Upper Volta - Rural Roads Project

Report No. 738a-UV FILE COpy Appraisal of a Rural Roads Project Upper Volta June 6, 1975 Westem Africa Projects Department Highways Division Not for Public Use Document of the International Bank for Reconstruction and Development International Development Association 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 It may not be published, quoted or cited without Bank Group authorization.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 Eauivalents Currency Unit = CFA franc (CFAF) US$1.00 = CFAF 225 CFAF 1 million = US$4,44.44 Fiscal Year: January 1 - December 31 System of Weights and Measures: Metric Metric British/US Equivalents 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) = 0.62 mile (mi) 1 square kilometer (km2) = 0.386 square miles (sq mi) 1 metric ton (m ton) = 2,204 pounds (lb) Abbreviations and Acronyms AAW - Autorite pour l'Am4nagement des Vall'es des Voltas BCEoM - Bureau Central d'Etudes pour lea Equipenents d'Outre-MIr DPW - Directorate of Public Works DEF - Drought Relief Fund FAC - Fonds d'Aide et de Coope'ration FED - Fonds Europeen de Diveloppement HER - Service de 1'Hydraulique et de 1'Equipement Rural MYW - Ministry of Public Works, Transport, and Urban Development ORD - Organisme Regional de Developpement ORSTOM - Office de Recherches Scientifiques et Techniques d'Outre-lAr RDF - Rural Development Fund RMWA - Regional Mission in Western Africa SERS - Service d'Ehtretien des Routes Secondaires UNDP - United Nations Development Programe UNIDO - United Nations Industrial Development Organization USAID - United States Agency for International Development  UPPER VOLTA APPRAISAL OF A RURAL ROADS PROJECT Table of Contents Page.No SUMMARY .......................................... - iii 1. INTRODUCTION ........ .............................1 2. BACKGROUND ......... .............................. 2 A. The Economy ........ ......................... 2 B. Agriculture ................. 2 - General Features . ...................... 2 - Roads and Agricultural Development ..... 3 - The Marketing System ................... 5 C. Roads ............................ 5 - The Network ...... ...................... 5 - Road Transport Industry. 6 - Highway Administration. 6 - Financing Highway Maintenance. 7 - The Road Construction Industry 8 3. THE PROJECT ........ .............................. 9 A. Description ............................... 9 - Improvement and Maintenance of Rural Roads .............................. 9 - Technical Assistance to MPW .10 - Equipment Purchase .10 - Evaluation Study of Rural Road Construction .11 B. Cost Estimates .............................. 11 C. Execution ....... ............................ 12 D. Procurement ................................. 13 E. Financing and Disbursements .... ............. 13 4. ECONOMIC EVALUATION .............................. 14 5. AGREEMENTS REACHED AND RECOMMENDATION .... ........ 16 This report has been prepared by Messrs. C. Delapierre (Engineer/Economist, RMWA), and R. Gusten (Economist, RMWA) following an appraisal mission in December 1974.  TABLE OF CONTENTS (Continued) TABLES 1. Highway Network 2. Design Standards 3. Maintenance Program and Improvement Program 4. Length of Rural Roads to be Improved and Maintained 5. Highway Equipment Purchased under Previous Projects 6. Equipment to be Purchased under Proposed Project 7. Project Costs 8. Estimated Schedule of Disbursements ANNEXES 1. Agriculture 2. Migration 3. Bank Group Operations in the Highway Sector 4. Guidelines for Selection of Rural Roads to be Improved in the Second and Third Years of the Project 5. Technical Assistance tc DPW - Job Description 6. Evaluation Study of IDA-financed Rural Roads - Outline Terms of Reference for Consulting Services 7. Details of Economic Evaluation ORGANIZATION CHART MAP - Upper Volta-Rural Roads Project - IBRD 11504  UPPER VOLTA APPRAISAL OF A RURAL ROADS PROJECT SUMMARY i. Upper Volta's economic development depends on agriculture which provides a livelihood for more than 90% of the population. Crop production (cereals, cotton, groundnuts) and cattle-raising will remain for a long time the principal economic activities in the country, despite the many physical constraints to these pursuits. Agricultural development is however affected by the maldistribution of population in relation to natural resources. More than 60% of the country's inhabitants live on about one-third of the land in a region with poor or mediocre soils and insufficient rainfall, while regions in the west and south which have greater agricultural potential are less populated, because of poor access and disease hazards in the river valleys. Large areas of these regions will eventually become accessible and fit for settlement as a consequence of the ongoing campaign for the eradication of onchocerciasis (river-blindness). Agricultural policy emphasizes rural development programs, settlement schemes, and selected irrigation projects in the valleys of the Volta Rivers and other areas in the west and southwest. ii. Substantial investments in rural transport systems are required to promote effective agricultural and rural development. The Government has recognized this during the last five years, and the rural road system has been improved considerably with the support of various foreign agencies, mainly the Fonds d'Aide et de Cooperation (FAC), the Fonds Europeen de Developpement (FED), and the Association. However, no Government agency has so far been equipped to ensure proper development and adequate mainte- nance of the improved roads. For the future, this task will be carried out by a special Department of Rural Roads (Service d'Entretien des Routes Secondaires, SERS) created in January 1975 within the Ministry of Public Works, Transport, and Urban Development (MPW). iii. The objective of the proposed project is essentially to staff and equip SERS, to develop low-cost roads in regions with significant agricultural and rural development programs, and to preserve, through proper maintenance, the important investments recently made in the rural road sector. The project consists of: (a) a three-year program for improvement and subsequent maintenance of about 1,200 km of rural roads, and maintenance of about 2,100 km of existing rural roads; (b) technical assistance and procurement of equipment for SERS; and (c) an evaluation study of the effectiveness of road components included in agricultural projects financed by the Association over the past five years. iv. Of the 1,200 km of roads to be improved, only about 250 km have been identified; the remaining roads will be selected by SERS during project implementation on the basis of criteria agreed between the Government and the Association. The list of roads to be improved during each fiscal year will be  - ii - submitted to the Association for its approval four months before the scheduled start of works to be implemented under that year's program. An Interminis- terial Technical Committee will be consulted during the selection process to ensure that road improvement works are directed to meeting the requirements of social and economic development in particular agricultural areas. The 2,100 km of existing rural roads to be maintained are spread over various parts of the country, but are primarily located in agricultural development areas in the West Volta and Bougouriba regions. v. Project costs are estimated at US$8.5 million equivalent (net of taxes), with foreign costs of US$6.6 million (78%); taxes are estimated at US$1.7 million equivalent. The proposed Credit of US$7.5 million would finance the entire foreign cost and US$0.9 million equivalent of the local costs of the project. The Government's contribution would be US$1 million equivalent, or about 12% of total project cost net of taxes. vi. Physical implementation of the project is expected to start in mid- 1976. The project will be executed by SERS' own forces, with some support provided by contractors and community self-help programs. Equipment, mater- ials, spare parts, and supplies amounting to about US$4.2 million will be procured on the basis of international competitive bidding in accordance with Bank Group guidelines. Items which could not be bulked into packages costing US$40,000 equivalent or less, and which would not be sufficient to attract the interest of foreign bidders, could be purchased through local suppliers in accordance with Government competitive bidding procedures acceptable to the Association; the total amount of such purchases would however not exceed US$250,000 equivalent. Manufactured items in this category are available from local representatives of international suppliers, service is adequate, and prices are competitive. Contracts for selected minor works (mainly drainage and crossing structures) and haulage of materials, will be awarded on the basis of competitive bidding advertised locally following procedures acceptable to the Association. A small part of project costs (about US$0.7 million) will be for staff salaries and direct operating costs. Consultants for technical assistance and for the evaluation study will be retained in agreement with, and under terms of reference and conditions satisfactory to the Association. vii. Funds from the proposed Credit will be disbursed as follows: (i) 100% of c.i.f. costs of equipment, spare parts, materials and supplies; (ii) 100% of foreign expenditures for consulting services and technical assistance; (iii) 50% of expenditures (net of taxes) for direct operating costs for improvement and maintenance works by SERS' forces; and (iv) 80% of total costs (net of taxes) of works by contractors. Disbursements for direct operating costs will be made against claims submitted by DPW and supported by relevant documents. The accounting system to be followed and controls to be established for assessing the direct operating costs of departmental works have been defined and agreed with the Government. viii. The economic justification of the project rests on two complemen- tary factors: favorable conditions for road construction, and low traffic  - iii - volumes and corresponding high unit transport costs. The combined effect of these factors implies that relatively small expenditures on the improve- ment and maintenance of rural roads can be expected to have a significant impact on transport conditions, and in turn, on agricultural production. Quantifiable project benefits include: (i) direct benefits resulting from savings in vehicle operating costs; and (ii) indirect joint-product benefits related to increased agricultural production. Institution-building is of primary importance, and the component included in the proposed project will have benefits reaching well beyond the immediate scope of this project. ix. The economic return on the maintenance component of the project, based on vehicle operating cost savings alone, is conservatively estimated to range between 10-18%. No return can be calculated for the improvement works since only a few of the project roads have been identified so far; however, the guidelines for road selection (para. iv above) stipulate that all roads for improvement will have to yield an economic return of at least 10%, and it is expected that most of the roads will yield a return substantially above this minimum level. x. The proposed project is suitable for a Credit to the Republic of Upper Volta in the amount of US$7.5 million on standard IDA terms.   UPPER VOLTA APPRAISAL OF A RURAL ROADS PROJECT 1. INTRODUCTION 1.01 Over the last five years, the Government of Upper Volta has made considerable efforts to improve the country's rural road network. To date, however, no Government agency has had the financial, technical, or organiza- tional means to plan, construct, and maintain these roads systematically; as a consequence, there was a danger that the improved network would soon re- lapse into its previous poor state. The Government and the Association explored various possibilities for remedial action, and concluded that the best solution for implementing the above tasks would be to set up within the Ministry of Public Works, Transport, and Urban Development (MPW) a Department of Rural Roads (Service d'Entretien des Routes Secondaires - SERS). SERS was formally established in January 1975, and the proposed project has been formu- lated on the basis of making effective use of this agency. 1.02 The project would be the second financed by the Association in the transport sector of Upper Volta. The First Highway Project (Credit 316-UV, US$2.8 million, 1972) consisted essentially of construction of the Koundougou- Solenzo road in the West Volta cotton area; work on this road is now completed. The amount of the Credit had to be increased in 1973 to US$4.15 million to meet higher project costs than originally estimated. In addition to the abovementioned project which was exclusively for highways, four agricultural and rural development-type projects financed by the Association over the past five years have included programs of rural road improvement (para. 2.09). Also, the rural road network has been further improved with the support of various foreign agencies, mainly the Fonds d'Aide et de Cooperation (FAC) and the Fonds Europeen de Developpement (FED), and the United States Agency for International Development (USAID). 1.03 The rural roads project now proposed is designed to consolidate achievements of the previous programs, and to develop the institutional framework necessary for the future growth and maintenance of the rural net- work needed to support continued agricultural development. Road improvements under the proposed project are directed to ongoing or planned agricultural development programs, with a regional bias towards the West Volta, Banfora, and the White Volta areas, the frontiers of agricultural development in the country. The project consists of: (a) a three-year program for improvement and subsequent maintenance of about 1,200 km of rural roads, and maintenance of about 2,100 km of existing rural roads; (b) technical assistance and procurement of equipment for SERS; and (c) an evaluation study of the effec- tiveness of road components included in agricultural projects financed by the Association over the past five years. 1.04 Project costs are estimated at US$8.5 million equivalent (net of taxes), with foreign costs of US$6.6 million (78%); taxes are estimated at  US$1.7 million equivalent. The proposed Credit of US$7.5 million would finance the entire foreign cost and US$0.9 million equivalent of the local costs of the project. The Government's contribution would be US$1 million equivalent, or about 12% of total project cost net of taxes. 1.05 The proposed project is based on a study financed by FAC and carried out by consultants BCEOM (France) in 1972, and on additional preparation work done by the Bank's Regional Mission in Western Africa (RMWA). This report is based on the findings of an appraisal mission consisting of Messrs. C. Delapierre (Engineer/Economist, RMWA) and R. Gusten (Economist, RMWA) which visited Upper Volta in December 1974. 2. BACKGROUND A. The Economy 2.01 Upper Volta is a landlocked country in the Sahel region of Africa. It has an area of about 274,000 kmh, and a population of 5.6 million growing at about 2% p.a. The productive population is about 2 million, of whom nearly 90% are engaged in crop production, and about 6% in cattle-raising. 2.02 With a per capita Gross Domestic Product (GDP) estimated in 1972 at about US$70, Upper Volta is one of the world's poorest nations. GDP at market prices in 1972 was estimated at CFAF 95 billion (US$370 million at the 1972 exchange rate). The contribution of the primary sector to GDP was about 40%, of which 24% came from crop production and about 16% from livestock, hunting, fishing, and forestry activities. Very little data are available on the growth rate of GDP, but it appears to have increased at about 3.0 - 3.5% p.a. during the sixties. GDP has stagnated since 1970, and may even have declined as a consequence of the persistent drought which has afflicted Upper Volta and neighboring countries in the Sahel. B. Agriculture General Features 2.03 Agricultural development in Upper Volta is limited by a number of serious constraints, the most important of which are: (i) the long distance to the sea (Ouagadougou-Abidjan - 1,150 km) which increases the cost of imports and reduces the earnings from exports; (ii) sparse rainfall ranging from 1,000 - 1,300 mm in the south to only 500 - 800 mm in the north; (iii) generally poor soils, except in the south and west; and  - 3 - (iv) the prevalence of debilitating diseases, in particular bilharzia and onchocerciasis (river-blindness), which affect large segments of the population. 2.04 About 80% of total agricultural output in the country consists of cereals. On the Mossi plateau in the northern and central regions, production consists mainly of food crops such as sorghum, millet, and groundnuts, most for home consumption. Ecological conditions are harsh on the plateau, and low and irregular rainfall combined with relatively high population pressure result in over-exploitation and erosion of the already poor soils. Agricul- tural production is more diversified and market-oriented in the west and southwest regions where rainfall is higher and soils more fertile. In these areas, cotton is grown as a cash crop, and much of the grain production (sorghum, millet, maize, and rice) is sold to the few cities and to grain- deficit areas in the north. Only about 15% of total cereal production is marketed; however, the volume amounts to about 100,000 tons p.a., making it by far the most important commodity flow on the rural road system. (Details on the agricultural sector are given in Annex 1). 2.05 In 1970, 1972, and 1973, the droughts caused a 15 - 25% decline in agricultural production below normal levels, but partial recoveries took place in 1971 and 1974. The most serious losses occurred in the northern and central regions where production of millet and sorghum dropped sharply, necessitating exceptionally high food imports. One effect of the drought was that it accentuated the existing disparities in production and income levels between regions; as a consequence, emigration from the Mossi regions to the coastal countries and to the West Volta area has increased over the last four years (see Annex 2 on migration patterns). 2.06 Livestock is one of the country's main resources, and the principal single source of export earnings. Development of the livestock sector is hampered by overstocking and consequent overgrazing in the north, and since the drought, the growing competition with crop producers for available land has become more acute. This is especially evident in certain areas in the west where herdsmen have moved in search of food and water. Roads and Agricultural D eve_Lpment 2.07 In addition to the constraints imposed by nature, one of the primary factors inhibiting agricultural production is the poor condition of rural roads (due primarily to inadequate maintenance), and in many cases the complete absence of any such facilities; this is particularly true for areas of new settlement. Road transport costs are high (ranging from CFAF 18 or US48 per ton-km on good gravel roads, to more than twice this figure on rural tracks), and tend to discourage traders from going to remote areas to collect produce; as a result, farmers tend to limit their production to subsistence requirements (para. 2.12). Also, the high distribution costs in rural areas for agricultural inputs and consumer goods further shifts the terms of trade against agricultural  -4- producers. The poor quality of rural roads, many of which are impassable in the rainy season, also prevents the regular and timely supply of improved seed and fertilizer; it is also an important reason for the low proportion of food production marketed, even with increased demand resulting from rising food deficits in the few major towns and outlying areas on the Mossi plateau and the Sahel zone. 2.08 Traffic on the rural network rarely exceeds 10--15 vehicles per day (vpd) 1/, except on a few roads near Ouagadougou and Bobo-Dioulasso, and possibly in the center of agricultural project areas. Traffic consists mainly of various commodity-carrying vehicles (pick-ups and small trucks) which account for more than 70% of the total against only 50% for these categories on the trunk road system. No firm data are available on the actual impact of improved rural roads on agricultural production, settlement densities, cropping patterns etc.; as a result, there is not much to guide the selection and evaluation of future rural road improvement projects. On the other hand, some random information collected under the RDF/DRF projects (para. 2.09 below) indicates that even minor road improvements have a substantial stimu- lating impact on transport. 2.09 Investments in rural road improvements have been essential elements in all major agricultural and rural development projects financed by the Association over the last few years: - the West Volta Cotton Project (Credit 225-UV, US$6.2 million, 1971) included about 820 km of rural roads; - The Rural Development Fund (RDF) project (Credit 317-WV, US$2.2 million, 1972) and the Drought Relief Fund (DRF) project (Credit 422-UV, US$2.0 million, 1973) allocated about 25% of total in- vestments for improvement of about 270 km of rural roads; - The Bougouriba Agricultural Development Project (Credit 496--UV, US$8.0 million, 1974) provides for improvement of about 660 km of rural roads. Details of the above projects and the status of their implementation are given in Annex 3. 2.10 In addition to these investments, FAC has financed construction of about 450 km of gravel roads, and FED and USAID are making continuing contri- butions to improvement of the rural road network. However, none of these programs provides for maintenance of the improved roads, and the proposed project is helping to build up the institution necessary to assure adequate upkeep of the network. 1/ A representative figure for miost of the rural network would be 5-10 vpd, with up to 10-15 vpd in the peak season, and as few as 1-2 vpd, if any at all, during the rains (June-September).  -5- The Marketing System 2.11 Agricultural production falls into two main categories -- crops grown for export, mainly cotton and groundnuts, and those grown for domestic consumption, mainly cereals. In the case of export commodities, producer prices, exporter margins, etc. are officially set by the Caisse de Stabili- sation des Prix des Produits (CSPP), and these products are now mainly marketed by private traders who are licensed by CSPP, and who sell to exporters. The impact that may be expected from road improvement in this case is there- fore limited, in the short run, to savings in transport costs. 2.12 With respect to the marketing of cereals, the situation is different, and road improvement would have a much wider and more immediate impact. Al- though there is an official organization (Office National des Cereales - OFNACER) charged with marketing functions, its activities are limited to dis- tributing food donated by external'assistance for drought relief, as well as regular food imports. Minimum producer prices for cereals are set by the Ministry of Finance prior to the marketing season, but except for this restric- tion, products are sold freely. Private traders predominate, and competition prevails in the most accessible areas. The pattern is different in areas which are less accessible because of poor road conditions; in such cases, transport unreliability and high costs tend to discourage traders from collecting produce, particularly cereals, and producers are in turn less inclined to generate mar- ketable surpluses. Those traders who do enter these areas and collect produce are likely to derive high profit margins, due to the lack of competition. In these circumstances, road improvement should not only increase producer prices commensurate with the reduction of transport costs to the markets, but should also result in increased numbers of traders entering the market and thus obtaining still higher prices. It is difficult to estimate accu- rately the impact these higher prices will have on production; however, only about 10-20% of the farmers' cereal production is currently transported from surplus areas for sale in grain-deficit and urban areas where cereal short- ages are met by imports. There is therefore substantial scope to increase demand and thereby stimulate production, and it is expected that the higher producer prices resulting from improved transportation will generate substan- tial production increases. More specific information on this subject is expected from the evaluation study to be implemented under the proposed project (para. 3.08). C. Roads The Network 2.13 For administrative purposes, the road system is divided into two categories: classified (about 8,700 km) which are grouped into national, departmental, and regional roads; and unclassified (about 7,800 km) which consist only of tracks (Table 1). Functionally, the system is divided into trunk roads and rural roads. The network of rural roads covered in the proposed project consists of classified departmental and regional roads, as well as tracks (see Map).  - 6 - 2.14 The network of trunk roads (about 4,450 km, of which 575 km paved) radiates from the capital city Ouagadougou and the main commercial center Bobo-Dioulasso, and is generally adequate for current needs. The majority of the unpaved roads are gravel-surfaced and are considered to be of all- weather standard, but sections are often closed to heavy vehicles for short periods after major rains. The rural roads are essentially dry-weather facilities which become impassable during the rains; a large number of these roads have deteriorated over the past decade due to lack of proper maintenance. Road Transport_Industry 2.15 The road transport industry is highly fragmented, consisting of one large fleet operator and many very small firms or owner-operators. The in- dustry is supervised by the Transport Division of the Ministry of Public Works, Transport, and Urban Development (MPW), but there are at present no significant barriers to entry or other regulations inhibiting growth. The bulk of goods traffic in the country is carried by an estimated 8,100 heavy vehicles; on rural roads, small vehicles continue to account for much of the commercial traffic. About 80% of truck shipments are in the hands of five freight forwarding firms. The existing capacity of the trucking industry appears adequate. Highway Administration 2.16 Within MPW, the Directorate of Public Works (DPW) is responsible for the planning, design, construction, and maintenance of roads and bridges. DPW is divided into four divisions for planning and design of new works; maintenance of national roads; equipment and mechanical workshops; and the newly established division for rural roads (SERS). DPW also operates a technical training school in Ouagadougou (Centre de Formation des Techniciens des Travaux Publics) for foremen, mechanics, and operators. 2.17 DPW's maintenance division which is responsible for national roads has been supported over the past several years by about US$5 million worth of highway equipment provided by FAC which covers most of its needs. Maintenance of rural roads is the responsibility of local authorities, but they have had neither the funds, equipment, nor personnel necessary to undertake the work required. Responsibility for these roads has now been taken over by SERS (established in January 1975). 2.18 'SERS has four sections for administration, studies, construction and improvement, and maintenance ('see Organization Chart). The Studies Sec- tion will work, in cooperation with the Bureau of Planning and Programming to be created within DPW, on the establishment of priorities of rural road con- struction and planning of annual programs (para. 3.11). The Bureau is intended to serve as a liaison between MPW and the Ministry of Planning, and will be responsible for the country's entire road network, primarily for: (i) collect- ing and evaluating traffic and road inventory data on a permanent basis;  - 7 - (ii) formulating and coordinating with the various Government agencies the priorities for road improvement; and (iii) analyzing sector issues and developing transport policy recommendations and future road investment plans. The Government requested the United Nations Development Programme (UNDP) to help establish the unit, and to provide two experts for about three years, as well as overseas fellowships for local staff. UNDP has indicated its willingness to provide this assistance, and the Bank Group has agreed to act as executing agency. Early establishment of the Bureau is important to im- proving DPW's institutional capacity, and the Government has accordingly provided assurances that this will be effected not later than June 30, 1976, the expected starting date of physical implementation of the project. A condition of effectiveness of the proposed project will be the receipt of a firm commitment from UNDP, or some other source of technical assistance acceptable to the Association, that it will provide the Government with the required expert services to establish and maintain the Bureau of Planning and Programming. 2.19 Most of DPW's foreign assistance staff is provided by FAC; there are at present 31 FAC experts at various levels, including three Division Chiefs, some accountants, and several highway technicians supplementing the 84 local staff. The Government is presently making a major effort to train Voltaics to take over positions in DPW now held by foreign staff. Financing Highway Maintenance 2.20 Maintenance of national roads is financed through allocations from a Road Fund established in 1968, as well as through supplementary appropriations from the current budget, and by contributions from FAC. Total allocations to DPW for this purpose ranged from CFAF 550 million (US$2.5 million equivalent) in 1968 to CFAF 693 million (US$3.1 million equivalent) in 1974. 2.21 According to the law establishing the Road Fund, 59% of all Govern- ment revenues from taxes, duties, and other levies on gasoline and diesel oil are to be allocated to the Fund and used exclusively on the national network. Revenues increased from US$5.2 million equivalent in 1970 to US$6.1 million equivalent in 1974, representing about 10% of the current budget. However, the Ministry of Finance in line with its general policy of fiscal austerity, has not been making allocations to the Road Fund as stipulated by law, and between 1970-74, allocations ranged between only 46% and 57% of the revenues accruing to the Fund. The effect of the reduced allocations on the road network has however not been detrimental, and the Association feels that the reductions were justified given the other priorities created as a result of the drought. 2.22 For maintenance of rural roads, the annual allocation to DPW on termination of the proposed project should be about CFAF 200 million (US$0.9 million equivalent) to assure effective operations. This additional expendi- ture for maintenance of rural roads would not appear to be an excessive burden  - 8 - on public finances, and could be met from the revenues from fuel taxes which, as indicated in para. 2.21 above, are only partly used for national roads. The Government has therefore agreed that it will allocate a minimum of CFAF 200 million for rural road maintenance in the first year after project completion, and that this amount will be augmented annually in line with cost increases, and adjusted to reflect the evolution of maintenance requirements on the rural road network. 2.23 Althougb the initial financial requirements of the rural road main- tenance program are not expected to represent an unbearable burden on public finances, they are not negligible in comparison to the requirements of the national network, and could conceivably increase very substantially as the scope of rural road operations increases. Alternative sources of revenues should therefore be sought; these could possibly come from the budgets of the local communities which will directly benefit from the rural road improvement and maintenance program, or the populations of those communities could parti- cipate in execution of the works through self-help programs (para. 3.13). These alternatives would not only provide some relief to the public finances, but would also ensure that the local communities are committed to the road program. The Government has agreed to review these proposed alternative financing methods, and to discuss its findings with the Association no later than June 30, 1976. The Road Construction Industry 2.24 Since 1968, an annual average of about CFAF 2.5 billion (US$11 million equivalent) has been spent on road investments. All major contracts have been carried out by foreign firms, many of which operate throughout West Africa. There is only one local contractor of any importance involved in road construction works, and his activities are limited to supply and haulage of materials, and construction of culverts. On the other hand, 15 domestic entrepreneurs active in the house-building sector had contracts with DPW in 1973. These contractors have the potential to enter the civil works field, for which the proposed project will provide good opportunities. The improve- ment and maintenance of rural roads calls for operations such as simple drainage works, roadway reshaping, and periodic regravelling, all of which are well suited to small domestic contractors willing to enter the civil works construction industry. 2.25 To help develop the domestic industry, the Government in 1970 created the Office de Promotion de l'Entreprise Voltaique (OPEV) responsi- ble for training and assisting in the management of small- and medium-sized domestic enterprises, and it has so far been effective in this effort. OPEV also has a training center which provides courses in accounting, management and elementary technology for home construction; 275 Voltaic nationals have so far been trained.  - 9 - 2.26 Since its creation, OPEV received technical and financial assistance from France through AFCOPA (Association Francaise de Formation, de Coopera- tion et de Promotion Artisanale), (CFAF 180 million); from Germany (DM925,000 or CFAF 85 million); and starting in February 1975, from UNIDO (US$530,000 or CFAF 119 million). A special equity fund has also been created in OPEV in 1974 with German financing (DM 500,000 or CFAF 46 million) to help very small enterprises obtain loans from commercial banks. It is expected that development of the domestic construction industry will be stimulated by these various measures. 3. THE PROJECT A. Description 3.01 The proposed project consists of: (a) a three-year program for improvement and subsequent maintenance of about 1,200 km of rural roads, and maintenance of about 2,100 km of existing rural roads; (b) strengthening of SERS through technical assistance to MPW for implementation of the above road program, and procurement of highway equipment; and (c) consulting services for an evaluation study of the impact and effectiveness of road components included in agricultural and rural development projects financed by the Association over the past five years. -Iprovement and Maintenance of Rural Roads 3.02 The project provides for improvement of about 1,200 km of rural2 roads in all regions of the country except for an area of about 35,000 km in the south, where road requirements will be met under the Bougouriba Agricultural Development Project (Annex 3, para. 4). The proposed improvements are: (i) reshaping of roadway; (ii) regravelling of selected sections; and (iii) building or reinforcing of drainage and crossing structures. 3.03 As justified by traffic levels, two types of improvements are planned as follows: Type_A: Roads designed to carry more than 2,500 tons annually will have a 7 m roadway. and will be gravelled over a 5-6 m width to a thickness of about 15 cm where necessary.  - 10 - Type B: Roads designed to carry less than 2,500 tons annually will have a 6 m roadway, and will be gravelled over a 4-5 m width to a thickness of about 12 cm where necessary. Details of road design standards are shown in Table 2. 3.04 Of the total planned improvement program, only four roads totalling 250 km have so far been identified (Table 3). One of these roads (Orodara- Kourouma) is vital for the proposed livestock project which is now being negotiated between the Government and the Association, and which is expected to start at about the same time as the present project; the other three roads have been selected and already partially improved by FED and the RDF. These four roads will provide SERS with a work program for the first year of the project (1976/77), during which time the planning unit will identify and prepare roads to be built during the next year of the project period, in line with progress made in planning for rural development projects. Road selec- tions will be made by MPW according to criteria and procedures discussed and agreed between the Government and the Association (para. 3.11 and Annex 4). 3.05 The proposed project also provides for maintenance of about 2,100 km of rural roads for which SERS will take over the responsibility from other projects (Tables 3 and 4). These roads will be maintained to the standard and service level for which they were designed, possibly also with some up- grading in the case of several roads built under the RDF/DRF projects using labor-intensive methods. SERS will also take over maintenance of the 1,200 km of roads to be improved under the project as the works are completed. Technical Assistance to MPW 3.06 To implement the road program, it has been estimated that SERS will need two road engineers, four highway technicians, and five administrative assistants. Of these eleven posts, eight can be filled with local staff now available in the country or overseas on training courses. For the other three positions (two road engineers and one administrative assistant/accountant for equipment management), technical assistance experts will be required for two years, and the proposed project provides financing for these services. The experts' duties would include on-the-job training of their local counter- parts scheduled to take over responsibility during the third year of the project. The outline of the experts' job description given in Annex 5 has been discussed and agreed with the Government; the Government also confirmed that it will provide qualified local staff to be trained by the experts. SERS will also require about 120 foremen, mechanics, plant operators, equipment overseers, and laborers; these personnel can all be recruited and trained locally. Equipment Purchase 3.07 Highway equipment for the improvement of rural roads has been financed under various projects by foreign assistance agencies (Table 5). FED has financed a light highway brigade in the Banfora region, and FAC is  - 11 - financing another highway brigade to build the Kongoussi-Djibo road in the Sahel Zone; FAC also provides equipment to the Volta Valley Authority for the development program in the White Volta area. The Association has financed equipment under the West Volta Cotton project, the Bougouriba pro- ject, and the Drought Relief Fund, and this equipment will all be transferred to SERS when the projects are completed. The proposed road improvement pro- gram will require two additional regravelling brigades and two culvert- building units; the maintenance operations will require three equipment groups. The proposed project provides funds for procurement of all the necessary equipment as listed in Table 6. Evaluation Study of Rural Road Construction 3.08 By mid-1976, about 1,600 km of rural roads will have been improved with financing under Bank Group agricultural and rural development projects. It is now considered necessary to provide a stronger basis for future plan- ning of rural road investments, particularly in areas scheduled for systematic development over the next ten years (see Annex 1, section C). Under the pro- posed project, SERS will commission about 25 man-months of consulting services for a study which will, inter alia, review the cost effectiveness of construc- tion methods used, analyze observed traffic, and attempt to assess the link between transport costs and agricultural production. Outline terms of refer- ence for the proposed consulting services as given in Annex 6 have been discussed and agreed with the Government. B. Cost Estimates 3.09 The project is estimated to cost US$8.5 million equivalent net of taxes (in June 1975 prices), with foreign exchange costs of US$6.6 million (78%). Taxes and customs duties are estimated at US$1.7 million equivalent. Details of cost estimates are given in Table 7 and summarized below:  - 12 - ---- (in CFAF million)--- ----(in US$ '000)---- Local Foreign Total Local Foreign Total A. Equipment & Materials - Equipment 8 384 392 30 1,709 1,739 - Materials 4 152 156 20 678 698 12 536 548 50 2,387 2,437 B. Spare Parts & Sjpylies 67 380 447 300 1,688 1,988 C. Staff - Technical Assistance 9 54 63 40 242 282 - Head Office 15 4 19 70 16 86 Field Staff 98 - 98 437 - 437 122 58 180 547 258 805 D. Works Contracted 79 79 158 350 350 700 E. Studies - 43 43 - 192 192 Total A - E 280 1,096 1,376 1,247 4,875 6,122 F. Contingencies - Physical (about 5%) 14 51 65 70 232 302 - Price Escalation /1_ 114 350 464 520 1,535 2,055 Total F 128 401 529 590 1,767 2,357 GRAND TOTAL 408 1,497 1,905 1,837 6,642 8,479 (rounded) (1,900) (6,600) (8,500) /1 Details in Table 7. 3.10 Estimates of equipment costs are based on the results of bids for similar items financed recently tnder Credit 442-UV for the Drought Relief Fund project. Estimated direct operating expenditures and maintenance costs of equipment are based on the most recent (December 1974) tariffs of the Central Equipment Pool. Running costs of equipment to be transferred to SERS from ongoing agricultural projects are taken as of the expected dates of these transfers: mid-1976 for the RDF/DRF and West Volta unit, and in 1978 for the Bougouriba unit. Estimated costs of technical assistance are based on actual cost of two highway experts now employed on the West Volta Cotton Project and  - 13 - the RDF/DRF projects. A 5% physical contingency allowance has been made in order to permit some flexibility in adjusting the proposed scope of the project. Price contingencies amounting to about 25% of total project cost, have been calculated as shown in Table 7. C. Execution 3.11 Physical execution of the project is expected to start in mid-1976, and to take about three years to complete. DPW will be responsible for over- all execution. As regards the particular responsibility of SERS under the proposed project, the Head of this agency will submit to the Director of DPW annual work programs prepared by the Bureau of Planning and Programming in coordination with SERS' Studies Section which will be responsible for engineer- ing and programming aspects of the works. DPW will present this program for approval to an Interministerial Technical Committee (ITC) which the Government plans to create shortly. It is intended that ITC will be chaired by the Minister of MPW and consist of representatives of Ministries and local agencies which have a direct interest in rural roads; ITC will be similar to a committee which was created for the DRF project, and which is functioning satisfactorily. The existence of ITC will be essential to ensuring that rural road improve- ments are closely linked with rural development programs, and the Government has provided assurances that ITC will be established not later than July 1, 1976 when project execution is scheduled to start; the composition of the Committee will have to be satisfactory to the Association. Once SERS' work program for each fiscal year is adopted by ITC, it will be submitted to the Association for approval four months before the scheduled start of work to be undertaken in that year's program. The Association will satisfy itself that the roads selected for improvement meet agreed criteria (Annex 4). 3.12 In order to create a legal basis for budgetary appropriations for improvement and maintenance works, all roads included in the project which are not yet classified must be brought into this category (para. 2.13 and Table 1). The Government has provided assurances that it will fulfill the required administrative and legal procedures for classifying such roads. 3.13 Road improvement and maintenance works will be carried out by SERS' own forces, with some support provided by contractors and community self-help programs. This method of execution is expected to be best suited to the scattered nature of the proposed operations and the flexibility required in conducting them. The project is expected to provide good training oppor- tunities for local contractors (most likely small domestic entrepreneurs) who are initially expected to be involved in the construction of minor works, mainly drainage and crossing structures, and in haulage of road surfacing materials. Regarding the proposed community action programs, basically similar labor-intensive work methods were used extensively in execution of the RDF/DRF projects, but the degree of participation of the population, as well as the technical results, were uneven among the various project areas. In the present project, labor-intensive activity can be applied most effec- tively in day-to-day patching and repairs, cleaning of ditches and culverts,  - 14 - and minor earthworks. SERS will be asked to review carefully the various experiences in the country with labor-intensive work, and to incorporate these methods in its work programs wherever appropriate; in this respect, SERS will attempt to enlist the cooperation of local authorities in setting up self-help community action programs. The extent to which SERS intends to make use of local contractors and self-help schemes will be described in the work program to be submitted to the Association for its approval (para. 3.11). 3.14 Consultants should be engaged so as to allow a start on the evalua- tion study not later than September 1, 1976. SERS will be assisted by the Bureau of Planning and Programming in supervising the study. All arrangements for project execution as described in the preceding paragraphs have been discussed and agreed with the Government. D. Procurement 3.15 Equipment, materials, spare parts, and supplies amounting to about US$4.2 million will be procured on the basis of international competitive bidding in accordance with Bank Group guidelines. Items which could not be bulked into packages costing US$40,000 equivalent or less, and which would not be sufficient to attract the interest of foreign bidders, could be purchased through local suppliers in accordance with Government competitive bidding pro- cedures acceptable to the Association; the total amount of such purchases would however not exceed US$250,000 equivalent. Manufactured items in this category are available from local representatives of international suppliers, service is adequate, and prices are competitive. Contracts for selected minor works (mainly drainage and crossing structures) and haulage of materials, will be awarded on the basis of competitive bidding advertised locally following procedures acceptable to the Association. A small part of project costs (about US$0.7 million) will be for staff salaries and direct operating costs. Consultants for technical assistance and for the evaluation study will be retained in agreement with, and under terms of reference and conditions satisfactory to the Association. All the above arrangements have been dis- cussed and agreed with the Government. E. Financing and Disbursements 3.16 The proposed Credit of US$7.5 million will finance about 88% of total project costs net of taxes, i.e. all the foreign costs (US$6.6 million) and US$0.9 million equivalent of the local costs. The Government has confirmed that it will provide the remaining local costs of the project (US$1 million equivalent) plus about US$1.7 million equivalent in taxes. 3.17 Credit funds will be disbursed as follows: (a) 100% of c.i.f. costs (Bobo Dioulasso or Ouagadougou) of equipment, spare parts, materials, and supplies;  - 15 - (b) 100% of foreign expenditures for consulting services and technical assistance; (c) 50% of expenditures (net of taxes) for direct operating costs for improvement and maintenance works by SERS' forces; and (d) 80% of total costs (net of taxes) of works by contractors. A schedule of cumulative quarterly disbursements from the proposed Credit is shown in Table 8. Disbursements for direct operating costs will be made against claims submitted by DPW and supported by relevant documents. The accounting system to be followed and controls to be established for assessing the direct operating costs of departmental works have been defined and agreed with the Government. 4. ECONOMIC EVALUATION 4.01 The economic justification of the project rests on two complemen- tary factors: favorable conditions for road construction, and low traffic volumes. The first element results from the generally easy terrain in the country and the abundance of natural construction materials which make it possible to achieve major road improvements at very low cost. The low traffic volumes mean that goods generally move on small vehicles, and that unit trans- port costs are high; as a result, any road improvement tends to have a substantial impact on transport costs. The combined effect of the above factors implies that relatively small expenditures on the improvement and maintenance of rural roads can be expected to have a significant impact on transport conditions, and in turn, on agricultural production (para. 2.12). 4.02 Institution-building is of primary importance, and the component included in the project represents a major benefit which cannot be quantified. It consists of: (i) establishing within DPW a division for improving and maintaining rural roads; and (ii) coordinating the development of agriculture and of rural roads through the ITC. Concurrently with implementation of the proposed project, UNDP will be helping finance the required technical assist- ance for a Bureau of Planning and Programming to be created within DPW. With- out this institutional strengthening, rural road improvement and maintenance could not be executed effectively on the country-wide scale as required. 4.03 Quantifiable project benefits would include: (i) direct benefits resulting from savings in vehicle operating costs; and (ii) indirect joint- product benefits related to increased agricUltural production in some areas, or to new agricultural development in others. Details of the economic analysis are given in Annex 7.  - 16 - 4.04 The economic justification for the improvement works will become available only as project execution progresses and specific roads are selected; all roads selected will have to yield an economic return of at least 10%. The selection procedure described in Annex 4 distinguishes between three cases: Case I: This category would include roads in areas where ongoing agricultural activity is already substantial. The economic return will be based on road-user savings. Case II: This category comprises roads with little or no existing traffic, but which form part of an agricultural develop- ment project. In this case, the economic return will be based on savings in transport costs for the traffic which would use the road in the absence of the agricultural project, augmented by the value added on the incremental agricultural output resulting from the combined road/ agriculture investment. Case III: This category would include roads which carry less traffic than those in Case I, and which are located in areas with good agricultural potential. The economic return of these roads will be computed as in Case II above, but in this instance, the analysis will also include a thorough investi- gation of the agricultural and economic activity in the zone of influence, w:Lth particular emphasis on any invest- ment outside the transport sector which may be required to bring forth the expected agricultural development impact. As the Bureau of Planning and Programming gains experience and the evaluation study bears results, the Government and the Association may agree to review and improve the above selection criteria. 4.05 Of the four roads selected for improvement during the first year of the project, one has been identified as vital to the proposed Association- financed livestock project, and the other three have been previously identified and already partially improved by FED and the Rural Development Fund (para. 3.04). Each of the roads currently carries traffic of between 8-15 vpd, and on the basis of a Case I type analysis, their improvement is expected to yield economic returns ranging between 10--18%. An extrapolation of the analysis done for the four roads (Annex 7) shows that, on the basis of savings in vehicle operating costs alone, improvement to Type A level (para. 3.03) would be justified for traffic of more than 15 vpd, and to Type B level for traffic as low as 6-8 vpd (Table 2). Such traffic levels are typical for the many roads that could be considered for improvement under the proposed project. 4.06 The economic justification of the maintenance component of the project is based on vehicle operating cost savings only. As in the case of roads falling under Case I described earlier, it ignores any attributable  - 17 - indirect benefits resulting from induced agricultural development. The com- puted economic return is therefore very conservative, ranging between 10-18% depending on assumptions made about the rate of road deterioration with no maintenance (Annex 7). 5. AGREEMENTS REACHED AND RECOMMENDATION 5.01 During negotiations with the Government on the proposed Credit, agreement was reached on the following principal items: (i) allocation of agreed amounts for maintenance of the rural road network after completion of the proposed project (paras. 2.22 and 2.23); (ii) criteria and procedures to be applied in selecting rural roads for improvement during the second and third years of the project period (paras. 3.04, 3.11, and 4.04); (iii) establishment of an Interministerial Technical Committee not later than July 1, 1976 (para. 3.11); and (iv) provision by the Government of all local project costs not financed by the Credit, plus the tax component (para. 3.16). 5.02 A condition of effectiveness of the proposed project will be the receipt of a firm commitment from UNDP, or some other source of technical assistance acceptable to the Association, that it will provide the Government with the required expert services to establish and maintain the Bureau of Planning and Programming; the Government has provided assurances that the Bureau will be established not later than June 30, 1976 (para. 2.18). 5.03 The proposed project is suitable for a Credit to the Republic of Upper Volta in the amount of US$7.5 million on standard IDA terms. June 6, 1975.   Table 1 UPPER VOLTA RURAL ROADS PROJECT Highway Network 1/ Surface type (km) Total Length- km Paved Gravel Dirt Dirt Partly Without Improved Improve- ment A. Classified Roads tlational Roads (Nl-19) 4,457 576 2,510 1,371 - Departmental Roads (Dl-18) 1,905 - 300 524 1,081 Regional Roads (Rl-34) 2,331 _ - 290 684 1,357 8,693 576 3,100 2,579 2,438 B. Unclassified Tracks 7,760 876 6,884 TOTAL 16,h53 576 3,100 3,455 9,322 Sourc_s: Directorate of Public Works, BCEOM Report, dated May 1973 Excluding urban roads.  Table 2 UPPER VOLTA RURAL ROADS PROJECT Design Standards Type A Type B Clearing 12 m lOm Roadway 7 m 6m * Gravelling width 5-6 m 4.5-5m depth 0.15 0.12 Gradient 107o i2% Design Speed 60 km/hr 40 km/hr * Spot im-provements Source: BCEOM Report, May 1973  UPPER VOLTA RURAL ROADS PROJECT Maintenance Program and Improvement Program Km to be ,Km to be improved& Road maintained 2/ to be maintained financed by Observations subsequently A. Type A Roads RD 1 Ouagadougou-Pabre-Kongoussi 107 FAC RD 2 Kongoussi-Djibo 94 _ RD 5 Nobili-Manga 23 - " RR 11 Manga-Garango 60 - of RD 9 Garango-Tenkodogo 22 - ' RR 14 Koudougou-Didyr-Sapala 63 - RD 8 Po-Ouengo 48 - AAVV /FAC RR 28 Bamoi-Baringira-Dapola 29 - IDA Bougouriba RR 30 Latara-Batid 63 - o RD 18 Koundougou-Solenzo 77 - IDA 1st Highway Pr. RD 15 Pa-Dano-Djipologo 73 - Under study for possible construction (IDA Project Bougouriba) RR 22 Boundoukou-Bagassi-Ouahabou 80 _ IDA Wett Volta RR 35 Ndzrola-Kourouma-Orodara 17 101 For IDA Livestock Project 17 km built by West Volta Project RR 38 Banfora-Sindou-Baguera 52 33 52 km constructed by FED Subtotal A 808 134 It Firm list only. 2/ Initially, i.e. by mid-1976 before improvement program under proposed project starts. CD  UPPER VOLTA RURAL ROADS PROJECT Km to be Km to be improved& maintained to be maintained financed by Observations subsequently ,B. Type B Roads a) Tracks constructed by IDA ProjectsI/ West Volta Cotton Project 345 - IDA, West Volta Proj. Bougouriba Agric. Dev. Project 341 IDA, Bougouriba Proj. Rural Dev. Fund/Drought Relief Fund 190 IDA, RDF/DRF Proj. Subtotal a) 876 b) Identified Secondary Roads RR 27 Tonker-Nako-Tiankoura 57 IDA Bougouriba RR 29 Batie-Volta Noire 20 to RR 31 Loropeni-Kampti 21 it RR 21 Balave-=Solenzo 24 _ IDA West Volta RD 18 Solenzo-Nouna 80 RR 18 Gassan-Toma 20 20 km constructed by West Volta project RR 20 Kosso-Sanaba-Manemba 49 49 km constructed by West Volta project RR 19 Soin-Sourou-Gassan 37 - 37 km constructed by RDF/DRF RR 5 Boulsa-Zorgo 12 48 12 km constructed by n RR 1 Latodin-laya 80 69 80 km constructed by n Subtotal b) 400 117 Subtotal B 1,276 117 Total Identified Roads (A & B) 2,o84 251 Unidentified Roads 949 Total Program 2,o84 1,200 1/ For details see page 3 of this table 2/ Assuming a share of 25% standard A roads  Table 3 Page 3 UPPER VOLTA RURAL ROADS PROJECT IDA and RDF/DRF Tracks to be maintained A. West Volta cotton project KM Souna - Dedougou Area Nouna - Dimbo - Doumbala 45 Dimbo - Felawe 47 Nouna - Badinga 62 Dira - Dimkouro 17 Solenzo - Tansilla - Ben 41 Namouana.- Toukouro 10 Subtotal 222 Nounde - Boromo Area Safane - Tona 30 Bohakari - Bereba 30 Subtotal 60 liobo-Djoulasso Area Sanandeni-Lahirosso 63 Subtotal 63 Grand Total 345 km B. Bougouriba Agricultural Development Project Diebougou District Dano - Kpoumane 32 Dano - Gueguere - Nakar - Tankredougou 48 Oronkua - Kankani 25 Fouazan - Kovio - Poulaba 40 Djisslogo - Zambo - Manoa 37 Mongue - Nisseo - Loukoura - Tiankoura 38 Loukoura - Dissara 33 Subtotal 253 Gaoua District Bouroum - Bouroum - Dipeo 31 Dipeo - Loropeni 37 Batie - Malba junction 20 .Subtotal 88 Grand Total 341 km C. Rural Development Fund and Drought Relief Fund ORD Yatenga Ouahigouya - Koumbri - Ban 45 ORD.Ouagadougou Zorgho - Yarghim 70 ORD Bobo-Dioulasso Bamakeli - Daka 25 ORD Koudougou Fara - Laro - Ouessa 49 Grand Total .190 km  Table 4 UPPER VOLTA RURAL ROADS PROJECT Length of Rural Road Network to be Improved and Maintained * - -- ~~~~(km) Identified Optional* Total A. Betterment Works Rural roads Type A 134 166 300 Type B 117 783 900 MOTAL (A) 251 949 1,200 B. Maintenance Works (I) Rural roads (including A) 1,459 949 2,408 (ii) Tracks: West Volta cotton area 345 345 Bougouriba area 341 3141. RDF/DRF areas 190 190 876 876 TOTAL (B) 2,335 949 3,284 * Estimated total distribution: 25% A roads Not: for details see Table 3. Item B (i) equals all rural roads listed in Table 3 minus the tracks financed under IDA projects (item B (ii) plus rural roads included under A, i.e. those to be improved under the project.  UPPER VOLTA Table 5 RURAL ROADS PROJECT Highway Equipment Purchased under Previous ProJects A. West Volta Cotton Project - Credit 225 UV Bulldozer D7 Caterpillar 1 Motorgrader 112F Caterpillar 3 Front Loader 920 Caterpillar 1 Frort Loader ME44 Massey Ferguson I Dump Trucks L62 Berliet 6 Tanker Trucks L62 Berliet 2 Agricultural Tractor Massey Ferguson 1 Compactor, towed Richier 1 Service Truck SG4 Renault 1 Pick-up 404 Peugeot I Station Wagon 404 Peugeot 1 Total cost CFAW 75 million ($330,000) B. Bougouriba Agricultural Development Project - Credit 496 UV Motorgraders 2 Pick-ups 2 Tanker Trucks- 3 Agricultural Tractor 1 Compactor, towed 1 Water Pump 50m3/h I Concrete mixer 2 Dump Truck 3 Compressor 7 kg. I Vibrating Compactor I Total cost CFAF 50 million ($220,000) C. Rural Development - Credit 317 UV and Drought Relief Fund- Credit 442 IN Front Loader 1 Motorgrader N521 Richier 2 Dump Truck GLR160 Berliet 4 Tanker Truck's GLR160 Berliet 1 Bulldozer D50 Komatsu 1 Agricultural Tractor Massey-Ferguson I Compactor, towed Albaret 1 Service Truck L62 Berliet I Concrete Mixer B942C Richier 1 Water Pump P487 Richier 1 Vibrating Rammer SV1500 Delmag 1 Total cost CFAF 65 million ($290,000) D. ORD Banfora - Financed by FED Dump Trucks 7.5T 2 Tanker Trucks 6m3 2 Service Truck 5T 1 Agricultural Tractor with Trailer 3m3 4 Motorgrader 1 Front Loader 1 Agricultural tractor with compactor 1 Pick-up 1 Concrete mixer 2  UPPER VOLTA I RURAL ROADS PROJECT Equipment to be Purchased _____________Equipment (in units)_---------------- CIF Cost (in million CFA) Hiead Office Betterment Culvert Maintenance Total Unit Cost Total Cost Bulldozer 180HU 2 2 24.0 48.0 Motorgrader 120HP 4 6 10 12.6 126.0 Front Loader 115HP 2 2 12.0 24.0 Dump Trucks 6/7T 14 14 5.2 72.8 Tanker Trucks 6m3 4 4 5.2 20.8 Service Trucks 3.5T 2 4 3 9 2.6 23.4 Self-Propelled Compactor 15T 2 2 8.0 16.0 Fuel Tankar 5m3 2 2 1.3 2.6 Trailer (office & repair) 2 2 1.4 2.8 Agricult. Tractor 75HP 2 2 2.9 5.8 Concrete mixer 4001tre - 4 4 , 1.0 4.0 Water pump 50m3/h 4 4 8 0.3 2.4 Water Tank 2m3 - 4 4 1.3 5.2 Station wagon 2 2 1.4 2.8 Pick-up 2 1 1 1 5 1.1 5.5 Radio Equipment 6 6 0.1 0.6 TOTAL: 362.7 CD Source: Ministry of Public Works and Appraisal Mission December 1974  UPPER VOLTA RURAL ROADS PROJECT Project Costs (In million CFA Frs) 1976 1977 1978 1979 Six months ------- ------Twelve months----- ------Twelve months----- -------Six months ----- ----------TOTAL --------- Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total A. EQUIPMENT AND MATERIALS Equipment - - - 8 384 392 _ - - - - - 8 384 392 Materials - 25 25 2 51 53 2 51 53 - 25 25 4 152 156 25 25 10 435 445 2 51 53 25 25 12 536 548 B. SPARE PARTS AND SUPPLIES 11 63 74 22 127 149 23 127 150 11 63 74 67 380 447 C. STAFF Technical Assistance 3 18 21 4 24 28 2 12 14 - - - 9 54 63 Ilead offfice 3 1 4 5 1 6 5 1 6 2 1 3 15 4 19 Field Staff 16 - 16 33 _ 33 33 - 33 16 - 16 98 - 98 22 19 41 42 25 67 40 13 53 18 1 19 122 58 180 D. WORKS CONTRACTED 11 11 22 28 28 56 29 29 , 58 11 11 22 79 79 158 E. STUDIES - - - - 43 43 - - - - - - - 43 43 Sub-total A - E, 44 118 162 102 658 760 94 220 314 40 100 140 280 1096 1376 F. CONTINGENCIES Physical (about 5%) A -E 1 4 5 5 30 35 5 12 17 3 5 8 14 51 65 Price Escalation on A - 1976 14% - 4 4 4 4 1977 21% 1 96 97 1 96 97 1978 32% - 16 16 - 16 16 1979 39% - 10 10 - 10 10 on B, C, D, E 1976 19% 5 5 10 5 5 10 1977 30% 26 63 89 ,6 63 89 1978 45% 52 95 147 52 95 147 1979 58% 30 61 91 30 61 91 Sub-total F 6 13 19 32 189 221 57 123 180 33 76 109 128 401 529 GRAND TOTAL A - F 50 131 181 134 847 981 151 343 494 73 176 249 408 1497 1905 All basic costs as of June 1975 Delivery of equipment by January 1977 Source: DPW and mission estimates. May 1975.  Table 8 U?PPE VOLTA 7TPRAL RPOADS PROJECT Estirnated Schedule of Disbursements (US:+ 'o0o) IDA Fisoal Year Quarter Disbursement Undisbursed amount During Quarter *3uimulation at end of, quarter 1 lo00 100 7,),OO 1977 2 1400 500 7,000 3 2,200 2,700 11,800 4 900 3,600 3,900 1 700 h4300 3,200 1978 2 700 5,000 2,500 3 500 5,500 2.000 4 500 6so00 1,500 1 600 6,600 900 1979 2 500 7,100 400 3 200 7,300 2.00 )' 200 7,500 Source: Mission estimates June 1975  Annex 1 Page 1 UPPER VOLTA RURAL ROADS PROJECT Agriculture A. Main Features 1. Agicultural production statistics are summarized in Tables 1 - 3 of this Annex. Cereals account for more than 50% of total production. The share of marketed production (excluding exchange on the local level) is estimated to be not more than 15%. Where is a structural deficit in the Sahel region and in the Yatenga ORD,/, and to a lesser extent, in the other areas of the Mossi Plateau. The west and southwest, as well as some areas in the east, are structural surplus regions. Marketed production is about 100,000 tons annually, and by far the most important commodity flow on rural roads. The main flows are from the Black Volta area to Yatenga, the Sahel and Koudougou, from Bobo-Dioulasso and Bougouriba to Koudougou and Ouagadougou, and from Fada-Ngourma/Koupela to Ouagadougou. 2. Millet and sorghum (778,000 tons in 1972) are grown alU over the country; maize thrives best in the south and parts of the west,while rice is grown primarily in lowlands throughout the country and in the Kou Valley in the west where irrigation is controlled. Rice is a staple food in some producer areas and among upper-income groups in the towns. 3. The main cash crop is cotton which is grown primarily in the West Volta and Bobo-Dioulasso regions, and on a much smaller scale, on the Mossi Plateau and in the southwest. Total production by region is shown in Table 2 of this Annex. Cotton comprises about 20% of total exports. Secondary cash crops are groundnuts, sesame and sheanuts. The share of home consumption of these products is constantly rising, however. Still, in 1971 the combined share of the oilseed products in total exports was about 20%, or as high as the contribution of cotton. 4. About 2.2 million hectares (or 8% of total land area) are devoted to crop production which is generally practised in the form of shifting culti- vation. In some parts of the Mossi Plateau, the share of cultivated areas reaches 18% on an ORD average. 5. The typical farm in Upper Volta has about five hectares (4 to 5 on the Mossi Plateau, and 5 to 6 in the less densely populated areas in the west, south and east). The average family has 9 or 10 members, of whom about half are active. Except for the monitored cotton areas in the West Volta region, production techniques are elementary. Little if any ferti- lizers and insecticides are used; animal traction for transport (donkeys) has been introduced with the help of FAC on parts of the Mossi Plateau, and is spreading. Yields per hectare range from 300-500 kg for millet, from 400-800 kg for sorghum, from 500-1,000 kg for maize; the yield for rice is very uneven, varying with the type of cultivation practised. 1/ Organisme Regional de D6veloppement  Annex 1 Page 2 Cotton yields an average of 460 kg/ha, which leaves much room for increase if compared to yields in neighboring countries with comparable physical conditions. The same applies to groundnuts (average 520 kg/ha). 6. Livestock is one of the cointry's main resources, and has tradi- tionally been the principal source of export earnings. The national herd was estimated at 2.5 million head of cattle in 1971. Its contribution to GDP is about 10% (provided by 6% of the population), and before the drought, livestock products comprised about one-third of total exports. Develop- ment of the livestock sector is hampered by overstocking and consequent over- grazing in the north, insufficient watering capacity, insufficient veterinary control, and growing competition with crop production for the available land. Like many other problems, the latter has become more acute since the recent droughts. Conflicts have developed between herdsmen and sedentary farmers, in particular in the west where herdsmen have moved from the north in search of food and water. 7. In late 1974, a large-scale campaign for eradication of onchocerciasis (river-blindness) was started. This campaign, carried out by the World Health Organization (WHO),will eventually cover seven West African countries-/. The Bank has been instrumental in organizing financing for the program by bilateral and multilateral sources. In Upper Volta, the campaign will be directed to the valleys of the three Voltas and their tributaries as well as the Comoe basin and several minor rivers in the east, and is expected to make these fit for settlement beginning as early as 1975 (although the campaign will have to extend over a 20-year period). As a result of the campaign, some 1.6 million hectares in Upper Volta alone will become acces- sible for permanent settlement, of which (according to preliminary studies carried out by the Preparatory Assistance Group (PAG) organized by UNDP) about 600,000 hectares will be suitable for agricultural development purposes. B. Government Services 8. The agricultural services cf the Ministry of Planning and Rural Deve- lopment comprise the agricultural, extension service, the livestock service (veterinary and extension), and the Service de l'Hydraulique et de l'Equipe- ment Rural (HER) responsible for small dams, lowland development and well- drilling. The first two services operate through the individual ORDs to which the staff are seconded; HER has offices only in Ouagadougou and Bobo- Dioulasso. The central staff of the Directorate of Agriculture is very small. A rural planning unit and a Permanent Committee for the Coordination of Rural Development were created in 1974 within the Ministry of Planning and Rural Development, but are not yet fully operative due to lack of staff. Agricultural servicesalso suffer from a shortage of personnel, and live- stock services are particulary limited; livestock is one of the country's main resources, but it receives only 1% of Government current expenditure. The ORDs are supposed to employ additional staff from their own resources, but because of a lack of funds,are actually able to do so only on a very limited scale. Water resource development has been pursued with increased vigor since the start of the Rural Development Fund (RDF) project which includes lowland development. The activities of the RDF are controlled by I1/ Niger, Dahomey, Togo, Ghana, Upper Volta, Mali, and Ivory Coast.  Annex 1 Page 3 the Banque Nationale de Developpement (BND). In late 1974, a regional authority was created for development of the valleys of the three Volta rivers, the "Autorite pour l'Amenagement des Vallees des Voltas" (AAW). This organization is likely to supersede the ORDs within the area of its authority once the settlement programs are launched on a larger scale following the control of river-blindness. 9. The Government is shifting the emphasis of development expenditures to agriculture, and the current development plan (1972-76) has earmarked 30% of total expenditures for this sector. The first priority is achieving self-sufficiency in food, and livestock also receives more attention than in the past. 10. Implementation of the plan is about 50% behind schedule during the first two years of the period (48% and 56% respectively for the rural sector), primarily as a result of limited administrative and planning capacity, in- adequate preparation of projects, lack of qualified personnel, and delays in equipment delivery. 11. A further inhibition to agricultural development is the Government's reluctance to allocate funds both for investments and for recurrent costs. Since foreign donors have frequently agreed to finance very high proportions of project costs (both capital and recurrent cost), there is generally a heavy reliance on foreign assistance for all types of expenditure associated with development projects, particularly in the rural sector. The inherent danger is that projects which do not have a minimum financial autonomy are very vulnerable to changes in the interest and the involvement of foreign agencies. C. Agricultural Development Programs (a) Mossi Plateau: Rural Development Fund Operations 12. On the densely populated Mossi Plateau, efforts will in future be directed primarily towards preventing the further decline of soil productivity, and the consequent degradation of living standards. Specific actions envisaged comprise water supplies, storage facilities,erosion control, lowland development, water conservation works, etc., i. e. activities presently carried out by the Rural Development Fund, which, incidentally, encounters the best response precisely in the overpopulated regions of the plateau. These actions will be continued and intensified over the next few years in the ORDs of Yatenga, Kaya, Koudougou and Ouagadougou; in the peripheral development areas, they may be expected to be scaled down or discontinued in favor of other actions. (b) Southwest and East: Integrated Rural Development Programs 13. Integrated rural development programs are comprehensive operations concentrated in a particular geographical area, and including not only crop development with the required input package (seeds, pesticides, ferti- lizer, credit, technical advice), but also well construction, staff training, and applied agricultural reserach. An important objective is the integration  Annex 1 Pa ge 4 of cash crops with food crop cultivation, and where feasible, with live- stock husbandry. In the future, efforts will be 4ncreasingly directed towards achieving more sedentary cultivation methods (using draft animals, -fertilizers and crop rotations), since the present method of shifting cultivation will ultimately become impracticable even in areas of new settlement as population continues to grow. 14. The first project of this type in Upper Volta is the Bougouriba Agricultur-l Development Project' in the southwest which comprises 350,000 people, including a growing number of Mossi immigrants. In the West Volta cotton area, the need is felt to extend the ongoing cotton project into a more broadly based Rural D)evelopment Project integrating, in particular, food crops. Other actions of this type are envisaged in the B,nfora ORD and in the east. In the Banfora region, limited operations focussing on rice are underway with assistance from FED; in Fada-Ngourma, a preparatory project in four pilot zones will start with US assistance in 1975. In the southwest and west, similar programs are expected to reach almost a million people by the end of the decade. In the east, progress is expected to be slower due to the different physical conditions and the lower degree of preparation of the local population. (c) West and South: Irrigation Programs 15. Development of swampy lowlands (potential: 30,000 ha) and of small dams (potential: lO,OOO ha) is planned to continue in all parts of the country, although with rather more emphasis on the Mossi Plateau. These operations fall within the scope of the Rural Development Fund mentioned in para. 12 above. 16. The remaining irrigation potential comprises: - 55,000 ha in the Black Volta basin (including tributaries); - 47,000 ha in the White and Red Volta basins; - 15000 ha in the Comoe basin; and - 13,000 ha in the flood-plains of the west. 17. The largest project underway is the sugar-cane plantation near Banfora in the Comoe basin where a first stage of 2,250 ha is nearing completion, and a second stage of l,500 ha is planned on the basis of a FAC-financed master plan for use of the Comoe water resources. The irrigation scheme is expected to also accommodate some rice-growing projects for laborers working in the sugar-cane plantations. 18. The flood plains of the Kamadena (5,000 ha) and the Niena-Dionkele (2,000 ha) both seem to offer good possibilities for integrated programs including, besides irrigated crop production, rainfed agriculture and livestock husbandry. A feasibility study is underway for the Kamadena project. Both projects are located in the West Volta area. 19. A further plan concerns the Sourou plain, a dry valley flooded a few months each year by the Black Vol-ta waters, and for which studies have been underway for many years. An exper.imental irrigation scheme exists at  Annex 1 Page 5 Sanfiera, and over the long run, up to 20,000 ha could be developed here (in the northern part of the Black Volta ORD); a first phase comprising 3,000 ha is under consideration. 20. Except for the Sourou plain, all other irrigation projects in the Black Volta basin must be postponed until the UNDP-financed com- prehensive survey (including a master plan for the use of water resources)is completed in 1977; any project started before that date will probably be adversely affected by major dams that may be built on the basis of findings of the UNDP study. 21. Irrigation projects in the valleys of the three Volta Rivers will form part of the wider settlement programs envisaged for these areas when they become fit for settlement as a consequence of the ongoing onchocer- ciasis eradication campaign. (d) South and Southwest: Settlement Projects in the Volta Valleys 22. The areas to be freed from onchocerciasis are estimated as follows: While Volta Basin 750,000 ha Black Volta Basin 600,000 ha Red Volta Basin 250,000 ha The Red Volta Basin however appears to offer only limited agricultural opportunities. 23. Starting in 1972, bilateral French aid (FAC) has financed an important program to make preliminary studies for development of the Volta vallyes, and to establish a technical assistance group to help insure the success of this program. The objective of the program was to study the prospects for developing irrigable areas, and the possibility of dry- farming settlement. 24. The studies have already resulted in the start of a pilot project: in three zones in the White Volta Valley (Mogtedo, Kaibo, and Bane), 1,800 families will be settled over 197h-76. The settlement pattern will bring about a departure from traditional shifting cultivation patterns; more intensive farming will be practised, including fallow, the use of ferti- lizers,-and the use of animal traction. 25. The project contains a road improvement brigade which is to improve selected secondary roads in the White Volta area (Po-Tiebele-Zabre-Ouargai, Nobere-Palogo, Kombissiri-Ouigi) totalling 600 la plus 1,600 km of tracks primarily in the Manga area. 26. The two major irrigation projects under study in the White Volta area are the Bagre dam (study financed by FAC) estimated to have an irriga- tion potential of 30,000 ha, of which 5,000 ha are to be developed in the first phase. Tne Tanema dam would have a potential of only 7,000 ha.  Annex 1 Page 6 27. Studies in the Black Volta basin are less advanced because they have only recently started on a substantial scale, while in the White Volta,studies have been going on with FAC assistance since 1972. At present, the status of projects and studies in the White Volta area is estinated by AAW to-be two years ahead of the other regions, but this advance will be progressively reduced until 1976/77. Project possibili- ties identified in the Black Volta a.ea are a a dam at Karankasso on the Bougouriba with an irrigation potential of 20,000 ha, and the development of the Poni river, a tributary of the Black Volta, in the south of the Bougouriba ORD.  ANNEX 1 UPPER VOLTA Table 1 RURAL ROADS PROJECT Agricultural Production, 1967-73 (in thousand of metric tons: in CFAF per kg: in CFAF million) 1967/68 1968/69 1969/70 1970/71 1971/72 1972/73 1973/74: Millet: volume 1/ 330 315 362 327 298 259 257 Farmgate price- 12 12 12 12 14 16 20 production value 3,962 3,780 4,344 3,924 4,172 4,144 5,140 Sorghum: volume 546 545 560 506 474 507 493 farmgate price 13 13 13 14 15 17 23 production value 7,098 7,124 7,280 7,084 7,110 8,619 11,339 Maize: volume 65 66 69 55 66 59\ 58 farmgate price 13 13 13 14 16 19 25 production value 845 858 897 770 1,056 1,121 1,450 Rice: V4lume 36 38 39 34 37 34 31 farmgate price 17 17 18 20 23 28 30 production value 612 646 702 680 851 952 960 Groundnuts: volume 75 75 78 65 66 60 63 farmgate price 17 1l 18 18 19 21 22 production value 1,375 1,350 1,404 1,170 1,254 1,260 1,386 Sesame: volume 3 5 8 4 4 6 5 farmgate price 19 20 20 20 21 22 23 production value 57 100 160 80 84 132 115 Cotton: Volume 17 32 36 24 29 32 27 farmgate price 29 30 30 30 30 32 35 production value 493 960 1,080 720 870 1,024 945 Total Agricultural production value Current prices 3/ 14.3 14.8 15.9 14.4 15.4 17.2 21.1 (100) (103) (111) (101) (108) (120) (147)- 1967.constant price.-8 b 15 1 16.2 14.1 13.7