Malawi - Third National Rural Development Program (NRDP) - (Karonga - Chitipa Agricultural Development Division) - Project

Document of The World Bank FILE COPY FOR OFFICIAL USE ONLY Report No. P-3112a-MAI REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF MALAWI FOR A PHASE III OF THE NATIONAL RURAL DEVELOPMENT PROGRAM (KARONGA-CHITIPA) September 22, 1981 Eastern Africa Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = Malawi Kwacha (MK) US$1.00 = MK 0.78 MK 1.00 = US$1.28 (As the Malawi Kwacha is officially valued at a fixed rate of MK 1.00 to SDR 0.9487, the US$/MK exchange rate is subject to change. Conversions in this report were made at US$1.00 to MK 0.78, which is close to the recent exchange). WEIGHTS AND MEASURES 1 meter (m) = 3.3 feet 1 cubic meter (m3) = 35.3 cubic feet 1 hectare (ha) = 2.47 acres 1 kilometer (km) = 0.62 miles 1 square kilometers (sq.km) = 0.39 square miles 1 centimeter (cm) = 0.4 inches ABBREVIATIONS ADMARC = Agricultural Development and Marketing Corporation ARD = Agricultural Research Department CEU = Central Evaluation Unit DEVPOL = "Statement of Development Policies 1971-80" INDEBANK = Investment and Development Bank KRDP = Karonga Rural Development Project MOA = Ministry of Agriculture NRDP = National Rural Development Program FISCAL YEAR April 1 - March 31  FOR OFFICIAL USE ONLY MALAWI NATIONAL RURAL DEVELOPMENT PROGRAM, PHASE III (Karonga-Chitipa) Credit and Project Summary Borrower Republic of Malawi Loan Amount: SDR 6.5 million (US$7.3 million equivalent) Terms : Standard IDA terms Project Description: The proposed project, which would constitute a third phase of the National Rural Development Program (NRDP), aims to strengthen project management capabilities and support further development of agricultural potential in the Karonga and Chitipa districts. Project components would include: (a) strengthening of extension, training and research programs; (b) expanding livestock development; (c) promoting burley tobacco as a smallholder cash crop; (d) providing marketing facilities and expanding credit activities to provide greater coverage; (e) improving the water supply and health facilities in the project area; (f) improving administration and evaluation of project activities; and (g) providing assistance to the Ministry of Agriculture (MOA) and the National Statistics Office (NSO) in data gathering and analysis. MOA would have overall responsibility for project implementation. About 1,200 farmers in Karonga and 2,000 farmers in Chitipa would benefit directly from the project. There are no unusual risks associated with it. Thisdocument 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$000------------- Local Foreign Total Agric. Extension 0.5 0.6 1.1 Training 0.3 0.3 0.6 Pilot Burley Tobacco 0.1 0.1 0.2 Research 0.2 0.2 0.4 Livestock 0.4 0.3 0.7 Credit 0.1 0.2 0.3 Marketing 0.1 0.1 0.2 Land Husbandry - 0.1 0.1 Forestry 0.3 0.2 0.5 Water Facilities 0.1 0.1 0.2 Health 0.2 0.4 0.6 Project Administration 0.2 0.3 0.5 Central Evaluation Unit - 0.1 0.1 Survey Unit 0.6 0.6 1.2 Base Costs Estimates 3.1 3.6 6.7 Physical Contingencies 0.2 0.3 0.5 Price Contingencies 0.7 0.7 1.4 Total Project Cost net of Taxes and Duties 4.0 4.6 8.6 Financing Plan: IDA 2.7 4.6 7.3 Government 1-3 _ 1.3 Total net of taxes and duties 4.0 4.6 8.6 Estimated Disbursements: US$000 FY82 FY83 FY84 FY85 FY86 FY87 Annual 0.4 1.9 2.1 1.6 1.1 0.2 Cumulative 0.4 2.3 4.4 6.0 7.1 7.3 Rate of Return: 17 percent Appraisal Report: No. 3420-MAI, dated September 9, 1981  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT FOR A PHASE III OF THE NATIONAL RURAL DEVELOPMENT PROGRAM (KARONGA-CHITIPA) TO THE REPUBLIC OF MALAWI 1. I submit the following report and recommendation on a proposed credit to thie Republic of Malawi for SDR 6.5 (US$7.3 million equivalent) on standard IDA terms to help finance the third phase of the National Rural Development Program (NRDP). PART I - THE ECONOMY 2. A report entitled "Memorandum on the Economy of Malawi" (Report No. 1677a-MAI) dated September 30, 1977, was circulated to the Executive Directors on October 10, 1977. A Basic Economic Mission visited Malawi May/June 1979; reports resulting from the mission were distributed to the Executive Directors on June 26,1981. Annex I contains the basic country data. 3. With a population of 5.7 million (1978) and an area of about 118,500 sq km, Malawi is relatively densely populated. Its main assets are moderately fertile soils, good water resources and a climate favorable to crop production. Unlike its neighbors, Malawi has no known substantial mineral resources. Being landlocked, it has to depend on other countries for access to the sea. 4. Although Malawi has a GNP per capita of only US$200 and has been identified by the United Nations as one of the world's poorest countries, its progress since independence, measured against its natural resources, has been significant. GDP at constant prices grew at an average annual rate of 6 percent between 1964 and 1979. During the same period, real growth of estate agriculture and manufacturing exceeded 10 percent per annum and export volume grew at 4.5 percent per annum. A steadily increasing investment rate (rising from 9 percent of GDP at independence to 22 percent in 1979) has been supported by heavy inflows of foreign private and public capital as well as by a significant increase in domestic savings (from virtually nil in 1964 to 14 percent of GDP in 1979). 5. Malawi's success in its development efforts has been due in large part to the realistic and purposeful policies of the Government. Those for the period 1971-80 were outlined in the "Statement of Development Policies 1971-80" (DEVPOL) which set out the basic priorities for economic developnent. 6. As stated in DEVPOL, public investment has been intended primarily to support private efforts in the directly productive sectors through provision of essential infrastructure, public utilities and  - 2 - support services. In addition, the Government has attached high priority to investments that assist smallholder agriculture, as about 90 percent of the population lives in the rural areas and depends on agriculture for its livelihood. To this end, the Government has undertaken a number of integrated rural development projects in the past, and recently embarked on the NRDP, an ambitious 20-year program designed eventually to extend agricultural services to smallholders countrywide. The Government's decision to emphasize directly productive sectors and related economic infrastructure, coupled with limited amounts of financial and human resources, has resulted in slower development of social services such as health and education. 7. DEVPOL has now been succeeded by a five-year investment program beginning in 1981/82. The Government's priorities for the sectoral allocation of resources under this program are: 22 percent of total public investment expenditure for agriculture, 36 percent for transport, 10 percent for education, 11 percent for water and health, and 22 percent for other miscellaneous investments. These sectoral allocations reflect the Government's continued emphasis on smallholder development and transport, and the increased importance it now attaches to manpower development. '8. In 1977, a population census revealed that the country's population grew at 2.9 percent per annum during the past decade. Projecting the same growth rate for the remainder of the century, Malawis population would almost double by the year 2000. This high population growth rate has important implications for the labor/land ratio. Malawi's population density, about 140 persons per sq km of agricultural land, already is among the highest in Africa and by the year 2000, will rise to 265 persons per sq km. Over 35 percent of total land area is classified as suitable for cultivation and the available arable land area is almost fully utilized. The implications of Malawi's rapid population growth on expenditures for social services, availability of arable land, dependency ratio, etc. have been discussed with the Government which, at this time, opposes active population control measures but permits contraceptives to be distributed at physician-attended facilities on demand. Only about 9 percent of the total population lives in urban areas. However, with the diversification of the economy, urban population is increasing by more than 7 percent per annum, in line with the expansion of wage employment opportunities in the non-agricultural sectors. The population growth issue is being pursued in discussions with the Government of the findings and recommendations of the Basic Economic Report and, as appropriate, through the Bank's sector work and lending operations. 9. Notwithstanding Malawi's impressive economic performance over the past 15 years, its economy, heavily dependent on 2 primary commodity exports (tea and tobacco), has remained highly vulnerable to international price fluctuations. Since 1974, the country has experienced periodic balance of payments disequilibria of increasing severity due primarily to (a) rapid escalation in import prices, particularly of fuel and intermediate and capital goods; (b) cyclical swings in export prices of tobacco and tea; and (c) significantly higher costs of transport for both exports and imports owing to rising ocean freight charges, port congestion in Beira and Nacala, and disruptions of overland transport.  -3- 10. While the Government successfully steered the economy through balance of payments crises in the past, the deterioration in the balance of payments since 1978 has been less manageable, primarily due to a 35 percent fall in the terms of trade between 1977 and 1980, when export prices fell 18 percent (due mainly to declines in tea and tobacco prices) and import prices rose about 41 percent. The petroleum import bill more than doubled between 1977 and 1980. The growing trade deficit was exacerbated by a doubling of the negative balance for non-factor services, due mainly to rising transport costs. Malawi's current account deficit reached 17 percent of GDP in 1978, 19 percent in 1979, and 14 percent in 1980, in contrast to an 8-9 percent average experienced since independence. Because capital inflows have not been sufficient to cover the current account deficits, Malawi has also experienced a drop in foreign exchange reserves. Between end-1977 and end-1980, gross official reserves fell from the equivalent of four months to two months of imports. Over the same period, net official reserves fell from US$42 million to minus US$41 million. 11. In the past, the Government has approached the energy problem through its pricing and tax policies to restrain demand and through investments aimed at identifying and developing new sources. Oil imports have been subject to tariffs of 30 to 60 percent. The retail prices of gasoline and diesel have been set at US$0.88 and US$0.80 per liter, respectively, while their equivalent import prices are US$0.48 and US$0.45. In connection with fuelwood, which represents some 80 percent of the country's domestic energy consumption, the Government has in NRDP II undertaken to increase wood prices gradually to levels which reflect production costs. The Government has also launched projects in wood energy and ethanol production. At the Government's request, the Bank plans to conduct an energy sector study that would survey the available resources, project future demand and supply, examine alternative sources of energy and explore possibilities for intersectoral substitution. 12. Malawi's fiscal position has also seriously deteriorated over the past two years. From independence through 1974/75, government expenditures and revenues expanded roughly in line with the increases in GDP; and deficits did not exceed 8-9 percent of GDP. In the past two years, expenditure growth has outstripped the increase in revenues and the share of government deficits in GDP averaged 12 percent in 1978/79-1980/81. With the increased deficits came an increased reliance on domestic borrowing mainly from the monetary system, and on foreign borrowing, partly on commercial terms. At the same time, inflationary pressures grew and the balance of payments position deteriorated. Prices rose at an average rate of 13 percent per annum in 1979-1980. 13. Faced with these problems, the Government in 1979 initiated a series of short-term corrective measures culminating in a two and a half year stand-by arrangement with the IMF amounting to US$32.9 million (SDR 26.3 million). Malawi also obtained US$23.8 million (SDR 19.0 million) from the compensatory financing facility and a US$7.1 million (SDR 5.7  - 4 - million) loan from the Trust Fund. Unfortunately, a drought and a complete stoppage of all overland external transport, owing to political unrest in Mozambique during November and December 1979, forced termination of the stand-by arrangement as the Government could not meet some of the performance criteria. 14. A new two-year arrangement, drawing on the second to fourth tranches for US$64.8 million (SDR 49.9 million), was approved in May 1980. The two-year program, which coincides with Malawi's fiscal years 1981 and 1982, aims at constraining demand and limiting the balance of payments current account deficit to US$195 million in FY81, and US$169 million in FY82. The performance criteria involved phased ceilings on total domestic credit and on net bank credit to the Government and a limit on government (or government-guaranteed) external borrowing of 1-12 years maturity. 15. After successfully negotiating the two-year IMF stand-by arrangement, the Government, in April 1980, formally requested Bank assistance for a structural adjustment loan. The loan was appraised in September 1980, and approved by the Executive Directors in June 1981. It supports the Governments program of economic recovery which is designed to diversify the export base, encourage efficient import substitution, adjust incentives and incomes policies, improve the public sector-s financial performance and strengthen the Government's economic planning and monitoring capability. Foreign exchange is to be used for essential imports and counterpart funds are to be used for development purposes in the government budget. 16. Because of the Government-s limited ability to mobilize resources, the sizeable expansion of Malawi's development program over the past decade has been largely assisted by increased public capital inflows. The net contribution from foreign official sources to the financing of public investment increased from US$17 million in FY68, to about US$103 million in FY79, of which US$23 million were grants. However, in contrast with earlier experiences, over 35 percent of the FY79 capital flows were on commercial terms, which will have a pronounced effect on future debt servicing. 17. By the end of 1980, Malawi's external public debt totalled US$800 million, of which US$637 million had been disbursed. Debt service in 1980 amounted to US$64 million, equivalent to about 23 percent of exports of goods and services. There has been considerable hardening of the average terms of lending in the past few years; the average grant element of official assistance fell from the 80 percent level of 1971-1975, to 48 percent in 1978, 42.5 percent in 1979, and 40.7 in 1980. On the basis of loans committed by the end of 1980, and on additional capital requirements for the period 1980-85, Malawi's debt service ratio is projected to reach 24 percent in 1982, and then decline to 16 percent in 1985 (as compared  - 5 - with 8 percent in 1978, and 12 percent in 1979). The domestic share of development expenditures amounted to 22 percent in 1979, and this share is unlikely to rise in the near future, as the need for recurrent expenditures for operations and maintenance will absorb the bulk of additional tax revenues. Additional foreign exchange will remain a significant requirement to maintain imports. Hence, external financing will be called upon to cover a substantial portion of total project costs, including some local financing. PART II - BANK GROUP OPERATIONS IN MALAWI 18. Over the past 15 years, Malawi has received 23 IDA credits totalling US$257.2 million and six Bank loans totaling US$75.2 million, of which two were on Third Window terms. Of the total Bank Group assistance, US$98.2 million (30 percent) was for agriculture, US$45.0 million for structural adjustment (13 percent), US$37.8 million (11 percent) for power development, US$73.4 million (22 percent) for education, US$65.0 million (20 percent) for roads, US$3.0 million (1 percent) for a development finance company (INDEBANK), and the balance of US$9.0 million (3 percent) for water supply, technical assistance and to finance feasibility studies for a pulp mill at Viphya. The first Bank loan to Malawi was made on Third Window terms in June 1976, and the first standard Bank loan in April 1977. The most recent loan, US$45 million for the first structural adjustment, was approved on June 25, 1981, and declared effective August 3, 1981. 19. IFC's investments in Malawi consist of a loan of US$6.0 million made in 1976 for a textile mill, another of US$9.5 million for sugar development in 1977, a US$0.6 million equity investment in INDEBANK in 1979, and a US$2.0 million loan to Malawi Hotels Limited for tourism in 1979. A US$262,000 equity investment and a loan of US$1.7 million for the production of ethanol from molasses were approved on July 29, 1980. A summary statement of Bank Group operations and notes on the execution of ongoing projects are provided in Annex II. Project implementation has been fully satisfactory. 20. Duiring the next five years, Bank Group assistance to Malawi will be closely tailored to help Malawi restructure its economy, especially to improve agricultural productivity. Towards this end, consideration will be given to a second structural adjustment loan or credit following utilization of the first. In addition, the fourth phase of NRDP, a second water supply project, a second line of credit to the Investment and Development Bank, a fifth education project and possible investments in health and agro-industry are being contemplated. The Bank Group-s economic and sector work will focus on such key areas as: agricultural financing and production; the most cost-effective approaches to providing social services; energy investment opportunities; and public sector management.  - 6 - 21. In 1979, multilateral sources, especially IDA, provided about 45 percent of official development assistance to Malawi; the UK about 15 percent; and a variety of bilateral sources, notably Canada, the Federal Republic of Germany and the United States, accounted for the remainder. At the end of 1980, the Bank's and the combined IDA/Bank shares in Malawi's disbursed debt were 4 percent and 24 percent, respectively, and service on the Bank Group debt accounted for 4.7 percent of the total debt service. In 1985, the IDA/Bank share in total disbursed debt is projected to be 18 percent and the service on Bank Group debt to be 5 percent of the total debt service. PART III - THE AGRICULTURAL SECTOR AND RURAL DEVELOPMENT SUBSECTOR 22. Agriculture and related activities constitute the largest single sector in Malawi's economy, providing employment for 85 percent of the population, contributing about 90 percent of export earnings and 43 percent of GDP. Smallholders account for 85 percent of agricultural production, including all food staples (maize, beans, groundnuts and rice), raw materials for industry, and some export surplus. The 15 percent of production attributable to estates provides 60 percent of the principal agricultural exports--tobacco, tea, and sugar. Tobacco accounts for 63 percent of agricultural export earnings, tea for around 20 percent and sugar for 13 percent. Maize is the single most important food crop and is grown throughout the country as a subsistence crop. Surplus quantities are marketed by private traders or by the Agricultural Development and Marketing Corporation (ADMARC), a parastatal body which also purchases and distributes farm inputs to smallholder farmers throughout the country. 23. Livestock raising is important in the smallholder subsector. Most cattle are raised by traditional grazing methods in the less densely populated central and northern regions and are considered by farmers as a source of wealth rather than an industry. With the present population of about 900,000 head of cattle, overstocking will become a problem unless the present offtake of about 10 percent is increased. Malawi is self-sufficienit in meat, but still imports most of its dairy requirements, even though recent progress in local production has been impressive. In the past, the Government has not given much emphasis to livestock and dairy development and as yet has not clearly defined its long-term development strategy for this subsector. To provide a basis for formulating a long-term policy, the Bank is financing, under a technical assistance loan (Ln. 2027-MAI, approved in June 1981), a study of the development prospects of the livestock, meat and dairy industries with emphasis on estimating production and marketing cost, price responsiveness of producers and consumers, and future demand and supply. The study is expected to be completed by the Ministry of Agriculture (MOA) by March 31, 1982, after which the Government will exchange views with the Bank Group on its findings and recommendations.  - 7 - 24. Out of Malawi's 9.3 million hectares of land, only around 3.3 million are considered arable--of which about 3.0 million are estimated to be under cultivation. Soils of this arable land arerelatively fertile and a fairly reliable rainfall permits cultivation of a wide variety of food and cash crops. About 82 percent of the land is held under customary tenure; about 2 percent, freehold; 16 percent, public land. The average small farm size is about 1.7 hectares, cultivated by a farm family of five members. Historically, economic activity has centered on the southern part of the country, which is mainly lowland, around the main commercial centers of Zomba and Blantyre. Since independence, however, the Government has concentrated on the central plateau and more recently the largely mountainous northern region, where levels of income and Government services are far lower. Although the least developed economically, the northern region is endowed with considerable, and to date not fully tapped, natural resources. Here only about 50 percent of the arable land is cultivated, whereas in the central and southern regions mounting population pressure has extended cultivation to marginal land. In the past, the northern region has suffered from relative inaccessibility and inadequate infrastracture for distribution of inputs, services and consumer goods. Consequently, the Government attaches high priority to developing this region in order to realize its full productive potential. 25. The Government's overall strategy has been to maintain self-sufficiency in food staples, expand agricultural exports and, at the same time, raise rural incomes. In the past, agricultural production has grown through expanding cultivated acreage. However, given the limited supply of arable land and the increasingly high cost of reclaming marginal lands, the main emphasis now is on raising both smallholder and estate productivity. Thus, land use planning, land conservation, and maintenance of soil fertility, through improved farming techniques, timely supply of input, and reforestation have become increasingly important. Rural Development 26. Improving smallholder productivity has been approached through two different methods. The first has concentrated on gradual improvement of extension, land husbandry, and farmer training throughout the country. The second through more capital-intensive, integrated rural development programs in the Lilongwe, Shire Valley, Karonga and the Central Lake Shore areas. All of these programs, except the European Development Fund assisted Lake Shore Rural Development Project, are IDA financed. They all provide for roads, water, health facilities, markets, land improvement, conservation, improved extension, training and research facilities, and farm credit. Despite these efforts, however, the increases in smallholder marketed production have been slow to materialize. Between 1971 and 1978, the value of smallholder, officially-marketed production grew only about 3 percent per annum, compared with 10 percent per annum in the estate sector. Better performance by the smallholder subsector has been hampered by: (a) low producer prices; (b) inadequate extension due to insufficient manpower; and (c) government limits on smallholders growing high-value tobacco and tea in order to maintain strict quality control over these high-cost commodities.  - 8 - The National Rural Development Program (NRDP) 27. In order to reach greater numbers of smallholders more quickly, the Government, at the Bank-s suggestion, has adopted the NRDP. Initiated in the mid-1970s, NRDP aims to improve and extend ongoing development programs throughout the rural areas of Malawi by improving the efficiency and scope of farm extension, input supply, marketing and credit facilities. Emphasis is initially on increasing production from existing cultivated areas, then on developing new areas. A phased approach has been adopted to bring each development area into full productive potential. 28. The core of the NRDP, for which the MOA is responsible, consists of the following services: (a) Agricultural extension, coverage of which now is based on ecological zones and on farm size related to population density. The objective is to reach a level of extension staff of about 1 to 500 farmers. Presently, this ratio varies widely from 1 to 200 farmers in some projects, to 1 to 2,400 farmers in non-project areas; (b) Training facilities, for farmers and their wives on three levels: farm institutes (of which there are three), divisional residential centers (currently 16), and day centers, which consist mainly of one room at 180 field offices. (c) Agricutural research, carried out by the Agricultural Research Department (ARD) of the MOA; the Faculty of Agriculture at the University of Malawi; the Tea Research Foundation; and the Tobacco Industry Authority. Besides research on all crops and livestock, ARD multiplies basic seed and, for some crops, produces breeder and certified seed. A private seed company produces certified maize, tobacco, beans, and groundnut seed. The Government is redirecting its research efforts to better support and guide ongoing operations, giving high priority to improving location-specific technical packages for smallholders. Bank Group Assistance in the Agricultural Sector 29. Bank assistance for the NRDP Phase III project would be the eleventh loan/credit to Malawi for rural development. They include three credits for the Lilongwe Land Development Programs (113, 244 and 550); three for Shire Valley Agricultural Development Projects (114, 363 and 823); two for the NRDP (857 and 992); and one credit (282) and a third window loan (1286) for the Karonga Rural Development Project. NRDP I is designed to complete the consolidation phase of the Lilongwe Land Development Program and begin development in other areas. NRDP II is a  - 9 -- wood energy project designed to establish a national network of nurseries for production of seedlings for sale to smallholders to strengthen forestry management, and to carry out studies of alternative sources of energy. While this project is proceeding on schedule, NRDP I is suffering difficulties from delays in the Government's providing sufficient supervisory and technical staff and recurrent budget funds. The Government is addressing these problems through the Structural Adjustment Loan and is in the process of recruiting additional staff. 30. The Karonga Rural Development Project, in the extreme north, began in August 1972, to develop irrigated and rainfed rice maize, cotton, and groundnuts through better extension, farmers credit, constructing roads, water supplies, health facilities and staff houses; plus rehabilitating freight transport services on Lake Malawi. Due to unexpected price escalation and cost overruns on the irrigation schemes, the project period was reduced from five to four years. 31. Despite the slow start and other problems, however, the Project Completion Report and the Project Performance Audit Report (Cr. 282-MAI, Report No. 2576, June 1979) judged the project in general successful and farmer participation better than expected. The project emphasized the "scheme" approach to crop development in which extension was concentrated on blocks of land in which individual holdings had been reorganized and consolidated. However, this approach proved to be time consuming and tended to bias project efforts toward more fertile land. There were substantial production increases, particularly for rainfed rice, but irrigation was less successful. 32. Phase II of the Karonga project commenced in September 1976. This phase, which included for the first time the Chitipa district, supported and expanded the activities financed under Phase I, focusing more on local needs, conditions, and new crops. Improvements were made to Chipoka, Lake Malawi terminal and livestock facilities, and financing staff housing, health facilities and market complexes. Initially there were cost overruns in this phase due mainly to insufficient financial controls, combined with steeply rising fuel costs. However, a monitoring and control system for vehicle use is now in place; and these expenses are now under control. 33. The impact of Phase II is difficult to assess as complete production data are not yet available. Nevertheless, the combined impact of the two phases has been considerable in terms of improved cultivation practices, additional farm output, better animal health and the infrastructure the area now enjoys. However, weaknesses also have become apparent; namely, poor planning, inadequate coordination among extension, veterinary and research staff; lack of success in developing appropriate technical input packages for specific areas, or finding suitable new high-value crops; and overgrazing and soil erosion. The present project will address these problems.  - 10 - Smallholder Productivity 34. The key to the Government's structural adjustment program, which the Bank is supporting, is to raise smallholder productivity. This the Government hopes to accomplish by extending and improving the NRDP and using prices to provide greater incentives to farmers. Over the next five years, investments will be concentrated on completing existing projects and on currently cultivated areas where immediate production responses are likely to be greatest. In addition, the Government expects to diversify its agricultural exports with different kinds of tobacco, groundnuts, and livestock products. To support these programs, total government outlays for agriculture will rise from 18 percent in the previous five-year public investment program to 22 percent in the period FY82-86. 35. As further incentive for expanding production, the Government increased producer prices for groundnuts in 1978, maize in 1980, and will raise the price for cotton to a level acceptable to the Bank (as stipulated in the Structural Adjustment Loan Agreement). Moreover, to set producer prices on a more systematic basis, the Government has adopted a methodology (worked out jointly with the Bank) to be used in its annual price reviews. Applying this methodology, Malawian authorities will review the prices of all major crops with the Bank Group by October 31, 1981 (in accordance with the Structural Adjustment Loan Agreement). Recurrent Expenditures 36. Agricul.ural projects, particularly in recent years, have suffered from ins'fftcient funding for recurrent expenditures. To help rectify this underfun1ing, the Government in FY82 will budget an additional MK 4.4 million for agricultural recurrent expenditure over that provided in FY81.1 Coupled with this increase, the Government is completing a study on NRDP's longer-ter.n budgetary implications. This study, which will be reviewed by the Association in October will provide the basis for improving the coverage and impact of the program. Malawi will nevertheless continue ) experience difficulties in meeting its recurrent cost requirements during the next several years. iSom. MK 2.8 million of this amount is being provided as a supplemeritary budgetary allocation (Schedule III, Structural Adjustment Loan Agreement).  - 11 - PART IV - THE PROJECT 37. The project was prepared by the Government with assistance from the World Bank Group. It was appraised in September/October 1980, and negotiations were held in Washington, D.C., from September 2-4, 1981. Mr. Godfrey Kalinga of the Ministry of Finance led the government delegation. A Staff Appraisal Report is being circulated separately. Annex III provides supplementary project data. Project Objectives and Description 38. The project, which would constitute the third phase of NRDP, would increase agricultural productivity and improve rural living standards in the Karonga and Chitipa districts. It draws on the experience gained from previous rural development projects in Malawi, particularly the two previous Karonga/Chitipa Rural Development Projects (KCRDPs). The project is expected to increase Karonga/Chitipa rice production by 2 percent; maize, 10 percent; groundnuts, 25 percent; and bean production, 22 percent. Specifically, the project would over a four-year period help: (a) strengthen district level extension, training and research programs; (b) construct 3 new dip tanks and improve 43 existing livestock dip tanks, upgrade livestock development centers, introduce a second pilot grazing scheme and construct slaughtering facilities; (c) introduce a smallholder pilot burley tobacco scheme as a basis for expanding it in Chitipa and other suitable areas; (d) expand smallholder credit staff and build marketing facil- ities; (e) establish forestry reserves in 7 locations and a Chitipa town fuelwood plantation to produce fuelwood for sale to the public; (f) provide essential social services (health and water supplies; (g) improve project administration and management; and (h) strengthen MOA,s data gathering and analysis capability.  - 12 - Project Area 39. The Karonga and Chitipa districts represent around 6 percent of Malawi's total land area and have a population of about 32,000 farm families. Their far northern location and topography make transportation costs high and communications difficult. In the two districts, about 80 percent of the population are in the plains area, which are the most productive agriculturally. In Karonga on about one-quarter of the land, maize, cotton, groundnut and some cassava are grown on the better drained soils and cattle grazed on the rest. The remaining three-quarters, largely dissected hilly land, is unsuitable for cultivation. In Chitipa, even less (about 17 percent) of the area is suitable for cultivation and of that only 25 percent is cropped. Unlike Karonga, Chitipa has room for increasing output by expanding the crop area. Maize is the major crop grown on over 80 percent of arable land, while beans, groundnuts and millets are secondary crops. Detailed Features Extension, Training and Research 40. The project would improve extension in Karonga and Chitipa by giving refresher courses to about 200 field assistants yearly on crop and livestock husbandry and training on preparation work plans, extension techniques and term management. Funds also are provided for an extension van, vehicles and staff housing. The extension staff: farmer ratio of 1 to 350 would be maintained while the quality of extension services would be improved. Financed by the project, consultants (four manmonths) would assist in the training program for extension staff. The farmers' training program would be continued (about 5,000 farmers would be trained in four years); a residential training center, and staff houses would be built and training personnel employed. Assurances were obtained that the Government would employ short-term training specialists, whose qualifications, experience, and terms and conditions of employment would be satisfactory to the Association (Section 3.02(b), draft Development Credit Agreement), and that the Government would, by June 30, 1982, prepare and furnish to the Association for comment its program for in-service training (Section 3.06(b), draft Development Credit Agreement). Research would concentrate on trials in various locations and the project would finance about five additional research staff, a small laboratory extension to existing research facilities, as well as equipment and vehicles. Livestock Development 41. To further expand activities already being implemented under previous phases, three new dip tanks would be constructed and 43 existing ones upgraded. Cattle feeder roads near the tanks would be fenced to avoid crop damage and five additional crushes would be constructed in the foot-and-mouth disease control area. The two livestock development centers  - 13 - at Karonga and Aleru would be improved and increased attention given to the use of agricultural by-products as livestock feed. A second grazing re- serve would be established on a pilot basis in Karonga district, as a holding area where cattle could be moved from the intensively cultivated plains during the growing season. Present unhygenic slaughter facilities would be improved in Karonga and Chitipa townships as well as in a number of villages. Burley Tobacco 42. Developing burley tobacco would help greatly to relieve Chitipa's reliance on maize as a cash crop. A pilot scheme, involving 50 farmers initially, to cultivate burley tobacco would be started in the district with project-financed grading and supply sheds and credit for purchasing inputs and materials to build curing barns. Staff experienced in burley tobacco cultivation would manage the scheme and a local committee would become responsible for the scheme. The Government would employ and assign not later than March 31, 1982, a senior technical assistant, with qualifications and experience acceptable to the Association, to assist in implementing the scheme (Section 3.02(d), draft Development Credit Agreement). Credit and Marketing 43. The project would continue supplying seasonal and medium-term credit to farmers for growing cotton, maize, rice, groundnuts, and burley tobacco, as well as purchasing fodder, seed, fencing, dairy cows, and oxen. The Government and ADMARC will finance a marketing shed, five input stores, a shed extension and staff housing needed to supplement existing .ADMARC facilities. The draft Development Credit Agreement stipulates that the Government would, not later than December 31, 1981, conclude financial arrangements, satisfactory to the Association, between the Government and AiDMARC (Section 4.02, draft Development Credit Agreement). Since demand for credit in the project may exceed funds available, specific assurance will be obtained that the Government would provide whatever additional amounts are required up to an amount of MK 125,000 (Section 4.03(b), draft Development Credit Agreement). Forest Reserves and Wood Plantation 44. To alleviate serious soil degradation and erosion from overgrazing and population encroaching on hillsides, the project would establish seven forest reserves throughout the Karonga-Chitipa area. While several of these reserves would provide complete protection, others would allow controlled cutting and grazing. A 300 ha fuelwood plantation would be established near Chitipa town to ensure an adequate supply of fuelwood and poles for the township. It has been agreed that the Government will take the necessary measures to obtain the appropriate written approvals for use of land for fuelwood plantation and forest reserves not later than September 30, 1982 (Section 3.05(b), draft Development Credit Agreement).  - 14 - Water and Health Services 45. About 30 boreholes would be sunk for the cattle dip tanks, pilot tobacco scheme, health center, and to supplement other water supply programs in the two districts. The Government would develop a plan, with the assistance of the Department of Lands Valuation and Water and the Karonga and Chitipa District Development Committees, for siting the boreholes and would furnish the plan to the Association for comment before June 30, 1982 (Section 3.07(b), draft Development Credit Agreement). To improve health services, the project would develop and test, on a pilot basis, approaches to primary health care, including ways to reduce recur- rent costs. Before December 31, 1982, the Government would prepare an area-specific health plan for comment by the Association (Section 3.06(a), draft Development Credit Agreement). Funding for a subcenter, two maternity units, equipment and a public health officer for three years also are included. The Government would employ the specialist with qualifi- cations, experience and terms and conditions of employment satisfactory to the Association by June 30, 1982, who would help draw up and implement the health plan (Section 3.02(c), draft Development Credit Agreement). The assistant chief medical officer in the Ministry of Health would be respon- sible overall for the health items in the project, assisted by the public health physician and district public health nurses assigned to Karonga and Chitipa. Project Management and Evaluation 46. The first two phases of the Karonga/Chitipa Development project suffered from weak management and an absence of forward planning. To redress these weakness, a project financed economist, to be recruited within the first 6 months of the project, would work with project manage- ment to establish an effective planning and monitoring system. In addition, the Government would, by April 30, 1982, hire a financial con- troller with experience, qualifications and conditions acceptable to the Association (Section 3.02(a), draft Development Credit Agreement). Besides improving the existing system of project accounting, budgeting and financial control, he would train a Malawian senior accountant. The project's monitoring and evaluation section, currently staffed by two survey teams, would continue to collect data on yields and carry out house- hold studies. It would be strengthened by adding a data processing officer and a data analyst. The reporting procedures would be streamlined and tailored to the management's needs. The MOA's Central Evaluation Unit (CEU), which provides technical backup and coordination to the monitoring and evaluation teams in the various projects, would also be strengthened by the provision of a microcomputer and overseas training of the data pro- cessing officer.  - 15 - Data Collection and Analysis 47. The proposed project also would continue funding (for an addi- tional year) a systems analyst (currently funded by NRDP I, in the National Statistics Office) and 12 months of consultant services for surveys. Although modest, this financing supports a vital activity essential to evaluating the entire NRDP. After completing a National Sample Survey of Agriculture, financed in part by the Association and in part by the UK, ca- pability for carrying out annual agricultural surveys will be continued jointly in the National Statistical Office and the MOA. Recurrent Expenditures 48. The new investments of Phase III are modest and will complement and expand the ongoing development effort by introducing staff training, emphasizing an integrated approach to farming systems, encouraging greater coordination among research, extension, and farmer training, as well as expanding staff to cover a wider area in the Chitipa District. Continuing development efforts by the existing project staff are therefore crucial to Phase III incremental investment proposals. To ensure that the recurrent budget is adequate to assume the cost, it was agreed during negotiations that the Government would increase its allocations to its revenue account by an additional MK 1.0 million in 1981/82 and maintain that level over the project period (Section 4.03(a), draft Development Credit Agreement). Project Costs and Financing 49. The project's cost, in June 1981 prices, is estimated at US$8.6 million (the project is exempt from taxes and duties) of which US$4.6 million, or 53 percent, are foreign exchange costs. The proposed IDA credit of US$7.3 million would finance 85 percent of total costs, including all foreign exchange and 69 percent (US$2.7 million equivalent) of local costs. The Government would finance the remaining 15 percent (US$1.3 million equivalent). Physical contingencies of 10 percent were added to the costs of civil works, vehicles and equipment, and those components, such as forest reserves and plantations, where the costs were mainly for establishment. Physical contingencies come to 6 percent of total base costs. Price contingencies for vehicles, equipment and other supplies are 9 percent of the items' foreign costs in 1981, 8.5 percent in 1982 and 7.5 percent thereafter. Price contingencies for civil works are 18 percent in 1981, 17 percent in 1982, 16 percent in 1983, and 15 percent thereafter, reflecting the rising cost of inputs as well as the pressure on the construction industry's capacity in Malawi.2 The project cost estimates include 100 consultant months of assistance (estimated to cost around US$623,000) including a 4 consultant months for staff in-service training, 36 months for a financial controller, 36 months for a public health specialist, and 24 consultant months for a systems analyst (12 months) and survey specialist (12 months). The average cost per consultant month (for salary, international travel, etc.) is estimated at US$6,272. These price contingencies are an average of foreign and local cost components.  - 16 - Procurement and Disbursement 50. Procurement of vehicles, machinery and equipment (US$0.6 million) for orders of US$100,000 and more would be subject to international com- petitive bidding according to Bank Group guidelines; orders would be grouped whenever possible. Orders which cannot be grouped in packages of US$100,000 and more, up to US$250,000 in aggregate, would be procured in accordance with local procedures which are acceptable to the Association. Civil works construction (US$2.3 million), which, due to their small sizes and dispersed locations, would be constructed after local competitive bidding or, if approved by IDA, force account. 51. Proceeds of the credit would be disbursed on the following basis: (a) 100 of foreign expenditures and 85 percent of local expenditures for civil works, except for office and grading shed for the pilot tobacco scheme; (b) 100 percent of foreign expenditures and 85 percent of local expenditures for vehicles, spare parts, equipment and other materials; (c) 100 percent of foreign expenditures and 85 percent of local expenditures for bulls, cows, and agricultural inputs and supplies; (d) 85 percent of local expenditures for all operating costs, excluding agricultural inputs and supplies, and excluding forestry, CEU, survey unit and pilot tobacco scheme expenditures; and (e) 100 percent of foreign expenditures and 85 percent of local expenditures incurred by the CEU, survey unit, operating costs for forestry reserves and Chitipa plantation, the grading shed, and office and operating costs for pilot tobacco scheme. Accounts and Audit 52. MOA would establish and monitor consolidated project accounts for all expenditures under this credit in a clearly identifiable manner. Project accounts would be maintained in project headquarters at Karonga, except for separate accounts of the CEU and survey unit that the principal accountant of MOA would maintain at headquarters. These accounts would be audited by the auditor general, or by independent auditors acceptable to the Association, not later than 6 months after the end of the fiscal year (Sections 4.01(a) and (b), draft Development Credit Agreement). The Government also would monitor progress of the project and, not later than 6 months after the closing date, would prepare and submit to the Association a fu'll report on the execution of the project (Section 3.04(d), draft Development Credit Agreement).  - 17 - Project Implementation 53. The existing NRDP management structure, under the overall direction of the MOA, would be responsible for the project, except for the health, water and forestry components. These would be overseen by the Ministries of Health; Lands, Valuation and Water; and Forestry and Natural Resources, respectively. The program manager would continue to report to the chief agricultural development officer at MOA headquarters. The program manager would be responsible for the operations and specialist senior staff at MOA and at the Ministry of Forestry and Natural Resources would give technical support. Whereas previously, the livestock, forestry and research sections reported directly to MOA headquarters, they have now been brought under the direct administrative supervision of the program manager, thereby facilitating closer coordination and integration of NRDP district-level activities. Coordination between extension, research, credit and land husbandry has also been strengthened by bringing these units under the jurisdiction of the senior crop development services officer. Another substantive change in the existing organizational structure is upgrading of the training unit to a section directly responsible to the program manager. These changes, together with strengthening project evaluation, planning and financial control (para. 46 would provide for improved administration and further develop program management's planning and implementation capability. 54. Community involvement would be enhanced by bringing the area action groups (headed by chiefs) and farmers' committees (elected by farmers) into the decisionmaking process concerning planning of extension services, farmers training, credit programs and in the siting of boreholes, dips, pilot grazing areas, etc. Benefits and Risks 55. The main objectives of the project are to integrate crop and livestock activities and to expand farmer coverage. In addition, forestry activities would improve conservation and supply forest products to the area. Significant economic and social impact is expected from improved infrastructure, increased crop, livestock and forestry production, and better access to government services. 56. The analysis which follows is based on the incremental costs and benefits of Phase III only. A separate analysis was done for all three phases combined and the resulting rate of return was 17 percent. About 1,200 farmers in Karonga and about 2,000 farmers in Chitipa would be affected directly by the third phase of the project. Production is expected to increase by 2 percent for rice, 10 percent for maize, 25 percent for groundnuts and 22 percent for bean production. Through adoption of improved crop husbandry, farm families would increase their net incomes over the life of the project: a typical rice farmer in Karonga, from MK 191 to MK 239; a typical maize farmer in the Chitipa district, from MK 178 to MK 228. Roughly 30 percent of the farming population (about 9,500 families) own cattle. Of these, about 40 percent would benefit from the new and improved dipping facilities and extension services. Better animal health would permit a higher offtake for beef and increased milk production. It is estimated that livestock owners with 10 head of cattle  - 18 - would realize an incremental income of about MK 44 by project year 4. Fuelwood and poles from the Chitipa plantation would replenish the existing supply of fuelwood and would substitute for other sources of imported energy such as coal or kerosene. The estimated economic rates of return for the project components with quantifiable benefits are 19 percent for crops (38 percent of total project costs); 13 percent for livestock (11 percent); 9 percent for forestry (7 percent); and 17 percent for these components combined (56 percent of the total costs). In addition, the project is expected to yield a number of non-quantifiable benefits. 57. A sensitivity analysis shows that in order for the economic rate of return to fall below 10 percent, benefits would have to decrease by about 18 percent or costs would have to increase by about 21 percent. (If, for example, benefits fell by 10 percent and costs rose by 10 percent, the economic rate of return would still hold at 10 percent). It is unlikely that costs would rise to this level; however, benefits could be affected by increases in transport costs which are not anticipated, unusually poor weather conditions or crop and/or cattle disease. Termite damage is a risk to the forestry plantation component. PART V - LEGAL INSTRUMENTS AND AUTHORITY 58. The draft Credit Agreement between the Republic of Malawi and the Association, and the Recommendation of the Committee provided for in Article V, Section l(d) of the Articles of Agreement of the Association are being distributed to the Executive Directors separately. 59. Special conditions of the project are listed in Section III of Annex III. 60. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 61. I recommend that the Executive Directors approve the proposed credit. A. W. Clausen President (by M. Qureshi) Washington, D.C. September 22, 1981  - 19 - ANNEX I Page 1 of 6 TABLE 3A MALAWI - SOCIAL INDICATORS DATA SHEET MALAWI REFERENCE GROUPS (WEIGHTED AVEEAGES LAND AREA (THOUSAND SQ. KM.) - MOST RECENT ESTIMATE)- TOTAL 118.5 MOST RECENT LOW INCOME MIDDLE INCOME AGRICULTURAL 41.4 1960 /b 1970 /b ESTIMATE /b AFRICA SOUTH OF SAHARA AFRICA SOUTH OF SAHARA GNP PER CAPITA (USS) 50.0 80.0 200.0 238.3 794.2 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) .. 49.7 69.9 70.5 707.5 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (THOUSANDS) 3419.0 4511.0 5817.0 URBAN POPULATION (PERCENT OF TOTAL) 4.4 6.4 9.2 17.5 27.7 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 11.4 STATIONARY POPULATION (MILLIONS) 36.0 YEAR STATIONARY POPULATION IS REACHED 2110 POPULATION DENSITY PER SQ. KM. 28.9 38.1 49.1 27.7 55.0 PER SQ. EM. AGRICULTURAL LAND 90.0 114.2 137.4 73.7 130.7 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 45.5 46.8 47.2 44.8 46.0 15-64 YRS, 52.1 50.8 49.3 52.4 51.2 65 YRS. AND ABOVE 2.4 2.4 3.5 2.9 2.8 POPULATION GROWTH RATE (PERCENT) TOTAL 2.4 2.8 2.8 2.6 2.8 URBAN 4.5 6.6 6.9 6.5 5.1 CRUDE BIRTH RATE (PER THOUSAND) 52.9 51.6 51.0 46.9 46.9 CRUDE DEATH RATE (PER THOUSAND) 26.8 22.0 18.5 19.3 15.8 GROSS REPRODUCTION RATE 3.2 3.2 3.4 3.1 3.2 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) USERS (PERCENT OF MARRIED WOMEN) .. .. FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 90.0 91.0 96.0 89.5 89.9 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 86.0 98.0 90.0 90.2 92.3 PROTEINS (GRAMS PER DAY) 55.0 67.0 59.0 52.7 52.8 OF WHICH ANIMAL AND PULSE 5.0 10.0 10.0 17.8 16.1 CHILD (AGES 1-4) MORTALITY RATE 41.0 31.3 25.4 27.3 20.2 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 37.2 42.5 46.9 45.8 50.8 INFANT MORTALITY RATE (PER THOUSAND) * 149.0 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. .. 33.0 23.9 27.4 URBAN .. .. 70.0 55.0 74.3 RURAL .. .. 29.0 18.5 12.6 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. .. .. 26.2 URBAN .. .. 15.0 63.5 RURAL .. .. .. 20.3 POPULATION PER PHYSICIAN 35250.0 38429.8 40678.3 31911.8 13844.1 POPULATION PER NURSING PERSON 12918.0 9051.7 2785.9 3674.9 2898.6 POPULATION PER HOSPITAL BED TOTAL 866.1 649.0 737.8 1238.8 1028.4 URBAN 115.0 155.6 .. 272.8 423.0 RURAL 1312.0 895.4 .. 1745.2 3543.2 ADMISSIONS PER HOSPITAL BED .. 36.1/c 39.0 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL .. .. URBAN .. 3.4/d RURAL .. .. 5.0 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL .. .. URBAN .. 1.9/d 1.7 RURAL .. .. ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. .. .. URBAN .. 16.0/d .. RURAL .. .. ..  20 - ANEX I Page 2 of 6 TABLE 3A MALAWI - SOCIAL INDICATORS DATA SHEET MALAWI REFERENCE GROUPS (WEIGHTED AVE AGES - MOST RECENT ESTIMATE)- MOST RECENT LOW INCOME MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b AFRICA SOUTH OF SAHARA AFRICA SOUTH OF SAHARA EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL .. 35.0 59.0 56.4 73.7 MALE .. 45.0 73.0 70.7 96.8 FEMALE *- 26.0 51.0 50.1 79.0 SECONDARY: TOTAL 1.0 2.0 4.0 10.0 16.2 MALE 1.0 3.0 5.0 13.6 25.3 FEMALE 0.3 1.0 2.0 6.6 14.8 VOCATIONAL ENROL. (X OF SECONDARY) .. 3.0 7.2 8.0 5.3 PUPIL-TEACHER RATIO PRIMARY 41.0 43.0 62.0 46.5 36.2 SECONDARY 14.0 16.0 20.0 25.5 23.6 ADULT LITERACY RATE (PERCENT) .. 22.1/e 25.0 25.5 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 1.8 2.2 1.9 2.9 32.3 RADIO RECEIVERS PER THOUSAND POPULATION 1.0 23.5 24.0 32.8 69.0 TV RECEIVERS PER THOUSAND POPULATION 0.7 * - * 1.9 8.0 NEWSPAPER (-DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION .. .. 3.2 2.8 20.2 CINEMA ANNUAL ATTENDANCE PER CAPITA 0.3 .. 0.9 1.2 0.7 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 1570.5 1980.8 2404.2 FEMALE (PERCENT) 38.7 38.1 37.8 34.1 36.7 AGRICULTURE (PERCENT) 92.0 89.0 86.0 80.0 56.6 INDUSTRY (PERCENT) 3.0 4.0 4.9 8.6 17.5 PARTICIPATION RATE (PERCENT) TOTAL 45.9 43.9 41.7 41.7 37.2 MALE 57.5 55.3 53.4 54.3 47.1 FEMALE 34.8 32.9 30.6 29.2 27.5 ECONOMIC DEPENDENCY RATIO 1.0 1.1 1.2 1.2 1.3 INCOIE DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS .. 32.6/f HIGHEST 20 PERCENT OF HOUSEHOLDS .. 50.6 .. LOWEST 20 PERCENT OF HOUSEHOLDS .. 10.47? . LOWEST 40 PERCENT OF HOUSEHOLDS .. 21.57f . POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 123.0 136.0 381.2 RURAL .. .. 99.0 84.5 156.2 ESTIMATED RELATIVE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. .. 65.0 99.1 334.3 RURAL .. .. 52.0 61.2 137.6 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 25.0 39.7 RURAL .. .. 85.0 68.8 Not available Not applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicaLors depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1976 and 1979. /c 1965; /d 1967; /e 1966; /f 1967-68. May. 1981  - 21 - ANNEX I Page 3 oE 6 DEFINITIONS OF SOCIAL INDICATORS St-op A11 thgh the iot urtoofeouee enrlyJudgd thaose auh.ro"I Iv Idrrla. I eh.,Id elet be -co that they sy 0t be intr thebs --I o curh oreoofe ttd,ldioete tred.. sod ch--a-erte -ertai aJ., ditffer-eoj bet-e toutte.. Tnerot -oocogroup ore llhe aoconr gro f the subject cou-try and (2) a country group with somewat highreaaeicm he h ont ru of the oho couroryleotayr fr ..poa 1yS-orplue1 OIl uotr' opwee"Middle I-on forth Afrti- sod Kiddi tact' tethnC becus of. ..teyngsr- stctotulouOl atf too Lao. lahe ref--ro grop dat. th. a-rae eve _popultion weighted -fthbmtil meat for ...h tdi-tato end show only hbwg najorioy of the tonr ow lo gropbe data f-t that i.dlo-ter. Sate .the --vra. of -outrloweeew the itdioet-v depends ow theovllhility of d.t. un iotooiTfo -nti-o mutt be worI wd iw relwtia9 -esegew of aweldi-eto no onther Th...sv-rageers toly u..ful In tep-ring the e-lua of on oio-or or a tine -moo the oootry end refov-e groupe. T.t.l - Tot.l eurfec iermren ud raudOlo a a urhen. ed rura) dtide b ther -apei- nebhr of hoepite1 had AfrIc_uAto.. - tetlscoeo ariutua eeeuod aporrl 00p'reansoy availble fin Pbhio end prirate genra erd pe-ieliwed heepita1 ead - Itc -cpe, P.et_rt ahted kItchen e-de- -r to 1I. fa1low; 1979de-s. hwbtlitetiotatea fleil 00 etbliebhett permanetlyewfd by tI-ee e- phy Icia.. E toblihbneots P-ovdlvg prinoipelly ono GNP PER CAPITA S GN) lP Per r-pite estiwotr at --ten -krht pr -1, e- diall cur are ct icludad. uroI h.epitols, haoe.e-, include health ,,iated by some 1 ovrwion method . World Owol Anise (1977-79 basis); 1960. awd editol t-ter not prm nty tf fad by a phyaliew. (hat bya I971 od 1979 dut. ndicel ... isn t, nurs, idwife, etc.) ehith offer in-Petiart w-oene- darit en. d proide aILiited runie f tedi..l fciiie. ,o ata-i 05_110 C0OSUrOPTI.CNM yr A 7TA - Aenuo oo.eomptiow ofoomeo aorgy I(a fteal p-rposae urba hoepitel laloaOf. ptnipl gnra opitele. cod oin prt-ol.u, vut-r1 gee tod hydro-, -ul-a n eohra else at-rra hospita.1. lao- o rurlhsital ed .edie and magt.-ity tor~lty) to kilog-oa of 0001 euieotPO -0710; 1960, 19, anS99ooes p..ialteod hoapielel err ooluded ..Iy uwdee total. dtru. ~~~~Admlsuep0ftega o ttlnme f odmisi.e. to or dshne fro hospittel divided by the ete ofl bed. P'OPULATION MD1 VITAL STATMSICS TottP~uiOlp, fidYru (houuo) A.u of July 1; 1960, 1970, wod 1979 00OU1ING iota. ~~~~~~~~~~~~~Avers.. Si.. of Househod (Sreso-e oo housthd) - totol. urhn. and tonal- ljtho Popoutiot(pororo oftorl ~- Rtie of u-bat to total p.polstieo; A ho..ohold -oni.tMf ropo indvdul Who share liviog qeet... difforno dfluitooa o-urhe er-c a ffc op-rbilityafdate *ad thi anmal.Ahader or lodgerma or may not he toluded 1s aoongto...ories; 1960, 1970 uod 19709uw the h.o.ahold for ntliatla prpn. Poy...tI on Projo-t-nu Avlrweanum..beIo eew o os-total.1 urb!T.:!wd ruralI - A..raga a Poro...... On Yro 7000 - C..r..t poPulatio p-eJoctioor wr base.d ow 1960 he fpasw prromi l ura,an ualeopedanlate totulpopuatio by ge ad .o and ihe neolr n eriiyrn d.olli.g., r-p-tivaly. freelirge eatiuds toe-p.rm -tm trutm.... a.d frjerio arnerrefem oraIy aror coprise of three leos ee- norpe prs Oct I100 aopere,-yc<o lteein-OhoettO0 e apisieteAos to .l-ttoio (prer..rt of dwelliowsl - tonl.aran .ad rena - le_l-. otOwl - Iref otoaty ilhl,i.ig at 77.5 year. Th. Pra Convetiona deullingo oteh eleetitgr 1 ivI .amquatr epromtas. entree forretility rate also have thro 1eel- anuin deoliwo to at tetu1, urbee. end rura dellings r-ePantivoly. fort-tyu u--adiog to iroi lov.. ..d Vatfamily plaoiagprfoenn lath.cvty1 to eted oeo hee in cobinations uf mertitty EDUCATION Sood fertility trenda fo- prejeovI.. purp.ew. AdJusted Enrollm-t Ratins StaOtotaro yco1ucIoo~ln t oIonr oylieaia sn growth sltrmry sho - oa. aoad fosal - Gr... rtotl, sale amd f le the birth ruto Ia oqu,tic the d-ath retr. awdels the g etutorel we oula falage' t h pegeary iw-a as percetages of reapoetfe noloOtonatut ~i. baInohieo ony fafe f-otility rates deolino to priwary schuel-ags po aio..; normally -inldes rhildren aged 6-11 tho ro.plat o loa ... uttit neItj Pro detie o-ta, 0h- seth genertien year bat edjsted f or digffneot lengths of penme edoratiu; fa ofoenryae oef natl. rThe s.taijey papulotto sieen countries with uwivreel indura.tion enoletmy eaoed 105 panning --imted or the bunie of the peojoted carcieristges of theipopulatio sie_ some popile ss Is-e or above lbs fflota1 mehoi aS.. ton the your lO. and t0, rate of d-cline of tactilIty rats n. .... - Ooed.ry school - total,' malesad famala - Cmputed as abov;aeedr nerO level. o~~~~~~~dutatios r.nroat lase foryears ef eppo-vd pegar laraigm otsttonary.. roputol- Ia root.hud - Th. Y.ar uber trai..ary pepultien pe-id.. ga...rel. --eti-1a, o tarh.. tas imie iwennutla f. orpspik. sT :Lee s re ..couhad, usully of 10 to 17 year of ae oaarepaed=msours c geesealy ftc t. ka. Hq- Ol-erppktl posur ilumt-e 1100 hs.tte-) ef Ve...tiol Ia...lmowt lonr... otlf ...... ere) Va.. ttaeal ttale tot.1 ura- 96,1970 and 1979 dote. le. teoboinel. iwdustrFl rehrprgaselbaprt msm fore- ha.1 _critltor.. land - Cemypltd as bove for arcltoilend eatlyore depertmett of seeeedary instintntam.. voly; 1060., 1970 and 1976 dare. Puell;j-tesbo eal -pIr,wd sc u,ar - Ttoal sEed..g .sre1lld is Aouatp 0 Struture (.r ... t) - Childew 10-14 years), arking-ags (II- priaY adoenaY le_l divie by b.1r of t-.oboo is the ho yeoro) so eld -i 61 yar on-d ove) as potoonoan of sid-Y-ar popu- eanepeda IIIl., lot ion; 1960. 197 0, and 197Y9 dote. Adul171t l=rse rts tar-ett - Litrat. adate (able te read sa write) foulilo oth Hair l-ro...t) -otutl - Ae-e gr-I ooth r.tws of total mid- asa percetaga of total edwt pupulagIn gad 19 yeats en eso yorpoueiot ar15-6.160-71 end 197-79 P.p.l.tien Grouh Ratn . roo - u n- A.nua growth rates of urban pop- CoaNttSfff 10 loIons f-o 1950-60, 1960-70,. ad 1970-79. pe Csge tar (nor theusd.. oeio - Peomr s npiamnr Crd Ith Rate _(par Othsejed) - Aen-I lIve births par thued of mid-yea-te satio less the..ih pessi wlds smbolewe. be-.a.a sed oylvo;10,1970, end 1979 done. slitry v.hi,les. Crude Dro ov rtheoseod) - Aowo Id.eth. per thounnds of sid-y...ndaResvrefo thouadnowoin - All types wf raimsfar radio pouaIon: 1960, 1970, and 1979 data. broadeasne to gemar- wii e thecend of peplatiom; a..ladmeon Orose R Oorduorti.nHoi t - i- vrgeubar of daught-rs una ill beer in liossed reniv-ts inomt 4s and Yw pear wham regi*tratien of radio rnoma -p-rd-uoiv period ifsha.np-eis- p..on... -retft ofr.. eat was In sff et; date for retes t y ...s say non ho oopaalssi 001lity races; us...lly fiv-y-a u--rgos .ndiag In 1960, 1970, and 1979. mast nowtela sho blso llaanewg.) Pnnily PlnnngAoeeor,Annual (ie-s-ds) - A-ntl numberf a...... rI TVtniaraaath"ednouele - TV ....iLns for broadn..st to of hlreb_- t-nOu d-vi-o under suspios of nwtiaua1 famly pl oenS poogosm gSn...ra publia p., thou... d popoaties; ueladss usltosssd TV rnei-srs really Pleeofnw-llese (roroent of marrie women) - Paromenag of marroed in oufI tise andi is yadri whw. rsgih.. etiui of