Burundi - Telecommunications Project

Document of FILE COPY The World Bank COPY FOR OFFICIAL USE ONLY Report No. P-2742-BU REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF BURUNDI FOR A TELECOMMUNICATIONS PROJECT July 10, 1980 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit - Burundi Franc (FBu) US$ 1.00 - FBu 90 FBu 1.00 - US$0.011 ABBREVIATIONS HF/VHF/UHF - High Frequency (up to 30 MHZ)/Very High Frequency (30-300 MHZ)/Ultra High Frequency (beyond 300 MHZ) ONATEL - National Office for Telecommunications TPT - Ministry of Transport, Posts and Telecommunications FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY BURUNDI TELECOMMUNICATIONS PROJECT CREDIT AND PROJECT SUMMARY Borrower: Republic of Burundi Amount: US$7.7 million Terms: Standard IDA Terms Beneficiary: National Office for Telecommunications (ONATEL) Relending Terms: Interest rate of not less than 8.25% per annum with a repayment period of 20 years including 5 years of grace. Project (i) Purpose: To assist the Government in implementing Description: its 1980-84 investment program for telecommunications, which aims at improving the quality of existing telecommunications services while extending the coverage to areas and segments of the population presently unserved. (ii) Components: (a) installation of junction cables in Bujumbura and improvement and expansion of urban cable networks in Bujumbura and provincial towns; (b) installation of new exchanges, and rehabilitation/ expansion of existing ones; (c) installation of 40 public call offices in rural areas; (d) replacement/ expansion of UHF links; (e) replacement and expansion of telex facilities; (f) purchase of vehicles, tools and miscellaneous equipment; (g) construction of a warehouse and other buildings; and (h) technical assistance and training. (iii) Benefits: The project would improve the efficiency of business management and Government administration. It would stimulate production and marketing activities in both rural and urban areas, while also extending the benefits of telephone facilities to broader segments of the population. (iv) Risks: The project presents limited risks. The main risk is that physical implementation of some components might be delayed. However, as the project comprises a relatively large number of independent works and as, were delays to occur, the costs and benefits would be delayed in roughly the same proportion, the impact .of delays on the rate of return would not be significant. This document has a restricted distribution and may be used by recipients only in the performance of their ofimcial duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - Estimated Costs (net of taxes and import duties): (US$ Million) Local Foreign Total Local Telephone Network: - External Plant 0.4 1.3 1.7 - Switching 0.1 1.3 1.4 Interurban Telephone Network 0.1 1.6 1.7 Telex 0.1 0.3 0.4 Miscellaneous Equipment - 0.2 0.2 Civil Works 0.1 0.1 0.2 Technical Assistance 0.2 0.7 0.9 Total 1.0 5.5 6.5 Physical Contingencies 0.1 0.2 0.3 Price Contingencies 0.3 2.0 2.3 Total Project Cost 1.4 7.7 9.1 Financing Plan: (US$ Million) Local Foreign Total Government 1.4 - 1.4 IDA - 7.7 7.7 1.4 7.7 9.1 Estimated Disbursement: (US$ Million) IDA FY 1981 1982 1983 1984 1985 Annual 0.1 1.1 1.4 2.6 2.5 Cumulative 0.1 1.2 2.6 5.2 7.7 Economic Rate of Return: 20% Appraisal Report: Report No. 2886-BU, dated July 7 , 1980 Map: IBRD 14297R  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF BURUNDI FOR A TELECOMMUNICATIONS PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Republic of Burundi for the equivalent of US$7.7 million on standard IDA terms to help finance a Telecommunications Project. The proceeds of the credit would be relent to the National Office for Tele- communications (ONATEL) at an interest rate of not less than 8.25% per annum with a repayment period of 20 years including 5 years of grace. PART I - THE ECONOMY 1/ 2. The last economic memorandum on Burundi (1838-BU) was distributed to the Executive Directors on April 25, 1978. An Economic Mission visited Burundi in November/December 1979 and its report will be distributed in August 1980. Preliminary conclusions of the Mission are provided below and updated country data in Annex I. Background 3. With an average GNP per capita of about US$140, Burundi is one of the poorest countries in the world and is designated as "least developed" by the United Nations. Of a population of about four million, only 90,000 are wage earners; the remainder depend mainly on subsistence agriculture. The Government is facing several critical problems in its efforts to develop the economy: the capability to prepare and manage programs and projects is weak; the agricultural labor force is largely untrained; and population growth keeps straining Burundi's productive resources, particularly in agriculture. Despite a stated policy of "spaced births", the problems of population pressure cannot be solved in the immediate future. A major effort must be made to increase agricultural productivity. Agricultural yields have been declining, as more and more marginal land has been brought under cultiva- tion. The search for more arable land has caused large-scale deforestation, resulting in a severe lack of firewood in the rural areas and forcing the development of alternative energy sources. 4. Improvements to the internal transport system will be of limited effect unless reliable external links can be established. Shipments of imports and exports through the principal outlets via Tanzania have tradition- ally encountered frequent delays due to bottlenecks in the port of Dar-es- Salaam, underinvestment in the railway link between Tabora and Kigoma on Lake 1/ This part is identical to that in the President's Report for the Second Education Project (Report No. P-2684-BU) considered by the Executive Directors on January 29, 1980.  -2- Tanganyika, and losses because of theft. However, some action is being taken to improve the situation. For example, several donors (Canada, Belgium and the European Development Fund) are considering financing the rehabilitation of railway and port infrastructure in Tanzania. The link via Rwanda and Uganda to the former East African Railways and the port of Mombasa (Kenya) is becoming increasingly attractive with the continuing improvement in national highways between Bujumbura and Mombasa. 5. Recent Economic Developments. Over the period 1973-78, Burundi's GDP grew at a rate of only 3.6 percent per annum in real terms compared to the 2.2 percent annual growth of its population. Growth was concentrated mainly in the capital city, particularly in manufacturing and construction activity. Food crop production grew significantly more slowly than did population, while the production of export crops (including coffee, the main source of foreign exchange earnings) tended to decline. 6. The overall investment rate of the economy rose considerably in 1977-78, when it accounted for 12.7 percent of GDP, but it is still below the average for low-income countries. The allocation of investment between production and infrastructure, one-third and two-thirds, respectively, has not changed noticeably in recent years. The bulk of investment in the rural areas has been to a large extent financed by official external aid and has been allocated mostly to export crops. In 1978, the public sector accounted for about 94 percent of gross fixed capital formation. This has been accom- plished largely by government investment in social and transport infra- structure and by the activities of public corporations. Investment by private enterprises has been relatively weak, reflecting in part the excess capacity prevailing in certain industries and the limited financial and managerial capabilities of most private firms. 7. Owing to high coffee prices in 1976 and 1977, export earnings, in- come and Government revenue rose sharply in those years. By the end of 1977, Burundi had accumulated about US$89 million in net foreign reserves, equiva- lent to 11 months of imports. The improvement in the terms of trade resulted in income gains equivalent to an increase of about one-fourth of GDP over 1975. These increases accrued primarily to the Government through higher export taxes; the rest was shared by the small coffee producers through increases in producer prices. The increase in Government revenues allowed substantial increases in current and investment expenditures. In spite of these, overall budgetary transactions, which had showed a small deficit in 1975, registered a surplus in 1976 and 1977 due to the higher growth of tax revenues. 8. In the wake of a 50 percent decline in the average price of coffee exports, rapid import growth stemming from strong consumer demand, rising public investment, and significant increases in import prices and costs of insurance and freight, Burundi lost US$9 million of its reserves during 1978 (despite a large increase in grants and net disbursements of external loans). By August 1979, net international reserves had fallen to US$40 million, equivalent to about five months of imports. Faced with a significant decline in revenues from coffee exports, and with rapidly rising expenditures, after  - 3 - two years of surpluses, the Government was forced to borrow from the banking system to finance its overall deficit (2 percent of GDP). 9. Most recently and as a result of the hostilities in Uganda, Burundi has encountered severe difficulties in transportation which led to acute shortages of fuel, cement and certain consumer goods in late 1978 and the first half of 1979. Since July/August considerable improvement in the overall supply situation has taken place. Despite this, during 1979 productive sector activity is estimated to have stagnated and investment declined in real terms. The shortages which prevailed over the first half of this year, significant increases in the domestic price of oil products, rapidly rising import prices, transportation and freight charges as well as continued pressure from the fiscal deficit have raised the domestic inflation rate to an unprecedented 25-30 percent. 10. Government Development Strategy. Since 1977 the Government has designed a new strategy to achieve social justice, ethnic reconciliation and improved living conditions in the rural areas. The poll tax, which was levied on all males, was replaced by compulsory deposits which can be withdrawn after three years. In addition, the traditional obligation for small farmers to provide services to landowners in exchange for the right to cultivate land has been abolished. Likewise, land which was obtained in an irregular manner for speculative purposes has been returned to the State or to the farmers who cultivated it. Other aspects of the new policies, which are embodied in the Third Five-Year Plan (1978-82), are: (a) to emphasize agri- cultural production to face the increasing needs for food supplies of the rapidly-growing population; (b) to increase the rate of economic growth substantially in order to provide greater employment opportunities and more income to the poorest segments of the population; (c) to raise the investment rate significantly; (d) to give the Government a more active role in mobilizing financial and manpower resources and in participating in mixed enterprises in the commercial and productive sectors; and (e) to foster decentralization of economic and social activity away from the capital city and achieve a more balanced geographic distribution through the creation of development poles, voluntary settlement of the peasant population in villages, and migration from densely populated areas. To facilitate the implementation of its strategy, the Government has strengthened the role of planning by elevating the planning organization to the rank of Ministry and by giving it a key role in the allocation and monitoring of public investment. 11. External Assistance and Prospects. Economic prospects are less favorable than in recent years as a result of expected declines in coffee prices. Three major challenges which the Government currently faces are limiting the loss of reserves, preserving its revenue base, and containing inflationary pressures. This will require cautious budgetary policies and a significant reduction of the Government's investment targets for the remainder of the Third Five-Year Plan. In addition, the producer price for coffee will have to be reduced in real terms, as the world market price for this commodity is expected to average in real terms, during 1980-82, only 56 percent of the 1976 level. The Government is currently revising its policies  -4- in all of these areas. Most recently, it reduced its investment targets for 1980-84 by 40 percent in real terms. Likewise, for the period October 1, 1979 to September 30, 1980, the Government has prepared, with the IMF's assistance, an economic and financial program whose major objectives are to reduce signi- ficantly the rate of inflation and to limit the balance of payments deficit. In conjunction with this program, the IMF authorized last October drawings of SDR 8.3 million in the form of Trust Fund resources. At the same time, SDR 9.5 million in compensatory financing for the shortfall in coffee exports experienced in 1978-79 were authorized by the IMF. 12. If the Government continues to focus on development and strengthens its administration, it may achieve a steady, albeit slow, improvement in per capita income. If mining of Burundi's nickel resources proves feasible, the prospects over the next ten years would be much better. However, the commer- cial viability of exploiting these deposits has yet to be established. Regional development in Central Africa will also be important to Burundi's economy. In September 1976, Burundi, Rwanda and Zaire signed a convention establishing the "Economic Community of the Countries of the Great Lakes." The Community, which has its seat in Gisenyi, Rwanda, aims inter alia at stimulating and intensifying intra-regional trade and cooperation in a wide range of activities. A major objective of the Community is the electrifica- tion of the Great Lakes region. The three countries have also agreed to set up a joint development bank, to exploit methane deposits around Lake Kivu, and to develop a fishing industry around Lake Tanganyika. They have also instructed the Secretariat to investigate ways of improving the transport system around the lakes in order to ease the transport bottlenecks in Burundi and Rwanda. 13. Disbursements of long-term loans and capital grants averaged US$34 million per annum during 1977-78, most of it coming from Belgium, the Federal Republic of Germany, IDA, the UN agencies and the European Development Fund. In the 1975-78 period, total long-term capital inflows amounted to about US$110 million, of which US$64 million was in the form of grants. On December 31, 1978, Burundi's external medium- and long-term debt amounted to about US$63.6 million (excluding undisbursed amounts), of which IDA held 22 percent. Debt service averaged 3.5 percent of export earnings during 1978. Due to the large proportion of grants in external assistance, IDA will probably continue to hold an important proportion of Burundi's outstanding debt. Notwithstand- ing the low debt service ratio, Burundi is unable to absorb any borrowing on commercial terms, because of its poverty and the instability of its export earnings. External aid should therefore be on grant or very concessional terms and continue to include a substantial share of local cost financing. PART II - BANK GROUP OPERATIONS 14. Since IDA lending started in Burundi in 1966, thirteen credits have been made totalling US$70.2 million; one credit (US$1.1 million) helped improve water supply to Bujumbura; four credits (US$17.3 million) were for agriculture (two for coffee production, one for fishing and one for forestry); three credits (US$19.4 million, including an engineering  -5- credit of US$400,000) helped start a highway maintenance and improvement program; a US$10.0 million credit is supporting the improvement of primary education and a second one of US$15.0 million, signed on April 23, 1980, will finance vocational and technical training; two credits (US$4.0 million) were made for technical assistance and the National Economic Development Bank received a credit of US$3.4 million. The Second Coffee Project and the Fisheries Project are being cofinanced by the Kuwait Fund (US$1.0 million) and the Abu Dhabi Fund (US$1.2 million), respectively. The Second Highway Project is cofinanced by the Arab Bank for Economic Development in Africa (BADEA) in an amount of US$6.0 million. The Forestry Project is cofinanced with a credit of US$1.2 million equivalent made from the EEC Special Action Account. Annex II contains a summary statement of IDA credits and notes on the execution of projects and the status of disbursements as of April 30, 1980. 15. Project performance has been uneven, reflecting the shortage of local management capacity and technical skills which is likely to remain a major constraint to development for some time to come. This situation has particularly delayed the execution of the Fisheries and the Second Coffee Projects, although the implementation of the Second Coffee Project has recently improved. Disbursement of the Credit to the National Economic Development Bank has been lagging because of the general sluggishness of the industrial sector. On the other hand, implementation of the First Education, the Second Highway and the Forestry projects is satisfactory. 16. Future IDA operations in Burundi will continue to focus on agri- culture and rural development, transportation and education, and to include provisions for project management and technical assistance. Documents regard- ing an IDA credit of US$15.0 million for an Urban Development project were distri- buted to the Executive Directors on June 5, 1980. An agricultural development project, which aims at improving the living standards of the rural population in one of the poorest areas of the country, was appraised in March/April 1980. Further improvements of the road sector are envisaged under a third highway project, which is expected to be appraised shortly. PART III - THE TELECOMMUNICATIONS SECTOR Background 17. Due to insufficient past allocations of resources to the sector, basic telecommunications facilities are lacking in many parts of the country, and, where available, they are inadequate and unreliable. With the telecommuni- cations services increasingly becoming the least-cost means of communication for a growing proportion of the population, lack of adequate and good quality telecommunications services hinders business and commerce, social services, government administration, and economic development. Up to the end of 1979 telecommunications services in Burundi were the responsibility of the Telecom- munications Department of the Ministry of Posts and Telecommunications. In January 1980 the Government established the National Office for Telecommunica- tions (ONATEL), a Government owned parastatal entity, to operate and manage the telecommunications sector of Burundi.  -6- Existing Facilities 18. The average number of telephones per 100 persons in Burundi is about 0.1, which is amongst the lowest in the world. This compares with an average of about 0.4 for sub-Saharan Africa; about 0.6 for Asia (excluding Japan); and about 4.5 for Latin America. Almost 90% of all telephone subscribers are in the capital city of Bujumbura. The seven provinces outside of Bujumbura have minimal access to service; there are only 378 subscribers outside the iapital with the number of subscribers in each province ranging from 10 up to 175. 19. Countrywide, about 50% of all telephone subscribers are Government offices; outside Bujumbura, the Government's share rises to 70%. Small tele- phone exchanges and public call offices are available in 14 small towns outside Bujumbura and are mainly used by Government officials and merchants. In most small towns and rural settlements in the country, there is no access to rapid two-way communications facilities. The telex network is automatic with about 60 subscribers. Outside Bujumbura, there is only one telex for public use in each of the 14 small towns. 20. The quality of telephone communication is generally poor. Local telephone service is frequently interrupted by faults on the lines, which are particularly common during the rainy season, due to the types of cable used and the inadequate methods of laying them. There is also a high failure rate on the interurban network. Demand for Service 21. No comprehensive study of the existing and potential subscriber demand has been undertaken to date. Since 1975 the annual growth in number of subscribers has averaged 5.5% annum. As of December 1979, there were only 4,888 telephones in Burundi. It is difficult to predict growth outside Bujumbura because of the lack of data. However, the existence of more than 50 independent licensed HF systems for domestic communications shows a major need not met by the public system. These networks are owned primarily by commercial, industrial and religious organizations, many of which provide schools and health services in rural Burundi. As part of planning for extension of the telecommunication system to the interior, the Ministry of Communications contacted the Governors of the 8 provinces. This helped determine a list of 200 potential sites for service, of which the Ministry has initially selected 31. These include 11 communes, 14 commercial centers, 21 schools and 10 missions. In addition, they comprise a wide variety of economic development activities including coffee and tea plantations, forestry projects, hydro- electric projects, etc. It is estimated that approximately 80% of the traffic from these locations will be interurban and 20% local. The amount of inter- national traffic (telephone and telex), is expected to increase rapidly with the installation of a new earth satellite station.  - 7- Sector Objectives and Constraints 22. The goals established for telecommunications in the current five year plan include (a) improvement and extension of the telecommunications system to the interior in order to promote rural, industrial and commercial development; (b) integration into the communication network of the locations chosen for agricultural and industrial projects; and (c) increase in external telecommunications capacity. 23. The 1980-84 investment program for telecommunications comprises the following components: (a) ongoing works, which include (i) rehabilitation and expansion of Bujumbura's network and some expansion of the provincial network (expected to be completed in 1982); and (ii) an earth satellite station (cutover expected at the end of 1980) and an international switching center (cutover expected in 1982); (b) the proposed project (see Part IV); and (c) preliminary works for the future expansion of facilities from 1985 onwards. This program is estimated to cost about US$12.5 million with a foreign exchange component of about US$11 million. The program is designed to meet the most urgent needs for improvement and expansion of telecommunications services in Burundi given the anticipated resources of ONATEL. 24. The main constraints on the establishment of more efficient tele- communications services have been so far the shortage of continuous long term financing, inadequate sector organization and management, and a lack of trained manpower. The Telecommunications Department lacked adequate autonomy for efficient management and financial and technical planning. No separate financial statement had ever been established for telecommunications, and as a result the Department had no clear yardstick to measure its efficiency nor any incentive to improve it. The establishment of ONATEL as a separate financially autonomous entity should provide a better institutional framework to address these issues. IDA's Strategy in the Sector 25. IDA first became associated with the telecommunications sector in Burundi through a sector mission in March 1979. IDA's strategy in the tele- communications sector is focused on institution building, provision of inde- pendent technical and economic advice, and transfer of long-term financial resources to allow better planning and resource utilization.  - 8 - PART IV - THE PROJECT Background and Objectives 26. The proposed project was appraised in December 1979. Negotiations were held in Washington from May 5 to May 9, 1980. The Government delegation was led by Mr. Habonimana, Director of Treasury Department, Ministry of Finance. A detailed description of the project components can be found in the staff appraisal report (No. 2886-BU) being distributed separately to the Executive Directors. The main features of the project are highlighted in the credit and project summary at the beginning of this report, supplemented by Annex III. 27. The project is a major component of the 1980-84 investment program for telecommunications. It would help improve the quality of existing telecommunications services while extending the coverage to areas and segments of the population presently unserved. Project Description 28. The project would include: (a) installation of junction cables in Bujumbura and the improvement and expansion of urban cable networks in Bujumbura and various provincial towns(a total of 1,050 new main lines would be provided); (b) installation of a new exchange at Ngagara in the Bujumbura area, equipped for about 1,200 lines, and of three new provincial exchanges, with a total initial capacity of about 150 lines; rehabilitation of various provincial exchanges and increase in their capacity by about 300 lines; (c) connection to the national telephone network of about 40 villages and production centers, presently unserved, through public call office installations; (d) improvement and expansion of the long distance transmission network through: (i) installation of three new UHF links; (ii) replacement of three UHF links with facilities of higher capacity; and (iii) overhaul of all other UHF links; (e) replacement of the telex exchange at Bujumbura and provision of teleprinters for 50 additional subscribers; (f) purchase of a bills processor, vehicles, tools, and other miscellaneous equipment; (g) construction of a warehouse and of other project related buildings; and (h) technical assistance and training.  -9- Project Costs and Financing 29. The estimated cost (net of taxes and import duties) of the project is about US$9.1 million, with a foreign exchange component of about US$7.7 million. The proposed IDA credit of US$7.7 mill-;on would finance 100% of foreign exchange costs, amounting to about 85% of to ` pro,jc-t costs. The remainder (US$1.4 million) would be financed by the --Trment. ,D. funds would be onlent by the Government to ONATEL at an intlre!t rete of noc _ess than 8.25% per annum with a repayment period of 20 years i uludirg 5 yts7^ of grace (Section 3.01 (b) of the draft Development CrediL A-e?mer1t< Implementation 30. The National Office for Telecommunications (ONATET) would be respon- sible for implementation of the project. It would employ engiueering con- sultants to: (a) prepare the specifications and bidding docdments for the telephone switching equipment cable networks, microwave VHF/UITF r,id'o equip- ment, open wire carrier systems and rural network materials; and th) super- vise installation and acceptance testing of telephone switching an' mcrowave systems. ONATEL would lay and join the cables and install the subscriber facilities in the provincial towns; in the metropolitan area, it would be assisted by the suppliers. ONATEL would supervise the contractor;- wlo would supply and install the telephone exchangEs as well as microwave ald lKF/T radio equipment. Civil works for construction of buildings and access ro would be carried out by ONATEL. Institutional Aspects 31. Established in January 1980, ONATEL is a parastatal agency whose board is appointed by the Ministry of Transport, Posts and Telecommunications (TPT). The board consists of a chairman and five members representing the interests of the Ministry of Finance, Ministry of Commerce, TPT, ONATEL staff and the Association of Traders and Industrialists. The management, budgeting and control systems inherited from the previous organization (Department of TPT) need considerable strengthening. To help ONATEL during the initial phase, the proposed project would include about 86 staff-months of technical assistance: (i) 48 staff-months of one telecommunications management expert to act as assistant and advisor to the General Manager; (ii) 24 staff-months of engineering consultants (para. 30); and (iii) 14 staff-months of a financial consultant who would assist in the preparation of ONATEL's commercial accounts. The financial consultant has already been appointed. The signing of a con- tract, satisfactory to IDA, providing the services of the telecommunications management expert and engineering consultants would be a condition of effec- tiveness (Section 6.01 of the draft Development Credit Agreement). 32. ONATEL's staff consists of 38 technical and administrative staff, 80technicians and specialized workers, 16 operations and 149 linesmen, cable jointers and unskilled workers. This staff (293) is sufficient given the present number of telephones, and with some training would be able to operate the telecommunications system after the proposed expansion.  - 10 - 33. In October 1979, TPT opened a telecommunications training school in Bujumbura. The training program is designed primarily for operators, linesmen, switching technicians and cable jointers and provides both introductory and refresher courses. Higher level personnel are not trained in Burundi but are sent to advanced schools in other African countries (Senegal and Madagascar). The school of Bujumbura can accommodate about 50 students. It is adequately staffed. One constraint, however, is the lack of training equipment; the project would provide funds for this purpose. As the school has no accounting training, it is proposed that a specific one month course in accounting would be held each year. Provision would also be made in the project for senior staff of ONATEL to attend overseas management courses and seminars. Financial Aspects 34. The financial performance of ONATEL's telecommunications operations, based on cash and notional commercial accounts for 1976-79, has been satisfac- tory both in terms of financial returns and internal cash generation. ONATEL's financial position is sound and its capital structure is adequate. To ensure continued financial viability of telecommunications operations, telecommunica- tions tariffs would be maintained at levels sufficient to achieve a rate of return of at least 10% on revalued net fixed telecommunications assets in operation (Section 4.03 of the draft Project Agreement). For the purposes of rate of return calculations, ONATEL would propose by December 31, 1980 to IDA a method for revaluation of its fixed assets in accordance with a method agreed upon with IDA and would not change the method without prior discussions with the Association (Section 4.06 of the draft Project Agreement). The Government has also agreed that, prior to the completion of the project, ONATEL would not undertake any significant capital expenditures other than those envisaged in the ONATEL Investment Program, unless a financing plan had been agreed between the Association and ONATEL (Section 4.04 of the draft Project Agreement). 35. Tariff levels and structure have not been used in the past as a means to allocate scarce telecommunications services to the highest priority uses. As a result, telephone installation and rental charges are relatively low and there are no differential rates between daytime peak period calls and off peak night-time and weekend calls over the long distance network. Tariffs were, however, increased in January 1980 after over ten years of no increases, and, partly as a result, local call charges are not low by international standards. In order to rationalize tariff levels and structure, ONATEL would undertake a tariff review to be completed by July 1, 1981, under terms of reference acceptable to IDA and would discuss with IDA the implementation implications of this review by December 31, 1981 (Section 4.03(a) of the draft Project Agreement). 36. At present, telephone rentals are billed in advance and call charges are billed after they have been made. The two-month billing cycle is adequate for the present and expected levels of activity. Private subscribers can pay their bills in any post office, and the proceeds are deposited in an ONATEL bank accounts. Traditionally, the costs of telephone services used by govern- ment departments and agencies were offset within the various budget allocations;  - 11 - in future, ONATEL will bill each government department directly. Accounts receivable as of December 31, 1979 were estimated at about 22% of annual revenues. To maintain arrears at an acceptable level, the Government has agreed to take appropriate steps to ensure that its telecommunciations bills would be paid within four months of the billing date (Section 4.01 of the draft Development Credit Agreement). Accounting 37. ONATEL would maintain its accounts on a commercial basis (Sectior! 4.01 of the draft Project Agreement). The framework of a commercial accounting system has already been established and the system would be implemented with the assistance of the financial consultant under the Technical Assistance program (para. 31). Audit 38. ONATEL's accounts and financial statements would be audited each year by independent auditors acceptable to the Association. The auditors' report together with certified copies of the financial statements would be forwarded to the Association within six months of the end of each fiscal year (Section 4.02 of draft Project Agreement). Procurement 39. All equipment to be financed by the proposed IDA credit would be procured through international competitive bidding, except for the followii. items costing about US$0.5 million: (a) interworking equipment and rehabil- itation of the existing Bujumbura exchange; and (b) additional equipment to increase the capacity of the telex exchange. These items would be procured through negotiated purchase, which is justified on grounds of standardization, savings on spare parts, and ease of maintenance; purchase prices would be subject to IDA approval. Contracts for vehicles and sundry equipment costing less than US$50,000 and not exceeding a total of US$500,000 would be awarded on the basis of Government procurement procedures, which are satisfactory. Disbursements 40. Disbursements of IDA funds would be made on the basis of (a) 100% of foreign expenditures or 80% of local expenditures on equipment for local telephone network, exchange equipment for local telephone and long distance network and telex; (b) 100% of foreign exchange expenditures or 80% of local expenditures on vehicles, training equipment and civil works; and (c) 100% of foreign exchange expenditures or 90% of local expenditures on the cost of technical assistance and training.  - 12 - Economic Justification, Project Benefits and Risks 41. Lack of rapid and reliable communications is a major constraint to the development of the productive sectors in Burundi. In urban areas, replacement and expansion of telecommunications facilities are needed to meet at least part of the unsatisfied demand, relieve congestion and, at a minimum, prevent further deterioration in service quality. In smaller towns and more remote areas currently unserved, access to telecommnunmications services needs to be broadened and improved to better serve the development needs of the rural population. 42. The proposed project would thus have benefits in terms of both efficiency and equity. Urban business, service industries and public administration are highly dependent on telecommunications and would benefit from provision of additional lines in urban areas and relief of congestion. Similarly, in rural areas, automation and expansion of local networks, auto- mation of long distance service, and provision of service through rural long distance call offices in some of the areas currently unserved would promote the Government's goals of decentralization, stimulate production and marketing activities, and encourage development of social services. Provision of public call offices in both rural and urban areas would broaden the access to telephone facilities to segments of the population who previously either were not served or could not afford private facilities. The additional revenues generated by ONATEL from expanded and automated domestic services and the international services would enable ONATEL to finance a significant portion of its own capital expenditure in addition to providing Government with financial surpluses. 43. The project's financial rate of return is estimated at 11%, but this significantly understates the economic benefits from the investment program because the benefit stream used in the calculation does not include thq con- sumer surplus to be received by the telephone users. By measuring the consumer surplus on the basis of prices which the existing subscribers and registered applicants have demonstrated their willingness to pay, the economic rate of return is estimated at 20%. 44. The project presents limited risks. The main risk is that physical implementation of some components might be delayed. However, as the project comprises a relatively large number of independent works, a delay in the implementation of a few works would not generally prevent the use of other newly created assets. Furthermore, were delays to occur, the costs and benefits would be delayed in roughly the same proportion; hence, the impact on the rate of return would not be significant.  - 13 - PART V - LEGAL INSTRUMENTS AND AUTHORITY 45. The draft Development Credit Agreement between the Republic of Burundi and the Association, the draft Project Agreement between ONATEL and the Association, and the Recommendation of the Committee provided for in Article V, Section 1(d) of the Articles of Agreement are being distributed to the Executive Directors separately. 46. Features of the draft Development Credit Agreement and the draft Project Agreement of special interest are referred to in Annex III to this report. Special conditions of effectiveness are that (i) a contract, satis- factory to IDA, providing the services of the telecommunications management expert and engineering consultants, has been signed, and (ii) the subsidiary loan agreement between the Government and ONATEL has been signed (Sections 6.01 and 6.02 of the draft Development Credit Agreement). 47. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATIONS 48. 1 recommend that the Executive Directors approve the proposed Credit. Robert S. McNamara President Attachments Washington, D.C. July 10, 1980  - 14 - ANNEX I Page I of 5 TABLE 3A 311111l - SOCIAL INDICATORS DATA SHEET LAND AJLEA (TROUSAND suamiRFEtENCE GROUPS 1(ADJUSTD 9ARAGES LAND ASEA (THOCSAND Sq.1.) - MDST RECENT ESTIIATE) TOTAL..28 SAME SA41 NET IGE ACRICULTURAI. 16.* 9 MDST RECENT GEDGRAPRIC INCOME INCOME 1960 /b 1970 /b ESTIMATE b REGION /e GROUP /d GROUP /e GN7P PER CAPITA (US$) 50.0 80.0 140.0 306.1 209.6 467.5 ENIRG! CONSOMTION PER CAPITA (ILOG2AMS or COAL EQUIVALENT) 10.0 /f 15.0 12.0 80.6 83.9 262.1 POPULA"ION AND VITAL STATISTICS POPULATION ID-YEAR (MILLIONS) 2.9 3.6 1.1 URN POPULATION (PERCENT or TOTAL) 2.0 2.0 5.0 17.1 16.2 24.6 POPULATION PROJECTIONS POPULATION IN YTE 2000 (MILLIONS) 7.0 STATIONARY POPULATION (MILLIONS) 20.0 YEAR STAIOIIArY POPULATION IS 8EACHED 2160 POPULATION DENSITY P*R SQ. KM. 104.0 129.0 lb.5 18.4 49.4 45.3 PER SQ. EM. AGRICULTUA LAND 181.0 222.0 212.6 50.8 252.0 149.0 POPULATION ACE STRUCTURE (PERCENT) 0-14 YRS. 42.5 42.5 12.1 44.1 43.1 45.2 15-64 YnS. 54.6 54.7 51.3 52.9 53.2 51.9 65 nRS. AND ABOVE 2.9 2.8 3.6 2.8 3.0 2.8 POULATION OWTH RATE (PERCENT) TOTAL 2.0 2.4 2.2 2.7 2.4 2.7 URN 5.3 2.4 5.o 5.7 4.6 4.3 CRUDE BIRTH RATE (PER THOUSAND) 48.0 47.0 47.0 46.3 42.4 39.4 CRUDE DEAH LATE (PER ThOUSAND) 27.0 24.0 20.0 17.2 15.9 11.7 G0SS REPRODUCTION RATE 2.6L1 2.8 3.1 3.1 2.9 2.7 FAMILY PLANNING ACCEPTORS. ANUAL (THOUSANDS) .. .. .. USERS (PERCENT OF MKAIED WOMEN) .. .. .. .. 12.2 13.2 FOOD AND UTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 88.8 101.0 95.0 94.3 98.2 99.6 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 82.0 "9. 99.0 89.5 93.3 94.7 PROTEINS (GRAMS PER DAY) 47.0 61.0 .. 55.8 52.1 54.3 OF WHICH ANIMAL AND PULSE 28.0 40.D .. 17.9 13.6 17.4 CHLD (AGES 1-4) iCITALITY RATE 41.0 36.0 28.0 22.3 18.5 11.4 HEALTH LIFE XPECTANCY AT 1I1TH (TEARS) 37.0 40.0 45.0 47.0 49.3 54.7 INFANT 4DRTALITI RATE (PER THOUSAND) .. 140.0 *- *- 105.4 68.1 ACCESS TO SAFE WAT!R (PERCENT OF POPULATION) TOTAL .. .. . 20.3 26.3 34.4 URBAN .. 77.0 91,.0 53.9 58.5 57.9 RURAL .. .. .. 10.1 15.8 21.2 ACCESS TO EXCRETA DISPOSAL (PERCENT Or POPULATION) TOTAL .. .. 22.5 16.0 40.8 RURAN 95.0 62.5 65.1 71-3 UIRAL .. .. ~ ~ ~~~~~~~~~~.? 13.9 3.5 27.7 POPULATION PER PHYSICIAN 63000.0 59000.0 45430.0 17424.7 11396.4 6799.4 POPULATION PER NSING PERSON 5420.0 7500.0 6240.0 2506.6 5552.4 1522.1 POPUVATION PtR HOSPITAL BED TOTAL 730.0 790.0 760.0 502.3 1417.1 726.5 URBAN .. 70.0 .. 201.4 197.3 272.7 RURAL .. 730.0 .. 1403.6 2445.9 1404.4 ADMISSIONS PER HOSPITAL BED .. .. .. 23.4 24.8 27.5 HOUSING AVERACE SIZE OF HOUSEHOLD TOTAL .. .. .. 4.9 5.3 5.4 URBAAN .. . 6.5 4.9 4.9 5.1 RURAL .. .. 5.0 5.5 5.4 5.5 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL .. .. .. URBAN .. .. .. RURAL .. .. .. ACCESS ro ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. .. * .. 22.5 28.1 UR.BAN .. .. . .. 17.8 45.1 RURAL .. .. .. .. .. 9.9  - 15 - ANT'X -7~ Page 2 of 5 TA3LE 3A SURUND - SCCIAL INDICATORS DATA SNEEr SREFERENCE GROUPS (ADJLSTED AyIEAGES M- OST RECENT ESTIAI_) a sNE SAME -EXT HIGHER MCST RECENT GEOGRAPLIC it'COmE INCOME L960 /b 1970 /b ESTIMATE lb REGION ic CROUP /d GROUP /e EDUCATION ADJUSTED ENROLT'ENT RATIOS PRIMARY: TOTAL 1L.0 35.0 23.0 59.0 b3.3 82.7 KALE 21.0 07.0 0 64.2 '9.1 87.3 FEMJLE 9.0 23.0 17T9 44.2 48.4 75.8 StCONDARY: TTAL 1.0 2.0 2.5 9.0 16.7 21.4 MAE 1.0 3.0 3-5 12.0 Z2. L 33.0 FEMALE 1.0 1.0 1.5 4.4 10.2 15.5 VOCATIONAL ENROL. (1 0P SRONDARY) 35.0 24.0 12.9 7.0 5.6 9.8 PUPIL-TEACHER RATI0 PRIMARY 36.0 37.0 32.0 42.2 41.0 34.1 SECONDARY 15.0 12.0 16.0 22.9 21.7 23.4 ADULT LITERACY RATE (PERCENT) 13,9/f .. 25.0 20.8 31.2 54.0 CONSULPTION PASSENGER CAES PER THOUSAND POPULATlON 0.8 1.0 1.3 4.0 2.8 9.3 RADIO RECEIVERS PER THOUSAND POPULATION ., 18.0 27.0 44.3 27.2 76.9 TV RECEIVERS PER THOUSAND POPULATION ., .. .. 2.9 2.4 13.5 NEISPAPER (ODAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION .. 0.1 0.3 5.6 5.3 18.3 CINEKA ANNUAL ATTENDANCE PEiL CAPITA .. .. .. 0.4 1.1 2.5 LABOR FORCE TOTAL OR FORCE (THOUSADSD) 1500.0 1700.0 1900.0 FEMALE (PERCENT) 45.1 44.8 44.4 31.9 t4.8 29.2 AGRICLLTURE (PERCENT) 90.0 87.2 85.0 77.6 69.4 62.7 INDUSTRY (PERCENT) 3.0 3.9 5.0 7.9 10.0 11.9 PARTICIPATION RAIE (PERCENT) TOTAL 52.7 51.2 49.6 40.8 36.9 37.1 MALE 58.5 57.2 55.8 53.9 52.4 48.8 FEtALE 47.0 45.3 43.4 25.6 8l.0 20.4 ECONOMIC DEPENDENCY RATIO 0.9 1.0 0.9 1.2 1.2 1.4 INCOME DtSTRIBUTION PERCENT OF PRIVATE INCOME niCEIVED BY HIGHEST 5 PERCENT OF HOUST;LLDS .. .. .. .. .. 15.2 HIGHEST 20 PERCENT OF HOUSEHOLDS .. .. .. 48.2 LOWEST Z0 PERCENT OF HOUSUIOLDS .. .. .. 6.3 LOWEST 40 PERCENT OF HOUSEHOLDS .. .. .. .. .. 16.3 POVERTY TARGET GROUPS 1STIMATID ABSOLUTE POVERD! INCOME LEVEL (USS PER CAPITA) URBAN .. .. 213.0 187.6 99.2 241.3 RURAL .. .. 136.0 96.8 78.9 136.6 ESTIMATED RELATIVE POVERY tINCOME LEVEL (US$ PER CAPITA) URBIAN .. .. .. 38.4 91.9 179.7 RURAL *- *- 37.0 71.0 54.8 103.7 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 55.0 34.5 44.1 24.8 RURAL .. .. 85.0 48.7 53.9 37.5 Not available Not applicable. NOTES /a The adjusted Rroup averages for each indicator are pop.lation-weighted geometric axat. *.cloding the extreme values of the iodicetor and the most populalqd councry in each group. Coverage of countries among the Ladicacors deponds on avalability of data jed is not niform. / Unless otherwise noted, dat& for 1960 refer t yeSx betWeet 1959 and 191; for 1970, between 1969 nd 1971; and for Most Becent Estimate, betveen 19T7 ad 19T8. /c Africa South of SUerik; /d Low Iacae. ($280 or lese par capita, 1976); /e Los-er Middle Income (9281-550 per capita, 1976); 7f 1962; /t 1957. )osc Recent Estimate of GNP per capita Is for 1978. Revised De3c_ber 1979  - 16- ANNEX I DtIXICIO SOIA O CTOt Page .3 of 5 MalTeadjusted gras evarmanme tog eeeb laWlc&ter sae pe,qc1timm-s10tedl semAtcc mama,. cacladl the eatcind v1.06 of the Ladles to e 0e ee pap..te contr ineeck grete. Cerands,g of coacrt.. nag the jadicatar. depeAeas we alebillty, af let. eel is wat waloe. Due. to ack If date. Eroup -vor"e for Capital S.rpl... 0. beprtecu sod indicators el ecceac to "ter eW excrete disposal, bo.aaist. L5amoo dl.tribetiae eel povrtY -v- .1aPla poolalmomgtd ostric nine WJthout the sclUdalo, of ec valeet&I-. LiD M&F (thelsaad Oci b) qg..scc t hoetlbd-ttl.cbm e ua .Paplacla (t.otl. Ttl- Total surfaet are" clf 161*6 laud "oee seel ilm d waters, urban, e"el ccI) 41,11. by teIr epCt:it mA2br of hospital buds 6AIC4.lM1t"Al - e-Ct n.nint aetfet. af eWin.ltacaL acm. asela ...ol II?lbl is public we privet. generel Nel apaallia.d hospital eel ra- or peteasestly for crepe. peetere.. mArket eel kitchas gardame at tc hebilitetiee teeter. leaitale are oetabllehe.ea p50ueasctly staffed by Li. fell... at least oms pby.tifie. Reatblishom.cc. previAlle priwelpally custodial IMP U CPIT WS) - P pr cpit eetamte a toreecseret riea. careC arme jicladel. AWOaL hefpitala beeavmr, inladed health eel sell- G______CAPITA___S__ - K te4I&-Ceto-ttrmtmktP1e,cl cateo, eat Permanntly .1.1 ed by a sk7sictas (but bY . UM.lca se- ca.lculated bY en$ cosocecle msths Be VUsd4 bask AClee (l973-y7 baals). aletmt. msec. sfidife. age.) swa&b offer la-PeCIlest seCanletioc eel 1 and19. e lPfl late. ircuoi a liitccd, rams of wadical facilities. UDOT ~~20E 13 OiIIA -Anal tae~ciec t terntl mrgy ~ ~ ~ e!~T ljYl ,-Toetal mumer of almissleca taor eliacherge (Coalmo ligeic Patrolmenee. satoaL a"geeal hydra-, deeimel m ase- thermal 41ectclei97) is kil*$rM at geal sqivaiemt pet capita. Min 1otesslsof= nehli meom a eaml oa , eho. aoul corl Ineehl ealt tagap fLlvol ohm borer ILvima 4"teacrs PO TOW.11 21M MT.17 IkEaL- 46ato JIay 1. Lt met andlbl e tbelt -to. oasis. A boalar or ladder 00y cr mey oat be inLu..da C5 aVerage Of TOGoe-.year atifttijj 194. 1970. s.d 1977 late, the hawe.bcld fec otetiatical Puposrese. WIgatical letioiltoae of ho."- lraa.cqiam (14= 1 nit:tfia - Rstia of orbae c total p""Is- held -eY. CLos; dif ferent doie isao arbea art"aasep effect comeeklicty AVersINe.nable Of lecasa. Mc ream - tcCi urhs. eam craal - A-cotebee of lac n"a oes.cie. bar ot Perna"mera reem is all *ce. eel rural occupied Goevaotieoa !o" i.li!..amLi.. leelleg. respeatively. Doomigsp exclola sem-p-somest Crutcaeuroancd !3l.Js.! ..-ll.m Ppoulation Par .q".ec kileator (1OC beecarca) unoccupied part.. of total or". Aec... to electrcit,Y (ec ci dolisas) - total, orbes. sad total - For as. he. eacicolcoro lead - Caspoted as sabve far agricultucal laud Cmonentional dollca 11t elecrIcty La 1101s quarters so parceocega foovetlo ectrte.eresi-Chiliras (0-14 peers). aerkieg-age e oa.-0. e Tldlls'.at-y (15-64 yeacat. elrtlc.d (65 years aol ...v) ea pr.atgaoeg of lid- qa Yea ouetn MIiissed aceolla-St relod Ponulcioe reachceta(--ree - total. Nel ar6e - cop aemua- l Primary School - "Totl, eel fouel, - Iocal aolf I .... ocrowleas of all age. growth rasa of,total eel aras mid-ycar popeaitlame for .1*50-40. at the prSeerY 1o0... as p-erstegee of r.peiayprisary .chool-nS. 19 =.t e 190-7. 7,pe,r1lecia; normally iclaldes chlidra sead 6-Il y-aer but .dj.etdl far (cads birh rece leer theoe4el) - Aaeal Iive girthe per twoaeaat of it fr..ct lamgtho at ptieacy olecatlca;,for cuotfices with aul-r-1el .u- .1d-year popalacias; tee-year sorthmetic .-aveag. achin is 1940 anl caci*ft aerolsemt mex ceed 100 erce cioca seame pupils are bol1- or 1970 eel fla-peer averaga selAlg is 1975 to mease reste eatleata. shor the official school age. CT-At death rats, lee th,ce) - Aosuealdeath* per cheuaemd of a1-Scelrdeha- 1tot ml d f1 t ls - Cmputoled e. bo,e; aacoolsc elate- peer ppleftiam; te-yarsctisic ..srgeas lleeL Ic 94 sal 1920 clm ellra t ca t... po.ac of epprood p'imey leastru......; Pro'- sel fti.-Y"c averag0en setog L. 1975 for meast racent estimate. vile. eansral -ocatIonal. or teacher treales ...rc lc for puplse Grove ceProducclam Meo-Al ...g e.taxaer at leoetntro . comes.0111 beer. ucuely of 12 to 17 Years of age; carr ...poed . . . ..... era g.nora ly 10 hec noocm ,sroducttlve p*.iod It ale saperiaces preasat egs- secl.ale. 19pe.ifel 197. ..-Il fiv_Ye-., a.... Sa. andiag in 1900. . Joei-eleclae orre farean Vc.ti ...l ie.tstitlOcOh La- 19'.. .. N715111t, ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ al c ad tchnical. inloetI l. or ocheM~rl fpro1.0greo hehi IF.. epoac indopead.atly faala. leano. ecastoa. asel lthtsodaela - Ashacl woba of or Adep aptentesa of soandsary, lnstlt.tlam.. ecccpoce o hirt-castrol device coder auspices of eatiaml feelly Pc-tahreo- iay.elaolr,-Tet.L etudaeto wrcolle Ic PlsaiaO Proeam. prIr o sodr eeedvdlb abr f teacher. in the ...rr.- reellrnaon sc lorcecofmerid ee Pacaceat ocpaalbog iccale. merried comas of ch Id-ee,a ef (5-,, 1ece v 8as hlc-uscgro1 Malt litracy jats Coorcmgt) - Llt ...t.aedulte (ebla to real eed wita) sc devicrs to oIl macclad caomes is od age grop. . agperetas .. to total adult populatIon coo 15 yoara and Ivor. lOoD d0IOfIONc songfT0 lobe offood rod%Ktimoerctapita (197OcO ad-Isin eabor of par Pess ser ac (por th-arced cocaleatl) - Pu ... SrT cerc tompri..ocmtal icr. capita *--Io prodectico . aTelawtoo an lIt,.. ceactog l.e. thei eight P.case.; noCdul. ablm. hearooc and .1itAry P.r 1551t0 .acclv of calories (ccca"I of c ainto),- Campoted trom vahiclea. onrg aobalas of net food auppile veilabl s% toltry P.r capita tall e..t-siec (P.c thousaea oo,.eftlaon) - All type* of rceivecra far cello or dey. Avceilablo aoPPiiee compriao lomectic Production. iapports loca broadcast. to Sena-el ptublic par thoucaud ol pop.lation; saclulo Allr.....d exPort.. cod cheoa- in atck. Net supplies -ealua eeIeel feel. ..e.a reca..r It co...trt. cald 1n yc.eo when r.*iotratlo.ofa cello sets on it qu..ocitie aaa use iced- pretocalog. mod Losmee ic distribution. Re- etfect; deta for ra..a.t yp... my wot be -opecAbla saco meat -oWetrI qolcasese wore astfasted by PA haed an phyolologlcel needs for nor- abolished llc.ooint. eal nctility eel health .... Idscig aw,iroamemtal temperture. holy rV rocolora goa th, .... yoealocI:) - I .. rtiners tar bnoaleaectoaancrd r:iolht. goad s listelboi:on If.at ppletla. aol sllrig 10 per.ulcprco,olpplec;ocue ant ood rV rac:lvrer 10L. 0 confo cot thoead101 trite atd 10 y.ae oor ad. tatctccT otaoa*. in *ffct. P., -acita Ifol a ocotalo Poa a r day) - pr.C.ia content o per . 9eueouc,r circulation (coc 1housmod pOa.latl-n) - Shoose cho S.rg cru caPita oat aap Iof toedapar dey. tat sapply Of tool ic defined ao clt fdel aenre1 Intrerst -a.p.per". Weined ae apor 1dic1 pablt- .1h-n. toqulcamant. fot ell ...ancrioc established by USDA p-oullo for c.tio.. dootad primarily to r.oordi.g geere) raw.. It is co...i14rod to a ei mma. eIo.... a of 60 tree of total proteI per daY cud 20 cram, b. lelLly" if it opporo at Ibes.t tour time. a .ook. of.ani al end pale. potaio. of which 10 glrasa ohoad ha animles rtl. hseer.;atoa o.r caodte oar -ear - gco otho Ouab., of tltk.t TOh. etandarda er. lowe thee th... af 75 grosa of totsl protein and cold dorIa th yocc II41.udleg dmao to I ro-o Iltate cod obiL. 23grac ft eoimal protein as ac -vec* tar the -Ird. pl.opoat hy -ntt.. FAlI in rh, ThIrd World Pad S ar-r-y. Per tacit. .. crtlo oucol fro% IA&ima and Pulse - Pr-col oupply of food UtpLOYftcO d.rinod l-ta anlela aod p.leae is gSsew p.r dap. Tota CIho Ltofrco (tbo..... ol - tcoooc4cally o.Cine Parsna.. Ircludi.g arced Child (.... 1-4) -ut.lltv rota (wac thae-nd) - OAn1a de-tha par fhu-roco. .nd Iamcplo-d boO .-cldlrg ha.aw-i-o, t-doa..c Daft t- end to age group 1.4 years. to children in thlo age group. clt.. i0nrou co...trie. are not cooparco1o. Peal Focen; - f al labor force as p.,crcntgo of total labor torte. 4EAI.TO crHltc (ret) - Labor force in foreing. forcotry. huntlog sod fiehihg Lif. -pecta-y at hicoh (years) - A-rago number of yacc.aot lit. as pr...ra.tgo of totc1l labr f.cc.. religat birth; ....elly flr--ypee-r 9. aneee ndlg L. 1960. 1970. Indlustry (0-ccoti -abrfroin dointg..coctrr.crio. ctafOo and al19. octricty. ao n a ae p.cneeds of total labor tE. Infant motrAlity cate (ocr,:tho ....d) - A4...5 Idaths of Woants ood.r Patooto rc nc.t - " toal -l., and female - Tota. c. al.,..d0 oat cerof go pr tau.el ive blrhto. '.-cl. Iabor Pr-. as e-pscacas o. f th.lr -opectlv pt cat- Ic.... to asot. water (wrcoo .. t cosu...l.ttoo - utotl. !rban. sod rural - That .. TLc)'-0.4a)uanr p-ricipatio cart, cefll-ctt-ar-c Soumber Of Pa_PI, (tta,rbn, adcrarl) vith raotbl,e .....aa to --t-urr of thopplo. ond loot rime nfr-l. oto sarapply (tn, dc treated ..rfaoeoa.t-r or uctrcatd hoblonol d ....dc.'- raio - Reti Iof .pop.tletio .0cr 15 and OS end -Ce C .m--otealnaced .eto suth a.4 that ftro protmectd borehlol.e epclgo. nCh labor forCa to cg. Sroup of 15-644 year.. eod acitary .alle) ea parcest.ooc of their raaP.Cttl- PePtlatete.. 10 an arbe area a pobl1c faunt.i. or ctadpaoo loceted OCt wear EVC~ DISTZIITTOo thanZOO ecao trm ahaaac way h.a-ciod.red 4. b.lng tithLn rca- Partxc. of Private locamo (both 10 eahed id ocio y ihc ecoabl aucoc of cht hs. In arol ar.e. r"..e beal access could porcet,l rich..t 50 parccnt, pocroot 10 P.rCoO. sol po.orea '.0 pote..nt Laply that the houa.-ifo or smbece of the hocsehold do tot h&0. to of hb..ouhb1do. ap.nd a 4I.prcp-rtlaoata pert of tOe Icy it fetching th. feelly'. cater teed.. p~~~~~~vryTy TAtUcT Ic~~~~GOUPS N,al x ober of people (total, urban,1and rural arved by Ora A.lt oac ooelvl1 ha om .o .c he iio dlarelcaprenae o hI ro.e P y pti poloIline. torceta .atrIiota-lly.4.qoatc liar p10 ..e...nnia1 nt-food -roqul..c.otc I0 l lioyo. - Incude th oleload diapecl iuO or wIthaut .ff.rd.hla. troanot.- of hu,man ort duc.atrb ac-oo eyetoa tari-ard ccla-i- oovorty Iecca lIvel (US4 P., eia uhotdrrl ort. ac f pitP: pins. ad cielai n.taI'lone Islatin. p-norty Inc... loy-l is that loon.. lanol la.. than One-OtOI Puano e hyncliau - Population dl)id.d by aumbor of Practici.g par -apita p reonl inoome of the oourrtry. ptrvicln ulfe reecdcl ccla orect e.C.tlcgt.d oonuj!t1*on balco~ ponorty leact lonol (prc!ttl-ernrad uo ~pju1nlon co ourelc Dec.0 - Ppulation dlvidla by tomberOtPrct of p,opol.u.tloIn (urban .od rura-1 h are elth I' alcblu. co" practcin Sa. ad !emale grelua t.rc pe,-pctoc.1 suo,ad L.tv or OIlfrtC orcot.r. tEco...ic Aoraly.la and P-oj-tion. lyPrtn-n  ANNEX I - 17 - Tg4 5 ECONOMIC INDICATORS GROSS NATIONAL PRODUCT IN 1979 ANNUAL RATE OF GROWrH (%S constant prices) US$ Mln. C971-77 1978 1979 GNP at Market Prices 798.8 100.0 3.3 5.5 1.3 Oross Domestic Investm,e7t 100.4 12.6 17.1 15.p -5.9 Gross National Saving ^ 61.5 7.7 12.7 -16.5 -7.o Current Account Balance -38.9 -4.9 Exports of Goods, NFS 108.7 13.6 -1.9 36.3 14.0 Imports of Goods, NFS 177.8 22.3 7.7 7.7 12.2 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1979 Value Added US$ Mln. __ Agriculture 400. 5 49.1 Industry and Mining 110.1 13.5 Services 219.5 26.9 Unallocated. 8 54 10.5 Total/Average 815 5 100.0 GOVERNMENT FINANCE Central Government (B Il M-Ln. 7 L I unr 1978 1978 1976-78 Current Receipta 8.226.2 14.7 14.5 Current Expenditure 61686.6 1.9 11.0 Current Surplus 1,539,6 2.7 3.5 Capital Expenditures 5,072.8 9.0 7.7 External Assistance (net)N/ 2,115.7 3.8 4.0 MONEY, CREDIT and PRICES 1977 1978 1979 (Million BuF outstanding end periodT 'Money and Quasi Money 8,283.2 9,411.2 12,244.0 Bank credit to Pr,blic Sector - 270.8 1,660.8 4,150.4 Bank Credit to Private Sector 1,886.9 4,491.3 6,220.4 (Percentages or Index Numbers) Money and Quasi Money as % of GDP 16.9 16.8 16.7 General Price Index (1970 a 100) 175.7 235.5 295.5 Annual percentage changes ins General Price Index 6.8 34.0 25.5 Bank credit to Public Sector -75.9 513.3 149.9 Bank credit to Private Sector 23.1 138.0 38.5 NOTE, All conversions to dollars in this table are at the average exchange rate prevailing during the period covered. 2/ Savings net of transfers and income payments. i/ Indirect taxes less Bubsidies. S/ Canital grants and net foreign disbursements. g/ Includes credit to public corporations. Not applicable  - 18 - ANNEX I gae.ge e of 5 TRADE PAYMENTS AND CAPITAL FLOWS BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1977-79) 1977 1978 197 3/ US$ Mln % ll71ions UStPi Coffee 79.2 90.7 Exports of Goods, NFS 96.3 71.4 108.7 Cotton 2.5 2.9 Imports of Goods, NFS 94-T 123.4 177.8 Skins 0.9 1.0 Resource Gap (deficit = -) 1.7 -52.0 -9. Tea 1.8 2.1 Interest Payments (net) -0.5 -0.7 -1.4 Workers' Remittances -13.2 -13.8 -15.2 Other Factor Payments (net) - - - Net Transfers 29.0 32.7 46.9 All other c mndities 2.9 3.3 Balance on Current Account 16.9 -33.8 -38.9 Total 87.3 100.0 Direct Foreign Investment - - - EXTERNAL DEBT,DECEMBER 31,19793/ Net MLT Borrowing Disbursements 17.1 23.2 25.9 US$ Mln Amortization 2.2 -1.8 -2.6 Subtotal 14.9 21.4 23.3 Public Debt, incl. guaranteed 83.3 Capital Grants 13.8 21.0 25.3 Non-Guaranteed Private Debt Other Capital (net) -0.3 -24.6 -6.5 Total outstanding and Disbursed 83.3 Other items n.e.i. 0.8 6.9 lo.9 Increase in Reserves (+):T -9.1 14.1 DEBT SERVICE RATIO FOR 19781/ Gross Reserves (end year)!/ 95.9 83.4 93.7 Net Reserves (end year) 88.6 79.5 93.6 Public Debt, incl. guaranteed 3.5 Non-Guaranteed Private Debt Fuel and Related Materials Total outstanding and Disbursed. Imports of which: Petroleum 6.o 7.2 12.6 Exports of which: Petroluem - - - IBRD/IDA LENDING,APRIL 30,1980(Million US$) RATE OF EXCHANGE IBRD IDA Through Feb. 1273 Since May 3, 1976 US$1.00 = BuF 87.5 US$1.00 = BuF 90.0 Outstanding and Disbursed - 28.6 BuF 100 = US$1.14 BuF 100 = US$1.11 Undisbursed - 41.4 Outstaniding incl. Undisbursed - 70.0 From March 1973 to May 2. 1976 US$1.00 = BuF 78.75 BuF 100 = US$1.27 1/ Ratio of Debt Service to Exports of Goods and Non-Factor Services (estimated). 2/ Central Bank. 3/ Estimated. Not available. May 1980  - 19 - ANNEX II Page 1 of 5 THE STATUS OF BANK GROUP OPERATIONS IN BURUNDI A. Statement of Bank Loans and IDA Credits to Burundi (as of April 30, 1980) Amount Loan or US$ million Credit (less cancellations) Number Year Borrower Purpose Bank IDA 2/ Undisbursed One loan 1/ and three credits fully disbursed 4.8 3.3 - 467-BU 1974 Burundi Highway Maintenance - 5.0 0.3 593-BU 1975 Burundi Second Coffee Improve- ment - 5.2 1.3 613-BU 1976 Burundi Technical Assistance - 1.5 0.1 626-BU 1976 Burundi Fisheries Development - 6.0 4.0 679-BU 1977 Burundi Education - 10.0 2.7 731-BU 1978 Burundi Development Bank - 3.4 2.4 773-BU 1978 Burundi Second Highway Project - 14.0 8.9 917-BU 1979 Burundi Second TA Project - 2.5 2.5 918-BU 1979 Burundi Forestry - 4.3 4.2 976-BU 1980 Burundi Second Education 3/ - 15.0 15.0 Total 4.8 70.2 41.4 of which has been paid 4.8 0.2 Total now held 0.0 70.0 Total undisbursed 0.0 41.4 41.4 1/ Extended in 1957 to the Belgian Trust Territory of Ruanda-Urundi for the improvement of the Bujumbura-Muramvya road and the expansion of the Lake port of Bujumbura. The loan which was guaranteed by the Kingdom of Belgium has been fully repaid. 2/ Prior to exchange adjustments. 3/ Not yet effective.  - 20 - ANNEX II Page 2 of 5 B. Statement of IFC Investments There have been no IFC investments in Burundi. C. Projects in Execution 1/ Credit No. 467-BU Highway Maintenance Project: US$5.0 million of March 27, 1974; Effective Date: August 22, 1974; Closing Date: December 31, 1980 The Highway Maintenance Project is the first phase of a long-term program to establish an efficient highway maintenance organization. The project which has been substantially completed consists of the purchase of maintenance equipment, spare parts, fuel and construction materials, the construction of a workshop and consultant services for technical assistance and training, a study on the development of the road sector and feasibility studies. The project is cofinanced by the UNDP (US$1.05 million for technical assistance), Germany (US$1.33 million for the construction of and technical assistance to the mechanical workshop in Bujumbura) and Belgium (US$400,000 for local cost financing). All equipment has now been procured and mechanical road maintenance is well under way. Several manual road maintenance crews and one mechanized maintenance unit have been established resulting in a sub- stantial improvement in the quality of road maintenance works. Good progress has been made in training road maintenance personnel. Completion of the office building for the Directorate of Roads, which is the only project component still outstanding, is now scheduled for July 1980. Credit No. 593-BU Second Coffee Improvement Project: US$5.2 million of December 5, 1975; Effective Date: October 31, 1976; Closing Date: March 31, 1981 The Project is a continuation of the first Coffee Improvement Project (US$1.8 million Credit No. 147-BU of April 11, 1969). It is being co-financed by the Kuwait Fund (US$1.2 million) on a parallel basis and by Belgium (about US$600,000). The Kuwait Fund finances the construction of ten coffee washing stations, and Belgium assists in the carrying out of a coffee research component. The project is designed to support the develop- ment of coffee and food production by strengthening and expanding extension 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 under- standing that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution.  - 21 - ANNEX II Page 3 of 5 services and distribution of agricultural inputs; it includes a pilot rural development program to improve livestock and food crop production. Start up of the project was slow because of frequent changes in foreign and local project staff. A new team of foreign experts has been appointed and project management is now improving. Coffee extension work is showing favorable results. Husbandry methods practiced by coffee growers continue to improve. and coffee research activities are making satisfactory progress. Constructlon of the ten coffee washing stations is expected to be completed by the end of 1980. The pilot foodcrop development programs have been redefined and scaled down to ensure better control. Credit No. 613-BU Technical Assistance Project: US$1.5 million of March 19, 1976; Effective date: July 13, 1976; Closing Date: June 30, 1980 This project provides financing for hiring long term advisers and short-term consultants to assist in planning, collection of statistics and project preparation. Several long term advisers (including a senior economic adviser and a senior statistician in the Ministry of Planning, a savings bank expert and a metallurgist at the Ministry of Mining) are in post. Several short-term studies and consultant services relating to the prepars ion of projects in the agricultural and industrial sectors have been carried out. Credit No. 626-BU Fisheries Development Project; US$6.0 million of June 11, 1976; Effective Date: February 22, 1977 Closing Date: June 30, 1982 This project is designed to increase the production of fish through the provision of training, equipment and materials to fishermen and to improve the distribution of fish throughout Burundi. The project also includes financing for the preparation of rural development plans for the coastal region along Lake Tanganyika and the implementation of pilot development activities. The project is co-financed by a US$1.2 million loan from the Abu Dhabi Fund. Project implementation was initially very slow because of problems encountered in the recruitment of both expatriate technical assis- tants and their national counterparts and in the procurement of goods. Most of these constraints have been overcome and the pace of project implementation has accelerated. Production of fiberglass hulls for fishing boats has begun and there has been an improvement in the catch rates at some fishing centers. Problems of shortages of spare parts for the outboard engines are being solved. Contracts for all the studies have been signed and all of them are underway. Management performance of the fisheries company has been unsatisfactory and a new project manager and a new deputy manager have just been appointed. Financially, the company has working capital problems. These problems were recently reviewed with the Government and an agreed plan of action for improving performance was established.  - 22 - ANNEX II Page 4 of 5 Credit No. 679-BU Education Project: US$10.0 million of April 28, 1977; Effective Date: September 1, 1977; Closing Date: March 31, 1983 This project assists the Government in continuing and consolidating the reform of primary education. It aims at substantially expanding primary school enrollments and improving the distribution of educational opportunities. It provides technical and material assistance to the Rural Education Bureau responsible for the execution of the reform of primary education as well as for teacher training. As a result of a shortage of cement and fuel caused by the hostilities in Uganda during the past year project execution has been delayed by about a year. Recently, however, deliveries of cement and fuel have resumed. The construction of 12 schools, a teacher training center and a printshop has been completed. An additional eight schools are nearing completion and the construction of five new schools started in early 1980. Credit No. 731-BU Development Bank Project; US$3.4 million of September 30, 1977; Effective Date: March 27, 1978 Closing Date: March 31, 1983 The project aims at providing funds for investment in medium size productive entreprises and technical assistance to the National Economic Development Bank (BNDE). Project execution is slow as a result of limited activities of Burundi's industrial sector, and about 70% of the Credit amount remains uncommitted. The newly established Industrial Development Unit of BNDE which is to promote and appraise industrial projects has now been fully staffed. Credit No. 773-BU Second Highway Project; US$14.0 million of March 29, 1978; Effective Date: July 27, 1978 Closing Date: June 30, 1982. This project provides for the construction of the Bujumbura-Rugombo road (65 km), improvement of roads and bridges, technical assistance and procurement of maintenance equipment. Project implementation, in particular road construction, was hampered by the lack of cement and fuel supplies during the first half of 1979. Performance of the supervision consultants for the road construction and consultants for engineering (road and bridge improvement) is satisfactory. Two mechanized maintenance units have been set up and have started the road improvement program. Consultants providing technical assis- tance to the Ministry of Public Works, Equipment and Housing are in post.  - 23 - ANNEX II Page 5 of 5 Credit No. 917-BU Second Technical Assistance Project; US$2.5 million of June 1, 1979; Effectiveness Date: September 27, 1979 Closing Date: December 31, 1982 This project provides for the further strengthening of the Govern- ment's planning mechanism and its project preparation and implementation capacity. It includes continuation of the technical assistance to macro economic planning at the Ministry of Planning, provision of experts to the planning divisions of the Ministries of Agriculture and Industry and financing of feasibility studies. Recruitment of experts is underway and terms of reference for several feasibility studies are being prepared. Credit No. 918-BU Forestry Project; US$4.3 million and US$1.2 million EEC Special Action Credit of June 1, 1979; Effectiveness Date: October 22, 1979; Closing Date: March 31, 1985. This project assists the Government in initiating the first stage of a long-term program to develop basic forestry services and plantations supplying fuel wood, building poles and timber to further the Government's objectives of increasing forest production and establishing long-term wood production and marketing policies. The project includes the establishment of rural nurseries in 30 communes, a 2,000 ha eucalyptus plantation and a 5,000 ha pine plantation, technical assistance (provided by France) and financing of energy studies. The three expatriate technical assistants (project manager, two silviculturists) are in post; approval has been given for the appointment and the terms of reference of the different local and expatriate staff. Credit No. 976-BU Second Education Project; US$15.0 million of April 23, 1980; Terminal Date for Effectiveness: July 21, 1980; Closing Date: June 30, 1985. This project assists the Government in training middle level techni- cians and skilled workers in industrial trades and secretarial/administrative skills. It includes the construction, furnishing and equipping of two new boarding technical schools, a Mechanics Department and a Typist and Bookkeeper Training Department in two existing schools and staff housing. The Credit is not yet effective.  - 24 - ANNEX III BURUNDI TELECOMMUNICATIONS PROJECT Supplementary Project Data Sheet Section I: Timetable and Key Events Identification: March 1979 Preparation: Government with IDA's assistance Appraisal Mission: December 1979 Negotiations: May 1980 Planned Date of Effectiveness: September 1980 Section II: Special Implementation Action None. Section III: Special Conditions of the Project - Telecommunications tariffs would be maintained at levels sufficient to achieve a rate of return of at least 10% on revalued net fixed assets in operation (para. 34). - ONATEL would undertake a tariff review, to be completed by July 1, 1981, under terms of reference acceptable to IDA and would discuss with IDA the implementation implication of this review by December 31, 1981 (para. 35). - ONATEL would have its accounts and financial statements for each fiscal year audited by independent auditors acceptable to the Association and would send certified copies of these accounts together with the auditors' report to the Association not later than six months after the end of each fiscal year (para. 38). - Special conditions of effectiveness are that (i) a contract, satisfactory to IDA, providing the services of the telecom- munications management expert and engineering consultants, has been signed and (ii) the subsidiary loan agreement between the Government and ONATEL has been signed (para. 46).  IBRC) 142 97 R F 9 UA Y
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