Ghana - Community Water and Sanitation Project

Dacun?t of The World Bank FOR OFFICIAL USE ONLY Repot No. P-6180-GH MEHORANDUM AND RECONMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 15.9 MILLION TO THE REPUBLIC OF GHANA FOR A COMMUNITY WATER AND SANITATION PROJECT MARCH 23, 1994 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (;uIfe;cy Unit - Cedi (C) USS 1 835 e 1= US$ 0.00120 ABBREVIATIONS AND ACRONYMS (W 'S Community water and sanitation ('8VSD Community Water and Sanitation Division ' \W Sp Community Water and Sanitation Project L3DYS I District Water and Sanitation Team GO( Govemment of Ghana 5(xS C Ghana Water and Sewerage Corporation NGO Non-Governmental Organization Q&NM Operations and Maintenance PPF Project Preparation Facility UND I United Nations Development Program FISCAL YEAR January - December  FOR OFFICIAL USE ONLY REPUBLIC OF GHANA COMMUNITY WATER AND SANITATION PROJECT CREDITAND PROJECTSUMAfARY Borrower: Republic of Ghana Beneficiaries: Ghana Water and Sewerage Corporat on Participating District Assemblies Participating communities and households Implementing Agency: Ghana Water and Sewerage Corporation Credit Amount: SDR 15.9 million (US$21.96 million equivalent) Terms: Standard with 40 years maturity. Onlending Terms: Proceeds of the credit would be passed on by the Government in grant form to the Ghana Water and Sewerage Corporation. Financing Plan: Local Foreign Total (US$ million) GOG 2.46 0.00 2.46 Communities 0.90 0.00 0.90 Government of Canada 0.62 1.06 1.68 IDA 7.61 14.35 21.96 Total 11.59 15.41 27.00 Economic Rate of Return: N/A Poverty Category: Program of Targeted Interventions Staff Appraisal Report No.: 12406-GH This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not othewise be disclosed without World Bank authorization.  MEMORANDUM AND RECOMMENDATION OF THE PRESEI)ENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF GHANA FOR A COMMUNITY WATER AND SANITATION PROJECT 1. I submit for your approval the following report and recommendation on a proposed development credit to the Republic of Ghana for SDR 15.9 million ($21.96 million equivalent). The proposed credit would be on standard IDA terms, with a maturity of 40 years, and fina.'ce a community water and sanitation project. Part I of the document discusses Ghana's development issues and prospects, the key priorities of the economic reform prognim at the macroeconomic and sector levels, and the Bank Group's assistance strategy. Part II of the document describes the proposed Credit. PART I: COUNTRY POLICIES AND BANK GROUP ASSISTANCE STRATEGY 2. This section describes Ghana's policies and development objectives and the Bank's Country Assistance Strategy (CAS). It first summarizes recent developments and Ghana's central development issues. A discussion of the status of the policy dialogue and the Bank's country assistance strategy follows. The section concludes with a summary assessment and criteria for evaluating progress in key areas. Annexes A1-A6 provide details on portfolio performance, and key economic and exposure indicators. A. Recent Economic and Social Performance 1. Background 3. Ghana is well endowed with natural resources, including arable land, forests, and sizable mineral deposits of gold, diamonds, bauxite, and man1ganese, as well as additional potential for hydroelectric power. The economy has traditionally depended on primary production and exports of cocoa and minerals. Most of the Ghanaian labor force is employed in agriculture. Agricultural production, primarily small scale, is concentrated in staple food crops and cocoa. Ghana ranks among the world's largest producers and exporters of cocoa. The service sector is the second largest employer-over 25 percent of the labor force-accounting for over 40 percent of real GDP. It consists largely of trade and public sector services. The industrial sector accounts for about 14 percent of GDP and employment; it is relatively diverse and well developed by Sub-Saharan Afiican standards. 4. Pre-reform Setting. Although Ghana once enjoyed a relatively high living standard compared with most other West African nations, inappropriate economic policies and a deterioration in the external terms of trade in the 1970s led to substantial declines in income in the 1970s and early 1980s. Between 1970 and 1982, import volumes fell by a  2 third, real export earnings declined by 52 percent, and domestic savings and investment declined from 12 percent of GDP to almost nothing. Production spiraled downward and prices upward. The inflation rate exceeded 100 percent in 1983. The return of over one million Ghanaians from Nigeria in 1982-83 and a prolonged drought during that period severely strained food supplies and the employment situation. 2. The Economic Recovery Program, 1983-93 5. The Government introduced the Economic Recovery Program (ERP) in 1983. The goals of the ERP were to: (i) restore and sustain macroeconomic stability; (ii) create an incentive framework to enhance efficiency, encourage savings and investment, and provide an enabling environment for economic growth; and (iii) improve the efficiency of public sector management. The ERP was supported by financial and technical assistance from the World Bank, the IMF, and other multilateral and bilateral donors. Real GDP growth averaged 5 percent per annum in the decade following the introduction of the ERP; this contrasts with minus 2 to 3 percent per annum in the preceding decade. On a per capita basis, real income grew by 2 percent per annum, and the benefits of growth were widely distributed. Most farmers and rural workers gained from improved producer prices for cocoa and liberalization in trading of other cash crops. Real food prices (cereals and reots) gradually declined. Government expenditures on social programs rose significantly in the initial years of the ERP, resulting in improved provision of basic social services and in improved social indicators. 6. Exchange Rate and Trade Reforms. Exchange rate and trade reforms were the centerpiece of the ERP; after a decade of reform, Ghana now has a market-determined exchange rate system and a low-tariff trade regime free of quantitative restrictions. Foreign exchange transactions at the bureaux de change were legalized in 1990. In April 1992, the Government introduced an interbank market in place of the weekly auction of foreign exchange, with a view to encouraging such transactions among banks. The spread between the interbank foreign exchange market and the bureaux has fallen since 1990; currently it is less than 10 percent. The Government abolished the import licensing system in 1989. Tariffs on imports were reduced substantially during the ERP; excise taxes on imports were equalized with those on locally produced goods. Exports, except for cocoa, are not taxed. 7. Fiscal Management. Under the ERP, the Government improved the fiscal situation and the efficiency of public resource management. Greater resources were mobilized through tax reform, improved tax collections, and a rationalization of consumption taxes and user charges. Reflecting previous shortages of materials and supplies, recurrent expenditures were given higher priority under the ERP, with particular emphasis on improving the efficiency of the health and education sectors. Public investments, which grew from negligible levels at the beginning of the ERP to 10.4 percent of GDP in 1993, focused on the rehabilitation of economic and social infrastructure. To improve investment allocations, sectoral ministries strengthened their planning units and the Ministry of Finance and Economic Planning (MFEP) established a  3 committee to ensure that, within a three-year time horizon, investments would meet established criteria and support sectoral strategies. These improvements notwithstanding, there is a worrying trend towards expenditures for public service wages and salaries. Indeed, some 70 percent of revenue (equivalent to 9 percent of GDP) finances the public service wage bill. What is left after interest payments cannot adequately support required operational and maintenance expenses. The develcpment budget is increasingly being financed through foreign grants and loans. 8. Financial Sector. Under the ERP, the Government began implementing a program of wide-ranging financial reforms. It abolished interest rate controls and sectoral credit ceilings, improved the legal framework goveming banking activities, and introduced uniform accounting and auditing standards for all banks. The Bank of Ghana (BOG) improved its supervision of banks. A program to restructure the finances and management of distressed banks has been completed, and the second stage of the financial adjustment program, to reduce government owrership in all the state controlled banks to a minority position of 40 percent, is now under implementation. The two largest banks-Ghana Commercial Bank and the merged Social Security and National Savings and Credit Bank -are to be divested by the end of 1994; the divestiture of other banks will be continuing over the next few years. Ghana has a small stock exchange, listing some 15 companies; with the ongoing divestiture program in the commercial manufacturing and financial sectors, it is anticipated that the stock exchange will be a vehicle for the flotation of shares, thus facilitating a broadening of company ownership. 9. Agricultural Sector. For the cocoa subsector, an important ERP objective was to improve farmer incentives through increasing the share of the world price they receive for their cocoa. The farmers' share of the FOB price increased from 25 percent in the 1984- 85 crop year to an estimated 45 percent in 1992-93; however, there has been some reduction since then with the depreciation of the cedi. The Cocoa Board has reduced operational e-xpenses by retrenching about 32,000 workers since 1984. From the 1992-93 season, private traders can compete with the Produce Buying Company of the Cocoa Board in domestic cocoa trading. Five companies have been licensed to trade, and they are expected to purchase 20 percent of the crop for the currem season. Vigorous private trading of cocoa in the domestic market during the next few years should compete down marketing costs and provide the basis for a corresponding increase in the farmers! share of cocoa export revenues. An important element of the reform agenda yet to be undertaken is the liberalization of cocoa export marketing. 10. Mining. The mining sector accounts for some 20 percent of export earnings and employs about 20,000 workers in the larger mines and about 30,000 workers in small scale mining. Gold is the principal product, with about 85 percent of mining export values and 85 percent of formal employment. Since the sector opened up for private investment under the ERP, overall output has grown steadily--from 277,000 ounces in 1983 to 995,000 ounces in 1992. Value added in mining rose by about 7 percent in 1991 and over I0 percent in 1992, reflecting investments in the rehabilitation of existing mines and in increased small scale mining activity. Before the enactment of Small Scale Mining Law in  4 1989, illegal mining activity was rampant. Since the issuance of the law, over 400 licenses have been issued to gold and diamond miners. Private sector participation in both small- scale mining as well as large-scale mining is now on the increase. Meanwhile, the Government's divestiture program has been quite successful. It has divested half of its holdings of Ashanti Gold Fields; purchase offers for other gold mines are being evaluated. 3. Recent Developments and Sustainability 11. Macroeconomic Situation. During the last quarter of 1992, just before the parliamentary and presidential elections, civil servants demanded-and obtained-a large increase in wages. As a result, the narrow fiscal deficit (including grants) rose sharply in 1992-to 4.8 percent of GDP-the money supply expanded by more than 50 percent, and the current account deficit widened to 12.9 percent of GDP. Though the 1993 budget introduced significant corrective measures aimed at restoring macroeconomic stability, the actual revenue turnaround fell short of expectations, largely because the second round increase in petroleum tax rates could not be implemented. Thus the money supply grew more than anticipated, the inflation rate was higher, and the cedi depreciated more than had been expected. The 1993 fiscal outturn was a deficit of 3.0 percent of GDP, rather than a surplus of 0.3 percent. However, a favorable agricultural outturn resulted in GDP growth of 5 percent, instead of the projected 4.4 percent. The 1992 fiscal shock halted a sharply rising trend in private investment and reversed a falling trend in inflation. Total in';cstment, after peaking at 16 percent of GDP in 1991, fell to 13 percent in 1992 and recovered slightly in 1993. National savings, after rising consistently to reach over 9 percent of GDP in 1991, fell to 4 percent in 1992 and have been estimated to be about 1 percent in 1993. The inflation rate, which had fallen to 10 percent in 1992, bounced up to 25 percent in 1993. Macroeconomic stability is programmed to be restored over the course of 1994. At the core of the 1994 Government budget are measures designed to secure a fiscal surplus of 1.3 percent of GDP. Credit policy aims at a 5 percent growth in money supply, and the rate of inflation is targeted to slow to 15 percent on an annual basis by the end of the year. 12. Sustainability. After a decade of sustained adjustment in which Ghana has made steady progress based on strong political support for the reform program, Government commitment continues to be strong. Given the broad-based support for the ERP's reforms, it is highly unlikely that they would be reversed. That said, what is less clear is how quickly the next tranche of Ghana's economic reforms, especially in respect of public service restructuring and privatization, will be adopted and implemented. Without public service reform, the large wage bill will make fiscal balance difficult to sustain over the medium term. This will affect the macroeconomic setting and the enabling environment for private sector activities, both of which will strongly influence the vigor of the economy's supply response. Policies that directly affect the private sector will also clearly bu important. (These issues are discussed below in Sections C and D.)  4. Social Conditions 13. The prolonged decline in the economy in the 1970s and early 1980s caused a substantial reduction in per capita income. Social indicators deteriorated markedly. Under the ERP, some of the poor, particularly those in urban areas, were affected adversely, and real wages, particularly of unskilled labor, declined due to civil service retrenchment and the impact of increased competition on inefficient public and private enttiprises. But these adverse effects were limited in duration. For the most part, social indicators and living standards improved under the ERP, which enhanced opportunities for gainful employment in rural areas. Attention is now focused on investing in basic social services essential for improving living standards and enhancing poor Ghanaians' human resources. Life expectancy is 55 years (compared with 51 for Sub-Saharan Africa), and the infant mortality rate is 83 per thousand live births (compared with 107 for Sub- Saharan Africa). The adult illiteracy rate is about 40 percent (compared with 50 percent for Sub-Saharan Africa) and the primary school enrollment ratio is 75 percent (compared with 70 percent for Sub-Saharan Africa). While these indicators compare favorably with the rest of Sub-Saharan Africa, they are behind the levels attained in East Asia when those countries began to grow rapidly. The implication is that investments in basic social services need to be increased for improving social indicators and living standards, as well as for establishing the foundations for accelerated growth. 14. Poverty Assessment. Because of the lack of consistent data covering the period prior to the start of the ERP, a comparative analysis of the effects of the pre- and post- reforms on poverty is difficult to make. That said, the available evidence, as summnarized in the FY93 Poverty Assessment, was that Ghana had made progress in reducing poverty under the ERP. The assessment also found that poverty in Ghana remains predominantly rural with considerable regional variations. Most of the poor live in the Savannan, the Volta basin, and mid-coast zones; these areas account for 64 percent of the nation's poor but only 32 percent of the nation's population. This suggests that programs and projects focused on these areas are likely to be beneficial to the poor. 15. Women in Ghana. Ghanaian women have been, and continue to be, active participants in the country's labor force, particularly in agriculture, trade, and small scale manufacturing. However, the potential contribution of women to the economy is constrained by a lack of education (school enrollment ratios and literacy rates for females are lower than for males, particularly in the North) and by legal, cultural and social barriers that limit their access to land, credit, farming inputs, technology, and support services. While some women have managed to participate in the formal economy dominating the trade in domestic food commodities, most continue to spend long hours on low output, physically demanding activities such as collecting fuelwood and headloading of farm produce, in addition to their household responsibilities. On average, women in Ghana bear six children.  6 5. Environmental Issues 16. The major environmental issues in Ghana are soil degradation, deforestation, and the impact on health from mining activities, water contamination, and inadequate sanitation. Traditional agricultural systems, because of population pressure reducing land fallow periods, have exploited the soils and the forests, with little regard for their long- term productive capacity. In the 1980s, 25,000 hectares of forest were lost each year, and indications are that the rate is accelerating. In rural areas, less than 30 percent of the population has access to safe drinking water aiW' less than IS percent have household sanitation. Mineral production has polluted the air with corrosive and poisonous gases; the discharge of heavy metals and cyanide is polluting water with a potentially serious impact on human health. Government policies and programs to address these issues will be vital for reducing health risks and for ensuring the sustainability of overall development. To this end, the Government can shift some of the associated investment and conservation costs to private beneficiaries; commercial mining and forestry ccncession should reflect the associated environmental costs to the country. Subsidies for the use of fossil fuels, chemicals, and logging, therefore, must be carefully reviewed for their impact on the environment. The provision of clean water and improved sanitation, and the control of toxic chemicals used in mining will greatly reduce health risks in both urban and rural areas. Meanwhile, clarification of ownership and management rights can improve land use. Such interventions, by preventing the erosion of fragile but important income sources, can also contribute to poverty reduction. B. External Environment 17. The Ghanaian economy is highly exposed to price fluctuations in world markets. Exports contribute about 19 percent of GDP. Primary products-asically cocoa, gold, and timber-account for about 78 percent of total exports. The country is also heavily dependent on fuel imports, for which price fluctuations have a major impact on Ghana's external terms of trade. Ghana is gradually adjusting to the changing international realities, through diversification in the manufacturing and nontraditional agricultural sectors. Ghana's nontraditional exports have responded well to the ERP, but from a very low base; they still constitute a small fraction of total exports. 18. Debt. Ghana has never rescheduled its debt service obligations. Its total debt outstanding and disbursed (including IMF) amounts to $4.9 billion, close to 81 percent of GDP. Of the total, IBRD loans and IDA credits account for more than 50 percent. The share of non-concessional borrowing, especially for medium-term oil financing, has declined significantly from 25 percent in 1988 to 18 percent in 1993. Including IMF repurchases, the debt service ratio was 38 percent in 1993, compared to 59 percent in 1989. The ratio is expected to decline further to 27 percent in 1994, -in part due to lower scheduled repurchases from the IMF and lower amortization of medium-term debt, - and to 23 percent by 1997. The share of preferred creditor debt service to total public debt service is expected to decline from 56.3 percent in 1996 to 45.3 percent in 2000.  7 Also, the preferred creditor debt service ratio is expected to decline from 13.4 percent in 1996 to 5.6 percent in 2000. 19. Foreign Financing. Increases in the level of foreign direct investment and in concessional aid financing are likely to he constrained. During the ERP, foreign aid financed imports of capital goods and inputs for rehabilitation and reconstruction, and softened the impact of adverse shifts in the terms of trade. Foreign assistance will continue to be needed, although we are projecting a secular decline in real terns, in part reflecting the projected decline in the ratio of the current account deficit to GDP. External financing over the 1995-97 period is projected to total $2.5 billion, nearly 85 percent of which is expected to come from foreign aid. (During the last Consultative Group meeting held in June 1993, $2.1 billion was pledged for a two-year period.) Foreign direct investment, including receipts from the divestiture of existing enterprises to foreigners, is projected at nearly $275 million for the 1995-97 period. Although foreign direct investment is projected to rise three-fold between 1993 and 1997, its contribution remains relatively small, given its low starting level; divestiture-related private inflows are projected to account for some 50 percent of private capital inflows. 20. Impact of CFA Devaluation. The impact of the devaluation of the CFA currencies on the Ghanaian economy has two major components-cocoa and non-cocoa. Th- former largely works through the impact on Cote d'Ivoire as a major cocoa producer, since increased Ivorian output may depress cocoa prices in world markets from what they would otherwise be. This would clearly have adverse consequences for Ghana. Furthermore, Ghanaian farmers may export cocoa through Ivorian channels, thereby lowering Ghana's official foreign exchange earnings and tax revenues. Ghana also stands to lose in other ways, as foreign investors switch to CFA countries and as Ghanaian producers lose markets to CFA competitors. These effects are difficult to quantify since little border trade between Ghana and its CFA neighbors enters the official statistics. Official trade between Ghana and neighboring countries is low, but unrecorded trade, particularly in consumer goods and agricultural commodities, has flourished. C. Country Development Objectives and Policies 21. Despite its rather successfull adjustment program, Ghana's average growth rate has not crossed the 5 percent threshold. The associated 2 percent per annum growth in per capita income is not enough to alter the poverty situation in a dramatic way. Nor is it sufficient to match widespread expectations of more rapidly rising incomes. The Government is therefore interested in achieving accelerated growth. 1. Sources of Growth 22. The achievement of faster growth will depend inter alia on how rapidly macroeconomic balance can be achieved. In 1993, the magnitude of the macroecononic adjustment to the fiscal shock of 1992 was less than anticipated, leaving a further fiscal correction to be implemented in 1994. Beyond that, the achievement of rapid growth will  8 also depend on fully implementing an ambitious policy agenda of structural reforms including public service reform -which will be necessary for sustained macroeconomic balance- accelerated privatization, the liberalization of external marketing arrangements for cocoa, and enhanced support for human capital development and capacity building. 23. Investment and Savings. Taking account of past performance, the current macroeconomic situation, and the Government's commitment to the unfinished reform agenda, the central scenario forecasts a steady but modest increase in economic growth from 5.0 percent in 1993 to 5.3 percent in 1997 and further to 5.6 percent in 2000. In the scenario, private investment is projected to recover gradually, reattaining its 1991 share of GDP at the turn of the century. Increases in private investment are projected to be financed mainly through increases in domestic savings. Though higher foreign direct investment would be desirable, actual increases in such investment over the next five years are unlikely to be a large source of investment financing. Public investment is expected to rise as a share of GDP, financed largely by donor-supported investment programs. Private savings is projected to recover gradually, reattaining 1992 levels (in relation to GDP) by 2000. Public savings as a proportion of GDP is forecast to increase, reflecting the planned implementation of the Value Added Tax (VAT) and the assumption of some progress on public service reform, which in turn will permit a shift in public spending from wages to investments in human capital development. 24. Sou-ces of Growth. Most of the forecast increase in growth will come from agriculture, mining, financial services, and transport. Rapid growth in manufacturing should follow with a lag. Growth at the projected levels should not create serious sectoral bottlenecks, as it will come mostly from better performance in agriculture and services. For the anticipated growth to take place in agriculture, critical constraints in technical support services and rural infrastructure must be addressed. Improvement in the availability of agricultural inputs is also necessary. Most of the agricultural growth is expected to come from increased productivity in traditional crops and from the growth of nontraditional products (fisheries and horticulture). The mining sector, especially gold and diamonds, is projected to grow in the early years, but rapid growth beyond that may face environmental constraints. Given their long gestation periods, it is imperative that the foundations for future growth-in terms of investments in education, telecommunications, other infrastructure, and access to technology-are laid now. 2. Key Development Constraints 25. The ERP's growth was primarily public-sector led. To achieve accelerated growth, greater participation of the private sector in the economy will be necessary. In the past, a number of constraints, including mutual distrust between the private and public sectors prevented strong private sector involvement. In the future, the private sector needs to increasingly become the engine of growth. This will depend on overcoming the constraints outlined below, both with respect to the private sector per se and with respect to public service reform, capacity building, and poverty reduction.  9 26. Private Sector Perceptions. During the past year there have been some improvements in the enabling environment for the private sector. The Government has streamlined business laws affecting the private sector, and a more liberal investment act is now before the Parliament. To forge a working public-private partnership, a Private Sector Round Table has been set up (with the Banks assistance). To attract foreign direct investment, the Government has arranged a few successfiul investment seminars abroad. Albeit very slowly, the private sector is beginning to show some signs of response; for example, a few multi-national companies that had ceased to operate in Ghana have now resumed business operations. However, the private sector remains uncertain about Government intentions, and some constraints remain. The pace of privatization remains slow-notwithstanding recent sales of shares in Ashanti Goldfields. Financial sector weaknesses continue, and infrastructure bottlenecks, especially in the telecommunications area, need to be removed. A recently passed Serious Frauds Act is seen by many as a reflection of Government's continuing distrust of the private sector; however, others feel that the Act should improve transparency and confidence, since due process will now have to be followed in investigating allegations of fraud. 27. Shortages of Institutional and Managerial Capacity. Ghana faces serious capacity and human resource constraints. Although the country has much better educated and trained manpower than most other sub-Saharan African countries, there is a serious shortage of experienced personnel to manage and implement the various elements of the economic reform program. Moving from a highly control-oriented system of economic management to one that facilitates private sector development through market incentives is indeed difficult for a bureaucracy whose previous experience has been with direct state intervention. To address the managerial capacity constraints, the Government has recently established an interagency Capacity Building Steering Committee under the leadership of the Ministry of Finance and Economic Planning. Under this Committee's guidance and with UNDP's support a capacity assessment is being undertaken to be followed by a national conference for consensus building (see also paragraph 36). 28. Public Service Restructuring. Though the Ghana's public service (core civil service and subvented agencies) remains one of the largest in Afiica, it lacks an appropriate incentive framework to ensure effective public service performance in implementing investment projects, in managing public expenditures, and in formulating and executing policy. Given that nearly 9 percent of GDP is currently spent on public service wage and wage-related expenditures, a substantial downsizing of the current service must be an integral aspect of that strategy. Indeed, without substantial reductions in the wage bill, macroeconomic stability may not be sustained over the medium-term, and the private investment response will lag. In addition, improvements in the skill-base of the public service through recruitment and through better pay-performance linkages will not be feasible without downsizing. While the Government in principle accepts the need for significant public service restructuring, it has, however, been rather slow in developing a long-term strategy for doing so. Recently the Government has begun to talk of developing a "home-grown" strategy around which a national consensus can be built. The objectives include implementation of a new staff performance appraisal system,  l0 development and implementation of improved terms of service, and the realignment of civil service functions, including the eradication of duplication in public services. 29. Poverty. The Government's strategy recognizes the two way linkages between poverty reduction and accelerated growth. First, it recognizes the importance of rapid economic growth for poverty reduction, hence its preoccupation with accelerated growth. Second, it recognizes that emphasis on human resources development is needed to ensure that the poor are sufficiently healthy and literate to take advantage of the new opportunities arising from growth. In primary education and overall literacy, Ghana lags far behind the successful East-Asian countries, which had achieved nearly universal literacy as a precondition to rapid growth. Thus, social services need to be sharply improved and adequately supported. The Government plans to enhance its capacity to deliver basic social services to the poor, especially in the areas of health, family planning, nutrition, basic education and safe water and sanitation. It is also decentralizing responsibilities for implementing social programs. D. Bank Group's Country Assistance Strategy 30. The thrust of the Bank's country assistance strategy in Ghana is to help the Government achieve its objectives, as outlined above, through the policy dial .due, economic and sector work (ESW), new lending operations, portfolio management, and donor coordination. Over the past decade, IDA has played an important role in helping Ghana to develop and implement its reform program and to coordinate donor assistance. T he Bank's role is increasingly shifting to advising the Government on the formulation of policy options, leaving much more of the work of developing the options to the Government, albeit with support as needed from the Bank. Promoting Ghanaian ownership and capacity is a guiding principle of our current efforts. 31. Sectoral Strategies. The Bank's sectoral strategies and programs reflect country objectives in poverty reduction, capacity building, and private sector development. Our policy dialogue on poverty reduction is directed towards accelerated growth coupled with a reorientation of public expenditures towards the provision of basic social services to build up the human capital of tne poor. On capacity building, the policy dialogue focuses on encouraging and supporting the Government's own efforts first, to gain public recognition of the foregone development benefits resulting from a bloated and ineffective public sector bureaucracy, and subsequently to forge a wide consensus on the strategy and actions to be taken in improving public sector performance and in facilitating private sector expansion. On private sector development, the dialogue focuses on reduction of public sector involvement in commercial activities through rapid privatization and strengthening of the legal and regulatory framework governing private sector activities. These three themes are covered in flagship ESW tasks and the FY95-97 lending program, which contains operations directed towards reduction of poverty, building capacity in private and public sectors, and increasing the role of the private sector in the economy with particular emphasis on non-traditional exports, trade development, technology diffusion and industrial infrastructure support. The following matrix summarizes the objectives and instruments of our country assistance strategy during FY95-97. The salient features are discussed below.  Oblectives and Instruments of Country Assistance Strategy, FY95-97 Maintain macroaconomio stability, >omplete remaining SuNd capacity Increase rote of Improve management structural reform.s Reduce in private and prhirsts swcor In economy, of unurdl reoorrces Invest in key sectors povety pubfic sectoms Includin exports and the environment olicy dialogue l ncrease public sector savings and Define the causes of poverty niore National Capacity Building Emphasis on etiminating restrictive Ongoing consultation with the iversify instruments foi private clearlv reorient public expenditure, Workshop in March 1994 will egulations, improving institutional Ministry of Environmnent and orrowing/saving. strengthen improve access of poor to basic aRine a strategy and initiate framework, reducing public sector Environmental Planning Council ndependence of financial systeon. services; Improve quality of processes to develop and involverrent in production through (EPC) to insure that Ghena's ncrease pace of privatization. services; and achieve the goals of implement an action plan. privatization. and supporting development policies, programs. iberd7ze cocoa marketing. Worid Summit of Children. Devise exports to promote private invest- and projects take futly into account more demand-driven approaches in ment. the impact on the country's social sectors partly through environmental resource ____ _d__ __ ecentraNzation of services. management. EM FY95 will focus on mediumt- Extended Poverty Study (with Capacity building study rY95 will Industrial Sector Review FY96. Preparatory Sector Work for Rural rm sustainability of macro-balance HROVPI FY95; Urban Sector |cover private sector, universities Water Credit. Urban Environment nd the potential for private sector Strategy Update FY9S. Housing land government. Study FY95196. rowth Finance Strategy Note FY95196. | _ ew lending ,_._._ . I diustment lending and Educational/ Vocational Training; Economic Management Support fil; Public Sector/Private Sector Small-Scaea Mining; Growth- frastructure projects will support PHN; Basic Education; Uteracy II; Capacity Building. Parliamentary Development; Financial Sector. Environrment Ttade-offs in Western reater private investment. Private Agriculture Sector Investment 11; Project. Metro Cities Development. Many projects in infrastructure will Region. Fisheries; Wildlife actor Adjustment Credit. Highwa Metro Cities Development; Small Other projects also inciude major strengthen environment for Management; Water Rehab II. ector, Telecomrnmunications Il, Scale Mining. institution-building components. improved private investment. termodal Transport, Public nterprise Proiect. _ l ortfollo management ranche review process under Supervision of Education, Review of MFED operations under Improved services and enhanced Environmental Resources Manage- ngoing Financial Sector (FINSAC) Health/Population and Urban Economic Management Support It credit for Ghanaian exporters under ment and Forest Resources Man- nd Agriculture Sector (AGSAC) Infrastructure Projects by RMG Project, including some refocusing Public Enterprise Export Project. agement Projects strengthen djustment Credits and Proposed improves contact with beneficiaries of EMS 11. AGSAC to strengthen private cocoa Government's planning capacity in Prvate Sector Adjustment Credit, participants and ownership. trading activities. FINSAC to secure key areas. Impternentetion of supervision of infrastructure Restructuring of PHN It Project. privatization of banks. Agriculture Research and Extension rolects. _ _ ____ _ Projects. onor coordination ext CG (June 19951; Regular Locally organized donor group for Assess Governrnent's Public Active search for cofinancing Consultations with donors and nthly meetings of donors under population, health and nutrition Expenditure Review with other sources in Japan, USA (OPIC). and NGOs under the leadership of the es7dent Mssion Review of macro already in operation but more active donors; support the new Centre for European countries (CDC, CFD, Environmental Planning Council rogram, with IMF. SPA, meetings. participadon by Government still Econonmc Policy Analysis with other KfWI. IEPCI. neods to be fostered. donors.  12 1. Policy Dialogue 32. The policy dialogue with the Government through the decade of the ERP was very successful. Under democratic rule, the dialogue will have to broaden to a wider group of decision makers and consensus builders. For the medium term, the Bank's policy dialogue will emphasize maintenance of macroeconomic stability, private sector development, human resources development and poverty reduction, and capacity building. 33. Governance. In the Ghanaian context, governance issues revolve broadly around three main areas: public service reform, dialogue between the public and private sectors, and the transparency of economic decision making. Some progress is taking place in each of these areas, which are central to the dialogue with the Bank and donors. The Government recognizes the need to seriously review the overall issue of how to streamline public services and downsize these effectively, given the importance for the sustainability of the macroeconomic framework and for the effective provision of basic social and infrastructure services. The dialogue between the Government and private sector is gradually improving, partly through regular sessions with the Private Sector Round Table. The Parliament is now playing a major role in economic decision making thereby broadening its acceptance at all levels. New parliamentary processes for evaluating policy proposals and for debating them are also evolving. Last year, a delegation of the parliamentary committee on finances visited the United States to study processes and systems within the finance committees of the U.S. Congress and state legislatures. Similar study tours are planned to other countries. 2. Economic and Sector Work 34. ESW underpins our policy dialogue. It focuses on diagnosing development problems and identifying constraints to long-term growth and poverty reduction that can be relaxed through public policies, institutional development, and/or investments. The ESW program is being conducted in a participatory manner, with Ghanaian institutions collaborating with us on all ongoing studies. The current year's program includes four large tasks: an extended poverty study, an examination of capacity building requirements, a financial sector review, and an environmental study of the Western Region. (See below.) The FY95-97 ESW program also covers: reviewing public expenditures (this years public expenditure review is being prepared by the Government); preparing a country economic memorandum (focused on the medium-term sustainability of macroeconomnic balance and potential for private sector growth); assessing rural institutions, the industrial sector, and intermodal transport; and developing strategies for the urban, water, and housing sub-sectors. 35. Poverty Analysis. The objective of the extended poverty study, which builds on the FY93 Poverty Assessment, is to better understand the constraints facing the poor and to develop a long-term Ghana-specific poverty reduction framework. The study will update the poverty profile and include a qualitative poverty assessment, which will be  13 based on the poor's own perceptions about the nature and causes of their poverty. It will also identify mechanisms for reaching the poor, and recommend ways of improving the poor's utilization of social services. It is a collaborative effort between the Government, the Bank, and several donors. 36. Capacity Building. The Bank, through the Resident Mission, is actively participating in the work of the Government's inter-agency Capacity Building Steering Committee, along with UNDP and ODA. Following a UNDP-supported assessment of capacity weaknesses throughout the economy, the Bank is working with the Steering Committee in designing and financing a Workshop where Ghanaian leaders will discuss capacity weaknesses and means of overcoming them. The Workshop is intended to assist in forging a consensus around the urgency of defining a feasible strategy for both better utilization of existing capacity and development of the specialized skills needed to achieve accelerated economic growth. Although the focus of the Workshop is broader than civil service reform or public sector reform, the initial thrust will be towards enhancing the institutional performance ot the public sector. The intention is to support a process for identifying the most urgent capacity needs. The Workshop should create consensus on the direction and priorities, and from it should emerge a strategy and components for a program of action to address capacity deficits in Ghana. This action plan will form a framework for donor support. 37. Financial Sector. In collaboration with a Ghanaian counterpart team, we are looking at the financial system from three interlinking perspectives-macroeconomic, microeconomic, and sectoraVdevelopmental. Since the official statistics suggest that the savings rate in Ghana is low, an important component of the review deals with the two- way linkages between financial sector development and savings and investment behavior. The review is also looking at the legal and regulatory framework for the financial sector, focusing on issues of collateral, information systems, and legal constraints. The study includes a detailed analysis of the rural banks, which have been successful in mobilizing deposits, but unsuccessful at recovering loan funds. Building on the ample research on informal financial markets in Ghana, the review will make recommendations as to how informal institutions can be encouraged to become more effective financial intermediaries -between savers and the formal system. The review is also looking at non-bank financial institutions. 38. Western Region Environmental Study. The natural resource potential of the Western Region has importance for Ghana's overall economic growth. The study is looking at the various growth options on the regional and national economy, and the social and environmental implications of the options. It will provide a more detailed understanding of the region's development future, and particularly, a better understanding of issues of sustainability. We expect that this work will provide a framework and a guide for similar studies of other regions in the country. There is a very strong local ownership of the study; the Bank's role is primarily catalytic.  14 3. Lending 39. Over the FY95-97 period, we anticipate total lending in the range of $480 to $780 million. We intend to rely increasingly on sector investment credits to support sectoral policies and institutional development. Adjustment credits will continue to be used to support policy and institutional reforms, although these are being kept at about 20 percent of new commitments. These adjustment operations, including one currently under preparation, would support private sector development through accelerated privatization, public senrice restructuring, and public resource management, and financial sector reforms. If implementation of reforms is on track and the country is hurt by a severe terms of trade shock, creating additional balance of payments need, the Bank would consider raising the share of adjustment lending. The investment lending program will contain sector investment loans for infrastructure, social sectors, and private sector development. Agricultural marketing and rural development will also be emphasized, with the objective of increasing productivity and diversification in the agricultural sector. Inadequate performance in achieving macroeconomic stability, in the promotion of private sector development, in reducing poverty or in improving project implementation, would result in the reduction of new commitments to the lower end of the planned range. Criteria for assessing progress in these areas is provided in paragraph 58. 40. Poverty Reduction. This is the central goal of IDA's operational work in Ghana. To this end, our efforts are directed towards supporting the Government in achieving accelerated growth and in reorienting public expenditures toward primary education and health programs. We are also supporting increased opportunities for the poor, especially in rural areas, through developing markets for labor and decentralizing responsibilities for implementing social programs. Lending in support of poverty reduction includes projects such as Agriculture Sector Investment, Community Water and Sanitation, Small Scale Mining, Educational/Vocational Training and Fisheries. In addition, the planned Basic Education, and Population, Health, and Nutrition projects focus on poverty reduction, by supporting Government efforts to reduce fertility and population growth and to enhance the poor's human capital. 41. Private Sector Development. The Bank's strategy to support private sector development ranges from the macroeconomic level-given the importance of macroeconomic stability for private savings and investment-to more specific sectoral assistance. Past Bank involvement in the sector was instrumental in getting the Private Sector Roundtable process started; this has been very successful in broadening the dialogue between the Government and the private sector started earlier by the Private Sector Advisory Group. The Private Enterprise and Export Development project, approved last year, is assisting private exporters by providing technical assistance to facilitate export activity and short-term finance, while a new Private Sector Development project, under preparation, will strengthen the Research and Development infrastructure, commercialize the trade devulopment and support systems, and support small and medium enterprises in developing better credit standards and bankable projects. The entire  15 adjustment lending program, which consists of three proposed credits, supports private sector development. The Private Sector Adjustment project currently being prepared is focused mainly on supporting an accelerated privatization program. The credit will also provide support to Government's time bound and well-articulated process for generating Ghanaian consensus on efforts to improve public expenditure management. The planned Financial Sector Adjustment operation would support reforms relating mainly to non-bank financial institutions. The Public Service Adjustment credit is expected to support implementation of specific measures on public service restructuring, with a view to enhancing the sustainability of macroeconomic balance over the medium term. 42. Crowding-in the Private Sector. The Bank is also encouraging the Government to involve the private sector in the provision of public services. In telecommunications, we are actively supporting the development of an enabling environment for private sector participation: a regulatory framework for the sector is under preparation with IDA assistance. The Government is reviewing the possibility of bringing in a strategic investor as a partner in Ghana Telecommunications. A proposed Thermal Power project will increase power generation for industrial development. The project also supports increased private sector participation in the power sector, and the development of an appropriate regulatory framework. In agriculture, we are supporting small-scale infrastructure, especially feeder roads, which are essential for improving transport of agricultural products to market towns. Future industrial infrastructure projects will strengthen the export markets through providing infrastructural support for perishable exports and an export processing zone. 43. Capacity Building. As a guiding principle of our country assistance strategy, capacity building is addressed in all planned lending operations, including the three FY95- 97 adjustment operations discussed in paragraph 41. The Private Sector Adjustment project will support government's initiation of the process for developing a "home grown" program of public service reform, while the Public Service Adjustment operation is expected to support implementation of specific measures to reform public service generated by that process including possible downsizing, all aimed at improving the capacity and effectiveness of public service. The Financial Sector Adjustment credit will emphasize capacity building in both public and private sectors. The Bank is also discussing with the Government a technical assistance project, which would include support for the parliamentary committees (Finance Committee) and for the judiciary. 44. Environmental Management. This has grown in importance in the past few years. An ongoing Environmental Resource Management Project contains a component designed to introduce new soil conservation techniques for small farmers, which will have potential for much wider application once the pilot phase is complete. In the area of mining, the Bank is assisting the Government in evaluating and monitoring the environmental impact of mining activities and developing more environmentally responsible techniques. A proposed Small Scale Mining operation will be based on these principles. In conjunction with our capacity-building initiative, IDA will be supporting Ghana's Environment Protection Council to more effectively execute its monitoring and  16 regulatory functions, establish a national environmental information and monitoring system, and safeguard coastal wetland sites. 4. Portfolio Management 45. Total IBRD and IDA lending to Ghana as of December 31, 1993 amounted to $2.78 billion, with total disbursements of $1.9 billion. Of total lending, about 42 percent has supported private sector development mostly through adjustment loans; about 34 percent has been for infrastructure projects, including transport (14 percent) and power and telecommunications (13 percent); agriculture has accounted for about 11 percent, education and health 7 percent, natural resources development and the environment 4 percent, and the balance has been for technical assistance projects. In terms of completed projects, Ghana's record is good: 79 percent of projects completed by December 1992 were rated satisfactory by OED. Annex AI (page 2) summarizes OED's findings about the major reasons for unsatisfactory projects. (In brief, most were related to the pre-ERP policy framework or to design issues associated with projects in the early days of the ERP.) 46. Disbursements. The current portfolio consists of 33 investment projects and 4 adjustment operations. As of end-December 1993, the undisbursed balance was $0.93 billion (investment operations $812 million: adjustment operations $116 million). The Country Portfolio Performance Review (CPPR) held in June 1993 reviewed Ghana's disbursement performnance. As the size of the IDA portfolio increased under the ERP, the average annual rate of disbursements on investment projects gradually declined, reaching a low of 14.5 percent in FY92. In FY93, the disbursement rate went up to 17 percent. In dollar terms, disbursements were 30 percent higher in FY93 than in FY92. 47. Implementation. Annex Al provides indicators of portfolio performance. There has been reasonable progress on problem projects in the past year. Their number has been reduced to five from seven in FY92. An Action Plan on each of the problem projects has been drawn up and agreed with project managers. Intensive monitoring of these plans is under way. 48. Procurement. Although the overall pace of implementation of IDA financed projects is slow, it has gradually been accelerating. In the past, processes for procurement, contract bidding, evaluation and award of contract were very complex and time consuming. Use of standard bidding documents has helped. We proposed to the Government during the CPPR to introduce simpler procedures with strict time limitations given to various agencies involved with procurement. This should shorten the unacceptably long periods of time taken to clear and approve purchase orders. 49. Counterpart Funds. Currently, we are focusing on the availability of counterpart funds, easing of which should improve project implementation. Counterpart funding and the mechanics of cash flow management are being looked at by an ad hoc committee established at last year's CPPR. New procedures have been recommended, and are under  17 consideration by the Government. As part of the FY94 Public Expenditure Review, the Government is also looking at the counterpart finance requirements of all donor-financed projects as well as projects within the approved Public Investment Program, assessing the adequacy of cedi allocations, and investigating why release mechanisms fail to ensure that projects receive funds on a timely basis. 50. Quality at Entry. Efforts to improve quality at entry entail factoring implementation constraints into project design and ensuring adequate country ownership both on the ground and in the bureaucracy. Wherever possible, we are working with the Government to develop simpler project design with limited number of implementing agencies and projects with shorter lifespans, to reduce forecast error during project preparation and design. We are also trying to ensure greater govemment involvement in project identification and preparation and are looking more critically at proposals for technical assistance to ensure that they are consistent with the overall capacity-building and institutional development strategy. Greater involvement of implementing agencies at the project design stage, and in highlighting institutional difficulties of execution, will help us to better anticipate and design around constraints. Upstream participation at the working level will help to ensure ownership among the people responsible for carrying out the project. Last year's CPPR devoted a substantial amount of time to this topic. 51. Resident Mission. The Resident Representative and his staff hold regular discussions with the core ministries on the status of the portfolio and on generic and project-specific problems. All education projects, and selected projects in other sectors, are supervised by Resident Mission staff. In fact, for most sectors at least one headquarters staff is now in the Resident Mission concentrating on project supervision. The current year's CPPR, which will primarily be based on sectoral implementation reviews, will be led by the Resident Mission. A Quarterly Summary of Operations, which highlights problems in each project, is produced by the Resident Mission; this has proven an effective aid to portfolio management. The Resident Mission also organizes periodically an Introduction to the World Bank Seminar for new staff at the sectoral ministries. The intention is to familiarize our clients' staff with Bank procurement and disbursement procedures, to assist them in implementing their projects. 5. IFC and MIGA Activities 52. IFC has played an important role in Ghana's private sector development. As of the end of December 31, 1993, IFC's gross loan and equity investments totaled $423.3 million. Resources have been targeted to the mining, tourism, and industrial sectors through direct project financing and through capital markets. IFC has also been active in the development of the financial sector: it participated in the creation of Ghana's First Discount House and Leasing Company and is providing hands-on assistance to the Government in the development of the Accra stock exchange. In the privatization field, IFC participated directly in two transactions, and prepared the valuation study on Ashanti, which underpinned the divestiture of the Government's shares. Seven projects are being assisted under IFC's Africa Enterprise Fund which provides loan and equity financing of  18 $200,000-$1 million for projects with costs ranging between $400,000 and $5 million. As of the end of 1993, IFC had assisted 20 small and medium size Ghanaian entrepreneurs in developing marketing and other skills as part of its Africa Project Development Facility (APDF). To meet the increasing demand for IFC services in Ghana, both IEFC and APDF opened satellite offices in the country in May 1993. IFC expects to expand its operations in Ghana, with an emphasis on diversification in value-added activities in the agriculture and manufacturing sectors. MIGA has begun operations in Ghana. It has concluded one guarantee operation in the mining sector and several others are under consideration. 6. Donors and Multilateral Agencies 53. The June 1993 Consultative Group (CG) meeting for Ghana pledged official assistance at about current levels with the existing mix of program and project assistance. As the country slowly graduates from adjustment lending, the Bank's coordinating role, through the CG and in the SPA, is likely to become more complex. Donors have expressed interest in cofinancing sector investment operations and have asked the Bank to develop new modalities so that they can participate. Donors are also playing an expanded role in the public expenditure review process. 54. Relations with the IMF. The IMF has supported the Government's ERP with three successive Standby Arrangements, and two compensatory Financing Facility purchases, amounting to a total use of Fund resources by end-1986 of SDR 642.3 million or 314 percent of quota. In November 1987, the IMF approved a three-year extended arrangement for SDR 245.4 million, and a three-year structural adjustment arrangement for SDR 129.9 million. These were replaced in 1988 by an arrangement under the ESAF program amounting to SDR 368.1 million, or 190 percent of quota. After the completion of the ESAF program, the Fund approved a $65 million Contingency and Compensatory Financing Facility in July 1993. Ghana is on an annual Article IV consultations cycle with the IMF, and there is currently an informally monitored program. The Bank maintains close working relationships with the Fund, especially in support of the Government's macroeconomic reforms. 55. Multilateral Agencies. UNICEF is a major donor in the health sector in Ghana. The Bank is working closely with UNICEF both on the National Program of Action for Children and in the context of the ongoing Health and Population Project. In education the Bank has been working closely with the African Development Bank in helping the Government improve tertiary education. E. Agenda for Board Consideration 1. Summary Assessment 56. Ghana has successfully managed a complex adjustment process and is eager to move towards sustained and accelerated growth. But, the shift to democratic rule and to a parliamentary system of Government has brought with it a new phase of the economic  '9 reform process, for which consensus building is an essential ingredient. The process of securing the latter will inevitably slow the adoption of new policy measures. But this slowing should not be seen as a negative development; on the contrary, greater consensus building means broader domestic ownership, and ultimately more sustainable development impact. Meanwhile, the Government faces major challenges, particularly in the areas of public service reform and privatization of public enterprises, where progress has so far been limited. Although the Government has done much to streamline business related laws and regulations to ease entry of new investment in the country, segments of the private sector remain uncertain about Government intentions. 57. Role of IDA. The Bank has played an important role in helping Ghana to develop and implement its reform program and to coordinate donor assistance. The objectives of our future efforts will be to support the Government in the transition from adjustment to accelerated and sustainable growth and in building constituencies for the further reforms that the transition will require. We thus plan to become more pro-active in disseminating both relevant lessons learned from other countries and research findings about best- practice development policies and approaches, in order to help inform the debate in Ghana on the direction of policy. Reflecting our objective of promoting Ghanaian ownership and capacity, the Bank's role is increasingly shifting to advising the Government on the formulation of options, leaving the actual development of the options to the Ghanaians, albeit with ready support from us as needed. Meanwhile, the Bank continues to provide sectoral leadership within the donor community, based on participatory economic and sector work aimed at developing effective sectoral policies and strategies. 2. Criteria for Assessing Progress 58. We fully expect that the planned lending at the upper end of the range (suggested in paragraph 39) will be forthcoming over the FY95-97 period. However, we would propose to move to the low case lending scenario in the event of a serious decline in the Government's commitment to maintaining macroeconomic stability; reducing poverty; promoting private sector development, and improving portfolio management. Progress in these areas will be judged primarily as indicated below: * Progress on macroeconomic management will be judged by Ghana's success in containing inflation and achieving fiscal balance over the course of 1994, and by its ability to set in train, steps to correct the structural problems underlying the fiscal situation-in terms of public service reform. * Progress on poverty reduction will be judged by the overall climate for efficient growth and the orientation of public expenditures towards the delivery of basic social services, especially primary education and health care. * Progress on private sector development will be judged by Ghana's success in both accelerating the pace of the divestiture of public enterprises and maintaining a constructive dialogue between the public and private sectors.  20 Progress on portfolio management will be judged by the timeliness of procurement and other implementation processes, and by the ava"1bility of counterpart funds as needed for IDA and other bilaterally financed projects. 3. Risks 59. Sustained and accelerated growth will require continued strong support for reform. Government commitment to the reform process clearly remains strong-and popular support for the basic reforms is there-so the reforms undertaken under the ERP are unlikely to be reversed. What is less clear is the speed with which Ghana will adopt and implement the further reform measures that will be necessary to achieve accelerated growth. If these reforms prove to be too politically difficult to implement, over time, recurring macroeconomic problems-the result of a too-large public service wage bill- and/or excessive uncertainty about Government intentions would undermine the private sector response, and Ghana would not achieve accelerated growth. 60. The projected growth of the Ghanaian economy is dependent on both internal and external stability. A lower growth scenario is likely to emerge if the policy performance is unsatisfactory with respect to either macroeconomic stability and structural reforms or the government's management of investment projects and expenditures. If macroeconomic performance is unsatisfactory in 1994 and 1995, whether due to domestic policy or exogenous shocks, growth will be slower, as both public and private investment will be adversely affected. If the privatization program lags and the Government's intentions vis- a-vis the private sector continue to be perceived to be ambiguous, private investment and public savings will not recover. Also, stability in the external environment wil be important. Another adverse terms of trade shock would lead to a larger than projected current account deficit and hence higher inflation and a more depreciated cedi. Meanwhile, the full implications of the CFA devaluation of the currencies are not yet fully visible. PART U: THE PROPOSED PROJECT 61. Background. Two-thirds of Ghana's population of 15 million live in rural communities. Water supply schemes have been installed during the last 20 years with a potential capacity to serve 3 million of these inhabitants; service, however, is subject to frequent and long outages, particularly for the some 0.5 million served by rural piped systems. Access to adequate sanitation is even lower. The Ghana Water and Sewerage Corporation (GWSC) is responsible for urban and rural water supply and piped sewerage. Districts and municipalities, assisted by the Ministry of Health, are responsible for on-site sanitation. Extemal assistance agencies have financed the major share of rural water supply investment and recurrent costs.  21 62. A brief summary of the key sector issues is as follows: (a) Management GWSC must put large amounts of resources into maintaining existing small water supplies; while the approved tariff is sufficient to cover recurrent costs of boreholes fitted with handpumps, the collection rate is only about 25% of this level. Its operations would be strengthened by shifting to community management of rural and small town water supply systems (i.e. relying on communities assisted by the private sector to operate and mair.tain them), allowing it to focus on its financially viable urban operations and the development of new community managed systems. (b) Planning and Finance Communities' involvement in planning has been limited to deciding whether or not to accept the technology that is being offered; there has been no choice between different technologies. In addition, most boreholes were originally provided free of charge. The result has been a supply rather than demand-driven sector and unsustainable systems. (c) Technology Use of boreholes where hand dug wells would have been suitable has resulted in unduly high construction costs, and unsustainable systems as many communities cannot afford or are not willing to pay relatively high handpump maintenance costs. 63. A Rural Water Supply and Sanitation Workshop was held in February, 1991 to discuss a draft sector strategy and action plan. The workshop, and subsequently the Government, adopted the proposed strategy, which includes: (a) community planning and management of rural water supplies; (b) government promotion rather than provision of services- (c) private sector provision of goods and services; (d) demand driven investment for basic services based on communities paying part of the capital cost and all normal operations, maintenance and repair costs; and (e) special focus on women as users, planners, operators and managers of water schemes. 64. Project Objectives. The primary objective of the project is the full-scale demonstration of the proposed National Community Water and Sanitation Strategy. In so doing, it would help achieve the objectives of the National CWS Program - that is to: (a) provide basic water services to communities that will contribute towards the capital cost and pay the normal operations, maintenance and repair costs of their facilities; (b) ensure sustainability of these facilities through community management, private sector provision of goods and services, and public sector promotion and support; and (c) maximize health benefits by integrating water, sanitation and hygiene education interventions. 65. Project Description. The project comprises three components: water supply and sanitation for rural communities (34% of project costs), water supply and sanitation for small towns (38%), and capacity building for the public and private sector (28%). Water Siqpply facilities would be provided for rural communities, schools and health clinics in four regions. In all some 1000 water points in 700 rural communities would be constructed (about 2/3 hand dug wells and 1/3 boreholes) and 170 boreholes fitted with handpumps would be rehabilitated. On a pilot basis, a combination of point sources and piped systems for about 30 small towns would be provided in six regions in order to gain experience in the community management of them. The process would be demand driven where beneficiaries would apply for a construction grant, prepare a Facilities and Management Plan with the assistance of a prequalified NGO of their choice, and collect  22 their share of the capital cost before a construction contract is let. Sanitation facilities for households, schools and public places would be provided through a program in which local artisans and small contractors are trained to promote and construct household and public facilities. Hygiene Education would be integrated into the process of helping communities and households to plan their water supply and sanitation systems and training them to manage them. In addition, a teacher training program for hygiene would be offered to schools that want improved water and sanitation facilities. The private sector would be encouraged to take a lead role in planning, construction, maintenance, and equipment distribution for water supply and sanitation facilities, and the ptublic sector (GWSC's and District Assemblies) would be encouraged to facilitate communities' efforts to plan and manage their water and sanitation facilities. 66. Project Financing. The IDA credit would finance training and water and sanitation facilities for rural communities in the Ashanti, Brong Ahafo, Northern and Western Regions, and for small towns in these regions plus the Upper East and Upper West Regions. The Government of Canada would finance training and technical assistance for the small towns component in the Northern, Upper East and Upper West Regions as part of its continuing assistance program there. The total project cost including contingencies would be $27.0 million. IDA credit of $21.96 million would finance 84% of project costs excluding duties and taxes. The project costs and financing plans are given in Annex B. Procurement arrangements and disbursements are shown in Annex C. Key processing steps are in Annex D. The status of Bank Group operations is given in Annex A6. The Staff Appraisal Report No. 12406-GH dated March 21, 1994 is being distributed separately. 67. Project Implementation. At the community level the project would be promoted by District Assembly Representatives as well as NGOs/companies that have been prequalified as "Partner Organizations" to provide planning assistance to communities. The process of obtaining an improved water supply begins when a community, school or health clinic submits a "Construction Grant Application" to its District Assembly through the District's Water and Sanitation Team (2 or 3 person group of community development, water and sanitation specialists). The District would review the application and pass acceptable ones on to a GWSC Regional Water and Sanitation Team which would confinn that the application is authentic and inform the community, school or health clinic through the District WJater and Sanitation Team that it may choose one of the qualified Partner Organizations to assist it to plan its water supply system. The Partner Organization would first go through a mobilization phase to make sure that women and minority groups in the community are involved in the planning process and advise the community on the skill requirements of a Water and Sanitation Committee that would be responsible for representing the community in planning and managing its water supply system. The Partner Organization would then work with the community to prepare a Facilities and Management Plan that includes a preliminary design and a description of how the system would be managed including operations, maintenance, repairs, revenue collection, and accounting. The Plan would be vetted by the District Water and Sanitation Team, passed on to GWSC's Regional Water and Sanitation Team to check for conformity with  23 Construction Grant Guidelines, and retumed to the District Assembly for final approval. Latrines would be constructed by local artisans, hand dug wells by local contractors, boreholes by drilling companies and piped systems by general civil works contractors. Handpumps would be installed by private distributors who would also establish spare parts supply system. Follow-up operations, maintenance, and management training would be provided by the Partner Organization. Hygiene education would be integrated into the planning process from mobilization through the follow-up period. 68. The sanitation component would be the responsibility of individual districts. Those districts that form Water and Sanitation Teams and make a serious effort to implement the sanitation component would be given priority when new districts are selected to participate in the water supply component. With training assistance from GWSC's Regional Water and Sanitation Teams, artisans would be selected and trained to promote and construct household latrines. They would seek applications for construction grants from individual households and submit these to the District Water and Sanitation Team. Through a District Water and Sanitation Fund, a 25% advance payment would be made to the contractor with the final 25% payment made upon completion of the works. The project would reimburse the district for successful works. 69. A community Water and Sanitation Division in GWSC, financially independent of GWSC's urban operations and directly under its Managing Director, would be responsible for overall project implementation. Its Regional Water and Sanitation Teams would manage the project at the regional level providing training and technical assistance to participating districts, facilitating private sector participation, and supervising the Construction Grants Program including management of planning and construction contracts. The Training Network Center at the University of Science and Technology would refine the training materials and methods and train trainers in GWSC's CWSD and District Assemblies in each region. Local and international specialists in participatc-v training, training materials preparation, water engineering and financial management, plus others as required would be made available to the project through an international firm. Key individuals would visit for short periods from time to time to advise/train project personnel and to assist with monitoring and evaluation. 70. Lessons Learned. This would be the first IDA supported rural water supply project in Ghana. The experience of other donors and the UNDP/World Bank Water and Sanitation Program in Ghana and elsewhere in Africa has led to the introduction of community-based planning and management; community contribution towards the capital cost and fiull payment of normal operations, maintenance and repair costs; private sector provision of planning support for communities as well as distribution, installation and repair services for pumps; and capacity building within GWSC to implement new projects. The ongoing Water Sector Rehabilitation Project includes institutional development, rehabilitation and expansion of water supply systems. Good progress has been made in certain areas, including the preparation of planning and detailed designs for the 33 town water supply systems covered under the project; the successful retrenchment of 1,500 GWSC staff; the improved finances of GWSC due primarily to regular tariff increases  24 during the past few years; and the completion of plans to improve operations and maintenance and financial management. Nevertheless, more needs to be done, including the installation of essential equipment already purchased, improved billing and collection, reduced unaccounted for water, greater decentralization and local accountability, as well as greater involvement of the private sector. Initiatives to address each of these are ongoing; but during negotiations, agreement was reached on a more comprehensive action plan leading to the restructuring of the water supply sector. This action plan will comprise: (a) appointment of a steering committee; (b) selection of consultants (to be financed under a Japanese grant) to assess the feasibility of restructuring options; (c) workshop to review consultant report and recommend options; (d) decision by the Minister of Works and Housing to adopt a restructuring option; (e) preparation of a detailed implementation plan; and (f) implementation of the detailed plan. 71. Rationale for IDA Involvement. The Bank's past interventions in the water supply sector have been limited to urban areas. Although there has been significant bilateral involvement in rural water supply, these efforts have not been sufficient to meet the needs nor have they been developed within a strategic context designed to yield self-sustaining investment. The Bank's involvement at this time would support a more rapid development of rural water supply, and would provide further opportunities to improve overall sector management. The Government, with its new sector policy in place, would thus be able to direct and coordinate external assistance more effectively. This operation is consistent with the Country Assistance Strategy being presented to the Board at this time. In particular, it is targeted to the poor, builds capacity in the public sector, and increases the role of the private sector in the economy. It will also enhance health and the quality of life by providing improved water and sanitation facilities, and it will support an increasing role for women as beneficiaries and managers of rural water supply. 72. Agreed Actions. GWSC has (a) adopted the Policies and Guidelines and Institutional Plan for a National Community Water and Sanitation Program; (b) upgraded its Rural Water Supply Department to a Community Water and Sanitation Division (CWSD) whose director reports directly to the Managing Director; (c) increased employee salary and benefit packages to be sufficiently competitive with the private sector to attract and keep qualified personnel; and (d) established offices, procured essential equipment, made good progress in recruiting staff, and approved the Implementation Manual for the proposed Community Water and Sanitation Project. In addition the Government has (a) signed a letter of Sector Policy acceptable to IDA; (b) entered into a Performance Contract with GWSC which separates its urban and rural water supply functions; and (c) agreed on an action plan to restructure the overall water sector. During negotiations it was agreed that (a) communities would own and manage their water and sanitation facilities, paying part of the capital cost and all normal recurrent costs; (b) private contractors and artisans would construct all water and sanitation facilities and assist communities to operate and maintain them; (c) GWSC would carry out the project in accordance with the implementation manual; and (d) annual and mid-term reviews would be conducted at which time progress would be compared to monitoring indicators; the effectiveness of communities, districts, GWSC and private sector in carrying out their  25 responsibilities would be assessed; and the workplan, budget and implementation manual would be updated and (e) as conditions of effectiveness the Borrower would appoint auditors and initially deposit Cedis 150 million into the project account, depositing the remaining part of its counterpart contributions in each year of the project quarterly in advance, in the amounts determined by the Borrower and the Association. It was also agreed that the restructuring plan for the overall water sector would be implemented. 73. Environmental Impact. The environmental category is B. The project would have a positive environmental impact by improving sanitation a"d hygiene within communities and small towns. Potential negative environmental impacts and the measures that will be taken to minimize them are as follows: (a) Increased sullage water can result in ponded water and muddy areas around water outlets and along community pathways, and the creation of potential guinea worm reservoirs and mosquito breeding grounds. Provision of soakaway pits at water outlets and user training regarding the proper management of water point surrounds would safeguard against such problems and would be provided by the project. In addition, community training would include the operation and maintenarce of water outlets; (b) Contamination of drinking water resulting from latrines and soakaways being constructed too close to water points can be prevented by maintaining appropriate distances between latrines and wells and properly constructing wells and well aprons. These would be stipulated in the Construction Grants Guidelines and would be required to be addressed in Facilities and Management Plans; (c) Water quality can be a problem in coastal areas with regard to possible salt water intrusion of more permeable aquifers and in some localized areas where iron and manganese concentrations are high. Water quality testing will be carried out for all water sources and alternative sources or treatment provided as required; (d) Hydrogeological investigations would be conducted for higher yielding wells as well as spring fed and surface water supplies to ensure that well yields are sustainable and that extractions do not adversely affect downstream users; and (e) The project does not involve dams or resettlement. 74. Poverty and Program Objective Categories. The project will (i) provide basic water and sanitation infrastructure in communities, schools and health clinics; (ii) improve health and the environment by improving drinking water quality, personal hygiene and excreta disposal; (iii) help develop the private sector by supporting it to provide goods and services needed for planning, construction and maintaining water and sanitation facilities; (iv) facilitate public sector development by strengthening GWSC and District Assemblies; and (v) support women in development by ensuring that they have a leading role in the planning and managing of their facilities. The project targets the rural poor and improves the quality of their life by providing convenient good quality water and sanitary latrines plus management training and hygiene education. In so doing the project improves health, decreases the amount of time and effort women must spend collecting water, and increases income generating opportunities and food security. The project requires communities (water supply facilities) and households (latrines) to apply for a construction grant, and builds capacity within the community to plan and manage their facilities, enabling them to extend these skills to other development activities.  26 75. Project Benefits. With Ghana's economic recovery well underway and with a new administration in place, the Government's agenda has placed more emphasis on social equity issues and the high incidence of absolute poverty. In Ghana, as in most developing countries, the rural population is substantially less well served by social infrastructure, including access to health services and water supply, than is the urban population. Improved water supply, in conjunctioi: with sanitation and hygiene education, would result in improved health conditions and time saved in fetching water. The project would also be a major step towards sustainability of the water sector by moving towards community management of rural and small town water supplies, private sector provision of related goods and services, and capacity building. This in turn would reduce the long term costs to government and strengthen GWSC by allowing it to focus on facilitating provision of new systems and operating its larger urbani systems. Use of mixed technologies and community management of operations and maintenance would reduce capital and recurrent costs by about 30%, compared to projects based on a single technology and centralized maintenance. 76. Project Sustainability and Risks. The project entails risk in scaling up (where each community must first prepare a facilities and management plan) and in sustaining investments (where communities must manage the operations and maintenance of their facilities after construction). However, the alternative is "top down" planning, and centrally maintained systems that experience has shown cannot be sustained. To scale up and ensure sustainability, the project has been specifically designed to respond to demand at the district and community levels, and to build capacity in the private sector to plan, construct and maintain water and sanitation facilities. Throughout the project particular attention would be given to the training of partner organizations, hand dug well contractors and handpump distributors, as well as district and regional water and sanitation teams to carry out their support role. To expedite implementation, project arrangements including establishment of several regional and district offices, procurement of essential equipment, and recruitment and initial training of key project personnel would be completed during the PPF period. And to reduce risks and ensure sustainability, the IDA financed project has been based on the National Community Water and Sanitation Strategy. In this way training methods/materials and lesson learning can be shared between regional projects, and the critical mass needed for successful private sector participation can better be achieved. If the project is not undertaken, it is likely that the sector would remain constrained by inadequate financing and human resources, and continued use of varied regional projects that employ differing implementation strategies. 77. Recommendation. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve it. Lewis T. Preston President  - 27 - Annex Al Page I of 2 Ghana-Selected Indicators of Bank Portfolio Performance and Management Indicator FY91 FY92 FY93 FY 94 thu Qt. II Portfolio Performance Number of projects under implementation 38 38 40 36 Average implementation period (years)' 3.29 3.46 3.41 3.88 Average ratings Development objectivesb 1.32 1.58 1.57 1.56 Overall statusc 1.58 1.95 1.92 1.97 Percent of projects rated 3 or 4 Development objectives' 5.3 10.5 7.5 8.3 Overall statusc 7.9 18.4 12.5 13.9 Canceled during FY 0.0 0.0 0.0 0.0 Disbursement ratio (O/)d 16.8 14.3 17.0 5.6' Meemorandum item: % completed projects mated unsatisfactoryf 21.0 Portfolio Management Supervision resources (total staff-weeks) 453.0 601.0 631.3 340.4 Average supervision (staff-weeks/projects) 11.9 15.8 15.8 9.5' Supervision resources by location (in %/o) 100.0 100.0 100.0 100.0 Percent Headquarters 100.0 88.0 76.0 75.5 Percent Resident Mission 12.0 24.0 24.5 Supervision resources by rating category (staff-weeks/project) Projects rated I or 2 11.5 12.7 14.6 8.5' Projects rated 3 or 4 23.5 29.5 23.8 17.1' Memorandum item: date of last/next CPPR 6/93 6/94 'Average age of projects in the Bankls country portfolio. b Extent to which the project will meet its development objectives (see OD 13.05, Annex D2). 'Assessment of overall performance of the project based on the ratings given to individual aspects of project implementation (e.g., management, availability of funds, compliance with legal covenants) and to development objectives (see OD 13.05, Annex D2). The overall status is not given a better rating than that given to project development objectives. d Ratio of disbursements duing the year to the undisbursed balance of the Bank's portfolio at the beginning of the year investment projects only. fCumulative rating from OED database as of December 1992. g Represents disbursement ratio or supervision staflveeks as of December 1993.  - 28 - Annex Al Page 2 of 2 Projects with Unsatisfactory Completion Rating Summary of Causes Sector Summary Causes for Unsatisfactory Completion Agriculture Projects implemented prior to Economic Recovery Period (ERP) when there was steady decline in infrastructure and in Ghana's economy, thus leading to disincentives to raise production. Finance Projects implemented prior to ERP. The political, economic, and financial turnoil at that time created an atmosphere of uncertainty which reduced demand for investments, resulted in business closures and inability to service debt which adversely affected the financial performance of development finance credits. Telecommunication Project completed only two years after start of ERP. Due to difficult implementation climate, and delays in project execution, real benefits from physical targets expected seven-and-a-half years behind schedule. Inability to retain experienced and qualified staff also contributed to overall unsatisfactory rating. Multi-Sector Export Rehabilitation Projects, although implemented beginning with the second year of the ERP, were not as satisfactory as they could have been. In an effort to support quick disbursements, projects were not adequately prepared especially in respect of components involving onlending for sub- projects. There was also little involvement of beneficiary agencies in the design of projects.  - 29 - Annex A2 Page I of 2 Gharta-Bank Group Fact Sheet, FY91-FY97 IBRD/IDA Lending Program, FY91-97 Past Current Lending Planned FY95- Category FY91 FY92 FY93 FY94 FY91-94 97programa Commitments (US$m) 319.5 288.9 354.4 100.7 1163.5 480-780 Sector (%/O) Agriculture 12.1 38.2 6.3 27.0 20.3 11.0 Industry and Finance 0.0 34.6 11.6 13.0 16.2 10.0 Energy 0.0 0.0 0.0 0.0 0.0 0.0 Power 0.0 0.0 22.6 0.0 6.9 12.0 Public Sector Management 4.7 0.0 0.0 0.0 1.3 16.0 Infrastructure and urban development 30.0 19.0 21.5 38.2 24.4 27.0 Human resources 13.1 6.2 31.1 0.0 15.1 24.0 Environment 0.0 0.0 5.1 21.8 3.4 0.0 Mining and other extractive 0.0 0.0 0.0 0.0 0.0 0.0 Multisector 40.1 2.0 1.8 0.0 12.2 0.0 TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 Lending instrument (%) Adjustment Loansb 40.1 64.4 1.8 0.0 33.1 20.0 Specific investment loans and others 59.9 35.6 98.2 100.0 66.9 80.0 TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 Disbursements (US$m) 231.7 188.9 206.4 213.3 840.3 218.0 Adjustment loans 154.7 108.7 99.1 85.0 447.5 56.0 Specific investment loans and others 77.0 80.2 107.3 128.3 392.8 162.0 Interest (US$m) 17.9 18.4 19.4 21.1 76.8 25.2 a Planned sectoral breakdown is based on upper range of FY95-97 lending program. b StructUral adjustment loans, sector adjustment loans and debt and debt service adjustment loans.  - 30 - Annex A2 Page 2 of 2 Ghana-IFC and MIGA Program, FY91-FY94 Past Current C-ttegory FY91 FY92 FY93 FY94 IFC Approvals (US$m) 9.5 19.0 60.1 0.6 Sector (%/0) Agribusiness - I Capital Markets 34 - 20 Chemical/fertilizers 9 - Infrastructure 44 - - Manufacturing - 5 13 100 Oil/mining 13 95 66 TOTAL 100.0 100.0 100.0 100.0 Investment instrument (%) Loans 72 91 95 100 Equity 28 9 5 Quasi.equityb -_ - - -, TOTAL 100.0 100.0 100.0 100.0 MIGA Guarantees (US$m) - 9.9 MIGA Commitments (US$m) 3 Tourism project. b Includes quasi-equit types of both loan and equity instruments.  - 31 - Annex A3 Page Iof 2 Ghina: Priority Poverty Indicators Moil Same regiow incomegroup Neu recent Sub- higher 2S-30 15-20 4s:mate Saharan Low- incom Indicator Unit of measure 'ears aso Yan ago (mr) Afica .ncome group POVERTY Upper Povcrty line loal cuwr. .. .. 32,9g1 Hedount index %ofpop. .. .. 36 Lowerpoverty line localcozy. .. .. 16,491 Headcount index % pop. .. 7 GNP per capita USS 230 280 400 350 350 1,610 SHORT TERM INCOME INDICATORS Unskilled uban wages locaS curr. ... . Urskilled na-Al vwages Rwal teams oftn.ade Consuterpriceindex 1987-100 .. 266 Lower income .. .. .. Food .. 256 Urban Rural SOCIAL INDICATORS Public Expenditure on basic social services % ofODP .. 6 7 Gross enroilment ratios Prinmy % schoolagepop. 69 71 75 70 113 100 Male 82 80 g2 76 122 106 Female 57 62 67 60 106 98 Morality thou live births Infant morlity 120 104 23 104 70 40 Under 5 mortality .. 131 177 92 53 Immunization % age group Measls .. .. 67 40 73 70 DPT .. .. 45 35 81 74 Child Malnrition .. _ 36 Lifeetancy Total yeas 47 51 55 51 63 67 Femalesmales ratio 1.07 1.07 1.07 1.06 0.95 1.08 Total fertility rate bits per woman 6.8 6.6 6.2 6.4 3.7 3.5 Matemal mortality raue 100.000 live births .. .. 1,000 Populatio growth rate Infant moralfty rate Primay eu t 6+.@ 250 Qb ofhba ) 1204( 5 ~~~~~~~200 100 4 so 150 3 60 2 40 1 ~~~~~~~~~~~~~~020 011 0 0 u4d6& id70. ane m460B auiO. an. taid6O midft amm F-q.m  - 32- Annex A3 Page 2 of 2 Ghana: Resources and Expenditures Most Same regionlincome group Next recent Sub. higher 25-30 15-20 estimate Saharan Low. income Indicator Unit of measure years ago years ago (mrle) Africa income group HU'MAN RESOU'RCES, Population (mre=1981) thousands 7.830 9.835 15.336 4811,932 3,127.265 773.203 .Age depedenicy ratio ratio 0.94 0.93 0.98 0.97 0.66 0.71 Urban % of pop. 26.1 29.8 33.0 28.7 40.1 53.9 Population growth annual % 1.8 2.2 3.1 3.0 1.9 1.7 Urban 4.0 2.7 3.1 5.0 5.2 3.1 Labor force (1S-64) thousands 3.259 3.813 5,867 203.947 1.448,104 302.448 Agriclture % of labor force 6 1 57 . Indusury 1 5 17 . Female 43 42 40" 37 33 32 Female per 100 males Urban number . .. Rural NATURAL R.ESOUTRCES Area thou. sq. kmn 239 239 239 23.066 38.828 23,990 Density pop. per sq. km 33.0 41.0 60.0 20.0 77.0 31.0 Agricultural land % of land area 32.8 34.4 33.6 51.0 47.4 41.8 Ch,mge ins agricultural land annual % -.09 -0A4 OA 0.0 0.0 0.0 Agri -..:ia land under irrigation %0.0 0.1 0.1 5.5 13.7 12.6 Fores= dnd woodland thou. sq. kmn 98 9 1 8 1 6.651 9,197 5,396 Deforestation (net) antnual % -0.7 .0.8 .0.9 E CINC I E Household income Share of top 20% of households % of incotne . .44 Share of bottom 40% of households . .19 Share of bottom 20% of households .. 7 EXPENDITURE Food % of GDP .. 39.3 40.1 Stasples ... .5 Meat, fish, milk, eggs... 19.9 Cereal imports thou, metric tons 82 85 337 7.838 36,008 44,4 18 Food aid in cereals ..33 73 2,677 6.669 4.047 Food production per capita 1979-81=100 112 132 98 94 122 101 Fertilizer consumption kg%h 0.0 9.0 4.0 14.5 47.5 94.2 Shire of agriculture in GDP % of GDP 43.5 47.7 53.1 29.2 28.7 tiousing % of GDP ..8.4 5.5 Average household size persons per household . .. Urban Fixed investment housing % of GDP . .0.4 Fuel and power %,*of GDP . .2.2 Energy consumption per capita kg of oil equiv. 76 187 68 100 350 1,249 Households with electricity Urban % of households . .. Rural Transport and Comniwncation