Rwanda - Third Highway Project

DOCUMENT OF INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use Report No. P-1441-RW REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF RWANDA FOR A THIRD HIGHWAY PROJECT May 15, 1974 This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.  CUhtRENCY EQUIVALENT Unit: = Rwandese Franc US$1: = RwF' 91.114 RwF 1: = US$ 0.01 RwF 1000: = US$ 10.97 RwF 1,000,000:= US$ 10,972.13 Fiscal Year January 1 - December 31  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF RWANDA FOR A THIRD HIGHWAY PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Republic of Rwanda for the equivalent of US$6.3 million on standard IDA terms to help finance a third highway project. Belgium has agreed to finance the preinvestment studies included in the project, which are estimated to cost $560,000. PART I - THE ECONOMY 2. A report entitled "Recent Economic Developments and Prospects of Rwanda" (AE-23a) was distributed on April 20, 1972. An economic mission visited Rwanda in November 1973 and its report will be circulated shortly. 3. Rwanda became independent in 1962. In July 1973 the army took power and ended the regime which had been governing the country since inde- pendence. A new government was formed in which several high officials of the former regime were retained. The change in government was not violent and did not affect economic activity. The Government has confirmed that it is determined to pursue policies favorable to economic and social develop- ment. 4. Rwanda is one of the poorest countries in Africa with an annual per capita income of about US$60, and is included in the UN list of the 25 least developed countries. The economy is predominantly agricultural and subsistence production accounts for more than half of GDP. Coffee has been the most important cash crop for several decades and currently accounts for more than half of export earnings. Tea and pyrethrum were introduced recently and their production is increasing. Prospects for livestock development are also good. The only significant nonagricultural resources are limited quanti- ties of cassiterite and wolfram ore which are being exploited for export. 5. After independence Rwanda's economy suffered from social and political dislocation and a concomitant decline in coffee production. The economy recovered in the second half of the 1960s, and between 1964-1970 GDP increased by 60 percent in real terms. Coffee production increased, as well as the export prices for both coffee and wolfram. Meanwhile, how- ever, the population grew by 22 percent. In 1970-72 GDP practically stag- nated at about $225 million but increased by slightly over 5 percent in 1973. Despite the increase in per capita GDP the standard of living is woefully low. The pressure on natural resources is great and underemployment is common.  - 2 - 6. Although no statistics are available, income distribution appears fairly even. The level of savings is low. Between 1969 and 1973 gross capital formation rose by 6.5 percent per year but amounted to only 10 percent of GDP in 1973. Public sector investment accounted for about half of this total. About 70 percent of public investment was for basic infrastructure and 15 percent for agriculture. Foreign aid financed about 80 percent of public investment as well as a substantial part of current expenditures. 7. Several constraints hamper Rwanda's development, among which popula- tion pressure on scarce land resources, high transportation costs, a small domestic market and the scarcity of skilled manpower are critical. 8. The population density in Rwanda is 144 per square kilometer, one of the highest in Africa. Nearly all arable land is fully occupied except for certain areas where settlement has been prevented by tsetse fly. The farmland available averages less than one hectare per family. Pastures are overgrazed. The population is increasing at an annual rate of over 3 percent, thus putting further pressure on land. Over 90 percent of Rwanda's population is rural and most of it live at a level close to subsistence. Protein-caloric malnutrition is endemic. With the scarcity of resources and continual popu- lation growth, migration and population control may ultimately be the only possible solutions. Regarding the latter, recent discussions held with re- presentatives of the new Government that came into power in July 1973, show that, gradually, a policy to introduce family planning may emerge. Migra- tion on the other hand is severely constrained by the lack of opportunities in Rwanda's adjoining territories. 9. Rwanda's external trade is adversely affected by the high transport costs caused by its landlocked position and long distance from the sea. Most of Rwanda's merchandise is transported through Mombasa on the Indian Ocean, a distance of 1,700 km. Domestic transportation is also costly because of the poor condition of the national road 'network. In 1968-72 the value of oil imports averaged about $1.5 million or 6 percent of total imports per year, As a result of the rising fuel prices the value of oil imports is expected to increase to about $4.0 million in 1975, representing about 11 percent of total imports. 10. The low purchasing power of Rwanda's population and the small size of its domestic market limit the possibilities for industrial development. However, there are some possibilities for the development of small to medium size agro-based industries. With foreign assistance, the Government has already started processing of tea and pyrethrum and the processing of groundnuts and soybeans is also envisaged. Thus, foreign exchange earnings could be improved by broadening the export package. 11. Rwanda has, however, insufficient skilled personnel to meet even its current need for technicians and managers and relies heavily, therefore, on foreign technical assistance. This lack of trained manpower also inevitably hampers project implementation and will continue for some time. The Government is, however, introducing a reform of the educational system which would make it more oriented to rural activities and geared to vocational training.  -3- 12. The Government's principal development objective is in the agricul- tural sector, in particular to expand production of export crops, such as coffee, tea and pyrethrum. These objectives were laid down in Rwanda's first development plan (1966-1970), from which a number of projects are still to be completed. A second plan, which would continue the effort to increase and diversify export crops, is under preparation. It is likely that an attemot will be made to improve coffee yields through intensification of production in suitable areas and that high priority will also be given to livestock development, in particular on non-arable land in the eastern part of Rwanda. 13. Rwanda receives a substantial amount of foreign aid; between 1969-72, commitments amounted to nearly $100 million, mostly in grant form. The Bank Group share in this was about 12 percent. In 1972, foreign aid financed about 540 technical assistants, more than half of whom were employed in education. In financing its recurrent expenditures, the Government also received budgetary support from Belgium, in particular for education, public health, agriculture and transportation. The Government expects to receive an increasing amount of foreign aid, particularly from European countries and the European Development Fund (FED). During 1974-78 gross capital in- flow is expected to be about $150 million. 14. At the end of 1973 Rwanda's external debt amounted to about $39 million, including undisbursed, of which IDA accounted for $16.1 million or 41 percent. The debt service burden which was less than 2 percent of foreign exchange earnings in 1972 is expected to reach about 3 percent in 1980. Assuming some increase in IDA lending, by 1980 the Bank Group's share in Rwanda's debt and debt service is expected to reach about 60 per- cent and 15 percent respectively. The high share of debt owed to the Bank Group is largely due to the fact that most other aid is given on grant terms. Although the debt service ratio is low, external assistance should continue to be provided on very soft terms in view of the country's poverty and limited export potential. Furthermore, because of the lack of development capital in Rwanda, foreign assistance should continue to finance a substantial part of the cost of projects including local costs. PART II - BANK GROUP OPERATIONS IN RWANDA 15. Since Bank Group assistance started in 1970, Rwanda has received three IDA credits, totaling $16.1 million, of which 76 percent has been for road improvement and maintenance and 24 percent for agricultural development. There have been no Bank loans or IFC investments. Annex II contains a summary statement of IDA credits as of March 31, 1974 and notes on the execution of on-going projects. 16. The Bank Group's initial development efforts in Rwanda have focused on the improvement of the road sector on which the country is almost entirely dependent for the movement of its domestic and foreign trade. The first IDA credit of $9.3 million, was made in June 1970 for a road construction project  - 4 - linking the capital, Kigali, with the Uganda border at Gatuna. This project is cofinanced with the Belgian Government. Delays by the contractor and un- foreseen geotechnical problems, together with, more recently, supply and price problems related to the energy crisis, have hampered its progress (see Annex II). The Association is examining with the Government the possibility of re- ducing the scope and thus the total costs of this project, as well as the feasibility of finding additional financing to complete it. The second IDA credit, of $3.0 million, was made in March 1972 for a highway maintenance project based on a UNDP-financed study for which the Bank was executing agency. The project is cofinanced with the UNDP and the Federal Republic of Germany. Some delays occurred at the beginning but the project is now pro- gressing satisfactorily. The third credit of $3.8 million, made in November 1973 for an agricultural development project, aims at improving livestock development and cash crop cultivation. Work is scheduled to start in July 1974. 17. A major element of strategy for Bank Group operations in Rwanda aims at increasing skilled manpower and improving the efficiency of Govern- mental institutions through rurally-oriented education and vocational train- ing. We are preparing a first education project in which emphasis will be given to agricultural education. Our lending program also continues to focus on agriculture and transport, two sectors which are closely related and are crucial for increasing production, exports and employment. We are currently assisting the Government in preparing an integrated agricultural development project. Because of the shortage of skilled manpower and tech- nical expertise in the country, development projects in Rwanda require sub- stantial technical assistance and financial support for training facilities. Both the second and the proposed third highway project provide for such assistance. PART III - THE TRA4SPORT SECTOR 18. With no railways and only limited water transport on Lake Kivu, Rwanda is almost totally dependent on roads for the movement of its domestic and foreign trade. International air carriers connect Kigali with neighboring countries and Europe, and two local firms provide limited air services to several airstrips throughout the country. 19. The highway network is quite extensive, consisting of about 6,300 km of road, mainly low standard earth and gravel. About 3,000 km are designated as national roads and maintained by the Directorate General of Roads and Bridges (DRB) in the Ministry of Public Works and Equipment. The remaining 3,300 km are local roads maintained by local authorities. Because of inadequate mainte- nance resulting from a shortage of qualified staff in the DRB and lack of funds and equipment, a large part of the national road network is in poor condition. The current highway maintenance project aims at improving this situation bv providing equipment and training for the staff through technical assistance. The present staff of the DRB includes only 27 engineers and technicians, of wlhom 16 are provided by technical assistance from the Federal RZepublic of Germany, Belgium and the UNDP.  - 5 - 20. Total highway expenditures by the Government have been considerably less than total revenues collected from road users. While these revenues in- creased steadily from 1970 to 1972, and amounted to almost $1.2 million in 1972, recurrent expenditures averaged only about $700,000 per year and capital investments ir roads about $200,000. This situation is expected to change during implementation of the Government's draft second five year plan (1972-1976) which envisages an increase in road maintenance expenditures to about $930,000 by 1976, as agreed under the highway maintenance project. During the plan period, revenues from road users are expected to increase at an average rate of 13 percent annually (as compared to 18 percent per year between 1970-1972). About $3.0 million would thus remain for capital investments on roads projected for construction during the second plan period. Most of the financing for the construction of about 1,000 km of main roads (at a cost of about $36 million) in the second plan will, in the absence of other domestic sources of funds, have to come from foreign aid. 21. Rwanda is receiving foreign assistance for upgrading road connections with neighboring countries in order to improve its outlets to the Indian Ocean. The Kigali-Gatuna road, the reconstruction of which is being financed by IDA, is part of the northern route from Rwanda, through Uganda and Kenya, to Mombasa. The improvement of the Kigali-Butare road to the Burundi border is being financed by the European Development Fund (FED). This latter road is part of the southern route to the Indian Ocean, through Burundi and Tanzania, to Dar es Salaam. A third route from Rwanda to Dar es Salaam is being studied with the assistance of the People's Republic of China, which would link southeastern Rwanda by road with the East African Railways at Ikusule in Tanzania. PART IV - THE PROJECT Background 22. A report entitled "Appraisal of the Third Highway Project, Rwanda" (No. 246a-.RW) is being circulated separately. The proposed project is based on a UNDP-financed feasibility and engineering study of the Ruhengeri-Gisenyi road, completed in February 1971 with costs updated in 1973. It was appraised by an IDA mission in March 1973. Negotiations were held in November 1973. The Government's delegation was headed by the Minister of Public Works, Mr. Andre Katabarwa. As explained below in paragraph 31, presentation of the project to the Executive Directors was postponed until the bids for the construction works were received in order to determine more accurately the cost of the project. A credit and project summary is provided in Annex III. The Project 23. The proposed project consists of: (i) the improvement to two-lane paved standard of the Ruhengeri- Gisenyi road (about 60 km);  (ii) the feasibility study and detailed engineering of the Kigali- Ruhengeri (116 km) and Ruhengeri-Cyanika (27 km) roads; (iii) technical assistance to the DRB Planning and Engineering Division; and (iv) training of DRB highway maintenance personnel. 24. The improvement of the Ruhengeri-Gisenyi road is one of the high priority projects in the Government's draft second five-year plan. The road serves the country's most densely populated and agriculturally rich region, as well as one of its most attractive tourist areas, and carries transit traffic between Zaire and Uganda. Gisenyi, on Lake Kivu, has a modern brewery, coffee and tea processing industry, and is also a tourist resort. The present road is poorly aligned for part of its length and its surface deteriorated badly as a result of heavy traffic and insufficient maintenance. Under the project, the road would be upgraded to two-lane paved standard, to meet the expected increase of transit and local traffic. Drainage will be improved, but no major bridge work is required. Detailed engineering has been completed for the most difficult section but further engineering work is required before construction of the remainder; the project provides for completion of this work by the supervisory consultants. 25. The project includes feasibility and detailed engineering studies of the Kigali-Ruhengeri-Cyanika road wnich could lead to further highway invest- ment by the Association. The present road is in poor condition and its re- construction would provide Kigali with better connections to the north of the country. Belgium has agreed to finance the studies. Detailed engineering vitl be undertaken only if the feasibility studies give adequate indication that construction is likely to be economically justified. Terms of reference for such detailed engineering will be agreed with Belgium and the Association (Section 3,05 of Credit Agreement). 26. The present technical staff of the DRB's Planning and Engineering Division is hard pressed to handle its present workload, and unless strengthened would be unable to provide the services necessary to support the road construc- tion atid maintenance program envisaged over the next few years. The Federal RepublIc of Germany, which is already providing technical assistance, ba8 agreed to make available an additional engineer. Under the proposed project, a transport economist would be employed for a period of two and a half years to heip in the implementation of the ongoing highway investment program (1972- 76) and to draw up a highway development plan for the following years. 27. Finally, the project includes an extensive training program for high- way maintenance personnel to complement the effort being made under the ongoing highway maintenance project. The program calls for practical training for about 440 technical and administrative personnel. Audio-visual teaching aids would be procured under the project and would be used by two training experts recruited to coordinate and supplement the training provided by existing staff (Section 3.06 of Credit Agreement).  -7- PrLiect Execution 28. The DRB in the Ministry of Public Works will be responsible for executing the project and will be assisted by consultants for construction supervision (including completion of detailed engineering) and for the training of maintenance personnel. Construction is expected to begin in August 1974 and to take about 18 months. The training program is expected to cover a 2-1/2-year period. Financing Plan 29. The total cost of the project is estimated at US$7.7 million with a foreign exchange component of US$5.7 million. The proposed IDA credit of $6.3 million would finance about 87 percent of total project costs (net of duties and taxes estimated at $420,000). Belgium has agreed to finance the preinvestment studies included in the project which are estimated to cost $560,000. The Government contribution would amount to about $830,000 inclu- ding taxes and duties. 3(0. At the end of April, we were informed that UNDP might be prepared to consider financing part of the project, in particular the technical assistance program (including the training program for highway maintenance personnel) and some of the consultant services. UNDP financing could be up to $700,000. We have however been advised that a firm commitment would not be possible for a few months. Since Rwanda would not have the resources to finance this part of the project if UNDP financing does not materialize, we have included this in proposed IDA financing, with the provision c:hat if and when UNDP funds are made available, an equivalent amount of the IDA credit would be cancelled (Section 2.03 of Credit Agreement). Procurement and Disbursement 31. Improvement of the Ruhengeri-Gisenyi road will be carried out under contract after international competitive bidding in accordance with Bank/IDA Guidelines. Because of the uncertainties pertaining to construction costs resulting from Rwanda's landlocked position, it was thought advisable to call for bids prior to presentation of the project to the Executive Directors. Tenders were received in February 1974 and the construction costs have been estimated oni the basis of the lowest evaluated bid. 32. The proceecls of the IDA credit would be disbursed over three years anci would cover; (a) 92 percent of expenditures for road improvement works and (b) actual foreign exchange expenditures for supervision, technical assistance and training. About $30,000 would be utilized to finance retroactively consul- tant services to update cost estimates and to prepare tender documents for the road improvement works (para. 3a of Schedule I to the Credit Agreement). Economic Benefits 33. The major benefit from the proposed project would be a considerable reduction in vehicle operating costs. In addition, the reduction in transport  - 8 - costs is expected to stimulate the development of the area served by the road. The economic return of the project is estimated at 18 percent. As part of the traffic, particularly that between Uganda and Zaire, is carried by foreign transporters, or serves the foreign-owned brewery in Gisenyi, it is likely that some of these benefits would not accrue to the Rwandese economy. On the assumption that a third of the benefits from the road improvement would be lost to the Rwandese economy, the economic rate of return to Rwanda alone would be 12 percent. Furthermore, construction would provide temporary employment for about 500 Rwandese. PART V - LEGAL INSTRUMENT AND AUTHORITY 34. The draft Development Credit Agreement between the Republic of Rwanda and the Association, the recommendation of the Committee provided under Article V, Section I (d) of the Articles of Agreement, and the text of a resolution approving the proposed development credit, are being distributed to the Executive Directors separately. 35. Features of the Credit Agreement of special interest are referred to in paragraphs 24, 26, 29 and 31 of this report. An additional condition ef credit effectiveness is the signing of a contract between the Government of Rwanda and consultants for the supervision of road improvement. 36. I am satisfied that the proposed Development Credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 37. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President Attachments May 15, 1974  A'JNEX I Page 1 of 3 pages COUNTRY DATA - RWANDA AREA 2/ POPULATION DENSITY 26,340 knr 4.0 million (mid-1973) 144 per hl2/ Rate of Growth: 2.8 (1973) 310 per kri2/of arable land POPULATION CHARACTERISTICS (1970) HEALTH (1972) Crude Birth Rate (per 1,000): 50 Population per physician : ,4,000 Crude Death Rate (per 1,000) : 22 Population per hospital bed 750 Infant Mortality (per 1,000 live births): 133 INCOME DISTRIBUTION (1972) DISTRIBUTION OF LAND OWNERSI1IP (1972) % of national income, highest quintile: ..o owned by top 10% of owner t: lowest quintile: . % owned by smallest 10% of cowners: ACCESS TO PIPED WATER (1972) ACCESS TO ELECTRICITY (1972) % of population - urban:.. % of population - urban:. - rural: - rural: NUTRITION (197Q) EDUCATION (1970) Calorie intake as % of requirements: 80 Adult literacy rate 7: 23 Per capita protein intake: 50 gr. Primary school enrollment % 60 1/ GNP PER CAPITA in 1972 US $ 60 GROSS NATIONAL PRODUCT IN 1972 ANNUAL RATE OF GROWTH (%. ccnstant prices) US $ Mln. % 1960-65 1968-72 1972 GNP at Market Prices 241.2 100.0 .. 6.0 3.5 Gross Domestic Investment 23.4 9.7 *- 14.0 37.5 Gross National Saving 7.8 3.2 ,, 13.8 - 3.0 Current Account Balance - 15.6 - 6.5 Exports of Goods, NFS 20.4 8.4 .. 6.8 -16.0 Imports of Goods, NFS 40.0 16.5 12.6 - 3.0 OUTPUT, LABOR F ORCE AND PRODUCTIVITY IN 1972 2/ Value Added Labor Force7 V. A. Per Worker US$Mln. 7. Thous. % LS $ % Agriculture 146.8 63.5 1636 94.0 39.7 67.5 Industry 23.2 10.0 19 1.1 112.1 91.9 Services 61.3 26.5 31 1.8 197.7 148.7 Unallocated . . 54 3.1 Total/Average 231.3 100. 1740 100.0 132.9 100.0 GOVERNMENT FINANCE General Governlment Central Government2t (_ Mln.) 7 of GDP ( Mln.) 7% of GDP 1972 1972 1968-7 1972 T142 1968-72 Current Receipts .. .. .. 1874 d.2 8.1 Current Expend-iture .. 2338 1).3 8.6 Current Surplus .. .. .. -64 -.5 Capital Expend:Ltures .. .. .. 1142 ;.0 4.0 External Assistance (net) 1/ The Per CapIta GNP estimate is at 1970 market prices, calculated by the same conversion technique as the 1972 World Atlas. All other conversions to dollars in this table are at the aver;ge exchange rate prevailing during the period covered. 2/ In 1970. Unallocated include unemployed, people without occupation for health reasons, old age, et<. Statistics available refer to occupational distribution of populaTion above 15 years, i.e. not exactly to labor force. 3/ dxcluding external assistance. not available not qpplicable  A) NEX I Paige 2 of 3 pages COUNTRY DATA - EWANDA MONEY, CREDIT and PRICES 1969 1970 1971 1972 T illion of RwF outstanding end period) Money and Quasi Money 1,858 2,188 2,536 2,6.9 Bank Credit to lublic Sector 1,549 1,345 2,588 2,3(6 Bank Credit to Private Sector 289 507 686 4c8 (Percentages or Index Numbers) Money and Quasi Money as 2, of GDP 9.8 10.1 11.4 11.8 General Price Index (1963 = lOO)1J 102.1 105.2 108.3 1)6.6 Annual percentage changes in: General Price Index .7 3-0 2.9 7.6 Bank credit to Public Sector 33.8 -13.1 92.4 -.0.9 Bank credit to Private Sector 27.4 75.7 35.2 -34.8 BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1970-72) 1970 1971 1972 US $ Mln ?/ (Millions US $) Coffee 11. 51.5 Tea 1.4 6.2 Exports of Goods, NFS 25.3 22.7 20.4 Pyrethrum .5 2.2 Imports of Goods, NFS 33.5 38.0 40.0 Cassiterite 4.8 21.3 Resource Gap (deficit = -) -8.2 -15.3 -19.5 Wolfram 3.0 13.3 Interest Payments (net) .6 6 All other conmodities 1.2 5.3 Workers' Remittances .5 .9 .8 Total 22.5 l0OQO Other Factor Payments (net) - - - Net Transfers 1.3 2.1 3.0 EXTERNAL DEBT. DECEMBER 31, 19'72 Balance on Current Account -6T -1.7 315. US $ Mln Direct Foreign Inivestment .2 .2 .9 Net MLT Borrowing Public Debt, incl. guaranteed 3.0 Disbursements .2 .2 .9 Non-Guaranteed Private Debt Amortization .2 3 .4 Total outstanding & Disbursec. Subtotal - -.1 .5 2/ Capital Grants 7.3 5.6 5.8 DEBT SERVICE RATIO for 1972- Other Capital (n(.t) -.1 1.0 .5 % Other items n.e.i 2.5 2.0 2.0 Errors & Omissiors .8 1.8 2.0 Public Debt, incl. guaranteeo 2.3 increase in Reserves (+) 43 -1.1 -3-7 Non-Guaranteed Private Debt Gross Reserves (end year) 8.6 7.7 6.6 Total outstanding & Disbursed Net Reserves (end year) 3.5 5.2 3.5 RATE OF EXCHANGEa/ IBRD/IDA LENDING, March 31, 1974(Million US $) Through Feb. 1973 IBRD IDA US $ 1.00 = RwF 92.1 RwF 1.00 = US $ .0108 Outstanding & Disbursed - 4.4 Undisbursed - 11.7 Since Jan. 197L Outstanding incl. Undisbursed - US $ 1.00 = RwF 92.8 RwF 1.00 = US $.0108 1/ Kigali and Nyambirambo general consumer price index. 2 Ratio of Debt Survice to Exports of Goods and Non-Factcr Services. 3 B3fore December 1971 the exchange rate was US$ 1 = RwF 100. Between February 1973 and January 1Y(4, the rate was floating with a central rate of US$ 1 = RiF 82.9. not available . not applicable - nil or regligible April 7, 1974 EACP II  ANN:C I Pagi, 3 of 3 pages EXTER.:AL ASSISTANCE BY ,oUJRPrCE (US'; m.llion) 1970 1971 *972 A mount Percent Amount Percent Amount Percent U!)?/UNOT 2.35 12.2 2.32 10.7 2.66 10.7 IBRTD/IDA .27 1.2 1.19 .7 FED 3.14 16.2. 3.38 15.6 4.03 16.2 Belg.ium 7.54 38.9 8.38 38.6 8.60 3b.6 Iermany 0.68 3.5 o.8h 3.8 1.2 5.0 France 1.67 8.7 1.97 9.0 2.10 8. Sv:itzerland 0.90 4.7 1.08 4.9 1.50 6.o Canada 0.92 4.8 1.03 4.7 1.74 7.0 Oth,ers 2.-1 11.0 ;.70 12.3 2.00 8.0 TOTAL 19.31 100.0 2'1.70 100.0 2i1.87 100.0 / Corun,nitmrienlts in general. For LDA creodits actuial. disbur5cmernts are shown. Source: iW.ni.stry of Planning and Natural Resrurces.   ANNEX II Page 1 of 3 pages THE STATUS OF BANK O;ROUP OPERATIONS IN RWANDA A. STATEMENT OF BANK LWANS AND IDA CREDITS TO RWANDA (as of March 31, 1974) Amount US$ million (les3s cancellationsT Loan or Fiscal Credit No. Year Borrower Purpose Bank DA Ifndisbursed 196-RW ]970 Rwanda Kigali-Gatuna Road Cons;truction - 9.30 4.90 299-RW 1972 Rwanda Highway Maintenance - 3.00 2.99 439-RW ]974 Rwanda Agropastoral Development - 3.80 1/ 3.80 Total 16.10 11.69 of which has been repaid: - Total now held by Bank and IDA ! 16.10 11.69 Total undisbursed 11. 1/ Not yet effective. 2/ Prior to exchange adjustments  ANNEX II Page 2 B. PROJECTS IN El.ECUTION- Credit No. 19oz-IW Kigali-Gatuna Highvay Project: $9.3 million of tune 11, 1970; Closing DatE.: September 30, 1974. The project consists of the construction and maintenance of a paved road between Kigali and Gatuna (8 0 km); the purchase of maintenance equipment; consulting services anc supervision of construction. T'he project is cofinanced by the Belgian Government ($980,000) to cover part of the local cost of the project. Progress was hampered in the early stages of conLtruction by unforeseen geotechr,ical and managerial problems. Work was further delayed in mid-1973 when the contractor encountered serious difficulties in obtaining fuel and cement,initially because of interruptions to transport in neighbcuring countries through which supplies have to transit and later because of worldwide shortageE. The contract is now about 20 manths behind schedule. Detailed investigations by the supervising consultants indicate that the technical problems, together with the general increases in prices might cause a cost over- run of up to $4 million. Discussions are being held with the Government to find an appropriate solution. This may include a reduction in the standards of the Kigali-Gatuna road. Credit No. 2'cl-RW Highway Mhintenance Project: $3 million of March 21, 1973; Closing Date: December 31, 1976. The project is the first phase of a highway maintenance program designed to improve the condition of the 3,300 km national road network and tc provide the foundation for a maintenance organization that will be able to keep the network adequately maintained. The project is cofinanced by the Federal Republic of Germany ($0.5 million), which covers the foreign costs of a central workship at Kigali, and the UNDP ($1.1 nillion) for the provision of fc.reign technical assistance. Despite early delays in implemencration, the project is now pro(eeding satis- factorily. Credit No. 435-TW Agricultural Develcpment Project: $3.8 million of November 29, 1973; Closing Date: December 31, 1979. The project consists of the development of food and cash crops and livestock production through organized cropping and ranching settlements in the Mutara region in the northeast of 1/ These notes are designed to inform the Fxecutive Directors regarding the progress of projects in execution, and in particular to report any prcblems which are being encountered, and the action being taken to remedy then. They should be read in this sense, and iith the understanding that they do not purport to present a balanced evaluztion of strengths and weaknesses in project execution.  ANNGX II Pago 3 Rwanda. The project provides for the establishment of a paysannat comprising about 4,250 plots and ab(ot 120 group ranches, including infrastructure consisting Of plot and grazing area layout, road constructicn, water supply, staff housing and cattle handling facilities. In adlditicii, technical and marketing services are provided to project participants; a bull-breeding ranch will be established and the tsetse fly eradicated from the project area. A feasibility study will be made of the complete eradication of the tsetse fly from Rwanda. The project, Cor which the conditions of credit effectiveness are being fulfilled by the Government, is die to begin in July 1974.   ANNEX III Page 1 of 2 pages RW,NDA - THIRD HIGHWAY PROJECT CREDIT AND PROJECT SUMMh'ARY Borrower: The Republic of Rwanda Purpose: Road improvement, preparation of further highway development and training. Amount: US $6.3 million equivalent. Terms: Standard Project description: The project would provide for the improvement to paved standard of the Ruhengeri-Gisenyi road (about 60 km); feasibility stucy and detailed engineering of the Kigali-Ruhengeri-Cyanika road; technical assistance,and training of DRB highway maintenance personnel. Estifated. Cost The total cost of the project (including taxes and duties of $L20,000) is estimated at US$7.7 million with a foreign exchange component of $5.7 million. Details are as follows: US$ Million Local Foreign Total I. Improvement of the Ruhengeri-Gisenyi Road (a) Right-of-way acquisition 0.16 - 0.16 (b) Supplementary oonsultantis services - 0.05 0.05 (c) Construction 1.00 2.80 3.80 (d) Supervision 0.09 0.33 0.42 II. Studies l/ 0.11 0.45 0.56 III. Technical Assistance and Training 0.15 r.65 0.80 Subtotal 1.51 4.28 5.79 IV. Contingencies on I (c) - Quantity: 20% 0.20 0.56 0.76 - Price: 20.5% 0.21 0.57 0.78 - Special Risk: 8% 0.08 0.22 0.30 on I (d) 15% 0.01 0.05 0.o6 o. 17- 179- Total 2.01 5.68 7.6Y 2/ / Including contingencies. 2 Of which an estimated US$420,000 equivalent is for taxes and duties.  ANNEX III Page 2 Financing Plan: Local Foreign 1'otal % -US $ million- DA 1.07 5.23 6.30 82 Belgium 0.11 0.45 o.56 7 Rwanda 0.83 0.83 11 Total 2.01 5.68 7.69 100 Estimated Disbursements: IDA Fiscal Year Cumulative Disbursements 1975 2.7 1976 5.8 1977 6.3 Procurement Arrangements: Improvement of the Ruhengeri-Gysenyi road will be by contract, awarded after international competitive bidding in accordance with Bank/IDA guidelines. Consultants: Consultants acceptable to IDA will be employed under the project to camplete detailed en- gineering, to assist the DRB in supervising construction, to plan highway investments and to train maintenance personnel. >;conomic Rate of Return: 18 percent Economic return to Rwanda - 12 percent Appraisal R!I!orts No. 246*-RW, dated May 8, 1974. epAw tPsr: im 10o473  IBRD 1 47 MAY 19731 RWANDA THIRD HIGHWAY PROJECT ! oD