Morocco - Second Small-scale Industry Project

Document of CO LE py The World Bank FOR OFFICIAL USE ONLY Report No. P-3097-MOR REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED SECOND SMALL SCALE INDUSTRY LOAN TO THE KINGDOM OF MOROCCO June 22, 1981 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.  KINGDOM OF MOROCCO CURRENCY EQUIVALENT US$1.00 = DH5.00 FISCAL YEAR January 1 - December 31 GLOSSARY OF ABBREVIATIONS BNDE Banque Nationale pour le Developpement Economique CCG Caisse Centrale de Garantie CMPE Centre Marocain de Promotion des Exportations EEC European Economic Community EIB European Investment Bank ERR Economic Rate of Return ITC International Trade Center ODI Office pour le Developpement Industriel SSI Small Scale Industry TAU Technical Assistance Unit  FOR OFFICIAL USE ONLY KINDGOM OF MOROCCO SECOND SMALL SCALE INDUSTRY PROJECT Loan and Project Summary Borrower; The Kingdom of Morocco. Beneficiaries: Banque Nationale pour le D6veloppement Economique (BNDE) and commercial banks in Morocco. Amount: US$70 million equivalent. Terms: Fixed repayment over 15 years, including four years of grace, at an interest rate of 9.6 percent per annum. Relending Terms: The proceeds of the loan will be onlent by the Government to BNDE and other commercial banks at 8 percent interest. The latter will in turn onlend to small scale industries (SSI's) at an effective rate of 10 percent. Subloans will have a maximum repayment period of 12 years including 3 years of grace. Project The project consists of a line of credit to BNDE and Description: commercial banks for relending to small scale industries (SSls); and of related technical assistance and studies. The loan will create industrial employment at costs substantially below those in industry in general, provide resources to small entrepreneurs who would otherwise face difficulty in securing sufficient financing, provide technical assistance to potential and existing SSIs, and develop new small enterprises or expand existing ones to complement larger industries. The loan is expected to cover some 600 firms, and create about 15,000 jobs, at an average cost of about $9,500 per job, or about one-fourth of the average cost per job in manufacturing industry in general. The loan will also help finance 96 man-months of technical assistance to SSI's through a specialized unit, at an estimated $8,600 per man-month, including subsistance and international travel. Finally, provision is made for 18 man-months of consultants' time at $10,000 per man-month (including subsistence and international travel), for studies to review the existing policy and incentive systems relating to SSIs and to make recommendations for changes to foster efficient SSI development. 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.  Estimated Disbursements: $ Million Bank FY 1982 1983 1984 1985 1986 Annual: 1,330 12,880 26,950 21,280 7,560 Cumulative: 1,330 14,210 41,160 62,440 70,000 Appraisal Report: Report No. 3502-MOR, dated June 10, 1981  REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE IBRD TO THE EXECUTIVE DIRECTORS ON A PROPOSED SECOND SMALL SCALE INDUSTRY LOAN TO THE KINGDOM OF MOROCCO 1. I submit the following report and recommendation on a proposed second loan to the Kingdom of Morocco for the equivalent of US$70.0 million to finance small-scale industry (SSI) development. The loan would have a term of 15 years, including 4 years of grace, with interest at 9.6 percent per annum. Most of the proceeds of the loan would be relent to project beneficiaries through financial intermediaires for up to 12 years, including 3 years of grace, with interest at prevailing rates for industry in Morocco. The loan will also finance the foreign exchange costs of technical assistance provided by the Government to small-scale industries, and of studies relating to the structure of incentives for SSIs. PART I - THE ECONOMY 1/ 2. A basic economic mission visited Morocco in November 1978, and updating missions in September and December 1979 and in May 1980. A report entitled "Morocco: Basic Economic Report" (3289-MOR) was distributed to the Executive Directors in December 1980. Country and Economic Data Sheets are attached as Annex I. Introduction 3. Compared with many developing countries, Morocco is well endowed with natural resources. It has a considerable agricultural potential both in irrigated and rainfed areas. The Atlantic and the Mediterranean coastlines offer considerable fish resources. Morocco also has the world's largest and most easily recoverable phosphate reserves, which makes the phosphate sector a key export sector. Other minerals such as iron ore, manganese, lead and zinc are also exported, but in much smaller amounts. Coal and hydropower plants satisfy only a small part of the country's energy requirements, which are essentially met with imported oil. Morocco has however uranium and oil shale resources which it plans to exploit. In addition, Morocco's proximity to Europe has favored trade, tourism and labor migration with the EEC countries. 4. During the first 15 years after independence (1956), a conservative approach to economic policy predominated in Morocco. GDP increased at an average rate of 4% a year in the 1960s. Growth accelerated somewhat under the 1968-72 development plan as the economy derived substantial momentum from 1/ This part is an updated version of Part I of President's Report No. P3061-MOR of May 6, 1981 on a proposed loan for a Third Water Supply Project.  -2- exports. However, a relatively weak savings effort and a small externally financed resource gap resulted in only a slow rise in the share of resources allocated to investment. Morocco thus entered the 1970s with no major financial imbalances, but a relatively limited growth capacity. Although some industrialization had taken place, over half of the labor force was employed in the relatively inefficient traditional agricultural sector, and primary products accounted for close to 90% of merchandise exports, with phosphates representing about a quarter of the total. Economic Performance in the 1970s 5. During the 1970s, economic policy became more ambitious. The 1973-77 Development Plan aimed at an acceleration of economic growth, as well as an improvement in income distribution. To accomplish this, the original plan strategy included two key elements: an intensified savings effort and the development of exports. However, in 1974, with the sudden jump in phosphate prices, phosphate export earnings more than quadrupled. As a result of this windfall, the value of merchandise exports doubled and budgetary receipts rose by 70% between 1973 and 1974. Although the petroleum import bill also quadrupled in 1974, the current account of the balance of payments remained in surplus. The plan's concern for exports and savings lost some of its urgency, and the Government launched a massive public investment program which brought about a sharp acceleration in the rate of growth of the economy and a considerable increase in demand for imported goods and services, whose share in GDP doubled from 19% in 1972 to 39% in 1977. 6. The phosphate boom, however, was shortlived; as early as mid-1975, phosphate exports started falling in both volume and value, and prices continued to decline until 1980. Markets for other exports as well as for tourism and labor migration were also negatively affected by the world recession and restrictions imposed by the EEC. Agricultural production and exports entered a period of prolonged stagnation, and Morocco turned from a net exporter to a net importer of foodstuffs. As a result of all these factors, the growth of exports of goods and nonfactor services, which in constant prices had exceeded 8% a year in 1968-72, was only 1% a year in 1973-77. 7. Stimulated by the high investment level, a high GDP growth rate of 7.3% a year was achieved during the 1973-77 plan period. This growth was led by the expansion of the construction and service sectors. The pattern of investment, however, favored economic and social infrastructure more than the productive sectors. In addition, public investments in industry, agriculture and transport tended to be capital intensive and to emphasize import substitution. 8. Accelerated investment and growing public expenditures created strong pressures on both the balance of payments and the Government budget. While investment jumped from about 15% of GDP in the early 1970s to 32% in 1977, gross domestic savings rose briefly from 13% of GDP in 1972 to 21% of GDP in 1974 thanks to phosphate receipts, but fell back to 10-11% in 1976-77. The large resource gap which emerged as early as 1975 rose to an unsustainable 20%  -3- of GDP in 1977 (in current prices). To help finance the gaps, Morocco borrowed heavily from the international capital market, which led to rapid increases in external debt and the debt service burden. By the end of 1977, external debt outstanding was close to 40% of GDP. The debt service ratio rose from 5.6% of exports of goods and services in 1975 to 10.7% in 1977, and 18.5% in 1978. 9. The Government's overall budget position also deteriorated considerably during the period 1973-77. While budgetary revenues increased rapidly as a result of the windfall phosphate profits in 1974 and 1975 and of the growth of import duties and taxes in following years (reaching 23% of GDP in 1977), the growth of expenditure far exceeded that of revenues. Total budgetary outlays rose from 20% of GDP in 1972 to nearly 42% in 1977, in response to a number of pressures. These included not only the large scale public investment launched under the plan, but also the rapid increase in defense spending in response to growing tensions in the Western Sahara, and the acceleration of current expenditure for social programs (particularly education). As a result, the Government's overall budget deficit increased sharply, reaching peaks of 17 and 18% of GDP in 1976 and 1977. The expansionary monetary and fiscal policies pursued during the period led to some acceleration of domestic inflation, but excess demand was largely allowed to spill over into the external sector. Recent Developments 10. In order to redress the rapidly deteriorating financial situation, the Moroccan Government in 1978 adopted a three-year stabilization program, characterized by a substantial retrenchment of investment and import levels. In 1978, the first year of the adjustment, public investment was cut back by nearly half in real terms and the growth of current budgetary expenditure held down to about 13% (or less than 3% in real terms). These measures of fiscal restraint were combined with tight credit policies and stringent import controls. As a result, the overall budget deficit declined to about 12% of GDP and the external payments situation improved in 1978. Since then, however, the stabilization program encountered a number of obstacles, including poor harvests, petroleum price increases and the rise in interest on the commercial debt. In addition, internal pressures led to some relaxation of the highly restrictive fiscal policy adopted in 1978. Although the economy continued to make slow progress toward equilibrium, by 1980 both fiscal and external imbalances were still substantial. The resource gap (in current prices) remained at about 10% of GDP and the ratio of the overall budget deficit to GDP at about 11%. 11. The reduction in the Government deficit during the 1978-80 period was achieved chiefly through cutbacks in the level of budgetary investments, which dropped from 22% of GDP in 1977 to 12% in 1980. The growth of current expenditure proved difficult to restrain because of the continuing need to maintain defense and social expenditures, the growing interest payments on the public debt and the rising cost of consumption subsidies. The latter tripled in 1979-80 reaching 2% of GDP, as price increases for subsidized staple food and petroleum products could not catch up with the rise in import costs for these products. Reflecting these pressures, the growth of current  -4- expenditure accelerated to 16% of GDP in 1979 and 22% in 1980. Substantial increases in domestic prices of food and petroleum products in late 1980 and early 1981 should now make it possible to contain consumption subsidies in 1981. With the help of economies in other areas, the Government's plan is to hold the growth of current outlays in 1981 to 11%, above the 1980 level. 12. In the external sector, non-oil imports were reduced substantially and remained below the 1977 level in nominal terms due to a sharp reduction in capital goods imports (by about two-thirds in real terms between 1977 and 1980). Oil imports on the other hand increased 2.5 times in value due to price increases. Export earnings improved in 1979 and 1980 and received a significant boost from the recovery of phosphate prices in 1980. Thus, despite a large increase in the petroleum import bill (from less than $400 million in 1977 to $1 billion in 1980) and a rise in external debt interest payments by about $350 million between 1977 and 1980, the current account deficit was reduced from $1.8 billion, or 18% of GDP, in 1977 to about $1.4 billion, or 8% of GDP, in 1980. The growth of external borrowing slowed considerably during the period. However, the absolute level of gross external capital requirements rose because of growing amortization payments on medium-term commercial credits contracted earlier and the rise in the interest rate on these credits in 1980 (paragraph 21). 13. The budgetary and balance-of-payments constraints had a serious impact on the levels of investment and economic activity in 1978-80. Annual GDP growth dropped to about 3% in both 1978 and 1979. In 1980, GDP growth is estimated to have risen to about 6%, largely because of favorable weather, increased exports and some recovery of investment in the private sector. The adverse impact of the stabilization program on employment has probably been substantial in contrast with the rapid rate of employment creation during 1973-77. On the whole, the demand management policies followed since 1978 have had a high cost in terms of growth and employment and appear to have been only partly successfui in their short-term stabilization objectives. These results brought out the urgent need to address adequately the long-term structural weaknesses which are at the root of the continuing financial imbalances in the Moroccan economy, and which must be corrected if an acceptable rate of economic growth is to be achieved over the medium term without unsustainable external deficits. Medium Term Prospects 14. Projectionsl- of the likely outcome of the continuation of past policies without concerted effort to implement major structural reforms suggest that Morocco would be faced with a prolonged period of slow growth, rising unemployment and continued large external imbalances which would keep the country in considerable dependence on external borrowing and could jeopardize its creditworthiness. To forestall such a deterioration, the Government adopted a strategy in the development plan for 1981-85 which aims at narrowing the external resource gap while accelerating growth and spreading 1/ For details on these Bank projections, see Morocco - Basic Economic Report, December 30, 1980 (No. 3289-MOR), Chapter III.  -5 - the benefits of growth more widely. The main objectives are to achieve a significant increase in domestic savings and exports, a reduction in the elasticity of imports with respect to GDP, and a rise in productivity and the employment rate. The Plan's projections show that, if achieved, such changes would permit a gradual acceleration of annual GDP growth to 6.5% p.a., somewhat higher than Bank projections, in 1981-85, accompanied by a reduction of the resource gap to about 7% in 1985. 15. The containment of imports would result in part from the substitution of imports of food products (cereals, sugar, vegetable oil, meat and dairy products) to be brought about by an acceleration of the rate of growth of agricultural production. This will require a wide range of institutional reforms in addition to a review of prices of certain inputs and outputs, and a greater allocation of resources to rainfed areas and to projects with high rates of return. The Government also intends to follow a determined policy in 1981-85 in the area of energy conservation, including in particular maintaining domestic energy prices at high levels, and making the necessary investment allocations to increase energy production from local sources. 16. An essential role in the achievement of the Plan's objectives will have to be played by export promotion aimed at exploiting Morocco's comparative advantage as regards phosphates and phosphate derivatives as well as the current favorable export prospects for manufactured goods, agricultural products and tourism. Exports of goods and nonfactor services are expected to rise at 8.5% p.a. in real terms over 1981-85. While feasible, such a growth rate would require implementation of the supporting investments and incentives policies. 17. Narrowing the resource gap while maintaining at the same time high investment levels would require an increase in domestic savings as well as rationalization of the pattern and content of investment. A vigorous recovery in domestic savings, which would rise from 11.5% of GDP in 1980 to 16% by 1985, would make it possible to narrow gradually the resource gap from about 10% in 1980 to 5% of GDP by 1985. Such a rise in the domestic savings rate would exceed the performance in 1973-77 when savings averaged 14% of GDP. It would demand intensive efforts to increase public savings (through an increase in budgetary savings and an improvement in the performance of public enterprises) and to stimulate private savings (through a revision of interest rates and improvements in financial intermediation). 18. Given the feasible level of investment, the future rate of growth of the economy will depend to a large extent on the sectoral allocation and the efficiency of investment as well as institutional reforms. Under the Plan, the Government will start fewer large capital-intensive projects and pay particular attention to the allocation of investments to priority subsectors. Priority is given to projects that are export oriented, less capital intensive and which use a greater proportion of domestic resources. In addition, particular attention will be paid by the Government to manpower planning and to the employment effect of investments in order to ensure that unemployment does not rise.  -6- Social Development 19. Comparatively slow economic growth and employment creation up to the early 1970s were accompanied by widening income disparities. The limited data available indicate that in the 1970s, while disparities continued to grow, household incomes increased in both urban and rural areas, and the lower income groups shared in the real increase in incomes. In addition, infant mortality has declined and life expectancy has increased, both significantly. More recently, partly in response to the demands of locally elected assemblies, the Government has shown more awareness of social problems and greater interest in the issue of basic needs. Social expenditures have been at a high level in recent years, accounting for more than half current outlays. However, social indicators still appear to be at low levels in Morocco. The limited effectiveness of past social policies in reaching the lower income groups, especially in rural areas, is increasingly recognized as a major issue, and the new strategy of the 1981-85 Development Plan emphasizes rural development in rainfed areas, where most of the poorest households in Morocco currently live, and improved mechanisms to deliver services to meet basic needs at an affordable cost, especially in rural areas. An effort is also being made to increase the involvement of local communities in providing basic needs, particularly for sites and services for low cost housing, water supply, sewerage and electrification. Although rapid results cannot be expected in any of these areas, implementation of these policies would help meet the needs of low-income groups, while holding down the budgetary cost of social programs. External Debt and Debt Service 20. Morocco sharply increased external borrowings after 1974. Nearly all of the increase came from Arab and commercial sources. Morocco also drew on the IMF automatic credit facilities in early 1976, and obtained about $70 million in IMF compensatory financing in August 1978. Agreement was reached with the IMF in 1980 for Morocco to draw on the Extended Fund Facility (EFF); the agreement provided for the use of IMF resources in the amount of SDR 810 million over the 1980-83 period, an amount subsequently increased to SDR 956 million ($1.2 billion). 21. From the low levels of 1974-75, Morocco's external debt rose rapidly to $7.2 billion (disbursed only) by December 1980. Gross inflow of medium and long term capital reached $1.55 billion in 1980. Debt service amounted to $800 million in 1979 and $1.2 billion in 1980 (22% and about 28%, respectively, of total exports of goods and services). The debt service rose considerably in 1980 due mainly to the steep rise in interest on commercial credits. As a result of recent and projected borrowings, debt service may be expected to average $1.5 billion annually in the early 1980s. The debt service ratio may drop to about 25% or less by 1985, depending on the success of the Plan's export drive, the containment of imports and the future developments in the interest rates on commercial credits. Because of the growing burden of debt service, external borrowing has become more restrictive and selective since 1978. If debt service is to stay manageable, Morocco will have to continue  -7- this policy over the next few years. Limits on commercial borrowing have been agreed within the framework of the Extended Facility arrangement with the IMF, and efforts sbould be continued to seek loans on softer terms. 22. Loan commitments from multilateral and bilateral official sources to Morocco rose from $205 million in 1975 to $1376 million in 1978. Since then, they have averaged $700-800 million a year (excluding grants). Major sources of aid were France, Saudi Arabia, the UAE, the U.S., Germany and the Bank Group. At the end of 1979, the Bank Group's share in Morocco's outstanding and disbursed external public debt was 8.4 percent. The sbare of the Bank Group in debt service was 21 percent in 1976 and declined to 15 percent in 1977, and 8 percent in 1979. By 1985 the Bank Group's shares in debt outstanding and in debt service are projected at about 10 percent and 11 percent respectively. PART II - BANK GROUP OPERATIONS IN MOROCCO 23. Bank and IDA lending to Morocco has supported 50 projects, financing a total of $1,694.9 million (net of cancellations), of which $1,189 million has been lent since the beginning of FY1975. IDA credits, totalling $50 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 $29.1 million ($17.1 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, 1981, and notes on the execution of ongoing IBRD/IDA projects. In some cases delays in project implementation have been caused by management problems and budgetary constraints; however, overall performance in project execution has been improving and is satisfactory. Total disbursements as of December 31, 1980, amounted to 63 percent of original appraisal forecasts, and 71 percent of revised forecasts. 24. Past Bank Group lending has been concentrated in the agricultural and industrial sectors, which have accounted for 30 and 21 percent respectively of total commitments; the balance is represented by utilities (18 percent), tourism (10 percent), education (9 percent), roads (6 percent), energy (3 percent) and urban development (3 percent). While limited as regards the transfer of resources to Morocco (Bank Group gross disbursements amounted to 2.2 percent of total fixed investment during the 1973-77 Plan period), the main objectives of Bank lending in the early years of Bank operations in Morocco 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. 25. While these objectives remain, over the last few years Bank lending has increasingly focussed on supporting a number of policy objectives: to promote exports and other foreign-exchange earning activities; to reduce imports, particularly of food and energy; to lower unit costs for the delivery of basic services, widen their distribution among regions and increase access by lower-income groups; and to increase employment and improve income distribution.  -8- 26. Since FY1975, lending in agriculture has emphasized improvement in the productivity of rainfed agriculture and livestock, which employ over 80 percent of the rural population, primarily small farmers. The Fes-Karia-Tissa Agriculture Project, approved in June 1978, directly addresses these objectives in the favorable cereal producing zone. The Loukkos project, approved in May 1980, extends support of these objectives to a less favorably endowed region and finances investments for agricultural development, erosion control, forestry and livestock. It should have a significant poverty impact and address major issues in developing Morocco's relatively densely populated but poorly endowed mountainous regions. Continued Bank support of rainfed agriculture is expected to be provided through an extensive livestock project in central Morocco and an integrated rural development project in the Khemisset province, both under preparation. A fourth line of credit to Caisse Nationale de Credit Agricole (CNCA) has helped provide credit to small and medium farmers, and a fifth project is under preparation. Increased export earnings are expected to result from a Bank-supported project for fruit and vegetable marketing and production, as well as from a project currently under preparation to improve the efficiency of the coastal fishing industry. 27. Increased foreign exchange earnings or savings and, more recently, job creation, have been the key objectives of Bank projects in industry and tourism. A fourth line of credit to Credit Immobilier et Hotelier (CIH) for tourism projects was recently approved by the Executive Directors, in a sector which has contributed a substantial share of Morocco's foreign exchange earnings and provided significant employment. A loan to the Banque Nationale pour le Developpement Economique (BNDE), which is being presented to the Board concurrently, will incorporate a pilot component for export-oriented industries. A project to increase the incomes of artisanal and small-scale miners in southeastern Morocco, a region largely bypassed by previous development efforts, is also scheduled to be presented to the Board shortly. 28. Projects to improve basic infrastructure and services have concentrated on improving the efficiency of existing investments and extending services to rural and low-income urban groups, which was the principal objective of the Third Water Supply Project recently presented to the Executive Directors. This project will also provide access to safe water in small towns and semi-rural areas, as well as expand a pilot component initiated under the second project to provide credit for house connections to low income urban families. A second urban development project was recently approved by the Board, which would continue to support the Government's efforts to provide shelter, basic services and employment to low-income urban families. A third highway project, approved in FY1980, supported the Government's road maintenance efforts and a fourth project now being prepared would continue support for maintenance and improve rural access roads. A loan for village electrification approved in FY1979 is helping bring power to over a hundred small towns and villages. In addition, a project to strengthen the capacity of local communities to prepare and implement their own development programs and provide financing for such programs through the Communal Infrastructure Fund (FEC) is being prepared. It will not only help to widen the distribution of infrastructure and services but will also support the Government's policy of encouraging administrative decentralization and local participation.  -9- 29. Education continues to need attention to ensure Morocco's manpower development. While recent projects have focussed on secondary level technical education and teacher training, attention has also been given to expanding basic education in the rural areas and ensuring a greater orientation in primary schooling towards practical training. This would be complemented by future projects in non-formal education and vocational training. The Government's recent policy supporting primary health care would be tested through a project currently being prepared as a first phase in a nationwide program to reorganize medical and paramedical training, health education, nutrition, environmental sanitation and family planning services, especially in rural areas. 30. In order to reduce the impact of the oil import burden on the Moroccan economy, a project was approved in April 1980 that would contribute to the Government's efforts to accelerate the exploration and development of its petroleum potential. Preparation is also underway of an engineering loan to finance studies and a pilot unit to test the potential for commercial extraction of oil from oil shale. 31. The sectoral objectives implied in these projects as well as other objectives relating to price policy, efficiency and composition of the public sector investment program, and measures to mobilize domestic savings, would be reinforced by the policy changes envisaged under the first Structural Adjustment Loan which has been appraised and is under discussion with the Government. PART III - SECTORAL BACKGROUND Manufacturing: Recent Performance and Characteristics 32. The share of the manufacturing sector in GDP remained stable at about 17 percent in the 1970s. After a period of accelerated growth at 7 percent per annum in real terms in the Third Plan (1973-77), due almost entirely to the modern industrial sector, the growth of manufacturing slowed to 4.5 percent per annum in 1978-79, as a result of increasing financial constraints on the economy and a reassessment of industrial development policy. Gross fixed capital formation in industry during the Third Plan is estimated at DH 3.3 billion, much higher than during the Second Plan. The main source of this upsurge in investment was the public sector, largely as a result of the launching of a dozen major projects. Almost half of public sector investment was channelled into highly capital-intensive subsectors. In the Interim Austerity Plan (1978-80), investment (both in number of projects and amount) decreased sharply; the primary emphasis of policy began to shift to exports and employment generation. Preliminary data for 1980 indicate a recovery in industrial production and investment. 33. The manufacturing sector has remained largely oriented toward the domestic market for consumption goods, with food industries the dominant subsector (generating over one-third of industrial value added), followed by textiles (responsible for over one fifth of industrial value added) and other resource-based, intermediate goods industries (chemicals, cement, construction materials, paper and pulp). Import-substitution, a major feature in Morocco's industrial development thus far, has not reduced dependence on imports, but  -10- has led to replacement of substituted imports of consumer goods by imports of intermediate and capital goods. The share of domestic demand for manufactured goods met by local production increased only marginally, from 59 percent in 1975 to 62 percent in 1978. There have been significant recent increases in the volume of industrial exports (17 percent in 1980, as compared with 10 percent per annum during the period 1973-77) and their share in total export value (from about 24 percent in 1975 to about 39 percent in 1979). The food, textile and chemical industries are most active in exports and account for about 90 percent of manufactured exports. Food industries have traditionally exported about 7 percent of their production, and textiles and chemicals emerged as significant export industries in the 1970s. 34. Manufacturing establishments and employment are concentrated along the Casablanca-Rabat-Kenitra axis, but recent Government policies aimed at regional decentralization have produced slight changes. While total industrial employment (excluding handicrafts) grew by 8.8 percent per annum between 1975 and 1978, the manufacturing sector only provides a small share of total employment (estimated at 11.5 percent in 1977). 35. Morocco's complex system of industrial incentives comprises protection and some export subsidization, pricing policy and investment incentives. There are indications that the price structure is highly distorted and not conducive to efficient resource allocation, that it discriminates against exports and intermediate goods industries, and through encouraging capital intensity, adversely affects employment generation. Protection is rarely revised, except upward, and has uneven subsectoral impact. Industrial investment incentives in the form of interest rebates, duty exemptions on imported equipment, and tax exemptions have not encouraged labor-intensive processes. Export incentives (tax exemptions on export generated profits and short-term export credits at concessionary interest rates, have provided outside domestic credit ceilings, and assumption of the foreign exchange risk on export contracts by the Treasury) have not been sufficient to outweigh the disincentive effects of the high prices of local inputs and the relative higher profitability of the domestic market as a result of protection. There is thus a need to rationalize the incentive system to make it more responsive to the Government's objectives of employment generation and rapid export led industrial growth (paragraphs 47 and 52). Small Scale Industries (SSIs)l/ 36. According to a 1977 Government survey of enterprises employing between 5 and 49 workers, there were about 3,160 such enterprises in Morocco, employing about 42,000 workers and representing about 20 percent of 1/ As in the Integrated Project for Small Scale Industry Development (Loan 1687-MOR, SSI I project), SSIs are defined as manufacturing enterprises with a total project cost, or total assets after expansion, of less than DH 5 million ($l million equivalent) excluding land, and with an investment cost per job created of less than DH 40,000-50,000 ($8,000-10,000) depending on the location and the type of industry.  -11- manufacturing employment and value added. About two-thirds of these are concentrated in the three large urban areas of Casablanca, Fez, and Marrakech. Handicrafts (which normally employ less than 5 workers) are more scattered in rural and urban areas, and may employ about 45 percent of the manufacturing labor force. 37. The food, textile and leather industries dominate small scale industries' production and exports. SSIs are also active in the chemical, electro-mechanical, construction materials and wood and furniture industries. With more than DH 450 million ($90 million equivalent) of exports, SSIs accounted in 1977 for 22 percent of all manufacturing exports. 38. Since 1978, the Government, in a reassessment of priorities, has emphasized employment and the role of the SSI sector, and has attempted to identify and assist potential entrepreneurs, encourage production to complement larger enterprises, and use the encouragement of SSIs to promote regional dispersal of industry. The main components of the Government's integrated programs for assisting SSIs have been the creation of a Policy Making Unit in the Ministry of Commerce and Industry (MCI) to formulate policies for their development, the provision of technical and management assistance to SSIs (paragraph 43), and the provision of financial assistance through a new scheme including a guarantee mecbanism. The Financial System 39. Morocco's financial sector includes Banque du Maroc (the Central Bank), fifteen commercial banks, five specialized institutions including the industrial development bank, Banque Nationale pour le Developpement Economique (BNDE), and two savings banks. There is also a stock market in Casablanca with a limited and declining role. Commercial banks are efficient, have a good record of profitability, and are free from major Government interference. Sight deposits represent the major part of commercial banks' resources (59 percent in 1979), and short-term loans account for about 90 percent of their lending. The five specialized financial institutions are responsible for the bulk of medium- and long-term lending, and consist of institutions specialized by sector of activity, lending to agriculture and agri-business, tourism projects, housing, and industry, as well as an institution in charge of public fund management. Financing of industrial investment takes various forms: medium- and long-term credits of BNDE and commercial banks, foreign suppliers' credits, leasing, and equity participation. Commercial banks offer three-year equipment financing loans, but though the processing period for these is short, their cost is higher than that of medium-term credits. Leasing, (introduced in 1965 and offered by three institutions) has only a marginal impact. While BNDE and commercial banks occasionally invest in equity participations in the private sector and the Office pour le Developpement Industriel (ODI) (paragraph 42) in the public sector, there is as yet no specialized venture capital company. Most equity financing comes from individual savings or from public sources.  -12- 40. Since 1978, the Government, in its effort to rebalance the economy, has curtailed public capital expenditures and tightened bank credit to the private sector. In practice, however, the banking system's short-term credits have increased as a proportion of total credits, with a worsening of the traditional illiquiditv of Moroccan commercial banks. In 1980, the Central Bank raised its basic rediscount rate, for the first time since 1975, from 4.5 to 6 percent. 41. Lending Rates. The interest rate structure was overhauled in October 1980, with substantial increases in both deposit rates (to attract savings) and lending rates. The ceiling on commercial bank rates on rediscountable loans was raised from 8 percent per annum to 9 percent per annum for short-term loans and to 10 percent per annum for medium-term loans. BNDE introduced a single rate of 12 percent per annum on all its loans, regardless of maturity (replacing the former system of 10 percent per annum for medium-term and 11 percent per annum for long-term loans). The rates for SSI borrowers would be 10 percent per annum for sub-loans up to seven years, and a nominal 12 percent per annum for sub-loans over seven years. However, because of a two-point interest rebate applicable to sub-loans with a maturity longer than seven years, the effective rate for all SSI borrowers would be 10 percent per annum. The desirability of eliminating the interest subsidy is to be studied in the context of the Government's structural adjustment program. Lending rates were marginally negative in 1977 and 1978, but became marginally positive in 1979 and 1980. Inflationary pressures were moderate through 1976, and intensified in 1977, when the cost of living index rose 12.5 percent. Austerity measures imposed in 1978 slowed the inflation rate to 9.7 percent in 1978 and 8.3 percent in 1979. In 1980 inflation increased to 9.4 percent. The effective rate for SSI lending of 10 percent per annum is higher than the expected rates of inflation which are projected to average 8-9 percent per annum over the commitment period of the proposed loan, 1981-1983, slightly lower than BNDE's nominal (12 percent) and effective (10 percent) lending rates. Institutional and Policy Framework 42. The Government sets policies for the development of industry through its Ministry of Commerce and Industry, and also participates directly in manufacturing activity. The Office Cherifien des Phosphates (OCP) is responsible for mining, processing and exporting phosphates and derivatives, activities reserved to the public sector because of their importance to the economy. Under the supervision of the Ministry of Industry, the Office pour le Developpement Industriel (CDI) is responsible for industrial promotion activities. The ODI undertakes pre-investment studies, acquires equity shares in new industrial enterprises, and aims at contributing to regional development and local participation in manufacturing.  -13- 43. In the SSI field, a Policy Making Unit was created in the Ministry of Commerce and Industry in 1978, to formulate development policies. A Technical Assistance Unit (TAU) was also established in the ODI to assist in the technical and managerial functioning of small scale industries. The Policy Making Unit had, by 1980, completed a few useful studies such as a survey of SSIs and a report on actions to encourage SSI promotion, some of which were incorporated into the Plan. However, insufficient staffing of the Unit and its limited influence have not enabled the formulation of strategy guidelines for SSI development or proposals for basic required policy changes. The TAU has provided effective assistance to a number of projects, in technology, management and finance. 44. In the field of export promotion, the recently created Centre Marocain de Promotion des Exportations (CMPE), assisted by the International Trade Center (ITC) in Geneva, is expected to function as the central institution for the promotion of exports. The CMPE plans to conduct studies between 1981 and 1983 on export markets, to identify a list of products of high export potential, and to prepare a plan to penetrate US and Canadian markets. In future, export opportunities could develop by large foreign companies sub-contracting production to SSIs and, in the process, providing technical assistance. Some recent promising examples of such subcontracting arrangements with large European firms have been for automotive and electronic components. Further studies by the Policy-Making Unit and CMPE to identify the subsectors most promising for such arrangements, as well as possible promoters, will be undertaken. 45. Knowledge of the manufacturing sector is still incomplete, and Morocco has no unit for the study and planning of industry, evaluation and monitoring of implementation, and review of industrial policy. To fill this gap an Industrial Planning Unit is being established within the Ministry of Commerce and Industry. 46. The new 1981-85 Plan stresses three major objectives of industrial development: (a) expanding export industries based on local resources (such as, principally, phosphate-based chemicals) or using unskilled or semi-skilled labor (such as textiles); (b) employment creation through encouraging SSIs; and (c) promotion of efficient import-substitution industries for capital and intermediate goods. Under the Plan, industrial investment is projected to total DH 20.9 billion ($4.2 billion equivalent) and generate a growth rate of 8.4 percent per annum in industrial value added. Industrial investment is to be focussed on; chemical industries for exports, mainly manufacture of phosphate derivatives (51 percent of investment); SSIs (12 percent of investment); and intermediate and large engineering industries (15 percent of investment) where, at Morocco's present stage of development, opportunities exist for efficient import substitution. 47. The revision of the incentives system (protection, and investment and export codes) will be undertaken by the Government after a series of studies to assess the current system and to recommend appropriate changes are completed; these studies, supported by the Bank, have been in progress  -14- since 1979. They will serve as a basis for rationalizing the protection and price structure, and for recommending new incentive systems. The Government has drawn up a program for completing the studies in 1981, for preparing its recommendations for reformulating the structure of protection and of the incentive codes in the first quarter of 1982, and for completing the gradual reform of the structure of protection and tariffs by mid-1983. The reforms are expected to reduce administrative delays, and the various biases that exist presently among sectors, among firms and between production for the local market and for export. The new codes are also expected to offer more effective incentives to foreign companies to make sub-contracting arrangements with Moroccan firms, and bring about transfers of technology. 48. While the preparatory work for the major industrial policy reforms outlined in the previous paragraph is underway, the Government plans to undertake several important actions for promoting exports in the short-term. The CMPE is being strengthened, administrative export procedures and access to export financing are being simplified, and an agency is being created for standardization and quality control, especially of industrial export products. The Government is also undertaking measures to promote the participation of domestic engineering industries in capital formation. These include the study and establishment of a credit system for financing the inputs and marketing of capital goods, and the establishment before March 1982, under the auspices of the Ministry of Commerce and Industry, of an Engineering Contracting Unit to integrate more domestic capital goods in public industrial projects. Performance under Previous Bank Loans 49. The Bank commenced its assistance to the SSI sector in 1977 with a pilot-line of $5 million in conjunction with the eighth line of credit to BNDE (Ln. 1428-MOR), designed to improve lending procedures and improve the Bank's knowledge of the subsector. The amount allocated was shared between the Banque Centrale Populaire (BCP, Morocco's largest commercial bank) and BNDE. Forty one sub-projects with a total cost of DH 44 million ($8.8 million equivalent) were financed, potentially creating some 1,700 jobs at an average cost of DH 26,000 ($5,200 equivalent). At the time of appraisal of the current project, only a few sub-projects were operational, as a result of delays in organizing the new firms and in obtaining delivery of equipment. Sub-projects which were operational appeared to be functioning satisfactorily. Two-thirds of the pilot line was disbursed June 1, 1981. 50. As a result of the favorable experience with the pilot-line, the SSI I (Loan 1687-MOR) project was designed to increase substantially long-term financing available to the SSI sub-sector, and strengthen the delivery of technical assistance and the institutional framework. An amount of $25 million was channelled through the commercial banking system and BNDE, with BNDE acting as the apex institution. Commitments were much more rapid than anticipated, and by May 1981, 91 percent of the funds were committed, as compared with 75 percent expected at appraisal, and 196 sub-projects financed in the textiles and leather, electro-mechanical,  -15- chemicals, construction, food processing and miscellaneous subsectors. The Central Bank's decision to exclude SSI sub-loans from credit ceilings was a decisive incentive. This exclusion will be maintained for the SSI II Project. The only significant issue that arose in implementing the SSI I project so far has been that the demand for sub-loans to finance very small firms was less than expected, while demand for financing small and medium firms was greater than expected. As a result, it was necessary to adjust the allocation of the SSI I loan by sub-loan category. This development has been taken into account in designing the SSI II Project (paragraph 59). Constraints 51. The problems affecting the development of Moroccan SSIs are not different from those observed in other countries at a similar stage of development, and indeed in many others. The internal problems which adversely affect the productivity of SSIs and constrain their growth include: deficient production planning, accounting and management; poor product design and plant layout; at times inappropriate selection of equipment; and lack of quality control. Because of their small size, SSIs also suffer from shortages of raw materials (most of which are indirectly imported through wholesale dealers), and limited marketing capabilities (channelling through several intermediaries, thus adding further to the costs). The institutional problems faced by SSIs are mainly limited access to financing, and the system of investment incentives with criteria which are not well tailored to SSIs (such as the encouragements for capital intensive projects, while SSIs are oriented toward labor-intensive projects). The bias in favor of import-substitution and high protection built in the 1973 Investment Code has reduced competition in price, quality, and technological innovation. Last but not least, Government regulations and administrative procedures have repeatedly deterred SSI promoters from making investment decisions or caused delays in their implementation. Until the inception of the first SSI Bank project, there were no institutions in Morocco providing effective technical or managerial assistance to SSIs. The establishment of the TAU has filled the gap, but the needs, both qualitatively and quantitatively, are large. Priorities for technical assistance appear to be for general and financial management and for marketing, for assistance with the selection of equipment and technology, and for on-the-job training of foremen and middle-level staff. The program of the Technical Assistance Unit for 1981-82 (see paragraph 4.11 of Staff Appraisal Report), reviewed with the Bank, reflects these priorities. Some banks, such as Banque Centrale Populaire (BCP), Banque Nationale pour le Commerce et l'Industrie (BNCI), and BNDE, have also established special programs to assist SSIs. Lack of access to institutional financing particularly for small SSIs, is still an important constraint to SSI development. It is hard, however, to ascertain the true dimensions of the problem because of the reluctance of SSI promoters to disclose their detailed financial position in official surveys. A 1977 sample survey of SSIs 1/ revealed a financial structure characterized by a weak equity base, 1/ SORCA-BMB: "Etude du Secteur de la Petite Industrie au Maroc", June 1978.  -16- and very low ratios of working capital to fixed assets and to turnover. Basic cost accounting is generally lacking; some financial accounts are produced only occasionally for fiscal purposes, and tend to be meaningless. Bank Role in Industry 52. The role of the Bank in industrial development in Morocco has been to support structural change in industry through the efficient development of individual sub-sectors, through the development of institutions concerned with industrial development, and through a dialogue on policy issues. Past Bank financing has supported the development of industrial processing of Morocco's phosphate reserves; of the cement subsector; of BNDE as a source of medium-term financing for industry of growing importance and sophistication; and of the development of SSIs, where there is considerable potential for efficient growth of production and generation of employment. Recently, the policy dialogue has focused on the structure of protection and incentives in general, on the expansion of manufactured exports, on employment generation and on developing the industrial structure. These areas are receiving priority from the Government and will form the main focus for Bank financing over the next several years. PART IV - THE PROJECT Project Background 53. The proposed project emerges from successful experience under the SSI I project. It was appraised in October-November 1980, and negotiations were held in Washington, D.C. in May 1981. The Moroccan delegation was led by Mr. Abdelkader Benslimane, President Director-General of BNDE. A Staff Appraisal Report entitled "Second Small Scale Industry Project" (No. 3502-MOR, dated June 10, 1981) is being circulated separately to the Executive Directors. The main features of the loan and project are listed in the Loan and Project Summary and in Annex III. Project Objectives 54. The proposed project would help create industrial employment at costs substantially below those in industry in general by: a) providing resources for small entrepreneurs who would otherwise face difficulty in securing sufficient financing for their enterprises (at least $68.75 million of the loan); b) providing technical assistance to potential and existing SSIs ($1.0 million); and c) financing studies to help overcome institutional constraints and to revise the incentives system for SSI ($0.25 million).  -17- Loan Features 55. Lending terms, arrangements and procedures would be essentially the same as under the SSI I loan. The proposed SSI II loan would help finance the Government's program for assistance to small industries over the period 1981-83, through financing of SSI sub-projects and of technical assistance. The loan would also finance studies to review the policy and incentive systems relating to SSIs, and to recommend appropriate changes to foster efficient SSI development. As some of the sub-projects are expected to have maturities of up to twelve years, and may be approved towards the end of the three-year commitment period, the Bank loan to the Treasury would be repaid over a period of fifteen years including four years of grace. 56. The terms of sub-loans would conform to the economic life of sub-projects with a maximum maturity of twelve years, and a maximum grace period of three years (Loan Agreement, Schedule 4, Section C, paragraph 6). Interest rates would be those prevailing for BNDE loans to industry, net of interest subsidies, (paragraph 41 above, and Loan Agreement, Schedule 4, Section C, paragraph 6), presently resulting in a uniform effective rate of 10 percent. Commercial banks and BNDE would draw the proceeds of the proposed loan from the Treasury at a rate of interest two percent below the effective rate to be paid by sub-borrowers. Under the SSI I project, this spread appears to have been adequate. The Government would bear the foreign exchange risk under the proposed project. 57. Under the proposed loan, as in SSI I, BNDE would have a double role: that of a direct lender, and, under a management agreement, of an agent of the Government in supervising the commercial banks and managing the funds relent to them. A standard contract between BNDE and the commercial banks would spell out eligibility criteria and procedures for appraisal of sub-loans, disbursements, and supervision. The execution of a BNDE convention between the Government and BNDE, as well as the conclusion by BNDE of standard conventions satisfactory to the Bank with at least three participating banks, including the Banque Centrale Populaire, would be conditions of effectiveness of the proposed Loan (Loan Agreement, Section 6.01). Approval of sub-loans and the coordination of project implementation are the responsibility of a Technical Committee (on which the Ministries of Finance, Commerce and Industry, the Banque du Maroc, ODI and BNDE are represented). As in the SSI I project, participating banks would prepare annual supervision reports on all the borrowers under this component; BNDE would consolidate and analyze these reports. BNDE's report, an annual monitoring report of the Ministry of Commerce and Industry, and a report prepared by ODI on technical assistance activities would be reviewed by the Technical Committee, which would make necessary changes in criteria and procedures. Eighty percent of the sub-loans would be guaranteed by the Caisse Centrale de Garantie (CCG), a Government agency, and guarantees would be approved at the same time as the sub-loan.  -18- 58. Sub-loans under the SSI component would finance up to 50 percent of the total cost of SSI sub-projects, representing their estimated foreign exchange content (Loan Agreement, Schedule 4, Section C, paragraph 1). Sub-borrowers would provide at least 20 percent of project cost. The balance would be financed by lending by the participating banks, and would be rediscountable with the Banque du Maroc, outside global credit ceilings. 59. The SSI II loan would be allocated to three categories of sub-projects, classified by assets of the recipient company, after establishment or expansion as follows; a) very small firms (including artisan workshops), with assets of up to DH 1 million (200,000 equivalent); this category would be allocated at least 25 percent of the loan component, ($17.2 million); b) small firms, with assets of between DH 1 million and DH 3 million ($600,000); this category would be allocated at least 60 percent of the loan component ($41.3 million); c) medium sized firms, with assets of between DH 3 million and DH 5 million ($1.0 million); this category would be allocated at most 15 percent of the loan component ($10.3 million), (Loan Agreement, Section 3.02). By comparison with the SSI I project, the ceiling for very small firms has been raised from DH 500,000 to DH 1 million, and the ceiling for small firms has been raised from DR 2.5 million to DH 3 million. To ensure adequate emphasis on smaller, more labor-intensive firms, the eligibility ceiling for medium firms (category (c)) has not been raised, despite the inflation experienced in recent years. It is estimated that the proposed percentage allocation of the loan among the three categories would result in a smaller average subproject size than was the case under the SSI I project. In line with the conditions of the SSI I loan, the financial rate of return for all SSI sub-projects financed under the proposed loan must be at least 10 percent; for small firms, as defined above, the cost of end-products, calculated by valuing inputs at international prices, must be comparable with c.i.f. prices of similar imports; while for medium firms a minimum economic rate of return (ERR) of 10 percent must also be met (Loan Agreement, Schedule 4, paragraphs A l(a), (c), and (d)). 60. To promote maximum employment creation, a ceiling on the investment per job required will be maintained. Taking into account the increasing concentration of industries in the Casablanca area, and the Government's desire to obtain a wider geographical spread, the cost per job ceiling will be set at DH 45,000 ($9,000 equivalent) in the Casablanca area, and at DR 50,000 ($10,000 equivalent) elsewhere for SSI projects in general, with the exception of projects in the electro-mechanical sector. For the latter, the cost per job ceiling would be DH 55,000 ($11,000) in the Casablanca area and DH 60,000 ($12,000) elsewhere (Loan Agreement, Schedule 4, paragraph A l(b)). Special ceilings are proposed for electro-mechanical industries because of their greater capital intensity, and so as to offer incentives for their development in line with the Government's sectoral priorities. The cost per job ceilings mentioned would continue to be indexed to the wholesale price index for Casablanca as in the SSI I project, with July 1, 1981 the base date for indexation. The proposed ceilings represent a slight tightening in real terms of the cost per job ceilings under the SSI I project.  -19- Technical Assistance 61. The Ministry of Commerce and Industry will be responsible for carrying out and monitoring the technical assistance program through its Technical Assistance Unit (TAU) (Loan Agreement, Section 3.04, and Schedule 2, Part B). The technical assistance provided by the TAU (paragraph 43) will be continued with the help of foreign experts. This assistance is effective and well received by the SSI promoters. The terms of reference for the TAU, as agreed with the Bank, call for activities in the following fields: (a) identification and preparation of SSI projects in coordination with banks and the Ministry of Industry; (b) technical advice to entrepreneurs in the selection and procurement of equipment and in preparing financing requests; (c) assistance in project implementation through solving infrastructural and administrative problems; and, (d) assistance in identifying and solving management, production, accounting, and financial problems of SSIs. Under the project, the emphasis will be on helping to identify investment opportunities by creating a data bank, and helping promoters with project processing; offering seminars in elementary accounting, general management and related fields; and assisting SSIs in the choice of equipment and appropriate technology. It is expected that the EEC will continue to fund the foreign exchange cost of these activities after the current contract expires in mid-1982. However, the proposed loan would provide for the foreign exchange cost of the TAU for a two-year period, estimated at $1.0 million, if additional EEC financing cannot be obtained. If it can be, this amount will be made available for SSI project financing. The proposed technical assistance to be funded will include 96 man-months of consultants' time, at $8,600 per man-month, including subsistence and international travel. 62. The SSI Policy Making Unit in the Ministry of Commerce and Industry (paragraph 43) has not yet had a decisive impact on policy formulation. Agreement has been reached during negotiations with the Government to strengthen the Unit. Areas on which the Unit will focus include the involvement of SSIs in carrying out public contracts, quality control of products and marketing, especially for exports. The Unit would also study institutional constraints, make recommendations to improve the structure of incentives pertaining to SSIs, and would follow up on their implementation. The proposed loan would provide for the foreign exchange cost of these studies estimated at $250,000, covering 18 man-months of expert services at a cost of $10,000 per man-month, including subsistence and international travel. The Government would prepare the terms of reference for these studies for the Bank's approval by December 31, 1981 (Loan Agreement, Section 3.06, and Schedule 2, Part C(2)). Procurement and Disbursement 63. Given the small size and cost of individual investment items, most of them will be directly purchased from suppliers. BNDE has developed a set of guidelines for procurement under the SSI I project; purchases are made following a comparison of price quotations from suppliers or contractors. These procedures are satisfactory and will continue to be used for the SSI II loan, with continued supervision by BNDE. For very small and small  -20- enterprises (with total assets, excluding land, of below DH 3 million), price quotations would be obtained from at least two suppliers or contractors, as under the SSI I project. For medium sized SSIs (with total assets, excluding land, of between DH 3 million and DH 5 million), price quotations would be obtained from at least three suppliers or contractors (Loan Agreement, Schedule 4, Section D, paragraph 1). Under SSI I typical items procured included individual pieces of machinery and equipment, with estimated costs ranging from $1,000 to $50,000. 64. The proposed SST II loan of $70 million is expected to be fully committed by December 31, 1983 (Project Agreement, Section 2.03 (b)) and fully disbursed by June 30, 1986. Disbursements would be supported by standard documentation to be retained by commercial banks and BNDE and made available for periodic review by Bank supervision missions. Bank disbursements would be made against certified statements of expenditure issued by BNDE. This procedure has worked satisfactorily under the SSI I loan. Accounts and Auditing 65. BNDE would keep separate accounts for transactions related to all sub-loans and these accounts would be audited annually by a reputable international accounting firm, and the audited financial statements would be submitted to the Bank within six months of the end of the financial year. (Loan Agreement, Schedule 4, Section C, paragraph 4). Justification and Risks 66. The loan directly supports the Government's policy to alleviate urban unemployment through industrialization, and to expand the industrial base of the country's economy. Although there is not yet full feedback on the achievements of SSI I, its success so far demonstrates the demand for this type of financing and the associated technical assistance. Under the SSI II project about 600 existing and new SSIs would be financed, and about 15,000 new jobs would be created at an average cost of DH 47,500 ($9,500) per job; this compares with an average cost of DH 190,000 ($38,000) for employment in manufacturing industry in general. The sub-projects are expected to supply component parts for larger industries, substitute for imports, and generate exports. The development of small enterprises (which normally can adapt quickly to changing demands), as well as the creation of additional entrepreneurial managers should have a substantial impact on Morocco's longer term industrial development prospects. Taking into account the experience gained under the pilot project and the first line of credit, there are no special risks. PART V - LEGAL INSTRUMENTS AND AUTHORITY 67. The draft Loan Agreement between the Kingdom of Morocco and the Bank, the draft Project Agreement between the Bank and BNDE, and the Report of the Committee provided for in Article III, Section 4 (iii) of the Articles of Agreement are being distributed to the Executive Directors separately.  -21- 68. Special features of the project are described in paragraphs 57 to 62 of this report. Special conditions of loan effectiveness are: (i) the execution of a convention between the Government and BNDE for administration of the loan, and (ii) conclusion of standard conventions by BNDE, on terms and conditions satisfactory to the Bank, with not less than three commercial banks, including the Banque Centrale Populaire (Loan Agreement, Section 6.01). 69. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 70. 1 recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President by Ernest Stern Attachments June 22, 1981 Washington, D.C.   ANNEX I - 22 - Page I TABLE 3A MOROCCO - SOCIAL INDICATORS DATA SHEET MOROCCO REFERENCE GROUPS (WEIGHTED AVE AGES LAND ARLA (THUUSAND SQ. Esi.) - MOST RECENT ESTIMATE)- TOTAL 447.0/c MIDDLE INCOME nGRDCULTUIAL 203. 77c MOST RECENT NORTH AFRICA & MIDDLE INCOME 1960 /b 1970 lb ESTIMATE /b MIDDLE EAST LATIN AMERICA & CARIBBEAN GCP PRLt CAPITA (US$) 200.0 310.0 740.0 865.5 1616.2 ENERGY CONSUMPTION PER LAPITA (KILOGRKAMS OF GOAL EQUIVALENT) 169.3 222.2 315.2 758.3 1324.1 POPULnTION AND VITAL STATISTICS POPULATION, MlD-YEAk (THOUSANDS) 11626.0 14993.0 19538.0 URBAN PoPULATIuN (PERCENT UF TOTAL) 29.3 34.6 39.9 45.2 64.2 POPULATIUO PkuJECT iONS PuPULATION IN YEAK 200O (MILLIONS) 35.6 STATIONARY POPULATION (NILLIONS) 81.0 YEAR STATIONARY POPULATION IS REACHED 2090 FOUFLLATIO N DENSITY PER SQ. th. 26.0 33.5 43.7 36.3 34.3 Ptk SQ. KM. AGRICULTURAL LAND 59.b 76.0 92.9 442.7 94.5 eOPULATION AGO STRUCTURE (PERChNT) U-14 YRS. 44.8 47.6 46.3 44.2 40.7 15-64 YRS. 52.6 4B.3 50.4 52.4 55.3 o5 YIR. AND ANOVE 2.6 4.1 3.3 3.4 4.0 PJPULATION GROWTH RATE (PERCENT) TOTAL 2.6 2.5 2.9 2.7 2.4 URBAN 3.7 4.2 4.5 4.6 3.7 GRUDt. BIRTh kAATE PER THOUSAND) 50.2 47.4 44.2 41.5 31.4 GCtUDD DEATH RATE (PER THOUSAND) 20.8 16.4 12.8 12.8 8.4 GRObS REPRODUCTION RATE 3.6 3.5 3.2 2.9 2.3 PARiTLY PLANNING ACCLPTORS, AhNUAL (THOUSANDS) .. 25.1 78.0 USERS (PERCLNT oP HARRIED WOMEN) .. 1.0 5.4 PouD AND NUTkRITIO INDEX Ot FOD PROUDUCTION PlK CAPITA (1969-71-100) 99.0 98.0 85.0 96.3 108.3 PER CAPITA bUPPLY OP LALORIES (PERCENT OP RELUIRLKLNTS) 96.0 102.0 105.0 110.4 107.6 PROTUINS (GRAMS PER DAY) 62.0 66.0 67.0 73.4 65.8 O} Wh1Ch ANIMAlL AND PULSE 13.0 13.0 13.U 17.1 34.0 CHILD (AGES 1-4) MOKTALITY RATE 30.3 21.9 15.7 14.9 7.6 hEALTH LIFF EXPECTANCY AT biRTh (YEARS) 46.9 51.9 56.4 55.9 64.1 IhNANT hOKTALI'IY BATE (PEk ThOUSAND) .. .. .. .. 70.9 ACCESSb TO SAFL WAlER (PERCENT OF POPULATION) TOTAL 30.6 31.0 55.0 59.4 65.7 URbAN 58.7 92.0 100.0 83.9 79.7 KRKAL 19.0 28.0 25.0 40.8 43.9 ACCESS [o EXCKETA DISPOSAL (PERCENT Uo POPULATION) TOTAL .. 29.0 .. .. 59.9 uKboN .. 75.0 .. .. 75.7 RURAL ., 4.0 .. .. 30.4 POPULAlION PUb PHYSICIAN 9406.1/d 12814.5 11037.4 4174.5 1728.2 POPULAlION PER NURSING PERSON .. 2742.2 1693.5 1780.5 1288.2 POPULATION PER hOSPITAL KED TOTAL 626.u 664.3 773.6 647.4 471.2 UKBAN .. 454.7 623.4 547.2 558.0 hURAL . . 5821.4 3089.5 3361.1 ADMIbSIONS PER HOSPITAL BED .. 15.5 16.5 25.3 hOuS 10 AVbRAGE SIZL OP HOUSEHOLD TOTAL 4.8 5.5 URBAN 4.3 4.9 hREAL 5.1 5.8 AVERAGE StUMbER OF PERSONS PER R80(5 TOTAL 2.2 2.4 UbKAN 2.1 2.1 RURAL 2.3 2.6 ACCUSS TO ELECTRICITY (PERCENT OP LWELLIN0S) TOTAL 76 , . .. UkbAN 85.4Te 68.4 65.0. KUhAL 30.8Te ..  ANNEX I - 23 - Page 2 TABLE 3A MOROCCO - SOCIAL INDICATORS DATA SHEET MOROCCO REFERENCE GROUPS (WEIGHTED AVE7AGES - MOST RECENT ESTIMATE)- MIDDLE INCOME MOST RECENT NORTH AFRICA & MIDDLE INCOME 1960 lb 1970 /b ESTIMATE /b MIDDLE EAST LATIN AMERICA & CARIBBEAN EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 47.0 52.0 72.0 85.1 101.7 MALE 67.0 67.0 90.0 101.5 103.0 FEMALE 27.0 36.0 54.0 67.5 101.5 SECONDARY: TOTAL 5.0 13.0 20.0 38.0 35.3 MALE 7.0 18.0 25.0 48.1 34.9 FEMALE 2.0 7.0 15.0 28.3 35.6 VOCATIONAL ENROL. (Z OF SECONDARY) .. 2.0 3.0 11.3 30.1 PUPiL-TEACHER RATIO PRIMARY 43.0 34.0 39.0 34.9 29.6 SECONDARY .. 20.0 21.0 23.8 15.7 ADULT LITERACY RATE (PERCENT) 14.0 21.4 28.0 43.0 80.0 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 11.0 14.8 19.6 18.3 42.6 RADIO RECEIVERS PER THOUSAND POPULATION 45.8 62.4 87.4 121.0 215.0 TV RECEIVERS PER THOUSAND POPULATION 0.4 11.6 32.6 37.4 89.0 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 22.0 16.2 10.7 35.9 62.8 CINEMA ANNUAL ATTENDANCE PER CAPITA 2.0 .. 2.0 3.0 3.2 LABCR FORCE TOTAL LABOR FORCE (THOUSANDS) 3369.7 3951.7 5117.3 FEMALE (PERCENT) 10.1 14.1 15.6 10.5 22.6 AGRICULTURE (PERCENT) 62.5 56.9 52.7 43.5 35.0 INDUSTRY (PERCENT) 13.8 17.4 20.7 27.3 23.2 PARTICIPATION RATE (PERCENT) TOTAL 29.0 26.4 26.2 26.4 31.8 MALE 52.1 45.2 44.2 47.0 49.0 FEILaLE 5.9 7.5 8.2 5.7 14.6 ECONOMIC DEPENDENCY RATIO 1.6 2.0 1.9 1.8 1.4 INCOME DISTRIBUTION PEgCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS 18.0/f 20.0/f HIGHEST 20 PERCENT OF HOUSEHOLDS 43.377 49.077 LOWEST 20 PERCENT OF HOUSEHOLDS 7.077 4.077 . LOWEST 40 PERCENT OF HOUSEHOLDS 18.0/f 12.0/f POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN 107.0 157.0 389.0 271.4 RURAL 66.0 101.0 238.0 144.6 187.6 ESTIMATED RELATIVE POVERTY INCOME LEVEL (USs PER CAPITA) URBAN .. .. 242.0 400.8 513.9 RURAL .. .. 157.0 290.9 362.2 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN 51.0 38.0 28.0 22.1 RURAL 49.0 45.0 45.0 29.2 Not available Not applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators 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 host Recent Estimate, between 1976 and 1979. /c Excludes the ex-Spcaish Sahara /d 1961?; In R-i-k 'vi!dings o' ,f Cr. -,tic^f Revised June, 1981  - 24- A2Nn I P... 3 DEPINITCION Or SOCILaj tPlCflORS Note. Altbooth the da.t-drew from e--c generally judged the wet ahrtietd reliable, it should ele he totd that they my tot be tote- nutooally ounpe...bla because of the loch of staudordieed dotiintoos cod conoepte oed by diff-aet -tounr .ic tooiloto .h data. The de. . , tt th.lese, sef o1 to decotheb orders of eagolcod, hoiceen tren.ds, nod hareoterli cer..tain eajor differec- btw-toctte The re ratr rop r (1) the ea- contry troop of the eabjoot coutry end (2) a tountry troo.p toh somehat highar stene i-re that the co-tty trop of th aehtc outry (-.urt foo "CuPita1 turplo. 011 footeegop oh.re 'Middle bo-n Woth Afice cod Middle fact" is . bhoen eoeAa of-enrrge eoofo.-ooltor.l aftots . I the e Src troop dote the -reroa arm Ppulartlot neightod arinbecic ea-afor .uo indicator cod eh-n ooly ret eajority of the c.outrine io a eo..ap hoe data for then irdioecor. fince the -orag of conrteamo the inditcator depeode ro the cilabilittY cf dete and s nt uifor, cuntr wt he noerteed it.rlottog aoera.a of.. one 4dtcar to another. Th..n roreeAre only uea fol to ceo to chelu o on SnIatra tn eo the oou.tny and ref-aor grooPe. [ANP AR04 (thoo-d qkn) -P.pueooopeti eyro nod - totl, aobn, ond rura - FPcpolatto (cotal, Total - Total eof o ,aneo aprlto Iaod area And inlcod noe.rb o, ad rura1l) tided by oh le -eperio otabe of hasPita1 bode Eaiutrl -itecaut of-eoctur ee oeed temporaily or p -ran ly avilable to publiccdprvt -euca aud Peyecneitrd hoepittl andr- for oroyc, putra arrt and kittrbe fardex or to lie fullor; 1973 dana. hobilltotiot reotere. Iopcaareaathestoe pr-nasrty ecaffed by at mon atel.. phycicEon ntbshna.rsproidli~g prlio.ict lcoic INP POt CAPITA (lUg) - IffP par onpita -aet.m.m An o-rroc moke prime o- dial oco. tern -r locode.6 r op le uer,illud bmnlth oulatod by e-coteett ,ehod me Word Muti Anise (19)7-79 basis; 1960, nAM edncl1 -atere non permanotly aneffod hy a phyito U ho b 1970, and 1979 dana. _edioul n.e. too._one, el:dotfa, oc.) which offor to-oa"t io o datlor and poroide e [lonitd -at of nadico frlins.rFea- e fENERlY CIMOfIPTIIl PfER CAPITAL - Aaooal c2oteuPtc ot f -c-a-ctnlnrer.gy (tool ctcrl purpotna urbun hospitole ioclode Wof poloripa1/grn..a hoe.pitale, andtlignite.,p osm -tatu.r It cod hydro- , nucea codetherula- cod rura hoepitl1. loca no rura hospItals cod medical and aaerl-ty rtotniyl to kIlogram of coal eqo-oalet Per cie; 190. 197. nod 1979 Setrn pecinlinad hasp Ot.ln ac =ooa4 oly ordertoo data. Adetenione -r Iositul. Bad - Totl o1 o on adol ..o. tour diachorg.s from dopt ls yldad by ohn nube of hrda. POPUILATION ANtD VITAL STATISTICS Total Pooclttoo. roid-Yeor (thousan ds) -A. ofJuly 11 1960, 1970, nod 1979 itUtIft data Are...as ties of ftoo..hold (remjotep oarouseho~ld)-talurc.odua- irb. ...u....ot .P.e.c.ot of total) Ratio oflub- to tota .poplohion) A household ocoicte ofa rop_f oividoAlawoeo 110101 quatEOn different deffnitions- of rta trs y offset oap-abailtoy of into cod their aic me1al. A bood-r or lodao my orme to hr toludad co amogtontin;1960, 1970, sod 1979 dato. the house hold fora. ieia purpreen. Populanito Proleottone A-ara- nuber ofteas oaloo - ntotl. oren. and rrl.. - Av-rote ou. Poneistion in you 20ll - Cuo-w population roeotoc r based on 1980 bar of p-rsoo prr noon Inal ubt, cod rural occupied -cortioalnu total Ppoplontu by aten eno naod their matality end fertility rae.drlligS., ep-ci-nly. D-rt1iog.aexlude o-prann trooread AProirrolon paosor lo netaliny ratne oeprise of three le-ne Aen- untople ore tog. lfe - eaatncy At birblocenio ith coutry's pm capita inonm dUo..s to nEatritti Iorso f .. fdnltl- total,-urban.onrua- leol and f lae life -escoc tbiltinig Al 77.1 yemr.. ?Oi pare1- Ceotn-Io dvnlliot tlhth eletr,ilfly In nrlg qatn epren manor for fortility into alto her tbrnn level asnumfto decline In of total, urhet, tndru-n denlliotsr-p-cttvly. fuall lity ....ondiag to itoom lnal and Pastaly plnrlog p-rf-rao.. lah outy is ther. osseod oeo three cone coehinonlio of me-tlity EDUCATIONl and fenniliny trends 0. poy-jetiot purposes. Adiueted tano1-to Ratios ttattoorr nunlatton-I Iteentionuy npulotlon thr toi to grtwh ems Otewo shoo - totalmal nod femagle - Irose total, mis and tfnni the birth rate iS equa to nhe dexnh rate, od ole hreg eocr n-s imnt o all ogma the -pioy lve as p-arto-ugr of r-p-cti- thio co -an Thin isucierd only afr fertility rntos deoline no pray shulaepoyalotinoon; noomly inludee children agedf-11 th - Iicnet on of unit oat -eprodanior rune. oh.. .-b go ati.n.er bun nd)uatod f-r difftloet lnogthe of primay adnoation; 0 of wetop- oaitenir eacly. Thestationer parulatitotsr w coonrce nrhuourso..I edoc-toi so ot ear -oaad 100 pur-o onttnocad ton the heats of th. proiotnd oh-rccorianice of the popula1tion i_c soepoitar -e or bo- the offidol1 echoal ue. itthe yn- 2000,. od the rate of deollion of ferility tntn to replace- eonedeorsoy o -otl male and fem1n - C.mpotdIasbhar; secodar neo lve. educatilo requiree atI. lan four Yoen of apprord prmr nsroit yZor stncione porulctot is reahed - The you rh.. staionay populioob ponoidet trS-a,rcI. nl ctuhn cO,r larcu fortpoolS sine hot ben rnechrd. osoaly of 12 to 17 yerof-0~ uraod-xncnra r area-11 Per en.he. - Od-yearpopulation Per t..u. killoat-r (110 h-ctrn) of Vtorttou' noletlaoo of eouodnry) - Voctional loetlnutto.n Pato ann; 1960 190ndW7 na inld tohlol, outil nohrpoom hc urt oeed mr a. h . orOuooa lend -11 Compted asaoe o giclun ln ly or or dopocllo of _acotdy itettoloe only; 1960, 1970 und 1979 do,ta. Pupo1-tas... rai rmr.ad nodr oa snst ooldt Pono3latot.n cucon(rrt)-Childre f0-l4 yasre), ourhiog-age (15-ptmcyanecody lorele diridd by neborn oftcathr in tho 66 penre), cod -tirnd (6l ynr- and ra)c ocoan of scd-yenr Pupa- .o.epodig er -o tlatte; 1960, 1970, nod 1979 data. Adult litrac roo (P roln)- Litrae duta lohie to read and -ite) Potu.lattom- Ino-h tote lnorcext) - -onn - Annual gronthre of tocn1 And- Anpeocontoen of total wdult y..aptloio nad 19 y-aO androt ym puolutlA_ f.o 191= t60l!69h0-7. no 1070-79. Pooltit rothnae enrec)- rbc- dA-o1 itonh oeeor u-hec pop- oomooawllno lattomaf or 190-60. 960-70. and 1970-79. Cueeerl.o (p- thouea. AMonpo1lotlo) - P...-,-e rare comprise aor Crude Octh iot (rer tounood)- Annual lion btrohs por thoceand of nod-yea otossnoting letnhoo igtinopros -xcidntnIIh -,lboctm hn end ropuoon19,190od 197 icon. m1itotayo-hicas louda tDahht nrionn)- Annual douche P th-aode of aid-roar tadto On-i'es(r huci ounlul-ga ye o iri -r u radio pop.,Alatot 1960 1970, and 1979 data. b-od-aao to 9-Tam 1a puhll por cho-eofda .porlnctio; noclode .. - Icons roodoctt a -Aec..eS number of dooghteren no ill hea in licensed racoirvre in cottisad to ynar oh..eiercnof -sdto her nral1 -nprdotton polod if hb. mosiscnpr-x gs-epeif cc f so- erte was ioeffoo; data tin recent yer may to be comparable sice tility rAte; aeelytfr-po asagcenig o19 17. ad 1939. weUooraaoihdlrxtag.i, y~yP=aon - cntola, Anua fnheueanda - dain1 nober of actponS envr (Ptt thousad ....nIatnon - To onc.nrei- f. orhrodae .to1 of birth--t-1ro dricet ndr auspice of altonl family PLanig grx tnoroltpbhlti per thousand ppleIon.; e.. lodt ulioetetdLTV neoi-so Aaiy lon- Users (torret of mcrid rmo - Parcextoes of maroid icotot-ri. and Ia yen- tintretirut.too. of TW ta. -r It nf.lse. romeo of chiild-h-itig age (15-44 yas btac irth-ooorol devt.. no PoEpen iclno crth-uno oolah h) - tow the a rteir- almrcid -oa it eso gn group. oacon f "do7gortItesrneaPrr, n toed anap oica` Puhlioltaio darotad d=rinaiy`to7ratordiP9 gnorl tome It itcnidtrnd POh0f)ftHITlm to he "d.ily0 nf it appenre at tra..t four clone a . nk. loden of rood re-d-cion con Cauca (1969-71-100) - Index of Pot captia aconual tlo a -1ono Attexdan- -a canito rePO c - aSed, oc rho o-nh- o prodction of all fond t-editine. Producit, on1idee tend nod fend and ticete aold during thepor iecing odatinlon to dlit-b ri-sa leon -loodar y-a hotin. Coneditise core primary good ) .g. Sn--r-- nod wi unite.. itatnd of .so-) which are ibtla and cocftahonutients r. g.. co fo n cntneloe) Aeegt eprolociun of enc, couttp is homed en [fLtPIOCE -,t-Wa a.nrgs produ.er:pic oiho,; 19h61-61, 1970, And 1979 done. Total ohr room thbuenda) totsualyntton pane..n.. trludlng Oar cnpitu 0mb of caloirn Irerr_t of crtcomaaotel - Compotofrmrd f foos nl I.plyn but enludig hou-entae,sodc,nt. e..orgy oqoirlent of otfood suPplies sonlabis in -nooty per cat origpopolati_o of all mere. tefinitloeho.r.. ottis p per day. A-nilabl eupplime roplndonnenir prodottlo, layut lasto -tP.rbr 1960. 1970 and 1979 data. exots, ad bhenge it stork, iNnt epplins maclde animal fed,. erde, Fenalt (rorno - roml lbho force as P-rcextge of total labor force. _uaoitie usd in food proc-aing, And lieeen in dieioio RPquirs- ayiot-tUre(portent) - Laber force in finnig. for-tny. hoatiut nod ettnon teica,itd by rAO bae..i on physhololal osa f- oro-Ia acti- fthoga er igs of tota labor force; 1960, 1970 nod 1979 data. rity adhalth cnadrit riron-acl1 temperanuo, id i, bd AS. Inusr f .n...c -Labor forc it saiting corcito. aoatoo andaediohoonopoiclnanelehg1 pereroyfno "eer at an"t-oroly,neo e gA nose "ect-oon of cnl lbur foc;1960, household ln-n; 19,61-65. 1970. And 1977 iota. 1970 mod 1979 dAta ep rootto. nnyofrnaofcmradal-rotooteof f ptr cnto Pariolaionair. P. cc t -toa, ILe nodfemal - Pmctcipation cc no nnp ffo Pan doy,.lnernn of toad Is ufinnaaro.a-nrdtycoe rfrso a oo,1ee odIml labor forsa roiro"'nn f. oral coutrine usthliehod by 07Sk p-lodi for elotmu porooa- s. of tocal, male and fom1l popalatiuc of nil agna -ep-ci-nly; allu-tc of 60 -ram of Io-a Protoho Pro day nod 20 gree of oimalso 1960. 1970, erA 1979 dut Th.. ~sars based ton l,la potlicipationratrt polon protroa.'of wh ich 10 tram should bn animal poceho. Thass stood- reflscninee-aotrno fthn rylno . ad lotg time trend.A erAs are lone that thoas tf 75 gram of total protnin and 23 trom of fe seimote ae ro atioro..ococas. annue protisi te at -nsog for the, wrld, Proposed by Pod in the Third fr-oit Dsprdec ..l Rm oiaI of pcpulanioo oodnr 15 nod 65 and orer trd od -uoy; 11-5. 1970 and 1977 date,t the conithortc. Parenrto roeinnorlyfro anma nOd oe - Penisi supply of food de- Pa ditA frmPtiMaAn ple gcas prdy 1961-65. 1970 and 1977~daoa.. IC9 lyIc(o thd(ns 1-lnoclily Putt (oar choeo ) -.nul,eh rthuodI ecnae fPinolc hit nrs o id R- i enrd by iuch.a tinns Attn drir-d ftran life cablon; 1960, 1970 and 1979 data, of housholds. LIfeto, cecoI "Srh(rat- krge nube c( prone Of life r-maitit TeR'lei nanetntwy a-eniotal oasors- of Pov.r. inya, atbith;t90 li 4197 nod1YT979'dato.7 sod1 ehoold .betocncprrtnd 0ith --oedarnblnaontoo.. lofac torttality Punt Ira thoneand) - Annua dootba of infot uoden Ott .n.. neleaa u o -Ponrt tooa[oL- (U00 -ro uirt-) - rend rur-1 efanpothousad unbirths. Anoosprry roaiolista oemn hnn hc lta hoc..n to hfn Pacer (percent of ....olacit-tcl hn n ua ne urruul dquodr lsntotialro-fodrr thr t aisOct he o eol (tonal, urban, sod norl) lt oeonbl at.r.s. to safe fodhn otter su,Pply (incue trcd ofo...oncoos or o.t-orltd but -ootamnftd f-tmidloatlorP. roIrn.ee (oor nio ri o ua rarcenagee o chnireapEciti-ppuRoclon.-loourbntbsa apubli -t- -th that f.- = .d Wlahl.., lyOttmatd Prultto Or dYolut poverty Itroma leve -reret P- orben do d nof her btopeda dinrroori--bl por of the-a ho-. fetchIo thepor .1ih - f-ig- oli -b Acces toturrts lroeid (olrrthat of h-cloift - ct bal. t fh th.sod me ld -.al ll:tI b1,1 - P Pomber of Prpm (otal, uayen. tnd urco) sten"a.hy1eurh.sldispuoul a th ilrto isposal, atibt or tithot cran tnsot ofbana art pcmos. tquatf ledfrm mdie school en p nlto. Eretty dipe.-I- -d lb'uTo,I:yti- Idu-t