Somalia - Northwest Region Agricultural Development Project

CIRCULATING COPY FILE'COPY Documentof TO BE RETURNED TO REPORTS DESK aTheWorld Bank FOR OFFICIAL USE ONLY Report No.P-1713b-SO REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE SOMALI DEMOCRATIC REPUBLIC FOR A NORTH-WEST REGION AGRICULTIJRAL DEVELOPMENT PROJECT May 20, 1976 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.  EQUIVALENTS Currency Unit - Somali Shilling (So. Sh.) US$1 = So. Sh. 6.23 So. Sh. 1 = US$0.16 So. Sh. 1 m = US$160,000 Government of Somalia Fiscal Year January 1 - December 31  FOR OFFICIAL USE ONLY INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE SOMALI DEMOCRATIC REPUBLIC FOR A NORTH-WEST REGION AGRICULTURAL DEVELOPMENT PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Somali Democratic Republic for the equivalent of US$10.0 million on standard IDA terms to help finance a North-West Region Agricultural Development Project. PART I - THE ECONOMY 2. A Bank Economic Mission visited Somalia in November/December 1974 and its report entitled "Somalia: Recent Economic Developments and Current Prospects" (Report No. 702-SO), was distributed to the Executive Directors on August 20, 1975. Country data sheets are attached as Annex I. 3. The Somali Democratic Republic was formed in 1960 by a merger of the former Italian Trust Territory of Somalia and the British Protectorate of Somaliland. Following a decade of parliamentary rule, the Government was taken over by the military in 1969. The Supreme Revolutionary Council, consisting of army and police officers, is the highest decision-making body. 4. In 1970 the Government announced its adherence to a program of scientific socialism, emphasizing egalitarianism and social justice, develop- ment through the public sector, nationalization of certain foreign enter- prises, and the formation of cooperatives. This policy was at first asso- ciated with a negative attitude toward private investment, but the Government now appears to have tempered this with pragmatism. In general, the Govern- ment's development efforts have been characterized by austerity and self- reliance. Somalia joined the Arab League in February 1974. This step has significantly improved the country's foreign assistance prospects. 5. Somalia is located on the horn of Africa with three thousand kilometers of coastline on the Gulf of Aden on the north and the Indian Ocean on the east. It has an area of 637,000 square kilometers. The topo- graphy varies from a hot and arid coastal plain, which gives way to sparsely wooded savannah, to rugged mountains, agricultural plateaus and lowlands of varying fertility and rainfall. Much of the country is arid; water supplies are scattered and often unreliable, and periodic droughts bring great hard- ship to both the people and their livestock. Only a small proportion of the land is arable. While geology suggests mineral resources, exploration is still in the early stages. Lacking other known resources, development plans center on agricultural and livestock development. However, progress in the development of stock-raising and agriculture will depend upon careful management of scarce land and water resources. 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,  - 2 - 6. With an estimatect per capita income in the order of US$80, Somalia is classified by the UN as one of the 25 least developed countries of the world. Of the total population of approximately three million, about two- thirds are nomads, who depend on livestock for their livelihood, and about 20-25% are farmers cultivat:ing land along the Juba and Shebelli Rivers and in the higher rainfall northwest region. The small monetary sector of the economy provides only limited opportunities for employment. Apart from the traditional export of livestock, commercial agriculture is mainly cen- tered on the production of bananas for export, in which Italian concession holders are still important:, and the production of sugar for the domestic market. Manufacturing and other sectors of the ec:onomy are restricted in their potential by the small size of the market, poor infrastructure, and the shortage of capital and entrepreneurial experience. No income distri- bution data exist, but about 70% of the population live at subsistence levels. Social services are still very inadequate; the school enrollment ratio was until recently among the lowest in the world. Recent Economic Performance 7. There is little economic data on Somalia. Even basic figures such as GNP, population, number of livestock, or output: of major agricultural crops are only our rough estimates. Therefore, it is extremely difficult to measure economic performance except in a very rough and ready manner. 8. Due to favorable rainfall, 1972 harvests reached record levels and substantial food surpluses were purchased by the Government Marketing Agency. Poor rainfall in 1973 and a virtual absence of rain during 1974 led to a widespread crop failures. The drought has cut exports of livestock and bananas, the two largest earners of foreign exchange, and required large imports of maize, sorghum, rice and sugar. However, the drought was finally broken as the 1975 summer rains were quite good. 9. Performance in mobilizing and investing resources sharply improved during 1969-72 but it has been adversely affected by the drought of 1973 and 1974. The drought affected the entire central and northeastern parts of the country involving a large part of the population, mostly nomads. The Government moved quickly to respond to the situation and began to set up relief camps in November 1974. Relief camp population peaked at about 270,000 in late May and early June 1975. While the Government's foodgrain reserves were almost totally exhausted by the end of 1974, food aid was received in sufficient volume to cope with the immediate problem of hunger. However, despite prompt action by the Government and the response of foreign aid donors, the loss of human lives reached 19,000 by the end of summer 1975. Given the size of the disaster, this was a relatively low figure and is an indicator of the growing effectiveness of the Government. However, there was extensive loss of livestock estimated at 25-30% of the national herd. 10. As the summer rains of 1975 set in, the relief camps were disbanded and the inhabitants were given the choice of either returning to the bush or joining the Government's agricultural settlements in the south or the fisheries settlements along the coast. About 100,000 chose to go back to nomadism while  - 3 - 105-110 thousand were resettled in three agricultural areas and about 15-16 thousand were settled in six locations along the coast which have potential as fishing ports. The recently approved Drought Rehabilitation Credit assists the three agricultural settlements. 11. Somalia's manufacturing sector consists of a few relatively large- scale publicly owned enterprises and some small private enterprises, out of an estimated value added in industry of US$20.1 million in 1973; about 80% was in the public sector. Most of the industries are agro-based, depending upon locally produced raw materials. Food processing accounted for over 58% of value added in industry during 1973. After making strong progress in the period 1968-70, a period of relative stagnation started in 1971 and lasted until 1973. Indications are that industrial activity may have picked up in 1974-75. Several significant manufacturing investments were made in this period such as the brick factory, the flour and pasta mill, local mills, the corrugated carton factory, etc. In addition, expansion and modernization of existing plants,especially the sugar complex and the textile factory will come to fruition in the near future. Also, the expansion of the fishing fleet is contributing to the improved performance of the fish factory. 12. Somalia's recent fiscal performance has been most encouraging and it reflects the Government's emphasis on self-reliance. Current revenues have increased from US$38.1 million in 1969 to an estimated US$90.5 million in 1974 and the current budget position has changed from a net deficit of US$2.0 million in 1969 to a surplus of US$11.6 million in 1973. The rising trend in public savings was not sustained in 1974; against projected savings of US$19.7 million only about US$11.1 million is estimated to have been realized. A similar figure is tentatively expected for 19/5 while the Government hopes to double that during 1976.' It should be noted that the public savings (especially in 1973 and 1974) took place in the midst of large expenditures for drought relief and for the mass literacy campaign. Other contributing factors are the higher (absolute) levels of police and defense expenditures and the failure of state enterprises to provide the planned surpluses. 13. Government recurrent expenditures, which already account for slightly more than one fourth of estimated GNP, are likely to grow more in the next few years than in the past because of the continued burden of displaced population and the implications for recurrent expenditures resulting from the increasing level of development outlays. New sources of revenue may be required since a substantial increase in rates of existing taxes may not be possible. The whole system of taxation should be reviewed with particular attention paid to the potential role of public enterprises in mobilizing resource for develop- ment. The Bank economic mission currently in the field is concerned precisely with the task of evaluating the performance of state enterprises and advising the Government on measures to improve it. 14. Somalia's balance of trade has been in deficit since Independence. In recent years, the trade gap has grown from US$13.7 million in 1970 to US$101.7 million in 1974. Exports jumped from US$31.9 million in 1970 to US$56.5 million in 1972, but then declined by 9% in 1973. Although export  - 4 - volumes continued to decline in 1974, export earnings are estimated to have been slightly higher than in 1973 due to better prices for livestock and meat products. The drought has caused reductions in the production of live- stock, meat products, and bananas, which together account for about 90% of Somaliats exports. However, an unexpectedly strong performance in exports of livestock (attributed by the Somalis to unsettled conditions in neigh- boring countries) has pushed 1975 exports up to about US$79 million (So.Sh.500 million). Other better performers in 1975 were meat products and canned fish. Bananas, on the other hand, suffered a decline in volume (compensated by higher prices) to 85,000 tons from the more usual figure of 100,000 tons in normal years. Imports, on the other hand, have been rising steadily, from US$56.8 million in 1971 to an estimated US$166.0 million in 1974. Prelimi- nary data for 1975 indicate that imports have stabilized at about So.Sh.l billion (US$159 million). While imports have grown fast, attempts are being made to constrain them but, as the composition shifts towards development related to imports (from 25% of total imports in 1970 to 40% in 1974) the scope for reducing non-essential imports diminishes. 15. In the period 1968-72, the trade deficits of Somalia have been offset by transfers and capital inflows which averaged US$28 million per year. In 1973 and 1974, however, though foreign transfers and horrowings increased to US$79 million per year, they were no longer sufficient to finance the deficits and Somalia lost US$7.2 million of reserves in 1973 and US$9 million in 1974. In 1975, foreign transfers and borrowings amount- ing to about So.Sh. 800 million (US$125-130 million) more than offset the deficit on goods and servic:es and a modest surplus is expected to emerge. 16. Foreign aid has at times been the sole source of financing for investment. In recent years, it has been supplemented by modest sums of public savings. However, for the foreseeable future, foreign assistance will continue to play the major role in the development of the country. The Somali Government is well aware of this fact and while pushing for self-reliance by emphasizing domestic savings and crash programs, it has mounted a major effort to attract commitments of funds from the OAPEC countries. The size of inflows of foreign funds during 1975 (US$125-130 million) attests to the energy with which this activity is conduted. -17. The source of foreign assistance in the recent past has been changing from reliance on the western countries (except for the EEC which continues to have a fairly large program) towards the socialist group (mainly China and the Soviet Union) and the Arab countries and Funds. The terms on which the debts to the socialist countries are contracted are not known to us, however, the Arab countries tend to have terms which, while soft compared to commercial rates, resemble Third Window conditions more than standard IDA terms. Consequently, the burden of debt-servicing has been growing particularly because of the large sums being borrowed. 18. The total public foreign debt of Somalia as of October 1975 was approximately US$361 million. Disbursements at the middle of 1974 amounted to about US$145 million. IDA commitments as of December 1975 accounted for  - 5 - 16% of total debt outstanding. Although a large share of this debt is on fairly soft terms (from grants up to 3-4% per annum with maturities ranging from 6-7 years to 50 years), the debt service ratio has been increasing from 3.4% in 1972 to about 5.6% in 1974 and may have reached 10% in 1975. It is not expected to rise significantly further in the next few years. In view of the country's poverty and uncertain export prospects, Somalia should concen- trate its efforts on obtaining assistance on the softest terms possible and should clearly stay away from debts at commercial rates of interest. Development Planning and Achievements 19. The long-range objectives of the Government are strongly influenced by the desire to be self-reliant. In line with this goal, the Government is seeking to make the country self-sufficient in agriculture through both an expansion of the area under cultivation and the development of irrigation. In this process the Government intends to provide permanent settlement for many of the nomads who comprise about two thirds of the population. Consider- able emphasis is given to moderninzing and mobilizing the population. Of central importance for achieving these objectives are education, rural lit- eracy and self-help programs such as the agriculture and public works "crash" programs. Finally, the Government places emphasis on developing infrastrac- ture, especially transportation and communications which are necessary to facilitate the above objectives. 20. Since the bulk of the population is engaged in herding or in sub- sistence farming, a development strategy for Somalia must start with agricul- ture and livestock as a base. The major development goals of the Somali Government include self-sufficiency in foodgrains, the partial substitution of other food imports (oils, rice) and improvement of the lot of the tradi- tional nomadic herdsmen through settlement programs and improvements in live- stock production and marketing facilities. These essentially production- oriented goals are reflected in the 1974-78 Development Plan which calls for an eight-fold increase in annual investment in agriculture and irrigation and a four-fold increase in annual investment in idustry (as compared to the 1971- 73 plan). The current plan's emphasis on irrigated agriculture is meant to make the country less dependent on the erratic pattern of rainfall, and assure more stable and predictable increases in output. Attention is also being given to projects in rainfed agriculture (mainly through the Crash Program, the Rainfed Crop Production Project under the Jub-Shebelli Area Emergency Settlement Scheme, and the proposed North-West Region Agriculture Project) which focus on making the best use of the limited amount of rainfall. Improvements in livestock production and marketing are being promoted by the IDA-financed Trans-Juba Livestock Project designed to provide market access to the nomads in the southern part of the country and the Kuwait Fund-financed Northern Rangelands Projectwith emphasis on rehabilitation of the denuded range- lands in the north. The plan continues to base its development of industry on the processing of domestic raw materials to produce products mainly for import substitution. 21. The 1974-78 five-year plan as originally conceived was probably overly ambitious and its implementation has been rendered even more difficult, because of the recent disastrous drought which forced the Government to con- centrate resources on measures to save the drought stricken population. While the drought impact on the plan is likely to mean a lower-than-anticipated  - 6- domestic financial participation because of large requirements of public funds for use in emergency relief and rehabilitation, its long-term impact will not be entirely adverse. Implementation of the Drought Rehabilitation Program is in fact accelerating development of the agricultural sector and the settlement of nomads and is resulting in a larger inflow of foreign funds than originally anticipated. 22. The Government's achievements have been impressive by any standard. Before the present Government camie to power in 1969, the economy was stagnant and financially unviable. Today the economy is developing in a dynamic and financially viable manner. Where as a few years ago, a bilateral budget support grant was necessary to finance the deficit incurred in a current budget which then financed an extremely low level of services. Today, even though the country has been beset by national calamities and is carrying on new tasks, the budget is not only balanced but actually produces a modest surplus which is expected to grow in the future. 23. Two fields where the Government's achievements have been particularly outstanding have been in the settlement of nomads and in education. As noted above (paragraph 10), within a period of less than one year beginning in the summer of 1975, more than 100,000 nomads were transported from the arid range- lands of the north and settled on unutilized agricultural areas in the south. A small first crop has already been harvested and a second, larger one is now being planted. In education, the Government has concentrated on two aspects: education as a necessity for a decent life and education as a requirement for national development. With respect to the former, the mass literacy campaign conducted in the years 1973, 1974 and 1975 at a cost of So.Sh. 100 million (US$16 million) has resulted in an increase in the adult literacy ratio from about 5% to about 50-60% at present. With respect to the second aspect, the formal primary school enrollment ratio has risen from less than 15% of the age group a few years ago to approximately 60% at present, and universal primary education will be achieved within the next 3-4 years. A script, introduced by the Government in 1972, made the writing of the Somali language possible for the first time and this removed one of the major constraints to progress in the field of education PART II - BANK GROUP OPERATIONS IN SOMALIA 24. Starting in 1965, IDA has made ten credits totalling about US$66 million, about 56% of which has been made for transportation development including construction of twco trunk roads (Afgoi-Baidoa in the centrla region and Hargeisa-Berbera in the northern region), and a new deepwater port and associated extensions at Mogadiscio. IDA credits were also made for educa- tion in FY71, livestock development in FY74, and a second education project in FY75. A credit of US$8 million for a drought rehabilitation project was approved in April 1976. No Bank loans or IFC investments has been made to Somalia. IDA credits accounted for 9% of Somalia's outstanding debt at the end of 1973. Debt service payments on existing IDA credits in 1980 are projected at 9% of Somalia's total debt service payments.  25. Annex II contains a summary statement of IDA credits as of March 31, 1976, and notes on the execution of ongoing projects. Performance on ongoing projects has been satisfactory, except for some initial delays. 26. We plan to concentrate our efforts on the country's directly pro- ductive sectors -- agriculture and livestock -- and also on education and transportation. While agriculture and livestock offer potential for develop- ment, most rural development activities are only at the beginning stage. Moreover, agricultural development in Somalia is particularly difficult because most of the people in the rural areas are nomadic. Our first effort in livestock was the Trans-Juba Livestock Project, approved in FY74. Our first agricultural project for Somalia was the recently approved Drought Rehabilitation Project in the South which, together with the proposed project for the agricultural development in the North-West Region, would contribute to balanced agricultural development in Somalia. 27. The country's transportation facilities are inadequate and the Government plans to continue transportation development in the next few years. The second highway credit now under implementation provides for feasibility studies and detailed engineering for the improvement of the Hargeisa-Borama Road in the northern region. The studies were recently completed and on the basis of which, we have recently appraised a third road project for possible IDA financing together with other external aid agencies. 28. Recently, there has been a marked increase in resource inflow into Somalia from the oil-exporting Arab countries. The Government expects this trend to continue, but considers the lack of projects to be a constraint. The Government has, therefore, requested IDA assistance in identifying and preparing an adequate number of development projects to absorb these funds. We are now exploring various possibilities of assisting the Government in this task. 29. As stated above (paragraphs 8 to 10) a severe drought struck Somalia in 1974. The emergency relief phase has been completed and the Government has now embarked on rehabilitation; it requested IDA assistance in January 1975 to take a leading role in the preparation and financing of the drought rehabilitation program. IDA's role has been a catalyst for attracting other external funds for drought rehabilitation. PART III - AGRICULTURE IN SOMALIA 30. Somalia is heavily dependent on the agricultural sector for its economic development. However, with the exception of commercially produced bananas and sugarcane, production is mainly for subsistence. About 70% of the population are pastoralists, some of whom engage in subsistence cultiva- tion; an additional 15% are engaged in settled agriculture, fishing and forestry. Of the total land area, 32% is too arid for any form of agriculture, 55% is suitable for grazing,and 13% or 8 million hectares are available for settled agriculture. Only about 600,000 hectares of the 8 million hectares  - 8 - of potentially arable land are now cropped. All land belongs to the State. There is no uniform system of land tenure. In the northern regions arable land rights are conferred by district authorities who can revoke cultivation rights if a farmer fails to use the land properly. In the south, the Ministry of Agriculture, on the recommendation of the district authorities, confers arable land rights, and can similarly revoke cultivation rights. Subject to this, the rights are traditiornally inheritable and transferable. No title deeds are issued and consequently banks do not lend on the security of agri- cultural land. The enactment of satisfactory legislation with regard to land and water use will be essential for the success of the long-term development of water resources. All natural and Government-constructed: stock watering facilities are for common usage and are mostly free of charge. 31. Rainfed sorghum, the most important food crop, is grown on about 350,000 hectares and total annual production ranges from 100,000 to 150,000 tons depending on the rainfall. Dryland maize is the next staple food crop; the area planted fluctuates between 50,000 and 80,000 hectares with annual production averaging between 30,000 and 50,000 tons of grain. Bananas, sugarcane, rice, vegetables and fruits (mainly citrus) are grown under irri- gation. Some groundnuts, sesame, cotton and pulses are also cultivated. Agricultural research facilities in Somalia are generally inadequate although some research on major cash cr'ops has started. There are a number of con- straints which have severely limited the development of rainfed agriculture; these include: poor cultural practices, inadequate extension services, poor seed quality, severe soil erosion (which unless checked could eventually destroy the most productive lEnds, especially in the North-West Region), lack of agricultural credit, and irnadequate and uneven distribution of water faci- lities for both human and livestock consumption. 32. The Government has placed the highest priority on agricultural development. During the 1971-73 Development Plan period, Government intro- duced a comprehensive agricultural development program including a guaranteed price scheme for grains and bananas, as well as the development of large-scale irrigation schemes in the South. Helped in part by extremely favorable weather in 1972 the country produced sufficient sorghum and maize to make it self- sufficient in these crops that: year. However, a drought has affected sorghum and maize production in 1973 and 1974. A new plan for 1974-78 which has been finalized emphasizes: (1) self-sufficiency in basic food and cash crops (oil- seeds, cotton vegetable and fruits); (ii) import substitution to stimulate production of rice, wheat, ancl dates; (iii) development of export crops; (iv) irrigation development; (v) soil and water conservation in less developed areas such as the northern regions; and (vi) improvement of livestock. As part of this overall plan, Government has decided to initiate a first phase development project in the North-4lest Region. 33. The Government provides a wide range of services to the agricul- tural sector through the Ministry of Agriculture, the Ministry of Livestock, Forestry and Range, the Agricultural Development Corporation (ADC), the Water Development Agency (WDA) and t:he Somali Development Bank (SDB). The Ministry of Agriculture suffers generally from,) lack of funds, a shortage of trained staff, and insufficient transport facilties. The Miinistry has a total staff of about 670, of whom 60 are extension staff with some training in their field,  -9 - but the quality of training is variable. In 1974, there were only four agri- cultural staff at the sub-professional level in the North-West Region. The overall situation is expected to improve, however, as agricultural graduates from the University of Somalia and diplomats from the vocational agricultural secondary school become available from 1976/77, and as additional agricultural extension agents are trained under the project. 34. The Agricultural Development Corporation, an autonomous agency of the Ministry of Agriculture, was set up in July 1971 with monopoly powers for the purchase of all marketable surpluses of sorghum, maize, oilseeds and cotton from farmers, procurement of sorghum and maize from abroad (when neces- sary), and the sale of grain to the regional government authorities and muni- cipalities at prices fixed by the Government. The regional government authorities and municipalities in turn sell grain at a Government-fixed price which covers their operating costs. The National Tractor Hiring Agency (ONAT) operated by ADC until 1972, provides tractor hire services for farm operations. ONAT's operations are limited by a lack of trained staff and its operations are dispersed over a wide area and its management is not experienced in handling large-scale activities. The Water Development Agency is an autonomous agency within the Ministry of Mineral and Water Resources which designs and undertakes the siting, drilling and equipping of boreholes for municipal and rural water supply and the excavation and maintenance of artificial reservoirs for livestock. It has some 25 drill rigs and other auxiliary equipment and its staff includes four qualified hydrologists. 35. The Somali Development Bank, a Government banking institution with an authorized share capital of US$16 million provides medium- and long-term loans to both industry and agriculture. In 1975, SDB extended loans of US$4.3 million for industrial development and US$1.7 million for agriculture -- mainly to large-scale and commercial enterprises. Loans to the northern regions accounted for only a tenth of total agricultural lending and were primarily for purchase of tractors, pumps and irrigation equipment. Lack of loan capital and a high proportion of non-recoverable loans hamper SDB's operations. Govern- ment has recently established a branch of the SDB in the North-West Region to provide increased agricultural lending within the North-West Region. PART IF - THE PROJECT 36. A report entitled "Somalia - Appraisal of a North-West Region Agricultural Development Project" (No. 912-SO, dated April 26, 1976, is being circulated to the Executive Directors separately. A credit and project project summary is attached as Annex III to this report. 37. This project was prepared by the FAO/IBRD cooperative program with the collaboration of the IBRD Regional Mission in Eastern Africa (RMEA). The project was appraised by an IDA mission in May/June 1974. Processing of this project was delayed while attempts were made to obtain co-financing to complete the financing plan. Negotiations took place in Washington in January 1976 with the Somali Delegation headed by Mr. Abdurahman Nur Herzi, Secretary of State for Finance.  General 38. The North-West Region of Somalia has a harsh physical environment. Soils are generally poor, the rainfall is limited and occurs within a very short period. The region suffers from isolation and considerable distances separate it from the more produjctive areas of Somalia. It is deficient in food and this has involved costly transfers from the South. Transport links are weak. The administrative services -- particularly agricultural services -- are still rudimentary and need strengthening in various respects. The bulk of the population is semi-nomadic but has shown willingness to adopt a settled way of life, given basic minimum conditions for survival. The envi- ronment is deteriorating through soil erosion during periods of rainfall and the carrying capacity of land is slowly, but steadily, decreasing. Description 39. The project area would cover about 160,000 hectares of arable land in the North-West Region in the Hargeisa, Gebile and Borama districts, where about 120,000 people reside. Although majority of the people are nomadic herdsmen, an increasing number are gradually adopting settled agriculture as a means of supplementing their low incomes. Soil and climatic conditions allow seasonal dryland cultivation of food crops, mainly sorghum. In years of low or poorly distributed rainfall, crops often wither before reaching maturity except on about 20,000 hectares of bunded land. These bunds utilize rainfall to the maximum extent and control erosion by run off. No instance has yet been reported to complete crop failure on bunded land. 40. The project would, over a six-year period, aid in the redevelopment of the North-West Region through erosion control, water conservation and other measures designed to substantially increase agricultural production and incomes of about 2,500 families. The project would establish some basic agricultural services for the first time and strengthen others which have been allowed to run down during the past years. It would, however, take advantage of some valuable experience built up over the years, particularly in the construction and maintenance of bunds which are a vital ingredient in any program of crop production. The project would assist the current trend toward settled agri- culture, pioneer the technical basis for future production increase in both the North-West and the Bay Regions of Somalia, and would make provision for training of Somali personnel aimed to create a capacity to execute future projects of this type exclusively with Somali manpower. It would include: (a) construction of field bunds on 25,000 hectares, repair of existing bunds on about 2,000 hectares and experimental gully erosion control works; (b) development of 50 small irrigated farms; (c) improvement of crop trials and training facilities at the Aburin dryland demonstration and experimental farm;  - 11 - (d) extension of the Geed-Deeble irrigated horticultural station for fruit crop trials, nursery production and sorghum seed multipiication; (e) rehabilitation of the extension service for dryland farmers and establishment of a new extension section serving irrigated farms; (f) construction of 100 water points for human consumption and 50 water points for livestock; and (g) technical services, training and feasibility studies. Project Management 41. The project would be implemented by a Project Implementation Unit (PIU) attached to the Ministry of Agriculture. Overall responsibility would be vested, however, in a Project Ministerial Committee (PMC) comprising the Secretaries of State for Finance, Agriculture and President of the Somali Development Bank. The PIU which would be headed by a Somali Project Manager, would be assisted by consultants in implementing the project (see paragraph 50). Detailed Features 42. Field Bunding, Gully Erosion Control and Water Points. Earth bunds would be constructed on about 25,000 hectares in priority areas. This is based on experience gained over several decades during which period bunds have demon- strated their effectiveness both in aiding crop production and preventing soil erosion. Old bunds would be repaired on a further 2,000 hectares, i.e., about 10% of the area bunded between 1950 and 1964, the rest having been maintained in excellent condition. Bunds will be built with the use of bulldozers. This continues the practice adopted in the 1950's after difficulties had been expe- rienced in using animals in bund construction. A part of the cost of bund construction will be recovered from project farmers (see paragraph 54), who will also be responsible for bund maintenance. 43. Gully erosion control measures would be implemented in an experi- mental area of 200 hectares where gully formation is already in an advanced stage. This experiment would help to establish the technical feasibility and cost of controlling gully formation in arable areas, and its results would be taken into account in the design of future projects in this area. 44. One hundred underground concrete water tanks with handpumps, silt settling tanks and catchment ditches would be constructed for the human popu- lation in existing and newly bunded areas. These would supplement the present inadequate water supply by providing about 10 liters of water per person per day to about 50% of the farming families during the driest period of the year (about 120 days). Also, 50 earth water reservoirs for the catchment ditches would be constructed by mechanical excavation for the livestock owned by the farmers in the bunded areas. These would supply about 30 liters of water per  - 12 - day to each animal unit during the driest period. The Government has agreed to take all necessary action to safeguard existing use of surface and under- ground waters and to ensure that agricultural credit will be available to individual land users under the project for the development of water resources in their holdings (Credit Agreement, Section 4.06). 45. Small-Scale Irrigation Development. Fifty new small irrigated farms averaging one hectare would be established alongside tugs or springs in scattered places throughout the project area where underground water resources exist. These resources are known to be limited in many areas and the number of farms to be developed has been restricted in the project to avoid over exploitation. Further expansion in a future project would be dependent on the results of the feasibility studies. It is estimated that each irrigation unit would consist of a hand-dug shallow well equipped with pump, pipes and water tank. The main crops to be grown on the farms would be citrus and other fruit trees and some vegetables. Applications from candidates for these farms would be invited and a committee consisting of the District Commissioner concerned and the Project Manager and the Horticultural Extension Officer would allocate the farms on basis of criteria and ?rocedures for settlement to be prepared with assistance of the project consultants and agreed by the Association. 46. Dryland Crop Trials. The crop trial program being carried out at Aburin experimental and demonstration farm would be improved through the introduction of improved varieties, crop husbandry techniques, pest control, rotations and alternative crops including fodder crops. Investigations would also be carried out to select improved ox-drawn implements suitable for the small local oxen, particularly for sowing sorghum in rows and for inter-row weeding. The Government has agreed to appoint a suitably qualified farm manager within one year from the date of the Development Credit Agreement (Credit Agreement, Section 4.04). 47. Extension of Geed-Deeble Horticultural Station. The existing ten hectares citrus farm and nursery at Geed--Deeble would be expanded to a total area of 30 hectares under irrigation. About 20 hectares of this area would be utilized for a variety of trials of citrus, peaches, plums and other fruits (10 hectares); a nursery for production of grafted seedlings of citrus and other fruits for sale to farmers (5 hectares); and for a date nursery (5 hec- tares). The remaining 10 hectares would be used for multiplication of selected sorghum seed. This improved seed would be used by the extension service in demonstration carried out on farmers' fields and would also be available for sale to farmers. The Government has agreed to appoint a suitably qualified horticulturist within one year from the date of the D)evelopment Credit Agreement (Credit Agreement, Section 4.04). 48. Extension Services and Training Facilities,. A nucleus agricultural service in the North-West Region would be expanded to a total of 23 extension agents. Initially, there would be one extension agent per 200 farms; at full development this would be reduced to 1:600. Extension would be directed mainly towards (but not restricted to) farmers on bunded lands. It would concentrate on simple concepts -- including timeliness of cultivation and  - 13 - planting, improved seed, row-sowing, weeding, the use of improved implements and plant protection -- and would utilize demonstration plots on farmers' land. Farmers would also be advised on the maintenance of bunds and the control of gully erosion. A small horticultural extension service (3 pro- fessionals)would also be created to provide advice to farmers on the production of fruits and vegetables under irrigation. Most of its activities would be concentrated in the latter part of the project implementation period on the 50 small irrigated farms to be developed under the project. 49. Additional facilities for the training of extension agents would also be provided at Aburin. About 28 middle school graduates would be trained in an eight months course as extension agents. The facilities would also be used for farmer training in short courses. 50. Consultant Services and Feasibility Studies. A range of technical and other services would be provided by consultants employed under the project: (a) Project Management Team. The consultants would provide a project management team to assist the Project Manager with the execution, coordination and supervision of the project; in addition, they would devise a training program for the Somali staff. (b) Feasibility studies. Provision would be made for the con- sultants to undertake two feasibility studies for a possible second phase project in the North-West Region and an inte- grated rural development project in the Bay Region. (c) Technical Assistance. The consultants who would undertake feasibility studies would also provide technical assistance to the PIU both during the course of the feasibility studies and after their completion. The former would include assistance with the design and construction of an irrigation system at the Geed-Deeble Horticultural Station and water resources studies in both the North-West and Bay Regions. Upon completion of the feasibility studies, the consultants would also provide technical advice to the PIU with regard to the development of the 50 small irrigated farms to be established under the project. Project Costs 51. Total project costs (excluding $0.7 million in import duties and taxes) are estimated at $13.23 million, of which $10.2 million or about 77% represents foreign exchange requirements. Project costs are based on prices actual or estimated to be prevailing as of June 1975. Physical contingencies of 5% on bunds and 10% on all other costs have been included. Price contin- gencies for equipment, civil works and other items reflect the latest esti- mates of possible cost increases during implementation from June 1975. Over the project period, price contingencies amount to about 50% of the base costs.  - 14 - The Financing Plan 52. The financing of project costs would be shared in the following amounts and proportions: US$ million Percent IDA 10.0 76 Government (net) 3.21 ) Participating farmers .02 ) 24 Total 13.23 100 The proposed IDA credit of US$10 million to Government would finance the foreign exchange cost. The Government's contribution (net of duties and taxes) would be US$3.21 million equivalent or 24% of the total costs. 53. In order to ensure the smooth implementation of the project, it is important that the Project Implementation Unit should have prompt access to the requisite funds particularly since the project activities are all located at a considerable distance away from Mogadiscio, the country's capital. The Government has agreed to provide the Project Implementation Unit with adequate funds and in a manner acceptable to the Association to enable the Unit to function efficiently (Credit Agreement, Section 3.01). The contribution of farmers, although negligible in terms of total project cost, would be significant for the 50 one-hectare irrigated farm component. Farmers would contribute in cash 35% of the capital cost of this component and would be fully responsible for all operating costs. IDA would finance the rest which would be chanleled by the Government to the farmers through the Somali Development Bank at 5-1/2% interest to be repaied over ten years, the prevailing terms for loans of this type in Somalia. In order to facil- itate the processing of these loans and to provide an opportunity for increased agricultural lending within the North-West Region, the Somali Development Bank has established a branch office in the region. Recovery of Costs from Beneficiaries 54. In the past, charges have not been levied to recover the cost of the bunding operations. As the incremental income accruing to those farmers directly affected by the bunding operations would be substantial, the Govern- ment is of the view that these farmers should make some contribution to the cost of the project. However, farmers' capacity to pay is limited and it would not be possible to recover more than a small portion of the project costs. One method whereby a part of the costs of the bunding operation would be recovered would be to increase the land tax applicable to bunded lands. Such a supplementary tax could be administered with the minimum difficulty and would be the most equitable type of levy; it would also provide an addi- tional incentive to farmers to maintain the bunds. It has been estimated that a flat project charge equivalent to 15% of the estimated additional income  - 15 - generated by the project would recover about 10% of the bunding costs at an interest rate of 5.5% (the current rate of interest) by 1990, assuming a two-year grace peri:d --sidered that a levy at this rate would not jeopardize farmers incentives to any significant extent. The Project Implementation Unit and the project consultants will undertake a study of the method and criteria to be adopted in the recovery of the bunding costs from the farmers participating in the project on the basis of experience gained in the initial period of project implementation. Moreover, the Government would, by December 31, 1980, submit for the Association's review detailed proposals on the quantum and method of such recovery and later recover these costs from the farmers in accordance with procedures which would be agreed upon between the Government and the Association (Credit Agreement, Section 4.07). Markets and Prices 55. The Government plays a major role in marketing basic food crops (mainly sorghum and maize) through the ADC. ADC's marketing activities are intended to encourage agricultural production and maintain consumer prices. At the beginning of ADC's operations, producer prices for sorghum and maize were stabilized at a fairly high level to provide production incentives. These grain prices are fixed annually by ADC's Board of Directors. Project output of sorghum would be marketed through the ADC. Prices of fruits and vegetables are not controlled and there is no central marketing agency for fruit and vegetables. Project output of these commodities would be sold by farmers themselves or through merchants or market agents. As the North-West Region is presently a net importer of sorghum, project production of sorghum would be consumed locally. About 50% of the fruits and a somewhat smaller percentage of the vegetables would be exported to markets in neighboring countries; the remainder of the incremental output would be marketed locally. Future marketing prospects of fruits and vegetables in the neighboring countries seem to be good. Procurement 56. Procurement of tractors, equipment for the field bunding works and the Geed-Deeble farm, and vehicles (US$3.0 million) in orders exceeding US$50,000 would be by international competitive bidding in accordance with Bank/IDA guidelines; orders would be bulked whenever possible. Field bunds and water points which would be unsuitable for construction by contractors either because design cannot be standardized or because of the widely dis- persed location of small works, would be constructed by force account (mainly by the PIU) using equipment procured under the project. Contracts for the construction of buildings, concrete water reservoirs and fencing (US$469,000) which by reasons of their dispersed location and small size would not attract international bidding would be awarded on the basis of competitive bidding advertised locally and in accordance with local procedures, which are satis- factory to IDA. Construction of dug wells, supply of pipes and installation of irrigation equipment (US$50,000) for small-scale irrigation development would be by local contractors. Pumps (US$13,000) would be procured locally, and farmers would be free to purchase from existing commercial channels.  - 16 - Single units of tractors and cultivation equipment, furniture, office equip- ment and other small items (US$86,000) would be procured locally; supplies of the items for local procurement are adequate and competition between firms is satisfactory. Disbursements 57. The proposed credit would finance 100% of the CIF cost of directly imported equipment and 70% of imported equipment procured locally; 45% of operating costs for bunding and water points, extension and training; 100% of the foreign expenditures for fees and expenses of management team, feasibi- lity studies and technical assistance. In the case of the Project Implementa- tion Unit's operating costs, expenditures would be approved by the Project Manager, and disbursed against a certified statement, the documentation for which would not be submitted for review but would be retained by the Borrower and available for inspection by IDA during the course of project supervision. Economic Benefits and Justification 58. The internal economic rate of return of the project is estiTmated at about 11% over 25 years. The major quantifiable benefits arising from the project would be increased production of sorghum, fruits and vegetables, which at full development (Year 13) would be valued at $0.75 million. Sorghum would be consumed in the region whilst about 35-50% of fruits and vegetables would be exported. The project would also reduce the necessity of costly internal transfers of foodgrains at a significant saving to the Somali economy, and would help to narrow the income disparities between the northern and southern regions of the country. The project would result in additional employment for an estimated 500 persons in the construction of the field bunding and it would also help to reduce underutilization of family labor on participating farms. There would be substantial increase in the cash incomes of approxi- mately 2,500 families, almost all of whom are now living at subsistence levels. Per capita annual net incomes would be raised from approximately US$46 without the project, to about US$80 with the project. Furthermore, a sizeable number of nomadic people would use some of the facilities created by the project, particularly the water points for livestock. Amongst other unquantifiable benefits of the project would be its effect on the ecology of the project area since bunding operations would help arrest the massive soil erosion which, unless checked, could eventually destroy the most productive lands of the region. 59. The cost per beneficiary family is relatively high. However, it should be noted that the project will be implemented in a part of Somalia where there are no viable alternatives. The crop trials, improved seed and better agricultural services which would be provided by the project, as well as the feasibility studies, would gradually increase yields and help develop an optimum technological package which would improve the financial and economic basis of subsequent projects in the North-West area and in the Southern Bay Region.  - 17 - PART V - LEGAL INSTRUMENTS AND AUTHORITY 60. The draft Development Credit Agreement between the Somali Democratic Republic and the Association, the recommendation of the Committee provided for under Article V, Section l(d) of the Articles of Agreement of the Association, and the text of a draft resolution approving the proposed development credit are being distributed to the Executive Directors separately. 61. Features of the Development Credit Agreement of special interest are referred to in paragraphs 44, 46, 47, 53 and 54 of this report. The appoint- ment of a project manager and the consultants are additional conditions of effectiveness of the credit (Credit Agreement, Section 5.01). 62. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 63. I recommend that the Executive Directors approve the proposed development credit. Robert S. McNamara President By: J. Burke Knapp Attachments Washington, D.C. May 20, 1976   AIJNEJ I TABLE 3* SOMALIA - SOCIAL INDICATDRS DATA SHEET LAND AREA (THOU KM-Z) SOMALIA REFERENCE COUNTRIES 119701 TnTAL 637.7 MOST RECENT ARABLE 83.3 1960 1970 ESTIMATF ETHIOPIA TANZANIA SENEGAL - - - _ - _ _ _ ----- - --- -- - GNP PER CAPITA lUSSI 60.0 70.0 80.0 70.0 11.0 200.0 POPULATION AND VITAL SrATISTICS POPULATION Pm1n-YR. MILLrTINI 2.2 2.8 3.0 24.6 12.9 3.8 POPULATInN DENS ITY PfP SQIJARF KM. 3.0 4.0 S.D 20.0 14.0 20.0 PER SQUARE KM. ARABLE LAND .. .. 36.0 . 147.0 VITAL STATI STICS CRUOE BIRTH RATE PER THOUSAND . 46.0 50.0 4S.O 47.f/ 44.0 CRUDE DEATH RATE REP THOUSAND .. 24.0 22.0 25. 0 22.0 7 22.0 INFANT MORTALITY RATE ((THOUI .. .. .. .. 160.0 156.0 LIFE EXPECTANCY AT BIRTH ItRSI .. 39.0 41.0 39.0 43.0 41.0 GROSS REPRODUCTION RATE .. 3.0 3.0 2.9 3.2 3.0 POPULATION GROWTH RATE III TOTAL 2.3 ?.4 2.4 2.2 3.0 2.l URBAN .. .. .. .0 5.O /a b 4.0 URBAN POPULATION It OF TOTALI .. .. . 13.0 6. 29.0 AGE STRUCTURE IPERCENTI 0 rn 14 YEARS 44.0 46.0 45.0 45.0 44.3 a 42.D 15 TO 64 YFARS 53.0 52.0 53.0 5 r.0/a 53.0 a 54.U 65 YEARS AND OVER 3.0 2.0 2.0 '.O b 3.D) 4.0 AGE DFPFNDFNCY RATIO 0.9 0.9 0.9 1.0 0.9 0.9 ECONOMIC [TFPENDENCY RATIO 1.5 1.5 1.3 1.1 La 1.2/a 1.1 FAMILY PLANNING- ACCFPTORS ICUMULATIVF, THOUI . .. ... USERS IS nF MARRIED WCOMENI .. . ... EMPLOYMENT TOTAL LAROR FORCE tTHOUSANDI 930.0 [100.0 1250.0 [[300.0 5603.0/i^b 16JO.3 LABOR FORCF IN AGRICULTURF 1I% 88.0a 82.0 .. 85.0 91.0 b 73.0 UNEMPLOrEG IT OF LABOR FnRCEI .. 20.O,a .. .. .. 7.3 INCnME nOSTRIA,RUTION T (F PRIVATE INCOlME REC'O BY- HrGHFST Sr OF POPULATlON .. .. .. .. 33.5 HIG.HEST 20t OF POPULATION .. .. .. . 63.3 LnwSET 203 OF POPULATION .. .. .. .. 2.3k LOWFST 403 OF POPULATION .. .. .. .. I.RA * TISTRIBUTILUN OF LAND OWNERSHIP I OWNED BY TOP 103 OF OWNERS t O WNFD RY SMALLEST IOS CWNERS .. .. .. HEALTH AND NU TRITION POPULATIUN PER PHYSICIAN 30000.0 21140.0 1554o0. 74550.0 21570.0 , 14940.0 POPULATION PEP NURSING PERSON 3780.0 369O.0 .. 24040.0 4890.01 2410.0 PnPULATION PER HOSPITAL REn 570. 570.0 . . 3030.0 702.0/b T30.0 b PER CAPITA SUPPLR OF - CALORIFS IT OiF REOUIREMENTSI 77.0 71.0 79.0 9z.0 73.0 97.0 PROTFIN IGRAMS PER DAY) 57.0 57.0 56.0 69.0 43.0 64.0 -UF dHICH ANIMAL AND PULSE 19.0/b 27.0/ . 25.0 23.0 28.0 La OEATH HATF IITHOUI AGES 1-4 .. .. .. .. EDUCATION ADJUSTEE ENRDLLMENT RATIO PRIMARY SCHOOL 9.0 10.0 11-0 j 16.0 31.0 38-0 d SECONOARY SCHOOL 1.0 4.0 9.0 tb 4.0 3.3 15.0 /d.e YEARS [F SCHOOLING PPUVtOED (FIRST AND SFCONn LFVELI 12.0 12.0 1Z.0 12.0 13.0 13.0 VDCAT If'NAL ENRfOLLMENT It OF SFCONDARRY .. 5.0 L 5.0 5.0 4.0 7.0 ADULT LITFRACY RATE ITJ .. .. 5.O/L 7.0 *- 10.0 HOUS ING PERSONS PER ROOM IAVERAGEI .. .. .. .. OCCUPIFO DWELLINGS WITHOUT PIPEn WATER It) .. .. .. .. 33.0 /ad ACCESS TO ELECTRICITY It OF ALL OWELLINGSI .. .. .. RURAL DWELLINGS CONNECTED TO ELECTRICITY (tI CON SUMPT I UN RAOTO RECEIVERS IPER THOU POPI 12.0 18.0 ?2.0 6.0 L1.0 69.0 PASSENGER CARS IPER THOU POPI 2. 0 /a 2.0 3.0 2.0 3.0 11.0 ELECTRICITY IKWH/YR PER CAP? 5.0 10.0 14.3 21.0 29.o0b 84.0 NEWSPRINT (KG/YR PER CAP) 0.2 0.1 O .04 0.1 0.1 SFE NOTFS AND DEFINITIONS ON REVERSE  NOTES Unless otherwise noted, data for 1960 refer to 1959-1961, for 1970 to 1969-1970, and for Hoot Recent Estimate to 1971-1973. *- Senegal has been selected as an objective country because of ito different socin-ecomiel structure and smiler oeni-arid ecology and population ieto. SOMiALIA 1960 /a 1963; /b 1961-63. 1970 /a Urban only; lb 1964-66; Ic Public educatimon nly. MOST RECENT ESTIMATE: In 6-13 year; lb 14-17 years, iIncldes vocational education; Ic Recent eatimate for 1973-74 is ouch higher. ETHIlOPIA 1970 /s 13-59 yenta; lb 60 years ned over; Ic Ratio of population under IS and 60 sod over to total labor force. TANZANlA 1970 Is 1967; /b Tangasyka only; Ic Householda; Id Urban only. SENECAL 1970 /a Ratio of population under 15 and 65 and Over to labor force age 15-59; /b Government hospital eetablishments; - 77 1964-66; /d Unadjus ted; Is Lower secondary level. ES January 28, 1976 DEFINITIONS OP SOCIAL INDIICATORSS I.dAreth Lou km PopulTalion pr niursing person - Population divided by ouster of practicing eotc -Total surface area comprising land area end inland asters, maeadfml rdae nurses,trie'o"ctfed cus,An A-able - Nest recnt astisste of land crea used temporarily or per~manently, auxiliary person,tel with training or experience. 'Torcultivation, pasturos, market and kitchen gardens or to liB fallow. POPulto.pe optal bed - Popu~lation divided by ouster of hospital beds availabl9T.e i pIusbliic and private general and epe-ialized hiospital and CIPper caita CUSs) - GNIP per capita estimates at market prices, calcu- rehabilitation centors; excludes nursing hones andI estailishmencts for lated byr sane conversion method as World Bank Atlas (1972-74m basis), custodial and preventive care Per capita supply of calories (% of requirements) - Computed from energy Population and vital statistics equivalent of net food supplie available in c ountry per capita per day; Pouato (mi d-yr. siltlier) - As of July first; i-f not availeLbls, average available supplies comprice ciosstic production, imports less experts, of two end-year estimates. and changes, in stock; net supplies exclude animal feed, seeds, quanti- ties used in foodi processinig and losses inc diLotribution; requirememts Pouain density - rsurehc- Mid-year population per sqware kilo- were estimated by FAO based on plysiological needs for normal activity meter~ (% hectares)eVof oael araan et conisidering envirocosental temperatur-e, bocky weighto, age and PopulaTt.ison enosity - per square kmc of arable land - Computed as shove for sex distributions of population, and allowing 10% for waste at household aaoland ily. level. Per capita supply oaf protein (grains per day) - Protein contest of per Vital statistics capita net supp ly of food per day; net supp-ly of food is defined as Crude bith rat Per thousand - Annual live births per thousand of midt- above; requirements for all countries established by USDA PazonooAc year population;usually five-year averages ending in 19,60, 1970 and Research Services provide for a minimum allowance of 60 grams of total 1975 for developing countries, protein per day, a,nd 20 grams of animal and pulse protein, of wh1ich 10 CrUde death, rate_per thousand - Annual deaths per thousand of mid-year groom should be animal protein; these standards are lower than those of population usaly fv-erargsending in 1960, 1970 and 1975 75 grams of total protein and 23 g'~ ieyaraeae rams of animal protein as an average for developing countries, fwn the world, proposed by FAG in the Third World Food Survey. Infant mortality rate /theu) - Annual deaths of inifants under one year Pecptapoti supl from animalgand puls - Protein supply of feed ofage per thousas lve births, der Five rmai'asadpio ngasprdy 'I e !,,e~an at birth cyrm) - Average nmuser of years of life remain- Death rate (/then) ages 1-li - Annual deaths per thousand in age group 1-4a Th~)iUTrThTsuahl7ly 've-year averages e-igi-16-17Iadyas t hlr n i this age group; suggested so an indicator of mal- 1975 for developing countries, nutrition. Gro.ss erdcinrt Average number of live daughters a wonmn will bear inhe nrareproductive period i-f she experiences present age- Educatiooi npecific fertility rates; usually five-year averages ending in 1960, Adjuste enoletrto-piaysho -Erlmn falae spr 171and 1975 for developling countries. cetge ofpimr scho-geouato;icue cide gd6-1l Pmp~1atioc growt1h rate (8) - totagl - Compound annual growth rates of mid- years but adjusted for different lengths of primary education, for coon- yea popla Lion for 190-0 1U-70, and 19600 to most recent year. tries with universal education, enrollmenrt rosy emceed 100% sI~ce ammo Peculation growth rate (%) - urban - Computed like growth rate cf total puapils are below or above the official school age. population; different defini.tions of urban areas may affect emopara- Adjusted enrolinmen ratio - secondary school - Computed as above; second- hility of data among countries. ary education requires at least four yearn of approved primary inotruc- I' ftotal) - Ratio of urhan in total population; dif- tion; provides ge.neral, vocational or teacher training instructions forn - 2 ; -- .- uran area., may affect comparability of data pupils of 12 to 17 years of age; correopondence courses are generally no,ong nountries. excluded. Ic trocn:-urr ;errat) - Children CO-1h years), working-age (15-6h years), Sasoscolnprvded ( first and second levels) -Ttlyaso and retired (5year,s and over) as percentages of mid-year population. schoig o eodry leve,vctoainsrtim aybprily Agedepndecyratio - Ratio of population under 15 an d 65 and over to ar completely excluded. choe of ages OW through 0.I Vocational enrollmnent (5 oftsecondary) - VonaIonmalinstitutions i.nclude F,conomic dependenocy ratio - Rantis of pnpulation under 15 and 65 and over technical, indutral ooter programs which operete independently or tothe labor force in age group sf 15~-65 years. as departments of secondary institutions. fondly planning - acceptors (cumulative, thou) - Cumulative namber of Adult literacy rate (5) - Literate adults (able to read and write) as per- acceptors of birth-coctrol devices under auspices of national family centage of total aduLlt population aged 15 years and over. planning program since inception. Family planncing users (5 of mnrried women) - Percentages of married Hoeusing women of child-bearing age, (15-L55 years) who use birth-control do- Pers'ons or rom (aversge) - Average number ofI persons per room in occupied vices to all married women in s-ame agpe group. co6inptinoal dellings in urban areas; dwellings exclude non-permanent structures end unoccupied parts. ..,pl,yment C~~~~~~~~~~~~~~ccupied dwellpg without iewater 4) - occupied conventional dwell- Total labor force thuand) - Ececemically active persons, including ingsTfin uba and iWirl areastwiiF nside or outside piped water armed forces and unm ydbtecuIghoswvs tds t. f'acilities as percentage of all occupied dwellings. definitions in various countries are not compareble. Access to electricity ( of all dwe11incs) - Conventional dwellings with Labor forte is agriculture (5) - Agricultural labor force (in fanning, electricity in living quarters as percent of total dwellings in urban forestry, hoonting and fishing) as percentage of total Saber force, and rural areas. (Inemploved (% of labor force) - Unemployed are usua.lly defino~d as per- Hural dweillige Connected to electricity (5) - Computed as stove for rural soot who are able and willing to take a job, sout of a Job so a given d..,Lgsonl&7 da,y, remained out of a job, end sedcing work for a specified mininmm period cot exceeding one week; may not be comparable between. coin- Cornsumptison trios doe to different defi-nitions of unemployed and source of data, Rdorcies(puthou Pop) - All types of receivers for radio broad- e9.g. -ploymoent sffice statistics, nsample surveys, compulsory unem- cssto gene ra pulic Per thousand of population; excludes unlicensed Ploymect insurance, receivers in counitries and in years when registration of radio sets was in effect; data for recent years may not be comparable since most noun- Income distribution - Percentage of private income (both in -ash and tries abolished licensing. hind) received by richest 5%, richest 20%, poorest 218. and poorest Pas: ar prto po)- Passengesr cars numprise motor cars seating ;!,38 of pop,lation. tihan gh persma excludes ambhulances, hearses and military Distrihution of land owrership - Percentages of land owned bY wealthiest Electrici y(w rpercp) - nnual cornuoption of industrial, comsmercial, 10% andTpo`or-esatW1%of land owners. pubIlTani pivalWte eleticiiity in kilowatt hours per capita; generally based on production dads, without allowance for losses in grids but allow- lHealth an d Nutrition ing for imorspande exor ts of electr icity. Eos9il ep~pgscin - Population divided by nmuser of practicing Newsprint (gypecap) - Per capita annual coureumtion in kolograrms 3)jIatlEiE .auiNfifT d4Trom a mednial school at university level, estimated fromn cbmest ic production plus net inports of newsprint.  AN'NEX I P0g, 2 SOKALLA ECONOMIC INDICATORS CROSS NATIONAL PRODUCT ANNUAI. RATE OF GfOW11 (7t. -o.Lflat or.c-'.) US$ MI.. 1 1961 - 69 19t9 - 73 197, GNP at Market Prices (1974) 260.0 100.0 Cross Domestic Investment Cross National Saving Current Ac.count Balance (1973) -69.1 Exports of Goods, NFS (1973) 71.1 Imports of Goods, NFS (1973) 140.2 OUTPUT, LABOR FORCE AND PRODUCTIVITY Vala. Add.d VI .... V.A. PFr Worke US$ '(In. 7 Nln. 7. uSS Agriculture Industry Services Unallocated .. . TotaI/Average 100.0 106.0 100.0 GOVERNMENT FINANCE General Government Central Govcrnment (So..hfMln.l . of CDP (So. Ski ll. 7 of GCP 1973 1973 1969-73 1973 1973 1969-73 Current Receipts 497.8 .. .. 446.. Current Expenditure 414.7 374.8 Current Surplus 83.1 71.6 Capitol Eapenditures 327.0 . 327.0 External Asista.n-c (net) 247.0 .. .. 247.0 MONEY, CREDIT and PRICES 1965 1970 1971 1972 1973 1974 (Million SoSh outstanding end period) Money and Quasi Money 220 466 391 516 608 783 Bank credit to Public Sector 2 38 100 72 13 5 2.4 Bank Credit to Private Sector- 178 297 254 315 622 916 (Percentages of Index Numbers) Money and Quasi Money as 7. of CDP .. .. General Price Index (1963 - 100) 127.7 136.6 133.8 131.8 140.3 165.8 Annual percentage changes in: Ceneral Price Inden 12.7 0.9 -0.6 -2.9 6.5 18.2 Bank credit to Public Sector .2. 61.8 -28.0 -81.9 -61.5 -52.0 Bank crodit to Private sector- 10.0 27.1 -14.5 24.0 50.2 47.3 NOTE: All conversions to dollars in this table are at the average exchange rate prevailing during the period covered. 1/ Total labor force; unemployed are allocated to sector of their normal occupation. "Unallocated" coneists mainly of unemployed workers se-king th-,r fr. t ob. not available not applicable 2/ Private sector here includes decentralized, government-owned enterprises. Country Prograr. , EAN Dece.bor 23, 1975  ANNEX I Page 3 SOMALIA TRADE PAYMENTS AND CAPITAL FLOWS BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1971-73) I/ 1971 1972 1973 1974- US $ Mln 7, (Millions Us $) 2/ Exports of Goods, NFS 48.3 66.3 71.1 55.0- Live Animals 26.0 56.0 ,3/Baaa 08 23 Imports of Goods, NFS 66.3 90.9 140.2 157.4- Banans 10.8 23.3 Resource Gap (deficit = -) -18.0 -24.6 -69.1 -02.4-_ Meat & meat products 4.0 8.6 iHides and skin 2.9 6.3 Interest Payments (net) -0.4 0.2 1.4 1.9 Workers' Remittances - - - -16.6E- Other Factor Payments (net) Net Transfers 19.2 17.2 28.8 44.9 All other commodities 2.7 5.8 Balance on Current Account 0.8 -7.2 -38.9 -72.2 Total 46.4 100.0 Direct Foreign Investment 2.9 7.8 4.7 5.6 EXTERNAL DEBT. OCTOBER 1. 1975 Net MLT Borrowing Disbursements .. .. .. .. US $ Mln Amortization .. .. .. .. Subtotal 3.3 14.5 27.2 55.7 Public Debt, incl. guaranteed-/ 360.7 Capital Grants - - - - Non-Guaranteed Private Debt Other Capital (net) - - - _ Total outstanding & Disbursed Other items n.e.i -1.0 -0.8t - - 6 Increase in Reserves (+) 8.0 18.1- -7.0 -10.8 DEBT SERVICE RATIO for 1974- a! Includes allocation of SDR 2.0 million ' Gross Reserves (end year) Net Reserves (end year) Public Debt, incl. guaranteed 5.6 Non-Guaranteed Private Debt Fuel and Related Materials Total outstanding & Disbursed Imports 2.7 3.6 of which: Petroleum 2.7 3.6 Exports - - - of which: Petroleum - - - IBRD/IDA LENDING. (AUGUST 31, 1975) (Million US $): RATE OF EXCHANGE IBRD IDA Outstanding & Disbursed - 26.7 hi rough - 1971 Since April 1973 7 Disbursed _ 27.5 US $ 1.00 So.Sh 7.143 US $ 1.00 = So.Sh 6.295- Outstanding incl. Undisbursed - 54.2 SoSh 1.00 = US $ 0.140 SoSh 1.00 = US ? 0.160 1/ Estimated 2! Exports f.o.b. 3/ Imports c.i.f. 4/ Trade balance 5/ Net non-factor services 6/ Ratio of Debt Service to Exports of ..not available Goods and Non-Factor Services (estimate) 7/ Central Rate (Somalia avails itself of . not applicable wider margins). The Trade conversion factor used by IMF is 6.233 So.Sh./US$. 8/ A $33 million dollar loan from the USSR (not included in this figure) has been publicized. It was made for fisheries, development (in conjunction with a grant for resettlement); terms and conditions are not known. Country Programs I, EAN December 23, 1975  ANNEX II Page 1 STATUS OF BANK GROUP OPERATIONS IN SOMALIA A. Statement of IDA Credits (as of March 31, 1976) (US$ million) Amount Undisbursed No. Year Borrower Purpose (Net of cancellations, terminations and refundings) Two credits fully disbursed 6.38 123-SO 1968 Somalia Highway-Supplementary (Afgoi-Baidoa Road) 2.30 0.26 247-SO 1971 Somalia Education 3.30 0.30 295-SO 1972 Somalia Highway (Hargeisa- Berbera Road) 9.60 0.80 359-SO 1973 Somalia Port of Mogadiscio 12.95 4.37 462-SO 1974 Somalia Livestock 10.00 9.44 511-SO 1974 Somalia Second Education 8.00 7.69 586-SO 1975 Somalia Mogadiscio Port Extension 5.20 4.63 1976 Somalia Drought Rehabilitation 8.00 8.00 Total 65.73 35.49 of which has been repaid .26 Total now held by IDA 65.47  ANNEX II Page 2 1 / B. PROJECTS IN EXECUTION - SCMALIA Cr. No. 123 Highways Supplement (Afgoi-Baidoa); $2.3 million Credit of June 26, 1968: Date of Effectiveness: February 25, 1969; Closing Date: originally December 31, 1971 and postponed five times to December 31, 1976. The construction of the Afgoi-Baidoa road was substantially com- pleted in March 1971. The contractor has submitted four major claims for arbitration, and a final arbitration award has recently been made. An amount of $263,000 remains undisbursed in the credit. Cr. No. 247 First Education Project; $3.3 million Credit of June 3, 1971; Date of Effectiveness: November 18, 1971; Closing Date: December 31 197Z5 and postponed to September 30, 1976. The project is virtually complete. Only a small amount of equip- ment remains to be procured, mainly to supplement that installed. The equipment, about 15% of requirements, should be procured during first semester 1976; thus, the closing date has recently been postponed by nine months to permit full disbursement of credit proceeds. The eight mobile training units, under the Ministry of Agriculture, operate satisfactorily. Technical assis- tance (UNESCO) for the National Teacher Education Center has been completed satisfactorily, likewise the technical education program (UNESCO/ILO) which, however, will be expanded and continue with two separate coordinated programs in (i) Technical Education, and (ii) Vocational Training with UNESCO and ILO as executive agencies. Problams with insufficient counterparts for experts have been substantially overcome. Final total project cost is estimated to be about US$0.26 million above the appraisal estimate, including contingencies. The Borrower has been implementing the project effectivelv. A mission to assess the project's execution and operational results is currently in the field. 1/ 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 that they do not purport a balanced evaluation of strengths and weaknesses in project execution.  ANNEX II Page 3 Cr. No. 295 Highways II (Hargeisa-Berbera); $9.6 million Credit of March 30, 1972; Date of 'ff srtivness: May 11, 1972; Closing Date: originally December 31, 1975 and postponed to December 31,1976. The construction of the liargeisa-Berbera road has been completed and opened to traffic. The road is still under contractor maintenance. The feasibility and detailed engineering studies financed under this credit for the proposed Hargeisa-Borama (third highways) project have been completed, and the proposed project is currently being appraised. Cr. No. 359 Port of Mogadiscio; $12.95 million Credit of March 15, 1973; Date of Effectiveness: September 10, 1973; Closing Date: June 30, 1977. The physical execution of the civil works is going well after a slow start. The Contractor is working three 8 hour shifts and 95% comple- tion is expected in January 1977, nine months behind the original schedule. However, of the nine months, the Contractor has been granted three months extension, since additional works, financed under Credit 586-So, will take four to five months and have to be completed before the original works can be completed. A settlement between the Government and the contractor of the latter's claims for exchange loss compensation and price escalation has been reached and has been agreed to by the Association. Funds available for port operations equipment are sufficient only for a used 700-800 HP tug. Likely sources for such a tug are being contacted for particulars and quotations. Consultants for SPA management, port operations and accounting services are expected to commence field work shortly. Cr. No. 462 Livestock (Trans-Juba) Project; $10 million Credit of February 20, 1974; Date of Effectiveness: October 29, 1974; Closing Date: June 30, 1980. The Project Director began work in early February 1975. Up to now, he has been recruiting staff, planning project implementation, preparing tender documents for procurement of machinery and equipment and construction of buildings and boreholes, and finalizing systems for monitoring the project and keeping project accounts. Physical execution of the project is expected to begin in the first half of 1976 with the arrival of machinery and equipment and the start of the construction program. Cr. No. 511 Second Education Project; $8 million Credit of September 19, 1974; Date of Effectiveness: December 19, 1974; Closing Date: June 30, 1980. Project implementation is proceeding satisfactorily. Civil works tendering for most of the secondary schools, the Academy of Somali Studies  ANNEX II Page 4 and the Elementary Teacher Training College is currently taking place and construction is planned to start later this year. Equipment contracts are about to be awarded,furniture lists are under preparation and tenders are scheduled to be invited later this year. Contracts for some nomadic train- ing centers have been awarded to local authorities and construction is expected to start by mid-1976. Although the project is proceeding on schedule, the current estimate of final project cost is US$2 million above the appraisal estimate including contingencies. Some of the cost overrun may be offset by Local Government/self-help construction of nomad centers. The Government is about to review and evaluate information leading to the formulation of programs basic for implementing the Fishery and Marine Institute component. Cr. No. 586 Mogadiscio Port Extension Project; $5.2 million Credit of October 15, 1975; Date of Effectiveness: January 15, 1976; Closing Date: December 31, 1977. The casting of concrete blocks for the additional berth as well as the breakwater extension, necessary for completion of the civil works financed under Credit 359-SO, has begun. Drought Rehabilitation Program - Juba-Shebelli Emergency Settlement Scheme; $8.0 million Credit This credit was approved on April 13, 1976 and will be signed shortly.  Annex III Page 1 SOMALIA - NORTH WEST-REGION AGRICULTURAL DEVELOPMENT PROJECT CREDIT AND PROJECT SUMMARY BORROWER: Somali Democratic Republic AMOUNT: $10 million equivalent in various currencies TERMS: Standard PROJECT DESCRIPTION: The project seeks to assist in the re-development of the North-West Region through soil and water conservation, and other measures to increase agri- cultural production; to support current trend toward settled agriculture; and to provide technical basis for preparation of future projects in the North-West and Bay regions. It consists of: (a) Construction of field bunds on 25,000 ha, repair of existing bunds on about 2,000 ha and experi- mental gully erosion control works; (b) Development of 50 small irrigated farms; (c) Improvement of crop trials and training facilities at the Aburin dryland demonstration and experi- mental farm; (d) Extension of the Geed-Deeble irrigated horticul- tural station for fruit crop trials, nursery production and sorghum seed multiplication; (e) Rehabilitation of the extension service to dryland farmers and establishment of a new extension section serving irrigated farms; (f) Construction of 100 water points for human con- sumption and 50 water points for livestock; and (g) Technical services, training and feasibility studies. ESTIMATED COST: (US$ million) Local Foreign Total Construction of field bunds and water points 1.5 3.9 5.4 Small-scale irrigation development .03 .04 .07 Dryland crop trials .07 .04 .11 Geed-Deeble horticultral station .1 .2 .3 Extension and training .3 1.1 1.4 Feasibility studies and technical assistance .3 1.3 1.6 Base cost 2.3 6.6 8.9 Contingencies: Physical .1 .5 .6 Price 1.2 3.2 4.4 3.6 10.3 13.9 Less: Duties and taxes (0.7) (0.7) Total Project Cost 2.9 10.3 13.2  Annex III Page 2 FINANCING SOURCES: (US$ million) Local Foreign Total IDA - 10.0 10.0 Government 3.01 0.2 3.21 Farmers .02 - .02 Total 3.03 10.2 13.23 ESTIMATED DISBURSEMENTS: Annual Cumulative (US$'000) FY77/78 700 700 FY78/79 2,600 3,300 FY79/80 2,700 6,000 FY80/81 1,500 7,500 FY81/82 1,500 9,000 FY82/83 1,000 10,000 PROCUREMENT ARRANGEMENTS: Procurement of tractors, equipment for field bunding works and the Geed-Deeble farm and vehicles (US$3.0 million) in orders exceeding US$50,000 million would be by international competitive bidding; orders would be bulked whenever possible. Contracts for construction of buildings, water tanks, dugwells and installation of irrigation equipment (US$500,000) which by reason of their dispersed location and small size would not attract competitive bidding would be advertised locally. Field bunds and water points which would be unsuitable for construction by con- tractors either because design cannot be standard- ized or because of the widely dispersed location of small works, would be constructed by force account using equipment procured under the project. Pumps, irrigation equipment, single units of tractor and cultivation equipment, furniture, office equipment, and other small items (US$86,000) would be procured locally. TECHNICAL ASSISTANCE: (a) A firm of consutlants would provide a project manage- ment team to assist in execution, coordination and supervision of the project and devise a training program for Somalia staff - 25.75 man years. (b) Consultants would undertake two feasibility studies for evaluation of a prospective second phase project in the North West Region and a project in the Bay Region, and provide technical assistance to Geed- Deeble Horticultural station and to the development of the 50 small irrigated farms - 15.75 man years. RATE OF RETURN: 11% APPRAISAL REPORT: Report No. 912-SO Eastern Africa Projects Department  SO M A LI A ~~~~~~~~~~~~~~~~~~~~~~~SAUDI ARABIA S O M A L I A 6-XUIAAI NORTH WEST REGION -A AGRICULTURAL DEVELOPMENT PROJECT A2Al j-l d?t mn 1PRIORITY AREAS FOR CONSTRUCTION ROADS |REA 0$ 12- , ' OF FIELD BUNDS - WATERSHED BOUNDARIES H * t 77 E ASIBITY STUDY AREA FOR SECOND MAIN WADIS E