Morocco - Second Water Supply Project

Document of The World Bank FOR OFFICIAL USE ONLY i$ Report No. P-2567-MOR REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE KINGDOM OF MOROCCO FOR A SECOND WATER SUPPLY PROJECT May 24, 1979 This document hbs 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 authoriation.  Currency Equivalents Currency Unit: Moroccan Dirham (DH) US$1.00 = DH 3.82 DH 1.00 = US$0.26 Fiscal Year: January 1 - December 31 ABBREVIATIONS ONEP Office National de l'Eau Potable FEC Fonds d'Equipement Communal RAD Regie Autonome Intercommunale de Distribution d'Eau et d'Electricite de Casablanca RAK Regie Autonome Intercommunale de Distribution d'Eau et d'Electricite de Kinitra RED Regie Autonome Intercommunale de Distribution d'Eau et d'Electricite de Rabat-Sale  FOR OFFICIAL USE ONLY KINGDOM OF MOROCCO SECOND WATER SUPPLY PROJECT LOAN AND PROJECT SUMMARY Borrower: Kingdom of Morocco Beneficiaries: The Office National de l'Eau Potable (ONEP) and the water distributing regies of Casablanca, Rabat-Sale and Kenitra. Amount: US$49 million Terms: Twenty years including four years of grace, with an interest rate of 7.9 percent per annum. Relending Terms: The Government would relend on the same terms: (i) $39.5 million to the Office National de l'Eau Potable (ONEP), and (ii) $4.25 million to the water distributing regie of Casablanca (RAD), $2.85 million to the water distri- buting regie of Rabat-Sale (RED), and $1.4 million to the water distributing regie of Kenitra (RAK) to finance house connections of low-income customers. The foreign exchange risk would be borne by ONEP for $39.5 million and by the Government for the remainder. Project Description: The primary objective of the project is to improve access to safe water supplies of the population of the Mid-Atlantic Coast and the Greater Agadir area. It consists of: (i) the expansion of bulk water production and transmission facilities along the Mid-Atlantic Coast. These addi- tional facilities would include the construction of two booster pumping stations along the existing transmission pipeline, a raw water pumping station with a capacity of 5 m3/sec., a 2.83 km pressure main linking the pump- ing station at the foot of the Bou Regreg dam with the treatment plant, a 5 m3/sec. treatment plant, a 2 km transmission main to Rabat, and an 82 km transmission main to Casablanca; (ii) the expansion of bulk water production and transmission facilities for the Greater Agadir area. This component would include: (a) equip- ping the existing Ahmar Boudhar well field with pumps and ancillary equipment; (b) constructing a transmis- sion pipeline to Agadir and a treatment plant at Sidi Bou Shab; and (c) installing power transmission lines to the well field and the treatment station; (iii) funds for credit facilities to finance house connections of the low-income population in the project area; and (iv) studies. The implementation of the project does not pose any special risks. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  -2- an all-time high, and despite some Government restrictions, did not slow down, while the world demand for Morocco's main exports, especially phosphate, recovered only moderately. At the same time, efforts to increase budgetary savings were insufficient to meet the continued increase in investment and military expenditures. As a result, in 1977 Morocco faced again a large resource gap (21 percent of GDP) and overall budget deficit (19 percent of GDP). To cover these, it sharply increased external borrowing to $1.9 billion (commitments), from $909 million in 1976 and $780 million in 1975; most were from commercial sources. Despite these borrowings, the country's net foreign assets stayed at a low level (1.2 months of 1977 imports by year's end). On the domestic side, external borrowings fueled monetary expansion which remained rapid in 1977; consumer prices rose 12.5 percent over 1976 compared to about 8 percent in the previous 2 years. 5. By and large, the new Government has succeeded in regaining control over the excessive increases in investment and external borrowing experienced towards the end of the 1973-77 Plan. Investment has since been reduced by an estimated 25 percent in real terms, and so has external borrowing which at $1.3 billion of new commitments was, however, still large and mostly on commercial terms. The Government has achieved these improvements through budgetary austerity, including severe cuts in public investment, restraint in current spending and some tax increases; it applied selective import restrictions and controls on private credit preserving as much as possible the growth momentum of private sector output and exports. A good agricultural crop in 1978 helped sustain growth, despite a sharp decline in construction activity largely resulting from cuts in public investment plans; overall, GDP grew by an estimated 4 percent in real terms in 1978. 6. The Government will have to pursue austerity policies for a while, considering the continued excessive resource gaps and low exports and savings which cannot be increased quickly for reasons largely beyond the Government's control. Instead of the 1978-82 Plan, the Government has introduced a three- year interim plan (1978-80) which was approved by Parliament in December 1978, together with the 1979 Budget Law. Its main objectives are to further reduce the budget and current balance of payments deficits, and to concentrate avail- able resources (after meeting defense requirements) on productive projects, education and health, especially insofar as these benefit the neediest popula- tion groups. Implementation of major public projects not meeting these criteria has been postponed, while the measures designed to preserve growth in the private sector have been strengthened. Recently, the Government agreed with the IMF on a short-term financial rehabilitation program for 1979. This program calls for continued limitation of budgetary expenditures, domestic credit expansion and new external borrowing, while maintaining selective import restrictions and credit controls favoring productive private activities. It is aimed at reducing the overall budget deficit by 15 percent, and narrow- ing the current balance of payments deficit by more than 30 percent. Assuming harvests are equal to those of 1978 and phosphate exports increase by 6 percent in quantity and 7 percent in value, real GDP growth in 1979 again may still not exceed 4 percent. Gross official reserves would stay around 1.5 months of imports.  - 3 - 7. While the interim measures may be effective in re-balancing the econ- omy, because of the short-term constraints on exports and savings, they might cause a rise in social pressures. The Government is therefore anxious to resume the more dynamic social policy stance which characterized Moroccan devel- opment during the 1973-77 Plan. Preparation of the 1981-85 P1 n has begun and attention is being given to long-term reforms which are needed if an early resumption of more rapid economic and social progress is to be achieved. Economic Development Issues and Prospects 8. Bank projections summarized in Annex I reflect the Government's keen concern to avoid a liquidity crisis in the next two to three years. They assume sharp policy adjustments to keep the economy on a financially viable growth path over the long run, but also reflect the desire to maintain adequate GDP and employment growth during the interim period, and to achieve further progress towards the country's social objectives. The projections show that investment and GDP growth will have to be curtailed for the next two to three years, given the constraints on savings and exports. In this period, Morocco will need substantial capital transfers from abroad on terms as favorable as possible to sustain the project investment and GDP growth. Beyond 1982, export prospects should enable Morocco to resume more rapid growth of investments, output and employment while progressively reducing the relative burden of debt and debt service. 9. Following the large windfalls in foreign exchange and domestic sav- ings caused by high phosphate prices in 1974-75, the investment target was raised to meet cost increases, permit some real expansion of original invest- ment programs, and undertake large capital-intensive projects geared to import substitution (in particular sugar, chemicals, shipping and steel). Thus the GDP growth target for 1973-77 was nearly met, and investment rose to nearly 32 percent of GDP in 1977 from less than 14 percent in 1972. In the process, Morocco built up its capacity to prepare and implement projects not only in traditional sectors such as irrigation, import-substitution industries and physical infrastructure, but also in new and more difficult sectors such as rainfed and small-scale agriculture, export industries, and socially-oriented programs. There is little doubt that Morocco can achieve the investment levels assumed in the Bank projections, the main constraints being domestic savings and foreign exchange availability. 10. Domestic savings have been falling in relation to GDP after the brief increase during the phosphate windfall years, mainly due to low public savings of only 4.7 percent of GDP in 1977. Successful efforts to raise public revenues to 28 percent of GDP in 1977 were offset by increases in current spending, partly for education and health, but particularly for price subsidies and military expenses. Tax reform measures (which are being prepared with IMF assistance) and unpopular price policy decisions, such as reduction of subsidies to urban consumers, farmers and industrial investors, will be required to increase public savings. Interest rate adjustments to reflect changes in the rate of domestic price inflation would also be called for.  - 4 - 11. During the 1973-77 Plan period, exports rose by less than 2 percent p.a. in real terms (the Plan target was 10 percent). This lackluster per- formance was largely due to weak external demand for Morocco's main export products since 1974, especially phosphate, other minerals and agricultural products. Moreover, with some exceptions, such as textiles, export production and marketing efforts were not sufficient, and new markets were not aggres- sively sought; Morocco continued to depend on demand from the EEC, especially France. Yet, it has considerable export potential if only products and markets were diversified. Programs designed to boost foreign exchange earn- ings are now under preparation particularly for phosphate and its derivatives, fresh and processed foodstuffs, and tourism. With regard to phosphate, for example, Morocco and the USSR signed agreements in March 1978 under which Morocco will export phosphate rock and phosphoric acid for the next 30 years for possibly up to 10 million tons per year by 1985-86; in return, the USSR will lend Morocco up to $2 billion on favorable terms to develop its phosphate export capacity and will export various commodities and goods to Morocco, including crude oil. These agreements substantially improve Morocco's long- term prospects for phosphate exports. 12. While the emphasis on completion of high-return projects will have to continue, Morocco should shift away from highly capital-intensive, import substitution investments, as well as from some ambitious programs for phys- ical infrastructure. This would call for improvements in policy planning and investment programming. Consultants are currently completing a major study on industrial investment strategy, which should facilitate better investment selection. A changed investment pattern should reduce the external resource gap, and also contribute to higher growth and employment at lower investment and import costs than in recent years. Social Development Strategy 13. Comparatively slow economic growth and employment creation up to the early 1970's were accompanied by widening income disparities and a decline in real consumption for the weaker sections of Morocco's population. As a major objective, the 1973-77 Plan set out to reverse these trends. The Government's strategy since 1973 has emphasized: (i) acceleration of employment creation; (ii) measures aimed at reducing income disparities; and (iii) specific investment programs to benefit the least favored population groups. 14. Progress has been made towards these objectives, as witnessed by the increased expenditures for social sectors (from DH 1.3 billion in 1972 to DH 3.7 billion in 1977). However, the institutions created to meet social sector objectives are in many cases still fragile. Understaffing, weak policy analysis and inadequate program formulation are common. As a result, public programs to improve productivity, collective amenities and social services are reaching relatively small proportions of the population, especially in rural areas. In addition, during the period of financial stringency ahead, Morocco will not be able to sustain the current level of expenditures in socially-oriented sectors, and cuts have been made as part of the measures to re-balance the economy.  -5- 15. With the population growth rate now at about 3 percent, pressure to provide adequate social services will rise. Despite short-term financial constraints, efforts will be needed to limit such growth. Consequently, strengthening health and family planning services is now an integral part of the Governmert's social objectives. External Debt and Debt Service 16. Morocco sharply increased external borrowings after 1973 (para. 4). Nearly all of the increase came from Arab and commercial sources. With a hardening of terms on new commitments, average maturity dropped from 19 to 10 years and average interest rose from 5 to 7.5 percent between 1974 and 1977. Morocco also drew on the IMF automatic credit facilities in early 1976, and obtained about $70 million in IMF compensatory financing in August 1978. From the low levels in 1974-75, Morocco's external debt has risen rapidly to an estimated $4.0 billion (disbursed only) at the end of 1978, and in that year debt service amounted to $481 million (18 percent of exports and workers' remittances). As a result of recent and projected borrowings, debt and debt service may be expected to increase further, and debt service may exceed 25 percent of exports and workers' remittances by 1980-82, and decline progres- sively thereafter. The country's net foreign assets would remain at a rela- tively low level. Because of the expected upswing in debt service, external debt management has become more restrictive and selective since 1978. If debt service is to stay manageable, Morocco will have to continue this policy over the next few years. Additional commercial borrowing should be limited, and efforts should be increased to seek loans on softer terms. Yet, external borrowing needs would be sizeable. Beyond 1980-82, however, the situation should progressively improve with the Government firmly controlling domestic demand and with good long-term prospects for exports and, in particular, with assured sales of phosphate rock and derivatives. Morocco should therefore be considered creditworthy for further Bank lending. PART II - BANK GROUP OPERATIONS IN MOROCCO 17. Bank and IDA lending to Morocco has supported 40 projects, financ- ing a total of $1,106.9 million (net of cancellations), of which $886 million has been lent since the beginning of FY73. IDA credits, totalling $50.0 million, have been made available for five projects. A Third Window loan for $25 million for the third education project was approved in March 1976. IFC investments have amounted to $12.6 million ($10.5 million after cancellations, terminations, repayments and sales). Annex II contains a summary statement of Bank loans, IDA credits and IFC investments as of April 30, 1979, and notes on the execution of ongoing IBRD/IDA projects. In some  cases, delays in project implementation have been caused by management or procurement difficulties, and in 1974 cost overruns increased due to the upsurge in investment activity in Morocco and the acceleration of inflation. Overall performance in project execution, however, has considerably improved in recent years. Total disbursements as of December 31, 1978, amounted to 72 percent of original appraisal forecasts and to 75 percent of revised forecasts. 18. Past Bank Group lending has been concentrated in the agricultural and industrial sectors, which have accounted for 27 and 32 percent respec- tively of total net commitments; the balance is represented by utilities (14 percent), education (14 percent), tourism (7 percent), roads (4 percent), and urban development (2 percent). Apart from the transfer of resources to Morocco (Bank Group gross disbursements amounted to 5.5 percent of total fixed investment in 1970-74), the main objectives of lending were to foster and strengthen development institutions, provide technical assistance especially for project preparation, and increase productive capacity, in order to improve the balance of payments. 19. While these objectives remain, greater emphasis is being given to prepare projects that support the Government's policy of fostering social development and improving income distribution. An increasing share of Bank Group lending will be devoted to projects directly or indirectly developing the productive capacity of the lowest urban and rural income groups and meeting their basic needs, including, possibly, Bank participation in the Government's program for promoting integrated regional development, which is under discussion. 20. Past lending for agriculture has supported irrigation development, credit and, through a first operation in FY75, improvement in the produc- tivity of rainfed farming. Continued selective lending for irrigation is envisaged but emphasis will be increasingly given to support small farmers and the development of rainfed areas. The Fez-Karia-Tissa Agriculture Proj- ect, approved in June 1978 was the second, after the Meknes Project (Credit 555-MOR) to directly address these objectives with the added advantage of being located in the favorable cereal producing zone. An integrated rural development project, including livestock/forestry development, is under preparation in a rainfed zone in northern Morocco. A project aimed at develop- ing production and marketing of off-season vegetables for export markets has recently been appraised. 21. Projects in industry and tourism have had as key objectives increased foreign exchange earnings or savings and the improvement of sectoral policies, which have taken on increased importance in view of the country's short-term resource constraints. The eighth loan to Banque Nationale pour le Developpe- ment Economique (BNDE) which was approved in 1977, included a pilot small- scale industry component to promote labor intensive investments. This pilot effort led to the recently approved Integrated Project for Small Scale Industry Development. The loan to Maroc Phosphore made in 1978 will help increase Morocco's foreign exchange earnings. Continued lending for industry through the BNDE is contemplated as well as further lending to Credit Immobilier et Hotelier (CIH) for tourism development.  - 7 - 22. Previous lending for utilities has consisted of one loan for water supply, two loans for power generation and a recently approved loan for village electrification and one engineering loan for the preparation of a sewerage project for Casablanca. Additional projects designed to assist low-income groups are under preparation, including a sewerage rroject in Agadir. The proposed project would better the standard of living of the urban popula- tion, particularly the poor, along the Mid-Atlantic Coast and in the Greater Agadir area by providing water supply services. 23. Education continues to need attention to ensure Morocco's manpower development. Two credits and a loan have been made to develop secondary education and teacher training, to improve technical and vocational training, and to expand facilities in rural areas. A fourth project with emphasis on technical education has been recently approved. 24. The Rabat Urban Project (FY78) was the first Bank-financed project in the urban sector. Follow up projects are under consideration to support the Government's program for slum upgrading and urban development through the provision of basic infrastructure, housing and social services and the creation of employment opportunities. 25. Loan commitments from multilateral and bilateral official sources to Morocco rose from $221 million in 1975 to $296 million in 1976, and dropped from $831 million in 1977 to $370 million in 1978. Major sources of aid were France, Saudi Arabia, the UAE, the U.S., Germany and the Bank Group. At the end of 1978, the Bank Group's share in Morocco's outstanding and disbursed external public debt was 11.2 percent. The share of the Bank Group in debt service was 24 percent in 1976 and declined to 18 percent in 1977, and 9.5 percent in 1978. By 1983 the Bank Group's shares in debt outstanding and in debt service are expected to be about 25 percent and 12 percent respectively. PART III - THE WATER SUPPLY AND SEWERAGE SECTOR Background 26. In most parts of Morocco water is scarce, the summers are hot and dry, and rainfall is concentrated in the few winter months. The scarcity of water supplies is a present and growing problem in some regions as a result of the unbalanced distribution of the resources (annual rainfall varies between 100 mm and 1,000 mm in the different areas of the country) and the rapid increase in population (3 percent per annum). Available water sources renewed each year amount to some 25 billion m3 and about 16 billion m3 are usable. At present 50 percent of these resources are exploited: 300 million m3 for potable water (3.7 percent), 200 million m3 for industries (2.3 percent), and 7.5 billion m3 for agriculture (94 percent). 27. Morocco's present population is about 18 million with about 7 mil- lion or 39.5 percent living in the urban areas, which ranks Morocco as one of Africa's most urbanized nations. The urban population is heavily concentrated  - 8 - in six major cities: Casablanca, Rabat-Sale, Marrakech, Fes, Meknes and Tangier, which have already a population of about 4 million. Urban growth rate, including migration from rural areas, is estimated to be 4.8 percent annually. Overcrowding in the ancient parts of the cities (medinas) and in the more recent shantytowns (bidonvilles) at the outskirts of cities is becoming very serious and underlines the urgent need to improve inadequate water supply and sewerage systems. 28. Some urban or village water supply systems date back to the Middle Ages. The medina of Fes in particular, the ancient imperial capital, still uses water and sewer systems in earthenware pipes which were started in the 11th century. These ancient systems were, however, progressively replaced by modern installations during the first half of the century. Today, in general, all of the urban population have at least limited access to piped water, but only about 45 percent are supplied through house connections. Parts of the medinas and shantytowns have to rely on public standpipes, which in most cases are not sufficient with often more than 2,000 consumers for a multiple faucet standpipe and sometimes with walking distances of over 500 meters. In the rural areas, water is still often provided through ancient wells, sometimes modernized with pumps; only 5 percent of the population has house connections and an additional 10 percent has access to public stand- pipes. Organized sewer systems exist only in the large cities, but are generally inadequate; only about one third of the population is connected to sewers. Morocco has no major sewage treatment facilities and most of the networks discharge raw sewage into rivers, streams or the sea, creating severe health hazards. No organized disposal systems are available to the smaller cities and rural population. Organization and Administration 29. The study and development of water resources is the responsibility of the Hydraulics Department of the Ministry of Equipment which is also in charge of the operation, maintenance and control of all major dams. Produc- tion and distribution of potable water is carried out by different agencies depending on whether the demand is located in urban or semi-rural or rural areas. The largest organization is the Office National de l'Eau Potable (ONEP), the agency responsible, under the tutelage of the Ministry of Equip- ment, for development, production and transmission of water to the urban centers. Distribution of water in the urban areas is mainly the responsi- bility of autonomous municipal agencies (regies) in large cities and elsewhere of municipal administrations and ONEP. The Ministry of Interior supervises the municipalities and, through them, the Regies, and has to approve the tariffs they propose. In the past, the Regies have financed between 80 per- cent and 100 percent of their investment program through internally generated funds and customer contributions payable at the time of connecting to the system. Tariffs based on an exhaustive tariff study, which went into effect in October 1977 have been instrumental in achieving this goal. 30. Water distribution in the administratively chartered rural centers, with about 1.8 million inhabitants, falls under the responsibility of the Ministry of Equipment and is assured by ONEP. The Ministry of Agriculture  - 9 - is responsible for the other rural centers with a population of about 9.2 million. Operation of water distribution systems in the rural centers is extremely costly because of the scattered nature of the habitat, and the lack of economies of scale. Studies of water distribution systems in North Africa have shown that the per capita investment is up to ten times higher for a village of 403 inhabitants than for a town of 40,000. Tariffs in line with these costs would become prohibitive and might add to the exodus from the rural areas. 31. The services provided by the sector are subject to a variety of taxes which are collected by the Government. Water sales are subject to a 6.38 percent tax, services rendered to a 7.5 percent, and purchase of equipment and materials to an average 11.25 percent. The water sales tax and the tax on services rendered, which are contributed by the water con- sumers, exceed the losses which ONEP incurs in operating the rural centers. These consumers, primarily those in the densely populated areas along the Mid-Atlantic Coast, therefore, generate the funds needed to provide a cross- subsidy within the sector and to cover those operating costs of the rural centers which are not met by revenues. 32. Sewer systems, where they exist, are also administered by the municipalities, but the Government plans to either create new Regies or to enlarge the existing ones which are at present responsible for water and electricity, once adequate sewerage becomes operational. Studies for the installation of sewerage including treatment facilities in certain urban areas are indeed under preparation, and some pilot treatment plants have been constructed to gather information and experience on the most appropriate treatment technologies. Investment Programs and Priorities 33. Although the development and extension of water supply facilities enjoy high priority in the Interim Three-Year Plan (1978-1980), the Government is faced with severe budgetary constraints during the next two years. The problem is compounded by the remote location of fresh water sources from the main urban centers, which requires the construction of storage reservoirs and long transmission pipelines resulting in high capital costs. First priority is, therefore, given to the improvement of water supply in the urban areas where limited financial resources could benefit a large segment of the popu- lation. As approximately 70 percent of the gross national product originates from the Mid-Atlantic Coast from Casablanca to Kenitra, the extension of the bulk water production facilities serving this area has a high priority. Also included in the Plan is the development of water supply facilities in the Greater Agadir area, as well as in Fes, Marrakech, Tangier and Safi. For the agglomerate villages in the rural areas, the Three-Year Plan envisages an investment of $14 million, while the scattered rural population continues to be served by individual systems. Bank Lending for Water Supply and Sewerage 34. The Bank's strategy in the water supply and sewerage sector is to help the Government plan the sectoral development in the overall context of  - 10 - total water resources and needs, to support the investment program for improv- ing water supply, sewerage and sanitation facilities and to provide technical assistance and training for institution building and staff development. A loan of $48 million (Loan 850-MOR) was made to ONEP in 1972 to help finance the construction of bulk water production facilities along the Mid-Atlantic Coast. As indicated in Annex II, all project elements are completed, except for the training school, which is under construction and expected to be completed by the fall of 1979; training courses are presently being given in temporary facilities. A second loan of $1.5 million (Loan S-7 MOR) in 1977 provides the foreign exchange required for the preparation of a feasibility study for the sewerage facilities of the Casablanca-Mohammedia area. Six Bank-financed urban and rural development projects are also providing water supply and sanitation systems for low-income groups. The proposed loan of $49 million would constitute a significant step towards improving access to safe water for most of the urban poverty group in the project area. The Bank's future lending program would include a loan for sewerage in Casablanca- Mohammedia, and a loan for water distribution and sewerage in the Greater Agadir area as well as further increases in house connections for low-income customers. PART IV - THE PROJECT 35. The proposed project, which would be the Bank's third operation in the sector, was prepared by ONEP with the assistance of the French consult- ing firm "Societe Anonyme Francaise d'Etudes et de Gestion" (SAFEGE). It was appraised in October 1978. Negotiations were held in Washington on April 25-May 1, 1979 with a Moroccan delegation led by Mr. Hassan Belkoura of the Prime Minister's Office, and concluded in Rabat on May 4-10, 1979. A Staff Appraisal Report entitled "Kingdom of Morocco - Second Water Supply Project" (No. 2410a-MOR dated May 18, 1979) is being distributed separately. Supple- mentary project data are provided in Annex III. Project Objectives and Description 36. The primary objective of the project is to improve access to safe water supplies of the population of the Mid-Atlantic Coast and the Agadir area by (a) meeting increased water demand in these regions; (b) establishing a revolving fund within each of the regies of Casablanca, Rabat-Sale and Kenitra to help finance the installation of house connections for low-income customers; and (c) assisting ONEP to become a more efficient institution. 37. The project consists of four main components: (i) the expansion of bulk water production and transmission facilities along the Mid-Atlantic Coast; (ii) the expansion of bulk water production and transmission facil- ities for the Greater Agadir area; (iii) funds for credit facilities to finance house connections of the low-income population in the project area; and (iv) studies. The expansion of bulk water production and transmission facilities along the Mid-Atlantic Coast is the logical expansion of the existing system to fully utilize still untapped storage capacity behind the  - 11 - Bou Regreg dam. These additional facilities would include the construction of two booster pumping stations along the existing transmission pipeline, a raw water pumping station with a capacity of 5 m3/sec., a 2.83 km pressure main linking the pumping station at the foot of the Bou Regreg dam with the treatment plant, a 5 m3/sec. treatment plant, a 2 km transmission main to Rabat, and an 82 km transmission main to Casablanca. The completion of this second transmission main was foreseen for 1985 at the time of appraisal of the first water supply project (Loan 850-MOR). Water demand along the Mid- Atlantic Coast, however, has increased faster than anticipated, and, according to recent estimates, the second pipeline to Casablanca should be operational in 1982. The Agadir component would consist mainly of: (i) equipping the existing Ahmar Boudhar well field with pumps and ancillary equipment; (ii) constructing a transmission pipeline to Agadir and a treatment plant at Sidi Bou Shab; and (iii) installing power transmission lines to the well field and the treatment station. 38. The project would establish within each of the regies of Casablanca (RAD), Rabat-Sale (RED) and Keni:ra (RAK) a revolving fund which would provide credit facilities to new low-income customers to cover the payment of house connection and contribution towards the extension of the distribution system. It is expected that by the end of 1983, about 48,000 house connections will be installed under the project. 39. The proposed water resource and water management study for the Greater Agadir area should provide for a rational planning and water alloca- tion between various users. Consulting services would also be provided to ONEP to improve treatment techniques, related training, final design, prepara- tion of tender documents and construction supervision. An estimated 1,200 man-months of such assistance would be provided at an average cost of $6,500 per man-month. Finally the proposed water supply sector study would review the sector organization, the investment decision process and update the first country-wide water tariffs study. Project Area and Population Served 40. The proposed project will cover two different areas in Morocco: the Mid-Atlantic Coast between Casablanca and Kenitra, and the Greater Agadir area in the South. The Mid-Atlantic Coast, with a population of 2.9 million or 18 percent of the total population, comprises four major cities: Casablanca, Rabat, Sale and Kenitra as well as a number of interlying smaller towns and villages. Approximately 2.75 million inhabitants live in the urban agglomera- tions which account for about 40 percent of the total urban population. With an overall annual growth of 4.6 percent, the population between Casablanca and Kenitra is expected to reach 5.2 million by 1990. The Greater Agadir area, with a population of about 200,000 inhabitants, consists of the cities of Agadir and Inezgane and the rural centers of Ait Melloul and Tikiouine. The economic activity of the area is based on its natural resources and tourism because of its location in a climatic zone with agreeable winter temperatures. The area population is expected to grow to 465,000 by 1990, representing a 7 percent annual increase. 41. While most of the water consumed along the Mid-Atlantic Coast is produced by ONEP, three autonomous regies in charge of water distribution  - 12 - assure its distribution in Casablanca, Rabat-Sale, and Kenitra. The inter- lying towns and villages are served by ONEP directly. As the regies finance practically all their investments out of internally generated funds and customer contributions, expansion of the distribution system has so far not benefitted much the low-income group of the population, which was often unable to make rather large cash payments required at the time of connection. Only 53 percent of Casablanca's population is therefore connected to the system, 61.5 percent in Rabat, 45 percent in Sale and 50 percent in Kenitra. ONEP is in charge of water production and distribution in the Greater Agadir area with the exception of Tikiouine which manages its own water production and distribution system. 42. About one million of the 2.9 million inhabitants of the Mid-Atlantic Coast live at income levels below the 1978 urban poverty threshold of DH 692 ($181) per household per month. The majority of these urban poor, 750,000, who live in shantytowns, are not connected to the water distribution system and depend on standpipes for their water supply. About half of the 345 multiple faucet standpipes in Casablanca, Rabat, Sale and Kenitra are located in the squatter areas, and have to serve 750,000 inhabitants, or an average of 4,000 inhabitants per standpipe. Walking distance to the standpipes often exceeds 500 m, and, as a result, in most cases only the minimal water demand is satisfied. In contrast to the squatter areas, service levels for the other 250,000 urban poor along the Mid-Atlantic Coast can be upgraded through the installation of individual house connections provided that adequate arrange- ments are made to finance the installation charges. The proposed project would provide part of the financial assistance required. 43. Increasing the number of standpipes in the shantytowns and extending the number of house connections would have an important impact on the urban poor in the project area. In order to ensure adequate service levels by such public facilities in the project area, assurances have been obtained from the Government during negotiations that it shall cause the municipalities to expand the network of standpipes, consonant with the reasonable needs of the population served by such facilities (Loan Agreement, Section 3.01(f)). Project Cost and Financing Plan 44. The total cost of the project is estimated at $182.5 million equiva- lent with a foreign exchange component of $82.3 million (45 percent). The estimated costs of the various project items are given in detail in the Loan and Project Summary. Physical and price contingencies would amount to $38.2 million or 21 percent of total project cost. Custom duties and local taxes are included in the base costs. The proposed Bank loan of $49 million would be made to the Moroccan Government which would on-lend, on the same terms as the Bank loan, $39.5 million to ONEP, $4.25 million to the Regie of Casablanca (RAD), $2.85 million to the Regie of Rabat-Sale (RED), and $1.4 million to the Regie of Kenitra (RAK) to finance house connections of low-income customers. The execution of a subsidiary loan agreement between the Government and ONEP would be a condition of effectiveness of the Bank loan (Loan Agreement, Section 6.01). The Bank loan would have a term of 20 years, including 4 years of grace, with interest at 7.9 percent per annum. ONEP would assume the foreign exchange risk for $39.5 million and the Government for the remainder.  - 13 - 45. The Bank loan would finance 36 percent of total project cost (net of taxes and duties) and would cover the estimated foreign exchange costs of all project items, with the exception of the Bou Regreg-Casablanca transmission pipeline, which the Federal Republic of Germany is prepared to finance. The foreign exchange cost of this component amounts to about $33.3 million or 24.5 percent of tLual project cost (net of taxes and duties). The Government has also confirmed that it would provide the substitute funds necessary for successful completion of the Project, should the German co-financing not materialize. The Bank would have the right to suspend its loan, if external borrowing for the Bou Regreg-Casablanca transmission pipeline is not effective by June 30, 1980. The Loan Agreement (Section 5.01(f)) also includes the standard provisions of cross-suspension and cross-default used in connection with co-financing. The Fonds d'Equipement Communal (FEC), an autonomous public corporation, has agreed to lend to the regies of Casablanca, Rabat-Sale and Kenitra $8.5 million to cover the local cost component of the proposed fund for house connections. Lending agreements between FEC and the three regies as well as subsidiary loan agreements between the Government and the three regies should be executed by all parties concerned on or before June 30, 1980, under terms and conditions acceptable to the Bank (Loan Agreement, Section 5.01(e)). The Government would provide ONEP with $90.4 million over the period 1979-1983 as an equity contribution to ONEP's capital. During negotiations, assurances have been obtained from the Government that it will make this amount available to ONEP, and, if necessary, will provide additional funds needed to cover any cost overruns ONEP cannot meet (Loan Agreement, Section 3.01(d)). Project Implementation 46. The project would be executed in the years 1979 through 1983. ONEP would be responsible for the construction of the bulk water production and transmission facilities on the Mid-Atlantic Coast and in Greater Agadir. The Hydraulics Department of the Ministry of Equipment would be in charge of the water resources study in Agadir, and the regies of Casablanca, Rabat-Sale and Kenitra would be responsible for the installation of house connections. Construction supervision will be performed partly by ONEP and partly by consultants. Although ONEP's staff has acquired reasonable experience in this field, additional assistance is required for a proper implementation of the more specialized project components. 47. In order to avoid water shortages in Casablanca as well as in Agadir, the booster-pumps on the existing Bou Regreg-Casablanca transmission pipeline, and the Ahmar Boudhar well field near Agadir should both be opera- tional at the latest in June 1980. ONEP, therefore decided, with the Bank's concurrence, to initiate in January 1979 international competitive bidding procedures in accordance with the Bank's guidelines. Contracts are expected to be let in May 1979, and retroactive financing of about $1.6 million is recommended for this advance contracting. 48. Each of the regies of Casablanca, Rabat-Sale and Kenitra would operate, as separate account, a revolving fund for house connections. The regies would administer the sub-loans, collecting repayment and interest charges from the borrowers. The following eligibility criteria would be applied: (i) proof that monthly family income is less than $262 equivalent;  - 14 - (ii) no commercial activity on premises; (iii) location in a zone classified as either densely population or low-income housing area; (iv) economic type or traditional style of construction; (v) diameter of water meter not exceed- ing in principle 20 mm; and (v) owner occupancy with the exception of tradi- tional multi-family dwellings. To ensure that the urban poor benefit to the maximum extent possible from this operation, at least 40 percent of all connections installed in each year under this program should be for families with a monthly income of less than $181. A repayment period of up to 5 years and a maximum quarterly payment of $26 would ensure affordability. The interest rate charged to the beneficiaries would be the same as that charged on the Bank loan. 49. No major problems of land acquisition are anticipated. In fact, ONEP has already acquired all the land needed for future extension of the existing Bou Regreg treatment plant, as well as for the laying of the pressure main and the transmission pipeline to Casablanca. Procurement and Disbursements 50. All major contracts totalling about $62.5 million, for which the Bank would finance the foreign exchange component, would be awarded on the basis of international competitive bidding in accordance with the Bank's guidelines. A preference limited to 15 percent of the c.i.f. price of imported goods, or the custom duty, whichever is lower, would be extended to domestic manufac- turers in the evaluation of bids. Contracts let by ONEP for civil works less than $800,000 and for equipment and materials less than $100,000 and all aggregating to no more than $4 million, would be awarded on the basis of local competitive bidding in accordance with ONEP's procedures which are acceptable to the Bank and which permit participation by foreign bidders. The installa- tion of house connections would be carried out by the regies of Casablanca, Rabat-Sale and Kenitra on force account. Materials used for installing the house connections and extending the distribution system (costing about $11.2 million) would be procured on the basis of local competitive bidding in accordance with the regies' procedures which are acceptable to the Bank and would include international notification; these contracts would be subject to ex-post review by the Bank. The Office National de l'Electricite (ONE) would install for the account of ONEP the electricity supply line to the Ahmar Boudhar well field and the treatment plant, costing $2.6 million, in accordance with local procurement procedures for public contracts, which are acceptable to the Bank. The supply and installation of the Bou Regreg- Casablanca transmission pipeline would be procured and funded under parallel financing. 51. The Bank loan would be disbursed over four years (FY1980-FY1984) against: (a) 100 percent of the foreign exchange cost of directly imported equipment and materials; (b) 58 percent of the cost of locally procured imported equipment;  - 15 - (c) 55 percent of the ex-factory cost of locally manufactured equipment; (d) 38 percent of the total expenditures for civil works construction; (e) 100 percent of the foreign costs of consulting services and 45 percent of local expenditures for consultants domiciled in Morocco; and (f) 50 percent of the total expenditures for work on force account. Organization and Staffing of ONEP 52. The "Office National de l'Eau Potable" (ONEP), was created in 1972 to replace the "Regie des Exploitations Industrielles" (REI) previously in charge of bulk water production. Its responsibilities as a bulk water supplier have been progressively extended over the whole country. ONEP's Board is chaired by the Minister of Equipment, and comprises twenty members representing interested Ministries, regional assemblies and some regies. The overall control exercised by the Government covers major decisions such as approval of investment and operating budgets, borrowings, tariff levels, but does not affect ONEP's operational autonomy. 53. A new organizational structure, developed by consultants (financed under the first water supply project) and approved by the Prime Minister, has recently been implemented. Under the new structure, the deputy general manager supervises the daily operations of ONEP and the inspector general is responsible for operational control and internal audit. A special planning unit attached to the general manager's office is in charge of long-range planning. ONEP's head office is organized in five departments responsible for (i) operation and maintenance; (ii) detailed planning and execution of small to medium sized projects; (iii) detailed planning and execution of large projects; (iv) administration, personnel training, legal and support services; and (v) finance and accounting. The new accounting system, which management consultants developed for ONEP, includes billing, cost accounting, cash flow projections, budgeting and inventory controls, together with appropriate procedures. Assurances have been obtained from ONEP during negotiations that ONEP would continue to employ consultants for implementing the new accounting system, which should be in full operation by December 31, 1979 (Project Agreement, Section 3.03). 54. ONEP employed 2,353 people at the end of 1978; conditions of service are satisfactory and salaries adequate. ONEP has, within the scope of the first water supply project, established a training center which offers one to two years training courses for mechanics, treatment plant operators and equipment specialists. By 1982, the training program should be fully imple- mented and would provide ONEP with 120 graduates annually.  - 16 - ONEP's Financial Position 55. ONEP's equity capital has been provided by the Government in the form of assets turned over to ONEP at its creation in 1972 and by further contributions to ONEP's development programs since that time. ONEP enjoys a large degree of operational autonomy, though major financial decisions are subject to Government approval. Practically all of the water distributed by ONEP is metered. Bulk water sales account for about 78 percent of total revenues and the remaining 22 percent are from retail customers. New customers pay for the cost of the connection, contribute to the capital cost of the distribution networks and deposit an advance payment covering about three months of water sales. 56. ONEP incurs, through the operation of water supply systems in about 80 rural centers (see para. 30), sizable losses which cannot be absorbed by its bulk water operations in other areas. The Government is providing a special annual contribution of DH 5 million to cover part of the costs of these operations, but this special contribution will cease at the end of 1981. Instead of making direct payments to ONEP to cover the operating losses of the rural centers, which may reach DH 22 million in 1979, the Government makes substantial contributions to ONEP's investment program. For 1979, DH 100 million have been allocated and for 1980, DH 146 million. Part of the funds provided by the Government towards ONEP's investment program originates in the sector through taxes levied on water sales. These taxes, which are paid by water consumers, exceed the losses incurred by ONEP in providing water supplies to the rural centers. To the extent that these taxes are retained in or brought back into ONEP for its development, it is reasonable to admit them as revenues for the calculation of ONEP's rate of return. With these taxes treated as revenues, ONEP achieved a rate of return of 2.3 percent in 1977, and 2.7 percent in 1978 on its net fixed assets in operations in compliance with the financial covenant under the First Water Supply Project (Loan 850-MOR). 57. ONEP's present tariff structure and rates were introduced in October 1977 following a comprehensive study of the cost of developing future water resources. The study was part of the first water supply project and covered the whole country. Production and distribution tariff levels were proposed by consultants on the basis of the long-term development cost of future water sources in different areas. To maintain the envisaged ratio of self-financing and cost recovery through the covenanted rate of return, the study also recom- mended annual adjustments of tariffs for inflationary increases. Although such an adjustment has not yet been made this year, ONEP, which has managed to reduce its operating costs since late 1978, in compliance with the Government's austerity program, would be able to achieve in 1979 a 2 percent rate of return. 58. However, future tariff increases, primarily for adjustments of operating costs will become necessary. The magnitude of these increases will depend to a large extent on ONEP's ability to control operating expenses, particularly in the rural centers, and to provide water of acceptable quality at reasonable cost along the Mid-Atlantic Coast. While the latter should be accomplished through the proposed technical assistance (para. 39), assurances have been obtained during negotiations that ONEP would start at the latest  - 17 - January 1, 1980 a study, under terms of reference acceptable to the Bank, to determine ways of increasing its operating efficiency, in particular in the rural centers (Project Agreement, Section 3.03(c)). 59. The existing rate of return covenant under Loan 850-MOR commits ONEP to achieve an annual rate of return of 2 percent for the period 1977-1980, and 7 percent in 1981 and thereafter. This covenant was established on the basis of projections prepared in 1972, when it was assumed that ONEP would take over a private concession which supplied about 63 million m3 per year to Casablanca. The Government, however, has decided for the time being not to exercise the right to acquire this concession. Its takeover by ONEP would have improved its profitability and would have added more than I percentage point to ONEP's rate of return. This, together with the envisaged tariff adjustments and the offsetting Government contributions referred to in para. 56, would have enabled ONEP to meet the covenanted rate of return of 7 percent by 1981. It seems, therefore, reasonable to require only a 5 percent rate of return in 1981 while applying the existing covenant of 7 percent from 1982 onwards (Project Agreement, Section 4.03(a)). 60. The financial projections suggest that ONEP's debt service coverage will not drop below 1.7 from 1980 onwards. The existing commitment to obtain Bank approval before incurring any long-term debt unless net income is at least 1.5 times the maximum debt service in any future year would also be reaffirmed (Project Agreement, Section 4.04). Agreement has also been reached with ONEP during negotiations on a quarterly reporting system of key indicators pertaining to ONEP's technical, financial and administrative performance (Project Agreement, Section 2.05(b)). 61. Although Government decrees were issued in 1976 and 1977 to facilitate and expedite the repayment of arrears, collection from Government agencies and some regies and municipalities has deteriorated over the years. To resolve the matter, the Government has recently settled all the arrears which its agencies, the regies of Marrakech and Safi and the Municipality of Sale owed to ONEP for water sales prior to June 1, 1978. The Government has also agreed to take all measures necessary to ensure the payment of water bills within 120 days of their presentation by its departments, municipalities and agencies (Loan Agreement, Section 4.05). Project Benefits and Urban Poverty Impact 62. About 20 percent of the country's total population and over 40 per- cent of its urban dwellers live in the project area. Existing water produc- tion facilities can assure sufficient supply only to 1980 while less than 50 percent of the population is connected directly to the distribution system. The proposed project would help ONEP to meet the projected water demand along the Mid-Atlantic Coast until 1989 and in the Greater Agadir area until 1986 when additional facilities will have to be put into operation. Appproximately  - 18 - 300,000 inhabitants living at or below the urban poverty threshold in the project area along the Mid-Atlantic Coast would directly benefit from the project through the establishment of a revolving fund to finance house connections. This would provide water to about 85 percent of the poverty group living in zones accessible to house connections in the four cities served by the project. An additional 900,000 persons living in the shantytowns where the installation of house connections is not feasible would have their access to safe water improved through the planned expansion of the standpipes network. 63. The project would also strengthen ONEP's management, its financial performance and project implementation capability. The establishment of ONEP as an efficient and well-managed institution continues to be one of the primary objectives of the Bank's involvement in the sector. Implementation of the new accounting system, based on the recommendations of the management study financed under the first project, would be a significant step towards achieving this objective. 64. The proposed project is the least cost alternative for meeting water supply needs in the project area. The estimated internal financial rate of return of the Mid-Atlantic Coast and the Agadir components is 8 percent; were such benefits as health and environmental improvement quantifiable, the eco- nomic return would certainly be higher. Project Risks 65. Measures to be taken to ensure satisfactory project completion are those normally found in a typical water supply project. With close monitoring of project progress and the assistance of consultants to supervise construc- tion, implementation should pose no major problems. ONEP, has shown under the first project that it could perform satisfactorily. The project, therefore, poses no special risks. PART V - LEGAL INSTRUMENTS AND AUTHORITY 66. The draft Loan Agreement between the Kingdom of Morocco and the Bank, the draft Project Agreement between the Bank and the Office National de l'Eau Potable (ONEP) and the Report of the Committee provided for in Article III, Section 4 (iii) of the Articles of Agreement are being distributed to the Executive Directors separately. 67. Special conditions of the project are listed in Section III of Annex III.  - 19 - 68. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 69. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments May 24, 1979 Washington, D.C.  - 20 - ANMEX I Page 1 of 6 TABLE 3A MOROCCO - SOCIAL INDICATORS DATA SHEET REFERENCE GROUPS (ADJUSTED AVERAGES MOROCCO /a LAND AREA (THOUSAND SQ. RM.) - MOST RECENT ESTIMATE) TOTAL 659.9 /f SAME SAME NEXT HIGHER AGRICULTURAL 157.8 MOST RECENT GEOGRAPHIC INCOME INCOME 1960 /b 1970 Lb ESTIMATE /b REGION /c GROUP /d GROUP Le GNP PER CAPITA (US$) 190.0 290.0 570.0 1438.5 432.3 867.2 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 148.0 180.0 274.0 816.7 251.7 578.3 POPULATION AND VITAL STATISTICS TOTAL POPULATION, MID-YEAR (MILLIONS) 11.6 14.8 17.7. . . URBAN POPULATION (PERCENT OF TOTAL) 29.3 32.2 39.5 45.8 24.2 46.2 POPULATION DENSITY PER SQ. KM. 26.0 33.0 39.0 /g 23.2 42.7 50.8 PER SQ. KM. AGRICULTURAI LAND 61.0 74.0 112.0 112.4 95.0 93.3 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 44.3 46.4 45.8 46.0 44.9 42.9 15-64 YES. 51.7 51.1 51.6 50.6 52.8 53.5 65 YRS. AND ABOVE 4.0 2.9 2.6 3.3 3.0 3.5 POPULATION GROWTH RATE (PERCENT) TOTAL 2.6 2.4 2.4 2.9 2.7 2.5 URBAN 6.4 4.0 4.8 5.0 8.8 4.7 CNUDE BIRTH RATE (PER THOUSAND) 50.4 49.2 44.5 45.0 42.2 37.8 CRUDE DEATH RATE (PER THOUSAND) 24.2 18.5 13.4 13.7 12.4 10.8 GROSS REPRODUCTION RATE 3.4 /h 3.4 3.3 3.4 3.2 2.5 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. 25.1 68.0 USERS (PERCENT OF MARRIED WOMEN) .. 3.0 5.4 14.7 14.2 20.0 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1970-100) 118.7 100.0 86.0 107.1 104.3 107.3 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIRDEENTS) 90.0 102.0 108.0 99.2 99.5 105.3 PROTEINS (GRAMS PER DAY) 43.0 64.0 70.5 63.4 56.8 63.0 OF WHICH ANIMAL AND PULSE .. 14.0 /i 15.6 16.4 17.5 21.7 CHILD (AGES 1-4) MORTALITY RATE .. .. .. .. 7.5 8.0 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 45.4 50.4 53.0 53.7 53.3 57.2 INFANT MORTALITY RATE (PER THOUSAND) 149.0 /h .. 130.0 77.7 82.5 53.9 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 51.0 .. 59.1 31.1 56.8 URBAN .. 92.0 .. 85.9 68.5 79.0 RURAL .. 28.0 .. 38.0 18.2 31.8 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 29.0 .. 64.3 37.5 30.9 URBAN .. 75.0 .. 94.5 69.5 45.4 RURAL .. 4.0 .. 27.7 25.4 16.1 POPULATION PER PHYSICIAN 9700.0 /h 12650.0 12400.0 4271.6 9359.2 2706.8 POPULATION PER NURSING PERSON .. 2820.0 1500.0 2077.4 2762.5 1462.0 POPULATION PER HOSPITAL BED TOTAL 680.0 660.0 710.0 580.2 786.5 493.9 URBAN .. 460.0 .. 310.0 278.4 229.6 RURAL .. 2980.0 .. .. 1358.4 2947.9 ADMISSIONS PER HOSPITAL BED .. 15.5 16.5 22.0 19.2 22.1 HOUS ING AVERAGE SIZE OF HOUSEHOLD TOTAL 4.8 5.5 .. 5.4 .. 5.2 URBAN 4.3 4.9 .. .. .. 5.0 RURAL 5.1 5.8 .. .. .. 5.4 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL 2.2 2.4 .. .. 2.0 URBAN 2.1 2.1 .. 1.8 2.3 1.5 RUJRAL 2.3 2.6 .. .. .. 2.7 ACCESS TO ELECTRICITY 'PERCENT OF DWELLINGS) TOTAL 76.0/4 .. .. 40.3 28.3 64.1 URBAN 85.4 / 68.4 55.0 .. .. 67.8 RURAL 31.0 /1 .. .. 12.2 10.3 34.1  - 21 - ANNEX I TABLE 3A "age 2 of 6 MOROCCO - SOCIAL INDICATORS DATA SHEET REFERESCE GROLPS (ADrCSTED AVERAGES MOROCCO __ - MOST RECENT ESTIMAT:) SAME SAME NEXT hiGHER MOST RECENT GEOGRAPHIC INCOME INCOME 1960 Lb 1970 / ESTIMATE 'b REGION /c GROUP /d GROUP Le EDUCATION ADJUSTED ENROLL"'hT RATIOS PRIMAPY: TOTAL 47.0 52.0 65.0 80.8 75.8 99.8 PEMALE 27.0 37.0 47.0 61.8 67.9 93.3 SECONDARY: TOTAL 5.0 13.0 17 0 23.6 17.7 33.8 FEMALE 2.0 7.0 12.0 18.2 12.9 29.8 VOCA,IONAL (PERCENT OF SECONDARY).. 2.0 3.0 6.7 7.4 12.8 PUPIL-TEACHEP RATIO PRLMARY 43.0 34.0 40.0 31.5 34.3 34.9 SECONDARY .. 20.0 22.0 22.3 23.5 22.2 ADULT LITERACY RATE (PERCENT) 17.0 21.0 28.0 50.1 63.7 71.8 CONSUMPTION PASSE%GFR OARS PER THOUSAND POPULATION 11.0 15.0 18.0 14.5 7.2 12.4 RADIO RECEIVERS PER THOUSAND POPULATION 46.0 60.0 77.0 125.8 71.1 104.5 TV RECEIVERS PER THOUSAND POPULATION 0.4 11.0 23.0 34.5 14.1 28.1 NEWSPAPER ( DA.LY GENERAL INTEREST") CIRCULA-ION PER THOUSAND POP'LATION 22.0 16.0 14.0 17.4 16.3 45.2 CISEMA ANNUAL ATTENDANCE PER CAPITA 2.0 .. 1.6 1.6 1.6 4.6 IOTAL LABOR Ft?CE (THOUSANDS) 3250.0 . 3980.0 4930.0 FEMALE (PERCEUr) 10.6 15.2 19.0 9.3 28.0 25.7 AGRICULTURE (PERCENT) 56.4 49.9 42.5 42.0 54.1 46.2 INDTSTRY (PERCENT) 11.3 14.9 18.1 PARTICIPATION RATE (PERCENT) IOTAL 28.0 26.3 27.0 26.9 37.8 33.8 YALE 50.1 44.5 44.4 46.6 50.3 48.1 FEDALE 5.9 8.0 10.3 5.3 20.9 17.3 ECONOMGC DEPENDENCY RATIO 2.0 1.9 1.8 1.9 1.3 1.4 INCOME DISTR'SIJTION PERCENT OF PRIVATE INCOME RECEIVED RT HICHEST 5 PERCENT OP HOUSEHOLDS 18.0 /k 20.0 /k .. .. 19.5 23.6 RICHEST 20 PERCENT OP HOUSEHOLDS 43.3 /k 49.0 /k .. .. 48.9 52.3 LOWEST 20 PERCENT OP HOUSEHOLDS 7.0 /k 4.0 /k .. .. 5.9 4.3 LOWEST 40 PERCENT OF HOUSEHOLDS 16.0 /k 12.0 /k .. .. 15.7 13.1 POVERTY TAIGET GROUPS ESTIMATE ) ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN 107.0 157.0 288.0 .. 155.9 191.9 RURAL 66.0 101.0 174.0 i42.0 97.9 193.1 ESTIMATED RELATIVE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. .. 189.0 236.1 143.7 319.8 RURAL .. .. .. 144.7 87.3 197.7 EST IMATED POPULATION BELOW POVERTY INCOME LEVEL (PERCENT) URBAN 59.0 39.0 34.0 21.5 22.9 19.8 RURAL 49.0 45.0 45.0 37.4 36.7 35.1 Not availlable Not appilcable. NOTES j The adjuated group averages for e-ch indicator are popultion-veighted geometric means, excluding the extreme values cf the indicator snd the mo-t populated country in each g:oup. Coverage of countries among the indicators depends on availability of data and is not uniforx. lb Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, betweeo 1969 and 1971; snd for Most Recent Estimate, between 1973 and 1977. Jc Norri Africa & Middle East; /d Lower Middle Income (5281-550 per capEta, 1976); /e Intermediate Middle Iccome (555t-135 per rapita, 1976); Lf Including Moroccan provinces tn Western Sahara; Li Excludes Moroccan provinces in W. Sahara; /h 1962; LI Av. 1964-66; Li Brick building mnly; /k Consu-ption expenditures of houscholds. SeptenSer. 1978  - 22 - ANNEX I pirwTo of AML rIATage 3 of 6 MU: The adj u.ted group avareges foe Oath Indicator are p.9.sle