Senegal - Second Highway Project

DOCUMENT OF INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use FILE COMPI Report No. P-1161-SE (a) REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF SENEGAL FOR A SECOND HIGHWAY PROJECT February 15, 1973 This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.  RATE OF EXCHANGE Currency Unit CFA Franc (CFAF). US$ 1 CFAF 255.79 CFAF 1 = US$ 0.0039 CFAF 1,000 = US$ 3.91 CFAF 1,000,000 = US$ 3,910  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF SENEGAL FOR A SECOND HIGHWAY PROJECT 1. I submit the following report and recommendation on a proposed de- velopment credit to the Republic of Senegal for the equivalent of US$7.5 million on standard IDA terms for a second highway project. PART I: THE ECONOMY 2. A report on the current economic position and prospects of Senegal was distributed to the Executive Directors on June 10, 1970 (Report AW-15a). A Bank economic mission visited Senegal in March to assess the current economic situation and prospects. The following paragraphs reflect the findings of that mission. Country data are given in Annex I. Economic Potential 3. Endowed with few natural resources, Senegal has only limited possi- bilities for economic development. Ecological conditions are generally poor particularly in the northern groundnut basin where the bulk of the population lives. The south and southeast offer better prospects for development of a varietv of other agricultural products, but Senegal can still be called a one crop economy, as groundnuts account for the cash income of most of the rural population and for nearlv half the country's export earnings. 4. Apart from agriculture, the main possibilities for economic develop- ment are fisheries, touirism and manufacturing. Thanks to rich resources off the coast, fish production has been growing rapidly. International tourism to Senegal has started to develop only in recent years, but prospects for further expansion of this sector are promising. Senegal developed its industrial sectors earlier than other West African countries and its industrial labor force is one of the best in Africa. However, although there are certain definite possibilities for development of new crops and new sectors, diversification will take a long time. The economy will for some time continue to be affected by the vagaries of the weather and by fluctuations in the world market price of groundnuts. Past Development 5. During the early 1960's, Senegal's economy remained stagnant. The growth of CDP in real terms was minimal (1 percent a year) and per capita income mav have declined though at about US$250 it is higher than in most other African countries. Two factors were primarily responsible for this  -2- slow growth. First, independence caused Senegal to lose its privileged posi- tion as the center of French West Africa. This resulted in the loss of export markets for manufactures as domestic industries developed in other W4est African countries. At 'he same time, departure of most of the French civilian and military personnel resulted in declining demand for services and locally produced goods. Second, the Government was slow in attacking the country's difficult adjtustment problems. The heavy administrative apparatus could not respond quickly to the new situation and government policies stressed administration rather than development. The First Development Plan (1961-64) concentrated on investments for social and transport infrastructure, including housing, urban water supply and ad- ministrative buildings; investments in rural sectors accounted for less than 20 percent of total development outlays. 6. The second half of the 1960's saw more energetic development policies by the Government. There was a considerable increase in the public investment program, made possible by substantial improvements in absorptive capacitv of the public sector. The program became more directly development- oriented with the share of investments in productive sectors increasing from 24 to 45 percent during the Second Plan. Rural investments improved in qual- ity, and tripled between the First and the Third Plan. Rural diversification, mainly for cotton, rice and tomatoes, was successfully started. 7. The change in the Government's development policy, however, came too late to have a significant impact on the economy in the late 1960's, when a combination of bad weather and falling export prices led to a 50 percent decline of groundnut production, and when even production of millet and other maior food crops remained insufficient to cover local demand. In the modern sector, though, the Government did succeed in stimulating import substitution, and this partly offset the loss of export markets. In an otherwise static economy, annual growth of manufacturing output amounted to 6 to 7 percent. S. A number of factors combined to bring about a sizable growth of CDP in the last four years after about seven vears of virtual stagnation. Between 1968 and 1971, GDP increased by over 8 percent a year (at current prices). First, the Covernment's agricultural diversification efforts started yielding important benefits. In addition, at the beginning of 1971, effective measures were taken to stimulate grcundnut output. Sharp in- creases in world market prices after 1968 made possible a 25 percent increase in producer prices, and this, combined with favorable weather conditions, helped restore the level of groundinut production. Finally, the modern sector of the economy continued' to expand. There was a marked increase in exports of manufactured products, averaging 14 percent a year and reflecting Senegal's improving competitive position. At independence, the country had been plaguee, with a high cost structure which seriously hampered economic growth. Since then, however, Government nolicies have been aimed at curtailing price and salary increases, which in turn allowed local indcustries (e.g., manufac- turing of textiles and shoes) to start competing successfully in export markets.  -3- Public Finance and Foreign Aid 9. These overall economic trends are reflected in the condition of public finances which deteriorated throughout most of the 1960's. By 1968/69, public savings had declined slowly but continuously to virtually zero. Reve- nues stagnated because of the decline in imports, the most important element of the tax base. Thus, keeping the tax ratio at roughly 20 percent of GDP was quite an achievement. But current expenditures grew, albeit moderately, at some 3 to 4 percent annually thus eroding the current account surplus. 10. After 1968/69, a recovery of public savings was made possible because of better tax collection, increased tax rates and substantial sur- pluses of the groundnut stabilization fund following the rise in grotndnut export prices. In 1970/71, public savings represented scme 7 percent of cur- rent revenues. Yet locally-financed public investment continued to exceed savings by a wide margin, as it had throughout the 1960's, and this resulted in a steady decline in Treasury deposits. 11. Senegal has been benefiting from a large inflow of foreign aid, mostly on concessionary terms. Between 1966 and 1970, foreign aid financed about 65 percent of the public capital program and averaged US$30 million per year. This corresponds to US$8.0 per capita annually, mainly financed by the European Economic Community (40 percent) and France (30 percent). The World Bank Group and Germany contributed, respectively, 13 and 10 per- cent of the total. Foreign aid programs concentrated on infrastructure and on directly productive projects in the rural sector. Of importance also was the technical assistance, mainly in education, which amounted to US$29 mil- lion annually, and which was mostly financed by the French Government. Prospects 12. In coming years the economy will probably grow faster than in the past decade, largely as a result of on-going efforts to diversify agricul- tural output and to expand fisheries, tourism and industrial exports. Medium term prospects would be more favorable, were it not for the fact that ground- nut prices are expected to fall from their present level of over 100/long ton to E80/long ton by 1975, which is expected to erase the surplus of the stabilization fund within two to three years. 13. The government is determined to keep the expansion of current expenditures to a minimum and to improve the financial performance of public enterprises. However, since tax rates are already relatively high, the urgently needed revenue increases will have to come from a combination of better collection and overall economic growth. 14. Considering the need to diversify the economy, it appears essential that public investment be increased from US$60 million annually during the Third Plan (1969/73) to US$80 million during the Fourth Plan. However, while  such a program is in line with the recent improvement in the government's capacitv to prepare and implement projects, the slow increase in public savings, together with the limited possibilities of deficit financing with- out endangering the difficult foreign exchange situation or restricting credit to the private sector, make financing of the Fourth Plan difficult. To offset the expected shortfall in local resources associated with the deterioration of terms of trade, foreign lenders will have to increase their share in the financing of the Fourth Plan to about 85 percent of total development expenditures. Foreign aid is expected to continue to expand rapidlv, based on the progranis of the Euromean Comnunities (Third FED Program), hilateral aid donors (Canada, Italv, Belgiu.m, and oil produc- inrg countries in the Arab world) and the- World Bank Group. In view of Senegal's improved economic performance and absorptive capacity, increased external assistance is warranted. 15. External aid will have to continue to be on relativelv soft terms if it is not to create serious debt service problems. The proportion of grant aid has declined from 85 percent in 1964-66 to 55 percent in 1969-71 and is likelv to drop to about 40 percent of total foreign financial aid during the period of the Fourth Plan. Although the foreign debt service ratio is still low at 5 percent, financing of the remainder of foreign aid on conventional terms would soon lead to unmanageable balance of pay- ments and budgetary difficulties. Projections indicate that at least half of non-grant aid should be extended on concessionary terms if an excessive increase in the debt service ratio is to be avoided. Budget constraints are even more serious, as debt service charges are already projected to absorb one-half of gross public savings by 1980. Any substantial harden- ing of the blend could result in negative public savings. PART II: BANK GROITP OPERATIONS 16. The Bank Croup has had twelve operations in Senegal to date. Total lending amounts to USS55.45 million (net of cancellations), including eight IDA credits, three Bank loans and one hlencd of Bank and IDA funds. The Bank Group is now Senegal's third largest aid donor (after France and the European Economic Communities) providing ahout 13 percent of Senegal's external capi- tal assistance. IFC has invested USS3.25 million in two projects in Senegal. Annex II contains a summarv statement of Bank loans, IDA credits and IFC in- vestments as of December 31, 1972, and notes on the execution of on-going projects. 17. Initially Bank Group lending in Senegal was limited to the trans- port and groundnut sectors. The implementation of a railway project financed in 1966 (Credit 96-SE) was delayed and there were shortfalls in the railway's financial performance. However, the project eventually succeeded in strengthen- ing the railway authority which, with the assistance of a second project ap- proved in FY 72 (Credit 314-SE and Loan 835-SE) should soon be showing an operating surplus. A loan for the Dakar port (Loan 493-SE) had more immediate  success and helped improve the finances and administration of the Port Authority. The Bank Group's first operation in agriculture (Loan 584-SE and Credit 140-SE) was a project to improve groundnut and millet cultivation. It suffered at first from a sharp fall in groundnut output (paragraph 7) which caused a drop in demand for credit and which led to the cancellation of the loan, In 1971, a combination of the Government's strong action, and good weather conditions, permitted the recovery of groundnut production; funds for the lending program to farmers will be fully disbursed shortly but those for technical assistance will continue to be disbursed until the end of 1974 (para. 4, ANNEX I). A 1960 credit for construction and maintenance of feeder roads in the groundnut basin (Credit 198-SE) has been satisfactorily implemented. 18. The Government and the Bank both emphasize now the diversification of agricultural production and development of new productive sectors. The Casamance Rice project (Credit 252-SE) approved in 1971, the Terres Neuves project (Credit 254-SE), also of 1971, and the Rtiver Polders project (Credit 350-SE), all aim at developing new crops and opening up new agricultural re- gions. Hiowever, in view of Senegal's limited agricultural potential, we are actively exploring with the Government other avenues for diversification. Perhaps the most promising of these is tourism, for which Senegal's pleasant climate and attractive beaches are important assets. A Bank mission recently reviewed the prospects for Senegalese tourism within the context of the over- all development of the sector in W4est Africa. The Dakar airport project (Loan 867-SE) approved last November will facilitate tourism development. Other possibilities for diversification currently being examined by the Bank include fisheries and manufacturing. The Government has also asked the Bank to take the lead in assessing the viability of a large tanker repair project, and we are considering the possibility of a project preparation loan. 19. Other areas in which the Bank is involved are urbanization, for which a Site and Services project (Credit 336-SE) was recently approved, and educa- tion, for which a general education project is being prepared following a credit in 1971 (Credit 253-SE) for teclhnical and agricultural education. In- stitution-building and improvement in the performance of public enterprises and services will continue to be important themes in Bank Group lending in Senegal. Examples of these include the telecommunications project (Loan 866-SE) approved last Ilovember, and a DFC and water/sewerage projects being prepared. PART III: TiHE TRANSPORT SECTOR 20. Senegal possesses a relatively well-developed transport system, in- cluding some 9100 km of roads, 1032 km of railways, and a modern deepwater port and airport at Dakar. Transport has consistently ranked high among the Government's investment priorities since independence. The First, Second and Third Four-Year Plans allocated roughly 25, 30 and 15 percent respectively of the public investment program to transport. Roads accounted for roughly half of the total, railways for one-fifth, the rest being split between ports and airports. The transport sector has contributed on average 5.0 percent to Gross Domestic Product since 1964, reaching a peak of 5.6 percent in 1968.  - 6 - 21. Possible inland competition between road and rail in Senegal is limited, since eighty percent of rail traffic is either in bulk freight which is more economically carried by rail or in captive international traffic to and from Mali. There are however areas of transport policy which deserve more attention and coordination, such as investment planning, truck licensing, and, where competition does exist, pricing. The Government has decided to strengthen the institutional framework for decision making on transport co- ordination, with the assistance of consultants to be financed under the Second Railway Project (Loan 835-SE and Credit 314-SE). 22. W;hile past policy has succeeded in providing a well developed trans- port system, insufficient emphasis has been given to maintaining the road net- work. The relatively large stock of road maintenance equipment available at independence has been allowed to deteriorate, to such an extent that the state of repair of the road network has suffered. Out of 9,100 kilometers about 5,000 kilometers are being maintained. This 5,000 kilometers comprises the paved and gravel/earth road neltworks, while the rest of the network is of sand tracks not justifying regular maintenance. The First Highway Project (Credit 198-SE) financed the most urgent requirements for secondary and feeder road maintenance equipment, as well as a study of the needs for road maintenance and improvement. This study led to the project now proposed which would finance a comprehensive program of highway maintenance and the rehabil- itation of 110 kilometers of paved road that has seriously deteriorated. 23. In general the network provides adequate access to most parts of the country, though some need for feeder roads persists. The Government is now remedying this shortfall. The Bank's first Highway Project (Credit 198-SE) financed four feeder roads totalling 78 kilometers in the Sine Saloum region in central Senegal, and other feeder road requirements are being handled in the context of agricultural projects. In this respect a further 244 kilometers will be constructed under the Bank's first Terres Neuves project (Credit 254-SE) and 69 kilometers under the Bank's Casamance Rice Development Project (Credit 252-SE). Several studies have been made into feeder road requirements in the recent past, though the approach to planning feeder road development is not entirely systematic. There is a need to coordinate the studies which have been made and to establish future priorities for feeder road construc- tion. PART IV: TIE PROJECT 24. A report entitled "Senegal, Appraisal of the Second Highway Project" (37-SE) is being circulated separately to Executive Directors. A credit and project summary is provided at Annex III. 25. The road improvement and maintenance study, financed as part of the first Highway Project (Credit 198-SE), was completed in October 1971. The consultants' recommendations served as a basis for a government request for  -7- Bank Group financing of a second highway project. Bank missions in July and November 1971 assisted the Government in reviewing the conclusions of the consultants, and in completing project preparation. The project was appraised in June 1972. Negotiations with the Government delegation led by Secretary of State for Planning, Mr. Ousmane Seck, took place in January 1973. 26. The proposed project includes: (a) pavement strengthening of six sections of road totalling about 110 km; (b) a four-year program for improving highway maintenance by (i) the reorganization of maintenance operations and equipment repair, including training all levels of Direct- orate of Public Works' personnel; and (ii) the purchase of equipment and spare parts; (c) preinvestment studies. 27. The total capital cost of the project is estimated to be US$10.5 million including duties and taxes of US$1.7 million. The proposed IDA credit would be equivalent to the estimated foreign exchange component of US$7.5 mmillion. The Government of Senegal would contribute the remaining US$3.0 million equivalent. Equipment and spare parts would be procured on the basis of international competitive bidding. A preference of up to 15 percent on equipment would be permitted in respect of equipment (trucks) on which the proportion of value added locally is more than 20 percent. The strengthening works would be carried out by contractors under unit price con- tracts awarded on the basis of international competitive bidding. The pro- posed IDA credit would be disbursed against the CIF price of imported equip- ment and 91%, being the estimated net of tax cost, of locally procured equip- ment; 62 percent of total expenditure under the construction contracts for the strengthening of paved roads; and 100 percent of foreign expenditures for scholarships and consultantst services. 28. The recurrent costs of highway maintenance will amount to US$19.3 million from 1973/74 to 1976/77. Over the project period, this will repre- sent an average annual increase of 6.3 percent in the recurrent budget of the Directorate of Public Works in line with predicted traffic growth. Project Execution 29. The Directorate will be responsible for the execution of the pro- ject with the assistance of consultants to be provided under the proposed project. Although the Directorate has faced staffing shortages at the upper and middle levels, the Government has encouraged entrance into technical fields through various programs. W4ith the technical assistance envisaged, and as new Senegalese graduates gain experience, the requirements of the Directorate in design, construction and maintenance work will be adequate.  -8- Pavement Strengthening 30. Under the road improvement and maintenance study, consultants identified about 1,000 kilometers of primary roads on which the pavement had deteriorated to such an extent that normal maintenance would not assure adequate operating conditions and have proposed instead a long-term rehabili- tation program. As the first stage of the rehabilitation program, six sections totalling about 110 km, will be strengthened under the project. These paved roads were built 10 to 20 years ago and are structurally inade- quate for present traffic volumes, ranging from 500 to 5,500 vehicles daily. Even with present high maintenance expenditures on these roads, their con- dition is deteriorating, resulting in high vehicle operating costs. The economic returns from each section of road proposed are between 11 and 42 percent. The economic return on the total strengthening work is 25 percent. Improvement of Maintenance 31. The proposed project includes a comprehensive program for improving higawav maintenance operations. The maintenance study revealed that 60 per- cent of the fleet was no longer serviceable. One-third of the equipment has since been renewed under the First Higlhway Project. To meet future mainten- ance needs, new equipment would be purchased and some of the fleet would be reconditioned with spare parts financed by the proposed project. The project also includes financing for needed improvements to the Directorate of Public Works' storage facilities, the purchase of new workshop equipment, and the purchase of radio equipment for subdivisions not served by the telecommunica- tions project recently approved by the Bank Group. The project would finance one permanent and two mobile weighing stations to assist in the enforcement of vehicle weight regulations. 32. The proposed project would also finance 273 man-months of technical assistance to assist in the reorganization of the Directorate of Public Works. Four experts in the Central Maintenance Division would plan and supervise maintenance operations and accounting, and four more in the Central Equipment Division would organize the central and regional workshops. In addition, an expert would be provided for a few months to assist in defining a training program. The consultants would be responsible for training counterpart staff as well as maintenance personnel at all levels of the organization. During negotiations the Government agreed to assign the required counterpart staff to the consultants team. No suitably qualifiedl mechanical enginieers are available among the Directorate's staff, but it was agreed that three mechanics will be upgraded with foreign training. In addition, one civil engineer will be sent overseas for practical managerial training. 33. The project would assure that the Directorate of Public Works has sufficient capacity to maintain properly the 5,300) kilometers justifying regular maintenance: these are the most important roads in the country, with the 2,000 kilometers of paved roads carrying an average 900 vehicles per day, and the 3,300 kilometers of gravel and earth roads carrying an average of 75 vehicles per dav.  -9- Preinvestment Studies 34. A recently completed feasibility study of the 85 kilometers road between Louga and Lake Guiers, the source of Dakar's water supply, indicated that upgrading would yield an economic return of 12 percent. Consequently detailed engineering of this route would be included in the project together with feasibility studies and detailed engineering for a second phase of the pavement strengthening program, comprising 190 kilometers of paved road. The proposed project would also provide 10 man-months of consulting services to establish a priority list for feeder road improvements and extensions based on several recent studies. PART V: LEGAL INSTRUMENTS AND AUTHORITY 35. A draft Development Credit Agreement between the Association and the Republic of Senegal, the Recommendation of the Committee provided for in Article V, Section I (d) of the Articles of Agreement of the Association and the text of a draft resolution approving the proposed credit are being dis- tributed to the Executive Directors separately. The draft Development Credit Agreement conforms to the normal pattern for highway projects. 36. I am satisfied that the proposed development credit would comply with the Articles of Agreement of the Association. PART VI: RECOMMENDATION 37. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President Attachment Washington, D. C. By: S. Aldewereld February 15, 1973   ANNilX I Page I COUNTRY DATA - SENEGAL AREA 2 POI'IILATION DENSITY T0OO km E.0 mi'ion (mid-1972) per kP k 20 Rate of Growth: 2.2 8 (from 196)-1972) pr X of arhbe land 34 POPULATION CHARACITERISTI CS lIfAITO Crode Birth Rate (ner 1,G0) 44.0 (1970) Population per physician 15,300 (1968) CrD/eAn Death Rnte (per a,090) 22.0 (1970) Population Ier honpi lal l,ed 735 (1968) Infant Mortality (per 1,000 live birt.hs) 156 (1968) SEGGEII DISTRIBUITION DISTRTBIrrTON OF Lu't 'tS1TFrr:: 5 Of national oncome, lowest s:intile .. 5. owned by top ... - highest nuintile .n. % owed hy malllest 10% of' nncrsr ACCESS TO PIPED WA1'ER ACCESS '10 FLECTICSTTY 5 Of population - ::rhan of.. 9, -popu]ntion - urban - rural . . - r-ral NUTRI1T5ON EDUCATiON 1971 Calorie intake as 5 0t reo- ire..nt.s 2,300 /day /capita Adult li1eracv rato f 5-10 (1970) Per capita protein inl.ake est.mated higi: compated to ot.ier african countries Primary school enrol lmest 5. 1, (i 370) GNI' I'ER CAPITA in 1971 - : u11$ 250 GROSS DOMESTIC PROllCT TN 1939/7.1 ANNUAL RATE OF rRCIWTi (i,, nountoct prices) IIS $ Mfln. 91 1960-6,5 1965 i_0 197!1 011P at Market Prio-s 938 100.0 25, - 10.:: Cross . Doesthi Investment 15, 16.6 11.9 Groan National Saving 110 1.8. C-rrent Atonmnt Balance 44 - h .7 7/ Eiport of' Goods, OIFS 229 14.1: .3 F,', -1: f Inpor 's of Goods. FI, 273, 29.1 ..8 % 'S GIJTPITT, LABOR FORCE Aii0 PRODUCTSTVITY IN 1971 Vaine Added i.DP factor costs) Labor force V.A. Peo Worker UD ROiln. ,iMl. , S:| f Aorhonl:o ure 328 35.9 .. .. Iniutdr- 172 1S.8 .. .1... ',errices 4l13 153 4. .. .45.. U-islio-ated Tot al/A-versge 913 .O lOOn.O :O /'oPNOMPOT FINAOCE General Gooroemen- t C . . 1 - (CFAP Mn.) 6 ol DI' (Ci'AP i * DP 'r-: '' ) 5 , F 1970/Ti71970/1 19 8/7t 1970/7 1 . I1 7/ Current Rece-iptsn 4iii '/ P2.2 1 ,o o . CI:rreu,t Expeudituorn .. 3u. 17.: uOl' Corru-t Surplust73 . . .. . . u ?? 4.0 Capital Enpendituoes ., .. .. 11.1 45 17 Rxtersal Ahsist,nce (net) .. .. .. .19 1/ The Per Capita SNP estimate is at 1970 market prices, calcolated by the came conversion technique ao the 1972 World Atlas. a11 other co:-versionn t.o dollars in thin tahle are at t.he average e-ohange rate prevailing during the period coered. o/ 1968-70 3/ Including CSAF 2.7 billion of Traisfern ti the Stsbilizalion Funds. not available not applicable  ANNEGX T Page 2 COlUNTRY DATA - SENEGAL, MIDNEY, CREIIT AND PRICES 1965 19,') 19YO 1971 (Bill ion.s of CFAF 12 months averae) Money -nd Qoasi Money 30.5 32.0 34.5 37 9 Bank Credit to Pbblic Sector - 10.8 -1.h -o.8 - T.n5 Balk Credit. to rieate Sector 34.8 35.6 38.6 39.0 (PFer-cL .ages or Nnline Nsbeen) Moocy and Qoasi Money as % of G,YP 12. 9 15.0 14.7/ 1Ill., General Price Tndex (1963 100) 105.7 fl9.0 L23.6 131.1, Annnal l -rcenta4e changes in: General Price TDden 2.1 l 3.9 11.- rOc-"um+n't Ilcl-oIts Bank credit t.o Pliatc Set.or 9 4.8 2. .1 3 L.0 BAlANlCE lip IAYMENIT MEERCiAiI)TSE EXPORIS (AVFRAGE 19G8-71) 1969 1970 1971 LIS $ Min- 1 - (p. onio7Tius (Mllon`rondnll. and :rollnill i. FpoeLt of foods. NFS 2011. 260 222 Prodoct c 61.7 110.9 Teports i G.oode, NIS 27f, 277 305 Miocellanco.. MaDnfacl.c1ed l'rod-tlns 7.4 22.9 Trade dcfinit -FS -13 3 Pood,boe.rages, tobacco 24.8 15.3 inrt.eret cyntera (nt.) -12 -17 -16 All ot-r enncodit.ie- 314.1 20.9 Wlorke,re R-cit.ances ) 19 18 20 ',ISAT 163 o 104.0 Other Factor Payments (eet.) Nc- Iransfers EXT:RIAL. DEBT, DECEMSBER 11, 1971 Balnoce or Corrent AccoDnlil C-- (inle lsingp I ram.c'ers) i O Prinate long erm onpital (nIet.) 10 ) 6 ) 8 Pri-ate ohoct tens capital (net) - ? ) - Kedirlo noel cog-ieee Crdit.s, Iollie ]f7.8 Official (-anto l ) 19 ) 14 Non-B;-.u.rn.cid m-utal.n il. Icons 2i4 ) 10 ) Total Oini..nding arni Dib-herl,d DAnorl.ioat.ion - 4, ) - 4 ) Other (net) 2 ) S ) EBRT SERVLCi: PLATTO tor 1970/71 4.0 Errors ail OiOissions -15 5 TOTAJ. 2Q 35 T Incrca-e in rcscrvee (-icorease) 17 -23 3 rros Roescres 1-une 30 Eel. Ronernen RATE lF EXCIULNGE IIlD/IDA FlFANDG, December 31, 191. (Million. Lt Tl-onirv Decenber 71 US , 1 CFAF 277.7 DM22 liii 4FAF 1.0 = 12 $ 0.0036 IDl.aAldinp & Cichersed 2.5 15.3 Since Senenmrer 31 lSnlnrsuricr,n lir.e.dled cherenr2 [9.1 lS 125$ 1 . 7 CPOP 293.79 CFAP 1.0 iUS $ 0.0039 not anailobDe rot. applicable abstern Africa Regional Office Fearary 15, 1973  ANNEX II Paste 1 THE STATUS OF BANK GROUP OPERATIONS IN SENEGAL A. Statement of Bank Loans and IDA Credits (as of December 31, 1972) Amount, less cancellation Loan or (US$ million) Credit Number Year Borrower Purpose Bank IDA Undisbursed 96-SE 1966 Senegal Railway 9.0 1.1 493-SE 1967 Port of Dakar Port 4.0 1.1 140-SE* 1969 Senegal Agricultural 6.0 1.4 credit 198-SE 1970 Senegal Highways 2.1 0.3 252-SE 1971 Senegal Rice 3.7 3.5 Development 253-SE 1971 Senegal Technical and Agri- 2.0 1.9 cultural Education 254-SE 1971 Senegal Settlement 1.3 1.2 Scheme 314-SE 1972 Senegal Railway 6.4 3.2 9.6 336-SE 1972 Senegal Housing Site & 8.0 8.0 Services 867-SE 1973 Senegal Airport 3.0 3.0 866-SE 1973 OPTS Telecommunication 6.25 6.25 350-SE 1973 Senegal River Polders - 4.5 4.5 Total, 19.65 39.8 of which has been repaid 0.5 - Total now outstanding 19.15 39.8 Amount sold 0.4 of which has been repaid 0.4 Total now held by Bank and IDA 19.15 14.7 _ Total undisbursed 16.75 25.1 41.85 * A loan of US$3.5 million for agricultural credit (584-SE) made in 1969 was cancelled on March 25, 1971.  ANNEX II Page 2 B. Statement of IFC Investments (as of December 31, 1972) Amount (US$ million) Type of Equity Year Obligor business Loan Investment Total 1967 Societe Fertilizer 1.7 0.8 2.5 Industrielle Plant d'Engrais au Senegal 1972 Bud Senegal, Vegetable - 0.05 0.05 S. A. Export Total commitments now held by IFC 2.4 0.85 3.25 Total undisbursed - - C. Projects in Execution-/ Cr. No. 96 First Railway Project, US$9.0 Million Credit of September 29, 1966; Closing Date; June 30, 1973 1. The project was designed to put the Railways (Regie) on a sound technical and financial footing. All project items, mainly track material and some rolling stock, have now been delivered and the project will be com- pleted by the end of 1972, about three years behind the original schedule. Due to the Regie's internal administrative difficulties, lack of qualified staff to prepare and issue tender documents and also to labor problems, de- livery of materials and equipment was delayed and, as a result, disbursements were slow. 2. The financial performance of the Regie during the first project fell considerably short of expectation, principally because traffic did not increase as expected at the time of appraisal. Furthermore, the Regie's effort to cut personnel costs was largely offset by an increase in its mate- rial costs. As a result, the Regie is still operating at a loss as compared 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any prob- lems which are being encountered, and the action being taken to remedy them. They should be read in this sense, and with the understanding that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution.  ANNEX II Page 3 to a target rate of return for 1969/70 of 4 percent as agreed in 1966. The shortfalls in the Regie's performance under Credit 96-SE must be viewed in the light of the Senegalese and Malian economies' failure to move ahead as rapidly as expected. The recent economic recovery in both countries will assist in improving the financial situation of the Regie. Ln. No. 493 Port of Dakar; US$4.0 Million Loan of May 1, 1967; Closing Date: December 31, 1972 3. The first port project, which was approved in 1967, was to improve Dakar port facilities by extending the wharves, reconstructing quay walls, and dredging various areas in the port. After slow but satisfactory execu- tion, the project should be completed by the end of 1972. Special loan covenants helped to improve the finances and administration of the Port Atu- thority. The Port Authority, which has recently established a Master Plan for its future development, is presently considering the extension of its fishing port and ship repair facilities. Cr. No. 140 First Agricultural Credit Project; US$6.0 Million and Ln. No. 584 US$3.5 Million Credit of February 10, 1969 and Loan of same date (cancelled); Closing Date: March 31, 1974 4. The objective of the First Agricultural Credit Project was to bring about increases in farmers income and Government's revenues by an increase in production and vields of groundnut and millet in Senegal's "Groundnut Basin"@. The project finances 75% of the cost of animal drawn equipment purchased bv farmers and varying percentages of the costs of management assistance to marketing, extension and credit institutions. A sharp fall in groundnut out- put due to lowq prices and poor weather caused a drop in demand for credi; ancl led to a cancellation of the Bank Loan. In 1971 a combination of better financial incentives and normal weather conditions permitted the recovery of groundnut production, but as a result of drought conditions in 1972 the crop for that year was the smallest of the last 25 years, as a result, actual production levels have stayed well behind expectations at the outset. It is felt, however, th;at the essential component under the first project, the distribution of animal drawn equipment on credit, has benefitted the farmer even under adverse weather conditions and that without equipment availability overall production would have been even lower. Cr. No. 198 First Highway Project; US$2.1 MIillion Credit of June 19, 1970; Closing Date: December 31, 1972 5. The first highway project provided for construction of feeder roads, purchase of highway maintenance equipment and study on road improvement and maintenance. Execution of the project has been satisfactory. Actual costs are within appraisal estimates and surplus funds available are being used for providing additional maintenance equipment.  ANNEX II Page 4 Cr. No. 252 Casamance Rice Project; US$3.7 Million Credit of June_18, 1971; Closing Date: June 30, 1977 6. Launched in early 1972, the project is about to complete its first campaign. Targets for area un,der cultivation and production have been met and the construction and marketing programs are on schedule. The quality of management and extension services is good. There are some delays in the channelling of funds to the Project Unit but a new arrangement is now being discussed with the Government. Cr. No. 253 Technical and Agricultural Education Project; US$2.0 Million Credit of June 18, 1971; Closing Date: October 1, 1976 7. Construction of all Project schools is expected to be completed by January 31, 1975 in accordance with the appraisal schedule. Disbursements are temporarily delayed due to a delay in signing an architects contract. The project is progressing satisfactorily except for the Merchant Marine School at Dakar, where there has been a delay in the selection of a fisheries expert; it is expected that his appointment will be made within six months. Cr. No. 254 Terres Neuves Settlement Project; US$1.35 Million Credit of June 18, 1971; Closing Date: December 31, 1977 8. Despite a late start due to delays in the establishment of the project entities, the 1972 first year targets have generally been achieved: Forty-two families settled in April 1972 and cultivated 100 hectares. Agri- cultural results are satisfactory and the settlers express satisfaction with the project. The preparation of a second phase project is well under way and the feasibility study shou:Ld be ready by the end of 1973. Cr. No. 314 Ln. No. 335 Second Railway Project; US$3.2 Mil:Lion and US$6.4 Million Credit and Loan of June 23, 1972; Closing Date: June 30, 1975 9. This project involves continuation of track renewal towards the Mali border, modernization of workshops to increase efficiency and thus improve availability of rolling stock, the purchase of locomotives, and the modernization of freight cars to reduce maintenance costs, technical services and training. The terminal date for effectiveness of the Loan and Credit has been extended from November 1, 1972 to December 29, 1972 to permit the Borrower to furnish the requisite legal opinions. However, specifications and tender documents for the main items have already been prepared by the Regie and it may be expected that the project should proceed normally and be completed according to schedule.  ANNEX II Page 5 10. In order to achieve full potential benefits of the Investment Program and to allow the Regie to reach financial viability by 1975/76 a Plan of Action has been agreed upon with Government and the Regie. This Plan outlines measures to be adopted by the Regie to improve operations, reduce staff, and study certain branch lines which appear to be unprofitable. Cr. No. 336 Site and Services Project; US$8.0 Million Credit of September 25, 1972; Closing Date: June 30, 1979 11. The Credit Agreement was not signed until September 29, 1972 and is not yet effective. However, the executxng agency, Office des Habitations a Loyers Moderes is carrying out its reorganization and is about to begin the detailed engineering for the first phase of the project. Ln. No. 867 Airport Project; US$3.0 Million Loan of December 19, 1972; Closing Date: June 30, 1975 12. This project was signed on December 19, 1972. Ln. No. 866 Telecommunications Project; US$6.25 Million Loan of December 19, 1972; Closing Date; June 30, 1976 13. This project was signed on December 19, 1972. Cr. No. 350 River Polders Project; US$4.5 Million Credit of January 9, 1973; Closing Date: December 31, 1976 14. This project was signed on January 9, 1973.   ANNEX III Page 1 SENEGAL - SECOND HIGHWAY PROJECT CREDIT AND PROJECT SUMMARY Borrower: Republic of Senegal Beneficiary: Directorate General of Public Works Amount: US$7,500,000 Amortization: Standard Service Charge: Standard Project Description: a. pavement strengthening of six sections of road, totalling 110 km; b. a four-year program for improving highway maintenance through (i) the reorganization of maintenance operations and equipment repair, including staff training and (ii) the purchase of high- way maintenance, workshop and radio equipment, spare parts, and weigh-bridges; c. preinvestment studies.  ANNEX III Page 2 Estimated Cost: US$ Million Total Foreign Local Maintenance improvement program 3.01 2.56 0.45 Pavement strengthening 5.06 3.17 1.89 Preinvestment studies 0.53 0.42 0.11 Scholarships 0.06 0.06 - 8.66 6.21 2.45 Physical contingencies 0.86 0.62 0.24 Price contingencies 0.98 0.67 0.31 Total 10.50 7.50 3.00 Financing Plan: IDA 7.50 Government 3.00 Total 10.50 Estimated Disbursements: Fiscal Years $ million 1973/74 2.75 1974/75 3.70 1975/76 0.8 1976/77 0.25  ANNEX III Page 3 Procurement Arrangements: (i) Equipment and spare parts will be procured on the basis of international competitive bidding. Bid comparisons will be made on the basis of the cif Dakar price. Equip- ment (trucks) assembled locally involving at least 20 percent of domestic value added with benefit from a preference of up to 15 percent. Suppliers will be required to provide an adequate servicing organization in Dakar. (ii) Strengthening works will be carried out by contractors under six unit price contracts on the basis of international competitive bidding. Consultants: Consultants for each of: Mi) Construction work supervision. (ii) Technical assistance to the Directorate General of Public Works. (iii) Preinvestment studies. Rate of Return: Maintenance equipment 31 percent. (Economic) Pavement strengthening 25 percent. Appraisal Report: 37a-SE dated February 13, 1973.   SENEGAL / 16h N\ A U R I T A N I A -- - S .rei Libyo SECOND HIGHWAY PROJECT f- j - MAIN ROAD NETWORK | LW ,- M -byp dMou t i l 'r,ed 'cods O~~~~~~~~~~~Rchard T.ollEr .'..cued roods under construoroc- G.~~~~~~~~~~~~5 6> Grovel aeond j$ > o5 e{X G/n ob , .rc*pek>/~r~~- Po,e cdo.ds d obe rr nglheglre ned under ere e ,l . Ngerro 1. e stu,t Pnder rorho nI -F e coer roads coontuoutedunderorediS 198- Sr.i5U' ouu.. A tIc d o m r o t L-col ogrporis / / .*S < ,efe reo n Eq Gi.nea JU5 m- _ nemno,onel bounder en / tb--o _EMlm_.Jgo DAAR ou o,isqo Not __:tooGrtt N, t~N . IA.~ ~ ~~~~~~~~~~g 0~~~ 0 _0 ouns 40 (0 000 90L l 00Nir k.. OSCi A N1) = ,6.b',ySt < 3 T 1AA R. N. T. Ni- W orhPrO Xontn-X09 b. . . . X ' X $ * - ' _ - - .y. d