Malawi - Fourth Highway Project

Documentof TILE COPY The World Bank FOR OFFICIAL USE ONLY Report No. P-2896-MAI REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF MALAWI FOR A FOURTH HIGHWAY PROJECT January 14, 1981 This documet bas a retrcd distIbutWo . may be _ed by reeipints oy in the performence of tseir oficil dties Its otuts may dt otherwie be diclsed witout World Bank ato .rIato.  CURRENCY EQUIVALENTS Currency Units - Malawi Kwacha (MK) MK 1.00 - US$1.25 US$1.00 - MK .80 US$1.00 - SDR .78 WEIGHTS AND MEASURES 1 foot (ft) - 0.305 meters (m) 1 mile (mi) 2 - 1.609 kilometers (km) 2 1 square mile (mi ) - 2.590 square kilometers (km ) 1 ton (t) 0.907 metric tons (m ton) (As the Malawian Kwacha is officially valued in relation to a basket of the currencies of Malawi's trading partners, the USdollar/Malawian Kwacha exchange rate is subject to change. Conversions in this report were made at US$1.00-MK.80 which is close to the 1980 average exchange rate.) LIST OF ABBREVIATIONS AfDB (AfDF) - African Development Bank (Fund) DEVPOL - Statement of Development Policies DRIMP - District Roads Improvement and Maintenance Program EDF - European Development Fund EEC - European Economic Community EPD - Economic Planning Division (Office of the President and Cabinet) HDM - Highway Design and Maintenance Model KfW - Kreditanstalt fur Wiederaufbau MTC - Ministry of Transport and Communications MWS - Ministry of Works and Supplies ODA - Overseas Development Administration PVHO - Plant and Vehicle Hire Organization UNDP - United Nations Development Programme voc - vehicle operating cost vpd - vehicles per day GOVERNMENT OF MALAWI FISCAL YEAR April 1 - March 31  FOR OFFICIAL USE ONLY MALAWI FOURTH HIGHWAY PROJECT CREDIT AND PROJECT SUMMARY Borrower: Republic of Malawi Beneficiary: Ministry of Works and Supplies (MWS) and Economic Planning Division (EPD) Amount: SDR 25.9 million (US$33.0 million equivalent) Terms: Standard Project Description: The proposed project would assist Malawi in developing the economic potential of the Northern Region by con- structing and improving the major unpaved sections of the principal North-South road. In addition to linking the Northern with the more developed Central and Southern Regions, the project would promote the maintenance of the main, secondary and district road networks. Specifically, the five-year project would finance the: (i) construction of a two-lane bituminous paved road between Jenda and Luwawa Turnoff (32 km), and Mbowe and Ekwendeni (37 km) and improvement of the existing road between Luwawa Turnoff and Mbowe (100 km) to a low gravel standard; (ii) the second phase of the District Road Improvement and Maintenance Program (DRIMP); (iii) consulting services and training; (iv) provision of road maintenance equipment; and (v) facilities in Lilongwe for training semi-skilled MWS personnel. With the project, direct road users would benefit from cost savings in transport costs, which also would be expected to benefit farmers, shippers and consumers in the form of lower freight and passenger rates. The proposed project also would strengthen and expand the Government's road maintenance capacity as well as improve the EPD's transport planning. There are no major risks to the road construction and improvement program, although Government delays in providing suffi- cient budgetary support for improvement and maintenance would adversely affect the timely implementation of the road program. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - US$ Millions Estimated Costs: Local Foreign Total 1. Road Construction 5.10 11.86 16.96 2. Road Improvements 1.55 2.45 4.00 3. DRIMP 4.16 3.15 7.31 4. Consulting Services 0.56 3.10 3.66 5. Road Maintenance Equipment 0.01 0.13 0.14 6. Construction of Training Center 0.38 0.25 0.63 Sub-total 11.76 20.94 32.70 Physical Contingencies 1.17 2.10 3.27 Price Contingencies 2.60 3.63 6.23 Sub-total 3.77 5.73 9.50 Total Project Costs 15.53 26.67 42.20 Total Net of Taxes and Duties 12.53 26.67 39.20 Financing Plan: IDA 6.33 26.67 33.00 Government of Malawi 6.20 - 6.20 Total Net of Taxes and Duties 12.53 26.67 39.20 Estimated Disbursements: IDA Fiscal Year US$ Millions 1981 1982 1983 1984 1985 Annual 1.0 18.5 10.1 3.1 0.3 Cumulative 1.0 19.5 29.6 32.7 33.0 Rate of Return: 18 percent Appraisal Report: Report No. 3019a-MAI, December 22, 1980  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATIONS OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF MALAWI FOR A FOURTH HIGHWAY PROJECT 1. I submit the following report and recommendation on a proposed credit tc the Republic of Malawi of SDR 25.9 million (approximately US$33.0 million equivalent) on standard IDA terms to help finance a Fourth Highway Project. PART I - THE ECONOMY 2. A report entitled "Memorandum on the Economy of Malawi" (Report No. 1677a-MAI) dated September 30, 1977, was circulated to the Executive Directors on October 10, 1977. A Basic Economic Mission visited Malawi from May 11, 1979 to June 15, 1979 and the report is currently under preparation. 3. With a population of 5.7 million (1978) and an area of about 118,500 sq km, Malawi is relatively densely populated. Its main assets are moderately fertile soils, good water resources and a climate favorable to crop production. Unlike its neighbors, Malawi has no known substantial mineral resources. Being landlocked, it has to depend on other countries for access to the sea. 4. Although Malawi has a GNP per capita of only US$200 and has been identified by the United Nations as one of the world's poorest countries, its progress since independence, measured against its natural resources, has been significant. GDP at constant prices grew at an average annual rate of 6 percent between 1964 and 1979. During the same period, real growth of estate agriculture and manufacturing exceeded 10 percent per annum and export volume grew at 4.5 percent per annum. A steadily increasing investment rate (rising from 9 percent of GDP at independence to 22 percent in 1979) has been supported by heavy inflows of foreign private and public capital as well as by a sig- nificant increase in domestic savings (from virtually nil in 1964 to 14 percent of GDP in 1979). 5. Malawi's success in its development efforts has been due in large part to realistic and purposeful planning by the Government. The country-s long-term development policies for the period 1971-80 were outlined in the "Statement of Development Policies 1971-80" (DEVPOL) which set out the basic priorities for economic development. The Government is now in the process of replacing the DEVPOL with a five-year development plan beginning in 1981/82. 6. As stated in DEVPOL, public investment has been intended primarily to support private efforts in the directly productive sectors through provision of essential infrastructure, public utilities and supporting services. In  - 2 - addition, the Government has attached high priority to investments which assist smallholder agriculture, as 90 percent of the population lives in the rural areas and depends on agriculture for its livelihood. To this end, the Government has undertaken a number of integrated rural development projects in the past, and recently embarked on the National Rural Development Program, an ambitious 20 year program designed eventually to extend agricultural services to smallholders countrywide. The Government's decision to emphasize directly productive sectors and related economic infrastructure, coupled with limited amounts of financial and human resources, has resulted in slower development of the social services such as health and education. 7. While details of the new five-year plan's investment program are unknown at present, the Government has already informed us of the broad priorities for the sectoral allocation of resources: 30 percent of total public investment expenditure is earmarked for agriculture, 35 percent for transport, 10 percent for education, 9 percent for water and health, and 16 percent for other miscellaneous investments. These sectoral allocations reflect the Government's continued emphasis on smallholder development and transport and the increased importance it now attaches to manpower development. 8. In 1977, a population census revealed that the country's population grew at 2.9 percent per annum during the past decade. Projecting the same growth rate for the remainder of the century, Malawi's population would almost double by the year 2000. This high population growth rate has important implications for the labor-land ratio. Malawi's population density, about 140 per sq km of agricultural land, already is among the highest in Africa, and by the year 2000, will rise to 265 people per sq km. Over 35 percent of total land area is classified as suitable for cultivation and the available arable land area is almost fully utilized. The implications of Malawi's rapid population growth have been discussed with the Government which, at this time, opposes active population control measures. The Basic Economic Report will further analyze these implications particularly in terms of the cost of social services for a rapidly growing population and the Government's land-use policy. Only about 9 percent of the total population lives in urban areas. However, with the diversification of the economy, urban population is increas- ing by more than 7 percent per annum, in line with the expansion of wage employment opportunities in the non-agricultural sectors. 9. Notwithstanding Malawi's impressive economic performance over the past 15 years, its economy, heavily dependent on two primary commodity exports (tea and tobacco), has remained highly vulnerable to international price fluctuations. Since 1974, the country has experienced periodic balance of payments disequilibria of increasing severity due primarily to (a) rapid escalation in import prices, particularly of fuel and intermediate and capital goods; (b) cyclical swings in export prices of tobacco and tea; and (c) sig- nificantly higher costs of transport for both exports and imports owing to rising ocean freight charges, port congestion in Beira and Nacala, and disrup- tions of overland transport.  - 3 - 10. While the Government successfully steered the economy through balance of payments crises in the past, the deterioration in the balance of payments since 1978 has been less manageable, primarily due to a 20 percent fall in the terms of trade between 1977 and 1979 when export prices fell 5 percent (due mainly to declines in tea and tobacco prices) and import prices rose about 15 percent. The fuel import bill doubled from MK25 million in 1977 to an estimated MK49 million in 1979. The growing trade deficit was exacerbated by a doubling of the negative balance for non-factor services, due mainly to rising transport costs. In 1978 and 1979 Malawi-s current account deficit reached 12 and 15 percent of GDP in contrast to the 7-8 percent average experienced since independence. Because capital inflows have not been sufficient to cover the current account deficits, Malawi has also experienced a sharp drop in foreign exchange reserves. Between end-1977 and end-1979, gross official reserves fell from MK76 million to MK51 million (from the equivalent of four months to one and a half months of imports). Over the same period, net official reserves fell from MK37 million to minus MK29 million. In the first half of 1980, the country's external position deteriorated further, owing to a shortfall in the 1979/80 season's maize crop, which has led to emergency grain imports and a sharp drop in the average auction price of flue-cured tobacco which constitutes a large part of Malawi's tobacco crop. 11. In the past, the Government has approached the energy problem through its pricing and tax policies to restrain demand and through its invest- ments aimed at identifying and developing energy resources. Oil imports have been subject to tariffs at 30 to 60 percent rates and retail prices have been set at levels which reflected the cost of fuel imports plus tax. In connection with fuelwood which represents some 80 percent of the country's domestic energy consumption, the Government has undertaken to increase wood prices gradually to levels which reflected production costs. The Government has also launched projects in wood energy and ethanol production. At the Government's request, the Bank plans to conduct an energy sector study that would survey the available resources, project future demand and supply, examine alternative sources of energy and explore possibilities for intersectoral substitution. 12. Malawi's fiscal position has also seriously deteriorated over the past two years. From independence through FY78, government expenditures and revenues expanded roughly in line with the increases in GDP; while deficits grew larger, they still did not exceed 7-8 percent of GDP. In the past two years, expenditure growth has outstripped the increase in revenues by more than 40 percent. The share of government deficits in GDP averaged 10 percent during 1978 and 1979. With the increased deficits came an increased reliance on domestic borrowing mainly from the monetary system, and on foreign borrow- ing, partly on commercial terms. At the same time, inflationary pressures grew and the balance of payments position deteriorated. Prices rose at an average rate of 10 percent per annum during 1978 and 1979. 13. Faced with these problems, the Government in 1979 initiated a series of short-term corrective measures which included a two and a half year stand-by arrangement with the IMF amounting to US$32.9 million (SDR 26.3 million). Malawi also obtained US$23.8 million (SDR 19.0 million) from the compensatory financing facility and a US$7.1 million (SDR 5.7 million) loan from the Trust  - 4 - Fund. Unfortunately, a drought and a complete stoppage of all overland external transport owing to political unrest in Mozambique during November and December 1979 forced termination of the stand-by arrangement since the Government could not meet some of the performance criteria. 14. A new two year arrangement, drawing on the second to fourth tranches for US$64.8 million (SDR 49.9 million), was approved in May 1980. The two- year program, which coincides with Malawi's fiscal years 1981 and 1982, aims at constraining demand and limiting the balance of payments current account deficit to US$195 million in FY81 and US$169 million in FY82. The performance criteria involved phased ceilings on total domestic credit and on net bank credit to Government and a limit on government (or government guaranteed) external borrowing of 1 - 12 years maturity. 15. After successfully negotiating the two-year IMF stand-by arrangement, the Government in April 1980 formally requested Bank assistance for a Structural Adjustment loan. A reconnaissance mission in May made a preliminary assessment of the economy and reviewed the corrective measures which the Government had taken already or was intending to take. An appraisal mission visited the country during August-September, 198C. 16. Because of the Governnment's limited abilicy to mobilize resources, the sizeable expansion of Malawi's development program over the past decade has been largely assisted by increased public capital inflows. The net contribution from foreign official sources to the financing of public invest- ment increased from US$17 million in FY68 to about US$103 million in FY79, of which US$23 million were grants. However, in contrast with earlier expe- riences, over 35 percent of the FY79 capital flows were on commercial terms. Such commercial borrowing will have a pronounced effect on future debt ser- vicing (see para 17). The sources have also been gradually diversified. At independence, Britain was virtually the only source. By 1979 the British contribution had declined to less than 15 percent; multilateral sources, especially IDA, provided about 45 percent, and a variety of bilateral sources, notably Canada, Federal Republic of Germany and the United States, accounted for most of the remainder. 17. By the end of 1979, Malawi's external public debt totalled US$606 million, of which US$423 million had been disbursed. Debt service in 1979 amounted to US$25 million, equivalent to about 10 percent of exports of goods and services. At the end of 1978, the Bank's and the combined IDA/Bank shares in Malawi's disbursed debt were 4 percent and 32 percent, respectively, and service on the Bank Group debt accounted for 7.1 percent of total debt service. In 1985, the IDA/Bank share in total disbursed debt is projected to be 30 percent and the service on Bank Group debt to be 10 percent of the total debt service. There has been considerable hardening of the average terms of lending in the past few years; the average grant element of official assistance fell from the 80 percent level of 1971-1975 to 48 percent in 1978 and 23 percent in 1979. On the basis of loans committed by the end of 1979 and on additional capital requirements for the period 1980-85, Malawi's debt service ratio is projected to reach 23 percent in 1985 (as compared with 8 percent in 1978  and 10 percent in 1979). Despite being a poor country, Malawi has been making reasonable efforts to mobilize domestic resources to fund both its private and public investments. Domestic share of development expenditures amounted to 22 percent in 1979. However, this share is unlikely to rise in the near future, as the expansion of the Government's investment program required to achieve a reasonable rate of economic growth and the consequent need for recurrent expenditures for operations and maintenance will absorb the bulk of additional tax revenues. Foreign exchange will remain a significant require- ment in maintaining imports. Hence, external financing will be called upon to cover a substantial portion of total project lost, including some local cost financing. PART II - BANK GROUP OPERATIONS IN MALAWI 18. Over the past 15 years Malawi has received 21 IDA credits totalling US$183.2 million and four Bank loans totalling US$29.2 million, of which two were on Third Window terms. Of the total Bank Group assistance, US$98.2 million (46 percent) was for agriculture, US$37.8 million (18 percent) for power development, US$32.4 million (15 percent) for education, US$32 million (15 percent) for roads, US$3 million (1 percent) for a development finance company (INDEBANK) and the balance of US$9 million (5 percent) for water supply and for feasibility studies for a pulp mill. The first Bank loan to Malawi was made on Third Window Terms in June 1976 and the first standard Bank loan in April 1977. IFC's investments in Malawi consist of a loan of US$6 million made in 1976 for a textile mill, another of US$9 million for sugar development in 1977, a US$6 million equity investment in INDEBANK in 1979 and a US$2.0 million loan to Malawi Hotels Limited for tourism in 1979. A US$.26 million equity investment and a loan of US$1.7 million for production of ethanol from molasses were approved in July 1980. A summary statement of Bank Group operations and notes on the execution of ongoing projects are provided in Annex II. Project implementation has been satisfactory. 19. During the next five years, Bank Group assistance in Malawi will continue to emphasize rural development and agriculture, education, water supply and roads. The third phase of the National Rural Development Program already has been appraised. Preparation of a second-phase water supply project for Lilongwe and selected rural areas has begun. Structural Adjustment lending also is expected to figure prominently over the next three years. Preparation of the first Structural Adjustment credit is well advanced. Possible investments in energy, health and development finance companies are also being investigated. PART III - THE TRANSPORT SECTOR 20. Malawi's major transport arteries include a 11,300 km road network which is fairly well developed south of the capital, Lilongwe, but undeveloped in the northern half of the country; a 650 km rail system in the southern half of the country which is used mainly for export-import and transit traffic; lake  -6- transport which serves the north and compensates to some extent for the un- developed land transport links; and air transport at four airports. The main outlet to the sea for Malawi's external trade is by the railway through Mozambique to the ports of Beira and Nacala. Frequent disruptions in service because of insurgency problems in Mozambique as well as operational problems (line and equipment) of the Mozambique railway and at the sea ports have led to interruptions of traffic and problems with importing essential materials, particularly fuel, in recent years. Malawi Railways, a parastatal, operates not only the railways but also a road freight service and the freight and passenger transport system on Lake Malawi. Another parastatal, Air Malawi, provides international and domestic air services. 21. Road transport dominates internal travel although the topography in parts of the country makes provision and maintenance of transport facilities difficult and costly. Approximately 3,000 km of main roads (about 1,600 bituminous paved) connect principal cities and towns, and about 2,500 km of secondary roads (about 200 km bituminous paved) link smaller centers to main roads. There are also around 5,000 km of district feeder roads and another 1,000 km of roads serving individual towns and agricultural estates. Over 85 percent of the paved and improved roads are located in the southern half of the country reflecting the regional imbalances. In 1978, the vehicle fleet totalled just under 27,000 or 4.8 vehicles per 1,000 inhabitants, which is above average for Eastern Africa but less than half of Kenya's vehicle owner- ship rate. The fleet consists of 13,500 passenger cars, 300 buses, 13,100 trucks and light commercial vehicles; in addition there are 4,230 motorcycles and 7,000 other vehicles. Overall, the fleet has been growing at around 10 percent per annum since 1973. Road transport services are dominated by small operators and are regulated by the Road Traffic Commissioner in the Ministry of Transport and Communications (MTC) through the issuance of licenses for specific roads. Vehicle dimension and weight regulations are adequate, and enforcement of the regulations by the MTC and the national police has improved considerably during the past few years, partly as a result of a covenant agreed under the Second Highway Project. Transport Policy and Coordination 22. Malawi's transport policy has three broad objectives: (a) to improve the administrative and socioeconomic integration of the country by linking the Northern, Central and Southern Regions with reliable all-weather road connections; (b) to support rural development by improving access to rural areas; and (c) to provide efficient links with external transport routes leading to Indian Ocean ports. Substantial progress has been made on (a) and (c), and the District Roads Improvement and Maintenance Program is now underway to address (b). In accordance with the high priority assigned to the transport sector, the Government plans to allocate some 35 percent of its total five-year capital investment program to continue to improve regional road links and the lakeshore road, to extend the feeder road network to handle a larger volume of agricultural output,and to improve external links through continued investment in the railway.  23. Responsibility for coordinating transport investments is vested in the Economic Planning Division (EPD) in the Office of the President and Cabinet which annually reviews the operational plans of the Ministry of Works and Supplies (MWS) for roads and the MTC for all other transport modes. In the past effective coordination of transport investment has been lacking due to staffing constraints and limited intersectoral planning. Consequently, the various transport modes have been developing independently although primarily in a complementary rather than competitive fashion. Recent heavy investments in railways and possible future competition between road and lake transport make it essential that EPD's transport planning capability be strengthened immediately. The Government has requested the Bank to provide technical assistance in transport planning and in financing the overseas training of local staff who will man the transport unit in the projects section of the EPD (para. 34). At present, the unit is staffed by one pro- fessional officer who requires further training and assistance in developing an effective system for transport planning and evaluation. Road Administration and Training 24. The MWS, through its Roads Department, is responsible for the construction and maintenance of all classified roads (main and secondary) while the District Councils have primary responsibility for district roads. In addition, the Ministry of Agriculture and Natural Resources is responsible for 1,600 km of forestry and national park roads and tracks. The organization of the MWS and its Roads Department is satisfactory. MWS has three major functional units at headquarters in Lilongwe: Administration (including financing), Engineering, and Development (largely planning). The Roads Department within the Engineering unit is staffed by 11 civil engineers and 1 transport economist who plan and oversee the road work carried out by divisional offices in the three regions. The divisional offices are headed by a civil engineer and are responsible for road construction and other works. The regional offices are supported by 4 branch offices, 14 district depots and 48 subdistrict depots for road maintenance. 25. Altogether MWS has around 60 professional staff and 100 supervisory and sub-professional staff. Localization of MWS has proceeded slowly but satisfactorily. At present 5 of the 8 most senior MWS posts and 8 of the 12 professional posts in the Road's Department are filled by Malawians. Nevertheless, around 100 professional/sub-professional posts are staffed by expatriates. The Government places high priority on educating/training its nationals for professional positions but due to the shortage of qualified candidates, the program has not fulfilled the high demand for Malawians. Much of the professional training is provided abroad through externally funded programs (ODA, EEC, etc.,) which to date have provided sufficient training opportunities for suitably qualified candidates. In the meantime, the Malawi Polytechnic has been developing its technical training capabilities. Substantial progress has been achieved in training of lower levels of personnel (foremen, road supervisors, mechanics) whose skills are essential in implementing road maintenance and construction programs. The MWS-s train- ing program has been carried out in the Zomba Training Center. While the  - 8 - availability of lower level technical and administrative Malawi staff to be trained and quality of training in the Zambia center are adequate, expanded facilities are needed to keep pace with increasing demand for trained staff. The proposed project would assist the Government in relocating and building new training facilities in Lilongwe for the training of Road Department staff (para. 36). Maintenance 26. Responsibility for maintaining the main and secondary roads system rests at the headquarters level with the Roads Department and at the regional level with three regional divisions of the MWS. The divisions have a well- trained staff of maintenance personnel which utilizes mechanized technology for periodic maintenance while routine maintenance is basically labor intensive. Equipment is rented by the Roads Department from the Plant and Vehicle Hire organization (also under MWS), which procures and maintains all Government- owned equipment and vehicles. Equipment availability and utilization rates are satisfactory, and rental rates are reasonable. 27. Road users contribute to government revenue through taxes and duties on fuel, lubricants, vehicles and spare parts, and through license and registration fees. 1/ In FY78, total revenue from road users amounted to US$15.0 million equivalent, whereas during the same period total expenditures for administering and maintaining the road network totalled US$3.5 million equivalent. Road usage taxation, therefore, contributes greatly to the Government budget. In the past, Malawi has adequately maintained its roads system while allocating around 10 percent of its annual highway budget for mainte-^""e. More recently, however, maintenance provisions have not kept pace with inflation and the growth and wear of the road network. 28. The revenues for the District Councils for maintenance are aldo inadequate. To provide a basis for establishing adequate roads maintenance organizations in all of the country's 24 Districts, a pilot District Roads Improvement and Maintenance Program (DRIMP) was begun in the Kasungu District in 1974 under the IDA-financed Second Highway Project. The scheme led to the successful establishment of an improvement and maintenance unit responsible for all maintenance operations in the district and the training of road staff and foremen; the pilot program was subsequently extended to three additional districts. Altogether 1,100 km of district roads are being improved to a minimum all-weather standard. The proposed project would finance the second phase extension of the DRIMP to 10 additional districts (para. 33). 1/ The pump price of gasoline is US$0.88 per liter and US$0.80 per liter for diesel; equivalent import prices are US$0.48 and US$0.45 respectively. There is a 24 percent surtax on all fuel. The normal duty on gasoline is US$0.06 per liter and on diesel, US$0.03 per liter; however in 1979 during a period of fuel shortage in Malawi, an additional fuel levy of US$0.18 per liter was imposed on gasoline and diesel, and this levy is still in force although the supply of fuel is back to normal.  - 9- Previous Bank Group Involvement 29. The Bank Group's involvement in Malawi-s highway subsector dates back to 1966 when Credit S-2-MAI was made to help finance detailed engineering design of the Zomba-Lilongwe road (290 km). The First Highway Project (IDA Credit 112-MAI: US$11.5 million) was approved in 1968, and provided for the construction of the Zomba-Lilongwe road and the financing of studies on road transport licensing and road-rail coordination. The Performance Audit Report on the project indicated that the objectives of the project were achieved. Although implementation of road construction fell one year behind schedule, the internal rate of return was re-evaluated at 13 percent, against 12 percent at appraisal, and traffic generation was 50 percent greater than projected. The Second Highway Project (Credit 523-MAI: US$10.0 million) of 1974 assisted construction of the Lilongwe-Kasungu road (113 km) and initiated the DRIMP pilot scheme. Both components have been completed and substantial cost savings realized on the construction component are being used to finance the first phase extension of DRIMP into three other districts. The Third Highway Project financed by Credit 758-MAI of 1977 (US$10.5 million) covered construc- tion of the Kasungu-Jenda road (85 km) and a feasibility study and detailed engineering design of the Jenda-Mzuzu road. The road construction was completed in October 1980, a few months behind schedule. PART IV - THE PROJECT 30. The proposed project was prepared by the Malawi Government with the assistance of consultants and the Association. The project was identified in February 1977 and appraised in February 1980. A report entitled "Fourth Highway Project-Staff Appraisal Report," No. 3019a-MAI, dated December 22, 1980 is being distributed separately. The negotiations were held in Washington, D.C. from December 1 to 3, 1980. The Malawi delegation was led by Mr. J. R. Phiri, Under Secretary in the Ministry of Finance. Annex III provides supple- mentary project data. Project Objectives and Description 31. The proposed project would assist the Government in: extending the benefits of development to the relatively less developed Northern Region; achieving a more balanced distribution of resources between rural and urban areas by improving and maintaining the largely neglected district roads; starting to redress the country's deteriorating road maintenance performance by ensuring that adequate local resources are provided by the Government to maintain the road network; and strengthening the transport planning capacity of EPD. The project would assist the Government over a five-year period (FY8l-85) to reach these objectives by: (a) constructing a two-lane bituminous paved road between Jenda and Luwawa Turnoff (32 km) and Mbowe and Ekwendeni (37 km), and improving the existing Luwawa Turnoff-Mbowe section (100 km) to a low gravel standard;  - 10 - (b) financing the second phase of DRIMP; (c) providing consulting services and training; (d) providing road maintenance equipment to the Roads Department; and (e) financing facilities in Lilongwe for training of semi-skilled MWS personnel. Detailed Features 32. Construction and Improvement of the Main North-South Road. Con- struction to a paved standard of the Jenda-Luwawa Turnoff and Mbowe-Ekwendeni sections and upgrading of the Luwawa Turnoff-Mbowe section to all weather-low gravel standard would substantially complete the development of the 1,100 km North-Sownh roJ i.unning trom Bangula in the deep south to Karonga in the far north; only the 100 km upgraded Luwawa Turnoff-Mbowe road section would remain unpaved. The linking of the Northern Region with the more developed Central and Southern Regions would helD to redress the regicnal imbalances by ensuring the timely availability of agricultural inputs and the regular collection of crops. At present construction of the Luwawa Turnoff-Mbowe section to a paved standard is not justified because of low traffic levels and high construction costs due to the hilly terrain. However, the Government is in the process of reviewing the alternative uses of the wood resources of the Viphya forests which adjoin the unpaved road section. Some 24,000 hectares of pine have been planted for an eventual pulp and/or timber industry. Prompted by the growing burden of maintaining the now unutilized Viphya forest and the importance of securing financial backing for developing the Viphya forestry resources, the Government (through ODA) is carrying out a study of the entire forestry sector, looking at possible uses, particularly saw-milling and manufacturing particle board. In addition, the German Government is financing a feasibility study of a pulp mill to meet domestic and possibly regional demand. Results of the studies, which are expected to be made available in late FY81, should enable the Government to identify the most economic uses of the country's forest resources. Depending on the outcome of the studies and the Government's decisions on Viphya, construction to a paved standard of the remaining 100 km of road section may become economically justified at a later time. In the meantime, upgrading the Luwawa Turnoff-Mbowe section to a low gravel standard to permit regular maintenance would be needed for it to withstand the effects of forecast traffic until full reconstruction becomes viable. 33. Second Phase of DRIMP. The proposed project would extend the first phase of DRIMP to ten additional districts. Selection of the roads to be improved and planning for maintenance units in these districts is being carried out by consultants. The project would provide for establishing and equipping maintenance units in each district, including a depot, housing for key staff and staff training, and the improvement of some 2,600 km  - 11 - of district roads. The work program for establishing the maintenance units and the roads to be improved for the first year was agreed during negotiations. It was further agreed that for subsequent years, the Government, not later than four months before the beginning of each fiscal year, would furnish to the Association for its concurrence, the proposed work program for that fiscal year until completion of this project component (Section 3.07 of the draft Credit Agreement). The second phase of DRIMP also would assist the Government in meeting the maintenance needs of the District Councils by financing on a declining basis the incremental costs for district road maintenance (para. 39). Agreement was reached at negotiations that the Government would make available to the District Councils, on a grant basis, the funds necessary to maintain the roads in the districts covered under DRIMP, to the extent the resources available to the Councils for this purpose from their own resources are not sufficient. The Government would review with the Association, not later than four months before the beginning of each fiscal year, the amounts to be made available to the District Councils for this purpose during such year (Section 3.01 (b) of the draft Credit Agreement). The system of Govern- ment assistance and the allocations needed during the project period have been agreed with Government. In order for the second phase of DRIMP to start immediately following completion of the first phase and because of the long lead time to construct the depots and housing in the first three districts of DRIMP's second phase, retroactive financing is needed from July 1, 980 (para. 39). The preparation for the third phase of DRIMP is being carried out by Government selected consultants. 34. Consulting Services and Training. The proposed project includes consulting services to: (a) supervise the road construction and improvement program on the North-South road; (b) assist MWS in carrying out the second phase of DRIMP and in preparing the third phase of DRIMP; (c) strengthen EPD's transport planning capacity; and (d) undertake a study of road maintenance needs. For the purposes of transport planning, agreement was reached with the Government during negotiations that a transport economist, with qualifica- tions and experience satisfactory to the Association, would be appointed by the Government by December 31, 1981 (Section 3.02 of the draft Credit Agreement). The transport economist would work with the head of the Transport Unit of EPD in developing a transport planning system. It was also agreed that the Government would select about three staff members of EPD whose qualifications and proposed training program were satisfactory to the Association; the first such candidate would be selected by June 1, 1981 and the remaining candidates by December 31, 1981 (Section 3.09 of the draft Credit Agreement). These candidates would return to the Transport Section after two years of overseas training under a five-year bonding arrangement. The comprehensive maintenance study would provide the basis for identifying the road maintenance needs in Malawi over a five-year period and the technical, financial and manpower resources required to meet those needs. The terms of reference have been agreed with Government. Agreement was reached during negotiations that the Government would carry out the study by May 31, 1982 (Section 3.08 draft Credit Agreement) and exchange views with the Association on its findings and recommendations. On the basis of the study, the Government would establish a rolling five-year maintenance program satisfactory to the Association. Thereafter, the Government would, not later than four months before the beginning of each fiscal year, until five years after the project is completed,  - 12 - enchange views with the Association on the maintenance program and budgetary allocations to it (Section 4.02 (b) of the draft Credit Agreement). In the interim, prior to the completion of the study, to ensure that the existing road network is properly maintained, agreement was reached during negotiations on the level of funding to be allocated in FY82 and FY83 for maintenance of tne main and secondary road network and roads improved under DRIMP. 35. Road Maintenance Equipment. Although any substantial strengthening of MWS-s maintenance capacity must await the results of the maintenance study, the project provides financing for a few key items of maintenance equipment, mainly for repair of bituminous pavements. 36. Training Center Facilities. The first phase of the relocation of the MWS training branch from Zomba is to provide for the construction and equipping of new MWS training facilities in Lilongwe including staff houses, classrooms and dormitories with a capacity for about 25 trainees; altogether 50 Roads Department staff will be trained annually. Relocation near MWS head- quarters would facilitate continuous supervision of training activities and use of existing MWS facilities and of professionals as part-time instructors. Project Cost and Financing 37. The total project cost inclusive of taxes and duties is estimated at US$42.2 million equivalent, of which about US$26.7 million, or 63 percent, would be foreign costs. Details of project costs are included in the Credit and Project Summary. The proposed IDA Credit of SDR 25.9 million (around US$33.0 million equivalent) would finance about 84 percent of total costs net of taxes or duties - 100 percent (US$26.7 million) of the foreign exchange costs and US$6.3 million of local costs. The Government would provide the remaining 16 percent (US$6.2 million) of project costs. The justification for local cost financing is found in para. 17 above. Total project costs include 10 percent physical contingencies, and price contingencies on foreign components of 10.7 percent in 1980, declining to 7 percent in 1983, and, on the local component 12 percent in 1980 and 1981 and 10 percent in subsequent years. Procurement and Disbursements 38. MWS would be responsible for project implementation apart from the technical assistance for transport planning for which EPD will be responsible.. Civil works contracts for road construction and improvements (US$21.0 million) would be awarded on the basis of international competitive bidding (ICB) in accordance with Bank Group guidelines. Contracts for civil works consisting of depots and housing for DRIMP and new MWS training center facilities (US$2.5 million), which, due to their small sizes and widely dispersed locations, would not attract ICB, would be awarded after local competitive bidding or, if unsuccessful, the works would be constructed by force account. In order to train local staff in the districts, improvement and maintenance works under DRIMP-s second phase (US$4.5 million) would be by force account. Consultants employed by the Government to supervise road construction (about 130 person- months), assist in the implementation of the second phase of DRlMP (about 90 person-months) and the preparation of DRIMP-s third phase (about 15 person- months), carry out the maintenance study (around 55 person-months) and provide  - 13 - technical support to EPD's transport planning unit (about 30 person-months), would be employed on terms and conditions satisfactory to the Association (Section 3.02 of the Draft Development Credit Agreement). Approximately 320 person-months of consulting services estimated to cost US$3.7 million are required, at an average of about US$8,850 per month for direct costs. Local transport, otfice and supporting services raise this figure to US$11,560. These costs are based on recent consultants' contracts with Government. The equipment for maintenance of bituminous pavements (US$140,000) would be procured through local shopping. To maintain standardization and interchange- ability between districts as well as with MWS, equipment for the second phase of DRIMP (US$940,000) would be purchased through local shopping. 39. Proceeds from the proposed credit would be disbursed on the follow- ing basis: (i) 80 percent of total expenditures for construction and improve- ments on the Jenda-Ekwendeni road; (ii) 100 percent of foreign expenditures and 90 percent of local expenditures for vehicles, equipment and spare parts; (iii) 70 percent of expenditures on civil works (depots and housing) for DRIMP's second phase and on civil works for MWS's new training center; (iv) 60 percent of expenditures on civil works for district roads' improvements under DRIMP's second phase; (v) 85 percent of total expenditures for consultants' services; (vi) for incremental maintenance expenditures on district roads; for each district being brought into the maintenance program, subsequent to completion of road improvements: 75 percent of incremental expenditures during the first year of maintenance; 50 percent during the second year of maintenance; and 25 percent during the third year of maintenance; and (vii) 100 percent of foreign expenditures for overseas training. Retroactive financing is recommended for up to US$350,000 to meet 70 percent of the costs of depots and housing for the first three districts of DRIMP's second phase and up to US$230,000 to meet the foreign exchange component of consultants' fees for the preparation of DRIMP's second phase. A schedule of estimated disbursements is provided in the Credit and Project Summary. Project Accounts and Reports 40. Separate project accounts would be maintained by MWS for each component. It was agreed during negotiations that these accounts would be audited by the Auditor General or other independent auditors acceptable to the Association and the audit report furnished to the Association not later than six months after the end of the fiscal year (Section 4.01 (c) of the draft Credit Agreement). Agreement was also reached that the Government would monitor the progress of the project and that after completion, the Government would prepare and submit to the Association a full report on the execution of the project (Section 3.04 (d) of the draft Credit Agreement). Benefits and Risks 41. The proposed project would yield an overall economic rate of return of 18 percent; 19 percent for the road construction and improvement component. The three road sections to be paved show individual rates of return of 13 percEnt (Jenda-Luwawa Turnoff, 32 km), 16 percent (Mbowe-Mzuzu, 17 km) and 30 percent (Mzuzu-Ekwendeni, 20 km). The sections to be improved to gravel standard, Luwawa  - 14 - Turnoff-Kalungulu (42.5 km) and Champhoya-Mbowe (47 km), would yield rates of return of 11 percent and 18 percent, respectively, and the section to be gravelled, Kalungulu-Champhoya (10.5 km) shows a rate of return of 55 percent. These rates were derived by comparing the cost of construction, improvement and maintenance with quantifiable benefits resulting from lower vehicle operating and road maintenance costs. Traffic on the above road sections is assumed to grow at 7 percent per annum in accordance with recent traffic counts. By 1983, when construction of the road is expected to be completed, traffic would vary from 83 vpd on the Luwawa Turnoff-Kalungulu section to 395 vpd on the Mzuzu-Ekwendeni section. This includes normal and diverted traffic, plus generated traffic on the paved road sections equivalent to 10 percent of the expected traffic level in 1983 without the improvements, as well as traffic generated from agricultural projects at the northern and southern ends of the road. In the first instance the project benefits would accrue primarily to road users; however, in view of the competitive nature of the road trans- port industry, the benefits are expected to be passed on through lower freight rates to the population areas adjoining the road. Within the zones of influ- ence of the project road are several development projects, including two projects financed by the Association, the Second Karonga Rural Development Project, and the National Rural Development Projects in the districts of Karonga, Chitipa, Mzimba and Rumphi. Tobacco, rice and tea cultivation schemes would also be indirectly served by the road. 42. The project would also assist in extending DRIMP to ten additional districts for the improvement and subsequent maintenance of about 2,600 km of district roads. These roads would be selected according to socioeconomic criteria and would have a rate of return of at least 12 percent. Benefits from the works are expected to be in the form of savings in vehicle operating costs and increases in agricultural production made possible by easier access to farms and markets. Benefits from the reduced transport costs would accrue initially to road transporters; there is adequate competition to ensure that these lower costs would be passed on to the farmers in the roads- zone of influence who would also benefit from the increased agricultural production made possible by improved roads. The only major risk to the expansion of DRIMP is the availability of Government's financial resources for maintenance. To minimize the risk, agreement was reached during negotiations on Government financing of maintenance costs; the Association would help to cushion the burden by financing, on a declining basis, the incremental maintenance costs for DRIMP. PART V - LEGAL INSTRUMENTS AND AUTHORITY 43. The draft Development Credit Agreement between the Republic of Malawi and the Association, and the Recommendation of the Committee provided for in Article, V, Section 1 (d) of the Articles of Agreement of the Associa- tion are being distributed to the Executive Directors separately. 44. Special conditions of the project are listed in Section III of Annex III.  - 15 - 45. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 46. I recommend that the Executive Directors approve the proposed Credit. Robert S. McNamara President Attachment January 14, 1980  - 16 - TABLE LA MALAWI - SOCIAL INDICATORS DATA SHEET MALAWI REFERENCE CROUPS (UFICHTFD AVE9ACES LAND AREA (THOUSAND SQ. KM.) - MOST RECENT ESTIMATE)- TOTAL 118.5 AGRICULTURAL 41.2 MOST RECENT LOW INCOME MIDDLE INCOMF 1960 /b 1970 /b ESTLIATE /b AFRICA SOITH OF SAHA?) AFRICA SOLTH OF SAPARA GNP PER CAPITA (US$) 50.0 80.0 200.0 260.0 868.0 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) .. 46.0 52.0 90.0 699.4 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (MILLIONS) 3.4 4.5 5. 7 URBAN POPULATION (PERCENT OF TOTAL) 4.4 6.4 8.9 17.3 28.9 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 11.0 STATIONARY POPULATION (MILLIONS) 32.0 YEAR STATIONARY POPULATION IS REACHED 2165 POPULATION DENS ITY PER SQ. 1K1. 29.0 38.0 49.0 27.4 61. 7 PER SQ. KM. AGRICULTURAL LAND 89.0 113.0 141.0 82.6 126.0 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 43.6 43.9 47.5 44.9 45.5 15-64 YRS. 52.0 52.1 50.0 52.2 51.6 65 YRS. AND ABOVE 4. 4 4.0 2.5 2.8 2. e POPULATION GROWTH RATE (PERCENT) TOTAL 2.4 2.8 2.9 2. 7 2. 7 URBAN 4.8 6.6 7.3 6.8 4.9 CRUDE BIRTH RATE (PER THOUSAND) 53.0 52.0 52.0 47.4 46.8 CRUDE DEATH RATE (PER THOUSAND) 27.0 22.0 20.0 19.6 16.4 GROSS REPRODUCTION RATE 3. 2 3. 2 3.5 3.2 3. 2 PAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. .. USERS (PERCENT OF MARRIED WOMEN) .. .. FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 90.0 91.0 101.0 91.8 94.0 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 86.0 98.0 90.0 90.2 92.7 PROTEINS (GRAMS PER DAY) 55.0 67.0 59.0 53.0 53.0 OF WHICH ANIMAL AND PULSE 5.0 10.0 10.0 18.4 15.6 CHILD (AGES 1-4) MORTALITY RATE 41.0 32.0 27.0 27. 7 21.3 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 37.0 42.0 46.0 45.3 50. 1 INFANT MORTALITY RATE (PER THOUSAND) .. 149.0 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. .. 33.0 23.2 31.0 URBAN .. .. 70.0 58.0 66.8 RURAL .. .. 29.0 16.8 ACCESS TO EXCREITA DISPOSAL (PERCENT OF POPULATION) TOTAL .. .. .. 28.9 URBAN .. .. 15.0 67.0 RURAL .. .. POPULATION PER PHYSICIAN 42400.0/c 38430.0 48198.0 30910.4 14508.2 POPULATION PER NURSING PERSON 12918.0 16344.0 3291.0 5793.2 3279.5 POPULATION PER HOSPITAL BED TOTAL 927.0/d 649.0 546.0 1198.9 1141.5 LRBAN 115.0 110.0 RURAL 1312.0 802.0 ADMISSIONS PFP HOSPITAL BED .. 36. 3/e HOUSING AVERA-E SIZE OF HOUSEHOLD TOTAL .. .. URBAN .. 3.4/f RURAL 5.5 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL .. .. URBAN * 1. 9/f 1.7 RURAL .. .. .. ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. .. URBAN .. 16.0/f RURAL .. ..  - 17 - TABLE 3A ANNEX I MALAWI - SOCIAL INDICATORS DATA SHEET MALAWI REFERENCE GROUPS (WEIGHTED AVERGES - MOST RECENT ESTIMATE) MOST RECENT LOW INCOME MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b AFRICA SOUTH OF SAHARA AFRICA SOUTH OP SAHARA EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 63.0 40.0 62.0 57.7 61.7 MALE 81.0 50.0 75.0 74.2 69.2 FEMALE 45.0 29.0 50.0 54.1 51.4 SECONDARY: TOTAL 1.0 2.0 4.0 10.0 20.6 MALE 1.0 3.0 6.0 13. 7 29.2 FEMALE 0.3 1.0 2.0 7. 1 14.7 VOCATIONAL ENROL (X OF SECONDARY) .. 3.0 7.2 6.8 7.0 PUPIL-TEACRER RATIO PRIMARY 41.0 43.0 61.0 45.0 36.6 SECONDARY 14.0 16.0 21.0 25.2 24.3 ADULT LITERACY RATE (PERCENT) .. 22. 0jj 25.0 25.5 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 1.8 2.0 1.9 3.6 38.8 RADIO RECEIVERS PER THOUSAND POPULATION 1.0 24.0 26.0 31.5 83.5 TV RECEIVERS PER THOUSAND POPULATION 0.7 .. .. 1.8 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION . . . 1. 8 4.6 24.2 CINEMA ANlNUAL ATTENDANCE PER CAPITA 0. 3 .. 0.9 0. 0. 7 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 1570.5 1980.8 2404.2 FEMALE (PERCENT) 38.3 37.8 38.0 33.5 38. 1 AGRICULTURE (PERCENT) 92.0 89.1 86.0 80.7 54.3 INDUSTRY (PERCENT) 2.7 3.7 5.0 8.1 17.8 PARTICIPATION RATE (PERCENT) TOTAL 48. 2 46.9 45.8 42.2 38.8 MALE 60.3 59.2 58.1 55.1 48.4 FEMALE 36.4 35.0 33.9 29.5 29.4 ECONOMIC DEPENDENCY RATIO 1.0 1.1 1.2 1.2 1.3 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS .. 29.5 HICHEST 20 PERCENT OF HOUSEHOLDS .. 52.9 LOWEST 20 PERCENT OF HOUSEHOLDS .. 5.7 LOWEST 40 PERCENT OF HOUSEHOLDS .. 15.0 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 123.0 138.2 RURAL .. .. 99.0 86.1 ESTIMATED RELATIVE POVERTY INCOME LEVEL (USs PER CAPITA) URBAN .. .. 65.0 107.0 RURAL .. .. 52.0 65.0 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOMIE LEVEL (PERCENT) URBAN .. .. 25.0 RURAL .. .. 85.0 66.9 Not available Not applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Eatiimate, between 1974 and 1978. /c 1962; /d 1963; /e 1965; /f 1967; IR 1966. Most recent estimate of GNP per capita is for 1979, all other data are as of April, 1980. October, 1980  18 ~~~~~~ANNEX I DEIPIITIONS CF SOIALO] INDICATORS oNes:. Althouge the dots ar dre frmmu'egnrly judged the -.ee etheeinatl. . ond relabl,1It should also be outed then they may ton be inter- naioaly ..pr .i he_eot ofth lack of tienderdle oltlnasdntt acdby differen nnre nt.lrlgm es h aese t The eeen ,ueae1 h secotyeopt the sat-(eon touny me Ds tonty grouP 1 cIt somhat higher averag Iatam than the nitry troop otthe bajet totyeoptfr"stalupoOiEpotr'gapeee'Ide msNtt btfits end Otiddl nEst" tathm..- benamas of er mooutaeaffloitnit). lo the referents group dana the anree r papalan=en ceihntd_antIthetn temah "d'ao sod shew oy whe at date end Smnronf. no 0 enet heb ari in .1relenig av .ne. of ion dira-r not nnbr These averges ge only oseful In tpntgthe raIse ft --m Iditmno- ena im so tho -otey nod refetenn RooPs. LAND ARE I Ihouteed e.a)resnoor hioa-t'poetcaidad ty mne0 Inatntg y- Ten1 - Tetel sofaeara op.lalg land tress ad Indeed o..e.. altlame qualifie fro a-ndloe adoe! eanylvl Eelanoa tsisane ofag`i-1lto-alremose.d tmorrl orpar enly "Ponlanla oaNar. s Faat -Papulo le diolded by nbee of pr...tnltta foe oro.p, pnom ,maket end kitohac gardes or to lie fd1ots; 1977 dana. als sadtamel gradoasmce,trnia.mms t ealanes eae- GOOP PtR CAPITA lS$l - Cat per -aplnartiateattretmra pirina, Ca1- Poacletln ref Inoaital Ned - tete. -rb-n and eme - Popsatlce (tmit, urban, sadtoe divided by their raspaties gesae af itapite1 beds t-lened by as -onttnmto OrId BskAOe1_170 -79 hamIa); 19W, avialei bolin end private germa-and epenListed banplta1 and e- 197 , sad I",9data..biiti .t. H.Ptl blh tp tL tfd A'I ~~~~~~~~~~~by en lenLtto phyaloisa. Eanablih-ats ptdldg ptlnnt"tlly netedil1 sad lIgnYite psarlesa onare ge ho ydn- nuoeaac geetharml la- retes e P.-cattly ttsffd by a physinisa (inn by a aedie.l .a.. ste toLIttyg nblssso oleuvaetotC ie 90 90 nod 1970 auras tdette, em,) hieh often i-pentin anoa.deeli end provide data, limited teog of.edinsi tfilitlie. Fer ntatIetfeal parpee aria Nampy- tala Iselad fVWs printipa1 genera nd apea1a1tnd hompitala. -ad rota1 FPOPULATIHOC AND fITAL STATNISICS bespltale ira oc -ans hospitals ead mdital senmerin nantrs Tota1 Poraleti.o. Mid-Yeap (milliooa( -A. rf July 1; 1960, 1970, ead 1978 dmaaent opnled-tinlnere o deeltatosdahre Hans .(PV t ~t.)R.tiins. t .1f. hosptna1a diotded by the neber of bade. differcot deinlitiea of urban arasmy fer o -btllty of Hens HOUINJG seigoncrc; 191 190, sod 1979daa Am..-e ti.e of Household ......aaas .a..asehe1dl -ea.uba. sd arD Porultiem Preeoisma ...t.J.i..V . A house hold tn n of a gro af indieidoale na ait Ii"g qanriar Pcaasmit vast lWOi-Cunnpyaaocpjmlctnehsd ma 190 d shait sin mel. A beda or ledger esy ensy eat be intlad.d is totel popaILtiet by age en ea d their -art'ln sad fertility rat.. nb hos...nold for statistipa1 p...c... Projennios pa-taseer far atality ratee omprina of oboes leel-. *t Average amber of otaace ras - tent.] ubhg. sd rara - Averag a'.- tag Jlife -aet-ty at bith'n - in...ta w.ith otmaty' per aplts lans her of peos.e. :per oes I al,Dl oisa, so- ae eeid navmae.l- leel ndCsal life eapo.ttacy enblltg n77. Tyh..m pare- dIig.reettol.Ioltg . 'a.a co-smma arses snar tot fertility rate algo hors thr.. len- sesmlt deoitsianrupa pie fatiltya....rdige no ttm level and past f saly planiag parf-rna. A..ms.i IeTniityv (ronnan't df lilma) - ntatl. aria. sad cora - Osohfmantr Isthen -eige oar ofpthese alas nOshoties of mosty Cvetinal. dreliega snob el-riity In lIinin qartare - petostag sa .eriity Irndeo projani opas f otel, urban, ard rura dwelliage cniey Otetisear reralatis - In a .e.stiorar population ther i or g-oth atone tbc birth Vtao te aqa is the death rate, and also the ag rt...e - EDUCATION nab. . osant inn is anhl-d only after fertIlity racea dmnltae ts Adjsel trl eenett at wee .PI..a. -Inef assonly. ma: a_atonay Ppcpeltio ilee aeerlmsofllgsat the prmr lvlengtceae f espeogirs aentuatad on the beia nf the proJ.rtd oheratteritio- of the aaalr otaynht-a etlton;mral mldseida gd01 inttyar20,so en fHoIne of f-rtilltyrVctentplao- ysr bun adnd let f. differan Ieneb of petea deogies; fee mast lee.ounlect nvra Posinsclms a mnd100 Pereane Teatstnieaar panslanti is ...ohed - Tba yea cha t stio...ry pspulatLo alto eo- pupIsar halo orhon ibe off intL1 anNal ge ia hs .ea rahad. Son..dary erbha1 - total, male s fas1a - C.Mm.Ded a abov;aesdy natal .d C~ d b. rgirl- area. n.al. o1,f 12 te 17 years of ags; orrsoedsn oers are genally onlyI.A. Sto-tireapl.-soroI e14nt.l) e-.m gtiat aetadervl - Vonetineel igatiatton Poreleiog Am tttesrm terranl - Clldta(I-l yers. ktiag-ae(t ttoata t . idsra. o other rrar hbicb p-srte ledes- 64 eace), *sd r-nlrd (65 fees and%oer aspert--ga of sld-y-a psP.- dently srasdepar atst of sanmodaryImteioa latiec; 1960. 1970, sad 1978 dana. P1,ia-sebrrta-rle'.edeodry-TfltdnenoedI Pmrltion Gir-ti Dens Iceretl - total - A-a gIo9tch rates ef total mid- primar and 4enand yr levlsdiid dby -sToba 1 teenar is1ltie yattlseieoa for 1950-60, lO6H-70, aad 1970'g ttesde aes Pemota ir.h es(mnat) - urha M- e gr-h ost- of orbar F07- Adult litar-y rate taan - Literate .dt fable to reed sa evims) leiosfo 1'hi l9NO7t, sad 1970707. -apfseseo otlautpplto agd 11 yeses sadevr lans Nnt tes lanabsad) - dAmsel live births par thoaneadofmdya popaletisa;l9H 197t0, sad 1979 Hats. COgnNSUPION OroeDet ae ettoued Anasal d-hsb pan thossad of aid-year Peatasa Cern (net thoaaad -oralalo) - Peesmaget tars eamerts saner 8topsetie; 190, 191, -d 1978 dan.- trsV estig lena tha eight peteers; mooldan emis1emes, hserm sad Gres _ rsrdoieta- A-veag camber at d.aSgae a. coa ill heat is miiar ehna. her m-ma reprodootiv pertod if she e plae ...ea tgS-ep-nif it far- ttsEnian(ceo thosnond coenetiorl - All types of resi..r. for red, Ililey rates; ussally fo-eraeae i a1900. 1970, sad 1977. brdasatgerlrulnpttoedofooaim;gedssl- Pamilo Planat - Omens tero= tof __erId coa)-Preta f manled o-utries b.io bod lnaug -oa of obhldbearlg age (15-4h Yearn -) h.aoa blth--otrs1 dmrios to . cavp fear imsa erlnas -T enotaCe etdetm al VarId sam i .-a ege gt... . genera publIcprthond positio; adages utliossad TV r-.ar-. FMADNTIINI i -ootriss see Is .t chat ragistratln of TV eat sea ID sftOat lInd of PooH ered-ttl per teams. l1990t71a100 - lage of yarn .pita taoa fnn of"daily eoe fncatawppr,Htisad aap.rlediel pmi- poadantisaatal fund condlItI- Prdctior eanldes mend nod f.ca *W Ilneton devted potmeolly to rcnrdieg gst.r. news, It Is ta= Verd inton tsfr .year baIn. Coneditien torso1 primar toads fag. sgr. to he "daly'tIf 'it appears at le-e f-cu Vin a mesh matdo Vua) iob ate edible ae onat -uni_c Ie.. cffee min Cinea Anea Ato _so nc emma. ear Tes - Based on ahe atme of te -eaealdad). Hdrcs ooat-on of e..ob -tnur is" basd ontinhts sold doming nbc yea, isalodiag dase ta n din-bi siam -at-ma enrag prde poSt euh-a l961-65, 1970, aA10 del. ndtmbile o-it.. energ sqatalet ofme ford sppliesf avilable In agntry Dare .pits LAut FORCE par day. Availabl su pplima ocmpVisa d_metlo. prdoction imports as Total Labor Por- Ithnads) - 0cE-minally e.tniV paPsoa, ianledgag epeta,en obahtg-s It ettIk. NtOt soppIies acluds ecime f-cd, aera, are ftessd uneployed ban ...oludieg hamar-n-, atodest. etc. qenit b sd ofo troteslog -a snei tita cur- Ofiiir in reiaso-trias are eon nomparabl; 19600, 1970 sa manna core machasted by PAP based ma physiologica~~~~~~~~~~~Vl eeda for -_ma eai- 1979 data. nit y a-d health n,oteidatiog rrro tultmpeaue bo.dy omi$hta. eSc Paml (retes) - Femal labor ferom as penontaga of stal labor ferns. sa sea b.d silboto of9p6 alaioc sa .elotg 10 peoecon for reste ,S Hainlar Mtro ) - Labor fsoe ha famin.& feretry.-Sama sad hooabold level; 190-65 1970, sad 1977 data. fiha sptang fttllbofroa ICHa197 isd19tda Far tarta sanly of notae(seas ea Her) - Pontain nonnat of por nPiti Idhatmn (monan -- g fao Ctta1 is. fiin. cesetr0ttio.0 medsif8eetert ot sapply of food par day.,le aepply of Cfsad in def teed ma abav. Xs- sod P. . elert -n,sne adC gas Riaupretqse .-tonl ae n;190 qsirsaanos or nil toar.ie stabiteltd by USDA prvde f-n inItIt 1970 and 1978 data. I-omsn of. hIras oftote Prti perday end D ras of sasmal sd Prntirailotn Dens-(c.r.sei - total man.a fMal - Pattcipetlueo pulse pronal,of to 10 _gra should be ati-1a prtei,t hee ted- acIvt esteeeatmoe stoa,ml,ndfmaelhrfnO erds are 1onr that those of 75 ort of tona pronia met 23 eteV peccetagets of tna tal, ale ad fmal peo dto of al bnga feetsney Itlpaeca noavrage for the world, ;'pro.o.d by FAO I the mhind 19100. 19710, sad 1976 Hate, Th... are I10s participattes.t rais talestle OrdFn. Su Iy 901-65, 190ed 1977 dan. oesnsrnoeo the popaltie, and long time tred. A to .sen- Pertees eonso mcrI Irn aima an o Pee -Preic sapply of fead do- mtsseio ainlsoce tired fine eatmle ad polec to oe po day; 1901-85, 1970 se 97 at. togmo esdeac yltin - Eatie of popalatin uadet 15 sed NOmndcs Child feesa 11-41 Nteitn11t Bat fret th.mesdl - Anal deaths ptbih-sa is to the tensi IlabrPr agegonp 1b mar. t oildre In this age grop; C. oceat davalopiecse tries Hats derived Iro life teblas; 19600, 1970 cd1, ae REALTH P~~~~~~~~~~~~~~~~~Fr-t-ao ef private I_om (both In o..h and kind: - Ranelvm by riahea SELifTO U-bV- ...- i. -., po-tta. nith- 00 pornat, penVrct 10 pPton-t, end poorest h0 eminet at thIft;61900.1970tand 1978 aa la-tettrtltBas(c thoagn) - Hansel deaths of intan sadar -r pt.. PooTa TARGtET hROPS ofeo e .1 thousad liv births Netimatd Absolute Poverty (US ed 1$ car -Pot.e - ransd coral - hoACnar_ , b...P_Vyir-W -1... no Oafs Osi- (Inao of nrltn)-ta l. urban. en oal-EAbeoepoet tne l ii then lorom lee hele eBini a mie.~ embr o reple(toal,uren,asHrorl) uthnenacblestoes o sfetagicisrlly edeqota diet pine easantalerfndtqiesa1i a eaermpply (locluda treated aerfeas waters or -nr-d bet -neastuet- affordable. eaenmch an then fr-o proreond boriln priags, ad eniey ale " tetimeed talative% P srrtanin Level 100 e taIn)- rasdtrs- p_r.ttet .a of thir r..petitr e coa.I n re et oloBrlmsiepeet om ee noethr faeaeptcpt foosmisicor eteedcan locaod ton cre than 00 miens fro a bean: say~ be ao l le-e af tha s-ory. Urba laa .. eJ derivd teem the cre -eidered as being etihin reasonable. ...... ofthen..s. Icntl ra eeIrt edetms orhgmeos"o ivn s ra eas rsariecoee dimply then the hon..-if.ay ahr ofte lesnd tEtimatad Pecuaion Halo. AbsoltePovri bgo frlfncet - ra do, con bars to- p-rdediapoorlonepr I o day. In 1feobia the sa oa evn tpplto sie e aa)weaeehcusps dispoal a pmonse f rheinro-p-oti- pspslaeittt. tEernte delE-totl ad Sonal Data DivIion Po..al ay Iroude tOecolttonsd dinpo...i, einh on withosn netm55. tyo-oit Analysia ad ProJannes Bpar-em of huma sooe_ and mens.-wter by eat-br- synts or tin -s of ttsbat CIwo cit priotam end a hiler- etltoe  ANNEX I COUNTRY DATA - MALAWI MONEY, CREDIT and PRICES 1/ 1975 1976 1977 1978 1979 (Million K outstanding end period) Money and Quasi Money 122.4 121.0 161.0 168.6 170.1 Bank Credit to Public Sector 67.4 88.1 85.7 99.8 121.8 Bank Credit to Private Sector 56.1 76.5 84.9 122.4 170.9 (Percentages or Index Numbers) Money and Quasi Money as % of GDP 21.6 18.5 20.9 19.8 15.8 General Price Index (1970=100) Annual percentage changes in: 100.0 104.5 108.5 118.0 131.1 General Price Index 15.0 4.5 3.8 8.7 11.1 Bank Credit to Public Sector 237.0 30.7 -2.2 16.5 22.0 Bank Credit to Private Sector 13.6 36.4 11.0 44.2 39.6 BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1976-1978) 1975 1976 1977 1978 1979 US$ Mln. _ (Millions US$) Tobacco 108.5 45.0 Exports of Goods, NFS 179.4 202.6 241.9 260.0 269.0 Tea 39.4 16.4 Imports of Goods, NFS 284.0 246.4 279.1 425.3 468.7 Groundnuts 8.7 3.6 Rebt4uue BttljlLICe -104.6 -43.8 -37.2 -165.3 -199.7 Sugar 19.3 8.0 All Other Commodities65.8 27.0 Total 241.7 100.0 Interest Payments (net) -5.4 -5.5 -5.5 -8.8 -15.0 Other Factor Payments (net) 17.3 -14.2 -20.0 4.0 -22.7 Net Current Transfer 6.1 5.5 23.5 44.8 35.5 EXTERNAL DEBT, DECEMBER 31. 1979 Balance of Current Account -86.6 -58.0 -37.2 -125.3 -201.9 US$ Mln. Direct Private Foreign Public Debt, incl. guaranteed 606.0 Investment 9.9 8.2 11.1 19.6 20.9 Non-guaranteed Private Debt .. Net MLT Borrowing Total Outstanding & Disbursed Disbursements 42.3 34.0 56.8 87.5 170.0 Amortizations 2.9 3.3 8.4 11.8 15.0 NET DEBT SERVICE RATIO for 1979 Subtotal 39.4 30.7 48.4 75.7 155.0 Other Capital (net) -17.9 -30.1 35.6 31.5 21.4 Public Debt, incl. guaranteed 10.0 Increase in Reserves (+) -47.1 -38.3 57.9 -18.1 - 4.6 Non-guaranteed Private Debt .. Total Outstanding & Disbursed Gross Reserves (end year) 65.5 26.2 88.0 69.9 65.5 Petroleum Imports 22.9 26.1 21.5 36.0 38.1 IBRD/IDA Lending, October 31. 1980)(Mln. US$ Petroleum Re-exports - - - - - IBRD) IDA (Inc. Third RATE OF EXCHANGE Window) Outstanding & Disbursed 25.2 123.2 Undisbursed 4.n ) . US$ - K .8861 .9130 .9029 .8438 .8169 Outstanding incl. 292 183.2 Undisbursed K 1 - US$ 1.1545 1.0953 1.1075 1.1851 1.2241 I/ IMF, International Financial Statistics. July 1980 not available December 23, 1980 not applicable  ANNEX I ,20- ECONOMIC INDICATORS GROSS NATIONAL PRODUCT IN 1979 ANNUAL RATE OF GROWTH (%, constant prices) US$ Million % 1968-78 1979 GNP at Market Prices 1,278.7 100.0 6.3 3.9 gross Domestic Investment 374.8 29.3 15.4 -19.0 ,ross National Savings 137.8 10.8 27.0 -45.4 Current Account Balance -201.9 -15.8 - Exports of Goods, NFS 269.0 21.0 6.3 - 0.8 Imports of Goods, NFS 468.7 36.7 7.0 - 1.0 OUTPUT, EMPLOYMENT AND PRODUCTIVITY IN 1979 Value Added Labor Force V.A. Per Worker US$ Million Z Thousand % US$ Million Z Agriculture 520.2 42.6 2631 93.0 197.7 45.9 Industry 236.9 19.4 66 2.3 3,158.9 732.6 Services 463.2 38.0 133 4.7 3,482.7 807.7 1,220.3 100.0 2830 100.0 431.2 100.0 .OVERNMENT FINANCE Central Government K Million ' of GDP 1978/79 1978/79 1975/76-1977/78 ,urrent Receipts 147.8 17.3 13.2 ,urrent Expenditures 140.4 16.4 12.6 ,urrent Surplus 7.4 0.9 0.6 ,apital Expenditures 113.5 13.3 8.8 NOTE: All conversions to dollars in this Annex are at the average exchange rate prevailing during the period covered, not available not applicable December 23, 1980  - 21 - ANNEX II THE STATUS OF BANK GROUP OPERATIONS IN MALAWI A. Statement of Bank Loans and IDA Credits (as of October 31, 1980) Bank incl. Loan or Third Un- Credit No. Year Borrower Purpose Window IDA disbursed Two loans and 12 credits have been fully disbursed 17.0 81.1 S-17-MAI 1974 Republic of Transport Engi- Malawi neering & Services 2.0 0.23 523-MAI 1975 Second Highway 10.0 1.54 590-MAI 1976 Education II 11.6 1.21 1286-T-MAI 1976 Agriculture- Karonga II 9.2 0.96 711-MAI 1977 Water Supply 7.0 6.98 758-MAI 1977 Third Highway 10.5 0.95 823-MAI 1978 Shire Valley Consolidation 10.7 3.92 1610-MAI 1979 INDEBANK First DFC 3.0 3.00 857-MAI 1979 Republic of National Rural Malawi Development Programme I 22.0 17.08 910-MAI 1979 Education III 14.5 13.86 992-MAI 1980 National Rural Development Programme II 13.8 13.80 TOTAL 29.2 183.20 - of which has been repaid 1.68 Amount sold - - of which repaid TOTAL now held by Bank and IDA I/ 29.2 181.52 TOTAL undisbursed 3.96 59.57 63.53 1/ Prior to exchange adjustments.  - 22 - ANNEX II B. IFC INVESTMENT IN MALAWI Total Investment Type of Held Undis- Number Year Obligor Business Equity Loan Total by IFC bursed --------------(US$ Million)------- 326-MAI 1976 David Whitehead Textiles - 6.0 6.0 5.0 & Sons (Malawi) Limited 362-MAI 1977 Dwangwa Sugar - 9.0 9.0 9.0 - Sugar Corpora- Production tion Limited 434-MAI 1978 Investment and Development 0.6 - 0.6 0.6 0.1 Development of Finance Malawi Corporation 502-MAI 1979 Malawi Tourism - 2.0 2.0 2.0 1.6 Hotels Limited TOTALS 0.6 17.0 17.6 16.6 1.7  - 23 - ANNEX II C. BANK PROJECTS IN EXECUTION Credit No. S-17-MAI Transport Engineering and Services Project; US$2.0 Million Credit of June 13, 1974; Date of Effective- ness: August 28, 1974; Closing Date: June 30, 1981 The project helps determine the infrastructural requirements and provides technical assistance for the exploitation of the Viphya forest resources. Necessary transportation studies and the design of the required transport facilities have been completed. Part of the credit proceeds that remained were used to assist in putting together a financial package for the proposed mill. The package is still incomplete, however, and the pro- posed project is still being analyzed by the Government. The Closing Date was extended to June 30, 1981. Credit No. 523-MAI Second Highway Project; US$10.0 Million Credit of December 19, 1974; Date of Effectiveness; February 21, 1975; Closing Date: June 30, 1982 The project consists of reconstructing to two-lane bituminous paved standard the Lilongwe-Kasungu road (about 70 miles), including a bypass around the Lilongwe industrial area and reconstructing the Ligadzi bridge; and a pilot program in one district for improving development and maintenance of district roads. Construction works for the main road are complete and savings of approximately US$3.5 million were realized for this component. Results from the pilot program for district roads improvement and maintenance indicate clearly that the program has been successful and that it is feasible to extend it to other districts. The savings from the reconstruction component are being used to extend the pilot program to three additional districts; accordingly the Credit Agreement was amended by letter of June 9, 1978 and the Closing Date was extended to June 30, 1982. Credit No. 590-MAI Second Education Project; US$11.6 Million Credit of November 24, 1975; Date of Effectiveness; February 24, 1976; Closing Date: March 31, 1981 The project provides for constructing 22 model primary schools as examples for replication by communities and facilities at the schools for a rural education program; it establishes a new primary teacher college; adds practical subjects in selected secondary schools with emphasis on facilities to increase female enrollment. As costs permitted, the project scope was enlarged to include computer facilities for the Malawi Certificate Examination and Testing Board and additional staff housing. All contracts have been awarded and, except for additional housing and minor additional construction, the project has been substantially completed. The Bank is reviewing a government request to extend the Closing Date by six months to permit completion of all contracts.  - 24 - ANNEX II Loan No. 1286-MAI Second Karonga Rural Development Project; US$9.2 Million Loan of June 24, 1976; Date of Effectiveness: August 18, 1976; Closing Date March 31, 1981 The project, financed on Third Window terms, consists of seasonal- and medium-term credit to farmers, extension service, market complexes, health facilities, boreholes and other infrastructural facilities, agri- cultural and hydrological research, preparatory investments for the National Rural Development Programme, and rehabilitation of berthing facilities at Chipoka lake terminal. Improvement of Chipoka harbor has been completed. Although understaffing hampers implementation efficiency in some parts of Chitipa district and there have been small cost increases, the project's progress is satisfactory. Credit No. 711-MAI Blantyre Water Supply Project; US$7.0 Million Credit of June 3, 1977; Date of Effectiveness; April 18, 1978; Closing Date: March 31, 1982 Initial delays in project implementation occurred mainly to avoid interference with an ongoing UK-financed water supply project and also be- cause of the Government's decision to revise the scope of the project, with the approval of IDA. Project implementation is now proceeding reasonably well; detailed engineering is substantially complete; bid documents have been issued and awards made on three of the four contracts being financed by the Association with the award of the fourth contract expected shortly. However, due to the initial delay, commissioning of the works is now scheduled for late 1982, rather than December 1980 estimated at appraisal. Credit No. 758-MAI Third Highway Project; US$10.5 Million Credit of January 18, 1978; Date of Effectiveness: June 29, 1978; Closing Date: June 30, 1981 The project consists of constructing the 52-mile Kasungu-Jenda road to two-lane bituminous surfaced standard; strengthening three short sections of the Zomba-Lilongwe road; and providing consultant services for the supervision of the roads, and for the feasibility and engineering studies of the Jenda-Mzuzu road. Construction works on the Kasungu-Jenda road are almost completed, and strengthening works on the Zomba-Lilongwe road are well underway. Studies for the Jenda-Mzuzu road are nearing completion, and consultants are preparing tender documents.  - 25 - ANNEX II Credit No. 823-MAI Shire Valley Agricultural Development Project; US$10.7 Million Credit of July 7, 1978; Date of Effectiveness: September 6, 1978; Closing Date December 31, 1982 The project is the consolidation phase of the Shire Valley Agri- cultural Development Programme and includes extension services to support increased cotton and foodcrop production, seed multiplication and afforesta- tion programs, production credit, livestock and fisheries development, health and potable water supply facilities, a smallholder irrigation development study and some rural roads. It will provide social and infrastructure services to about 70,000 families. The Valley attained self-sufficiency in food crops for the first time in its history in 1977/78. Cotton produc- tion also regained the levels attained in the early 1970s. Guar bean pro- duction is rising rapidly, but groundnut production is declining. The project had a slow start because of staffing shortages and procurement delays. Although steps have been taken to improve staffing, it remains a problem, with inadequate middle level staff and delays in replacement of senior staff. Civil works and road construction although behind schedule, are proceeding well, despite shortages of vehicles and materials. Production estimates for 1978/79 show a decrease in tonnage for cotton and maize below their 1977/78 levels and an increase for the drought resistant sorghum, millets, guar beans and irrigated rice. Loan No. 1610-MAI Investment and Development Bank of Malawi Limited; US$3.0 Million Loan of July 7, 1978; Date of Effectiveness: November 1, 1978; Closing Date: July 1, 1983 The project provides foreign exchange for financing medium- to large-scale industrial and agro-industrial investments, and will help INDEBANK consolidate its policies and procedures and develop project promotion. To date, US$1.3 million has been committed for three sub- projects and more commitments are expected shortly. Credit No. 857-MAI National Rural Development Programme Project Phase-I; US$22.0 Million Credit of December 21, 1978; Date of Effectiveness: April 5, 1979; Closind Date: September 30, 1983 The project is assisting the Government in implementing the first phase of Malawi's National Rural Development Programme. Over a five-year period it aims to increase output of maize, groundnuts, fire-cured tobacco and rice, and expand milk and meat production. It will strengthen the Ministry of Agriculture and Natural Resources Central Service, four existing Management Units and establish eight new development areas. It will also complete the consolidation phase of the Lilongwe Land Development Programme. The project is cofinanced by CIDA, DEG, EDF, and ODM. It is proceeding satisfactorily except for staffing and recurrent financing problems.  - 26 - ANNEX II Credit No. 910-MAI Third Education Project; US$14.5 Million Credit EEC Credit No. 12-MAI June 19, 1979; Date of Effectiveness: September 4, 1979; Closing Date: June 30, 1984 The project is assisting the Government in improving and expanding primary and secondary education and improving curriculum development, in- service training and management of education. Its major components include const..ucting, furnishing and equipping primary schools; improving and expanding primary teacher training, secondary teacher training, secondary and technical schools; providing primary school textbooks; establishing an Institute of Education responsible for curriculum development, in-service training, and materials preparation; and assisting school inspectorates, architec'iral and engineering services, educational studies and project adminis. ation. An EEC Special Action Credit of US$7.5 million was made available to the project. Implementation is proceeding well and on time. Credit No. 992-MAI National Rural Development Programme (NRDP) Project Phase II (Wood Energy); US$13.8 Million Credit of April 25, 1980; Date of Effectiveness: June 9, 1980; Closing Date: December 31, 1985 The project is assisting the Government in its long-term energy development program aimed at increasing forest resources. It will establish a national network of 88 nurseries to produce seedlings for sale to small- holders, who will be encouraged to establish their own woodlots; fuelwood and pole plantations to help meet increasing demands from the commercial and industrial sectors, as well as from urban dwellers; and an energy unit in the Forestry Department of the Ministry of Agriculture and Natural Resources. It will finance preinvestment activities for launching NRDP phase III. Imple- mentation is proceeding satisfactorily.  - 27 - ANNEX III Page 1 of 2 MALAWI FOURTH HIGHWAY PROJECT Supplementary Project Data Sheet I. Timetable of Key Events (a) Time taken to prepare: two years (b) Prepared by: Government with assistance from IDA and consultants (c) Initial Discussion with IDA: February 1977 (d) First IDA mission: June 1978 (e) Appraisal mission departure: January 1980 (f) Negotiations: December 1-3, 1980 (g) Planned date of effectiveness: June 1, 1981 II. Special IDA Implementation Action None III. Special Conditions of the Credit (a) The Government would (i) make available to each District Council, on a grant basis, the funds necessary to maintain the roads in the DRIMP districts, to the extent the resources available to the Councils are insufficient to cover the expenditures required; and (ii) not later than 4 months before the beginning of each fiscal year, review with the Association the amounts to be made available (para. 33); (b) The Government would not later than December 31, 1981 appoint a transport economist (para. 34); (c) The Government would select candidates for training whose quali- fications and proposed training prorams are satisfactory to the Association; the first such candidate to be selected by June 1, 1981 and the remaining candidates by December 31, 1981 (para. 34); and (d) The Government would: (i) by May 31, 1982 carry out a maintenance study and promptly upon the completion of the study, exchange views with the Association on the findings and recommendations of the  - 28 - ANNEX III Page 2 of 2 study; (ii) on the basis of the study and an exchange of views with the Association, establish a rolling five-year maintenance program satisfactory to the Association; and (iii) thereafter, not later than four months before the beginning of each fiscal year, until five years after the project is completed, the Government would exchange views on the maintenance program to be implemented during the following fiscal year, including maintenance allocations required (para. 34).  1;~T op i ! L S .0 MALAWt FOURTH HIGHWAYPROJECT TRANSPO TION NET WORK ........ Orednsdec e.ts f2Mt '-~~~~KA NSA * ~~~~~~~~523-MAt ie4 746'MAt to KILflMETE6S 0 - Va Poeedf mR ds n 6nR6rgijqt 0 t ==gIS!!S ig 2DXio & tf '7 0 20 h0q Paved rods, proposedX 30 0 0 2,; 0 ;0 0 zf :, = \ > , t,frW i ; le, , -lin ipw Xel gaeatd-FrtIsroadsda 1- ~~~~......Roads baisrg stosi,ed ',4' L,vingstof.oo -.-.....tosheoy epder coestructvon NViSA hiwU t ........... St""n, -rtr 'P LATEAU 4 sorswtast~o. e-ae RUMP -~~~~~~ I --.P~~~~~K Rers R. p 2 IA tsDistrCt eIrinstrahve ceeterm 0 : ; 0 :; 0 ; :; i; 1 i 0 0 i pf-FGXOJv ( ,sisyt: ;t \ 0 0 ; 0; N~~Dstrict boundotnies: /0 -;0 0 ;; ; 0 00 V 0<5ag yJX sisa Regi-oa bondoies0 ndame I - - totembonat bounsodaries Z A M B I A hirserbo' )i naW. DISTRtCT ROAD iMPROVE= ENT AND 11/IcCMAI M4INTENA CE PROGRAMA (DRIMP) e ~~~~~~~~~~~~~~~~~~~First phone areas (CR.523-MAtt Second plone ares $5(KHOA A / if ; {t ii E ;; ;;4rJr- | e i K G U \.. ... ; j ; - - MOZAMBIQUE Ntch, ~ ~ ~ ~ ~ I agah N ls .j.Ai GO I,w,~~~~~~h to H, ,i1 D 14'. 0NGWE , o f (- ' , I L 0 ~ ~ ~ ~ ~ ~ ~ ~ alk ONaa, aeaaa.tar.efrrwnrae 0 e5irs4seae.nOO 0.0 dsraesraaaasna.t 0 5ar.rr..F{C ANAt; ti .r, 0 dd{ Os, das,rarfl. a,, d,.a,.a air, 5 /h a aeaaNyGOae.araaa=as.r.aaar.rr eaeoarKarepaann.eP t A B W E J > q v b 0; ; < t E rr o m v 0 S > * 0~~~~~~B.I. . P N tMIElA>>_; Cj ; 0 tASEANJA 0 0 0 ; f N:H0E \ t z - { 0 i $ biN o ; ; ,g y y j ; 0 0 i < t v ) } e t ; i 0 Q f t 0 i~~~~~P \> > R E LJE i( @ > ; j = = ~ " > z r 0 ,<: ( 0 X $; 0 Q :~~~~~~~~~~~~~~~~~~~~~~~~~ K=eiW AV Nt i ;\ zf B: A S