Joint Financing for Roads in Somalia

• • • INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET, N.W .. WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 65/4 Subject: Joint Financing for Roads in Somalia March 29, 1965 The European Development Fund (FED) of the European Economic Community, the International Development Association (IDA), an affiliate of the World Bank, and the United Nations Special Fund (UNSF) have joined together in a unique operation to provide $13,445,000 to the Somali Republic for a highway project. FED' is providing $4,8i,9,000 as a development grant and $300,000 as technical assistance and IDA is _....~~' l ...." ! " ! ' ~ " - extending a development credit of $6,200,000. The UNSF is making a technical • assistance grant of $2,095,000 against which the Somali Government is providing $800,000 as its contribution to the project. The project is a comprehensive approach to Somalia's road problems. It involves the construction of an all-weather road through Somalia's most important dry-farming area; this will reduce the costs of transporting agricultural products to Mogadiscio, the largest consuming center, and encourage further production of food crops. The project provides for adequate road maintenance installations and equipment and for the creation of an effective organization to carry out maintenance operations. It also includes feasibility studies of future roads and an analysis of investment needs for all forms of transport in Somalia. The Somali Republic covers an area of approximately 254,000 square miles in the Horn of Africa. Over two-thirds of the population of about 2\ million are nomads· engaged in raising livestock. The rest of the population lives mainly in the center . ~ of the country between Baidoa and Mogadiscio, the capital and principal port, in the Hargheisa-Berbera area in the north, and in the Giuba River valley near the port of  •• - 2 - Chisimaio in the south. Development of transportation facilities within these three areas has high economic priority. • Most of the people now depend on primitive means of transport, mainly the camel and donkey. There are no railroads, air transport is in its infancy, and road transport is still at an early stage of development. Of the total network of some 7,500 miles of roads, approximately half are earth tracks; only 375 miles are paved. Nearly all the roads are impassable during the periodic rainy seasons. The new road will be a 125 ....mile two-lane, all-weather road from Afgoi to· Baidoa. There is already a road from Mogadiscio to Baidoa, the center of a major agricultural region, but only the first 19 miles, up to Afgoi, are paved and open to traffic the year round. The remainder is little more than a poorly aligned earth track. The new road will follow a better alignment and will be shorter. Since it will by-pass the important nomad trading center of Uanle Uen, a 12~-mile feeder road will be ~ built to connect Uanle Uen to the main road. Engineering con·sultants will be retained to do the final engineering of the roads and to supervise construction. The IDA credit will be applied to the costs of construc~ion, and $2.4 million from the FED grant will finance the remainder of the construction costs and all the engineering consultants' fees. The se~ond part of the project is reiated to the establishment of an effective highway o,ganization within the Ministry of Public Works. Maintenance equipment and other facilities are now wholly inadequate and roads are maintained poorly, if at all. An amount of $2,750,000 from the FED grant will finance the entire costs involved in the purchase of maintenance equipment, the establishment and equipping of field workshops, the provision of an initial stock of materials and spare parts, • and the building and equipping of adequate headquarters. In order to derive full benef!t from its road network anJ to plan rationally future investment in roads and other modes of transportation, Somalia will need the • technical assistance of t0reign experts. - 3 - They will be retained for a pe~iod of 4-5 years to staff and oJerate the Highway Department, to train Somali engineers and road maintenance staff, and to conduct feasibility studies of new roads and a study to coordinate transportation investJnent. Selected Somalis will also be trained abroad for senior p0sitions in the Highway Department. This technical assistance will be financed by the grant of $2,095,000 from the U.N. Special Fund, and an amount of $800,000 from the Government of Somalia. The World Bank will act as Executing Agency for the Special Fund. The IDA credit of $6,200,000 is for a tenn of SO years. Repayment of principal will begin June 1, 1975 after a 10-year period of grace. Thereafter, 1% of the principal will be repayable annually for 10 y~ars and 3% will be repayable annually • for the final 30 years. The credit is free of interest, but a service charge of 3/4 of 11 per· annum on the amount withdrawn and outstanding will be made to meet IDA's administrative costs. Agreements providing for the joint financing were signed today by His Exceliency Dr. Omar Mohallim, Ambassador of Somalia in Washington, by Mr. Hen~i Rochereau, Member of the Commission of the European Economic Community, and by Mr. George D. Woods, President of the International Development Association. At the same time, His Excellency Ahmed-Baba Miske, the Ambassador of Mauritania, Mr. Rochereau and Mr. Woods signed documents concluding arrangements for the joint financing of the construction of the 125-mile Nouakchott-Rosso road in Mauritania. An IDA credit of $6,700,000 for this project was made on December 28, 1964 and an agreement for a grant of $3,220,000 from FED was signed last week. This is the first time IDA and FED have joined together in fin~ncing development projects . •