Chad - Lake Chad Polders Project

CIRrC]LAT;IEG CJ 1X Eso0 py TO E RETIIRNED TO REPORTS DESK DOCUMENT OF INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use CIRCULATING COPY TO BE RETURNED TO REPORTS DESK Report No. P-1702-CD REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF CHAD FOR THE LAKE CHAD POLDERS PROJECT October 30, 1975 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 It may not be published, quoted or cited without Bank Group authorization.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 EQUIVALENTS Currency Unit - CFA Franc US$ 1 - CFAF 225 1/ CFAF 1 - us$ 0.0044 FISCAL YEAR January 1 - December 31 1/ Floating exchange rate  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF CHAD FOR THE LAKE CHAD POLDERS PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Republic of Chad for the equivalent of US$5 million on standard IDA terms to help finance the development of two polders of Lake Chad. Other contributors to the project are: The African Development Fund (ADF) US$5 million on the same terms as IDA; Fonds d'Aide et de Cooperation (FAC), US$2 million as a grant; and USAID, US$1 million as a grant. The proceeds of the Credit and contributions from the other donors would be relent to the Societe' de Developpement du Lac (SODELAC) for 50 years at an interest rate that would initially be set at a nominal 0.25 percent. PART I - THE ECONOMY 2. The report "Chad's Economic Development: Constraints and Potential" was distributed to the Executive Directors on July 2, 1973 (R73-191). A special mission visited Chad in December 1973 to update our information on the public finance situation. Its conclusions, which were reviewed in the light of recent economic developments, are reflected in the following para- graphs. Annex I contains country data. 3. With extremely poor natural resources, a harsh climate, a limited infrastructure and a pervasive lack of skills, Chad faces unusually difficult handicaps in its economic development. An additional difficulty is the high cost of transport to and from the outside world, because the main centers of activity of this large land-locked country are located at 1,500 to 2,500 km from sea ports. With a per capita GNP estimated at US$82 in 1973, Chad is classified by the United Nations as one of the 25 least developed countries in the world. 4. Over 90 percent of Chad's 3.8 million inhabitants live in rural areas, deriving their livelihood from agriculture and livestock. About half of the rural population lives in central and northern Chad as semi-nomadic herdsmen who exploit the Sahelian grasslands. The other half lives in the somewhat higher rainfall zone in the South, where they grow millet and sorghum as food crops and cotton as a cash crop. Recently, there has been some effort to intensify traditional rice growing on the flood plains of the Logone River. 5. In the first decade since independence in 1960 GDP grew by about 5 percent annually in current prices, and 2 percent in constant prices. The most rapid growth took place in the market economy, mainly import substitution industries and services, while the growth of livestock and subsistence crops probably did not exceed the population growth rate of 1.8 percent annually.  - 2 - Accordingly, income disparities somewhat widened between the small modern urban sector and the mass of the people living in the rural areas and, within the rural population, between the cash crop growers and the herdsmen. 6. Since the late 1960's two events have affected Chad's growth and financial situation -- the rebellion and the drought. The rebellion which broke out in 1968 made wide areas of the country insecure and cut off tradi- tional cattle trading routes. Wells were neglected and the supply of water for livestock dwindled. Earlier progress in animal disease control was set back. The effects of the rebellion were compounded by droughts which occured to a severe extent in three of the five years, 1969-1973. Water levels in the major rivers reached an all-time low, while Lake Chad dried up to one-third of its normal size, impeding river transportation and causing great damage to an already fragile ecological system. The impact on the livestock sector was critical: by the end of 1974, almost one-half of the national herd had apparently perished. Food crops were especially hard hit, particularly millet and sorghum -- the basic staple crops which declined by more than one-third during 1972 and 1973. Only emergency food shipments from abroad were able to avert widespread starvation. With return of good rainfalls in 1974, the country is nearing self-sufficiency in food crops. 7. These factors have made the financial situation of the Government more precarious. Up to 1968, the Government's current budget had been in balance, and considering the country's development constraints, the overall fiscal performance appeared satisfactory. After 1968, however, expenditures began to grow much more rapidly than receipts as military outlays rose sub- stantially. Meanwhile, the droughts further increased the demand for Govern- ment services while reducing revenues. The overall budget deficit rose from CFAF 2.1 billion in 1970 to CFAF 2.8 billion in 1973 (about 17 percent and 24 percent respectively, of yearly revenue) and is estimated provisionally to have further increased in 1974. External budgetary subsidies have partly covered these deficits. However, a considerable financial gap remained, causing arrears on Government payments to rise to CFAF 8.1 billion bv September 1974. 8. The fiscal situation constitutes a serious obstacle to development, as Chad cannot contribute to the financing of the required capital outlays nor finance all the recurrent expenditure of ongoing and new high priority projects. Even essential economic services have had to be curtailed. Chad's new mili- tary government which took over power in April of this year is aware of the necessity of re-examining current spending priorities and has taken steps to reassess the economic and financial situation and plan the best course to follow ahead. Limited sources of domestic tax revenue and the current costs of maintaining even the present level of public services mean that there is little prospect of generating budget surpluses through the end of the 1970's. 9. Chad's development potential lies in its rural areas. Opportunities for productive employment in towns will remain small. Progress in the rural economy, however, will be slow. Even assuming political stability and normal  - 3 - rainfall, it will take many years and great effort to restore the productive capacity destroyed by years of rebellion and droughts. In the meantime, improvement of livestock and diversification of agricultural output should be pursued. Recently, the Government announced that oil has been discovered in the North-Western and Southern parts of the country, but it will take more time to assess the size of the deposits and their exploitability. 10. In view of Chad's very limited savings capacity, almost all of the country's investment has been financed by external sources. Foreign aid received during 1970-72 averaged $10 million a year, about $3 per capita. Most of the aid -- 90 percent -- consisted of grants. France and FED provided the bulk of aid (about 40 and 30 percent respectively). Other aid donors, including the European Investment Bank and United Nations agencies made smaller contributions. In 1973 foreign aid rose substantially to about US$30 million, not only on account of increased development grants, but also because of higher drought relief transfers. 11. Since most of the external aid to Chad came in the form of grants, outstanding and disbursed external debt is small and amounted, by preliminary estimates, to US$70.5 million at the end of 1974; disbursed IDA credits re- presented about 15. percent of this amount. In 1973, debt service was estimated at 2.5 percent of the export earnings. Since 1973, Chad has continued to receive grant aid from its traditional sources of aid and also from some Middle Eastern countries. Taking into account the concessionary nature of most of the assistance extended and in prospect for Chad, the debt service ratio is likely to remain low. 12. In the light of Chad's poverty, its modest prospects for growth of GDP and exports of goods and non-factor services, external borrowing should be, to the extent possible, on very concessionary terms. Furthermore, even with good fiscal performance, Chad will have neither the free budgetary resources through the end of the 1970's to enable it to pay its share of capital outlays, nor will it be able to afford substantial new outlays for recurrent costs associated with new projects during that period. In the next few years, foreign aid agencies should, therefore, consider financing a very high proportion of the total cost of projects including, in the early years of project operation, a high proportion of current operating costs. 13. An economic mission will visit Chad in spring 1976 to review the effects of recent important international and domestic developments on the country's economic prospects and the future role of Bank Group assistance to the country. PART II - BANK GROUP OPERATIONS IN CHAD 14. To date the Bank Group has extended seven credits to Chad totaling US$24.2 million. Three of these credits were for agriculture (including  -4- livestock), two for highway maintenance and improvement, and two for education. Except for the Drought Relief (agriculture) project, which is being imple- mented satisfactorily, all ongoing projects are behind schedule as a result of time-consuming administrative procedures, the Governiment's inability to finance its contribution and cost overruns resulting from world inflation and foreign exchange adjustments. 15. Following the Govern.ment's development priorities, the Bank Group's lending to Chad continues to focus on agriculture (inicluding livestock), transportation and education - the key sectors of the economy. 16. In agriculture, our objectiv.e is to help the Government assure a sufficient food supply for a growing urban as well as the predominantly rural population, to restore Chad's production base, which was seriously affected by drought, and to make it less vulnerable to the vagaries of climate. Hence, the importance of irrigation where our efforts started with the Sategui-Deressia project and are continued with the proposed project. 17. In transportation, we give priority to the improvement of crop marketing roads. To this end,, we have planned a two-phase improvement pro- gram for cotton roads. The f:irst phase covering the improvement and main- tenance of feeder roads in cotton growing areas was financed in 1974. The second phase whose preparation is provided for under the first phase would cover the improvement of roads used for transporting cotton fiber from gin- neries to export outlets. We are also exploring ways and means of improving landlocked Chad's transport links with the sea. 18. In education, we are trying to identify a project giving priority to the training needs in rural areas, taking into account a study of the training of young farmers financed under an existing IDA credit as well as related UNESCO work. PART III - AGRICULTURE IN CXAD 19. Chad's rural sector directly supports some 90 percent of its popula- tion and accounts for over half of its GDP. Chad is the leading cotton pro- ducing and exporting country in West Africa with cotton accounting for about 70 percent of exports. Next to cotton, livestock Is Chad's most important foreign exchange earner. Foodcrops are grown for subsistence. Although the adverse impact of the recent drought is difficult to measure, it is undeniable. Livestock and foodcrop production were most severely affected by the drought, while cotton suffered least. The country is still in the process of recover- ing from its disastrous effects. 20. Given Chad's very limited agricultural resource base, Government's options for developing the rural sector are quite restricted. Because of the importance of the cotton and livestock sectors in Chad's economy, their  - 5 - development presents a good opportunity for producing new resources, employ- ment and incomes required to raise the standard of living of the bulk of Chad's population. Accordingly, many development projects, mostly financed by ex- ternal sources, have been directed at raising productivity in these sectors. 21. In the case of livestock, projects mainly financed by FED, FAC and IDA (Credits 309-CD and 445-CD) have concentrated on improving animal health, transportation and marketing facilities, and on increasing the supply of water so that unused pasture can be exploited. In the case of cotton, which is mainly grown by traditional smallholders in the South, the Govern- ment, with the financial and technical assistance of FED and FAC, launched in 1965 a five-year productivity program to raise output. Under this program, the participating farmers were provided with fertilizers, insecticides and sprayers at subsidized prices, and trained to adopt more intensive and better methods of cultivation. After an initial increase, both area and output under this program declined because of the drought, which also caused farmers to turn to food crop production. A second five-year productivity program, which was started in 1971 is currently underway. IDA has contributed to it by financing the improvement, and maintenance of feeder roads in the cotton growing areas. The Government is now organizing a detailed evaluation of the program to determine its viability for the future. 22. As far as rain-fed farming is concerned, however, there is a limit to the increase in output and income that can be generated by development pro- jects such as the cotton program discussed above. Current income levels in rain-fed areas of Chad are about US$35 - 50 per capita and can probably be increased by maybe 50 percent, with present technology. However, the bene- ficiaries of such projects will continue to remain very poor, and the food base of the country will continue to depend upon a rainfall that even in normal years is very variable and that from time to time, as in the recent Sahelian drought years, fails to a degree where national catastrophe results. Further increases in productivity will require development projects for crops that combine high yield with drought resistance. The Government of Chad has made efforts in this direction. 23. Thus, while rain-fed projects will continue to be given the highest priority, Government believes that in time it will be necessary to develop the irrigation potential of Lake Chad and the rivers of the Lake Chad basin. Given Chad's arid climate and the susceptibility of most of the country to droughts, irrigation would make a major contribution toward solving the critical problems faced by the economy as a whole and the rural sector in particular. It would bring a wide range of benefits from (i) diversifying crop production into wheat, sugar, rice, vegetables, and medium staple cotton; (ii) better utilization of the country's livestock resources through fodder production; (iii) evolving a high technology agriculture; and (iv) insuring against the disruptive effects of recurring droughts. 24. Given the very high investment cost, irrigation is not a panacea but rather a complement to the expansion and intensification of rain-fed agriculture. The first irrigation project, which IDA (Credit 489-CD) and  -6- the African Development Fund are helping to finance, is the development of about 11,000 ha of land for improved rice cultivation in the Sategui-Deressia plain alolng the Logone River. Bids received from contractors for the civil works component have been excessively high and Government has now decided, in agreement with the co-lenders, to try out labor intensive methods of construction by force account (see page 4 of Annex II). The proposed Polders project would be our second operation in this sector and takes into account experiences on construction methods gained so far with the previous project. PART IV - THE PROJECT Background 25. The project was identified in 1968 by a joint FAO/RMWA sector mis- sion. Over the years, the Bank - with the support of Government, FAC and more recently ADF - has followed the preparation of an irrigation project totaling about 2,800 ha by Fretnch consultants, SCET-International, and the operation of a 70 ha pilot farm, both financed by FAC. The project was appraised in October 1974 by a Bank Mission which concluded that it should be reduced to 1,170 ha in size. Negotiations for the proposed credit were held in Washington from September 8 to September 13, with a Chadian delegation led by Mr. Madengar Beremadji, Secretary of State for Finance, the Economy and the Plan. A report entitled "Chad: Appraisal of Lake Chad Polders Pro- ject" No. 828a-CD dated October 16, 1975 is being distributed separately and a Credit and Project Summary is attached to this report as Annex III. 26. The project would consist of: (a) rehabilitating and completing the irrigation and drainage networks of Guini polder (370 ha net area); (b) constructing the irrigation and drainage networks for Berim polder (800 ha net area); (c) establishing a Commercial Agricultural Development Section within the Project Unit which would prepare the way for farmer settlement, and be responsible for the first year of operations on all newly developed land, and for the basic cultivations during the following year; (d) providing a package of services to the farmers who would take up cultivation of the polders after the initial first year of operations by the Commercial Agricultural Development Section. Such services would include resettlement assistance, training extension, credit and marketing;  (e) constructing necessary service centers and houses for project staff; (f) expanding adaptive agricultural research at the Matafo Research Station; and (g) providing consultant assistance to reorganize the Societ6 de Developpement du Lac (SODELAC). Organization and Execution 27. SODELAC has incurred heavy losses over the past few years and as a result has not been able to pay all its bills. We estimate that about CFAF 124 million are needed to straighten out its financial situation and Government has agreed to provide these funds in the form of equity (CFAF 70 million) and budget subsidies for 1973 and 1974 (CFAF 54 million) prior to effectiveness of the Credit. Under the project, SODELAC would be reorganized with the assistance of a consultant to make it more efficient but, pending such reorganization, management of funds used by the Project and the Project Unit, and their account- ing would be kept entirely separate from those required for SODELAC's other activities. 28. The Project Unit Manager and key project staff would be recruited internationally. As it is essential, under the harsh living conditions pre- vailing in the lake area, that internationally recruited staff should form a compatible team and receive adequate technical backstopping, staff would be provided by an international company with the expertise to carry out irriga- tion projects including construction of works. The Government has chosen the French consultants SCET-International to provide the internationally recruited staff. SCET-International prepared the project and operated the Matafo Research Station from 1970 to 1972. 29. Construction of the water intakes and the pumping stations and the supply of secondary irrigation pipes (US$3 million in total) would be financed by ADF which would apply its own procurement procedures. It is expected that construction of the water intakes and pumping stations would be let to local competitive bidding, and supply of pipes to international competitive bidding among ADF members. The remaining irrigation works would be small (US$2 million) and would include different items such as construction of primary canals, laying down secondary pipes, and land levelling. Because of their smallness and their nature, it is proposed that the remaining works, which would be financed by IDA, would be constructed by force account. The force account approach could result in some savings as we expect it will in the Sategui-Deressia project (paragraph 24) and in addition, would have the advantage of (a) integrating the agricultural development with construction of the irrigation systems, and (b) enabling SODELAC to acquire capability in basic irrigation construction techniques. 30. To prepare the polders for settlement, a Commercial Agricultural Development Section would be created within the Project Unit. This section  would be equipped to develop up to 400 ha of new land each year. It would exploit all newly developed land in the first year, drawing its labor force from the population of the project area. In the following year, when the farmers are settled, it would provide them with mechanical assistance for basic cultivation and would p:Lant their cotton and wheat crops. The cost of this assistance would be incorporated in the credit extended to participants for purchasing the tools and inputs necessary for participating in the project. In the first year of settlement, the farmers would be responsible only for irrigating and harvesting their crops and would thus be able to attend short training courses on the new crops and production techniques that they would encounter through participating in the scheme. After these initial courses, farmers would receive assistance in the field from project employed extension workers. 31. About 1,200 farm families would be needed to settle project land, if each family is allocated and cultivates an average of one hectare, which is the maximum the typical family could effectively handle without outside help. The selection of farmers would be made jointly by the Project Unit and a committee consisting of representatives of the local authorities. Selection criteria would include, among other things, present proximity to the polders, size of family, farming experience and ownership of bullocks. It is expected that the 700 families already living in the project area, who are already practicing traditional irrigation, would join the project. An additional 500 farm families would be needed from outside the project area. As these families represent only 7 percent of the farming population within a 60 km radius of the project area, it should not be difficult to recruit them. The Government, who owns all polder lands, would issue a decree to confirm that SODELAC is authorized to settle farmers on newly developed polder land. The publication of this decree is a condition of effectiveness of the credit. 32. The land to be exploited by the farmers would be alloted to them for a renewable period of three years by SODELAC on terms and conditions that would be acceptable to the Gcovernment and IDA. These conditions would specify, among other things, that SODELAC would control water supply for irrigation, established crop cultivation patterns, and provide maintenance of irrigation works, marketirLg, extension and credit services. The farmers would be assured tenure, supply of water, basic services and sale of their produce at guaranteed prices. They would pay an annual consolidated fee to SODELAC to cover the amortization of the government loan as well as the Project Unit's operating and maintenance expenses. 33. Farmers would receive credit for the purchase of farm inputs, equipment and oxen on terms and conditions that would be acceptable to the Government and IDA. All credit would be made in kind. Seasonal credit would average US$300 per ha per year and would carry an interest rate of 10 percent, the prevailing rate in Chad. It would be repaid after each crop. Medium-term credit would average US$350 at an interest rate of 10 percent, and would be repaid over 5 years.  34. The Matafo Research Station Program would continue and expand its efforts to determine optimum cultural methods for the main crops grown on the polders, paying particular attention to improved methods of cultivation, weed and insect control, and water application. In addition, it would carry out trials to determine the long-term fertility of polder soils, including the development of rotations satisfactory to maintain fertility. It would con- duct also research into alternative irrigation methods in an attempt to achieve reductions in development costs, particularly experiments with low lift pumping from wells. Finally, it would evaluate ongoing project results and initiate a program to look into the sociological problems involved in recruitment and settlement of farmers. Marketing of Project Output 35. The project is expected to produce 3,000 tons of wheat and 3,000 tons of seed cotton by 1980. SODELAC would sell project produced wheat to the Grands Moulins du Tchad (GMT), a private company which has the monopoly for flour milling in Chad. SODELAC and GMT would enter into a formal agree- ment by which GMT would purchase project wheat at a price that would provide an adequate incentive to farmers. For cotton, SODELAC would enter into a similar agreement with Cotontchad, the Government-owned corporation which has the monopoly for the purchase of seed cotton and the processing of cotton lint. These agreements would be acceptable to the Government and IDA, and their signing are conditions of effectiveness of the credit. Project Cost and Financing 36. The total cost of the project, net of duties and taxes, is estimated at US$13 million equivalent, with a foreign exchange component of US$10.4 million (80 percent). The costs of the project are high--with civil works, without contingencies, costing US$4,800 per ha in 1975 terms. This very high cost reflects conditions specific to Chad: high external and internal trans- portation costs, lack of a technically developed Chadian domestic contracting industry, and a generally low level of experience in irrigation works. The situation will not change in the short run, but it should improve as experience is built up through the implementation of irrigation projects. Other major items in p- ject costs are similarly high but generally reflect the disecono- mies of a small scale operation. 37. Given the exceptionally difficult situation of Chad as described in paragraph 8, the co-donors have agreed that together they would finance the total cost of the project net of taxes. The proposed IDA credit of US$5 million would finance 38 percent of this cost and would cover some 48 percent of the foreign exchange requirements. The remainder of project cost would be financed as follows: ADF, US$5 million covering 38 percent of total cost; USATD, US$1 million covering 8 percent; FAC, US$2 million covering 16 percent. The IDA credit and the funds from the other donors would be relent to SODELAC by the Govern- ment for 50 years at 0.25 percent. SODELAC would repay the loan from the proceeds of the consolidated fee collected from farmers. If farmers are to be provided with sufficient incentive to participate in the project it would not be feasible, initially at least, to set this fee at a level that would enable SODELAC to repay the Government at more than a nominal rate of interest (see paragraph 40). The consolidated fee would be reviewed from time to time  - 10 - by SODELAC, the Government and IDA, as the farmers' response is tested, and adjustments would be made by mutual agreement. Should an increase of the fee prove feasible, the interest rate on the Government loan to SODELAC would also be increased. 38. The financing plan recognizes the differences in the procurement practices of the co-donors. ADF, which cannot finance goods or services supplied from non-member countries, would finance alone 100 percent of the irrigation works built by contractors, 100 percent of the procurement under international competitive bidding of equipment and PVC secondary distribution pipes, and 100 percent of the cost of staff housing and service centers to be built by local contractors. USAID would finance 100 percent of the agricul- tural research component for cereals. IDA and FAC would jointly finance the remaining project items, providing 71 and 29 percent of the required funds respectively. 39. Following credit effectiveness, IDA would disburse US$400,000 into a revolving fund to be held by the Banque de Developpement du Tchad to finance project activities as they are incurred and prior to reimbursement by IDA. The co-donors will make similar arrangements. l'o facilitate the early start of the project, IDA would finance retroactively expenditures incurred under IDA's share of the project from October 1st, 1975 in an amount not to exceed US$100,000 equivalent. Recovery of Costs from Farmers 40. It has been agreed that the consolidated tee would be set initially at CFAF 130,000 (US*578) per ha per annum, a level which would give partici- pating farmers adequate remuneration and incentives while at the same time allowing Government to recover as much as possible of its cost. Although this fee is about 7 times that collected on the only ongoing large scale irrigation scheme, at Bongor, in southern Chad, it is estimated on the basis of farm models that participating farmers will still receive a net income equivalent to about twice what they could earn at the minimum official wage rate in the agricultural sector. 'This is considered to be an adequate incen- tive. On the other hand, at the initial level of the consolidated fee, Government would recover 40 percent of its initial investment and recurrent expenditures in the project over a 50-year period, assuming the cost of capital to be 10 percent. Government recovery would :Lncrease to 68 percent, if project induced cotton taxes and profits generated by Cotontchad are taken into consideration in addition to the consolidated fee. The level of the consolidated fee will be reviewed periodically with a view to ensuring the maximum recovery of cost which appears compatible with the successful implementation of the project.  Procurement and Disbursement 41. For those project items financed by IDA and FAC, the following pro- curement procedures would apply: orders or contracts for equipment, cement, vehicles or chemicals with a value of more than US$25,000 will be through International Competitive Bidding (ICB) in accordance with IDA guidelines. ADF and USAID procurement procedures would apply to those project items they would finance. 42. The Credit would be disbursed against 71 percent of total expendi- tures for cement, equipment, vehicles, and chemicals; for operating expense, local staff, expatriate staff and for consulting services. Economic Benefits and Justification 43. The proposed project holds the promise of drought protection and high yields of food crop - in addition to cotton. Thus, it fits well into the Bank's approach to agricultural development in the Sahel. In view of the fragility of the rain-fed farming system, investment in irrigation - despite its high cost - is essential in Sahelian countries such as Chad, if any type of sound economic base is to be established and sufficient food assured. Moreover, pending comprehensive and time-consuming surveys beyond the work of the 1968 sector mission, there are at present no other alternatives for substantial investment in agriculture. 44. The project's direct benefits would be the 3,000 tons of wheat and the 3,000 tons of seed cotton production that it would generate annually, and which would cause the per capita income of the 1,200 farm families to rise from US$35 to about US$300. If farmers are allotted less than 1 ha each, and if farm family size increases, as it is expected to, through in- creased birth rates caused by better diet and higher incomes, and through the attraction to the project area of members of the extended family, the number of people who would eventually benefit directly from the project could reach 14,000. The economic rate of return of the project is estimated at 17 percent with shadow pricing of the incremental work required of farmers under the project, inclusion as economic cost of the foregone incomes from traditional irrigation, and exclusion of the cost of agricultural research. Pricing the work of the farmers at the minimum wage rate for the agricultural sector would lower the rate of teturn to 13 percent. 45. The project would also have a number of secondary benefits which have not been included in the economic rate of return calculations: it would prevent the progressive salinization, a normal process exacerbated by tradi- tional irrigation, and eventual abandonment of Guini and Berim polders; it  - 12 - would create a pole of development in an exceptionally fertile area of the so far under-privileged northern part of Chad and help stabilize the farm community by reducing the income disparity between northern and southern regions; it would create employment opportunities and strengthen the balance of payments by providing a permanent source of foreign exchange; it would provide a reliable source of agricultural production, protected against the adverse impact of possible droughts, and it would provide the basis for the development of a modern technology in irrigated agriculture. PART V - LEGAL INSTRUMENTS AND AUTHORITY 46. The draft Development Credit Agreement between the Republic of Chad and the Association, the draft 'Project Agreement between the Association and SODELAC, the Report of the Committee provided for in Article V, section 1 (d) of the Articles of Agreement and the text of a draft resolution approving the proposed Credit are being distributed to the Executive Directors separately. 47. Special features of these agreements have already been referred to in paragraphs 31, 32, 35 and 38 of this Report. Additional conditions of effectiveness provided for in sections 6.01 and 6,02 of the draft Development Credit Agreement include: (a) the agreement for onlending the proceeds of the Credit to SODELAC shall have been concluded; (b) the marketing agreements between SODELAC and GMT, and SODELAC and Cotontchad shall have been concluded; (c) a decree empowering SODELAC to organize farmers' settlement on newly developed polder lands shall have been enacted and duly published; (d) the Project Unit Manager shall have been appointed; (e) the French Republic and the African Development Fund, shall have approved their contributions to the project; and (f) the Government shall have paid to SODELAC its contribution to SODELAC's capital as well as the amount budgeted in favor of SODELAC for the preceding two years. 48. I am satisfied that the proposed Credit would comply with the Articles of Agreement of -the Association.  - 13 - PART VI - RECOMMENDATION 49. I recommend that the Executive Directors approve the proposed Credit. Robert S. McNamara President Annexes Maps Washington, D.C. October 30, 1975   ANI(EX I Paps 1 of 3 Papee OmUmTR DATA - CHAD AREA POPhLATTON DENSITY 1,281.,000 koaD 3.78 sllon (ei.d-19?2) * e ao rbeln SOCIAL INDICATORS Referente Countries Chad CA OR? PIR CAPITA 1$(TASRss 70 80 480 4 200 La 160 La DEO5IORAPOIC Crde birth rate ((Per thoucnd La4 14 504 41.4 L6 Cede dahrt(per thou:andd 08 5 2L 9 75 Infan,t sortallty rate (per thouean,d live blithe) 160 ~ 151. ieexpectency at birth (Feers) 32I 4.1 LI1.f 17 14 Dines reproduction rate /2 ~~~~~~~~~21.4 /ae.a 3.0 4f. 328 PopulatIongrowh re te15184 Population growth rate - urban .. 24 Age trcue(percet) 0-11. 51./ 1.4194 14 1.2 15-61.5 5~L h194 55 6506 over 2.K1~ M9~ Ago de`pendency ratio 4 1*91K0 . Aconoic dependency r-lly 11. 1.3 3/a.c 9 09 r.o 7. ( Urban population as percent.of tota1 7 /e.i 13 /a.i ..9 'a 27/. Family Planning, No. of accePtors ounulative (thous.) ... lNe, of users (% of married woane) ... Rotl lbor force (thoceande) 1,100 1,270 a~ 1 7,800 41 2,300 5 Percentage emeploeyd in agriculture 95 9 Li 91 -/- 66 8 Percentage unemployed ... .16 INCOE IIST_IBDTICN 7 ainlincome received by higheet 5% 23 I .. 36 Percent of rat ional incme receised by highest 20% L3 7 59 Percent of national income received by lowest 20% 8 L. Percet of nationa 1lincome recei-ad by lowast LO0% 18..* 13 MISTRIBUTION OP LAND OWRERSIP S owned by-top lOS of -ownrs . % owned by -.alleet 10% of - -nere HEATHAND NUTRITION Pouainprphysiien 56,0CC I 60,320 Li 11,80 ~2,300 29,760 / Poulation Per nu,ein,g person 5,0 . 5607 ,0 5d 2730 2,29 Ppulation per hospital bed 820 4j 1,150 4 ~ 1,380 0~ .0 4 160 Per Capita calorie supply as % ofreuemns/ 91 86 92 77 96 Per capita protein supply, total (grams per dayj / 77 I 73 69 1.6 12q Of which, Mainl and pulse. 33 /ab 23 lab 11, /ab 22 /ab Death rats 1-1 years /7 . _ _ EDUCATION 1 72 Adjua_Ted /A p,icary school enrollment ratio 52.~2 96 /n 76 Adj.eted J secomnary school enrollment ratio 0.1. 4 2 2 i 37 7 leerstof eChling provided, first and second level 13 13 12 13 10-13 Vocatiocei enrollmen t as % of sac, school enrollment 21 9 /nO. 33 32 Adult literacy rate . 7aaL.a 10 Ia.a.a.d 38/a HOUSIN3 Average No. of parsons per r... (urban) . Percent of occupied units withoat piped water... Ace.e tn ele_tricity (as % of total ppulatico)... Percect of #ural populatiot conneted to electricity ... CONSUMPTIN Radio -receivers per 1000 population 2 11. /a.. /a 268/ 33 / Passe.nger care Par 1000 pePulatio" I fof c IElectric power consumtion (ksh P.C.) 3 W 13 ~f 10 16'8 /a 31/ Newsprint Consumption p.c. kg per year . .. 0.9~ 7-f Notes, Figure. refer either to the latest periods or to cout of enir-rental teepertare, body -aighte, and the latest yearn. Intact periods refer in principle to dieotribata.n by age and sm af national popuielatnem. the years 956-60 or 1966-70; the latest yeara in prin- /6 Prtein standa.rds (requirements) for a31 eoantriec am eatab- ciple in 1960 end 1970. liahad by OURDa Nm-it Reaerch Service provide for a einimum 4I The er. Capita tNP estimate is at sakAt prices for alowance of 60 greee of total protein per day, aMd 20 grwa of y-oa,th-r thoc 1960, c.lculated by the mae ooneeraion anmeal and pulse protein, of e1hlo 10 greea should be anieal teCichiqus u the 1972 Worid Beadk Atlas. protein. Thee standardsi -ar .-what 1awc thac ttoee of 75 12 A,enecme of dagtr e oa o erdciepN of total protein and 23 graa of anima.l protein as n age. ~~~~~~~~~~~~~average for the world, proposed by PAO in the Third World Pood a Fbpulation growth rcteo are for the decades ending in ur 1960 nod 1970. LI SanIaudlse have suggested that crde death rates of childrn. /4*, Ra tio oofpopulation under 15 end 65 end ever to popula- age. 1 through 4 eay be used as a first appriateatta index of tion of egeo 5-,61. for age dependency ratio and to labor ealnatrition. force of ae 15-61. for economic depedency ratio. /8 Pecetage enrolled ef oorresponding popul.to of achoo1 age F LO referenceastandardo - reprmat piWsiological re- as defined for each oioutry. quiraeots for normal activity end health, taking A 1972; /b Estimate for Afr-ican pepsulation based onmreoults of 1959-60 sample surveys in neighboring aes /c 1965-70 aetteete7 /d 1955-571 /e 1963-4 1. /f 1.970-75; a. 1960-72; /b 1963-72; /i Ten urban centers; 4Z Cities of La Pe., orura, Potoal, ro-huamb.h, sucre-, Tea-lia, S=tas Cro, Trinidadanmd Gabije; & Age group 0-17, 18-59, an 60 end over; a Fatimate; La 1969; /4 1965-66, Li Age group 15-59; 4, Age 60 end o,er; & Ratio of popula- tion under 17 end 60 and ever to total labor fmor; 47 Ratio of population under 15 end 60 and over to total labor force; /a Ratio of populAtion under IS end 65 end over to total labor fore;l A 20 principal Centers with a popula- tion of over 3,000 inhabitants; 4. 1968; /v 1958, populatio-; /. 1961; /x 197l,;q6& Gover,tmMt on13'; In 1962; /a. Including midwives and aseiatact nurses in government medical centers; /ab 196.16 lao Definition cot available; /4d 15 years end over; Ian Africa population; If 1973. CThe Central African Republic has been selected as en objective country focC Chad beocuse it is alsoe landlocked hut at a higher level of deve1op,eni . 82 October 16, 1975  ANNEX I Page 2 of 3 pages ECONOMIC INDICATORS GROSS NATIONAL PRODUCT IN 1973 ANNUAL RATE OF GROWrH (%, current irices US$ Mln. % 1961-71 1971 - 73 1973 GNP at Market Prices 323.7 100.0 5.0 -6.9 -1.2 Gross Domestic Investment 46.2 14.3 5.5 -1.1 -12.6 Gross National Saving -7.6 (2,3) --6.1 Current Account Balance -39.8 (12.3) Exports of Goods, NFS 86.3 26.7 6.3 -2.0 -1.0 Imports of Goods, NFS 136.6 42.2 6.1 0.2 -2.4 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1971 Value Added Labor Force-/ i V. A. Per Worker US$ Mln. T Thous. % Us $ Agriculture 135.6 47.2 829.3 . i63.5 Industry 35.6 12.4 5.0 . 6,137.9 Services 115.4 40.4 45.3 . 2,556.3 Unallocated . . . Total/Average .__ 28 6.6. 100.0 . 100.0 GOVERNMENT FINANCE General Government Central Government ( Mln.) % of GI? (CFAF Bln.) % of GDP 197_ 197 196_-7_ 1973 1972 1971-73 Current Receipts j . . . 12.46 12.49 16.3 Current Expenditure b/ . * * 15.22 15.26 19.0 Current Surplus . . -2.76 -2.7-; (-757 Capital Expenditures . . . .51 1.35 l.y External Assistance (net) . . . .60 2.50 3.5 MONEY, CREDIT and PRICES 1968 1969 19770 1971 1972 1973 7Billion CFAF outstanding end periodT Money and Quasi Money 7.35 7.95 9.03 9.61 9.77 10.00 Bank credit to Public Sector -0.01 0.0