Cameroon - Feeder Roads Project

FILE COPY Report No. 1668-CM Appraisal of a Feeder Roads Project United Republic of Cameroon November 15, 1977 Regional Mission in Western Africa Feeder Road Section 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 Currency Unit = CFA Francs (CFAF) US$1.00 = CFAF 245 Fiscal Year July 1 - June 30 System of Weights and Measures: Metric Metric US Equivalents 1 meter (m) 3.28 feet (ft) I kilometer (km) 0.62 mile (mi) I square kilometer (km) 0.386 square mile (sq. mi) 1 hectare (ha) 2.47 acres I metric ton (t) 2,204 pounds (lbs) Abbreviations and Acronyms BAC Bamenda Association of Cooperatives DCD Department of Community Development DR Department of Roads FAC Fonds d'Aide et de Cooperation FED Fonds Europeen de Developpement FONADER Fonds National de Developpement Rural MINEH Ministry of Equipment and Housing MINEP Ministry of Economy and Planning MINIAGRI Ministry of Agriculture MOT Ministry of Transport REGIFERCAM Regie Nationale des Chemins de Fer du Cameroun SATA Swiss Agency for Technical Assistance SODEPA Societe de Developpement et d' Exploitation des Productions Animales UCCAO Union des Cooperatives de Cafe Arabica de l'Quest vpd Vehicles per day ZAPI Zones d'Actions Prforitaires Integrees  FOR OFFICAL Us ONLY UNITED REPUBLIC OF CAMEROON APPRAISAL OF A FEEDER ROADS PROJECT TABLE OF CONTENTS Page No. SUbMUARY ................................................... ....... soii Is INTRODUCTION ......................................................... l 2. BACKGROUND ...**.. ... .......................... ............. ... 2 A. Geographic and Economic Setting .................... 2 B. The Transport System ............. .................. 4 C. Transport Sector Management, Goals and Investments.. 5 3. THE HIGHWAY SECTOR ..... .......... 6 A. The Road Network ................. 6 B. Traffic on the Feeder Road Network 6 C. The Road Transport Industry ... 7 D. Highway Administration .................... .... 8 E. Road Maintenance ... . ......... 9 F. Road Engineering and Construction .................. 9 G. Road Financing ..1..$0........... lO 4. THE PROJECT ...................................... .... 12 A. General Description .............. .......... . . ... 12 B. Feeder Road Program ..............o 12 C. Improvement of Project Regional Roads .... .......... 13 D. Equipment and Material Purchases ........ . ........... 13 E. Technical Assistance and Studies ................... 14 F. Training ................ . 15 G. Provision of Workshops and Office Space ............. 15 H. Project Monitoring ... ... ...................... 15 Is Cost Estimates ....*...O..... O.......* ............................. 16 J. Execution ................ ......... .......................... 18 K. Procurement ............ 19 L. Financing and Disbursements ........................ 19 5. ECONOMIC EVALUATION ...... .............. .................. 20 A. General ............................................ 20 B. Economic Justification ............................. 21 6. AGREEMENTS REACHED AND RECOMMENDATIONS ................... 25 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 " disclosed without World Bank authorization.  TABLES 1. Agricultural Production 2. Development of Highway Network 3. Motor Vehicle Registration 4. Consumption of Motor Vehicle Fuels 5. Maintenance Allocation for Different Road Types 6. Road Expenditures During the Third Plan 7. Road User Revenues 8. Road Design Standards 9. First Year Feeder Roads Improvement Program 10. Tentative Second Year's Feeder Road Improvement Program 11. Tentative Third and Fourth Years' Program 12. Maintenance Standards for Roads 13. Roads to be Included Under Proposed Third Highway Project 14. Equipment to be Purchased for Improvement and Maintenance of Roads 15. Project Costs 16. Implementation Schedule 17. Financing of Project Costs 18. Estimated Schedule of Disbursements 19. Transport Cost Savings to Non-Agricultural Traffic 20. Results of Sensitivity Analysis for Agricultural Projects ANNEXES 1. The Project Areas 2. Draft Terms of Reference for Consultants 3. Project Monitoring 4. Summary of Illustrative Economic Analysis 5. Guidelines for Selection of Feeder Roads for the Second, Third and Fourth Years of the Project MAP  UNITED REPUBLIC OF CAMEROON APPRAISAL OF A FEEDER ROADS PROJECT Summary and Conclusions i. Cameroon's broad range of ecoclimatic zones provides excellent diversification and potential for agriculture, the predominant sector in the economy. It accounts for about 40% of gross domestic product (GDP) and over 70% of the country's export earnings, and provides the livelihood for over 80% of the population. The Government's investments in the sector, about 16% of total investments in the Fourth Plan (1976/77-1980/81), emphasize (a) raising farmers' incomes and reducing regional disparities, (b) increasing exports and (c) alleviating the domestic food shortage. To achieve these objectives, Government's strategy consists of (a) implementing projects and schemes aimed at increasing the production of cash crops, food crops and livestock, and (b) continuing support of institutions such as FONADER (Fonds National de Developpement Rural) for financing agricultural credit and the ZAPI (Zones d'Actions Prioritaires Integrees) for implementing integrated rural development projects. Efficient and reliable rural transport is a prerequisite to the success of these programs. ii. Cameroon's road network of about 58,000 km is reasonably adequate in extent and distribution. However the feeder road network, about 46,000 km of mostly dry-weather roads and tracks, is in very poor condition due to low construction standards and/or neglect of maintenance. The country needs a program to rehabilitate, improve and maintain feeder roads. Such a program will have to be long-range, partly because of the large amount of funds and work involved and partly because a parallel effort will be required on the national and provincial network. The proposed project is the start of this program. iii. The proposed project is designed to (a) improve and maintain the feeder roads in the proposed Bank Group-financed ZAPI East Rural Development Project, the proposed Bank-Group, FED and German Government-financed Western Highlands Agricultural Development Program and the ongoing Bank Group-financed Livestock I Project in the Adamaoua area, and (b) establish the institutional framework for the development and adequate maintenance of the feeder roads network. It consists of (a) a four-year program for the force-account con- struction, improvement,rehabilitation and maintenance of about 2,200 km of feeder roads in the above-mentioned areas, (b) construction of, and provision of equipment and tools for, a DR workshop including office facilities at Nguelemenduka, (c) technical assistance to establish and strengthen a Feeder Roads Unit to implement the program and to train local staff, and (d) consul- tant services for studying resources for feeder road maintenance and preparing a follow-up feeder road program. iv. The total project cost is estimated at US$21.1 million includ- ing US$4.0 million equivalent in taxes and duties. Project costs, net of taxes and duties, are estimated at US$17.1 million equivalent, with for- eign costs of US$11.1 million (65%). The proposed Loan of US$4.6 million  and Credit of US$6.5 million will finance 100% of foreign costs. The Govern- ment's contribution would be US$6.0 million of the net-of-tax project cost. v. The Ministry of Economy and Planning will have overall responsibility for project execution. However, it will appoint as executing agencies for the construction/improvement and subsequent maintenance the Ministry of Equipment and Housing (in particular its Roads Department) for about 1,600 km of feeder roads; the Ministry of Agriculture (in particular its Department of Community Development) for 300 km of feeder roads; the ZAPI East Organization for about 150 km of farm access roads; and the SODEPA for 150 km of access roads. Physical execution is expected to start in September 1978 and be completed by September 1982. Road construction, improvement and maintenance will be carried out by force account; local contractors will be used for constructing drainage structures and for supplying road-building materials. vi. In order to provide the necessary flexibility in planning and executing the feeder roads program, only the first year's program (1978/79) has been defined. The tentative programs for the remaining three years will be revised annually by provincial interministerial committees to be convened annually in the three provinces directly affected by the project. These revisions will be approved by the Bank Group. vii. Equipment, materials, spare parts and supplies amounting to about US$8 million, net of taxes, will be procured on the basis of international competitive bidding in accordance with Bank Group Guidelines. A local pref- erence will be allowed for goods manufactured in Cameroon. Contracts for these items costing under US$50,000 may be awarded on the basis of competi- tive bidding following local procedures acceptable to the Bank; the aggregate amount will not exceed US$600,000. viii. The proposed project is indispensable to the success of the agri- cultural and rural development projects in the ZAPI East, the Western High- lands and the Adamaoua Livestock area. Specifically, the feeder road works will (a) provide the cheap, reliable and efficient transport needed to gen- erate and market the increased agricultural and livestock production aimed at in those projects, (b) reduce produce spoilage, (c) provide improved access to health and social amenities, and (d) reduce transport costs to passengers and other non-agricultural traffic. Evaluated as an integral part of the above rural agricultural development projects, the proposed feeder road project is economically justifiable. The ZAPI East project is expected to yield an economic return of about 27%, the Western Highlands programs about 20% and the Livestock project about 18%. 1/ ix. The institution-building component of the project represents a major project benefit. It will (a) establish an efficient institutional 1/ These are preliminary figures subject to revision.  - iii - framework for planning, developing and maintaining feeder roads, (b) train local staff in performing the above functions, and (c) initiate a concerted, interministerial and interagency approach to planning feeder roads. x. Project risks include (a) possibility of diversion of project equipment and goods to non-project work, (b) interference with the selection of roads for the annual programs and (c) significant modifications in the associated agricultural projects. These risks should be reduced by the ex- pected alleviation of the Department of Roads' equipment problems, the control to be exercised by the various executing agencies of the agricultural programs and by the agreement between the Government and the Bank on guidelines for selecting roads for the annual programs. xi. The proposed project is suitable for a Bank Group Loan of US$4.6 million and a Credit of US$6.5 million. An appropriate Loan term would be 20 years with a 5-year period of grace. The Credit would be made on standard IDA terms.   CAMEROON APPRAISAL OF A FEEDER ROADS PROJECT 1. INTRODUCTION 101 Cameroon's road network totals about 58,000 km of which about 12,000 km are paved and laterite-surfaced roads classified as national and provincial roads. The remaining 46,000 kms are mostly dry-weather roads and tracks classified as feeder roads. Road investments in the past have concentrated on the national and provincial network notably the road links on the Transcameroon rail/road route and the Douala-Bafoussam-Foumban axis. Even though about 66% of total road investments under the Fourth Plan (1976/77- 1980/81) will continue to be devoted to these roads, the Government is begin- ning to focus more attention on feeder roads which are in very poor condition. The outlays for construction and improvement of these roads have increased from CFAF 3.9 billion or 9% of total road investments in the Third Plan to CFAF 24.6 billion or 31% in the Fourth Plan. The proposed project supports Government's goals of improving its feeder road network. 1.02 A study of feeder roads was included under the Second Highway Project (Loan 935/Credit 429-CM, US$ 48 million, 1973; Supplementary Credit, US$15 million, 1976) as part of a general road maintenance study. The Bank agreed in 1976 to study feeder roads separately due to delays in starting the maintenance study and the need to focus on the network's special requirements, establish close links with agriculture and rural development, and permit more involvement of local staff and representatives in project design and prepara- tion. It was also agreed to start with a project concentrating on a few well-defined areas, since this was the Bank Group's first operation in the feeder road subsector in Cameroon and since the country lacked the absorptive capacity for a nation-wide project. This study, carried out predominantly by Government with the assistance of only a total of 5 man-months of short-term consultant assignments but with considerable input from the Bank's Regional Mission in Western Africa, constitutes the basis for the present project. 1.03 The project would be the Bank Group's third lending operation for road development in Cameroon and the first involvement in feeder roads apart from some 900 km integrated with the Bank-financed Cocoa Project (Loan 1039-CM, US$6.5 million, 1974). The First Highway Project (Loan 663/Credit 180-CM, US$19 million, 1970)) financed the study and construction of the Ngaoundere-Garoua (285 km) and the Tiko-Victoria (24 km) roads. The project was successfully completed in 1975 but with one and one-half years' delay, largely due to pavement failures that occurred soon after construction, and a cost overrun of US$4 million, US$2 million of which was financed by Bank Group supplementary financing in 1975. 1.04 The ongoing Second Highway Project is assisting the Government to continue improving the Trans-cameroon rail/road route and the Douala-Badoussam- Foumban axis. The project consists of the improvement of about 485 km of main  -2- roads and consultant services for technical assistance in transport planning and coordination, for studies of forestry policy and forestry roads, and for a study of road maintenance and secondary and feeder roads betterment. Road construction is proceeding satisfactorily after a year's initial delay in contract awards due to an estimated US$72 million cost overrun resulting from underestimation of base costs during appraisal and inflation. The Association made a supplementary credit of US$15 million in tIarch 1976 to cover part of the cost overrun and agreed with the Government to reduce the project scope by postponing the Garoua-Figuil section (98 km) of the Garoua-Mora road for inclusion in the proposed Third Highway Project. The road maintenance study started about a year late because of delays in recruiting consultants. The consultants report on Phase I has been found unsatisfactory and they have been requested to improve their analysis and review their recommendations according- ly. After about three years and under constant Bank insistance, Government has only recently recruited the other consultants for the ministries responsi- ble for planning, equipment and transport to assist in transport planning and coordination. For the proposed project, the Government and the Bank have already agreed on consultants' Terms of Reference, and the Government has taken steps to recruit the experts. 1.05 The proposed feeder roads project is designed to (a) improve and maintain the feeder road networks to support the proposed Bank Group-financed ZAPI (Zones d'Action Propriataires Integrees) East Rural Development Project, appraised in March 1977; the proposed Bank Group and FED/German Government- financed Western Highlands Agricultural Development Projects, the Bank portion appraised in May 1977, and the ongoing Bank Group-financed Livestock I Project in the Adamaoua area, and (b) to build the institutional framework for the development and adequate maintenance of the feeder road network. It includes a 4-year program for the improvement and subsequent maintenance of about 2,200 km of feeder roads in the above-mentioned areas. The project would complement the proposed Third Highway Project which is expected to focus on maintenance and rehabilitation of the national and provincial network. 1.06 This report is based on data collected and analyzed by Cameroon Government staff, with the assistance of consultants, and the findings of an appraisal mission, consisting of Messrs. Gyamfi and Tessier-Viennois, which visited Cameroon in January and February 1977. 2. BACKGROUND A. G3graphic and Economic Setting 2.01 The Republic of Cameroon, situated at the junction of West and Equatorial2Africa and extending from the Gulf of Guinea to Lake Chad, covers 475,000 km and has a population in 1976 of about 7.6 million growing about 2.3% p.a. Wide variations in the country's terrain, climate and vegetation lead to varying transport problems: in the south, dense forest and heavy  rainfall make road construction and maintenance expensive; in the southwest, a mountain range hampers transport development; in the Western Highlands, steep slopes, clayey soils and a prolonged rainy season make road construction and maintenance costly; and in the far north, poor subgrade and shortage of good roadmaking materials make road construction and upkeep difficult and expensive. The north-central part of the country is the only area where topography vegetation and soils present no major problems. 2.02 The economy is predominantly rural with about 80% of the adult population engaged in agriculture for which the broad range of the country's ecoclimatic zones provides excellent diversification. The agricultural sector accounts for about 40% of GDP and over 70% of the country's export earnings. The secondary sectors contribute about 30% and transport about 5%, services about 3%, and commerce about 22% of GDP. GDP was about US$1.94 billion in 1975 with a per capita income of about US$270. Rural incomes ranged from US$80-140 in the forest and savannah areas to some US$70-80 in the northern plains. During the 1960's real income grew at an average of some 6% p.a., but slowed to about 3% p.a. between 1971 and 1975 due mainly to declining demand and the fall in world prices for cocoa and coffee, deter- iorating terms of trade, and a lower level of private investments. The current Fourth Plan (1976/77-1980/81) aims at a 7% p.a. growth with emphasis on rural and agricultural development (paragraph 2.05). 2.03 About 85% of agricultural production is contributed by the tradi- tional sector--about 1 million smallholders with an average of 2 ha using family labor and producing a large variety of crops. Plantations, mostly state-owned, are limited to palm oil and rubber. The main foodcrops are maize, cocoyams, beans, plantain, sorghum and groundnuts (Table 1). Food production has grown at about 3-1/2% p.a. over the past five years, just ahead of population. Except for wheat and rice, Cameroon could be self-sufficient in foodcrops; however, urban centers have been experiencing increasing supply problems due to lack of efficient, reliable and cheap transport and effective agricultural support services and partly due to significant exports to neigh- boring Gabon. 2.04 The principal cash crops and export commodities are cocoa, coffee and cotton and, to a lesser extent, palm oil and rubber. Since the beginning of the Third Plan, Government has emphasized smallholder cash-crop develop- ment but progress has been slow. This is because of problems such as lack of adequate physical infrastructure and agricultural support services and because producer prices for the main cash crops, generally about a third of world market prices, are low compared with the soaring prices of food crops. Government recently increased the producer price for coffee to about CFAF 330,000 per ton which makes its cultivation competitive with foodcrop pro- duction. 2.05 The Government allocated 16% of total investments to speed up rural development under the Fourth Plan. The Plan's objectives in agriculture are directed towards (i) raising farmers' incomes and reducing regional dispari- ties, (ii) increasing exports and import substitution, and (iii) alleviating domestic food shortages. To achieve these objectives, Government's strategy  -4 - is (i) implementing projects and schemes aimed at increasing the production of cash crops, foodcrops and livestock, and (ii) continuing support of institu- tions such as the Fonds National de Developpement Rural (FONADER) for financing rural development projects and providing agriculture credit, and the ZAPI's 1/ for implementing integrated rural development programs with emphasis on in- creasing farmers' participation in development. The Bank has assisted Government's efforts in agriculture by financing eight projects; one CAMDEV plantation projects, two SOCAPALM oil plantation projects; a SEMRY rice project, a livestock project, a cocoa project, a rural development project in the Plaine de M'bo and a FONADER project. In addition, a rural development project in the ZAPI East and a Western Highlands Agricultural Development project and a second CAMDEV Plantation project have recently been appraised. B. The Transport System 2.06 Cameroon's transport system consists of about 58,000 km of roads, 1,170 km of railway, three seaports, a navigable waterway with a river port at Garoua, and five airports. The main transport system, which is export/ import oriented, is focused on Douala the commercial center, where there are a deep-water port and an international airport. Links to the rest of the country are provided along two principal corridors--the Trans-Cameroon rail/ road route (1,170 km) and the north-south Douala-Bafoussam-Foumban axis. Emphasis on transport development to date has focused on modernizing the main system, an objective which will be practically achieved with the comple- tion of the Second Highway Project and improvement to the line characteristics of the railroad between Douala and Yaounde. Railways 2.07 The railway network, operated by Regie Nationale des Chemins de Fer du Cameroun (REGIFERCAMV), comprises two main lines originating at Douala: (i) the central line to N'Gaoundere (930 km), with a branch from Otele to Mbalmayo (37 km), and (ii) the northern line to N'kongsamba (172 km) with a branch from Mbanga to Kumba (28 km). From 1968/69 to 1975/76 freight traffic and ton-km increased by 4% and 11.5% p.a., respectively, reaching 1.3 million tons and 437 million tons-km in 1975/6. The corresponding in- creases for passenger transport were 3% and 7.5% p.a., respectively, to 1.86 million passengers and 260 million passengers-km. The northern line which accounted for only about 10% of the traffic has received no major investments for some time. Investment on the central line continues. The construction of the Yaounde-Ngaoundere line was completed in 1974. The Bank's Second Railway Project (Loan 1038-CM) provided equipment, mostly rolling stock for timber and general cargo. Further line improvement, including realignment of the Douala-Edea section, is expected to be undertaken with financing primarily from various European aid agencies. The above development has not, however, been matched by improvement of REGIFERGAM's managerial and operational capabi- lity. The Government and the Bank are discussing means to solve this problem. 1/ This is a semi-autonomous rural development agency operating in selected high-priority areas. The ZAPI's perform marketing, agricultural extension, training and social services.  -5- Ports 2.08 The Douala port, by far the most important of Cameroon's three ports, handled over 2 million tons including about 400,000 tons of timber in 1975. Under the Bank's First and Second Port Projects, the capacity and productivity of the port are being improved. The secondary ports of Tiko- Victoria and Kribi serve limited hinterlands. The Port of Tiko-Victoria has declined in importance due to inadequate facilities and the diversion of its traffic to Douala. The lighterage port of Kribi has much better prospects, especially for timber of which it handled over 200,000 tons in 1975. The port is undergoing expansion to handle increasing exports of logs and is expected to reach 400,000 tons per year within a few years. Air Transport 2.09 Owing to the size and elongated shape of Cameroon, air transport is important. There are five airports with paved runways, including that of Douala which provides international services; the others and nine unpaved airstrips are served by regularly scheduled internal flights. The Douala airport is being improved under a three-phase plan financed in part by the African Development Bank. Studies have just been completed for the improve- ment of the Garoua Airport so that it can receive international flights and for finding a new site for the Yaounde airport. C. Transport Sector Management, Goals and Investments 2.10 The Ministry of Transport (MOT) is officially responsible for overall transport sector management including reviewing, coordinating and screening transport investment proposals prepared by other ministries and public agencies, formulating transport policy and approving the tariffs of REGIFERCAM, the National Port Authority and Cameroon Airlines. However, MOT's accomplishments have been mostly limited to collecting statistical data on transport. The Ministry has neither the qualified staff nor adequate auth- ority to perform its functions adequately. The Ministry of Planning and Economy has undertaken some transport planning, but its limited resources, sufficient when investment decisions consisted mainly of ranking high priority projects on the principal transport axes, are proving inadequate for the more difficult investment choices between competing corridors and between major arteries in the same corridor. The Ministry of Equipment and Housing (MINEH) is responsible for preparing and executing road projects but so far lacks the qualified Cameroonian staff to perform the task adequately. 2.11 Attempts to reinforce the organization and machinery for transport planning and policy-making and for project preparation and execution have in the past met with limited success. Recent developments imply changes in Government's attitude: (i) the Minister of Transport has prepared a decree for Presidential approval which would create a Planning Unit within MOT, (ii) the government is in the process of recruiting an expatriate transport specia- list, financed under the Technical Assistant Project, to assist in planning, policy formulation and coordination, and the UNDP transport technical assis- tant's contract is being extended and (iii) the three road experts provided under the Second Highway Project to assist MINEH have been recruited.  - 6 - 2.12 During the Third Plan (1971/72-1975/76), investments in the trans- port sector totalled CFAF 80 billion out of total public sector expenditures of CFAF 200 billion. The primary objective was to improve the trunk system, particularly the Trans-Cameroon rail/road route with a planned investment of CFAF 136 billion in the Fourth Plan (1976/77-1980/81) Government's goals are to (i) complete the works carried over from the Third Plan, (ii) expand capacity of the Douala port and realign sections of the Douala-Yaounde railway line, (iii) improve road maintenance and (iv) shift emphasis from trunk roads to the development of the rural network. These objectives largely reflect the sector's physical needs. 2.13 The Bank is assisting Government to achieve the above objectives in the sector through its ongoing projects as well as future projects in an advanced stage of preparation. The proposed Third Highway Project will concentrate on road maintenance and rehabilitation; the proposed feeder roads project will establish institutions for feeder roads administration and maintenance in addition to providing the necessary resources to construct, improve and subsequently maintain selected high priority feeder roads (para- graph 1.05). 3. THE HIGHWAY SECTOR A. The Road Network 3.01 The road network in Cameroon totals about 58,000 km of which about 2,000 km 1/ are paved and 10,000 km are all-weather gravel or laterite roads; the remainder are dry-weather roads and tracks (Table 2). About 28,000 km are classified for maintenance budgeting purposes; 12,000 km of these form the national and provincial network. The most important roads, which are part of the Trans-Cameroon route and the Douala-Bafoussam-Foumban axis have recently been or are being constructed to paved standards. The rest of the classified roads, though generally adequate in extent and distribution for the country's economic needs, are mostly in poor condition due to inadequate maintenance. The problem is even more acute for the unclassified roads, most of which are in an advanced state of deterioration due to the compound effect of low construction standards, particularly of drainage, poor construction quality and practically non-existent maintenance. B. Traffic on the Feeder Roads Network 3.02 Traffic on the feeder roads network consists of (i) agricultural produce destined for local markets, district centers as well as cooperative collecting centers, (ii) small volumes of consumer goods and agricultural 1/ Another 265 km, the Garoua-Mora road, is being paved under the Second Highway Project.  -7 - inputs, and (iii) passengers. There is a large variation in the traffic volumes of individual feeder roads depending on population density and level of economic activity. In general, however, traffic increases from an average of about 5 vpd on farm-to-market roads to about 30 and in some rare cases 50 vpd on roads leading to the main collecting centers or district capitals. The typical vehicles used for freight transport on these roads are 3-5 ton pay-load light trucks; 7 ton pay-load trucks are more common on the roads leading to collecting centers or district capitals. The selection of truck size appears to be influenced as much by road condition as by transport demand. Traffic is highly seasonal, being over twice as much during the harvest period as during the off-season. Passenger transport is mostly by small buses and nine-passenger cars. C. The Road Transport Industry 3.03 The motor vehicle fleet has grown at an average of about 6% p.a. over the past five years to about 63,500 vehicles; about 54% are cars, 35% trucks and vans, 7% motorcycles and 4% specialized vehicles (Table 3). Motor fuel consumption increased at about 8% p.a. during the same period (Table 4). There is a Motor Vehicle Code which regulates, inter alia, vehicle weights and dimensions, but these regulations are not generally enforced. The proposed Third Highway Project is expected to include specific action to solve this problem. On the feeder road network rain barriers are erected to prevent passage of heavy vehicles after rains. Road transport generated by commerce and industry, including agricultural exports, is dominated by the "Syndicat des Transporteurs," a union of two large foreign firms and several Cameroonian truckers. The Syndicat handles about 80% of the long-haul trucking business, mostly interregional, and all of Chad's transit traffic; the balance is handled by small owner-operators. There are no restrictions on vehicle impor- tation or entry into the trucking business, but this has not resulted in overcapacity; competition is keen. Inter-city road passenger transport is mostly by taxi and bus, often owner-operated. 3.04 Transport on the feeder roads network is either by small private truckers or, in the case of some cash crops, by cooperatives which often supplement their capacity with private carriers on contract. Supply is usually adequate; the few instances of undersupply are due mostly to the poor state of roads. For the transport of passengers, consumer goods and food- crops, competition among truckers is sufficiently strong to ensure that most of the savings in vehicle operating costs associated with road improvements will in general be passed on to the rural population. For the transport of cash crops, the bulk of the savings goes to the cooperatives which purchase directly from the producers at prices fixed independently of transport costs. These savings will either be used by the cooperatives to expand and improve their services or will be passed on the Government's Price Stabilization Fund which usually protects the rural farmers during the period of adverse world market prices for their cash crops and which sometimes participates in financing feeder road improvements (para. 3.14).  -8- D. Highway Administration 3.05 The Department of Roads (DR) within MINEH has legal responsibility for planning, developing and maintaining the road network. In practice, however, DR has so far restricted its activities to the national and pro- vincial network; the remaining roads have been developed by local authorities, various Government agencies, autonomous cooperatives and private companies. The DR has two central sub-departments, one for road engineering and con- struction and the other for road maintenance; it has nine regional divisions divided into forty subdivisions. Each regional division is headed by a Pro- vincial Delegate of Equipment who also acts as the technical advisor to the regional governor on roads and other civil works. 3.06 Responsibility for the administration of the feeder roads network is ill-defined, as local authorities and several Government agencies, the Department of Roads, the Genie Rural and the Department of Community Develop- ment (DCD), all have statutory responsibility. The proliferation is not necessarily a handicap since the wide variations in standards, functions and methods of construction and financing of these roads necessitate diverse strategies not efficiently provided by a single organization. The DR is more suitable for administering the construction and maintenance of the "higher trafficked" feeder roads using mostly mechanized methods. DCD is most suitable for construction or maintenance with intermediate or labour-intensive methods and for cases where community participation is feasible. The Genie Rural could be used for modest-standard feeder roads with or without community participation. The missing element is the coordination of the activities of the different groups to ensure (i) consistency with overall road development strategy, (ii) economically and technically reasonable design standards and (iii) adequacy of construction and design quality. The DR is best suited to perform this task. Therefore, under the proposed project, a Feeder Roads Unit (FRU) will be set up within the DR to coordinate and administer the planning and development of feeder roads throughout the country; and more specifically to execute the proposed project, carry out procurement of equipment and some materials, advise on and control the technical standards of works, assist in the preparation of detailed annual feeder road programs, and to execute studies for a follow-up feeder roads project and for organizing resources for feeder roads maintenance. The Government has given assurances that it will set up the Unit by March 31, 1978. 3.07 FRU's key staff will consist initially of a Cameroonian engineer and a technical assistance expert (road engineer) to be financed under the project. Initially the economic input for the FRU will be provided by a short-term consultant (transport economist) provided under the project. In time, another local road engineer and transport economist should be added if and when warranted by the unit's workload. FRU's local staff should be  - 9 - assigned full time on feeder road matters; the alternative arrangement of having existing DR staff working part-time on feeder roads was tried durirg project preparation and judged unworkable. The Government has agreed to the above arrangements and is taking steps to designate a full-time, Cameroonian engineer as head of the unit. E. Road Maintenance 3.08 The DR is responsible for maintenance of the national and provincial roads classified into paved roads and laterite-road categories A, B, C, and D; local authorities are responsible for the rest. Even though sufficient budgetary allocations are provided for paved roads and those in categories A and B, maintenance on these roads is still poor due to inefficient use of funds and the inability of MINEH's central Equipment Pool, the only source of DR's maintenance equipment, to fill the Department's needs. The situation is even worse for categories C and D where allocations are insufficient (Table 5). Consultants are studying DR's maintenance organization and operations. The proposed Third Highway Project is aimed at assisting Government to improve road maintenance. 3.09 Feeder road maintenance, the responsibility of the local authorities, is practically non-existent. Most of the effort made has come from the local population using their own labour and resources. This is especially true in West (anglophone) Cameroon where the Department of Community Development (DCD), with technical assistance from SATA (Swiss Agency for Technical Assistance), has had a successful record of organizing and motivating local communities for feeder road improvement and maintenance. Even there, the frequency of main- tenance has been limited. The results of neglected maintenance are evident everywhere; roadways and structures have deteriorated to a point where most are no longer at an adequate level of servicability or in suitable condition for normal maintenance operations. Extensive rehabilitation has become imperative. 3.10 The country needs a program for (a) rehabilitation and improvement of high priority feeder roads and (b) adequate maintenance of those roads and other feeder roads recently constructed or planned for construction under various agricultural schemes. Such a program will have to be long-range be- cause of the relatively large amount of work and funds that would be involved and because a parallel effort will be required on the main and secondary networks. The proposed project is a start in this direction with emphasis on the three selected project areas. F. Road Engineering and Construction 3.11 The DR is responsible for engineering and construction of roads. In practice, only the design and supervision of small projects is carried out directly by the Department; consultants are employed for work on most projects financed by foreign aid agencies. The Feeder Road Unit to be  - 10 - established under the proposed project will form the nucleus for developing DR's engineering capacity for the feeder roads network. In the absence of local contractors of adequate capability and capacity, practically all major works are carried out by foreign firms on the basis of competitive bidding. Force account is used only for minor works and for improvement of feeder roads. DR's only significant undertaking with force account, the Kumba- Manfe road, with equipment financed by USAID, proved reasonably successful and served to train a number of local engineers. Force account road construc- tion under the Bank's Cocoa Project using a local civil engineer, a Genie Rural road technician and a technical assistance road expert has so far yielded very encouraging results. Under the proposed project, DR will be equipped to construct higher standard feeder roads in the West Province and the ZAPI East area by force account. DR will be assisted by three technical assistant experts (one road engineer and two road technicians); the experts will also provide on-the-job training for local staff (paras. 4.07 and 4.08). 3.12 The DCD has had reasonable success with feeder road improvement using labour-intensive methods, intermediate technology and community parti- cipation in the Northwest Province. Under the project DCD will be equipped to construct and subsequently maintain about 300 km of feeder roads in that province. The DCD will continue to receive SATA's technical assistance for preparing the annual detailed programs but will also need a qualified road engineer. SATA has just trained a Cameroonian engineer in their local training school and during appraisal, the Director of DCD agreed to use him full-time for the project. 3.13 There are a few local contractors, who undertake mostly building construction. The few who have ventured into roadworks have so far performed poorly and consequently have discouraged local authorities from using them. The reasons for their poor performance are insufficient capital, lack of ade- quate managerial ability, and a shortage of technical staff. An attempt to develop the capacity of the local road construction industry will involve considerable funds and, most importantly, the Government's commitment which does not appear to be strong. The problem will be examined in the context of the proposed Third Highway Project. Therefore, under the proposed project, local contractors will be used for the construction of drainage structures and workshops and for the supply of local road-building materials. Contracts to be awarded to them are estimated at US$1.8 million. G. Road Financing 3.14 Road expenditures are financed from general revenues and from foreign loans and grants. Under the Third Plan, about CFAF 42.3 billion (at 1974 prices) was spent on roads, of which CFAF 34.6 billion was for con- struction and improvement and CFAF 7.74 billion for maintenance of the classified network (Table 6). Under the Fourth Plan, proposed road spending totals CFAF 78.2 billion at 1974 prices, of which CFAF 68.5 billion is for construction and CFAF 9.8 billion for maintenance. The amount for construc- tion and improvement of feeder roads have increased from CFAF 3.9 billion or  - 11 - 9% of road expenditures in the Third Plan to CFAF 24.6 billion 1/ or 31% in the Fourth Plan. Local communities have contributed unknown but significant financial resources towards feeder road development. More recently, about CFAF 300 million from the Price Stabilization Fund has been spent on improve- ment of some cocoa roads. Revenue from road users derive from import duties on vehicles, fuel taxes and licensing fees. Over the period 1971/72-1975/76, these revenues amounted to about CFAF 53.8 billion (Table 7), far more than the amounts budgeted for road maintenance. 3.15 No central budgetary funds are allocated for feeder road mainte- nance; although local authorities and communities have contributed some funds and, in some cases, labor and materials, these have often sufficed only for routine maintenance. Unless adequate funds are made available on a timely basis, the feeder roads being built or proposed, including those under the project, will rapidly deteriorate. A general strategy needs to be adopted to ensure adequate maintenance of the other parts of the feeder road network as they are rehabilitated to a maintainable state. Given the Govern- ment s increased emphasis on maintaining the classified road network, it is highly unlikely that sufficient funds will be provided; therefore, additional sources should be found. 3.16 During appraisal, discussions were held with the Government on the feasibility of collecting contributions in cash or in kind from the following direct and indirect beneficiaries of feeder roads: (a) the Govern- ment, (b) local population, (c) cooperatives, (d) transporters, and (e) Price Stabilization Fund (PSF). Although Government has agreed in principle to use some of these sources in some selected cases under the project, it wants to study the question in more detail before it adopts a general policy on it. The following approach has therefore been agreed with the Government: First the necessary resources are being mobilized under the project to maintain the project roads during the four-year project period after their construction and improvement. This initial maintenance includes minor betterment required by the low level of improvements inherent in this type of project. It would help set up the institutional and technical arrangements and training of staff required for carrying out adequate maintenance. The DCD, the ZAPI East Organization and the SODEPA 2/ will assist in maintaining the roads they improve using a maximum of community participation with labor, local mate- rials and cash. Secondly, the Government will provide DR the resources to maintain a significant and annually increasing number of specific feeder roads recently built or programmed for improvement during the next four years. These feeder roads will be maintained at a long-term, estimated cost of about US$400,000 per year, including periodic maintenance. The maintenance standards which have been agreed upon with the Government are described in Table 12. The remaining feeder roads are not in a suitable condition for normal maintenance operations. Thirdly, consultant services are provided under the project for the study of resources for feeder road 1/ This figure does not include some feeder road investments budgeted as part of agricultural projects such as those in the proposed project. 2/ SODEPA: Societe de Developpement et d'Exploitation des Productions Animales.  - 12 - maintenance. The Government has agreed to maintain the project roads and the additional specific feeder roads by the end of the project period. The Government also agreed to undertake the feeder road maintenance study for completion by December 31, 1978, and to discuss with the Bank promptly thereafter the funding of feeder road maintenance in light of the study's findings. 4. THE PROJECT A. General Description 4.01 The proposed project consists of: (a) a four-year program of construction, improvement, rehabili- tation, and maintenance, mainly by force account, of about 2,200 km of feeder roads including (i) purchase and rental of equipment; (ii) purchase of spare parts, fuel, lubricants, and materials; and (iii) minor civil works by local contractors; (b) construction of, and provision of equipment and tools for, a DR workshop including office facilities at Nguelemenduka; (c) technical assistance to establish and strengthen the Feeder Road Unit to be set up within DR, to implement the program, and to train local staff of the Unit in planning, imple- menting and monitoring feeder road improvement and mainten- ance, and in maintaining and repairing road equipment; and (d) consultant services for (i) studying the resources for feeder road maintenance; and (ii) preparing a follow-up feeder road program. B. Feeder Road Program 4.02 The proposed project provides for the construction, improvement and rehabilitation of about 2,200 km of feeder roads. Of these 850 km are to be expected within the proposed ZAPI East Rural Development Project, 1,200 km in the Western Highlands (about 900 km within the proposed Western lHighlands Agricultural Development Project in the West Province and 300 km in the proposed FED/German agricultural project in the Northwest Province) and 150 km in the Adamaoua area of the ongoing Livestock I Project. Annex I describes in more detail the objectives and scope of the above projects. About 320 km of new feeder roads will be constructed and the rest improved or rehabilitated. The proposed improvement, rehabilitation consists of (a) reshaping with or  - 13 - without widening of roadway, (b) regravelling selected sections, and (c) building, repairing and reinforcing drainage and drainage structures. The design standards for them (Table 8) have been chosen as a function of expected traffic level over a ten-year period. Where existing standards are higher than those proposed, they will be retained. During negotiations, Government agreed to use these standards for the project roads, except where otherwise agreed by the Bank Group. 4.03 A firm work program for the first year (Table 9) and a tentative second-year program (Table 10) have been established and agreed in principle with Government; a tentative list of roads to be included in the third and fourth year programs are shown in Table 11. The criteria for the selection of roads to be included in the first year's program were (a) economic rate of return (ERR), (detailed in Annex 5); a minimum 10% ERR requirement was applied to each road; the ERR was based on road-user savings for those feeder roads with substantial existing traffic and on road-user savings, net incre- mental agricultural production and reduced produce spoilage for feeder roads with little or no existing traffic but in areas expected to have significant future agricultural activity; (b) the needs of the agricultural_projects supported by the roads, and (c) the necessity for geographical coordination to prevent long travel distances by road brigades. For the second, third and fourth year programs, the ZAPI East Organization, UCCAO 1/ and BAG 2/ will select, using the same criteria as above, the roads to be included under the annual programs for the ZAPI East and Western Highlands respectively for review and approval by their respective provincial interministerial committees and the Bank (paragraphs 4.22 and 4.23). The firm first year program and the above arrangements for establishing the subsequent annual programs were agreed with the Government during negotiations. C. Improvement of Project Regional Roads 4.04 In order to achieve the objectives of the project roads, the road network linking them to the ultimate export outlet or regional market centers should also be in reasonable condition. Therefore, some national and provin- cial roads in the project areas requiring minor but essential works have been included under the project. These include improvements of roadside and offshoot drains, repair of culverts and bridges, improvement of embankments on crossing of marshy areas and regravelling, as necessary. Additionally, about 540 km of main roads needing extensive rehabilitation and some reconstruction will be provided for under the proposed Third Highway Project. A list of these roads is presented in Table 13. The total costs for these works are tentatively estimated at about US$3 million. During negotiations Government confirmed its intentions to include these works under the proposed Third Highway Project. D. Equipment and Material Purchases 4.05 The Central Equipment Pool does not have sufficient equipment to fill DR's existing needs and cannot be counted on to supply equipment re- quirements of the force account brigades under the project. Therefore, the 1/ UCCAO: Union des Cooperatives de Cafe Arabica de l0Ouest will be the executing agency for the Bank-financed Western Highlands Agricultural Project. 2/ BAC: Bamenda Association of Cooperatives will execute the FED/German project.  - 14 - proposed project provides for all the equipment and spare parts needed to operate the different brigades as listed in Table 14. However, equipment to be used for improving the feeder roads in the areas of the proposed Zapi East and Western Highlands projects may be subject to modification if the scope of these projects is modified or reduced. The bidding documents and schedule for delivery of the equipment would reflect this. The Government has agreed to these arrangements. Bidding documents for all equipment under the project will be prepared by DR's FRU with the assistance of the technical assistance consultants (engineer and mechanic) provided under the project. Preparation of these documents should be finished by December 31, 1977 to permit equipment delivery by the beginning of the construction period in September 1978. The project also provides for purchasing materials such as cement, steel, lumber and for supplies such as fuel, lubricants and tires. E. Technical Assistance and Studies 4.06 Technical assistance (seven experts for about 133 man-months) will be provided under the project to assist the Government to: (a) establish the FRU and train Cameroonian staff; (b) prepare the bidding documents and procure equipment, spare parts, some materials and supplies; (c) define the annual programs and prepare detailed plans for their execution; (d) implement the feeder road program; (e) design and implement a program for the training of DR staff including, but not limited to, engineers, road technicians, mechanics, equipment operators, brigade chiefs and foremen; and (f) prepare a second-phase program for feeder road improvement and maintenance. 4.07 The experts' draft Terms of Reference, required qualifications and duration of assignments, are outlined in Annex 2. These arrangements were confirmed at negotiations. 4.08 The proposed project provides funds for short-term consultants (20 man-months total) to assist the Government in preparing (a) by December 31, 1978 a study of the resources for feeder road maintenance which will be dis- cussed with the Bank, and (b) by September 30, 1980 a study of a follow-up feeder roads project. Government has agreed to attach qualified local staff to the FRU on a full-time basis to be trained by the experts, both those for technical assistance and studies (Annex 2).  - 15 - F. Training 4.09 The project will provide on-the-job training, through the tech- nical assistance experts and the short-term consultants for the Cameroonian engineers and transport economists at MINEH's headquarters in Yaounde. In the field, the project will require 4 road engineers and technicians, 20 foremen, 110 equipment operators and drivers and 33 mechanics. Even though sufficient staff is available for these positions most of them will require different degrees of training which is therefore an important element of the project. The training specialist in the team will propose an outline training program for each counterpart assigned to the team and for the mechanics, foremen and equipment operators for review by the Government and the Bank by the end of February 1978. He will also train a Cameroonian training counterpart. Sup- plementary training for the road engineers, technicians and the mechanics will mainly be on-the-job by the technical assistance experts. Training of operators will be carried out at MINEH's training center at Douala. Equipment operators who have already received training will receive supplementary train- ing from the suppliers of the equipment to be purchased under the project. The bidding documents will specifically include this provision. Training of personnel for the DCD brigade will be carried out by SATA which is already providing technical assistance to DCD and has a training center in West Cameroon. The technical assistance will be phased out gradually and in the last year the program will be managed entirely by Cameroonians. The Govern- ment has agreed to these training arrangements, to the local staffing and to take appropriate budget measures to allow recruitment and training of these personnel. G. Provision of Workshops and Office Space 4.10 DR has workshops both at Bertoua in the ZAPI East and at Bafoussam in the Western Province. The Bafoussam workshop is reasonably well equipped with both facilities and staff to maintain the equipment of the DR brigades. A new but modest workshop including office facilities will be built at Nguele- menduka, which is more central for the ZAPI area, to take care of the DR and ZAPI brigades. It will also be supplied with the necessary tools and equip- ment. DCD already has a good workshop at Bamenda. The Government will provide office space at Bafoussam, Yaounde and Bamenda. The Government has agreed to construct and have the workshop and office in operation at Nguele- menduka by December 31, 1978. H. Project Monitoring 4.11 The economic, social and engineering aspects need to be monitored closely to determine both the extent to which they should be modified for preparation of the follow-up project and the long-term impact of the project roads. Since the bulk of the socio-economic aspects concern the results of the ZAPI East and Western Highlands Rural/Agricultural Development Projects, monitoring of these elements will be integrated with the monitoring systems of those projects. Monitoring under the project will, therefore, be reduced to (a) the engineering parameters, which will be done routinely with project execution (see list in Annex 3), and (b) evaluation of traffic forecast and  - 16 - evolution of transport costs which can be done periodically by the provincial feeder road engineers to be appointed under the project. At negotiations, Government agreed to these arrangements as well as the list of items to be monitored. I. Cost Estimates 4.12 The total cost of the project is estimated at US$21.1 million, including US$4.0 million equivalent in taxes and duties (Table 15). Project costs, net of taxes and duties, are estimated at US$17.1 million equivalent, with a foreign exchange cost of US$11.1 million (65%). The following is a summary of project costs: Foreign Exchange Local Foreign Total Local Foreign Total Component -----CFAF Million---- -----US$ thousand---- % I. Equipment Purchase 81 722 803 330 2,947 3,277 90 Rental 1 3 4 4 12 16 75 II. Spare parts 113 283 396 461 1,155 1,616 71 III. Fuel and lubricants 100 266 366 408 1,086 1,494 72 IV. Local staff 386 - 386 1,576 - 1,576 0 V. Materials 96 320 416 392 1,306 1,698 77 VI. Civil works 171 187 358 698 763 1,461 52 VII. Technical Assistance 62 160 222 253 653 906 72 VIII. Provision of Office space and equipment 35 35 70 143 143 286 50 IX. Workshop equipment and tools 8 31 39 32 126 158 80 X. Studies 6 34 40 24 139 163 85 Total I-X 1/ 1,059 2,041 3,100 4,321 8,330 12,651 67 XI. Contingencies Quantity 106 204 310 432 833 1,265 66 Price 307 468 775 1,254 1,910 3,164 60 Grand Total 1,472 2,713 4,185 6,007 11,073 17,080 65 Rounded (6,000) (11,100) 17,100) (65) Source: Mission estimate 1/ Base costs refer to February 1977.  - 17 - 4.13 Cost estimates for equipment and tools (Table 14) are based on the findings of consultants and bids received in 1976 for similar equipment. Operating costs of equipment, assuming 180 working days per year, are based on cost figures observed under the feeder road improvement program in the Cocoa Project. The average cost including equipment depreciation but excluding contingencies, net of tax, for road construction and improvement are as follows: Western Highlands ZAPI East Adamaoua (US$) (US$) (US$) pr. Km 6 m roads 8,000 4,800 4.5 m roads 6,000 2,400 Access Tracks 5,000 2,000 2,000 The higher cost for the roads in the Western Highlands is mostly due to the mountainous terrain, the need for more gravelling and the large number of drainage structures to be reconstructed or improved. The costs in the ZAPI East are average. The lower cost in the Adamaoua zone is due to the rela- tively flat terrain, the availability of good road-making soils, the limited number of drainage structure and the rather low design standards acceptable for the expected low traffic on those roads. 4.14 Technical assistance is assumed to be provided by consultants. The average man-month cost is estimated at about US$7,000 which corresponds to rates of the firms working in the region. The billing rate for these ser- vices is estimated at US$4,000 to US$6,500 per field man-month, according to the experts' qualifications, and comprises salaries and overhead (home office expenses, expatriate allowance, social security, etc.). Reimbursable expenses payable to consultants, i.e., housing, travel, etc. is estimated at US$1,500- 2,000. These costs will be significantly reduced if the Government elects to use SATA experts for the services (para. 4.10). The cost of short-term consultants is estimated at about US$8,000 per man-month based on the Bank's experience with their use during project preparation and assuming that experts would be provided by a consulting firm. 4.15 Cost estimates for workshop buildings are based on bids received from local contractors in 1976 for similar works. 4.16 A quantity contingency allowance of about 10% has been included in the cost estimates to allow for increases in quantities. Even though this is a program-type operation and would normally not require physical contingen- cies, they have been included since the program target has been set to fit definite agricultural programs. Provision for future price increases has been calculated separately for the various items in the country in accordance with Bank Group Guidelines as follows: for equipment and spare parts, 7.5% p.a. from 1977-79 and 7% thereafter; for other items, 9% p.a.from 1977-79 and 8% thereafter. These amount to about 27% of the total base cost for February 1977 prices.  - 18 - J. Execution 4.17 The Ministry of Economy and Plan (MINEP) will have overall re- sponsibility for execution of the project. However, it will appoint other ministries to be executing agencies for separate components of the project as follows: (a) MINEH (in particular the Department of Roads) for the construc- tion, improvement and subsequent maintenance of the feeder roads (other than access roads in the ZAPI East and the West Province), the study of the follow- up project and the sources of funds for feeder roads; (b) the Ministry of Agriculture (in particular the Department of Community Development) for the construction and subsequent maintenance of about 300 km of feeder roads in the Northwest Province; (c) the ZAPI East Organization for the construction and subsequent maintenance of about 150 km of farm access roads and (d) the SODEPA for the construction and subsequent maintenance of 150 km of access roads in the Adamaoua zone. 4.18 Physical execution of the project is scheduled to start in September 1978 and be completed in four years in accordance with the implementation schedule shown in Table 16. The Government has agreed to this schedule. Road construction, improvement and maintenance will be carried out by force account; local contractors and 'petty contractors" 1/ will be used to construct workshops and drainage structures and to supply road-building materials. 4.19 The roadworks under the project will be executed as follows: Type I and II Feeder Roads in ZAPI East and West Province: two special feeder road construction units will be formed by the Department of Roads, one in the ZAPI East and the other in West Province. Each unit will be headed by a provincial feeder roads engineer who will depend, for technical matters, on the provincial delegate of equipment. Feeder Roads in the Northwest Province: these roads (about 300 km) will be built by a brigade from the Department of Community Development equipped relatively lightly (see Table 14). SATA will provide technical assistance (a road technician and mechanic) to the brigade. Farm Access Roads in the ZAPI East: the ZAPI East Organization will create a light brigade to build the roads with technical assistance provided under the project. Access Roads in the Adamaoua Zone: these roads will be built by SODEPA's own forces with their existing equipment to be supplemented by some rented equipment. Construction is expected to be over one construction season. 4.20 The roads to be constructed during the first year were agreed during negotiations. Roads for subsequent years will be proposed annually by 1/ These are individuals who take on small contracts and assemble the skilled and unskilled labor to execute the works. They usually have to be supplied with materials and supplies.  - 19 - the ZAPI East Organizations for the East Province and UCCAO for the West Province and BAC for the Northwest Province according to the guidelines in- cluded in Annex 5. These lists would be reviewed and approved by provincial interministerial committees (PIC) to be organized within the three provinces withi provincial representatives from, inter alia, the Ministries of Planning, Finance, Equipment and Housing, Agriculture, Transport as well as important cooperatives and agencies with direct interest in agricultural feeder roads. During negotiations, the Government undertook to ensure the meeting of the PICs not later than May 31 each year during the period of project execution. The approved programs would be submitted to the Bank for approval three months before the scheduled start of works to be undertaken in that year's program. FRU will be responsible for preparing the detailed annual programs for the DR roads as well as provide technical guidance on the programs of the other agencies. These arrangements have been agreed upon by Government. 4.21 Detailed plans for the Nguelemenduka workshop and office buildings under the project will be developed by the Feeder Roads Unit. K. Procurement 4.22 Equipment, materials, spare parts and supplies amounting to about US$8.0 million (net of taxes) will be procured on the basis of international competitive bidding in accordance with Bank Group Guidelines. These items will be bulked to the extent possible to m-ake them suitable for international competitive bidding. Goods manufactured in Cameroon would be allowed a pref- erence equal to 15% of the c.i.f. price on imported goods or the prevailing duties generally applied to non-exempt imports, which is lower. Contracts for equipment, materials and supplies costing under US$50,000 may be awarded on the basis of competitive bidding following local procedures acceptable to the Bank. The aggregate amount for such purchases would not exceed US$600,000. Contracts for the construction of workshops and drainage structures totalling about US$1.8 million will follow local competitive bidding procedures accept- able to the Bank. Consultants for technical assistance and for the feeder roads studies will be employed in agreement with, and under Terms of Reference and conditions satisfactory to, the Association. All the above arrangements were discussed and have been agreed to by the Government. L. Financing and Disbursements 4.23 The proposed Loan of US$4.6 million and Credit of US$6.5 million will finance about 65% of total project costs net of taxes; i.e., all foreign costs. Government will finance local costs of US$6.0 million of net-of-tax project costs. Taxes and duties are estimated at US$4.0 million. Table 17 gives details of project financing. Loan/credit funds will be disbursed as follows: (a) 100% of the foreign costs of imported highway equipment, vehicles, spare parts, workshop equipment and tools, office equipment aLnd wiaterials or 55% of the local costs of these items if purchased locally;  - 20 - (b) 55% of the total expenditures for fuel, lubricants, and rented equipment; (c) 55% of total expenditures for civil works done by contractors; and (d) 70% of total expenditures for technical assistance experts and consultants. Requests for disbursements will be fully documented. Based on the foregoing and the project implementation schedule shown in Table 16, the estimated schedule of disbursements from the loan/credit account is shown in Table 18. 4.24 Early engagement of the team leader (highway engineer) for the technical assistance team (paragraph 4.09) and other project starting costs will necessitate use of the Project Preparation facility for financing of about US$100,000. 5. ECONOMIC EVALUATION A. General 5.01 The Government is emphasizing (a) increased agricultural production for both domestic consumption and export and (b) raising the income and the general well-being of the rural population which has an average per capita in- come of only about US$85 p.a., compared to a national average of US$270. To achieve these objectives, various integrated projects are being implemented or planned. These provide credit, farm inputs, extension services and improved marketing to increase holdings and improve yields. Efficient, reliable transport of agricultural inputs and produce is vital to their success. Moreover, in existing productive farm areas outside the integrated schemes, poor roads and the consequent high transport costs and unreliability result in excessive produce spoilage and low farm-gate prices for food crops. Poor roads also discourage the use of fertilizers and insecticides and constitutes an important hindrance and disincentive for increasing production. The planning, development and maintenance of these feeder roads, on the other hand, demands an efficient well-staffed organization at both the national and local levels to avoid misinvestments and to ensure proper upkeep of the investments made. The objectives of the proposed project are (a) to establish an efficient in- stitutional framework for planning, developing and maintaining feeder roads, (b) to train local staff in performing the above functions and (c) to pro- vide adequate resources for the construction and subsequent maintenance of some 2,200 km of feeder roads to support agricultural/rural development projects in the ZAPI East, the Western Highlands and the Adamaoua Livestock area.  - 21 - B. Economic Justification 5.02 The justification of the proposed project derives from its indis- pensable role in four agricultural and livestock development projects and its important institution-building objective. Institution Building 5.03 The institution-building component of the project represents a major benefit, albeit unquantifiable. It will improve DR's capability and thereby reduce the waste of resources concomitant to poor planning, inadequate construction quality and insufficient or, in most cases, complete neglect of maintenance. The training component will result in increased capacity of local staff, at all levels, to handle the development and maintenance of the feeder road network and decrease the need for technical assistance in follow- up projects. The project will also initiate a concerted interministerial/ interagency approach to planning feeder roads as well as to encourage more intensive local participation in both the decision-making process and in financing and executing the works. Feeder Road Programs 5.04 The economic justification of the feeder roads in the proposed project addresses four issues, namely: (a) the justification of the roads as an integral part of the agricultural projects they serve (paras. 5.05- 5.12); (b) the justification of the feeder road project without the associated agricultural projects; (c) the justification of the specific roads included in the first-year program (para 5); and (d) criteria for selecting roads for the subsequent annual programs. Justification within context of agricultural programs 5.05 The feeder roads in the proposed project are integrated with the ZAPI East Rural Development Project, the Western Highlands Agricultural Development Program (both the Bank and FED/West German-financed parts) and the Adamaoua Livestock Development Project. The justification of the roads has, therefore, been evaluated as an integral part of those projects in the same manner as the other components; namely, credit, extension services, health facilities and agricultural inputs.  - 22 - The ZAPI East Road Program 5.06 The 850 km in the ZAPI East area will serve the proposed ZAPI East Rural Development Project.l/ Total investments for that project would amount to US$10.6 million,2/ net of taxes, of which US$9.0 million for agriculture and other direct production and US$1.6 million for health, water supply and marketing. An additional US$4.0 million is being provided for feeder roads under the proposed feeder roads project. Benefits from the ZAPI East project include (a) incremental annual production of crops (food and non-food) esti- mated at about US$2.5 million at full development after 10 years and (b) unquantifiable but significant benefits from improved health and water supply facilities. About 16,500 farm families, all below the poverty level of US$80 p.a., are expected to benefit from the project. The feeder road component will (a) provide the cheap, reliable and efficient transport indispensable for generating and marketing the increased production, (b) provide improved access to health and social amenities, (c) increase communication between communities and thus enhance the cooperative spirit vital to ZAPI's success and (d) reduce transport costs to existing and future non-agricultural traffic, about US$254,000 per year by 1983, the year after completion of the road proj- ect (Table 19). 5.07 On the basis of the above costs and quantifiable benefits, the integrated rural development project including the road component is ex- pected to yield an economic return of about 27% over the 20-year life of the rural development project. In the calculation of the economic return, further investments for minor rehabilitation, periodic and routine maintenance on the project roads to carry them beyond their 10-year normal life have been assumed. The Western Highlands Road Program 5.08 About 1,230 km of the project roads support two agricultural devel- opment projects in Cameroon's Western Highlands--the proposed Bank-financed project in West Province 3/ (930 km) and a similar FED/German project (300 km) in the Northwest Province. Investments under the Bank agricultural project, about US$30 million, will finance (a) agricultural extension and research services, (b) credit to farmers for farm inputs including fertilizers, (c) improved and high-yield seed farms, (d) soil conservation and reforesta- tion, (e) small animal husbandry and (f) marketing assistance (Annex 1); the US$6.4 million for road construction and improvement and annual recurrent costs for road maintenance are additional. 5.09 Benefits from the Bank-financed agricultural development project will include (a) maintenance of production and improved quality of arabica coffee, and increased production of foodcrops, vegetables, poultry, pigs and 1/ These are the current estimates being used in the ZAPI Appraisal Report (draft yellow cover). 2/ Scheduled for Board Presentation February 21, 1978. 3/ Scheduled for Board Presentation March 7, 1978.  - 23 - eggs, expected to reach about US$7 million on the fifth year of the project, (b) introduction of appropriate land use patterns and of soil cultivation and (c) introduction of new cultivation systems and techniques. The road component, will, as in the ZAPI case, provide the cheap, reliable and effi- cient transport necessary for (a) generating and marketing the additional agricultural population, (b) reducing spoilage of foodcrops and vegetables which are transported mainly during the rainy season when the existing feeder roads are practically impassable and (c) reducing transport costs to non- agricultural traffic, about US$507,000 p.a., by year 1983 (Table 19). On the basis of the above benefits and costs, the agricultural project, includ- ing the road component, is expected to yield an economic rate of return of about 20% over its 20-year life time. The project is expected to increase the family income of about 80,000 farm families by 30-40X. 5.10 The composition and level of investments in the FED/German agricul- tural project is not yet known. The project is, however, expected to be similar in composition and benefits to the Bank-financed project and, there- fore, expected to yield a comparable economic return. The Adamaoua Road Program 5.11 The 150 km of low standard roads provided in the livestock area is a component of an ongoing livestock development package including credit, extension services, veterinary services and ranch inputs and aimed at pro- ducing about 1,000 head of cattle in a 3-year period. Additional project benefits will include increased agricultural production and other economic activity as the area is introduced into the market economy and reliable transport provided among the area's communities hitherto only connected by footpaths and cattle tracks. Benefits from the roads would consist mostly of the provision of low cost and reliable transport of ranch inputs and better access for extension officers as well as transport of agricultural produce. Even though cattle transport will be mostly "on-the-hoof" it is expected that a significant number of ranchers will profit from road transport to reach the various markets scattered in the area. 5.12 In the justification of the project, the cost of the roads and other diverse inputs required to produce the target heads of cattle have been com- pared to the incremental gains from increased cattle and agricultural produc- tion. The costs and benefits are based on actual figures experienced by the SODEPA in the Bank-financed First Livestock Project; agricultural cost esti- mates were obtained from the provincial staff of the Ministry of Agriculture. On the basis of these costs and benefits, the livestock development package including the roadworks is expected to yield an economic rate of return of about 18% over the 10-year life of the roads. Justification of the feeder roads without the agricultural projects 5.13 To verify that the feeder roads component within the agricultural projects is viable without the agricultural projects, a separate analysis of the feeder roads, without the agricultural projects, was performed using as  - 24 - benefits, road-user savings, reduced spoilage and modest induced increases in agricultural production. The proposed feeder roads project was shown to yield a minimum economic rate of return of 14%. As an illustration of the justifi- cation of a Category II road, the analysis for one first-year road is provided in Annex 4; a safeguard that the individual roads are justifiable is provided by the selection criteria outlined in Annex 5. Justification of roads in the first-year program 5.14 Roads selected for the first-year program fall into two categories: Category I roads (about 70% of total) which serve areas of consi- derable existing economic activity, and Category II roads which serve areas with little existing economic activity, but where considerable potential exists for increased agricultural production. Category I roads have been justified on benefits from: (a) road-user savings to non-agricultural traffic; (b) induced increases in agricultural production; and (c) reduced produce spoilage. All roads included in the first year have an economic return exceeding 10%. Criteria for selection of roads after first-year of project 5.15 The criteria for selecting roads to be included in the second, third and fourth annual programs (detailed in Annex 5) will be: (a) economic rate of return; (b) the needs of the agricultural projects served by the roads; and (c) geographical coordination of brigades. In all cases, road selected for inclusion in the annual programs will have to yield a minimum ERR of 10%. Distribution of the Project's Benefits 5.16 The distribution of the feeder road project's benefits will be influenced greatly by (a) Government's policy on producer prices and (b) the extent of competition in the transport industry. Under prevailing conditions (paragraph 3.04), approximately a third of the benefits from increased cash crop production, mostly cocoa and coffee, will accrue to farmers, about a third to the Price Stabilization Funds, about a sixth to Government as export tax and the remaining sixth to various cooperatives. The farmers will even- tually recuperate some of the benefits to the latter beneficiaries through price subsidies and improved agricultural services. With regard to foodcrops, farmers will capture most of the benefits through both selling more and enjoying a higher producer price, given the competitiveness of the trucking industry; transporters and exporters will share the rest. Benefits from reduced transport costs to passengers and non-agricultural traffic will be shared by the communities in the project area, the transporters and the traders. Project Risks 5.17 The risks associated with the proposed project include (a) pos- sibility of diversion of project equipment and goods to non-project work, (b) interference with selection of roads for annual programs and (c) sig- nificant modifications in or partial failure of the associated agricultural  - 25 - projects in reaching their targets; minor modifications can be easily accommo- dated within the annual program revisions. Diversion to non-project work may be a serious risk since MINEH, the expected recipient of the bulk of the project's equipment and supplies, has to date experienced difficulty in satisfying its needs from the Central Equipment Pool (para. 3.08). The risk is reduced by the expected alleviation of MINEH's equipment problem under the proposed Third Highway Project (para. 1.05) and the vigilance of the Provin- cial Interministerial Committees and the various executing agencies of the agricultural programs. The risk of potential interference is alleviated by the guidelines agreed with Government for justifying roads selected in the annual programs (Para. 5.14 and Annex 5). 5.18 The risk of drastic modifications in the agricultural or rural development projects is rather low, but even in the unlikely event of this occurring, the proposed feeder roads project, without the agricultural projects, would yield a minimum economic return of 14% (para. 5.04). A sensitivity test of the economic returns of the agricultural projects (Table 20) to possible variations in the degree of the projects' success and costs of inputs indicate acceptable returns for those projects. 6. AGREEMENTS REACHED AND RECOMMENDATION 6.01 Agreement has been reached with the Government on the following: (a) that it will set up a Feeder Road Unit by March 31, 1978 (para. 3.06); (b) that Government will take all administrative, technical and financial steps necessary to maintain (i) the project roads to adequate standards after project completion and (ii) a significant and annually increasing number of specific feeder roads, not included under the proposed project (para. 3.10 and 3.16); (c) that Government will undertake a feeder road maintenance study to be completed by December 31, 1978 and discuss the funding of feeder road maintenance with the Bank promptly thereafter in light of the study's findings (para. 3.16); (d) that it will agree to adopt the design standards outlined in Table 8 except where otherwise agreed by the Bank Group (para. 4.02); (e) the first year's road program and the arrangements for establishing the subsequent annual programs including the guidelines for selecting individual roads (paras. 4.03 and 4.20 and Annex 5);  - 26 - (f) Terms of Reference for consultants and a list of local per- sonnel to be attached to them as counterparts (paras. 4.07 and 4.08); (g) that Government will attach qualified local staff to FRU to be trained by the experts and make all necessary budgetary arrangements to ensure that the required local staff is recruited on time and that all costs, to be met by Government are paid on time (paras. 4.08 and 4.09); (h) that it will furnish to the Bank prior to February 28, 1978, a training program for local personnel assigned to the project, review its contents with the Bank and agree on a schedule for implementing recommendations made concerning the program (para. 4.09). (i) the project procurement and implementation schedule, and the arrangements for monitoring the project (paras. 4.05, 4.10, 4.11 and 4.18). (j) that the Government will organize provincial interministerial committees to meet not later than May 31 each year during the period of project execution to review and approve the annual road programs (para. 4.20); (k) that arrangements for procurement will be on the basis of international competitive bidding in accordance with Bank Group Guidelines (para. 4.22); and (1) that the Government will employ consultants for technical assistance and studies under terms of reference and conditions acceptable to the Bank (para. 4.22). 6.02 Since agreement has been reached with Government on the items mentioned in paragraph 6.01, the proposed project is suitable for a Loan of US$4.6 million for a term of 20 years including a 5 year grace period and a Credit of US$6.5 million on standard IDA terms to the United Republic of Cameroon including a Project Preparation Facility Advance of US$100,000.  UNITED REPUBLIC OF CAMEROON FEEDER ROADS PROJECT Agricultural Production ('000 tons) 1969/70 1971/72 1972/73 1973/74 1974/75 A. Cash Crops Cotton 91 43 45 28 40 Cocoa 108 122 107 110 118 Robusta Coffee 58 64 63 60 67 Arabica Coffee 24 30 32 25 32 Bananas (Export) 49 58 63 67 75 B. Food Crops Millet/Sorghum 376 340 321 Maize 254 283 300 Rice (paddy) 12 14 8 Sugar Cane 185 179 185 Groundnuts 141 153 166 Doliques-Beans 39 53 53 Macabo-Toro 613 603 635 Manioc 595 662 719 Sweet Potatoes 125 128 149 Yams 161 268 380 Plantains 623 763 840 Potatoes 26 31 38 Si Source: Annexe de Statistique: Ministry of Economy and Plan, 1974/75 (  Table 2 UNITED REPUBLIC OF CAMEROON FEEDER ROADS PROJECT Development of Highway Network (km) 1972 1974 1976 1977 A - Classified Network Paved Roads 1,417 1,610 1,977 1,997 Laterite Roads A 996 1,195 1,021 1,902 B 2,339 2,468 2,822 2,817 C 2,152 3,064 5,716 7,493 D 6,084 6,196 5,526 3,790 E 7,959 9,315 9,240 10,801 Total 20,947 23,848 26,302 28,800 B - Unclassified Network Earth 22,000 25,000 28,000 30,000 Grand Total 42,947 48,848 54,302 58,800 Sources: Ministry of Equipment and Housing, February, 1977 Frederic R. Harris Highway Maintenance Study, January 1977 Mission, February 1977  Table 3 UNITED REPUBLIC OF CAMEROON FEEDER ROADS PROJECT Motor Vehicle Registration Year Passenger Delivery Buses Trucks Special Purposc Total Cars Vans yehicles F]eeL 1971 3,697 1,352 406 1,021 250 46,800 1972 3,955 1,462 434 1,103 263 44,750 1973 4,153 1,396 469 1,202 350 52,240 1974 4,402 1,508 493 1,262 290 55,370 1975 4,622 1,659 527 1,350 313 59,250 1976 n.a. n.a. n.a. n.a. n.a. 58,690 1977 n.a. n.a. n.a. n.a. n.a. 62,500 Average annual growth (1971-77): 6% n.a. - not available 1/ The estimated total fleet differs from the number of vehicles registered since only imports are registered and retirement of vehicles from service is not recorded. Source: Ministry of Transport, Cameroon, February 1977 Mission Estimates, February 1977  Table 4 UNITED REPUBLIC OF CAMEROON FEEDER ROADS PROJECT Consumption of Motor Vehicle Fuels Fiscal Year Gasoline Diesel Total 1971-1972 124,581 118,464 243,045 1972-1973 133,111 136,945 270,056 1973-1974 140,839 156,175 297,014 1974-1975 139,091 156,000 295,091 1975-1976 145,351 167,780 313,131 1976-1977 146,000 168,000 314,000 Source: Ministry of Transport, Cameroon, February, 1977 Frederic R. Harris Highway Maintenance Study, January, 1977 Mission, February 1977  Table 5 UNITED REPUBLIC OF CAIIEROON FEEDER ROADS PROJECT Maintenance Allocations for Different Road Types (Fiscal Year 1976/77) Amount Road Category (CFAF/kmYear) Paved Roads 296,000 Laterite Roads A 164,000 B 132,000 C 108,800 D 55,250 Source: Ministry of Equipment and Housing, Cameroon, February, 1977 Frederick R. Harris Highway Maintenance Study - January, 1977 Mission, February 1977  Table 6 UNITED REPUBLIC OF CAMEROON FEEDER ROADS PROJECT Road Expenditures during the Third Plan (CFAF Million) Fiscal Year 1971/1972 1972/1973 1973-1974 1974/1975 1975/1976 Studies 350 400 800 300 380 Construction 3,603 4,943 4,591 10,503 12,940 Maintenance 1,455 1,483 1,790 1,797 2,356 TOTAL 5,408 6,826 7,181 12,600 15,676 Source: Frederic R. Harris Highway Maintenance Study, January, 1977 Mission's Estimates, February 1977  Table 7 UNITED REPUBLIC OF CANEROON FEEDER ROADS PROJECT Roader User Revenues (CFAF Million) Custom duties Fuel Vehicle Transport Fiscal Year on vehicles Tax Registration Taxes Total 1971/1972 4,167 3,443 320 110 8,040 1972/1973 4,626 4,000 375 146 9,147 1973/1974 5,135 4,892 375 161 10,563 1974/1975 6,810 5,095 400 170 12,475 1975/1976 7,560 5,393 450 180 13,583 1976/1977 8,400 5,483 465 100 14,448 Source: Ministry of Transport, Cameroon, February, 1977 Frederic R. Harris Highway Maintenance Study, January, 1977 Mission Estimates, February 1977  Table 8 UNITED RE?MJLIC OF CAMEROON FEEDER ROADS PROJECT Feeder Road Design Standard Type I Type II Access Tracks Clearirn 10-12 m 7 - 8 m 8 m Road Formetion M-'dth 6 m 5 m 5 m Gravelled Width 5 m 4m 3m Thickness of,Gravel 15-20 cm 10-15 cm 10-15 cm Drainage Lateral ditches, fords and culverts (bridges only where the size of river or the volume of traffic warrants this) Traffic v0oc Over 15 5-15 Under 5 Source: 3K."ission estimate February 1977 ..;ne 1977  UNITED REPUBLIC OF CAMEROON FEEDER ROADS PROJECT First Year's Feeder Road Improvement Program Province and District Road Name Road Road Road Lenath Remarks no Standard km North-West To be improved - Bamenda (Mezam) pinyin-Bali 1 Class II 10.4 by C.D.D. Pinyin-Kontoko 2 " 6.3 Pinyin-Santa Mbu 3 " 15.2 Santa-Estate Awing 4 " 8.6 Sub-Total Bamenda 40.5 - Nji-ikom (Metchum) Njinikom-Anyajua 5 " 10.3 Anyajua-Mbezenaku 6 " 29.7 Sub-Total Ninikom 40.0 Grand Total North-West 80.5 West To be improved - Mifi Bandjoun-Bansoa 51 Class I 15 by MINEH Bamendjou-Langou 49 " 10 " Kena-Bankadjou 31 " 20 Bankadjou-Baju 32 10 Tyo-Bamafo 15 " 15 Sub-Total Mifi 70 - Bamoun Koutaba-Kouden - 28 Sub-Total Bamoun 28 - Menoua Balele-Toufem 62 15 Fombap-Foutsa-Toula 65 " 8 Fomopea-Fokwe 63 " 15 Dschang-Foutsa-Toula 73 " 20 Bafou-Bangang (via 78 " 12 Balenying) Sub-Total Menoua 70 - Bamboutos Bamendjina-Galim 7 " 58 Estate Roads a' (Dl-'  province and District Road Name Road Road Road Lencrth Remarks no Standard km To be improved - Bamboutos (cont'd) Ngossong-Bougeka-Bati 24 Class I 4 by MINEH Nkieneghang-Bati 18' 4 Bakalou-Bati Road 19 2 Bamendjing-Mt Fouoya 11 9 Sub-Total Bamboutos 77 Grand Total West 245 East Angossas-Zuine-Mboma 08 Class I 20 Ngoap-Nguelemendouka-Mbet 09 70 Djende-Bika 113 33 Doumaintang-Oubliam-Baditoum 116 29 Sub-Total Class I 152 To be improved Ndjimbou-Bengoua 121 Class II 6 by the ZAPI Ngoumou-Old Village 122 2 Badouma-Djelzok 123 2 Aminemenkoud-Zilly 124 4 Ambaka-Metsoumb 221 7 Bagoloul-Djankel 222 5 Djokoundi-Djow 223 9 Ankom-Agoamba 224 4 Kek-Mpalamedja 225 7 Npoundou-Mbakou 226 9 Sub-Total Class II 55 Grand Total East 207 t- -  Province and District Road Name Road Road Road Length Remarks n