Benin - Borgou Province Rural Development Project

Document of ILE Copy The World Bank FOR OFFICIAL USE ONLY Report No. P-2984-BEN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE PEOPLE'S REPUBLIC OF BENIN FOR THE BORGOU PROVINCE RURAL DEVELOPMENT PROJECT March 12, 1981 This document has a restricted distribution and may be used by recipients only In the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorizatIon.  CURRENCY EQUIVALENTS Currency Unit CFAF US$1.00 CFAF 210 1/ CFAF 1,000 - US$4.8 CFAF 1,000,000 3 US$4,762 FISCAL YEAR January 1 - December 31 MEASURES 1 meter (m) - 3.28 feet (ft) 1 kilometer (km) - 0.62 mile (mi) 1 square kilometer (km2) = 0.386 square mile (sq.mi.) 1 metric ton (m ton) 2,204 pounds (lb) 1 hectare (ha) = 2.47 acres 1 cubic meter (m3) = 1.308 cubic yards LIST OF ABBREVIATIONS AND ACRONYMS CARDER - Centre d'Action Regionale pour le Developpement Rural CATS - Cooperatives Agricoles de Type Socialiste CNCA Caisse Nationale de Credit Agricole FAC - Fonds d'Aide et de Cooperation (France) FAS - Fonds Autonome de Soutien et de Stabilisation des Prix des Produits Agricoles FED - Fonds Europeen de Developpement IFAD - International Fund for Agricultural Development GRVC - Groupement Revolutionnaire a Vocation Cooperative GV - Groupement Villageois MDRAC - Ministere du Developpement Rural et de l'Action Cooperative PMEU - Project Management and Evaluation Unit SONACEB - Societe Nationale pour la Commercialisation et l'Exportation du Benin SONAGRI - Societe Nationale pour la Production Agricole SOPROCA - Societe Provinciale de Commercialisation des Produits Agricoles 1/ The CFA Franc (CFAF) is tied to the French Franc (FF) in the ratio of FF 1 to CFAF 50. The French Franc is currently floating.  FOR OFFICIAL USE ONLY BENIN BORGOU PROVINCE RURAL DEVELOPMENT PROJECT Credit and Project Summary Borrower: People's Republic of Benin Amount: SDR 15.7 million (US$20.0 million equivalent) Terms: Standard IDA terms. The proceeds of the credit would be passed on to the project executing agencies as grants. Co-lender: International Fund for Agricultural Developmient (IFAD) Project Description: The main objectives of the proposed project, to be implemented over the four-year period 1981-85, are to improve the level of rural incomes and promote exports by improving and diversifying production of the prin- cipal crops in the Borgou Province, primariLy cotton and maize. Specifically, the project provides for expanding agricultural production through the strengtlnening and support of institutions and of technical infrastructure, integrated with improved extension, cooperatives, training, and social services. At full development, the project is expected to reach about 39,000 farm families (about 50% of the total in Borgou), and to generate an incremental production of some 10,400 tons of seed cotton, 5,000 tons of maize, 6,000 tons of sorghum, 1,200 tons of groundnuts, and 1,000 tons of cowpeas. The project's major quantifiable benefit would be increased production of cotton and foodcrops which, by the end of the implementation period, is expected to yield additional real income to participating farmers (estimated at $7.3 million for cotton and $4 million for foodcrops, in 1980 prices). Unquantifiable benefits would result from the proposed strengthening of Government s capacity to plan and manage further rural development activity, and to improve financial management in the agriculture sector. Additionally, future benefits would accrue from proposed activities in foodcrop research, foodcrop seed production, and improved cultivation practices. There are no major technological risks in the project, since all technical proposals have been proven in other similar West African situations and in Benin itself. One important risk lies in the area of organization and financial management in the rural sector, but this risk would be minimized as a result This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - of the solid Government commitment to the project proposals, and the expected support from a strong technical assistance team to be selected in agreement with the Association. Estimated Costs (including taxes): US$ Million Local Foreign Total Inputs (fertilizer, insecticides) 1.3 2.9 4.2 Civil Works 2.1 0.9 3.0 Vehicles 0.2 3.0 3.2 Equipment 0.5 1.3 1.8 Operating Costs 4.5 3.1 7.6 Personnel 6.5 - 6.5 Technical Assistance - 3.3 3.3 Studies, scholarships 0.5 1.0 1.5 BASE COST 15.6 15.5 31.1 Contingencies Physical 0.5 0.6 1.1 Price 4.4 4.4 8.8 Total Contingencies 4.9 5-0 9.9 GRAND TOTAL 20.5 20.5 41.0 of which taxes 3.2 - 3.2 Total Costs (net of taxes) 17.3 20.5 37.8 Financing Plan: US$ Million Local Foreign Total Percentage IDA 11.0 9.0 20.0 1/ 53 IFAD 6.3 7.7 14.0 37 Government 1.8 5.2 7.0 10 1/ Including an advance of US$600,000 under the Project Preparation Facility. Estimated (US$ Million) Disbursements: FY81 FY82 FY83 FY84 FY85 FY86 Annual 0 2.3 4.5 5.5 5.1 2.6 Cumulative 0 2.3 6.8 12.3 17.4 20.0 Economic Rate of Return: About 21 percent. Staff Appraisal Report No.: 3157/BEN, February 23, 1981.  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE PEOPLE-S REPUBLIC OF BENIN FOR THE BORGOU PROVINCE RURAL DEVELOPMENT PROJECT 1. I submit the following report and recommendation on a proposed Development Credit to the People's Republic of Benin for an amount in various currencies equivalent to Special Drawing Rights 15.7 million (US$20.0 million) on standard IDA terms to help finance the Borgou Province Rural Development Project. Additional financing for the project would be provided by a loan from the International Fund for Agriculture Development (IFAD) for the equivalent of US$14.0 million; the IFAD loan would be made to Government for a term of 50 years including a grace period of 10 years, with a 1 percent service charge per annum. PART I - THE ECONOMY 1/ 2. The latest economic report on Benin (Report No. 2079-BEN, issued in May 1979) was the result of a basic economic mission which visited the country in fall 1977. The paragraphs below are based on this relport, but include updated information. Annex I provides basic country data. Introduction 3. After independence in 1960, a period of instability characterized by frequent changes in Government prevailed until the revolution in 1972 which brought to power the military Government of President Kerekou. The new regime immediately took steps to replace foreign dominance in the modern sector and strengthen the Government's involvement in the agricultural sector. These measures initially disrupted the economy since there was an inadequate number of trained Beninese to replace the departing expatriates. Yet, the Government also pursued conservative financial policies which resulted in budgetary surpluses and the maintenance of the debt service ratio at less than 7 percent. 4. Benin has now enjoyed a comparatively long period of political stability under a tight, centrally controlled one-party system. Following the adoption of a new constitution, Lieutenant Colonel M. Kerekou was recently confirmed President of the Republic for a three-year term by a newly elected National Assembly. Mr. Kerekou has in turn appointed a civilian-dominated Government. 5. The nation is poised for a period of moderate growth propelled by major investments in the industrial sector. But Benin's near term prospects should be assessed with caution, because they are dependent on a few key factors: strength of the Nigeria and Niger markets, success of key indus- trial projects and continuation of a prudent budgetary policy. 1/ The text of this section is essentially the same as that included in the President's Report for the Second Feeder Roads Project which was distributed to the Executive Directors on December 4, 1980.  -2 Recent Economic Developments 6. With a population of 3.3 million people and a GNP per capita of $250 (1979) per annum, Benin remains one of the least developed countries as defined by the U.N. Over the 1975-79 period, the country enjoyed an average real GDP growth rate of 3.7 percent, and a sound public finance position. Exports are limited (US$130 million per annum) and little diversified (mainly oil palm products and cotton). A large resource gap, 20 percent of GDP, is shown over the 1972-78 period according to Central Bank statistics. The gap is, in fact, smaller due to the substantial volume of informal, unrecorded exports, primarily to Nigeria. Also, an important part of the remaining shortfall is financed by a sustained inflow of workers, remittances and capital grants, leading to only a modest reliance on medium- and long-term borrowing. 7. Agriculture, which employs about 70 percent of the population and generates 39 percent of GDP, has not substantially increased its output over the past decade. With respect to export crops, cotton peaked in 1972 at 50,000 tons but has since fallen to around 15,000-20,000 tons. Palm oil production continued to increase until the mid-1970s, but output has been reduced since a severe drought in 1976. Institutional changes, insufficient farmgate prices, lack of financial resources and the absence of technical assistance are the main reasons for the unsatisfactory performance of export crops. Foodcrop production, although beset by many of these problems has fared somewhat better with sustained demand from Nigeria. The situation of the sector in general is slowly improving under renewed Government support through producer price increases, less interference with market forces, and better climatic conditions. 8. The industrial sector is still undeveloped due to a lack of skilled manpower, smallness of the local market, and institutional constraints. It employs less than 2 percent of the labor force, contributes 11 percent to GDP (1979), and consists mostly of processing of agricultural products and import- substitution activities. The sector achieved an 11 percent annual growth rate during 1972-76, but slowed down to 4 percent during 1977-1979 because of a fall-off in demand from the Nigerian market. Currently, Benin is beginning to exploit its natural resources through several major industrial projects, the Onigbolo cement factory (limestone), the Save sugar plant and the Seme off- shore oil field. 9. The tertiary sector (mainly transport and commerce) accounts for 41 percent of GDP (1979), and employs almost 40 percent of the labor force. The port of Cotonou has traditionally provided access to the sea for land- locked Niger and the western part of Nigeria. The Niger traffic through Cotonou Port rose from 180,000 tons in 1973 to 529,000 tons in 1977, and total transit traffic including Nigerian traffic rose to a peak level of 900,000 tons in 1979. 10. There has been a significant improvement in the central Govern- ment s current financial situation over the last decade. The chronic current budget deficits of the 1960s, financed by French Treasury transfers, were  - 3 - eliminated during the first half of the seventies. During 1976-78 the budget registered current surpluses averaging a high 23 percent of current revenues. The Government has controlled the growth of current expenditures, which did not increase in real terms during the 1972-77 period, and surpluses accrued from the sudden rise of tax revenues resulting from the growing transit trade to Nigeria and also, to a lesser extent, from the development of Beninese industrial activities. Some levelling off or decline in public revenues related to the Nigeria trade, combined with expected heavy demands on the Treasury for investment projects, will probably tighten the budget in coming years. In 1979, Government resources were mobilized for an accelerated implementation of the large projects, and a deficit equivalent to 12 percent of total revenues opened up. 11. Prices have been kept under control, and the overall rate of infla- tion was limited to 8-9 percent in 1978-79. The increased economic activity induced by the start-up of major industrial projects is likely to exert continuous pressure on prices in the next few years, with an inflation rate of 10-11 percent projected for 1981-82. 12. The Government is committed to broad-based socio-economic policies, but a key concern hitherto has been to keep wages and salaries low because of limited public revenues. In real terms, both public and private sector salaries have declined. Cash incomes of the farmers may have irLcreased slightly, the losses resulting from the drop in cotton production probably having been made up by increased exports of maize to Nigeria. I'hus, Benin is one of the few countries in Africa where the urban-rural income gap has not widened in recent years. Education is one of the Government's top priorities. It is in the process of implementing reforms aimed at both adjusting the education system to the needs of the country, and reducing the high cost of formal education which absorbs 33 percent of the Government's recurrent budget. Health facilities are still poor, and the social indica- tors for Benin (literacy, life expectancy, etc.) remain well be]Low the average for low-income developing countries. The 1978-80 Development Plan 13. A Three-year Plan (1978-80) was issued in October 1977, setting out the Government's economic goals. Its stated objectives are to raise the general standard of living, to achieve independent national direction of economic policies, and to promote broad participation in the conception and implementation of economic and social changes. Investment allocation in the Plan favors large-scale projects. The major items are: the Cotonou Port extension (US$50 million) financed by IDA and seven other a4gencies; a 40,000-ton sugar project at Save (US$210 million); a 500,000-tonl cement plant at Onigbolo (US$159 million); and the Seme offshore oil production project (US$120 million), estimated to yield a total of about 11 to 20 million barrels. These projects together account for some 50 percent of Plan investment. Work on the Cotonou Port is far advanced. The sugar and cement projects are joint ventures with the Nigerian Government, with Nigerian marketing and financing guarantees. The production of sugar, cement and oil should commence around 1982.  14. In fact, the rate of implementation of the Three-Year Plan has been less than 50 percent of Plan objectives. Major difficulties include inade- quate project preparation and coordination, delays in obtaining foreign finan- cial commitments, and insufficient control over project execution. Recently, however, the Government has succeeded in accelerating commitments from foreign aid donors, and total public investment is likely to be some US$750 million in the five-year period 1978-82. This represents an increase in the public investment rate from 10 percent during 1972-77 to 19 percent in 1978-82. Prospects 15. The medium-term outlook for economic growth in Benin is moderately optimistic. Real GDP growth during 1981-85 is expected to average 5-6 percent per annum. The risks to Benin's economy are a slackening of export demand and the negative impact of problems which may arise in implementing the large projects. The benefits from these projects are, in turn, dependent upon price agreements (specifically with Nigeria in the case of cement and sugar). Benin's agricultural growth prospects will, moreover, depend on effective pricing and marketing policies in the rural sector. In the long term, Benin's growth potential will be limited by a poor resource base to perhaps 4 percent per year, and even the achievement of this rate will depend on the ability of Government to channel resources and orient programs (in social and economic infrastructure, training, marketing, etc.) to the development of food and cash crops. 16. Benin's public finance and balance of payments situation may fluc- tuate more over the next five years than has been the case in the preceding half-decade. In the mid-1970's conservative public policies led to budget surpluses and a stable trend in foreign reserves. This partly reflected, however, the lack of sizable new initiatives in public investment. The situation is now changed with the increase in public investment which places heavy demands on the Treasury for counterpart funding, and steps up the pace of capital and intermediate goods imports matched by foreign financial inflows. The balance of payments will undergo fluctuations between now and 1985 under the impact of the major projects. Since the large projects under- way will heavily influence the trade balance and public finances, their successful implementation is essential for Benin's medium-term outlook. 17. Benin's total external debt (including undisbursed), which until the end of 1979 had remained relatively low (amounting to US$293 million with a debt service equivalent to 7 percent of the country's exports), is expected to rise substantially as investments increase and borrowing conditions harden. The debt service ratio is projected to reach 22-27 percent of exports in the mid-1980s. This ratio is high, but up to 80 percent of the debt service is accounted for by the large projects, two of which are guaranteed by Nigeria.  18. In view of the country's low per capita income, the growing need for external funding of priority projects in an expanding economy, and Benin's narrow export base, it will be necessary to increase the volume of foreign financing on concessionary terms. Benin is expected to be able to finance no more than 10-15 percent of its overall public investment program; thus foreign donors should continue to provide a large share of total project costs, including some financing of local costs. PART II - BANK GROUP OPERATIONS IN BENIN 19. To date, the Bank Group has extended eleven credits to Benin, in- cluding two supplementary credits totalling US$84.8 million. Three of the credits were for agriculture (17 percent of total lending), five for highway construction and maintenance (56 percent), and one each for port expansion, education and small-scale industries development. Annex II contains a sum- mary statement of Bank Group operations in Benin, as well as notes on the execution of ongoing projects. 20. IDA's first operation in Benin was the HINVI Agricultural Develop- ment Project (FY69) which provided for oil palm plantings and foodcrop development. The project was satisfactorily completed in 1974. As stated in the Project Performance Audit Report (M78-451 of May 19, 1978,), poor rainfall delayed palm tree development, while foodcrop production remained below appraisal estimates mostly because of labor constraints. To overcome this difficulty, an accelerated program of ox-drawn cultivation was initiated. Animal traction expanded rapidly, resulting in substantial increases in maize yields. The project was successful in assisting SONADER, the executing agency, to continue its good performance and supporting cooperative develop- ments. The second agricultural credit, the Zou-Borgou Cotton Project (FY72) has also been completed (Project Performance Audit Report M78-353, April 20, 1978). This operation aimed at expanding cotton and foodcrop production in the Zou-Borgou provinces. Due to frequent changes in Government policy, and reorganization of institutions within the sector, the project faiLled to achieve its objective of increasing cotton production. Foodcrop production, on the other hand, was expanded mainly due to growing demand from neighboring Nigeria. While the OED Report did not conclude that a larger ma:ize component in the project would have made it successful, experience suggests that agri- cultural packages should be more diversified by combining export cash crops and staple food crops, with the latter included to satisfy farmrers subsistence needs and to supply domestic markets and those of neighboring countries. It was clear that careful project monitoring was also necessary to provide a measure of flexibility to the implementing agency. The third project in the agricultural sector was the Technical Assistance Project (FY77) designed to strengthen the country's agricultural institutions, carry out pilot projects, conduct foodcrop research, and re-train extension services. Although the project did not fully meet all the set objectives, it did result in satisfac- tory preparation of two follow-up operations to the Zou-Borgou project (paras. 37 and 38). The proposed project is the first of these; a second project focussing on the Zou Province is being prepared.  21. The Bank Group's involvement in the transport sector in Benin began in 1969, when the Bank acted as Executing Agency for a UNDP "Land Transport Study." This study led to thie financing of a four-year Highway Maintenance Project in FY69. The Project Performance Audit for this project (Report No. M77-758) of October 25, 1977 indicated that significant strengthening of the Government department then responsible for maintenance operations occurred under the project. The Second Highway Project (FY73), co-financed by USAID, comprised the reconstruction of 320 km (Parakou-Malanville) and short sections (between Godomey and Bohicon) of Benin's north south trunk road, continuation of the road maintenance program initiated under the first project, and train- ing. The project was satisfactorily completed. The rate of return of the Parakou-Malanville road is estimated at 16 percent versus 13 percent at appraisal, and 30 percent versus 19 percent at appraisal when including benefits to Niger from its transit traffic. The Third Highway Project (FY78) provided for further rehabilitation of a 107 km section of the Godomey-Bohicon road and expansion of the maintenance program, including elimination of the backlog in resurfacing bituminous laterite roads. Some of the bituminous roads have now deteriorated to the point where full reconstruction is needed, and Government has asked the Association to cover the related additional costs under the proposed Fourth Highway Project being planned for Board presentation later in FY81. This project would aim at improving the efficiency of routine and periodic maintenance and continuing the elimination of backlog maintenance of laterite roads. A feeder road development program was initiated under the First Feeder Road Project in FY77. This project had been completed, and a second one to continue the program was approved earlier this fiscal year. About 300 km of this latter project would serve the purposes of the proposed Borgou Province Rural Development project. The major objective of a Port Project approved in 1978, is to raise the cargo-handling capacity of the port by providing additional berth (660 m), storage capacity, and technical assistance to improve port operations. Implementation of the project has encountered technical problems resulting in cost overruns, and Government is seeking supplementary financing from the co-lenders. 22. The First Education Project (FY74) emphasized the non-formal sector. Its aim was to train rural youth and upgrade the country-s voca- tional training capacity. The rural youth training component is now being evaluated to determine whether a follow-up project would be justified. A Second Education Project (scheduled for FY82) would consist of training for primary, secondary, and technical school teachers, and production of didactic materials. 23. In FY80, IDA granted a Credit to the Banque Beninoise pour le Developpement (BBD), the national development bank providing medium and long-term loans to both the public and private sectors. The project is aimed at providing BBD with resources needed to finance small- and medium-scale enterprises up to 1982, and strengthening BBD's management and capacity to promote small- and medium-size investments. 24. In the future, in addition to the rural development and highway projects mentioned in paragraphs 20 and 21, IDA is considering participation in the exploitation of an off-shore oil field at Seme, and in the urban development of Cotonou.  - 7 - PART III - THE AGRICULTURE SECTOR 25. Agriculture is the most important sector of the Beninese economy. It employs some 70 percent of the active population, and provides nearly 55 percent of the country s total foreign exchange earnings. 26. Benin's approximately 350,000 farm families work holdings that average 1.2 ha in the densely populated southern provinces of Atlantique, Mono and Oueme, and 2.8 ha in the sparsely populated northern provinces of Atacora and Borgou. About 18 percent of available land is cultivated in the south with two cropping seasons, against only 4 percent in the north with one cropping season. Cultivation is usually by traditional techniques, and yields are low. The sector is predominantly subsistence-oriented, producing yams, manioc, sorghum, maize, beans, and small quantities of rice. The main cash crops are palm products, cotton and groundnuts, while maize is both a subsistence and cash crop. Livestock production has grown in recent years, with a population now estimated at about 800,000 head of cattle, 2 million sheep and goats, and half-a-million pigs. Cattle production is concentrated in the northern provinces of Atacora and Borgou. Sheep and goats exist in all areas, and pigs predominate in the south. 27. Borgou Province, the project area in the north-east of Benin, covers 51,000 km2 or 45 percent of the country's total land area. Its population is estimated at about 490,000 (1979 census). Historically, the Borgou Province has produced nearly 60 percent of the national cotton crop, 40 percent of sorghum, and 20 percent of rice and beans. About 30 percent of Borgou's estimated 68,000 farm families grow cotton (0.6 ha c,n average per family) and most grow maize or groundnuts as cash crops (1.5 ha), with the rest in subsistence crops (0.7 ha). About 70 percent of farm faLmilies own the estimated half-a-million cattle in the province. 28. Although endowed with a favorable resource base for agriculture, growth of the sector has been sluggish for the past decade. The main con- straints on growth have been institutional and economic. Modern cotton production which was introduced in Benin in 1963 under bilateral assistance from France, progressed at a commendable rate--5,000 tons in 1965 to 50,000 tons in 1972. Production subsequently fell, reaching a low of about 14,000 tons in 1976/77, despite efforts made under the joint IDA-FAC Zou-Borgou Rural Development project (FY72) (para. 20). This decline was partly due to sweeping political changes in 1972 which brought about a fundamental restructuring of the sector, ending all expatriate technical assistance and creating havoc in the organization of cotton production. Simultaneously, by 1974, low producer prices for seed cotton, poor yields, high labor requirements, and input delivery problems made cotton unattractive to farmers who switched rapidly to maize production. Maize production has continued to expand, fueled by high demand for unofficial exports to Nigeria, and rice production, although still relatively small, has grown in the past five years due in part to recent irrigation schemes. Production of most other foodcrops has however stagnated, although statistics are considered unreliable in most cases.  29. The Government has been increasingly aware of the priority of the agriculture sector for the country's socio-economic development. This was reflected in the country's Three-Year Development Plan adopted in 1977 which foresaw investments of over US$300 million (one-third of the total Plan investment) in agriculture (including agro-industries), and in Government's emphasis in recent years on institution-building and project preparation. Government policy for rural development has three main objectives: firstly, to achieve self-sufficiency in food production by gradually eliminating food imports and promoting foodcrop exports to other African countries; secondly, to develop domestic markets by increasing incomes of the rural population and by linking agricultural production with agro-industries; and thirdly, to provide an economic surplus to help finance imports of capital goods. These objectives are to be achieved through improving productivity from greater use of inputs, developing foodgrain storage capacity, expanding public support for production and marketing, increasing the availability of credit, developing agro-industries, and expanding rural infrastructure. This is considered a sound overall strategy, although frequent Government reorganization has constrained the identification, formulation, and execution of projects. 30. Responsibility for the implementation of rural development policy rests with the Ministry of Rural Development and Cooperative Action (MDRAC) which controls national agricultural policy through three directorates, and the Ministry of State Farms, Livestock and Fisheries. Regional production efforts are the responsibility of the CARDERs (Centres d'Action Regionale pour le Developpement Rural) located in each of the six provinces. The CARDERs are responsible to the Ministry of Rural Development, and group the regional representatives of the central directorates of agriculture, live- stock, production, forestry, rural engineering, and fishing. The CARDER directors also act as advisors to the prefects of the provinces, who chair their Boards of Trustees. The CARDERs provide all agricultural inputs and extension services, maintain some rural roads, and handle official primary marketing of selected crops. Within each Province, the CARDER has a District organization under the direction of a "Responsable du Developpement Rural" (RDR), who supervises and directs the services provided by the CARDER at the level of the communes and villages. The CARDERs represent a major change in the basic philosophy of providing extension and input supply and marketing services. Prior to their creation in 1976, these services and related activities were handled on a crop-by-crop basis. Now CARDERs have responsi- bility for provision of all these services for all crops within the Province. However, since their creation, the CARDERs have suffered from lack of funds and shortage of adequately trained management and field staff. In addition, their organization is cumbersome and inefficient. Corrective measures would be taken under the proposed project to increase the effectiveness of the CARDER-BORGOU as executing agency (para. 42). 31. A cooperative movement commenced in 1971 with the creation of village groups (Groupements Villageois, or GVs) with the objective of coordinating the provision of inputs and marketing services for groups of cotton growers. Inputs were provided on credit, which was recovered at the time of cotton marketing. The number of GVs in the Borgou Province  expanded to 344 by 1975, and fees earned from their cotton-marketing activi- ties were used for community development projects. Following political changes in 1974, Government decided to reduce emphasis on cottoni production, and the creation of new GVs ceased. In their place, Government encouraged in 1977, a new type of village group of about 30 members each, called Groupe- ment Revolutionnaire a Vocation Cooperative (GRVCs), still based on individual ownership and cultivation, but with a higher degree of centralization of services supervising farmers' cotton and foodcrop production, as well as providing more input, credit and marketing help than was the case for GVs. The CARDERs were to promote their formation and their operations. The GRVCs were well received by farmers, and Government decided to carry its policy of collectivization even further by the creation of Cooperatives A1ricoles de Type Socialiste (CATS) as an experimental alternative. CATS were based on communal ownership of land, equipment, work and remuneration, and received special intensified extension and support services. However, CATS were adopted reluctantly by farmers, and their total membership, which was 1,545 in 1978/79 (averaging 62 per CATS), declined to 772 (averaging 18) in 1979/80. Indications are that this decline will continue. Government now believes that the CATS movement went too far in centralizing agricultural production, and recognizes that its support of the cooperative mnovement in agriculture should concentrate on the GRVCs which, in addition to small farmers, would be the main focus of the proposed project. 32. Various other national programs are executed by semi-autonomous State Enterprises (Societes d'Etat), five of which are under the general supervision of MDRAC: SONAFOR (forestry), SONIAH (irrigation and water development), SONAFEL (fruits and vegetables), SONAPECHE (fisheries) and SONAGRI. SONAGRI was established in 1976 as the successor to SONACO, an executing agency under the Zou-Borgou project. SONAGRI is responsible for the import and distribution of all fertilizers and insecticides needed in the agriculture sector, and for marketing and ginning seed cotton. SONAGRI has experienced some financial difficulties which have hampered its effec- tiveness, but for which remedies are currently being undertaken by the Gov- ernment (para. 44). Three other state organizations are responsible for the processing and marketing of export crops: SONACEB is responsible for the export of all agricultural products except oil palm; palm products are processed by SOBEPALH and marketed by SONICOG. Government's participation in foodcrop marketing has been through the Regie d'Approvisionnement et de Commercialisation (RAC) which has recently been reorganized, and is now under the control of newly established marketing companies in each province, SOPROVAs (vegetables and livestock) and SOPROCAs (other agricultural produce). The private sector handles almost all foodcrop marketing, and is efficient. Only marginal quantities (about 10 percent) are bought by marketing companies at fixed prices for Government enterprises such as feed-lots and breweries. Agricultural research formerly under the direction of the French Research Institutes, IRHO (oil palm and coconut), IRCT (cotton) and IRAT (foodcrops), is now run by the Ministry of Higher and Technical Education and is organized into a number of Research Units with responsibility for specific crops. Ongoing research has already produced encouraging results in the form of improved cotton and foodcrop varieties.  - 10 - 33. Three financial institutions are of importance for the agriculture sector. The agricultural credit agency--CNCA (Caisse Nationale de Credit Agricole) directed by a national committee composed of representatives of MDRAC, the Ministries of Finance and Commerce and from the various State agencies extends credit to state enterprises, the CARDERs, and to individuals in association with regional and local credit organizations, the Caisses Re- gionales de Credit Agricole Mutuel and the Caisses Locales de Credit Agricole Mutuel. CNCA has had responsible management to date, and its performance, although restricted by low volume, has been efficient. The Autonomous Stabi- lization Fund (FAS) is an agricultural price stabilization fund created to protect producers against fluctuations in export crop prices, including that of cotton, and to administer Government's support program for inputs. For price stabilization, FAS pays to or receives from the exporting agency (e.g. SONACEB for cotton) an amount sufficient to equalize the unit price received in world markets with a target price equal to the prices paid to producers plus processing and marketing costs. The total costs are tabulated in the crop's bareme, which is a statement of standardized costs of each step in the production and marketing chain. It has been difficult to establish this bareme because of the absence of any detailed cost accounting. At present, farmers are being paid out of the bareme a reasonable price for their produc- tion of seed cotton; but the remuneration to SONACEB is overly high, while the share of SONAGRI and the CARDERs is grossly underestimated. This has had a severe effect on the financial stability of these iatter institutions, and on their ability to carry out their functions efficiently. 34. FAS also pays Government's contribution to the cost of purchase and distribution of fertilizers and insecticides. In the case of cotton, SONAGRI imports and distributes the inputs to CARDERs, who subsequently distribute them to farmers--usually with seasonal interest-free credit. In principle, once acquisition and distribution costs are known and farmers payments are collected, FAS is expected to pay the difference between acquisition plus distribution costs, and farmers' payments on behalf of Government. However, the system has not worked well, since SONAGRI and the CARDERs have not been able, owing to poor accounting, to establish the real cost of distributing inputs as a basis for reimbursement. Also, CARDERs have had a poor record of recovering credit from farmers, which leaves an additional financing gap that FAS is unwilling to fill. As a result, SONAGRI and the CARDERs have become heavily indebted to their creditors. Since the financial stability of SONAGRI and the CARDERs is crucial for successful project execution, SONAGRIfs and CARDERS' past debts have been transferred to the Government's debt amorti- zation agency for repayment. Furthermore, Government would undertake reforms in the financial arrangements in the cotton subsector beginning with the 1981/82 campaign, including a staged increase in producer prices for seed cotton, a reduction of its annual contribution to financing the costs of fertilizer and insecticides, and a revision of the cotton bareme based on cost accounting information (draft Development Credit Agreement, Section 5.04 (a), (b) and (c)). 35. The National Pricing Commission (Commission Nationale des Prix) sets farmgate prices for major crops as part of the baremes negotiated at the beginning of each agricultural campaign. State enterprises have the  - 11 - sole franchise for the main export crops, and these function fairly well since few alternative markets are open for smallholders. Official prices are also announced for maize, sorghum, and certain other foodcrops; however, unofficial foodcrop prices determined on the open market are generally higher than official prices. Government has made several attempts to participate in foodcrop marketing, and has installed considerable storage capacity and equip- ment for this purpose. However, with the relatively efficient unofficial channels available, further investment in official foodcrop marketing would not be a high priority. 36. Professional agricultural training is offered at the School of Agriculture of the National University for engineers, and in three agricul- tural polytechnics (one of which is at Ina in Borgou Province) for extension agents. Low annual output of each of these categories relative t:o the national requirement is a serious problem, and is exacerbated by inadequate facilities and insufficient operating funds which limits field performance. This is a major constraint to accelerating rural development, and is re- flected in the current quality of the CARDER-BORGOU staff. Although long- term remedies are currently under discussion between Government, the Bank and UNESCO, the proposed project would finance essential training for extension agents and farmers. PART IV - THE PROJECT Background 37. Bank Group strategy and operations in Benin-s agriculture sector have been designed to help Government meet its objectives of increased production of cotton and foodcrops, with related efforts in needed institu- tion-building, and provision for production inputs, credit, and rural infra- structure (paras. 20 and 28). This strategy has been implemented over recent years primarily in the Zou-Borgou area which covers most of the country, and where most of domestic cotton and foodcrops are produced. However, only limited success was achieved in meeting the desired objectives, primarily because the institutional and policy setting in the sector were not always appropriate. In recognition of the need to address the institutional dif- ficulties on a broad front, the Association in 1977 financed a Technical Assistance Project (Cr. 716-BEN) which was designed to strengthen the major agricultural agencies, to establish effective pricing policies, to prepare sound proposals for investment projects, and generally to try to regain farmer confidence in further development activities. While not meeting all these objectives, the technical assistance effort made some progress towards improv- ing the development of agricultural research, seed production, its well as strengthening the operations of CARDER-Borgou. It also allowed satisfactory preparation of the project proposed in this report (para. 20). 38. The proposed project has been designed around the lessons learned from previous operations. Within the broad objective of rehabilitating production of cotton and foodcrops, the project concentrates on a narrower ecological and socio-economic zone than earlier operations, and makes provision for more systematic monitoring. Government commitment to the  - 12 - project design and to plans for its implementation have been demonstrated throughout the preparation effort, which was the responsibility of the Ministry of Rural Development. The project was appraised in May 1980. Negotiations were held in Washington in January 1981. The Beninese delega- tion was led by the Minister of Rural Development. The Staff Appraisal Report No. 3157-BEN dated February 24, 1981 is being circulated separately. Annex III contains supplementary project data. 39. The project's main objectives are to improve the level of rural incomes and promote exports by expanding production of the principal crops in the Borgou Province. These objectives would be achieved through the following principal actions: (a) strengthening of the CARDER-Borgou, the proposed executing agency, through reorganization, technical assistance, systematic staff training and retraining, provision of vehicles, office space and equipment, and organization of a monitoring and evaluation unit; (b) strengthening of farmer support services (extension, input supply, credit and applied research) through improved cooperatives, farmer training, and provision for improved seeds and credit for fertilizer insecticides and ox-drawn equipment; (c) strengthening of SONAGRI, through improved financial management, provision of transport vehicles, operational support and technical assistance, to better organize cotton marketing and ginning; (d) infrastructure development, bottomland rehabilitation, and well construction; and (e) consulting services to carry out a bottomland survey, crop develop- ment study, and preparation of a possible follow-up project. Project Implementation 40. The project would be carried out over the four-year period 1981-85 by the CARDER-Borgou, whose Director would become Project Manager. The employment of a Project Manager with qualifications and experience acceptable to IDA, would be a condition of Credit effectiveness (draft Development Credit Agreement, Section 7.01 (c)). He would report directly to the Minister of MDRAC in Porto Novo. For input supply and primary seed cotton marketing, CARDER-Borgou would establish close cooperation with SONAGRI. Since the project's headquarters at Parakou is more than 400 km away from Cotonou and Porto Novo, the project would have a small coordination unit located in Cotonou, to permanently represent its interests and take care of the antici- pated heavy and frequent contacts with Ministries, other Government institu- tions, and suppliers. 41. The project would concentrate its efforts on the GRVC type of cooperative. The objective would be to expand the block cultivation  - 13 - system already proven successful in Borgou Province, thus increasing the potential and efficiency of the extension services, and facilitating the "Training and Visit" system introduced under the Technical Assistance Project. With support of the improved extension services, the number of GRVCs is expected to increase from 100 to about 500 during the project implementation period, both from creating new ones and upgrading existing GVs which now number about 350. Other cotton producers would continue to receive assistance through the remaining GVs. Thus, the area of cotton fields cultivated in blocks would increase from 1,500 ha (8 percent) to about 10,000 ha or 50 percent. This trend is expected to continue after project completion, as smallholders are influenced by positive results of demonstrations in their localities. 42. The CARDER-Borgou has operated in the past through seven divisions organized in 24 sections headquartered at Parakou, all currently lacking sufficiently trained personnel. Of the 660 CARDER-Borgou employees, only 32 have professional training, and the 472 field officers generally lack up-to- date training or experience. The CARDER organization is weak, cumbersome and inefficient. It requires strengthening and reorganization. Headquarters management would be strengthened by the addition of two Deputy Project Managers (one technical, one administrative and financial), and operations would be decentralized. Duplicate services would be combined, reducing the number of divisions from seven to four: administration and finance, extension and training, technical, and rural works. Superfluous subsector chiefs and extension agents would be deployed to other assignments, while the number of input supply, credit, and home economics officers would be increaLsed at farmer level to give better attention to these hitherto neglected services. 43. Field organization of extension services would be reorganized under the Responsable du Developpement Rural in each of the province-s 14 districts, with adjustments in staff so that each subsector chief would be responsible for about 2-3 communes (15 villages each, or about 170 farms versus 300 at present). The extension agents would continue to implement the "Training and Visit" system. Each district would also be staffed with specialized extension agents in the areas of home economics, adult literacy, cooperatives, and animal traction. As an incentive, by December 31, 1981, a system of bonuses based on individual performance for extension agents and subsection chiefs within the CARDER-Borgou would be introduced, and staff salaries increased to a level comparable to those paid to state enterprise employees. Upgrading field organization by providing material support and retraining would be the overall responsibility of the Technical Deputy Project Manager at CARDER- Borgou headquarters. CARDER-Borgou management would introduce a system of annual work plans and associated budgets for each section and district as the basis for project implementation. Introduction of this system, and submission of the first such work plan for 1981/82, would be a condition of Credit effectiveness (draft Development Credit Agreement Section 7.01 (d)). Assur- ances were obtained that the subsequent annual work plans and budgets would be sent to IDA for comments by October 31 of the preceding year (draft Develop- ment Credit Agreement, Section 4.07 (ii)).  - 14 - 44. Major emphasis would be placed on the timely acquisition and distribution of production inputs. Supplies of fertilizer and insecticides for cotton would be distributed by SONAGRI to the level of communal stores throughout the project area. These stores would be built or repaired with project funds. To carry out its tasks, SONAGRI s operations would be strengthened through reorganization and provision of transport equipment and technical assistance. CARDER-Borgou would assume ownership of the inputs, paying SONAGRI with credit arranged through CNCA. Credit for seasonal inputs would then be provided to farmers by CARDER-Borgou's credit administrative staff. CARDER-Borgou credit staff would recover the credit at the time and place where cotton is marketed, a system which has succeeded in assuring high recovery rates where applied elsewhere in West Africa. Initially, only farmers producing cotton would be eligible for credit until experience shows that the security of cotton-marketing system is not required to assure credit recovery; however, any farmer could buy fertilizer and insecticides for cash. Equipment for ox-drawn cultivation would also be made available on medium- term credit, and CARDER-Borgou staff would acquire the equipment directly from local manufacturers. 45. Agronomic and varietal research, which has shown encouraging results to date, would be pursued at Lie fese.irch stations at Ina and at substations throughout the province. It would continue to be directed and conducted principally by Beninese staff with good basic training, supported with techni- cal assistance staff. Multiplication and preparation of seed for distribution to farmers would be managed by the project Seed Multiplication Unit, using an existing farm refurbished and expanded for the purpose. Improved seed would be distributed to farmers through the extension service, initially on a bag- for-bag exchange basis. By December 31, 1983, the Government would institute charges for improved seed for food crops, sufficient to cover production and distribution costs (draft Development Credit Agreement, Section 5.05). Over- all coordination of the research, seed multiplication and distribution would be the responsibility of CARDER-Borgou Technical Division. 46. The CARDER-Borgou rural works division-s capacity to construct and maintain small dams for flood control and water retention in dry season and community wells, and to carry out bottomland development, would be re-established under the project. The proposed project would provide for construction of about 130 wells and development of about 500 ha of bottomland. Villagers would provide the necessary labor. 47. The project would provide for 34 man-years of specialist tech- nical personnel whose skills are currently unavailable in Benin, to fill eleven positions for periods of two to four years. Some of these posts would be line positions. Assurances were obtained from Government that the experience and qualification of incumbents of these positions would be at all times acceptable to IDA (draft Development Credit Agreement, Sec- tions 4.03 and 4.04 (a)). This would include: (i) for CARDER-Borgou the Technical Deputy Project Manager; the Financial Controller; the Chief  - 15 - Accountant; the Seeds Production Specialist; the Input Supply, Credit and Marketing Specialist; and the TrainiLg Specialist; (ii) for SONAGRI, the Financial Controller, and the Chief Accountant; (iii) f.or MDRAC the Agro- Economist in Project Monitoring and Evaluation; and (iv) for Research, the Cotton Research Specialist, and the Fooderop Research Specialist. The appointment of qualified assistants to the technical assistance personnel would be required to ensure effective replacement on completion of each technical assistance contract; the Government has given assurances to this effect (draft Development Credit Agreement, Section 4.04 (b)). Onte of the major tasks of Llte LechnLical assistance would thus be the in-service Lraining of prospective Beninese assistants, a process which would be monitored by the project's training specialist. Short-term consultancies for SCNAGRI and agricultural research, totalling about three-man years, would also be pro- vided. The project would provide for 3U man-months of consultants services for carrying out a bottomland inventory and crop development study, to assess the investment potential of some 2,400 ha of bottomland, and for the prepara- tion of a possible follow-up project. 48. By September 1, 1981, a project monitoring and evaluation unit (PMEU) would be established at Parakou to monitor both the progress of project execution, and the impact of project activities on farmers in the province (draft Development Credit Agreement, Section 4.06 (d) (i)). Basic information on project inputs and outputs would be secured periodically from normal operational reports within the executing agency, with impact informa- tion coming from field surveys of an adequate sample of farmers. Such infor- mation is necessary to give project management the necessary flexibility to adjust operations in response to new developments. This information would also later serve as a basis for evaluating the project and its components, leading to recommendations for changes in approach and the identification of components for a possible future project. The first priority of the interna- tionally recruited head of the PMEU would be to agree with project management and MDRAC on key indicators and methodology required to monitor project execution. By September 1, 1981, a detailed PMEU work program would be submitted to IDA for review and comments, and implemented thereafter (draft Development Credit Agreement, Section 4.06 (d) (ii)). Cost Estimates and Financing Arrangements 49. Project costs (including taxes) are estimated at US$41.0 million, with a foreign exchange component of US$20.5 million (50 percent). Taxes would amount to US$3.2 million equivalent. Included in the project cost is the refinancing of an advance by 1DA from the Project Preparation Faci- lity (PPF) in the amount of US$600,000. Project costs are based on mid-1980 prices. Estimated costs include physical contingencies of 5 percent for all costs (except personnel), and expected locai and international price increases applied on base line costs plus physical contingencies compounded yearly over the project implementation period. Price contingencies for fertilizer, insecticides, chemicals and gasoline are based on World Bank projected price increases for petroleum. Physical and price contingencies amount to 32 percent of project base cost net of taxes and duties. Average man-montlh cost of consulting services is estimated at US$10,300 including  - 16 - fees, out-station allowance, and international transport, housing and subsis- tence, and company overhead and profits. 50. Project expenditures would be financed pari passu by IDA (US$20.0 million), the International Fund for Agriculture Development (IFAD) (US$14.0 million), and the Government (US$3.8 million) representing 53, 37 and 10 percent respectively of total project cost net of taxes and duties. The IFAD loan would be made for a term of 50 years including a ten-year grace period, with a one percent service charge per annum. Fulfillment of all conditions precedent to the effectiveness of the IFAD loan would be a condition of Credit effectiveness (draft Development Credit Agreement, Sections 7.01 (a)). 51. The external financing contribution would be channeled through the Caisse Autonome d'Amortissement (CAA), which is the Government-s agency for handling official foreign financing. Funds would be passed on to the project executing agencies as grants, since these agencies are not fully financially autonomous (draft Development Credit Agreement, Section 4.01 (b)). Foreign funds and Government-s contribution would be passed on to CARDER-Borgou to cover purchases and distribution costs of production inputs (US$7.4 million), the costs of its management, operations, specialized units, technical assis- tance and studies (US$29.5 million); and to SONAGRI to cover the costs of its primary marketing unit, technical assistance (US$4.1 million). For the pur- chase and distribution of production inputs, SONAGRI would receive from FAS, not later than October 31 of each year, the amount of Government subsidy. The CARDERs obtain credit from CNCA to purchase inputs from SONAGRI and repay this credit from recovery of cotton sales. To facilitate this advance funding, CARDER-Borgou would obtain short-term credit from CNCA which would be reim- bursed the following year from farmers' credit repayments. For the purchase of animal traction equipment and sprayers, CARDER-Borgou would make similar arrangements directly with suppliers using CNCA financing. Assurances were obtained from the Government that it would ensure the availability to SONAGRI, by October 31 of each year, of funds necessary for purchase of production inputs (draft Development Credit Agreement, Section 4.02 (a)). To establish working capital for the rest of the project's operations other than the purchase of inputs, Government would open an Advance Account (Project Account) in the name of CARDER-Borgou at the Caisse Autonome d'Amortissement, with an initial deposit of CFAF 250 million (US$1.2 million) (draft Development Credit Agreement, Section 4.02(b)(i)). This would be a condition of Credit effective- ness (draft Development Credit Agreement, Section 7.01(b)). The Government would thereafter replenish the Advance Account quarterly with sufficient funds to meet expenditures for the following quarterly period (draft Development Credit Agreement, Section 4.02(b)(ii)). 52. Short-term credit in kind, covering 100 percent of the sale value of fertilizer and insecticides would be granted to cotton producers, and would be repaid annually. Cotton growers would also be eligible for credit on 100 percent of the cost of sprayers, repayable in two equal annual installments. Animal traction equipment would be available on  credit, covering 75 percent of its value, witLh repayment in three annual installments. Credit would be recovered by credit agents employed by CARDER-Borgou at. the same timne as cotton is marketed at the cotton marketing points. Until a reliable alternative recovery system is developed, iaputs would be made available to non-cottoro producers through cash sales only. 53. Present Governmeat policy ic to make no interest charge on seasonal credit for insecticides and fertilizers. Both SONAGRI and the CARDERP-Borgou have suffered as a result of this, since they have had to pay for credit administration out of other revenues. Government has agreed to introduce, beginning with the 1981/82 cotton czmpaign, an interest rate charge of not less than 11 percent for seasonal credit for inDuts and medium-term credit for animal-drawn equipment. This rate represents the rediscount rate available to CNCA at the Central Bank of West African states--8 percent--augmented by 1 percent to cover credit administration costs of CNCA, plus 2 percent to approximately cover operating costs of CARDER's credit administration in the field; this spread is considered adequate at least for the early ph1ases of the project, but would be adjusted as necessary in subsequent years in acrordance with criteria agreed between the Government and the Association (draft Deve- lopment Credit Agreement, Section 5X04 (b)). Procurement 54. Contracts of US$100,000 or more would be awarded through interna- tional competitive bidding in accordance with Bank guidelinLes. Goods and services so purchased would be expected to total about US$9.0 million, of which IDA would finance US$5.2 million, and would include purchases of vehicles, fertilizer and insecticides. Purchases would be grouped whenever possible in order to derive maximum beniefits from bulk procurement. Inter- national tenders for cotton fertilizers and insecticides would be invited for total quantities required for the project, including the incremental amounts to be financed under the credit; in addition to allowing the lowest possible prices for these items, the procedure is considered necessary to simplify the administration of procurement, and to ensure that suffEicient inputs are available on time. Assurances to this effect were obtained from Government during negotiations (draft Development Credit Agreement, Section 3.08). Contracts for vehicles, equipment and supplies of more than US$50,000 but below $100,000 would be procured through local competitive bidding pro- cedures (US$2.6 million, of which IDA US$1.4 million), while those of less than US$50,000 would be on the basis of quotations from not fewer than three reputable suppliers (US$1.4 million, of which IDA us$o.5 million). Contracts for construction of buildings and dams (US$3.0 million, of which IDA US$1.3 million) would be too small and geographically dispersed to attract interna- tional bidders, and consequently would be awarded following locally advertised competitive bidding procedures acceptable to IDA. Contracts for short-term studies and training courses abroad (US$2.1 million, of which IDA 1.3 million) would be obtained in accordance with procedures acceptable to IDA. About US$18.9 million (IDA US$7.9 million) of project expenditures, consisting  -~ 1-8 - mainly of incremental operating costs and local staff salaries, would not be appropriate for bidding procedures. Technical assistance with a total value of US$4.0 million (IDA us$2.4 millior) would be engaged following procedures acceptable to the Associatlon. Disbursements 55. The proposed IDA credit and IFAD loan would be disbursed to cover: (a) 100 percent of inacremental expenditures for inputs; (b) 100 percent of CARDER-Borgou vehicles, 72 percent for CARDER- Borgou civil works, equipment, local personnel and other operating costs; (c) 100 percent of SONAGRI marketing unit vehicles, and 72 percent of SONAGRI's marketing unit local personnel and operating costs; (d) 100 percent of costs of consultants- services, studies and scholarships; (e) 100 percent for refunding of the amount due as of the effective date of the Credit under the advances for project preparation (US$600,000). Audits and Reporting Requirements 56. CARDER's and SONAGRI's accounts would be audited by independent auditors selected in agreement with, and under terms of reference acceptable to IDA, and their reports would be furnished to IDA within four months after the close of each financial year. CARDER and SONAGRI would also submit quarterly progress reports to Government and to IDA showing actual and budgeted expenditures, statements of progress achieved, and objectives for the forthcoming quarter by each project component. These quarterly reports would contain summary financial information indicating the levels of its short-term borrowings and of any outstanding receivables from Government or other bodies with respect to budgetary allocations for the project and subsidies on production inputs. Project Benefits and Risks 57. The major quantifiable benefit of the project would be expansion of both cotton and foodcrops production, as a result of the package of farmer support services to be introduced. By the end of the project's implementation period, production is expected to double to 26,000 t in the case of cotton, and to increase by 50 percent in the case of foodcrops, as a result of higher yields and larger areas being cultivated. This increased production would  - 19 - yield additional annual real income for farmers--valued in 1980 prices at US$7.3 million from cotton and US$4.0 million from foodcrops--and increased foreign exchange for Government, as the world price for cotton is expected to increase significantly in real terms. By the end of the project implementa- tion period, about 39,000 farm families with current net incomes of about US$488 per year (US$70 per capita) could expect to earn net incoimes of about US$800 (US$114 per capita), or an increase in real terms of about 65 percent. Family net cash income would increase from about US$90 per year to about US$400 per year. Because of the relatively narrow range of farm-size and family sizes throughout the province, these increases would be well distri- buted among the population. 58. Among the unquantifiable project benefits would be an improvement in the capacity of Government institutions to manage and plan further rural deve- lopment activity, and in their financial management capabilities. In addition, a firm basis of adaptive foodcrop and cotton research, and seed production, would have been established to provide a sound basis for further development. 59. The estimated economic return to the proposed project is about 21 percent, when all project costs leading to production increases at the farm level (about 84 percent of project base costs) and farm level benefits are taken into account over a 20-year period. This rate of return is rather sensitive to changes in real costs and benefits, since a 20 percent rise in projected real costs or a 15 percent decline in projected real benefits would lower the return to about 10 percent. 60. There are no major technological risks in the project since all technical proposals have proven in other West African situations to be capable of initiating a recovery in production. The principal risk is that poor organization, rapid staff turnovers, and financial mismanagement may occur and lead to under-performance. To minimize this risk, technical and organizational training programs would be provided for all stafi, salaries would be increased at least to the levels of state enterprises, and a bonus system would be worked out for sub-section chiefs and extension agents. It would also be critical that a strong technical assistance team work in both line as well as in advisory posts; however, past experience has showr the difficulty of recruiting foreign experts who would be both technically compe- tent and capable of establishing productive working relationships with Beninese counterparts. For the proposed project, this risk is minimized by the fact that responsible agencies have expressed considerab:Le interest in the technical assistance component, and by the close consultations which have taken place between Government and the Association in preparation of terms of reference and selection of consultants following an international search. 61. However, the most significant risk lies in the area of financial management. Presently, financial flows in the cotton sector are directed by a bareme which is an agreed schedule of standard costs, but which currently bears little resemblance to the real cost structure of the sector. Project success would, therefore, depend on Government-s correcting several identified problems with the bareme, its use, and the relationship between principal  - 20 - participants in the cotton sector (paras. 33 and 34). In this respect, Government has in fact already initiated a review of component costs of the bareme with a view to defining corrective measures to improve sector performance, and is expected to ultimately implement these measures. PART V - LEGAL INSTRUMENTS AND AUTHORITY 62. The draft Development Credit Agreement between the People's Republic of Benin and the Association, and the Recommendation of the Committee provided for in Article V, Section 1 (d) of the Articles of Agreement of the Associa- tion, are being distributed separately to the Executive Directors. 63. Special conditions of the project are listed in Section III of Annex III. Special conditions of effectiveness included in the Development Credit Agreement would be: (i) execution and delivery of the IFAD Loan Agreement, and fulfillment of all conditions precedent to effectiveness of that Agreement; (ii) initial deposit by the Government of CFAF 250 million (US$1.2 million) in an Advance Account to be opened by the Government at CAM in the name of CARDER-Borgou and to operate as a revolving fund for all expenditures under the Project other than for inputs; (iii) appointment of a Project Manager acceptable to the Association; and (iv) the Association's approval of CARDER- Borgou's proposed annual work plan and associated budget for the 1981/82 cotton campaign. 64. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 65. I recommend that the Executive Directors approve the proposed Credit. Robert S. McNamara President Attachments Washington D.C. March 12, 1981  - 21 - Annex 1 BENIN - SOCIAL INDICATORS DATA SREET BENIN REFERENCE (ROUPS (WEIGHTED AVERAGES LAND AREA (THOUSAND SQ. KM.) - HDST RECENT ESTIMATE)" TOTAL 112.6 AGRICULTURAL 33. 0 HOST RECENT LW INCOME MIDDLE INCOME 1960 Ab 1970 /b ESTIMATE Ab AIRICA SOUTH OF SAHARA AFRICA SOU1TH OF SAHARA GNP PER CAPITA (US$) 90.0 120.0 250.0 260.0 868.0 ENERGY CONSUMPTION PER CAPITA (KILOCRAMS OF COAL EQUIVALENT) 39.0 42.0 56.0 80.0 699.4 POPULATION AND VITAL STATISTICS OPULATION, MID-YEAR (HILLIONS) 2. 1 2.6 3.3 URBAN POPULATION (PERCENT OF TOTAL) 9.5 12.6 14.0 17.3 28.9 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 6.0 STATIONARY POPULATION (MILLIONS) 15.0 YEAR STATIONARY POPULATION IS REACHED 2160 POPULATION DENSITY PER SQ. RH. 19.0 23.0 29.0 27.4 61.7 PER SQ. K1. AGRICULTURAL LAND 62.0 77.0 97.0 82.6 126.0 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 44.2 44.9 46.0 44.9 45.5 15-64 YRS. 53.2 52.6 51.3 52.2 51.6 65 YRS. AND AMOVE 2.6 2.5 2.7 2.8 2.8 POPULATION GROWTH RATE (PERCENT) TOTAL 2.2 2.6 2.8 2.7 2.7 URBAN 6.0 5.5 4.2 6.8 4.9 CRUDE BIRTH RATE (PER THOUSAND) 51.0 49.0 49.0 47.4 46.8 CRUDE DEATH RATE (PER THOUSAND) 27.0 22.0 19.0 19.6 16.4 GROSS REPRODUCTION RATE 3.3 3.3 3.3 3.2 3. 2 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. USERS (PERCENT OF MARRIED WOMEN) .. .. FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 95.0 101.0 92.0 91.8 94.0 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQIUIREMENTS) 93.0 96. 0 98.0 90.2 92. 7 PROTEINS (GRAMS PER DAY) 51.0 53.0 51.0 53.0 53.0 OF WHICH ANIMAL AND PULSE 14.0 15.0 13.0 18.4 15.6 CHILD (AGES 1-4) MORTALITY RATE 41.0 32.0 27.0 27.7 21.3 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 37.0 42.0 46.0 45. 3 50. 1 INFANT MORTALITY RATE (PER THOUSAND) 206.0 .. ACCESS TO SAPE WATER (PERCENT OF POPULATION) TOTAL .. .. 20.0 23.2 31.0 URBAN .. .. 42.0 58.0 66.8 RURAL .. .. 16.0 16.8 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 14.0 .. 28.9 URWAN .. 83.0 .. 67.0 RURAL 1.0 POPULATION PER PHYSICIAN 47000.0 28920.0 26908.0 30910.4 14508.2 POPULATION PER NURSING PERSON .. 2910.0 3007.0 5793.2 3279.5 POPULATION PER HOSPITAL BED TOTAL 748.0 847.0 736.0 1198.9 1141.5 URBAN .. .. 209.0 RURAL .. .. 3876.0 ADMISSIONS PER HOSPITAL BED .. 302 17.7 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL .. .. URBAN .. .. RURAL .. .. AVERAGE NUEMBER OF PERSONS PER ROOM TOTAL .. .. URBAN .. .. RURAL .. .. ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. .. URBAN .. .. RURAL .. ..  - 22 - Annex 1 Pase 2 BENIN - SOCIAL INDICATORS DATA SHEET BENIN REFERENCE GROUPS (WEIGHTED AVE4OES - MOST RECENT ESTIMATE)N _ MOST RECENT LOW INCOME MIDDLE INCOME 1960 A 1970 /b ESTIMATE /b AFRICA SOUTH OF SAHARA AFRICA SOUTH OF SAHARA EDUCATION ADjUsTED ENROLLMENT RATIOS PRIMARY: TOTAL 26.0 40.0 58.0 57.7 61.7 MALE 38.0 56.0 80.0 74.2 69.2 FEMALE 15.0 25.0 37.0 54.1 51.4 SECONDARY: TOTAL 2.0 5.0 11.0 10.0 20.6 MALE 2.0 8.0 16.0 13.7 29.2 FEMALE 1.0 3.0 6.0 7.1 14.7 VOCATIONAL ENROL. (X OF SECONDARY) 13.0 4. 1 2.1 6. 8 7.0 PUPIL-TEACHER RATIO PRIMARY 41.0 44.0 48.0 45.0 36.6 SECONDARY 23.0 26.0 31.0 25.2 24.3 ADULT LITERACY RATE (PERCENT) 8.0 .. *- 25.5 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 1.0 4.0 5.4 3.6 28. e RADIO RECEIVERS PER THOUSAND POPULATION 12.0 32.0 48.0 31. 5 83.5 TV RECEIVERS PER THOUSAND POPULATION ., ,. 0. 1 1.58 NEWSPAPER ("DAILY GENERAL .ditLREST") Ct,.-aLATION PER THOUSAND POPULATION 2.0 1.0 0. 3 4.6 24.2 CINEMA ANNUAL ATTENDANCE PER CAPITA 0.2 0.4 .. .. 0. 7 LABOR FOR TOTAL LABOR FORCE (THOUSANDS) 1048.9 1285.7 1530.2 FEMALE (PERCENT) 45.1 44.9 44.9 33.5 38. 1 AGRICULTURE (PERCENT) 54.0 49.7 47.0 80.7 54.3 INDUSTRY (PERCENT) 8.9 11.8 46.0 8.1 17.8 PARTICIPATION RATE (PERCENT) TOTAL 51.2 49.0 46.4 42.2 38.8 MALE 57.1 54.9 51.0 55. 1 48.4 FEMALE 45.5 43.3 42. 1 29.5 29.4 ECONOMIC DEPENDENCY hATIO 0.9 1.0 1. 1 1.2 1.3 INCOME DISTRIBUTION PERCENT OF PRIVATE INCCME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS 31.4/. HIGHEST 20 PERCENT OF HOUSEHOLDS 51. LOWEST 20 PERCENT OF HOUSEHOLDS 5.5/c LOWEST 40 PERCENT OF HOUSEHOLDS 15.8/c POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PEE CAPITA) URBAN .. .. .. 138.2 RURAL .. .. 84.0 86.1 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. .. 107.0 RURAL .. .. 82.0 65.0 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. RURAL .. .. 55.0 66.9 Not available Not applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1974 and 1978. /c Population. Most recant eatimate of GNP per capita is for 1979, all other data are as of April, 1980. October, 1980  -23- ANNEX I Page 3 ltP7-ITflO5It -OPSOCIdi, -IOOtAbttR Not..: Although the data are draw f o suce enrly dgdth e nut1ioitetir- and reibe ft ehood leo be noted tint they may no be anis- .........(ot :8thbi beas. fth. nho eodrts dnfation- uAM terr d bydifrt cut Iosi collecting the dunn. Tht do.t , rhbes,orfb odeeo h ucso tancd.i.cnnted,ad hnatniocetin _Jo. diff . hbete... coutres The ...eeocg.t.pe o(1) thn ea cooco rop of the subjeof rooy and (2) a -onoy grouP niith no hwbt higher -verog tacom thnt the coutrygru of the solrccony eep for "Capitsl burpio Oil fooee group nh-r 'iddlainom dorb- Air, icean Middle tent" is cho-a beonuer of etrng eucl-culmininffoitiel. crirefoencegrop darnte avaage repoplbnion e-ightod arithmetic _oses foeo th dicutor und show oely eheon baerhof c i onre ineyu a ot rta ltd t_r finre the.oaaeo otre aog te diot-rs dePeods on tin evnibiiiin of daasdO o nfr,cuio cnh nrin nrltngneae fnnidctrc soio hs rrgsa ny sfla npnn i au d..id itoa - .e.if.-e ofi .gluiue area ied iapornnipor peresnentf Pouatn e ueieProo-Pphaiodvie.ye,brohrecre for croPs, Pscrnneb adkicchen gardens or co lie fnline; 1977 dan.. mole end isie graduate er ,pratical nures adeanoares Poe..letti- -c Boaital Bed - inIl. -b-n end rura - fpnie.tine (ltotn. GbP PfO CuiTA (ci)) - ce per c-ritn snnea curentmakec prcta- uben. and rura) di,,idebybireestea.rentepeb ed colated by sn c Ior io- necIod nu Wtold Beak tios. (1977-79 hnts); 196f, ratlobie he pohltc edpointrs go-I an spatisinsed boepins1 and e 1970., sod b9lbdto. ahitto reters. Hoapitale are tnobliebhete Peemn ly snuffed ENERGY WNSUMPTION PER CAPITA - ~~~~.og I by a1tbout tan "physirten. !atbiiebmeTs pronding priaipall3 rstodisl mari COiiOPlio Pi tOITO onua.:I_onahapttono.flon-rcinl.. enrg (coat care ar net tecoded. ursI.b1 ios,hwvr terlude henitt ad -d.aol enditntto peroion neuro ea so hdro-, o -ia and snotbhras sino- cetes-o rernenly vanhffd by hsce (ban bp s medica.. etto triicyl it ktilogren of coa eqotJ-not Per- copita; 1960, i970, an 978 mose idiuf. etc.) hbto offor in-ratitn erru.dation ad provde dat. litited range of aedicab facblitits. Put sntte.tical Ppurpse torbn hapl- POPULATION AND VITAL STATISTICS I.I.~~~~nal toolde tiBt priocipab ganral sod spetiabted bhepitsie, sad r-ru POllAltIdibIA, llitC hoerpelel bocob er rorsi ortes and aadto1 and marsete ceters. Ttota Pop'cin.Mdya (m A.oe -d of J.ip 1; 1960, 1970. end 1979 Admissio- ret BHeOttel Be - Total nmber of dmisainna to or discharge data, from hoepitls divided by rbn number of beds. iranPonono (rrsn fto l) - ~tatt of urban to tota ppopition; dtfferenc definitions of orianeresa ma~~~y affect ctmPaobtlity of data RetsotNo amon touotpta- 19bi, 19)0, and 1978 dstn. Amman. niee of tn..e.hold ieen rer bou..hold) - totn. urban, AndMel Porulatint Prcf notions A ho.eehbd c-niste of a grooup o niiui b horn livigqe Porultiec n yer 211 - Curentprpulontin proimotiona Ate base.d on 19S0 anotei.ei mas.d ordr Acloidge-a1 rsu. o eilddi cci pt uloio by age ned non and their sotality and f-rtiiity fates, the .. ooleod foreetsiripurposne. Projection -a --en for mortaliey rota. ropi of hthre bevels a.e..- base buhe of reoeprIoa oa. ne.ad ua veaeam bn Zifeap--tY at biticceenntbcurtepesptaocs beo of PI p -en ep- rot. bo alui,-dro.a. ocrupind reeto levl, nd em leife onpectency etailtetog an 77.5 yoars.,The ae dwellings, respectinvly. Been11.s.ludm o-emnnWsrrne n enesfur f-titlity rent aitto have hTbe bevel assmin dcine touocpiedpats fenltycoding to Incoar iv1 and pAt..n.ype.tgpefrane Ocsto El-cticito rnoto deline tnl uban, endI Ion Euch ooncry Is then assigned oo thet iecobntos fmraitp Convetional dtllins. nitbtoleiToinyinTlivn qoutersa percentage and ftrililty ireds for projection ruro..e. of total, urbo, nod r-rni d-elitngisrts.pietntvi-. Ittonr rorulncio-Olonen _innary .poplation thte Is no growth sinus rhe bIrch rote Is equel to the death -nto nd also the age anuerr- EDUCATION _ab_so_atut. Thia be ahievd onlyatrfertility ..... d...i.. tO AVdtustd Enrollmn Mtatto of eunetreplace tcself nactip.Tie taioar pqus io iesserlletof all ages an the primory lee'neprenae o epen entue nths bunie of tie pocjeotmd csatrsieof the populonion P rn-mny ehnl spepu1atinn; mortally inclodea tildregs.. bl _inhe year liii, and the ret of daIitne nf fertility rent tn rep lore- years ho t edjuated for dif feret 1engtho of primary eduatiot:; for snot level. ocoanrins nith--t-typopl.i..i. tanversab doctio Oe'rolma imal encee',d !1.00 pet s..i-o ha betmca.tonayahool -total, ens sod famabe- Computed as abtn; ...onador Poueto lrito ed utn require a..t beset fou yre of approved primar i--at...nine; Pe g.b. i-pear pcpulation pn, square ktilomn (100 benteree) of p_oidae genrlratnu,n T.tea -e totninig inatrutin fopeb totnI ermu. ue~~~~~~.oalp of j12 no 17 years of a Be; coercepoed-ecose n gnelip Per eq. ho. aotoulcoral lud - Comutd e abort for- gr Irltra len.lcided. P2orlano doe A norr (aro - Children 10-14 yesrs) motking-egs.l nbd ehie,idsno,o te progonahithb opnran indee-- 94 yer),ad eiedI) er and over -spretgsof aid-yee Pp.p- datlyora depantmatt of .....ndory inetit'tione leo ;609h, 1970, and 1978 dana -A~. t- ...o ..1 d P'elre errtio - rrfay n aeoderr- Itut stdents enrolle Ir 10uatoirwhtt P eret os oulgrohrtso o i- Pri7Muyad secondary levein dioided byosr of te...iere in the oar populations for l95t-hi, i960-70, nod 19-70 corres..ponding levels. Porulunio iroeth ate loetenn) - urue - Oooel ge.wt rates of urhbo Pop-O ndnit.1itn-noyst f(rPrcnt) - Littste edoirs failentree.d and -rit.) bottom fur 190-hi, BbO-70 And i ith . t-.do 197079. eape vtge of cuta1 edult popn.isco aged 10 pears ond over. Ppoyuition; 196f, 1970, end 1908 date. COgNSUMPION Coude Deuti Rtat (per tinn.aud) - A-1un deaths par thousan.d of mid-yea-esas tCar fre1tthonnad roruatio(- Psene tar omrteson popoiston;lh,1)1 n iBSdt,crsssigln h.. sight peratne; n.oldes ambuleno, ho-nse and Crsstr. dcc, - Pdtit-dperiod ifhe o dagher nm- mi bari etinary vsb-hin.- he ..e. rpoutinpro fa rmprae Y7ea as-peif tofr .dunr Ive (-e thousand Alualo)-i types of recsoe-r for redb t-lylaes nuiy fir-year avraeseding In 196i. 1970, and 1977. AEl hadstsncSnsreb pohlio per thousan d of ppisit notdna unit- famiby Piscina-Acoerora. donisi (thonnadal - duoui oumbnt f acce Ptors con sd re... ri countries and in yer h-e eierto cf radiose of birth-ontrol doiona unde auspice nf natinal fanCl planing rogra. nn to_effet;f date or recentyears maynot-he tmparabbn tcc_ mos Peatly finemna-lears rnrcenn of arried rnma) - Pernenags of sooied countris abolishe licensing utat o obti.d --Isin oge (i-Ayas inuebrhcnto etp o o' evr ce boadrrletion) - TV Ip.c.i-ern for hreed,at to nil tiarried ooman to sane age grocp.~general pblit o ye irthon..d populetion; -oInd4ee oolnnen...d 77' reci-an R02LAND MRITION .01~~~~~~~~~toronreean i years nh..oitrco of TV eennn In fst rOOb 0141 cclcit:on etewar71or-erod-itrculatto (o- thouaend ronulatioc) - ninh th evrgo coo.I loden of Food ProductionerCaia(ib-i-P)- e ofpecepita o-uI tierof, "1daily geee.aI1 ineet-- sapr,defined aspne.rdclp p-ced-tof Euno uh r dii udcoticcret ( .g.dfn sod C1Ineodna ienac e ais o erBsdontenmrro osi laeaeproduoto price nighce; i96i-65. 1970, and 1978 data, tickets aold duniog the peer, including odmiet... to drive-i,tci-ea Pet topics saroir of cslortea (rerrat of roanirseents) - Computed from nod nobtie unite. ft ..d -bil enry- qivlnto etfrdsppbeaviabecirotry Per topita FRCE~ I~:;.d,, - II I:.-qpI1,k,~,- d- ti I.dottoo, ip.t. no. perdt. A tih..ie sop_eeompte dopsseeto odorin . oosles oablboffrt thuans - tEonoi-elly active psosos. inoiuding sop_ts,adcngst1 t oc.Bnaupinanbd nma ed ses rmdfre od unemloyed but nnoIuditg ioe -cn vdents, etc. qooctrteeend n fod Ir Ieota. an lo...a in disteibotbon. taquire- cnofincto..t i. --Icocirseon not - oe--rbli; 1960, i970 end rannni-ed bY Pit huedonLphyjiologinaI.. reds for norma att- 1978 dora. htnyood hen ib cneteri toobrooe ... aprtuf., body -eigt, Fgm Psnl (re-ceot) F- reul Cao oc spn nae otllbrfre nr r ieccuion ofpopolation, and n11iotg 10 portent fornmet *rrlue(oon)-lbrfrei aig oetp on n hoosebhold I-o; 1961-h5, i970, nod 1977 data. fbbn a oeto o oa labo forc; 96, 97t and 1079 .da. VuIrevenr for all -r-ties -erblisbhd by liDA reoride formnin 17 end 1970d dott~ ts. .d P- ti.0 .: It'i9 aiooceo hI gna oft ntul pootrin Pee fey nod 20 grins of animal and P_rcicoacid tots (prec -ttl mi,ed enl-Prb painn volne ..cin f ochi gra ehould he oo-1 protein. Theme stad- ativty atsrecmudancnieleodfeinihrocen nods ore lite ciIh...ths of 7b 9r-a of tonal Protein and 23 gram of precof f.i .t.I too, -ai an .,-1,.d femleppusio f l nagen fapetv- enpoalproten as a soocge OcI,thenorid, proponed by Pi in tbe Thitd b6., 1070, end 0970 dot. ms:m:nacrtin o rtsrforo foldfod :;;Itey 691-67, i9Pi ond 1977 dto. floo fron -oal end .o.et it g-ea per day; it-65 ,19 70 0 1977 dota. maenr fd ntini-orc economic ier Id"ucy Rtiuo -Rctin of ropulacioc under 15 audtOudoe tro usdacived fron life teblen; i9hI, tOOl sod 1977 data. inivet cccStoyTION i.bf_E _-- - drerge onob- of ymaoe of life -emttg of hotholda. atf. hitch; 1960. 1970 and 1978 date. bract Oorcaic coct (per thouseod) ~~- nonul desthe of inferte under .ee year ovonTY TnuET GRnuoPS of cr m chuoad lve trte. stiate dhoiun Poern boonoInvldIl) er ott) -urbn ad rural - oecerouchonchor frow yr-teotd brehole.. sprioga, nod eo.titery neilal d e tEtinstd Rltv oet ooalrl(S e nie rg~gjf foocnv r tuooct lcaednonmoe'han 100 aetere iron bones may be . pe.en. inon f the c.outry. bria Level be derived f...n tbe rural co-dro-don tbeing -..c .. bneoale.o..... of tithos,to rural ar... en1 ilh adjuntsen.t for higher cot of livi0 in urban. are.a. donrhotcspn aOeropono ePer fteday to f-bchtg tin - Acces to .n.ca.... Icrca f ounco-ocluhe n yit orlobeoerd statist loeesilscohcionodD., I  - 24 - ANNEYX I Page 4 ECONOMIC INDICATORS GROSS NATIONAL PRODUCT IN 1979 ANNUAL RATE OF GROWTH (% CURRENT PRICES) USS Million % of GDP 1975-79 GNP at Market Prices 972.7 102.7 16.0 GDP at Market Prices 946.7 100.0 15.7 Gros- Domestic Investment 198.1 20.9 21.0 Gross Domeatic Saving 6.1 0.6 8 Current Acrount Balance - 109.8 -11.6 .19.8 Exports of Goods, NGS 252.3 26.6 15.0 Inports of Goods, NGS 444.3 46.9 13.9 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1979 Value Added Laor For.e V.A. Per Worker US$ Million . 5JS$ Million 7. us$ million 7. Agric-lture 364.1 42.8 0.914. 57.7 398.3 74.1 Industry, Construction & Public Works 100.7 11.8 0.035 2.2 2,877.1 535.6 Onvernoe,nt 94.8 11,1 0.069 4.4 1,373.9 255.7 Coserce and Transpor 269.6 31.7 0.565 35.7 477.2 88.8 Other Services 21.2 2.5 .. . .._.. GDP at Factor Cost 850.4 100.0 1,583. 100.0 537.2 100.0 GOVERNMENT FINANCE Central Government (CFAF Billion) 7. of GDP 1979 1972-75 Current Receipts 28.5 14.2 14.9 Current Expendituren 25.6 12.7 14.0 Current Surplus 2,9 1.4 0.9 Capital Ispendir.res 6.2 3.1 9.2 Elternal Debt Disburaements (gross) 7.8 4.0 3.6 MONEY. CREDIT AND PRICES 1972 1973 1974 1975 1976 1977 1978 1979 (Billion CPAF Otstanding End Period) Money and Q ..si Money 13.89 14.79 18.45 31.86 30.63 33.32 39.01 45.37 Bank Credit to Public Sector -0.51 -1.16 -2,42 -2.95 -5.50 -7.63 -10.45 -4.47 Bank Credit to Privste Sector 10.41 12.73 16.45 32.60 32.10 38.60 47.10 59.40 (Percentage or Index Number) Money and Qasi Money as % of GDP .. .. 17.1 28.2 23.5 23.8 24.1 22.5 General Price Index (1974 X 100) 88.4 89.6 100.0 114.7 124.1 136.3 145.6 160.4 Annual Percentage Changes in: General Price Inden .. 1.4 11.6 14.7 8.1 9.8 6.8 10.2 Bank Credit to Public Sector 37.8 -127.5 -108.6 -21.9 -89.0 -38.0 -36.0 233.0 Bank Credit to Private Sector 22.0 22,3 29.2 97.3 -1.1 20.0 22.0 26.1 Mote: All conversions to dollars in this table are at the exchange rates noted on the following page. not -vsilsble  - 25 - ANNEX I Page 5 TRADE, PAYMENTS AND CAPITAL FLOWS BALANCE OF PAYMENTS 21 2/ MERCHANDISE EXPORTS (AVERAGE 1975-1978, RECORDED) 1975 1976 1977 1978 1979 US$ Million (US$ Million) Exports of Goods, NFS 116.3 133.0 182.1 191.1 252.3 Cotton 7.3 26.2 Imports of Goods, NFS 235.5 276.9 314.2 360.6 444.3 Caoeo Beans 3.4 12.2 Resource Gap (deficitn - 5 -119.2 -143.9 -132.1 -169.5 -192.0 Palo Products 4.9 17.5 All Other Coosnodinli- 12 .3 4~4. 1 TOTAL 27.9 100.0 Interest Paynentn (net) -1.3 0.0 0.4 -0.9 -1.0 Wjorkers' RemittSc..s 14.9 20.1 21.2 26.1 27.1 Other Factor (net) 0.0 0.0 0.0 0.0 0.0 Net Trsssfers 31.8 31.4 25.8 23.0 31.9 Balance on Current Ancounts -73.8 -92.4 -85.5 -121.3 -134.0 Direct Foreign Investment 1.9 6.3 6.7 4.4 10.4 ExTERNAL DEBNT DECEMBER 31. 1979 Net HLT Borrowing 7.9 31.8 37.1 61.9 70.7 Capital Grants 20.6 25.9 37.9 32.7 24.1 US$ Million Other Capital (net) -0.8 1.7 -12.5 7.3 16.0 Other Itars noe.i. 23.6 32.2 15.8 -6.6 - Publin Debt (Disbursed), UsD of Reserves (isorease= - 3 -20.6 5.4 -0.4 -21.7 -12.7 Including Guaranteed 179.4 SN.-Guaranteed Private Sob:- Net Reeerves (end year) 1/ 14.6 18.8 18.3 -2.2 -15.1 Total Otstanding and Disb-rsed Pe#rslenm Imports as % 3/ of Total Imports 6.1 4.4 3.9 3.6 DEBT.SERVICE RATIO FOR 1970 Public Debt (Disbursed) Inclsding Guaranteed 6.8 Non-Guaranteed Private Debt EXCIUIIC BATES (CFAF PER US5) Total Outstanding and Disbursed ''ear Period Averase End of Period 1973 223 230 IBRD/IDA LENDING October 11, 1980 1974 241 222 1975 214 224 IBRD IDA 1976 239 248 (US$ Million) 1977 246 235 1978 226 209 Outstanding and Disburoed 48.2 1979 212 201 Undisbursed 20.48 1980 210 - Outstanding Including Undisbursed 68.68 1/ Net foreig_ assets of Central Bank 8/ Estites 3/ Preliminary estimate of ratio of debt service to exports of goods and services not available  Annex 11 - 26 - A. STATEMENT OF IDA CREDITS (as of January 31, 1981) Credit Number Year Borrower Purpose Amount 1/ Undisbursed (US$ million) Three Credits fully disbursed 14.80 415-BEN 1973 Benin Roads 20.80 2/ 3.52 583-BEN 1975 Benin Rural Education 4.00 1.97 and Training 716-BEN 1977 Benin Technical Assis- 1.70 0.49 tance 717-BEN 1977 Benin Feed-r Roads 5.50 1.24 746-BEN 1977 Benin Third Highway 10.00 3.21 826-BEN 1978 Benin Cotonou Port 11.00 3/ 4.48 997-BEN 4/ 1980 Benin Industrial Develop- 10.00 10.00 ment 1090-BEN 4/ 1981 Benin Feeder Roads 7.00 7.00 TOTAL 93.10 31.91 of which has been repaid 8.40 TOTAL now outstanding 77.70 TOTAL now held by IDA 77.70 TOTAL undisbursed 31.91 1/ Prior to Exchange Adjustment. 2/ Including a Supplementary Credit of US$9 million. 3/ Including participation of the Government of Norway (fully disbursed) of US$8.3 million in the IDA credit. 4/ Not effective yet.  - 27 - ANNEX II Page 2 B. Projects in Execution 1/ Credit No. 415: Second Highway Project; US$11.8 million credit of July 3, 1973; Closing Date: October 31, 1981. Due to inflation and currency realignments, project cost estimates increased to US$23.3 million or 77 percent above the original cost estimates. The Association provided a supplementary credit of US$9.0 million on March 10, 1976. Physical execution of the project has been completed. The closing date was postponed to October 31, 1981 to allow for disbursement of about $600,000 to cover costs of tech- nical assistance under the Feeder Road Project (Credit 717-BEN). Credit No. 583: Rural Education and Training Project; US$4.0 million credit of September 5, 1975; Closing Date: June 30, 1981. This credit provides for (i) construction and supply of training materials for a Skills Upgrading Center in Cotonou; (ii) construction, equipment and technical assistance to improve the ongoing rural youth training program; and (iii) preparation of a second education project. The construction of the National Support Center (CNAC), and of the Regional Support Centers for the rural training component of the project and of the Skills Upgrading Center (CPPE) have been completed. Personnel have been appointed to the CNAC. Equipment has been selected and issued to the youth clubs. Training for extension staff and group leaders has begun. Implementation of the rural water supply com- ponent jointly financed with UNICEF, commenced in July 1980 is expected to take two years to complete. Credit No. 716; Technical Assistance Project; US$1.7 million credit of May 30, 1977; Closing Date: December 31, 1980. This project is designed to prepare the way for a rural development project. The project which was to be carried out over a two-year period is nearing completion. It provided for technical assistance to SONAGRI, the project-executiLng agency, in financial management, project preparation and evaluation, procurement of trucks and staff vehicles, consultant services for the preparation of invest- ment proposals and for cotton and foodcrops adaptive research. Preparation of the proposed Borgou project has been completed and the one for the Zou project is nearing completion. The technical assistance program has been extended to July 1981. Credit No. 717: Feeder Roads Project; US$5.5 million credit of May 30, 1977; Closing Date: September 30, 1981. This project consists of a three-year program for the improvement of about 845 km of feeder roads and subsequent maintenance of about 1,270 km, the purchase of highway maintenance equipment and spare parts, and technical assistance to the Ministry of Equip- ment. This project is about completed. The program of feeder road develop- ment would be continued under a recently approved Second Feeder Road project. 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems\which are being encountered, and the action being taken to remedy the_. They should be read in this sense and with the under- standing that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution.  - 28 - ANNEX II Page 3 Credit No. 746: Third Highway Project US$10 million credit of November 18, 1977; Closing Date: December 31, 1981. This project is designed to facilitate access to the Port of Cotonou by providing for the rehabilitation of a 107 km section of the country's main north-south highway; it also aims at expanding the highway maintenance program begun under the two previous highway projects; including the elimination of some of the backlog of bituminous and laterite roads resurfacing. Project execution is proceeding satisfactorily although delays in starting the bitumen roads resealing program have resulted in further deterioration of about 54 km of roads which now require full reconstruction. This coupled with an erosion of the dollar of about 17 percent since appraisal has caused project costs to increase by an additional $5.5 million. Reconstruction of the bitumen roads is provided for under the proposed Fourth Highway project. Credit No. 926: Cotonou Port Project; US$11.0 million credit of October 6, 1978, Closing Date: March 31, 1982. This project provides for the extension of the existing general cargo port facilities involving dredging of a new basin, construction of 610 m berths with transit sheds, hardstandings, roadway, and railway services; the construction of a new cut-off breakwater and entrance channel dredging; technical assistance for all port operations including railway and a study of coastal erosion problems. Eight co-financiers including IDA had originally agreed to par- ticipate in the project and to provide about US$44.0 million of external financing. A US$3.0 million EEC Special Action Credit was approved on November 9, 1979 to close the financing gap created by the withdrawal of one of the co-financiers. Civil works are proceeding satisfactorily. Project costs have increased by about $7.5 million, primarily because of a design change necessitated by an apparent shortfall in the volumes and sizes of rocks expected to be obtained from an old breakwater to be demolished for the construction of a new one. The Government is seeking additional financing from the cofinanciers. Credit No. 997-BEN: Industrial Development Project; US$10 million credit of April 16, 1980; Closing Date: June 30, 1985. This project provides needed term resources to the Banque Beninoise pour le Developpement (BBD) for financing small- and medium-scale investments in the industrial sector and technical assistance to help build up BBD's capacity to identify, promote and assist industrial projects. This credit is not yet effective. Credit No. 1090-BEN: Second Feeder Roads Project; US$7 million credit of January 14, 1981; Closing Date: June 30, 1984. This project provides for the construction of about 700 km and maintenance of 1,200 km of feeder roads. This credit is not yet effective.  - 29 - ANNEX III Page 1 Supplementary Project Data Sheet Section I Timetable of Key Events (a) Identification: the project was identified and prepared under the Technical Assistance Project (Credit 716-BEN of June 3, 1977). (b) Appraisal Mission: May 1980. (c) Negotiations: January 1981. (d) Planned Date of Effectiveness: June 1981. Section II Special Project Implementation Actions by IDA None Section III Special Conditions The Government shall: (a) introduce, beginning with the 1981/82 campaign, an inter- est rate of at least 11 percent per annum for seasonal and medium-term credit for the financing of production inputs and agricultural equipment, and for subsequent cotton campaigns, adjust this interest rate in accordance with criteria agreed upon between the Government iand IDA (para. 53); (b) require farmers in the Borgou province, by December 31, 1983, to pay a charge for improved seed for foodcrops, sufficient to cover variable cost of production (para. 45); (c) undertake reforms in the financial arrangements in the cotton subsector beginning with the 1981/82 campaign, including a revision of the cotton bareme based on cost accounting information, a staged increase in producer prices for seed cotton, and a reduction of its contribu- tion to financing the costs of fertilizer and insecticides (para. 34).  - 30 - ANNEX III Page 2 Special conditions of Credit effectiveness included in the Development Credit Agreement would be: (i) execution and delivery of the IFAD Loan Agreement and the fulfillment of all conditions precedent to the effectiveness of that Agreement (para 50); (ii) initial deposit by the Government of CFAF 250 million (US$1.2 million) in an account at CAA to operate as a revolving fund for all expenditures under the Project other than the purchase of inputs (the Project Advance Account) (para 50); (iii) appointment of a Project Manager acceptable to the Association (para 40); and (iv) approval by the Association of CARDER-Borgou's proposed annual work plan and associated budget for the 1981/82 cotton campaign (para 43).  PEOPLE'S REPUBLIC OF BENIN 3. BORGOU PROVINCE RURAL DEVELOPMENT PROJECT N I G E R Project Area with Principal Centers and Location of Development Existing establishments: * SONAGRI garage and cotton ginneries * CARDER garage A MDRAC agricultural research center K yIMMA I Proposed project developments: Provincial CARDER training center -12' Seed production farm 1, 2oio ; Primary roads U PPER ANVILLE Secondary roadsTod, Tracks VOLTA ' ------Railway RiversMdooj @ Provincial caPitals 0 District capitals Provincial boundaries . International boundaries _ _-lT \ \ l<, i~~~~~~~~~~~~~~~~~~~~ChOioo N y