Togo - Second Cocoa - Coffee Development Project

Document of The World Bank FLE C"OPY FOR OFFICIAL USE ONLY Report No.P-2521-TO REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT AND AN EEC SPECIAL ACTION CREDIT TO THE REPUBLIC OF TOGO FOR A SECOND COCOA-COFFEE DEVELOPMENT PROJECT June 14, 1979 This document hs a resided disribflon and may be med by recipients only in the performnce of their ofichd duties. Its contents may not otherwise be diIscloed withou World Bank authorizafon.  CURRENCY EQUIVALENTS Currency Unit - CFA Franc (CFAF) US$1 - CFAF 220 CFAF 1 - US$0.0045 CFAF 1,000,000 - US$4,545 FISCAL YEAR Government: January 1 - December 31 SRCC: July 1 - June 30 SYSTEM OF WEIGHTS AND MEASURES: METRIC Metric US Equivalents 1 meter 2 3.28 feet (ft) 1 square meter ( ) 10.76 square feet (sq. ft.) I cubic meter (ma) 35.30 cubic feet (cu ft) 1 kilometer 2 0.62 mile (mi) 1 square kilometer (km ) 0.39 square miles (sq. mi) 1 hectare (ha) 2.47 acres 1 metric ton (t) 2,205 pounds (lb) ABBREVIATIONS AND ACRONYMS BTD - Togolese Development Bank CCCE - Caisse Centrale de Cooperation Economique CIMAO - Ciments de l'Afrique de l'Ouest CNCA - National Agricultural Credit Agency FAC - Fonds d'Aide et de Cooperation (France) IFCC - French Institute for Coffee, Cocoa and Other Stimulant Plants IRCT - Research Institute for Cotton and Other Fiber Crops IRAT - Research Institute for Tropical Agronomy and Fooderops OPAT - Office for Agricultural Products of Togo PCU - Project Credit Unit SRCC - National Cocoa and Coffee Development Agency SSVD - Swollen Shoot Virus Disease  FOR OFFICIAL USE ONLY TOGO SECOND COCOA-COFFEE DEVELOPMENT PROJECT PROJECT SUMMARY Borrower: The Republic of Togo Amount: IDA: US$14 million EEC Special Action Account: about US$4.6 million Terms: Standard IDA Project The project would continue cocoa-coffee rehabilitation Description: begun under the first cocoa-coffee development project. It would be implemented over a five and a half year period and focus mainly on replanting by about 17,000 smallholders of 7,500 ha of coffee and 4,000 ha of cocoa; foodcrop planting within cocoa and coffee areas as well as outside the plantations; providing marketing facilities for plantain; supply the farmers with improved extension services, including cocoa, coffee and food- crop planting materials; rehabilitation and maintenance of 300 km of feeder roads in the project area; and tech- nical assistance to carry out a project evaluation, including preparation of a possible follow-up project, and to strengthen SRCC, the project executing agency and PCU, the Project Credit Unit. Project benefits would accrue to the Government through increased foreign exchange earnings and to about 17,000 farm families through increased average annual incomes. A project risk would be that producer prices and other incentives were set too low to be attractive for replant- ing, particularly for cocoa planters, about 50 percent of whom are tenant farmers working under ill-defined sharecropping arrangements. A safeguard against these risks would be the Government's annual review of farmgate prices in consultation with IDA and the introduction by the end of March, 1980 of long-term contractual arrange- ments between tenants and landowners. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - Estimated Cost: ------US$ Million------- Local Foreign Total I. Project Execution and Administration (SRCC), including Feeder Road Rehabi- litation and Studies 9.7 8.2 17.9 II. Project Credit Unit (PCU) 5.8 0.8 6.6 III. Base Cost 15.5 9.0 24.5 IV. Contingencies: Physical 0.6 0.3 0.9 Price 5.6 3.2 8.8 V. Total Project Cost (including taxes) 21.7 12.5 34.2 VI. Taxes 2.8 - 2.8 VII. Total Project Cost (excluding taxes) 18.9 12.5 31.4 Financing Plan: -------US$ Million------ Local Foreign Total IDA 8.1 5.9 14.0 CCCE 4.5 3.2 7.7 FAC 2.0 1.5 3.5 EEC Special Action Fund 2.7 1.9 4.6 Government 4.4 - 4.4 Total 21.7 12.5 34.2 Foreign financing would account for about 87 percent of total project costs, or about 95 percent of net project costs. Estimated Disbursements: FY82 FY83 FY84 FY85 FY86 Annual 2.7 3.7 3.3 3.5 0.8 Cumulative 2.7 6.4 9.7 13.2 14.0 Estimated Completion Date: June 1985  - iii - Economic Rate of Return: 18 percent. Staff Appraisal Report: No. 2408-TO, dated June 4, 1979.   INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT AND AN EEC SPECIAL ACTION CREDIT TO THE REPUBLIC OF TOGO FOR A SECOND COCOA-COFFEE DEVELOPMENT PROJECT 1. I submit the following report and recommendation on two proposed credits to the Republic of Togo, a development credit for the equivalent of US$14 million and an EEC Special Action Credit for the equivalent of US$4.6 million, both on standard IDA terms, to help finance a second cocoa-coffee development project. This project would be cofinanced by a grant from the Fonds d'Aide et de Cooperation (FAC) for the equivalent of US$3.5 million and a loan from the Caisse Centrale de Cooperation Economique (CCCE) for the equivalent of US$7.7 million. The terms and conditions of the CCfE loan would be over 19 years, including 6 years of grace at 4.5 percent annual interest. The Government would onlend about US$2.5 million of the proceeds of the IDA and Special Action credits to the National Agricultural Credit Agency (CNCA) to be onlent to farmers at an interest rate of 8.5 percent over a term of 8 years, including 4 years of grace, for coffee plantings and 12 years, includ- ing 6 years of grace, for cocoa plantings. PART I - THE ECONOMY 1/ 2. The most recent economic report on Togo, Report No. 458a-TO "Current Economic Situation and Prospects of Togo" was issued on December 30, 1974. An economic mission visited Togo in December, 1978 and its findings are incorporated below and in Annex I which contains basic country data. Economic Performance 3. Over the 1972-78 period, the macroeconomic aggregates present a picture of good growth, high investment, and rising debt. Real growth in 1972-78 is estimated at 5 percent per annum. Beginning in 1975, phosphate profits were channeled into public investment, with gross domestic investment averaging a high 31 percent of GDP over 1975-77, up from 20 percent in the early 1970s. Rising public investment was therefore partially financed by borrowing, which raised the debt service ratio from 6 percent in 1972 to 17 percent in 1978. Higher imports of capital and consumer goods have been reflected in a widening resource gap, estimated at 27 percent of GDP in 1978. The per capita GDP is estimated at US$300 in 1977 for a population of 2.35 million growing at a rate of 2.7 percent annually. 4. Phosphate exports have provided the major stimulus to recent economic growth in Togo, following the quadrupling of the world market price in early 1974 and the nationalization of the mines in the same year. Since then, prices have stabilized at around $30 per ton, and this price combined with increased output raised average phosphate revenues during 1974-77 to US$93 1/ Substantially identical with Part I of the President's Report No. P-2503-To, dated May 31, 1979 for a Technical Assistance Project.  -2- million per year or about 16 percent of GDP. In 1977 phosphate sales amounted to about 40 percent of the country's merchandise exports. The increased phosphate revenues have provided substantial new public income, shaped the Togolese balance of payments and public finance picture over the past four years, and broadly influenced Government's investment plans and expectations. 5. Despite these developments agriculture remains the largest sector in the economy employing 75 percent of the working population and accounting for 23 percent of GDP. It is mainly made up of small farmers growing a combina- tion of foodcrops for subsistence and cotton, cocoa, coffee, or groundnuts for sale. Rainfall is considerably less than in the Ivory Coast or Nigeria, limiting the range of feasible crops. The major agricultural exports are cocoa and coffee, which provide about 30 percent of exports. These two crops contributed heavily to Government revenues through the official marketing agency due to high world prices and relatively low producer prices. The volume of cocoa and coffee produced has, however, fallen sharply since the early 1970s, coinciding with a decline in real producer prices. Output of other agricultural products (mainly fooderops and cotton) has grown moderately. Foodcrop production has generally kept up with rural population growth, with the exception of drought years in 1976 and 1977; rainfall conditions were good in 1978, and foodcrop storage capacity is presently fully utilized. 6. The rise of heavy industry is one of the striking aspects of this small country. Mining and beneficiation of phosphate rock was the first such operation, now employing about 2,000 people. A 1.2 million-ton annual capacity cement clinker plant (CIMAO) is under construction, with equity participation by Ghana and the Ivory Coast as well as Togo, and financing from the Bank and several other aid agencies. Production should start before the end of 1979. However some of Togo's other heavy industrial investments appear less promising. The Government-owned Lome oil refinery became operational in October 1977, with an annual capacity of one million tons per year, but was soon shut down for some time due to financial problems. A 20,000 ton steel mill, based on imported scrap to produce reinforcing rod, has recently been completed. 7. Growth in the tertiary sector, accounting for 46 percent of GDP at market prices in 1977, has largely been linked to trade, to substantial infrastructure investments and industrial growth, and to the expansion of the public payroll. The latter grew from 17,300 in 1973 to 37,600 in 1978 including 14,000 in education and an army of 5,400 men. Transport activity has expanded with construction of a modern port at Lome in 1968, financed by the Federal Republic of Germany. The nation's major international road links are almost completely paved and have enabled increased transit trade principally to Upper Volta and Niger. The construction sector is flourishing due to urban building and civil works projects. Public Finance Developments 8. Prior to the 1974 phosphate boom, Togo's financial policies were generally p-udent and its public investments modest in scale, in harmony with the smallness and openness of the economy and its dependence on a few primary for for- gn exchange earnings and Government revenues. Public  - 3 - expenditure was below 15 percent of GDP, the budget deficit was very small, and the Government held substantial reserves in the form of deposits with the banking system and net foreign assets. Foreign indebtedness was low because by far the largest part of foreign resources was extended to the Government in the form of grants or concessionary loans. 9. However, public expenditures greatly accelerated beginning in 1976, in response to phosphate revenues which tripled public receipts from 1973 to 1977. Current plus extrabudgetary expenditures expanded fourfold over the same period, with extrabudgetary spending reaching 40 percent of current spending levels, and a budget deficit equivalent to 6 percent of GDP devel- oped. Extrabudgetary items included some spending for investment projects and military equipment purchases. Among current expenditures, public debt payments rose rapidly as did the cost of the largest ministries (education, defense, and health) due mainly to sharp increases in the number of civil servants. 10. The Government also used readily available credit from foreign private banks and suppliers to finance new projects. Committed public debt rose from US$120 million at end-1973 to reach US$680 million by end-1977 (including US$160 million of CIMAO debt jointly guaranteed by the Ivory Coast, Ghana and Togo). For the first time, substantial arrears to both domestic and foreign suppliers began to accumulate and the Government borrowed from the Central Bank and drew down its foreign reserves. Arrears on public debt amounted to about US$125 million in April 1979. 11. This situation led to a request by the Togolese for IMF assistance and the negotiation, in April 1979, of a standby agreement in the third credit tranche for SDRs 15 million. The program extends to December 1980, and during this period it is expected that an extended facility will be agreed upon to take effect in 1981. The performance criteria and other conditions generally restrict new borrowings on hard terms; provide for a substantial reduction in payments arrears; impose ceilings on net banking credit; and call for reduced current and capital spending and the elimination of extrabudgetary expenditures. Relief from certain external private debt is currently being sought by the Togolese Government. 12. The Government is committed to carrying out this program and rectify- ing the current financial problems. It announced an austerity program along these general lines in November 1978. Bank estimates indicate that much of the spending cutbacks can be absorbed in the ongoing investment program and that, despite the constraint on the recurrent expenditures, it will probably not be necessary to lay off any civil servants. Fiscal restraint would then permit real increases in current expenditures starting in 1981 and contribute to a greater domestic share of capital expenditures in the 1980s. However, debt service will constitute a heavy burden consuming 33 percent of Government revenues in 1985 and 26 percent in 1990, even assuming that the mix of new loan commitments is from more concessionary sources. 13. To provide necessary foreign inflows, concessionary lending will have to increase substantially: loan commitments from bilateral and multi- lateral institutions will have to amount to about 60 percent of new commit- ments on average over 1978-85 compared with roughly 40 percent in 1971-75  -4- and 50 percent in 1976-77. This level of aid should be obtainable given the traditional support Togo enjoys from Germany, France, and multilateral sources and the agreement now reached with the IMF. At the same time a large per- centage of local cost financing will be necessary, particularly on projects with a relatively low foreign exchange component. Development Planning 14. The 1976-80 Development Plan was prepared during the phosphate boom and does not provide a clear view of development priorities. The objectives expressed for the long-term, while asserting that both equity and growth will be pursued, basically emphasize growth through development of the modern sector: an 8 percent annual real growth rate is to be achieved, largely financed by domestic savings. The Plan focusses on mechanization of agricul- ture, water supply, agro-industrial complexes, tourism, import-substitution, minerals and the necessary infrastructure. The actual allocation of 1976-77 public debt commitments emphasize the modern sector with, for instance, hotels accounting for 15 percent of committed debt in 1976-77. Many recent investments do not address income distribution objectives, and rely on the "trickle down" effect to reach the urban and rural poor. Only 2 percent of 1976-77 debt commitments were in support of human resources. Health facilities and water supply remain inadequate. Economic Prospects 15. The Government has begun to reformulate its development strategy. In agriculture greater emphasis is being placed on integrated rural develop- ment and on improving the use of the resources allocated to this sector. In mining a less precipitous approach is being taken towards the extension of both the phosphate and CIMAO activities than has characterized some earlier decisions on the industrial sector. A significant development is the recog- nition by the Government of the need to strengthen its planning capacity at the macro level and its capacity to evaluate the economic viability of pro- jects. This recognition was demonstrated by the Government's request for a Technical Assistance Project, approved by the Executive Directors on June 12, 1979, which will provide the Minister of Planning with advice on a macro- economic level as well as on project analysis. 16. The macro-economic outlook, based on an analysis of sectoral constraints and potential, is for real GDP growth of 4-5 percent per year over the 1978-90 period. Present very high growth rates (8 percent per year over 1976-78) will taper off as investment declines from the unsustainable 30 percent of GDP recorded in 1976-78 to about 17 percent of GDP during the 1980s. The ICOR is projected to decline in the late 1980s as the investment program becomes more efficient. A sharply declining resource gap, fueled by rising exports, should lead to higher domestic savings. The balance of payments projections indicate a shortage of foreign exchange (essentially a shortage of budgetary resources available) in the early 1980s due to the heavy debt service from earlier projects and the inevitable lag between large investments planned for a phosphoric acid project and a second phase of CIMAO, and the resulting exports. The Bank's projections assume this gap will be filled 1- a combination of short-term funds, debt relief, IMF resources, and increascu borrowing from the West African Monetary Union's central bank. The  - 5 - net result would be a diminishing deficit on current account and increasing reserves. These projections do not include any output or exports from the oil refinery or the steel mill, since the steel mill is not operational and the oil refinery has only recently reopened. Higher petroleum product prices and advantageous terms on Nigerian crude may result in additional foreign exchange and public revenue inflows from the oil refinery. PART II - BANK GROUP OPERATIONS IN TOGO 17. To date the Bank Group has extended eight credits to Togo amounting to US$59.9 million and two loans totalling US$53.0 million for the CIMAO regional clinker project (a loan of US$3.5 million to Togo and one of US$49.5 million to CIMAO jointly and severally guaranteed by the Ivory Coast, Ghana and Togo). Four of the credits were for highway construction, maintenance and feeder roads, three for agricultural projects and one for technical assistance. Annex II contains a summary statement of Bank Group operations in Togo, as well as notes on the execution of the projects. 18. The Highway Maintenance Project, the Bank Group's first lending operation in Togo, was satisfactorily completed in November 1973. The Second Highway Project evolved from preinvestment studies financed under the first project and provided for the construction or upgrading of three highways and the continuation of the maintenance program. This project is now virtually completed, although, due to inflation, the scope of the road construction component had to be reduced in 1976. The Third Highway Project has as its main objective, the improvement of two important roads serving mainly agricultural areas and linking the site of the CIMAO plant, Tabligbo, with the port of Aneho, and to continue building up an efficient road main- tenance service. Today, most of the country's major road links are paved and adequately maintained. The Bank's future operations in the sector will, therefore, aim at improving rural roads through the creation of an efficient institutional framework and training of maintenance personnel. 19. The first agricultural project for which a credit was approved in 1974, covers part of a long-range program for the development of the Plateau Region's coffee and cocoa potential. The proposed credit is a follow-up operation. The second agricultural credit, approved in June 1976, provides financing for a rural development project in the Maritime Region geared pri- marily to increasing foodcrop production and to providing support services and rural infrastructure for 20,000 farm families. A possible follow-up project is envisaged. The third and most recent agricultural credit, which was approved by the Board in October, 1977 supports a 5-year program to increase cotton and foodcrop production by introducing improved cotton and foodcrop growing techniques. A rural development project in the Bassar region is being prepared. It would intensify the integrated rural development approach begun under the cotton project. 20. Togo is the host to the CIMAO project, one of the largest interna- tional industrial ventures so far undertaken in West Africa. Implementation of this US$284 million clinker project, financed by the Bank and seven other official aid agencies, is proceeding satisfactorily. The Bank Group is also assisting in the preparation of a phosphoric acid project.  - 6 - 21. A first education project has been appraised. It emphasizes teacher training at the primary level, upgrading and expansion of middle level agri- cultural staff training and rural artisan training. Also, based on the findings of a recent Bank-WHO Cooperative Program mission to Togo, an urban water supply project for Lome is expected to be identified. 22. Present Bank Group disbursements account for about 10 percent of Togo's disbursed and outstanding public debt (as of early 1978). Service payments to the Bank Group are about 2 percent of total debt service and will remain at about this level over the medium-term. PART III - THE AGRICULTURAL SECTOR 23. Agriculture employs about 75 percent of the active population and accounted for about 30 percent of GDP in 1978, a decline from about 45 percent in 1973. This reflects the substantial growth of the mining sector (phosphate) and a stagnation of agricultural output. Foodcrop production has essentially kept pace with rural population growth and accounts for about 75 percent of agricultural production, except during the low rainfall years of 1976 and 1977. The major staples are maize, sorghum, yam and cassava. The remainder consists of industrial and export crops, principally cocoa, coffee, cotton and palm oil. Overall agricultural production is estimated to have increased in real terms by about 3.5 percent per year during the period 1966-70, but since then the marketed production of coffee, cocoa and palm oil decreased by about 50 percent, whereas cotton recovered from a decline in the late 1960s. The share of agriculture in export earnings has varied between 25 and 50 percent in the 1970s, with cocoa and coffee accounting for an average of 85 percent of agricultural exports and about 30 percent of total exports. 24. Responsibility for the Agricultural Sector is shared by two minis- tries. The Ministry of Rural Development is concerned with policy formulation and program coordination of production activities and includes directorates for research, development, cooperatives and credit, livestock, and training. The Ministry of Rural Equipment is concerned with infrastructural develop- ment and support services and includes directorates for rural engineering, pedology, plant protection, veterinary services, forestry and fisheries, and produce inspection. 25. Execution of agricultural development projects is generally en- trusted to autonomous, product-oriented public corporations. The major ones are SRCC for cocoa and coffee, SONAPH for oil palm, TOGO-FRUIT for fruits and SOTOCO for cotton. Their responsibilities include the supply of planting material, provision of extension services and primary marketing and processing. Agricultural credit is the responsibility of the National Bank for Agricul- tural Credit (CNCA). 26. The Milistry of Trade supervises two marketing entities: OPAT, responsiblt for coffee, cocoa, cotton, palm oil and palm kernels, and TOGO- GRAIN for F-odcrops, OPAT's producer price stabilization program for export  -7 - crops produces sizeable surpluses for the Government. In the past these have been used to finance development in general, with only some 6 percent re- invested in agriculture. TOGOGRAIN is intended to play a stabilizing role for foodcrops by timely interventions in the market. It has built six silos since 1975 with a total capacity of 7,000 tons. 27. Agricultural research is carried out with technical assistance from French commodity-oriented institutes. The Research Institute for Tropical Agronomy and Foodcrops (IRAT) is in charge of foodcrops, the Research Insti- tute for Cotton and Other Fiber Crops (IRCT) of fiber crops and the French Institute for Coffee, Cocoa and Other Stimulant Plants (IFCC) of cocoa and coffee. Soil studies, classification, mapping and analytical work are under- taken by ORSTOM (Office de la Recherche Scientifique et Technique Outre-Mer). The Government recently created a multidisciplinary research institute, the Institut Polyvalent de Recherches (IPR), which should eventually become responsible for overall research coordination, basic research, and laboratory services. 28. The main objectives of the Government's agricultural development strategy are to increase food production, including maintaining food reserves against natural calamities; rehabilitate and increase traditional export crop production and diversify into some new products. However, until recently the Government has viewed agricultural production as having rather low development potential. During the Second Development Plan period (1971-75), actual investments in agriculture amounted to about 6 percent of total investments, compared with the originally planned 15 percent. The share of agricultural investments is expected to reach 20 percent under the Third Plan (1976-80). In the past few years the Government has begun to adopt a policy of helping small farmers with extension service and credit, an approach supported by three IDA rural development projects. The Association's strategy in the sector will continue to support projects directly addressing the needs of small farmers. 29. A major policy issue in this sector currently under discussion with the Government concerns agricultural pricing. Producer prices for the main cash crops have traditionally been kept low, thereby reducing incentives to farmers to invest in these crops which have relatively long gestation periods. A recent 30 percent increase of the farmgate price for cocoa, from about US$0.68/kg to US$0.91/kg, indicates that the Government recognizes the effect of this constraint. The Association recently completed and submitted to the Government for review an analysis of cash crop production incentives. The report recommends a producer price policy which would balance conflicting objectives such as increased farmer incomes from cocoa, coffee and cotton against the need to generate public revenues, and the goal of food self- sufficiency versus export crop production. The Cocoa-Coffee Sub-Sector 30. The area where cocoa and coffee are grown is in the western part of Togo's Plateau Region (see map). The topography is heterogenous, encom- passing lowlands, plateaux and mountains. The climate is tropical with a  - 8 - rainfall pattern strongly influenced by the mountainous character of the area. As a consequence, the area enjoys generally higher precipitation than the rest of the country averaging 1,500 mm annually. The four months of dry season fall between November and February. About two thirds of the cultivable soils in this region are considered suitable for cocoa and coffee cultivation. 31. In the 1960s, cocoa and coffee production stagnated and little new plantings of these crops were undertaken, because of declining farmgate prices and the lack of appropriate extension services. In 1971, the Government, using FAC assistance, founded the National Cocoa and Coffee Development Agency (SRCC). Its objective is to rehabilitate and expand cocoa and coffee cultiva- tion by taking advantage of IFCC's cocoa and coffee research station estab- lished in Togo since 1967, and by providing extension services and essential infrastructure. SRCC was responsible for managing IDA's first Cocoa-Coffee Project in 1973 (Cr. 503-TO) and its performance and financial control have been good. SRCC would continue to be the project executing agency for the proposed second project. Credits to farmers were introduced through the Project Credit Unit (PCU) created under the first project within CNCA. Credit recovery will only start this year and will primarily be the responsibility of PCU, assisted by licensed buyers of cocoa and coffee. The Government has agreed to establish an Organization of Licensed Buyers for this purpose by November 30, 1979 (Section 4.12 of Development Credit Agreement). In addition, the PCU has created in 1977/78 three pilot village group centers (VGC). They serve to channel post-harvest technical advice to farmers and to construct low-cost village stores. The proposed project would provide funds to continue these services and to build this type of storage space in up to 80 villages. 32. Individual village members acquire land use rights which they may transfer to non-village members under rental or sharecropping arrangements. Under the sharecropping system used for cocoa plantings, the tenant clears the land and plants, maintains and harvests the crop. He receives as payment a certain proportion of the crop or is paid a fixed sum per harvested headload of cocoa. The rights of these tenants are ill-defined and conflicts between landlords and tenants have arisen, particularly in the main cocoa growing region (Litime), where about 50 percent of the cocoa area is worked under various tenancy or sharecropping arrangements. Most tenants have no long-term security on the land they work. The land shortage means that old trees need to be uprooted to make space for replanting. But then, tenants and landlords would have to give up the income from the old trees and have no income from the new ones for four or five years. 33. Since 1977, the Government has made bonus payments to landowners of about US$45 per ha of old cocoa plantings cleared which, however, do not appear to offer enough incentive to motivate them to replant. As a result only about half of the 1975-80 cocoa planting target will be met under IDA's first cocoa- coffee project. The landowner-tenant conflict, which does not affect the coffee growing area, would be addressed in the proposed second project. The Government would increase to about US$270 per ha the grant payment for clearing old and replanting new cocoa and increase farmers' credits for cocoa plantings from about TS$270 per ha of new plantings to about US$360 paid in equal instal- ments over a five year period. With the support of the Government, SRCC is preparing a format for long-term contracts between landowners and tenants.  - 9 - These contracts are expected to be introduced by the end of March, 1980. IDA has hired a Togolese consultant to study the landowner-tenant relationship from a legal, social and traditional point of view. His report indicates that proposed contractual arrangements appear to be acceptable to landlords and tenants. This is an encouraging sign that the tenure issue may be resolved and the cocoa planting targets under the proposed project can be met. PART IV - THE PROJECT 34. The proposed project would be a continuation of the first Cocoa- Coffee Development Project financed by IDA. It was appraised in September/ October 1978 and is summarized at the beginning of this report. Annex III contains supplementary project data. The Staff Appraisal Report No. 2408-TO of June 4, 1979, will be distributed separately. Negotiations were held in Lome, Togo from May 15 to 16, 1979. The Togolese delegation was led by Mr. Koudjolou Dogo, Minister of Planning, Industrial Development and Admin- istrative Reform and included Messrs. Gassou and Bagnah, Ministers of Rural Development and Public Enterprises (including OPAT); and other Government officials. 35. The project would be implemented over a five and a half year period, starting in 1980 and would include the following components: (i) replanting of about 7,500 ha of coffee and 4,000 ha of cocoa by about 17,000 smallholder farmers and bringing into production cocoa and coffee planted under the first project; (ii) providing marketing facilities for plantains grown as temporary shade for young cocoa trees; (iii) foodcrop plantings within replanted cocoa and coffee and improvement of foodcrops outside cocoa and coffee; (iv) extension services, input supply and credit to farmers and construction of low-cost storage space for cocoa, coffee and inputs in up to 80 villages; (v) research and improvement of planting material and seeds by IFCC for cocoa and coffee and IRAT for foodcrops; (vi) building or rehabilitating about 300 km of feeder roads and periodically maintaining these roads and those built under the first project; and (vii) provision for a financial manager for SRCC, technical assistance to improve supervision and training of SRCC extension agents and to carry out studies on the requirements for expanded plantain marketing; and on the project's progress, including preparation of a possible third project.  - 10 - Project Implementation 36. The proposed second project would continue to be carried out by SRCC. As under the first project credits to farmers would be provided by the CNCA through the PCU. The present General Manager of SRCC is a well-qualified expatriate who would be retained for the first three years of the proposed project until a suitably qualified and experienced national is ready to take over. The existing expatriate heads of planting material production and general services (workshop and roads) would also need to be retained. For the proposed two new posts in SRCC (financial director and field service manager) it is unlikely that suitably qualified and experienced nationals would be available. Thus, these positions would be filled by expatriates who would train Togolese staff to take over their responsibilities at the latest after project execution. The project also provides for two years of technical assistance to CNCA (one expatriate) primarily for the purpose of supervising PCU's initial involvement with recovery of farmer credits made under the first project. Total technical assistance provided to SRCC would amount to 252 man-months at US$9,500/man-month and to 24 man-months for PCU at US$8,300/ man-month, including contingencies and all travel, housing and other allowances. To allow for a smooth transition from the first to the second project, the Government would, as a condition of effectiveness, deposit in a special account established for SRCC and PCU with a bank satisfactory to the Associa- tion, initial amounts of CFAF 50 million (US$230,000) and CFAF 25 million (US$115,000) respectively (Section 6.01 (g) of Development Credit Agreement). These revolving funds would be replenished quarterly by the Government in advance, based on SRCC's and PCU's annual budgets. 37. Most of the land suitable for cocoa and coffee in Togo is already planted. Thus, the new program would be mainly carried out on land cleared of old and unproductive trees. The planting program would be undertaken by smallholders. A total of about 17,000 farmers are expected to participate. SRCC would determine whether a farmer qualifies for the program by judging the suitability of his land and his capability to establish and maintain his plantation. To facilitate extension work, groups would be formed of at least five farmers with a minimum total of 3 ha to be replanted. These groups would produce their own planting material in village nurseries under the supervision of SRCC. Farmers would be responsible for preparation of their plots, includ- ing planting of plantain shade trees for cocoa plots. 38. The proposed project would attempt to intensify foodcrop production in the cocoa-coffee area which traditionally has had a foodcrop deficit. For this purpose the Government would provide SRCC with two existing demonstration farms (called centres polyvalents) to be used for field trials and planting material production. The handing over of these two centers to SRCC would be a condition of effectiveness (Section 6.01(e) of Development Credit Agreement). Foodcrops would be interplanted with cocoa and coffee and, in a second phase, foodcrop cultivation would be introduced outside plantations. As a result, annual foodcrop production per family is expected to increase by 90 percent in cereals, and 80 percent in tubers and legumes, an annual incremental pro- duction of about 3,000 tons of grains and 7,000 tons of tubers.  - 11 - 39. Production from the plantain shade trees could provide additional cash income to farmers. However, the size of the output generated might result in a drop of farmgate prices. At the peak of production in 1986 the Litime area would have an estimated surplus of about 9,000 tons of bananas. To seek outlets outside of the project area the proposed project would finance a study of the marketing and logistical requirements needed, as well as the facilities required to handle the excess plantain (Section 3.02 and Schedule 2 (F) (2) of Development Credit Agreement). Incremental revenues to farmers are estimated at about US$800/ha over the three years that plantain trees are under production, before they are uprooted. This would be an additional incentive for replanting cocoa. Cocoa and Coffee Marketing 40. Cocoa. According to Bank projections, world annual cocoa production is projected to increase from 1.5 million tons in the mid-1970s (1974/76) to about 1.9 and 2.3 million tons by 1985 and 1990 respectively. In constant 1978 dollar terms, cocoa prices are expected to fall to about US$1.44 by 1990 from a 1974/76 average of US$2.00/kg and of US$4.05/kg in 1977. The major reasons for this include the high production anticipated in the late 1980s and early 1990s, notably in Brazil and Ivory Coast, the gradual decrease of trade in cocoa beans, the increasing use of cocoa substitutes in chocolate and confectionery, and the effects of international inflation. Demand growth, projected at 3.3 percent per annum, is expected to follow the production trend. 41. Incremental production from the 4,000 ha to be replanted under the proposed project would be 2,400 tons annually by 1993. Including the 1,300 tons net additional production expected from the first project (as from 1985), Togo's total production and exports are projected to reach 20,700 tons by 1993. The present cocoa export quota for Togo, if enforced, would be 20,500 metric tons, with a provision for an increase to 23,000 tons, well above Togo's projected exports in 1993. Adjustments to quotas would probably be made under a Third Cocoa Agreement, for which negotiations are currently proceeding. 42. Coffee. High coffee prices during the mid-1950s triggered an expan- sion of coffee plantings in most producing countries, which led to an increase in production and to mounting stocks during the early 1960s. Producer stocks reached their peak of about 5.3 million tons, equal to 2 years of world import demand, in 1966. As a consequence production fell continuously short of con- sumption, gradually depleting stocks. However, prices reacted slowly to the changing market situation. Only when the commodity boom of 1973/74 started, did coffee prices join the upward trend, reaching US$1.58/kg in 1974, after an average of US$0.88/kg in the 1960s. The Brazilian frost of 1975 increased them further to a peak of US$7.25/kg in April 1977. However, consumer re- sponse to high prices triggered a sharp decline in coffee prices through 1978. Prices are nonetheless expected to remain above their long-term average level until 1980. In the longer term the current decline in prices is expected to slow the rate of new coffee plantings which will result in a strengthening of coffee prices during the second half of the 1980s. Thus, according to Bank projections in constant 1978 prices, they will reach US$2.26/kg in 1985 and US$2.46 in 1990.  - 12 - 43. Togo's export quota under the 1976 International Coffee Agreement was 13,500 tons, with provision for an increase up to 16,875 tons in 1981/82. Projected exports for Togo, including the production resulting from the first and the proposed projects, are about 15,500 tons in 1990, well within the quota. The International Coffee Organization has been consulted and has raised no objection to the project. Roads 44. The SRCC road program, which began in 1972, would be continued under the proposed project. It would consist of constructing and rehabilitating 300 km of feeder-roads and maintaining the 160 km of roads constructed under the first project as well as those to be constructed under the proposed project. The program would be carried out by SRCC's road unit which has performed well under the first project. The roads would be built to standards sufficient to facilitate essential all-weather traffic. To replace worn-out machinery, new equipment would be financed under the proposed project. At the end of the project responsibility for maintenance of these roads would be taken over by the Rural Works Department of the Ministry of Rural Development. Credits to Farmers 45. To enable Caisse Nationale de Credit Agricole (CNCA) to handle efficiently long-term loans to cocoa and coffee farmers, a Project Credit Unit (PCU), located in SRCC's regional office, was established under the first project. By mid-1978 PCU's portfolio included over 7,000 loans. Under the proposed second project, the PCU would continue operating under its present structure having a central unit responsible for overall management of loans, general accounting and central cash operations, and one or two credit agents in each of the SRCC sectors, responsible for disbursements, recovery of credit, individual accounts and accounts of farmers' groups. 46. The project would provide credits to farmers for inputs and labor to plant new cocoa and coffee trees. The term of cocoa credit would be twelve years including a grace period of six years, and that of coffee credit eight years including a grace period of four years. The grace periods represent the respective gestation periods for these crops, during which interest would be capitalized. In order to achieve PCU's financial viability, it needs to receive a contribution equivalent to 11 percent on outstanding farmers' credits. It would collect this rate by charging to farmers an annual interest of 8.5 percent, CNCA's current rate on farmers' credits which is in line with BCEAO regulations, and by receiving a complementary payment from the Government of an additional 2.5 percent per year on outstanding credits to farmers. This would constitute a compensation by the Government to the farmers as the latter receive only about one third of the economnic value of cocoa and coffee, while the Government collects almost two thirds of the market value of these crops (Section 3.09 and Schedule 5(C)(2)(a) of Development Credit Agreement). 47. Planters of cocoa and coffee would receive credits totalling about US$360 and US$430 per ha respectively. Cash payments would amount to about 80 percent of these credits and be disbursed over five and four years  - 13 - respectively. The per hectare credit amounts would be reviewed annually so as to cover possible price increases of inputs. Cocoa farmers would in addition receive a grant, in five yearly instalments, each of about US$55 per ha as partial compensation for income foregone from old cocoa trees (Section 6.01(g) of Development Credit Agreement). Credit recovery would rely primarily on effective and persistent follow-up by PCU's credit agents and the Organization of Licensed Buyers (para. 31 above). Project Cost Estimate and Proposed Financing 48. Project costs in mid-1978 prices during the five and a half year investment period are estimated at US$31.4 million net of taxes. Taxes are estimated at US$2.8 million. The foreign exchange component is estimated at US$12.5 million or 40 percent of net project costs. The proposed IDA and EEC Special Action credits of US$14 million and US$4.6 million respectively would cover about 59 percent of net project costs. Financing would also be provided in the form of a grant from FAC of US$3.5 million and a loan from Caisse Centrale de Cooperation Economique (CCCE), US$7.7 million. In addition to the taxes, the Government would finance US$1.6 million in local costs. The terms and conditions of the CCCE loan would be over 19 years, including 6 years grace, at a 4.5 percent annual interest rate. The CCCE contribution would be made available in two tranches, the second being dependent upon satisfactory project performance during the period covered by the first one, through June 30, 1982. The amount of the first tranche would be US$2.2 million and that of the second one US$5.5 million. CCCE's main concerns about project performance refer to the size of the cocoa component in view of the replanting problems and the maintenance of mature coffee trees. Both issues are addressed in this project, the first by a substantially increased compensation grant for uproot- ing old cocoa trees and the second through the provision of a field service manager and staff to SRCC for improved extension services. In case CCCE would decide not to proceed with the second tranche, the Government would be required to provide, if the second tranche is not effective by September 30, 1982, the necessary financing to complete the project (Sections 4.11 of Development Credit Agreement). The effectiveness of the first tranche of the CCCE loan and the signing of the EEC Special Action Fund Credit Agreement would be conditions of credit effectiveness (Section 6.01(a) and (b) of Development Credit Agreement). The Borrower would take all measures necessary to obtain the FAC grant by December 31, 1979. If this grant shall not have become effective by April 30, 1980, the Borrower would provide the necessary finan- cing from other sources at conditions satisfactory to the Association (Section 4.10 of Development Credit Agreement). Procurement and Disbursement 49. Equipment, vehicles and technical assistance to be purchased over the first 18 months of the project (about US$1.1 million), financed by the EEC Special Action Credit, would be procured in accordance with the Special Action Fund guidelines. Other items financed by the EEC Special Action Credit in this period, mainly operating costs and buildings (about US$3.5 million) would be procured locally in accordance with Bank Group guidelines. Goods and services financed under the IDA credit would be procured according to the following procedures: contracts for goods and services of US$50,000 equivalent or more  - 14 - would be awarded through international competitive bidding in accordance with IDA Guidelines, amounting to US$2 million; individual contracts for vehicles, equipment and goods for less than US$50,000 would be awarded on the basis of local competitive bidding procedures which are acceptable to IDA. Contracts for less than US$10,000 would be awarded following prudent shopping. The total amount for these items would not exceed US$1.4 million; civil works (US$2.9 million), mainly road construction, housing, field offices and ware- houses, scattered over a large area and unlikely to attract foreign bidders, would be carried out under force account by SRCC or be contracted through local competitive bidding in accordance with procedures acceptable to IDA; services of consultants, applied research and seed multiplication, which were considered satisfactory under the first project, would continue under contracts approved by IDA, amounting to US$5.4 million; and US$13.5 million would be expended on salaries and operating costs, and farmers' credit. The materials and supplies would be obtained in accordance with the borrowers' normal procedures which are satisfactory. 50. IDA funds would be disbursed after all proceeds from the EEC Special Action Fund have been disbursed. The IDA Credit would be disbursed over five years (pari passu with the funds from CCCE and FAC), against 50 percent of the following expenditures: US$ Million (to be disbursed) (a) SRCC (buildings; vehicles and equipment; technical assistance; studies; local personnel and operating cost) 6.08 (b) PCU (buildings; vehicles and equipment; technical assistance; local personnel and operating costs) 0.85 (c) Credit to Farmers 2.10 (d) Research and Foodcrops (IFCC and IRAT) 1.64 (e) Road Construction and Maintenance 1.93 (f) Unallocated 1.40 TOTAL 14.00 Disbursements for local personnel and operating costs and credit to farmers would be against certificates of expenditure, the documentation for which would not be submitted for review, but retained by the borrower and available for inspection by IDA during the course of project supervision. The control of these statements of expenditure would be reinforced by the annual external audit. Disbursements for all other items would be fully documented. Project Benefits 51. The project's primary benefits would be the increases in foreign exchange earnings from higher exports of cocoa and coffee. Maintaining the present level of producer prices in line with inflation, the Government would  - 15 - begin to earn revenues from the second project (through OPAT) in 1986. Project-induced net foreign exchange earnings are estimated to rise to about US$10 million annually (in constant 1978 terms) by 1993 and thereafter to remain at about this level. These two crops are the only high-value cash crops suitable for planting in the project area. Environmental and other considerations preclude any substantial diversification into other crops. 52. The project would benefit about 17,000 farm families, about 110,000 people. The average farm income for coffee farmers would increase in 1978 terms, from about US$440 to about US$830 in 1991 and for cocoa from US$1,150 to US$1,620 in the same period. The additional labor requirements during the project period are expected to be supplied by the farm families which have limited alternative employment opportunities during the season when such labor is required. A shadow wage rate of 50 percent has, therefore, been incorpor- ated in the economic analysis. Economic rates of return have been calculated for each of the three project components (coffee, cocoa and foodcrops) separa- tely and for the project as a whole. World market prices used for coffee and cocoa are in line with the Bank's most recent projections. Rate of Return Percentage of Project Component (percent) Project Cost - Cocoa Replanting 14 33 (Including plantain production) - Coffee Replanting 20 58 - Foodcrop Development 25 19 - Whole Project 18 100 Project Risks 53. Since this is a follow-up project, the risks of failure are much smaller than for a new venture, especially in view of the achievements under the first project. The project's major risk is economic. Producer prices for cocoa and coffee, coupled with the financial package (credits and grants) offered to farmers, might not constitute a sufficient replanting incentive. To guard against this risk the Government would consult with IDA annually on the farmgate prices for cocoa and coffee (Section 4.05 of Development Credit Agreement). The problem is compounded by the landlord/tenant conflict in the cocoa area which emerged as a bottleneck for cocoa replanting under the first project. The Government is attempting to resolve the problem by introducing by March 31, 1980 contractual arrangements into the sharecropping system, giving tenant farmers a long-term income security (Section 3.08 of Development Credit Agreement). In addition, grants for uprooting old cocoa trees would be increased from about US$45/ha to US$270/ha as a condition of effectiveness of this credit (Section 6.01(f) of Development Credit Agreement). It is recognized that the landlord/tenant conflict is a problem which can only be resolved by the introduction of new contractual measures governing the rela- tionship. Therefore, targets for cocoa replanting under the proposed project have been set at about half the level of those for coffee. The risk that the second tranche of the CCCE loan would not be forthcoming is small, as  - 16 - described in para. 48 above. However should this be the case the Government would provide the necessary financing to complete the project (Section 4.11 of Development Credit Agreement). PART V - LEGAL INSTRUMENTS AND AUTHORITY 54. The draft Development Credit Agreement between the Republic of Togo and the Association and the draft Special Action Credit Agreement and the Association as Administrator of the EEC Special Action Account established with funds contributed by EEC member states, and the Recommendation of the Committee provided for in Article V, Section 1 (d) of the Articles of Agreement of the Association are being distributed separately to the Executive Directors. 55. Features of special interest are listed in Section III of Annex III. Special conditions of effectiveness would be: (i) the Government's initial deposits in special accounts, established for SRCC and PCU with a bank satisfactory to the Association, of CFAF 50 million (US$230,000) and CFAF 25 million (US$115,000) respectively (para. 36 of this report); (ii) the Government's handing over to SRCC of two foodcrop demonstration farms (para. 38); (iii) the effectiveness of the first tranche of the CCCE Loan Agreement and the signature of the EEC Special Action Fund Credit Agreement (para. 48); and (iv) the increase of the premium paid to farmers for uprooting old cocoa trees (para. 53). 56. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association and that the proposed EEC Special Action Credit would comply with the criteria established by the Agreement of May 2, 1978 between the Association, the EEC and its member states. PART VI - RECOMMENDATION 57. I recommend that the Executive Directors approve the proposed Development Credit and EEC Special Action Credit. Robert S. McNamara President Attachments Washington, D.C. June 14, 1979  - 17- Annex I Page 1 TOGM - SOCIAL INDICATORS DATA SHEET nREEENCE GROUPS (ADJUSTED ArAE LAND AREA (THOUSAND SQ. KM.) TOGO - HOST RECEN ESTIMAS AETE) S TOTAL 56.8 SAME SANE NEXT HIGHER AGRICULTURAL 25.0 IIST RECENT GEOGQRHIC INCOME INCOME 1960 /b 1970 A ESTIMATE Ab REGION /c GLOUP d GROUP /e GNP PER CAPITA (US$) 80.0 180.0 300.0 223.6 182.9 432.3 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OP COAL EQUIVALENT) 23.0 67.0 65.0 86.7 88.9 251.7 POPULATION AND VITAL STATISTICS TOTAL POPULATION, MID-YEAR (MILLIONS) 1.5 2.0 2.4 URBAN POPULATION (PERCENT OF TOTAL) 10.0 13.0 15.0 13.6 15.0 24.2 POPULATION DENSITY PER SQ. 10. 26.0 35.0 42.0 18.4 46.8 42.7 PER SQ. KM. AGRICULTURAL LAND 64.0 83.0 94.0 53.6 254.1 95.0 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 47.9 49.8 50.7 44.4 43.6 44.9 15-64 YRS. 48.3 46.0 45.0 52.7 53.3 52.8 65 YRS. AND ABOVE 3.8 4.2 4.3 2.8 2.9 3.0 POPULATION GROWNH RATE (PERCENT) TOTAL 2.8 2.7 2.6 2.6 2.4 2.7 URBAN 7.9 5.4 6.7 5.8 4.0 8.8 CRUDE BIRTH RATE (PER THOUSAND) 50.9 51.0 50.6 46.9 44.3 42.2 CRUDE DEATH RATE (PER THOUSAND) 31.0 26.6 23.3 20.6 19.7 12.4 GROSS REPRODUCTION RATE 3.5 3.3 3.3 3.1 2.9 3.2 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. .. .. USERS (PERCENT OF MARRIED WOM .. .. .. 2.5 14.6 14.2 OOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1970-100) 46.9 100.0 .. 94.2 96.4 104.3 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 89.0 94.0 96.0 90.1 92.3 99.5 PROTEINS (GRAMS PER DAY) 48.0 51.0 52.1 55.2 50.0 56.8 OF WHICH ANIMAL AND PULSE .. 19.0 /f 15.4 17.1 13.9 17.5 CHILD (AGES 1-4) MORTALITY RATE 44.9 .. .. .. .. 7.5 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 33.5 38.5 41.0 43.7 45.8 53.3 INFANT MORTALITY RATE (PER THOUSAND) 127.0 Jg .. 121.0 138.4 102.7 82.5 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL 17.0 16.0 22.4 26.4 31.1 URBAN .. .. 49.0 66.3 63.5 68.5 RURAL .. 5.0 10.0 10.4 14.1 18.2 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 1.0 15.0 23.9 16.1 37.5 URBAN .. 4.0 36.0 70.3 65.9 69.5 RURAL .. 1.0 12.0 14.2 3.4 25.4 POPULATION PER PHYSICIAN 49650.0 Ah 27940.0 22310.0 21757.5 13432.7 9359.2 POPULATION PER NURSING PERSON 5340.0O/h 4170.0 2220.0 3473.8 6983.3 2762.5 POPULATION PER HOSPITAL BED TOTAL .. 860.0 if 700.0 645.4 1157.6 786.5 URBAN .. .. .. 172.9 183.3 278.4 RURAL .. .. .. 1292.6 1348.8 1358.4 ADMISSIONS PER HOSPITAL BED .. 24.3 .. 19.2 19.5 19.2 HOUSING AVERAGE SIZE OF HOUSEHOLD TMTAL .. .. .. 4.9 5.2 URBAN .. .. .. 5.0 4.8 RURAL .. .. .. 4.7 5.3 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL .. 5.8 .. URBAN .. .. .. .. 1.8 2.3 RURAL .. .. .. ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. .. .. .. 25.9 28.3 URBAN .. .. .. RURAL .. .. .. .. 8.7 10.3  - 18- Annex I Pee. 2 TOGO - SOCIAL INDICATORS DATA SUE T RPmzNCE GROUPS (ADJDSTSD AVnEAGES TOGO - HOST RECENT ESTIMATE)L SAME SAME NET HlGlll iDST RECET GZOG0CPIC INCOME INCOME 1960 A 1970 A ESTIZT /b RUGIOI Lc GROUP /d GROUP /e EDUCATION ADJUSTED ENIROLLMENT RATIOS PRIMARY: TOTAL 44.0 72.0 98.0 52.1 62.9 75.8 FElALE 24.0 45.0 68.0 37.6 45.9 67.9 SECONDARY: TOTAL 2.0 7.0 19.0 8.0 14.4 17.7 FOALE 1.0 3.0 9.0 5.0 S.8 12.9 VOCATIONAL (PERCENT OF SECONDARY) 10.0 J1 10.0 8.0 7.2 6.6 7.4 PUPIL-TEACHER RATIO PRDIARY 63.0 58.0 60.0 43.2 38.5 34.3 SECONDARY 25.0 40.0 22.8 19.8 23.5 ADULT LITERACY RATE (PERCENT) 10.0 /k 12.0 . 20.3 36.7 63.7 CONSUMPTION PASSENGER CG& PER THOUSAND POPULATION 0.3 4.0 6.0 3.9 3.1 7.2 RADIO RECEIVERS PER THWSAND POPULATICI 4.0 22.0 23.0 60.1 31.1 71.1 TV RECEIVERS PER TOOUSAED POPULATION 2.2 2.8 14.1 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATIOI PER THOUSAND PlPU ATION 2.0 7.0 6.0 3.9 6.0 16.3 CINEmA ANNIAL ATTENDANCE PER CAPITA 0.2 . 1.2 1.4 1.6 iPLOPIENT TOTAL LABOR FORCE (THOUSAiNDS) 630.0 / 720.0 / 890.0 FENALE (PERCZNT) 40.2 42.1 41.4 32.6 24.2 28.D AGRICULTURE (PERCENT) 80.0 75.0 75.0 73.3 60.7 54.1 INDUSTRY (PZRCNST) 8.1 10.9 PARTICIPATION RATE (PERCENT) TOTAL 45.4 43.8 42.4 42.0 39.8 37.8 mALE 56.1 52.2 50.9 54.8 53.3 50.3 FIIALE 35.4 35.9 34.3 27.3 19.6 20.9 ECONOHIC DEPEDENCY RATIO 1.3 1.5 1.4 1.2 1.3 1.3 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS . 25.7 20.3 19.5 HIGHEST 20 PERCENT O HOUSEROLDS 55.1 45.1 48.9 LOWEST 20 PERCENT OF HOUSEEOLDS . 5.8 5.7 5.9 LOWEST 40 PERCENT OF HOUSEHOLDS 14.5 16.8 15.7 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCCE LEVEL (US$ PER CAPITA) URBAN . 201.0 108.8 88.5 155.9 RURAL 97.0 74.1 71.9 97.9 ESTIMATED RELATIVE POVIRTY INCOMZ LEVEL (US$ PER CAPITA) URBAN 124.4 100.8 143.7 RUiEAL . .. 1O.0 59.6 42.0 87.3 ESTIMATED POPULATION BELOW POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 35.0 26.8 46.0 22.9 RURAL 40.0 47.6 48.0 36.7 Not available Not applicable. NOTES /a The adjosted group averages for each indicator are population-_eighted geometric meas, excluding the extreme values of the indicator and the moat populated country in each Sroup. Coverage of countries aong the indicators depends on availability of data and ia aot uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Moat Recent Estimate. between 1973 and 1977. /c Africa South of Sahara; /d Low Income ($280 or le" per capita, 1976); a Lower Middle Income ($281-550 per capita, 1976); /f 1964-66; a African population only; /h 1962; /i Governent hospital establiaheetne; Li Excluding teacher training; Ik Prior to 1965; L1 Figures do not include apprentices and unemployed; Le Figures do not included unemployed. September 1978  - 19 - Annex I N-.: Alh.. h t d DEFIITION$OF 90CIAL INDICATOIRS Page 3 Nots: ltoug th d tsr.dran fomsouce g reemlly Judged the meet euthor itetive end reliable, it should also be noted that they may not be ite-- nainly utiaal es ftto lath of stnardioed deffoitione end eOonnePte used by different osoctirfe In to11eeting rho data. The data are, notette.lsee usful to deuoribe orders of nageitode, indicate treads, and osetiecertain major differes.ee ho tness osun.trie.. ITo. oduetod grou. averses fon each indloator are populetioe--sighted gensatrie means, ooluding the ectraec veIsee of the irdinator and the sost populated _ onntr _I cet grop. C-vetge of -ourrlcs snog the indieiorn depends cc -velltility of dets and i- rot snifoo. Due to leek of deis, group "Inaecfur Capitol Sarploc Oil Eaporter and indiostore of -oe.. to water end enereta disposel, hb.ueIng, lnoat dietrihutfon end Povorty ler siaple yopos1.tluc -wighted gEneatrlo means without rho coolusion of entren vaIses. LAND ARi.A (thou...ud sq. kst) Populaton per bhrialbed- .oa,ran. and rural - Populecion (totl, Total - Total ear-ac area -oprleing lasd arcs and inlgu aes ra,and rurre.l) divided hy their respective seeker of hosapital bede Aurc.ulnru1 -,lost esosot.estimate of agrioaltuoal area see d temporarily available is public and private general and epenielieed hospital andrto ur ponnanotly for orpe peeuc market end kitnhsn Bardene ur to hahilitation ...etere. Hospitals are etbhlich,eete pormas,u.tly etofed hy lie fallow. ~~~~~~~~~~~~~~~~~~At leaet one physician. Eetsblielmsnte providing principally -utod ial care are con icoIded. Ruoral hoepitals. howver, inolods health sod -edi- COP,PE1 CAPITA(11$ - IS pt usr .pits oelieiste an ou.ant market priose, -1a . ostere not pereneotly staffed hy A physician (hat by A msdioul as- aluadty;sae uoveocomthod as Werld Bash Atlas (1975-77 basis); sietant, sores, midwife, eto.) which offar in-pe tient Accommodation and 1960, 1970, god 1977 dsta. provide a limited range of medica faoIitise. Admiasoions rs hopital bed - Total numiber of Admissions to ur diechoegos tfNcRY CONSUIMPTION PER CAPITA - Atna.l roon.-ption of tommearis1 energy from hespPitals ivided hy the oamber ofbhde. Cuou and lignito, petoolsum, catora1 gas and hydro-, nulear and ge- Ithrn1 olsotnicity) in kilograms of ca1 equolvalt per capita.HOUSING Avrs ieis of hbou.cbold (pernoespeirh household) - totel. urhan. end ou-al- POPULATION AND VITAL STATISTItS A household consists of e gaP ofidividesls wh hre living q_ut-r Totel popultiun. mid-veer Ceilliocel- Aslof Jly 1; if nut aveilabls, end their main e-sI,. A boarder or lodger may or ny tc be iceloded in anrg ftwo d-sa etImates; 1961, 1.97 0, end 1977 data, the household for steitieclea purposes. Siatis tical defisitioss of h....- rbnopltIo (peroan ' otta) -Rtio of urhen to total papuls- held vary. tiniot; ii forn'td dfinittions 1of uban areas nay affect comparshility Averag sanher of D,sroa, nePr roo- total, aches. end rural - Averoge un ofdta onog bantie.hr of parson per losn in al.11orban, end rural occupied uo-nvetiona1 Po aiudensity dwellings, respectively. Dwellings aelade nos-preomsant structuces and Per no. hkm. -Mid-year populstion per square kilometer (100 hectaes) uncocepld parts. of ttlac.Aones%t io slo otr (percen!t ofdwslli) - tota. ura.ed lrun1 Per eq.lo. grioulture loaud - Conputod as shove for agricultural loandCovnIonal dsllig with electriuity Is livn quaters e percentage only. ~~~~~~~~~~~~~~~~of total1, arbao, and rural dwellings respectivey&.u Fouaicaesructure pret - hldoes (01- years) ein-g (15-it poor), and retired (6D years end over) as pernestegee of mid- EDUCATION poor Populatlon. AdJusted euroilemnt ratios P'opulatioo growth r.ne (psroent) - total, and urban - Compound Annual Primary shool- total n female - Tete1 and female enrollment of eli egos Srooth ronos ci total And urban aid-year populations for 1950-60, at the Primar Iea spertoetages of respectivelyPrimary eta-g 1960-7 0, aod 1970-71. pepuletio..s; ssrmally includea children aged 6-11 yearsib,utadjusted for irudo birth rate (par thousand) - AnnualI live births pee thousand of diffse-nt lengths of primary education; for n..untrie wth aiversel edo- aidps puuatiou; is-er ertauoeeegssSn in 1960 end cation enrollment may exceed 100 peccant siten sane pupil. are helo- or 170 end C rpe aoeesoigi 1971 for mas repen etimate, shove the official school age. Crudo death laot (Por thua..snd) - Actua deaths par thousand of mid- sonaoschool - toel. and fmal -boourdasshc; ....ond-ryeduo- Year population; ten-year erithantio -.erg.s ending in l9Af end 1970 tion requires at least four yoars of Approved primary instruction; pro- ondfAivo-year average ending in 1971 for mast recent eatimats. video genar1 vocetina&l, or leather training inenruotione for pupils lr...enretduutio raens- Avecago namber of deughtare a wman will bear -aully of 12 to 17 years of eg-; oorreepsndenoe courses Ler generally is her norma ceproduotive Period if she eaperiesces poseest age- excladd. op-cifiu fartiLity' rans;_uually five-yasr Aveagso sndfsg in l1960, Voca.tional ....ellast irercnt of ...u.ndary) - Vn..tic..al insstitutions is- 1970, and 1975. dude taechnical, industrial, at other programs whint operst inedpendently PFnil, olasnlog - --otnur., annua (thousands4) - Annual number of .or a departeasts of eseondery institutions. scoeptoru of hirth--ot-oI devloss undsr a..epinee of satnl.sal fenily Pupil-teethetr ra'tio -., erme.en e drY -Total students enrlle1d,to PltI g prgrran. primayend seonay levels divide by numbers of teachera is the crre- Fnilypl ...uoings-uancs (potosut of na-ild noss). P....stage of ponding I.levl. married cores of child-bearing ege (15-A4 years) who ass birth-ontr-l MAlut litereerY rate (eseeot) - Literate adults (able to read and onto) us dovior 1n al racld _ome in sme. ego group, a proetage of ratId edut popaletio aged il yesre end 00cr. FOOD AND NUTRITTION CONSUMPTION iude offoo crduoion, perfoopts (197im10i -.lode- namber of per PasseOnger c-ar eer thous..and Population) -Plas.eesgr tars comprise manoros uspno nnol podotiu ofellfood coeities seating lass than eight parsns: enludos anhulences. heareee end nilitery Per cePits sunoly of clrs (parnent of requirements) - aoptd f-ro v-hiels. oco-gyoquivaleni of Oct foo supplies aellahibe in coutry per eapita Rad ie re.ceies pr thousand pseulenion) - All types uf rece.ivers icriredo prday. Av llutb ouppie oprl-e domeetie production , imports lees br-adote to Manls public pee thoa..and of Populanion; ensludos unlicoosd _p_rtu,jond uhagen in stock,_ at supplies enclude anImal feed, aseeds, renie in countries and is years ohen registration of radio sets wee it qstit le uucd in food protean.itg, endlosses in distribation. Ro- effect; data for rscent years may non he comperablo since most countrfea qoinenoon -.or ontimatud by FAQ based ochyiological ..eoda for nor- abo1iehd licens.ing. caI ac,itiy cud health .n....id-rng euvi-eopet.1n teapereture. body IV -eoivere (or thousad pslto -TiV reciver for hroadcast to go...r- -oihtn., ago ud se. disotcibttl-o of population, end e11wing 10 per- Public per thnuaand population exc ludes unlicense TV reciver ioon corn for wanne at houunehold level, tries and in pears when registratPion miT ets use inof effect. l'n .ooit. supply of protein (gams Per day) - Protein econtcot of pefosaar ti1pprtuain(oar thouan oplticn) - Sh-w tho coerage cioula- -oyit. oat eaPply of food Per day. PNt surely of food is defbued aslio of .daily genete interest newpaper", defined s periodical pubi- Otoo.tooeoonnfor all coun tries established by cSlA provide for catlos devoted prImarily to rocerding geerl.n. r tn in conoidreed to a ininun 1 _lloaco of h0 erase of total prutein per day and 20 graem be "daily" if it epp.earm at loser fourttmaswss.. of anineIend p,lse procti, of which 10 gramesehould be animal protein. Cinema aeua attendnc Pee capita eear Year - Bae on. d thn naner of tinkote Theo-ntundards arc 1oor than thoso Of 75 grams of total protein sod sold during; theyeas, inoludig admissions to drivo-in cinea and mobile 23 freon of ocin1alpoutol as eancg for the -crd, propose.d by a-it.. PAOI in the Third World Foo auvy Per o..eit. proe sarolo froM. enma and .Il.. - Protein supply of food EHPIfYNENT dorivod iron oniman andpussIgaape dap. Total labor force (thousande) - Economically active persons, inoluding Armed child(oc14 oin rate pr thussn)r - Annua deaths per thnus- freanuemlyed butasldn hueioe,tdns,tu Dfn- and i. ago group 1-4 years, to hilidren is this age groap. tione in vroscutries are c nor .coparable. Pemle (percent)- Female labor force, as pe-oentago of tonal labor fore. otFALle e.,,.,it vraen ro .r flf Aeticaltue (osenet) - Labor forts in fsraisg, fo-enry, hunting end fishing Life onon" orbIt .(ous -. Avrg ubro peso oa percenneg of total labor force. non.1alnig At trn; unually fivn-yeer av-ragea ending in 19A0, 1970. Industry fpsr-et) - Labor fsree in mining tonncutian, . naoonuingor and 1971. electricity, water end gas as peetag of tota labor foeno.t Inatmroiyrate oo thousa nd) - Ann..sI deaths of inants under Priitssae(pcn)-tte. male, and female - oa, male, and ourpma of ae p0- tho..nand Ive birhts. female labor foros an psr-etegse oftheir respective populations. Acorco to cafe ronoc (portent of Ppoulation) - total. urban. and rurel - These are MIl' adjustred particip tiow rtes -efl-tonig age--e luster of peoplo (,toa. artec.. and rurl) with r.....sahla -c...t tot tronre cf the pepola-1ce ndfloop tfacs trond. _fo goner supply (inoludos t-otod s-rfao waters or untreated but Eonmi ..ecdenoy ratio -Raio of. ppulatir un .der 15 and hI end ove to unOocnt-inanod wonee nuh a tha-t frn poct-oted borsholes, springs, the lebor forte in age group of 15-hi4 ymare. aud wseiu-y eljjn an porcntncag- of thei r: repetive popu1etloa.. Iu us urban area upublio f-utein or atandpost Iscat. I 50t mare INCOME DISTRIBUITON thou 200 motors fron a t.... may be -onsderd as betng within re.- Per-otase of orlv-te intone (bath in .a.h sod hind) reocived by cihc5 ....ahle u-nu of that hous.. Is cural areas reasonable accessa we.Id percen.t, richest 20 Percent, poorest 20 p.ernt, and poorest 40 percentt i.ply nhac thc h.ucwif or members of the house.hold dn not haen to of housholds. spend a dluroyortofe pert of the fey in fetohtng the ramily' we tcr -odu PfVERTY TARGET GROUPS Acucu to corea disosal(rerant o eaelanin) - onal urbn. ad Estimatd ahsolo1re rover,ty inroma level (00$. sr o-pite) - urban and rural- rurl -Ntorofpeople (tota. ,urhan, end rural) servd by:-erta AbouepvryicmelvlI htitn leve belo hiob a ninisa dluyoo- o p-Oroteges of their respective Popalatiosn.EImcata nutritionally adaquateo dicet pl.... e cti1 ro--food rnquirenencs insc dcoy...a. .o' iolu-de the cletneddiepc..el, with 00 without ef fordable. hr-tnnt c xtrs eooaend waste-aeter by water-borne systaem fetimated reletive poverty macne level (U1$ per capita) - urban end torel- urcbote ufptt rivin and iallr tuselaious.Relatve poertyincome loya is that intun. leve loss then one-third Puclanuc er hysoia -Population divided by ...sher of practicing per capita personal income of the nountry. phy ...ci-n qoolified fro a sodiol school at university level.fEstimaned espalatiac ..o oeryi m 1r-e (pesro..t) - urhan nod rural- Pupuluion yu nurnno csnon -Populetlon divided by ombe- ofPreof f ouaion (uban ed rual wh r ihe asltepu"o prauticiug oslo and female graduate ues practical ure,And "relative poor" whiohv-r is greater. Economic and Sun ie1 lots Divisiun lonoic Analysis and Proj-tt.c. bepartasn  - 20 - ANNEX I Page 4 ECONOMIC INDICATORS GROSS NATIONAL PRODUCT IN 1977 ANNUAL RATE OF GROWTH (7. constant prices) US$ Min. % 1972-1977 GNP at Market Prices 675.6 100.0 4.4 Gross Domestic Investment 216.4 32.0 11.9 Gross National Savings 5.5 0.8 -42.0 Current Account Balance -211.6 -31.3 -2.4 Exports of Goods, NFS 229.9 34.0 26.5 Imports of Goods, NPS 441.5 65.3 19.2 OUTPUT, IABOB FORCE AND PRODUCTIVITY IN 1977 Value Added Labor Porcel/ V.A. Per Worker US$ Mln. % Thousand 7 USS_ % Agriculture 157.5 23.0 725 77.0 217 29.6 Industry and Mining 212.4 31.0 3 Services 315.0 . 3 209 23.0 2523 344.2 2i Total/Average 684.9 100.0 934 100.0 733 100.0 TREASURY OPERATIONS (Billion CPAF) (7. of GDP) 1972 1977 1972 1977 Revenue 12.9 41.8 1.8j 24.B OPAT (1.5) (4.3) 0.2 2.5 OTP (0.0) (10.5) 0.0 6.2 Other (11.4) (26.9) 13.1 15.5 Expenditure 14.7 56.1 17.0 33.0 Current Budget (11.3) (33.3) (13.0) (19.7) Investment Budget (2.9) (9.5) (3.3) (5.3) Other (0.5) (13.2) (0.6) (15.0) Special Accounts (Net) -0.8 1.3 -1.0 0.7 Annexed Budgets (Net) -0.2 -0.1 -0.2 0.0 Overall Deficit -2.8 -13.1 -3.2 -7.7 Memorandum Item GDP (current prices) 86.9 168.4 MONEY, CREDIT AND PRICES 1972 1973 1974 1975 1976 1977 1978 (Billion CFAF outstanding at year end) Money and Quasi-Money 13.9 15.9 30.5 28.2 41.2 48.0 64.3V' as % of GDP 16.0 17.2 23.2 23.0 30.0 28.5 - Bank Credit to Public Sector -2.3 -1.9 -2.5 1.4 1.2 1.9 6.92J Bank Credit to Private Sector 10.2 13.3 16.2 24.7 32.2 44.6 50.21/ annual % change - 30.4 22.6 50.9 30.9 38.5 (Index liumber) Consumer Price Index (1975=100) 72.5 75.1 84.7 100.0 111.6 136.7 137.3 annual % change - 3.6 12.8 18.0 11.6 22.5 0.4 Note: All conversions to dollars in this table are at the exchange rates noted on the following page. 1/ Total labor force; unemployed are allocated to sector of their normal occupation. 2/ GDP at market prices (1977) / As of end-September. - Not available. WA2DA May 18, 1979  - 21 - ANNEX I Page 5 TRADE, PAYMENTS AND CAPITAL FLOWS BALANCE OF PAYMENTS 1972 1974 1976 1977 DEBT SERVICE RATIO FOR 1977-/ (Millions US $) % Exports of Goods, NFS 83 230 178 230 Public Debt, Imports of Goods, NFS 117 137 282 442 incl. guaranteed 10.6 Resource Gap (deficit -) -34 93 -103 -212 Non-Guaranteed Private Debt Interest Payments (net) 2 4 -7 -2 Total outstanding & Workers' Remittances 0 0 1 1 Disbursed Other Factor Payments (net) -9 -3 -8 -9 Net Transfers 11 16 12 10 Balance on Current Account -30 110 -107 -211 IBRD/IDA LENDING, March 31, 1979 Direct Foreign Investment 2 -39 23 10 (Million Ub $) Net MLT Borrowing 2 10 58 162 Disbursements (6) (17) (67) (180) IBRD IDA Amortization (-4) (-7) (-9) (-18) Outstanding & Capital Grants 13 25 38 40 Disbursed 16.2 23.9 Other Capital (net) 5 -3 -10 -32 Undisbursed 36.8 33.8 Other Items n.e.i. 4 -20 21 0 Outstanding incl. Increase in Reserves (+) -4 83 23 -31 Undisbursed 53.0 57.7 Gross Reserves (end year 2/ 37 54 67 46 Net Reserves (end year) - 36 101 51 18 RATE OF EXCHANGE Fuel and Related Materials Imports 117 137 282 442 Average Year End of which: Petroleum 5 12 13 17 (CFAF per US $) Exports 83 230 178 229 1978 226 209 of which: Petroleum 0 0 0 0 1977 246 235 1976 239 248 1975 214 224 1974 241 222 MERCHANDISE EXPORTS (AVERAGE 1976-77) 1973 223 230 1972 252 256 US $ Mln. % Phosphate 67.3 38 Cocoa Beans 28.2 16 Coffee 23.4 13 1 Ratio of debt service to ex- All other commodities 56.2 33 ports of goods and non-factor Total 175.1 100 services. 2/ Gross international reserves of Central Bank. 3/ Net foreign assets. EXTERNAL DEBT, DECEMBER 31, 1977 4/ $53.0 million of which $3.5 m. US $ Min. CIMAO loan to Togo and $49.5 m. Public Debt (disbursed), loan to CIMAO with the guarantee incl. guaranteed 332.2 of Ghana, Ivory Coast and Togo. Non-Guaranteed Private Debt - Total Outstanding & Disbursed - WA2DA May 18, 1979  - 22 - ANNEX II Page 1 STATUS OF BANK GROUP OPERATIONS IN TOGO A. Statement of Bank Loans and IDA Credits (as of March 31. 1979) Amount US$ million (less cancellations) Bank IDA 2/ Undisbursed One credit and one loan fully disbursed 3.5 3.7 450-TO 1973 Togo Road Reconstruction 8.7 0.4 503-TO 1974 Togo Cocoa/Coffee Development 6.0 2.2 638-TO 1976 Togo Maritime Region Rural Development 9.5 7.1 693-TO 1977 Togo Third Highway 10.0 5.4 741-TO 1977 Togo Rural Development in Cotton Areas 14.0 12.9 810-TO 1978 Togo Feeder Roads 5.8 5.8 _ 1/ 1979 Togo Technical Assistance 2.2 2.2 TOTAL 3.5 59.9 36.0 of which has been repaid 0 0 Total now outstanding 3.5 59.9 Amount sold 0 0 of which has been repaid 0 0 Total now held by Bank and IDA 2/ 3.5 59.9 Total undisbursed 36.0 36.0 B. Statemerit of Bank Loan Guaranteed by Ghana. Ivory Coast and Togo 1295-WAF ~976 CLMAO CIMAO Regional Clinker 49.5 36.8 1/ Not yet effective. 2/ Prior to exchange adjustment.  - 23 - ANNEX II Page 2 C. Statement of IFC Investments (as of March 31, 1979): None D. Proiects in Execution* Credit No. 450 Second Highway Project; US$8.7 Million Credit of December 28, 1973; Closing Date: June 30, 1979; Effectiveness Date: April 19, 1974 The project originally provided for the construction of one section of the main south-north road axis (Blitta-Sokode) and two secondary roads (Sokode-Kambola and Agou-Notse). Due to inflation, the scope of the road construction had to be reduced. The Agou-Notse road, the least priority stretch of the three roads to be constructed under the project, was dropped and subsequently included in the Third Highway Project. The project is now completed and the undisbursed balance (about US$500,000) will be used to finance studies for future road rehabilitation. Credit No. 503 Cocoa/Coffee Development Project; US$6 Million Credit of August 6. 1974; Closing Date: December 31, 1980; Effectiveness Date: March 12, 1975 This project provides for the rehabilitation, planting and mainte- nance of 4,000 ha of cocoa and 4,400 of coffee in the Plateau Region. While the coffee component is well on schedule, cocoa is lagging behind, mainly due to lack of incentive for farmers to uproot old trees for replanting of new ones. The Government is aware of the problem and has in principle agreed to increase compensation payments for old trees and credits to farmers. The project's overall replanting targets (cocoa and coffee combined) are being met on schedule. Credit No. 638 Maritime Region Rural Development Project; US$9.5 Million Credit of June 16, 1976; Closing Date: December 31, 1981; Effectiveness Date: October 26, 1976 The purpose of the project is to improve and diversify production of upland crops (maize, cassava, groundnuts, cowpeas and cotton); develop lowland rainfed rice and vegetables; rehabilitate irrigation facilities for existing vegetable production; renovate smallholder coconut plantings; and provide the necessary support services and infrastructure for about 20,000 farm families. Foodcrop plantings are on target, while rice and cotton targets are behind schedule, mainly due to uneven rainfall. The related shortfalls in farmers' revenues have delayed repayment of about 80 percent of the credits farmers received in 1977. C These notes are designed to inform the Executive Directors regarding the progress of the projects in execution and, in particular, to report any problems which are being encountered and the action being -:aken to remedy them. They should be read in this sense and with the understanding that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution.  - 24 - ANNEX II Page 3 Loan No. 1235 WAF CIMAO Regional Clinker Project; US$60 Million 1/ Loan No. 1296 TO Loans of June 28, 1976; Closing Date: December 31, 1980; Effectiveness Date: April 17, 1978. The project is designed to produce 1.2 million tons of clinker for delivery to cement grinding stations in Togo, Ivory Coast and Ghana. The project consists of (i) the industrial complex, comprising quarry, clinker plant and related workshops, at Tabligbo, about 65 km northeast of Lome, and (ii) related infrastructure components comprising a power link, a rail/port terminal at Lome, a rail link and a township for CIMAO personnel. Execution of the industrial complex is about 6 months behind schedule, due to delays in civil works, increasing the cost of the project to the limits of available financing. Commercial production of clinker is expected to start in January 1980. Credit No. 693 Third Highway Project; US$10 Million Credit of April 1, 1977; Closing Date: June 30, 1981; Effectiveness Date: September 13, 1977 The project provides for the reconstruction of the Aneho-Tabligbo road (45 km), the construction of the Agou-Notse road (51 km), the provision of technical assistance for improving transport planning and road maintenance and preinvestment studies for a follow-up project. Project execution has started satisfactorily with construction of the Agou-Notse road 65 percent and Aneho-Tabligbo 12 percent completed. Recently contractors have stopped work, however, due to delays in Government's counterpart payments. To ease the situation the Executive Directors have recently approved US$2 million additional financing from the EEC Special Action Fund (IDA/R79-37). This increases total external financing to about 90 percent of project cost. Credit No. 741 Rural Development Project in Cotton Areas; US$14 Million Credit of October 5, 1977; Closing Date: June 30, 1982; Effectiveness Date: March 17, 1978 The project aims at increasing cotton production from 7,000 tons to 34,000 tons and foodcrops grown in rotation with cotton from 40,000 tons to 57,000 tons of maize and sorghum at full development. Physical targets for 1978 project execution have been met. Credit No. 810 Feeder Roads Project; US$5.8 million Credit of June 28, 1978; Closing Date: June 30, 1983; Effectiveness Date: March 2, 1979 Procurement is underway. Credit No 2/ Technical Assistance Project; US$2.2 million of ; Closin_g Date: December 31, 1983 1/ Amount of US$60 million covers the loans to CIMAO of US$49.5 million and to the three member states (Togo, Ivory Coast and Ghana) of US$3.5 million each. 2/ Not yet signed.  - 25 - ANNEX III Page 1 TOGO SECOND COCOA-COFFEE DEVELOPMENT PROJECT Supplementary Project Data Section I: Timetable of Key Events I. Project Preparation: Studies carried out under the First Project, completed March 1977 2. Appraisal Mission: September/October 1978 3. Negotiations completed: May 1979 4. Loan Effectiveness Planned: September 1979 Section II: Special IDA Implementation Action IDA funded study on legal, social and traditional values governing landlord-tenant relationships in the cocoa-growing project area. This study is expected to help formulate policies on how to resolve conflicts between landowners and tenant farmers that could potentially hamper progress of the cocoa planting program. Section III: Special Conditions The Government would: (a) establish by November 30, 1979 an Organization of Licensed Buyers to assist PCU to recover credits from farmers (para. 31 of this report); (b) hire consultants to carry out a study on marketing of plantain and the related logistical requirements (para. 39). (c) cause PCU (through CNCA) to levy an interest rate on farmer's credits of 8.5 percent and complement this interest by a rate of 2.5 percent per year on outstand- ing loans to farmers, bringing total interest collected by PCU to 11 percent (para. 46);  - 26 - ANNEX III Page 2 (d) provide the necessary funds from other sources at conditions satisfactory to the Association, if the FAC grant is not effective by April 30, 1980 and/or if the second tranche of the CCCE Loan is not effec- tive by September 30, 1982 (paras. 48 and 53); and (e) consult with IDA annually on the level of farmgate prices for cocoa and coffee and introduce contractual arrangements in the cocoa-growing areas between landlords and tenant farmers (para. 53). Special Conditions of Effectiveness would be that: (a) the Government deposits in special accounts, established for SRCC and PCU, with a bank satisfactory to the Associa- tion, initial amounts of CFAF 50 million (US$230,000) and CFAF 25 million (US$115,000) respectively (para. 36); (b) the Government hand over to SRCC two foodcrop demonstra- tion farms (para. 38); (c) the first tranche of the CCCE Loan Agreement is effective and the EEC Special Action Fund Credit Agreement is signed (para. 48); and (d) the Government increases the incentive payments for uprooting old cocoa trees (paras. 47 and 53).  IBRD 10536RI FEBRUARY 1979 c<< P ~~~E R v o _L T A 0 _APANGO | ( s TOGO SECOND COCOA-COFFEE DEVELOPMENT PROJECT < stANSANNE PROJECT AREA AAANGOAMOGU D O c ) SOTUODA iJ AASSARI ,J 9 ~ ~ ~~SOOD PRQ*CrAEA, ./_ COI:OA SOTOUBOUA AF"A t ROAD LATERI-TE RtOAD-S i BLITTA< RAILWAI Y I I WAFSG G p NOHOU Eli LITIMi AKPAME ) -to--ft.- An ft. w7ftAftfttAni Nr* nftnpWSf ft t*n,dnEna SENEG \0,kJLe I G E B ASSAHOUN UINEA VEF~L B:xISSAUE - v ati,GA AN.tI'l S _ER ANECHO LEONE Qav~~' *IEAWIOEAN to Of ~TANTI^rC OCFAN EGGUINEt a f u __________________________________________________ J