Cameroon - Niete Rubber Estate Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 3507 PROJECT PERFORMANCE AUDIT REPORT CAMEROON NIETE RUBBER ESTATE PROJECT (CREDIT 574-CM) June 22, 1981 Operations Evaluation Department 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. ABBREVIATIONS EIB European Investment Bank CCCE Caisse Centrale de Cooperation Economique (France) (Central Bank for Economic Cooperation) CDC (CAMDEV) Cameroon Development Corporation CDC (COMDEV) Commonwealth Development Corporation (UK) ENSA Ecole Nationale Superieure Agronomique (Higher National School of Agronomy) FAC Fonds D'aide et de coop6ration (France) EDF European Development Fund HEVECAM SociEt6 H6v&a-Cameroun IDA International Development Association IRA Institut de recherches agronomiques (Agronomical Research Institute) IRCA Institut de recherches sur le caoutchouc (Rubber Research Institute) PAMOL Societe PAMOL de Cameroun (Unilever Group) PCR Project Completion Report SAFACAM Soci6t6 Africaine Forestilre et Agricole Cameroun (African Forestry and Agricultural Company, Cameroon) SAR Staff Appraisal Report SATET Soci6tC Africaine de travaux et d'studes topographiques (African Company for Topographical Works and Studies) SEDA Soci6t6 d'Etude pour le d6veloppement de l'Afrique (Research Company for the Development of Africa) SOCAPALM Soci6t6 camerounaise de Palmeraies (Cameroonian Oil Palm Plantation Company) SPFS Soci6t6 des plantations de la ferme suisse SPROA Soci6t6 des plantations r6unies de l'Ouest Africain (United West African Plantations Company) WEIGHTS AND MEASURES 1 kilometer (km) = 0.621 miles 1 hectare (ha) = 2.471 acres 1 kilogram (kg) = 2.205 pounds 1 metric ton (t) = 0.984 long ton 1 kilowatt (kW) = 1.360 cheval-vapeur (CV) or = 1.341 horsepower (hp) FISCAL YEAR Government and HEVECAM - July 1 to June 30  FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT CAMEROON NIETE RUBBER ESTATE PROJECT (CREDIT 574-CM) TABLE OF CONTENTS Page No. Preface ..................................................... i Project Performance Audit Basic Data Sheet ............ ii Highlights .. . . . ....................... .......... iv PROJECT PERFORMANCE AUDIT MEMORANDUM I. SUMMARY ............................................ 1 II. MAIN ISSUES .............. .......................... 4 A. Turnover of the Labor Force ................ 4 B. Foodcrop Production .... .................... 6 C. Salvage Logging .................................... 7 D. The Indigenous Forest-Dwelling Minorities .......... 8 ATTACHMENT: PROJECT COMPLETION REPORT I. INTRODUCTION................... ....... ..... 10 II. IDENTIFICATION, PREPARATION AND APPRAISAL OF THE PROJECT.......................... ........... 19 III. EXECUTION .............................. 32 IV. PROJECT COSTS AND FINANCING............................. 42 V. ECONOMIC RATE OF RETURN ............................. 45 Annexes 1-161/ IDA OVERVIEW OF THE HEVECAM PROJECT COMPLETION REPORT INTRODUCTION........................................ * .... 68 SUMMARY............................................. ... 68 IMPLEMENTATION................................. 69 COMMENTARY......................................... #.... 69 1/ The West Africa Regional Office has excluded some of the material from the original PCR. The material so excluded does not contribute to the main thrust and emphasis of the PCR. 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. C s - 1 - PROJECT PERFORMANCE AUDIT REPORT CAMEROON NIETE RUBBER ESTATE PROJECT (CREDIT 574-CM) PREFACE This is a performance audit of the Niete Rubber Estate Project in the United Republic of Cameroon for which Credit 574-CM was approved in July 1975 in the sum of US$16 million. The final disbursement in respect of this loan was made on March 13, 1980. The audit report consists of an audit memorandum prepared by the Operations Evaluation Department and a Project Completion Report (PCR) dated March 31, 1980. The PCR was prepared by the Project Executing Agency; the IDA Overview was prepared by the Western Africa Regional Office. The audit memorandum is based on a review of the Appraisal Report (No. 716a-CM) dated May 20, 1975, the President-s Report (P1615-CM) dated May 21, 1974, the Development Credit Agreement dated July 30, 1975, the Staff Appraisal Report of the follow-on HEVECAM II Project (2661-CM) of December 10, 1979, and the PCR. Internal Bank memoranda on project issues as contained in relevant Bank files have also been consulted, and Bank staff associated with the project have been interviewed. An OED mission visited Cameroon in February 1981. The mission held discussions with officials of the Ministry of Agriculture and the project authority (HEVECAM: Societe de Hevea; - Cameroon). The information obtained during that mission was used to test the validity of the conclusions of the PCR and of the IDA Overview. The audit finds that the PCR and the IDA Overview together cover adequately the project-s salient features and the PPAM generally agrees with their conclusions. In addition to summarizing the objectives and results of the project, the PPAM expands upon the discussion of the high labor turnover and the problems of foodcrop production. The draft audit report was sent to the Government of the United Repolic of the Cameroon and to the project executing agency on April 22, 1981. No comments were received from either. A copy was also sent to the CCCE; they advised that they had no observations to make. The valuable assistance provided by the Government of the United Republic of Cameroon and the staff of HEVECAM met during the preparation of this report is gratefully acknowledged.  - ii - PROJECT PERFORMANCE AUDIT BASIC DATA SHEET CAMEROON NIETE RUBBER ESTATE PROJECT (CREDIT 574-CM) KEY PROJECT DATA Appraisal Actual or Expectation Current Estimate Total Project Cost (US$ million) 28.5 30.3a Cost Overrun (%) - 6 Credit Amount (US$ million) 16 16.1a Disbursed ) 16 Cancelled )-- Raeaid January 31, 1981 Repaid)-- Outstanding ) 16 Exchange Adjustment Borrowers Obligation (US$ million) - 16 Date Physical Components Completed 06/30/80 /b Proportion Completed by Target Date - /b Delay (% Time Overrun) -b Economic Rate of Return 14/c 11.9 Cumulative Estimated and Actual Disbursements (US$ Million) FY76 FY77 FY78 FY79 FY80 Appraisal Estimate 1.5 4.0 7.5 11.8 16.0 Actual 0.7 3.3 7.0 13.8 16.0 Actual as % of Estimate 47 83 93 117 100 OTHER PROJECT DATA Original Actual or Plan Revisions Est. Actual First Mention in Files - - 02/71 Negotiations 05/75 - 05/75 Board Approval 05/20/75 - 05/20/75 Effective Date 12/01/75 - 12/01/75 Closing Date 12/31/80 - 06/30/80 Borrower United Republic of Cameroon (Republique Unie du Cameroun) Co-financier Caisse Centrale de Cooperacion Economique Executing Agency Societe Hevea - Cameroun (HEVECAM) Follow-on Project Name Second Hevecam Rubber Project Loan/Credit No. Ln 1791-CM and Cr 975-CM Loan/Credit Agreement Date April 18, 1980 Loan Amount ) US$15 million US$31.5 million Credit Amount ) US$16.5 million ) /a Includes pre-financing US$0.9 million from follow-on project (Cr 975-CM and Ln 1791-CM) and US$0.3 million from Cr 673-CM. /b Reduced targets completed by November 12, 1979. By June 30, 1980, financed by follow-on project, 94% of original targets were achieved. /c Assuming the full 15,000 ha will be planted which the follow-on project will assure.  - iii - MISSION DATA Sent Month/ No. of No. of Man- Report Item by Year Weeks Persons weeks Date Identification Bank 04/73 0.5 2 1 05/10/73 Preparation I Bank 04/74 0.3 3 1/a 05/17/74 Preparation II Bank 10/74 1 1 1 11/74 Appraisal Bank 12/74 4 4 16 05/20/75 Total 19 Supervision I Bank 10/75 2 1 2 12/05/75 Supervision II Bank 10/76 1 1 1 11/24/76 Supervision III Bank 06/77 1 2 2 07/15/77 Supervision IV Bank 02/78 1 2 2 03/30/78 Supervision V Bank 10/78 1 2 2 12/01/78 Supervision VI Bank 04/79 0.6 3 2 06/25/79 Supervision VII Bank 03/80 2 1 2 03/27/80 Total 13 Project Completion Report prepared by project executing agency. COUNTRY EXCHANGE RATES Country Currency: Franc de la Communaute- Financiere Africain (CFAF or F.CFA) CFAF 50 = FF1 (tied exchange rate) During the disbursement period, the rate to the US$ varied between 204 and 249. At appraisal US$1 = 225 During disbursement (average) US$1 = 227 Completion US$1 = 246 /a Bank staff time.  - iv - PROJECT PERFORMANCE AUDIT REPORT CAMEROON NIETE RUBBER ESTATE PROJECT (CREDIT 574-CM) HIGHLIGHTS The credit was granted to support the first 5,800 ha tranche of establishing a 15,000 ha rubber estate in the south-western, rain-forest area of the United Republic of Cameroon (Republic Unie de Cameroun) and to finance the preparation of a master plan for the proposed development of the south- western province of the country. As the area was only sparsely inhabited, housing as well as health, communal and social facilities had to be provided as part of the project. The project was financed by an IDA credit of US$16 million equivalent and a loan of French Francs (FF) 20 million (approximately US$4.4 million) granted by the Caisse Central de Cooperacion Economique (CCCE) the French Government's foreign aid agency. Owing to higher-than-expected price escalation and technical prob- lems that necessitated employment of the costlier solutions, the original funds permitted only planting about 4,200 ha, or 72% of the area planned. Health, communal and social facilities were provided only for the area planted. The Master Plan was prepared in draft, for Government and Bank review. A follow-on project, in which the Bank, CCCE and the Commonwealth Development Corporation (CDC) of the United Kingdom are participating, will bring the estate to 13,500 ha. A third project is expected to finance the completion of the entire 15,000 ha and the latex processing facilities. The economic rate of return of the project was estimated, in 1975, to be about 14%. The present re-estimate, allowing for higher costs but also significantly higher price (in real terms) of rubber is about 12%. The following points are of special interest: - the high labor turnover may jeopardize efficient operations of the estate (PPAM paras. 12-18, PCR para. 3.05 and Annex 13 Tables 3 to 6); - problems of subsistence food production by the labor force (PPAM paras. 19-20); - existing timber resources were not fully utilized during clear- ing operations (PPAM para. 21); - high quality assistance rendered by the Bank-s rubber special- ists, especially in the early stages in project execution (PPAM para. 9); and - problems of indigenous forest dwellers due to envisaged develop- ment schemes investigated under Bank financed Regional Master Plan (PCR para. 22-24). O' ek PROJECT PERFORMANCE AUDIT MEMORANDUM CAMEROON NIETE RUBBER ESTATE PROJECT (CREDIT 574-CM) I. SUMMARY1' 1. The project represented a segment of the proposed development of the southwestern corner of the United Republic of Cameroon (Republique Unie du Cameroun). Its objective was to develop 5,800 ha of a proposed 15,000 ha rubber estate and to finance the preparation of a master plan for the develop- ment of the entire southwestern, tropical rainforest region of the country. Information at hand in 1974 justified proceeding with the first rubber estate even before formulating the regional plan. The Bank, and the the co-financier (Caisse Centrale de Cooperation Economique, - CCCE, - of France) indicated to the Cameroonian Government at the time of project appraisal that, if circum- stances should permit at the appropriate time, they would continue their assistance for the full development of the 15,000 ha Niete Estate, including processing facilities. This point was reached in 1980 when together with the Commonwealth Development Corporation (CDC) of the United Kingdom, the Bank and CCCE formally participated in what is known as the Second HEVECAM Rubber Proj- ect. This second project, inter alia, aims to develop a total of 13,500 ha of the eventual 15,000 ha plantation envisaged in the first project, finance the first tranche of facilities to process the output of earlier plantings, and the completion of the regional master plan. The remaining 1,500 ha planta- tion, and processing facilities to handle the estate-s designed peak produc- tion, would be financed by a third project, due to be appraised in 1983/84. Consequently, the cautious attitude of the appraisal report which endeavored to evaluate the economics of the first project if only 5,800 ha were to be planted, is no longer relevant. 2. The Niete Project is under its own autonomous management by a cor- poration specially created for the purpose: Societe Hevea Cameroun - HEVECAM, which, more descriptively than "Niete Estate", gave its name to the second project. 3. The first project, the subject of this Audit Report, was estimated to cost US$28.5 million. As noted, it aimed to establish a 5,800 ha rubber plantation, a supporting road network, housing and medical services for 3,000 of the 7,500 worker families who would eventually live on the estate and for the management staff of 38 persons. Rubber tree nurseries; an adaptive re- search area to test different rubber clones and their response to alternative cultural practices, including planting methods; and clearing a further 1,700 ha to continue expanding the plantation, were included. The Societe Africain Forestiere et Agricole Cameroun - SAFACAM, who are also the managing agency of 1/ Adapted from "IDA Overview of the HEVECAM Completion Report". - 2 - HEVECAM, participated in the preparation of a master plan for Ocean Depart- ment, which is part of the south-west region. SAFACAM is a wholly-owned subsidiary of a well-known French plantation and research corporation with extensive interests and experience in many parts of the world, including the Far East. Production would not start until trees are at least six years old, i.e., at least two years after project completion, and would peak 12 years later when the trees are between 18 and 34 years old. The project was fi- nanced by an IDA credit of US$16 million equivalent and by a loan of about US$4.4 million by CCCE (denominated in French Francs; FF20 million). The United Republic of Cameroon would contribute US$8.1 million equivalent. 4. Because the project would not produce any income for several years and would not show a positive cash flow for at least 10 years, rubber price projections prepared by the Bank-s economic staff had to be applied to cal- culate project benefits. Compared to 1975 when the project was appraised, the latest price forecasts are higher because of higher crude oil prices!/. Therefore, despite considerable cost overruns (see para. 6 below), the eco- nomic rate of return for the entire 15,000 ha estate is now estimated to be 11.9% (para. 10) compared to 14% at appraisal. 5. Project execution by HEVECAM has been assisted by expatriate per- sonnel seconded from SAFACAM. Profitable exploitation of the plantations will depend on the ability to recruit, train and, - most importantly, - keep a skilled and motivated labor force; the number and permanence of skilled tappers being the most crucial. This risk was recognized at project apprai- sal, and therefore adequate housing, schools, shops, social and recreational facilities, health services and the growing of food crops by the laborers' families were either included in the project or planned as items to be pro- vided during the subsequent expansion of the community. 6. Project costs exceeded appraisal estimates. The Bank, CCCE, the Government of Cameroon and the fourth partner in the follow-on project, the CDC (see para. 1) eventually agreed to the following adjustments: Appraisal Revised Targets Estimates and Attainments area to be planted (ha) 5,800 4,206 families to be housed 3,000 2,631 date to achieve the above 06/30/80 11/12/79 costs of plantation-a CFAF 6140M CFAF 6547M (US$27.3 M) (US$29.1 M) /a Excluding cost of Master Plan. 1/ Crude oil is the raw material used in synthetic rubber production - the main competitor of natural rubber. - 3 - 7. The project was financed as follows (in US$M): Appraisal Estimate/a Actual IDA Credit 574 15.3 15.3 IDA Credit 673 - 0.313 CCCE 4.2 4.4L1 Hevecam II project/d - 0.9 (CFAF 204 M) Government of Cameroon 7.8 8.2 Total 27.3 29.1 /a Excluding cost of Master Plan. /b A technical assistance credit, approved on June 15, 1977. /c Increase, in terms of US$, due to changes in the exchange rates. /d Out of CDC's contribution. 8. The reasons for the extra costs, apart from the fact that price escalation exceeded the estimated 13.2% price contingencies, were as follows: (a) Social amenities for the labor force had to be considerably in- creased, partly at the initiative of REVECAM and partly by Govern- ment-s decision. (b) The middle management cadre had to be increased, to train Cam- eroonian staff for the management of this and future estates. (c) There were unexpected problems and higher costs in plantation development - by far the most costly factor. These were: (i) The condition of all roads; within the estate and to Kribi, the town where the access road branches off from the main highway, predicated the purchase of more and, mainly, more expensive vehicles: four-wheel drive personnel carriers and larger trucks. (ii) Land clearing had to be fully mechanized, partly due to labor shortages and partly because all trees and stumps had to be windrowed and burnt as a preventive disease control measure. This meant purchasing and operating more heavy equipment than estimated. (iii) Of the three planting methods envisaged at appraisal, the only one giving acceptable rates of establishment: plants raised in polybags, was the most expensive. 9. An outstanding feature of project implementation was the close technical coordination and constant exchange of ideas between HEVECAM, SAFACAM and experts from the Bank. This cooperation has clearly helped in problem solving and contributed to the containment of cost overruns. 10. Based on appraisal production forecasts, since corroborated by yields currently bein obtained in nearby estates from the same clones that HEVECAM has planted,1 the economic rate of return for the 4,200 ha is esti- mated at about 7.5%; on the 13,500 ha, which is the area of the combined first and second project, the ERR is estimated at 11.3%. Combining it with the expected third phase of 1,500 ha, which would complete the planned total of 15,000 ha, the ERR is expected to be 11.9%. However, the following additional factors need to be considered, pointing to possibly larger overall benefits from the entire scheme on its completion than those reflected in the re-esti- mates of rates of return: (a) the ERR calculations allow no residual value for the trees at the end of their useful life. This is considerable, whether for fuel- wood or for further processing, the technology for which is rapidly developing; (b) replanting, when the trees reach the end of their economic life, will cost only a fraction of the original planting costs. 11. The Master Plan for the south-west zone has been completed according to appraisal estimates and within estimated costs. The final draft was available by the end of June 1980. II. MAIN ISSUES A. Turnover of the Labor Force 12. The major problem of the project is undoubtedly the very rapid turnover of labor. Rubber tapping is a highly skilled operation, the quality of which not only determines annual yields, but, more importantly, the useful life of the tree. A rapidly changing labor force cannot, and would not have the interest to apply the necessary skills. Past records of labor turnover are disappointing, as shown in the following table: Table 1 Jan. 1 Dec. 31 Increase Engaged Left or dismissed 1977 463 918 455 1,123 668 1978 918 1,520 602 2,222 1,620 1979 1,520 2,040 520 2,884 2,364 1980 2,040 2,242 202 1,902 1,700 Source: HEVECAM annual reports. 1/ In view of the high labor turnover, from which it follows that many tappers may not be well trained and fully skilled (paras. 12-18), CPS thinks that while yields in the early years may reach the levels assumed (PCR Annex 10, Tables 1 and 2), the possibility of lower peak yields and earlier decline in production is not to be overlooked. However, to solve or at least to alleviate the problem, the Region is considering the ini- tiation of a study into the causes and remedies of high labor turnover. - 5 - 13. The ethnic composition of the labor force is, as can be expected in a country with numerous tribes, mixed. Original expectations at the time of project appraisal, that the major part of the labor would come from the northern savannah areas where the population is underemployed, have not materialized; only 2% are ethnic northerners. This expectation proved to be unrealistic since no precedent existed of savannah people settling in rain forests of the coast. At present, 82% of the workers come from the north-west and center of the country. The plantation has no difficulties in attracting them; - only in keeping them. However, there are no records on the average length of a laborer's employment. 14. The personnel officer of the estate advised the mission that most unmarried men remain for a short time only; married laborers with families tend to settle more permanently. While undoubtedly correct, no records exist to substantiate the statement. Based on this experience the outlook for a more permanent force appears to be gloomy since to date the estate attracted only 28% married laborers, thereby implying substantial labor movements in the future. 15. Facilities provided by the project include villages in various parts of the estate. They are about 4-5 km apart. Unfortunately, the estate management did not consult a professional planner or architect, - who in a developing country, needs to be supported by a professional social anthropo- logist, - in the design of the houses and, perhaps more importantly, the siting and layout of the villages. At present, housing units are blocks of three family or six bachelor dwellings. No attempt has been made to create ethnically homogeneous communities: management believes that all laborers, including their wives, speak sufficient French to communicate freely. How- ever, even if there is no language barrier, ignoring the strong ties of ethnic origin and a common background has probably been a mistake. Moreover, no management staff actually reside in the workers' villages, even though each village has a "chief" who is a HEVECAM staff member. All these measures are not conducive to establishing a community spirit, which would be necessary to make laborers "feel at home" at the plantation. On the positive side, villages have good medical and educational facilities (there are 26 teachers for 637 pupils, a 1 to 25 ratio); drinking water is readily available, and all who want one are given a garden. Shopping facilities consist of an "economat" run by the estate where basic food and household commodities are available at cost and of privately operated shops for a great variety of other goods. The village has electric street lights but no electricity is provided to the houses. The probable effects of house electricity have not been examined; it would certainly be very costly to install, and few other estates provide it. 16. A rubber and oil palm estate, situated close to Douala, - the largest city in Cameroon, - and established in its present form some 25 years ago, provides the same facilities as Niete. Moreover, the majority of its labor force is of local origin. Yet, in 1980, they had a 35% labor turnover. - 6 - There, too, the bachelors do not stay long: they regard work on the estate as a staging post to more attractive jobs in Douala. This estate runs a school for tappers but is nevertheless concerned about the effect of the transient labor force on eventual yields and the useful life of the trees. 17. The appraisal report expected labor recruitment to be helped "...as satisfied workers begin to write relatives in their home villages..." (Annex 2 para. 11). Yet, there is no post office on the estate and no postage stamps are available in the village shops. With the relatively high literacy rates evidently anticipated, this omission may well exacerbate a sense of isolation. 18. It is unquestionably vital to determine whaL would be the appro- priate incentives to attract more permanent - which appears to be synonymous with more married - laborers to the estate. Neither in the appraisal report nor in the course of subsequent supervision missions was it considered neces- sary to call upon a social anthropologist to examine the problem, despite the fact that most missions flagged it as a cause for concern. Since the Bank continues to disburse in its follow-on project for villages and social facili- ties, it would appear essential to identify the underlying causes and, if possible, introduce remedial measures even at this late stage. B. Foodcrop Production 19. The regular and cheap supply of bulky staple foods - plantains, cassava, and the different kinds of yams - was rightly considered an important labor-stabilizing factor. One project component was to support foodcrop pro- duction. Originally, it was expected that most of the laborers would be ethnic northerners (para 13). Since the northerners' principal food is cereals (as opposed to tubers and rootcrops, the preferred starchy food of the forest-dwelling southerners.), project management has decided to invest in the mechanized growing of rainfed and swamp rice. This venture, which was to be carried out on land not suitable for rubber, was soon abandoned, but not until after a combine harvester and a rice drier were purchased; both are now unused and unsaleable . The venture should never have been started; there was no practical evidence that it could succeed: the terrain allocated was not suitable for mechanized rice production. The policy adopted now is to support village "gardens": allocating plots of land to workers who wish to grow foodcrops. Planting material of plantains and maize and groundnut seeds are distributed. However, cassava, the most widespread and popular food crop, has not received any attention: infestation with the mosaic virus is widespread and cultural practices observed by the mission leave much to be desired. Neither the project authority nor the Ministry of Agriculture provide advice to villagers on crop husbandry. This is all the more to be regretted because, owing to the soil conditions of the Niete estate, additional skill and atten- tion is required to attain yields of foodcrops that compare to those the laborers have obtained, with less effort, in their home areas. Also, in some cases, garden plots are some distance from the villages, thereby receiving less attention by owners due to excessive time required in reaching them. The appraisal report correctly foresaw the need for specialized research and -7- extension assistancel/ and included an adviser on foodcrops on the consul- tant's team. There is little indication that he was effective and the lack of his achievements was never highlighted in supervision reports.2 20. Without a socio-economic study, it is difficult to be definite whether these factors exert any significant influence on labor turnover, but based on experience gained elsewhere, it cannot be ruled out. The manager of a nearby oilpalm estate believes that foodcrop gardens are important, and attributes his own labor problems, which are worse than those of the Niete estate, to the lack of village gardens. C. Salvage Logging 21. Much of the valuable timber was lost when clearing the forest prior to planting. Concessionaires were expected to extract all usable timber, starting about a year before the area was due to be cleared. HEVECAM did not and does not have the right to extract any of the trees, even for its own use. In practice, the concessionaires were frequently unable to remove all timber on time and did not find it profitable to fell some of the more inaccessible trees. By the time the second project was appraised (March/ April 1979) it was obvious that much timber was wasted. According to the Staff Appraisal Report of the second project (para. 2.08), about 16m3 per ha would pay for the full cost of land clearing. Yet, the wasteful process continues. Under present legislation and ordinances, only the principal timber concessionary, Exploitant Forestiere, is allowed to cut and market the trees. Physically, HEVECAM would be able to cut the trees and prepare them for sale and, there- fore, the question has to be raised whether stronger representations on the Bank's part would not have helped in better utilizing this important national asset by overcoming the legal barriers.3/ 1/ The appraisal mission has based its assessment on the generally poor performance of the traditional forest-belt foodcrops and the lack of any well-tested and proven recommendations from the research stations on how to increase yields and production. 2/ The Region states that "the performance of the food crop advisor was discussed with project management and staff changes were made..." How- ever, perhaps it was too optimistic to expect, at appraisal, that one expert can materially influence the situation (see footnote 1/ above). 3/ On this issue, the Region advises as follows: "though not specifically stated in the various supervision reports, the problem of logging ... had been discussed with the Ministry of Agriculture, HEVECAM and CAMDEV. On April 22, 1980 the Bank requested that action be taken to allow the agro-industrial estates to extract timber from their concessions and on February 13, 1981 the Minister of Economy and Plan has given his approval." - 8 - D. The Indigenous Forest-Dwelling Minorities 22. The Pygmies. In connection with the preparation of the Master Plan, the appraisal report of the project under review (see para. 3.09) and the Staff Appraisal Report of the second project (see para. 2.03) suggest some problems that may arise in integrating the pygmies into regional development. The agreed work program of the Master Plan study contains provisions that the interests of the indigenous minorities will be duly considered (Section 3.05(a) of the Development Credit Agreement). 23. There are an estimated 3,000 to 5,000 pygmies in the area covered by the Master Plan. The provincial administration recognizes the problem: they believe it arises partly out of the pygmies unwillingness to change their present lifestyle, made more profitable and rewarding by illegal shooting of elephants for ivory, and partly from the reluctance of other groups, local and immigrant, to accept them as equals. However, the aud:t mission was informed of a successful effort of integration recently completed in the south-eastern provinces, helped considerably by efforts of missionary groups. 24. The fishermen, also numbering about 5,000, despite their less flexible lifestyle, present fewer problems, as their habitat is likely to be affected only to a minor extent, and their contact with other outside people is much more developed than that of the pygmies. One group, who live on the Niete estate, have been successfully resettled from potential rubber land and are able to follow their former lifestyle. While not offering themselves for permanent employment, they form a useful reservoir for short- term tasks which they appear willing to undertake. As with the pygmies, their interests and further development should continue to engage the Bank's attention. -9- UNITED REPUBLIC OF CAMEROON MINISTRY OF AGRICULTURE MINISTRY OF ECONOMIC AFFAIRS AND PLANNING Societe Hevea-Cameroun (HEVECAM) Development Corporation Capital: CFAF 9,506,120,000 Headquarters: Kribi Ocean Department United Republic of Cameroon PROJECT COMPLETION REPORT ON THE NIETE RUBBER ESTATE PROJECT International Development Association Credit and Project Agreements No. 574-CM Credit Agreement of the Caisse Centrale de Cooperation Economique No. 58 31 00 75 04 0 Financing Agreement between the United Republic of Cameroon and Hevecam dated September 29, 1975 Douala, March 31, 1980 - 10 - L IN TROD U C TIO N 1.01 Suitability of the coastal rezion for Derennial crc Ds The coastal region of Cameroon is suitable for perennial crops such as oilpalm, coconut and rubber as a result of the existence of areas below 300 m in elevation. having high humidity, over 2,000 hours of sunshine a year, ferrallitic soils, and rainfall above 1,800 mm a year without any months of inadequate precipitation. 1.02 Situation in 1960/61 (a) When Cameroon became independent there were five groups of planta- tions in the coastal zone (the present South-West and Littoral provinces): C AM D EV: oil palm, rubber, tea, bananas, pepper and cocoa (South- W est) PAM 0L: oil palm and rubber (South-W est) SO C FIN OL: oil palm (Littoral) SP R 0 A: oil palm (Littoral) SAFACAM: rubber (Littoral) The first group was a "Statutory Corporation" of the Federation of Nigeria. The other four groups were entirely private. A sixth private family plantation (Colinet plantation) existed in the Eastern region (now province), producing rubber. (b) A program of rubber development on family plantations had been started, chiefly in the Eastern province, during the Second World War, but like many "war effort" activities, it did not last long after the return to normal economic conditions. In the 1950s the colonial authorities introduced an oil palm rehabi- litation program in the Littoral province, with three main features: - rationalizing the collection of the fruit of the natural palm groves (including creation and rehabilitation of access tracks), - processing of production, - establishing oil palm plantations using selected planting materiaL The oil mills at Edea and Dibombari were constructed at this time with public funds. Their management was entrusted to two private groups with plantations nearby, under agreements between France, the owner of the oil mills, and the groups concerned: SPROA at Edea and SOCFINOL at Dibombari. Management of the latter was subsequently transferred to the local Societe Africaine de Prevoyance; it was eventually closed in 1963 as a result of disastrous administration. The Edea oil mill was later handed over to SOCAPALM by the - 11 - State of Cameroon (successor to France). These two oil mills experienced many operat-ng difficulties as a result of inadequate supplies of fruit: the low oil content (10% at most) of the fruit of the wild palms and the dispersion of production (high collection costs) compelled processors to offer purchase prices that the producers considered hardly remu- nerative; this made them reluctant to hand over their crop, much of which was processed using traditional (small-scale) methods. - the modern plantations introduced by the authorities on a family smallholding basis by a specialized semi-public organization, SEM- MARITIME, were poorly maintained by their owners; output from these plantations was therefore unable to compensate for the declining yield from the wild palms. (c) At the time of independence the oil palm and rubber plantation sector was in a poor state: the industrial plantations were ageing and there was little or no interest among smallholders in the establishment of improved plantations. 1.03 Development strategy for perennial crops Given this situation the Government of Cameroon decided to submit for the approval of the National Assembly a program whose principal aim was to develop industrial plantations under various successive five-year plans, with the dual purpose of: - rapidly increasing national output; and - demonstrating to smallholders the advantages to be derived from using the im proved planting material. Now that a certain number of industrial plantations have been es- tablished, the Government systematically includes a smallholder component in any new oil palm and rubber development project. The evolution of this strategy is reflected in the description of projects for which the Government has requested external financial assistance. (Annex I of French text, retained on file). 1.04 The Development Corporations Achievement of the short, medium and long-term goals contained in the Economic, Social and Cultural Development Plan requires a massive and constantly increasing investment of public, semi-public and private capital. From the second Plan onwards, the State was faced with the need to define a legal structure enabling such capital to be invested in a simple, flexible and effective way. Law No. 68/LF/9 on Development Corporations was therefore submitted to and approved by the National Assembly and promulgated on June 11, 1968. The Development Corporations have the following characteristics: - they help to execute the Plan, - 12 - - they make possible participation by the State and/or public entities and/or public enterprises and/or the private sector; - they are commercial corporations governed, except as otherwise sti- pulated in their statutes, by the provisions applicable to stock com- panies at their headquarters; - they are established by a decree approving their statutes, and any subsequent amendments to those statutes are also approved by decree; - they are eligible for the various schemes contaLned in the Investment C ode; - they are under State supervision: through a Government Commissioner appointed by decree, who: receives his instructions from and reports to the Supervisory Minister for the corporation concerned and attends general meet- ings and meetings of the Board of Directors; has a te mporar-. veto power over decisions in cases where 50% or more of the capital is held by the State, pu'lic entities and public enterprises, or the right to express reservations where less than 50% of the capital is so held; these powers are valid for only one session and lose all effect if the Supervisory Minister does not request a review of the question within 15 days. at the auditing level, through the Directorate-General of State Supervision. 1.05 Brief description cf the Project The Project as negotiated in 1975 contained two components: - the frst component, hereafter referred to as the "Estate Projects", consisted in selecting and planting 5,800 ha with rubber between 1975/76 and 1979/80, preparing a further 1,700 ha for planting in 1980/81, and constructing housing and other facilities for workers, the factory and the VRDs 1/, as well as the network of roads and tracks serving the complex; - the second component, hereafter called the "Master Plan", concerns the preparation of a Master Plan for the Kribi region with the emphasis on the production of perennial crops. The Estate Project was executed by HEVECAM (cf. section 1.07) and the studies for the Master Plan are being carried out by SEDA. 1.06 Geographical location of the Project The Project was executed in the northern part of a rural area of 1/ VRD = Roads and Bridges. - 13 - "0.000 ha. 25 km from the town and port of K 'bi. a municiaky in the Ocean department in the South-Central province; this area is located to the south of the Kribi-Ebolowa road. from which it is separated by a corridor 20km long between Angale and Elon reserved for the development of food crops. The area was classified as "collective national endowment" by Decree No. 74/615 of July 2, 1974, which also authorized its addition to the capital of the development corporation which was designated to execute the Project. The boundaries of the area were amended by Decree 76/403 of February 17, 1976, but the figure of 40,000 ha remained unchanged. Map 2 shows the boundaries as established by Decree 76/403. 1.07 Negotiation and Project financing (a) Negotiations Negotiations for financing the Project took place at World Bank headquarters in Washington between April 28 and May 7, 1975, the participants being representatives of the World Bank, CCCE and the Republic of Cameroon. The delegation from Cameroon included (in addition to Government represent- atives) two representatives of SAFAC AM which had been asked by the Government to prepare the feasibility study and to provide technical assistance to the Project in the areas of know-how, management, recruitment of personnel, and training. (b) Project costs and participation in the financing The cost of the Project was estimated at CFAF 6,435 million (US$28.6 million), of which CFAF 6,093 million (US$27.1 million) were for the Estate Project and CFAF 342 million (US$1.5 million) for the Master Plan. Financing was arranged as follows: - IDA Credit No. 574 CM for the equivalent of US$16 million, signed on July 30, 1975 and effective December 1, 1975: Estate Project: US$15,127,000 Master Plan: US$ 873,000 - Opening of a credit from the CCCE in the amount of FF 20 million, under Agreement No. 58 31 00 75 04 0 signed on September 29, 1975, with no stipulation as to the effective date: Estate Project: FF 18,900,000 Master Plan: FF 1,100,000 - Constitution of the capital of HEVECAM from Cameroonian funds: CFAF 1,600 million - Grant from the State of Cameroon: Estate Project: CFAF 145 million Master Plan: CFAF 90 million. - 14 - (c) Financing arransements (Financing Agreement) The funds for the Estate Project from the external and domestic sources indicated in (b) above were passed on to HEVECAM under a Financing Agreement signed on December 6, 1975 between the Republic of Cameroon and HEVECAM (cf. Section 1.7), in the form of loans, subsidies and capital grants, according to the nature of the costs; these were divided into seven categories of which the last provided for physical contingencies and price increases. The cost categories, amounts and the allocations to HEVECAM by category and source of financing are listed in Annex 2. It was agreed during negotiations that the resources provided by and repayable to ID A and C C CE relating to cost categories 1 through 3 would be passed on to HEVECAM in the form of an equity contribution (15%), and a loan (85%) on the following conditions: - interest rate: 5.5% per annum - duration: 30 years from the signature of the Agreement - grace period: 15 years for both principal and interest, which will not be capitalized - repayment of principal and interest in 30 equal semi-annual ins- tallments after expiry of the grace period - payment dates: March 1 and September 1 each year. The exchange rates used were those at the time of the negotiations, namely US$1= CFAF 225, and FF1 = CFAF 50. The financial structure of HEVECAM resulting from the provisions of the Financing Agreement is as shown below, in CFAF million: National IDA CCCE Resources Total % Establishment costs 20 20 Statutory capital 462 128 1,580 2,170 33 Grant 321 89 145 555 9 Own funds 783 217 1,745 2,745 42 External financing 20 728 - 3,348 52 Total financing 3,403 945 1,745 6,093 94 Value of land - - 400 400 6 Gtand Total 3,403 945 2,145 6,493 100 - 15 - 1.08 HEVECAM (a) Establishment The HEVEA-CAMEROUN Corporation (HEVECAM) was established in 1 75 to execute the Estate Project. Decree No. 75/284a of April 30, 1975: - established the Corporation under the legal framework for Development Corporations referred to in section 1.04; - fixed its initial capital at CFAF 700 million of which: CFAF 400 million in kind, representing the area of 40,000 ha described in section 1.06; and CFAF 300 million in cash shares callable in full upon subscription; - define its objectives as follows: . to acquire, establish, administer, operate and develop agricultural enterprises of all kinds, and process their products, especially as regards permanent plantations of crops such as rubber; . to market agricultural products, or products resulting from processing by the corporation; . to assist small farmers, or associations of the same, in growing crops capable of being marketed, processed and/or treated on the corpo- ration's premises; . to undertake all com mercial or industrial operations connected with the above-mentioned objectives, through the creation of new compa- nies, financial support, mergers, stock participations or other means; . to rent, purchase and sell all kinds of fixed assets and land, and to create any kind of industrial and com mercial establishment or enter- prise related to the above-mentioned objectives; and .in general all operations directly or indirectly connected with the above activities or tending to encourage their development. The statutes were approved by a second Decree, No. 75/346 of May 23, 1975. (b) Amendments to the statutes These amendments relate purely to increases in the corporation's capital as provided for the following legislation: Decree 76/67 of February 19, 1976 : first increase Decree 78/386 of September 7, 1978 second increase Decree 80/007 of January 9, 1980 : third increase Decree 80/007 of January 9, 1980: fourth increase. - 16 - At the time this report was prepared the amount and structure of the capital stock was as follows: State National External Land Resources Funds ONCPB SNI TOTAL Initial capital 400 50 - 200 50 700 First increase 320 556(1) 880 100 1,856 Second increase 320 - 950 130 1,400 Third increase - 500(2) - - 500 Fourth increase 450 500(2) 3,600 500 5,050 Total 400 1,140 1,556 5,630 780 9,506 3,096 % 4.2 12.0 16.4 59.2 8.2 100.0 32.6 - 17 - On June 30, 1980 the following was added under the second capital increase by incorporating the 15% of the res urces provided by CCCE and IDA for costs of the Project (categories 1, 2 and 3), received after June 30, 1979: (CFAF million) State ONCPB SNI TOTAL Second increase 71(1) 71 Total 400 1,140 1,627(3) 5,630 780 9,577(4) 3,167 % 4.2 11.9 17.0 58.8 8.1 100.0 33.1 (1) 15% of resources for cost categories 1, 2 and 3, IDA and CCCE funds for the Project. (2) Transfer of CCCE credit for the follow-up Project 2 (3) The exact amount is CFAF 1,626,955,000 (4) The exact amount is C FAF 9,576,955,000 (c) Establishment Agreement The Government was authorized to make an establishment agreement with HEVECAM by Law 76/10 of July 8, 1976. The said agreement, concluded August 30, 1976 between the Govern- ment, represented by the Minister of Economic Affairs and Planning, and HEVE- CAM, represented by the Chairman of the Board of Directors, classifies HEVECAM under Category C as provided by Law 60/64 of June 27, 1960 (amended by Laws 64/LF/6 of April 6, 1964 and 66/LF/5 of June 10, 1966) on the Investment Code. The text of the Investment Code and of the Establishment Agreement are at Annexes 3 and 4 (French text only). (d) HEVECAM/SAFACAM Agreement As noted in2.03(a)SAFACAM, a company belonging to the French RIVAUD group, was retained by the Government to: - prepare the feasibility study - 18 - - provide assistance to HEVE CAM at the senior rn anage n ent level in the areas of technical know-how, seconding of perso.nel to H EVE CAM and training of Cameroonian nationals. Cooperation between HEVECAM and SAFACAYM on this second point was the subject of a convention signed on May 23, 1975, ef:Fective for a period of eight years and subsequently renewable for periods of four years. (The text of this agreement has been retained on file.) 1.09 Supervision Supervision missions from the World Bank and CCCE visited Cameroon, generally on a joint basis, in October 1976, March 1977, July 1977, February 1978, October 1978, March 1979 and March 1980. 1.10 The Second Phase Project In 1977 HEVECAM drew the attention of the Government and co- financiers to the necessity of rescheduling the estate program so as to give priority to preparing the land and roads one year ahead of planting, in order to obtain the best possible burn of the felled vegetation in the climatic conditions prevailing in the Kribi region. This question was studied during the July 1977 supervision mission. The World Bank representatives felt that the rescheduling was very justified but that for this reason, it was desirable to appraise the second phase of the 15,000 ha program in September 1978 as to avoid a hiatus of funds between the two phases due to the inevitable delays between appraisal and the effectiveness of the agreements. There were more discussions between the co-fLnanciers (including Government) during the February 1978 supervision mission, during which it was also noted that for other reasons beyond the control of the Estate management the cost of the first phase would be higher than the 1974 appraisal estimate; the overrun was then estimated at CFAF 1,300 million, which implied that the existing financing would be exhausted towards the end of 1979. At that time the Bank representatives indicated that as far as their institution was concerned, appraisal of the second phase could probably not take place before t;he beginning of 1979, which would give HEVEC AM the time to analyze the actual costs and yields during the first phase for the 1977/78 financial year, thus making possible a more realistic estimate of the costs of the second phase. As requested by Government, HEVECAM sent to the Commonwealth Development Corporation (CDC, London)in March 1978, a complete documentation about its activities as this institution had shown interest in participating in the financing of the second phase of the program. On September 7, 1978, the Government invited these three organizations (World Bank, CCCE and CDC) to send a mission at the beginning of January 1979 to supervise the first phase and appraise the second phase, with a view to holding financial negotiations in May 1979. To this end the feasibility study for the second phase was sent to the headquarters of each institution by special messenger at the beginning of De- cember 1978. The World Bank could not adhere to this time'able because of staff constraints, and appraisal of the second phase finally took place between March 12 and 29, 1979. This was followed by a co-donors meeting in Paris on May 14, 1979, during which agreement was reached on the final project cost estimate and financing plan, and the co-financiers explained the legal requirements and pro- - 19 - cedures of their organizations. Negotiations with CCC-E took pace in ?ans on November 9, 1970, from November 12 to 16 in Washington with the World Bank, CCCE and CDC and on November 22 in London with CDC. The costs of the second project were finally calculated at CFAF 19,958 million (US$95 million),to which CFAF 1,012 million (US$4.8 million) were added as additional working capital, giving a total amount of CFAF 20,970 million (US$99.8 million). Details of the financing plan and on-lending terms between the Government and HEVECAM are on file in supple m ent 6. By granting financing for the second phase, the co-financiers confirmed their agreement to include under the second phase project the investments initially envisaged under the first phase. As a result the closing date for the first phase was fixed at June 30, 1979, corresponding to a planted area of 4,200 ha. The present completion report therefore covers the period from the start of the Estate Project up to June 30, 1979, with an extension up to September only as regards the planting operations executed after June 30, 1979 under the program for calendar 1979. It does not cover the execution of the Master Plan, which, has not yet been completed and will be the subject of a separate report. II. IDENTIFICATION, PREPARATION AND APPRAISAL OF THE PROJECT 2.01 Preliminary studies The first exchanges of views between the Government, the World Bank, the French Ministry of Cooperation and CC CE concerning the appropriateness of a new rubber project, in the form of an agro-industrial complex, took place during the first quarter of 1971. The interest shown by these donors strengthened the Government's own intention to include such a project in the Third Five-Year Plan, and from then on there were regular contacts between the Government and the financing agencies on major decisions. Based on a study of the economic and technical conditions of rubber production and their probable evolution over the medium and long term, the Government and the co-financers decided that the size of the complexes to be created should be between 10,000 and 15,000 ha in order to obtain a satisfactory rate of return. To ensure the preparation of an accurate feasibility study, the Government requested IRCA to carry out a preliminary study for the purpose of: - bringing together the existing documentation on the areas where the establishment of a rubber production complex seemed a priori feasible; - analyzing the climatic, pedological, demographic and geographical data thus collected and progressively eliminating those areas lacking the essential conditions for the establishment of such a complex; and - making a first survey of the zone or zones retained. This study, carried out between January 18 and February 18, 1972, identied ecologically suitable zones on the basis of the following criteria: - rainfall of between 1,850 mm and 2,700m m; the lower limit guarantees - 20 - an adequate water supOlV to the future plantations. given the monthly distribution of rainfall in Cameroon; the upper limit constitutes a maximum in order to exclude areas of heavy rainfall which, while not retarding tree growth, affects the frequency of tapping and therefore reduces production; and - altitudes less than 300 m to provide a guarantee against cool tempera- tures at night and in the morning which, while facilitating the latex flow lead to fungus diseases of the tapping-panel and leaves, and reduce tree growth. This first survey led to retention of only an area between the 2,700 mm isohyet to the west and the higher land to the east, a crescent shaped zone around Douala, as shown in Map 3. The next criterion was the existence of adequately-sized areas with the right topography for establishing plantations at reasonable costs. The aim was to find plantable areas as little fragmented as possible by a dense hydrographic network or by rugged terrain. This led to the retention of four areas shown in Map 3. Field visits with the exception of the Campo hinterland (which was inaccessible) led to the conclusion that the risks of wind-break 1/ were not so severe as to jeopardize the economic exploitation of the plantations. It was also confirmed, despite limited observation during a short visit, that it would be possible to find soils of appropriate depth (1.10 m) without any hard or rocky layers to hinder rooting, and with a clay content of the order of 35 % to 45 % in the red (Kompina) or yellow (other locations) ferrallitic soils from metamorphic rocks, principally gneiss, which constitute the cultivable soils in the area retained. The preliminary report was submitted to the financing agencies, whose representatives met with Government officials on April 11, 1973 to examine the four areas retained, namely: - Kompina (Mungo department) in the bend of the Mungo river at K o m pina; - Nyong bounded by the 2,700 mm isohyet, downstream from the SOCA- PALM plantations; - Kribi to the south of the Kribi-Ebolowa road opposite Kienke forest reserve; - Campo comprising the eastern part of Dipikar island and a strip about 7 km wide on the other side of the river. It was decided to eliminate the Kompina zone since it did not contain an area of 15,000 cultivable hectares on which to create the complex envisaged. 1/ certain high yielding rubber clones are susceptible to =unk snap in areas subjected to violent wind storms - 21 - 2.02 Project site location studies It was also decided that the studies to select a site should be undertaken in stages so that they could be suspended at any moment if insur- mountable drawbacks precluding development were identified, thus limiting costs if no positive result emerged. The difficulties experienced in establishing the agro- industrial oilpalm complex at Eseka provided a precedent for proceeding with great caution; in that case the 4,500 ha plantation originally planned had to be reduced to 2,500 ha in view of the very fragmented nature of the cultivable surfaces, which led to high establishment and exploitation costs. The studies were therefore planned in three successive stages and entrusted to the SATET-Cameroon company, as regards topography, and to the So" Sciences Department of ENSA as regards soil studies; these two aspects were investigated simultaneously for phases II and IIL (a) Phase L* study on IG N map of scale 1:200,000 and 1:50,000 (insofar as they exist) and stereoscopic study of the 1:50,000 photographs, and preparation of a plan (1:50,000) indicating zones according to land surface characteristics. This work made it possible to eliminate areas of unsuitable topography. The report submitted on August 1, 1973 by SATET-Cameroon confirmed that the plantable area in the Kompina zone did not exceed 9,000 ha, thereby fully justifying the earlier decision to eliminate this zone. Likewise, stereoscopic examination of the photographs of the Campo region led to the exclusion of 11,000 ha of steep hills from among the 28,000 ha in the zone, leaving 17,000 prospective ha, of which very probably less than 10,000 ha were plantable. As a result, this zone was also eliminated. This left only the Kribi and Nyong zones where at least 15,000 plantable ha in terms of topography and non-fragmentation of parcels could potentially be located with a reasonable degree of precision. (b) Phase MI opening of survey traces using compass and clinometer, plotted on the 1:50,000 plan, as far as possible cutting across the hydrographic network in the zones retained as a result of phase L Soil sampling every 300 m along the traces to a depth of 1.50 m except where augering was impossible. The length of the traces opened and studied during this phase in the Kribi and Nyong zones was 157 and 224 km respectively; over these distances the following percentages were obtained: Kribi Nyong Swampy soils 14% 9% Steep gradients (more than 15%) 5% 20% Topographically suitable soils 81% 71% In these two zones the depth of the plateau soils (described above as "topographically suitable") was generally in excess of 1.50 m, making them suitable for rubber planting; the gravel content of the 60 cm surface layer was as follows: - 22 - Percentage of zravel at less than 60 cm Nvons less than 10% 84Z 84% from 10 to 20% 10% 4% from 20 to 50% 5% 6% above 50% 1% 6% The content of fine elements (clay and silt) was: Kribi Nyong Horizon Average Maximum Minimum Average Maximum Minimum 0-30 cm 30.6 38.1 23.7 33.8 43.7 25.6 30-60 cm 35.2 40.9 29.1 41.2 51.1 32.1 As regards the pH level, studies made in the two zones gave very satisfactory values for rubber cultivation: pH Range Kribi Nyong 4 to 4.50 8% 3% 4.50 to 5 50% 77% 5 to 5.50 35% 17% above 5.50 6% 3% It is generally accepted that the optimum pH level for rubber is between 4.50 and 5.50 On the basis of these data the Kribi soils proved to be slightly richer than those of the Nyong zone in exchangeable bases, especially as regards potassium, an important element in the nutrition of rubber trees. Moreover the precedent of the SOCAPALM plantation at Eseka gave rise to apprehension that the Nyong region, which is a continuation of the oilpalm plantations, would present similar terrain and that the more detailed topographical s-udies under phase III would reveal many gradients greater than 15%, entailing considerable fragmenta- tion of the cultivable parcels. Thus, the representatives of the various departments concerned met at Yaounde on December 19, 1973, and recommended the selection of the Kribi zone, since apart from the advantages mentioned above it is favorably located 40 km from the port of Kribi and lies along the Kribi-Ebolowa road, which has an important role to play in the evacuation of forest products from the south-eastern region of the country. (c) Phase III: Execution of the following operations in the zone selected as a result of phase IL - 23 - - preparation of a north-south/east-west grid of 2 km by 2 km squares, with posts at every kilometer along all traces: - survey of the major features of the area bounding the mountains and hills; - survey of the flood-liable areas and rivers; - study of soil profiles along the traces as in phase II, and 600 complete soil analyses. Representatives of the financing agencies (World Bank and French aid Authority) and government ministries concerned, and the administrative authorities of the Ocean department, visited the Kribi site on April 18, 1974. SATET-Cameroon and the Soil Sciences Department of ENSA had at this point covered 8,260 ha out of the 20,000 usable ha (after elimination of the central hill) in the zone initially retained to the north of the Niete river (see Map 4). The soil data collected along the 55 km of traces at the time of the visit confirmed that 80% of the soils were usable, 40% being deep soils (no obstacles down to 1.50 m), and 40 % having a variable gravel content constituting no serious hindrance to root penetration. The remaining 20% represented hydromorphic soils or gradients in excess of 15%. The issue of the land to be allocated to the local communities for the continuation and further development of their agricultural activities was raised during the visit and discussed at the working meeting which took place on April 19, 1974 at Yaounde. Taking this into account and in order to provide for the possibility of expanding the future rubber estate beyond 15,000 ha, the Minister of Planning and Territorial Develo- ment requested the expropriation on the grounds of public utility, and the transfer to State ownership, of an area of 40,000 ha, as shown in Map 5, leaving a strip more than 1 km wide along the Kribi-Ebolowa road in the hands of the villagers. The definition of these boundaries (Map 5), further to the south than those of the zone initially selected (Map 4), meant giving up 4,660 ha already surveyed at the time of the visit to the north and north-eastern parts of the zone; these were replaced by an equal area to the south-east and by 1,720 ha not yet surveyed to the east of the Adjap-Zingui road. Thus the surveyed area remained at 20,000 ha out of the total area of 40,000 ha allocated to the future estate; thus even on the pessimistic assumption that only 50% of the surveyed area were plantable, this guaranteed the availability of a plantable area of at least 10,000 ha. Given that establishment of the 15,000 ha estate would be financed under several sub-projects, the existence of a development plan covering a plantable area of 10,00 ha was deemed sufficient for the preparation of the feasibility study for the program as a whole and for identification of the financing needs for the first sub- project only where there was no doubt that the required plantable area could be found in the remainder of the estate zone. For this reason topographical and soil studies similar to those carried out in phase I were completed for the 18,800 ha in the south and south-western parts of the estate zone which were not covered in the studies under phase TII. - 24 - 2.03 Fearibilitv study (a) Choice of a nartner From the first discussions onwards, the World Bank and the French Aid authorities indicated that they would prefer that the Government of Cameroon select an experienced firm to assist, firstly, in the preparation of the feasibility study, and subsequently with project execution, and that in their view this partner should be the same for both the preparation and execution stages so as to avoid any problems during the transition from one phase to another. Four groups were consulted: - Societe Africaine Forestiere et Agricole (SAFAC AM) - Societe de Developpement des Cultures Industrielles (SODECI),acting jointly with the Societe des C aoutchoucs d'Extre me Orient (CEX 0) - Compagnie Generale des Etablissements Michelin - Commonwealth Development Corporation (CDC). The last two groups declined, though CDC indicated that it might possibly contribute to project financing. The proposals presented by the first two groups were fairly similar in content but differed as regards the financial arrangements. SAFACAM proposed, if it were engaged, to finance itself the activities of its experts, while the CEXO- SODECI group proposed to charge for these activities. Given SAFACAM's willingness to assume the financial risk, the Government decided therefore to engage this company and an agreement was signed on April 31, 1974, entrusting SAFACAM with the control and coordination of all studies and preliminary operations. (b) Terms of reference of the feasibility study These were discussed and adopted atthe April31,197L meeting and are given in Annex 7. (Text retained on file.) (c) Introduction and multiplication of experimental planting material In order to save time and ensure correct establishment of the estates the Government requested IR CA to undertake the introduction and multiplication of planting material. For reasons of convenience (assistance provided by SO C APALM) the first nurseries was established at Eseka. After the April 18, 1974 meeting a second nursery covering 2 ha was established at Kribi, together with a field office. This work was executed by SAFAC AM. - 25 - (d) Cost and rinanc nz of the studies (including f-2sibili-_y s-'. nurseries) (CFAF '000) Government FAC SAFACAM Preliminary study 890 Phase 1 2,285 455 Phase 2 16,408 3,399 Phase 3 42,907 12,396 Feasibility study - 450 21,000 Planting material 6,400 7,900 Kribi field office 9,500 IRCA activities 2,900 Food crops study 4,000 68,890 41,000 21,000 130:'890 (e) Submission of the feasibility study A meeting of the co-financiers (World Bank, France, Government) and the consultant (SAFAC AM) was held on October 7, 10 and 11, 1974 at Yaounde to discuss progress on the feasibility study, the final version of which was sent to all the interested parties in November 1974. 2.04 Project appraisal The project was appraised from November 24, 1974 onwards by a team of experts from the World Bank, the French Ministry of Cooperation, CCCE and the Government, including representatives of SAFAC AM, which had prepared the feasibility study. A meeting was held on December 13, 1974 at the Ministry of Planning and Territorial Development under the chairmanship of its Secretary- General, which was attended by the appraisal team and representatives of these Government departments and agencies: Planning and Territorial Development, Agriculture, Industrial and Commercial Development, Finance, and the National Investment Corporation (SNI). (a) Estate Component During the course of their stay in Cameroon the experts from the financing agencies visited the site (which some of them had already visited) and then examined in depth the study prepared by SAFAC AM, the excellent quality of which was recognized regarding both the technical aspects and the economic analysis. They considered that the undulating terrain at the project site would not pose any particular development problems. However, they recommended that: - additional surveys be carried out to identify the needs for culverts and bridges for crossing the network of streams and rivers, which fortu- nately were not numerous; - 26 - - the duration and characteristics of the flooding of the land alonZ the Niete river be specified; and - the soils not being very rich, careful study be given to the question of manuring in the light of the results of the soil surveys. The agricultural techniques proposed by SAFACAM (choice of clones, planting systems etc.) were considered satisfactory, as was the proposal to market the crop in the form of technically specified, granulated block rubber. Construc- tion costs of the processing factory were not very high but given the time required for the first plantings to come into bearing it was agreed that this question should be re-examined when a decision was to be taken concerning construction of the industrial complex. It was agreed that as much of the work as possible should be carried out on force account by HEVECAM, so as to limit costs (especially as regards construction of the social facilities). Thus total project costs (in 1974 prices) for the establishment of the agro-industrial complex (plantations, factory and all infrastructures), putting the areas into production and operating the estate until the time when the cash flow becomes positive (after 15 years) were calculated at CFAF 9,955 million (US$44.2 million) including 5% for physical contingencies. This sum did not include price contingencies. Given the prevailing unstable economic conditions, the financing agen- cies noted that it would be reasonable to provide financing for a 5-year period covering the cost of establishing a 5,800 ha estate, including overheads, related infrastructure (villages, office, estate roads) and various equipment. The cost of this first phase was estimated in 1974 terms at CFAF 3,747 million (US$16.7 million) including 5 % for physical contingencies. Adding price contingencies (12% in 1975 and 8% thereafter), the cost of the first phase was estimated at CFAF 5,400 million, or approximately US$22,500,000. This amount included customs duties on imported goods of the order of 15% to 20% (which were to be waived by Government); on the other hand it did not cover: - the remuneration of SAFAC AM; - foodcrop development to ensure food supplies to the estate workers (calculated roughly at CFAF 83 million over the four years 1977-80); and - supplementary surveys, firstly in relation to that part of the zone not covered in the feasibility study, and secondly to remove remaining uncertainties regarding topography and soils, given the size of the grid squares used (2 km x 2 km). After long discussions with Government officials, the representatives of the co-financing agencies indicated that they would recom ni end to their respective managements a development program for the establishment of an agro-industrial complex of 15,000 ha, and a first phase of financing covering the exectition of operations during the first five years; they did not think that their institutions could at that time undertake a com mitment to finance the continuation of the project. - 27 - The donors emphasized the need to establish a contract,al relationship between HEVECAM and SAFACAM (the consultant providing technical assistance to the estate project) during both the establishment and exploitation stages, with a clear definition of the consultant's responsibility for proper execution of the said estate component. The financing agencies recalled that this question of project management had been debated at length and that they had advised the Government to create a new development corporation rather than entrust the project to an existing company, in this case SO C APALM. Finally, at the suggestion of the financing agencies, it was agreed to give the estate component a more precise name; hitherto it had been generally known as the "agro-industrial rubber complex in the Kribi region". The new title of "Niete estate" proposed by Government representatives was adopted. (b) Master Plan It was unanimously agreed that financing be provided under the proposed project for a master plan for the long-term development of the south- west coastal region (not to be confused with the South-West province); this had been recommended during the identification and preparation missions. This study was intended to make recommendations for the development over some 25 years of agro-industrial complexes, covering a total area of about 100,000 ha, and small- holder plantations. It is still under preparation and a separate completion report on this component of the project will be prepared when it becomes available. The Government requested the consultants (a consortium composed of SEDA, as the prime contractor, SATET-Cameroon, the Soil Sciences Department of EN SA and SA FACA M) to include in its study the entire coastal area less than 300 m-ters above sea level between Wouri-Nkam and the border with Equatorial G nea. 2.05 Project Financing (see section 1.07) Project cost estimates were drawn from the appraisal report of April 18, 1975 (green cover) prepared by the World Bank experts following their joint appraisal mission with CCCE in Cameroonin November/December 1974. (a) Project costs Project costs were estimnated at CFAF 6 billion (i.e. US$26.7 million at the exchange rate of US$1 = CFAF 225). An examination of specific cost components indicated that the following corrections should be made: CFAF millions - Inclusion of taxes on fuel for clearing and planting operations 57 - Inclusion of taxes on fuel in "water and power" under 19 "fixed expenditures" category - HEVEC AM's establishment expenses (corporate fees) and 145 annual capital levies - Inclusion of all expenditures under "Food Crop Development," 42 which had been only partially included, an increase of - 28 - - Preparation of the follow-up project and aronomic stucies 50 (;reviously omitted) - Revision of the cost of SAFAC AM services (one year delay) 22 - Provision for physical contingencies 17 - Provision for p-ce contingencies 63 TOTAL .......... 415 The revised project costs therefore became CFAF 6,415 million. Following a request for clarification from the delegation, the Government explain- ed that fuel for heavy tractors and stationary equipment could, exceptionally, be imported duty-free and that HEVECAM could be exempted from corporate fees and capital levies. This, therefore, reduced the increase in project cost to CFAF 114 million (in 1974 prices), i.e. CFAF 141 million including physical and price contingencies. It was nevertheless deemed more prudent to maintain the estimated project costs at CF AF 6,415 million so as to increase H EVE CA M's working capital, since the Company had to prefinance its suppliers before it was reimbursed from the proceeds of the IDA and CCCE credits, i.e. after a lag of two to four months. The total was subsequently increased by CFAF 20 million in order to cover HEVECAM's corporate fees (financed with local funds), thereby bringing the cost of the estate component to CFAF 6,093 million. Local Funds IDA CCCE TOTAL (CFAF millions) Estate Component 1,745 3,403 945 6,093 Master Plan 90 197 55 342 1,835 3,600 1,000 6,435 A breakdown (Annex 2) by category of expenditure, source of financing and allocation of funds were agreed upon as well as the terms of the Financing Agreement between Government and HEVECAM, which governs the release to HEVECAM of the funds needed for the execution of the Estate component. (b) Financing and allocation of funds Agreement was reached on a financing par ?assu applicable to all categories of expenditures as follows: IDA Credit 58% CCCE Credit: 16% Local Funds: 26% - 29 - excluding HEVECAM's corporate fees, which were to be Hnanced 100" by the Govern m ent. (b.1) Local funds were contributed to HEVECAM, prior to expenditures, as follows: - equity: CFAF 1,600 million - grant: CFAF 145 million ID A and CCCE disburse ments were to be made on presentation of substantiating documents or extracts from HEVECAM's accounts proving that HEVECAM had paid for goods and services acquired for the Estate Component. (b.2) With regard to the Master Plan, the SEDA/SATET-Came- roon/ENSA/SAFACAM Group entered into an agreement with the Government which was recorded on December 1, 1977. All invoices were settled direct with the Group by the three donors pari passu, as indicated above. (c) CCCE Credit-Agreement 58 31 00 75 04 0 The terms of this agreement are standard except for the repayment terms of the loan to the Government which were adapted to the long gestation period and gradual entry into production of the rubber plantations. A grace period of up to October 31, 1985 was agreed upon, during which period the United Republic of Cameroon will be exempt from any repayment of the principal. The amortization schedule is as follows: Amountin FF Date - 400,000 October 31, 1986 - 600,000 October 31, 1987 - 800,000 October 31, 1988 -1,000,000 October 31, 1989 -1,400,000 October 31, 1990 -2,000,000 October 31, 1991 -2,600,000 October 31, 1992 -3,200,000 October 31, 1993 -3,800,000 October 31, 1994 -4,200,000 October 31, 1995 (d) Credit and Project Agreements 574-CM The changes made during negotiations to the draft IDA Credit Agree- ment were minor and did not affect the substance of those documents. Most involved new references to the Financing Agreement and Schedule of the Credit Agreement (Description of the Project). - 30 - TIree side letters were sgned: - representations ) standard for all agreements involving a company or autonomous agency having - right of veto and suspension) a Government Co=issioner. - Master Plan for Kribi Region: This involves the assurances by the United Republic of Cameroon to use the terms of reference agreed upon during negotiations and attached to the letter for implementation of the Master Plan. Retroactive Enancing of up to US$300,000 for expenditures incurred after January 1, 1975 was accepted by IDA. (e) Description of the Project (Schedule 2 of Credit Agreement 574-CM) The Project is the first phase of the development of a rubber estate during the years 1975 through 1980 located north of the Niete River in the Kribi area of the Borrower's Ocean Department. The Project consists of the following parts: Part A The clearing of about 5,800 hectares and planting high-yielding rubber thereon, the preparation of about 1,700 hectares for planting thereon in 1981, and the maintenance of plantings during the development period of the Project. Part B The conducting of feld trials of promising planting material and agronomic research, if required. PART C The construction of housing, health, education and social facilities for about 3,000 families living on the rubber estate, and the building of service roads for the rubber estate. Part D The establishment of a com missariat on the rubber estate to provide food supplies and to supervise trials with foodcrops. Part E The preparation of a follow-up project, including the continuation of the pedological and topographical prospection. Part F The preparation of a program for training and technical assistance. Part G The preparation of a master plan for the Kribi area which emphasizes the production of perennial crops. The Project is expectged to be completed by Decembr 31, 1980. 2.06 Financing Decisions and signature of the Agreements CCCE: Decision of the Board of Trustees on June 27, 1975. Signature on September 29, 1975. IDA: Decision of the Board of Directors on June 3, 1975. Signature on July 30, 1975. - 31 - 2.07 Conditions for effectiveness of the ALreements (a) CC CE: no such condition, although the following st'pulations governing disbursement were made: - Receipt of the HEVECAM/SAFACAM Convention - Receipt of the Financing Agreement. (b) World Bank (specific conditions stipulated in the Credit Agreement) furnishing of legal opinions on the validity of commitments made by: - The United Republic of Cameroon (Credit and Financing Agreements) - HEVECAM (Project and Financing Agreements) Receipt of the CCCE Credit Agree m ent and the Financing Agree m ent. Receipt of the HEVEC AM/SAFAC AM Convention. Allocation of CFAF 300 million to HEVECAM from national funds and agreement on the payment schedule for the balance of the local contribution. After the information required above was furnished the Credit and Project Agreements became effective on December 1, 1975. 2.08 Project area (a) Transportation infrastructure For its supplies the Project is heavily dependent on the Douala-Edea- Kribi road. Unrestricted use of the Edea rail bridge, about which concern had been expressed before the start of the Project, has not been a problem. In any event this difficulty with the Douala-Kribi highway will soon no longer be a factor after the separation of traffic for the crossing of the two branches of the Sanaga River by different road and rail structures. Even though major repairs have been periodically made to the Douala- Edea road, deterioration is swift and extensive on this route, which can no longer meet traffic de m ands. This problem will be eliminated over the medium term with the opening of a new heavy-vehicle highway betgween Douala and Edea for which preselection is now under way. Financing will come from French aid, with participation by the EEC and the Netherlands. However, travel is difficult during the rainy season on the Edea-Kribi section, which is still a very mediocre dirt road. In view of the significant potential of the entire southern region of Cameroon and the country's need for a deep-water port, the Government has just begun studies on such a facility south of Kribi, between that town and the site known as Rocher du Loup. Road infrastructure problems will be included in the studies. Thus satisfactory port and road service to and from the Niete Estate will eventually be assured. - 32 - HEVE CAM has built an ai-strio near its mn cer 'n connections are frequently provided by the SOCAPALM airliane. (b) Social services The children of the workers attend the schools built under the Project as r art of village construction. These schools are staffed by 11 primary and secondary teachers (8 paid by the State and 3 by the Project). Medical care is provided by six nurses, all paid by HEVEC AM, as well as three nuns who run the central clinic and the laboratory attached to it. Construc- tion of the health center, to be built under the Second Project, is to begin shortly. A police station was opened near the Estate center (Niete village). Talks are being held between HEVECAM and The Ministry of Post and Telecom munications on providing Niete village with rural nail service. III. EXECUTION 3.01 Project-related studies When the works began, HEVECAM had a map on the scale of 1:10,000, which had been prepared from a topographic and soil survey using a grid of 2 km x 2 km and included the flood liable areas but not the peripheral tracts. This work, covering only about 20,000 ha of the property HEVECAM now holds, was carried out as part of the phase III studies (para. 2.02c). A provision of CFAF 40 million in 1974 values; (i.e. CFAF 47.9 million with provisions for physical contingencies and price increases) was included in project financing under the category of "Project-related studies" in order to complete this 2 km x 2 km grid for the rest of the property (about 18,000 ha to the west and southwest) and plot it on the map on the scale of 1:10,000. It soon became apparent that this grid would not permit the preparation of a sufficiently detailed map to be used in planning feeder roads and thalweg crossings, and the establish m ent of crop plots and villages. HEVECAM therefore revised its topographical and soil studies program to cover the entire property with a 1 km x 1 km grid, including the peripheral areas - which had not been done during the phase III studies - and the preparation of a map on the scale of 1:5,000. This meant an additional cost of CFAF 91 miLlion, which the Govern- m ent financed jointly with ID A under Technical Assistance Project 673-C M of June 15, 1977 (IDA: CFAF 70 million; URC: CFAF 21 million). Some of the work was contracted out to SATE"-Cameroon, the balance being done by HEVECAM on force account. - 33 - 3.02 Planting (a) Rate of implementation The following table compares the estimated and actual timetables for land preparation and planting for the first 4-1/2 years of the work program: Second Half 1975/76 1976/77 1977/78 1978/79 of 1979 1/ -----------------------hectares--------------------- Deforestation actual per year 220 1120 1630 1750 1720 cumulative 220 1340 2970 4720 6440 Land ready for planting yearly estimate 300 700 1500 2500 1250 cumulative 300 1000 2500 5000 6250 actual per year 170 920 1330 1840 1410 cumulative 170 1090 2470 4310 5720 Planting yearly estimate 600 900 1800 1250 cumulative 600 1500 3300 4550 actual per year 94 280 672 2035 1125 cumulative 94 374 1046 3081 4206 (b) Land preparation During the supervision mission of July 1977 it was agreed to modify the work program, to accelerate land and road preparation and reduce the planting program somewhat for one to two years, after which time the previous rhythm would be resumed to ensure that the total area planted was within the range of the initial estimates by the end of the project. The above table shows that the execution of the program has been consistent with that modification; 4,206 ha were planted by the end of 1979 as compared with the 4,550 ha estimated. The land was prepared mechanically using D8 crawler tractors equipped for deforestation work. The felled vegetation was then windrowed using bulldozer blades and root rakes. The feasibility study had assumed 4.5 hours/ha for each of these operations. The time allotted to windrowing was halved during appraisal, since the recom mended technique was to use a V-blade to open planting rows without windrowing. HEVECAM tried this technique but because of discouraging results had to revert to conventional windrowing. Experience has shown the total time required to be 8.5 hours/ha for both operations, an increase of nearly 26%, increasing land preparation costs by nearly 25 %. 1/ Calendar Year. - 34 - The initial estimates for utilization of heavy -r-ctors called for operation during 1.800 hours per year. In practice. utilization was lower owing to the amount of rainfall and the fact that work could not continue dud.ng the rains. It was therefore necessary; to expand the number of vehicles and ourchase three D6 tractors instead of the two planned, these being adequate for the windrowing and finishing work in land preparation (Section 3.4). (c) Planting method' The appraisal report called for 3,400 ha to be planted with "seed at stake," in which the seedlings are raised directly in the field and subsequently bud- grafted there, and 2,400 ha planted with nursery-grafted container-grown plants. As it happened, the direct seed program had to be reduced owing to damage caused by rodents and difficulties with budding. Instead, another method, using budded stumps, was followed. (d) Origin of planting material The planting material used was very similar to what had been planned, with a large majority of two clones, GT 1 (55%) and PR 107 (25%). Later in the program, it became apparent that the proportion of PR 107 had to be reduced because its growth was less satisfactory than that of other clones. (e) Pests and diseases The damage caused by rodents during the first year after planting can be controled only by placing low fences around the planted areas and by hunting. As had been thought, there was evidence of Fomes (root disease) but tree losses are still within acceptable limits up to this point. However, vigilance must be maintained because the trees are still young and it will take several years to obtain a precise idea of the situation. There were no significant signs of leaf disease. (f) Exploitation (Annex 10) Tapping will begin only in 1981/82. Estimated yields and tonnages are given in Tables 1 and 2 of Annex 10. The first puncture tapping trials began during the first quarter of 1980. 3.03 Construction (Annex 11) Expenditures as of June 30, 1979 were 95% higher than the appraisal estimates (CFAF 1,447 million as compared with CFAF 743 million). In general the very sharp increase is due to the following reasons: - underestim ation of costs; - change in prescribed standards for labour housing; - inflation higher than expected; - work executed ahead of schedule. - 35 - An exact breakdown of increases by category of expenditure is im- possible without a large-scale data collection effort since the cost accounting system is not yet effective. Housing for Labour The housing program, completion of which had been planned for June 30, 1980 was virtually finished by the end of June, 1979. The 1975 appraisal report estimated that 25 % of the housing units built in the first five years would be temporary. In actuality, semi-permanent dwellings have been built since the outset; moreover, the area per worker housed has been increased from 10 to 15 m2. Thus, the cost per worker housed, originally estimated at CFAF 93,000 (1974 prices) in the appraisal report, rose to CFAF 285,000 in 1978/79 (corresponding to CFAF 175,000 in 1974 prices), the real increase in cost per worker housed is therefore 88%. The cost overrun under this heading is estimated at CFAF 400 million. (b) Housing for managerial staff The appraisal report called for a managerial staff of 25 in 1979/80 (15 expatriates and 10 nationals). This figure, according to estimates approved by the Board of Directors, will rise to 33 (12 expatriates and 21 nationals). The appraisal report also stipulated that the housing units to be built for the managerial staff during the first two years would be temporary, but in practice it was deemed desirable to build permanent dwellings from the start. Execution at June 30, 1979 is largely in line with the appraisal report timetable, and completion is expected by June 30, 1980, i.e. almost one year ahead of schedule. Because of the decision to build permanent rather than temporary dwellings, there was a 20% increase in costs over the appraisal estimate (CFAF 235 million), i.e. a cost overrun of about CFAF 50 million. (c) Basic village infrastructure The cost of basic village infrastructure (schools, clinics, markets, offices and warehouses, and water supply) exceeded the appraisal estimates by about CFAF 130 million. (d) General service buildings For this type of building, construction during the first four years exceeded the five-year projections by 2,450 m2, which means that implementation is ahead of schedule with regard to both the first and second projects. These include construction of additional buildings not called for at appraisal, in particular food crop hangars, police station, clinic, food commisariat, housing for the nuns, a club at village 4. The cost overun under this heading is about CFAF 100 million. 3.04 Materials and equipment (Annex 12) The table in Annex 12 compares the procurement estimates for major equipment for the five years and actual purchases by the end of June 1979. It was expected that in FY 1979/80 such procurement would amount to CFAF 32.6 million in 1974 prices (or CFAF 53 million in current prices), equivalent to only 5% of the five-year total, since all the heavy equipment was to be purchased during the first four years. - 36 - With regard to heavy equipment for land prepracior, the additona outlay of CFAF 157 million represents the purchase of the following equipmert not included in the 1975 estimates: (in CFAF million) 1 D8 Crawler tractor 33.2 ) 1 D6 Crawler tractor 23.5 ) 2 Self-propelled compactors 23.2 ) ) 103.0 1 Vibrating roller 5.0 ) 1 Loader 11.0 ) 1 Crushing station 7.0 ) Miscellaneous equipment and accessories. The additional outlays of CFAF 41 million for agricultural materials covers, among other items: (in CFAF million) 6 Wheeled tractors 25.1 6 Trailers 6.8 Foodcrop materials 7.5 It should be noted that the figure for foodcrop materials represents a transfer from one heading to another and is not an additional expenditure (see Note 1 of Annex 15, Table 3). Because of the difficult conditions on the Douala-Kribi and Kribi-Niete roads and on estate service roads, the project purchased heavier-duty vehicles and increased the fleet by: 6 trucks 9 Jeeps of which 6 replaced lightweight vehicles (R4 or R5) The additional outlays were only CFAF 31 million owing to attractive prices obtained for the fleet as a whole. Additional expenditure under the heading "ot:her equipment" in the appraisal report came to CFAF 75 million, of which CFAF 12 million were for foodcrops. The other CFAF 63 million represent purchases of additional surveying equipment, furniture and office supplies, residential furnishings and appliances, shop and hospital equipment and miscellaneous items. Another amount of CFAF 62 million is also shown in the balance sheet for prefinancing and partial payment for equipment not yet received. - 37 - 3.05 Personnel and workforce As HEVECAM was going into a region of very low population density (about 2 inhabitants/km 2), some concern was expressed during appraisal and negotiations with regard to the recruitment of the personnel needed for project implementation in terms of both sheer numbers and skills. Recruitment and personnel stability have indeed caused problems, but these have been largely solved and the present situation is satisfactory. Recruitment of managerial staff followed the planned timetable. The Cameroonian managers come from diverse backgrounds, which bears witness to the interest in H EVE CAM shown by various schools. Laborers had to be recruited in the various provinces of Cameroon, with the Central-South and the West/Northwest provinces supplying the bulk of the laborers. Instability of the labour force is unquestionably attributable to the fact that a high proportion of the workers are bachelors, and they feel isolated when they do not know anybody in their new surroundings. Mindful of this, HEVEC AM is attempting to promote the recruitment of families and is now sending laborers who have demonstrated their willingness to work hard to their own villages as recruiters. They later serve as "mentors" for the new recruits which greatly facilitates the settling-in and adaptation process. Annex 13 shows the statistics on recruitment and HEVECAM's labor structure. 3.06 Foodcrop development Despite the additional work that they caused to HEVECAM during the first four years of the project, when start-up and organization of industrial estates were in full swing, foodcrop development activities have been pursued very actively. This involved the identification of possible crops and then the choice of varieties adapted to local conditions and to modern farming techniques, primarily with regard to plant protection and manuring. The original idea of producing foodcrops by force account, has been dropped. Instead, HEVECAM has begun work on the multiplication of plantain stocks and stepped up its cooperation with IRA on seed production (maize, groundnuts, etc.) with a view to distribution to the workers. 3.07 Technical assistance The planned technical assistance from SAFACAM has been provided regularly, including periodic inspections and special visits to solve problems and verification of the accounts. The various reports are issued on time and submitted to all interested parties, especially the financing agencies. Technical assistance has, in particular, involved recruiting and making available experts for HEVECAM's permanent staff, or on secondment for specific tasks. Expatriate personnel made available full-time increased as follows: - 38 - July 1975 3 July 1976 5 July 1977 7 July 1978 10 July 1979 12 Seconded personnel who lent their assistance diring these four years were as follows: Mr. DOUXAML Seconded from March 1, 1976 to October 31, 1976: Preparation of HEVECAM's accounting instructions and accounting system-Acting Administrative Manager and General Manager; Mr. JOURDAN: Seconded from February 2, 1977 to June 10, 1977 for organization of the accounting system; Mr. BRIVES: Seconded from May 1, 1977 to July 14, 1977: Acting Sector Manager; Mr. CHAMBE: Seconded from September 15, 1978 to November 15, 1978: Expert agro-economist for the phase II feasibility study and from March 1, 1979 to March 31, 1979: HEVECAM II appraisal mission. Lastly Mr. VERNERIE, an auditor at SAFACAM headquarters makes annual visits to audit the accounts. The sum provided for in the Agreement was paid in virtue of the above technical assistance, viz. a lump-sum fee of CFAF 30 million (January 1, 1975) per year adjusted annually by application of the revision formula specified in the Agreement, and an additional fee proportional to the approved expenditures. This last payment, set at 2%, has grown along with the increase in total costs. 3.08 Training The development of the Niete estate to its full size of 15,000 ha will bring the necessary staff to 6,950, broken down as follows: Unskilled laborers 1,180 Skilled laborers 5,000 Office/workshop/factory specialists 566 Field managers 160 Managerial staff (of whom 6 expatriates) 44 Some of these people, particularly the specialists, are already fully trained or have had some of the necessary training before they were recruited, although more advanced training is given on the job in order to facilitate their adaptation. - 39 - Much of the work in rubber-growing reauires specialized 1im'nT, primarily for the skilled laborers who all have to receive additional training, such as in bud-grafting and tapping as well as running factory -machinery. Lastly, the junior managers who will in future be taking over senior positions in the Corporation must be given the necessary experience. This involves being exposed to all planting and processing operations plus budgetary control and administrative organization. This experience should also give them the opportunity to accuire the necessary authority. Thus far little has been done because HEVECAM is too recent a creation; local managers have not yet been there long enough for a determination to be made as to which ones have the aptitude for more advanced training. The measures taken, or to be taken, for staff development are as follows: Laborers With regard to skilled laborers and field managers, training has been and will continue to be given on the job. Prior to opening for tapping, the first teams of workers and their supervisors will be trained at SAFACAM and CDC. Specialists The few experienced specialists who are available prefer to stay in town rather than live on the estate. There is already a sufficient core but it has to be built up. With regard to accounting, it is planned to use the Association pour la Formation des Cadres de l'Industrie et de l'Administration (Association for the Training of Managers in Industry and Administration - AFCA) in Douala for advanced training and refresher courses. Managerial staff The number of Cameroonian managers is expected to rise from 15 to 38, while that of expatriates is to be reduced from 12 to 6. The on-job training of managers will be supplemented by stays of several months in rubber estate companies abroad (Ivory Coast and Malaysia) for technical training, and in management training agencies. 3.09 Exrerim entation The 1975 appraisal report proposed that "up to 1% of the total planted area would be allocated in various locations of the concession area for clone trials and field experiments. Agronomic research would be undertaken if and when required." Introductions of budwood from the Ivory Coast were made in April/May 1978. Some of the planting material received was multiplied in bud-gardens, the rest being done in the field. - 40 - The 1978 experimentation program included the estabishment of a clone trial in the plantings for that year. The experimental area would have two densities: 445 trees/ha (Sm x 2.75m) and 555 trees/ha (8m x 2.25m) in the North 11/5-C block for the lower density and the South 11/5-C or North 11/5-D block for normal density. The purpose of this trial is to compare eight clones with two planting densities and four replicates per clone and per densi:y, i.e. 2 x 8 x 4 = 64 plots.The clones represented are: - GT 1, AV 2037 and PR 261 (from Indonesia) - PB 217, PB 235, PB 28/59, RRIM 527 and RRIM 60) (from Malaysia). A clone trial was established in the 1979 area with: - Clones existing at Niete: GT 1 RRIC 100, 101, 102, 103 and 110 (from Sri Lanka) N 10, 29 and 60 (from Liberia) vith respectively 90, 61 and 210 plants RRIM 701 PB 252 and PB 254 with respectively 33 and 21 plants. - Clones introduced from the Ivory Coast R RIM 703 PR 253 and PR 257 IAN 717 and IAN 873 (from South America) One RO clone (Brazil) two M DF clones (Firestone-Brazil) five clones from new IRCA selections. As part of the cooperation with IRCA, it was agreed that all new planting material introduced in to the Ivory Coast would also 'e tried in Cameroon as soon as feasible. IRCA was requested to furnish as much information as possible on promising new clones (area planted and in tapping in Indonesia and Malaysia) in order to ensure optimal conditions for their introduction which, because of their impact on the future of an estate, must be made with every care and precaution. At the request of the Government, as recommended by HEVECAM, FAC financed two expert Missions: - Mr. GENER in May and October, 1978 - Mr. TRAN VAN CANH, October 1979. - 41 - During these missions visits were made to the areas show:g evidence of Fomes. These involved 1975. 1976 and 1977 trees planted in bags in hand cleare plots. It was observed that the attacks of this disease were slightly more serious than those found in the Ivory Coast. The methods for collecting field observations (Fomes, performance of new clones) have been defined. At the request of the Government, FAC agreed to bear the cost of a research officer assigned to HEVECAM in order to help it carry out its experi- mental program. 3.10 Procure m ent Project Agreement 574-C M stipulates (Schedule I A): A. General Procedures 1. Except as provided in Part A.3 hereof, contracts shall be awarded under procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in April 1972, as revised in October 1971 (hereinafter called the Guidelines), on the basis of international competitive bidding. 2. Bidders for the works included in Parts C and D of the Project shall be prequalified as described in Part 2.2 of the Guidelines. 3. (a) Land clearing, building of service roads and construction of housing and other facilities shall either be carried out by HEVE CAM through force account or by contractor hand labor procured on the basis of competitive bidding advertised locally in accordance with local procedures. (b) Any other contract not exceeding $60,000 equivalent shall be procured on the basis of competitive bidding advertised locally in accordance with local procedures. A single international call for bids was issued in 1975 (closing date July 31, 1975) for the procurement of land clearing equipment, farm tractors, trucks and lightweight vehicles, generating equipment, water treatment station and sprinkler irrigation equipment. All other contracts were awarded on the basis of local competitive bidding or local quotations in accordance with Sectin A3 of Schedule 1 of the Credit Agreement. 3.11 Supervision missions All supervision missions found project implementation to be satis- factory while also making the following observations reviewed below: (a) Seed supply Initial difficulties were caused by incomplete knowledge of possible supply sources. This problem seems to have been resolved in 1979, as HEVECAM was able to obtain large amounts of higher quality seed. - 42 - (b) With regard to land preparation, the desired progress has not yet entirely been achieved although this can be expected during the next fiscal year. Unfortunately, the V-blade trials (opening of individual lines) made with a view to avoiding costly windrowing operations did not produce the results hoped for and windrowing will have to be continued. (c) The bud-gardens were expanded and are producing enough to supply the budwood necessary for the realization of future programs. The recommendations made to HEVECAM involving the placement of container-grown plants (two per planting point) and abandoning planting of budded stumps could not yet be put into practice. (d) The tests on poisoning the stumps which constitute the sources of Fomes infection are now under way. It is HEVECAM's policy, also with a view to controling Fomes, to plant the cover crop as soon as the land is ready for planting, although this depends on weather conditions. (e) Rather than recruit an established firm as chief of construction for the works being carried out by force account, HEVECAM has preferred thus far to use small local contractors, as part of the Government's policy to foster the develop- ment of small and medium scale enterprises. (f) The intention to establish an agricultural section within the Company's technical department has taken a first step forward, even though the estate is not yet in full production, with the assignment of a French cooperant* who is responsible in particular for experimentation. *This is the least costly solution for HEVECAM, since the company does not have to pay his salary. (g) HEVECAM's bookkeeping is improving steadily, but still leaves some- thing to be desired, particularly with regard to cost accounting. The transfer of accounting services from Douala to Niete has caused an upheaval owing to a number of resignations. IV. PROJECT COSTS AND FINANCING 4.01 Projects Costs (Annex 15) From the tables in Annex 1, the cost estimates on which the financing was based can be compared with actual expenditures at June 30, 1979: Table 1: 1975 estimate Table 2: Actual Project expenditures taken from balance sheets and accounts at the end of the fiscal year Table 3: Difference between estimated and actual expenditures. National service recruit. - 43 - It should be noted that during negotiations ae motter ol inventories was not raised, although this is an important point for al agro-industial projects, especially those just starting up. The Government is drawig the attention of the coinanciers to the desirability of establishing such inventories and providing funds for their financing within the framework of new projects in this sector., The increase in costs as compared with the May 1975 estimates is as follows: 1975 Cost Actual Cost Increase (in millions of CFAF) 4,419 with inventory: 6,717 2,298: 52% 4,419 without inventory: 6,343 1,924: 44% Actual Project outlays at the completion of planting 4,206 ha include the expenditures shown at June 30, 1979 plus the following: - The proportional share of the fees for technical assistance for FY 1978/79 which can only be invoiced after the accounts are closed at the end of the year; - the upkeep of nurseries and planting operations on the 1,125 ha established after June 30, 1979; - completion of buildings under construction at June 30, 1979. Thus, expenditures under the first Project for the establishment of 4,206 ha as of the planting of the last seedling in the program is CFAF 6,921 million, including the establishment of an inventory of CF AF 374 million. 4.02 Financing (Annex 16) Total financing secured for the first Project comes to CFAF 7,777 million (Table 1, Annex 15): National Funds CFAF 3,279 million IDA: 3,553 CCCE: 945 7,777 Foreign aid disbursements exceeded the 1975 estimates: IDA Credit 574-CM: US$15,300,000 instead of US$15,127,000, i.e. CFAF 3,483,194,374 instead of CFAF 3,403,575,000. - 44 - CCC E: C FAF 945,280,000 instead of C FAF 945,0O,OO. The Government and IDA agreed to finance the addioral topographic and soil surveys (switch from 2 km x 2 km grid to 1 km x 1 kin grid, with peripheral areas) in the form of a subproject under the technical assistance project: ID A Credit 673-C M CF AF 69,903,292 URC -Investment Budget: Technical Assistance appropriation 21,120,000 At the outset of the Project, HEVECAM's cash position was sound, enabling it to invest funds that it did not need immediately and thereby accumulate financial proceeds of CFAF 103 million which helped to finance the project. However, since 1978, owing to increases in costs and the need to finance inventories, there has been a clear tendency for working capital to dip below the level agreed upon in CCCE Credit Agreement No. 58 31 00 75 04 0 (Article 6) and in IDA Credit Agreement 574-C M (Section 3.01.e): "In order to ensure that adequate working capital shall be available to HEVECAM, the Borrower shall take all action necessary on its part to enable HEVECAM, to dispose at all times of a cash bank balance, including overdraft facilities guaranteed by the Borrower, to cover HEVEC AM's expenditures during the four-month period following, but in any event not less than CFAF 300,000,000." Consequently, HEVECAM's special general meeting on July 17, 1978 decided on the second capital increase for CFAF 1,400 million, half of which would be paid up in FY 1978/79 and half in FY 1979/80. This dec5sion was approved by Decree 78/386 of December 7, 1978. Financing of CFAF 7,777,736,084 was granted to HEVECAM under the following terms: IDA Credit Credit CCCE URC TOTAL CFAF million 574-CM 673-CM (in CFAF million) Capital contribution 493 - 134 3000 3627 Grants 187 70 51 279(1) 587 Loan 2803 - 760 - 3563 3483 70 945 3279 7777 (1) of which creditor interest: 103. Working capital at June 30, 1979 (Table 4) was CFAF 1,060 million, b-t there was a net cash deficit of CFAF 21 million owing to the amount of acc: -:nts receivable (CFAF 1,351 million). - 45 - The cash position has been restored as of the drafting of this report and the outlook is satisfactory for all of calendar 1980, as shown by Table 5, which assumes that financing actually secured for the second project (all the financing for the first project was used at March 31, 1980) is to: - the paying up of the third capital increase (CC CE: CFAF 500 million) and 40% of the fourth capital increase (national funds plus CCC E: CFAF 2,020 million); - the utilization of the first withdrawal of the proceeds of the COM DEV loan ($2.3 million = CFAF 1,080 million); - the possibility of using the bank overdraft facilities granted by the SCB/BIAO consortium (CFAF 600 million, interest rate 7.5% per annum). V. ECONOMIC RATE OF RETURN The economic rate of return on the first project involving 4,200 ha was recalculated just prior to negotiations for the second project in November 1979. This report therefore refers to IBRD appraisal report No. 2661-CM (green cover of October 26, 1979) for the second project in indicating the following results for the economic analysis of the first project involving 4,200 ha. 5.01 Economic rate of return 1975 Appraisal (a) 1979 Appraisal Project (1) Program Project (2) Program Appraisal Estimates 10.2 13.6 8.1 12.3 Costs plus 10% 9.0 12.4 6.9 11.1 Costs plus 15% 8.4 11.8 Costs plus 25% 7.2 10.9 Benefits plus 15% 12.0 15.2 Benefits plus 25% 13.0 16.2 Benefits minus 25% 6.2 10.0 Costs plus 10% and Benefits minus 10% 7.4 11.0 Costs plus 20% and Benefits minus 20% 4.4 8.2 Benefits minus 10% - - 6.8 10.9 Project (1): 5,800 ha (a) World Bank report No. 716a-CM of May 20, 1975. - 46 - Project (2): 4,200 ha Program: 15,000 ha Assumed rubber price: First project: USc 35/lb in constant 1974 prices, equivalent to USc 59/lb in current 1980 prices. Second project: US 117/kg in constant 1980 prices, or USc 150/kg in current 1982 prices, when the first rubber is marketed in 1982. 5.02 Financial rate of return Phase I II Ha 4200 13,500 15,000 Appraisal estimates 4.5 8.3 8.7 Costs up 10% 3.0 6.9 7.3 Costs down 10% 6.0 9.8 10.2 Benefits up 10% 5.9 9.6 10.1 Benefits down 10%. 2.8 6.7 7.2 ANNEX I Perennial Crops Plantation Projects in Coastal Areas (AlIJUT) (7P!'0FLT1T::S PROJECTS CO-FINANCERS IDAN/CREDIT W, DATE CROPS IDAN CREDIT GRANT CANDEV I IDA 100-CM 1967 Oil palm and rubber US$ 7 M US$ 11 M IBRD 490-CH 1OT')ON I FED 448/CA/P 04/11/67 Oil pals. UCE 6.482 N Project 225-002.18 DJ'JTTITSA FED 2282/CA/P July 17, 1978 Tea U1CE 1.42 ti Projects 4100.031.16.22 Industrial estates UCE 1.42 i 4200.031.16.23 Smallholders CAM1DEV II IBRD 1508-CH February 1, 1978) oil palm, rubber, US$ 15 H CCCE 58.31.00.77.04.0 April 14, 197B ) Nester plan, FF. 36.75 H CONDEV \pril 13, 1978 ) Smallholders E 3.87 H SCAPAIM 111110m0, IBRD 593-CM April 15, 1969 ) US$ 7.9 N ESEKA CCCE 50,31.00.68.02.0 February 3, 1970) oil pals FF. 8.86 N FAC 11C/69/0. Project 3/CD/ June 14, 1969 ) FF. 8.86 P 69/VI/0/2. WIBONCO, IBRD 886-CM April 9, 1973 ) US$ 1.7 H ESEYA CCCE 58.31.00.73.01.0 August 6, 1973 ) oil palm FF. S.0 M (Supplement) FAC . 4C/73/0. Proj. 47/CD/73/ Hay 16, 1973 ) FF. 4.1 m VI/0113 DIM3BARI FED 1157/CA/P November 27, 1973 11 p..a Proj. 3200.019.02.18 UCE 8.85 H 3100 119 02 15 CFAF 808.9 M DTEOIARI FED 2032/CA/P (Supplement) Proj. 4200 019.16.06 February 14, 1977 UCE 2.5 HI Capital Venture December 9, 1976 UCE 2.3 H S!IALIUIOLDERS FED 2189 CA/P Projectst retember 16, 1977 oil palm 4100 031 16 17 4200 031 16 18 UCE 1.104 it UCE 0, 331 t 1'Bo.G0, CCCE 58.31.00.77.03.0 April 29, 1978 Otl palm, livestock FF. 13.4 m ESM'A under palm, coconut LIVESTOCK SOCAPAIN 11 13RD 1391-T-CM; 1392-CM August 25, 1977 oil palm US$ 7.0 M Us$ 18.0 M ANNEX 2 Appraisal Cost and Sources of Funds, by Categories of Expenses (in million CFAF and '000 US$) TOTAL COST IDA CCCE GOVERNMENT CATEGORIES IN MILLION IN '000 US$ IN MILLION CFAF IN MILLION CFAF CFAF GRANT CAPITAL LOAN GRANT CAPITAL LOAN CAPITAL SUBSIDY 15% 85% 15% 85% 1. Field establishment cost 1246 2. Civil works, buildings 611 720 4080 45 252 480 3. Equipment materials 837 330 1870 19 115 208 4. Administration 1138 375 2125 24 135 417 5. Food crop development 130 300 21 41 1 41 6. Technical Assistance 227 580 36 36 on 7. Project related studies 50 120 8 15 BASE COST 4239 1000 1425 8075 65 88 502 1130 92 8. Contingencies 1834 425 630 3572 24 40 226 450 53 9. Preliminary expenses 20 20 T 0 T A L 6093 1425 2055 11647 89 128 728 1600 154 15127 1/ 945 1745 1/ US$15,127,000 = CFAF 3403 million 1) - 49 - ANNEX II Table 1 CONSTRUCTIONS areas in m2 Forecast Actual HOUSING/LABOUR temporary 9600 5076 Semi-permanent 28800 29947 HOUSING/SUPERVISORS 4680 3212 HOUSTNG/MANAGEMENT STAFF Assistant 648 Staff level C temporary 904 S i permanent 791 " level B 1376 " level A 200 Total Management Staff 3919 3721 Social buildings 1/ 5796 5277 Kitchens 0 8633 Buildings/ General Services 2/ temporary 250 permanent 3211 3461 5614 TOTAL 56256 61480 3/ 1/ includes: toilets, wash-houses, schools, shops, market, churches, hospital, club. 2/ includes: offices, workshops, garages, warehouses. 3/ without kitchens: 52847m2 - 50 - Table 3 BUILDINGS (COMPLETED AND IN PROCESS) (in m2) Type Achieved In Process Total Supervisor/Temporary buildings (a) 5,076 - 5,076 Labour/72m2 construction (b) 23,408 1,728 25,136 60m2 construction (c) 1,800 960 2,760 Individual houses (d) 1,739 312 2,051 Supervisors level 1L & 2L 2,588 624 3,212 Social buildings 3,180 1,336 4,516 Kitchens 7,661 972 8,633 Toilets 609 152 761 Sub-Total 46,061 6,084 52,145 Managerial staff houses 3,173 548 3,721 Administrative buildings 600 - 600 Industrial buildings 5,014 - 5,014 Total 54,848 6,632 61,480 Total buildings (a) + (b) + (c) + (d) equal to 32,023m2 enabling to house 2,668 bachelors (12m2 each) or 670 families (24m2 each) plus 1,335 bachelors (12m2 each) i.e. 2005 workers. CAHIFJ1I3 A11 sEIli HVECAM RUBIrK n~JECF ugnancinl2L&C, (in Hillion s Sterlin, CFAF) WORLD wAwK coc ccCE CFAF) CUVERIT i/ (CrAF) (CrAF) iRF. CvAF ug$ CFAF IAN E MlMJY S.I.51DT 1TTAL EQ'TY SUBS ID¥ TOTAL 10A. i.Fild I Sk ablilsb,ent coat 1.1 jiv i - Deoc.r,ber 31, 1979 1 418 0.9 704 111452 1.2 ia,. I, (9), Second Pas. 2 2,243 10.7 1,458 3.2 754 256 1,010 897 697 3,608 I.3 lhi Phae4 570 570 570 2. Ci_i Bu0,07. 8uildings 2.1 ,1v I - 1. ,ber 3!, 1979 i 166 0.4 4141 207 .2 j narv I, 1I0 sond Phase 2 870 4.1 566 1.1 293 99 392 348 34 1,16 7.3 HIld I1., 4 47 47 47 3.1 !g.lør:nt/ r, riectri.tty 2 120 0.6 77 0.2 40 14 54 48 48 299 1.21 i.,:, 12,el iractors 3 219 219 219 1.t2 ter vehic.", fleevy Iquipi.nt 2 314 1.9 204 0.4 103 36 141 123 12s 7p4 3.3 oil.,r Fq.ipnt .2 74 0.4 48 0.1 25 8 29 29 If, __:t_ 2 367 1.7 239 0.5 123 62 165 167 147 918 5. Ilt iniat [on Joly I - fecimber 31, 1979 1 338 0.8 81 85 423 1f'er January 1, 1980 2 1,982 9.4 1,288 2.9 666 226 892 193 193 955 9378 6. lesi al A tance 3 564 564 564 7 : ,22,105 1035 1095 4 los losj~ 5. 'jpljef j_eseerclh 4 9) 9> 9I 9. _ _libolders 4 e.lhJ,oIder t Unit 60 60 60 oatoF-rnr. 85 85- 14s i. r i laited SudIe 3 139 139 139 11.1 uIv I - Deter.ber 31, 1979 1 102 0.2 26 128 100' erCe 3 24 78 102 102 >,0'. coverrenent 4 44 62 106 106 Parl Iasso 2 645 3.1 496 1.1 213 76 89 I 21 4 234 I 64" 2,i000 1oAL PmoilrCT csT/FIlANCINM 6,613 31.3 s,400 12.0 2,219 1,000 781 4,000 3,538 405 3,943 19,95" FIV:;:Cir:G WIMGI CAPIAL 1.012 1.012 1.012 TOTAL 6,615 5,400 4,000 4,95 2 g/ Ref1 I Pari Posu CDC 807,, G-ler-ent 20%. R'r 2 - art a.. Baik 40%, CoC 26, Goernv .1 16%, CcC £81 al tich 4ß6z In øqutty and 13.4% J, J-n.' Ref 3 - 100', CCE. Re: f - 100. CoverOant. /Of hkl1ch: Eq.ity: 5,s50 S,b,idyl 1,186 luana '_ Status of Rubber Cultivation in Cameroon S Evolultjon of areas (ha) 75/76 76/77 77/70 70/79 70/0/ 1)1 not in production 2 400l 3 151 3 2641 4 5031 6 6 61I 7 5H(101 In production l 10 7561 10 3701 10 7721 1] 109 1 100! ! 4 5011! 101A t3 156 13 521 14 036 15 612 17 669 22 0t0 'Al ACAM not in production 20 735 7(3 790 995 O l in produetion I4 623 li 607 4 249 4 159 4 159 5 PIAI10 not in production l 00 j0 100 10(10 10010 in production 1 61 1 60 1 6 00 1 60 1 6 6I 01 lAl 1 7001 1 700 1 700 1 700 l 700ll7: IllAviL M not in production 91 37 t 1 li 6 3 Ol l 5 200 () ) 2 in production -3 (19(1 HAI 79 4 374 1 046 3 (01 5 200 15 (1(1 UAltl l(OUN not in production 4 360 5 1937 I li 74 l l 2091(1 19 30 ' in production 16 979 6 577 16 621 I6 I6 6 767 2 0 9 03320 93 21 14 25342 9 7i23,5 ro u d L i o 1 Cl 545l 1 631l 1 740l 1) 615 l l3 Il iAI AUAM n o 2In r05 4 300 l 4 (12() 1 3 4001 $56 19I l PAM10 1 2 000 1 2 0 00 l 2 (0001 2 0001 2 000(1 i l i k Att (I2 ) 1 01dA c6716 791 16 93 17 7 76( 1 6 065 Ill 6071[ (1) Including development of llevacam I project (2) Thieretical production potentiality: 4 200 ha 7 169 T " "15 000 hia =25 57' Tr Regional .tudy related to levacam I project Future Development of Rubber plantations in the Southern Coasta! zone (1) 19/80 80/81 B1/B2 8ý2/03 6V84 84/85 85/66 860/7 07/8 !6/9 89/90 90/91 91/92 92/9 1Iy;yVIsCÅ4 i 4200 I 13VSCAM Ii 990t 2 210 2 200 2 192 1 7 0 + Plantationf smallholder 50 10D0 1001 250 I 5O¡gygca 11 500 Pl1 600 1600 1 600 1 600 1 600 + PYH/1 200 200 200 200 200 Pq11/2 6 00 1 6 1 (X) + Mi/ 200 100 Total Planted 5 190 7 406 9 650 Il 950 13 750 15 500 16 100 17 900 19 700 21 500'23 300 24 100 25 900 27 700 I Production l- 261 2061 700 2 3851 5 7171 9 704114 090116 650123 182127 460131 001135 146 1 93/94 94/95 95/96 96/97 197/98 90/99 99/00 100/01 01/02 02/03 03/04 04/05 05/06 1Il/2 (mult*) 1 600 1 600 + PY11/2 (flute) 200 200 200 1111/3 6oo i 60o 1 600 1 600 1 600 + PYl/3 200 200 200 200 200 I I I la/4 i 60ó0 6000 6000 1 6001 1 6001 I I I 200 200 200 200 200 Total Planted 129 500 31 300 32 100 133 900 35 700 37 500 9 300 40 100 41 900 43 700 45 500 47 300 47 50 Produotion 139 276143 319147 180150 190J53 666157 620161 476165 211160 135171 661175 141173 61711b1 6541 (1) From the mw-ter plan, being prepared. - 54 - AN'IEX 10 TABLE i Yield/ha (kg) EVAL A TiN PROJECT YEAR 197_' 1979 N 15C 200 7 900 1200 8 1200 1500 9 150C 1700 10 170C 1900 11 190C 2000 12 210C 2100 13 2200 2200 14 230C 2300 15 2300 2300 16 2300 2300 17 230C 2300 18 230C 2300 19 230C 2300 20 220C 2300 21 220C 2300 22 220C 2330 23 220C 230i 24 230C 2300 25 230C 2203 26 2100 2200 27 210C 2i00 28 200C 2100 29 2000 20u5 30 2000 2000 31 2000 900 32 2000 1900 33 2000 100 35 17 001 36 1700 3 7 1å0 - 55 - AMNEX i0 TABLE 2 HEVECAM I Project rroauction - Tons (in metric tons) PPCUC 0 GN Tons YFAP ilna l 243n' 1085naz2372 ! 37lnn !iat 1981/82 26 26 82 157 49 206 83 196 292 217 705 84 223 365 1302 474 2364 85 249 413 1627 2846 75 5210 86 262 462 1845 3558 450 6577 87 275 486 2061 4032 562 7416 88 283 510 2170 4507 638 8113 39 301 535 2279 4744 712 8571 90/91 301 -559 2387 4981 750 8978 91 301 559 2495 5218 788 9361 92 301 559 2495 5456 825 9636 93 301 559 2495 5456 862 9673 94 301 559 2495 5456 862 9673 95 301 559 2495 5456 862 9673 96 301 559 2495 5456 862 9673 97 301 559 2495 5456 862 9673 98 301 559 2495 5456 862 9673 99 301 559 2495 5456 862 9673 2000/01 258 559 2495 5456 862 9660 01 288 535 2495 5456 862 9636 02 275 535 2387 5456 862 9515 03 275 510 2387 5218 862 9252 04 262 510 2279 5218 825 9094 05 262 486 2279 4981 825 8833 06 249 486 2170 4981 788 8674 07 249 462 2170 4744 788 8413 08 236 462 2061 4744 750 8253 09 236 437 2061 4507 750 7991 10/11 223 437 1953 4507 712 7832 11 223 413 1953 4270 712 7571 12 210 913 145 4270 675 7413 13 - 389 1E45 4032 675 6941 Total 253.952 t P' l 72 l 0 DI-ic l ' 1 v I C l01Al Village' 1 x1 - 3160 - - 1 20 650 52 564 160 - 4706 Viii lIge 2 3 1 - 4624 - . 17211 1 5840 127 7(07 - 1 54 4 ILt 360 -I 90. 7, 72 ? 2 Vii age 3 1 20116 6192 ('ho - 3269 192 uhli (10 - 1,04 ? VilIlme 4 7 1 1441 46(1 0 0 (f4l1 - - 1650 132 616 144 - 4 0 0 it' - - - - 312 150 116 - - - 5411 0 Vi uie 5 9 1 1440 3111111 - - - 1332 106 - - 6 16 10 C -- 432 960 - 312 426 34 60M0 - - 21152 H- Vi I1l t 6 1 1 1 - 936 - -- - - - - 9 56 12 IC - 576 - -- 216 10 5/6 - - 1 3I86 Staff compound 13 - - - 1739 - . . - 3 75 4912 15 14 (' - 312 - - - - - 5411 11(60 C (i e 15 1 - - - 165 2(150 t 31115 ( 16 It -' - - - - - - Police 17 1 - 120) - 190 42 - - - - (D2 D Il iil it joll 19 1 1 1 -0- - - - - - 1115 - 0/iIl 20 TOTAL 1 5076 2 54(108 11100 1739 2511 7661 609 3101( 6 14 17/ 51 411 TOTAL - 1728 96(10 312 624 972 152 J336 5411 957 GRAND TOTAL 5076 2513(6 27604 2051 1212 11633 761 4516 5614 5721 614110 1 = completed EC= in process - 57 - MAIN EQUIPMENT Apavraisal Actual I. HEAVY EQUIPMENT Crawler tractor D8 13 14 + 1 D6 2 3 + 1 D4 1 1 - Motorgrader 1 2 + 1 Loader 1 2 + 1 Road roller 1 4 + 3 Stone crushing unit 0 1 + 1 Wheel tractor 7 13 + 6 Trailer 9 15 + 6 II. VEHICLES 8T truck 9 16 + 7 Wheel tractor plus trailer 1 1 - Tipping truck 1 1 - Tow truck 2 1 (1) Garbage truck 1 - (1) Fuel truck - 1 +1 Car/9HP 10 10 - Car/7HP 26 20 (6) Car/4 wheel drive 11 20 + 9 Minibus 6 4 (2) Ambulance 1 1 - Motorcycles 50cm3 9 10 + 1 - 58 - 13 TABLE 3 ';?OWER EVOLUTION (HIRED AND DISMISSED) PERIOD BEGINNING OF HIRED DISMISSED END OF PERIOD :PERIOD January/June 1977 528 400 275 652 July/December 1977 652 :58 392 918 : : January/June 1978 918 : 1 246 779 13Q5 : July/December 1978 1 385- : 976 841 1 520 : January/June 1979 : . 520 1 555 1 178 1 897 :28 : 4 835 : 456 1 897 TYPE OF RECRUITMENI PERI0DE IN GROUP INDIVIDUALLY TDTAL July/December 1977 381 277 658 January/June 1978 754 492 1 246 July/December 1978 576 400 9765 January/June 1979 866 689 1 55 ORIGIN OF HEVECAM WnRKijRg PROVINCE OF ORIGIN May 1978 Januarv 1-97 June 197q Center - South 41,4 : 45,9 40,6 w. Littoral 16,0: 9,0 7,2: West & South - West 33,5 t. 37,5 42,3 : North : 3,9 : 1,3 7 : East 3,8 :,7 7 2 : Foreigners 100: 00~ 100 - 59 - ANNEX 13 MANPOWER EVOLUTION 2/7S!6/76 12/76 6/77-12/77 6/7,2/7 6/79 Niete Es:ate Plantation Supervisors 2 2 3 5 14 18 20 28 Skilled workers Laborers 10 8 10 79 Unskilled laborers 36 33 91 33 189 243 277 303 - Men 177 595 389 465 641 976 1030 1354 - Women 33 30 37 30 62 12 14 125 248 273 528 661 920 1385 152C 1897 Douala Office 12 9 Supervisors Category VI and VII 4 4 6 6 10 13 13 Category III and IV 6 10 10 13 14 15 20 14 12 18 22 29 35 39 45 34 - 60 - GRO.TE IN GROSS SALARIES NIETE RUBBER ESTATE 75/76 76/77 77/78 78/79 1) Number of days Days worked 55,918 120,470 264,517 436,306 Days paid 59,100 128,447 286,490 L69,884 2) Gross salaries paid (CFAF) 22,048,811 72,207,957 174,L86,664 334,383,975 3) Average daily salary (CFAF/DAY) Per day worked 394.3 599.4 659.6 766.4 Per day paid 373.1 562.2 609.0 711.6 GROWTH OF SUPPLEMENTAL PIECE WORK (CFAF) 77/78 78/79 Construction - 16,141,108 Maintenance of fields 15,466,075 30,321,826 Topographical surveys 5,335,865 3,770,803 20,801,940 50,233,737 Day - equivalents 46,250 days 90,533 days ANALYSIS OF LABOUR USE 76/77 77/78 78/79 1) Days Worked (w) 120,,70 264,517 436,306 Paid leave (PL) 8,625 23,077 35,992 Unpaid leave (UL) 44,062 84,281 125,676 2) Absenteeism (Y) Total 17.9 15.7 14.3 Unjustified 13.0 10.9 9.9 3) Number of days paid 128,447 286,490 469,884 -- - 61 - ANNEX 13 TABLE 6 Distribution/Age of Workers May 1978 January 1979 June 1979 1930 to 1935 75 6,4 - 97 6,2 t 117 6,2 - 1936 to 1940 147 12,4 ! 192 12,3 1 223 11,9 ! 2941 to 1945 37 8,2 % 128 8,2 X 148 7, C9 1946 to 1950 158 13,4 % 214 13,8 t 243 12,9 - 1951 to 1955 340 28,7 % 449 28,9 % 553 29,4 Z 1955 to 1960 366 30,9 I 475 30,5 X 595 31,7 1 1 183 1555 1879 Break-down of Dependant Population May 1978 January 1979 June 1979 Married 139 183 222 Bachelor 915 1 202 1 453 Unmarried living 129 169 206 together Married women 139 221 225 Illegitimate wife 139 129 205 Legitimata boy 82 107 127 Legitimate girl 37 97 157 Illegitimate boy 43 57 68 Illegitimate girl 59 72 79 1.662 2.237 2.742 *1 Cost of the Plantation Project: 1975 estimate, project of 5,800 . Category (1) 75/76. 76/77. 77/78. 78/79. S/Total 79/80. Total U a - Field Costs 54 171 292 661 1 078 742 1 820 r - Civil Works 49 72 258 264 743 251 994 Sub-Total 103 243 550 925 1 821 993 2 814 t 2 - knuipment and.material 193 33? 304 214 1 043 53 1 096 0 3 - Administration 194 176 312 408 1 090 516 1 60C Rood crops 48 50 53 )51 29 180 5 - Technical Assistance 44 53 64 75 236 78 314 6 - Pro1cet related stidies 24 27 3 4 8 63 7. Initial statutory cost 20 20 Total 578 879 1 283 1 679 4 419 1 674 6 093 (1) The regional studies have been finance ou de Hevecam for 342 million, ANNEX 15 TABLE 2 HEVE CAM I Project Actual Expenditure (in million of CFAF) (excluding Master Plan) . . . . .Sous . 1975/76 1976/77 1977/78 1978/79 TOTAL 1979/80 T 0 T A L 1-a- Field establishment 45 187 432 879 1 543 85 1 628 -b- Civil works 92 284 568 503 1 447 75 1 522 -c- Inventories 26 113 169 66 374 - 374 A - Sub-total a-b-c 163 584 1 169 1 448 3 364 160 3 524 2- Material/equipments 248 502 467 193 1 410 - 1 410 3- Administration 155 218 460 642 1 475 - 1 475 4- Food crop development - 10 32 33 75 - 75 5- Technical Assistance 34 46 66 85 231 44 275 6- Project Related Studies 10 97 29 17 153 - 153 B - Sub-total 447 873 1. 054 970 3 344 44 3.388 Initial statutory cost 2 - 1 2 5 5 Coastal Estate Center - - 2 2 - Advances and deposits I - - 2 - 2 3 1 1 4 9 0 9 10TAL A i 8 i C 613 1 458 2 224 2 422 6 717 204 6G921 - 64 - ANNEX 15 TABLE 3 PROJECT COST EXCLUDING MASTER PLAN Variation Between 1975 Estimates and Actual Expenses Estimates Actual Expenses Variation 1-a- Field establishment 1 078 1 543 + 43 b- Civil Works 743 1 447 + 95 Inventories 0 374 2- Material and equipment 1 043 1 410 + 35 3- Administration 1 090 1 475 + 35 4- Food'crops 151 75 - 50 5- Technical Assistance 236 231 - 2 6- Project related studies 58 153 + 154 20 5 - 75 7- Initial statutory cost - Coastal Estate Center 0 - Advances, deposits 0 2 Total 4 419 6 717 + 52 4 419 + 43 - 65 - ANNEX 16 TABLE 1 Project Financing (Excluding Master Plan Distribution Between Co-financers R.U.C CaPital Equity 300 000 000 1st increase 1 300 000 000 2nd increase 1 400 000 000 Subsidies Financial agreement 15E 000 000 Topographical surveys 21 120 000 Interest -103 238 418 3.279.358.418 IDA Credit 574 CM 3 A83 104 374 Credit 673 CM 69 903 292 3.553.097.666 C..C.E 945.280.000 7.777.736.084 (1) PARI-PASSU FIRST PROJECT (2) TECHNICAL ASSISTANCE PROJECTTOTAL AID CCCE RUC TOTAL AiD RUC TOTAL Field establ. and 58 t_16 1 26 100 1 civil works 1891562910 511149320 844196189 3246908419 3407109014 Material and equipment 733974849 201882261 328814660 1264671770 1264671770 Administration 670217512 180810151 299009719 1150037382 1150037382 Food crops 53894373 14084653 23884523 .91863549 91863549 Technical Assistance 106758685 29964361 48037827 184760873 270353060 Project related studies 26786045 7389254 12007538 46182837 69903292 21120000 91023292 .137206129 3483194374 945?80000 1!,5950456 5984424830 69903292 21120000 91023292 0 0 343?47 9420003Z9546 ~1240912 0 15 300 000 US A Or I US $ 227.66 F. CFA 0 (3) Expenses incurred after July 10, 1979 related to the completion of the 4,206 ha and financed under the 2nd project C.D.C (i.w. C C.C.C.E 80o 20 % 100 T otal Field establ. and 128.160.476 32.040.119 160.200.595 civil works Technical Assistance 85.592.191, 85.592.195 128.160.476 32.040. 119 85.592.195 245.792.790 1/ Grand total (1) + (2) + (3) ,_Ni Total of Co-financing National (in million CFAF) Total Cost total National FinWp,ing Financing Share b 0'b e= + Se c + d O H H0 Plantation, civil works, 3 52 3 407 876 118 994 inventories Material and equipment 1 410 1 265 329 145 474 0 Administration 1 475 1 150 299 325 624 n Food crops development Wa 75 92 (1)24 (17) 7 C t Technical Assistance 275 (2) 270 48 5 53 Project related studies 152,6 137 33 15,5 48:5 Expenses related to statutory 5 C 5 Participation 2 2 A deposit 1.5 1,5 1,5 101AL 6 921 6 321 i1 609 600 2 209 (1) Concerning the food crop development, the amount appearing in column "a" is related to the operating costs, the amount indicated in column "b" includes the equipment brought for this program. # - 68 - CAMEROON NIETE RUBBER ESTATE PROJECT (Cr. 574-CM) IDA Overview of the HEVECAM Project Completion Reoort /1 Introduction 1. The project completion report (PCR) was prepared by the implementing agency HEVECAM on the basis of the Bank's standard guidelines. The original French text of the main report has been translated while the numerous Annexes are kept on file in the original version and are available on request. However, certain key tables from the Annexes have also been translated and are appended together with a set of the maps of the attached report. 2. The HEVECAM PCR itself provides an objective assessment of the achievements realized, as well as detail the problems and difficulties that were encountered during project implementation. The following observations are provided to record the views of the operating division that was responsible for identification, appraisal and supervision of the project. Summary 3. The project set out to create an industrial rubber estate of 5,800 ha as the first phase of an eventual 15,000 ha plantation. Also included was the preparation of a Master Plan for the development of the southern coastal zone of Cameroon in which the plantation is located. Financing was provided by IDA (US$16 million), CCCE (FF20 million), and Camerooniar Government (CFAFl.8 billion). At the prevailing exchange rate total project cost was estimated at CFAF6.4 billion (US$28.5 million). 4. No detailed rate of return calculations were prepared for the 5,800 ha first phase, but the completed 15,000 ha estate was expected to show a rate of return to Government of 14% (financial and economic estimates identical), and the 5,800 ha treated separately was expected to show the same rate of return within one percentage point. Principal benefits deriving from the 5,800 ha were expected to be: (i) foreign exchange earnings rising to US$7 million annually at full maturity from a production of 13,000 tons of rubber, (ii) secure employment for 3,000 workers and higher living standards for them and their families, 12,000 people in total, and (iii) the creation of a focal point for further development of a largely unpopulated region. 5. The principal risk was seen to lie in the difficulty of attracting and retaining a satisfactory labour force in such an undeveloped area. 6. As a result of substantial cost overruns and a rescheduling of the development timetable, financing was exhausted when only 72% of the planting /1 Prepared by Western Africa Region (WAPA2) staff. The attached translation of the original text has been made with only minor editorial changes. - 69 - program (4,200 ha) had been achieved. Revised rate of return calculations now suggest: for the 4,200 ha, 4.5% financial and 7.5% economic; and for the eventual 15,000 ha, 8.7% financial and 12% economic. The necessity for higher than initially planned investments in social infrastructure were a major factor in the cost overruns. This was of course closely related to the problem of attracting and retaining labour and a major upgrading, imposed by Government, of the housing standards to be provided by the agro-industrial corporations. No attempt has been made to evaluate in quantitative terms these increased social benefits deriving from the project but they are by no means negligible in socio-economic terms and must be recognized in any overall judgment of the project's achievement. On the other hand, the expectation that surplus labour from the north would be attracted and settled in the project area was not realized and HEVECAM is in direct, competition for still scarce labour with SOCAPALM and CAMDEV, the two other major Government-owned plantation companies, and with the private sector, PAMOL, SAFACAM, and SPFS. Imnlementation 7. Relations between IDA, the project agency HEVECAM, the technical assistance agency SAFACAM, and the supervising ministry have at all times been good and the contractual obligations imposed by the Credit and Project agreements have in general been respected. Effectiveness was delayed by a tardy contribution of capital by the SNI, and HEVECAM was at times in financial difficulties because of delays between the dates when expenses were engaged by the company and reimbursements were received. This was largely due to time consuming screening procedures in the country before demands were presented to IDA. Supervision missions also commented on delays in the preparation and presentation of HEVECAM's accounts and on certain shorbcomings in its auditing arrangements. 8. At the agronomic level HEVECAM's performance has been highly competent, and the creation of 4,200 ha of plantations in this area, virtually devoid of infrastructural support, represents no mean technical achievement. 9. In the following paragraphs an attempt has been made to clarify and when appropriate comment upon the major issues raised by HEVECAM in the PCR. For ease of reference we have retained the paragraph numbering of the English text. Commentary 2.08(a) TransDortation infrastructure. Government ha.s remained in default, through lack of resources, on Section 3.04 of the Credit Agreement. The Douala- Kriti road has never been upgraded to the status required and lack of a year- round motorable road has at times severly handicapped the project. 3.02(e) Pests and Diseases. While the risk of losses due to Fomes root-disease should not be underestimated the conditions at Niet6 do not lead one to anticipate more serious losses than are normally encountered in a development of this nature. The agricultural techniques that have been adopted are designed to keep the danger to a minimum. - 70 - 3.02(f) Exploitation. The yield forecasts are realistic in terms of the known genetic potential of the planting material under modern methods of exploitation. However, instability of the labour force, and the difficulty other companies are known to have in retaining tapping labour of the required calibre, must raise some concern as to the prospects of achieving the projected yields, at least during the early years of exploitation. 3.03 Construction. (a) Housing for Labour. The CFAF 400 million is not all strictly a cost overrun since, had temporary housing been built as originally planned, the cost of permanent quarters would have been an additional expense against the company's future development budget (HEVECAM II et seq.) The accelarated construction program was related to the labour problem, the need to provide more attractive accommodation in order to retain workers, and Government's decision to upgrade statutory housing standards for all plantation workers. While one cannot do other than commend these social objectives it becomes very difficult to evaluate HEVECAM's prospects and performance as a commercial organization when it is obliged to fill such a dual role. (c) Basis village infrastructure, and (d) General service buldings have both been provided to standards that could not have been considered as essential in a purely commercial context and reflect HEVECAM's special obligations as Government- owned development corporation. It is of course arguable that these social expenditures should be more heavily subsidized by the state in order to ensure a normal level of profitability for the commercial venture. 3.04 Materials and Equipment. The expansion of the tractor fleet was made necessary by the limited number of hours that heavy equipment is able to operate under Niete conditions. However, the normal total of operating hours over the life of the equipment is still expected to be realized and the potential carried forward to the second project has substantially reduced, in fact almost eliminated, the purchase of new tractors to complete the planned development. The need for more solidly built supervision and general service vehicles is closely related to Government's failure to create a road system commensurate with the requirements of the area. 3.05 Personnel and Workforce. According to the SAR it was expected that by June 30, 1979 HEVECAM would be employing 20 management staff, 12 expatriates and 8 nationals. (Annex 3 of the PCR is in error on this point). In fact the number of Cameroonian managers has been raised to 15 while the expatriate strength remained at 12 as planned. Thus, by normal standards, the company is overstaffed. However, here again, HEVECAM's development role in the training of national management has been given precedence over purely commercial considerations. The labour force, which numbered 528 workers in January 1977, had risen to 1,897 by June 1979. These figures are very close to the appraisal forecast of the company's needs (1,810 workers at end of PY4, i.e. at June 30, 1979). In order to achieve this increase of 1,369 over 2 1/2 years HEVECAM brought in a total of 4,835 recruits. Total wastage over the period was 3,466. Between January and June 1979, 1,555 new workers were recruited and there were 1,178 departures. This enormous turnover has grave implications for the future as the company's need for skilled labourers, especially rubber tappers, builds up. At appraisal it was expected that HEVECAM would be able to recruit most of its labour from - 71 - the north but by June 1979 less than 2% of the workforce were northerners. It has now to be..realized that in a country as ethnically and climatically diverse as Cameroon great mobility of labour across cultural boundaries is not to be expected in the short term. Actually workers are more interested in a shift from rural to urban employment than in changing from one agricul- tural job to another. 3.06 Foodcrop develorment. After some disappointing attempts to adopt modern methods of husbandry (e.g. mechanized rice growing) in order to produce food crops for its workforce HEVECAM has' gone back to the more traditional system of making available land on which its workers can grow their own food. The eventual provision of improved varieties of the staple crops should prove of real benefit, but not too much can be expected in the way of food crop farming until the company has a stable labour force with a high proportion of married workers. 3.07 Technical Assistance. HEVECAM has been strongly supported by SAFACAM and the six-monthly inspection visits have been followed by the production of detailed reports on project progress that have been of the highest quality. This technical assistance has greatly facilitated the task of IDA supervision missions. However, the TA contract is open to criticism in that the amount paid to SAFACAM is proportional to HEVECAM's investment expenditures. In principle, this is an unsatisfactory arrangement and open to abuse. Though it must be recorded that in SAFACAM'c case the utmost probity has been observed, the contract is not a satisfactory model for future use. 3.10 Procurement. There have been no major problems with regard to procurement though inflation during the project period resulted in some technical infringements (ICB not observed for everythLng over US$60,000) which were accepted by the co-financers. 4.01 The financial tables relate to the planting of 4,200 hectares, which was completed in September 1979. The total cost (CFAF6,921 million) was financed partly under this project (CFAF6,717 million for expenditures up to June 30, 1979) and partly out of co-donors contributions to the second HEVECAM project (CFAF204 million) for expenses incurred in the first quarter of FY 1979/80. Minor discrepancies appearing between the various financial tables have been summarized in a separate memorandum. They do not affect the global view of the project costs and financing. 4.02 IDA financing was made available partly through technical assistance credit 673-CM (cFAF69.9 million) and mainly through c:redit 574-CM (total US$16 million, i.e. CFAF3,483 million for HEVECAM and CFAF152 million for the Master Plan). Transfers were made at an average :ate of US$1: CFAF227.2 against the appraisal estimate of US$1: CFAF225 representing a gain of CFAF35 baillion. The credit was entirely disbursed by end March 1980, 15 months before the closing date. - 72 - The disbursement profile given below is expressed as a percentage of the total credit: Years from loan signature % 1 4 2 21 3 44 4 86 5 100 AGreen:mcl Attachments  一，& ヤSPし上0と日1