Niger - Fourth Highway Project

Dowmunt or The World Bank FOR OMFCL USE ONLY CR I35 {q- Aj Dz Rest P-3600-I REPOIRT D MM ECENDION OF 1E PRESIDENT OF TM INTERNTIONAl DEV ELPMNT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT C? SDR 21.9 MILION TO THE REPUBITC OF NIGER- FOR A FOURTH HIGHWAY PROJECT * May 23, 1983 Tdocumet ba a res&icwd diskibajim and may be _wed by new;2t emy in the pedoncee of t|dr efil diii.. Its ans nt ohwse be dbWned witho Wod Dak mahsdtw.  CURRENCr EQ S Currency Unit CFAF 11 US$1.00 8 CFAF 340 CFAF 1,000 US$2.94 US$1 SDR 0.927 FISCAL YEAR Government of Niger - October 1 - September 30 ABBREVIXTIONS AND ACRONYMS BCEAO - Banque Centrale des Etats de 1'Afrique de l'Ouest (Central Bank of West African States) BCEOK - Bureau Central des Etudes d'Outre-Mer (France) EDRN - Banque de Developpement de la Republique du Niger (Niger Develop ent Bank) CONCERMA - Compagnie Nationale pour la Construction et 1'Entretien de la Route Tahoua-Arlit DTT - Direction des Transports Terrestres (Directorate of land Transport) DTP - Direction des Travaux Publics (Directorate of Public Works) LNTp - Laboratoire National des Travaux Publics (Niger) MTPU - Ministere des Travaux Publics et de l'Urbanisme (ministry of Public Works and Housing) RMU - Road Management Unit DM - Dire'tion du Materiel (Equipment Department) SNGTN - Societe Nationale des Grands Travaux du Niger SNTN - Societe Nationale des Transports Nigeriens 1/ The CFA Franc (CFAF) is tied to the French Franc (FF) in the ratio of FF 1 to CFAF 50.  FOR OMCUAL USE ONLY REPUBLIC OF NIGER FOURTH HIGHWAY PROJECT Credit and Project Summary Borrower: Republic of Niger Beneficiary: Ministry of Public Works and Housing (MTPU) Amount: SDR 21.9 Million (US$23.6 Million) Terms: Standard Project Description: The proposed project would help Government to establish a preventive periodic road maintenance program and set up a permanent training program for employees of the Directorate of Public Works (DTP) of MTPU. The project would provide for: (a) pavement strengthening and resealing of 374 km of the existing bituminous network; (b) establishment of a Road Management Unit (RMU) in DTP; and (c) construction and equipping of a training school for DTP's employees, and technical assistance to help design and implement a training program. The project would also provide vehicles and equipment for traffic counting, classrooms and work- shops. Benefits would accrue in the form of vehicle- operating cost savings and savings in road maintenance costs. There are no technical risks. Possible risk relates to the general fiscal crisis and its impact on the adequacy of maintenance funds, but measures have been introduced into the project to monitor this risk. This document has a resticted distrbution and may be used by recipients only in the performance or their offcil duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - Estimated Project Costs 1/ (including taxes) US$ 000'- Local Foreign Total Road strengthening and resurfacing program 8,670 11,637 20,307 Road Management Unit 377 419 796 Training 2,532 2,531 5,063 - of which Training Center Construction ( 815) { 821) ( 1,636) Base Cost 11,579 14,587 26,166 Physical Contingencies 1,193 1,408 2,601 Price Contingencies 1,488 1.851 3,339 Total 14,260 17,846 32,106 Financing Plan US$ Million Local Foreign Total IDA 5.70 17.85 23.55 Government 8.56 - 8.56 Total 14.26 17.85 32.11 Estinated Disbarsement US$ Million FY84 FY85 FY86 FY87 FY88 FY89 Annual 5.0 4.2 4.8 5.5 3.3 03.6 Cumulative 5.0 9.2 14.0 19.5 23.0 23.6 Rate of Return: 43 percent on the maintenance program. Staff Appraisal Report: Report No. 4017-NIR. Map: IBRD-16335 1/ Of which taxes $7.3 million equivalent.  INTERNATIONAL DEVELOPMENT ASSOCIATION PEPORT AND RECOMMENDATIONS OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE REPUBLIC OF NIGER FOR A FOURTH HIGHWAY PROJECT 1, I suumit the following report and recommendation or a proposed development credit for the equivalent of SDR 21.9 million (US$23.6 million equivalent) on standard IDA terms to the Republic of Niger to help finance a proposed Fourth Highway Project. PART I - THE ECONOMY 1/ 2. A report entitled "Economic Memorandum: Niger" was distributed to the Executive Directors on May 13, 1976. An economic mission visited Niger in June 1982, and the main findings of the mission are incorporated in the following paragraphs. Annex I contains updated Country data. Background 3. With its 1.27 million km2 of land, Niger is about 2.5 times the size of France. Niger is a landlocked country, and its closest access to the sea is about 600 km from Niger's southern border. Nearly 90 percent of the total population is concentrated in a thin band along the southern border. Only 12 percent of the land is considered arable, and only 2.5 percent is actually under cultivation. Rainfall is limited (350-750 mm) and often irregular, and soil fertility is low and declining. The total population was estimated at 5.3 million in 1980 and is growing at about 2.8 percent per annum. Per capita income was estimated at US$330 in 1980. Niger's social indicators are among the lowest in the world. Life expectancy at birth, which is only 43 years, is low even by African standards. The adult literacy rate is only 8 percent and the primary enrollment ratio only 23 percent. 4. Niger belongs to the West African Monetary Union which provides its members with a common currency (the CFA Franc) fully convertible into French Francs. The full convertibility of the CFA Franc and the liberal foreign trade policies pursued by the Monetary Union members kept the Nigerien economy very open in the past. This openness was further strengthened by the very strong trade links that have always existed between Niger and its neighbors, particularly Nigeria. Another particularly important characteristic of the Monetary Union is the strong discipline imposed o.er monetary and fiscal policies of the member countries, in return for the guaranteed convertibility of the currency. As is generally the case in open economies, excessive credit expansion quickly leads to increased imports, balance of payments deficits and a loss in foreign reserves. This being recognized by the Union member countries, their common Central Bank was empowered with strong controls over the domestic credit ceilings. I/ This section is substantially unchanged from the President's Report for the Water Supply Project (Report No. P-3285-NIR, November 15, 1982).  - 2 - 5. Like other Sahelian economies, Niger's is dominated by subsistence agricultural activities with millet and sorghum occupying 80 percent of the cultivated area. The discovery of large uranium deposits in the late sixties and their development, accelerated by the world oil crisis of the mid-seventies, propelled the mining sector into an important position in Niger's economy. The sector is now providing nearly 70 percent of Niger's total export earnings and an important share of the government revenues. Economic Achievements in the Seventies o. During the past decade Niger went from a period of despair to a period of almost unlimited hope in the future. Between 1970 and 1975 NJiger experienced one of the severest and longest droughts of its history. Its livestock herd was decimated, and food production declined by nearly 60 per- cent. At the height of the drought in 1974/75, Niger registered a food grain deficit of nearly one million tons. Real per capita GDP declined at an average annual rate of 0.5 percent. On the expenditure side, per capita con- sumption declined by 6 percent per annum although gross domestic investment grew at a modest annual rate of 3.2 percent with the help of increasing foreign aid. Uranium production and export began as early as 1971 and the impact of the sector on the national economy grew m)derately in the first half of the seventies as prices were stable. 7. During the second half of the decade Niger's fcrtune changed dramatically. More favorable climatic conditions allowed an accelerated recovery of the agricuiltural sector. With intensive government programs the Nigerien livestock herd was rapidly reconstituted. Food production steadily increased and by 1979 Niger was once again self-sufficient and even managed to show a substantial surplus. Nigerien agriculture has indeed performed excep- tionally well for a Sahelian country. In spite of having half the per capita arable land of the neighboring countries, a poorer soil fertility and less water resources, Niger's per capita food production has consistently been superior to its neighbors'. By 1977, uranium exports accounted for 53 percent of total exports of goods and non-factor services, and that share increased to 70 percent at the end of the decade. As prices and quantities exported increased rapidly Niger's total export receipts increased from CFAF 11.9 billion in 1975 to CFAF 85 billion in 1979. The contribution of the sector to public revenues followed the same trend. The share of uranium in total government revenues steadily increased from 18.3 percent in 1975 to an all time high of 41.6 percent in 1979. Government uranium revenues grew from CFAF 4.1 billion to CFAF 24.6 billion in the same period. As a result of the good performance of these two sectors, real CDP grew at an average annual rate of 7.2 percent. On the expenditure side per capita consumption grew at an annual rate of 4.5 percent and gross domestic investment at an average rate of 6.7 percent. The Eighties and the Uranium Crisis 8. The decade of the eighties started with serious signs pointing to a long lasting crisis of the uranium sector. UJranium export earnings stagnated at around CFAF 95 billion in the last three years, and government revenues sharply declined from CFAF 24.6 billion in 1979 to CFAF 12.5 billion in 1982.  - 3 - 9. During the same three years agricultural sector performance has also been mediocre. Unfavorable climatic conditions forced Niger once again to supplement its food production by increasing quantities of grain imports. Food grain deficits in 1981 and 1982 were estimated at about 100,000 tons per year. For the first time since 1975 real GDP has stagnated in 1982. 10. Unfortunately this serious slowdown in economic activity was not followed by an equal slowdown in Niger's public expenditures. The lack of clear signals from the uranium market experts left the Nigerien authorities uncertain about the future of the sector. It was not until 1982 that they initiated action to adapt to their changed export and revenue prospects. During this period the government continued to implement an ambitious Five- Year Development Plan by increasingly relying on foreign borrowing to finance the public investment expenditures. Public Finance 11. Throughout the 70's the Government demonstrated considerable restraint in expanding its current expenditure. This was even true during the uranium boom when current expenditures were always covered by non- uranium revenues. However, during the uranium boom the Covernment pursued an aggressive investment policy, which continued into the recession in the uranium sector. Public investment steadily increased from 34.2 billion CFAF in 1976/77 to 77.8 billion FCFA in 1980/81. 12. During the same time the overall Government deficit increased from 5.5 billion CFAF (10 percent of total government revenues including grants) to 32 billion CFAF (31 percent of total revenues). An increasing reliance on borrowing to finance its investment has led to a severe debt burden which the Government will have to face for some years to come. The Government will have to allocate nearly 25 percent of its total revenues to service its debt in 1982/83. Balance of Payments 13. In spite of the rapid increase in export earnings from uranium between 1977 and 1981, Niger's balance of payments continued to be charac- terized by large current account deficits which increased from about US$170 million to USS360 million. Until 1981, the net capital inflow from borrowing and from the parallel rapid growth in foreign aid (para. 18), allowed Niger to continue to accumulate substantial foreign reserves despite the increasing trade deficit. By 1982, though, the continuing stagnation of exports and rapidly increasing debt service payments are expected to cause a decline in reserves, which could reach about USS50 million, a reduction by half. The pessimistic outlook for uranium exports could lead to further weakening of the balance of payments situation in the next few years if corrective measures are not taken. Also, under the rules of the West African Monetary Union, Niger will soon face restrictive monetary and fiscal limits to correct its balance of paynents situation.  - 4 - 14. The rinancing of this deficit (and service of prior debt) caused total public and public-guaranteed debt from abroad to increase from US$269 million in 1977 to US$915 million in 1982. Niearly 46 percent of the increase occurred in the year 1980. The service on this debt increased dramatically from 1JS$9 million to US$63 million in the period, reflecting the substantial change in the structure of the debt, as commercial borrowing, which accounted for only 2.5 percent of debt outstanding in 1977, increased its share to 29 percent at the end of 1981. The public debt service ratio to total exports of goods and services increased from 3.8 percent in 1977 to 12 percent in 1981 and is estimated to have reached 17 percent in 1982. This ratio is expected to continue to increase rapidly in the next two years. Development Planning 15. The Five-Year Development Plan, 1979-1983, was conceived at the peek of the uranium boom and under the assumption that the boom would last for at least the duration of the Plan. This assumption combined with a firm commitment to a maximum development effort led to a highly ambitious investment target for the plan period. 16. The basic objectives of the Plan were: (a) the modernization of agriculture and livestozk production; (b) a high rate of economic growth spurred by investments in mining, industry, transportation and communications; (c) human resources development; and (d) a gradual reduction of regional disparities in income. Limited absorptive capacity and difficulties in project preparation caused primarily by manpower constraints in some sectors have led to large cost overruns and a severe distortion in the structure of the public investment expenditure during the first three years of the Plan. In 1980, for example, more than 63 percent of public investment was outside directly productive sectors. An ex ante evaluation of Niger's five-year plan (1979-1983), designed urder the basic assumption of a continued rapid growth of the uranium sector, would have concluded that the emphasis given to invest- ment in social, economic and administrative infrastructure was justified by the severe scarcity of this infrastructure which was a constraint to future economic and social development. However, as the uranium sector did not live up to expectations and the public investment program continued to be imple- mented by relying more and more on foreign borrowing the financial situation of the Covernment has become extremely vulnerable and the accumulated debt threatens to jeopardize future economic and social development of Niger. 17. After the deterioration of the financial situation in 1980 and 1981, the Government was forced to slow down its investment expenditure in 1982 and is considering the preparation of an interim plan for the next two or three years aimed at consolidating the economic and financial situation. In April 1982, the 1ead of State informed the people that Niger will have to adjust to its new financial situation and has called for the definition of a "Consolida- tion" program aimed at safeguarding the most essential of the investment program and strengthening the financial situation of the Government.  -5- Foreign Aid 18. Official development assistance to Niger more than doubled between 1977 and 1981. Excluding food aid, this assistance increased from about US$115 million in 1977 to an all time high of US$240 million in 1981. Most of the aid to Niger is provided by six donors. France and the Federal Republic of Germany contributions represented more than a third of total aid inflows. These countries are followed in order of importance by IDA, the F.E.D., Canada and U.S.A. Between 1977 and 1981, rural development claimed the largest share (33 percent) of the total aid, followed by industry and mining (18 percent) transport and telecommunication (16 percent) and education (11 percent). Niger's Future Development Prospects 19. Niger's future economic and social development will be severely constrained, at least in the medium term, by its underdeveloped humar. re- sources. A serious effort in the development of human resources will be needed for a long time to come. Primary eJucation will have to be expanded as rapidly as feasible until it becomes universal, and professional and vocational training designed and developed to meet the growing needs of the Nigerien economy. However, the increasing scarcity of public revenues will require original solutions to the financing of such human resources development. 2o. WIith the continued pessimistic outlook for the uranium sector in the 1980's, Niger once again will have to rely primarily on its limited agricultural resources as its leading sector. Hot7ever, the future of its agriculture is uncertain. Past increases in production were achieved through more intensive use of better soils and greater use of marginal lands. Con- tinuation of these practices could severely reduce soil fertility over time. The maintenance of food self-sufficiency in the eighties and beyond can only be achievec' through gradual improvements in yields on lands that are already under cult-Lvation. Civen past low levels of investment in human resources, the severe financial constraint on their future development and finally the limit'd state of the existing agricultural technology suited to Niger's conditions, the needeed improvements will be very difficult to achieve without a major and continuing support from the international community. Also, support for greater use of modern agricultural inputs, the development of small scale irrigation schemes, and applied research will be crucial to the V future development of Niger's agriculture. 21. In short, Niger's future economic and social development could * only be achieved through greater efforts in human resources and agricultural development. In addition to the major constraints enumerated above, Niger will have to face the problem of re-financing the large foreign debt inherited during the past few years. The Nigerien authorities are now aware of the need for adjustments to safeguard Niger's potential economic growth in the future. However, the necessary adjustments could only be feasible with increased 'oreign technical and financial assistance. Under the growing financial constraint the Government will be finding it increasingly difficult to meet  - 6 - counterpart financing commitments and project design will in the future have to pay even more attention to this constraint. Given a resource situation with little promise for the next five to ten years, the extremely low level of development and the largely unmet basic needs of the population, there will be a need for concessional flows, for local as well as foreign exchange costs. PART II - WORLD BANK OPERATIONS IN fTIC.ER 22. Twenty-two IDA credits, including two supplementary credits, have so far been approved for Niger totalling US$186.6 million. Annex II contains a summary statement of these credits as of March 31, 1983 and notes on the execution of current projects. Bank Group lending has covered transport, telecommunication, education, rural and industrial development. Eight credits have been in the rural sector (drought relief, rural development, forestry, irrigation and livestock), and five in roads (of which two are ongoing), mainly aimed at upgrading the main and feeder road networks. Niger's perfor- mance in project implementation and disbursement has in general been quite satisfactory particularly in light of the environmental, institutional and managerial constraints within the country. 23. Bank Group activities in Niger emphasize macroeconomic dialogue, technical assistance and institutional development, both separately and in conjunction with lending. We are at present supporting the Covernment's economic and financial consolidation effort by means of advice on policy issues and options. A technical assistance project, currently under pz,para- tion, is aimed at addressing key elements of short term fiscal improvement as well as offering longer term assistance to strengthen planning and financial management. Lending emphasizes productive investment, institutional develop- ment and effective policy and project implementation. In agriculture, the severity of natural constraints and the present state of technical knowledge make development slow and difficult. However, experience with ongoing projects have demonstrated that potential does exist. Here, Bank Group lending has supported projects to increase production, gradual development of irrigation potential, provision of services to pastoralists and crop-livestock integra- tion. Future lending in the sector will continue these directions, whiln seeking especially to improve technical packages, lower irrigation costs and introduce smaller-scale grassroots initiated development projects. Other sectors that will continue to be the focus of Bank Group operations will be human resources (health and education), water supply, industry, energy and transportation. In this latter sector, the emphasis would continue to be on feeder roads and maintenance.  - 7 - PART III - THE TRANSPORT SECTOR A. The Transport System 24. The main modern modes of transportation in Niger are road and air. The backbone of the road network is the east-west road axis which links the Mali border to Lake Chad and serves major economic areas and urban centers, and the north-south axis which links the uranium mining area in the north with the rest of the country. Distance to ocean ports is considerable and trans- port costs loom large in external trade flows. There are three main import/export outlets: (a) the Nigeria route, 1,450 km from Zinder to Lagos; (b) the Benin route, 1,100 km from Niamey to Cotonou; and (c) the Togo route, 1,350 km from Niamey to Lome. The bulk of freight traffic goes via Benin. 25. Air transport in Niger is centered around the international airport of Niamey, which is the closest to Europe of the Sub-Saharan airports and is an important transit stop. It generates significant revenues from landing fees. An IDA credit in 1974 helped finance the modernization and extension of the airport. There are also four small regional airports at Agadez, Tahoua, Haradi and Zinder. B. The Road Transport Sub-Sector The Network 26. Niger's classified road network is 8,500 km of which 2,910 km are paved, 3,130 km are good engineered laterite and the remainder are earth roads and tracks. There are also some 12,000 km of unclassified earth roads in agricultural areas and tracks in desert areas not under regular maintenance. Niger ranks fourth among the six Sahelian countries in terms of total length of classified roads, but due to the vast desert area it ranks last in terms of population density (1.5 km/1,000 inhab.) and density of network (6.3 km/l,000 km2). The network is concentrated in the south where most of the population lives, while the uninhabited areas in the north of the country are only sparsely served. Niger's terrain is mostly flat or undulating and presents no major physical barriers to land transport. Highway Administration . 27. The Directorate of Pub'.ic Works (ITP) in the M4inistry of '-ublic Works and Housing (MITPU) has overall responsibility for the administration, design, construction and maintenance of the road system. While DTP's overall staffing situation is adequate, managerial and middle-level staff are limited in availability, and there are still three expatriate staff in DTP headquarters. The Government is addressing this problem and, initially, the Third Highways Project (Credit 612-NIR) financed a training program for DTP personnel. Experience under that project revealed the need for a continuing training program, and the proposed project will assist DTP to etablish a training center (para. 39).  28. Construction and periodic maintenance of paved roads are carried out by contract under the supervision of consulting engineers, or of DTP. Major externally financed construction projects are usually executed by foreign firms. Routine road maintenance is carried out by DTP's six regional services supported by headquarters services and the Equipment Department (DM), which was subs'antially reorganized and reequipped under Cr. 128-NIR in 1968. Other projects financed by the Association have built up sufficient capacity for carrying out periodic maintenance on the laterite and feeder road networks, and for routine maintenance of the paved network. Some sections of the paved road network, however, have now reached the age where resealing and/or overlay- ing are required. A program of preventive periodic maintenance for paved roads would be introduced under the proposed project which would finance most urgently needed resealing and/or strengthening works on parts of the network. 29. With increasing emphasis being given to road maintenance (p3ra. 30), adequate management of maintenance operations has become an increasing concern. To address this issue, a Road Management Unit would be set up with the help of the proposed project (para. 3?) to program road maintenance works. Planning 30. While the Government's past transport policy was aimed mainly at upgrading the main east-west road link and at the construction of the north- south link from the mining areas to the southwest, present objectives are more diverse. The paved network is sufficient in relation to existing traffic levels, and further expansion is expected to be limited to the progressive upgrading of regional roads connecting major agricultural areas to urban centers. The feeder road network will need to be expanded to better support the Government's agricultural programs. As noted above, maintenance will take on increasing importance. Niger has a relatively good record in this area, but in coming years the needs for road maintenance are expected to rapidly increase: a large part of the paved network was built in the early 1970's and is now beginning to deteriorate as a result of aging and increased traffic volumes--road traffic increased by some 13.5 percent p.a. during the 1970's in the wake of the uranium boom and accelerating urbanization. As a result Government policy is increasingly geared to the maintenance factor--present objectives specify road maintenance as a priority of the country's consolida- tion program and efforts point to strengthening the national maintenance capability. 31. Prior IDA projects have supported this trend and the proposed project will continue to do so. Of the five previous IDA-financed projects in the road sector, one (Credit 886-NIR, ongoing) supports and expands the feeder road network, and one has contributed to the construction of roads to complete the linking of major urban centers and mining areas to the main paved network (Credit 55-NIR). Three projects (Credits 128-NIR, 231-NIR, and 612-NIR ongoing) have supported maintenance and the buildup of a national maintenance capability. The proposed project would continue this effort in a difficult economic phase and a period of rapidly escalating maintenance requirements.  The completed projects have been suc-cessfully executed. A combined Project Performance Audit Report for Credits 128-NIR and 231-NIR was issued in November 1977. It notes that the projects were reasonable successes, and that the Government's positive attitude contributed significantly to this outcome. The projects resulted in the improvement of DTP's routine maintenance operations and in the elimination of a backlog of deferred maintenance. Implementation of the two ongoing projects (Credit 886-NIR and 612-IIR) has been smooth, although the regravelling component of the latter project is expected to fall short of its target because of the difficult fiscal situation of the Govern- ment. Nonetheless, the overall economic rate of return for that project was recently estimated at 20 percent, compared to 17 percent estimated at appraisal. * The feeder road prcject (886-NIR) is proceeding as planned, and some road sections have now stood two wet seasons without damage. The institutional aspect of the project-creation of a feeder roads section in DTP and training of staff-has been particularly successful. Financing 32. Highway expenditures are financed from three sources: the national budget provides funds for administration and routine maintenance of national roads; and National Investment Fund finances minor road improvements and periodic maintenance works; foreign aid (mainly FAC, FED, USAID and IDA) goes to new road construction and periodic maintenance. Road expenditures over the 1979-82 period totalled CFAF 53.5 billion (USS157 million), of which CFAF 47 bil'ion (US$138 million) or 79 percent for investment (25 percent of the investment budget) and the rest for maintenance. 33. Until 1980 Niger was able to provide adequate funds for road maintenance. However, since that time funds allocated to- road maintenance have fallen short of needs, reflecting general fiscal difficulties following the decline in uranium revenues. The situation will become critical in the next few years when road maintenance requirements are expected to increase sharply as a result of the aging of the paved roads built during the 1970s. It is estimated that road maintenance expenditures will need to rise from the CFAF 1.8 billion spent in 1982/83 to an average of about $4.4 billion per year during the 1983/86 period to fully meet maintenance requirements. Following recent substantial increases in fuel taxes (averaging 80 percent) total revenues from road user charges are likely to exceed these expenditure levels, but other budgetary expenditure requirements preclude the Government from applying all road user revenues to road maintenance. In the future, the Government intends to maintain road user revenues at a level at least equal to the total cost of road maintenance (Section 4.05(a) of the Credit Agreement). * The proposed project will finance urgently required periodic maintenance of paved roads, leaving an estimated CFAF 5.7 billion of routine and periodic maintenance of gravel roads, routine maintenance of paved roads and associated administrative costs for the period 1983-86 to be financed outside the project. nnder these circumstances, the Government has agreed to an allocation of CFAF 1.7 billion in its budget for FY83/84, which should be adequate to meet maintenance requirements for that year. In subsequent years, it would attempt to maintain this amount, adjusted for inflation, as a minimum allocation.  - 10 - The feasibility of this objective would be reviewed annually by the Government and IDA in the light of the financial situation of the country. Likewise, the highway investment program would be reviewed to ensure that it does not prejudice the maintenance budget in case of budgetary constraints (Sections 4.05 and 4.06 of the Credit Agreement). The Road Transport Industry 34. The growth of mining and continued urbanization have strongly u stimulated the trucking industry. Public freight transport is now handled by well over 300 transporters, most of them located in Niamey. The largest of these is the SocietE Nationale des Transports Nigeriens (SNTN), a well managed and efficient transport company with 49 percent Government ownership. The company owns a fleet of more than 1,000 units. There is little direct goverment intervention in road transport operations and official tariffs are only indicative, except for oil products and goods carried on the Niamey-Benin route; tariffs for domestic traffic are usually negotiated on a case by case basis. In 1981, actual tariffs ranged between CFAF 23-34 per ton/km, only slightly higher than on the coast. Strong competition among truckers and the absence of a rigid tariff regulation has the benefit that most of the savings in vehicle operating costs resulting from road improvements are passed on to producers and consumzenrs. PART IV - THE. PROJECT 35. The project w;s prepared during implementation of the Third Highway Project (Cr. 612-NIR) and was appraised by an IDA mission to Niger in October 1981. Negotiations were held in Washington in April 1983; the Nliger delegation was led by His Excellency Houmouni Yacouba, Minister of Public Works and Housing. A report entitled "Niger Fourth Highway Project - Staff Appraisal Report" No. 4017-NIR is being circulated separately. A Credit and Project Summary appears at the beginning of this report, and a supplementary project data sheet is provided in Annex III. The roads involved are shown on tfap 16335. Project Description 36. The main objectives of the proposed project are to: (a) develop a long term program of preventive periodic maintenance for paved roads, and begin its implementation; (b) set up a Road tlanagement Unit (RIMT) to monitor and program road maintenance and investment works; and (c) establish a permanent training center for DTP employees. To this end, the project would provide for: (a) strengthening and/or resurfacing of 374 km of the existing bituminous network including supervision; (b) technical assistance to establish RMU; (c) construc- tion and equipping of a training school for DTP's employees, and technical assistance to operate the school over a three-year period; (d) the supply of  - 11 - traffic counting, pavement roughness measuring and line marking equipment, road maintenance equipment and spare parts as well as vehicles and other equipment. 37. Road Maintenance Program. The project would help establish pro- cedures and develop programs to effectively manage the existing paved road network on the basis of a pavement evaluation and indicative planning exercise carried out by BCEOM in 1980. This would be IIU 's starting point for devel- oping a long term rolling maintenance program. As part of such a program, the project would undertake urgently needed strengthening and resealing works on 374 km of roads as identified during the pavement evaluation exercise. 38. Road Management Unit. Forty man-months of technical assistance would be provided to set up a road management unit and establisb operational procedures for it. The unit would monitor the road network and program maintenance and investment works according to traffic demand and road wear. The RMU would also monitor and manage the nation's bridge resources assuring their structural integrity and programming their timely maintenance. Oualified local counterparts would be appointed to the expatriate engineer and technician to be employed by RMU. 39. Training. The proposed project would establish a permanent training center and provide teaching, office and workshop equipment and furniture, technical assistance and operating funds for three years of operation of the center. The project would also provide some earth-moving machinery and vehicles to the training center. In addition, the Equipment Department would transfer mobile equipment to the center (Credit Agreement, Section 3.08). Spare parts to rehabilitate equipment to be transferred will be provided under the project. The Government has made available a site of 15 ha near Niamey Airport for the training center. The site is suitable and provides a number of different rock and soil types, as well as surface drainage features for training of equipment operators and other civil engineering tradesmen. 40. DTP, aided by training consultants provided under the Third Highway Project, has prepared a detailed two-year training program which provides for courses for about 1,240 students in 23 trades or occupations. The project would provide approximately 150 man months of technical assistance to set up and operate the training center over a period of three years, covering the following posts: Director of the Training Center, Instructor in Administra- tion, Instructor in Civil Engineering, Instructor in Mechanical Engineering, and Instructor in Equipment Use. 41. Under the training component in the Third Highway Project, a train- ing expert was provided by the French Bureau Central des Etudes d'Outre-Mer (BCEOM), who has been responsible for preparation of the training component of the proposed project and for development of the architect's brief for construction of the center. Due to BCEOM's close association with the pre- paration of the training component and the need for continuity between the two  - 12 - projects, BCEOM will be retained for the provision of technical assistance to the training center. During the third project, five Nigerien employees of the Directorate of Public Works have been trained as instructors and it is intended that they will be the counterparts to the proposed technical assistance team. Project Cost and Financing 42. The total cost of the project including contingencies is estimated ac USS32.1 million equivalent, or US$24.8 million net of taxes, of which US$17.8 million (55 percent) represents the estimated foreign cost. A break- down of project costs is given in the Credit and Project Summary. Estimates of the cost of strengthening, resurfacing, building and road construction are based on the prices taken from recent bids submitted in Niger for similar work. Operating costs fer the training center have been estimated by BCEOM, based on costs of training under the Third Highway Project. The cost of traffic-counting equipment has been obtained by inquiries of potential suppliers. Supervision of civil works is estimated at 8 percent of the value of the works supervised; technical assistance costs are based on current man-month rates in the existing BCEOM contract. The billing rate for technical assistance is expected to average TISS8,500 equivalent per man-month net of tax. Of this amount USS2,300 equivalent account for housing and subsistence. Other costs - local office and local travel expenses, etc. - will average about USS1,960 equivalent per month. Physical contingencies have been in- cluded at a rate of 10 percent. Price inflation has been calculated on the basis of the following annual rates: 1983, 8.0 percent; 1984, 7.5 percent; 1985, 7.0 percent and 6 percent thereafter. The proposed IDA credit of US$23.6 million equivalent would finance 95 percent of total project cost net of taxes (100 percent of foreign and 83 percent of local costs). The Government would finance 5 percent of the net of tax project costs as well as taxes. Project Implementation 43. Responsibility for project implementation would rest with DTP. Contracts would be supervised by consulting engineers on behalf of DTP's engineer for new works. The teams responsible for the training center and the Road Mlanagement Unit will report to the Director of Public Works. The center would become an integral part of DTP. DTP would assume over-all responsi- bilitv for the equipment for traffic counting and pavement roughness measure- ments and the coordination of the related research and studies. Procurement V 44. Roa.1 strengthening and resurfacing would be executed through con- tracts awarded following international competitive bidding (ICB) in accordance with lUorld Bank guidelines. In the case of the contract for the building of the training center (USS1.8 million), a local preference of 7-1/2 percent would apply. Road maintenance equipment not obtained by transfer from DM, as well as vehicles and workshop equipment (USS66O,OnO) will be purchased  - 13 - by ICB. Other equipment for the training center and for traffic counting, pavement marking and roughness measurement (llS$230,000) would be purchased by local shopping. The services of consultants would be obtained in accord- ance with IDA Guidelines. Disbursement 45. The IDA Credit would be disburseJ as follows: - 74 percent of total expenditures for road resealing and strengthening works (US$15,000,000); - 50 percent of total expenditures for building construction (US$850,000); - 100 percent of foreign expenditures and 50 percent of local expendi- tures for equipment and vehicles for the Road Management Unit and the Training Center (US$900,000); - 85 percent of total expenditures for technical assistance and consulting services (US$4,400,000); and - unallocated USS2,450,000. 46. While withdrawal applications have been handled competently in the past, payments to suppliers have been slow. The Government has therefore agreed to forward to the Association all requests for withdrawal of funds from the credit within 45 days, and to make its own payments within 90 days of receipt of an invoice (Section 4.02 of the Credit Agreement). In order to ensure speed and flexibility in meeting day-to-day expenses of the training center, the Covernment will establish, prior to effectiveness, two project accounts - a project account A of CFAF 9 million and a project account B with an initial deposit of CFAF 3 million drawn from project account A (Sections 3.02 and 5.01(a),(b), Credit Agreement). 47. As another condition of credit effectiveness, Government would be required to show that it has inscribed at least CFAF 1,0C0 million in the 1983/84 budget to meet its contribution to the cost of the first year of the project (Section 5.01(c) of the Credit Agreement). Project Benefits and Risks 48. Resurfacing and strengthening works will further prevent deteriora- tion of the paved network and reduce vehicle operating costs and postpone reconstruction. This component has an estimated economic rate of return of 43 percent. Sensitivity tests show that the average rate of return would not go below 26 percent. A major unquantifiable benefit of the project would be its institutional impact-strengthening the planning and management capability of DTP and establishing the training function on a permanent basis. These would result in better investment programming and would benefit the preparation and execution of further projects in the sector.  - 14 - 49. Risk pertains to the provision of adequate budget funds for road maintenance over and above the periodic maintenance provided under this project. Annual minimum allocations to maintenance have been agreed upon. In addition, their feasibi'lity will be reviewed annually with the Government in the light of its yearly budget situation and constraints. Likewise, the investment program in the sector will be reviewed with a view tn giving priority to maintenance over new construction in case of budgetary constraints. PART V - LEGAL INSTRUMENTS AND AUTRORITY 50. The draft Development Credit Agreement between the Republic of Niger and the Association and the Recommendation of the Committee provided for in Article V, Section l(d) of the Articles of Agreement of the Association, are being distributed separately to the Executive Directors. 51. Special conditions of the project are noted in Section III of Annex III. 52. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association. PART VI - RECO?IMENDATION 53. I recommend that the Executive Directors approve the proposed Credit. A.U. Clausen President By Ernest Stern Attachments May 23, 1983 Washington D.C.  - 15 - ANNEX I TAIS 3A NICQIf- SOCIAL INDICATOIS DAUA SlT NICC PPTIICLCO OWS WCUID AVAS t=^L 1267.0 llDSar zc81t -o .Ui. I .D. IllUASI AGRICULTURAL 129.6 1960 /b 1970 /b ESTIMATE /b ARIC SODT3I OF SARA ARCA, SUT0 0I SAHR CUP PER CAPITA (USS) 140.0 170.0 330.0 250.3 1053.2 ENERCY CONSUPrWION PM CAPITA (KItCGRAHS OF CAL EQZUIVALNrs) 5.2 24.0 45.9 66.5 610.1 POPULATION AND VITAL STATISTCS POPLATION. NID--YLT (TCuZ A) 2876.0 4003.0 5316.0 URAN PopuiATIoN (PCIIcr or TOT) 5.6 8.4 12. 5 17.8 2B.3 POPULATION Pl!OJECTIONS POPULATION IN YES 2000 (HILIENIS) 10.1 btATIONARY POPULATION (HLU.IONS) 33.7 YEUI STATIONARY POPULATICI iS RgACD 2130. POPULATION DEmM PER SQ. Km. 2.3 3.2 4.1 27.7 54.7 PER SQ. Km. MAIClILTURAL tAND 22.6 30.3 39.8 86.7 129.9 POPULATION ACE STRUCTURE (PERCENT) g-jA Us. 44.3 46.3 46.9 44.8 46.0 1S-.4 US. 52.7 51.1 50.6 52.3 51.1 65 YNS. AND ABOVE 2.6 2.6 2.5 2.9 2.6 POPULATION CGRQTH RATE (PEXCENT) TOTAL 2.3 3.3 2.3 2.7 2.3 URAN 4.1 7.0 6.8 6.2 5.2 CRUDE BIRTH PATE (PER THUSAND) 51.9 50.7 51.6 47.3 47.2 CRQUE DEATH RATE (PER THOU5AND) 26.8 23.3 21.6 19.5 15.7 GROSS REPRODtUCTION RATE 3.5 3.5 3-5 3.2 3.2 FAmIL PLANNING ACCEPTORS. AfNUL (THOUSANDS) .. .. usERS (PERCENT OF MARRIED MEN) .. .. FOOD ASO NCTRITION INnER OF FO-O PRODUCTION ER CArPLTA (1969-71-100) 112.0 96.0 95.0 88.7 90.7 PER CAPITA SUPPLT OF CALORIES (PERCENT OF REQUIREHElTS) 101.1 39.1 91.0/c 90.2 93.9 PROTEINS (GRAMS PER DMY) 65.4 57.2 63.57; 53.1 54.8 OF 1ICR ASIMAL AND PULSE 20.2 18.9 26.87 18.4 17.0 CHILD (ACES 1-4) HDRTALITY RA7E 44.7 38.8 31.4 26.7 23.9 HEAL'TH LIE EXPECTANCY AT BIRTH (YEARS) 37.2 40.5 43.2 45.6 51.0 INFANT MORTALITY RATE (PER THOUSAND) 191.2 171.3 145.7 129.9 118.5 ACCESS TO SAFE WATER (PERCENT OF PoPULAnON) TOTAL .. 20.0 27.0/d 23.9 UR AM 37.0 38.07; 54.9 RURAL .. 19.0 26.07i 16.5 ACCESS TO EXCREIA DISPOSAL (PERCENT Or POPULATION) TOTAL .. 1.0 3.0/d 25.8 URBAN .. 10.0 36.07; 63.1 RURAL .. .. 3.0;T 20.2 POPULATION PER PHYSICIAN 82171.4 56037.0 42719.3/c 32097.3 14185.2 POPULATION PER NURSING PERSON Y46A.7/f 7019.3 2377.97; 3264.6 2213.2 POPUILATION PER HOSPITAL BED TOTAL 2207.2 2220.5 139M4/e 1225.0 1036.4 URIAN 358.6 4o7.oflr 249.5 430.8 RURAL 4230.4 1958.47 e12.1 3678.6 AI4ISSIONS PER HOSPITAL BED 10.4/R 34.7/h HOUSING AVERACE SIZE OF HWSENOLD TOTAL .. .. IIBN ... . .. .. RURAL AULRAGE N9115tR OF PERSONS PE ROOM TOTAL .. .. URBlAN .. .. . . RURAL * -- ACCESS TO ELECTRICITY (PERCENT OF MELLINGS) TOrAL .. .. URBAN RURAL -- ..  - 16 - ANNEX I Page 2 TABLE 3A NICER-SOC!L INDICATORS DAA ST NICER REFERENCE CROUPS CIIKTErD Aa jACES - MOST RECENT ESTIHATE_- MDST RECENT IJwN imCam IDIIDLE LNCOI 1960 /b 1970 /b ESTIKATE lb AFRICA SOUrH Or SALAR AFRICA SOUtH OF SARAA EDUCATION ADJUSTED ENRaOLIEFT RATIOS PRIARY: TOTAL 5.0 14.0 23.0 63.2 83.3 MALE 7.0 15.0 29.0 72.7 96.1 FEMALE 3.0 9.0 17.0 50.3 80.4 SECONDARY: TOTAL 0.3 1.0 4.0 10.2 15.3 HALE 0.5 2.0 5.0 13.2 19.4 FEMALE 0.1 1.0 2.0 6.6 11.3 VOCATIONAL EROL. (1 OF SECODARY) 4.3 2.7 1.5 7.9 4.7 PUPIL-TEACEE RATIO PRIMARY 43.0/f 38.9 41.0/c 47.4 38.6 SECODARY 17.0 20.2 23.07 26.2 23.4 ADULT LITERACY RATE (PERCENT) 1.4/f .. 5.2 34.0 35.6 CONSUNPtIJN PASSENCER CARS PER ITOUSAND POPULATION 0.3 1.4 2.1/- 3.0 31.9 RADIO RECEIVEPS PER TOWSAND POPUIATION 3.3 36.2 38.7 34.8 71.5 TV RECEIVERS PER THOUS0ID POPULATION .. .. 0.1 1.7 17.9 ESPAPER ( -AILY GENERAL INTEEsr) CIRCUIATION PER NOWSAJD POPULATION 0.3 0.5 0.6/c 2.9 19.1 CINEA ANNUAL ATTENDANCE PER CAPITA .. 0.2 .. 1.1 0.6 LAOR FORcE ToTLiA FORCE (THOUSuNDS) 946.0 1276.1 1652.0 FEMALE (PERCEFt) 9.0 9.7 10.1 34.1 36.5 AGRICULTURE (PERCENT) 95.0 93.0 91.0 78.4 56.5 INDUSTRY (PERCENT) 1.0 2.0 3.0 9.2 17.7 PARTICIPATION RATE (PERCENT) TOTAL 32.9 31.8 31.1 *1.4 37.0 HALE 60.2 58.1 56.5 53.9 46.9 FE1ALE 5.9 6.1 6.2 29.1 27.2 ECONOMIC DEPENDENCY RATIO 1.4 1.5 1.6 1.2 1.3 INCOME DlSTIRTIWON PERCENt O PRIVATE INCOME RECEIVED BY HGHEST 5 PERCENT OF HOUSEHOLDS .. HIGHEST 20 PERCENT OF 1OUSEHOLDS .. LOWEST 20 PERCENT OF USEN ..OLDS LOWEST 40 PEICENT CF HOUSEOLDS .. POVERoT TARGET GROUPS ESTIED ABSOLUTE PIVERTY INCQIE LEVEL (USS PER CAPITA) URBAN .. .. 133.0/c 134.3 507.0 RURAL .. .. 63.07 82.9 200.6 ESTIMATED RELATIVE HOVERTY INOtME LEVEL tUSS PER CAPITA) UPSAN .. .. 133.0/d 96.4 523.9 RUAAL 53.07 60.4 203.6 FSTIIIATED POPULATION BELOW ABSOLUTE POVERrY INCOME LEVEL (PERCENT) URBAN .. .. .. 39.3 RURAL .. .. 35.0/d 69.0 Not avallable Not applicable. NOTES /a The group averages for each Ldicator are population-weighted aritlmetic means. Coverage of countries mong the indicator. depemda on availability of data nd Is not uniform. lb Unless otherwim noted. data for 1960 refer to an year betwen 1959 and 1961; for 1970. between 1969 and 1971; and for otlt ReCent Estlete. betwvee 1978 nd 1980. /e 1977; /d 1975: 7. 1976; /! 192; 2 g 1964; lb 1966. Hey, 1982  ANNEX I - 17 - Page .3 munrms OF WISE. iSICAlS E.ats. Ajihemb the Adat -m be I.. ear ga-tly JmdpAd Lb. ama aschalCtclm as a1m.lei. It abald elan ht mats mist ts a, -. is Sbac.- adtimaalty amr biahaas .1 bm Lack ml mtadmrdiad imlieUttimad eas-pta .51 hy diiffIars t~art&sd is ss.iactaa El. data. TM bAi mar. - itnam. gmW. me Imarrib cedar at swims. iSles.tin. . as chrctIarm ets Ia ajar dtttsama hatum a t,ti.. lim emlr- - - maar a- 11 tic am tine1. gaMp ml the mab3i c-mtr as CE) a -canlc gmcp wit mmmahet blab. -- int tha ti. eaty cram. ml cbs ahrL cam.. (-Facmt ice 3I*b bras CLIi Ety-t-cc g..ap &a.- 9SIm tata 0mib MStru ad 111.M1 tSt' L. cb-as be-a .1 -t-sP mati-teterl mfiscis . m ci. rmtmea- *r..p Adate . cmarams - isystatis aishad ar1tadtlc -s fsr ash tadU.tscar 5 stday Wag ajmrt of. tie tmm-trtaa i. irawM ham data lo t%at adI-to.r. liar. ink. .-Cmado at tsaria dads mb. IsAtttatm dmpagdm - thin *nll5ilit7 at data Api. itibmiad mq.ha.) PmdtI .hrmL.-LA "t"ti arts, ad ""'I-P,mlcisCiml 1it 1- te arts- a- carpimikm IAd" -m ad LIsis -tar; 1979 data. a.,b.. admc- dmdd by.1 thaIb mapcttla -bs at imapltai hmdm Sss -cmat - ,Ccim lan-lCelcar are -ad Iap-rrli er P - Iatt m liai Wa pOLlk dad prima. masts1 ad mpmltliit bsapial 55d - In rmpm.pammrse nmbt a ktins- cAres - Cm It. rails; 197 dacs.. hchlttat- acata. masteim ar amttllaha-ca pmrmm-mtly masiln by at Isaac as rricim. rtatabli1stats ns.ldiae primmipaly sadt- Oil FM CIPThT (ESS) - CMP V., t.pit st. ama r-reat ceha priram.Ita- dia tas raa imImad. 3mgr! b-als.iimm. &-cIed bmsltb -&t"mm by a cearla macbad am OrIld asdk Mtisc (19714-0 best.); 1I16. ad sIdts.! atmm-t pmmmsatly tsmellS by * phymiml (bat by a itS0. -At 195 acm. -Al-ice asi-ta car. sihiar. ac.) mAth mIte Is-petis csn RyCffufsItit PM CAPITA - A-1 acaq.tlsm at crie -tay teal ticai t-pmmm mrha kcpitaim tart." WM wrilLmtiuomiga 1bsapltaLa. a lst...t peram. maca did mac4a bydr -. ,la .al Watbmal aim- .5 rael yims -Ia -r real banpitls -5 bad1.51 s gaitsmity trC.itriI kisaa am-as mmlmitP-r tnpta 1t . RIM0. ad 319 mflr Spatil.31as bmapicals ar Uikt5d sty madt gtlrs. le Mmpial dmidad by Lb. m.d.. at iSa.. POPIATIN Mib VITAL STAITIMCS Tee amaia. Ste-7-r Etamas - As of Jt17 1. itO. 1970. ad IO0 amEts Orbsicrammistmermat.C m-cal - Sari. .1 n.bs ma cact Isrta.I-: A tbaeraas Zlaaapc aiiml a ie iigqns 1,I eM INd.ata lara rs palnmmwrbtl,.1dt add thi im adi.