Rwanda - Bugesera Gisaka Mogongo Rural Services (Phase II) Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-3358-RW REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN AN AMOUNT EQUIVALENT TO US$16.3 MILLION TO THE RWANDESE REPUBLIC FOR A PHASE II BUDESERA GISAKA MIGONGO (RURAL SERVICES) PROJECT June 22, 1982 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 US$1.00 Rwandese franc (Rf) 91.91 RF 100 US$1.09 FISCAL YEAR January 1 - December 31 GLOSSARY OF ABBREVIATIONS BGM - Bugesera Gisaka Migongo Project CLUSA - Cooperative League of the USA CRS - Catholic Relief Services FAC - Fonds d'Aide et de Cooperation GRENARWA - Grenier National du Rwanda (National Grain Marketing) IAMSEA - Institut Africain et Mauricien de Statistiques et Economie Appliquee (African Mauritian Institute for Statistics and Applied Economics) IITA - International Institute for Tropical Agriculture ISAR - Institut des Sciences Agronomiques du Rwanda (Agricultural Research Institute of Rwanda) OBM - Office du Bugesera et Mayaga (Agency for Bugesera and Mayaga) OCIR-Cafe - Office des Cultures Industrielles du Rwanda - Cafe (Agency for Industrial Crops of Rwanda - Coffee) OCIR-The - Office des Cultures Industrielles du Rwanda - The (Agency for Industrial Crops of Rwanda - Tea ONAPO - Office National de la Population (National Population Office) OPROVIA - Office National pour le Developpement et la Commercialisation des Produits Vivriers et de la Production Animale (National Agency for Development and Marketing of Foodcrops and Animal Products) PAV - Poste Agro-Veterinaire (Agro-Veterinary Support Center) SSS - Service des Semences Selectionnees (Selected Seed Service) WEIGHTS AND MEASURES Metric British/US Equivalents 1 meter (m) 3.3 feet 1 hectare (ha) 2.47 acres 1 a1re (100 m2) 0.02 acres 1 kilometer (km) 0.62 miles 1 square kilometer (km2) = 0.39 square mile (sq. mi.) 1 kilogram (kg) 2.2 pounds (lb) 1 liter (1) 0.26 US gallon (gal) 0.22 British gallon (imp gal) 1 metric ton (m ton) 2,204 pounds (lb)  FOR OFFICIAL USE ONLY RWANDA PHASE II BUGESERA GISAKA MIGONGO (RURAL SERVICES) PROJECT Credit and Project Summary Borrower: Rwandese Republic Amount: SDR 14.5 million (US$16.3 million equivalent) Terms: Standard Project (i) Objectives: To: (i) carry out research trials and Description: introduce new cropping techniques and varieties for the semi-arid areas; (ii) promote conservation to prevent loss of soil fertility; (iii) integrate crop and livestock activities on the farm plot and promote destocking of cattle and substitution of small stock where appropriate; (iv) intensify cultivation of cash crops and foodcrops in areas of average and above average potential; (v) improve rural roads; (vi) improve nutrition standards and expand awareness of family planning alternatives and (vii) develop the project planning and implementation capacity of local government (prefectures, sub-prefectures and communes). (ii) Components: The project would provide for: (a) applied and adaptive research for semi-arid crop development; (b) strengthening extension support services through: i) improvement of in-service training, establishment of local demonstrations and organization of a service network for cropping and livestock activities; ii) promotion of an improved seed multipli- cation program; a tree nursery and distribution program for coffee, fruit and forest trees; a program to improve soil fertility through stall-feeding and compost production and erosion control measures; promotion of improved methods of coffee plantation maintenance and organization of pest control campaigns; and This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  (ii) iii) training for cooperative management and technical support for agricultural credit; (c) livestock activities, including upgrading of local sheep and goat stock; (d) support to the Rubilizi Training Center for training assistant veterinarians; (e) nutrition center activities and development of a pilot family planning program in the project area; (f) rural roads construction and improvement; and (g) monitoring and evaluation and studies. (iii) Benefits: The project would promote: strengthening of the support services for agricultural and livestock activities at the farm level; increased production of subsistence and cash crops and of livestock; increased trade and transportation in and out of the project area; useful technical information from research activities for the future development of the semi-arid zones in Rwanda; and, over the long-term, reduced fertility rates through family planning efforts. (iv) Risks: The success of the production-oriented activities will depend on the effectiveness of extension services in responding to farmers' needs and in introducing new inputs (such as semi-arid foodcrop varieties) and improved cultivation techniques. Timing and coordination problems will be minimized by specific agreements between implementing agencies. Technical and financial management of all components has been carefully reviewed to assure clear lines of responsibility, reporting and control. Thus, the program of investments and the organization of project management have been carefully considered to minimize such risks.  (iii) Estimated costs 1/: Local Foreign Total (US$ thousands equivalent) Project Management 703 3,045 3,748 Extension Activities 2,458 2,334 4,792 Livestock Development 82 323 405 Rubilizi Training School 96 128 224 Research Activities 518 1,549 2,067 Nutrition and Population 207 667 874 Rural Road Construction 1,573 2,437 4,010 Contingencies Physical 484 635 1,119 Price 2,946 1,388 4,334 Total 9,067 12,506 21,573 Financing Plan: Local Foreign Total (US$ millions equivalent) IDA 6.8 9.5 16.3 FAC - 3.0 3.0 Government 2.3 - 2.3 Total 9.1 12.5 21.6 Estimated Disbursements: IDA Fiscal Year (US$ thousands equivalent) 1983 1984 1985 1986 1987 1988 1989 Annual: 1,200 3,050 3,250 2,500 2,500 2,500 1,300 Cumulative; 1,200 4,250 7,500 10,000 12,500 15,000 16,300 Appraisal Report: No. 3853-RW of May 28, 1982. Rate of Return: 16 percent on 65 percent of project costs for which benefits have been quantified. Map: IBRD 15961. 1/ Taxes included in project costs are negligible as all major items would be exempt from import duties and local taxes. Project costs include an advance from the Project Preparation Facility of about US$935,000 to finance road-building equipment, building construction, and start-up of the semi-arid research and family planning activities.  0 9  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE RWANDESE REPUBLIC FOR A PHASE II BUGESERA GISAKA MIGONGO (RURAL SERVICES) PROJECT 1. I submit the following report and recommendation on a proposed credit to the Rwandese Republic for the equivalent of SDRs 14.5 million (US$16.3 million) on standard IDA terms, to finance a Phase II Bugesera Gisaka Migongo (Rural Services) Project. The project would be cofinanced with the French FAC (about US$3.0 million) on a parallel basis. PART I - THE ECONOMY 2. A report, "Memorandum on the Economy of Rwanda" (No. 1108-RW), was distributed to the Executive Directors on July 27, 1976. Rwanda was visited by an economic mission in February 1979 and again in November/December 1981. The major findings of this recent mission are reflected below. Country data are provided in Annex I. 3. Rwanda is a small landlocked country in sub-Saharan Africa, surrounded by Uganda, Tanzania, Burundi and Zaire. It has the third highest population density of low income countries, at 188 persons/km2 (following Bangladesh and Sri Lanka), and its GNP per capita is among the lowest in the world, at US$200 in 1980. Rwanda's population of nearly 5.2 million in 1980 is predominantly rural (with only 4.5 percent in urban areas), and lives in small individual farms scattered over hilly terrain. The balance between food production and population is precarious, as potentially arable land is scarce, foodcrop yields are declining, and population is expanding at an estimated 3.6 percent annually. Twice recently (1974 and 1980), Rwanda had to resort to emergency food imports. Agriculture (coffee, tea, pyrethrum, cinchona) provides most of the country's foreign exchange earnings. Coffee is, by far, the most important source (62 percent) followed by mining products (20 percent), mainly cassiterite and wolfram. Rwanda's manufacturing base is narrow, and its growth is limited by the small size of the market, and the lack of raw materials, marketing facilities, entrepreneurial skills and skilled manpower. The country, consequently, imports petroleum products, capital goods, cement, steel, construction materials, and virtually every other modern manufactured product. Its merchandise trade is hampered by high transportation costs and dependence on neighboring countries for access to the seaports at Mombasa and Dar es Salaam. 1/ Part I of this report is substantially the same as that in Report No. P-3335-RW on the Second Education Project, considered by the Executive Directors on June 15, 1982.  - 2 - 4. A quantitative assessment of Rwanda's economic performance can only be tentative because of deficiencies in the statistical data base. Available estimates indicate that during the period 1977-79 the rate of growth of real GDP averaged 5 percent, but declined to about 4 percent in 1980. The average contribution of the agricultural sector to GDP, from 1977 to 1980, was 45 percent, and the sector's performance reflected mainly variations in foodcrop production, which during this period accounted for 79 percent of the value added by the sector. Foodcrop production oscillated with weather conditions, but is estimated to have been, on average, slightly above the rate of population growth. The remaining 21 percent of the value added by the agricultural sector is shared by livestock, fishing, and export crops. As a consequence of the pressure of population on land, the cattle herd has been reduced, and thus the contribution of livestock to the growth of the primary sector; fish production remains very low, as there is no tradition of fish consumption. Export crops, involving only 6 percent of Rwanda's arable land and contributing an average of 11 percent to the value added by the agricultural sector, are of crucial importance to the economy. Coffee is not only the principal source of foreign exchange but also a major source of cash income to a large proportion of the population and has accounted for a significant proportion of the Government's budgetary revenue. 5. The contribution of mining production to GDP averaged only 2 percent in 1977-80, and has declined in recent years. Output of cassiterite and wolfram has stagnated, owing to low international prices aggravated recently by the appreciation of the Rwandese franc, which is linked to the United States dollar. Furthermore, supply of necessary fuels has at times been irregular (as in 1979, with the closing of the Uganda border), and access to additional deeper seams by small-scale independent miners has become increasingly difficult. 6. The contribution of the manufacturing sector to GDP averaged 15 percent from 1977 to 1980. There are indications that manufacturing has experienced some significant real growth in recent years, principally in traditional production (mainly of banana and sorghum beer), which is estimated at nearly three-quarters of the value added in industry. Important also are the agro-industries (coffee, tea, pyrethrum), sugar refining, and beer and fruit juice production (lemon, passion-fruit etc.). Rwanda's modern manufacturing base has grown slowly, often in response to foreign aid. Examples include a cement plant under construction in the south, financed by China, and a match factory financed by Japan. The construction sector contributed, on average, 4 percent to GDP in the period 1977-80. Its recent growth has been limited to the construction of dwellings, mainly in Kigali (Rwanda's capital), and public buildings. 7. The assessment of performance of the tertiary sector is particularly tentative, partly because of the difficulties associated with evaluating commercial activities in the rural areas (traditional trade in coffee and foodcrops), but also because of probable tax evasion. The data available indicate that commerce and transportation contributed nearly 18 percent to GDP, on average, during 1977-80. Other tertiary activities seem to have expanded in real terms, especially public administration, whose contribution to GDP averaged 8 percent in that period.  - 3 - 8. Traditionally, Rwanda's fiscal policies have been prudent, and have taken into account the variations of revenue from export taxes, notably on coffee. As a result, current budgetary surpluses averaged 3 percent of GDP in 1977-80. The budget structure reflects the narrow revenue base, high recurrent expenditures, and development expenditures which are contingent upon external assistance. In 1977-80, more than 50 percent of central government revenues came from import and export taxes, with coffee exports alone contributing 25 percent; taxes on beverages (17 percent), and on income and profits (18 percent), accounted for most of the remainder. Recurrent expenditures were distributed mainly among Government's administrative services (25 percent), education (24 percent), and defense (20 percent), but expenditures on agriculture and public works have expanded faster in recent years. Budgeted development expenditures have been particularly important in agriculture (18 percent in 1977-80), transport and communications (13 percent), education (13 percent) and other social services (16 percent). 9. The fiscal situation, however, is being affected by a number of unfavorable trends. Preliminary estimates indicate that in 1981, contrary to the preceding years, increases in revenue fell short of increases in expenditures. Coffee prices declined, and in spite of higher export volume, budgetary receipts from this source fell. At the same time, there was a sharp expansion in government expenditures reflecting, inter alia, the impact of the general wage awards granted in September 1980 and the costs associated with the addition of a new Ministry of Higher Education and the establishment of a new legislative assembly. In an effort to expand the revenue base and increase revenue, the Government introduced a new business tax which, however, has not yet yielded sufficient resources to compensate for the fall in revenue from coffee. The overall treasury position thus shifted from a surplus of Rwf 1.4 billion (US$15.1 million equivalent) in 1980 (equivalent to 1.3 percent of GDP) to an estimated deficit of Rwf 2.1 billion (US$23.1 million equivalent) in 1981 (equivalent to about 2 percent of GDP). Even if growth in government expenditures is slowed, continued deficits are likely in the medium-term, as revenue from coffee is expected to remain depressed, and the possibility of recourse to other taxes (or to increase tax rates) is limited. 10. Conservative monetary and credit policies were followed during the 1977-80 period. Inflationary pressures have arisen mainly from supply shortages caused by frequent disruptions of supply routes through neighboring countries, increased international transport costs, and increased prices of imports and domestic foodstuffs. Inflation averaged 12.5 percent per annum during 1977-80; it peaked at 16 percent in 1979, primarily as a result of the closing of the Uganda border, but also reflecting higher transport costs following the 1979-80 oil price rises. The inflation rate declined to 7.2 percent in 1980 and remained at this level in 1981 as trade through Uganda was back to normal, the prices of domestic foodstuffs did not increase, and there was a significant slowdown in the rate of increase of import prices. 11. Rwanda's balance of payments generally reflects coffee market conditions, and has benefitted in recent years from significant net capital inflows. During the period 1977 to 1980, the current account deficit averaged U$105 million. Nevertheless, it was substantially lower in 1977 and 1979, and higher in 1978 and 1980, in line with fluctuations in coffee export receipts. Sustained net capital inflows led to overall balance of payments surpluses each  -4- year, and Rwanda's gross official foreign reserves, at end-1980, were equivalent to seven months of projected 1981 imports of goods and non-factor services. The decline in coffee export receipts observed in 1980 continued in 1981. Preliminary estimates indicate that in spite of a significant net inflow of capital, Rwanda suffered its first reserve loss in many years, bringing gross official foreign reserves down to the equivalent of five months of projected 1982 imports of goods and non-factor services. Medium-term prospects are not encouraging, as the terms of trade are expected to deteriorate. Because there are no viable alternatives, in the medium-term, to the products currently exported, export receipts are likely to increase only slightly (on the strength of increased volumes of coffee and tea), while import payments will probably remain at a high level, as Rwanda's import needs will increase if growth is to be sustained. 12. Rwanda's development plan for the period 1977-81 included as its main priorities to increase food production, improve living standards through more widespread access to better health care and basic social services, increase employment and improve utilization of human resources, and strengthen the country's external position (through reducing its dependence on coffee as the principal source of foreign exchange earnings and its vulnerability to external factors, such as transportation). The Government has made serious efforts to pursue these objectives, but structural, financial, and institutional constraints have limited the success of its policies. Particularly, institutional weaknesses stemming from lack of skilled personnel, fragmentation of institutional responsibilities, and poor coordination among concerned agencies have hindered project preparation and implementation and public sector management, and have thus contributed to the sluggishness of plan implementation. The Government's efforts to increase agricultural production, especially of foodcrops, have had modest results, and food supply remains inadequate. This situation is likely to be aggravated in the medium-term, as population is increasing rapidly. The work of the National Population Office, recently created and still being organized, will take time to produce results. While there has been a gradual increase in the number of health/nutrition centers and hospital beds, health services in rural areas are still sparse and water supply has tended to deteriorate in some rural areas. The implementation of the 1979 education reform has been hampered by financial and administrative constraints and by the limited number of teachers. The only significant increases in employment have occurred in the public administration and construction sectors. While Rwanda succeeded in diversifying somewhat its export crops by increasing the production of tea, this did not reduce significantly its vulnerability to volatile world market conditions. 13. One of the 1977-81 Plan's main objectives was to reduce the country's vulnerability to bottlenecks affecting transportation through neighboring countries; however, improvement of internal transportation is also needed to stimulate agricultural productivity. Rwanda's rudimentary road network has hampered agricultural specialization and monetization, and thus the modernization of the agricultural sector. External donors finance most of Rwanda's infrastructure projects, and investment in roads and road maintenance has increased in recent years. However, a large proportion of the road network is still not passable during the rainy seasons which sometimes seriously disrupt trade. The northern transportation corridor through Uganda and Kenya to the port of Mombasa carries most of Rwanda's external trade. Interruptions of this trade have had negative impacts on the economy, as during the Uganda/Tanzania  - 5 - war in 1978/79 when the Government was forced to resort to expensive air transport. Air Rwanda, the state-owned airline, purchased a used Boeing 707 cargo plane which has been used since July 1979 to transport all kinds of merchandise. Kigali's airport has been equipped for all-weather operation and, since its recent expansion, can accommodate wide body jets. It appears likely that air transport will continue to grow in importance, given the risks of political disruptions in the region and the prohibitively high cost of shipment over alternative routes. 14. External agencies have financed the largest proportion of development expenditures in Rwanda. The principal sources of foreign assistance and their average share during 1977-80 were Belgium (26 percent), the European Development Fund (13 percent), the Federal Republic of Germany (9 percent), the United Nations System (14 percent), and France (8 percent). IDA contributed over half of the United Nations System share. Japan, Switzerland, non-governmental organizations, Canada, and the United States account for the remainder. External aid has been mainly in the form of technical assistance and financing infrastructure development. Most technical assistance (58 percent) has benefitted agriculture, education, and health care. Investment in transport and communications accounted for about two-thirds of infrastructure financing in 1980. Together, these four sectors received nearly 62 percent of the aid extended to Rwanda in 1980, an emphasis in line with the country's avowed objectives and priorities. 15. Rwanda's need for external assistance will increase in the next few years, as its fiscal and balance of payments prospects are less favorable than in the past, principally as a result of depressed world prices for its major exports (coffee, tea, cassiterite and wolfram). Agricultural production, particularly of foodcrops, is not expected to increase significantly in the short run, as it will take time to raise yields. Significant increases in mining production will only be possible if the financing for currently planned investments materializes. The performance of the other sectors, which depend heavily on imported goods, can only be maintained with further reserve losses and/or increased net inflow of capital, and these sectors will probably compete with food items for scarce foreign exchange. Thus, the medium-term outlook for Rwanda is not encouraging, especially at a time when the external agencies also have financial constraints. The country's external debt is still low. At end-1980, the public- and publicly-guaranteed external debt amounted to US$170 million, or 14 percent of GDP, and the debt service ratio was equivalent to only 3.2 percent of exports of goods and non-factor services. Hence, there remains considerable scope for further borrowing. Nevertheless, given the poverty of the country, the vulnerability of its economy and its poor medium-term prospects, external funds should continue to be provided mostly in the form of grants or loans at highly concessionary terms. PART II - BANK GROUP OPERATIONS IN RWANDA 1/ 16. Bank Group assistance started in 1970 and initially focused on the improvement of the road network and the strengthening of agriculture production. Rwanda has received seventeen IDA credits totalling US$171.4 million, of which five (totalling US$69.0 million) were for roads, six (US$64.3 1/ Part II of this report is substantially the same as that in Report No. No. P-3335-RW on the Second Education Project, considered by the Executive Directors on June 15, 1982.  million) for agriculture, two (US$9.2 million) for DFC projects, two (US$18.0 million reduced to US$16.4 million) for education, one (US$7.5 million) for telecommunications and one (US$5.0 million) for technical assistance. There have been no Bank loans. An IFC loan of US$535,000 for a tea factory was signed in 1976; a second IFC loan of US$226,000 and contingent equity commitment of up to US$60,000 to expand the tea factory were signed in September 1980. Annex II contains a summary statement of IDA credits, IFC investments and notes on the execution of ongoing projects. 17. The first three highway projects are completed and totally disbursed. A fourth credit for a highway maintenance project (Credit 769-RW), which became effective in August 1978, is three-quarters completed and is progressing satisfactorily. A US$25.9 million credit was approved May 20, 1982 for a Fifth Highway Project. 18. The first agricultural development (Mutara) project was completed in July 1979 and funds have now been completely disbursed (see also para. 34). A second credit of US$8.8 million, which supports the second phase of a long-term development for the Mutara region, was declared effective on May 30, 1980, but has experienced start-up problems due to difficulties in recruiting technical assistance. The Cinchona Project (US$1.8 million) is nearing completion and has progressed satisfactorily; the Bugesera/Gisaka/Mingongo mixed farming and rural development project (BGM I) is expected to be completed in December 1982. Construction, procurement and budgeting are proceeding satisfactorily under this project, though the results of foodcrop and plant improvement components are below appraisal estimates due to a lack of appropriate technical packages for the relatively dry project area. Given this, the proposed BGM II project emphasizes research for semi-arid crop development. A project to support reforestation programs in Kigali, Butare and Gisenyi Prefectures (IDA Credit 1039-RW for US$21.0 million) became effective on November 11, 1981; the project includes a study of renewable energy sources for Rwanda. A US$15.0 million credit for a coffee improvement/foodcrops project in the Lake Kivu region became effective January 18, 1982; all staff have been recruited, the first year extension program has been completed successfully, and research activities have commenced. A credit for an education project (US$8.0 million) became effective in 1975; physical implementation has been complicated by procurement problems (para. 19 below). The first credit of US$4.0 million to the Rwandese Development Bank (BRD) has now been fully committed. BRD's performance under the credit has been highly satisfactory. A second credit of US$5.2 million to BRD was signed on July 13, 1979, and became effective on January 4, 1980. A credit for a telecommunications project (US$7.5 million) which aims at reducing Rwanda's geographic isolation from other countries and at improving internal telecommunications facilities, became effective July 7, 1981, and is proceeding satisfactorily. 19. In fiscal years 1979-81, disbursements for Rwanda totalled US$28.9 million compared to new commitments of US$42.4 million. In the same period, the average annual disbursement rate (ratio of change in disbursements to undisbursed balance) was 20 percent; this is about average for countries of the Eastern Africa Region. While disbursement performance in general is satisfactory, notable difficulties have arisen in the case of the First Education Project. The lack of acceptable record keeping has impeded the processing of disbursement requests. However, following a UNESCO-assisted final inspection and evaluation mission for the worshops financed under the project,  - 7 - disbursements hasve resumed. Implementation of the Second Education Project approved June 15, 1982 should be less affected by similar weaknesses given the familiarity with Bank Group procedures now acquired in the Ministry of Primary and Secondary Education, where in addition, a new and more positive managerial climate now prevails since the Ministry was reorganized about a year ago. 20. One of the major constraints on Rwanda's development is the shortage of technical/managerial capacity. This affects all sectors and inhibits project preparation and implementation. Intensive technical assistance and on-the-job training of Rwandese staff are therefore a salient feature of the Bank's program for Rwanda, either under individual projects in the various sectors or through the recently approved Technical Assistance Project. 21. For the future, the primary emphasis of Bank operations will remain on rural development, the main objective being to increase food production as well as export crops, while maintaining soil fertility. A major emphasis will also be placed on the development of human resources, focusing on population control and support to basic education and skills training to improve agricultural productivity, provide skilled manpower, and influence attitudes on the population issue. Further investment is also justified for infrastructure and, in particular, transportation to reduce the country's isolation and provide incentives to further intensification of agriculture as well as increased specialization and diversification through better marketing. Another area requiring our special attention is renewable energy to lessen the demand for fuel imports and mitigate their impact on the balance of payments. A study of renewable energy sources is being financed under IDA credit 1039-RW (para. 18). The proposed BGM II rural development project includes a population/nutrition component, the Association's first operational effort in the critical area of population education and planning (para. 49). In highways, the Bank recently approved a credit to participate in the financing of the Butare-Cyangugu road. This project is designed to open up the southern region of Rwanda towards Zaire and Burundi and support both the forestry (FY80) and the coffee improvement/foodcrops (FY81) projects. A second education project, approved this past June, addresses clearcut manpower needs and supports the training of middle level technicians and managers; the project also includesselective support for basic education through preservice and inservice training of teachers. It is expected that the Bank will continue to support industrial development through the BRD. PART III - THE AGRICULTURAL SECTOR General 22. Rwanda, which has a traditional and overwhelmingly rural economy, is largely self-sufficient in basic foods, but there is serious doubt about the ability of agricultural production to keep up with the rapidly growing population. Almost all agricultural activities are carried out by smallholders on plots averaging about one hectare in size using traditional cultivation methods and tools. 23. Agricultural and Livestock Production. The variation in elevation and climate enables a wide range of crops to be grown. Subsistence crops include beans, sorghum, bananas, sweet potatoes, groundnuts and cassava. Foodcrops grown at higher elevations are peas, potatoes, maize and beans. About 95 percent of the cultivated land is planted with foodcrops, and although  - 8 - climatic conditions allow two crops a year in most areas, soil fertility is declining and crop yields are poor. Six percent of the cultivated land is planted with export crops, mainly coffee, tea, pyrethrum and cinchona. The size of the national cattle herd has been declining; in 1980 it was estimated at about 630,000. Milk production is low, estimated at about 66 million liters in 1980; with one-third going for human consumption. Meat production was estimated at 10,000 tons carcass weight in 1980. The numbers of goats and sheep, which provide most of the meat consumed in rural areas, were estimated in 1980 at 770,000 and 270,000 respectively. 24. Forestry. Rwanda's forest resources are estimated to cover approximately 170,000 ha, or roughly 6 percent of the total land area. This resource is being depleted at an estimated rate of 5 percent per annum. Sporadic Government tree-planting programs are not sufficient to keep up with growing demand for wood or to provide adequate soil protection against erosion in critical zones. The marked decline in wood available for fuel and charcoal has resulted in the increased use of agricultural residues for fuel. 25. Marketing and Prices. Most foodcrop production is consumed on the farm. An estimated 33 percent is marketed, mainly locally on traditional markets. Beans, sorghum, peas, and potatoes are the principal foodcrops traded inter-regionally; the prices of these foodcrops are determined by the market. The National Grain Marketing Organization of Rwanda (GRENARWA), a USAID-supported marketing parastatal, intervenes in the marketing of beans and sorghum in an effort to stabilize prices of these staples. However, the volume of foodcrop marketing presently handled by GRENARWA (estimated at 5 percent of total marketed production in beans and sorghum) is not sufficient for GRENARWA to have a major impact on price stabilization. Banana beer is the most widely-traded item in Rwanda, and the most readily available source of cash in the rural communities. Coffee is collected by traders licensed by the Agency for Industrial Crops of Rwanda - Coffee (OCIR-Cafe). Most cattle are sold in small rural markets or in Kigali and Butare. Official beef prices are established by the Ministry of National Economy but there is no regular enforcement. The number of cattle slaughtered at the Kigali slaughter house has increased steadily in recent years from about 7,000 head in 1975 to about 13,000 in 1980. The market for sheep and goats has also increased significantly. There is an important and growing export of cattle to neighboring countries. 26. Development Constraints, Prospects and Objectives. The three major objectives of Rwanda's Third Five-Year Plan (1982-86) are (i) to increase agricultural productivity through erosion control, diffusion of selected seeds and integration of livestock and agriculture; (ii) to increase employment, and (iii) to achieve a satisfactory balance between foodcrop and export crop production. These objectives are limited above all by the shortage of cultivable land. Increases in foodcrop production over the past decade have been largely achieved through extension of cultivation to poorer quality land previously devoted to pastoral and forestry uses; this alternative is almost exhausted. Intensification efforts in the future will require particular attention to erosion control and soil fertility. Agricultural research in Rwanda has demonstrated that yields can be increased by using improved seeds, by intercropping bananas with pulses, and by applying soil conservation techniques. In general, however, much more work needs to be done in identifying improved varieties and in introducing changes within the traditional farming system. The budget for the Ministry of Agriculture and Livestock Development remains small in comparison to the needs of this sector. The combined  - 9 - development and ordinary budgets for the Ministry represented only about 7 percent of the total government budget in 1981. Existing logistic services need strengthening, project planning and implementation require greater coordination, monitoring and feedback. Improved statistics collection, wider dissemination of research findings and monitoring of expenditures, are all essential to strengthening the Ministry's capacity to direct development efforts. To date, there has been a lack of effective coordination and monitoring of donor-financed projects. As a result of this situation, many projects remain isolated and important experience and results are not efficently disseminated. Some measures have been taken recently to strengthen project monitoring and data collection within the Ministry; however, overall planning and coordination need to be strengthened in order to improve efficiency in the allocation of resources. A Technical Assistance Project, designed to strengthen the Ministry of Plan's capacity to improve interministerial coordination as well as planning and budgeting, was approved by the Executive Directors in March 1982. Government Services 27. The Ministry of Agriculture and Livestock is responsible for virtually all activities related to agriculture and livestock in Rwanda. It operates a Selected Seed Service (SSS) and is the supervisory organization for six autonomous parastatal companies. The Ministry has over 2,000 staff members, most of whom are field extension workers (about 1,500) or veterinary field staff (about 400), operating in all the prefectures and communes. 28. Agricultural Research. The Agricultural Research Institute of Rwanda (ISAR) is headquartered at Rubona, and is responsible for agricultural and livestock research. ISAR has been supported mainly by Belgian aid; it has received limited funds from the International Development Research Center (IRDC-Canada). The Swiss are providing assistance in forestry. The IDA-financed Lake Kivu Coffee and Foodcrop Project (Credit 1126-RW) is supporting coffee and some foodcrop research. Up to now, ISAR's program has lacked both socio-economic studies of farm systems and adaptive trials on farmers' fields. The Bank (RMEA) is currently assisting the Government to organize a seminar in December 1982 to evaluate the present status of research in Rwanda and to define the scope of future efforts. One of the intended results of the seminar would be the identification of a national research project for possible Bank or other donor financing in early 1983, to define research priorities and to address the need to improve the links between research and extension and to strengthen the management and organisation of research in Rwanda. 29. The Selected Seed Service. Rwanda's foodcrop seed selection and multiplication service, the Service des Semences Selectionnees (SSS), was created in 1971. ISAR provides foundation seed which is multiplied by the SSS in five centers located in different ecological zones. The varieties currently distributed (mainly beans, sorghum, maize, peas and vegetables) have been selected to improve yields with low or no fertilizer inputs and to be tolerant or resistant to the main diseases. The objective of the service is to produce selected seed and supply Rwanda's 10 prefectures and 143 communes for further multiplication and the production of commercial seed. At present, however, SSS reaches only about 4 percent of the potential users. A recent FAO study has proposed a program for SSS which would address critical problems of financing, staffing and organization of seed multiplication and seed distribution at the communal level.  - 10 - 30. Agricultural Training. There are three institutions responsible for post-secondary agricultural training: the Agronomy Faculty of the National University of Rwanda at Butare, which trains agricultural engineers and veterinary assistants; the School of Agriculture, in Butare, which operates a four-year post-secondary course; and the Nyagahanga School in Byumba Prefecture which trains female agricultural technicians. In January 1980, the Rubilizi Training Center near Kigali (para. 47) began a two-year program for training lower-level assistant veterinarians. This center was financed under the BGM I Project. The first class of 56 students graduated in January 1982. 31. Rural Credit. Credit to farmers is very limited at present. Some credit is channelled through the People's Banks (Banques Populaires)which are supported primarily by Swiss technical assistance and provide an important channel for rural savings. These Banks make loans to cooperatives and individuals for working-capital needs and other small investments for housing improvement, transport, and a few agricultural and livestock inputs. An experimental credit program was begun under the BGM I Project and would be transferred to the Banques Populaires under this project (para. 45). 32. Family Planning Services. In recognition of Rwanda's high population growth and limited resources, the Government has recently undertaken to address the population problem. A National Population Office (ONAPO) was created in mid-1981, and Government is seeking the assistance of international organizations in developing programs for family planning education, training and service delivery. ONAPO has a broad mandate to define a national population policy, to initiate demographic research and to coordinate the implementation of family planning programs. 33. Local Administration. Local administrative structure is relatively well developed in Rwanda and is increasingly being used to channel development resources to the rural population. Rwanda's ten prefectures are each headed by a prefect and divided into communes (usually 10 - 16 per prefecture), headed by a bourgemestre. Each of the 143 communes is divided into sectors (10-14 per commune), and each sector is subdivided into cells, comprising 50 to 60 families. Each Rwandese adult man and woman is required to work a half day per week on a community, or umuganda, project. Projects are selected by the communal council and include construction of feeder roads, bridges, schools, work on communal demonstration plots, tree planting, and the installation of drinking water systems. Participation in umuganda activities is not uniform, but in areas where the bourgemestre is dynamic, achievements have been substantial. Previous Bank Lending for Agriculture 34. To date, the Bank Group has financed six agricultural projects in Rwanda. The first phase of the Mutara Agricultural Development Project Credit 439-RW for US$3.8 million) has been completed. A Project Completion Report was prepared in August 1980 and a PPAR issued in June 1981. They concluded that even though the project did not result in the expected increase in agricultural production, substantial achievements had been realized in the areas of infrastructure development and in experience acquired by Rwandese staff in project management. Experience gained through implementation of this and other projects was taken into account in designing the proposed project; notably, proposed technical interventions are fewer and simpler, infrastructure development has been reduced to a minimum, systematic farm-level monitoring and  - 11 - feedback has been introduced and implementation arrangements have been simplified. The Cinchona Project, supported by an IDA Credit for US$1.8 million, is nearing completion; implementation has been satisfactory. An IDA Credit of US$8.9 million was approved in June 1979 to support group ranch development and settlement under the second phase of the Mutara Agricultural and Livestock Development Project (Credit 937-RW). Settlement of cattle owners has proceeded in an orderly way and pasture production has been improved, but destocking activities and credit recovery have been disappointing due to lack of clear policies and enforcement mechanisms. The Integrated Forestry and Livestock Development Project (Credit 1039-RW for US$21 million) and the Lake Kivu Coffee Improvement and Foodcrop Project (Credit 1126-RW for US$15 million) became effective in late 1981 and early 1982, respectively; technical assistance and key local staff have been recruited and start-up activities are progressing satisfactorily. The Bugesera Gisaka Migongo I Project 35. The first phase Bugesera Gisaka Migongo Project, BGM I (Credit 668-RW), was approved in late 1976 and became effective in November 1977. BADEA and FAC co-financed the project with IDA. It was a five-year program designed to develop essential infrastructure and improve rural services in the Bugesera region and parts of Gisaka Migongo. Specifically, the project contained provisions for crop and livestock extension activities and training, the establishment of two steer fattening ranches and extension of a breeding ranch, the establishment of two regional development centers with training facilities and numerous civil works, including water supply infrastructure, staff housing, feeder roads, three schools and six health centers. The first phase is expected to be completed in December 1982. 36. Project Performance. Systematic implementation of extension activities did not begin until 1981; there had been staffing difficulties and the expatriate agronomists spent a disproportionate amount of time supervising construction works. Despite these factors, tree nursery activities were successfully organized by 1981; soy beans, new cropping patterns, a credit program and measures to protect farmers' plots from erosion were also successfully introduced. Implementation of the livestock program was hampered by lack of skilled technicians and adequate staff training. The area available for ranching was overestimated at appraisal; because of this and of difficulties in providing water and the limited market for high quality beef, the Gako and Nasho fattening ranches proved commercially unviable; by contrast, the Rusumo breeding ranch appears to be commercially viable under proper management. The building component of the rural infrastructure program, expanded during implementation to meet additional housing needs, was efficiently carried out. Only 10 percent of the targets set at appraisal for construction of feeder roads was achieved as the execution of this activity is beyond the capacity of the Ministry of Agriculture. Appraisal targets for the development of water supplies in eastern Bugesera are expected to be met by the end of 1982. No significant research was carried out under this project, with the exception of some limited trials on regional center plots. Only one training specialist was recruited (not two as envisaged at appraisal) and arrived two years after credit effectiveness. The Rubilizi Training Center, originally designed for training  - 12 - project veterinary personnel, was transformed into a national center for training veterinary extension officers; the first class graduated in January 1982, but the impact of the two-year program will not be felt until the mid-1980s. Regular follow-up of training for communal extension personnel began in mid 1981. The Project Coordinating Committee (PCC), established by Presidential Decree under BGM I, has been responsible for project implementation and has proved relatively effective as an implementation, coordination and management tool. Project activities were planned and carried out in accordance with annual work plans prepared largely by the Project Unit in Kigali and approved by the PCC and IDA. In appraising the second project, project activities have been planned to consolidate actions begun under the first (development of rural services, including crop and livestock extension and agriculture training; agro-veterinary support centers; feeder roads; health centers) and to concentrate on the development of services for the rural population of the project area. In addition, the proposed project would initiate certain other activities, such as semi-arid and farm systems research, road improvement and family planning services, which would contribute in the medium and long-term to increasing productivity and living standards. PART IV - THE PROJECT 37. The proposed project was prepared in 1980 by the Studies Bureau of the Ministry of Agriculture and Livestock as a follow-up to the BGM I project. The Regional Mission in East Africa (RMEA) was involved in discussions on a possible second phase since 1979, and assisted with the preparation. An appraisal mission visited Rwanda in May-June 1981 and post-appraisal discussions were held in Kigali in October/November of the same year. Negotiations were held in Washington from May 5 to 10, 1982; the Rwandese delegation was headed by H. E. Frederic Nzamurambaho, Minister of Agriculture and Livestock. A Credit and Project Summary, highlighting the main features of the project, is at the beginning of this report. A detailed description of the project components is in the Staff Appraisal Report (No. 3853-RW), dated May 28, 1982, being circulated separately to the Executive Directors. Special conditions of the Credit are summarized in Annex III. Project Area 38. The proposed Project would be implemented in the same areas as the BGM I project. These areas total approximately 3,000 km2 (Map IBRD 15961), covering three communes in the Bugesera region and three in Gisaka Migongo; their combined population was about 310,000 inhabitants in 1980. It is estimated that more than 50 percent of the inhabitants are settlers recently arrived from other, more densely peopled parts of Rwanda and that 50 percent of the current population is under 10 years old. The Bugesera and Gisaka Migongo regions are the driest zone of Rwanda and ground water reserves are limited. Only about 35 percent of the project area has soil conditions and adequate rainfall to support normal cropping activities. Approximately 20 percent of the land is under forest, and approximately 13 percent has little or no productive potential. Recent migrants to the area have brought with them agricultural practices and cropping patterns poorly adapted to these  - 13 - conditions. Present crop production is mainly for subsistence. The road network serving the north of Gisaka is relatively well developed, but elsewhere in the project area, roads are few and impassable during the rainy months. Infrastructure is still limited, and few communes can afford to support even minimal services. Objectives and Description of the Project 39. The proposed project would be the second phase of a long-term development program for the Bugesera and the Gisaka Migongo regions. It would consolidate certain actions begun under the first project which was designed as a five-year program (1977-1982) to develop essential infrastructure and improve rural services in the communes of the project area. In addition, the proposed project defines new interventions, particularly on semi-arid crops, small livestock promotion and soil conservation activities for the semi-arid zones; its primary objectives are thus to: (i) carry out research trials and introduce new cropping techniques and varieties for the semi-arid areas; (ii) intensify cultivation of cash and foodcrops in areas of average and above average potential;(iii) promote conservation to prevent loss of soil fertility; (iv) integrate crop and livestock activities on the farm plot; (v) promote the introduction of small stock where appropriate; (vi) improve rural roads; and (vii) improve nutrition standards and expanded awareness of family planning alternatives. 40. The proposed project would consist of: (a) applied and adaptive research for semi-arid crop development; (b) strengthening extension support services through: i) improvement of in-service training, establishment of local demonstrations and organization of a service network for cropping and livestock activities; ii) promotion of an improved seed multiplication program; a tree nursery and distribution program for coffee, fruit and forest trees; a program to improve soil fertility through stall-feeding and compost production and erosion control measures; promotion of improved methods of coffee plantation maintenance and organization of pest control campaigns; and iii) training for cooperative management and technical support for agricultural credit; (c) livestock activities: support for the Rusumo breeding ranch, a program for upgrading local sheep and goat stock; (d) support to the Rubilizi Training Center for training assistant-level veterinarians; (e) nutrition center activities and development of a pilot family planning program in the project area;  - 14 - (f) rural roads construction and improvement; and (g) monitoring and evaluation and studies. Detailed Features Semi-arid Crop Development and Farm Systems Research 41. The proposed project would support ISAR's research activities (para. 28) at ISAR's Karama Station in the Bugesera region. While a research program focused mainly on foodcrops has been carried out at this station for over fifteen years, trials have been based exclusively on the more fertile alluvial soils adjacent to the lake, and not on the semi-arid plateau soils. The research program would aim to: (i) develop improved and more disease-resistant varieties for the major crops (bananas, sorghum, beans, cassava, sweet potatoes, groundnuts and soy) (ii) identify improved agronomic practices consistent with the capabilities and circumstances of local farmers for the major existing crops; (iii) develop land management and cropping systems to increase or maintain soil fertility; (iv) test combinations of improved foodcrop and cultural practices on farmers' plots; and (v) provide training for Rwandese research staff in areas related to the agronomic and farm systems program to be carried out at Karama. The signing of a contract (satisfactory to IDA) between ISAR and the International Institute for Tropical Agriculture in Ibadan, Nigeria (IITA) regarding the implementation of the research component is a condition of credit effectiveness (Sections 3.07(a) and 6.01(b) of the Development Credit Agreement). IITA would provide technical assistance for this component. Assurances were obtained at negotiations that ISAR, in consultation with the IITA research specialists, would prepare a five-year work plan to be submitted within three months of the research specialists' arrival in Rwanda for IDA for approval. In addition, ISAR would submit, by September 15 of each year, a progress report covering the 12-month period ending September 30 and a detailed annual work plan for the following calendar year (Section 3.08 and Schedule 4 of the Development Credit Agreement). 42. Extension Services and Training. There are presently about 100 agricultural and livestock extension agents working in the Project area and some 20 staff working in the agro-veterinary centers (PAVs). Project activities would focus on providing technical training and logistic support for these personnel. Eighteen sectors, identified as the most responsive to innovation, have been selected for intensive assistance. To ensure adequate provision of extension services, assurances were obtained at negotiations that the Government would, over the project period (i) maintain the number of extension agents and other project personnel at the staffing level in January 1982, and (ii) continue to provide one agronomist and one veterinarian per commune in the project area (Section 3.03 (c) of the Development Credit Agreement). Foodcrop and cashcrop extension themes would focus on introduction of improved varieties and improved cultural practices, erosion control, preservation of soil fertility, intensification of foodcrop, fruit tree and coffee production, reforestation and livestock management. Livestock extension activities would revolve around local groups of livestock farmers. Veterinary products are presently subsidized. To institute a cost recovery mechanism, assurances were obtained at negotiations  - 15 - that Government would, (i) by September 1, 1982, submit to IDA a detailed plan and procedures for the progressive increase of changes applicable to all veterinary medicines dispensed in Rwanda and (ii) take all necessary measures to ensure that livestock owners would be charged as follows: 70 percent of the full cost of such medicines beginning January 1, 1983; 80 percent beginning January 1, 1984; 90 percent beginning January 1, 1985; and 100 percent beginning January 1, 1986 (Section 3.05 of the Development Credit Agreement). The Training programs would be carried out to upgrade the skills of the extension staff, the staff of the regional centers and the PAVs, as well as the technical staff of the communes in the project area. Training programs for extension staff would be organized regionally by the Regional Training Director assisted by an internationally-recruited Training Extension Specialist stationed in each of the two regional centers. The prefectorial and regional agronomists would assist with the training of the comune agronomists and veterinary officers, the PAVs staff, and the Sector-level extension agents. INADES-Rwanda, a Jesuit-supported organization, which has developed excellent teaching materials in the local language, would collaborate with project staff in preparing and conducting short courses for extension and selected other communal staff. 43. Production and distribution of selected foodcrop seeds and cuttings is a major objective of the extension program. Two multiplication centers, one in each region, would be used for the first multiplication. Seeds to be multiplied include soy beans, maize, beans and groundnuts. Assurances were obtained that Government would, by September 15, 1983, establish prices for selected seeds produced under the project which would allow recovery of the production and distribution costs of such seeds, provided that these prices are sufficiently attractive to encourage farmers to buy the seeds (Section 3.06 (a) of the Development Credit Agreement). Due to the critical shortage of fuelwood in most of the project area, a systematic program would be developed to provide additional treecrop material to farmers; tree seedlings would be distributed free of charge. The coffee improvement program to replace dead or unproductive trees in existing plantations would consist of the production and distribution of about 300,000 seedlings per year. Assurances were obtained at negotiations that OCIR-Cafe would continue to provide adequate quantities of pesticides to the project area at a minimum of the 1981 levels (Section 3.06 (b) of the Development Credit Agreement). Investments would include costs associated with the production of seedlings and a small revolving fund for the sale of saws and pruning tools to farmers. 44. Measures would be taken to control soil erosion and soil degradation which has resulted from a combination of overgrazing and lack of effective anti-erosion measures. Extension agents would continue to work with farmers to establish contour bunds. In addition to assisting farmers to piant small family woodlots, the project staff, working with communal leaders, would organize the reforestation of about 30 ha per year with paid labor. 45. Assistance to farmer associations begun under the BGM I project would be continued with increased emphasis on management and training. At present, there are about ten formal cooperatives in the Gisaka Migongo region and none in the Bugesera region, but there are close to 100 farmers' associations. Project staff efforts would be concentrated on introducing simple  - 16 - management techniques appropriate to activities of the cooperatives and farmers' associations. To support increased demand by local farmers, the proposed project would assist with expansion of Banques Populaires lending operations into agricultural investments. Local savings deposits of the Banques Populaires are adequate to finance a modest investment program in the project area. Project extension staff, with assistance from regional finance and accounting staff, would provide technical support for credit promotion; there would be no other specific investments associated with this program. 46. Livestock. The Rusomo breeding ranch was expanded under the first phase of the BGM project. With pasture improvements and purchase of additional breeding stock to be completed under the project by the end of 1985, the ranch's capacity could be increased from its present level of about 2,300 animals to its maximum potential of about 3,500. With a herd of this size, the ranch, if well managed, could be expected to generate revenues sufficient to cover its operating costs (including depreciation). The genetic upgrading of goats will be centered at ISAR Karama, and of sheep, at ISAR Rubona. It is expected that by 1984, project staff would be able to launch a sheep breeding program based at Nasho (para. 36), and funds have been provided for this activity to purchase 300 locally-selected breeding stock from ISAR's flock, veterinary supplies, salaries and associated transport costs. 47. The Rubilizi Training Center (para. 30) for veterinary staff was established under the Ministry of Agriculture in 1979, and financed with funds from BGM I project. It is the only school of its kind in Rwanda, with a unique training curriculum and methodology geared specifically for the requirements of veterinary extension work. The first class of 56 students graduated in January 1982 and is being placed in the BGM and other development projects to replace underqualified veterinary assistants. Funds under the proposed project would finance costs associated with curriculum modifications recommended by the recent commission of the Ministry of Primary and Secondary Education and, excluding teachers' salaries, of Rubilizi through 1984. At negotiations, assurances were obtained that the Government would take all financial, administrative and pedagogical action necessary to assure that during the execution of the proposed project, Rubilizi would continue to educate students at least at the level reached in January 1982, in terms of quality and quantity (Section 4.03 of the Development Credit Agreement). 48. The nutrition centers in the project area would be more systematically integrated into general project training and agricultural extension activities. Funds would be provided for the construction of four new nutrition centers and essential repairs to a limited number of the existing centers. Nutrition centers would be assisted to strengthen and expand their existing programs in: (i) agriculture, by introducing wider use of selected seeds and improved cropping techniques; (ii) small livestock, particularly rabbit, sheep and goat breeding activities; (iii) family planning education, by supporting training for center personnel and providing teaching materials; and (iv) family water supply, providing the cement for small, domestic cisterns constructed by farmers under the direction of center personnel.  - 17 - 49. Pilot Family Planning . Under the proposed project, pilot activities in the project zone would aim to assist ONAPO to provide for the first time in rural areas, family planning service delivery and information dessemination. To this end, an internationally-recruited family planning specialist would provide, on an intermittant basis over 3 years, 14 man-months of technical assistance in project implementation and evaluation. In particular, the consultant would help ONAPO conduct baseline and follow-up surveys in the component area to measure changes in family planning knowledge, attitude and use. After appropriate training, existing personnel of the Ministry of Health would provide family planning services, and personnel of the Ministry of Social Affairs would carry out educational activities. The component would also finance the training of community outreach workers to promote family planning, the construction of a family health center at Kibungo Hospital and short-term consultants for the development of educational materials and monitoring. At negotiations, assurances were obtained that the Ministry of Health would provide the services of one doctor and one nurse-midwife at Kibungo hospital and one nurse's aide each at the Mutendeli and Rukira dispensaries in the project zone (Section 3.03 (b) of the Development Credit Agreement), and (ii) the family planning specialist would have experience and qualifications satisfactory to IDA (Section 3.02 of the Credit Agreement). 50. Feeder Roads. At present, trade in the project area is restricted by the poor state of the roads (para. 13). Under the project, a program to improve and extend the feeder roads in the two regions would be carried out. One road brigade would be financed to work in Bugesera for two years and Gisaka Migongo for three years. To avoid difficulties encountered under BGM I (para. 36), all road works would be carried out by the Ministry of Public Works. Investments would be for equipment and materials, costs of labor and supervisory staff, spare parts and fuel. It would be a condition of disbursement for all expenditures on building construction and the rural road component that IDA approve a letter of understanding between the Ministry of Public Works and the Ministry of Agriculture and Livestock defining the management responsibilities for the road building component and all other project building construction (Section 3.07 (b) of the Development Credit Agreement). 51. Monitoring and Evaluation. Monitoring of extension activities and their impact on farmers' attitudes, practices and their agricultural and livestock productivity would be established as a permanent project activity, and the resulting evaluations reviewed regularly. A monitoring and evaluation specialist would be recruited under the project to design appropriate baseline and follow-up surveys and to train a small team to carry out regular monitoring functions. This specialist would be based in the Ministry of Agriculture and Livestock. Key indicators for project impact would be defined and surveys would test for variations in the sectors receiving intensified assistance (para. 42). Short-term consultants would be hired to conduct a baseline nutritional survey in 1983 and follow-up surveys in 1985 and 1987. A technical land use study for the southern Bugesera-Cyohoha area would be financed under the project. During negotiations, the terms of reference for the Bugesera-Cyohoha study were discussed and assurances obtained that the terms of reference, consultants and the contracts for this study would be submitted to IDA for approval (Section 3.02 of the Development Credit Agreement). Employment of consultants would be in accordance with Bank Group guidelines. Project staff would prepare a Project  - 18 - Completion Report assessing the progress and impact of project activities and submit it to IDA not later than six months after the project Closing Date. Assurances to this effect were obtained at negotiations (Section 3.10 (e) of the Development Credit Agreement). Project Costs and Financing 52. Total project costs are estimated at about US$21.6 million, of which about 58 percent, or about US$12.5 million, represent foreign exchange costs. Project costs were estimated as of January 1982. A physical contingency of 15 percent on construction and civil works, 5 percent on staff costs, training and general services and supplies, and 10 percent on all other costs was applied to reflect uncertainties in the detailed scope of project investments. Price contingencies were calculated on the following basis: local costs at 15 percent per annum for 1982 to 1987; foreign exchange costs at the rate of 8.5 percent per annum in 1982, 7.5 percent per annum for 1983 through 1985 and 6 percent per annum thereafter. Taxes included in project costs are negligible, since all major items would be exempt from import duties and local taxes. 53. Financing of the project costs would be shared by the Government of Rwanda, FAC, and IDA in the respective proportions of 10.5, 14 and 75.5 percent. The proposed IDA Credit of SDRs 14.5 million (US$16.3 million equivalent) would finance about 75.5 percent of total project costs, including about 76 percent of foreign exchange costs and about 75 percent (US$6.8 million equivalent) of local costs. The Government of Rwanda's contribution would consist primarily of local salaries. Government would pass on the proceeds of the IDA Credit and its own contribution to the Ministry of Agriculture and Livestock, the ONAPO, and the Ministry of Public Works. The contribution of the FAC would finance the salaries, travel, and local support of three technical assistants for 5 years, 15 staffmonths of a financial advisor, 5 vehicles, and foreign exchange costs of veterinary supplies and agricultural inputs. The average staffmonth cost (including salary, fees, travel) for long-term specialists is estimated to be between US$6,500 and US$8,000. The average total staffmonth cost for short-term consultants, including salary, fees and travel, is estimated at about US$9,000. An advance from the Project Preparation Facility (PPF) of about U$935,000 will finance road-building equipment, building construction, and start-up of the semi-arrid research and family planning activities. In order to assist the Government in pre-financing expenditures reimbursable under the IDA credit, a revolving fund, similar to that under the first phase project, would be maintained. An amount of US$800 thousand equivalent (equal to about four months of disbursements less those items to be disbursed for directly by IDA) would be financed under the proposed project and established in a project account in a commercial bank. During negotiations, agreements were reached on the terms and conditions for the operation of and accounting for the revolving fund (Section 2.02(c)-(h) of the Development Credit Agreement). Implementation 54. Project Management. The proposed project would be carried out over a five-year period. Responsibilities for overall implementation and coordination would continue to rest with the Project Coordination Committee (PCC--para. 36) established under BGM I. The PCC would delegate day-to-day project implementation responsibilities to the two Regional Directors. Local authorities would participate in the project through the Regional Development  - 19 - Committees to be set up in each region. The Bridges and Roads Department of the Ministry of Public Works would carry out the rural roads improvement program. ISAR would manage the applied research program, and ONAPO, with the Ministry of Social Affairs and Community Development and the Ministry of Health, would implement the pilot family planning activities. Responsibility for implementation would be decentralized to the regional centers under the proposed project. During a transitional period of no longer than two years, the post of Project Coordinator would be maintained, and the Posts of Project Financial Director and Livestock Coordinator would remain centralized in Kigali. The role of the Project Coordinator during the transitional period would be to ensure that the implementation of project activities conforms to the detailed annual plans (para. 55). By end-1984, it is envisaged that the Kigali bureau would be eliminated and a Financial Director and Livestock Coordinator would be appointed to each of the two regional centers. 55. Implementation of all project activities would be carried out on the basis of detailed annual work plans and budgets approved by IDA. Separate annual work plans would be required from the Ministry of Public Works (road component), ONAPO (pilot family planning program), ISAR (research component) and BGM II project management (extension, livestock, nutrition and Rubilizi). Approval of the work plans for each fiscal year during project execution is a condition of disbursement (Schedule 1, para. 5-c of the Development Credit Agreement). The annual plans for all extension, livestock and nutrition center activities in the Bugesera and Gisaka Migongo regions would be prepared by the Director of each Regional Center, with assistance, where necessary, of support staff in the Kigali project bureau. Annual plans would be submitted to the Project Coordinating Committee by early August of each year. The content and essential criteria for IDA approval of the annual work plans were discussed during negotiations and assurances obtained that the annual work plans and budgets would be sumitted to IDA for approval by September 15 of each year beginning in 1982 (Section 3.04 and Schedule 4 of the Development Credit Agreement). 56. Local Staff. Most of the key management staff were trained under the first project and assumed full management responsibility in mid-1981. Technical and support staff for activities to be continued under the proposed second project are either in place or would be recruited during 1982. The number of local staff by component is as follows: for project management (i.e. Kigali coordination bureau 9; Bugesera and Gisaka Migongo Regional Centers, about 40 each), 89 staff; for extension activities, 188 staff; for livestock ranches and goat and sheep promotion, 16 staff; for the Rubilizi Training Center, 20 staff; for research, 10 staff (not including existing staff at Karama Station); for nutrition and family planning, about 30 staff; and for rural roads, about 60 staff plus laborers. In total, about 415 Rwandese staff, 380 for the full five years, would be involved in project implementation. The costs of about 150 of these staff are considered non-incremental and, therefore, are not included in project costs. At negotiations, assurances were obtained that the Government would, in addition to its contribution to project costs, provide for the recurrent costs associated with non-incremental staff through the end of the project (Section 3.01 (a) of the Development Credit Agreement).  - 20 - Procurement 57. Civil works contracts for construction of five agro-veterinary support centers, 15 houses and facilities under the research, nutrition and family planning components, totalling about US$1.5 million (including contingencies) would be awarded following local competitive bidding procedures, which have been found satisfactory. These contracts would be generally small (maximum of about US$20,000), geographically scattered and not readily grouped for simultaneous tendering. Local contractors are adequately qualified and exist in sufficient numbers to carry out the required works; foreign firms can also participate in civil works contracts under local bidding procedures. The Ministry of Public Works would carry out the road works under the proposed project with a brigade especially set up for the purpose. Road construction equipment and materials costing about US$450,000 (with contingencies) and tools and spare parts for road construction costing about US$600,000 (with contingencies), would be procured in accordance with local competitive bidding procedures acceptable to the Bank. Other project vehicles and spare parts, totalling about US$800,000 (with contingencies) would be procured over a 3-4 year period not exceeding six vehicles at a time and following selective tendering procedures of the borrower. Furniture and equipment, tools and other agricultural and livestock inputs totalling about US$1.3 million (including contingencies) would be purchased through local suppliers after at least two price quotations have been obtained. Technical assistance and short-term consultant services for studies totals about 460 manmonths and about US$3.2 million. Assistance to be engaged includes two Extension/Training Specialists to be located in the Regional Centers. The appointment of these Specialists is a condition of credit effectiveness (Section 6.01 (a) of the Development Credit Agreement). The terms of reference, experience and qualifications of technical assistance financed by the FAC (including the two Extension/Training Specialists) would be satisfactory to IDA. All other technical assistance would be hired in accordance with the Bank's guidelines for international recruitment and use of consultants. With the exception of contracts for project annual audits, all other proposals of technical assistance would be evaluated with priority given to experience and qualifications. Disbursements 58. Credit funds would be disbursed as follows: 100 percent of total expenditures for technical assistance and studies to ISAR, ONAPO and MPW and 35 percent of total expenditures on technical assistance, surveys and studies for BGM II staff; for BGM II staff, 85 percent of foreign and 95 percent of local expenditures for vehicles and veterinary supplies, furniture and equipment, local training and other operating costs, and 85 percent in 1983, 65 percent in 1984, 50 percent in 1985 and 40 percent in 1986, and 30 percent in 1987 of total expenditures for local salaries and allowances; disbursement for all other category items would be 100 percent of foreign and 95 percent of local expenditures. Local expenditures on staff salaries and other operating costs and miscellaneous supplies would be made against Statements of Expenditure (SOEs) and certified by the head of each implementing organization and made available for inspection by IDA in the course of project supervision. SOEs would be audited by the external auditors selected for the project. Assurances were obtained at negotiations that all project expenditures would be documented according to the above arrangements (Section 3.10 (b) of the Development Credit Agreement). Disbursements for all other goods and services would be fully documented.  - 21 - Accounts and Audits 59. A good system of detailed accounting and monitoring of expenses was established under the first project with the assistance of an internationally-recruited Financial Director. A core of project accounting staff was trained under the first project, and the Rwandese deputy to the Financial Director was confirmed as the Project Financial Director as of February 1, 1982. Responsibility for project financial control would continue to be based in the Kigali coordination bureau for the first two years of the project. By 1985, this function would be decentralized, and a Financial Director would be appointed to each of the two regions (para. 54). Project accounting in the two project regional centers would be controlled on a quarterly basis by project accounting staff from Kigali. A project Financial Advisor would be employed on a short-term basis (3 months per year, 1983-87) to assist the project financial staff. Initially, the Advisor would help ISAR and ONAPO to establish proper project accounts; later, he would help put in place the regionalization of financial control. Due to the absence of a government auditor or qualified Rwandese audit firms, the BGM I project accounts were audited by foreign firms approved by IDA. Similar contractual arrangements would be continued under the proposed second project. Benefits 60. The principal benefits of the project would include the establishment of efficient support services for agricultural and livestock activities at the farm level, increased production of subsistence and cash crops, increased livestock from the Rusumo Ranch, increased trade and transportation in and out of the project area, and the generation of useful technical information from research activities for the future development of the semi-arid zones in Rwanda. Most of the project activities are aimed at ensuring sufficient subsistence food production and facilitating, where basic food needs are met, the production of marketable surpluses. The value of incremental production of foodcrops (including fruit trees), coffee and livestock (breeding stock and beef) are the only benefits that were calculated. At full development in project year 9, annual incremental coffee production would have an estimated foreign exchange value of Rf 142 million (US$1.54 million) in estimated 1982 constant prices; annual incremental foodcrop production would have an estimated value of about Rf 204 million (US$2.22 million) and annual incremental production of livestock from Rusumo would have an estimated value of Rf 21 million (US$230 thousand). Other benefits from productive activities, which have not been calculated for reasons of uncertainty about the timing of benefits, would include incremental wood production from family woodlots and community plantations and incremental meat and milk production from the improved health and genetic upgrading of local cattle, sheep and goat stock. Additional benefits, more difficult to quantify, include: improved technical and management services through staff training; technical asistance and support to agricultural and veterinary education at Rubilizi; land improvement through erosion control, improved cropping techniques and reforestation; greater integration of rural and urban markets through roads improvement; higher nutrition standards and, in the long-term, a reduction of  - 22 - overall fertility rates through family planning efforts; and increased project evaluation capacity through the development of monitoring and feedback. 61. An economic rate of return (ERR) measuring the net incremental benefits of the directly productive project investments is estimated at about 16 percent. Project benefits are derived from the incremental foodcrop and coffee production resulting from improved farming practices. The ERR is, however, not considered the primary justification for the long-term investments proposed in the project which are principally aimed at farmer training and the development of services and infrastructure in support of smallholder agriculture. Although the benefits from foodcrops in the initial years have been averaged over all crops, the primary benefits would come from cassava, beans, and sweet potatoes, for which improved seeds and plant material are available. The overall ERR analysis includes all expenditures for capital investments, replacements, operation and maintenance costs related to the project's directly productive components (i.e. project management, extension activities, Rusumo Ranch and rural roads) which represent about 65 percent of project cost. The full costs of all technical assistance except that associated with research, family planning and monitoring and evaluation activities, were included. Project activities are not expected to require significant increases in farm labor and, therefore, no economic value for labor was taken into account in the calculation. Coffee prices have been projected in accordance with Bank forecasts, and foodcrops have been valued at domestic market prices. Costs include estimated average physical contingencies of 7 percent, but do not include price contingencies, taxes or duties. Sensitivity analysis on the ERR showed that if costs were increased by 10 percent, the ERR would be 14 percent. 62. The proposed project involves certain risks which are not fully expressed in the sensitivity analysis. The success of the production- oriented activities will depend on the effectiveness of extension systems and logistic support in responding to farmers' needs and in introducing new inputs and improved cultivation techniques, some of which can only be expected to yield benefits over the medium-term. The project seeks to organize and train regional extension personnel to provide a few basic services to the population. These services would be complemented by proper cultivation and husbandry techniques. Careful monitoring and feedback would be emphasized. The project thus addresses problems experienced by other rural development projects in a focused and systematic way to reduce risks and to understand better past failures. There is the risk that the objectives of the applied research activities supported under the project will not be realized. The proposed project, however, specifically addresses the needs of the semi-arid zone by giving priority to the selection of semi-arid foodcrop varieties already developed for similar ecological conditions and the study of local farm systems to *ensure adaptability and acceptability. In order to avoid coordination problems, formal agreements (protocoles d'accords), defining the respective responsibilities of critical parties in the implementation of particular activities, were discussed during negotiations and will be agreed on during a joint IDA/I1TA mission to Rwanda in July of 1982. Technical and financial management of all components has been carefully reviewed to assure clear lines of responsibility, reporting and control. In sum, while there are risks, project investments and the organization of its management have been carefully considered to minimize them.  - 23 - PART V - LEGAL INSTRUMENT AND AUTHORITY 63. The draft Development Credit Agrement between the Rwandese Republic and the Association, and the Recommendations of the Committee provided for in Article V, Section 1 (d) of the Articles of Agreement of the Association are being distributed to the Executive Directors separately. 64. Special Conditions of the Project are listed in Section III of Annex III of the Report. 65. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATIONS 66. 1 recommend that the Executive Directors approve the proposed Credit. A. W. Clausen President Attachments Washington, D. C. June 22, 1982  ANNEX I - ' - Page 1 of 5 TABLE 3A RWANDA - SOCIAL INDICATORS DATA SHEET RWANDA REFERENCE GROUPS (WEIGHTED AVE5AGES LAND AREA (THOUSAND SQ. KM.) - MOST RECENT ESTIMATE)- TOTAL 26.3 MOST RECENT LOW INCOME MIDDLE INCOME AGRICULTURAL 14.6 1960 /b 1970 /b ESTIMATE /b AFRICA SOUTH OF SAHARA AFRICA SOUTH OF SAHARA GNP PER CAPITA (US$) 70.0 100.0 200.0 238.3 794.2 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) .. 15.8 29.5 70.5 707.5 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (THOUSANDS) 2916.0 -3847.0 5169.0 URBAN POPULATION (PERCENT OF TOTAL) 2.4 3.2 4.5 17.5 27.7 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 9.5 STATIONARY POPULATION (MILLIONS) 29.0 YEAR STATIONARY POPULATION IS REACHED 2110 POPULATION DENSITY PER SQ. KM. 110.9 146.3 188.1 27.7 55.0 PER SQ. KM. AGRICULTURAL LAND 193.1 253.1 328.8 73.7 130.7 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 44.3 45.7 46.6 44.8 46.0 15-64 YRS. 53.0 51.6 50.7 52.4 51.2 65 YRS. AND ABOVE 2.7 2.7 2.7 2.9 2.8 POPULATION GROWTH RATE (PERCENT) TOTAL 2.8 2.8 3.6/d 2.6 2.8 URBAN 5.6 5.6 5.8 6.5 5.1 CRUDE BIRTH RATE (PER THOUSAND) 51.1 49.8 49.6 46.9 46.9 CRUDE DEATH RATE (PER THOUSAND) 26.9 22.1 18.7 19.3 15.8 GROSS REPRODUCTION RATE 3.4/c 3.4 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) 81.0 102.0 107.0 89.5 89.9 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 80.0 96.0 98.0 90.2 92.3 PROTEINS (GRAMS PER DAY) 49.0 61.0 51.3 52.7 52.8 OF WHICH ANIMAL AND PULSE 25.0 34.0 .. 17.8 16.1 CHILD (AGES 1-4) MORTALITY RATE 41.0 32.2 25.4 27.3 20.2 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 37.2 42.4 46.7 45.8 50.8 INFANT MORTALITY RATE (PER THOUSAND) .. 127.0 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. .. 35.0 23.9 27.4 URBAN .. .. 41.0 55.0 74.3 RURAL .. .. 35.0 18.5 - 12.6 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 53.0 57.0 26.2 URBAN .. 83.0 87.0 63.5 RURAL .. 52.0 56.0 20.3 POPULATION PER PHYSICIAN 138095.0/c 62048.4 38916.7 31911.8 13844.1 POPULATION PER NURSING PERSON 11197.067 9181.4 10494.4 3674.9 2898.6 POPULATION PER HOSPITAL BED IOTAL .. 822.9 652.1 1238.8 1028.4 URBAN .. 47.8 45.4 272.8 423.0 RURAL 3224.4 1604.8 1745.2 3543.2 ADMISSIONS PER HOSPITAL BED .. 21.2 21.3 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL .. .. URBAN .. .. RURAL .. .. 4.5 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL .. .. URBAN .. .. RURAL .. .. ACCESS TO ELECTRICITY (PERCENT UF DWELLINGS) TOTAL .. .. .. URBAN .. .. .. RURAL .. .. ..  - 25 - ANNEX I Page 2 of 5 TABLE 3A RWANDA - SOCIAL INDICATORS DATA SHEET RWANDA REFERENCE GROUPS (WEIGHTED AVERAGES - 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 49.0 73.0 64.0 56.4 73.7 MALE 68.0 83.0 68.0 70.7 96.8 FEIALE 30.0 64.0 59.0 50.1 79.0 SECONDARY: TOTAL 2.0 2.0 2.0 10.0 16.2 MALE 2.0 3.0 3.0 13.6 25.3 FEMALE 1.0 1.0 1.0 6.6 14.8 VOCATIONAL ENROL. (% OF SECONDARY) 40.0 12.0 17.0 8.0 5.3 PUPIL-TEACHER RATIO PRIMARY 39.0 60.0 53.0 46.5 36.2 SECONDARY 14.0 13.0 15.0 25.5 23.6 ADULT LITERACY RATE (PERCENT) 16.4/c 23.0/e 23.0 25.5 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 0.4 0.9 1.6 2.9 32.3 RADIO RECEIVERS PER THOUSAND POPULATION . 7.8 17.1 32.8 69.0 TV RECEIVERS PER THOUSAND POPULATION .. .. .. 1.9 8.0 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION .. .. 0.04 2.8 20.2 CINEMA ANNUAL ATTENDANCE PER CAPITA .. .. 14.6 1.2 0.7 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 1650.6 2089.7 2582.3 FEMALE (PERCENT) 49.1 48.6 48.1 34.1 36.7 AGRICULTURE (PERCENT) 95.4 93.2 91.2 80.0 56.6 INDUSTRY (PERCENT) 1.1 1.6 2.0 8.6 17.5 PARTICIPATION RATE (PERCENT) TOTAL 56.6 54.3 52.2 41.7 37.2 HALE 58.9 56.9 55.0 54.3 47.1 FFDIALE 54.4 51.9 49.5 29.2 27.5 ECONOhIC DEPENDENCY RATIO 0.8 0.9 0.9 1.2 1.3 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS HIGHEST 20 PERCENT OF HOUSEHOLDS .. LOWEST 20 PERCENT OF HOUSEHOLDS .. LOWEST 40 PERCENT OF HOUSEHOLDS .. POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 148.0 136.0 381.2 RURAL .. .. 85.0 84.5 156.2 ESTLMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. ., 99.1 334.3 RURAL .. .. 43.0 61.2 137.6 - ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 30.0 39.7 RURAL .. .. 90.0 68.8 Not available Net applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries anong 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 Most Recent Estimate, between 1976 and 1980. /c 1962; /d 1978 census; Ie 1973. May, 1981  - 26 - AN~NEX I Page 3 of 5 DEbtItIONO.1 ~ St C0A1.01. OICATboS Notes Altbog os- oaeahrtt rcn>neheatj joedoosotacbte -oasr abn osrol l b Idtatmo - otb tt- ntoalnortbilb-.onos of the ar fsebroa ellosadcoashue ottos>c otso lot: tEn at I",'s err, non- obelocs,csotol o bo-otbs croons of so0asei-e, bodbieteorsr.d, odd da-o -inor asaatat toot doffrt-..- b-res- Tbh ssrosgrosoe 1) tIlsl st-n-ygroobcpf tbhonjsotoeotyaod 21~ ... toot7y gtptboooo: nrraecrcsoaoob.a'O-osrogrp ofossoist onrA sneoto Cpse.a..sbt.o..ss ropnoe Ptdb tot othAroenttodeOso sross t.egafsrts 1.05 ut (oboc..teth I,b. aai. h,Si h - dqia. -h:e:or nc> -b :- n .- th, ':roa. 0t rflncnd- l Toal-Stedtrara are a norrobo-baddI area eod ~ to -b tutors o aid t har,a- c-b -re - dto bofh thoetl icnr -0 nbr0hsttbhb bt. ii- ...Ig - .dtIy nd I cooao'oyoonc EtS.s.s''arraotprraso cso 0970, erd19yy don. osobool1stltron naddo..Xonrodron an Ins Etro-s, nt- I ges ol,rb our-, -ud c r Iend groo-l ur- ob0 rblroo to sIn'- loo- r- - rrlho cooils - o. nodou 00-sSt-d P.tly o k tgrr 00ne- qtoetbO ele 19)0, 1970, -d b S-b osttt--u i -yortlooahd- :b n drluooaL l cr00ftrd bto ,Iaoto, b-ao ohtub k-tso ly~ 1; 7 9619600ob rI add-Iiho-f~ dNERGYsONSUnT dOtNbsoPfER hcer toyIA -Ar fac-ti oopeb.ht of-i datey ob-th or ....n. ocl. Abratdro i .bduo W trorPI g ot e, -tonluob anongnouetnass 19th. 1970, rd lyly .dote, sheCho19r0ol.aoat19teosotne,,b.-oo.-s- dorhatoo rtttstnsAdOOSttO 7 oso o r-aon-b>K use,-rd or dArhoegrs- ousai pop ultotro b JiYage atd- tsone -ht rortfeJ ory aod f96 rs n9 Isy reet 1ollno rcoyla'.'bcl ff5cO a e-t-aaSINGrsrs r soglfs spsneoryrborhto Rsaigno frboono-rn ...'si yrooas otAorhsN.-adcrfrY.. kroo_f h",os-orl,re o1 rdarcl tona, ed ftel lI0 atanoId oAbbint s7. yos h ae cnaaoa alIosst looOt n IO ;oreco orn g dsfraor-0 I eettr naous h y ht isne,,s escor-tin fato ot- dt sohb ba, nod rorul Ore)-Ugo.respe-t 'oa'y and1,1, Ae-ioyoabofrpr(nto apos. usNb.Enro'rn rotOrs-1a. - r StatInery optlebyon-Irr a -sotoar phtt.tno thsr I.nn grnn stosttt tort-I-i - ootgl -esauoaa-G-ctr tot-al,-ol -s- or- watsoorsen. hI Os i-h ..r . onyai r etlt ratesd dsrttr or almr tAto-' ao pnpc-e tons; b -o a -ooloda nbtd eardgd 6-1l of foandapleoet Islfd snan bili b ia r ghoary7. pcpoa-er sToatsc brnstoalr tdr-1 a1d4 sorm ina oyaosd10pet ssomrdo ocelsoshbnetdtoersrtlcooonptatr cnaoa0poseoe,s oaortoodcnlo'ulna sleshas..ri heat rero"Ih " 1" Iaial-di.-1l ELab.stIOltN atD rVyutrag;n rpnbccnos :orrot toptla ttr Pslt: rdda .PjI. Adj-dbd.E 1-tRt, Plar i. h.-tn-er.cteso ar.uroOlos. 0 . .bonooos, o Puoat ..t I.s.l ernlco ftetos ofdsono9M y "- toeonl' taddlenoco tar sb.On e tttael leadl d- Cse -as ebtd act tgno. aoo re febrsy- , 00050 aoaut'totoo -din a,np.-ot a tortlattor tao troatoors fpecent) - ObIldorn (b-to taers, noon-g 15-oor bto senodtaayf dirrls- dtnddbrobsofoaoe to sted leson;196, 1970 st- 90 ar.sdl lhreny os (erars_ - Lteoseno eb rra.ada_ tooletieOoo Isefsasof r - -a-ul rotshrattt ofd sopr n.ib- oa otega-?P of brladl pp heto agedi U yata! aofors teartopuartoc fr 190-h, '9_-7, ea 19f7.,iiy-,tI,l-d---d- bd;a .y Crf to at. trsosnd nullrebrt a tosn frd-sanr e easti tos shotir sIghs tes-s sc..o.ads - ashatanos-s- iocsed; roytaooh 19ff, 1970, and 197 dra al -tory no-btolesII. posoio; 19- 1 19ff,ahsd. 0979deba freres to -eaa 1Yohato par boc--drf-p-d-utu antloe u-- y Prc aodnto ae-noaansa f ugrreta-tl srs Assbrctnd,nosessadI cosee slsstn frO. bseeIoc 60stae dt 97reosrtdofhetaons eco g-pctOto sto tsfe;aaorsosn thercarohe chpaoehs -scn PebIn . . t1ototostr,dtro sasts - Cp d b, fanea gtibe of. !arrrdsT ah car(or a thd osandpooa iit Prntasfrondoot sE areted tanadn....n. seta a age.g-ornutyr noporo.. o a."'bat eeo nrsocsae',cfOe sapaol I.b 11. , 117~~~~1 .I 1179 data. AddIpohlhoobis-yettsd (p-o iys LitrIrgb ga all, tern It. Osndntierd) tIl 12TIItIOI . 1 1- d hI- . b d to hr 'natty' OfI Os -posa atlet p.Fooai .d1 yrtsesasdsI. Prob.- ln- f-t allfoo oott-tttr--b. -tAb...ta! orthlbo see so frda snb- CofS.1ToNosst ttgrspa,tnuto dtsost er-tt Istion cflrdr 195e60 betta. Onnedtrt7snorec peoarygood.s....dP.g....o eddsoblIroo-is oto.1tnoal a19raf p1970os tId oshs 916, 90 n 19099bdar.Ontlitehor -htors(boad7-tnoeoly_cn pros,to:d oerrg eqoo-1c, of tPI t t--d) s- d-hs pat t .h.lds b lorooc ype oepcoa nnaeorou ert ofalogsha ..nt.tAls torrtrtif one- ar 1a9oss .as 1nhogstosocd sno, d oplsecloeata ee,ses asl yse - IPos..elebc pnroon pro- tganOsootlaorfote qoso_ lesse In oodp_nasseg obbr losses o ~l'b.r itrtnto.tqj. Oi-b-slor rIt -rneo -b Lao fort toi farmIng ye oreotro, hg ost-s5 es dd sansi ssret tta_rdi by PA aobos iysotgt a. sfrnra oiftf00 aesg of stru . ea... o 96,10 . 90 00 boooahntd era!; 096 -6y.170 and. 1977 tatdie. 1970 oeb 1979 d9,Art. I Perl P1ttosi sop r- Aapt-ac borsor o)d Aoset ot-o- of cper raptTV terlo-p tos1 tesa -pa poass) toobsTaV ..rd tasee It tsr-id-pts ,, oa,I p1 ofth I- fod-tro day. Nopi-ot nf ford.. Is s toet as a- os I-g- ar-toto asses on thna.. asd enrol, talc, a- o feal hn toea aE onso f60grs oU orlprraopad en...0. aaoo ant-e Ptd1960,1900 oct 1979a i ybeta. Tb -saoeb-asad - f _t d parottpoiosta ptlse rrtonf o nbl-b iob DO granbc l bdtt tlpoo 1 . teeead ostIsN- sins age-sati cop-osth or. the -opaoti n, oShb lnog els-arb d- Ibtdb fec 1-b) Prorratley pana(per-Obosond - Iotlda per n- onsan- "d.t..rstse f rra n rn Clita -lo Yaidbid -B-d hen -odby >no tedec bta derlrod fn..I'o- Iota abltes;-I-IdO.-1970yasd, 19l9ddote.iofi ottoochaldsi at bIrth; 19661,619709end 19799da-a .-as shaob bentpoablh Enstde- bltat'le.... -idn torosrn oy lq-abte (rmnr of.dIP. bd IrV .bn- rl, i orb tradcony apon- goetoal anoqoeta. doe f. sotta ontooetese sc her of psotl (ocoal. urbn, und rtael ttth reasorblo tonsoc e sce offorbo-...ble. sa_t doypl. cnlossseed potiao deta-sie nt sated boo. oncooresfoaI'Ooss peb -slata 1960 P 1rses Donos Lr79 (01paos-e obnad n fonetnesasdpsh . ..onarsd ottmor thenl101 seser 0 a hi oe me be~ F?attsel Intone) of Fheotbr. ' Erho . ten g' Is boto tro ob.a,rura A it~~~~~~~~~~~~~~~~P aelno bdsro for h.Ihrns of _Ito n r iadrrs 1 ,sbsena d dt-gnOogI resntaddoe ofa rbs hnoari.tDoRuco orros AEreta1ers (Poytato.tluf dn It tner fs-oe Lre fpeen)- eseati arosoltpyhohhneofosoeroerotbl drrltor foolen abrador(bassslo otoss 0 -nosr AIlatsa ls-cid o ltoitfog toto-tuIen, so - egtea -Il,,,-Lb .-i I.,-fdr th olaoa addspsl bto aro -eo Isteso ...o tO fhrna -,acItr-ity,.t, da -prnooontn Isf Soota1 Ioab. lfnct196r P-sa il toa disollasbos dyt"- - ai. 'liPi ",P r. 111 -, - Nttay 1991ilpi t anteto roe ty ItdP' ..N .PI' _udia nt predrototog R.yc- -ii - I I. .. 1 - 7 dIbda tless qtatftrd . frm -atnisl s,btli as bosnUSDAp ..os. i.f i..p- -g ftd1, 1aadf-l ..td.ala teanleiot ta Onostg Psoot - Ppotesin bloded bt snebe of pentlnls moteerdfasalsredtasatu-sss p-taortoP noss ead 20StIa iIsass, -179dt.Th- , I.d,IL'J, iit.  Annex I - 27 - Page 4 of 5 COUNTRY DATA - RWANDA GROSS NATIONAL PRODUCT IN 1979-80 1979 19801' US$ Mln. % US$ Mln. _ GNP at Market Prices 1035,0 100.0 1172.5 100.0 Gross Domestic Investment 194.9 18,8 187,7 16.0 Gross National Saving 113,0 10.9 21.8 1.9 Current Account Balance 46,8 4.5 54.3 4.6 Export of Goods, NFS 226.6 21,9 16556 14.1 Import of Goods, NFS 308,6 29.8 331.5 28.3 GOVERNMENT FINANCE Central Government (RF Mln) of GD? 1980=/ 1980 1972 Current Receipts 13,259 12.0 8.3 Current Expenditure 10,468 9.5 10.7 Current Surplus 2,791 2.5 -2.4 Capital Expenditures 2,113 1.9 1.2 MONEY, CREDIT AND PRICES 1976 1977 1978 1979 1980 (RF Million outstanding, end period) Money Supply2/ 8,047 10,173 11,224 14,113 15,209 Bank Credit to Public Organisations 480. 221 225 233 219 Bank Credit to Private Sector 2,392. 4,169 4.908 4,330 6,296 (Percentage of Index Numbers) Money and Quasi Money as % of GDP 13.0 14.2 13.9 14.5 14.0 Consumer Price Index (Jan-Mar 1976 = 100) 101.9 116.7 131.3 152.1 163.0 Annual Percentage Changes in: Consumer Price Index 6.l 14.5 12.5 15.8 7.2 Bank Credit to Public Organisations 5.1 -54.0 1.8 3.6 -6.0 Bank Credit to Private Sector 40.1 74.3 17.7 -11.8 45.4 NOTE: All conversions to dollars in this table are at the average exchange rate prevailing during the period covered. 1/ Provisional 2/ Includes Money and Quasi Money.  - 28 - ANNEX I COUNTRY DATA - RWANDA Page 5 of 5 TRADE PAYMENTS AND CAPITAL FLOWS 1/ BALANCE OF PAYMENTS 1977 1978 1979 1980 MERCKAXIDISE EXPORTS (AVERAGE ___________________ - - - ~~~~~~~~~~1977 -80) Exports of goods, f.o.b. 125.2 110.4 202.9 133.6 US$ Mln % Imports of goods, f.o.b. -102.3 -144.9 -159.5 -204.4 Coffee 80.3 55.9 Trade balance 22.9 -34.5 43.4 -70.8 Tea 10.5 7.3 Cassiterite 7.7 5.3 Services (net) -72.4 -106.3 -127.4 -90.0 Wallfram 6.s. 4.5 Net transfers 66.9 94.1 130.8 106.5 Pyrethrum 1.8 1.2 Cinchona 2.1 1.5 Balance on current account 17.4 -46.7 46.8 -54.3 Other 34.9 24.3 Total 143.7 100.0 Direct Investment 5.9 4.7 12.5 17.0 EXTERNAL DEBT, Net MLT Borrowing 23.3 20.1 17.6 33.2 DECE_BER 31, 1980 USS )ln Other Capital (net) and capital n.e.i. -24.1 26.1 -7.2 17.4 Public Debt, incl. Increase in reserves (-) -22.5 -4.2 -69.7 -13.3 guaranteed 170.0 Non-Guaranteed Private Debt -- Gross Reserves Total Outstandin (end year) 96.8 99.7 177.3 204.5 and Disbursed -- Petroleum Imports 12.3 11.8 14.5 22.8 MEIRLAL DEBT. SERVICE Petroleum Exports - - - - Public Debt incl. guaranteed 3.2 Non-guaranteed Pri-vate Debt -- Total outstanding and RATE OF EXCHANGE disbursed -- Annual Averages End Period 1974-80 December 1981 I3RD/IDA LENDING Dec. 31.1980) US$ 1.00 = RF 92.84 92.84 (USS MTh) IDA RF 1.00 = US$ 0.011 0.011 Outstanding and Disbursed 58.12 Undisbursed S7.48 Outst3nding mncl. 1/ Provisional Und'sbursed 115.60 2/ Debt Service as a percentage of Exports of Goods and Nonfactor Services. __ GNot available.  ANNEX II Page 1 of 5 - 29 - THE STATUS OF BANK GROUP OPERATIONS IN RWANDA A. Statement of IDA Credits (As of March 31, 1982) Amount US$ million (Less cancellations) Credit No. Fiscal Year Borrower Purpose IDA Undisbursed (Four credits have been fully disbursed) 31.90 567-RW 1975 Rwanda Education 6.38 2.87 655-RW 1977 DFC I 4.00 0.13 656-RW 1977 Agriculture Cinchona 1.80 0.31 668-RW 1978 Bugesera Gisaka-Migongo Mixed Farming and Rural Development 14.00 0.70 769-RW 1978 Road Maintenance 15.00 4.14 896-RW 1979 DFC II 5.20 4.71 937-RW 1979 Mutara Agricultural and Livestock Development 8.75 5.84 1039-RW 1980 Integrated Forestry and Livestock Development 21.00 10.59 1057-RW 1981 Telecommunications 7.50 7.05 1126-RW 1981 Coffee/Foodcrops 15.00 14.50 1217-RW 1982 Technical Assistance 5.00 5.00 Total 135.53 1/ 55.84 Repaid .38 Total Held 135.15 B. Statement of IFC Investments (As of March 31, 1982) In 1976, IFC made a loan of US$535,000 for a tea factory. A second IFC long-term loan of US$226,000 and contingent equity commitments of up to US$60,000 for an expansion of the tea factory were signed in September 1980. Note: Rwanda has received no Bank loan. 1/ Does not include US$25.9 million credit approved by the Board May 20, 1982 for a Fifth Highway Project and a US$10.0 million credit approved by the Board June 15, 1982 for a Second Education Project.  - 30 - ANNEX II Page 2 of 5 C. PROJECTS IN RWANDA 1/ (As of March 31, 1982) Credit No. 567-RW Education Project; US$8.0 Milion Credit of June 30, 1975; Date of Effectiveness: December 1, 1975; Closing Date: December 31, 1982 As now constituted, the project includes construction, equipping and furnishing of 250 primary-school workshops, a school-textbook printshop, and an office building for the School Financing and Construction Services (SFCS) as well as furnishing and equipping of the Rural Agricultural Training Center of Gitarama. The project also provides technical assistance, vehicles and operating expenses for the SFCS. The project has been hampered by implementa- tion difficulties centering on two misprocurements (an amount of US$130,000 was cancelled because of misprocurement of certain construction materials; a second amount of US$1,491,000 was cancelled due to misprocurement of paper). Most of the 250 workshops are nearly completed. The lack of acceptable record keeping, however, has impeded the processing of disbursement requests. There- fore, a final inspection and evaluation mission for the workshops, organized by the Government (with IDA approval) was undertaken successfully in November 1981 with UNESCO assistance. Disbursements have resumed. The printshop is now operational and construction of the office building for the SFCS completed. The original Closing Date (June 30, 1982) was extended to December 31, 1982 by which time the project is expected to be completed. Credit No. 656-RW Cinchona Project; US$1.8 million Credit of August 20, 1976 Date of Effectiveness: March 2, 1977 Closing Date: March 31, 1983 The project provides over a five year period inputs and extension services to grow cinchona for export. Progress is satisfactory and there is still a demand from farmers for planting material. World market prices for cinchona derivates, however, remained low during 1979 and 1980, and OCIR (the implementing agency) had to reduce the farm gate price for cinchona bark and abolish the export tax and the OCIR levy. In September 1980 it was decided to establish a cinchona bark processing plant in the Kirambo area, and construction has since started and the factory is scheduled to be open in early 1983. This should give Rwanda a stronger position in the future to compete with cinchona derivates on the world market. The original Closing Date (June 30, 1982) was extended to March 31, 1983 by which time the project is expected to be completed. 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered, and the action being taken to remedy them. They should be read in this sense, and with the understanding they do not purport to present a balanced evaluation of strengths and weakness in project execution.  - 31 - ANNEX II Page 3 of 5 Credit 668-RW Bugesera/Gisaka/Migongo Mixed Farming and Rural Development Project; US$14.0 Million Credit of March 31, 1977; Date of Effectiveness: November 23, 1977; Closing Date: September 30, 1982 The project consists of the promotion of mixed farming and rural development in two recently populated zones; it aims at strengthening the central services responsible for rural development. The project includes tsetse control, field extension and infrastructure, credit, improvement of feeder roads and water supply, a limited number of schools and health centers and establishment of two cattle ranches. The project is cofinanced with BADEA (US$5.0 million equivalent for livestock development and water facilities) and France (US$2.6 million for six technical assistants). Satisfactory progress has been made with programming of work, budgeting and construction. The results of the foodcrop and plant improvement components, however, are below appraisal estimates due to technical packages which have not taken adequate account of the relatively dry project area. A follow-up project will build on infrastructure put in place under the first project and focus primarily on applied research, training and extension. Credit 769-RW Fourth Highway Project; US$15.0 Million Credit of April 1978; Date of Effectiveness: August 4, 1978; Closing Date: July 1, 1982 Implementation of the Fourth Highway Project (a US$15.0 million Credit for road maintenance) started in January 1978. Specialists financed under the technical assistance program are performing satisfactorily. Procure- ment of equipment is completed. On the suggestion of the Association, an expert on labor intensive methods visited Rwanda for three weeks in June 1978 and recommended that one mechanized unit be replaced by one unit utilizing labor intensive methods. Following the consultant's recommendation, the Government has introduced labor-intensive methods for road maintenance. Although the project is about one year behind schedule, implementation is now at its anticipated progress rate and the project is proceeding satisfactorily. Project completion is expected for end-1982. Credit 896-RW Second Rwandese Development Bank Project; US$5.2 Million; Credit of July 13, 1979; Date of Effectiveness: January 4, 1980; Closing Date: June 30, 1983 The Project aims at providing further assistance to the industrial sector by supporting the activities of the Rwandese Development Bank. It includes two components: (a) a second line of credit of US$5.0 million (which is now about 80 percent committed) to finance BRD's foreign exchange require- ments and (b) a feasibility study for the establishment of an auditing firm in Rwanda (US$0.2 million). Government has just finished reviewing the audit study and its comments are currently under consideration by the Association.  - 32 - ANNEX II Page 4 of 5 Credit 937-RW Mutara Agricultural and Livestock Development Project; US$8.75 Million Credit of July 13, 1979; Date of Effectiveness: May 30, 1980; Closing Date: December 31, 1983 The project is the second phase of a long-term development program for the Mutara region. It aims at developing techniques, procedures, and an institutional environment which will make it possible to preserve the production potential of the area, make a rational and more intensive use of available resources, improve farming and ranching techniques, and integrate the project into the local administration. Settlement of cattle owners has proceeded in an orderly way and pasture production has improved, but destocking activities and credit recovery have been disappointing due to lack of clear policies and enforcement mechanisms. Credit 1039-RW Integrated Forestry and Livestock Development Project; US$21.0 Million Credit of July 7, 1980; Date of Effectiveness: November 11, 1981; Closing Date: September 30, 1986 The project is the first phase of a long-term program to develop the forestry resources of Rwanda and to strengthen the livestock industry. Technical assistance personnel and key local staff have been recruited and start-up activities are progressing satisfactorily. Credit 1057-RW Telecommunications Project; US$7.5 Million; Credit of August 13, 1980; Date of Effectiveness: July 7, 1981; Closing Date: June 30, 1985 The project aims at improving the quality of existing telecommuni- cations services, while extending the coverage to geographical areas and segments of the population which at present do not benefit from such services. In addition to improving international and domestic telecommuni- cations (telephone and telex) the project provides technical assistance and training to the Ministry of Post and Telecommunications. The project is cofinanced with FAC and CCCE (US$3.9 million equivalent) and CIDA (Can$4.95 million) and is proceeding satisfactorily. Credit 1126-RW Lake Kivu Coffee Improvement and Foodcrops Project; US$15.0 Million Credit of April 29, 1981; Date of Effectiveness: January 18, 1982; Closing Date: December 31, 1986 The project aims at building up an effective extension service which would assist farmers in increasing foodcrop and coffee production using field-tested techniques and also helping OCIR-Cafe (the implementing agency) improve its financial management. Technical assistance personnel and key local staff have been recruited and start-up activities are progressing satisfactorily.  - 33 - ANNEX II Page 5 of 5 Credit 1217-RW Technical Assistance Project; US$5.0 Million Credit of April 5, 1982; Date of Effectiveness: July 5, 1982; Closing Date: December 31, 1986 The project aims at increasing Rwanda's absorptive capacity, improving interministerial coordination in project preparation and monitoring, and strengthening the Ministry of Planning (MINIPLAN). The project credit agreement was signed April 5, 1982. The Project Economist to be assigned to the Programming Directorate in the MINIPLAN has been recruited and is expected to be at his post by mid-June 1982.  - 34 - ANNEX III RWANDA Supplementary Project Data Sheet Phase II Bugesera Gisaka Migongo (Rural Services) Project I. Timetable of Key Events (a) Origin of Project: Studies Bureau, Ministry of Agriculture and Livestock (follow-up to BGM I Project) (b) Identification Mission: June 1979 (c) Appraisal Mission: May/June 1981 (d) Negotiations: May 5-10, 1982 (e) Planned Date of Effectiveness: October 1982 II. Special Implementation Action None. III. Special Conditions A condition of disbursement for all expenditures on building construction and the rural road component would be IDA's approval of a letter of understanding between the Ministry of Public Works and the Ministry of Agriculture and Livestock defining the management responsibilities for the road building component and all other project building construction (para. 50). Approval of annual work plans for each fiscal year during project execution from the Ministry of Public Works (road component), ONAPO (family planning component), ISAR (research component) and BGM II project management would also be a condition of disbursement of funds concerned (para. 55). IV. Conditions of Effectiveness Conditions of Credit effectiveness would be (a) the appointment of the two Extension/Training Specialists (para. 57) and the signing of a contract satisfactory to IDA between ISAR and IITA regarding implementation of the research component (para. 41).  idRD lSi9si~ RWAN DA 0 o 20 3