Cameroon - Second Cameroon Development Corporation Project

Report No. 1676-CM FILE COPY Cameroon Appraisal of a Second CAMDEV Project December 9, 1977 Regional Projects Department Western Africa Regional Office FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS US$1 = CFAF 245 CFAF 1 = US$0.0041 CFAF 1,000 = US$4.1 CFAF 1,000,000 = US$4081.63 WEIGHTS AND MEASURES (Metric System) 1 hectare (ha) = 2.47 acres 1 kilometer (km) = 0.624 miles 1 kilogram (kg) = 2.204 pounds 1 metric ton (ton) = 2,204.6 pounds 1 liter (1) = 1.057 U.S. quart ABBREVIATIONS CCCE - Caisse Centrale de Cooperation Economique CDC - Commonwealth Development Corporation CAMDEV - Cameroon Development Corporation FAC - Fonds d'Aide et de Cooperation FED - Fonds Europeen de Developpement FONADER - Fonds National de Developpement Rural HEVECAM - Societe Hevea - Cameroun IRAT - Institut de Recherches Agronomiques Tropicales et de Cultures Vivrieres IRCA - Institut de Recherches sur le Caoutchouc en Afrique IRHO - Institut de Recherches pour les Huiles et Oleaginaux ODM - Overseas Development Ministry (United Kingdom) ONAREST - Office National de la Recherche Scientifique et Technique PAMOL - Societe Pamol Cameroun SATET - Societe Africaine de Travaux et d'Etudes Topographiques SAFACAM - Societe Africaine Forestiere et Agricole - Cameroun SUDA - Societe d'Etudes pour le Developpement de l'Afrique 'SOCAPALM - Societe Camerounaise de Palmeraies FISCAL YEAR July 1 to June 30  FOR OFFICIAL USE ONLY CAMEROON SECOND CAMDEV PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ...... ............................ i - v I. INTRODUCTION ............................................. 1 II. BACKGROUND ......... . ..................................... A. General . .... . ..... .... B. The Agricultural Sector ... so . ....................... 2 C. Institutions ...................................................... . 2 D. The First CAMDEV Project .................. .......... 4 111. THE PROJECT ........ ......................................... 4 A. The Project Areas .................... ... . . . 4 B. Summary Project Description ......................... 6 C. Detailed Features ... ................................ 7 D. Organization and Management ........................ 10 IV. PROJECT COSTS AND FINANCIAL ARRANGEMENTS ................. 13 A. Project Costs . ...................................... 13 B. Financial Arrangements ................ ............ 15 C. Procurement and Disbursement .......... ............. 17 D. Financial Management, Accounts and Audit ............ 18 E. Outgrower Program Costs and Cost Recovery ........... 18 V. YIELDS AND OUTPUT, MARKETS AND PRICES .................... 19 A. Rubber .......................... . ........... 19 B. Oil Palm ............................................ 20 VI. FINANCIAL RESULTS ....................... .............. . ..... ... 21 A. Project Participants ........................... ...... 21 B. CAMDEV ............................................. 22 C. Government and FONADER .. ............................. 23 VII. ECONOMIC BENEFITS AND JUSTIFICATION ...................... 23 VIII. AGREEMENTS AND RECOMMENDATION ..... ....................... 26 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  -2- ANNEXES ANNEX 1: Project Entities A. The Cameroon Development Corporation B. The Fonds National de Developpement Rural (FONADER) Table 1: CAMDEV Balance Sheet Table 2: Resources and Outlays of FONADER ANNEX 2: Technical Features A. CAMDEV's Present and Future Areas of Operation B. Development Areas C. Techniques D. Rubber Processing E. Outline Terms of Reference for Specialist Staff Table 1: Planting Schedule Table 2: Rubber Yields Table 3: Oil Palm Yields and Extraction Rates Table 4: Project Crop Production ANNEX 3: Development Preparations A. Introduction and Financial and Administrative Arrangements B. Expansion Study C. Preparation of Master Plan for west coastal region ANNEX 4: Outgrowers Program A. Organization and Management B. Financial Arrangements C. Outgrower Incomes Table 1: Oil Palm Outgrowers, Recommended Producer Price Table 2: Rubber Outgrowers, Recommended Producer Price Table 3: Oil Palm Outgrower Cash Flow Table 4: Rubber Outgrower Cash Flow Table 5: Cash Flow to FONADER Table 6: Cash Flow to Government ANNEX 5: Project Costs Table 1: Project Costs Summary Part A - Rubber Estates Base Costs Part B - Base Costs of Other Components and Total Project Cost Table 2: Kompina Estate-Field Establishment and General and Administrative Overheads Table 3: Kompina Estate - Fixed Assets  -3- ANNEX 5: Project Costs Table 4: Malende Estate - Field Establishment and General and Administrative Overheads Table 5: Malende Estate - Fixed Assets Table 6: Mbonge Estate - Field Establishment & General and Administrative Overheads Table 7: Mbonge Estate - Fixed Assets Table 8: Tombel Estate - Field Establishment and General and Administrative Overheads Table 9: Tombel Estate - Fixed Assets Table 10: West Coast Oil Palm Estate - Project Costs Table 11: Outgrowers-Central Management Costs Table 12: Rubber Outgrowers-Extension and Central Management Costs Table 13: Oil Palm Outgrowers - Extension and Central Management Costs Table 14: Outgrowers Field Establishment and Labor Costs Table 15: Technical Assistance, Expansion Study and Master Plan ANNEX 6: Schedule of Estimated Disbursement ANNEX 7: CAMDEV Financial Outlook and Cash Flows Table 1: Project Estate Developments: Ongoing Costs PY 6 to PY 15 Table 2: Project Cash Flow Table 3: CAMDEV Estimated Gross Profits from Crops 1977/78 - 1991/92 (Excluding CAMDEV II) Table 4: CAMDEV Profit and Loss Account for CAMDEV and Project 1977/78 to 1991/92 Table 5: CAMDEV Consolidated Cash Flow 1977/78 to 1991/92 ANNEX 8: Markets and Prices A. Rubber B. Palm Oil and Kernels  - 4- ANNEX 9: Economic Rates of Return Table 1: Projected Price of Rubber Table 2: Projected Price of Palm Oil Table 3: Projected Price of Palm Kernels Table 4: Economic Rate of Return - Rubber Estates Table 5: Economic Rate of Return - Oil Palm Estate Table 6: Economic Rate of Return - Outgrower Rubber Table 7: Economic Rate of Return - Outgrower Oil Palm Table 8: Economic Rate of Return - Total Project MAPS IBRD 12891 - Cameroon IBRD 12892 - CAMDEV/Mt. Cameroon Area CHART IBRD 17421 - CAMDEV's Organizational Structure  CAMEROON SECOND CAIIDEV PROJECT Summary and Conclusions Background i. The Government of Cameroon has asked the Bank to help finance a project that would be part of a program of development in the west coastal region of Cameroon, based on estate/smallholder tree crops. The project was prepared mainly by the Cameroon Development Corporation (CAMDEV), a state-owned agricultural development agency. This report is based on the findings of an appraisal mission which visited Cameroon in March 1977. Project Concept ii. CAMDEV was created in 1946 to rehabilitate and develop large tracts in West Cameroon. A long-term development program for CAMDEV was begun in the 1960s, based on rubber and oil palm as major crops. Government wishes CM1DEV to further expand and diversify its activities and the proposed project would set the stage for CAMDEV's progressive growth in line with its absorptive capacity. The project would also introduce an outgrower program in the CAMDEV area. iii. The Bank Group assisted the first stage of CAMDEV's development with a US$7.0 million loan and a US$11.0 million IDA credit in 1967. By June 1976, at completion, 10,500 ha had been planted and 4,700 ha of old estates cleared for a net increase of 5,800 ha of oil palm and rubber. The first project is judged to have been successful in meeting its objectives and the rate of return was estimated at completion to be 16% - the same as the appraisal estimate. Project Areas and Summary Project Description iv. The project plantings would be in the vicinity of CAMDEV's existing 30,000 ha of estate plantings, on the lower slopes of Mount Cameroon. A development planning component would focus on the remaining parts of the west coastal region that are suitable for perennial tree crops. v. The project would be implemented over a 4-1/2 year investment period and would include: (a) clearing and planting 7,900 ha of estate rubber, maintenance during the project period, and estate infrastructure including construction of two rubber factories; (b) planting about 1,000 ha each of outgrower rubber and oil palm, including credit, extension, and management services;  - ii - (c) clearing and planting 600 ha of estate oil palm, maintenance during the project period, and some estate infrastructure; (d) management and administration of the above estate plantings, including provision of three specialists with project specific functions and three additional specialists with company-wide responsibilities; and (e) development studies and related infrastructure, consisting of two components: (i) an expansion study for CAMDEV's next development phase - land surveys and project preparation for a follow-up five- year investment program for CAMDEV. This would include a bridge and 40 km of dirt road for access to the development area, and 80 ha for seed gardens and coconut variety trials; and (ii) a master plan for the west coastal region leading inter alia to guidelines for CAMDEV's longer term development. As usual with estate projects, further maintenance and necessary processing facilities would be provided for under CAMDEV's future investment program. Project Implementation vi. The project would be implemented by CAMDEV with the exception of the master plan, which would be directed by the Ministry of Economy and Planning. The outgrower program would be managed by CAMDEV under a contract with FONADER, the national agency responsible for agricultural credit and smallholder development. CAMDEV's institutional structure is considered satisfactory. However, within the corporation itself, some staff streng- thening is required to improve CAMDEV's general efficiency and to provide for the increased managerial and technical demands of the proposed project. This would be achieved through the recruitment of six high-level specialists - three with project specific functions and three with company-wide responsi- bilities in conjunction with a continued emphasis on internal staff training and upgrading. vii. Administrative arrangements for outgrower development would be similar to those in the Second SOCAPALM Project. CAMDEV would establish an outgrower management division which would provide support services to the outgrowers and coordinate both financial and agricultural aspects of the program. Outgrower plantings would average about 1-2 ha. The land would be cleared by the outgrowers and each outgrower would have a personal usufruct of his plantings when they are completed. FONADER would provide CAMDEV with the funds required for the establishment of the plantings. CAMDEV would deliver inputs, maintain credit accounts, and provide crop collection, pro- cessing and marketing services. Outgrowers would receive long-term financing in cash and in kind to cover crop establishment costs.  - iii - Project Costs and Financing viii. Project costs are estimated at CFAF 9.6 billion (US$39.3 million), including contingencies, over the 4-1/2 year investment period. The foreign exchange component would be US$21.2 million or 54%. Cost estimates include taxes of US$2.1 million, but exclude duties on all items imported expressly for the project as Government will exempt these from import duties. Thus, project costs net of taxes would be about US$37.2 million. ix. The project would be financed by CAMDEV self-generated funds, Gov- ernment, and loans from the Bank, the French Caisse Centrale de Coopera- tion Economique (CCCE) and the British Commonwealth Development Corporation (CDC). The three loans totalling US$30 million would be made to Government. Government would pass on US$25.8 million directly to CAMDEV for development of the estates, the provision of specialists and for the expansion study. Of the remaining US$4.2 million, US$1.9 million would be for the master plan, and US$2.3 million would be passed on by Government to FONADER and CAMDEV for the outgrower programs. The loans would help finance all project components and, with the exception of the master plan, participation by the colenders would be on a pari passu basis in the overall proportion: 2:1:1 representing loan amounts of US$15 million for the Bank and US$7.5 million each for CDC and CCCE. The master plan would be financed by the Bank and CCCE (39% each) and Government (22%). The Bank loan would be for a term of 20 years including a five-year grace period and would bear interest at the rate applicable at the time of approval. CCCE and CDC loan terms are expected to be similar to the Bank's. The Bank loan represents 40% of the total project cost net of taxes and 71% of the project's foreign exchange component. x. Local contributions to project costs (including US$2.1 million taxes) would amount to US$9.3 million; US$7.6 million from CAMDEV and US$1.7 million from Government. CAMDEV would bear all debt servicing on the US$25.8 million passed on to it by Government for the development of the estates, the provision of specialists and the expansion study. Government would bear debt servicing for the US$4.2 million of loans made for outgrower development and for the master plan. During the disbursement period, debt servicing would amount to: CAMDEV, US$4.3 million; Government, US$0.7 million. CAMDEV's total contribution during this period would amount to US$11.9 million, and would be met through self-generated funds available from its existing operations. Government's contribution to project costs would be made available as follows: (a) US$0.7 million to the Ministry of Economy and Planning for the master plan; (b) a grant of US$0.7 million to FONADER which would be passed on through CAMDEV's outgrower management unit to outgrowers as credit for field inputs and cash grants for subsistence (para xi) and; (c) a grant of US$0.3 million to CAMDEV for CAMDEV's outgrower supervision costs. xi. Financial arrangements for outgrowers are similar to the program in the Second SOCAPALM Project: during the crop investment period, outgrowers would be provided with credit for field inputs and cash grants to cover part  - iv - of the imputed cost of their labor inputs (cash grants supplied by Government and based on 80% of the per diem unskilled estate laborer wage multiplied by estimated man day requirements), and supervision would be provided without charge. Credit, with 9% interest, would be provided through FONADER during the crop investment periods - 8 years for rubber and 5 years for oil palm - and would be recovered over the succeeding 10 years and 7 years respectively. Procurement and Disbursement xii. Procurement. Except for the items specified below, procurement would be through international competitive bidding (ICB) following Bank guidelines. Goods and services subject to ICB - mainly machinery, vehicles and equipment, fertilizer and some imports for construction - are estimated to cost about US$11.6 million. Locally manufactured goods would be allowed a preference of 15% or the level of applicable import duty, whichever is lower, when comparing domestic with foreign bids. Contracts not exceeding US$100,000 would be let under competitive bidding procedures advertised locally and satisfactory to the Bank. Most land clearing, estate road build- ing, plantation work and minor estate constructions would be done on force account (US$13.6 million) using equipment purchased under the project. The remaining project costs (US$14.1 million) would be mostly for staff and labor costs and operating expenses. Specialists and consultants would be selected following Bank guidelines. xiii. Disbursement. Disbursements of the Bank loan would be made at 39% of total expenditure for: (a) vehicles, equipment, civil works, field invest- ments, salaries and operating costs for the rubber and oil palm estates (US$10.4 million); (b) salaries and operating costs for provision of techni- cal assistance specialists (US$0.6 million); (c) civil works, equipment, materials, salaries and operating costs for the expansion study (US$0.7 million); (d) vehicles, equipment, civil works, salaries and operating costs for the outgrower management unit (US$0.6 million); (e) field investments for the outgrowers program (US$0.4 million); and (f) vehicles, equipment, salaries and operating costs for the master plan (US$0.9 million). US$1.4 million would be unallocated. Disbursements for estate field investments and operating costs would be made against certificates of expenditures with documentation retained for inspection by Bank supervision missions. All other disbursements would be fully documented. Markets xiv. The project's rubber output would be exported, probably mainly as block rubber which is in demand by manufacturers because its technical qualities can be specified accurately. Projections of world demand for natural rubber are reasonably good and real prices are expected to remain stable. For oil palm products, CAMDEV is expected to sell an average of 85% of its palm oil on the domestic market and to export the remainder and all of its palm kernels. Long term price projections for oil palm and kernels are good and similar to real prices in the early 1970's. For both rubber and oil palm products, CAMDEV has established markets in Europe, and in West Africa Nigeria is projected to become a major importer of palm oil.  v Benefits xv. The incremental project output would improve Cameroon's balance of payments by providing increases in foreign exchange earnings from exports of rubber and palm kernels and increased palm oil production which would be used primarily for meeting a growing domestic demand. The project's economic rate of return is estimated at 17% with rates of return on individual compo- nents ranging from 16-23%. The project would also provide additional staff for strengthening CAMDEV's technical management in key areas, development studies and investments to prepare for the future growth of CAMDEV and the surrounding area; and introductory experience with organized smallholder credit schemes for rubber and oil palm. Employment and increased incomes would be provided for about 5,000 estate workers and 1,300 farming families. xvi. CAMDEV's financial rate of return from the project inclusive of 10% physical contingencies is estimated at 11%. By 1991, annual net revenues generated from the project would be US$11 million and would contribute to a cumulative cash balance for CAMDEV of US$78 million. However, while in the long run the project would provide a major boost to CANDEV's financial posi- tion, in the four years following the disbursement period (1983-1986) CAMDEV's cash balances are estimated to be at marginal levels in relation to its work- ing capital requirements. This is due to the additional field investments and processing facilities that would be required to bring the project plant- ings into production. In view of CAMDEV's strong long term financial posi- tion, short term bank borrowing to meet temporary cash requirements during this period would be within CAMDEV's debt servicing capacity. Furthermore, the additional investments for project plantings required after the project period are possible candidates for financing by international agencies as part of CAMDEV's next development program which Government has scheduled to begin in 1982. xvii. The project's main risks concern possible problems in obtaining the target requirements of estate laborers, the achievement of estimated rubber yields, and possible initial problems in attracting participants to the out- grower program. Minor shortfalls of estate labor or lower than anticipated yields would have as their main effect increases in costs (due to greater use of overtime and mechanized operations) and decreases in the benefit stream respectively. A 20% rise in costs or fall in benefits lowers the overall economic rate of return to 14% which is still acceptable. Economic rates of return for the outgrower programs were tested against the pessimistic assump- tions of a two year slow down in the rate of smallholder participation or a 50% overall reduction in the number of participants; in both tests out- grower rates of return were found to remain about 14%. CAMDEV's 11% financial rate of return, which already includes 10% physical contingen- cies, falls to 9% with a 10% fall in benefits or a 10% rise in costs. Recommendation xviii. With the major assurances and conditions outlined in Chapter VIII, the project is suitable for a Bank loan of US$15 million.   CAMEROON SECOND CAMDEV PROJECT I. INTRODUCTION 1.01 The Government of Cameroon has requested Bank assistance for a project that includes mainly rubber and some oil palm in the coastal section of the Southwest Province. The project would aim at increasing the produc- tion and efficiency of the Cameroon Development Corporation (CAMDEV), and introducing an outgrower program in its area of influence. The measures proposed in the project would set the stage for CAMDEV's progressive growth and are within its capabilities. 1.02 The First CAMDEV Project, which was successfully completed in 1976, was assisted by a Bank loan of US$7.0 million and a US$11.0 million IDA credit in 1967 for the planting and replanting of estate oil palm and rubber (para 2.09). Other Bank Group assistance for agricultural development in Cameroon has involved: (i) the first SOCAPALM oil palm project -- Loans 593-CM, US$7.9 million in 1969, and 886-CM, US$1.7 million in 1973; and, (ii) the Semry rice project -- Credit 302-CM, US$3.7 million in 1972; both of these projects have been fully disbursed. The Bank Group is also assisting: (i) a Livestock project -- Loan 983-CM, US$11.6 million (1974); (ii) a Cocoa Project -- Loan 1039-CM, US$6.5 million (1975); and (iii) the Niete Rubber Project -- Credit 574-CM, US$16.0 million (1975); with the exception of the Cocoa Project, which has encountered management and producer price incentive problems, all of these projects are progressing satisfactorily. The following loan/credits were signed in 1977: (i) the Plaine des M'bos Rural Development Project - Credit 672-CM, US$2.0 million; (ii) a Technical Assistance Project - Credit 673-CM, US$4.5 million; (iii) the Second SOCAPALM Project - Bank/Third Window Loans 1392-CM, and 1391 T-CM, US$25 million; and (iv) a Rural Development Fund Project, Credit 723-CM, US$7.0 million. 1.03 The proposed project was prepared mainly by CAMDEV with the help of a consultant. A tripartite appraisal mission, representing the Bank, the Caisse Centrale (CCCE) of France, and the Commonwealth Development Cor- poration (CDC) of Great Britain, visited Cameroon in March, 1977. The Bank mission was composed of Messrs. G. Losson, K. Oblitas, T. Winston, and Ms. L. Effron. II. BACKGROUND A. General 2.01 Cameroon hag a population of about 7.6 million (1976) and covers an area of 475,000 km . Average per capita income is US$300. During the  - 2 - Fourth Plan period (1977-81), it is anticipated that growth of GDP will be 5-6% per annum in real terms, slightly lower than achieved during the 1960s. However, if the Government can maintain a high volume of public investment and further expand and diversify the country's production base, higher rates of growth could be obtained in the early 1980s. B. The Agricultural Sector 2.02 Agriculture plays a major role in Cameroon's economy, provid- ing a livelihood for about 75% of the population and accounting for about 35% of GDP and over 70% of the value of exports. The traditional subsector accounts for over 90% of agricultural output, plantation agriculture the remainder. The traditional sector produces food crops for subsistence and the local market, and cocoa, coffee, cotton, and groundnuts for export; and cattle raising is undertaken by pastoralists in northern Cameroon. Cameroon is largely self-sufficient in foodstuffs, and production has ex- panded at about 5% per annum during the last 5 years. Agricultural incomes are highest in the cocoa and coffee producing areas of the south (estimated at about US$150 per capita), whereas in the northern plains and the western highlands they are estimated to be about US$70. Development of Rubber and Oil Palm 2.03 The main tree crops are oil palm and rubber, with estate production in 1975 of about 47,000 t of palm oil and 19,000 t of rubber. In addition to CAMDEV (13,400 ha rubber; 16,600 ha oil palm), the other major tree crop corporations are the state-owned SOCAPALM (15,500 ha oil palm); and the private SAFACAM (6,000 ha, mainly rubber) and PAMOL (9,000 ha, mainly oil palm). A third state-owned company, HEVECAM, was recently established for rubber production. 2.04 With Bank/IDA assistance, a large estates program, involving rubber, oil palm, and eventually coconut, has been launched in the sparsely populated coastal areas on either side of Douala--HEVECAM's Niete rubber estate and SOCAPALM's Kienke oil palm estate. Preparation of a master plan for development of the southern coastal area is being financed under the HEVECAM Project, and in the Second SOCAPALM Project smallholder oil palm development is being initiated. To coordinate development activities and provide certain central services for the estate corporations, a joint Coastal Estates Service Center for both private and public companies -- including CAMDEV -- is being set up under the SOCAPALM project. C. Institutions Cameroon Development Corporation (CAMDEV) 2.05 CAMDEV is a statutory corporation with capital shares owned 87% by Government and 13% by the Produce Marketing Board. Under Cameroon law,  such companies have a supervisory ministry, which in CAMDEV's case is the Ministry of Economy and Planning. More direct supervision is provided by a board of directors representing both national agencies and local busi- ness. The corporation's day to day management is undertaken by a qualified Cameroonian General Manager, whose performance has been satisfactory. This institutional framework has worked well and would continue under the proj- ect. 2.06 CAMDEV was created in 1946 to rehabilitate and develop large tracts of land in West Cameroon. In the 1950's, at the height of a short- lived "banana boom", CAMDEV employed 25,000 workers. Following a severe cut-back of banana operations, due to Panama disease and unfavorable market prices, a long-term development program was begun in the 1960's, based on rubber and oil palm as major crops, and was assisted over 1967-76 by Bank/IDA and European Development Fund (FED) finance (para 2.09). At present, CAMDEV controls approximately 80,000 ha, under leasehold from Government, of which 30,000 ha is planted -- 98% to either oil palm or rubber -- and employs about 12,000 workers. Most of CAMDEV's existing plantings are now in production, and as a result the corporation is entering a period of relative prosperity, ending two decades of financial stringency and enabling it to make a signifi- cant contribution to the financing of the project (para 4.02). 2.07 The National Fund for Rural Development (FONADER), created in 1973, was given the dual role of: (a) providing credit to farmers and farmer organizations; and (b) appraising, financing and supervising a wide variety of rural development programs, from farm input supply to village water pro- jects. It operates from its Yaounde headquarters, relying on other agencies for field services. The shortcomings of assuming very widespread responsibi- lities from a narrow base are recognized by Government, which is preparing, with assistance from FED, proposals for streamlining FONADER's activities. In the meantime, Government wishes FONADER to participate in Bank projects to gain experience and strengthen its operational departments. In the Rural Development Fund Project, a specialized rural credit unit is being established within FONADER. In the Second SOCAPALM Project, SOCAPALM's smallholder man- agement unit provides farmer credit through FONADER. Smallholder management in the CAMDEV project would be similar to the SOCAPALM project and would also build up expertise in credit supervision for tree crops which could later, if desirable, be centralized within FONADER. During project execution, FONADER's own staff would also gain experience through their liaison with the project's outgrower management division (Annex 1). 2.08 Other Institutions. Several other organizations are involved with CAMDEV. The U.K.'s Commonwealth Development Corporation (CDC), which was CAMDEV's managing agent for 15 years prior to 1974 and would be one of the colenders for the proposed project, provides technical assistance to CAMDEV through regular visits by staff specialists, and also provides marketing intelligence on a regular schedule. A UNDP/FAO soil survey team is helping CAMDEV with its soil surveys as part of a practical training for Cameroonian soil scientists. Technical advice is provided by two French institutes, IRHO  - 4 - (for oil palms) and IRCA (for rubber), and by the new National Research Organization, ONAREST. These arrangements work well and would continue under the project. D. The First CAMDEV Project 2.09 In 1967 a US$7 million Bank loan and a US$11 million IDA credit were made to CAMDEV. The credit was fully disbursed as planned by December 1971; completion of the Bank loan's disbursement was delayed until early 1976 instead of end 1974 as anticipated at appraisal. The project consisted of the planting or replanting of 7,900 ha of oil palm, 2,500 ha of rubber, 1,000 ha of tea, and 70 ha of pepper; the bringing into production of about 600 ha of immature oil palm and 4,900 ha of immature rubber; and the provi- sion of related infrastructure, processing facilities and equipment. During implementation there was a shift from oil palm to rubber -- oil palm dropping to 6,350 ha actual, rubber increasing to 4,200 ha actual; and tea was dropped from the project after only 80 ha was planted as subsequent information indicated that it would not be viable. With costs and benefits recast to reflect the project changes, actual costs were about 23% over appraisal estimates. The modified project's economic rate of return is estimated at 16% which is the same as the rate of return estimated at appraisal. The completion report and project performance audit concluded that CAMDEV I had been a successful project (Report No. 1752 distributed to the Board on October 12, 1977 - summary details at Annex 1). III. THE PROJECT A. The Project Areas General Location and Characteristics 3.01 The project plantings would be in the vicinity of CAMDEV's existing 30,000 ha of estate plantings, which are around the lower slopes of Mount Cameroon and, on the east side, are adjacent to SOCAPALM's concessions (see maps). Plantings would be at altitudes of less than 300m and slopes would not exceed 15 . Rainfall in the project area varies greatly: to the south and west of Mount Cameroon, conditions are extremely wet (up to 8 meters/ year), and suitable only for oil palm which grows well in the combination of heavy rains and light, well drained volcanic soils; to the north and east, rainfall is insufficient for oil palm but adequate for rubber (1.6 - 1.8 meters/year). Wind resistant planting material would be chosen to allow for high winds encountered at the beginning and end of the rainy season. Minor drainage works would be required in some areas. CAMDEV is well expe- rienced with the above conditions. The areas to be planted are virtually unoccupied (para 3.05) and are mainly covered by light to medium density forest. The land required for the proposed plantings has already been granted by Government for CAMDEV's use. Of the available and surveyed areas,  - 5 - most are suitable for rubber rather than oil palm and, accordingly, rubber would be the principal crop. 3.02 The project plantings would involve one new rubber area, Kompina (5,000 ha), located to the east of CAMDEV's present operations, and the areas around several existing estates. These extensions are: Malende (1,000 ha rubber) in the main estate area on the southeastern slopes of Mount Cameroon; Tombel (900 ha rubber), at the northeast limit for present estate plant- ings; Mbonge (1,000 ha rubber), on the northwest slopes, the most isolated of the existing estates; and Idenau/Debundscha (600 ha oil palm) along the west coast. 3.03 The new 5,000 ha Kompina estate would be a self contained unit, and the 16,500 ha concession within which it is situated is expected to contain additional suitable land for a further expansion in a future devel- opment phase. The four extensions would each increase the economic viabil- ity of the existing estates - the present estate plantings are: Mbonge 1,000 ha; Tombel 1,100 ha; Malende/Meanja 1,400 ha; and west coast oil palm 3,000 ha - and would justify building, during the project period, factories at Mbonge and Tombel. At present, these two estates do not have factories and latex is transported 40 and 70 km respectively to Mukonge for processing. Communications and Population 3.04 Public road communications in the CAMDEV area are generally adequate for CAMDEV's present needs and include a paved road to the main port at Douala. However, although not essential for the project, a dirt construction public road along the west coast between Idenau and Victoria, which is pass- able but in poor condition, needs upgrading. CAMDEV builds and maintains its own estate roads in conjunction with its estate clearing and maintenance operations and would continue to do so under the project. This would include a bridge and a minimal construction access road across the Meme river at Mbonge to connect the new extension with the existing estate and also to provide access to the survey area for CAMDEV's next expansion (para 3.15). 3.05 Most of the population in the project area live in towns such as Buea (the administrative center), Victoria - Bota (CAMDEV's center of oper- ations), and in CAMDEV's estate villages. Plantation workers are recruited from the more populated regions to the northwest, particularly the western highlands. The rural population, composed mostly of recent immigrants, grow cereals and cash crops such as coffee, cocoa, oil palm, tropical fruits, and cocoyam, mainly along the public roads. Since a 250m corridor on each side of these roads would be excluded from estate development it is estimated that only about 20 families would need to have their lands or homes disrupted by the estate developments. These families have settled along abandoned logging trails in some of the proposed estate development areas. As far as possible, relocation would be avoided by appropriate localized adjustments of the estate boundaries. Any necessary relocations would be done under established Govern- ment procedures with compensation as appropriate (details at Annex 2). Good  - 6 - land is available nearby for resettlement, and local villagers would also have the opportunity to become outgrowers or estate laborers. Smallholder Planting Areas 3.06 The initial smallholder rubber plantings would mostly be in the Malende and Kompina areas. At Malende, there is suitable land in proximity to the scheduled estate plantings along the Muyuka/Kumba road; at Kompina, the initial outgrowers would be along the public road crossing the conces- sion. Smallholder oil palm plantings would mostly be in proximity to the Mondoni/Mungo estate, CAMDEV's main oil palm operation, and near to the Mondoni mill. Additional smallholders could be recruited along the west coast between Bota and Debundscha, where a few successful private growers already sell their fruit to CAMDEV. B. Summary Project Description 3.07 The project would aim at increasing the production and efficiency of CGADEV, introducing a smallholder development program, and undertaking a regional study and preparations for future development of the corporation and surrounding area. The project would be implemented over a 4-1/2 year investment period and would include: (a) clearing and planting 7,900 ha of estate rubber, maintenance during the project period, and estate infrastructure including construction of two rubber factories; (b) planting about 1,000 ha each of outgrower rubber and oil palm including credit, extension, and manage- ment services; (c) clearing and planting 600 ha of estate oil palm, maintenance during the project period, and some estate infrastructure; (d) management and administration of the above estate plantings, including provision of 3 specialists with project specific functions and 3 additional specialists with company wide responsibilities; and (e) development studies and related infrastructure, con- sisting of two components: (i) an expansion study for CAMDEV's next development phase - land surveys and project preparation for a follow-up five-year investment program for CAMDEV. This would include a bridge and 40 km  - 7 - of dirt road for access to the development area, and 80 ha for seed gardens and coconut variety trials; and (ii) a master plan for the west coastal region leading inter alia to guidelines for CAMDEV's longer term development. As usual with estate projects, further maintenance and necessary processing facilities would be provided for under CAMDEV's future investment program. The project would be implemented by CAMDEV with the exception of the master plan (item e ii), which would be directed by the Ministry of Economy and Planning. The outgrower program would be managed by CAMDEV under a contract with FONADER. C. Detailed Features Estate Components 3.08 Planting Programs. The estate planting schedule would be as follows, in hectares per year (Annex 2, Table 1): PY-1/ PY2 PY3 PY4 PY5 Total Rubber 400 1,350 1,850 2,150 2,150 7,900 Oil Palm 150 150 150 150 600 Total 400 1,500 2,000 2,300 2,300 8,500 1/ CAMDEV fiscal years beginning July 1 -- half year only in PY 1. CAMDEV has established methods of clearing and planting in its area of opera- tions based on its experience and depending on the intended crop and existing vegetation. Most of the clearing and planting would follow these standard procedures, with adaptations as necessary. In general, CAMDEV favors manual methods of clearing, using chain saws. Tractors are used selectively, and the stumps of larger trees are poisoned. These operations are mostly done under force account although small local contractors (typically businessmen who employ gangs of laborers and who may also own chain saws and trucks) are encouraged and hired whenever possible to supplement CAMDEV's labor resources. Further usage of contractors for CAMDEV's field operations has not been possible in the past and this situation is not expected to change significantly during the next few years. While a limited local contractor capacity exists in Cameroon in certain sectors such as highways and housing construction, this is not so for the tree crop sector. Thus, CAMDEV, while  remaining continually interested in the possibility of employing contractors to augment its labor force, recognizes that the bulk of its field investment program - land clearing (plus associated estate road building), planting and initial maintainance - will continue to require its own work force. This has the advantage of a trained and continuous labor force which for many operations - especially planting, maintenance and harvesting - is essential. Nevertheless, CAMDEV will continue to actively encourage contractor services for all operations where high skills and continuity are less essential (e.g. land and road clearing and construction of estate villages) and where such work can be performed at a lower cost than under force account. In this way the gradual development of a local contracting industry to assist in certain tree crop operations would be encouraged, although it is recognized that for the time being force account will continue to predominate for operations in the tree crop sector. In view of the accelerated development rate that would take place under the project, a greater concentration on mechanical clearing would be undertaken during the project period, in particular for the Kompina estate. The required heavy equipment would be purchased under the project (Annex 2). In addition to the new project plantings, CAMDEV would continue its replanting program for its existing estates. Allowances for replantings have been made in calculating CAMDEV's ongoing estate costs and in assess- ing CAMDEV's staff requirements. As a systematic replanting policy is the long term key to the ongoing viability of an estate corporation, an assurance was obtained during negotiations that CAMDEV's replanting program would be conducted in a systematic manner and in consultation with the Bank. 3.09 Planting Material. The rubber clones to be planted under the project have been proven on CAMDEV's existing estates and in similar ecologi- cal conditions elsewhere. Multiplication of budwood would be done by CAMDEV from its existing collection of clonal material. For oil palm, selection trials have produced promising new material with yields under trial condi- tions considerably higher than those on CAMDEV's existing estate plantings. The new lines would be tested under estate conditions during the project. 3.10 Housing, Social Amenities and Infrastructure. A range of utili- ties and accommodations would be provided, including housing for new staff, and estate workers' villages with basic utilities and social facilities such as schools, markets, churches, and community halls. CAMDEV's present close coordination with the local administrative authorities on such mat- ters as the location of schools and public facilities and the use of the hospital at Victoria would be continued. Food supplies would be made ade- quately available, as at present, through commercial channels. Some access roads and connecting links would be provided, including about 340 km of plan- tation roads which would be built and maintained by force account, initially to minimum standards, and upgraded later. Processing 3.11 Two new factories - at Mbonge and Tombel; block rubber, 17 tons/ day each - would be built under the project. Minor expansions and technical improvements to CAMDEV's existing factories would be financed by CAMDEV through self generated funds. A general improvement in crop processing efficiency is required throughout CAMDEV, and this would be achieved under  - 9 - the supervision of the Crop Processing Engineer to be hired under the project (para 3.19 and Annex 2). Labor Recruitment and Wage Levels 3.12 CAMDEV's present labor force of about 12,000 would require an addi- tional 2,600 workers by PY5 and would then decrease slightly after planting is completed, increasing again later as crop exploitation gets underway, to a peak of 5,000 workers. During the planting period, incremental labor re- quirements would be as follows: PY1, 300; PY2, 1,100; PY3 1,800; PY4 2,300 and PY5 2,600. Labor is recruited by CAMDEV through licensed recruitment agents who operate mainly in the low income and densely populated highlands to the northwest. Wage levels would conform to Government stipulations for estate wages: during the planting period Government's base level wages would predominate; at full development, many workers would be undertaking skilled activities such as tapping and would earn substantially higher wages. CAMDEV has in the past employed many more laborers (para 2.06) than the 14,600 workers anticipated to be needed by PY5 and has a reputation as a fair and generous employer. Nevertheless, it is recognized that attracting labor will become increasingly more difficult as employment opportunities expan. on other coastal estates (para 2.04) and in urban centers such as Douala. Furthermore, the proposed Bank development project in the western highlands which has been recently appraised would reduce the attractiveness of migrating to find