Malawi - Agricultural Extension and Planning Support Project

Document of The World Bank FOR OMCIAL USE ONLY Reprt No. P-4120-MAI . REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 11.7 MILLION TO THE REPUBLIC OF MALAWI FOR AN AGRICULTURAL EXTENSION AND PLANNING SUPPORT PROJECT August 29, 1985 This douet bu a redM dsuioinm y be modl by relsm od in th perfeu of thi ffidd dmlb cotmtany "4 adrws be disde v Wad m atrzao.  CURRENCY EQUIVALENTS Current Units M Malawi Kwacha (MK) and Tambala US$1.00 MlK 1.80 MK 1.00 US 0.56 PRINCIPAL ABBREVIATIONS AND ACRONYMS ACAO - Assistant Chief Agricultural Officer ADD - Agricultural Development Division ADMARC - Agricultural Development and Marketing Corporation ART - Adaptive Research Team CAO - Chief Agricultural Officer (Extension) CAS - NRDP - Controller of Agricultural Services DAR - Department of Agricultural Research DCAO - Deputy Chief Agricultural Officer DOA - Department of Agriculture GOM - Government of Malawi ICB - International Competitive Bidding LCB - Local Competitive Bidding MOA - Ministry of Agriculture NARP - National Agricultural Research Program NRDP - National Rural Development Program PD - Planning Division in Ministry of Agriculture PS - Principal Secretary PPAR - Project Performance Audit Report RDP - Rural Development Project SAL - Structural Adjustment Loan SMS - Subject Matter Specialist TA - Technical Assistant USAID - United States Agency for International Development FISCAL YEAR April 1 - March 31  FOR OMCUIL USE ONLY MALAWI AGRICULTURAL EXTENSION AND PLANNING SUPPORT PROJECT CREDIT AND PRCJECT SUMMARY Borrower: Republic of Malawi Beneficiary: Ministry of Agriculture Amount: SDR 11.7 million (US$11.6 million) Tetms: Stat-dard Project The proposed Project would support an institutional development Description: process aimed at (i) improving Ministry of Agriculture's (MOA) analytical and long-term planning capability; (ii) strengthen- ing the national extension system through development of more effective mechanisms for program priority setting, resource allocation and financial management; and (iii) upgrading the managerial, administrative and technical skills of Department of Agriculture (DOA) and Planning Division (PD) staff. Main features of the project include: (i) strengthening MOA's Planning Division through technical assistance, training and logistical support and Cii) strengthening Department of Agriculture's capacity to plan, implement and monitor the agricultural extension program by (a) supporting a substantial training program for extension staff and establishing a training unit in MOA, (b) introducing a technical career stream and a promotion system for professional and technical staff, (c) supporting and testing innovative approaches to agricultural extension and information transfer in Mzuzu agricultural development division including provision of Incremental seasonal credit to smallholders in the Mzuzu area to encourage adoption of improved technical recommendations, (d) strengthening the existing system of financial management, (e) supporting production of improved technical and training materials and (f) improving extension and research linkages. The project, to be carried out over 5 years, provides funds for civil works; vehicles, furniture and equipment; training; technical assistance; and operating costs. Benefits and Economic benefits under the proposed Project are expected from Risks: (i) improved efficiencies in agricultural sector planning and extension planning and budgeting and (ii) increases in u agricultural production and productivity. Possible risks include ineffective management of the planning and extension programs, inadequate provision of budgetary resources, and low acceptance rates by farmers. To minimize these risks the project provides for a new extension planning and budgeting system to achieve greater efficiency with existing staff and infrastructure, substantial managerial and technical in-service training and consultancy services to supplement local expertise; a firm commitment from Government to provide adequate budgetary resources, and the opportunity to test and perfect different approaches to information and technology transfer in the Mzuzu ADD before introducing them throughout the country. This document has a resricted distibution and may be used by recipients only in the performance Of their of ria duties. Its contents may not otherwise be discosed without World Bank authorization.  - ii - Estimated Costs a/ Local Foreign Total - (US million)- Planning Division 0.37 1.69 2.06 National Extension System National Ext. Planning, Mgt. and Training 1.09 4.54 5.63 Agricultural Communications Branch 0.03 1.58 1.61 Adaptive Research Program 0.02 0.15 0.17 Mzuzu ADD (including Seasonal Credit) 1.50 3.22 4.72 Base Cost 3.01 11.18 14.19 Physical Contingencies 0.38 1.08 1.46 Price Contingencies 1.46 3.09 4.55 Total Project Costs 4.85 15.35 20.20 a/ Inclusive of taxes and duties vhich are neglible. Financing Plan: Local Foreign Total (USS million) Government 0.9 1.5 2.4 USAID 0.6 5.6 6.2 IDA 3.3 8.3 11.6 Total 4.8 15.4 20.2 Estimated Disbursements: IDA Fscal Year 1986 1987 1988 1989 1990 1991 (US$ million) Annual 0.7 2.6 3.9 2.1 1.5 0.8 Cumulative 0.7 3.3 7.2 9.3 10.8 11.6 Economic Rate of Return: Not applicable Staff Appraisal Report: Report No. 5453-MAI, dated August 29, 1985 MEE: IBRD NO. 18833  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF MALAWI FOR AN AGRICULTURAL EXTENSION AND PLANNING SUPPORT PROJECT 1. I submit the following report and recommendation on a proposed credit to the Republic of Malawi for SDR 11.7 million (US$11.6 million equivalent) on standard IDA terms for an Agricultural Extension and Planning Support Project. In addition, the Republic of Malawi is arranging cofinancing of US$6.2 million from the United States Agency for International Development (USAID). PART I - THE ECONOMY 2. A report entitled 'Malawi: Growth and Structural Change, A Basic Report" (Report No. 3082a-MAI) dated February 8, 1982, was circulated to the Executive Directors on March 9, 1982. An economic mission visited Malawi in March 1984. A Country Economic Memorandum is under preparation. Findings of the mission on recent economic events in Malawi are reflected below. Annex I contains the basic country data. 3. Malawi is a small (118,500 sq km), densely-populated (about 6.6 million people in 1983) landlocked coantry in southeastern Africa. Its main assets are moderately fertile soils, good water resources and a climate favorable to crop production. Unlike its neighbors, Malawi has no known substantial mineral resources. 4. With a GNP per capita of US$210, Malawi has been identified by the United Nations as one of the world's poorest countries. Nevertheless, since independence in 1964 until 1979, Malawi had steady economic growth, averaging six percent per annum in real terms (three percent per capita). The leading sectors were agriculture and manufacturing. Investment rose from 9 percent of GDP at independence to 33 percent in 1979, financed by increased domestic savings (from nil to 14 percent of GDP in 1979), and official and private capital inflows. In 1980 and 1981, Malawi met with serious difficulties due to world economic conditions, and GDP contracted by six percent over these two years. Consumption fell somewhat, but savings and investment were reduced drastically. Since 1982, recovery has been underway, with annual GDP growth averaging 4.6 percent through 1984. 5. With the exception of the 1980-81 recession, Malawi has enjoyed steady economic growth, due in large part to the pragmatic policies of the Government. Malawi has adopted an outward looking strategy based on agriculture, consistent with the country's resource endowment. Government investment has concentrated on provision of infrastructure, utilities and support services to encourage private initiative. The Government has also emphasized smallholder agriculture, a sound policy given that 90 percent of the population lives in rural areas and depends on agriculture for its livelihood. Traditionally, three quarters of the development budget has been directed towards agriculture and transport, the rest for administrative and social functions.  - 2 - 6. Malawi's economy is heavily dependent on three primary commodity exports (tobacco, tea, and sugar) and is highly vulnerable to international price fluctuations. Since 1974, there have been periodic balance of pay- ments problems of increasing severity due primarily to (a) rapid escalation in import prices, particularly of fuel and intermediate and capital goods; (b) cyclical swings in export prices of tobacco, sugar and tea; (c) significantly higher costs of transport for exports and imports owing to rising ocean freight charges, port congestion in Mozambique, and disrup- tions of overland transport; and (d) debt service burden. 7. Beginning in 1978, Malawi's chronic balance of payments problems became less manageable. The current account deficit rose from a level of 8-9 percent of GDP in the mid-1970s to 18 percent in 1978 and 23 percent in 1979. This balance of payments crisis was due to declining terms of trade, which fell 40 percent between 1977-80, increased transport difficulties and drought. Import prices rose by 39 percent over this period, primarily due to petroleum price hikes. Conversely, export prices declined by 16 percent (due mainly to falling tea and tobacco prices). In 1980 and 1981, a drought led to reduced agricultural exports and necessitated increased imports of subsistence crops (maize). Nevertheless, by 1981 Malawi enjoyed a surplus on the merchandise trade balance thanks mainly to a contraction in imports and has increased this surplus steadily since 1981. Continuing current account deficits were due to a large deficit on the service accounts. Transport costs for imports and exports were greatly increased due to continuing problems with traditional export routes through Mozambique. Debt servicing also contributed to the deficit on the invisibles account. These current account deficits were initially financed by sharply increased private capital inflows. These were still not sufficient to finance the current account deficit and the country drew down its foreign reserves to less than one month of imports by end 1983. In 1984, the current account deficit was greatly reduced to three percent of GDP and reserves were increased by US$65 million. This was due to improvements in the terms of trade, led by record tea prices, and a sharp increase in exports, as previous stocks of tobacco and sugar were moved out of the country, resulting in a large trade surplus, nearly matching the deficit on the services account. The outlook for 1985 is for a larger deficit as export prices have declined and carryover stocks are not as large. 8. The economic difficulties of 1980-81, as well as problems with public corporations led to an increase in the Government budget deficit reaching 16.5 percent of GDP in 1981, double historic levels. This was due primarily to a rapid increase in government expenditures, attaining 35 percent of GDP in that same year. Much of this was made up of recurrent expenditures, especially interest payments. Revenues did not increase commensurately, given the recession, hence the large fiscal deficit. These deficits were financed by government borrowing, primarily domestic. The fiscal position has improved since, with increased revenues and restrained spending so that the deficit has been reduced to 8.2 percent of GDP by FY85, an improvement, though still above target levels. Improving expenditure control is a key element to continuing Malawi's economic recovery. Inflation has been steady at approximately ten percent since 1981.  9. Given Malawi's early stage of development, foreign capital inflows, especially of a public nature, have been important in development financing. In the pre-recessionary period (1969-79), foreign savings financed approximately half of domestic investment. During the recession (1980-81), public and private capital inflows were used to maintain consumption levels, and domestic saving fell. Since 1981, domestic savings have been increasing, while private inflows have virtually ceased. Public transfers continue, financing approximately 50 percent of all investment, much of this from World Bank Group loans and credits. Grants and bilateral transfers have declined from past levels, and have not kept pace with Malawi's needs. 10. Initially, the country attempted to ameliorate the economic downturn of 1979-1980, by increased external borrowing, mostly on corsmercial terms, in order to maintain import levels and thus production, employment and consumption. Investment in the economy declined sharply, while consumption declined only slightly. It soon became evident that with increasing inflationary pressures and fiscal and balance of payments disequilibria, more stringent adjustment efforts were needed. The Government, therefore, launched a stabilization effort designed to reduce short-term fiscal and balance of payments disequilibria and a structural adjustment program designed to improve efficiency of resource use and ensure that positive growth of per capita income can be reestablished and sustained over the medium and longer-term within the context of a manageable balance of payments current account deficit. The structural adjustment program is broad-based; aimed at encouraging diversification of production and exports, improving performance of productive sectors, rehabilitating, restructuring and otherwise strengthening key development institutions, and improving resource mobilization and allocation in the public sector. 11. The Government and the IMF agreed to a standby program for SDR 22 million in August 1982. A first phase of a multi-year stabilization effort, the program aimed at reducing both the balance of payments current account deficit and the budgetary deficit. As part of the program, the Government devalued the kwacha against the SDR by 15 percent in April 1982. The other performance criteria involved phased ceilings on net domestic assets of the banking system and on net credit to the Government and a limit on government external commercial borrowing. The standby was implemented satisfactorily, and the Government and the IMF concluded a new multi-year program, and a three year Extended Fund Facility was approved in September 1983 and, except for a six-month interruption in late 1984-early 1985, it has been implemented successfully so far. As part of the Extended Fund Facility, the Government devalued the kwacha against the SDR by 12 percent in September 1983 and switched to a basket of currencies in January 1984. 12. The Bank's first Structural Adjustment Loan in support of the Government's program was made in June 1981, for US$45 million. After initial difficulties, good progress was made in implementing the Government's adjustment program: additional funds were allocated to the agricultural sector, certain agricultural prices were adjusted, public utility tariffs were increased and the budget for 1982-83 was trimmed, with sufficient resources provided for major development sectors. The second  - 4 - released in April 1982. However, during 1982 the country's efforts were set back by increased disruption of the traditional transport routes and continued depressed demand for Malawi's export products. Nevertheless, the country was able to hold its current account deficit to 11.3 percent of GDP in 1983, reduce the budgetary deficit for FY1983 to 9 percent of GDP, and meet its IMF standby borrowing ceilings. 13. The second phase of the structural adjustment program was supported by SAL II, approved by the Board in December 1983. The program continues and builds upon the reforms of SAL I. SAL II has been partially successful in diversifying exports and increasing smallholder share of exports by improving incentives for export crop production. Oil imports have been reduced thanks to local ethanol and electricity production. These factors, and stable international prices, have led to a reduced current account deficit - three percent of GDP as of 1984. The financial position of public enterprises has improved, though it remains weak. Efforts to improve control and allocation of public expenditures and reduce the overall size of Government have been slow. Nevertheless, the fiscal deficit has been reduced to 8.2 percent of GDP as of FY85, and further reductions are planned. Price controls have been reduced, while wages flexibility must still be improved. The second and final tranche was released in November 1984. The Bank is currently working with the Government on the preparation of SAL III. 14. By the end of 1984, Malawi's external public debt outstanding and disbursed totalled US$741 million. In late 1982, Malawi rescheduled both its official and commercial debts. Otherwise its debt servicing, including repayments to the IMF, would have amounted to over US$130 million, equivalent to over 40 percent of exports of goods and services. This compares to a level of about 10 percent in the mid-1970s. A second year of rescheduling was agreed to in October of 1983, keeping the debt service ratio to 26.7 percent in 1983. The Government has indicated that it will not be asking for any further rescheduling, and the debt service ratio is expected to remain at about 30 percent over the next few years. PART II - BANK GROUP OPERATIONS IN MALAWI 15. Over the past 19 years, Malawi has received 33 IDA credits and one Special Fund credit totalling about US$451 million and 8 Bank loans totalling US$99 million, of which 2 were on third window terms. Of the Bank Group assistance, some US$153 million (28 percent) was for agricul- ture, US$108 million (20 percent) for education, US$114 million (20 percent) for roads, US$98 million (18 percent) for structural adjustment, US$39 million (7 percent) for power, US$11 million (2 percent) for water, and the balance of US$27 million (5 percent) for health, development finance, technical assistance, and urban housing. The first Bank loan to Malawi was made on third window terms in June 1976 and the first standard Bank loan in April 1977. IFC's equity participations and lending commitments in Malawi total about US$17 million and include investments in textiles, sugar, a DFC (INDEBANK), tourism, and the manufacture of alcohol from molasses. In addition, a US$0.5 million equity subscription and  - 5 - US$1.8 million loan investment in the Viphya Plywoods and Allied Industries United were approved in August 1984, but are not yet signed. Annex II contains a Summary Statement of Bank Group Operations as of March 31, 1985. Bank Lending Strategy 16. During the next five years, Bank Group assistance to Malawi will continue to be designed to help Malawi restructure its economy, especially to help improve agricultural productivity, dealing with the transport prob- lem in order to improve the balance of payments and strengthening the effectiveness and efficiency of government and other development institu- tions. The remainder of the 1980s are likely to be a difficult time for land-locked Malawi which must continue its adjustments which it began with its two structural adjustment programs in the early 1980s. Investment and savings levels will need to increase as a proportion of GDP, the current account and budgetary deficits will have to be further reduced, export promotion and diversification will need to go forward and recurrent expenditure levels in key development agencies should be raised if past investments are to be utilized fully. These measures will have to be complemented by policy and/or institutional reforms in agriculture and industry to further increase the production and industrial incentives. A third structural adjustment loan embodying further key reforms was appraised in May and will be presented to the Board this fiscal year. It will help the Government increase the efficiency in the productive sectors, better mobilize and manage resources and improve development administration and the capacity for policy formulation. 17. Experience to date in Malawi has demonstrated that a combination of appropriate policies and sufficient external assistance channelled into productive investments can generate a sustained growth rate in per capita income. The Government's medium-term public investment program requires further Bank Group support in agriculture, transportation, education, population/health and water supply as well as medium-term fluance for diversification and agro-industrial investment. These Bank-financed investments will complement the Government's structural adjustment program providing the necessary technical, financial and institutional support to enable Malawi further to increase smallholder productivity, maximize the effectiveness of its external transport routes (particularly the northern route), rationalize and prioritize investments in the education and water sectors and address the single most pressing issue for Malawi's long-term future, the very high rate of population growth. Sector investment plans and strategy statements in health/population, education and transport are under preparation. All of these programs will be co-financed thereby helping Malawi to obtain some of the additional external financing it needs to reach its modest GDP growth targets. The United States Agency for International Development, the Federal Republic of Germany, the Overseas Development Administration and the Japanese have expressed interest in co-financing the third SAL. 18. The Bank Group's economic and sector work will continue to build an analytical base for discussions with the Government on the key development issues. The major pnints of focus will remain: how to increase productivity in the economy; how to improve the financial  - 6 - performance of the public sector; how to improve the management of the economy and how to slow the rate of population growth. In agriculture we have concluded a study on diversification and the steps needed to help broaden the export base of the economy; a study of the whole question of land utilization and what can be done to improve the productivity of this scarce resource is underway, as are project funded studies on livestock, smallholder irrigation and management and training in the Agriculture Ministry. In FY87, we will prepare an updated Agricultural Sector Memorandum, looking at progress made in structural changes in the sector and also analyzing further sub-sectoral policies pertaining to such matters as agricultural manpower training, production of perennial crops, etc_ In the transport sector we will finish the current study on external transport in FY86. In the social sectors, we will complete in FY86 a study of the dynamics of population growth, its implications for the economy and the recommended development assistance strategy for the sector. In education we will study the traiLting needs in the economy with special emphasis on the agriculture, health and transport sectors. These studies will provide the basis for helping Malawi develop appropriate sectoral strategies and investment programs and for mobilizing external assistance. 19. During the next three years, two Country Economic Memoranda will be completed, a Public Sector Investment Review will be carried out, and a special study on the institutional aspects of development finished. The CEM, which is now under preparation, will update our knowledge of the economy and focus on the resource requirements for sustained adjustment and growth. A Consultative Group meeting is planned in FY86 to improve donor coordination and increase the kinds and levels of resources needed to support the adjustment process in Malawi. The CEM planned for FY87 will concentrate on the long term constraints to Malawi's development (population, agricultural land pressure, etc.). The special study on institutional development will look at the shortcomings in the Govenment's institutions and bureaucratic system which have led to some of the structural weaknesses in the economy. This study is expected to be finished in FY86. External Debt 20. The Bank Group's share of Malawi's external debt (disbursed and outstanding) at the end of 1984 was about 51 percent (IBRD: 10 percent, IDA: 41 percent), and its share in debt service was about 12 percent. Because Malawi is one of the least developed countries, many other donor- give aid on grant terms. Other major donors have been the United Kingaom, the Federal Republic of Germany, the European Economic Community and the African Development Bank. Disbursements 21. Disbursements of the Bank Group loans and credits in Malawi generally have kept close to schedule and compare favorably with other countries in the region and even on a Bank-wide basis. During the period FY80-84, the disbursement rate on loans and c.edits to Malawi (excluding the effect of non-project lending) averaged about 27 percent per annum, significantly higher than the Eastern Africa Regional average of 19 percent and the Bank-wide average of about 21 percent.  -7- Project Implementation 22. Overall, implementation of Bank projects continues to be good. The Audit and Project Completion Reports underscore Malawi's sound development record and progress in extending nationwide the benefits of its investments. However, the third National Rural Development Program (NRDP) project and the Fifth Highway project have experienced moderate problems due to inadequate budget provision and management shortcomings. Implementation of the third NRDP project has subsequently improved with adequate budgetary support and fertilizer inputs supplied and progress made in constructing the marketing and input infrastructure. The staffing and management difficulties facing Highways V are being addressed and sufficient budgetary resources for the projects are expected to be allocated later this year. With these corrective actions, the projects are expected to regain lost momentum. PART III - THE AGRICULTURAL SECTOR Background 23. Agriculture is the leading sector in Malawi, accounting for 40 percent of GDP and 85 percent of exports in 1983/84, and employing 85 percent of the labor force. The smallholders on customary plots (93 percent of tilled land), produce mainly subsistence crops such as maize and account for 78 percent of agricultural GDP. The estates, on freehold land (the remaining seven percent) are the major foreign exchange earners, producing export crops such as sugar, tobacco and tea. Relatively fertile soils, fairly reliable rainfall and a widely ranging relief permit the production of a broad variety of food and cash crops with nearly 90 percent of the arable land cultivated. Annual real growth in smallholder and estate agriculture averaged 4.3 percent and 2.9 perc'nt, respectively, between 1980 and 1984, the productivity of the smallholder subsector being well below its potential due to: Ca) poor price incentives; (b) limited availability of appropriate technology for many smallholders; (c) Government limitation on smallholder production of selected high-value export crops; (d) untimely and limited availability of fertilizer; and (e) poor transmission of technical advice to farmers. The growth of the estate sector was dampened by depressed international prices for tobacco, sugar and tea and problems of transportating these commodities to ports for export. Ministry of Agriculture 24. The Government's Ministry of Agriculture is the central institution responsible for overall policy formulation, planning, coordination and management of the smallholder agricultural sector. It is also charged with providing most of the agricultural services. MOA is headed by a Principal Secretary (PS) and is divided into five organizational units, including the Department of Agriculture, which comprises the national extension system, and the Planning Division. In 1978, in an effort to integrate the management of the National Rural Development Program into the government structure, the country was divided into eight Agricultural Development Divisions (ADDs) and respective  sub-regional units for the purpose of extension planning and agricultural management. The ADDs report to the PS through Controller of Agricultural Services (CAS-NRDP). 25. NRDP. Initially, NRDP was mainly an investment program to build up rural infrastructure (roads, housing, offices, training centers, marketing centers, health clinics, dip tanks, water supply, etc.) in the econogically defined rural development project areas (RDPs). Agricultural and rural development staff were placed at all levels from the regional Program Managers at the ADD level to the technical assistants at the field level. During the period of systems build-up, insufficient attention was paid, inter alia, to the quality of the extension content (quality of staff, crop husbandry, women's program, etc.), the linkage between extension and research, adaptive research and training of farmers and DOA staff. These deficiencies were highlighted by the 1982 NRDP Review, which recommended that the RDPs focus on activities that directly support agricultural production, while the execution of non-agricultural activities (roads, forestry, health, etc.) became the responsibility of the respective sector ministries. The Review endorsed the overall structure and approach taken by NRDP but recommended reorganizing basic services (extension, planning, research, veterinary, etc.) at MOA's headquarters and ADD levels, maintaining minimum effective staffing levels and identifying career streams. It also recommended a reorientation of the research and extension programs to farming systems rather than a single crop approach, to developing appropriate technical packages and to reducing investment and recurrent costs by providing lower cost housing and adopting more conservative staffing levels. Almost all of the recommendations were accepted by the Government in 1982 and are being introduced nationwide including strengthening the management of the MOA by the appointment of a senior deputy secretary and two technical deputy principal secretaries. Emphasis is now being placed on the strengthening of the national systems. A National Agricultural Research Project (Credit 1549-MAI), whose objective is to revamp the research program, is being implemented. Agricultural Services 26. Agricultural Extension Services. The extension service has been organized on a block extension basis since 1981. Much of the infrastructure for this block system is now in place and it is adequately staffed. The field extension worker (Technical Assistant) is the basis of the extension program. The role of the Technical Assistant (TA) is to transmit appropriate technical advice (on crop production and farm management) to farmers with the goal of increasing agricultural output and income levels. Each TA is responsible for a Technical Assistant's Section - composed of five to eight blocks - each with approximately 100 farmers - giving an average extension worker to farmer ratio of 750 to 1. The TA makes a fortnightly visit to each block, to meet with farmers, show new techniques on the demonstration plot, transmit extension messages and answer questions. The 2,600 TAs cover the eight ADDs. This staff is supported by Subject Matter Specialists (SMSs), numbering 500, who give advice on specific technical areas. The system provides a channel for delivery of extensien messages to a greater number of farmers. What remains lacking is an institutional framework for better defining extension and research strategies and establishment of priorities. The proposed  Project is the first phase of a long-term national program to improve the focus and quality of Malawi's smallholder agricultural extension system, to formulate an overall strategy for its development, to improve the efficiency and economy of ongoing efforts, and to reinforce critical linkages between the extension and research programs. The major deficiencies in the present extension system to be addressed by the project are: (i) the limited number of adequately trained and experienced managerial and technical staff; (ii) inadequate formulation of technical packages for smallholder crops; and (iii) inadequate extension planning and - budgeting system. 27. Agricultural Research Services. Agricultural research for all commodities except tobacco, tea and sugar Is principally conducted by the MDA's Department of Agricultural Rede-arch (DAR). In addition to crop and livestock research, DAR also has responsibility for: (a) the production of breeders' seed for certain crops; (b) the propagation and distribution of selected fruit and nut trees; (c) the provision of plant protection and phytosanitary services; (d) soil survey and analysis; and (e) seed inspection and testing services. Agricultural research is also conducted by the Tea Research Foundation, the Tobacco Research Authority and by the Faculty of Agriculture of the University of Malawi. Research programs are organized on a crop basis and are reviewed from time to time when objectives are redefined. However, extension staff have had little involvement in this process, and, as a result, there has been a proliferation of commodity programs which often do not relate to problems faced by smallholders. Resolving these issues is among the key objectives of the recently approved National Agricultural Research Project (Credit 1549-MAI), which aims to improve the focus and quality of the smallholder agricultural research program, strengthen linkages between the research and extension programs and improve the efficiency and economy of DAR's ongoing activities. 28. Agricultural Marketing and Input Supply. Provision of agricultural inputs and marketing of smallholder crops is largely provided through the Agricultural Development and Marketing Corporation (ADMARC). ADKARC purchases smallholder crops, sells food crops and markets agricultural seed, fertilizer, chemicals and farm implements. ADMARC has traditionally been one of the more effective crop handling parastatals in Eastern Africa. For the estate subsector, fertilizers are supplied principally by Optichem, a locally incorporated company, and other agro-chemicals are marketed by various commercial firms. Estate produce is marketed almost entirely through the private sector. The National Seed Company of Malawi produces a wide range of agricultural seed for both smallholders and estates. 29. Agricultural Credit Services. There is no central agricultural credit institution in Malawi, and smallholder farmers have access to seasonal and medium-term credit through the Ministry of Agriculture's rural development projects, which have their own credit funds and staff. (The estate subsector obtains credit, which is primarily seasonal financing, from the two commercial banks.) Seasonal and medium-term credit are both provided to smallholders in kind. Although both types are available to individual smallholders and to smallholder groups, in practice seasonal credit is only given to groups and medium-term to individuals. The  - 10 - formation of smallholder clubs and credit groups has been encouraged in order to reduce the administrative cost of MOA's services to farmers and to increase the effectiveness of the extension system. The use of credit groups has also minimized defaults through the joint liability of group members for individual loans. Repayment rates of individual credit have averaged about 70 percent compared to between 90 and 100 percent for farmers' clubs/groups. Interest ("service charge") on seasonal credit is a flat rate of 10 percent. Most of the farmers' clubs (about 85 percent) repay the principal and interest within 9 months giving an effective interest rate of around 13.5 percent. This rate exceeds the current inflation rate of 12 percent. The costs for administering the scheme are unknown. However, the Government is committed to eliminating any subsidies after a thorough review of the existing system has been carried out to determine what the interest rate should be and how the system should be modified. Smallholder Production 30. Smallholders, grow a wide range of crops including maize, groundnuts, fire-cured tobacco, cotton, pulses, cassava, rice, sorghum and millet. Over the past few years, smallholder agriculture has been characterized by a steady swing into maize from a more diversified cropping pattern, although significant price increases in 1984 led to some recovery in tobacco and cotton production. Recently, maize has been produced with sufficient surplus for regional export. The Government is attempting to provide incentives for both smallholder and estate production to support the overall strategy of continued self-sufficiency in food staples with expansion of agricultural exports and improvement in rural incomes. The potential of the smallholder sub-sector for increased productivity of both food and cash crops is clearly indicated by the following comparison between current average smallholder yields with those obtained in research! station trials (potential yields): hybrid maize 3,000 kg/ha (7,000kg/ha), composite maize 2,000 (5,000), blue bonnet rice, 2,175 (5,000), beans under maize 350 (1,000), confectionary groundnuts 360 (1,800), dryland wheat 900 (2,000), cotton 600 (2,000), coffee 150 (1,500), and dark-fired tobacco 500 (1,200). The National Agricultural Research Project together with the proposed Project should help in reducing the average yield gap. 31. The Government, on recommendation of the Price Commission sets official prices for smallholder crops, and these are the prices ADMARC pays. Farmers who are indebted to MOA (due to loans for inputs) are obliged to sell part of their crop to ADMARC, up to the amount necessary to repay the loan. Any excess, and the crops of non-indebted farmers may be freely sold to private traders, who may or may not offer higher prices. In practice, private traders obtain the bulk of some items (such as beans) because they offer higher prices. Except for maize and tobacco, the prices of major crops are set near the appropriate export or import parity price. Maize prices are set between import and export parity with the objective of long run self-sufficiency. Tobacco prices are set at levels which will provide returns to farm labor competitive with alternative crops. Constraints of MOA's Planning Division 32. The Planning Division, headed by a Chief Projects Officer, is responsible for: (i) the preparation of annual budget estimates for MOA;  - 11 - (ii) identification and preparation of project proposals; (iii) annual evaluation of on-going projects; (iv) provision of advice on sectoral policies (including annual submission of smallholder crop price proposals); and (v) compilation and maintenance of agricultural statistics. To perform these functions, the PD is divided into five sections: marketing, project preparation, central evaluation, project processing and agro-economic surveys. In recent years, PD's volume and complexity of work have increased significantly. At the time of Project appraisal, 14 of 23 established positions in the Planning Division were vacant including the Chief Projects Officer, Principal Planning Economist, Principal Evaluation officer and Senior Economist Project Preparation. Although most key positions have now been filled, the lack of experienced staff has meant that the Chief Projects Officer and other senior staff must contend with numerous routine but time-consuming administrative tasks leaving little time to focus on work programing or to provide adequate supervision and guidance for junior staff. Recently, a series of actions has been considered by MOA to address these problems, including, inter alia, upgrading PD's level to that of other departments in MOA with the consequential upgrading of the division head's position, the establishment of additional positions to handle the increased workload, and the undertaking of a diligent search to recruit qualified persons to fill vacant positions. The proposed Project would assist the Government's efforts to support improvements in PD's planning capacity. Experience with Past Lending for Agriculture 33. Prior to the establishment of the NRDP, IDA helped finance three of the four large integrated agricultural programs, in Lilongwe, Karonga and the Shire Valley (Credits 113-HMAI, 244-MAI, 550-MAI, 282-MAI, 114-MAI, and 363-MAI; with related PPARs 751, 1597, 3414, 2576, 895 and 2593 respectively). Implementation of these programs was generally good and the projects were popular with farmers although crop production increases were often lower than originally forecast. Since 1978, IDA has assisted the Government with the development of the NRDP in the TLlongwe, Dedza, Thiwi-Lifidzi, Ntcheu, Mzuzu, Mzimba, Karonga and Chitipa areas (Credits 857-MAI, 1183-MAI and 1343 MAI). The impact in these areas has been mixed, as stated in the NRDP Review of 1982. The Operations Evaluation Department more recently did a study on the impact of the Shire Valley Project and an agriculture sector operations review on Malawi and Upper Volta. With few exceptions, appraisal targets for production have not been reached. In some cases, yields have not been as high as projected, but more often it is the uptake rate of input packages that has fallen short of expectations, perhaps because particular crops had unattractive returns or because farmers preferred to plant subsistence crops to ensure food supply. This experience and the conclusions of the various related Project Performance Audit Reports have highlighted the need (i) to develop acceptable crop technical packages for subsistence crops, (ii) to incorporate area-specific extension advice on crops in the farming system in each area and (iii) to ensure that this advice is both technically sound and financially attractive to farmers. The National Agricultural Research Project is designed to assist in the formulation of more appropriate and productive extension recommendations for the different crops and sections of the  - 12 - farming community. The proposed Project aims to, better promote and disseminate technical advice by means of upgraded management and staff and a more focused approach. 34. There have been other problems under NRDP projects. The cost of providing housing, to which all Malawian civil servants are entitled, has been high, but steps hLave been taken to reduce the unit costs. The record on the handover of infrastructure for operation and maintenance from the Ministry of Agriculture to parent ministries (roads, health, water supplies) under NRDP has sometimes been less than satisfactory. As a consequence, several departments and ministries have developed, or are planning, a national program for rural investment which establishes national priorities with regard to staffing and available resources. Finally, there is the quiestion of the lack of sufficient operating and maintenance funding for existing NRDP projects. This shortage of recurrent finance implies that ongoing projects must be scaled down, costs cut on vehicle replacements and measures introduced to facilitate smoother phasing of projects from the development to the revenue budget. Under SAL I and II (Loan 1427 MAI and Credit 2026 MAI), the Government was committed to reviewing recurrent budget allocations to MOA (on a regular basis,) to ensure that they were adequate. However, while the allocation has grown by about eight percent annually in the last four years, there is evidence that the sector is still underfunded. The proposed Project would introduce improvements in planning and budgeting within MOA to achieve better resource utilization and cost effectiveness within the NRDP program. 35. IDA has also assisted the Government with development of its national woodlot program (Credit 992-HAI) and, with IFAD, has provided finance for a Smallholder Fertilizer Project (Credit 1352-MAI). The establishment of a fertilizer revolving fund, the standardization and early procurement of fertilizer for the next growing season and the strengthening of ADMARC have greatly improved the availability and timely distribution of fertilizer. Sectoral Strategy 36. The Project forms an integral part of our sector development strategy and is closely tied with the on-going (Smallholder Fertilizer Project and National Agricultural Research Project) and prospective investments affecting the sector (SAL III, DFC II-estate credit-and the proposed Smallholder Credit project). The increases in real farm prices brought about under SAL I and SAL II together with the good rains have led to a strong production response with emallholder output growing by 8.3% in 1984. The SAL III program calls for continued use of price incentives. Agreement on input and crop price proposals for 1986/87, including a specific target for fertilizer subsidy removal would be a condition for release of the second tranche. This trend toward export parity levels has been greatly facilitated by the timely availability and supply of fertilizer provided under the Smallholder Fertilizer Project. The proposed FY86 DFC II project would provide the estate subsector (which makes a major contribution to agricultural production) with medium- and long-term capital (supported by management training and extension schemes) to encourage crop production and diversification.  - 13 - 37. Given the Government's severe financial constraints, it is unlikely that MOA's budget will be increased substantially, if at all, over the medim-term. Therefore, there is a need to link Investment objectives and priorities more closely with resource availability and to achieve greater efficiency with existing resources, staff and infrastructure. IDA's assistance strategy to Malawi's agricultural sector is one of long-term institutional development. The lending operation now proposed focuses on agricultural extension and planning, and together with the recently approved research operation is part of a major long-term effort to develop Malawi's key agricultural institutions at the national level. The strengthening of national systems (principally smallholder agricultural research, extension and planning) should be pivotal in expanding agricultural productivity and output, improving diversification,and increasing export earnings. Specifically, the proposed assistance to MOA's planning division aims to develop a consensus on its function and to strengthen its staffing so that it can provide continuing technical adv,ice to policy makers on investment priorities in light of Malawi's agronomic potential and comparative advantage. Strengthening the extension system would assist DOA in improving the technical competence base of its extension staff so that it is better able to disseminate advice on improved technology to farmers. The improvements in the relevance and quality of agricultural research, extension and planning are crucial to the import substitution and export growth effort and to raising the productivity of the Malawian smallholder. PART IV - THE PROJECT Background 38. The proposed Project was prepared by the Malawi Government with assistance from the World Bank. The Project was appraised in the field in September/October 1984. A post-appraisal mission discussed the Project with the Government in February/March 1985. Negotiations were held in Lilongwe, Mala7i, from July 25 to 30, 1985. Th' Malawi delegation was led by the Undersecretary of the Ministry of Finance. USAID participated as observers. A report entitled Staff Appraisal Report, Agricultural Extension and Planning Support Project-, No. 5453-MAI, dated August 29, 1985 is being distributed separately. Supplementary Project data are provided in Annex III hereof. Objectives and Description of the Project 39. The Project is designed to strengthen the existing extension system by ensuring sufficient trained staff and subject matter specialists at all levels to support field staff and by developing an institutional framework at the national level for better defining extension strategies, setting priorities and programs to guide the work of regional extension staff, and ensuring consistency in approaches and adequacy in levels of funding. 40. The Project would aim to do this by (i) improving the Ministry of Agriculture's analytical and long-term planning capability; (ii) strengthening the national extension system through development of more effective mechanisms for program priority, resource allocation and financial management; and (iii) upgrading the managerial, administrative  - 14 - and technical skills of Department of Agriculture and Planning Division staff. To meet these objectives, the five-year Project would have the following main features. (i) Strengthening MOA's Planning Division so that it can formulate an improved long term development strategy for the agricultural sector and provide better technical advice to policy makers on agricultural investment priorities. Specifically, the Project would provide consultant services for technical, financial and management support to conduct studies and supplement local expertise in PD; support a program of specialized training for selected PD staff; provide for up to six economist trainees and provide micro-computer facilities and other office equipment. (ii) Strengthening DOA's capacity to plan, implement and monitor the agricultural extension program. The Project would: (a) support a substantial program of local and overseas training for extension staff to improve technical, financial and administrative skills and establish a training unit in MOA to implement the above; (b) introduce a technical career stream and promotion system for both pr.fessional and technical staff; (c) support production of improved technical and training materials to allow better dissemination and application of the results of agricultural research to farmers; (d) improve extension and research linkages through extension staff participation in Adaptive Research Teams based at ADD level, in research-extension workshops, and in development and dissemination of locally-specific technical recommendations, and (e) strengthen the existing system of financial management and expenditure control; (f) support innovative approaches to agricultural extension and information transfer in Nzuzu Agricultural Development Division including the provision of ten marketing sheds and incremental seasonal credit to smallholder farmers in the Mzuzu area for agricultural inputs to encourage adoption of improved technical recommendations. Detailed Features Strengthening the Planning Division of MOA 41. The Planning Division, would be upgraded to the level of other departments in MOA. The Chief Projects Officer in the PD would be assisted  - 15 - by an internationally recruited Planning and Management Advisor (funded by the Association) for a period of at least 30 months after which time a review would be conducted to determine whether the contract should be extended. The advisor would provide technical advice and policy guidance to PD on, inter alia, commodity pricing and the agricultural investment program, including assessment of project proposals against identified sector priorities and available resources. In collaboration with the head of PD, the advisor would help formulate a five year plan for MOA which would include an agricultural sector strategy statement, major studies to be conducted, staff and training needs and budgetary requirements. This five year strategy plan would be forwarded to the Association for review and comment by July 1, 1987 (para 3, Schedule 5, draft Development Agreement). PD, assisted by the planning and management advisor, would examine its overall functions and future manpower needs to determine whether modifications are required to achieve its objectives. After a review by MOA and the Office of President and Cabinet, a staff recruitment program for PD would be developed and submitted to the Association for comment by July 1, 1986. PD would formulate detailed annual work plans and budgets and submit them to the Association for review and comment by September 30 of each year (para. 3, Schedule 5, draft Development Credit Agreement). In light of the importance of the planning and management advisor, it was agreed the post would be filled by April 30, 1986 (Section 3.04, draft Development Credit Agreement). 42. The Project would also provide finance for PD to recruit a systems analyst for about a year by March 31, 1986 (para. 4, Schedule 5 Draft Development Credit Agreement) and a pricing policy economist on a periodic consultative basis. In addition, the creation of up to 6 additional positions in PD would be supported to create a pool of trained professionals to meet future needs. Funds would be provided for specialized training to upgrade the qualifications of the PD staff, through degree and in-service training under the Planning and Management Advisor, 12 person-months of short-term technical assistance to conduct monitoring and evaluation studies, on-going pricing policy evaluations, and other minor studies would also be financed. National Extension System Development Management and Systems Improvement 43. The Project would build on the substantial experience Malawi now possesses in agricultural extension work. The block extension system has shown good promise in its early implementation, but its effectiveness has been hampered by the management, planning and other constraints previously noted (see para. 26). Utilizing the technical packages available and linking closely to the parallel, recently-initiated National Agricultural Research Project, the Project would strengthen the overall planning and management system, achieving greater efficiency with existing staff and financial resources. It would support the establishment of an extension program planning capacity within DOA to assist DOA and ADD management in (i) formulating a five year extension strategy plan, (ii) developing extension program and supporting budget proposals for annual submission to MOA and Treasury, (iii) analyzing annual ADD work plans to ensure that objectives, targets and resource allocations are adequate and tie with  - 16 - priorities set for the extension program, (iv) ensuring timely implementation of, and monitoring, extension program performance, and (v) arranging for specific ad hoc studies as needed to improve the quality of the extension program. 44. Responsibility for the extension program planning and related functions in DOA would be assigned to a newly created position of Deputy Chief Agricultural Officer CDCAO), who would be employed by March 1, 1986 (para 5, Schedule 5, draft Development Credit Agreement), and be assisted by an economist seconded from PD. A senior extension management and planning advisor, recruited internationally for 30 months, and reporting to the Chief Agricultural Officer would help the DOA carry out its expanded work program in coordination with other entities involved such as PD, the ADDs and the MOA Training Unit. This advisor, financed by the Association, would be in post by March 1, 1986 (para. 5, Schedule 5, draft Development Credit Agreement). Under the project, DOA would be provided with a total of 274 person-months of long-term and 71 person-months of short-term technical assistance. The project would also finance staff training required to design, implement and monitor the performance of the improved extension system for DOA and the ADDs. 45. A new annual extension planning and budgeting system would be developed by DOA, assisted by an internationally recruited financial specialist/controller, funded by the Association for a period of 28 months and in post by July 1, 1986 (para 5, Schedule 5, draft Development Credit Agreement). DOA, would be responsible for implementing the planning and budgeting system, which would provide a framework for: estimating the minimum annual budget requirements for DOA and ADD programs; setting operational guidelines for elimination of low-priority recurrent expenditures; evaluating the efficiency of existing investments; identifying areas for potential cost savings and cost recovery; and establishing a system for achieving better resource utilization and cost effectiveness within DOA and the ADDs. The system would initially be introduced and tested in the Mzuzu ADD by April 30, 1987 and, thereafter to other ADDs subject to such modifications as may be introduced by NQA0 (para. 6, Schedule 5, draft Development Cred$t Agreement). To monitor this process, DOA would prepare annual extension work plans, containing detailed descriptions of proposed work with supporting budgets, for DOA and the Mzuzu ADD. 46. To facilitate introduction of the proposed changes in the extension system, DOA would introduce annual workshops for ADD program managers to enable them to assess the results of their extension programs and to make appropriate adjustments in program targets and design. This would assure that feedbackl from ADD managers is taken into account in the formulation of extension strategy. Workshops would also be held. On the basis of information obtained from the above described planning and budgeting system and from recommendations of the Planning Division, a five- year extension strategy plan would be formulated by DOA (with the assistance of the extension management and planning advisor and in regular consultation with USAID and the Association) and submitted to the Association for review and comment by July 1, 1987 (para. 8, Schedule 5, draft Development Credit Agreement).  - 17 - Introduction of a Career Development System and Strengthening of DOA's Managerial and Technical Capacity 47. A study to assist in planning a long-term training program for all categories of DOA staff was conducted in May 1985. Job functions would be periodically reviewed and updated by DOA and ADD managers with the * assistance of a training specialist to identify new training needs resulting from staff turnover or additional work requirements induced by changes in the extension program. 48. Staff Incentives and Career Development. DOA's staff promotion ladder is limited by (i) the small number of grades assigned to each of its current civil service ranks and classes and (ii) the absence of a technical career stream for Subject Matter Specialists. A Civil Service Review Commission has recently reviewed all aspects of the civil service structure including the setting up of scientific and technical career streams and its report has just been released. Under the proposed Project, the Gove.-nment would establish a professional career stream for extension subject matter specialists permitting them to advance on the civil service ladder without moving into the administrative/management track. In this way, extension subject matter specialists would have similar salaries and career development opportunities to those of staff of the same grade in other departments and specialists in the private sector. There is, in addition, a need to review advancement opportunities and incentives for technical assistants whose work in the field is of high quality. The MOA would propose in consultation with IDA the establishment and implementation of a career stream for subject matter specialists and introduce a promotion system for extension professional and technical staff, satisfactory to the Association, by March 31, 1987 (para. 9, Schedule 5, draft Development Credit Agreement). 49. In-Service Training. Demand for Malawian managerial staff has increased dramatically with the rapid expansion of NRDP. Given present manpower constraints in the country, these positions cannot always be filled by persons with management experience and instead are filled by technicians who are expected to acquire management experience over time. This has contributed to the variable quality of management and other key staff within the extenslon system and highlights the need for a strengthened management training program. 50. To increase the managerial and technical capability of DOA staff, the proposed Project would support a substantial (over 13,000 weeks) training program, including: (i) 20 fellowships for post-graduate training at M.Sc. level and 34 fellowships at diploma or specialization level for selected managers and SMSs to provide skills to improve overall performance of the extension program; (ii) short-term fellowships for selected senior staff in their field of competence; and (iii) in-country courses and workshops for managers, financial controllers, and technical staff designed to (a) improve management skills in planning, budgeting and administration of extension programs, (b) provide field extension staff and SMSs with specialized technical knowledge and job specific skills needed to disseminate technical recommendations to farmers, and (c) upgrade the ability of training officers and extension staff to plan, design, conduct and evaluate training activities. The proposed credit would support all management training and USAID will finance all technical training.  - 18 - 51. The training program would be implemented by a Training Unit to be established in the office of the Controller of Agricultural Services-Institutions; the setting up and staffing of the Training Unit will be a condition of credit effectiveness (Section 6.01 (a), draft Development Credit Agreement). The Training Unit, staffed with a Malawian training officer (head) and two Malawian training specialists, will be assisted by the USAID-financed Training Advisor and Training Specialist, and be responsible for consolidating MOA's ongoing training activities in addition to developing (and implementing) the long-term training program referred to above. The Training Advisor is being financed under the National Agricultural Research Project and by the end of 1985 would be able to work on the entire MOA training program and help in the setting up and staffing of the Training Unit. The Training Unit would be responsible for establishing criteria for determining overall training needs, preparing criteria for selecting programs and candidates, developing procedures for evaluating the training program, identifying training instructors and suitable training institutions and organizing a record keeping system for trainees. A cadre of instructors would be formed by the Training Unit in teaching techniques and methods. The Unit would be guided by a Training Advisory Committee, representing DOA, DAR and PD. Extension Materials Development 52. The proposed project would provide support, under USAID financing, for the Agricultural Communications Branch (ACB) of DOA and the Audio Visual Sections in the ADDs to produce a wide range of audio and visual training materials for use by extension staff. The project would finance incremental staff, technical assistance, training, production and acquisition of films and slides, materials, equipment, spare parts and vehicles for both ACB and Audio Visual Aid Units in the ADDs. Extension-Research Linkages 53. The National Agricultural Research Project and the proposed credit would help improve extension and research linkages. Adaptive research teams would be established under the National Agricultural Research Project in all ADDs to combine research and extension staff in a program of farming systems research and on-farm trials and demonstrations, with the objective of making locally-specific extension recommendations on food as well as cash crops to be used by the extension services in the ADDs. Commodity Research Teams and the extension subject matter specialists would play a critical support function to ADD staff with regard to both the local research program and technical recommendations to farmers. USAID would finance establishment of eight ARTs in the ADDs. Strengthening Extension Services in Mzuzu ADD 54. Extension Services. The Mzuzu ADD, as the second largest ADD and representative of most of the country's agricultural areas, has been selected for the first phase of this nationwide program to improve the extension service. Different types of mass media and approaches to information and technology transfer would be tested under the Project.  - 19 - 55. New extension and management strategies, programs and methodologies developed would be further tested and refined in the Mzuzu ADD prior to being implemented nationwide. The improved block extension system would be extended throughout the Mzuzu ADD (two RDPs will be added), while an improved mass media conmunications system and extension program linked with the adaptive research teams (financed under the NARP) would be developed and the new management models put into place. Implementation of these changes in the on-going system would be phased with modifications being first tested over three planting seasons in Mzuzu. The project provides the needed support (additional infrastructure, equipment, personnel) to complete the extension system in the Mzuzu ADD. Emphasis would be placed on evaluation and monitoring of the system. 56. The Project would support a pilot mass communication scheme to identify more cost effective methods of disseminating technical information to greater numbers of men and women farmers. The high rate of illiteracy among adults in Malawi (estimated to be 47% for those 15 years and older, but varying considerably between districts and between men and women) means that visual presentation is key to reaching the rural population. The Project would cover the costs directly attributable to this pilot scheme. Under USAID the Project will also provide funds for an internationally recruited agricultural extension adviser to be in post in March 1986, and who would provide guidance in the design, supervision, implementation and evaluation of the improved extension systems. Assurance was obtained at negotiations that DOA would introduce a mass communication scheme in the Nzuzu ADD not later than October 31, 1986 and furnish IDA with annual report on progress made in its implementation (para 12, Schedule 5, draft Development Credit Agreement). Such a scheme would be tested over a three-year period prior to extending it to other ADDs. USAID would finance costs directly attributable to the communications scheme, while the Association would finance staff housing, offices and office furniture, marketing sheds, equipment, vehicles, demonstrations and staff training. The Association would also finance the services of a seed multiplication specialist for three years to conduct demonstrations on higher yielding improved varieties of groundnuts particularly suited to parts of the Mzuzu area. 57. Credit. Credit is increasingly important as the cost of inputs escalates and larger cash outlays are needed due to more advanced farming methods. The credit component financed under the proposed Project is * imited to areas in Mzuzu ADD where credit is necessary to reap full benefit from Bank funded infrastructure investment, and to other areas in the Mzuzu ADD where credit is required to enable farmers to adopt new or improved technology. Seasonal credit for the purchase of seasonal inputs, e.g., fertilizer, seeds and insecticides, would be provided to qualified farmers who are members of credit groups/clubs in the Mzuzu ADD and who are judged to have good potential for increased production. The total funding requirements for incremental seasonal credit over the Project period are estimated at USS 3.1 million. Funds for seasonal credit are relatively modest, since it is intended that credit to farmers would be in the nature of a pilot project. In the event that the planned improvements in the present agricultural extension system in Mzuzu are substantially realised, additional funds (by way of physical contingency) are provided to supplement resources specifically allocated for seasonal credit. It was  - 20 - agreed that the Government would carry out a study of the suallholder credit system, to determine the demand for credit and the adequacy of present interest rate structure and existing systems of credit administration. The study would make recommendations on the appropriate on-lending term and conditions of sub-loans, the most appropriate institution to administer the credit scheme, and the strategy to be followed in making credit more widely available. It would be submitted to the Association for review and comment not later than March 31, 1986. A new lending structure arising out of the study, including appropriate terms and conditions of sub-loans to farmers, will be put into effect not 'later than January 1987 (Section 3.03, draft Development Credit Agreement). Project Cost and Financing 58. The total cost of the proposed Project, including capital and incremental operating costs and contingencies, is estimated at US$20.2 million equivalent, with a foreign exchange component of US$15.3 million or 76 percent. Taxes and duties are negligible. The Project cost comprises US$2.0 million for civil works, US$1.7 million for vehicles, furniture and equipment, US$6.1 million for technical assistance, US$4.4 million for training, US$3.1 million for credit and US$2.9 million for incremental operating costs. Project baseline costs have been estimated on the basis of September 1984 prices, updated to reflect expected prices as of negotiations. Physical contingencies have been included at 15 percent for civil works, 10 percent for vehicles and equipment and 22 percent for seasonal credit. Local price contingencies fo: all iteus have been included at 12 percent for 1985, 11 percent for 1986, 10 percent for 1987 and 9 percent thereafter, except on local salaries and wages which have been adopted at midpoints on the respective civil service scale. Foreign price contingencies have been calculated assuming international inflation rates of 5 percent for 1985, 7.5 percent for 1986 and 8 percent for 1987-1990. 59. Financing of Project costs is summarized in the table below. Financing Plan: USAID IDA GOM TOTAL -(US$ mllion) n - Planning Division - 2.6 0.4 3.0 National Extension Planning, 3.8 3.4 0.3 7.5 Management and Training Agricultural Communications 2.2 - - 2.2 Branch Adaptive Research Program 0.2 - - 0.2 Mzuzu ADD (including Seasonal - 5.6 1.7 7.3 Credit) Total 6.2 11.6 2.4 20.2  - 21 - 60. The Project is being cofinanced with USAID on a parallel basis. USAID's contribution of US$6.2 million to the proposed Project would finance part of the training; technical assistance for extension planning and financial management and agricultural sector planning; civil works; and vehicles, furniture and equipment. The Government would provide the equivalent of-about US$2.4 million (or 12%) for the balance of civil works, building maintenance and repair costs, almost all vehicle operating costs and incremental staff salaries. 61. Under the proposed Project the MOA's Planning Division would be required to carry out a comprehensive analysis of recurrent financing requirements of all projects and to formulate proposals for setting program priorities and funding. To ensure that the Project's recurrent cost requirements are built into the revenue budget, the Government would finance 100 percent of incremental operating costs (about US$2.2 million) for all components of the Project except for those relating to the USAID financed Agricultural Communications Branch component. These measures will assist the Government in reallocating outlays within MOA's recurrent expenditures while the introduction of the new budgeting system will help to control the expansion of non-developmental services. Procurement and Disbursement 62. Project procurement would be in accordance with Bank Group Guidelines and is summarized below: Project Element Procurement Method Total ICB LCB Other N.A. Cost (USs million) Civil Works 2.0 2.0 (1.8) (1.8) Vehicles, Furniture and 0.9 0.8* 1.7 Equipment (0.9) (0.1) (1.0) Training 4.4* 4.4 (2.9) (2.9) Technical Assistance 6.1* 6.1 (2.8) (2.8) Credit 3.1 3.1 (3.1) (3.1) Operating Costs 2.9* 2.9 (0.0) (0.0) TOTAL 0.9 2.0 11.3 6.0 20.2 (0.9) (1.8) (5.8) (3.1) (11.6) Note: Figures in parentheses are the respective amounts financed by the Association. * Includes amounts for items financed by USAID and procured under its own procedures.  - 22 - 63. All civil works would be procured through Local Competitive Bidding (LCB) as they consist of small scattered works unlikely to attract international bidders. There are, however, numerous local contractors capable of executing the required smaller works. For housing and offices, Mzuzu ADD management would be assisted by the Government's Ministry of Works and Supplies in drawing up specifications, preparing bid documents, evaluating bids and supervising the construction program. Where LCB would not be feasiLle, the construction would be done through force account of MOA. 64. Vehicles, furniture, equipment and spare parts would be bulked to the extent fi-asible and orders of US$100,000 or more would be procured through International Competitive Bidding (ICB) from suppliers who maintain or agree to maintain an adequate inventory of spare parts and after-sales service in Malawi. Any orders for vehicles of less than US$100,000 would be procured through LCB from suppliers in Malawi. Miscellaneous small amounts of spare parts, equipment and furniture may be purchased in lots of less than US$25,000 and procured through competitive shopping including at least three price quotations or through the Central Government Controller of Stores Department, up to an aggregate of US $100,000 of such purchases. Training would be at selected overseas or local institutions which meet the training requirements. A total of 214 person-months of technical assistance would be financed by the Association (the remainder of the technical assistance to be funded by USAID) and would be procured in accordance with Bank guidelines. 65. Proceeds from the proposed credit would be disbursed as follows: 902 of expenditures for civil works; 100% of foreign expenditures and 90% of local expenditures for vehicles, furniture and equipment; and 100% of expenditures for training, technical assistance and incremental credit. Disbursements against contracts or purchase orders of less than US$5C,000 equivalent and for expenditures for incremental credit would be supported by Statements of Expenditures (SOEs), signed by the managers of the specific components and the Financial Controller of NRDP in MOA. Full supporting documentation in respect of such SOEs would be retained by the borrower and made available for inspection by IDA during normal project supervision. All other disbursements would be supported by full documentation. To expedite disbursements, a Special Account (Revolving Fund) would be established in US dollars with the Reserve Bank of Malawi or at another location satisfactory to the Association to prefinance all project expenditures. The initial deposit of US$ 0.2 million from the Credit would be made after the Government opens the Special Account in US dollars at the Reserve Bank on terms and conditions satisfactory to the Association. This will be a condition of effectiveness (Section 6.01(b), Development Credit Agreement). This sum is the equivalent of the estimated first four months of expenditures averaged for all categories. A schedule of estimated disbursements is provided in the Credit and Project Summary. Accounts and Audits 66. Financial records would be maintained at MOA and ADDs in accordance with sound accounting practices to reflect the operations and the financial position of the project. Credit fund accounts, which would operate as a revolving fund, would be maintained and audited separately.  - 23 - Statements of Expenditures (SOEs) would be separately recorded. Project accounts would be audited by the Auditor-General or by independent auditors acceptable to the Association and wcould include a specific audit of SOEs. Certified copies of the annual audited accounts and the auditors' report would be submitted to the Association within six months following the end of the fiscal year (Section 4.01(b), draft Development Credit Agreement). Monitoring and Evaluation 67. A major review of the current Monitoring and Evaluation (M&E) system is being undertaken by the Government to strengthen the Planning Divisionts ability to coordinate and direct the monitoring and evaluation of rural development programs within ADDs. A Principal Evaluation Officer is being recruited internationally to assist in organizing the M&E Unit within PD. Additional staff to strengthen the Unit would be provided under the project to enable PD to make full use of available information to help in project preparation, and also for project completion reports and cross-project analyses. In addition, the project would provide short-term technical assistance for ad hoc studies on the impact and effectiveness of NRDP projects at the smallholder farmer level. Project Organization, Implementation and Review 68. In addition to specific implementation conditions previously noted, the following management arrangements would pertain. Overall responsibility for Project implementation would be with the Ministry of Agriculture, acting through the Controller of Agricultural Services - NRDP. This arrangement has proven to be satisfactory in the past. The Controller of Agricultural Services would be responsible for establishing organizational linkages and coordinating programs to ensure that objectives of the project are met. To assist in this effort, Government would establish, no later than March 1, 1986, an MDA Program Steering Committee, (para. 1, Schedule 5, draft Development Credit Agreement). This Committee would be chaired by the Principal Secretary of MOA and include the CAS-NRDP; the Chief Agricultural Research Officer; the Chief Projects Officer; the Chief Agricultural Officer (head of DOA); the Chief Accountant; and a representative from the Ministry of Finance. The Steering Committee would: (i) monitor the carrying out of the project in accordance with predetermined benchmarks; (ii) review, discuss and make recommendations concerning any policy level issues or concerns which substantially affect the project; (iii) ensure coordination of program implementation between the donors and among the various Government departments concerned; and (iv) recommend actions required to resolve issues identified by USAID and IDA project review missions. 69. The project would have no separate identity from the overall programs of PD and DOA, and the day to day operation of project components would be carried out under the direction of the line managers of PD, DOA, and the ADDs. The training program in the Project would be implemented by the newly established MOA Training Unit (see para. 53). Credit in the Mzuzu ADD would be administered by MOA in the same fashion as other smallholder credit programs under NRDP. Internationally recruited advisors and specialists financed under the Project would be selected by MOA,  - 24 - subject to satisfaction of the Association as to their qualifications, experience and terms of reference. Whenever practicable, terms of reference for technical assistance will specify responsibility for on-the-job training of local staff. 70. In addition to normal Project supervision, the Association would also schedule review missions, with USAID if feasible, in order to exchange views with project managers at critical times during the implementation of the Project, e.g., shortly after receipt of annual work plans from PD and DOA; during the last stages of preparation of the five year agricultural strategy plan for PD and the five year extension plan for DOA; and prior to final decisions on replicating the new extension procedures tested in the Mzuzu ADD. Environmental Effects 71. The Project would have a generally favorable impact on the environment. The closer research-extension linkages would generate extension recommendations for specific problems including soil management, water conservation and agroforestry development. The Project would support primarily sun-air cured tobacco production in the Mzuzu ADD, so that minimal new demands would be made on fuel wood resources. Pesticides used under the project are limited to small amounts of insecticides utilized for crops such as tobacco and cotton. Benefits and Risks 72. Although the benefits of this type of Project are difficult to quantify, the Project would result in (a) improved efficiencies in agricultural sector planning and extension services and (b) increases in agricultural productivity and production. The strengthening of the MOA at the Planning Division level w-ill permit the PD to accomplish better its goals, namely: MOA budgeting, project identification and evaluation, sectoral analysis and advice, and statistical preparation. Improved research and extension linkages mean that MOA priorities will better reflect local concerns as well as national economic realities. 73. Upgrading the technical capacity and financial management of the DOA would improve financial control and productivity of the department. The new career development stream, as well as in-service training, would result in an improvement in the quality and continuity of the MOA civil service, leading to a more effective research and extension program. The improved linkages between research and extension would ensure two way communication between farmers and agricultural researchers, with a more rapid spread of information, improved adaptation to local conditions, and a more complete acceptance of new techniques. Better support materials and improved supervision would result in a more effective extension program. The final result would be increased productivity and yields. 74. Finally, the Mzuzu component and accompanying credit package (about 30 percent of disbursements) would have directly quantifiable benefits. This component has been calculated to have an internal economic rate of return of 22 percent. This results from increased production of maize, groundnuts, tobacco, cotton, wheat and rice, vaiued at import or  - 25 - export parity price. The relatively high rate of return stems from the more efficient utilization of existing staff and infrastructure put in place under previous NRDP investments in the Mzuzu area. The knowledge gained from the Mzuzu component would also assist in better implementation of the new research and extension methods when applied to the other ADDs. 75. Risks affecting any such long-term institutional development effort would include inadequate local funding (which could jeopardize returns from existing and future investments), ineffective management of the extension and planning programs, and difficulties of adoption by farmers of improved technical packages. The Project has addressed the issue of stability of funding by securing the Government's commitment to finance virtually all the recurrent costs, thus making easier their ultimate phasing to the revenue account. The introduction of the new planning and budgeting system for the extension system would lead to better resource utilization and cost effectiveness. The Project would also provide DOA and PD with consultancy services and adequate funds to train relatively inexperienced local staff. The difficulties of developing new and improved extension techniques and technical packages are being explicitly addressed by the NARP and the proposed Project, although higher costs of inputs attributable to increases in external transport costs due to chronic problems with traditional import/export routes through Mozambique, may still discourage their adoption by some farmers. PART V - LEGAL INSTRDMENTS AND AUTHORITY 76. The draft Development Credit Agreement between the Republic of Malawi and the Association and the recommendation of the Committee provided for in Article V, Section l(d) of the Articles of Association are being distributed to the Executive Directors separately. 77. Special conditions of the credit are listed in Section III of Annex III. Special conditions of effectiveness are: (a) establishment of the Training Unir in MOA; and (b) establishment of a Special Account. 78. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 79. I recommend that the Executive Directors approve the proposed credit. A.W. Clausen President Attacbments Washington, D.C. August 29, 1985  - 26 - MALAWI SOCIM INDICATORS DATA SHEET ANNEX I MIAMI RSFS3N GWUPB (WIGNISU S~ PAGE 1 of 7 mr (Ms 2Rwr nmA)& 1%dib 197,Lb LO INC AMC MIOEIC A (inAn SC. 00 TOni.- 11.5 I.3 113.5. SARICtLTUIAL 37.9 39.5 41.7 cvr Nt CArs Can) .. .. 110.0 238 1063.3 Sru couesows omnsa cwAm (ZILOCRANS OF OIL QUIVA r) .. 35.0 4".0 62.3 581.5 POvauONo ae vim snmnmc v0pULATIONWNItTEm (TNOSA*lS) 3529.0 4513.0 402.0 URAN POPULATION CT OF TOAL) 4.4 6.6 11.1 20.1 2.0 POPULATION PUOJICTIONtS - POULATION in TEA 2000 (ILL) 11.4 STATIOART POPULATIO (KILL) 38.0 POPULATION MMNUMu 2.0 POPULATION DItn PER SQ. LI 29.B 38.1 55.9 53.2 65.1 PIt SQ. m. ACRI. LUl 93.1 1143 154.1 112.3 124.8 POPULATION AGE STRUCTU CZ) 0-14 IRS 45.5 46.3 47.1 U6.0- 45.6 15-4 IRS 52.0 50.S 48. 50.4 31.5 65 AND Avw 2.4 24 4.0 2.9 2.7 POPULATION CEOwmN KATE (Z) TOTAL 2.0 2.5 3.0 2.8 2;; URBAN 4.3 6.2 7.0 6.4 5.1 CODE mm RAt-E (PM TVoS) 56.0 56.0 54.0 47.2 47.0 CRoU D011 rATS (PE 13wUs) 29.7 2S.0 23.0 17.8 15.0 OS REPUODUCTIOI Ra 3.A 3.8 3.8 3.3 3.2 AMILT WPLANINC ACCEPTORS. aMAL (mans) .. 33 .. USERS CE OF ARID lE) iD. 1.0 _3J 6 Nwar M ulrns IOaU or rooP Po. iR cair C1969-71-100) 90.0 91.0 96.0 3.3 82.9 PE CAPITA SUPFLY OF CALORES Cs OF RSQUItRNES) 51.0 9.0 ".0 87.7 98.5 PROTENS (CRAMS PER DAT) 62.0 71.0 68.0 51.9 55.4 OF 13ICR ANIMAL AD PULSE 13.0 19.0 19.0 /C 18.7 164 CHLrD (CCS 1-4) DEATH MNA 5.7 50.3 38.0 23.1 18.6 LIFEXnPC. AT BIRs (tumS) 36.3 40.0 44.2 47.8 32.0 INFANTr TNR. RATE (PtM T3US) 207.0 193.5 164.0 11945 1iO ACCESS TO SANE WATER (CZPa) -sOrAlL . 41.0 Id 27.1 42.4 URBAN i. --77.071 63.3 67.3 RURA. L 37.07a 193 35.8 ACCESS TO atTA DISPOSAL (Z OF POPULATIOII) TOTAL 0.. .. 53. Id 26.5 28.9 URBS. 100.0 7r 65.4 57.7 RURAL .. .. 61.0 7 20.8 20.7 POPULATION FR SICtS 36380.0 38630.0 409.0 /a 27l0. 11791.7 POP. PER NURSIG P1350 13220.0 /f 9050.0 330.77 3308.4 2459.s POP. PER HOSPITAL ED TOTAL 890.0 650.0 740.0 1 U173.6 931.1 URBS 120.0 /f 160.0 80.0 7 423.2 36.3 RAL 1310.0 7 900.0 1480.0 7 3252.5 4371.9 ADISSIONS U HOSPITAL D.. 32.1 39.0 /e .. 27.2 AVERAGC SIZE OF USENLO TrOAL .. .. uRA .. 3.4j . . . RURAL .. 5.0 . AVERAG NO. OF PErSUIRSO nrag .. .. . .. ORSM~, 1.7 lb . _. RURAL .. .. PERCENTAG OP DUELLINGE MITE ELEC. TOTAL .. .. URBA ., 16.0., . .. RURAL .. .. '..  -27- ANNEX I PAGE 2 of 7 NAELAMiI - SCIAL IKDITOS UAA SHEET XMAW NDCVF=isuCTA cPs (WEIGHTED AVEGS) /a HALAWI * HOS DST (MST 6wA*m bSTINATSJ Jb 1b CES LOW INCOUS AFRICA KDOLE INCaN 196fl/b ~ ~~T h SOUTH OF SAHARA AFRICA . 4W SAhARA aJCsA O TE RTIOS PRIKMA: TOTAL .. 36.0 62.0 67.8 93.7 MALE .. 45.0 73.0 77.6 IUU,U FEMALE .. 26. 51.0 56.9 5.2 SECONDARY: TOTAL 1.0 2.0 6.0 13.5 17.3 nALE 1.0 3.0 3.0 17.9 25.0 FALE 0.3 1.0 2.0 9.1 14.5 voCuTroAL (I OF SD^RY) 23.S 2.9 2.9 /d 13.2 5.9 PUPIL-TEACUt RATIO PRIMARY 41.0 ".0 65.0 /d 46.9 41.1 SECONDAr 14.0 16.0 21.0 Wi 27.5 25.5 PASSEER CARS/THOISO aOP l.a 2.2 2.4 /1 3.B 20.8 RADIO RECEIVERS/fII0USAUD raP 21.6 23.5 44.8 55.8 107.5 TV uaIVRS/nSTOusoD OP 1.7 .. .. 2.6 zo.n NEWSPAPER (PAUl CGENEUAL IEFEREST") CIRCULATtON PE THOUSAND POPLATION .. .. 6.3 5.0 1.4 CINEMU ANNEAL ATTENDA /CAPIA 0.3 .. .. o:s 0.4 LAwR onc ToTAL Uo TOR= (TSnS) 1621.0 1953.0 2751.0 FEMAlE (PERCENT) 38.7 38.1 37.5 36.2 36.2 ACRICILTURE (PERCENT) 92.0 89.0 56.0 /d 77.5 54.5 IDUmSTRY (PECENT) 3.0 4.0 5.0 W 9.7 18.3 PARTICIPATIN RATE (PERCET) TOTrAL 5.9 43.9 60.9 39.3 36.8 HALE 57.5 55.3 52.6 50.9 67.1 rEMLE 34.8 32.9 30.8 2B.1 27.2 ECoaNOIC DEPENDENCY RATIO 1.0 1.1 1.2 1.3 1.3 PERcr OFr PRIVAIE INCOME RECEIVED BY SICRESr SR or UUSEOLS- .. 32.6 .. REaMs 20 OF ROUSHLDS .. 50.6 i .. LoEST 2ZO OF HOUSases . IO.A. . . UST 4OZ OF IUMSERUS .. 21.S IL . . Per To ms ESTDMTEANSOlUTE POVERIY ITNCU mVEL (USS PER CAPT) URBAN .. .. 123.0 Ic 10.5 590.7 RURAL 99.0 iF 95.0 275.3 ESTIMTED RELATV POVERTY 18X12 LVEL (USS PER CAPIT) URBN .. .. 65.0 le 113.1 545.6 RURAL .. .. 52.0 iF 67.6 201.1 ESTIMATED POP. BELOW ABSOLUTE POVERY INCOME LEVEL (S) URBAN .. .. 25.0 /c 3b.6 - RURAL .. .. H5.07 61.8 NW AVAILABLE .ODT APPLICrALE N OTE S Ia The group aerages for eacb Indicator e popultion-wighted afltletlc ma_s- Coverag of Countries among the indicators depend. on evailabiLtty of data and Ia not uniform. lb Unleas otherlsee noted. 'Data for 1960" refer to ny year beten 1959 and 1961; "Data for 1970" between 1969 and 1971; and date for "Host Recent Estimte" betwaen 191l and 19U3. lc 1977; Id 1980; Ie 1979; /f 1962; a 1967; fb 1972; /A 1978. JUNE. 1985  - 28 -ANI TI DEFINNOIM OFPSOCIAL INDICATORS PAGE 3 of 7 Non sAlthough she damsare draw fnro,mour ene#rllyjudgedthe mat atuthmrimtlettand rellabk ishould ala.be mated thatmey maynotbe intenmamionafl) comrparabl beue of the lack of stanardied definitions and concepts umad by diflerent cmm.un in coering the datts The das are. nonetheles. uSl to dacribe urders or msapitude. indicate trnds and chmacterize ccrtain major differences bewn countris The reGermce roups are l I the same country poop of the subject country and (2) a country gp witb somewhat biger ave income thn the country pofheshubject muntry (except for "High lIcome Oil Exponrt" group where "Middle Income North Africa and Middl a' is ehoen beaueof stro soo-dultural aimnittes). In the reference pgup data the averWm are populaion weighed arithmesic nmca for cach iadicator and an nly when mjority of th countrcs ins poup ha data for that indicatot Sinc the coverae oecountrica ammgn the indicators depend oav te ailability ofdata is not uniform. coubtn must beeexrcied in reLaing awega of oaer indicator to another. b eaverageareonly uerul in compating the valueof oe indicator aa timeamong the cauarv and reference gmroup AREA (thousand sq.km.) Cr Bt Rate (perth.usaadI-Numberof live births in the year Torta-Total surface area comprising land area and inland waters; per thousand or mid-year population; 1960. 1970, and 1983 data. 1960. 1970 and 1983 data. Crndr Death Rate (fpr th*smnf)-Number of deaths in the year Agricukm'aIL-Estimase of agricultural area used temporarily or per thousand of mid-year population; 1960, 1970. and 1983 data. permanentlv for crops. pastures. market and kitchen gardens or to GrC Reprodwties Rate-Average number of daughters a woman lie fallow. ;960. 1970 and 1982 data. will bear in her normal reproductive period ir she experiences present ag-specific fertility rates usually five-year averages ending GNP PER CAPITA (USS)-GNP per capita estimates at current in 1960. 1970. and 1983. market prices. calculated by same conversion method as World Fauiy Planning-A wptors, Amnnu (rh.isad-Anaual num- Bank Atlas (1981-83 basis)-. 1983 data. F P q tr,Aa t- n ulnm ber ofac&eptors of birth-control devices under auspices of national ENERGY CONSUMPTION PER CAPITA-Annual apparent family planning program. consumption of commercial primary energy (coal and lignite. FkmSi7fO PIDUUtr (percent of nried uoentam-The peren- petrokum. natural gas and hydro-. nuclear and geothermnal ekec- tage of married women of child-bearing age who are practicing or tricity) in kilograms of oil equivalent per capitam 1960. 1970. and whose husbands are practicing any form of contraception. Women 1982 data. of child-bearing age are generaRy women aged 1549. although for some countries contraceptive usage is measured for other age POPULATION AND VITAL STATISTICS Proups. Total Paplie, n.M fid- Year (thoasandsl--As of July 1;1960. 1970. FOOD AND NUTRITION and 1983 data. Urban Pupukuzrion (percent of total)-Ratio of urban to total Index of FoodPraduaon Per Capite (1969-71 = I -Ilndex of per Jr Peprr {prtenter teiJ-Ran of uban t toul capita annual production of all food commodities. Production population; differcnt definitions of urban areas may affect compar- exludes animal feed and seed for agriculture. Food cesmmoditioes ability or data among countries 1960. 1970. and 1983 data. *cxud * primary cm dites (eg sgarcane Finsteadof tsu * 3 * mcl~~~inude primary axmtodities (eg.& sugareane instead of suear) Ptpulrion Prjections which are edible and contain nutrients (e.g. coffee and tea are Pipulation in year 2000-The projection of population for 2000. excluded): they comnprise cereals, root crops, pulses, oil seeds. made 'or each economy separately Starting with informnation on vegetables, ruits, nuts. sugarcane and sugar beets. livestock. and total population by age and sex, fertility rates mortality rates, and livestock products. Aggregate production of each country is based international migration in the base year 1980. these parameters on national average producer price weights; 1961-65. 1970. and were projected at five-year intervals on the basis or generalized 1932 data. assumptions until the population becamc stationary. Per p11a Spply O'CafOriS (percent Ofruh'eaKWts)-Comput- Stauionary population-Is onc in which age- and sex-specific mor- ed from calorie equivalent of net food suppGis available in country tality rates have not changed ovcr a long period. while agc-specific per capita per day. Available supplies comprise domestic produc- fertility rates have simultaneously remained at replacement levd tion, imports less exports. and changes in stock. Net supplies (nct reproduction rate = I). In such a population. thc binh ratc is cxdude animal feed, secds for usc in agriculture. quantities used in constant and equal to the dcath rate. th-'age structure is also food processing, and losses in distribution. Requiremneiits were constant. and the growth rate is zero. Thc stationary population estimated by FAO based on physiologicl needs for normal acti' ity sizc was estinmated on the basis of the projected characteristics of and health considering environmental temperature. body weights. the population in the year 2000. and the rate of decline of fertility age and sex distribution of population. and allowing 10 perent for rate to replacement level. waste at household level; 1961. 1970 and 1982 data Popidation famonrun nt-Is the tendency for population growth to Pfr Capita Sapply of Proteia (mras per day)-Protein content of conminue beyond the time that replacement-level fertility has been per capita net supply of food perday. Net supply of food is defined achieved: that is. even after the net reproduction rate has reached as above. Requirements for all countries established by USDA unity. The momentum of a population in the year t is measured as provide for minimum allowances of 60 grams of total protein per a ratio of the ultimate stationary population to the population in day and 20 grams of animal and pulse protein, of which 10 grams the year t. given the assumption that fertility remains at rplace- should be animal protein. These standards.are lower than those of ment level from year : onward. 1985 data. 75 grams of total protein and 23 grams of animal protein as an Poprlaeon DenWsty average for the world. proposed by FAO in the Third World Food Per sq.An. -Mid-year population per square kilometer (100 hec- Supply: 1961. 1970 and 1932 data. tares) of total arca: 1960. 1970. and 1983 data. Per Capita eProte Supply Fm Aninalt and -Protein supply Per sq.km. agriculrural land-Computed as above for agricultural of food derived from animals and pulses in grams per day: 19 1-65, land only. 1960. 1970. and 1982 data. 1970 and 1977 data. Ptp.liiaw Age Sterucre (percent)-Children j0-14 years). work- Child (ages 1-4) Death Rate (tperthousadj-Nlumber of deaths of ing age (15-64 yearsj. and retired (65 years and over) as percentase children aged 1-4 years per thousand children in the same age of mid-year population: 1960. 1970, and 1983 data, group in a given year For most developing countries data dented Population Growth Rare (percenta-tetal-Annual growth rates of from life tables: 1960. 1970 and 1983 data. total nud-vear population for 1950-60: 1960-70. and 1970-S3. HEALTH Popmsatio Growth Rate (perent p-mrhan--Annual growth rates Life Expectany a Rirk (yrwrs)-Nlumber of vears a newborn of urban population for 150-60. 1960-70. and 1971-83 data. infant would live if prevailing pattcrns of mortality for all people  - 29- AhNNEX I PAGE 4 of 7 at the time of of its birth were to say the same throughout its lire; Pupr-teacher Rauo - primary, and secondary-Total students en- 1960. 1970 and 1983 data. rolled in primary and secondary levels divided by numbers of Isnfat adutalt Ra (pt rhosad)-Number of infants who die teAchers in the corresponding levels. before reaching one yar of age per thousand live births in a given year; 1960, 1970 and 1983 data. CONSUMPTION AMa go Saif Wor (pen of popubtdon)--qtate urbu Jit Passenr Cars (Per rtaband popuslreou)-Passenger cars com- urul-Number or people (totaL urban, and rural) with reasonable prise motor cars seating less than eight persons; excludes ambul- aocem to sfe water supply (includes treated surface waters or ances. hears. and military vehicles. untreated but uncontuminated water such * that from protected Rago Receivers (per thowsand populalon)-All types of receivers borehols, sprinp and anitay wells) as percntags of their respec- for radio broadcast; to general public per thousand of population; tive populations. In an urban area a public fountain or standpost excludes un-licensed receivers in countries and in years when located not more than 200 meters from a house may be considered registration of radio set was in eRect; data for recent years may au being within resonable aess of that house. In rural areas not be comparable since most countries abolished licensin ma reasonable accus would imply that the housewfe or members of the housdhold do not have to spend a disproportionate part of the day TVRewivers (per thousand popubiln)-TV receivers for broadcast in fetching the family's water needs. to general public per thousand population; excludes unlicensed TV receivers in countries and in years when registration of TV sets was Aaw to Exee D;JPOsaI (ptv of popsilirtin)--totl, war- in efet and rural-Number of people (total. urban, and rural) served by n efect. excreta disposal as percentages or their respective populations. Newspaper Crclation (per thorl;ndppedonj-Shows the aver- Exceta disposal may include the collection and disposal, with or age circulation of "daily general interest newspaper." defined as a without treattment, of human excreta and waste-water by water- periodical publication devoted primarily to recording general news. borne systms or the use of pit privies and similar installations. It is considered to be 'daily" if it appears at least four times a week. Populaio per Pysician-PPulation divided by number of prac- Cinema Annual Attendance per Capita per Year-Based on the tsing physicians qualified from a medical school at university level number of tickets sold during the year. including admissions to Ppuladton per NIsig Person-Population divided by number of drive-in cinemas and mobile units. practicing malc and female graduate nurses, assistant nurses, practical nurses and nursing auxiliaries. LABOR FORCE * Populasion per Hospital Bed-total, urban, and ral-Population Totda Larmr Force (thosanduj-Economic lly acive persons, in- (totaL urban. and rural) divided by their respective number of studing armet forces and unemployed but excluding housenives, hospital beds available in public and private. general and specialzed students. etC. covenrng population of all ages. Definitions in hospitals and rehabilitation centers. Hospitals are establishments varous countris are not comparable; 1960, 1970 and 1983 data. permanently staffed by at east one physician. Establishmer's prov- Femafk rpereenti-Female labor force as percentage of total labor iding principally custodial care are not induded. Rural hospitals, force. however. include health and medical centers not permanently staffed Agricaure (percent)-Labor force in farming, forestry, hunting by a physician (but by a medical assistant, nurse, midwife, etc.) and fishing as percentage of total labor force: 1960. 1970 and 1980 which offer in-patient accommodation and provide a unmited range data. of medical facilities. Industry (percern)-Labor force in mining. construction. manu- Admissions per Hospitl Bed-Total number of admissions to or facturing and electricity. water and gas as percentage of total labor discharges from hospitals divided by the number of beds. force: 1960, 1970 and 1980 data. Participation Rate (percen)---talw. mae, andfemak--Participation HOUSING or activity razes are computed as total, male. and femakl labor force Avewe &S- of Hosh (person per hoaEhold)-towa. arba, as percentages of totaL male and female population of all ages andrurul-A household consists of a group of individuals who share respectively: 1960. 1970. and 1983 data. These are based on ILO's living quarters and their main meals. A boarder or lodger may or participation rates reflecting age-sex structure ofthe population. and may not be included in the household for statistical purposes. long time trend. A fcw estimates are from national sources. Aerage Number of Persons per Room-rtotal, urban, and rural-- Economic Dependency Ratio-Ratio of population under IS. and Average number, of persons per room in all urban. and rural 65 and over, to the working age population (those aged 15-64). occupied conventional dwellings. respectively- Dwellings exclude non-permanent structutes and unoccupied parts. INCOME DlSTRIBUTION Prcaetage of Dwellgs wh Ekcrriciy-4ortal, arban, and ral- Percensage of Totaf Disposable Income (borh in cash and kind)- Conventional dwellings with electricity in living quarters as percen- Accruing to percentile groups of households ranked by total house- tage of total. urban. and rural dwellings respectively hold income. EDUCATION . POVERTY TARGET GROUPS Adjusted E&nwr t Ratios The following estimates are very approximate measures of poverty Prsnary school - total, male and female-Gross total. male and levels, and should be interpretcd with considerable caution. female enrolment of all ages at the primary levd as percentages of Etimaed Absohaire Poverty Income Lerel USS per capita)-urban respective primary school-age populations. While many countries and rural-Absolutc povcrty income level is that income level consider primary school age to be 6-11 years, others do not. The bdow which a minimal nutritionally adcquate diet plus essential differenc:s in country practices in the agcs and duration of school non-food requircmcnts is not affordable. are reflected in the ratios given. For some countrics with universal Estimated Reltie Povrty Incom Lerel (LISS per capira)-urban education, gross enrollment may exceed 100 percent sincc somc and rural-Rural relative poverty income level is one-third of pupils are below or above the country's standard primary-school average per capita personal income of the country. Urban lcvl is age. derivcd from the rural level with adjustment for higher cost or Secondry school - total, me andfemal-Computed as above, living in urban areas. secondary education requires at least four years of approved pri- Estimaed Popslatiol Below Absolute Porerty Income Level (per- mary instruction; provides gneral, vocational. or teacher training centJ -urbn and rural- Percent of population (urban and rural instructions for pupils usuaLly of 12 to 17 years of age: correspond- who are "absolute poor." Cece courses arc generally excluded. Vocational Enrolnmeni fpercenr of secondary)-Vocational institu- Comparative Analysis and Data Division tions include technical, industrial, or other programs which operate Economic Analysis and Projections Department independently or as departments of secondary institutions. June 1985  30 -30- ~~~~~~~~~~~~~~~~~~~~~ANNEX I PAGE 5 of 7 Pum&lai t 6452 - (rsddISZ. dm .W PW MI CJti LSW'10 - (19W MGM - eMac ow.u=u WICAtSr a um M) 1W D179 1 19111 196 1910 am8' an5 1986 1967 19pI N4AML CS _ar eIIC pmb&AA 1326.9 5.4 0.6 0.3 2.6 CA 3.3 3.4 3.7 3. 6.1 .UdrIwlt A2.1 9.2 -5.4 3.6 5.9 3.2 3.2 3.4 3.6 3.7 3.6 Lb*O 229.1 -2. 0.7 6J -3.7 11.0 3.2 3.6 6.0 &A 4.8 S.4w D9.2 1.0 7.5 -L2 W . .8 3.2 3.4 16 3.8 41 Cmmm 1140.2 -Li *.1 -26 -4.1 6.4 9.4 0.6 Li 2.3 2.5 Qms IDvc.r 302.J 11. -23 -1.7 -LI 3.2 -16.2 S.7 5.3 55 5.7