Ghana - Accra - Tema Water Supply (Stage Two) Project

FILE COPY TOv~ CIRCULATtNG COPY FILEY TO BE RETURNED TO REPORTS DESK DOCUMENT OF INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use Report No. P-1469-GH REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF GHANA FOR A WATER SUPPLY PROJECT (SECOND STAGE) June 17, 1974 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 It may not be published, quoted or cited without Bank Group authorization.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.  CURRENCY EQUIVALENT Currency Unit Cedi (0) 0 1.00 100 Pesewa Us$ 1.00 0 1.1538 US$ 1 million = % 1,150,000 01.00 US$ 0.8667 O 1 million - Us$ 866,670 FISCAL YEAR July 1 - June 30 ABBREVIATIONS CWSC - Ghana Water and Sewerage Corporation ATMA - Accra Tema Metropolitan Area  INTERNATIONAL DEVEL[OPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSE) CREDIT TO THE REPUBLIC OF GHANA FUR A WATER SUPPLY PROJECT (SECOND STAGE) 1. I submit the following report and recommendation of a proposed development credit to Ghana for the equivalent of US$10.4 million on standard IDA terms to help finance a water supply project. The proceeds of the Credit would be relent to the Ghana Water and Sewerage Corporation (GWSC) for 25 years, including 6-1/2 years of grace, with interest at 7-1/4 percent per annum. Under collaborative financing arrangements, the Canadian International Development Agency would contribute US$7.5 million equivalent, to be relent at 2-1/2 percent interest with the same repayment and grace periods as those for the IDA Credit. An additional US$4.8 million equivalent would be lent by the African Development Bank directly to GWSC for 22 years, including 5 years of grace, with interest at 7 percent per annum. PART I - THE ECONOMY General 2. The last economic report on Ghana (R72-223) was distributed to the Executive Directors on October 3, 1972, and drew attention to the structural problems of the economy. An industrial sector mission visited Ghana during November 1973; its report is expected to be issued shortly. An economic mission was in Ghana recently and its report should be available in early fall. Country data sheets are attached as Annex I. 3. Gross domestic product in real terms in Ghana increased by about 2.5 percent a year between 1969 and 1972, while the population grew at rates ranging from 2.6 percent to 3 percent. Ghana seemed to have been caught in the downward economic spiral of declining per capita income and consumption affecting the capacity of the nation to save and invest. The Government is engaged in trying to break this cycle and is preparing a long-term develop- ment strategy for growth with stability. 4. On external account, Ghana's problem has been excessive dependence on cocoa exports -- cocoa still accounts for about 70 percent of merchandlse exports. Accordingly, with widely fluctuating cocoa prices and Ghana's declining share of worldwide production, the long-term balance of payments situation remains somewhat uncertain. 5. On public finances, there has been a tendency for current budget expenditures to rise at a rapid rate and to outstrip revenues which are overly dependent on cocoa export duties and import taxes. In addition to the imbalance in the government bulget per se, there are a number of public agencies and enterprises whose activities have not been jl'.iected to adequate economic tests, and which are dependent on budget support or bank borrowings.  6. in describ-ing these basic problems, the last economic report con- cluded tnat, even with vigorous and determined policies on the part of the -overnment, the necessary structural adjustments could only be effected gradually. ThanaIs structural problems and slow growta should not obscure, however, the strong points of its economy. Besides being the world's largest cocoa producing and exporting country, Ghana has a variety of mineral resources as well as substantial timber reserves. There is a reasonably advanced infrastructure. Cocoa production is broad-based and benefits many small farmers. The education system is well established; elementary education has been free and universal since 1962. Favorable external developments and government policy action over the past two years have laid the basis for more secure and sustained develop- ment. Ghana has achieved a reasonable degree of monetary stability, made a start in putting its state industries on a sounder economic footing and exercised caution in its public investment decisions. 7. During 1972 and 1973 the balance of payments position improved dramatically. Compared to a trade deficit of about $40 million in 1971, trade surpluses of about $160 million in 1972 and $100million in 1973 were achieved. In 1972 this was in part due to the very substantial retrenchment in imports following the reimposition of an import licensing system. While imports in 1973 were expanded to meet the production needs of the economy and to replenish stocks, continuin- high world prices for cocoa, gold and timber maintained a trade surplus. In contrast with the practice in previous years, the surplus has been used to repay some $40 million of Ghana's short-tem debts and to build up reserves w1hich stood at about $200 million at the end of 1973, com- pared to about $20 million at the end of 1971. 8. While prospects for continued high world prices for cocoa and gold seem good, the recent increases in petroleum prices are estimated to increase Ghana's import bill by about $100 million and eliminate the anticipated balance of payments surplus for 1974. Petroleum imports, which accounted for less than one-tenth of total imports in 1970-72, would account for about 30 percent of imported goods in 1974. With the need to meet substa.1tial payments obligations and to maintain an adequate level of short-term debt repayment, the overall balance of payments position is likely to become difficult once again. Therefore, Ghana will need new aid commitments to supplement the meagre aid pipeline, and it is appropriate that a substantial part of these commit- ments should be on concessionary terms. 9. An agreement for a long-term rescheduling of Ghana's medium-term external debt was reached at a meeting in Rome March 11-13, 1974. Under this agreement, which was announced by the Govermnent of Ghana last April, all payments due after February 1, 1972 in respect of pre-1966 debt obligations will be paid over a period of 28 years, including a grace period of 10 years, with an interest rate of 2-1/2 percent per annum. This concludes more than two years of negot_ations between Ghana and the creditor countries, in which the good offices of the Bank were provided. The rescheduling agreement is expected to go into effect this summer provided the creditors are satisfied that the results of Ghana 's review of the contracts underlying the medium-term debts do not put in quest-on the basis of the debt settlement. The review is to be completed by June 30, 1974. The exact impact which the Rame agreement will have on Ghana's future debt service obligations will of course depend on the outcome of this review. It iill be affected as well by the extent of the implementation  - 3 - of the agreement and its application to creditor countries not represented at the Rome meeting. These cannot be ascertained now but, given the size of Ghana's debt obligations, the relief obtained should prove to be substantial. 10. In Decmber 1972 the Government announced a new investment policy redefining the ground rules for foreign private investment in Ghana with a view to encouraging more indigenous participation in those sectors which exert a major influence on the economy. The Government is currently engaged in negotiating compensation arrangements with the affected parties; some settle- ments have already been reached. 11. On the basis of the understandings reached at the Rome meeting, and on the assumption that a substantial part of Ghana's external borrowing require- ments will be covered by aid on concessional terms, it is estimated that Ghana's external debt service ratio will average about 5-6 percent in 1974-76 and rise to some 10-12 percent during the remainder of this decade. The Bank Group's share of Ghana's total external debt is currently about 12 percent and is expected to rise but still remain small (14 percent) in relation to other lenders over the next several years. Similarly, the Bank Group's proportion of Ghana's future debt service is estimated to average 9-11 percent in the near future. Bank Group lending to Ghana since 1969 has been exclusively on IDA terms because of the large overhang of external debt service inherited from the early 1960s. The agreement to reschedule service of most of the medium-term suppliers' credits should open up possibilities for Ghana to borrow abroad on conventional terms, and it is planned to resume Bank lending to Ghana in the near future. PART II - BANK GROUP OPERATIONS IN GHANA 12. The Bank Group has lent Ghana $113.3 million, of which $47 million was a Bank loan for the Volta Dam and associated infrastructure in 1962. The remainder has been lent since 1968 for agriculture, power, water supply and sewerage and roads projects. Annex II contains a summary statement of loans and credits as of April 30, 1974 and notes on the execution of ongoing projects. There are now no major problems in project implementation. 13. Ghana is currently engaged in a major task of restructuring its economy, particularly to achieve greater self-sufficiency in agricultural products. Future Bank Group lending will support this objective, as reflected in the livestock project presented to the Board on June 18, 1974 as we:Ll as an oil palm project which was negotiated recently. A cotton project aind a rice project have been appraised and are expected to be presented for con- sideration by the Executive Directors in FY 1975. Follow-up projects in cocoa and fisheries are planned thereafter. Apart from agriculture, the findings of the industrial sector mission have indicated favorable prospects for pos- sible lending for small-scale industry. In addition, while proportionately lesS future Bank Group assistance than in the past is planned for infrastruc- tural improvements, some additional lending is contemplated in this field to support key institutions. The Bank is assisting Ghana in preparing telecom- munications, power generation and distribution, highway maintenance and feeder road projects.  PART III - WATER SUPPLY IN GHANA 14. It is estimated that about 40 percent of Ghana's total population has access to safe and dependable water supplies. In communities of 5,000 people and above, which account for 30 percent of the total population, between 90 and 100 percent have such access. In the case of the remaining 70 percent of the popiulation, only about 15 percent have access to safe and dependable water supplies. While water borne diseases such as dracontiasis (Guinea worn infection) and bilharziasis have been virtually eliminated in communities provided with piped water, these diseases are prevalent in rural towns and villages which have no public water supplies. Such communities are also vulnerable to cholera, which broke out in many parts of the country in 1970-71. 15. National responsibility for the provision, distribution and con- servation of water and for the establishment, operation and control of sewerage systems has been entrusted to the Ghana Water and Sewerage Corporation (GWSC), established in 1966 under the Ghana Water and Sewerage Act of 1965. GWSC has been concerned primarily with water supply, but comiissio.aed its first sewerage scheme in November 1973. The scheme serves central Accra; the only other sewerage scheme in Ghana is operated by the Tema Development Corporation, the body responsible for Tema's industrial and residential development. GW.SC: The Management 16. GWSC, the beneficiary of the proposed credit, is a statutory corporation; and has a Board of seven part-time members including a representa- tive of the Ministry of Works and Housing, to which the Corporation is accountable. Board members are appointed by the Head of State. The present managing director of GWSC was appointed in late 1973 after serving the Corporation in senior positions for many years. With increased operations and responsibilities, GWSC's management was decentralized in 1973. 41 District Management Centers were created within the Corporation's nine regional organizations, of which the Accra/Tema Metropolitan Area (ATMA) is by far the largest. GWSC has delegated to the District Management Centers primary responsibility for operations, management and development in their respective areas. This arrangement should contribute to increasing the efficiency of the Corporation. 17. The Accra/Tema Metropolitan Area (ATMA) manager was promoted to his post in early 1973. Although technically sound, ATMA's management needs some reinforcement in its financial administration. The Canadian Inter- national Development Agency (CIDA) is expected to provide the required technical assistance.  -5- GWSCZ The National Investment Program 18. GWSC is currently drawing up for Government approval a national investment program (presently in a rudimentary form) in the water and sewerage sector for 1975-79. The total cost of the program is estimated at about US$170 million equivalent, of which about 80-90 percent is expected to be allocated to the extension of water supplies to communities of less than 5,000 people. The objective of the program is to provide 60 percent of Ghana's population with a safe water supply by 1980. The program is to be financed from the national budget and foreign sources. So far, about US$12 million of bilateral assistance has been granted by Canada, Germany and Denmark for the construction of new water supply systems and the extension of existing ones, mostly in rural areas. In audition to water supply, the program includes a sewerage project to be constructed during 1975-79 in Kumasi, Ghana's second largest city. The UNDP has approved a rural water supply and sanitation project which is expected to provide a basis for a national rural water supply program. Tariffs 19. In 1973, GWSC sought Government approval for a change in the levels and structure of its water supply tariffs. The Corporation's proposal was that tariffs for all consumers with private connections in major urban areas should be raised, and that in the remaining communities tariifs should be unchanged and in some cases lowered. The objective of the proposal was to enable GWSC to achieve financial autonomy, while at the same time extending accessibility to safe water supplies to an increasing number of rural communities. Imple- mentation of GWSC's proposal would have a desirable inter-regional income dis- tribution effect. The Government, however, while agreeing with the proposal in principle, had decided to postpone a country-wide tariff change until all connections in urban areas have been metered. More recently, in view of ATMA's substantial investment program and the commitment made for the construc- tion of Weija dam, Government approved a new tariff proposal increasing water rates in the Accra/Tema Metropolitan Area from 40 Pesewas to 60 Pesewas per 1,000 gallons in respect of metered supplies to domestic consumers and from 90 Pesewas to Cedis 1.35 per 1,000 gallons in respect of metered supplies to commercial and industrial consumers. This tariff increase of 50 percent is to come into effect and the appropriate regulations issued not later than August 1, 1974. PART IV - THE PROJECT 20. A report entitled, "Ghana, Appraisal of the Accra/Tema Water Supply Project - Second Stage", dated May 31, 1974 and numbered 425a-GH is being circulated separately to the Executive Directors. A credit and project sum- mary is provided in Annex III.  -6- 21. This project would be the Bank Group's second credit for water suuply in Ghana. It is the second stage of the implementation of a master Dlan for water %nd sewerage for the Accra/Tema metropolitan area prepared by consultants in 10('3-70 under a stuay financed by UNDP, with WHO as the executing agency. In August 1969, IDA provided a credit of US$5.5 million equivalent (CredLt o60-GH) to cover the foreign exchange cost of the first stage project consis'ting of the extension of the water distribution system in Accra and Tema anrd a new sewerage system in Central Accra. These works were satisfactorily completed in November 197s. 22. The second stage project was first appraised in November 1971 but was delayed due to t'ne uncertainties created by the initial economic measures of the Government which assumed office in early 1972 and the precarious financial and economic situation in the country at the time. The project was then reappraised in March/April 197J, and the appraisal report was updated in February 1974. In view of the substantial increase in the foreign exchange component of the project since it was first appraised and the limited availa- bility of IDA funds, the Government has sought parallel financing from the African Development Bank (AfDB) and the Canadian International Development Agency (CIDA); and tlese institutions have agreed to provide the required financing. Approval of AfDB and CIDA contributions or a suitable alternative arrangenent satisfac-,ory to the Association is a condition of effectiveness of the IDA credit. (Section 6.01(d) of the Development Credit Agreement). Description 23. The project would help increase water supply for the metropolitan area where the population is growing around 5.b percent annually, as well as adjacent rural areas. The demand for water has increased at an annual rate of 12.5 percent in the last decade; with improved efficiency in the distri- bution works and reduced leakages (from the current 39 percent to about 25 percent by 1982) demand is projected to increase at a lower rate of 8 percent per annumr until 1978 and 6.5 percent thereafter. The project will expand the supplies of water from the current level of 8.5 million gallons to 28 million gaIllons per day and will meet demand in the service area up to about the mid-e:g,h`ies. 24. The Prolec`- comprises the following components (for details see Annex III): A. IDA-Assiso M2nents Construction of neu dam at Weija; improvement of existing Weija treatment works; extension of existing secondary and tertiary water distribution system in Accra/Tema; extension of water supplies in adjacent rural areas; provision of water meters and leakage detection eauipment; technical assistance for tne new sewerage system; training, and con- sulting services for design and procurement.  -7- B. AfDB-Assisted components Civil works for treatment plant and service reservoir; supply of transmission mains; extension of the existing primary cis- tribution system in Accra/Tema; ana miscellaneous items. C. CIDA-Assisted comPonents Raw water pumps; supply of treatment plant; and construction supervision for components not financed by IDA. Project Execution 25. As in the case of the first stage project (Credit 160-GH), ATMA would be responsible for project implementation. ATnA operates with a con- siderable degree of autonomy and keeps its own accounts (as provided for under Section h.01 of the Project Agreement). Its operations equal the rest of GWSC's operations combined. It is aaequately organized and managed, and successfully implemented the first stage project. However, in view of the proposed additional investment under the second stage project, ATMA requires assistance in financial management; and CIDA has been approached to provide the required technical assistance (para. 17). Project Cost and Financing 26. The total estimated costs of the project are summarized below and detailed in Annex III: -US $ Million- - - Local Foreign Total Pecenta Weija Dam and Works 11.73 14.08 25.81 57.6 Rbiral Water Supply 2.91 0.48 3.39 7.6 Engineering Services and Training 1.90 2.69 4.59 10.3 Contingencies 5.76 5.18 10.94 24-5 Total 22.30 _22_ 44.7t3 100.0 The three external financing agencies (IDA, CIDA, and AfDB) will provide the total foreign exchange cost of the project estimated at US$22.4 million. The proposed IDA credit would be re-lent by the Government to GWSC at 7-1/4 percent for a term of 25 years, including 6-1/2 years of grace. It is expected that the CIDA contribution would be re-lent at 2-1/2 percent with the same repaymenu and grace periods as those for the IDA credit and that AfDB's loan would be made directly to GWSC at 7 percent per annum for a term of 22 years, including 5 years of grace. The following table summarizes the financing of the total project cost:  US$ Million Percentage IDA 10.4 23.3 AfDB 4.8 10.7 CIDA 7.5 16.7 GWSC 14.4 32.3 Goverrnent 7.6 17.0 Total U4-44.*7 100.0 Financial Position and Prosp2ects 27. While GWSC as a whole continues to operate at a deficit and to require Government subsidies, although on a smaller scale than in 1969, ATMA has become financially self-sufficient and has been able to earn the 4 per- cent rate of return in FY 1973 stipulated under Credit 160-GH. Moreover, the projected debt/equity ratio of at least 58/42 and debt service coverage of at least 2.2 are satisfactory, a minimxum borrowing limit debt service ratio of 1.5:1 being provided for under Sectiorn 4.01 of the Project Agreement. 28. ATMA's water revenues are projected to increase from their present level oi about V5.1 million to 012.0 million by the end of the project con- struction period. This increase of 135 percent would result from projected increases in consumption, but more inmortantly from the proposed 50 percent increase, effective not later than August 1, 1974, in the average tariff (see para. 19). With the implementation of the proposed tariff increase, ATYiA is expected to be able to meet its obligations under the Project Agree- ment (Section 4.02) to earn a rate of return of not less than 7 percent, except for the last two years of project construction for which a minimum return of 3 percent was agreed in view of the increase in ATMA's asset base and the lag between new investments and new revenues. The implementation by August 1, 1974 of a tariff increase that will provide ATMA with the required rate of return in its fiscal year ending June 30, 1975 is a condition of effectiveness of the proposed Credit (Section 6.01 (c) of the Develop,ment Credit Agreement). 29. The Government has agreed to reimburse GWSC the amount of capital costs and operating losses relating to financially non-viable projects or services taken over by GWSC at Government request (Section 4.03 of the Develop- ment Credit Agreement). Procurement 30. Contracts for the major project elements to be financed by IDA (dam, related construction supervision, rural water supplies and extension of existing secondary and tertiary distribution systems) either have been or will be awarded on the basis of international competitive bidding in accordance with IDA guidelines. Consulting services for design and preparation of tenders com- menced in September 1972; and procurement of goods had to be started in mid- 1975 to permit the commencement of construction in the 1973/74 dry season and to avoid delays in project execution. Project elements to be financed by CIDA will be procured under CIDA guidelines, and items to be financed by AfDB will be procured on the basis of AfDB's international competitive bidding procedures.  -9- Disbursement 31. The proceeds of the proposed Credit would be disbursed during the period of FYs 1975-78 against the foreign exchange costs of the project com- ponents to be financed by IDA. 32. Retroactive financing estimated at about US$2.0 million is proposed for the foreign exchange costs of the civil works and technical assistance contracts for the IDA-assisted project components incurred between September 1972 and signature of the Credit. Justification 33. Water shortages are currently experienced in the Accra/Tema area (with a population of about 900,000) in the dry season. Without the proposed project, this situation would deteriorate further in the face of population growth and increasing demands from industry and commerce as well as public and private institutions and domestic households. The rural areas adjacent to Accra/Tewa have only limited supplies of piped water and rely mainly on generally polluted ponds, streams and wells. The project would extend safe water supplies to these areas for the benefit of about 200,000 rural people. 34. Studies of alternative sources have shown the Weija scheme to be the least cost source of water supply for Accra. The only alternative source, the Volta River at Kpong, was found to be more costly to develop. It would require a 48-mile transmission main from Kpong to Accra via Tema, plus associated pumping facilities, compared to 7 miles of transmission main required for Weija. In addition, the Weija dam would permit continuous use of existing pumping, treatment and transmission capacity which at present is under-utilized in the dry season due to inadequate river flows. 35. Mhe economic benefits resulting from.the project include substantial unquantifiable benefits which represent one of its main justifications. Ihese inelude first the prevention of a progressive decline in health conditions in Accra/Tema and the improvement of these conditions in the benefitting rural areas. There are also the anticipated benefits of resettlement. Additional benefits may accrue from the possible use of Weija lake for agricultural irrigation. 36. The facilities at the Weija Dam include minor works required to comply with a Government plan to allow for irrigation development next to the Wei.ja site. Preliminary analysis suggests that the irrigation project would be feasible and have a substantial economic rate of return. However, its scale and implementation remain to be defined on the basis of a full. feasibility study, as well as an investigation of potential sedimentation in the reservoir. The Government has agreed to establish operational pro- ceduress to determine the allocation of water from the Weija reservoir as between public consumption and other purposes and to pay due regard thereto in permitting any development involving water utilization. (Section 4.05 of the Development Credit Agreement.)  - 10 - Resettlement and Land Acquisition 37. The reservoir to be formed by the dam will inundate about 12 square miles, of which 7 square miles have already been acquired by the Government in connection with the existing Weija Works. The additional land is subject to flooding during the rainy season and only a small frac- tion of it is cultivated. There are eight villages within the area with a present population of about 2,000. A detailed socio-economic survey of the villages carried out by the University of Science and Technology, Kumnasi, in 1969 showed that the villages had no infrastructure or social services and that the villagers were willing to move to new sites suitable for resettlement and farming. Resettlement will not disturb traditional norms of the villages affected and will in fact improve their standard of living by providing them with better housing, roads, water supply, sanitation, health facilities and farming opportunities. Detailed planning and super- vision of resettlement will be undertaken by the University of Kumasi. Ecological Considerations 38. The feasibility study of the project included a survey to investi- gate possible health hazards that might result from the construction of the new dam. The survey showed that malaria and bilharziasis are endemic in the area; the hazard from these diseases should, therefore, decrease when the present inhabitants are resettled away from the immediate vicinity of the lake and bordering swamps, and provided with piped water and sanitary facilities. 39. GWSC are establishing a committee of experts to supervise and coordinate investigations into the environmental impact of the Weija reservoir, considering not only disease problems,but also water quality and potential of the reservoir for game or commercial fisheries. PART V - LIEAL INSTRUMENTS AND AUTHORITY 40. A draft Credit Agreement between the Republic of Ghana and the Association, a draft Project Agreement between the Association and Ghana Water and Sewerage Corporation, the recommendation of the Committee provided for in Article V, Section 1(d), of the Articles of Agreement of the Associa- tion, and the text of a resolution approving the proposed Credit are being distributed separately to the JExecutive Directors. 41. Features of the Development Credit and Project Agreements of special interest are referred to in paragraphs 19, 22, 25, 27, 28, 29 and 36 of this Report. 42. I am satisfied that the proposed development Credit would comply with the Articles of Agreement of the Association.  - 11 - PART VI - REOMMENDATION 42. I recommend that the Executive Directors approve the proposed Credit. Robert S. McNamara President Attachments: Annexes I, II & III Maps (3) June 17, 1974   Page 1 of 3 Pages OOUNTRY DATA - GHALNA AREA POPtULTION DENSITY 238,537 kin 2(W51lo (mid-1971) 37 Percr Per id2of arable land SOCIAL INDICATIORS Reference Countries Ghana U.K. Tanzania Peru r~~~~~~9 T~9~70 1-970 19I'70 GN' PER CAPITA US$ (ATLAS BASIS) /5 . 250 Ia 2,270 100 550 AIWRAPHIC rrStFe th rate (per thousand) .. 7 'h i6.6 47 52 Crude death rate (per thousand) ..i 11.S 21 12 Infant mortality rate (per thousand live births) 156 /b .. 8.6 i65 /c 75 Life expectancy at birth (years) .4 6 72.4 U3 59 Gross reproduction rate A2. 3.2 1.3 3 .2 2.9 Population growth rate 13 . 2.6 o.6 2.7 3.1 Population growth rate - urban 5 Id o.8 7 Age structure (percent) 0-11, h~~~~ ~ ~~~~~~~5 46 25.1 55 iS 15-64 52 52 63.1 53 52 65 and over 3 7 12~.a 3 3 De,,endency ratio/A 1.21e O. 9/f 0.6 1./ 1.6 Urban population as percent of total 23 'd 39 'A7I6'd5 / Family Planning,! Na of accPtors -uvlati-a (thou.) . 11 785 No. of users (% of carried wo,sn) *.2A/ EMPlYMENT Total abor force (thousands) 2,730 3,500 25,250 5,780 S,100 Percentage employed in agriculture 62 58 it 3 91 1,5 Percentage uneoploysd ....5 6 INCOME DISTRIBUTION Percent of nationai jocose received by highest 5% ...15 /5 3S /c 3S 1k Percent of national inomse received by highest 20% ...39 5 60 T, 6- 7W Pretof national income received by lowest 20% 6 57..27/ Percent of nationul inoose received by lowest 40% ...19 A~ i 72 2 77k DISTRIBUTION OF LAND OWN1ERSHIP % owned by top 10% of o-wners . % owned by smallest 10% of owners... HEALTH AND NUTRITION Population Per PhTysician 21,360 12,390) /1 860) 23,130 n/n 2,070 Population per nursing person .. 1,530 7?i 290- 2,980 1 i 760 PoPulation per hospital bed ..790 110 700) 7(t 1o Per capita calorie supply as % of requirements 5. 85 1 10 69 9S Per capita protein supply , total (grams per dayY~6 ..3 75 88 S3 58 Of which, animal and pulse . 10 7.- 58 23 i Death rate 1-5 years /7 ...0.9 ..9/5 EDUCATION Adjusted /8 primary school enrollment ratio 38 56 1l1 37 1 01 AdJusted 7ff secondary school enrollment ratio y5 a 72 7 38 Tears of s;chooling provided, first and aecond level 15 15 13 13 1i Vocational enrollmeest as % of sec. school enrollment 13 /r 15 I5 5 6 16 Adult literacy rate 5 . HOUSING Average No. of persons per coos (urban) 0.. .7/s . ./ Percent of occupied units withaut piped water... 7 75 20 It 76 Access to electricity (as 5 of total population) . 17 ..3 Percent of z1ural. population connected to electricity . CONSUMPTION IG'Ro rraeivers per 1000 population 17 78 325 11 1 35 Passenger care per 1000 population 3 5 215 72/i ms 17 Electric petwr consumption (kwh p.c.) 56 / 321 4,291 27 L0P Newsprint consumption p.c. kog per year o.6 O.h 27.7 0.1 3.5 Notes: Figures refer either to t'he latest periods or to account of environsmental temperature, body wihs n the latest years. Lateat periods refer in principle to dietribution by age aced sex of national popalations. the years 1956-60 or 1966-70; the latest yea~rs in prim- /6 Protein etandlards (requirements) for all coantires as estab- ciple to 1960 and 1970. Only significantly different lished by USDA Economic Resea~rch Service provide for a etimam periods or years ar footnoted aeparately. allowance of 60 grams of total protein Par day, and 20 grams of /1 The Per Capite CliP estimates for yeare other than 1960 animal and pulse protein, of which 10 grams should be animal is at market prices, calculated by the same conversion protein. These standards are aomewhat lower than those of 75 technique aa the 1972 World Bank Atlas. grazes of total protein and 23 grams of a.nimal protein as a.n /2 Average number of daughtere per woman or reproductive average for the world, proposed by FAO in the Third World Food age. Survey. LI Populatiec growth rates are frr the doeades ending in /5 Some studies have suggested that crade death rates of children 1960 ran 1976. apes 1 through 4 may be used as a firet approximation index of /4 Ratio of under 15 and 65 aMd over age brackete to malnutritios. those in labor force bracket of ages 15 through 64. /8 Pmerontage enrolled of cor~responding Population of school age Li FAD reference standards represent physiological re- as defined for each counrtry. quirements for normal activity and health, taking Is hesed on a U.N. estimnte Of the CliP lower tha~n the offincia wtio'te: lb U.N. esttsate, /c 1067: /A Towns with a Population of 5,000 and over: Ie Ratio of population wider 15 and 65 and ovmr to itetl labor force: If Rati.rof Population under iS and 65; and over no popsTattnn of l5-65 ace brack~et- Ig Capitals of district, and those nopul_oTed centres witb soch urbe characterloti-n as s treets, plazas, water-supply systamse sewerage wetems, electric light,, etc' 1h Estimate- /i 1969- / 1968. /k Relates to economically active population: /1 1971 1m Tanganxyika only; /n Includes midwives; 7o 1966-6t., /5 Eonludes Indian jt ungle population; Is Public eduvation only;/r Vocational enr~ollmsnt. as~ o f secondary public rd,00tor;0 Is 1 971, urha, / Urhan only; Is 1961 /v 1 965/71. Oct-ber 31, 19(3  Page 2 of 3 pages ECONOMIC INDICATORS GROSS NATIONAL PRODUCT IN l970 IJ ANNUAL RATE OF GMOWTHl (%, constant prices) USE Mln. % 1960 -65 196$ -70 1971 GNM at Market Prices Z 2477 100.0 J.2 2.0 G;ross Domestic Investment 318 12.8 4.2 -5.5 Gross National Saving 252 10.2 10.3 -11.0 Current Account Balance -66 -2.7 Exports of G-oods, NFS 465 18.8 4.3 -1.5 Imports of Goods, NFS 495 20.0 0.7 -0.4 CUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1968 /3 Value Added Labor Force a V. A. Per Worker US$ MI n M$n. Agriculture 617 41.8 Industry 295 20.0 Services 564 33.2 Unallocated Total/Average 176 100.0 100.0 100.0 XOVERTNYET FINANCE General Government Central Government J Mln-) tsof GDP jedis Nln.) oLcf GDP4 197 197 196-7 197017 1970/71 196- 71 Current Receipts 479.4 18.2 15.6 Current Expenditure jJ6.0 12.7 14.1 Current Surplus Capital Expenditures 3 1.2 45.7 External Assistance (net) 19.1 0.7 0.9 MONEY, CREDIT and PRICES 1965 1969 1970 1971 L9 72 (iTllion 0%outstanding end period) Money and Quasi Money 350 388 427 474 666 Bank credit to Public Sector 421 480 378 545 674 Bank Credit to Private Sector 67 92 126 175 174 (Percentages or Index Numbers) Money and Quasi Money as % of GDP 16.9 16.7 16.6 17.5 General Price Index (1963 = 100) 169.7 151.8 188.8 205.4 295.9 Annual percentage changes ins General Price Index 8.1 7.1 3.9 8.8 10.0 Bank credit to Public Sector 3.4 .. 21 .2 44.2 23.7 Bank credit to Private Sector 10.1 37.3 37.0 38.9 NOTE: All conversions to dollars in this table are at the average exchange rate prevailing during the period covered. /I Total labor force; unemployed are allocated to sector of their normal occupation. "Unallocated1' consists mainly of unemployed workers seeking their first job. /2 Based on unrevised conventional National Income accounts and the balance of payments data for 1970 converted at the then prevailing exchange rate. 13 Latest years for which the reliable National Income Statistics are available. /4 In the absence of National Income Statistics for 1971 and 1972, fiscal ratios for more recent years could not be given. Not available Not applicable  Page 3 of 3 pages TRADE PAYIENTS AND CAPITAL FLOWS BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1970-71) 1969 1970 1971 1922 US $ Mln % (Millions US $) Cocoa (beans and products) 279 72.4 Exports of Goods, NFS 385 465 419 455 Gold 26 6.8 Imports of Goods, NFS 397 495 538 329 Timber (logs and sawn timber) 34 8.8 Resource Gap (deficit =1-) -12 -11 9 Diamond 13 3.3 Manganese 7 1.8 Interest Payments (net) -20 -23 -21 -5 Al-. other comnodities 26 6.8 Workers' Remittances .. .. .. .. Total 3 100.0 Other Factor Payments (net) -17 -12 -18 -17 Net Transfers -2 -1 .. 14 Balance on Current Account -51 6 o T Direct Foreign Investment 11 66 33 12 EXTERNAL DEBT, DECEMBER 31. 1972 Net MLT Borrowing Disbursements 53 48 49 37 US $ Mln Amortization -12 -10 -12 -8 Subtotal 1T T30 159 Public Debt, incl. guaranteed 621 Capital Grants .. Non-Guaranteed Private Debt Other Capital (net) _5 +15 +61 -44 Total outstanding & Disbursed Other items n.e.i 1 -44 +22 +4 Increase in Reserves (t) 3 +9 -5 119 DEBT SERVICE RATIO for 1972 L 12.6% Gross Reserves (end year) 90 75 66 121 Net Reserves (end year)&Z, 19 28 14 112 Public Debt. incl. guaranteed Non-Guaranteed Private Debt Fuel and Related Materials Total outstanding & Disbursed Imports of which: Petroleum Exports of which: Petroleum IBRD/IDA LENDING, (April 30, 1974) (Million US$3) RATE OF EXCHANGE IBRD IDA ThrouohFebruary 11, 1973 Since February 12, 1973 Outstanding & Disbursed 42.6 24.1 US $ 1.00 = edi 1 .28 US $ 1.00 = Cedi 1 .15 Undisbursed 0.0 34.9 1.00 = US $ 0.78 l.OO = US $ 0.87 Outstanding incl. Undisbursed 42.6 59.0 /1 Based on estimated export of goods and NFS in 1972 and estimates of debt service paymenTs which assume full implementation of the 1966, 1968 and 1970 debt rescheduling agreements with participants in the London conference and conclusion of parallel arrangements with others. A debt service ratio based on actual payments in 1970 or 1971 would have understated the situation because of non-implementation of previ9us rescheduling agreementa. /2 Including SDRs but excluding bilateral balances and trade arrears. (Date)   ANNEX II Page 2 of 3 pages B. PROJECTS IN EXECUTION 1/ Credit No. 160-GH - Water Su,ply and Sewerage; US$3.5 million Credit of August 28, 1969; Closing Date: June 30, 1974 1. Tlis project comprised the extension of water distribution system in the Accra/Tama metropolitan area and a new sewerage system in central Accra. These works are complete. The credit also included the improvement of the organization and operations of the national authority responsible for Ghana's water supply and sewerage sector. The Ghana Water and Sewerage Corporation is now functioning with significantly improved management and satisfactory financial performance. Only retention payments for contract services remain to be made, for which the original Closing Date of June 30, 1973 was extended to June 30, 1974. Credit No. 163-GH - Fisheries; US$1-3 million Credit of September 25, 1969; Closing Date: June 30, 1975 2. This project was to have provided for: (a) the construction of forty purse seiners; (b) credits to fishermen for purchasing such vessels; (c) fishing harbor improvement and expansion studies; and (d) the improvement of the Ghana Industrial Holding Corporation's Boatyard Division. After protracted problems over the design and price of the proposed boats, the number of boats was reduced to 10, the procurement of their equipment is now virtually concluded. All 10 of the boats should have been sold and delivered by now. Delays have also been encountered in the execution of the harbor studies. Fol- lowing the reduction in the objectives of the project, the Government has agreed to cancel the remaining proceeds of the Credit except for those tunds required to complete the final procurement and the port studies. Meanwhile, IDA has been discussing with the Government a thorough re-examination of the fisheries sector and identification of further investment needs for a possible second project. The original Closing Date of December 31, 1972 was extended first to December 31, 1973 and then to June 30, 1975. Credit No. 205-GH - Cocoa Rehabilitation; US$8.5 million Credit of. June 26, 1970; Closing Date: December 31, 1979 3. The project, principally involving the rehabilitation and replanting of 87,000 acres of cocoa plantings, is proceeding quite well. During the first year of field works, the replanting targets were met with excellent nursery practices. Control of swoilen shoot virus disease is similarly well 1/ These notes are tesigned to inform the Executive Directors regarding the progress of projects in execution, and in particilar to report any problems which are being encountered, and the action being taken to remedy them. They should be read in this sense, and with the understanding that tVey do notpurportto present a balanced evaluation of strengths and w3aknesses in project execution.  ANW II Pa ,e 1 of 3 pages THE STAITUS OF BANK GROUP OPFATIONS IN GHANA A. STATENE1T OF BANK LOANS AND Im CREDITS (as at April 309 1974) Loan or US$ million: Amount (less cancela- Credit lation, termtions & reftundings) Number Year Borrower Purpose Bank IDA Undisbursed Two loans and three credits fully disbursed 53.0 18.4 160-Gil 1969 Republic of 1iter Supply Ghana and Sewerage 3.5 0.2 163-GH 1969 Republic of ?ishe-ies GharAa Ghana 1.3 1.1 205-GH 1970 Republic of Cocoa Ghana Rehabilitation 8.5 7.2 354-GH 1972 RepublIc of Sugar Rehabili- Ghana tation Project 15.6 13.3 438-GIH 1973 Republic of First Highuey Ghana Project 13.0 13.0 T o t a l 53.0 60.3 34.8 of which has been repaid 10.. 0.5 Total now outstanding 42.6 59.8 Amount sold 0.2 of which has been repaid 0.2 - - Total now held by Bank and IDA (prior to exchange adjustmnents) 42.6 59.8 Total undisbursed - 34.8 24*8 NOTE: There have been no IFC investments in Ghana  AU"EX II Page 3 of 3 pages ahead of project requirements. However, the Sahelian drought caused a reduction in the acreage of the 1972/73 replanting campaign to 5S percent of the target. Lower annual replantings in the future are likely in addition. An extension of the project period by one year on this account is con- templated. The rehabilitation component of the project previously postponed is now underway. With the elimination of this difficulty, project dis- bursements should now proceed on the scheduled basis. Credit No. 354-GH - Sugar Rehablxlitation; US$15.6 million Credit of January 29, 973; Closing Dates March 311 1979 4. Work on the project is proceeding satisfactorily. HVA International has been assisting Ghana Sugar Estates Ltd. in the operation of the two sugar factories and estates, and t.eld plantings with effective results to date. The Sugar Industry Committete has been established and ADB has written off its unrecoverable debts. Field irrigation and drainage systems are being rehabilitated and partially replanted. A survey in August 1973 showed that the total outgrowers cane area covers about 4,000 acres more than estimated in the Appraisal Report. Both factories have been overhauled and are expected to produce a larger output in the next milling season. A considerable volume of project equipment has been ordered, which should be reflected in sizeable project disbursements in the near future. Credit No. 438-GH - First Highway; US$13 million Credit of November 21. 1973; Closing Date: December 31, 1977 5. This project comprises rehabilitating and improving 13 sections of trunk roads totalling some 345 miles; consultants for supervision of construction, pre-investment studies for further road rehabilitation and preparation of road maintenance project; and the provision of equipment for traffic control and pavement surveys. The project became effective in January 1974. Its implementation is underway, delayed only slightly by the Government's move to establish an independent highway authority which should improve the performance of the previous Government road organization. Rehabilitation and other road improvements are expected to start in November 1974., the beginning of the next dry season. A maintenance task force is scheduled to conclude its preliminary report in July 1974.   ANNEX II Page 1 of 5 pages G H A N A Accra/Tema Water Supply Project - Second Stage Credit and Project Summary Borrower; The Republic of Ghana. Amount: US$10.4 million. Terms: Standard IDA terms. Relending Terms: The Borrower would onlend US$10.4 million to GWSC at 7-1/4 percent for a term of 25 years, including 6-1/2years of grace. Project Description: The Project comprises: A. Components To Be Assisted By IDA 1. Weija Dam - an earth dam, with a maximum height of about 55 feet, on the Densu River at Weija, about 14 miles west of Accra, to replace the dam destroyed in 1968. The 25,000 mg reservoir formed by the dam wil1 provide a reliable supply of 70 mgd. 2. Improvement of the existing treatment plant at Weija to increase capacity of 13 mgd. 3. Revenue meters and spares necessary to provide 100 percent metering of all new connections. 4. Waste water meters and other equipment necessary for a full scale campaigz to reduce leakage. 5. Extension of rural water supplies in an area of about 1,000 square miles immediately to the north of the Accra/Tama Metropolitan Area by laying about 110 miles of small diameter mains, constructing six small service reservoirs, and other associated works. 6. Extension of existing secondary and tertiary distribution systems in Accra/Tema. 7. Consulting services for construction supervision for the dam and rural water supplies.  ANNEX III Page 2 of 5 pages ProJect Description: 8. Technical assistance in the commissioning of the new sewerage system, staff training, design of sewerage extensions, and related items. 9. Training facilities and programs. B. Coonents To Be Assisted By AfDB 1. Civil works of water treatment plant and service reservoir. 2. Supply of tranamission mains connecting the raw water intake, the treatment plant, the service reservoir and the existing distribution system, together with various connections to existing mains. 3e Ectension of the existing primary distribution system in Accra/Tema. 4. Miscellaneous equipment and technical assistance. C. Components To Be Assisted Ey CIDA 1. Raw Water PUmps to withdraw raw water from the reservoir. 2. Supply of water treatment plant with a capacity of 20 mgd, designed for staged expansion to an ultimate capacity of 60 mgd. 3. Construction supervision of all project elements not financed by IDA. Estimated Cost: The estimated total cost of the project, net of import duties and taxes, is about US$44.7 million equivalent, including a foreign exchange component of US$22.4 million. Details are as follows:  ANNIDC III Page 3 of 5 pages -------- US$ Thousand ------------ Local Foreign Total % Weija New Works: Dam 2,8o6 4,896 7,702 17.2 Raw water pumps 252 1.129 1,381 3.1 Tre-.tment works and service reservoir 2,705 4,280 6,985 15.6 Land and resettlement 1,130 1,130 2.5 Transmission mains 1,290 1,551 2,841 6.3 Distribution system 3,1478 1,826 5,30o4 11.9 Water meters and leakage detection equipment - 232 232 0.5 Improvement of Existing Weija Works 70 170 240 0.5 Sub-total (i) 11,731 14,084 25,815 57.6 Rural 'Water Supply 2,911 477 3,388 7.6 Sub-total (ii) 114,6142 14,561 29,203 65.2 Engineering Services and Tr~aining 1,902 2,687 4,589 10.3 Sub-total (iii) 16,544 17,248 33,792 75.5 Contingencies: Physical 1,349 1,012 2,361 5-3 Price 4,,418 14,167 8,585 19.2 T o t a 1 22,311 22,427 414,73B 100.0  ANMI. III Page 4 of 5 pages Financing Plan: The proposed credit of Us$10.4 million would cover about 23 percent of total project costs and about 46 percent of the foreign exchange component. Remairing co;sts would be covered by AfDB and CIDA contribution=u, GWSC's internal cash generation, and Governmw.t contribution. US$ Millions IDA 10.4 Af'DB 4.8 CmI.A 7.5 G-WSC internal cash generation 14.4 Government contributions 7.6 T o t a 1 s$4. 7 (US$ million) Cumulative Fiscal Year Yearlg Disbursements Disbursements 1975 5.2 5.2 1976 2.6 7.8 1977 09 8.7 1978 1.7 10.4 Procurement Arrangements: International competitive bidding, in accordance with IDA guidelines, would be used for all procurement contracts for major project items financed by IDA. Some minor items would be procured from selected suppliers to maintain standardization with existing equipment. Procurement under AfDB and CIDA-assisted project cam- ponents would be in accordance with their respectire guidelines. Consultants: For IDA-finanoad consultants, arrangements would be made in accordance with procedures acceptable to IDA.  ANNEX III Page 5 of 5 pages Rate of Return: The eccnomic rate of return on incremental investment in the Project, excluding duties and taxes, is estimated at 6 percent. However, this estimate does not take into account possible irrigation benefits and non-quantifiable health benefits. Appraisal Report: Report No. 425-GH datedMay 31, 1974. taps: Attached are maps IBRD 3761-R, 3762-R, and 11032.   < 0 L P P E ER V O '|L T At t T> 5^''' CA i iMOUAGTAOF / :6 -11'~~~~~~~~~~~~~~~~~~~ t> I *_:I R I A V tt U P P E R SE G I