transport planning capacity. (ii) Components: The project would consist of the following: (a) construction to paved standard of the Butare-Kigeme- Kitabi section (53.5 km) of the Butare-Cyangugu road; (b) consulting services for (i) completion of prepa- ration studies and supervision of construction work under (a) above, (ii) engineering studies for the restoration of the Kigali-Gatuna road (80 km), (iii) preinvestment studies, and (iv) technical assistance to the Ministry of Public Works; (c) procurement of materials and supplies for main- tenance of the Kigali-Gatuna road; and (d) procurement and installation of weighing scales for control and enforcement of vehicle weight regulations. (iii) Benefits: The project would reduce vehicle operating costs (voc) for normal traffic and reduce total transport costs for the cement works which are being completed near Cyangugu. Such cost reductions would derive not only from the effects of a better road surface, but also from the feasibility of using larger and hence more economical vehicles once the road has been upgraded. The expected impact of reducing voc in the influence area of the road would include increased foodcrop production (highly sensitive to transport costs and perishability). Major direct beneficiaries of voc savings would be the traders/truckers. As road improvement increases competition and encourages new traders/truckers to enter the local transport market, 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) most of the benefits would likely be passed on to producers and consumers. Regarding the cement plant's output, direct beneficiaries are likely to be the cement company and/or the trading/trucking sector; it is expected that a significant portion of the savings would be passed on to the construction industry. (iv) Risks: Past experience in the sector has shown frequent cost overruns due to periodic shortages of construction materials and fuel caused by border closings in neighboring countries through which these commodities must be transported. To minimize interruptions in construction works, provision would be made for a larger than usual stock of material and fuel. In addition to physical and price contingen- cies, project cost estimates include a special 10 per- cent risk allowance to cover unforeseen increases in construction costs should unexpected interruptions occur and an additional 10 percent risk allowance to take into account the wide variations in bids expe- rienced in Rwanda. Difficult soil conditions also present some risk. Therefore, periodic services of an experienced soils engineer are proposed, in addition to supervisory consultants. The soils engineer would help the Government, Association and supervisory consultants in reviewing soil and geologic conditions, the use of appropriate construction materials and the application of proper work techniques. Estimated Costs: Local Foreign Total --------(US$ million)- (a) Construction of Butare-Kitabi Road (53.5 km) 4.5 12.1 16.6 (b) Consulting Services 0.5 2.5 3.0 (c) Materials & Supplies & Weighing Scales 0.1 0.6 0.7 (d) Contingencies (physical, price & special risk allowance) 2.7 7.7 10.4 Total 7.8 22.9 30.7 of which taxes and duties 0.6 0.0 0.6 (iii) Financing Plan: Local Foreign Total -(US$ million)------- IDA 4.2 21.7 25.9 UNDP . 0.3 1.2 1.5 Government 2.7 1/ - 2.7 Total 7.2 22.9 30.1 Estimated Disbursements IDA Fiscal Year (US$ millions equivalent) 1983 1984 1985 1986 1987 Annual: 0.6 8.6 10.2 5.7 0.8 Cumulative: 0.6 9.2 19.4 25.1 25.9 Rate of Return: 16 percent Appraisal Report: No. 3860a-RW of May 11, 1982 Map: IBRD 16034 1/ Government would in addition provide about US$0.6 million for taxes if included in the contracts. l INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE RWANDESE REPUBLIC FOR A FIFTH HIGHWAY PROJECT 1. I submit the following report and recommendation on a proposed Credit to the Rwandese Republic for the equivalent of SDRs 23.3 million (US$25.9 million) on standard IDA terms to finance a Fifth Highway Project. The UNDP would cover costs (US$1.5 million) for technical assistance and studies under the project. PART I - THE ECONOMY 2. A report, "Memorandum on the Economy of Rwanda" (No. 1108-RW), was distributed to the Executive Directors on July 27, 1976. Rwanda was visited by an economic mission in February 1979 and again in November/December 1981. The major findings of this recent mission are reflected below. Country data are provided in Annex I. 3. Rwanda is a small landlocked country in sub-Saharan Africa, sur- rounded by Uganda, Tanzania, Burundi and Zaire. It has the third highest population density of low income countries, at 207 persons/km (following Bangladesh and Sri Lanka), and its GNP per capita is among the lowest in the world, at US$200 in 1980. Rwanda-s population (nearly 5.2 million in 1980) is predominantly rural (with only 4.5 percent in urban areas), and lives in small individual farms scattered over hilly terrain. The balance between food production and population is precarious, as potentially arable land is almost fully exploited, and population is expanding at an estimated 3.6 percent annually. Twice recently (1974 and 1980), Rwanda had to resort to emergency food imports. Agriculture (coffee, tea, pyrethrum, cinchona) provides most of the country-s foreign exchange earnings. Coffee is, by far, the most important source (62 percent) followed by mining products (20 percent), mainly cassiterite and wolfram. Rwanda-s manufacturing base is narrow, and its growth is limited by the small size of the market, and the lack or raw materials, marketing facilities, entrepreneurial skills and skilled manpower. The country, consequently, imports petroleum products, capital goods, cement, steel, construction materials, and virtually every other modern manufactured product. Its merchandise trade is hampered by high transportation costs and dependence on neighboring countries for access to the seaports at Mombasa and Dar es Salaam. 4. A quantitative assessment of Rwanda-s economic performance can only be tentative because of deficiencies in the statistical data base. Available estimates indicate that during the period 1977-79 the rate of growth of real GDP averaged 5 percent, but declined to about 4 percent in 1980. The average - 2 - contribution of the agricultural sector to GDP, from 1977 to 1980, was 45 percent, and the sector's performance reflected mainly variations in foodcrop production, which during this period accounted for 79 percent of the value added by the sector. Foodcrop production oscillated with weather condition-. but is estimated to have been, on average, slightly above the rate of popula- tion growth. The remaining 21 percent of the value added by the agricultural sector is shared by livestock, fishing, and export crops. As a consequence of the pressure of population on land, the cattle herd has been reduced, and thus the contribution of livestock to the growth of the primary sector; fish production remains very low, as there is no tradition of fish consumption. Export crops, involving only 6 percent of Rwanda's arable land and contributing an average of 11 percent to the value added by the agricultural sector, are of crucial importance to the economy. Coffee is not only the principal source of foreign exchange but also a major source of cash income to a large proportion of the population and has accounted for a significant proportion of the Government's budgetary revenue. 5. The contribution of mining production to GDP averaged only 2 percent in 1977-80, and has declined in recent years. Output of cassiterite and wolfram has stagnated, owing to low international prices aggravated recently by the appreciation of the Rwandese franc, which is linked to the United States dollar. Furthermore, supply of necessary fuels has at times been irregular (as in 1979, with the closing of the Uganda border), and access to additional deeper seams by small-scale independent miners has become increasingly difficult. 6. The contribution of the manufacturing sector to GDP averaged 15 percent from 1977 to 1980. There are indications that manufacturing has experienced some significant real growth in recent years, principally in traditional production (mainly of banana and sorghum beer), which is estimated at nearly three-quarters of the value added in industry. Important also are the agro-industries (coffee, tea, pyrethrum), sugar refining, and beer and fruit juice production (lemon, passion-fruit etc.). Rwanda's modern manufactur- ing base has grown slowly, often in response to foreign aid. Examples include a cement plant under construction in the south, financed by China, and a match factory financed by Japan. The construction sector contributed, on average, 4 percent to GDP in the period 1977-80. Its recent growth has been limited to the building of dwellings, mainly in Kigali (Rwanda's capital), and public buildings. 7. The assessment of performance of the tertiary sector is particularly tentative, partly because of the difficulties associated with evaluating commercial activities in the rural areas (traditional trade in coffee and foodcrops), but also because of probable tax evasion. The data available indicate that commerce and transportation contributed nearly 18 percent to GDP, on average, during 1977-80. Other tertiary activities seem to have expanded in real terms, especially public administration, whose contribution to GDP averaged 8 percent in that period. - 3 - 8. Traditionally, Rwanda-s fiscal policies have been prudent, and have taken into account the variations of revenue from export taxes, notably on coffee. As a result, current budgetary surpluses averaged 3 percent of GDP in 1977-80. The budget structure reflects the narrow revenue base, high recurrent expenditures, and development expenditures which are contingent upon external assistance. In 1977-80, more than 50 percent of central government revenues came from import and export taxes, with coffee exports alone contribu- ting 25 percent; taxes on beverages (17 percent), and on income and profits (18 percent), accounted for the remainder. Recurrent expenditures were distributed mainly among Government-s administrative services (25 pecent), education (24 percent), and defense (20 percent), but expenditures on agricul- ture and public works have expanded faster in recent years. Budgeted develop- ment expenditures have been particularly important in agriculture (18 percent, in 1977-80), transport and communications (13 percent), education (13 percent) and other social services (16 percent). 9. The fiscal situation, however, is being affected by a number of unfavorable trends. Preliminary estimates indicate that in 1981, contrary to the preceding years, increases in revenue fell short of increases in expendi- tures. Coffee prices declined, and in spite of higher export volume, budgetary receipts from this source also fell. At the same time, there was a sharp expansion in government expenditures reflecting, inter alia, the impact of the general wage increase granted in September 1980 and the costs associated with the addition of a new ministry of education and the establishment of a new legislative assembly. In an effort to expand the revenue base and increase revenue, the Government introduced a new business tax which, however, has not yet yielded sufficient resources to compensate for the fall in revenue from coffee, and the overall treasury position shifted from a surplus of Rwf 1.4 billion (US$15.1 million equivalent) in 1980 (equivalent to 1.3 percent of GDP) to an estimated deficit of Rwf 2.1 billion (US$23.1 million equivalent) in 1981 (equivalent to about 2 percent of GDP). Even if growth in government expenditures is slowed, continued deficits are likely in the medium-term, as revenue from coffee is expected to remain depressed, and the possibility of recourse to other taxes (or to increased tax rates) is limited. 10. Conservative monetary and credit policies were followed during the 1977-80 period, and thus did not contribute to inflationary pressures. These have arisen mainly from supply shortages caused by frequent disruptions of supply routes through neighboring countries, increased international transport costs, and increased prices of imports and domestic foodstuffs. Inflation averaged 12.5 percent per annum during 1977-80; it peaked at 16 percent in 1979, primarily as a result of the closing of the Uganda border, but also reflecting higher transport costs following the 1979-80 oil price rises. The inflation rate declined to 7.2 percent in 1980, and remained at this level in 1981 as trade through Uganda was back to normal, the prices of domestic foodstuffs did not increase, and there was a significant slowdown in the rate of increase of import prices. 11. Rwanda's balance of payments generally reflects coffee market conditions, and has benefited in recent years from significant net capital inflows. During the period 1977 to 1980, the current account deficit averaged US$105 million. Nevertheless, it was substantially lower in 1977 and 1979, and higher in 1978 and 1980, in line with fluctuations in coffee export receipts. Sustained net capital inflows led to overall balance of payments surpluses each year, and Rwanda's gross official foreign reserves, at end-1980, were equivalent to seven months of projected 1981 imports of goods and non- factor services. The decline in coffee export receipts observed in 1980 continued in 1981. Preliminary estimates indicate that in spite of a signifi- cant net inflow of capital, Rwanda suffered its first reserve loss in many years, bringing gross official foreign reserves down to the equivalent of five months of projected 1982 imports of goods and non-factor services. Medium- term prospects are not encouraging, as the terms of trade are expected to deteriorate. Because there are no viable alternatives, in the medium-term, to the products currently exported, export receipts are likely to increase only slightly (on the strength of increased volumes of coffee and tea), while import payments will probably remain at a high level, as Rwanda's needs will increase if growth is to be sustained. 12. Rwanda's development plan for the period 1977-81 included as its main priorities to increase food production, improve living standards through more widespread access to better health care and basic social services, increase employment and improve utilization of human resources, and strengthen the country-s external position (through reducing its dependence on coffee as the principal source of foreign exchange earnings and its vulnerability to external factors, such as transportation). The Government has made serious efforts to pursue these objectives, but structural, financial, and institu- tional constraints have limited the success of its policies. Particularly, institutional weaknesses stemming from lack of skilled personnel, fragmentation of institutional responsibilities, and poor coordination among concerned agencies have hindered project preparation and implementation and public sector management, and have thus contributed to the sluggishness of plan implementation. The Government's efforts to increase agricultural production, especially of foodcrops, have had modest results, and food supply remains inadequate. This situation is likely to be aggravated in the medium-term, as population is increasing rapidly. The work of the National Population Office, recently created and still being organized, will take time to produce results. There has been a gradual increase in the number of health/nutrition centers and hospital beds, but health services in rural areas are still sparse, and water supply has tended to deteriorate in some rural areas. The implementation of the 1979 education reform has been hampered by financial and administrative constraints and by the limited number of teachers. The only significant increases in employment have occurred in the public administration and con- struction sectors. While Rwanda succeeded in diversifying somewhat its export crops by increasing the production of tea, this did not serve to reduce significantly its vulnerability to volatile world market conditions. - 5 - 13. One of the 1977-81 Plan's main objectives was to reduce the country's vulnerability to transportation through neighboring countries; improvement of internal transportation is also needed to stimulate agricultural productivity. Rwanda's rudimentary road network has hampered agriculture specialization and monetization, and thus modernization of the agricultural sector. External donors finance most of Rwanda's infrastructure projects, and investment in roads and road maintenance has increased in recent years. However, a large proportion of the road network is still not passable during the rainy seasons which sometimes disrupt trade. The trans-Africa highway through Uganda and Kenya to the port of Mombasa carries most of Rwanda's external trade. * Interruptions of this trade have had strongly negative impacts on the economy, as during the Uganda/Tanzania war in 1978-79 when the Government was forced to resort to expensive air transport. Air Rwanda, the state-owned airline, purchased a used Boeing 707 cargo plane which has been used since July 1979 to transport all kinds of merchandise. Kigali's airport has been equipped for all-weather operation and, since its recent extension, can now accommodate wide body jets. It appears likely that air transport will continue to grow in importance, given the risks of political disruptions in the region and the prohibitively high cost of shipment over alternative routes. 14. External agencies have financed the largest proportion of development expenditures in Rwanda. The principal sources of foreign assistance and their average share during 1977-80 were Belgium (26 percent), the European Develop- ment Fund (13 percent), the Federal Republic of Germany (9 percent), the United Nations System (14 percent), and France (8 percent). IDA contributed over half of the United Nations system share. Japan, Switzerland, non-govern- mental organizations, Canada, and the United States account for the remainder. External aid has been mainly in the form of technical assistance and financing infrastructure development. Most of the technical assistance (58 percent) has benefitted three sectors: agriculture, education, and health care. Investment in transport and communications accounted for about two-thirds of infrastruc- ture financing in 1980. Together, these four sectors received nearly 62 percent of the aid extended to Rwanda in 1980, an emphasis which is in line with the country's avowed objectives and priorities. 15. Rwanda's need for external assistance will increase in the next few years as its fiscal and balance of payments prospects are less favorable than in the past, principally as a result of depressed world prices for its major exports (coffee, tea, cassiterite and wolfram). Agricultural production, particularly of foodcrops, is not expected to increase significantly in the short run, as it will take time to raise yields on arable land, most of which is already under cultivation. Large increases in mining production will only be possible if the financing for currently planned investments materialize. The performance of the other sectors, which depend heavily on imported goods, can only be maintained with further reserve losses and/or increased net inflow of capital, and these sectors will probably compete with food items for scarce foreign exchange. Thus, the medium-term outlook for Rwanda is not encouraging, especially at a time when the external agencies themselves also have financial constraints. Fortunately, however, the country's external debt - 6 - is still low. At end-1980, the public- and publicly-guaranteed external debt amounted to US$170 million, or 14 percent of GDP, and the debt service ratio was equivalent to only 3.2 percent of exports of goods and non-factor services. Hence, there remains considerable scope for further borrowing. Nevertheless given the poverty of the country, the vulnerability of its economy and its poor medium-term prospects, external funds should continue to be provided mostly in the form of grants or loans at highly concessionary terms. PART II - BANK GROUP OPERATIONS IN RWANDA 16. Bank Group assistance started in 1970 and initially focused on the improvement of the road network and the strengthening of agricultural production. Rwanda has received fifteen IDA credits totalling US$135.5 million, of which four (totalling US$43.1 million) were for roads, six (US$64.3 million) for agriculture, two (US$9.2 million) for DFC projects, one (US$8.0 million reduced to US$6.4 million) for education, one (US$7.5 million) for telecommunications and one (US$5.0 million) for technical assistance. There have been no Bank loans. An IFC loan of US$535,000 for a tea factory was signed in 1976; a second IFC loan of US$226,000 and contingent equity commitment of up to US$60,000 to expand the tea factory were signed in Sept- ember 1980. Annex II contains a summary statement of IDA credits, IFC invest- ments and notes on the execution of ongoing projects. 17. The first three highway projects are completed and totally disbursed. A fourth credit for a highway maintenance project (Credit 769-RW), which became effective in August 1978, is three-quarters completed and is pro- gressing satisfactorily (further details on Bank Group operations in the high- way subsector are provided in para. 34, below). 18. The first agricultural development (Mutara) project was completed in July 1979 and funds have now been completely disbursed. 1/ A second credit of US$8.8 million, which supports the second phase of a long-term development for the Mutara region, was declared effective on May 30, 1980, but has experi- enced start-up problems due to difficulties in recruiting technical assistance. The Cinchona Project (US$1.8 million) is nearing satisfactory completion; the Bugesera/Gisaka/Migongo mixed farming and rural development project (US$14.0 million) is expected to be completed in December 1982. Construction, procurement and budgeting are proceeding satisfactorily, though the results of foodcrop and plant improvement components are below appraisal estimates due to 1/ A Project Completion Report (August 1980) concluded that even though the increases in agricultural production were less than originally expected, substantial achievements had been realized under the project in the areas of infrastructure development and in experience acquired by Rwandese staff in project management. In addition, the project had served as a positive instrument for IDA and the Government in developing a sectoral dialogue for the Mutara area. - 7 - a failure to come up with appropriate technical packages for the relatively dry project area. A project to support reforestation programs in Kigali, Butare and Gisenyi Prefectures (IDA Credit 1039-RW for US$21.0 million) became effective on November 11, 1981; the project includes a study of renewable energy sources for Rwanda. A US$15.0 million credit for a coffee improvement/ foodcrops project in the Lake Kivu region became effective January 18, 1982. A credit for an education project (US$8.0 million) became effective in 1975; physical implementation has been slow and complicated by procurement problems. More recently, however, project performance has improved (para. 19 below). The first credit of US$4.0 million to the Development Finance Company (BRD) has now been fully committed. BRD's performance under the credit has been highly satisfactory. A second credit of US$5.2 million to BRD was signed on July 13, 1979, and became effective on January 4, 1980. A credit for a telecommunications project (US$7.5 million) which aims at reducing Rwanda's geographic isolation from other countries and at improving internal telecom- munications facilities, became effective July 7, 1981. 19. In fiscal years 1979-81, disbursements for Rwanda totalled US$28.9 million compared to new commitments of US$42.4 million. In the same period, the average annual disbursement rate (ratio of change in disbursements to undisbursed balance) was 20 percent; this is about average for other countries of the East Africa Region. While disbursement performance in general is satisfactory, notable difficulties have arisen in the case of the First Education Project. The lack of acceptable record keeping has impeded the processing of disbursement requests. However, following a UNESCO-assisted final inspection and evaluation mission for the workshops financed under the project, disbursements have resumed. Implementation of a second education project should be less affected by similar weaknesses given the familiarity with Bank Group procedures now acquired in the Ministry of Primary and Secondary Education where, in addition, a new and more positive managerial climate now prevails since the Ministry was reorganized about a year ago. 20. One of the major constraints on Rwanda's development is the shortage of technical/managerial capacity. This affects all sectors and inhibits project preparation and implementation. Intensive technical assistance and on-the-job training of Rwandese staff are salient feature of the Bank Group's program for Rwanda, either under individual projects in the various sectors or through the recently approved Technical Assistance Project. 21. For the future, the primary emphasis of Bank operations will remain on rural development, the main objective being to increase food production as well as export crops, while maintaining soil fertility. A major emphasis will also be placed on the development of human resources, focusing on population control and support to basic education and skills training to improve agricul- tural productivity, provide skilled manpower, and influence attitudes on the population issue. Further investment is also justified for infrastructure and, in particular, transportation to reduce the country's isolation and provide incentives to further intensification of agriculture as well as increased specialization and diversification through better marketing. The proposed project is in harmony with these objectives. - 8 - Another area requiring our special attention includes renewable sources of energy to lessen the demand for fuel imports and mitigate their impact on the balance of payments. A study of renewable energy sources is being financed under IDA Credit 1039-RW (para. 18). A second Bugesera rural development project will include a population/nutrition component, the Association's first operational effort in the critical area of population education and control. A second education project would address clearcut manpower needs and support the training of middle level technicians and managers; the project will also include selective support for basic education through pre-service and in-service training of teachers. It is expected that the Bank Group will continue to support industrial development through the Rwandese Development Bank (BRD). PART III - THE TRANSPORT SECTOR 22. The topography of Rwanda, dominated by rugged mountainous terrain and rolling plateaus scattered with swampy valleys, makes it difficult to attain reliable and efficient transport of imports and exports and all-weather access within the country. The present infrastructure consists of a very dense network of mainly low standard earth roads, limited water transport (on Lake Kivu) and the international airport of Kigali (which was upgraded in 1981 to handle widebodied aircraft). Since Rwanda is too small to use domestic air transport extensively, this mode serves primarily external transport needs. In times of severe bottlenecks on surface routes (such as resulted from the 1979 hostilities between Uganda and Tanzania), air transport offers the only means to evacuate exports and receive essential imports. There are no railroads in Rwanda. 23. The Government has assigned high priority in its investment plans to improve the country's transportation system. In so doing its avowed goals are to (i) upgrade the main road network to facilitate the country's economic, social and administrative integration, (ii) improve vital external transport connections, and (iii) improve the road network through better maintenance. Under Rwanda's second five-year plan (1977-81), strong emphasis was placed on the transport sector: 26 percent of all planned investment was allocated to transport, and roads alone accounted for 22 percent. The Road Subsector 24. The road network, totalling about 6,300 km, is one of the densest in Africa, with an average of 240 m per km . It is divided into two groups: (i) the classified (or national) network (about 2,300 km), maintained by the Roads Branch (para. 29) and comprising about 500 km of paved roads, about 800 km of mostly gravel roads, and about 1,000 km of earth roads and tracks; and (ii) the unclassified (or rural) network, consisting of about 4,000 km of earth roads, maintained by local authorities. All roads that are not paved or recently regravelled are low standard earth roads characterized by corrugated surfaces, large ruts and potholes, and, in wet weather, by deep mud. The mountainous terrain, heavy rainfalls and poor soil conditions call for construc- tion of paved roads in most of the country due to the high cost of maintaining gravel and earth roads. - 9 - 25. Road Usage. In 1980 Rwanda's vehicle fleet numbered about 11,800 (of which 1,800 were owned by the public sector). The fleet is composed of about 4,400 cars registered mainly in Kigali, 5,700 pick-ups and minibuses, 1,300 trucks and 400 other vehicles. The total fleet increased by 87 percent in four years (1976-80). The number of pick-ups more than doubled during that period. This growth is related to small scale trade, which is rapidly gaining in importance. While this type of transport may suggest less efficient use of energy, it is well adapted to the country's trade and distribution requirements characterized by small loads. The most trafficked road sections are intercity trunk routes carrying about 500 vehicles per day. Average traffic growth in recent years is estimated at 7 percent a year with slightly higher growth for light vehicles. Heavy vehicles represent about 50 percent of intercity traffic. 26. The road transport industry is largely composed of traders/truckers who own one or two vehicles and engage mainly in trading with trucking as a second activity. Vehicle owners normally use their vehicles for their own account but will offer spare capacity when there is demand. Transport routes are not regulated, and competition appears to be stronger on improved roads where transport flows are higher. It is expected, therefore, that road upgrading will not only foster economic integration of the country (especially needed for the southwestern region) and facilitate agricultural development, but also reduce transport costs through increased competition. Although uniform tariffs for freight are set by the Government, the regulations do not provide penalties for non-compliance, and actual prices agreed between operators and shippers can differ from the official rates according to supply and demand and road conditions on a particular route. Passenger transport is mainly undertaken by traders who carry both goods and passengers in pick-ups and trucks. The public bus company ONATRACOM, under the Ministry of Communications (MC), operates about 48 buses between Kigali and provincial centers and 8 minibuses in Kigali where private minibus transport has recently made its appearance and has potential for growth. 27. For its foreign trade, Rwanda's landlocked and isolated geography forces it to rely heavily on road or road/rail transport that is undertaken at high cost through Uganda and Kenya to the Indian Ocean Ports. Clearing and forwarding agents established in Rwanda handle transit formalities and inter- national transport. They do not engage in transport themselves but contract out this work to truckers or pools of truckers. The Societe des Transports Internationaux du Rwanda (STIR), a semi-public organization created in 1974, is the main Rwandese international carrier. It has a fleet of about 90 tractor combinations of which about half are tank wagons. The trucking industry is dominated by carriers from the transit countries which account for about 75 percent of the total volume while Rwandese carriers transport the remaining 25 percent. 28. Road users contribute to government revenues through import duties and taxes on vehicles, spare parts and lubricants, through registration and - 10 - licensing fees and a border toll on commercial vehicles. Revenues collected from road users in 1980 are estimated to have amounted to about US$9.3 million. These revenues more than covered recurrent maintenance expenditures of US$3.1 million and also contributed to meet the costs of new road construction an' urban roads. The level of road-user taxes is adequate at present, but as maintenance expenditures increase with the growing maintenance needs and the expanding capacity of the Roads Branch (para. 29), they will need to be reviewed. 29. Highway Administration. The Ministry of Public Works (MPW) through its Roads Branch (RB) is responsible for design, construction and maintenance of the classified network (para. 24(i)). The RB is divided into two depart- ments: the Planning and Engineering Department (PED), whose responsibilities include construction supervision, and the Works Department (WD), responsible for road improvement and maintenance and for the mechanical workshops. The RB's main handicap is its shortage of experienced local staff. The RB, therefore, depends on foreign technical assistance and employs 24 expatriates financed by the Federal Republic of Germany and Belgium and by the Association under the Fourth Highway Project (para. 37). The formal and on-the-job training provided by this technical assistance is helping local staff to gradually replace the expatriates, but the RB will continue to depend on expatriates until sufficient staff can be trained. It is expected that by 1983, however, the RB wil be predominantly manned by local staff with only pockets of specialized expatriate assistance including technical assistance and training being provided by the Federal Republic of Germany for the PED and the mechanical workshop (see also para. 46). 30. Engineering and Road Construction. The PED is charged with engineer- ing and construction supervision tasks; it also operates a soils laboratory, which is adequately staffed and equipped. The department is headed by a Rwandese engineer, but its daily operations and administration are supervised largely by expatriate staff. Engineering studies and supervision for major projects are normally entrusted to foreign consultants, since the department can handle only minor engineering and work supervision tasks and since there are no local consultants. For major construction projects, the PED employs contractors; contracts are generally let out on a unit price basis following international competitive bidding. Road construction is expensive because (i) the terrain is rugged and (ii) materials have to be transported long distances from seaports. There are four local road construction firms established in the country, all subsidiaries of foreign companies. Rwanda has no domestic road construction firms due not only to lack of skilled and experienced staff, but to the limited financial capacity of the domestic contractors (who work only in the building sector and have not yet ventured into major civil works). 31. Maintenance. The RB's Works Department (WD) is responsible for maintaining the classified network (para. 24 (i)); district authorities are responsible for the maintenance of unclassified roads (para. 24(ii)). Since district authorities lack the resources to carry out this task adequately, the WD maintains about 1,600 km of the most important unclassified roads. Road maintenance operations have been steadily improving. This is due in part to the Government's recognition of the importance of maintenance and the assist- ance provided by the Association and other donors, principally the Federal Republic of Germany. - 11 - 32. Planning and Financing. The PED is responsible for planning highway investments but lacks sufficient staff to carry out all the tasks assigned to it. Two areas of planning--the strategy for the improvement of external transport and the relative weight to be given to main roads and feeder roads-- require particular attention. The Government therefore has set up a transport planning unit in the Ministry of Public Works (para. 45). To the present, a large volume of preinvestment work has been financed by external sources and carried out by consultants. However, since clear priorities for the gradual implementation of Rwanda's road reconstruction program and develop- ment of regional and feeder roads still need to be set, the transport planning unit will (i) recommend policies for the development and utilization of internal and external transport routes and (ii) prepare a road investment program consistent with national priorities. 33. Road construction is financed by the development budget and external donors, while road maintenance and improvement are financed from the Govern- ment's recurrent budget, with financial and/or technical assistance from the Federal Republic of Germany, Belgium and the Association. The UNDP has provided complementary technical assistance. The Government's recurrent budgets have been adequate in recent years, increasing from US$1.14 million equivalent in 1975 to US$3.14 million equivalent in 1980. Bank Group Operations in the Subsector 34. The Association began lending for improvement of Rwanda's roads twelve years ago. Since that time its investments have been geared to support Government's avowed policies and the priority needs of the country to (i) improve external transport connections; (ii) upgrade the main road network to facilitate the country's economic development and social and administrative integration; and (iii) improve the road network in general through better maintenance. The First Highway Project (Credit 196-RW, US$9.3 million) financed the purchase of maintenance equipment and the paving of the Kigali- Gatuna road, the final link of an all-weather road joining Kigali to the port of Mombasa. Repair works on sections of the road damaged by torrential rains, severe inflation in 1973/74 and a currency realignment gave rise to a sub- stantial cost overrun: total project costs increased from the appraisal estimate of US$10.9 million to US$28.1 million. The Credit Agreement was amended in 1975 to increase the credit by US$9.5 million (Credit 196-1-RW) to finance this overrrun. The Saudi Fund also provided US$5.0 million toward financing the road. The project was completed five years behind schedule. Since completion, sections of the Kigali-Gatuna road, particularly on the first 50 km, have deteriorated and require extensive restoration. While the exact causes of the deterioration have yet to be determined, it appears that the problem lies in inadequate design for difficult soil conditions, poor execution of the drainage works and overloading of trucks using the road. In view of the importance of the road, the proposed project includes a study to investigate the causes of its premature deterioration and to identify the type, scope and cost of restoration works (para. 41(b) (ii)). The Project Performance Audit Review (PPAR) estimated the project's economic return at 13 percent, the same as at appraisal, the increased project costs having been compensated for by higher than expected traffic. - 12 - 35. The Second Highway Project (Credit 299-RW, US$4.2 million, 1972) financed the initial phase of a comprehensive maintenance program and the strengthening of the Ministry of Public Works to enable it to carry out road maintenance and improvement works more efficiently. Project implementation was delayed by slow mobilization of technical assistance, late delivery of equipment, fuel shortages resulting from frequent border closings between Kenya and Uganda, and shortages of Government funds. The Credit Agreement was amended in 1977 to provide an additional US$1.2 million to help finance an increase in project cost. Although the project did not meet its maintenance targets (which the PPAR concluded were overly optimistic) it succeeded in setting up a basic road maintenance administration and improving the skills of local staff. 36. The Third Highway Project (Credit 475-RW, US$6.3 million, 1974) provided for the paving of the Ruhengeri-Gisenyi road (60 km), feasibility and detailed engineering studies of the Kigali-Ruhengeri and Ruhengeri-Cyanika roads (financed by Belgium), and technical assistance to the Ministry of Public Works to train maintenance staff. Completion of the paving component was delayed about one year due primarilly to the need for additional design work in the course of implementation. The feasibility and detailed engineering study of the Kigali-Ruhengeri road was satisfactorily completed as scheduled; the feasibility and detailed engineering of the Ruhengeri-Cyankia road were deleted due to cost overruns as were the technical assistance and training components (which were included in the Fourth Highway Project). The project was completed by mid-1977, about one year behind the appraisal estimate. The actual cost was US$8.9 million compared to US$7.7 million estimated at appraisal. Part of this increase (US$400,000) was financed by the Association under the supplementary financing credit for the First Highway Project and the remainder by the Government. The rate of return upon project completion (as noted in the PPAR of June 18, 1979) was calculated at 18 percent, the same rate estimated at appraisal, the increase in construction costs being offset by an increase in vehicle operating cost savings. 37. The Fourth Highway Project (Credit 769-RW, US$15 million, 1977) is financing the second phase of the maintenance program begun under the Second Highway Project and continuing the strengthening of the Ministry of Public Works road maintenance operations. It comprises a four-year improvement program covering 1,500 km of roads, routine maintenance of 3,850 km of roads, improvement of equipment repair facilities, and training of maintenance per- sonnel. Although the project is about one year behind schedule, implementation is now at its anticipated progress rate and the project is proceeding satis- factorily. 38. Experience with the aforementioned highway projects has shown that construction works have frequently been interrupted due to periodic shortages of materials and fuel caused by border closures in Uganda and Kenya. Further- more, difficult soil conditions in certain parts of the country have resulted in unforeseen additional construction works and have been the cause of extensive damage to roads requiring comprehensive repair and rehabilitation. As a result, road construction works have frequently required more time to complete than foreseen and costs have been substantially above those originally estimated. - 13 - However, Bank Group operations in the sector have produced substantial benefits, including those deriving from the institution-building efforts begun under the Second Highway and continued under the Fourth Highway Project; good progress has also been made in establishing the highway organization (RB) and in training staff (para. 29). PART IV - THE PROJECT 39. The proposed project was appraised in August 1981. Negotiations were held in Washington from April 5 to 8, 1982. The Government delegation was led by H. E. Joseph Nzirorera, Minister of Public Works. A detailed description of the project components can be found in the Staff Appraisal Report No. 3680-RW, dated May 11, 1982, which has been distributed separately to the Executive Directors. The main features of the project, which should strengthen elements already financed by the Association (and other donors), aim at pursuing Government policies in the sector (para. 34), and are high- lighted in the Credit and Project Summary at the beginning of this report. Special conditions of the Credit are summarized in Annex III. Objectives and Description of the Project 40. The main objectives of the proposed project are (i) to foster economic integration of the southwestern region with the rest of the country through more reliable and economical transport, (ii) to facilitate agricultural development in this region and (iii) to improve planning and programming of activities in the transportation sector. 41. The proposed project consists of the following: (a) construction to two-lane paved standard of the Butare-Kigeme- Kitabi section (53.5 km) of the Butare-Cyangugu road; (b) consulting services for (i) completion of preparation studies and supervision of construction works under (a), (ii) engineering studies for restoration works on the Kigali-Gatuna road (80 km), (iii) preinvestment studies, and (iv) technical assistance to the Ministry of Public Works; (c) procurement of materials and supplies for maintenance of the Kigali-Gatuna road; and (d) procurement and installation of weighing scales for control and enforcement of vehicle weight regulations. - 14 - 42. Construction of Butare-Kigeme-Kitabi road (53.5 km). The project road is a section of the Butare-Cyangugu road (156 km), one of the country's most important transport links. It connects the second largest city, Butare (population 35,000), to the southwestern region which is an agricultural surplus area. The present road is of an earth surface with poor driving conditions; during the eight-month rainy season, it is often impassable for all but four-wheel drive vehicles. The road surface is uneven and there are deep ruts and potholes. As a result, the driving speed is about 20 km/h for most of its length and transport costs are high. The road is also costly to maintain. Improvement of the road to all-weather standard is essential to year-round transport of agricultural products and consumer goods and of the output of a cement plant currently under construction near Cyangugu. Con- struction of the Kitabi-Cyangugu section (102.5 km) will be financed by the African Development Bank (AfDB), the EEC, BADEA and the Kuwait Fund for Arab Economic Development (KFAED). Signing of agreements between these four cofinanciers and Government would constitute a condition of effectiveness of the proposed credit (Section 6.01 of the Development Credit Agreement). 43. Consulting services. (i) Completion of preparation studies and supervision of construction of the Butare-Kigeme-Kitabi road. Consultants carried out a preliminary engineering study and an update of the feasibility study of the project road in 1981 under a PPF, since earlier studies did not provide an adequate assessment of improvements required and the related costs. In view of staff constraints in PED, consultants would be engaged to supervise construction of the project road. In addition, because of difficult soil conditions, the proposed project would provide for the services of a soils engineer with experience in soils and geological conditions similar to those of the project region. This expert would carry out periodic reviews of project implementation (about two man-months per year) with regard to the use of appropriate construction materials and proper work techniques. 44. (ii) Engineering studies for restoration works and maintenance of the Kigali-Gatuna road. Construction of this road was completed in 1977 with financing under the First Highway Project. Inspite of normal maintenance efforts, the road already shows considerable surface damage (para. 34). In order to determine the cause for the failure and the type, scope and cost of restoration works, the proposed project includes consultants services to carry out this investigation. The consultants services will include a soils expert. The study is expected to cost about US$100,000 equivalent. The Government has agreed to undertake the study and thereafter to prepare an action plan and identify sources of financing by June 30, 1983 for carrying out restoration works (Section 3.08 of the Development Credit Agreement). However, given the importance of the road and the rapid rate of deterioration, immediate steps are required to keep the road passable. Therefore, as an interim measure pending completion of the study, the proposed project would provide materials and supplies for routine maintenance of the road. This maintenance would be carried out by the maintenance brigade set up and equipped under the Fourth Highway Project (para. 37). 45. (iii) Preinvestment studies. Once the transport planning unit in the Ministry of Public Works (Section 4.02 of the Development Credit Agreement and para. 32) has defined priorities for the transport sector, the Association will approve the type and scope of the studies to be financed under the project and identified by the unit for the highway subsector - 15 - (Schedule 2 Part (C) (5) of the Development Credit Agreement). These studies, which will prepare future investments in the highway sector, are expected to include a feeder road study to assist the Government in defining priorities for improvement of its feeder road network. 46. (iv) Technical assistance. Technical assistance provided under the Bank Group's Fourth Highway Project will conclude at the end of 1982. The proposed project therefore includes three road maintenance engineers who will be assigned to the Ministry of Public Works (MPW) to assist in planning, budget- ing, carrying out and monitoring road maintenance operations; a transport economist to help strengthen the Government's transport planning capabilities; and one mechanic to strengthen the MPW's equipment maintenance and repair capability. Two of the three road maintenance engineers will serve for two years each; the other experts will serve for three-year periods and complement training activities for local staff being provided by German and Belgian technical assistance. This should make an important contribution to institu- tion building efforts (para. 29). 47. Procurement of weighing scales. To enable the Government to control and enforce vehicle load regulations, the project would provide for the procurement and installation of two fixed weighing scales and procurement of three mobile ones. The two fixed scales would be installed at the border posts of Gatuna and Kagitumba, through which nearly all Rwanda's imports by road must pass. The mobile scales would be used for spot controls of vehicle loads over the country-s entire network. The Government has agreed to install the fixed scales by December 31, 1983 (Section 3.06(b) of the Development Credit Agreement). Government has further agreed to establish vehicle weight regulations and an enforcement mechanism, acceptable to the Association, and to put the new regulations (updated to comply with the country-s needs and conditions as well as the regulations currently in force in neighboring countries) into effect by December 31, 1982 (Section 3.06(a) of the Development Credit Agreement). Project Cost and Financing 48. Total project cost is estimated at US$30.1 million, net of taxes and duties, with a foreign exchange component of US$22.92 million or 76 percent of total costs. Taxes and duties amount to about US$0.6 million. A physical contingency allowance of 10 percent has been provided to cover increases in quantities. In light of past experience, a special 10 percent risk allowance has been added to cover price increases for construction works that might result from interruption of imported essential supplies such as cement, bitumen and fuel due to border closures or other transportation bottlenecks such as have occurred in the past (para. 22). An additional risk allowance of 10 percent has been prov-ded to cover the risk of bids being higher than expected. (This will take into account the wide variations in bids sometimes experienced in Rwanda.) If not required for physical execution of the project, the balance of funds would be cancelled and not reallocated to other items. Price contingencies are based on the following estimates of inflation rates worldwide for the foreign cost of civil works and in Rwanda for the local cost of civil works: 1981--9 percent foreign, 15 percent local; - 16 - 1982--8.5 percent foreign, 15 percent local; 1983--7.5 percent foreign, 15 percent local; 1984--7.5 percent foreign, 15 percent local; 1985--7.5 percent foreign, 15 percent local. Cost estimates for construction works were derived from consultants' estimates based on final design quantities. The supervision of construction is estimated at US$1.0 million, equivalent to 100 man-months of consultants' services. Estimates for the engineering study for restoration works of the Kigali-Gatuna road are based on eight man-months of consultants' services and total about US$100,000. A lump sum of US$250,000 has been allocated for preinvestment studies. Technical assistance will require about 156 man-months of consultants' services, estimated at about US$9,000 per month covering salary, overheads, international travel and subsistence, local transportation, housing, report preparation and other minor expenditures. Procurement of the weighing scales and of materials and supplies from main- tenance of the Kigali-Gatuna road are based on recent costs for similar items under other Bank Group projects. 49. The proposed project would be financed by (i) an IDA credit of US$25.9 million which would cover about 95 percent (US$21.7 million) of the foreign cost and 58 percent (US$4.2 million) of the local cost; (ii) a UNDP contribution (to finance technical assistance and studies) of US$1.5 million, which would provide for the remaining 5 percent (US$1.2 million) of the foreign cost and 4 percent (US$0.3 million) of the local cost; and (iii) Government's contribution, totalling US$2.7 million (excluding taxes of US$0.6 million), equal to about 9 percent of total project cost or 38 percent of local cost. Included in the proposed IDA credit is provision for the refinancing of a US$250,000 advance from the Project Preparation Facility. Implementation 50. The Ministry of Public Works (MPW) would be responsible for the implementation of all project components. Within the MPW, the Planning and Engineering Department (PED) would be responsible for road construction carried out by contractor and supervised by consultants, the procurement and installation of weighing scales, and the execution of the study for the restoration of the Kigali-Gatuna road and of the preinvestment studies; the Works Department (WD) would be responsible for technical assistance for road maintenance, equipment maintenance and repair, and for procurement of materials and supplies and carrying out by force account maintenance of the Kigali-Gatuna road. It is expected that one consulting firm will supervise the entire Butare-Cyangugu road (para. 42). This is the intention of both the Government and the Association. 51. Road construction would start in the fourth quarter of 1982. It would take about three years to complete the entire road from Butare to Cyangugu. Procurement of weighing scales is expected to take about six months; the equipment is expected to arrive in mid-1983. The road maintenance engineer and mechanic (financed by UNDP) will start in January 1983 and work for three years; the two road maintenance engineers (financed by the Association) will start in January 1984 (at the conclusion of the Fourth Highway Project) and work for two years. Following establishment of the country-s list of priority investments (expected, mid-1983), by the transport planning unit in the MPW - 17 - the type, scope and schedule of execution of the preinvestment studies to be financed under the project would be subject to the Association's approval. The engineering study for restoration of the Kigali-Gatuna road would most likely start in January 1983 and be completed within six months. The total project is expected to be completed by the end of 1986. Procurement 52. The award of the contract for the construction component (US$16.6 million, excluding contingencies) would be subject to ICB in accordance with Bank Group guidelines. To minimize the risk of construction delays due to interruption of supplies, tender documents would include provision for a considerable stock of materials and fuel. The Butare-Cyangugu road will be divided into four sections, financed by the various donors (para. 42), and each contractor would be required to quote his bid price for each individual as well as for all the sections to be financed. It is thus hoped that this will enable Government to obtain lower unit costs. Because of the specialized nature, low cost and small amount of equipment being purchased, procurement of the weighing scales (US$0.15 million, excluding contingencies) would be through international shopping under procedures that are satisfactory to the Association. Materials and supplies (US$0.8 million) for maintenance of the Kigali-Gatuna road will be procured from suppliers from whom such items have been previously purchased on the basis of reasonable, negotiated prices. 53. Consultants services (US$3.6 million, including contingencies) would be needed for supervision of construction, technical assistance, a study for the restoration of the Kigali-Gatuna road, and preinvestment studies. The Government intends to recruit an individual consultant for the position of transport economist. The Association has agreed that the three road main- tenance engineers and mechanic would be recruited from consultants Rhei n-Ruhr, who have assisted the Government in strengthening road maintenance with financing under the Second and Fourth Highway Projects. Consulting firms would be selected for supervision of construction works, the study for restora- tion of the Kigali-Gatuna road and for preinvestment studies. Consultants would be selected in accordance with the 1981 Bank Guidelines for Use of Consultants; because of the specialized nature of the services required and given the rather difficult terrain and soil conditions in the project areas, price would not be a factor in the selection of the consultants for technical assistance, the soils engineer and supervision of construction works. Disbursement 54. Credit funds would be disbursed on the following basis: (a) 90 percent of total expenditures for road construction; (b) 100 percent of foreign cost or 90 percent of local cost for procurement and installation of equipment (weighing scales) and for materials and supplies for maintenance of the Kigali-Gatuna road; and (c) 100 percent of consultant services for super- vision of construction. All disbursements would be fully documented. Accounting and Reporting Requirements 55. MPW has not kept accounts for payments made from its investment budget, RB will therefore introduce accounts registering all expenditures under its investment budget and separate accounts for payments under the proposed project. Project accounts would be audited by independent auditors acceptable to the Association, and the audited accounts would be submitted to the Association not later than six months after the end of each fiscal year during project implementation (Section 4.01(b) of the Development Credit Agreement). The Government has agreed to provide the Association with project progress reports as well as with a project completion report, the latter not later than six months after the closing date of the Credit (Section 3.04 of the Development Credit Agreement). Benefits and Risks 55. The construction to paved standard of the Butare-Cyangugu road would provide the southwestern region with all-weather access, thereby accel- erating its economic, social and administrative integration with the rest of the country. Paving the road would bring year-round transport for the region-s agricultural products to the densely populated area around Butare. The project road also traverses the Nyungwe forest, which holds economic potential: a number of forest-exploitation and reforestation projects for this area are under preparation or consideration. Furthermore, a cement plant, being built near Cyangugu (30 km from Ntendezi), necessitates improved road communications for supplying the plant and evacuating its output. 56. The construction of the Butare-Kitabi section (of the Butare-Cyangugu road) which would be financed under the proposed credit, is expected to yield an economic return of 16 percent. This economic return is dependent on the paving of the entire Butare-Ntendzi road. No economic return has been cal- culated for the small technical assistance component which is clearly justified because it will result in an improved maintenance capability as well as in improvements of MC-s transport planning capacity. 57. The main benefits to be derived from the project are reduced vehicle operating costs (voc) for the normal traffic and reduced total transport costs for the cement traffic diverted to the project road from the lake/road route via Kibuye. The reduction in total transport costs would result from the combined effect of a better road surface and from the use of larger and hence more economical vehicles. The reduction in voc on the economic activity in the influence area of the road is taken into account through the benefits assigned to generated traffic included in the analysis. In the short term the major direct beneficiaries of voc savings would be the traders/ truckers. Later, as the road improvement increases competition and encourages new traders/truckers to enter the local transport market, most of the benefits are likely to be passed on to producers and consumers. Because marketing and distribution is dominated by traders/truckers whose trading and trucking activities are not easily separable, the savings in voc would be passed on in the form of higher farm-gate prices for agricultural products - 19 - and/or lower prices for the products sold by the traders/truckers. As for the cement traffic, direct beneficiaries may be expected to be the cement company and/or the trading/trucking sector. Most of the savings are anticipated to be passed on to the construction industry. 59. Experience with the Association's previous projects in Rwanda has shown frequent cost overruns due to periodic shortages of construction materials and fuel caused by border closings in neighboring countries through which these commodities must be transported. To minimize the risk of inter- ruptions in construction works, provision would be made in the contract documents for the construction of the Butare-Kitabi road for a larger than usual stock of material and fuel. The project cost estimates include a special 10 percent risk allowance to cover unforeseen increases in construction costs should any such interruptions occur. Another 10 percent risk allowance has been added to cover the possibility of bids being higher than expected (para. 48). 60. Difficult soil conditions and unexpected shortages of construction materials in some regions have also caused considerable increases in road construction materials, construction time and project costs under previous projects. Even though consultants were especially careful in their soils and geologic surveys and design and an Association-financed consultant visited the road to review consultants work, an element of risk still remains. Therefore the proposed project provides for periodic visits of a soils engineer with wide experience in soil and geologic conditions similar to those of the region, in addition to the supervisory consultants. This expert would help the Government, the Association and the supervisory consultants to review the soil and geologic conditions, use of appropriate construction materials and application of proper work techniques. PART V - LEGAL INSTRUMENTS AND AUTHORITY 61. The draft Development Credit Agreement between the Rwandese Republic and the Association, and the Recommendations of the Committee provided for in Article V, Section 1 (d) of the Articles of Agreement of the Asso- ciation are being distributed to the Executive Directors separately. 62. Special Conditions of the Project are listed in Section IV of Annex III of this report. 63. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association. - 20 - PART VI - RECOMMENDATIONS 64. I recommend that the Executive Directors approve the proposed Credit. A. W. Clausen President Attachments Washington, D.C. May 3, 1982 ANNEX I - 21 - Page 1 of 5 TABLE 3A RWANDA - SOCIAL INDICATORS DATA SHEET RWANDA REFERENCE GROUPS (WEIGHTED AVEiAGES LAND AREA (THOUSAND SQ. KM.) - MOST RECENT ESTIMATE)- TOTAL 26.3 MOST RECENT LOW INCOME MIDDLE INCOME AGRICULTURAL 14.6 1960 /b 1970 /b ESTIMATE /b AFRICA SOUTH OF SAHARA AFRICA SOUTH OF SAHARA GNP PER CAPITA (US$) 70.0 100.0 200.0 238.3 794.2 ENERKY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) .. 15.8 29.5 70.5 707.5 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (THOUSANDS) 2916.0 -3847.0 5169.0 UREAN POPULATION (PERCENT OF TOTAL) 2.4 3.2 4.5 17.5 27.7 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 9.5 STATIONARY POPULATION (MILLIONS) 29.0 YEAR STATIONARY POPULATION IS REACHED 2110 POPULATION DENSITY PER SQ. KM. 110.9 146.3 188.1 27.7 55.0 PER SQ. KM. AGRICULTURAL LAND 193.1 253.1 328.8 73.7 130.7 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 44.3 45.7 46.6 44.8 46.0 15-64 YRS. 53.0 51.6 50.7 52.4 51.2 65 YRS. AND ASOVE 2.7 2.7 2.7 2.9 2.8 POPULATION GROWTH RATE (PERCENT) TOTAL 2.8 2.8 3.6/d 2.6 2.8 URBAN 5.6 5.6 5.8 6.5 5.1 CRUDE bIRTH RATE (PER THOUSAND) 51.1 49.8 49.6 46.9 46.9 CRUDE DEATH RATE (PER THOUSAND) 26.9 22.1 18.7 19.3 15.8 GROSS REPRODUCTION RATE 3.4/c 3.4 3.4 3.1 3.2 FAMILY PLANNING ACCEPTORS, ANNUAL (TiHOUSANDS) .. USERS (PERCENT OF MARRIED WOMEN) .. .. FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 81.0 102.0 107.0 89.5 89.9 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 80.0 96.0 98.0 90.2 92.3 PROTEINS (GRAMS PER DAY) 49.0 61.0 51.3 52.7 52.8 OF WHICH ANIMAL AND PULSE 25.0 34.0 .. 17.8 16.1 CHILD (AGES 1-4) MORTALITY RATE 41.0 32.2 25.4 27.3 20.2 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 37.2 42.4 46.7 45.8 50.8 INFANT MORTALITY RATE (PER THOUSAND) .. 127.0 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. .. 35.0 23.9 27.4 URBAN .. .. 41.0 55.0 74.3 RURAL .. .. 35.0 18.5 12.6 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 53.0 57.0 26.2 URBAN .. 83.0 87.0 63.5 RURAL .. 52.0 56.0 20.3 POPULATION PER PHYSICIAN 138095.0/c 62048.4 38916.7 31911.8 13844.1 POPULATION PER NURSING PERSON 11197.07 9181.4 10494.4 3674.9 2898.6 POPULATION PER HOSPITAL BED IOTAL .. 822.9 652.1 1238.8 1028.4 URBAN .. 47.8 45.4 272.8 423.0 RURAL .. 3224.4 1604.8 1745.2 3543.2 ADMISSIONS PER HOSPITAL BED .. 21.2 21.3 HOUSlNG AVERAGE SIZE OF HOUSEHOLD TOTAL .. .. URBAN .. .. RURAL .. .. 4.5 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL .. .. URBAN .. .. RURAL .. .. ACCESS TO ELECTRICITY (PERCENT UF DWELLINGS) TUTAL .. .. URiAN .. .. RURAL .. .. - 22- ANNEX I Page 2 of 5 TABLE 3A RWANDA - SOCIAL INDICATORS DATA SHEET RWANDA REFERENCE GROUPS (WEIGHTED AVERAGES - MOST RECENT ESTIMATE)-a MOST RECENT LOW INCOME MIDDLE INCOME 1960 /b 1970 /b ESTIMATE lb AFRICA SOUTI OF SAHARA AFRICA SOUTH OF SAHARA EDUCATION ADJIUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 49.0 73.0 64.0 56.4 73.7 MALE 68.0 83.0 68.0 70.7 96.8 IEIALE 30.0 64.0 59.0 50.1 79.0 SECONDARY: TOTAL 2.0 2.0 2.0 10.0 16.2 MALE 2.0 3.0 3.0 13.6 25.3 FEMALE 1.0 1.0 1.0 6.6 14.8 VOCATIONAL ENROL. (7 OF SECONDARY) 40.0 12.0 17.0 8.0 5.3 PUPIL-TEACHER RATIO PRIMARY 39.0 60.0 53.0 46.5 36.2 SECONDARY 14.0 13.0 15.0 25.5 23.6 ADULT LITERACY KATE (PERCENT) 16.4/c 23.0/e .. 25.5 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 0.4 0.9 1.6 2.9 32.3 RADIO RECEIVERS PER THOUSAND POPULATION .. 7.8 17.1 32.8 69.0 TV RECEIVERS PER THOUSAND POPULATION .. .. !- 1.9 8.0 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION .. . 0.04 2.8 20.2 CINEMA ANNUAL ATTENDANCE PER CAPITA .. .. 14.6 1.2 0.7 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 1650.6 2089.7 2582.3 FEMALE (PERCENT) 49.1 48.6 48.1 34.1 36.7 AGRICULTURE (PERCENT) 95.4 93.2 91.2 80.0 56.6 INDUSTRY (PERCENT) 1.1 1.6 2.0 8.6 17.5 PARTICIPATION RATE (PERCENT) TOTAL 56.6 54.3 52.2 41.7 37.2 M1ALE 58.9 56.9 55.0 54.3 47.1 FaIALE 54.4 51.9 49.5 29.2 27.5 ECONOmIC DEPENDENCY RATIO 0.8 0.9 0.9 1.2 1.3 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS .. .. HIGHEST 20 PERCENT OF HOUSEHOLDS .. .. LOWEST 20 PERCENT OF HOUSEHOLDS .. .. LOWEST 40 PERCENT OF HOUSEHOLDS .. .. POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. .. 148.0 136.0 381.2 RURAL .. .. 85.0 84.5 156.2 ESTI1ATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. .. 99.1 334.3 RURAL .. .. 43.0 61.2 137.6 EST IMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 30.0 39.7 RURAL .. .. 90.0 68.8 Not available Not applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries a.ong the indicators depends on availability of data and is not uniform. /b Unless otnerwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1976 and 1980. /c 1962; /d 1978 census; Ia 1973. May, 1981 - 23 - A1NEX I Page 3 of 5 DEPfIITINlit OF SOCIA IbIICATIOS ntneellovgOnnacunaent dr iveocenre geoena~llvoucoe -.debneaoheo uaorlel,lrdcrlalnrretno- rnhe,IysapyetIen c oar lvepeaeecasb rcrncrarvfadn-ddf -venaaac --npns usrdhby dff-reteor--iee- in l-11-rgoreeat-. ThPedaoar..ce nv-rsn- eatlreea-nbevnrd-nofnharacu-eT-dtnurnreds, andcPar -c-arnee erenaodiff--nrrosr-- ..I Thereernc gnvtp er (:2 "Ar sa. uan-ry g-np If the et"cecol tr as 2C) a country grop efth crha ighan averge --ce rhan rhe va--y group Itfeaupeu re r-vfv Teeelr1.Tf o raslenun-r "Mlddie In-vneo-n Air a-n-d Midlieea- vceneasu enre s-b nalan locore 2 anefenocegnop dre ho cecgeearepoplaeuror gired rronroa can. Fuewi Incrale rd hee, .oly .h . nepoeorpiebaunnneauva enuI yea ata furtrap Iruvarur -tevuecPevceragevvrtnrreaaoungrP rnfLarrp dapordevvgPnvaflabfio.... aI and-enoaofftr,na. t"n,ous h "eenra..rc.anvn..er entvierdnbeoIjtYror Toeeud-rr tee~I. _ udvn arorroae Ipr vrnnrvnfna 1AAuE ouer 05 lprlnuvn--l-fa-f--r-n.,-rar.n.vidndeu-n(nai Pcpsfd-Tuafeurli-o-nravveonfauon rdu faa-ro....en...uboeluulfrddrffretnuuveo-h tohd aruuereAliiet IgvuluD raatAorcnrlvrpneEri evlbl vpulrur rqeenrr, n.eefi-e crrrlIn e fan vrcr, veeuree erro co cuenhe garte-~ cv c Inn lfun; 119 dan. icaflurarcr vereee. dvaurala rc trnhbeltnnr vercaoeoofrvafne T-! T-1 ......... b" ~~~~~~~~~~Ile o pranur.Peal-oter pvriir prnoaivnJv lh T ETFT -951- f ant eraenoae o u..crnerpfescf hlprcoeno-nre. Rra upiae bte, rbdePae nulatanPpseceecnersvreorvd k-le-l---nu rlatul9vl fPaeu-l;9gT,d hodredintlvannenevu p -norotrfeuvppnrnhpp taERt C-NA`draftefure pen -P-upei, - cinai -b ed - ptune prefer~ W2f tdcte- o no Iuifr doraI FeplAdun, _d- ue rhnuaotc-to ...l b, lhfu,19fF andff1 tidffh eocprunnus n t.. . 19f-F(,h an 1979, nana. 17, I 17 9Ohc PING l cnecttva aos dooa-i hrueueorSvrtaauhnnucere.. p,_ rte-v ~hildfer aId nurbf-Aueeprot Ptcelanitntuearl9lA -uncern pcpuanfutcrefecfnraarrbaedtvfli$ AevFvenrcnu evpvvsfraltrbao,aodeealeuvupiedcnven ..... rcelnpfaln o aoto se odrhfeoenfun ndner ifyrers de>cus opcrlel .AsiInpeec ndero-prtenAervdureb o TeA ausr etenasge oneuPnfee i rmlarfn vid eunre9lop TAFrTAiTTYPb.,.d - ,,f - and ereliopcreds in pa, ev dthrpupoes -Adlusced tyIeelfienn -laPfn feaesifanp topui hrlc--I eecrr poyieoe rhr f r grusof serv Aeia e a--hool p- eee, n ad-geiae-nos tonl, sof nd nestle rA iloPrcei eqyeI en rhe de0 rareth- o a-ec --he age cenrirere e_crller -- ali eg r-he pis ar_Pierei aspreoae Pr ctn stirs cn...etr .o this vsinfed on ly tPper feerl-fbi meet deilf Pr itpeDCAIONpsho-g noviv anpucadevidc gdPf erplered o ohebeef ci gb-r "Ijucdpernnt irs, ci rip ..rf.. rtrc rsep..e r belts or- abune obef-g a .eneu ag.df- ireper11,Tedhipe c a v-- delyanei- f-icnluny race .li norytu- e Iyde suhaul - g coral, cafe.an feai .. T d as aace;. aeuede-y seer I- -1'y- , levl.cduefupsc Pn_a IseefearI pears oipTucd_ ica tepapin Popalanior Teessrpr ..so-v-irtedh f fe so-t- -pAi-pear e_pflervo pen . s rcns flone 11th- Perne-es. - Toafrlouiler hi- ld . r.n.e. cisavedeny - --nntre trionsure_ creel ante; fOff, enor end 1919 dana. rrh.cplulAerevbnva p.pl. , to berel. neonfee!, pnfgean chEeP ovoseicced leeur;199. la- ad i -deg. dal f-ceuThas 1yrpee r-h-nre-adieafab-e-oi-a-so I rr_ PoAle-o ha.nbsh lace I ren:-11ny-astfgonfree ipnl i-a pifrrg ofsc2 di popalatvy-aged17 .pest an sore.I. -ce opletIuo ice0 1979-61, 1991 --h and f971-79.ldl,, Paeafebce Pan 9Ieneo d- te-e -ybvel rune ransdofarfa nap- 1hnorrFil poofnin iIChi,d9971, sod-r 1979i.gdeca.5 sfis-dePre ...1 1d,ddb . -I I . h Prade lePhPnePerrhnaL-tdI - 1 anea d"e'b pen gIpneo" of n-id i- -yea fdI Ocenes Iee shooe. d poien...... bin type cI teo-es o onrpr-sen;..Al 1975, ned 1979 danah. hadcsengsr9 vbi peeoed fpaea79;eofde n hesnnere1970hepenAi 79oyshcnsFneen..-.ehgce--rpoe hor 1eiien;sh feeen-yar .....eyn -ip nrotrelelv nlhlnyeaos;neoafy i on -eAn .. ennae eli-c binh p-t1, 1979 Id i97-. suer iansci _ eiciicedhnenfp... CroafpnicahrLI---dcvp- osanefncecs-ths-opevaopet Pccor ophearnclatr:_Ieenr oreecsn tintn 9-onnclanntserA-rre7Aacrscnili-yslpfrnopneen -hrfcbio eepoeappln-;enldscieeei eeor Fronfprcsonlv-Tse -d pr - Ie I en ldsetheoPh- Psene..rede If idcy... dinveuc -veerd n paes-,rd ioeefnllntyp sn,di snerat 60l-farn age1 C 15-0pae irs ir79rrldonsn repprEnealo(e rbcotd :pfefen - os f dttaent elf osnrfed easer lo asor apt group. nulepfcv. ci Idlf gcnelil p-eresrh sps-rh delnlappecedoa ~~ili b- ipobanesu ecaed tsnei- nod reoin geerlnee-I is pentdeie Poeal nnlonnoh dIyciy-ppaer estfa pesmeco talnl nrp h eledarnee prone-1 ccgrs; hNn-I 1971,hcod190 done. L inna Laor nnv 'rilcbrsoe,EoonnelparIce.peteers, h,ivoa Per c.anIeIdriaohetrlsPprnn c -oicocnPf-l-cuo Ponesefcrradfealpd ata ddfgfasePes IFese eopvrtof an.d nPnr sfr. oodtn vpfe-srldParel ed,sed dFeae relyo -Fsae a e Fre.e.erer`-ofrea lbo ore quenori tedIn ce ponsacog ad rsesrod-arIfuroo - Pp-fe drlcl oe nren -1- . Iaorfoc go iY-fg, thseep hnofcaan end se -IdttrtrrPv o ppnannn an Iofp1 ero o p arse at nod lecrnn seeI n gsa orctp c uoalhrtme.9l ipuorcbcd love-; 1h91-rh, 1970l~..ad .9.7 dana. 1970 and-ff-dare Petvr p srftfp o rooteog Igase d-d-i. - Proptior neor of pe nI lp LABOpFRinCEno aefeco rtc ae n eol-etnI rn alfsane o N prss 7 rna -rghtr. petd6 pan 6 ngreo viad e andtf91 . fOOr eon l9h-9dc.l -hee aelloy ori-n peeiipscrae p_forne_ ,feohl pertoldpsnoa coer.Fces1n- elennd g - -esr -cer of -he,,diatcr, .en ..goeco. = A etdeaefosrpic n.obvoaof0hrsens ctf tacnn- oadlg- sot reenCansae irtenoclovne- S ~ ~ ~ ~ ~ ~ ~ ~~~~IrIcdy freeacebla andpaif er-p reeo ret Pap;, fdOAl-Ph, 1971 end 197 dat. frFe Ff lp-obl;16 9 99 age ocu f d ees Pr frhndre IPIp Ign__;fr cndvfylgvv errn ifonI enc , por_esr Rlpeei-of--an phooir0ppcd mIttdan dencediron 'I loP .nele - IOPT gi_ - 190 an.ff0 def. c h a_evecicrids. i60 97 ad199 HEALTh FIOPOFF~~~~~~~~~~~~10 1 -1,- .1IAriIcilyF -rFSg.P asIde;190 00 n 00 a c e70 u-d hr7 dtonrnndarronvnA5t,Oo foir nItprt -aloto9ane.oernvcuea--aaoedear-Pooffvfeer---dIfaotranil Teretbrlnpvroecnpra FNcrtra-nrnna ru-- -ofage f .d - d 1 -pelrnfr-er-leoeiprdrrfsb-Aho-raPtTn.cr..rvnef.. srarprneetlitdea-o iroa Ancesic Sfe brer uerner c -pobliu1,,of- UIInrf tr o ea oa rtcoel 'Iadrvn dIe Thor_ ...ole oc-Foo eeqolneenosan "re- p..ornAr. pthrlarlcn to. an. dPAc tnt a. thblg Tehirdvooo oi a ti. Urfa .plrvtlof -d-tle fans 6he rural ico1ai n.de-- 6,17 treprclveeooer 1977 d-. thesfcePacnpc e tfp-rdpan1,- fuI- fhr-e iloeinbnnce cccidrtatoocsovi rsrn.aIfe dn-e .. ciotohre. bie ne soaeyrlenneouFcteoer Irahvfrren-r reeoel rvacul vl iarhnrnafru esetvim hocoY.nrvr- evorioolnceuho nrrapbor fffr doocrotvmertprpn.orlvan prIf'lvplrenvotrP riseflosnsre reedo i" _ ng..IP--1 0a dAnesrtcAenrre Alavosaffcrnernofplrrdnrao-nvreI.roacTandratel lerrenngee ci beir repcn-n t.pepola furs. d-h -runotat tne cap ..oldei l' r 1 - ~t i ah-k. -- ,I ofn uliordfry e,7 sed no75al vPo an aidn lve ronlonocpe hersit cnn I t I Peso-rtrAnnnnlvd-fhy nho o.f- protoI cop - oalsndeneIcg_edrtnbvoth. Ac-1vofoal-1oisoseod ThsOscI'llrrol" - 24 - Annex I -24- Page 4 of 5 COUNTRY DATA - RWANDA GROSS NATIONAL PRODUCT IN 1979-80 1979 19801/ US$ Mln. % US$ Mln. % GNP at Market Prices 1035.0 100.0 1172.5 100.0 Gross Domestic Investment 194.9 18.8 18707 16.0 Gross National Saving 113,0 10.9 21.8 1.9 Current Account Balance 46,8 4.5 54.3 4.6 Export of Goods, NFS 226.6 21.9 165.6 14.1 Import of Goods, NFS 3G8.6 29.8 331.5 28,3 GOVERNMENT FINANCE Central Government (RF Mln) % of GDP 1 8& l/ 1980 1972 Current Receipts 13,259 12.0 8.3 Current Expenditure 10,468 9.5 10.7 Current Surplus 2,791 2.5 -2.4 Capital Expenditures 2,113 1.9 1.2 MONEY, CREDIT AND PRICES 1976 1977 1978 1979 1980 (RF Million outstanding, end period) Money Supply 2/ 8,047 10,173 11,224 14,113 15,209 Bank Credit to Public Organisations 480. 221 225 233 219 Bank Credit to Private Sector 2,392. 4,169 4.908 4,330 6,296 (Percentage of Index Numbers) Money and Quasi Money as % of GDP 13.0 14.2 13.9 14.5 14.0 Consumer Price Index (Jan-Mar 1976 = 100) 101.9 116.7 131.3 152.1 163.0 Annual Percentage Changes in: Consumer Price Index 6.9 14.5 12.5 15.8 7.2 Bank Credit to Public Organisations 5.1 -54.0 1.8 3.6 -6.0 Bank Credit to Private Sector 40.1 74.3 17.7 -11.8 45.4 NOTE: All conversions to dollars in this table are at the average exchange rate prevailing during the period covered. 1/ Provisional 2/ Includes Money and Quasi Money. - 25 - ANNEX I COUNTRY DATA - RWANDA Page 5 of 5 TRADE PAYMENTS AND CAPITAL FLOWS 1/ BALANCE OF PAYMENTS 1977 1978 1979 1980 MERCHANDISE E:XORTS (AVERAGE 1977 -80) Exports of goods, f.o.b. 125.2 110.4 202.9 133.6 USS Mhn ' Imports of goods, f.o.b. -102.3 -144.9 -159.5 -204.4 Coffee 80.3 55. 9 Trade balance 22.9 -34.5 43.4 -70.8 Tea 10.5 7.3 Cassiterite ,.7 5.3 Services (net) -72.4 -106.3 -127.4 -90.0 Wclf rar. 6.- 4.3 Net transfers 66.9 94.1 130.8 106.5 ?yrethrum i.8 1.2 Cinchona 2.1 1.3 Balance on current account 17.4 -46.7 46.8 -54.3 Other 34.9 24.3 Total 143.7 100.3 Direct Investment 5.9 4.7 12.5 17.0 EXTERANI DE3B, Net MLT Borrowing 23.3 20.1 17.6 33.2 DECE'23ER 31. _910 USS Fln Other Capital (net) and capital n.e.i. -24.1 26.1 -7.2 17.4 Public Debt, incl. Increase in reserves (-) -22.5 -4.2 -69.7 -13.3 guaranteed 170.0 Non-Guaranteed Private Debc -- Gross Reserves ToEal Outs-rad_-.g (end year) 96.8 99.7 177.3 204.5 and Disburse_ -_ Petroleum Imports 12.3 11.8 14.5 22.8 EXTERNAL _DEBS--ERVICE Petroleum Exports - - - - RATIO FOR Public Debt incl. guaranteed 3.2 Non-guaranteed Private Debt __ Total outstanding and RATE OF EXCHANGE disbursed -- Annual Averages End Period 1974-80 December 1981 I3PB/IDA LENDING (nec. ,1.1980) US$ 1.00 = RF 92.84 92.84 (USS MYln RF 1.00 = US$ 0.011 0.011 Outstanding and Disbursed 58.12 yUndisbursed 57.48 l/ Provisional .* Outstanding incl. 1/ Provisional Und'sbursed 115.60 2/ Debt Service as a percentage of Exports of Goods and Nonfactor Services. -- = Not available. - 26 - ANNEX II Page 1 of 5 THE STATUS OF BANK GROUP OPERATIONS IN RWANDA A. Statement of IDA Credits (As of March 31, 1982) Amount US$ million (Less cancellations) Credit No. Fiscal Year Borrower Purpose IDA Undisbursed (Four credits have been fully disbursed) 31.90 567-RW 1975 Rwanda Education 6.38 2.87 655-RW 1977 DFC I 4.00 0.13 656-RW 1977 Agriculture Cinchona 1.80 0.31 668-RW 1978 Bugesera Gisaka-Migongo Mixed Farming and Rural Development 14.00 0.70 769-RW 1978 Road Maintenance 15.00 4.14 896-RW 1979 DFC II 5.20 4.71 937-RW 1979 Mutara Agricultural and Livestock Development 8.75 5.84 1039-RW 1980 Integrated Forestry and Livestock Development 21.00 10.59 1057-RW 1981 Telecommunications 7.50 7.05 1126-RW 1981 Coffee/Foodcrops 15.00 14.50 1217-RW 1982 Technical Assistance 5.00 5.00 Total 135.53 55.84 Repaid .38 Total Held 135.15 B. Statement of IFC Investments (As of March 31, 1982) In 1976, IFC made a loan of US$535,000 for a tea factory. A second IFC long-term loan of US$226,000 and contingent equity commitments of up to US$60,000 for an expansion of the tea factory were signed in September 1980. Note: Rwanda has received no Bank loan. - 27 - ANNEX II Page 2 of 5 C. PROJECTS IN RWANDA 1/ (As of March 31, 1982) Credit No. 567-RW Education Project; US$8.0 Milion Credit of June 30, 1975; Date of Effectiveness: December 1, 1975; Closing Date: December 31, 1982 As now constituted, the project includes construction, equipping and furnishing of 250 primary-school workshops, a school-textbook printshop, and an office building for the School Financing and Construction Services (SFCS) as well as furnishing and equipping of the Rural Agricultural Training Center of Gitarama. The project also provides technical assistance, vehicles and operating expenses for the SFCS. The project has been hampered by implementa- tion difficulties centering on two misprocurements (an amount of US$130,000 was cancelled because of misprocurement of certain construction materials; a second amount of US$1,491,000 was cancelled due to misprocurement of paper). Most of the 250 workshops are nearly completed. The lack of acceptable record keeping, however, has impeded the processing of disbursement requests. Therefore, a final inspection and evaluation mission for the workshops, organized by the Government (with IDA approval) was undertaken successfully in November 1981 with UNESCO assistance. Disbursements have resumed. The printshop is now operational and construction of the office building for the SFCS completed. Credit No. 656-RW Cinchona Project; US$1.8 million Credit of August 20, 1976 Date of Effectiveness: March 2, 1977 Closing Date: June 30, 1982 The project provides over a five year period inputs and extension services to grow cinchona for export. Progress is satisfactory and there is still a demand from farmers for planting material. World market prices for cinchona derivates, however, remained low during 1979 and 1980, and OCIR (the implementing agency) had to reduce the farm gate price for cinchona bark and abolish the export tax and the OCIR levy. In September 1980 it was decided to establish a cinchona bark processing plant in the Kirambo area, and construction has since started and the factory is scheduled to be open in early 1983. This should give Rwanda a stronger position in the future to compete with cinchona derivates on the world market. * _/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered, and the action being taken to remedy them. They should be read in this sense, and with the understanding they do not purport to present a balanced evaluation of strengths and weakness in project execution. The original Closing Date was extended to December 31, 1982 by which time the project is expected to be completed. - 28 - ANNEX II Page 3 of 5 Credit 668-RW Bugesera/Gisaka/Migongo Mixed Farming and Rural Development Project; US$14.0 Million Credit of March 31, 1977; Date of Effectiveness: November 23, 1977; Closing Date: September 30, 1982 The project consists of the promotion of mixed farming and rural development in two recently populated zones; it aims at strengthening the central services responsible for rural development. The project includes tsetse control, field extension and infrastructure, credit, improvement of feeder roads and water supply, a limited number of schools and health centers and establishment of two cattle ranches. The project is cofinanced with BADEA (US$5.0 million equivalent for livestock development and water facilities) and France (US$2.6 million for six technical assistants). Satisfactory progress has been made with programming of work, budgeting and construction. The results of the foodcrop and plant improvement components, however, are below appraisal estimates due to technical packages which have not taken adequate account of the relatively dry project area. A follow-up project will build on infrastructure put in place under the first project and focus primarily on applied research, training and extension. Credit 769-RW Fourth Highway Project; US$15.0 Million Credit of April 1978; Date of Effectiveness: August 4, 1978; Closing Date: July 1, 1982 Implementation of the Fourth Highway Project (a US$15.0 million Credit for road maintenance) started in January 1978. Specialists financed under the technical assistance program are performing satisfactorily. Procure- gent of equipment is completed. On the suggestion of the Association, an expert on labor intensive methods visited Rwanda for three weeks in June 1978 and recommended that one mechanized unit be replaced by one unit utilizing labor intensive methods. Following the consultant's recommendation, the Government has introduced labor-intensive methods for road maintenance. Although the project is about one year behind schedule, implementation is now at its anticipated progress rate and the project is proceeding satisfactorily. Project completion is expected for end-1982. Credit 896-RW Second Rwandese Development Bank Project; US$5.2 Million; Credit of July 13, 1979; Date of Effectiveness: January 4, 1980; Closing Date: June 30, 1983 The Project aims at providing further assistance to the industrial sector by supporting the activities of the Rwandese Development Bank. It includes two components: (a) a second line of credit of US$5.0 million (which is now about 80 percent committed) to finance BRD's foreign exchange require- ments and (b) a feasibility study for the establishment of an auditing firm in Rwanda (US$0.2 million). Government has just finished reviewing the audit study and its comments are currently under consideration by the Association. - 29 - ANNEX II Page 4 of 5 Credit 937-RW Mutara Agricultural and Livestock Development Project; US$8.75 Million Credit of July 13, 1979; Date of Effectiveness: May 30, 1980; Closing Date: December 31, 1983 The project is the second phase of a long-term development program for the Mutara region. It aims at developing techniques, procedures, and an institutional environment which will make it possible to preserve the production potential of the area, make a rational and more intensive use of available resources, improve farming and ranching techniques, and integrate the project into the local administration. Settlement of cattle owners has proceeded in an orderly way and pasture production has improved, but destocking activities and credit recovery have been disappointing due to lack of clear policies and enforcement mechanisms. Credit 1039-RW Integrated Forestry and Livestock Development Project; US$21.0 Million Credit of July 7, 1980; Date of Effectiveness: November 11, 1981; Closing Date: September 30, 1986 The project is the first phase of a long-term program to develop the forestry resources of Rwanda and to strengthen the livestock industry. Technical assistance personnel and key local staff have been recruited and start-up activities are progressing satisfactorily. Credit 1057-RW Telecommunications Project; US$7.5 Million; Credit of August 13, 1980; Date of Effectiveness: July 7, 1981; Closing Date: June 30, 1985 The project aims at improving the quality of existing telecommuni- cations services, while extending the coverage to geographical areas and segments of the population which at present do not benefit from such services. In addition to improving international and domestic telecommuni- cations (telephone and telex) the project provides technical assistance and training to the Ministry of Post and Telecommunications. The project is cofinanced with FAC and CCCE (US$3.9 million equivalent) and CIDA (Can$4.95 million) and is proceeding satisfactorily. Credit 1126-RW Lake Kivu Coffee Improvement and Foodcrops Project; US$15.0 Million Credit of April 29, 1981; Date of Effectiveness: January 18, 1982; Closing Date: December 31, 1986 The project aims at building up an effective extension service which would assist farmers in increasing foodcrop and coffee production using field-tested techniques and also helping OCIR-Cafe (the implementing agency) improve its financial management. Technical assistance personnel and key local staff have been recruited and start-up activities are progressing satisfactorily. - 30 - ANNEX II Page 5 of 5 Credit 1217-RW Technical Assistance Project; US$5.0 Million Credit of April 5, 1982; Date of Effectiveness: July 5, 1982; Closing Date: December 31, 1986 The project aims at increasing Rwanda's absorptive capacity, improving interministerial coordination in project preparation and monitoring, and strengthening the Ministry of Planning. The project credit agreement was signed April 5, 1982. - 31 - ANNEX III RWANDA Supplementary Project Data Sheet Fifth Highway Project I. Timetable of Key Events (a) Origin of Project: Request of Government based on economic study of Butare-Cyangugu road completed December 1979 by consultants SEDES (France) (b) Identification Mission: June 1980 (c) Appraisal Mission: August 1981 (d) Negotiations: April 5-8, 1982 (e) Planned Date of Effectiveness: September 1982 II. Special Implementation Action None III. Additional Condition of Effectiveness Signing of supplemental financing agreements for the Kitabi-Cyangugu road with the African Development Bank, BADEA, the EEC and the Kuwait Fund (para. 42). IV. Special Conditions (a) Government would establish appropriate vehicle weight regulations, including an enforcement mechanism, and put the new regulations into effect by December 31, 1982 (para. 47); (b) Government would install a weighing scale at Gatuna and another at Kagitumba by December 31, 1983 (para. 47); and (c) Government to prepare action plan and make financing arrange- ments for restoration works on the Kigali-Gatuna road by June 30, 1983 (para. 44). I IBRD 16034 2K- 1 1 | = ; ~; | ;; -; - m i -- l , ;_ ; \5Q SUTURSure aaU ; IBR1a FIFTH HIGHWAY PROJECT =PEVIOUdS ANK PROJECTS 1I ~OOSRTIIUCTELR UNDER FHIRST HIGHWAY PRpc#(r T SIR U ^1 o O n e bo AN DArD _ g Z A I R E _ + N t < W n |~~~~~~~~~~~~~~~~A N A I - APES) ROADSRO R n - OADS ON.ER CONSTRUCT OSI TO PAVED STANDARD MAIN GRhAVL, AND EARTHJ ROADS Z t NATIONAL CAITAL 5 00 5~~~~~~~~~~~~~~~~~~~~~'ITCESANDRRONNR SQ hRISERS AND LANES -.-INTLINAlIONIAL RAIUE AFRICA tA.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~AKA 0 :l 6 0 g 0 ; S 0 t 2 \ \ | 7 ): 5 5( 9 4 \ i 0 iX 4 t 0 0 0 0 g tv K 9 j_ > N A r 4 oN N A IL0 N A F-R C A" G260 :>NV;N W IAP E \ A I- R ''1; ' - K,b-g~ th,APRI ~ ~ ~ K GI>'kD IICCIrT WoRD RAPE j RPS A'T 'PIP ' R 3 N D I ,CIRRoCPRPAPOISOP,s P ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ I 5.111 ~~10 2 3 0 0 60s CHIabUftPStat' I,edf /rap S _ew-~ _XIIy ; ( 0 ~~~~~VW tFHA. j <}8sh1AbtlJf X D I I RILES UBLICOr\ _ r . II 5 | j B0 RD 50 ZAIRE U R U N D I '