Cameroon - Second Water Supply Project

Document ofL The World Bank FOR OFFICIAL USE ONLY Report No. P-2607-CM REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE UNITED REPUBLIC OF CAMEROON FOR A SECOND WATER SUPPLY PROJECT August 9, 1979 This document has a restricted distribution and may be used by reeipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CAMEROON SECOND WATER SUPPLY PROJECT CURRENCY EQUIVALENTS CURRENCY UNIT = CFA Franc (CFAF) US$1 = CFAF 220 1/ CFAF 1,000 = US$4.6 CFAF 1,000,000 - US$4,545 1/ Floating exchange rate. ABBREVIATIONS CAPME = Centre National d'Assistance pour Petites et Moyennes Entreprises CCCE = Caisse Centrale de Cooperation Economique (France) CDC = Commonwealth Development Corporation (UK) DEW = Directorate of Energy and Water, Ministry of Mines and Energy KfW = Kreditanstalt Fur Wiederaufbau (WG) MINEH = Ministry of Equipment and Housing MINEP = Ministry of Economy and Planning MINMEN = Ministry of Mines and Energy SNEC = Societe Nationale des Eaux du Cameroun SONEL = Societe Nationale d'Electricite du Cameroun FISCAL YEAR July 1 - June 30  FOR OFFICLAL USE ONLY CAMEROON SECOND WATER SUPPLY PROJECT LOAN AND PROJECT SUNMARY Borrower: United Republic of Cameroon Beneficiary: Societe Nationale des Eaux du Cameroun Amount: US$21 million Terms: 20 years including five years of grace at annual interest rate of 7.9 percent. Co-financixig: Commonwealth Development Corporation loan of US$15 million equivalent (E 6.75 million), with interest at 8.5 percent, repayable over fifteen yeears, including five years of grace. Relending Cerms: US$18.1 million of the proceeds of the loan would be relent to SNEC on the same terms and conditions as the Bank loan except that the Government would accept the foreign exchange risk. (The remaining US$2.9 million would be retained by Government to finance the foreign exchange cost of studies financed in this project). Project Description: The objectives of the proposed project are to: (i) improve and extend water supply systems in 13 second- ary centers and two major cities, Douala and Yaounde, with particular emphasis on low income areas, as a fiirst major step toward achieving the Government's sector program of 100 percent potable water services in urban areas in 1990; (ii) lay the ground work for organized urban development planning for Douala and Yaounde; (iii) initiate a pilot public health education project in order to ensure that the public health benefits which should derive from the project are realized; and (iv) strengthen the organization of the water supply sector. The project consists of six main components: water supply systems for 13 secondary centers; expansion and reinforcement of Douala water systems; expansion and reinforcement of Yaounde water systems; master plan studies for water supply, sewerage and drainage for Douala and Yaounde; consulting services for hygiene education; and a program of specific actions to be undertaken by SNEC document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - to strengthen its management and organization, including provision of training and management advisors for SNEC. The project faces no special risks. Estimated Costs 1/ Foreign US$ Million as x Local Foreign Total of Total A. Water supply systems in 13 secondary centers 5.4 12.1 17.5 69 B. Douala reinforcement 3.1 7.3 10.4 70 C. Yaounde reinforcement 0.5 1.7 2.2 77 D. Additional engineering, technical assistance and service promotion works for SNEC 0.8 2.0 2.8 71 E. Studies and supplies for Government 0.9 2.1 3.0 70 Total base cost 10.7 25.2 35.9 70 Physical contingencies 1.6 3.8 5.4 70 Price contingencies 3.1 7.0 10.1 69 TOTAL 15.4 36.0 51.4 70 Financing Plan: US$ million Local Foreign Total IBRD - 21.0 21.0 CDC - 15.0 15.0 SNEC 14.2 - 14.2 Government 1.2 - 1.2 TOTAL 15.4 36.0 51.4 Retroactive Financing: Consultants to carry out the master plan and final design studies have been contracted and expatriate technical assistance is being recruited, both under 1/ Because of exemption from taxes on water supply works, proposed costs do not include taxes.  - iii - terms and conditions approved by the Bank. To avoid delays in project execution, SNEC and the Government have prefinanced these contracts and it is proposed th,at an amount not to exceed US$300,000 would be financed retroactively under this project. Estimated US$ Million Disbursements: Fiscal Year 1980 1981 1982 1983 1984 Annual 0.5 3.2 6.0 6.0 5.3 Cumulative 0.5 3.7 9.7 15.7 21.0 Rate of Return: 7 percent. Staff Appraisal Report: Relport No. 2457-CM dated August 8, 1979. Map: IBRD 14236   INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE UNITED REPUBLIC OF CAMEROON FOR A SECO]ND WATER SUPPLY PROJECT 1. I submit the follow;ing report and recommendation on a proposed loan for the equivalent of US$21 million to the United Republic of Cameroon to help finance the Second Water Supply Project. The IBRD loan would have a term of 20 years including five years of grace, with interest at 7.9 percent per annum. US$18.1 nillion of the proceeds of the loan would be relent to SNEC on the same terms and conditions as the Bank loan to finance major project components to be executed by SNEC. The remaining US$2.9 million would be retained by the Government for other components. The Commonwealth Development Corporation (CDC) has agreed to finance the project jointly with the Bank, with a loan to SNEC for the equivalent of US$15 million with a term of 15 years including five years of grace, with interest at 8.5 percent per annum. PART I - THE ECONOMY 2. A report entitled "United Republic of Cameroon Economic Memorandum" (No. 1798-CM), was distributed to the Executive Directors on April 5, 1978. Its principal findings and conclusions, updated by missions that visited Cameroon in April and June 1979, are incorporated in the following paragraphs. Annex I provides basic country data. Background 3. Cameroon is one of Africa's most diversified countries with a wide range of ecological conditions, ethnic groups and cultures. Cameroon was a federation until the United Republic, which unified the anglophone western and francophone eastern parts of the country, was established in 1972. The Government has concentrated on the establishment and maintenance of national unity between the eastern and relatively small western parts of the country and between the sahelian zone in the north with muslim traditions and the southern tropical regions. 4. Cam1roon has a population of about 8.0 million and covers an area of 475,000 km . The main opportunities for development lie in the expansion of agricultural production, including forestry, and the processing of agri- cultural and forestry products for export. Soils and climatic conditions permit cultivation of a wide range of crops, and the southeast contains large untapped timber resources. The north holds promising potential for livestock development. Offshore oil and gas exploration has yielded modest results. Trade, transportation and transit services are other important economic  - 2 - activities. Cameroon's main economic centers are separated by vast under- populated areas; furthermore, the country's transport facilities also serve landlocked Chad. As a result, a large port and adequate inland transporta- tion infrastructure are essential for promoting agriculture, forestry and industry, and strengthening Cameroon's role as a regional trade center. Past Performance 5. During the Second Plan period (1966-71), GDP increased at a high rate of 7.6 percent per annum but declined during the Third Plan period (1971-76) to only 2.5 percent per annum. During 1977 and 1978, the first two years of the Fourth Plan period, growth of GDP recovered to 5-6 percent per year. Population growth is estimated at about 1.8 percent per annum in the 1960s, about 1.9 percent until the mid 1970s and about 2.3 percent from 1975-80. Per capita GNP reached about US$350 in 1978. 6. The high growth in output and income during the latter half of the 1960s was attributable to a number of favorable factors. Agriculture, accounting for about one-third of GDP, increased at a rate of 5.5 percent per annum during 1966-71. Most agricultural crops, livestock, fishing and forestry experienced high growth rates thanks to favorable supply and demand conditions such as high producer prices, high domestic income growth, and rapid economic expansion abroad. For example, because of a high level of new planting during the 1950s and early 1960s, Cameroon was able to con- tinue raising cocoa and coffee output throughout the 1960s, although the problem of the increasing age of the cocoa and coffee trees was already becoming apparent. In addition, the Government was able to maintain adequate cocoa producer prices even when export prices dropped because of built-up reserves in the cocoa stabilization fund. Manufacturing and mining, account- ing for 11 percent of GDP, increased at 12 percent per annum during 1966-71 mainly on account of the rapid development of import substitution industries, particularly manufactured consumer goods, facilitated by the high rate of domestic income growth and the availability of foreign exchange for the pur- chase of inputs and intermediate goods. The rapid agricultural and indus- trial expansion was accompanied by the growth of construction activities, public administration and other services. 7. In contrast, during the Third Plan period, growth in output and income fell off as domestic policy did not entirely offset the impact of unfavorable external factors. Despite an annual rate of expansion at 6 per- cent of staple crops in response to rising demand and high prices in urban areas, agricultural growth declined to a mere 3.6 percent a year. This poor growth record was attributable to a sharp reduction in the rate of expansion of commercial crops (1.3 percent a year, or less than one-tenth of the pre- ceding rate). The production of cocoa and arabica coffee, accounting for about 55 percent of commercial crops, actually declined, since cocoa and coffee producer prices failed to keep up with those of competing food cash crops; the foreign supported fertilizer subsidy program for arabica coffee was terminated; Government services to counter the black pod disease of the cocoa trees were inadequate; and climatic conditions were unfavorable in some  years. The other main commercial crops: cotton, rubber and oil palm, per- formed better, the last facilitated by two plantation projects assisted by the Bank and other co-donors. Growth in commercial forestry production dropped because of reduced Western European demand, lower domestic construc- tion activity and some translportation bottlenecks, while the drought cut growth in livestock production (mainly cattle in the north) from 7.2 per- cent to 3.3 percent a year. 8. In other sectors during 1971-76, growth in manufacturing slowed, following the first wave of import substitution; construction activity fell off, while other services (mainly trade and transport) hardly grew at all with a deceleration in exports, near stagnation in imports and the low growth in real income throughout the economy. With rising costs and expanded claims on available public revenues, real growth in public administration was also reduced below the 1966-71 rate. 9. Since 1977-78, the Cameroon economy has experienced a recovery attributable to record world prices for its principal export crops and the response of cocoa and coffee farmers to increased producer prices. Higher government revenues, particularly from the export sector, has allowed a rise in the investment rate, and this expansion along with higher farm incomes led to substantial growth in manufacturing, food crops, construction, trade and other services. Investment and Savings 10. Luring the Second Plan period (1966-71), the investment rate, in- cluding increases in stocks, exceeded 16 percent of GDP, and gross domestic savings and gross national savings were respectively 13.4 and 12.6 percent of GDP. Fcreign resources financed about 33 percent of investment during this period. During the Third Plan period, despite slow income growth, the investment rate increased to 18.1 percent of GDP. Gross domestic savings and gross national savings rose to 16.4 and 13.9 percent of GDP, but debt service increased by 60 percent from a small base. External resources there- fore contirnued to finance about one-third of total investment during this period. Th,e higher savings rate in a period of slow output growth was made possible by a drastic reduction in the real growth of consumption, particu- larly private consumption, to less than 2 percent per annum. One of the prices paid. for the substantial improvement in savings was, however, a lim- itation on farmers' earnings in tree crops, providing insufficient incen- tives for f'armers to raise output and make new plantings to maintain and expand production capacity -- a situation that has serious implications for the longer term future of these crops. The maintenance of a high investment rate during this period was offset by a decline in the efficiency of invest- ment. Some! reduction in capital productivity was attributable to projects, such as in oil exploration and transport infrastructure, which would lead to production increases only a number of years later, and social infrastruc- ture investments, which would improve welfare but have a limited impact on output. During 1977/78, the investment rate reached an average of 22.8 per- cent of GDE'. Thanks largely to the record cocoa and coffee prices, gross domestic savings and gross national savings increased further to 19.9 and 19 percent respectively of GDP. As a result, external resources financed only about one-fourth of total investment during these two years.  -4 Public Finance and Balance of Payments 11. Budgetary revenue amounted to 16.6 and 17.2 percent of GDP during 1966-71 and 1971-76, respectively, while public savings after debt service as a percentage of total public investment declined from about 39 percent in 1966-71 to about 36 percent in 1971-76. During 1977-78, the share of budgetary revenue in GDP increased to an average of 19.4 percent. The bal- ance of payments did not become a problem until 1974-76. Imports increased rapidly in 1975 and 1976 as a result of world-wide inflation and heavy public development expenditure, especially in capital goods, and the decline in agri- cultural exports, particularly exports of cocoa and timber, resulted in size- able current account deficits. The bulk of the current account deficits was financed by net capital inflows but a substantial drawdown of international reserves also took place in 1975. Therefore, net official international re- serves decreased from more than two months in 1974 to less than one month of imports in 1975. In 1977 and 1978, exports recovered substantially (by 35 and 18 percent) but imports also increased (by 28 and 22 percent) because of economic recovery and expanded investment. Gross official international re- serves were rebuilt in 1976, 1977 and 1978, in part by the use of IMF credit (Oil Facility and Compensatory Financing in 1976), but net official interna- tional reserves continued to be less than one month of imports at end-1978. This was a low level by international standards but still acceptable consider- ing Cameroon' s membership in the Central African Monetary Union. Development Issues and Prospects 12. Cameroon's main medium- and long-term potential lies in the devel- opment, through both industrial plantations and smallholders, of a diversi- fied agricultural sector, comprising export crops and domestic food crops to feed the growing urban population and replace imports, particularly of grains. Implementation of such a strategy depends on an appropriate mix of public intervention and support as well as price and policy measures to stimu- late private initiative; net financial returns to the public sector are more difficult to capture than in a less diversified foreign trade-oriented strat- egy. Factors that further complicate the agricultural development effort in Cameroon are the extensive dispersion of its main economic and population centers, its regional and institutional diversity, the competition between export and cash food crops for the dwindling agricultural labor in some parts of the country, the dependence of a substantial part of public revenue and savings on cocoa and coffee, and the limited availability of skilled agri- cultural agents and administrators. Through its technical assistance and education projects and through its normal project work, the Bank is supporting Cameroon's effort in manpower training and development in the agricultural services, as well as in other sectors. In industry the Government has moved to channel more financial resources for investment directly through the public sector, in addition to the indirect support provided by tax incentives and other measures, which have been in existence for many years. The Government has actively participated in a Bank study of the manufacturing sector whose results will help to identify bottlenecks and opportunities to develop exist- ing as well as new industrial activities.  - 5 - 13. The outlook for agricultural and industrial growth during 1976-81 is quite favorable. It is based on the maintenance of cocoa output at near the previous peak level; recovery of robusta coffee; continuing expansion for arabica coffee; increased production of most other commercial and food crops, as well as of livestock; and expansion of commercial forestry production. Growth of :industrial production is expected to derive from existing and ex- panded manufacturing facilities (particularly for food, beverages and con- struction materials); some new industrial projects, as well as from crude oil and new mining ventures. Given the stepped-up production and investment activities, a high growth rate is expected also for construction and ser- vices. 14. Long-term growth could be somewhat constrained by a worsening of the terms of trade, which will make it difficult to sustain the high invest- ment rate planned for the 1976-81 period, and by the need for prudent debt management to ensure the country's long-term borrowing capacity. Growth prospects will be greatly influenced by the extent to which Cameroon succeeds in the difficult task of maiintaining and expanding the country's main tradi- tional export crops, and the large-scale development of still unexploited forestry resources. Results of studies on the forestry potential, forestry sector development policy, investment plans and transport requirements, many of which are part of Bank projects, will support the latter development. In addition, there are still uncertain indications for the exploitation of iron ore, but with heavy investment requirements and long lead times to establish commercially viable export operations, production could probably not begin until the end of the 1980s. Fourth Development Plan (1976-81) 15. Cameroon is implementing its Fourth Economic and Social Develop- ment Plan. Private investment is encouraged, under Government guidelines, to expand production capacity in agriculture, forestry, mining and manufac- turing. A part of financing of private investment activities, however, will be publicly guaranteed borrowing. Planned investment of some US$3.1 billion (in 1974/75 prices) is about 80 percent higher in real terms than the esti- mated level achieved during the last Plan period and almost triple previous Plan expenditures in nominal terms. Public investment is expected to account for 73 percent of total investment. However, public investment should not be maintained at planned levels for several reasons, including: (a) the heavy dependence of public revenue and savings on cocoa and coffee prices, which are expected to decline substantially in the last three years of the Fourth Plan (1979-81) from their record levels in the past; (b) the need for adequate producer prices to give farmers sufficient incentives for production and new plantings; (c) the rise in import prices, which is expected to continue; and (d) the requirement to keep supplementary borrowing on commercial terms at prudent levels to maintain Cameroon's long-term capacity to borrow. An in- vestment rate during the Fourth Plan period of about 22 percent of GDP, some 10-20 percent below planned levels, appears manageable, implying a total investment: in current prices of US$3.4-3.7 billion or about US$690-740 mil- lion a year.  - 6- Financial Prospects and Creditworthiness 16. In the first two years of the Fourth Plan period (July 1976 - June 1978), with the favorable terms of trade, public savings after debt service financed more than half of total public investment. However, in the last three years (July 1978 - June 1981), public savings after debt service are not expected to finance more than 30 percent of total public investment, a share of domestic public financing that is unlikely to be exceeded in the longer run. Cameroon will thus have to rely increasingly on external financ- ing for the bulk of its public investment, and foreign official lenders should finance a high proportion of total project costs of externally financed proj- ects, including local costs in appropriate cases. An increasing reliance on foreign borrowing during a period of deteriorating terms of trade will require careful external debt management. Borrowing on commercial terms increased significantly in the last two years as a result of the implementation of a greater number of large investment projects than initially planned. Debt service will thus increase faster than expected at the beginning of the Plan period, but the debt situation will remain within acceptable limits provided future borrowing at commercial terms is kept within prudent limits. Cameroon has yet to establish a timely and comprehensive system for controlling the foreign borrowing of its public enterprises. However, our latest mission has enabled us to bring our estimates up to date. Cameroon is judged to be creditworthy for Bank financing over the medium-term on the basis of its ability to maintain and improve productivity in the utilization of the coun- try's resources and its potential in the long-term to further diversify the economy by developing still unexploited resources. In order to keep debt service within reasonable limits, foreign public donors should provide at least 50 percent of public capital assistance on concessionary terms. On this basis, the foreign debt service ratio, 7.7 percent of export earnings in 1978, should not exceed 17 percent by the mid-1980s. PART II - BANK GROUP OPERATIONS IN CAMEROON 17. The Bank Group's commitments in Cameroon now amount to US$475 million and cover 31 projects: fourteen in agriculture, eleven in transpor- tation, three in education, one in public utilities, one small- and medium- scale enterprises project, and one technical assistance project. Transport represents the largest share (54 percent) of our past commitments, followed by agriculture (35 percent). Annex II contains a summary statement of Bank loans and IDA credits as of June 30, 1979 and includes notes on ongoing projects. Although delays and setbacks have been occasionally encountered in the execu- tion of projects, the Government has consistently shown willingness to col- laborate with the Bank in finding solutions to such problems. 18. For the future, the Bank Group's strategy is to support the Govern- ment in its effort to increase agricultural production, including export oriented crops, and in the process create productive employment in rural areas; upgrade and improve the operation and maintenance of the country's in- frastructure; stimulate investment by local entrepreneurs and increase employ- ment in urban areas; and enhance the efficiency of Cameroon's institutions.  19. The Government rightly attaches priority to the balanced regional development of agricultural resources, and to the improvement of conditions in the rural sector parallel with promotion of plantation agriculture, includ- ing smallholder schemes. Bank Group assistance to Cameroon in agriculture is designed to support these policy objectives. The Bank helped the Government create an effective and welL-managed plantation sector by financing oil palm and rubber plantations in the south and west. The 1975 rubber project is almost completed and a second phase operation is being prepared to aid further the development of the southwest coastal region. The second SOCAPALM and CAMDEV projects are fol:Low-up operations to successful oil palm projects in the western coastal regions. At the same time, the Bank has assisted, with two SEMRY projects, in promoting smallholder rice irrigation in the north. The ongoing cocoa project is helping to modernize smallholder cocoa growing and to raise rural productivity in areas south and west of Yaounde. Rural development projects in populated but poor regions are being established with the assistance of the Bank. The Plaine des M'Bo Rural Development Project is financing studies and trial activities to establish whether a full-scale rural development program can be launched. The ZAPI-East Integrated Rural Development Project supports ZAPI's ongoing integrated rural development activities as well as an exlpansion of ZAPI's activities in eastern Cameroon. The Western Highlands Rural Development Project provides a package of inputs, techniques and infrastructure aimed at improving productivity for the agri- cultural economy of the western part of the country. The Rural Development Fund Project is designed to help the Government establish the machinery for processing and implementing small-scale rural development schemes - initially in the north. An objective of a rural development project that we are pro- posing for the northern region will be to establish planning and coordination capabilities at the provincial level as well as crop diversification, refor- estation, small-scale irrigation and rural water supply. The Government's objectives in its rural development policies are to improve income distribu- tion, to achieve a better balance in regional development and to promote essential foodstuff production. The Bank Group intends to increase lending for agriculture to support these efforts. As a corollary, the second phase of a livestock development program which began in 1974 is now being prepared and will comprise tsetse eradication, training and a credit scheme for tradi- tional producers. 20. Recognizing the crucial importance of transportation to economic growth in Cameroon and in neighboring countries, the Government has devoted the largest portion of public investment to this sector. The Bank Group, together with other development institutions, has substantially aided develop- ment of adequate transport facilities. The First and Second Highway Projects were designed to help complete the country's basic trunk road system. The latter project encountered severe cost overruns which were partly alleviated by a Supplementary Credit approved in March 1976 as well as by the elimina- tion of the reconstruction of the Garoua-Figuil section from the project. This secti.on is being finan,ced under the Third Highway Project. A Feeder Roads Project approved in 1977 will establish institutions for feeder road administration and maintenance in addition to providing the necessary re- sources for a feeder road program to support high priority agricultural/rural  - 8 - development projects. The Fourth Highway Project which was presented to the Board in June will concentrate on road maintenance and rehabilita- tion and will include funds for feasibility studies for the construction of a two-lane heavy duty road between Yaounde and Douala. The Fourth Railway Project, which was also presented to the Board in June will help finance the new Douala marshalling yard, maintenance facilities at Yaounde, railway equipment, and technical assistance for improvements in operations, management and training; an engineering loan, which is to be refinanced under this project, was approved in 1976 for these railway facilities. Given projected traffic increases, and the backlog of required investments in the transport sector, substantial capital outlays are still necessary - particularly for the expansion of the Port of Douala, which is being assisted by a Bank loan and IDA credit, and for related facilities such as those proposed in the Fourth Railway Project. Future road investments could possibly include financing of strategic international access routes, but should place greater emphasis on road maintenance and on developing the network of forestry, feeder and farm access roads. The Bank is currently assisting the Government to study ways in which a transport sector plan could be developed in Cameroon. 21. In other sectors, the Small- and Medium-Scale Enterprise Project, approved in 1975, focuses mainly on developing local entrepreneurship and a second project is in preparation. A Third Education Project, approved in April 1976, places special emphasis on rural education and training. The proposed Second Water Supply Project would provide water to 13 secondary centers, reinforce and expand water supply systems in Douala and Yaounde, and would include financing for sewerage and drainage master plan studies for these two cities. These studies would help prepare an urban development project designed to upgrade several low-income settlements and develop sites and services in Douala and Yaounde. 22. All these projects include, as needed, training, technical assis- tance, and other provisions necessary for strengthening institutions and improving sector policies. The Technical Assistance Project approved in June 1977 is helping to strengthen Government services in several key Ministries involved in investment planning, policy analysis and project processing and a second project is in preparation. To help achieve the Government's priorities and to support our future lending strategy will require continuing emphasis on strengthening the institutional framework, particularly concerning sector planning, project preparation and implementation in transportation and rural and urban development. We shall continue to assist the Government in develop- ing its policies toward newer sector of activity and are tentatively planning an energy sector study in the next fiscal year. In conjunction with the International Telecommunications Union, we recently carried out a study of the telecommunications sector in Cameroon. We have also recently carried out field studies for a forestry sector survey, in the course of which a project was tentatively identified.  - 9 - 23. During the second half of the sixties, overall disbursements to Cameroon amounted to about US$40-45 million a year. While at the beginning of this per:Lod 65 percent of aid funds were grants, the proportion of loans slowly increased. A major paLrt of external assistance was provided by France and was concentrated in infrastructure and the productive sectors. The European Development Fund and European Investment Bank directed their lending mainly to agriculture, with infrastructure in second place. Bank and IDA disbursemenls were small during this period. Since 1972 overall disburse- ments of foreign aid increased to about US$90 million per year with one-fifth as grants. The Bank and IDA's share of these inflows amounted to about 23 percent. Our lending to Cameroon has been closely coordinated with other donors; in 13 of our 31 projects, joint or parallel co-financing arrange- ments have been made and we are actively seeking co-financing for several future projects. 24. Public debt outstanding and disbursed as of December 31, 1978, amounted to US$1,167.4 million and is projected to reach US$3.1 billion in 1983. PubliLc debt service as' a proportion of export earnings amounted to 7.7 percent in 1976 and is projected to reach 16.5 percent in 1985. At that time, annual foreign aid disbursements may amount to over US$500 million. At end-1978,, IBRD loans accounted for 8.8 percent of Cameroon's public debt outstanding and disbursed, arid 13 percent of its public debt service. IDA credits accounted for 9.2 percent of public debt outstanding and 5.7 percent of public debt service. The Bank and IDA are expected to account for about 20 percent of total public debt and 11 percent of public debt service in 1985. 25. In October 1974, CaLmeroon became IFC's 100th member. IFC's first operation in Cameroon, a US$450,000 underwriting to bring domestic share- holders into a previously wholly foreign-owned shoe manufacturing company, was approved in May 1975. Irn September 1976, the IFC Board approved an equity investment of nearly US$900,000 in a foreign-owned rubber estate (SAFACAM). The investment will assist in the rehabilitation and diversification of an existing est:ate that will produce rubber for export and palm oil for the domestic market. The operation will also facilitate participation of domestic shareholders in the estate. In November 1977, the Board approved a third operation, an investment of up to US$125,000 in the share capital of a pro- motional company for maize development. No commitment has yet been made on this investiaent since the original technical partner has been replaced and major changes have been made in the arrangements expected earlier. The Board approved a second equity inVEtStment of US$390,000 in SAFACAM in September 1978. The iLncreased capitalization is required to finance the construction of a palm oil pressing mill. CaLmeroonian participation again increased with this operation. The Societe Nationale d'Investissement, a national development bank, is doubling its share in SAFACAM. In April 1979, the Board approved an investment of US$7.86 million consisting of US$7 million in loan and US$0.86 million equiLvalent in equity in a Cameroonian aluminum producing company, ALUCAM, to help expand the ccimpany's production capacity.  - 10 - PART III - THE WATER SUPPLY AND SEWERAGE SECTOR The Water Supply and Sewerage Sector 26. About 30 percent of Cameroon's total population of 7.8 million (1977) are estimated to live in urban areas. Roughly 43 percent of the urban and 24 percent of the rural population have an adequate water supply; however, there are practically no sewerage systems. Most towns have embryonic storm drainage systems, usually in the form of unlined ditches without protection. 27. Piped water systems are currently operating in 34 out of a total of 118 centers with a population greater than 5,000. While 70 percent of the total urban population (2.5 million) live in towns with piped water systems, only 10 percent have access via house connections and 33 percent via stand- pipes, with the remaining 57 percent relying on shallow wells and surface water sources which are usually polluted. In Douala and Yaounde, system ex- tensions have not kept pace with population growth and the number of working standpipes has declined, e.g. in Yaounde from 94 in 1969 to 49 in 1978. Con- sequently, the percentage of the population having adequate access to potable water is declining. In rural areas the Cameroon Government has supported the Directorate of Rural Engineering and Rural Development (Genie Rural) through budget allocations and the rural development fund. The Bank's Rural Develop- ment Fund project (Credit 723-CM) in four Departments of the Northern Province has allocated 60 percent or US$5.1 million of total project costs for the construction and operation of 50 small dams, rehabilitation of 600 wells, the sinking of 400 new wells, and support the continuation of a UNDP project to survey ground water resources. In the ZAPI Integrated Rural Development Project (Credit 776-CM) in the eastern region, US$248,000 is allocated for improving 82 water points, sinking of six wells, and studies for 13 small village water systems. Agencies and bilateral donors such as UNDP, UNICEF, Swiss Technical Assistance, the French Agency for Cooperation (FAC) and the Danish Government have been active in well drilling, construction of small multipurpose dams, supply of equipment, and in the training of well drilling teams and sanitarians in rural areas. Water Supply. Sewerage and Drainage Planning 28. The Government's current five-year Plan (1976-81) allocates CFAF 13.5 billion (US$61.4 million) for development of water supply systems in urban centers and about CFAF 4 billion (US$18.2 million) for sewerage and drainage in Yaounde and Douala. The Government based this allocation on the assumption that approximately two-thirds of these investments would be financed from external sources. Selection of the water supply project was made following discussion of the Bank/WHO sector study which was carried out in 1974 to identify new projects and sector development constraints. The Government objectives for the water supply sector under the Plan are: (i) improving the existing urban water supply systems and providing supply to all prefectorates and subprefectorates by 1981 so as to ensure an 80 percent access to safe water supply for the urban population; (ii) increasing the  - 13. - water supply facilities in rural areas to cover about 50 percent of the rural population; and (iii) completing the necessary studies that would lead to implementing water supply systems in smaller administrative centers during the succeeding plan and thus reaching a 100 percent service level target in urban centers by 1.986. For the sanitation and drainage sector, the objectives are to: (i) prepare and update studies for major centers, with possible imple- mentation of sewerage schemes for the largest and neediest centers of Douala, Yaounde, Victoria and Maroua; and (ii) implement first-phase and localized drainage operations in parts of downtown Yaounde and Douala where drainage problems are a major reason for the squalid living conditions. Revised Secl:or Objectives 29. During preparation of the proposed project, it became apparent that the objective of providing 100 percent access to water in all urban centers by [986 was too ambitious. The appraisal mission, in cooperation with the Government, prepared a revised investment program with the objective of 100 percent access by 1990. The attainment of this objective would depend not only on the construction of 84 new systems and the rehabilitation of 14 existing systems, but also oni the acceptance of standpipes as an essential means of providing access to about half of the 1990 population. The Govern- ment correctly recognizes the inherent problems in the use of standpipes. Standpipes require regular maintenance and most municipalities are reluctant to pay for standpipe consumption. Despite the planned introduction starting in FY80 of low cost yard connections which could serve 20 percent of the urban population by 1990, it is unLikely that the national water supply company, SNEC, could provide house and yard connections at a sufficient rate to supply all of the population. Therefore, there is no choice but to increase the number of standpipes in order to attain the desired service levels. 30. Based on the revised sector objective, the total urban population having access to piped water service would increase from about one million at present to 5.9 million in 1990, i.e. at an average growth rate of 16 percent per annum, or double the average urban population growth rate estimate of 7.5 percent per annum. It is estimated that implementation of the above program would involve the following investments:  - 12 - Investment Program to 1990 for Urban Water Systems Amount of Investment in Period US$ Millions in 1978 Prices Center 1978-85 1986-90 1. Yaounde 23.6 31.8 2. Douala 35.0 40.9 3. Secondary centers - existing 29.0 22.7 4. Secondary centers - planned/under construction 56.4 11.0 5. Secondary centers - identified 17.3 62.7 Total 161.3 169.9 Priorities for equipping centers presently unserved are based on a weighting scheme which takes into account population, distance to, and quality of, the raw water source, per capita cost, etc. The proposed loan includes financing for the water supply and sewerage/drainage master plan studies of Douala and Yaounde, as well as the feasibility studies for existing secondary center water supplies, to make it possible for SNEC and the Government to plan regular expansion of this infrastructure. Sector Institutions 31. Since the creation in 1967 of the national water supply company, Societe Nationale des Eaux du Cameroun (SNEC), the sector's basic responsi- bilities have been allocated as follows: (i) the Ministry of Economy and Planning (MINEP) provides general investment guidelines and seeks sources of external financing for the investment program; (ii) the Directorate of Energy and Water (DEW) of the Ministry of Mines and Energy (MINMEN) has general responsibility for urban water supply, in particular for overall planning, design and construction supervision of new water supply systems, operation of small provincial systems and the "tutelle" of SNEC; (iii) SNEC has been entrusted with the operation and extension of the 20 major urban water supply systems under concession contracts; and (iv) the Directorate of Rural Engineering and Community Development in the Ministry of Agriculture is responsible for rural water supply. 32. This organizational set-up is basically logical and is expected to improve as MINMEN delegates more of its responsibility for design and contruction supervision to SNEC. The viability of the service to the urban areas depends to a great extent on the dynamism of SNEC. Failure to obtain needed tariff increases in the past, and inadequate staffing due to the elimination of expensive expatriate personnel, have weakened SNEC. As a result, SNEC has not extended its systems in keeping with urban growth and has failed to assume a leadership role in the development of the water supply  - 13 - sector. The DEW has assumed some of the responsibilities normally to be carried out by SNEC. However, DEW suffers also from understaffing and lack of experienced engineers and planners. One expatriate water supply engineer and one senior engineer/economist are now being recruited (financed by IDA Tech- nical Assistance Project, Credit No. 673-CM), to assist the DEW. 33. The Ministry of Equipment and Housing (MINEH), through its Director- ate of Urbanism, and Housing and Construction, is responsible for storm drainage. The responsibilities for sanitation remain ill defined, and for this reason 'Little attention is given to collection and disposal of sewage and solid wastes. While MINMEN nominally has countrywide responsibility for sewerage planning and construction activities, MINEH has been implementing these because they were linked to other urban infrastructure such as road and drainage canals. The future allocation of responsibilities for this sector would be examined under sanitation and drainage studies, for which financing would be provided under the proposed project. 34. The Government has started construction of water supply systems in 17 secondary centers, eight of which are financed through a KfW loan (DM 40 million, or US$21.4 million equivalent) and most of the local cost by the national. budget (approximately CFAF 1 billion or US$4.5 million equiva- lent). Although completion of these projects has been considerably delayed, they are now expected to become operational in 1979. Construction in five centers at a cost of CFAF 2 billion (US$9 million) was completed in 1977, with financing by the Italian Government. SNEC 35. SNEC is a public company functioning under the direct guidance and supervision of the Government, especially of MINMEN. SNEC was created in 1967 to operate the water supply systems of Douala, Yaounde and nine smaller systems operated by separate entities, with the long-term goal to assume gradually the responsibility of all piped water supply operations. Since 1970, SNEC has enlarged its activities progressively by adding nine more systems. For 1979/80, SNEC plans to assume the operating responsibility for the 11 secondary systems to be improved under the proposed project, which are at present operated by the municipalities or the DEW-MINMEN. The Govern- ment intends that SNEC take over the design, construction and operation of all urban piped water systems. The development program of SNEC is thus synonymous with the national program for the urban water sector. 36. SNEC's share capital is CFAF 500 million. The national electric power company, SONEL, is thes largest shareholder (67 percent) followed by the Government (20 percent). Because the Central Government holds 80 percent of SONEL's share capital, it effectively owns 74 percent of SNEC's stock and controls directly 87 percent of the votes. The rest of the shares are held by CCCE of France (11 percent) and the municipalities (2 percent). Dividends at the rat.e of 5 percent have been paid in several years. As most of the dividends would go to the Government, who would provide a substantial portion  - 14 - of the sector investments in the future, the Government agreed during negotia- tions that it will cause SNEC to reinvest in the urban water supply sector any declared dividend during the project implementation period. (Section 4.02(a)(ii) of the draft Loan Agreement.) 37. SNEC operates under four separate concession contracts for different areas with the Government. One major deficiency of the contracts is that they do not specifically commit SNEC to a continuous expansion of these sytems in order to meet increasing demand and to expand the service to all, including the poor. During negotiations, the Government agreed that this responsibility will be added to the concession contract and that the Government will provide or cause to be provided through tariffs, equity or loans the financial re- sources necessary for SNEC to fulfill this responsibility (Section 4.04 of the draft Loan Agreement). The Government also agreed that it will, by June 30, 1980, review the existing concession contracts with a view to standardizing and simplifying these as necessary and will consult with the Bank before the final text is adopted (Section 4.02 (a) of the draft Loan Agreement). 38. Under the existing service contract between SNEC and SONEL, SONEL staff handles all commercial/administrative matters outside of Douala. This includes staff supervision of regional operations, as well as meter reading, billing, collection and data processing. This organization is unsatisfactory since SONEL's regional delegates working on a part-time basis for SNEC are not particularly interested in water supply. It is one of the main reasons for the somewhat unsatisfactory billing and collection situations. SNEC has decided to phase out this arrangement over a period of five years. Costs to SNEC are not expected to increase, while direct supervision of regional staff lead to an improved billing and collection performance. In order to assist SNEC to achieve this organizational change and, in the process, build up its institutions, we propose to finance related technical assistance within the Bank project. 39. A Project Performance Audit Report was issued in November 1976 for the First Water Supply Project (Loan No. 604-CM). The project was aimed at expanding water supply systems in both Douala and Yaounde as well as strengthening SNEC's managerial and financial capabilities and these objec- tives were successfully attained. The proposed project is specifically designed to reach the lower income groups in urban areas by adding 390 public standpipes, introducing low cost yard connections, and the introduction of a social block3in the tariff structure to reduce water tariff for consumption of up to 5 m per month per connection.  PART IV - THE PROJECT Background 40. The project stems from the recommendations of the water supply sector study made by the Bank/WHO cooperative program in 1974/75. The 13 secondary centers included in the project were selected from the priority listing of this sector study. The feasibility studies for these centers were financed with proceeds from the IDA Technical Assistance Project (Credit No. 673-CM). The studies for the urgently needed improvements to the Douala and Yaounde systems were made by an engineer seconded to SNEC by a French water supply company. A Bank consultant made an assessment of the Douala and Yaounde water treatment facilities in July 1978. Urban poverty aspects were researched by a Bank consultant, in May 1978. The present project was appraised in October 1978. A follow up post-appraisal mission visited Cameroon in January ]L979. Negotiations for the loan were held in Washington in May 1979. The Cameroon Delegation was led by Mr. Benoit Bindzi, Ambassador of the United Republic of Cameroon to the United States. A Staff Appraisal Report entitled Second Cameroon Water Supply Project (No. 2457-CM) dated August 8, 1979 is also being circulated to the Executive Directors. A timetable of key events is presented in Annex III of this report. Objectives 41. The proposed project will be the first major step toward achieving the general sector program objective of providing 100 percent potable water services in urban areas in 1990. The specific objectives are to: (i) pro- vide 13 secondary centers with a reliable potable water supply, to be managed by SNEC; (ii) extend the distribution systems so that potable water will be available in all urban areas of Douala and Yaounde by 1983 when 75 percent of the population will be served. This will mean an increase in population served by 700,000 people ovetr the estimated 400,000 served in 1978. Par- ticular attention will be given to serving the low income areas, which cover about 50 percent of both cities; (iii) lay the groundwork for an organized sanitation and drainage sector for Douala and Yaounde by providing technical plans as well as financial and managerial studies; (iv) in order to ensure that the public health benefits which should derive from the project are actually realized, initiate a pilot public health education project. Public health education is intended to lead to a country-wide effort to make the population aware of the health benefits of a public potable water supply and of proper excreta disposal and drainage systems, and of the measures to be taken to achieve these benefits; and (v) strengthen the organization of the Camercon water supply sector, in particular the daily management and operations of the water supply services by SNEC. Project Description 42. The project consists of:  - 16 - (a) water supply facilities including: (i) water supply systems for 13 secondary centers having an average population of 12,000 in 1978. The works will include nine treatment plants, 10 reservoirs for treated water and transmission and distribution pipes; (ii) reinforcement and expansion of the water distribution, transmission and storage facilities for Douala, including the supply and construction of distri- bution pipes, two reservoirs for treated water and improve- ment of the treatment and transmission facilities; (iii) re- inforcement and expansion of the water distribution, storage, treatment and pumping facilities for Yaounde, including the supply and construction of distribution pipes, two treated water reservoirs and improvements of the treatment and pump- ing plant; and (iv) construction of public standpipes and the introduction of a social house connection program; (b) studies which comprise: (i) design and construction super- vision of the water supply and operating facilities outlined above; (ii) master plan studies for water production, trans- mission and distribution in Douala and Yaounde; (iii) urban development studies for Douala and Yaounde to provide a basis for water supply, sewerage and drainage studies in- cluding sewerage and drainage master plan studies; (iv) fea- sibility studies for future extensions to the other SNEC water supply systems, including possible ground water research and standardization of equipment; and (v) studies for promotion of local civil works contractors and manufac- turers for the water supply and sanitation sectors; (c) management and operation improvement program for SNEC com- prising a program of specific actions to be undertaken by SNEC, to strengthen its management and organization, to ensure efficient operation of its facilities, to improve project implementation and to upgrade the level and quality of its services. Specifically the program would include: (i) partial reorganization of SNEC's regional operational responsibilities, creation of a commercial department, and an internal auditing unit and revision of accounting systems and procedures so as to prepare for the expected expansion of SNEC; (ii) about 18 man-years of technical assistance for training and management improvement for SNEC; and (iii) organizing a comprehensive training program to meet SNEC's manpower and training require- ments; and (d) public health education including: (i) consulting services (four man-months) for the purpose of identifying specific public health education needs for the realization of full health benefits from the investment in water supply; and (ii) vehicles and equipment and consulting services (12 man-months) for the detailed design of a pilot public health  - 17 - education campaign aimed at modifying unhygienic practices reLated to the use of water and at encouraging the use of yard connections, to be carried out in selected project centers. Project Implementation 43. The project would be carried out by SNEC, except for studies for sewerage and drainage, urban and public health education, and promotion of local contractors, which would be implemented by the Ministries of Mines and Energy, Equipment and Health and Centre National d'Assistance pour Petites et Moyennes Entreprises (CAPME) respectively. Bidding for major components covering manufacturing of equipment and construction/erection is expected to start by the end of 1979, and the project should be completed by mid-1983. For construction supervision, SNEC would be assisted by engineering consult- ants who would provide in-service training to SNEC's staff. One expatriate engineer is currently advising SNEC's management, and five more expatriate assistants are expected to be recruited by SNEC under the technical assistance component of the project. The technical assistance would include an operations manager (four years), a supervisor to assist in the take-over of new centers (two years), a commercial manager (four years), an accounting expert (four years), and a manager for the training center (four years). Consultants to assist SNiEC will be hired under terms and conditions satisfactory to the Bank (Section 2.02 of the draft Project Agreement). Key indicators would be monitored by SNEC during project execution to measure the achievement of the technical, financial, administrative, and training goals set for the proposed project. The target set for each item to be monitored will be discussed. SNEC agreed, during negotiat:Lons, to submit, until project completion, quar- terly reports on these monitoring indicators (Section 2.05 of the draft Proj- ect Agreement). SNEC already has the capacity to carry out this monitoring itself. 44. In order to achieve the objective of 100 percent service level of safe water in urban cities in 1990, the project would place particular emphasis on reaching the lower income groups. Specific measures would be provided to make the service affordable for these groups: (i) introduction of yard connections which is intended to reduce initial connection fees charged to consumers; (ii) substantial increase in standpipes; (iii) in- troduction of a low pricS social block in the tariff structure for water consumptiorL of up to 5 m per month; and (iv) lowering the cost of production and distribution facilities by introducing appropriate technical design standards and feasible alternatives to present systems. Financial Evaluation of SNEC 45. SNEC's financial structure and performance during FY1974-78 were generally sound and satisfactory. Net internal cash generation during this period financed 29 percent of the sector's investment in assets operated by SNEC. The debt service coverage was well in excess of the debt limit- ation covenant under the First Water Supply Project, according to which  - 18 - no additional debt could be incurred unless net revenues covered maximum future debt service 1.5 times. This debt service coverage covenant will be maintained under the proposed project. Until completion of the Project, SNEC, shall not undertake any capital investment costing more than US$1 million in the aggregate per annum without having reached an understanding with the Bank on such an investment (Sections 4.05 and 4.06 of the draft Project Agreement). 46. The four different concession contracts under which SNEC operates, set out multi-parameter tariff adjustment formulae. In practice, however, the formulae have not been applied. Moreover, the Government and SNEC intro- duced a nation-wide uniform tariff effective July 1, 1976. Therefore, the Bank appraisal mission recommended that Government replaces these four differ- ent formulae by one uniform formula and that tariff increases shall be based on a rate of return requirement. Effective January 1, 1979, the Gov- ernment allowed SNEC to increase the tariff level on average by 28 percent, based on the rate of return requirement for FY79 and to revise the tariff structure, introducing a low price social block, as recommended by the ap- praisal mission. SNEC will prepare, annually, financial forecasts over a five-year period to test the rate of return covenant (Section 4.08 of the draft Project Agreement). The Government and SNEC agreed at negotiations that tariffs would be increased as necessary to obtain rates of return of at least 4 percent in FY80 and at least 5 percent in each fiscal year thereafter until FY83, at least 6 percent in FY84 and at least 7 percent in each FY thereafter (Section 4.04 (a) of the draft Project Agreement and Section 4.04 of the draft Loan Agreement). This would enable SNEC to finance a high (37 percent) proportion of sector investment requirements through internal cash generation in addition to operational cost recovery. The above rate of return sovenant would not result in large tariff increases. The average price per m of water sold is expected to increase by about 10-12 percent each year, which would keep tariffs approximately constant in real terms. 47. SNEC's collections from domestic consumers and industry are satis- factory. Considerable arrears, however, normally exist for water consumed by the Government and for water consumed at standpipes which is paid by municipalities. However, prior to negotiations, the Government settled all its arrears in excess of three months of billing. The Government agreed at negotiations to cause payment of all municipal arrears in excess of three months by December 31, 1979. The Government also agreed that it will: (i) request adequate budgetary appropriations from the National Assembly, based on actual and estimated water consumption each year and settle water bills within three months after billing; (ii) cause the muncipalities to settle their water bills within three months after billing (Section 4.03 of the draft Loan Agreement). 48. Until recently, SNEC's accounts were reasonably well kept. Over the last few years, however, a gradual deterioration in the enforcement of internal control procedures has been observed. As part of the proposed project, training will be provided for SNEC accounting staff and an account- ing expert will be recruited. During negotiations, SNEC agreed to establish  - 19 - an internal auditing unit by December 31, 1979, with staff, functions and authority satisfactory to the Bank (Section 3.02 of the draft Project Agree- ment). Separate fixed assets registers under different depreciation methods are kept by SNEC for each of three categories of assets: (i) private assets owned by SNEC and financed by shareholders and operating revenues; (ii) concession assets financed by SNEC from operating revenues; and (iii) con- cession assets financed by the Government and consumers (the latter bear the cost of cornnections and extensions). During negotiations, an agreement was reached tha.t SNEC will simplify present asset registration practice as accept- able to the Bank (Section 3.07 and 4.03 of the draft Project Agreement). In the course of project implementation, the Government is expected to transfer the operating responsibility for water supply systems of at least 30 secondary centers to SNEC including the 13 to be improved under the proposed loan. Project Cost and Financial E'lan 49. Total project costs, exclusive of taxes, are estimated at US$51.4 million equivalent, of which the foreign exchange component would amount to about US$35 million (70 percent). By special fiscal regulation in Cameroon, SNEC is exempted from taxes on investments for water supply works. A breakdown of costs by major expenditure categories is given in the loan and project summary. Allowances have been made for physical and price contingencies, which amount to 43 percent of total base cost. An average annual inflation rate of 10 percent has been assumed for the project execution period. 50. The proposed Bank loan of US$21 million would finance 41 percent of total project costs or 58 percent of the project's foreign exchange cost. The Government would relend US$18.1 million to SNEC on the same terms and conditions as the Bank loan except that the Government would accept the foreign exchange risk. The conclusion of a subsidiary loan agreement be- tween the Borrower and SNEC would be a condition of loan effectiveness (Section 6.01(a) of the draft Loan Agreement). The remaining US$2.9 million would be retained by Government to finance the foreign exchange cost of studies for water supply, sewerage and drainage, urban planning and public health education. The Commonwealth Development Corporation (CDC) has agreed to co-finance the foreign exchange cost of the project with a direct loan to SNEC in the amount of US$15 million with terms of 15 years including five years of grace, with interest at 8.5 percent per annum. The balance of project costs would be provided by SNEC (US$14.8 million equivalent) and the Government (US$0.6 million equivalent) to finance all local costs. The signing oE the Loan Agreement between SNEC and CDC would be a condition of loan effectiveness (Section 6.01 (b) of the draft Loan Agreement). 51. Consultants to carry out the master plan and final design studies for Douala and Yaounde and the final design studies for the 13 secondary centers have been contracted and approved by the Bank and expatriate tech- nical assistance is being recruited. The amount of the advance contracting proposed is estimated to be about US$2 million, with retroactive financing for an amount not to exceed US$300,000. To avoid delays in project execution,  - 20 - SNEC and the Government have agreed to prefinance the above contracts for which the first payment was made in May 1979. Given the small amounts involved and the need to start construction works before the rainy season in 1980, this financing would be justified. 52. The average total cost per man-month of technical assistance and consulting services is estimated at US$9,900 excluding contingencies. The cost of the proposed studies and technical assistance was estimated on the basis of recent consultancy proposals for the water supply master plan studies and Bank experience with similar studies and technical assistance in Western Africa. Procurement 53. Contracts for goods and services for major components of the project would be procured on the basis of international competitive bidding in accor- dance with Bank Group guidelines. Civil works for the standpipes may be carried out under contracts procured on the basis of competitive bidding advertised locally, in accordance with local procedures satisfactory to the Bank or on force account by SNEC's services. Equipment and materials for the pilot hygiene education campaign may be procured on the basis of contracts negotiated after solicitation of price quotations from at least three sup- pliers. To the extent possible bidding documents would group civil works, the laying of pipes and supply of equipment and pipes into lots that would attract both local and international bidders. Procurement would be carried out in two stages for the 13 secondary centers and in one stage for the Douala and Yaounde sub-projects. Supply and construction of social connections and standpipes would be partially executed by the successful bidders for the above-mentioned works at the same time as the construction of the distribution system. The remaining work would be carried out by SNEC. Consultants and technical assistance would be selected and appointed on terms and conditions acceptable to the Bank. Disbursement 54. The proposed Bank and CDC loans of US$21 and US$15 million re- spectively would be disbursed against the estimated foreign exchange cost, net of tax, of items financed by the Bank and CDC as follows: (i) the Bank 38 percent and CDC 32 percent of the cost of all plant, equipment and pipes for SNEC; (ii) the Bank 38 percent and CDC 32 percent of the expenditures for pipe laying and civil works contracts for SNEC; (iii) the Bank 38 percent and CDC 32 percent of the expenditures for consulting services and technical assistance for SNEC; (iv) the Bank 70 percent of expenditures for consulting services for the Government; and  - 21 - (v) the Bank 70 percent of the costs of procurement of equipment and rmaterials by the Government. Project Benefits and Risks 55. The primary benefit of- the project would be the provision of ade- quate, safe water supply systems to 1.2 million people. About US$1.6 million or 8 percent of the US$21 million Bank loan would directly benefit half a million of urban poor people mainly through the financing of standpipes and yard connections. The overall Internal Economic Rate of Return (IERR) for the project is estimated to be 7 percent based solely on present tariffs and is satisfactory considering the unquantifiable health benefits and consumer surplus. Unit costs of supply vary for the 13 secondary centers, as they do throughout Cameroon, and, in general, are higher than prices fixed by the uniform national tariff. This situation is, however, acceptable as a means of redistributing income through cross-subsidization primarily from the industrial city of Douala. 56. Health benefits are unquantifiable and therefore not included in IERR calculations. These benefits are expected to result from a reduction in water borne disease and would lead to increased productivity through a reduc- tion in time lost from work, as well as a reduction in direct medical costs. Full health benefits can be realized from improved water supply, however, only when users employ the water in a proper, hygienic manner. It is for this reason that the health education pilot project is included in the proposed project and agreement was reached with the Government that it will implement, through the M:inistry of Health, the recommendations of the studies included in this project (Section 3.04 (c) of the draft Loan Agreement). There are no significant teschnical risks associated with the proposed project. Of concern is the need for training of Cameroonian personnel in order not to delay project implementation. Therefore, training assistance is included in the proposed project. PART V - LEGAL INSTRUMENTS AND AUTHORITY 57. The draft Loan Agreement between the United Republic of Cameroon and the Bank, the draft Project Agreement between the Bank and SNEC and the Report of the Committee provided in Article III, Section 4 (iii) of the Articles of Agreement are being distributed to the Executive Directors separately. 58. The fulfillment of the conditions of effectiveness of the loan agreement between SNEC and CDC and the conclusion of a satisfactory onlending agreement between the Borrower and SNEC are special conditions of effective- ness of the Bank loan (para. 5,0). 59. Special conditions of the project are listed in Section III of Annex III.  - 22 - 60. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 61. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments August 9, 1979  - 23 - ANNEX I TABLE 3A Page 1 of 4 pages CAnEROON - SOCIAL INDICATORS DATA SHEET CAMEROON REFERENCE GROUPS (ADJUSTED AyERAGES LAND AREA (THOLSAND SQ. KM.) - MOST RECENT ESTIMATE) a TOTAL 475.4 SAME SAME NEXT HIGHER AGRICULTURAL 156.4 MOST RECENT GEOGRAPHIC INCOME INCOME 1960 /b 1970 /b ESTIMATE lb REGION /c GROUP /d GROUP le GNP PER CAPITA (US$) 110.0 200.0 34O.0fl 261.4 430.3 926.1 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS O7 COAL EQUIVALENT) 55.0 91.0 98.0 80.6 262.1 730.7 POPULATION AND VITAL STATISTICS - POPULATION, !1ID-YEAR (MILLIONS) 5.7 6.8 7.9 URBAN POPULATION (PERCENT OF TOTAL) 13.9 20.3 27.2 17.1 24.6 49.0 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 13.0 STATIONARY POPULATION (MILLIONS) 32.0 YEAR STATIONARY POPULATION IS REACHED 2135 POPULATION EENSITY PER SQ. K}. 12.0 14.0 17.0 18.4 45.3 44.6 PER SQ. 1N. AGRICULTURAL LAND 36.0 44.0 51.0 50.8 149.0 140.7 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 38.5 41.3 43.0 44.1 45.2 41.3 15-64 YRS. 59.2 55.7 54.0 52.9 51.9 55.3 65 YRS. AND ABOVE 2.3 3.0 3.0 2.8 2.8 3.5 POPULATION GROWTH RATE (PERCENT) TOTAL 1.4 1.8 2.2 2.7 2.7 2.4 URBAN .. 5.6 8.0 5.7 4.3 4.5 CRUDE BIRTH RATE (PER THOUSAND) 43.0 42.1 43.0 46.3 39.4 31.1 CRUDE DEATH RATE (PER THOUSAND) 27.0 22.0 19.0 17.2 11.7 9.2 GROSS REPRODUCTION RATE 2.3/g 2.7 2.8 3.1 2.7 2.2 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. .. .. USERS (PERCENT OF MARRIED WOMEN) .. .. .. .. 13.2 34.7 FOOD AND NUTBITION INDEX OF PCOD PRODUCTION PER CAPIIA (1969-71-100) 70.4 100.0 102.0 94.3 99.6 104.4 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIRE.MENTS) 96.0 96.0 102.0 89.5 94.7 105.0 PROTEINS (GRAMIS PER DAY) 59.0 59.0 59.3 55.8 54.3 64.4 OF WHICH ANIMAL AND PULSE .. 23.0|h 16.5 17.9 17.4 23.5 CHILD (AGES 1-4) MORTALITY RATE 40.0 32.0 27.0 22.3 11.4 8.6 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 37.0 42.0 46.0 47.0 54.7 60.2 INFANT MORTALITY RATE (PER THOUSAND) 167.0/i .. .. .. 68.1 46.7 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. .. 26.0 20.3 34.4 60.8 URBAN 35.0 53.9 57.9 75.7 RURAL . .. 22.0 10.1 21.2 40.0 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULAT'ION) TOTAL .. .. .. 22.5 40.8 46.0 URBAN .. .. .. 62.5 71.3 46.0 RURAL .. .. .. 13.9 27.7 22.5 POPULATION PER PHYSICIAN 34000.0/f 25960.0 13980.0 17424.7 6799.4 2262.4 POPULATION PER NURSING PERSON 5210.0/f 2470.0 1890.0 2506.6 1522.1 1195.4 POPULATIOS PER HOSPITAL BED TOTAL 530.0/f 310.0 380.0 502.3 726.5 453.4 URBAN .. .. 350.0 201.4 272.7 253.1 RURAL .. .. .. 1403.6 1404.4 2732.4 ADMISSIONS PER HOSPITAL BED .. .. .. 23.4 27.5 22.1 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL ... 5.2 4.9 5.4 5.3 URBAN 5.1 4.9 5. 1 5.2 RURAL * - 5.2 5.5 5.5 5.4 AVERAGE NEUMBER OF PERSONS PER ROOM TOTAL .. .. .. . : 1.9 URBAN 2 1.6 RURAL ... .. .2.5 ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .28.1 50.0 URBAN 41.. .. .. .. 4.1 1.7 RURAL ... ... 9.9 17.3  - 24 - ANNEX I TABLE 3A Page 2 of 4 pages CAMEROON - SOCIAL INDICATORS DATA SHEET CAMIROON REFERENCE GROUPS (ADJUSTED AyERAGES - MOST RECENT ESTIMATE) a SAME SAME NEXT HIGHER MOST RECENT GEOGRAPHIC INCOME INCOME 1960 /b 1970 /b ESTIMATE /b REGION /c GROUP /d GROUP ke EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 65.0 107.0 120.0 59.0 82.7 102.5 MALE 87.0 124.0 133.0 64.2 87.3 108.6 FEMALE 43.0 91.0 106.0 44.2 75.8 07.1 SECONDARY: TOTAL 2.0 9.0 17.0 9.0 21.4 33.5 MALE 4.0 13.0 23.0 12.0 33.0 38.4 FEMALE 1.0 5.0 11.0 4.4 15.5 30.7 VOCATIONAL ENROL. (1 OF SECONDARY) 23.0 23.0 23.0 7.0 9.8 11.5 PUPIL-TEACHER RATIO PRIMARY .. 48.0 51.0 42.2 34.1 35.8 SECONDARY .. 24.0 23.0 22.9 23.4 22.9 ADULT LITERACY RATE (PERCENT) 19.0 12.0 .. 20.8 54.0 64.0 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 3.0 6.0 7.8 4.0 9.3 13.5 RADIO RECEIVERS PER THOUSAND POPULATION 3.0 36.0 96.0 44.3 76.9 122.7 TV RECEIVERS PER THOUSAND POPULATION .. .. .. 2.9 13.5 38.3 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 2.0/h 3.0 3.9 5.6 18.3 40.0 CINEMA ANNUAL ATTENDANCE PER CAPITA 0.1 .. 1.0 0.4 2.5 3.7 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 2230.0 2560.0 2783.0 FEMALE (PERCENT) .. *- 40.0 31.9 29.2 25.0 AGRICULTURE (PERCENT) 78.5 75.9 73.8 77.6 62.7 43.5 INDUSTRY (PERCENT) 4.6 6.0 6.3 7.9 11.9 21.5 PARTICIPATION RATE (PERCENT) TOTAL 39.3 37.8 35.7 40.8 37.1 33.5 MALE .. . 45.6 53.9 48.8 48.0 FEMALE .. .. 26.9 25.6 20.4 16.8 ECONOMIC DEPENDENCY RATIO 1.0 1.2 1.3 1.2 1.4 1.4 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS .. .. .. .. 15.2 20.8 HIGHEST 20 PERCENT OF HOUSEHOLDS .. .. .. .. 48.2 -52.1 LOWEST 20 PERCENT OF HOUSEHOLDS .. .. .. .. 6.3 3.9 LOWEST 40 PERCENT OF HOUSEHOLDS .. .. .. .. 16.3 12.6 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 189.0 187.6 241.3 270.0 RURAL .. .. 88.0 96.8 136.6 183.3 ESTIMATED RELATIVE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. .. .. 138.4 179.7 282.5 RURAL ,. .. .. 71.0 103.7 248.9 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 15.0 34.5 24.8 20.5 RURAL .. .. 40.0 48.7 37.5 35.3 Not available Not applicable. NOTES /a The adjusted group averages for each indicator are population-weighted geometric means, excluding the extreme values of the indicator and the most populated country in each group. Coverage of countries among the indicators depends on availability of data and is not uniform. lb Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1974 and 1977. /c Africa South of Sahara; /d Lower Middle Income ($281-550 per capita, 1976); /e Intermediate Middle Income ($551-1135 per capita, 1976); /f 1962, including ex-South Cameroons under British Administra- tion; /g West Cameroon o,nly; /h 1964-1966; /i 1960-65; /j Fiscal year July-June. May, 1979  -25 - ANX I Page 3 of 4 pages Note..:Although Ie d4cc ore doar Er- ecuce ge. rll jodgad :he moat au,th-rt.tstte ud r1u.llat, It should I.. be noted that thsy cay ot heb leae tionelly -opelrab bo hatac. ofthetech o f etoo.d.rdled di.fftbobo end coecpte used hy 4ttfa-sot ooooEat oollootle the dote. Th. dot . , -traheleec, use ful to desertbo urdurs of mgol.tda, tdlaftet tratde, end ehereotsrilstlee certaint 5*10 dIfferences haowee ..ou..trle.. Theedose oc e?..for etch isdtceor ar popclcltu-oig1htad geatrlc Moeels etldlog thu extra sue oftheIJdIcatr end the ceot populated cecetry to seth goup. Due to tool,of date, group erage. of eli ldleetar forI. Capital Surplhus l Exprter cod o InIctorsof .oeet ot?cd ert disPosel, H u.ttog, Iota. ditetblhtle ad Port far other xouotry gruop an popolatecoegtemisd cgantrl en olhout xocleo ofth eterea vlen sd th etppltd toatry. Ilc i oeaeo otolamo the tnjxter1deoaade cavllahlit, fdt ce tot tfo. i= tau:tlunm steaxrld torltloaareeoZ e I=trt_ae . c a r ee seu saersfmtoaIfrueoe sls ha csare hevle.oI n indlcatco et e ti me caca teconradoacan,rct h .Mk Itoed ath)aset ntt ltoa cre?c cuate - total os. lted otl-Ttaletfc Iae - uprlsirt ie.d area aend ibleed vater.-nut-ti fpa ttl re o ua)are ysceedc TurOWltca T ot000 stcaeo gtotrttreca eprot pals ao ee of chaI telpl tlt poulaIon.~ tobt, daoe or poroanaroly too oropt, paavoras rkrit sued kltohee gadens o to ixy ixoIds the n.1olltt- sold dip.oel, oith or w,ithout treat-tmtlf lee faIou h-..ao xcrte a t otete tala hyo.tor-hbr yotut or cha net of pit pllaod etmilll,r L.calctle 09?N f CAPt,.A lut)) - CoNp pr capita teloo a-orretm rt - pIesrkeo.tc act. p evioeo - Po.po,1,tato lddI rhhro patco phyci- caiolto lv oat c- tar lo uthod cc WurId Setit Attn (1915-73 heole clou qulifteldvfro a -adicl blet coooctybo. 1960. 19ff,..cd 1970, data. P-etalot- oar coa pecrol - Populettox dioldd.Ayy oeber of precticltA talIcud feted. grduettorc,poecticolore.1 o e -tootItte. ENERGY CONSITIPTI)N PEt CAPITA A- oca -nooopolot of totrolet ahrfy (cu.I Poealoti pc h.opcht1 hod - totld. ubo.I end r-re - Popotuloti (otl cod ligto pottlta, -etro So.a etd hydrA-, t-tteat and geotheosel o7rhoc, aed lrur1) dtoidod hy th.il roe.pr'tiye otahr of hoepilcal hodol eloctoc Ito)It Alieogoc f coo oqooattt per capIta 1960, 1970 oelablr It pol,lic, cod poloc t ossor Itcod op-olallod hospIta cdor cod 1906 data. hahtlieclicurcee Otpitto eta r::cb t h-lftoot Prcooti ecafed ho tPfIATIIOH ANDl VITAL STATISTICS at loca too phycloiat. lchllrttpollgpolocipalllo cetodiot Totl cocllo.h olld-yectfotloc - A. tf July 1. MD6, 1900, etd lcooe ott loolodod. Total h-apirtl. h-.avr, oolode bra-lob co oodt- (VT data. cal~~~~~~~1 oa co noI Poroocotly- tletfd b, a phyaioiat (butITcad Iolc- Colon orpulctn (000_0 olctell1 -Ratio of uthao to total populatlot; -ito,unr.oidto tc.Ao offer it-path rot -c ordotlot and 5lff foroo defotoor rhoraoyafucx-alt idt provido a llltod caugo of todlcl a-I clo avocotro,i 1960, 1970 cod 1915 data. Adifcatooo pe0 hocolcol had - Toa ... ha of b o-'I loloo. toor, dlt-h-rA- toclclo Polr-lts. foro hoepitalo diuidod by fIr oroeho of lode. Io.u.a... Iv Tea 1150 - Cur-tc populaclot projeotlot ate bu..cd Oc 191ctI ppltlot hyco co ot d tho to ootalt.ty cod fortillcy HOSN octet. tro(eutlct poocococros for sootellty 001cc~.t. coorirto of I I-"o A-oraoog,lorof bouorhold loorco .. foPr hot.,,d, ol.ubu,cd ua occrrt ie lt rprutucet bIrth lota o tt --rcpo aio Shcuhl oooe fofopo odIr.dnal o -oohor Iloo- qoard r1 -tme(to, and foclItfanrlcn Ioallro at 77.1 y_ca.ct rholr tlcd rl.S odoo o rty ocytth oiddI b Th. pora..tooc forMfrflt occltboIoooa groo d-ocllco h..c.ahld for cttlatti cl potypco.. l iv rotrllro cnnrdOo~ toloonto evel o pc P a.. y lOOlO P-O- I Anr..r Ic e o-.f r-x coo Mro t.focl. ubc cod rural clctro2jSloth -ro I, qa t h deat tot, co alt tho .... CotchoaldeIocollrotl ttAo qatr epeooeoo 0000000 Ito u I ooooo coplonet Itor,f toacy.TeSttocr oolto fIC ATIOP tdoolcatfo to the tt00,adtr t of dontlo.Iof fetIlIt caf PC-r.cochoo - docll. ital codl-rolrt roE o riotc q-rolr copfocr-toaol- uf tootl tia-donocb-cchev ochoothe I Wcc. tl o oae-Cxoe coor.ccoeoouc no Ir.-d croe ldai. fllll,r- '~ l ooclci:rcohtud c oorcfo o ,ltnnlyi (1e-r earti , and rot-te (7 ro-h cd - uT.cer) cc1 porttcao of. ry td.- -hcal-olcoolrt croo of,.,- sccocdcrl,- ocah oold,ootltutfoocl locud nerptltio.16,lr o 91dc.coofa oocll r010porc oodb0 opr--oco podp pioo loo cc Pcoaco Mno -thcaf (cootell l- cu-o q-Aenkil--ot ttto (0h total deacrrtt n otcocdrf cilcht Ic. rf-roppucSo o 11-S 90-f o 90-0 ol-rohrrSn-Icot.ad Irodle - oC-pl-d todeoc roro .-edto toculofoc tvorh rte Croceot - oclaod-Oot... f-to ct0o cr100 poroui tod l_ Eoc_dco _ool dlfle byoI hcIfcohooA Aec lrotuoiooitno fot 191-fl...19(0 _-VS enld 107 10-1. opo2odoog loorlo. 'g rd Sr..ll or _oct lr clpu-lto - o tt1(-0A .. oIb po-t croleo of u..1 dol.p ocyrtc.-r-r(- lraeco 0 ci 0c00cdoto00 ,Id-oc, lpupu_ _rto - 195060. ht cod -" 1901 9ccc a_77cotao o cci.odul oplad o - fod. -I Voritc.1 er Crd leahrth r.00 cho-tool - roobl eahs orthonoatd f old- 1e l yosult pi- lo. 19 191((.910 co ,'d 197 cc C p.tdiT g 1-1T1 Itbo vnolcoooln lo prodIfchepolonr troocur oto lot.g oho tfh1 pdrsIt p opoludec ochd lcoec. -ttr cdol tt sovolfi footi" 01, -to utul fly.o-yocc -oo-gec osdfcg f 1960, ochi,loc 191,7, cod 1071. Tadloreortotoc, (vec chouccod Allalc)-ol type- of tene-o fur radIo "avily oaooloo-ccrsotor actual(thoouadcI- 0001 trocr of hrocdcaotscooocIpohbti pot thoctd of popolattotoni dtot-rtd faoll.o olcoroSo0-00000 roorcooc of ocroled couco) - Perceocsgr o~~f-l -dholl-had- legcotltig. rocfd co-r of chfidE-hacfo ce 15-44 yecro) who uoeS bloth-cocco1 IT,coot (orotho....od ptpolottool - UVVccoo for broad.oc. tog ..,.ro doulce,t,co ItZ n-rrd 0 L00. coot ge groop. poblic Pat thooscod popuicti.o: -ncldro uci-coo-d IV roc.. Wert Iuco orrt- cod In yrc,- uhot or.~Incotio of TV etof oat ftefet 00 l NtOITRItON Nauao... cltclcti (rt hoccd populcctiuel - Shocs the a-rragr nlr-olo indocoZ od'-tduc--0"000 clc1969-71 * 1011 - ldoc of Peco-pitc tIcofdcliv Ira t'tts t coc,;.paprr' , d.floed -upe iclc ......l atuipooduoto fi l od7cr itodc-, Podotc ro .ldc od cod u-looh do..oto'd 'po iluo orccordtcg0 ...c 000?-. Ic Os -o-oIdered to food cod to on c-lordar porhd rretltsn prilary fttds ho 'dolly" Iflcppeo cn rot foor tloic- rh e.g.oogrnace toco ofI 0-c)hc 0 edibll cod ootalt octrl Dit C -..o cocI ctcodcoc coco .ptIlpe r yvoor--Ird0thcrhe of cliokrl _ .c.ofol d ta lce eo ldd. Atoccata podoottic of each Oc...cry oId fo-tg tho Toot, iociudlog odttloifo to dolio-lo iooro- sod cobilo to Saurd no o -otl 0050 prod-oo prfna coghts. utlo_. Pot -cpbt. coedly of calcoo tcotofocloo Cocputrd foot Pcc duo lrailchl.r -ppli-t , -pti-e docotto prodi lo,ipotMtc ociTblo fornr clh-uad. E-- foo lcit ontor p.l00cc, (ocludlog -rtd 0000,cd coI,ito - 6k N . to oio o ldoetao toed, ..ade. (to Icd rrooployd b Inc r didloghoout. I-doce --tc Det.1o- q -,:i Io so o, (nodepoocoslo- odlso I di.crhuclti,h to- otIot In _aiou -ototiec arc nt ouptoo i.b quirte-oc00 t te Iccod by05 bs-d 0 physIologBIcal roode f00 00 Fea1r foopot-t) - Focu1e lohor Eono as peco-togo of cocIlahor foror. oci acfyfty td Iroch nooldotoo roo Iooctetol crpot_tt, body dcotco(r007-Lbhot Eo-e Sol furefg. forcetry. hootiog cod filehfog uOtt (00 c-to at houchltld Ion.Lid.c foco L.hoc (cr00 toi 00,cccuiIc ,tfnrr.o too otona utdoof ornofoIcot t dy otot coctoo of pro-tonolcly, uotro ccd 000pncco of toellborOt coPi,.c -rotpolo uf fod'1ndo..csppyo food Sc dr'flcod o ocoto ueIecol-fcl so n ode-Poiletcn clot.Otoloto f fc iloootrocosabishd T IS poolo Ot ecfofy ars rcnueotd c ocl, e-. odfoda ohrtoooa a llcoalocoro f otef oa srcl ptdyco 0tat rcctgoo ttl obcdfrol otlto o l go epcctol Sfgoono 6na potl cs. atfrtg for tIE. on oyd cpoold by cr orntoclooot Ch I oe t4Mrd torcaiSc race (nor choocod - -fSoc Statls potei nol-d COCOlOTiT codtoag f00 . i-b ver ,i crr geldo f_ chite grodro p-c- 00c Torooa- -O -c-Io fo.t(cn .o oSnd k.Iod ocolod. by rf coo e Si ruiop the Tonood d-ld doofod foot, (oft frio poroec, ritoorp tyeoc.o~rs Vprot.dd oroc 000 'L' ;hIf of-- houseFf.d hods ...t i,-11,1p__~ .. 5.db d- 1 PnvOooo ith(etr ,ycoooo focrflf oa" ion ut boorS fbof tIto ocd iur~~~~~~~~ raro.d, (OrVO,h,,- IT TAERCOLT Clff ifac Io 'I'll irV -nItotnh iold- o I, nc e .-.. eldtcrriraroorfcocoas oo-cr-r-rto b.oh J,ot .-h.o. iro-.t-drb .rcthoto rtor.oaoloro irtyortsotiothirh.. olslutoooorroitooclo.rrltrbooiootoof_- conki .d c runto 0 tft cte toocon o touicioo-rtcl otan.codtorl . orr2tirrpty 'Ooproo :o-tl,o~--clot ,-d-- 1p- rorbo rO pooplh 'rorol197, -dhay Pc, rl rt'yt taVERoo00ufTdY hir .ofncoo .oot:rotturb nocco soocc,roroo r ,rrocodor _totuAoo RloE l ouocyIcor[-t b rul e-.ocPcoorr 0Ocr- virr-r-ouu.u ror-o Voorndhrerl--.rptiofo lrtledobcIo I...... i-eoltn Iuc-oi-1looscporpc rod,,sot'ol .cTr:ytaoco rcuorrpot otpp.rdritc.ptvoclr.roooO 00,o.trv .rdo noci-.toooclttoroot--. to oo-a 'to.o- rdoodc b0-eh0101- yoaoohi leouo P_~trro htor h-t ..' .t.. I0 flor ''t om. r .to rr p IfiectooP,dvcu-oc-for-'o.p7tcir-.Otouo,b'00 ,,0 'r-o:to-Od oc- 0-- _00.70h-0", to cry'-'t.:. p0- <~~'otu:: ..r-hioc ott boil: .oototvoco. -.',.00