Mali - Second Mopti Rice Project

FILE COPY Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-2168-MLI REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF MALI FOR A SECOND MOPTI RICE PROJECT November 15, 1977 This document bas a restricted distribution and may be used by recipients only In the performance of their official duties. Its contents may not otherwise be disclosed witbout World Bank authorization. |  Currency Equivalents Currency - Mali Franc (MF) US$ 1 - MF 490 MF 1 - US$ 0.0020408 MF I Million - US$ 2,041 Weights and Measures 1 hectare (ha) - 2.47 acres 1 metric ton (t) - 2,205 lbs Abbreviations ADF African Development Fund BDM Banque de Developpement du Mali DNAFLA Direction Nationale de L'Alphabetisation Fonctionnelle et de la Linguistique Appliquee EDF European Development Fund FAC Fonds d'Aide et de Cooperation GERDAT Groupement d'Etudes et de Recherches pour le Developpement de l'Agronomie Tropicale IDA International Development Association IER Institut de l'Economie Rurale IRAT Institut de Recherches Agronomiques Tropicales et des Produits Vivriers OACV Operation Arachides et Cultures Vivrieres OPAM Office des Produits Agricoles du Mali ORM Operation Riz Mopti RMWA Regional Mission in Western Africa (of the World Bank) RWD Rural Works Department SCAER Societe de Credit Agricole et d'Equipement Rural SCET Societe Centrale pour l'Equipement du Territoire USAID United States Agency for International Development WARDA West Africa Rice Development Association Fiscal Year Government Jan. 1 - Dec. 31 ORM Jan. 1 - Dec. 31  FOR OFFICIAL USE ONLY MALI SECOND MOPTI RICE PROJECT CREDIT AND PROJECT SUMMARY Borrower: The Republic of Mali Amount: US$15.0 million equivalent Terms: Standard Co-lenders: ADF and FAC Project Description: Modest expansion in the cultivated area through the construction of new polders, and consolidation of the existing project through some supplementary investments and through a strengthening of the project authority ORM. The project would comprise: construction of four polders with a total area of 8,800 ha; some improvements of polders developed under Credit 277-MLI; deep ploughing of the new polders as well as about 14,300 ha in existing polders; construction of storage facilities for paddy, farm inputs and farm equipment, of workshops, training centers, offices and staff houses; acquisition of farm machinery, civil works maintenance equipment, ferries, vehicles, workshop and office equip- ment; establishment of an adult literacy program for villages in the project area and an audio-visual program to be used by exten- sion services; applied agricultural research; agricultural credit for fertilizer and farm implements; technical assistance for project management and ORM staff and operating costs during the project period to the extent that they are attributable to the expansion of the project area. Estimated Costs: The estimated cost of the project, excluding taxes and duties, is US$26.3 million equiva- lent, including a foreign exchange component of US$19.0 million. Taxes and duties are estimated at US$4.9 million. Details are as follows: This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Source Foreign of US$ Million Exchange Financing 1/ Local 2/ Foreign Total % Civil Works IDA/FAC/ADF 3.9 6.0 9.9 61 Deep Ploughing IDA/FAC/ADF 1.1 1.9 3.0 62 Buildings IDA/FAC 1.0 0.5 1.5 35 Engineering and Supervision IDA 0.2 0.3 0.5 59 Vehicles and Equipment IDA/FAC 0.5 1.7 2.2 78 Adult literacy and Audio- visual Program; Applied Agricultural Research FAC 0.2 0.3 0.5 55 Incremental Staff and Op. Cost IDA/Gvnt. 0.9 0.3 1.2 28 Technical Assistance IDA/FAC - 1.3 1.3 100 On-Farm Investment IDA/Farmers/Gvnt. 0.9 1.1 2.0 53 Subtotal Mopti II Rice Project 8.7 13.4 22.1 61 Assistance to RWD IDA/FAC 0.4 0.6 1.0 63 Total Base Cost 9.1 14.0 23.1 61 Physical Contin- gencies (8.8%) 0.8 1.2 2.0 60 Price Contingenc- cies (26.4%) 2.3 3.8 6.1 62 Total Expected Project Cost 12.2 19.0 31.2 61 1/ Excluding taxes (US$4.9 million) to be financed by Government. 2/ Including taxes. N.B. Figures in US$ do not always add up due to rounding.  Financing Plan (net of taxes) US$ Million % IDA 15.0 57 FAC 2.0 8 ADF 6.0 23 Government 1.3 5 Farmers 1.9 7 Total 26.3 1/ 100 Estimated Disbursements: IDA Fiscal Year Cumulative Disbursements 79 1.2 80 4.4 81 8.7 82 12.7 83 14.5 84 15.0 Procurement Arrangements: Contracts for vehicles and equipment (US$2.2 million) as well as for civil works (US$5.5 million) and deep ploughing (US$1.5 million) to be financed jointly by IDA and FAC would be awarded on the basis of international com- petitive bidding in accordance with IDA guide- lines. Contracts for the construction of houses, offices, workshops and stores (US$1.4 million) would be awarded on the basis of competitive bidding advertised locally in accordance with local procedures acceptable to IDA. Bidding for small lots, rather than for all construction works, would be permit- ted. Miscellaneous items of equipment and 1/ Figures do not add up to total due to rounding.  furniture up to a contract value of US$50,000 would be procured on the basis of local competitive bidding according to procedures acceptable to IDA. For contracts of less than US$20,000 direct procurement on the basis of several quotations would be accept- able. Domestically manufactured goods would be allowed a preference of 15%, or the level of import duties, whichever is lower. Technical Assistance: The following specialists would be employed: - one extension specialist (5 years); - one agricultural economist (2-3 years); - one workshop manager (5 years); and - one accountant (4 years) Their cost including contingencies would average US$88,000 per man-year. Rate of Return The economic rate of return of the project is estimated to be 18% over 25 years. Appraisal Report: 1561c-MLI Map: IBRD 12839  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF MALI FOR A SECOND MOPTI RICE PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Republic of Mali in an amount equivalent to US$15.0 million on standard IDA terms to help finance an agricultural develop- ment project. The French Fonds d'Aide et de Cooperation (FAC) is expected to provide co-financing in the form of a grant equivalent to US$2.0 million and the African Development Fund (ADF), would provide a loan of US$6.0 million equivalent on IDA terms. PART I: THE ECONOMY 1/ 2. A report on "Recent Economic Developments in Mali" (233a-MLI) was distributed to the Executive Directors on September 27, 1973. An economic mission visited Mali in March 1976 and again in February 1977. Its con- clusions are reflected in the following paragraphs. 3. With a per capita GNP of $100 in 1976 Mali is one of the poorest countries of Africa and amongst the 29 least developed countries identified by the United Nations. It is handicapped by serious obstacles to development. The extreme variability of rainfall causes sharp fluctuations in crop and live- stock production. Access to foreign markets is made difficult by its landlocked position and the long distances - more than 1000 km - to the nearest seaports, Abidjan and Dakar. Development is also constrained by the shortage of skilled manpower and the narrow domestic market for industrial products. About 90% of the population depends for a livelihood on crop farming, animal husbandry, forestry and fishing. Exports consist almost entirely of agricultural commodities and livestock. The relative contribution of the primary sector to GDP declined from 43% in 1972 to 36% and 33% respectively in the drought years 1973 and 1974. It rose again to 38% in 1975 after the recovery of agriculture crop production. 4. Over the fifteen years following independence economic growth has barely kept ahead of the growth of population. During the 1960s GDP, in real terms, increased at an average annual rate of 2.8%. During the drought of the early seventies, GDP declined; and Mali's problems were further aggravated by international inflation, excessive credit expansion and growing budget and balance bf payments deficits. The Government has initiated action to redress major financial imbalances through credit restraint, substantial reduction of the subsidy element in the prices of essential consumer goods, fertilizers and agricultural equipment and through improved tax collection. Good crop seasons 1/ Substantially identical to the Economic background section of the Presi- dent's Report, Mali - "Second Education Project" dated June 24, 1977.  -2 - and 1976 facilitated the implementation of these measures. Though the growth potential is significant, serious structural problems remain. The drought years: 1972-1974 5. All economic sectors have in varying degrees been affected by the recent drought, and their recovery is following different patterns. The extent of loss of human lives is not known but has been severe among some groups, particularly nomads and among them more so the elderly and the child- ren. From an estimated 5.5 million head in 1971 the cattle herd was reduced by 15 to 20% as a consequence of the drought. 6. During the drought years the rate of investment was maintained at about 14-16% of GDP with the aid of an increasing inflow of external resources. The resource gap is estimated to have widened to nearly a third of GDP in 1974, an extraordinary level by any standards. In an effort to keep essential supplies at a sufficient level and retail prices for basic goods low, especially in urban centers, the government resorted to large imports of cereals, only partly financed by external aid, and consumption subsidies. Thus, cereal imports shot up from 64,000 tons in 1972 to 235,000 tons in 1974, at a time when the average import price trebled and the bill for imported petroleum doubled. To finance losses incurred by state enterprises charged with imports and sales of subsidized goods, growing amounts of bank credit were used. The GDP deflator, reflecting subsidization through officially controlled prices, increased at an annual rate of only around 5-6% between 1970 and 1974, although prices in the open market had risen more steeply after the onset of the drought. As supplies of exportables were affected by the drought, exports receipts did not increase as much as the favorable world prices would have permitted and the policy of price containment and subsidi- zation translated into very large external deficits. At the end of 1974, net foreign assets of the banking system were minus MF 61.9 billion (US$129 million) principally in the form of liabilities with the "operations account" at the French treasury. Uneven recovery: 1975-1976 7. Normal rainfall resumed in 1975 and primary production--cereals, as well as cotton and groundnuts--increased by more than 20% and total GDP by an estimated 12%. Recovery of physical production, however, was accom- panied by a sharp rise in the GDP deflator of about 18% in 1975 owing to a substantial reduction in Government subsidies and increases - ranging from 33 to 60% - in the official producer prices of main crops. While the resource gap was reduced it remained high, representing about 20% of GDP and foreign assets declined further to minus MF 88 billion (US$184 million). Public dissaving continued to increase as growth of revenues lagged behind fast rising expenditures, particularly expenditure on personnel. The wage bill increased rapidly because of cost of living adjustments and the policy of government to serve as residual employer of nationals who complete secondary or higher education. Current revenues did increase significantly as a result of efforts to improve tax collection, but not enough to keep pace with rapidly  -3- growing expenditures. The current budget deficit widened from 5.1 billion MF in 1972 to 10.5 billion MF in 1975, or about 36% of total current revenues. 8. In 1976, real growth of GDP continued though at a moderate pace (4 to 5%). At the same time, a slower rate of world inflation and redressal measures by the government have begun to have a favorable impact in the financial sphere. 9. Credit expansion was reduced sharply, the overall increase in out- standing indebtedness of the economy to deposit banks being of the order of 10% over the first nine months of 1976. At the beginning of the year the Central Bank discount rate was raised from 3.5 to 6.0% with corresponding increases in the whole set of borrowing and lending rates of deposit banks. And a new banking law, providing for legal minimum cash reserve and liquidity ratios, is to be promulgated soon. The rate of inflation slowed in 1976, even though prices of sugar, soap and groundnut oil had been raised in 1975 and power tariffs as well as prices of gasoline and kerosene were in- creased in 1976. Producer prices of agricultural products, with the ex- ception of groundnuts, remained unchanged. 10. The balance of payments deficit in 1976 is provisionally estimated to have come down by US$21 million to US$33.2 million. As in the past the deficit was largely financed through the "operations account". The improve- ment in the balance of payments is attributable essentially to higher volume and prices of cash crop exports, exports of foodgrains, some debt rescheduling and larger capital inflows and higher transfer receipts. Despite this, Mali's net foreign assets have somewhat further decreased, and at the end of 1976 were practically at minus MF 103.7 billion (US$217 million). The overall budget deficit for 1976 was still uncomfortably large (MF 10 billion) and it is unlikely to be significantly smaller in 1977. Foreign capital and debt 11. Public investment is mainly financed by foreign aid. During most of the sixties the USSR and the People's Republic of China were the most important aid donors. At the end of 1975, they held in roughly equal propor- tions, nearly 57% of Mali's external public debt disbursed and outstanding. Gross disbursements (grants and loans) from DAC sources increased from US$24 million in 1969 to US$108 million in 1974. Roughly 60% came from bilateral sources (mainly France, United States, Germany and Canada). Since the early seventies the amount of public aid received by Mali has increased very rapidly and grants account for most of the increase. The average annual gross inflow of aid was less than US$20 million in early 1970-71, reached US$50 million during:the first years of the drought (1972-73), peaked at US$112 million in 1974 and has decreased only marginally since then. Four-fifths of total aid since 1970 has been in the form of grants. 12. Mali's external public debt outstanding at the end of 1975 (ex- cluding drawings on the operations account with the French treasury) was US$471.0 million, including an undisbursed amount of US$144.0 million.  - 4 - IDA's share in the total amount disbursed and outstanding was 12.5%. Repay- ments of principal and interest due in 1975 would have claimed more than a quarter of foreign exchange earnings, but actual debt service payments have been small (2.8% in 1974, 3.1% in 1975) owing to the rescheduling since 1970 of Chinese, Russian and some other debts under short-to medium-term arrange- ments. However, projections indicate that the actual debt service ratio may go up to about 19% by 1980, unless some further rescheduling of debt takes place. Mali received five stand-by credits from the IMF between 1964 and 1971 which have been repaid. Apart from the stand-by credits Mali drew SDR 5.00 million under the 1974 oil facility and obtained another credit of SDR 3.99 million (in March 1976) under the 1975 oil facility. Development prospects 13. The return of better weather conditions has strengthened the eco- nomy's short run position. In the medium and long term, the government must address two sets of interrelated objectives. The first is to correct the pro- found financial imbalances that have developed over the years, especially since the early seventies; the second is to accelerate the pace of economic growth against a background of minimal improvement in per capita income since 1960. 14. The government has, since 1975, begun to tackle its financial problems and has been relatively successful in readjusting some key prices to more realistic levels. Thus, incentives to agricultural production are stronger; consumer prices more closely reflect economic costs, the burden of subsidies has been somewhat alleviated and credit expansion has slowed down. Reform of public enterprises has been undertaken, but is unavoidably a very gradual task; the budget is still unbalanced but the government is now seri- ously reconsidering its employment policy with a view to make it more selec- tive so as to check the growth of current expenditure; the external accounts now benefit from a stronger export performance which is expected to continue. However the reconstitution of external reserves will take some time. 15. Prospects for long-term growth are probably better than in other Sahelian countries. Agriculture has considerable potential for expansion both in the South where rainfed agriculture meets favorable conditions and in the vast inland delta of the Niger river. The river also offers much potential for power development to support industrial and mineral development. Planned investment in new capacity for cotton seed oil extraction and cotton textiles for export together with expanding crop and livestock production, will eventually help strengthen the balance of payments. Mineral resources (iron ore, phosphates) remain at present unexploited but may offer interesting longer term development possibilities. 16. The Five-Year Social and Economic Development Plan (1974-1978) gives high priority to agriculture, water and power development, industries  processing agricultural materials and road transport. The pattern of invest- ment is well conceived, and allocation conforms broadly to the resource endow- ment of the economy, but the size of the investment program, now estimated to cost 800 billion MF (about US$1.6 billion), is no doubt over-ambitious, which means that difficult choices will have to be made. Implementation of the plan has encountered serious internal and external resource constraints, and the objectives for investment outlays are being revised downward. At the same time, with regard to new investments, priority is currently being given to food crops while in the longer run greater emphasis is expected to be placed on export crops, animal husbandry, minor irrigation works and the more effi- cient manufacturing activities. However, in the selection of projects, especially capital intensive undertakings, more attention should be paid to economic factors. 17. The prospects for the Malian economy have improved following the marked increase in output over the last two years and the stabilization mea- sures taken by the Government. Nevertheless, sustained and viable growth in the longer run depends crucially on investments that will strengthen the economy's export base and reduce its dependence on imports. Mali's capacity to finance new investment, however, is severely constrained by the limited savings potential resulting from the extremely low per capita income level, a situation further complicated by serious financial difficulties in the public sector. Borrowing on conventional terms would add considerably to the burden of servicing an already sizeable external debt. External aid, accordingly, should be on soft terms and finance, besides foreign exchange outlays, a significant proportion of local currency costs. PART II: BANK GROUP OPERATIONS IN MALI 18. The proposed credit would be IDA's fifteenth operation in Mali, which would bring total commitments of IDA funds to US$144.2 million. Actual commitments so far amount to US$129.2 million. US$60.9 million has been disbursed as of September 30, 1977. Of the fourteen credits already approved, six have been directed to the transport infrastructure, five to agriculture, one in telecommunications and two in education. Transportation represents the largest share (48%) of our past commitments followed by agriculture (nearly 38%). A summary statement of these credits as well as notes on the execution of ongoing projects are set out in Annex II. 19. Experience with most ongoing projects has been satisfactory. However, the telecommunications project experienced some difficulties which have now been remedied as reflected in an amendment which was approved by the Board on July 21, 1976. The Second Highwqay Project faced some cost over- runs due mainly to a delay in bid opening of more than one year and the actions needed to deal with exchange fluctuations, and the Board of Directors approved in June 1975 a supplementary Credit of US$8.3 million to cover part of these overruns. In addition, a dispute between the contractor and the Government was recently settled following extensive discussions between the two parties. Other items of the project are either completed or well under way.  - 6 - 20. The Bank Group and other external agencies have financed some ten major agricultural development projects which geographically cover most of the country's cultivable area and benefit the majority of farm families, or about 90% of Mali's population. Initial Bank Group's operations in this sector have assisted Mali in developing rice production in the Niger flood plains for internal consumption. Subsequent projects financed by the Bank Group have helped develop groundnuts, cotton, kenaf, rainfed cereals and livestock production, while at the same time improving human health condi- tions, farmers' education and training of young farmers and rural artisans. In addition three of the six projects financed in the transportation sector are directly related to the rural sector. 21. Agriculture and livestock undoubtedly will continue to provide the main development possibilities for Mali's largely rural population; semi- autonomous state agencies ("Operations de Developpement") are the main channel for external investment in these sectors. Because of the droughts in the 1968-74 period, these "Operations de Developpement" have broadened their acti- vities to include food crops and livestock to permit farmers greater self- sufficiency. Increasingly, these "Operations de Developpement" are being used by the Government as vehicles for delivery of social services, specifically functional literacy for adult farmers and preventive health care at the village level. 22. The main objectives of Bank Group lending in the future are: (a) to promote agricultural development so as to raise incomes in the rural sector, to help the country attain some degree of food self-sufficiency as well as generate adequate supplies of agricultural materials for processing indus- tries and exports; (b) to strengthen the infrastructure facilities; and (c) to mobilize resources from other donors through co-financing. These overall objectives are in line with the priorities established in the Government's Five-Year Development Plan. Preparation is under way for a groundnuts/ cereals project to follow up the Integrated Rural Development Project (Credit 491-MLI). At the Government's request the Bank is exploring the possbility of offering some assistance to the Office du Niger for a large irrigation scheme on the Niger river. An afforestation project as well as a second livestock project are scheduled for FY80. As for infrastructure, a fourth highway project which could include primary road rehabilitation, a program of road maintenance and a program of feeder roads, is being considered for FY 80. The emphasis on rural development and infrastructure, however, does not preclude Bank Group financing in other areas. An urban project is scheduled for FY 79, and is designed to improve living conditions through a basic package of urban services emphasizing environmental sanitation and rehabilitation of existing facilities. A small scale industries' project, which would consist of tech- nical and financial assistance to sumall and medium-sized industries, assist- ance to artisans and a pilot project to rehabilitate a few public industrial enterprises, is also envisaged for FY79.  - 7 - PART III: THE RURAL SECTOR 23. About 90% of Mali's population depends for its livelihood on agri- culture and allied pursuits which accounted for 38% of GDP in 1975. Raw or processed agricultural commodities and livestock form the largest part of exports. Cotton, the single most important exchange earner, accounts for more than 30% of the value of exports which is nearly as much as the com- bined export proceeds from groundnuts and livestock, the other major export commodities. There are some two million hectares under permanent cultiva- tion, 90% of which is rainfed and the rest irrigated. Small family farms, under traditional rainfed cultivation, have 90% of their area under cereal crops (millet and sorghum) and the rest under cotton and groundnuts, the main cash and export crops. Of the area under irrigated cultivation, some 50% is cultivated traditionally by individual farmers, with the rest under the "Operations de Developpement" where improved methods are applied. At present all irrigated lands (40,000 ha) are under rice except 1,300 ha, which are under sugar cane. No cotton is presently grown under irrigation. 24. Development efforts until recently were directed mostly at export crops while cereals, particularly millet and sorghum, suffered from com- parative neglect. Cash crop production developed more rapidly and was less affected by the recent drought than cereal farming. Total production of cereals declined from 1.1 million tons in 1967/68 to an average 0.8 million tons during the drought years 1972-73 and 1973/74 while seed cotton output increased from 42,000 to 65,000 tons and the groundnut crop fell only from 118,000 tons to 104,000 tons. Agricultural production increased substantially over the last two years as a result of good rainfall and higher producer prices for both cash and food crops. Total rainfall was above average in 1974/75, average in 1975/76 and about average, but with an unfavorable dis- tribution in 1976/77. Production of cereals, including paddy, is estimated to have risen to 1.15 million tons in 1974/75 and 1.2 million tons in 1975/76. Cotton and groundnut crops in 1975/76 reached the unprecedented levels, of 103,000 and 200,000 tons respectively. Cotton production in 1976/77 main- tained the preceding year's level in spite of less favorable weather conditions while groundnut productions fell by some 15% as a consequence of the decreasing attractiveness of the official producer price. Mali's livestock population in the early seventies (some 5.5 million cattle and 11 million sheep and goats) was reduced by 15-20% as a consequence of the drought years of 1972/73 and 1973/7 4. Losses were most severe in the eastern part of the country. Herds are being rebuilt but exports are not expected to reach pre-drought levels before the mid-eighties. Institutions in Agriculture 25. Agriculture is the responsibility of the Ministry of Rural De- velopment. Since 1969, the Ministry has delegated important functions to the Operations de Developpement, institutions charged with agricultural development in specific regions and enjoying a considerable amount of financial and managerial autonomy. Operations distribute inputs to farmers and provide extension services, training and credit as well as marketing services for export crops and part of the food crops.  - 8 - 26. Rice development is mainly in the hands of the Operation Riz Segou (financed by EDP), the Operation Riz Mopti (financed by IDA) and the Office du Niger, which is not an Operation but enjoys an even larger degree of auto- nomy. Minor rice developments are under way in the IDA-financed Mali Sud agricultural project and the USAID-financed Action Riz-Sorgho in the 6th Region (Gao). 27. Marketing of cereals is the responsibility of OPAM (Office des Produits Agricoles du Mali) which has the monopoly for domestic and foreign trade with cereals. However, OPAM is not able to enforce its monopoly in the domestic market; it handles more than half of the marketed quantity of rice and less than half of the marketed surplus of coarse grains. Until 1974, official producer prices were well below the free market price; as a consequence, OPAM purchased only marginal quantities of coarse grains and most of the rice originating in the Office du Niger, where farmers cannot escape the official marketing channel. Private traders are officially banned from wholesaling cereals but have been tolerated, to a certain extent, in recent years as attempts to eliminate them have failed. OPAM buys rice from the Office du Niger and the Operations according to price schedules establi- shed annually in a negotiation process between the rice producing entities and Government agencies. These schedules ("baremes") specify the charges for collection, bagging, losses, and milling which are reimbursed to the selling agency. 28. Supply of farm inputs and farm equipment is the responsibility of SCAER (Societe de Credit Agricole et d'Equipement Rural). Both annual in- puts and equipment have been sold at subsidized prices, the subsidy being financed mainly from levies on cotton and groundnuts exports. As indicated by its name, SCAER also provides agricultural credit for the purchase of farm equipment, but only to farmers covered by the activities of Operations de Developpement. SCAER does not maintain field offices, but relies on the Operations for the distribution of inputs, the sale of equipment and the recovery of credit extended. The Operations perceive a percentage of the turnover as a fee. The steep rise in the price of farm implements over the last few years forced SCAER to end subsidization of equipment sales in 1976 and to reduce subsidies on annual inputs such as fertilizer. Because of budgetary difficulties, Government considers further reducing and eventually eliminating subsidies on farm inputs. Because of SCAER's difficulties in recent years in carrying out the functions assigned to it, Government envisages transferring responsibility for the supply of inputs and equipment to the individual Operations de Developpement before the 1978/79 campaign. At the Government's request, the Association will advise on this issue and on related matters such as agricultural credit and the restructuring of output and input prices. 29. Agricultural research in Mali is coordinated by the Institut d'Economie Rurale of the Ministry of Rural Development. Most agricultural research is carried out by French research institutes organized in the Groupement d'Etudes et de Recherches pour le Developpement de l'Agronomie Tropicale (GERDAT). Rice research was, until 1976, the responsibility of  - 9 - the Institut de Recherches Agronomiques Tropicales et de Cultures Vivrieres (IRAT), which operated two research stations for floating rice and non- floating rice, respectively. As from 1976, the West Africa Rice Develop- ment Association (WARDA) has assumed responsibility for research on float- ing rice varieties. Agricultural Strategy 30. The Government of Mali has decided to give increased attention to the promotion of food crops in order to achieve self-sufficiency not only in normal years but also in years of insufficient rainfall. The current Five- Year Plan (1974-1978) reflects the Government's determination to prevent a recurrence of the food shortage experienced in 1972/73 and 1973/74. The plan's development objectives with regard to agriculture are: - to achieve self-sufficiency in food production, also in years of insufficient rainfall; - to generate adequate supplies of agricultural raw materials for industrial processing; and - to ensure increasing surpluses of primary products for exports. Food crops are to take first place in public investment. The emphasis on protecting producers and consumers against climatic hazards has resulted in a strong bias towards irrigated agriculture i.e. rice production: not less than 85% of total allocations for food production are set aside for rice and only 15% for millet and sorghum, by far the country's most important food crop (80% of cereal consumption). 31. The plan's emphasis on food production projects follows from the decision that security of food supplies ranks higher than optimal allocation of resources from a strict domestic resource cost point of view. However, the long-term domestic rice requirements had been overestimated and have been revised downwards in the meantime. The First Mopti Rice Project: Experiences and Conclusions 32. The First Mopti Rice Project, which became operational in 1972, aims at the improvement of rice cultivation conditions and techniques in the Niger flood plains. Main project components are the construction of polders (13,000 ha) along the Niger and Bani rivers, the rehabilitation of existing polders (18,000 ha), construction of offices, stores, workshops, etc. and technical assistance for the project authority, the Operation Riz Mopti (ORM). Total project cost was estimated at US$9.4 million at apprai- sal; the participation of IDA was US$6.9 million, the participation of FAC US$0.7 million. A supplementary IDA credit of US$2.6 million was approved in 1975 to offset the effects of the dollar devaluation and to finance changes in project design and certain cost overruns. FAC also increased its contri- bution by US$0.5 million.  - 10 - 33. Civil works were virtually completed in early 1977 but the drought years demonstrated the need for a revision of design standards which led to a reduction of the cultivable area from 31,000 ha to 26,000 ha. This revision has been necessary because the first years of operation of the polders showed that without a higher degree of flooding probability farmers cannot be induced to incur monetary costs for the inputs and equipment re- quired for higher yields. ORM's performance, satisfactory in other respects, needs to be improved for extension work, applied research, farm machinery use and seed farm management. Yield increases have been attributable mainly to the rapid adoption of improved rice varieties while cultivation techniques, in particular weeding practices, have remained close to the traditional extensive style the farmers practised before joining the project. 34. An unexpected development was the high percentage of non-farmers among the participants, particularly in the polders close to the town of Mopti. A high percentage of nonfarmers is undesirable from the point of view of income distribution since one of the main objectives of the project was to provide economic opportunities for farmers. Consequently, assurances have been obtained at negotiations that farmers will have priority in land allo- cation under the proposed project (Section 3.05 of the draft Development Credit Agreement). While the average farm size (2.4 ha) is well below appraisal estimate (4 ha) it appears that a small percentage of participants occupy inordinately large holdings - up to more than 20 ha. Although no data are available which allow to correlate yields to farm size it is thought that these holdings may be a major factor contributing to the stagnation of cultiva- tion techniques and yields in 1975/76. Assurances have been therefore obtained at negotiations that in the new polders to be developed not more than 2 ha would be alloted per active male family member, (see Section 3.05 of the draft Credit Agreement). 35. The project is expected to show a rate of return close to the 14X estimated at appraisal, the reduction in cultivable area and increase in pro- ject cost having been offset by a substantial increase in the economic price of rice. The project has a considerable impact on the region's economy, and demands for land allocation far exceed the available areas developed under Credit 277-MLI. PART IV: THE PROJECT 36. The project is based on the findings of a November 1976 appraisal mission. Negotiations were held from October 3 to 6, 1977, with a Malian delegation led by H.E. Sori Coulibaly (Minister of Rural Development). The appraisal report (No. 1561c-MLI) is being circulated separately to the Execu- tive Directors.  ProJect Concept 37. Project area: The project is in the Niger flood plains which extend over more than 500 km with widths varying between 150 km and 200 km. Flood levels are sufficiently shallow to allow cultivation of submerged rice. Farmers cultivate about 2 ha of rice and on average 1.4 ha of rainfed land for millet and some secondary crops. About 100,000 ha of paddy are estimated to be cultivated by traditional extensive methods in the flood plains. 38. ObJectives, components and special features: The proposed project would aim at a moderate expansion in the cultivated area through construction of new polders; the improvement of rice cultivation conditions and techniques in the new polders as well as in the existing ones, and the strengthening of the project authority ORM. At full development, it would reach a popula- tion of about 90,000 in an area with few alternative economic opportunities. The project would consist of: - construction of four polders with a total area of 8,800 ha; - some improvements of polders developed under Credit 277-NLI; - deep ploughing of the new polders as well as of about 14,300 ha in existing polders; - construction of storage facilities for paddy, farm inputs and farm equipment, of workshops, training centers, offices and staff houses; - acquisition of farm machinery, civil works maintenance equipment, ferries, vehicles, workshop and office equipment; - establishment of an adult literacy program for villages in the project area and an audio-visual program to be used by extension services; - applied agricultural research; - agricultural credit for fertilizer and farm implements; and - technical assistance for project management and ORM staff and operating costs during the project period to the extent that they are attributable to the expansion of the project area. The project would also provide for assistance to the Study Bureau of the Rural Works Department (RWD) in Bamako, consisting of an extension to exist- ing offices and the acquisition of equipment and funds for irrigation project studies. The project would begin in mid-1978 and would extend over 5 years. Like the Mopti I Rice Project and except for the assistance to RWD it would be implemented by ORM.  - 12 - 39. The following specialists would be employed to provide technical assistance for ORM: one extension specialist (5 years); one agricultural economist (2-3 years); one workshop manager (5 years); and one accountant (4 years). The technical assistance costs including contingencies would average US$88,000 per man-year. 40. While ORM farm machinery is presently underutilized, demands on tractor, seeder and thresher services are expected to increase as areas, production and, in particular, marketed production increase. Additional equipment would be required by the middle of the project period. However, assurances were obtained at negotiations that additional farm machinery would be procured only when the Association is satisfied that the existing machinery is adequately utilized. (Section 3.06 of the draft Credit Agree- ment). 41. The agricultural credit fund would be made available to ORM once responsibility for supplying farmers with inputs and equipment is transferred from SCAER to ORM (para. 28). ORM is already acting as agent for SCAER in all matters pertaining to credit made available to project farmers and should, in consequence, have no difficulty in assuming full responsibility for the credit program. Assurances were obtained at negotiations that subsidies included in fertilizer and equipment supplied by ORM to farmers in the project area would be at the charge of Government (Section 4.07 of the draft Credit Agreement). Project Cost and Financing 42. Total project cost including taxes is estimated at US$31.2 mil- lion of which the foreign exchange component would be US$19.0 million or 61%; project cost net of taxes is estimated at US$26.3 million. Physical and price contingencies amount to about 35% of base costs estimated in prices of December 1977. 43. The IDA credit would be for US$15.0 million and would finance 57% of project costs net of taxes. It would cover 59% of foreign exchange costs and 53% of local costs net of taxes. Mali would receive further assistance from FAC (US$2.0 million; joint financing with IDA) and ADF (US$6.0 million; parallel financing). A condition of effectiveness of the Credit is the ful- fillment of all conditions precedent to the initial disbursement of the FAC grant (Section 6.01 (a) of the draft Credit Agreement). Government would finance part of the staff and operating expenditures, subsidies on farm inputs and taxes evaluated at US$4.9 million. Without taxes, Government's contribution would be 5% of project cost. Farmers would contribute US$1.9 million for farm inputs, IDA and FAC would jointly finance (in a proportion of 9:1) the following project components: civil works and deep ploughing except for those parts that would be financed by ADF; buildings, vehicles and equipment; technical assistance; and assistance to RWD. FAC would fi- nance the adult literacy campaign, the audio-visual program and the applied agricultural research program while IDA would finance the engineering and supervision, agricultural credit, and 50% of incremental staff and operating expenditure of ORM. The IDA credit of US$15.0 million would be made to Gov- ernment and passed on by Government to ORM as a grant since ORM, at prevail- ing producer prices, is unable to service the credit.  - 13 - Initial Funding of the Project 44. In order to expedite project implementation and to avoid the delays experienced during the implementation of Credit 277-MLI because of Govern- ment's inability to pre-finance reimbursable expenditures, it is proposed that IDA would finance a revolving fund of US$0.6 million to be used for the pre-financing of project activities and items financed by IDA (Section 2.02 of the draft Credit Agreement). The revolving fund would be held by the Banque de Developpement du Mali (BDM). Establishment of this account is a condition of effectiveness (Section 6.01 (b) of the draft Credit Agreement). The co-lenders were encouraged to make similar arrangements. 45. The extension to the building of the RWD Study Bureau having been constructed before the date of signature of the Credit Agreement, retroactive financing of up to US$70,000 is proposed for this purpose. Procurement and Disbursement 46. Contracts for vehicles and equipment (US$2.2 million) as well as for civil works (US$5.5 million) and deep ploughing (US$1.5 million) to be financed jointly by IDA and FAC would be awarded on the basis of international competitive bidding in accordance with IDA guidelines. Contracts for the con- struction of houses, offices, workshops and stores (US$1.4 million) would be awarded on the basis of competitive bidding advertised locally in accordaaice with local procedures acceptable to IDA. Bidding for small lots, rather than for all construction works, would be permitted. Miscellaneous items of equip- ment and furniture up to a contract value of US$50,000 would be procured on the basis of local competitive bidding according to procedures acceptable to IDA. For contracts of less than US$20,000 direct procurement on the basis of several quotations would be acceptable. Domestically manufactured goods would be allowed a preference of 15%, or the level of import duties, which- ever is lower. 47. The IDA credit would be disbursed to cover 90% of net of tax costs of civil works and deep ploughing not covered by the ADF credit; buildings; vehicles and equipment; technical assistance to ORM; and assistance to RWD; 100% of net of tax costs of engineering and supervision and agricultural credit; and 50% of the incremental staff and operating expenditures of ORM. Rice Production, Yields, Markets and Prices 48. The project would lead to an incremental production of 34,000 tons of paddy at full development in 1985, of which 15,000 tons would originate from the new polders and the remainder from existing polders that would be improved under the project. Yields would rise, on average, to 2.00 t/ha while without the project, yields would be 0.7 t/ha in traditional cultiva- tion and about 1.8 t/ha in the Mopti I polders. The project would help to fill the supply gap projected for Mali in the early 'eighties; until that time, it would provide a desirable safety margin against shortfalls in do- mestic supplies that are likely to occur from time to time, with varying  - 14 - severity, because of poor rainfall and flood levels. Any remaining sur- plus that would not be absorbed by domestic demand could be accumulated for the reserve stock which Government plans to build up as a protection against future droughts. In consequence, the economic price of rice has been based on the import substitution price. The share of production mar- keted by official channels, which would rise to 45 percent in 1983, would be consumed in Bamako while the remainder would be home-consumed or sold through private trading channels. 49. Most of the paddy produced by ORM would be milled at Sevare and Diafarabe. The capacity of the Chinese-built mill in Sevare is expected to be fully used by ORM production by 1981. Assurances were obtained at negotiations that Government would take action to ensure that rice-milling capacity in the project area will be expanded in line with the increase in paddy production (Section 4.03 of the draft Credit Agreement). 50. The producer price of paddy remained unchanged at MF 40/kg from mid 1974 until autumn 1977. While initially this price provided a strong incentive, it has been progressively eroded by inflation and the reduction of Government subsidies on farm implements. In 1977, the price for paddy paid by private traders was consistently higher than the official producer price. The latter was increased to MF 45/kg before the 1977/78 campaign but this increase is not sufficient to offset the effect of inflation. The Government advised during negotiations of its intention to increase the pro- ducer price of paddy to at least MF 50/kg before the 1978/79 campaign. The Government also agreed to ensure that the price is periodically adjusted in such a way as to provide sufficient incentive to farmers (Section 4.04 of the draft Credit Agreement). The financial analysis in this report is based on the assumption that the producer price of paddy will have been raised to MF/50 before the beginning of the 1978/79 campaign. 51. The consumer price of rice has also been stable at MF 111.5/kg (for the most common quality) from mid 1974 until autumn 1977. This price became increasingly out of line with real costs of production, which resulted in substantial subsidies for urban consumers. In autumn 1977, prices were in- creased by about 25% to a level close to both actual cost of production and the 1977 import substitution price. Reimbursements to ORM for paddy collec- tion, bagging and transport to the mill as well as the allowance for losses appear to be adequate. Assurances were obtained at negotiations that the price schedules for these items, which are vital for ORM's financial equilib- rium, would be kept at such a level as to reflect actual cost to ORM (Section 4.05 of the draft Credit Agreement). Organization and Management 52. Except for the assistance to RWD, the project would be carried out by ORM. Technical assistance would be increased to its 1976 level of four professionals but the profile of technical assistance will be redefined to ensure maximum support for the critical areas of ORM activities, such as extension work, use of farm machinery, seed farm management and applied research (see para 39).  - 15 - 53. The adult literacy program would be implemented by ORM with the support of the Direction Nationale de l'Alphabetisation Fonctionnelle et de la Linguistique Appliquee (DNFLA). Agricultural research would be carried out by ORM with scientific guidance from the Institut d'Economie Rurale and the West Africa Rice Development Association. The agricultural credit fund would be administered by ORM once responsibility for providing farmers with inputs and credit is transferred to that agency in the first half of 1978. Execution of civil works, deep ploughing and construction of buildings would be supervised by the Rural Works Department (RWD) which has worked out an agreement with ORM spelling out arrangements for procurement of equipment, hiring of personnel and schedules of disbursements by ORM to RWD. This agreement has been approved by IDA. Assistance to RWD would be implemented directly through the Ministry of Rural Development, of which RWD is a part. Farmers' Benefits, ORM Revenues, Government Budget 54. Farmers would benefit from the much higher security of flooding in the polders compared to cultivation under uncontrolled flooding. Farmers' income from rice cultivation would rise from US$100 per family in traditional cultivation to US$400 in the most representative case and up to US$550 if fer- tilizer is used. Without the project, most farmers' incomes in the Mopti I project area would stagnate at about US$300. This projection is based on Government's assurance that the producer price of paddy will be increased from MF 45/kg to MF 50/kg in 1978. 55. In order to safeguard ORM's financial position and to ensure that farmers in the project area make an equitable contribution towards project cost, the development levy would be raised above the level envisaged under the first Mopti Rice Project. Assurances were obtained at negotiations that the current policy of periodically raising the development levy would be con- tinued until a levy of 240 kg/ha is reached in 1982. (Section 4.06 of the draft Credit Agreement). With these levies and with statutory reimbursements from the rice marketing agency, ORM is expected to meet its recurrent expendi- ture including equipment renewal and to recover about 35% of investment. Gov- ernment would save important consumer subsidies on rice imports which would become necessary, without the project, towards 1983. The net savings would amount to US$1.1 million annually at full development. Including this in- direct recovery, about 90% of total project cost would be recovered over the project period. Health 56. The first Mopti Rice Project has been in operation for five years. Although no survey of disease prevalence attributable to the project has been concluded, reports of public health officials indicate that there has been no demonstrated negative impact on the prevalence of water-associated diseases such as schistosomiasis. Malaria is the key health problem in the project area with an estimated 80% of the population below 30 years of age infected. The prevalence of diarrheal diseases, including cholera, amebiasis and salmo- nellosis, and of urinary schistosomiasis is also high. The Association is planning a sector review of health problems in Mali.  - 16 - Economic Justification and Risk 57. The economic rate of return of the project is estimated to be 18% over 25 years. The sensitivity test show that the rate of return would still be acceptable even if benefits were 20% lower than projected. 58. The project's main risk is inherent in the system of controlled flooding which depends both on sufficient and timely rainfall and on suffi- cient and timely flooding. Although the flooding probability would be much enhanced as a consequence of the project, a residual uncertainty remains. This is the price to pay for an otherwise very economic production system. PART V - LEGAL INSTRUMENTS AND AUTHORITY 59. The draft Development Credit Agreement between the Republic of Mali and the Association, the Recommendation of the committee provided for in Article V, Section 1, (d) of the Articles of Agreement of the Association and the text of a draft resolution approving the proposed Credit are being distributed to the Executive Directors separately. 60. Special conditions of the project are listed in Section III of Annex III of this Report. Fulfillment of all conditions precedent to the initial disbursement of the FAC grant, and the opening of the Special Account by the Borrower, would be special conditions of effectiveness of the agree- ment. PART VI - RECOMMENDATION 61. I recommend that the Executive Directors approve the proposed Credit. Robert S. McNamara President by J. Burke Knapp Attachments Washington D.C. November 15, 1977  ANNEX I TABLE 3A 'age 1 o I pages MALI - SOCIAL INDICATORS DATA SHEET LAND AREA (THOU KM2) MALI REFERENCE COUNTRIES (1970) TOTAL 1.240.0 MOST RECENT CENMRAL AF".I. AGRIC. 417.0 1960 1970 ESTIMATE NIGER - SENEGAL.- GNP PER CAPITA (USS) 40.0* 70 .0i 100.0 /a*: 100.0* 170 0 * POPULATION AND VITAL STATISTICS _______________________________ POPULATION (MID-YR. MILLION) 4. 1 5. 1 5.E /a 4 0 1.6 4 4 POPULATION DENSITY PER SQUARE KM. 3.0 4.0 5.0 /a 3.0 3.0 22.0 PER SO. KM. AGRICULTURAL LAND i0.0 12 .0 11. a 22 .0 27.0 39.0 VITAL STATISTICS CRUDE BIRTH RATE ('THOU, AV) 50.1 49.6 SO.I 52.3 45 4 47.6 CRUDE DEATH RATE (/THOU AV) 32.4 27 .8 25.9 25 7 26.4 24.4 INFANT MORTALITY RATE (/THOU) 123.0 120 0 1.56 0 LIFE EXPECTANCY AT BIRTH (YRS) 34.7 37.2 38.1 38.5 39.0 40.0 GROSS REPRODUCTION RATE 3.8 3.3 3. 3 3.5 2.9 3.0 POPULATION GROWTH RATE (%) TOTAL 1.9 2.2 2.3 /b 2.8 2.2 2.6 URBAN 2.8 4.3 4.5 7S 6.3 7.2 6.0 URBAN POPULATION (X OF TOTAL) 9.9 12.1 13.4 8.2 30. 1 29.0 AGE STRUCTURE (PERCENT) 0 TO 14 YEARS 42.2 49.1 .. 44.5 42.1 41.2 15 TO 64 YEARS 54.5 49.3 .. 52.6 54.8 54.9 65 YEARS AND OVER 3.3 1i6 .. 2.9 3.1 3.9 AGE DEPENDENCY RATIO 0.8 1,0 .. 0.9 0.8 0.8 ECONOMIC DEPENDENCY RATIO 0.8 a 0. ! /a 1.0 /a 0.9 /a 1.2 /a FAMILY PLANNING ACCEPTORS (CUMULATIVE, THOU) .. .. .. .. . USERS (% OF MARRIED WOMEN) .. . . .. . EMPLOYMENT TOTAL LABOR FORCE (THOJSAND) 2300.0 2800.0 1900.0 820.0 1600.0 LABOR FORCE IN AGRICULTURE (%) 94.0 91.0 .. 91.0 91 0 73.0 UNEMPLOYED I% OF LABOR FORCE) .. .. .. .. . 7.0 INCOME DISTRIBUTION X OF PRIVATE INCOME REC'D BY- HIGHEST 5% OF HOUSEHOLDS .- .. .. .. HIGHEST 20% OF HOUSEHOLDS .- . LOWEST 20% OF HOUSEHOLDS .- .. . LOWEST 40% OF HOUSEHOLDS .. .. .. .. DISTRIBUTION OF LAND OWNERSHIP % OWNED BY TOP 10% OF OWNERS .. .. .. .. . % OWNED BY SMALLEST 10% OWNERS .. .. .. .. HEALTH AND NUTRITION POPULATION PER PHYSICIAN 39000.0/A 41490.0 37570. 0 58260.0 38120.0 16640 0 POPULATION PER NURSING PERSON 4650.0E C3860.0 2800.0 [C e 7040.0 1280.0 /b 2680 0 POPULATION PER HOSPITAL BED 1490.07 390. 0/A) 1380.0 a 2230.0 460.0 810.0 /b PER CAPITA SUPPLY OF - CALORIES I% OF REQUIREMENTS) 90.0 92 .0 88.0 93.0 96 0 97 0 PROTEIN (GRAMS PER DAY) 66.0 69.0 64.0 72 0 48.0 64 0 -OF WHICH ANIMAL AND PULSE *- 23.0 3 24.0 lb 22.0 28.0 /C DEATH RATE (/THOU) AGES 1-4 *- * * * * * * - EDUCATION ADJUSTED ENROLLMENT RATIO PRIMARY SCHOOL 7.0 20.0 21.0 I 14.0 73.0 38.0 /d SECONOARY SCHOOL 2.0 3.0 1.0 5.0 15.0 7 e YEARS OF SCHOOLING PROVIDED (FIRST AND SECOND LEVEL) 12.0 12.0 12.0 13.0 10.0 13.0 VOCATIONAL ENROLLMENT (% OF SECONDARY) 15.0 /e 40.0 3.0 12.0 7.0 ADULT LITERACY RATE I%) 5.0 * 10.0 * * 1 0.0 HOUSING PERSONS PER ROOM (URBAN) .. .. .. .. OCCUPIEO DWELLINGS WITHOUT PIPED WATER (%) .. .. .. .. . ACCESS TO ELECTRICITY (X OF ALL DWELLINGS) .. .. .. .. RURAL DWELLINGS CONNECTED TO ELECTRICITY (%) *- * * * . CONSUMPT ION RADIO RECEIVERS (PER THOU POP) 2.0 12.0 14.0 C 3G.0 30.0 69.0 PASSENGER CARS (PER THOU POP) 2.0 1.0 * 1 .0 4. 0 9.0 ELECTRICITY (KWH/YR PER CAP) 4.0 11 .0 15.0 10.0 29.0 73.0 NEWSPRINT (KG/YR PER CAP) *- * * * 0.1 SEE NOTES AND DEFINITIONS ON REVERSE  ANNEX I Page 2 of 4 pages Uinl-es otherwise noted, data for 1960 refer to soy year between 1959 and 1961, for 1970 between 1966 and 1970, and for Msat Recent 8stimat. between 1973 and 1975. GNfP per capita data are bas.ed on the World Bank Atlas methodolofcr (1974,-76 basie). Senegal has been selected an an objective country since its GNP pee capita (1970) is about three times that Of Mali, setting aimubitiou.a but not unre&alitic target. Both countries lie in the Saheliqo cone, Senegal being Mall's western neighbor, has similar Production Patterna, With groundnuts playing a ajor role; end sinilar ennetary arransgem.ensc with France. Their population, are roughlzy compsrable. MALI il60 /a Ratio of population under 15 and 65 and over to total labor force.; A5 1962; /5 Government personnel, incIuding nidwiven and assiatant nurses; /5 Government hospital establisht,ents only; /e Not including private vocational schools. 1970 5,% PAtio of population under 15 and 65 sod over to total1 labor force; A5 Government hospital establishments; Le 1964-66. MOVST RECENfT ESTIMATE: /5 1.976; /b 1970-75; /5 -1977; /d Government only; Le I_ncluding assiotantnunc /15 1971. n2aE 1970 /5 Ratio of population under 15 and 65 and Over to total labor force; A5 1964-66. IFTyCAS, RYRICAIi 9'4IRE 197 La Ratio of population under 15 and 65 and Over to total labor force; /b Includinig midwives, a.sintant midwives and assistant ndrsgs. ilniGAs, 1970 /a Ratio of population under 15 and 65 and over to total labor force; /5 Government hoapital eatablishnents; /5 1964-66; Ld Unadjusted; /e inuer secondary level. R6, July 19, 1977 DEFNITInONS SF SOCIAL DIDICATORS ist1sd t. urea th r..ha PPonuitio c uring par.o. - PcpcI.tioa divided by -ubte Of pr-ctIcing mcci - otal soface ar acoprising Ied area and ilsisd waters, m-le sed f-s1. grad uct euss*tr-ind" or "criid us. ad AAoi.. - M,t -ecntea tast of agrinuitu..i sees used tespac-rily or Pem- auxiliary PeraOIns1s with -trinin or nxParlante. seely Rot -cv., psatruce, marbet & kitchen gardns Or tc lIes fills_. Population par h-pnitai bed - pspulation divided by .-b.r of hospital beda -vilable R pablit and priests gn..ral sand spacialisd hospital1sod GOP e cnica(515 -GNP per capita eti-tate at coces .rkmcbt prices, rhbablitatiae' ceters; excludes aursieg homes end .stabliahsasnt foe -lculated by sae ve-rirmthod as World Sash Atisa (1973-75 basis); custadisi asd preventive care. 690 970 aed 1975 Pes.Or carRie ..poll Of calores ft af Csar~ ; - oputed fces energy Population ..d lLt.1 t.tt,ti~~~~~~~~r -qoivsient af met food supplies available is country Pac capita per day, Population sed vitalf ,It ftic!.evail.bie supplies -npriss dometic peeduotien, iports lea. enparts. -ed poocietloc eid-yeer niilon) or ofJoty first tnsnsosiahbt, ever.ge chan..in S tock, net suppli. te -etuds stasI feed, seeds, qunttis sd of tw c-erc ise.1160, 1970 and 1975 data, in Rand processing and iesaea in diatributiLn; reqoi,-nca were estimated by PAO based on Phy ialogic1naldsed far normal activity and hasith consaid- Fpapultice d...elr, - per accare ha~ - Mid-year PoPulation par square kilmueter eringo emvirsmnte l tempsrsturs, body saight., age and ass dietributians of (100 hectares) of Itetl area, poPulation, and allowing 1Ot far waste at household level. PaPuiet(on deniy ersusehao arn.ln - C-puted as above for per capita supp1y af protein (setas par day) - Protein contact af per ospit. agiuecliand only. net supply a ofon ' Per day; mat upply of feud is d.fimad aa shor; rqie meats far eli -outrisa stabishlibd b'y USDA Xtonoic geaesrth Servtesa Rutnaintins provide foc a mtnioaas elosanne of 60 grass, of total protein par day, and Crd ith rtet per th-..sd. average - Aannua lice birth. Par thauand at 20 greas Of nsi.Ag and Pulse pretais, af which 10 sc,ans should he nimsnaI aid-y... pepuistios; tea-year arittintin avecasa ending Is 1960 and 1970, Pretein; those standards are leas than thase at 75 grams at total p-ateio sod fiv-y-a averge ending in 1975 for mast recnst estima te, and 23 grams of animal pr.t.in as anaeaefor the enrld, Peapased by FAOO Crude death rafte er th-ussd. e re- AnnuaI deetho per thauad af aid-year ia the Third Woald peed Surwe. PoPulation, te--Yea eoit-ti. avrage. ending in 1960 and 1970 and fiv- Per capita Oetetin suenir f;ra 'Ig' ndeue - protein eapply of fond yeartvrg eigi 95fe atrcs aia dercv-d fr-e animaels an.ussi gram par day. ifan ntliyrt C/hou; - AatnusI deethl at infants under one year af age beath rtet (/thou) age S 1-4 - A,na-I deaths per thousand in age grasp 1-4 per thac d lvbirths. yers t children is this9 agersoup; auggested a nidctra Life natnya it (Y-a) - A-erage etbarh of Yesra at lif. e asaiing at malnutrition.f birth, usually fivs-year ..veraga ending to 1960, 1970 and 1971 for deeslp- inS. ronomtria. ra. ducation Gras.repr,dactin rat -Aovrage comber of live deughters a wesa will hear Adjse nolen aiE rasyahn nrollment of all ages asa per- fn he somlcpeutc eidi h spcecspesraeseii etoge of primary sobani-eg P,pt1ltion; includes children aped h-li year. tnvility ret-s, ualyfive-year averagn ceding in, 1960, 1970 and 1975 hat sdjuatd fra differenlt lengthsa of primary education; for cunertris with f.or deveop ieg -ontries. universal education,fenrllant may seasd lOSt alone $c,be pupils are below Poultion Armath rate(t- otl- cospoand -nnuI grnth reins af mid-year or above the affiriel ciheol age. "popu laion for 19160 19070ed 1970-75. Adiusted enr-1teet ratio - .-candar ached- Cmue saoe eod ponultion roset cat CT) urba - Cnpote likegrowh rat of ttal ducation requirs t least fear yesrs of approved primacy inatru.ties, populatien, differen deiiin f achen areas nay affect cmpa-ability Of proVides general vatonalI or teach- training instruction for pupils data mn eutis of 41 to di yesear ae areodsatur saegnrlyscue Orhan population fT Of total; - Ratio of urban to total population; diffarent Seers afshol proide (firt and ....n ...vr.* -m Totr.ly yea. of. definitions Of urban area. may affect casperebility of data amngcns sPcholn; tsao dard level, veatde-al imatetstio ma hed partall or an stuctre perent - hilren10-i yars, orhng-ge 11-4 yars, Rnatone eneilentftof ecod6r4 -yeatisal nsttutonsincud and etird (6 yeon ad ove) as perr-ecgee of mid-year pepulaion. rehia noa`a o terporaswichoeate indepetindetl or sd Ane dependet-y ratio - Ratie Of poPulationudci andl n vrt ha eatet of2 tr. se ondry tcer rituti hchpotsis.. .lyo Of ages iS through 64. qn-. 5- 5ad- .t..duip-liter rrte of -ad- li.terteaults i t edan rt)_spr E-Itoio rednc ai - Ratio of Population ooder 1) and h5 and over to elg fttlautpplto agdut (.i. eat.and oe.d-i. the labor forr- in age iroup of li-hi yeats,--i -- 5 ., a vr PoRy -nt -aePtors (cumlaive-, th C;-Cuulative cuber of accptors Rousing of b;rth-contr,I deci-o urder s.s pice, of netionl Rant;Y Pl-aning P-ragmProsprco ubn vrg nme fproaprcm tecp tintsiccepian cnventnnal welligs iurhaan -a, dwellicfe seclude toe-pern-eet rant lvolannin-ueere(1 oR mrried cnan) hPoretfeo r arid rwrin e tructure andIi- unocui-dpaes chi-harici age (1-4yae houehrhcnreoeie oal and Ocpe delpseiat ie ae 1 - Oc..oPied conventionalI dwllinga comet iii cone age gratip. in urban and rural ereas... without ineide Or Octaide piped cater fanilitisa E.P1,3-t ~~~~~~~~~~~~~~~~~~as perceecge of all -cupted duelltnge. Tmo;l y I... (, -ctd5a5E toi electricity ft iIofd allMddwelli. gs)e- Colnvetional dwellings with fnonesband uneployed ht eelding honaseivee, etudeta, etc , definitions ruralr areas,tftoa d-Iig.in~b-- in... vaius onre arenot tnepsrb.heorldelnsoneedteetiiy( -Cmpedaabvfr ruralr.. labor force in agiculur (.) _A g'riocitura1 laher force Rio farsIng, forestry, dwellings only. rura buo-ing end fishing) asPercentage of total labor force Uereebcye (2 of lanc force) - onPloysd are u-ucly defined as persons who CnnOnpio ace shI and wiling to taeaJob, ant of a Joh on a given day, renamed out neinreciesRarto a) l ye of reciceretfor radio b-ndcaate of a job, -nd seekingwork Rot spe f-eid .,nio.- period tat exceding -te ato nr;p pr huand- of .populatiJon,' ex.du uetesd receivers week; mayIntIhe n_parahir between -Icrties dun tn different defiteicone incontie ad in yeaawa rgsrtone aiest a i fet of oneplayed aod -aec o data, e.g., spyetofficeeataie sml dacato fronent years a ntbetprbe ineescuniaaolhd a usvey, c-apcisory cnoplo,y_en nuaeelIcensingbI iI---t .i.. Incam discibucit - Pcrenrge of private ccn_ (both ic cash and bind) leeta egtprsn,ecldsahraea h aras and miitry received by rirheat 52. richest 202, Poorst 202. and poorest 402 of h-.se- vehicles..ac. holds .r.. tlcrc. khy e a)-dcclcn,sto fidusril tancial OiOtthctic of and wnersip - P-cceteges of land ownd by weeltibint 102 baaed an produntion data, without alOsnetr ae,i rishtalw and poorest 102 of land owners m~~~~~i- for imprts and eaperts nf .lectricIty li.SUL _ adNtrirf_ ~~~~~~~~~~~~~Newpit(sy e a)-Per cepit ta ens I _naupri_n in kilegc~ heua,tlb Ptd Ntritonoetidatdifrm dbestI p_rducttin plus net imperte of newsprint R'phyto prpysta -PplaindiIe h ubr of pr.nticlna phy ica. qoslified from o modica1 -rbool or uni-e;ty leve  ANNEX I Page 3 of 4 pages ECONOMIC INDICATORS GROSS DOMESTIC PRODUCT IN 1975 ANNUAL RATE OF GROWTH (%, constant prices) US$ Mln. 1 1969-75 1975 GDP at Market Prices a/ 604.2 100.0 3.3 12.7 Gross Domestic Investment a/ 98.4 16.3 1.9 34.1 Gross Domestic Saving a/ - 13.1 - 2.1 b/ b / Current Account Balance -147.6 - 24.4 Exports of Goods, NFS c/ 122.9 20.3 11.6 d/ 7.0 d/ Imports of Goods, NFS c/ 234.4 38.8 22.6 d/ -10.0 d/ OUTPUT LABOR FORCE AND PRODUCTIVITY IN 1975 Value Added US-L Mln. % Agriculture 230.7 38.2 Industry and Construction 99.8 16.5 Services 273.7 45.3 Unallocated - - 604.2 100.0 GOVERNMENT FINANCE General Government (Billion MF) % of GDP 1975 1976 1973-75 Current Receipts 29.3 11.3 11.7 Current Expenditure 39.8 15.4 15.6 Current Surplus -10.5 - - 3.9 Capital Expenditure f/ 1.6 o.6 0.4 External Assistance f/ 11.6 4.5 3.8 MONEY, CREDIT AND PRICES 1971 1972 1973 1974 1975 1976 h/ TBillions of Mali Francs) Money and Quasi Money 31.2 35.0 39.1 57.7 68.3 71.4 Credit to Government 40.8 41.1 43.1 46.o 45.2 45.9 Credit to Economy 27.7 34.1 43.3 69.7 102.2 112.1 Credit to State Enterprises 18.1 20.6 28.4 46.6 68.7 76.7 Money and Quasi Money as % of GDP 18.7 19.8 21.4 29.5 26.4 24.8 Annual percentage changes: GDP deflator 5.1 1.4 5.8 6.2 17.6 6.1 Credit to Government 0.7 0.7 4.9 6.7 -1.7 1.5 Credit to Economy 18.4 23.1 27.0 61.0 46.6 9.7 of which: Credit to State Enterprises 20.7 13.8 37.9 64.1 47.4 11.6 NOTE:All conversions to dollars in this table are at the average exchange rate prevailing during the period covered. l/ Total labor force; unemployed are allocated to sector of their normal occupation. "Unallocated" consists mainly of unemployed workers seekingtheir first job. not applicable a/ Staff estimates for 1973, 1974 and 1975. b/ Trend growth rate is not significant; domestic savings were negative in 1973, 1974 and 1975. c/ Includes estimates of unrecorded trade. d/ At current prices. e/ Staff estimates. / Excluding capital expenditures financed out of foreign aid which do not figure in the budget. 7/ Fxternal official budget grants. h/ Bank credit and money supply at the end of September 1976. November 1 ,1977  ANN1EX I Page 4 of 4 pages TRADE PAYMENTS AND CAPITAL FLOWS BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1972-76) 1972 e 1974 1975 19761-' Us$ Mln. % US$ million) Merchandise Exports FOB 2/ 45.0 52.3 64.0 71.9 94.4 Cotton 30.3 37.4 Import of Goods FOB 63.4 106.2 129.1 131.3 111.3 Live Animals 14.3 17.7 Net Imports NFS 21.2 27.8 79.0 84.4 63.0 Groundnuts and Products 12.1 14.9 Merchandise Imports c.i.f. 78.5 126.4 179.0 175.9 154.2 Fish (dried and smoked) 2.0 2.5 All other Goods 22.3 27.5 Food 22.6 65.6 101.7 44.1 (Cereals) ( 6.5) (36.8) (72.8) (14.0) ( ) Total Recorded Exports 81.0 100.0 Petroleum Products 8.1 11.0 15.8 23.3 Unrecorded Exports 3/ 18.9 Other Merchandise 47,8 49.8 61.5 108.5 Resource Gap 9/ -28.2 -70.3 -129.7 -113.6 - 65.3 Total Merchandise Exports 89.9 Investment Income Payments (net) -5.4 _7.6 -8.5 -21.7 -16,5 EXTERNAL DEBT, DECEMBER 31, 197 5 Net Private Transfers 6/ 11,3 7.6 10.0 19.6 15.9 Net Official Transfers 21.0 48.7 100.2 82.1 35.8 US$ Mln. Official Capital (net) 12.1 1l.o 16.6 22.2 36.4 SDR Allocation 2.6 - - - - Public Debt, Disbursed and Outstanding 327.0 Use of IMF Oil Facility - - 4.6 1.2 4.8 Public Debt, Undisbursed 144-0 Errors and Ommissions (net) -5.6 8.5 o.4 -3.7 . Total Public Debt Outstanding 4/ 471-0 -Change in Reser es (increase -) 5.2 23.3 30.1 60.7 33.1 5/ Net Negative Reserves (end of DEBT SERVICE RATIO FOR 1975 period) 7/ -73.4 -106.4 -128.7 -205.1 -217.0 A Public Debt, incl. Guaranteed 3.1 IBRD/IDA LENDING, OCTOBER 31, 1976 IBRD IDA (Million U XT Outstanding and Disbursed - 51.5 Undisbursed - 44.5 Outstanding, incl. Undisbursed - 96.0 RATE OF EXCHANGE 8/ 1971: US$1 = MF 555.42 1972: US$1 = IF 504.42 1973: US$1 = MF 445.40 1974: Us$1 = MF 480.99 1975: US$1 = MF 428.64 1976: US$l = MF 477.96 1/ Preliminary 2/ Excluding unrecorded trade. 3/ Livestock, fish foodgrains (estimated). 4/ Includes US$29.2 million principal in arrears; excludes US$2.1 million interest in arrears. 5/ Ratio of debt service to exports of goods and non-factor services. Includes workers' remittances. 7! Net foreign assets of the banking system. -/ Period averages. 9/ Including unrecorded trade. November 1 , 1977  ANNEX II Page 1 THE STATUS OF BANK GROUP OPERATIONS IN MALI A. Statement of IDA Credits as at September 30, 1977 (US$ million) Credit Amount (less cancellations) Number Year Borrower Purpose IDA Undisbursed Three Credits fully disbursed 23.5 - 277-MLI 1972 Republic of Mali Rice Development 9.5 1/ 0.7 321-MLI 1972 Republic of Mali Telecommuni- cations 3.6 1.6 383-MLI 1973 Republic of Mali Highway Reha- bilitation 17.8 2/ 7.2 420-MLI 1973 Republic of Mali Education 5.0 2.4 443-MLI 1973 Republic of Mali Drought Relief 2.5 0.0 3/ 491-MLI 1974 Republic of Mali Integrated Rural Development 8.0 2.7 538-MLI 1975 Republic of Mali Livestock Project 13.3 9.8 599-MLI 1976 Republic of Mali Third Highway 10.0 7.9 669-MLI 1976 Republic of Mali Mali-Sud Agricultural 15.5 15.5 713-MLI 4/ 1977 Republic of Mali Railway III 10.5 10.5 733-MLI 5/ 1977 Republic of Mali Education II 10.0 10.0 129.2 68.3 of which has been repaid 0.1 Total now held by IDA* 129.1 Total undisbursed 68.3 * Prior to exchange adjustment. 1/ Including a Supplementary Credit of $2.6 million made in 1975. 2/ Including a Supplementary Credit of $8.3 million made in 1975. 3/ Balance of $31,192. 4/ Not yet effective. 5/ Not yet effective.  ANNEX II Page 2 B. Statement of IFC Investment as at September 30, 1977 Nil C. Projects in Execution I/ Credit 277-MLI Mopti Rice Development Project. US$9.5 million Credit of January 6, 1972 (as amended on April 11, 1975); Effective Date June 26, 1972; Closing Date May 31, 1978. The project started in 1972 and is expected to be completed as scheduled in mid-1978. In early 1977, civil works were virtually completed. The total area to be developed has been reduced from 31,100 ha to 26,200 ha as a consequence of a revision of design standards. With respect to areas under cultivation and yields, the project came very close to appraisal esti- mates adjusted for the reduction in area. Agricultural extension services need further strengthening, however. Credit 321-MLI Telecommunications Project. US$3.6 million Credit of June 28, 1972; Effective Date April 4, 1973; Closing Date July 1, 1976 - Extended to June 30, 1979 Following substantial cost overruns, Caisse Centrale (CCCE) pro- vided additional financing but due to lack of resources available in the country to close the financing gap the project has to be executed in two phases. The implementation of the first phase is progressing satisfactorily. The Postal and Telecommunications entity (OPTM) is still faced with the same acute liquidity problem mainly caused by the non-payment of the telecommuni- cations services rendered to Government services and State enterprises. A new General Manager of the OPTM has been appointed by the Government. Credit 383-MLI Second Highway Project. US$17.8 million Credit of May 23, 1973 (as amended on June 12, 1975); Effective Date September 12, 1973; Closing Date July 19, 1977 extended to June 30, 1977 Two items of the project, rehabilitation of the Bamako-Bougouni road and purchase of more highway equipment, were to be financed with USAID assistance. However, bids for reconstruction of the Bamako-Bougouni road (155 km) were so high that it was decided to drop that item, and USAID will only finance purchase of maintenance equipment (for an amount of US$3.25 million). 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered, and the action being taken to remedy them. They should be read in this sense, and with the understanding that they do not purport to present a balanced evalua- tion of strengths and weaknesses in project execution.  ANNEX II Page 3 Bids for reconstruction of the Faladie-Segou road (222 km) were also higher than expected, due mainly to a delay in bid opening of more than one year. The Board of Directors approved in June 1975 a Supplementary Credit of US$8.3 million to cover part of the overrun. In addition there was a dispute between the contractor and the Government which was recently settled following exten- sive discussions between the two parties. Other items of the project are either completed or well under way. Credit 384-MLI Second Railway Project. US$6.7 million Credit of May 23, 1973; Effective Date September 12, 1973; Closing Date June 30, 1978 The project was expected to cost a total of about US$9.3 million, with IDA participation of US$6.7 million and FAC-financing of US$1.8 million equivalent, the rest being provided under Railway's own financing. Bidding results disclosed a cost overrun of about US$2.6 million in the foreign ex- change component of the project. The cost overrun was caused by (a) low original estimates; (b) sharp increases in world market prices; and (c) the fact that only single bids were received for some items. Additional bilateral financing obtained for part of the freight cars proposed under the project (Germany and France) and of the technical assistance (Canada) partly offset the cost overrun. However, several items included in the project which had to be deleted or significantly reduced will partially be financed under the third railway project which was recently approved by the Executive Directors. Presently all funds are committed and the execution of the project is satis- factory. Final supervision took place in October 1977, the Completion Report is expected to be issued later 1977. Credit 420-M1I First Education Project. US$5.0 million Credit of July 11, 1973; Effective Date November 15, 1973; Closing Date December 31, 1979 Project civil works are about two and a half years behind schedule because of cost overruns which led to a Government decision to reduce the scope of the project. Implementation is now proceeding satisfactorily. Most construction works have started on science/technology block sites, and train- ing for specialized teachers and headmasters is underway. Works and equipment installation at the technical vocational institute are well advanced, with completion scheduled for Fall 1977. The preinvestment study of basic educa- tion is on schedule and progressing satisfactorily and will be followed up under the Second Project. The project is well managed. Credit 443-MLI Drought Relief Project. US$2.5 million Credit of December 7, 1973; Effective Date June 30, 1976; Closing Date December 30, 1977 The Credit is virtually disbursed and although only 10 out of the 25 sub-projects have been completed, due to funding shortages, most of the remaining sub-projects will also be completed as Government and other donors  ANNEX II Page 4 have agreed to provide the needed finance. The project is therefore expected to be fully compelted at the end of 1977. Credit 491-MLI Integrated Rural Development Project. US$8.0 million Credit of July 1, 1974; Effective Date December 9, 1974; Closing Date September 30, 1978 Most of the project components which had been delayed at the start are now under way, specifically: livestock, health and rural tracks. The project is making satisfactory progress in the primary marketing of ground- nuts. The project, however, has obtained less than satisfactory results in increasing the adoption rates of improved cultivation methods by farmers. Improvement of OACV extension services would be the prime objective of a second project presently under preparation. It would also be an opportunity to change OACV statutes to give it greater financial autonomy and operational flexibility. Credit 538-MLI Livestock Project. US$13.3 million Credit of April 11, 1975; Effective Date July 24, 1975; Closing Date December 31, 1979 The Project is a broad based effort to improve livestock production in Mali's fifth region including the management of a grazing scheme, rein- forcement of animal health services, development of stock watering facilities, livestock markets, an abattoir and a trial station, as well as a training and functional literacy program and the preparation of a follow-up Project. Overall progress in Project implementation is slower than expected but satis- factory, considering the difficult environment and the remoteness of the area. Building construction is being delayed because of a cement shortage; the establishment of the grazing scheme takes longer than projected at appraisal; cost overruns make it doubtful whether the objectives of the Project can be fully reached, but the motivated young Malian management team is doing well. Government however has fallen somewhat behind in its contributions to Project costs. Credit 599-MLI Third Highway Project. US$10.0 million Credit of January 9, 1976; Effective Date March 10, 1976; Closing Date June 30, 1979. About 203 km of feeder roads, for which the project provides retro- active financing, were constructed in 1975. The outputs of 1976 and the first quarter of 1977 were about 200 km and 79 km respectively. The first stage of the maintenance program for paved roads, consisting of training the newly formed brigade with the assistance of consultants, started in April. The Resealing and Patching Unit has started working and the Operations of the Resurfacing Unit are expected to start in January 1978, after the new equip- ment is delivered. The Government has started procuring the equipment financed under the project, and is receiving the first deliveries. It has also called for proposals from several foreign consulting firms to carry out the transport plan together with Malian professionals.  ANNEX II Page 5 Credit 669-MLI Mali-Sud Agricultural Project. US$15.5 million Credit of December 23, 1976; Effective Date: September 13, 1977; Closing Date December 31, 1981. The project consists of expanding cotton, kenaf, maize and rice production mainly through the intensification of improved cultivation methods; providing project farmers with technical advice, seed multiplication facili- ties applied research and credit; improving animal husbandry of cotton farm- ers; expanding cotton processing facilities, improvement of kenaf settling ponds, construction of a rice mill, provision of storage for inputs, procure- ment of vehicles for CMDT and improvement of agricultural tracks undertaking studies for the future development of the areas freed from onchocerciasis; improving the rural health services in the area; and training of CMDT staff, and of the rural population through young farmers and blacksmith's training and a functional literacy program. Credit 713-MLI Third Railway Project. US$10.5 million Credit of June 10, 1977; Closing Date June 30, 1982 Action toward an early start of the physical and technical assis- tance components of the project is on schedule. This leads to the hope that the project will be implemented acording to the appraisal schedule. No substantial delay in implementation of the conditions of effectiveness is anticipated. The dynamic action of the Government and railway in implementing preliminary measures leads to belief that the project will be implemented smoothly. The Credit is expected to become effective on or before December 15, 1977. Credit - 733 MLI Second Education Project. US$10.0 million Credit of September 30, 1977; Closing Date: June 30, 1983 The Project would build on the work and on the results of the pre-investment study of the First Education Project. It would also address priorities manpower needs in the economy, specifically: the training and upgrading of managers and planners for all priority sectors; the training of an increased number of junior agricultural and livestock field technicians; and the extension of functional literacy and numeracy to additional groups of farmers in the Integrated Rural Development Project area (Credit 491-MLI). The Project is expected to become effective on or before December 1, 1977.  ANNEX III Page 1 MALI SECOND MOPTI RICE PROJECT Section I: Timetable of Key Events (a) Time taken by the country to prepare the project: 9 months. (b) The agency which has prepared the project: IER, RMWA; (c) Date of first presentation to the Bank: August 1975; date of the first Bank mission to consider the project: November 1976; (d) Date of departure of Appraisal Mission: November 1976; (e) Date of completion of negotiations: October 6, 1977; and (f) Planned date of effectiveness: March 30, 1978. Section II: Special Bank Implementation Actions None Section III: Main Special Credit Conditions Assurances were obtained at negotiations that: (a) farmers will have priority in land allocations in the ORM polders (para. 34); (b) in the new polders to be developed not more than 2 ha would be allotted per active male family member (para. 34); (c) additional farm machinery will be procured only when IDA is satisfied that the existing machinery is adequately utilized (para. 40); (d) subsidies included in fertilizer and equipment supplied by ORM to farmers in the project area would be at the charge of Government (para. 41); (e) Government will increase the producer price of paddy to or at least MF 50/kg before the 1978/79 campaign and see to it that the price is periodically adjusted in such a way as to provide sufficient incentive to farmers (para. 50);  ANNEX III Page 2 (f) Government will take action to ensure that the rice- milling capacity in the project area will be expanded in line with the increase in paddy production (para. 49); (g) the price schedules (baremes) for collection, bagging and transport of paddy as well as the allowance for losses will be kept at such a level as to reflect actual cost to ORM (para. 51); (h) the current policy periodically raising the development levy would be continued until of a levy of 240 kg/ha is reached in 1982 (para. 55); (i) fulfillment of all conditions precedent to the initial disbursement of the FAC grant (condition of effective- ness, para. 43); and (j) opening of the Special Account by the Borrower (condition of effectiveness, para. 44).   IBRO i2839 5