Somalia - Mogadiscio Port Project

DOCUMENT OF INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use FILE COPY Report REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE SOMALI DEMOCRATIC REPUBLIC FOR A PORT PROJECT February 22, 1972 This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.   INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATiON OF THE PRESIDEN-T TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMEN'T CREDIT TO THE SuMALI DEMUCRATIC REPUBLIC 1`R THE MOGADISCIO PORT PROJECT 1. I submi-t the following report and recommendation on a proposed development credit to the Somali Democratic Republic for the equivalent of -S$12.95 million on standard IDA terms to help finance, jointly with the European Development Fund (FED), the construction of a deepwater port in Mogadiscio. The proceeds of the credit would be relent to the Somali Port Authority (SPA) on IDA terms. The F'ED will make a grant of So. Sh 86,648,ooo equivalent before the recent dollar devaluation to USX12.5 million; the proceeds of the grant will be passed on to SPA as government equi ty.1 PART I - THE ECONOMY 2. A report entitled "tReceat Economic Developments in Somalia" (AE-28a) was distributed, to the Executive Directors on August 28, 1972. A Country Data Sheet is attached as Annex I. 3. Somalia comprises the coastal plain that lies southeast of the Ethiopian highlands and mountainous ridge that forms the Horn of Africa. The -Somali Democratic Republic was born as an independent nation in 1960 througlL a merger of the former Italian Trust Territory of Somalia and the former British Protectorate of Somalia. In October 1969, the Govern- ment of Somalia was taken over by the military in a bloodless coup. Since then, the Supreme Revolutionary Council consisting of army and police officers has been the highest decision-making body in the country. Recent Economic Performance 4. Somalia is recognized to be one of the poorest countries in Africa with an estimated per capita income in the order of $70. The /1 The financial plan for this project, including the cost estimates and the contributions by IDA and the FED, and the information and analyses in the appraisal report have been based upon the currency values prevailing before the recent dollar devaluation. The project costs in terms of dollars are now expected to increase but in view of the favorable bids received on the project (see Paragraph 31 be- low) these increased costs are expected to be amply covered by the IDA and FED financing. It should be noted that the IDA commitment will be in terms of current dollars; the exact value in current dollars of the FED contribution will depend upon the future value of the Somali shilling, which has not yet been determined.  - 2 - economy is simple and largely undeveloped, and there are few natural re- sources which can be easily exploited at present. Most of the people depend upon livestock and subsiste.nce crops for their livelihood. Living conditions for the largely nomadic population are generally harsh. Much of the country is arid, water supplies are scattered and often unreliable and periodic droughts bring great hardship to both people and their live- stock. The small monetary sector of the economy provides orly limited opportunities for employment. Apart from the traditional export of live- stock, commercial agriculture is i2ainly centered around the production of bananas, principally by Italian concession holders, and the production of sugar for the domestic market. Manufacturing and other sectors of the economy are restricted in their pctential by the small size of the market, poor infrastructure and the shortage of capital and entrepreneurial ability. Social services are still very inadequate, only a small minority of children go to school and most rural communities are virtually isolated from the rest of the country by poor roads and communications. 5. The first decade since independence has been characterized by chronic financial difficulties which obliged Somalia to depend upon external assistance to balance her recurrent budget as well as to finance the whole of her development program. This assistance has beern, ho)ever, less effective than it might have been because of the limited adminis- trative capacity to evaluate, prepare and implement sound projects. 6. The Revolutionary Government which came to power in October 1969 is seriously commltted to the goal of economic development. It places a premium on self-reliance, which is evident in its management of public finance. Somalia's budgetary position showed considerable improve- ment starting in 1970, and in 1971 the Government achieved a recurrent budget surplus for the first time. This achievement was due mainly to effective control of expenditure, improved tax collection and cuts in salaries and wages of Government employees. Expenditures on defense still account fc*r about one-fourth of total recurrent expenditure, but their rate of increase -was reduced to about seven percent between 1970 and 1972, compared with the average annual rate of increase of about fifteen percent between 1967 and 1970. Budgetary support from Italy, which Somalia has been receiving since 1961, ccntinues but is now used to firnance develop- ment. 7. Somalia's trade balance has been constantly in deficit in recent years n thle average deficit over the period 1968-71 being So. Sh 116 mil- lion annually. During this period, exports and imports have increased by 31 percent and 25 percent, respectively. Aver the last four years, live- stock, animal products, and bananas have accounted for over 90 percent of total exports. Since 1968, Somalia's overall balance of payments lhas been in surplus. ln 1970 and 1971, the surpluses (excluding allocations of SDR's) were So. Sh 40 million and So. Sh 43 million. Somalia's foreign reserves Pmounted to $29 million at the end of November 1972, the equiva- lent of about six months imports.  - 3 - 8. Since independence, Somalia has received substantial amounts of foreign aid. From 1965 to 1971 the average annual disbursement of loans and grants was on the order of $23 million, seventy percent of which was in grants to finance development projects as well as deficits in the re- current budget. The major donors during this period were Italy, the United States, the European Economic Community, the United Nations, i-he Federal Republic of Germany and the USSR. In the last few years, the People's Republic of China has made substantial loan commitments. The United States and the Federal Republic of Germany suspended new commit- ments to Somalia in June 1970. 9. At the end of 1970 Somalia's total debt amounted to US$105.2 million equivalent, of which $73.9 million was disbursed. The USSR accounted for 52 percent of this, while the shares of the Federal Republic of Germany, United States and IDA were 19 percent, 9 percent and 10 per- cent respectively. The debt service ratio in 1970 was a modest two per- cent. However, starting in 1971, interest and amortization payments were scheduled to increase substantially and, in the absence of a corresponding increase in exports, the debt service ratio would probably have risen to about 15 percent during the next 5 to 6 years. Somalia experienced some difficulties in the past in servicing its external debt and sought relief through a series of rescheduling arrangements with the USSR in 1966, 1968 and most recently, in 1971. We do not yet have full information on the 1971 rescheduling but it will result in reducing the debt service burden in the immediate future. In view of the strained budgetary position of the Government, the management of the public debt, particularly the terms of new debts, is of critical importance. However, new commitments obtained since June 1971 amounting to $92 million have been generally on conces- sionary terms, particularly those from the People's Republic of China, the USSR and IDA. 10. In May 1970, the Government nationalized a number of foreign (mainly Italian) private enterprises, including an electric power company, a sugar refinery and commercial banks. The Government has stated that it will pay compensation and negotiations on the terms of compensation are under way. Development Planning and Prospects 11. The Government is now implementing the So. Sh 1,000 million development program (1971-73). Earlier plans, the first .`ive-Year Plan (1963-67) and the Short-Term Development Program (1968-70), looked to foreign aid for virtually all the financing. The Government, placing a high premium on self-reliance, intends to finance 20 percent of the present plan from internal sources. 12. The plan gives the highest priority to transport and communica- tions, which claim 35 percent of total expenditure. A 1,045 km road from Belet Uen to Burao (financed by the People's Republic of China), the Har- geisa-Berbera Highway (IDA and the African Development Bank), the Port of Mogadiscio (IDA and FED) and a telecommnnications project (FED) account for 85 percent of investment planned for this sector.  13. Agriculture, livestock, and water resources development account for 34 percent of plan investment. Of this, banana development ;^-eceives the largest share, but sizeable allocations also go to cotton development and the agricultural Crash Programs, para-military collective self-help schemes designed to increase food production by mobilizing unemployed labor. Sorghum and maize are the two most important food crops in Somalia. The aim is to achieve self-sufficiency in these two crops by the end of the period of the plan. 14. Investment is planned to reach So. Sh 333 million annually in 1971-73. This is very large compared with the previous program (1968-70) which called for average annual expenditures of So. Sh 235 million and proved to be over-ambitious. Even if all the necessary external and domestic finance can be found, the shortage of qualified and experienced personnel will make it difficult to prepare and execute projects as fast as called for under the plan. Achievement in 1971 was considerably below target. 15. The Government is now formulating a new Five-Year Development Plan to start in 1974. A Bank economic mission is planned to visit Somalia in December 1973 to help the Government establish the priorities for this new plan. PART II - BANK GROUP OPERATIONS IN SOMALIA 16. Starting in 1965, IDA has made five credits totalling about $22 million, about 85 percen-t of which was for transportation development, including construction of two trunk roads (Afgoi-Baidoa in thie central region and Hargeisa-Berbera in the northern region) and engineering and accounting services for the Port of Mogadiscio Project. 'The economic future of the country depends on the development of agriculture and the livestock export trade. Provrision of basic transportation infrastruc-ture was a prerequisite. It also helps in the important task of nation build- ing by tying together Somalia's geographically isolated regions. Another IDA credit in 1971 assisted education, the development of which is also at a verv early stage compared with other developing countries. No Bank loa:; or IEC investments have been made in Somalia. 17. Annex II contains EL summary statement of IDA credits as at January 31 and notes on the execution of ongoing projects. Performance has been generally. satisfactory except on the education project, which is about six months behind schedule. However, remedial actions are being taken and we plan to intensify our follow-up of the Project by frequent staff visits. 18. We are now concentrating our efforts on the country's most important productive sectors, agriculture and livestock. Agriculture  offers the greatest potential for development, but most rural activities are only at the beginning stage. Moreover, agricultural development in Somalia is particularly difficult because most of the people in rural areas are nomadic. The first fruit of our efforts will be a livestock project which was appraised earlier this month and for which a credit is expected to be put to the Executive Directors for approval early in FY74. This project, covering the area between the Giuba River and the Kenya border, would help increase efficiency in cattle raising, the country's key industry and main foreign exchEnge earner. In FY75 we hope to present another agricultural project based on the findings of an identification mission which visited Somalia in November/December 1972. 19. Despite the efforts of the Government and external assistance from various donors including IDA, the country's transportation and commu- nications are still inadequate. Both IDA and the Government will continue to support transport development in the next few years. The second high- way credit under implementation provides for feasibility studies and detailed engineering for the improvement of the Hargeisa-Borama road in the northern region, which would further promote livestock and agricultural development in the area. The studies are expected to be completed in the Fall of 1974 and are expected to provide the basis for a further project IDA could support. 20. As mentioned above, Somalia's education system is inadequate for the country's needs; for instance, only 8 percent of the relevant age population are attending elementary schools, one of the lowest attendance ratios in Africa. A UNESCO/IBRD Cooperative Programme Identification mission visited Somalia in January, and on the basis of the mission's finding we hope to assist the Government further in preparing a second education project soon. 21. Because Somalia is one of the least developed countries in the world and lacks exploitable resources, it will, despite recent successful economic performance, need a substantial amount of external aid for devel- opment. As much as possible of this aid should be on concessionary terms and external financing should be provided for a large part of domestic costs as well as the foreign costs of investments. Since Somalia's limited administrative capacity continues to be an important constraint, intensive technical assistance will be required.  - 6 - PARr III - 'THE S3CT0R 22. The exploitation of Somalia's limited resources has been in- hibited by lack of adequate transportation facilities: the road network is still under-developed, there are no railways, air transport services are in their early stage of development, and the principal port (M4ogadiscio) has obsolete fac:ilities and inefficient operations. The density of cargo and passenger flows in all modes is light. Road transport 23. The 200 km highway from Afgoi, just outside Mogadiscio, to Baidoa unites the Port of Niogadiscio to its hinterland. It was financed jointly by IDA and FED and completed in 1971. In the north, the 160 km road from Hargeisa to the port of Berbera was begun in 1972 under financ- ing provided jointly by IDA and the AfDB. There is also a bituminous road from Afgoi southwest to Goluen financed by FED. A 1,045 km road financed by the People's Republic of Jhina is being constructed from Belet Uen in the central region to burao in the north. Despite the imple- mentation of these various projects, the country's highway system is still under-developed and many regions are isolated. About 15,300 motor vehi_les were registered in 1970; registrations have grown at 6 percent per annum in recent years. Ports 24. Somalia has twenty-seven ports along the more than 3,000 km of coastline, including four major ones at Berbera, Ghisimaio, Merca and Iiogadiscio, accounting for more than 95 percent of the country's ocean- borne foreign commerce. New ports recently built at Berbera in the north and Chisimaio in the south, with the help of the USSR and USAiD respectively, have sheltered deepwater facilities. Mogadiscio and Merca are lighterage ports. There is little coastal traffic and virtually no passenger traffic. Iviogadiscio, the principal import port, handles about two-thirds of the coluntry's imports but only about 5 percent of its exports. Berbera is the only major port on Somalia's northern coast and the principal outlet for livestock exports. Merca and Chisimaio, located respectively 90 km ancl 500 km south of Mogadiscio, are primarily banana export ports but also hanidle small quantities of imports. Chisimaio also exports livestock and meat products and handles, during the southwest monsoon season, some import cargo destined for M4ogadiscio. After the completion of the proposed pro- je'1z 2t lhogcadicic,, the Port of ivierca is expected to cease operation. Air TransDort 2P.. 6omalialz' donestic air transport system (,omali Airlines) has lirect fliglhts between ivlogadiscio and twelve other centers. Domestic and intenzational air freight transport is negligible, an(d domestic pqssenper  -7- movements reached only 18,000 in 1969, but have been growing at an annual average rate of 19 percent in recent years. Between 1965 and 1969, inter- national passenger traffic grew at about 26 percent annually, but only a few international airlines visit Somalia because of the small demand. Organization 26. Four ministries are concerned with the transport sector: the iviinistry of Planning and Uoordination; the vivinistry of iiublic wvorks, through its Department of Civil E'ngineering, responsible for planning and constructing transport infrastructure and for highway maintenance; the FIinistry of Transport for vehicle registration and cont:rol, and through the Somali Fort Authority (SPA), for ports; and the M1inistry of Interior for highway traffic control. No Govermment agency exists to oversee the functioning of the whole sector, but there is no pressing need for one at present. PART IV - THE PROJECT Introduction 27. in November 1964, the Bank made a technical assistance grant of $311,000 for a preliminary engineering study for a new deepwater port at 10ogadiscio and in ?ebruary 1967, the consultants Societe Grenobloise d'Etudes et d'Applications Hydrauliques (SUGREAH, France) produced a master plan for a new seven-berth port. An appraisal mission which visited Somalia in May, 1967 found the proposed two-berth first stage to be techni- cally and economically sound, but there were insufficient IDA funds available at the time to finance the project. The closure of the Suez Canal also created uncertainty at the time about traffic forecasts. An engineering credit of $550,000 (s5-so of March 3, 1969) subsequently financed detailed engineering for a three-berth first phase, and engineer- ing was completed in 1970. In the meantime, there was a change of Govern- ment in Somalia, brought about by a military coup in October 1969. An IDA mission appraised the project in its present form in November/December 1971 and negotiations were held in Washington in September 1972. The Somali delegation was headed by Mr. Ahmad Mohamed Mohamud, the Secretary of State for Planning and Coordination. 28. A report entitled "Appraisal of M4ogadiscio Port Project - Somalia" (No. PTR-124a dated February 14, 1973) is being circulated to the Executive Directors separately, and a summary project description is attached as Annex III to this report. Present Port 29. The service area of Mogadiscio port constitutes the most produc- tive part of the country and has the greatest potential for economic  development. It covers most of the southern region, an important live- stock-raising area, including the agricultural area between the Giuba and Scebeli rivers. 'The present port does not have sheltered deepwater facilities and loading and unloo?ding by lighters is inefficient and is often made impossible by the choppy seas, particularly during the monsoon season. Substantial export and import traffic is carried uneconomically to other ports despite the convenient location of Mogadiscio. The Govern- ment consequently gives the highest priority to the new deepwater port in its current Development Plan. T'he Project Description 30. The proposed project, the first stage in the master plan, would provide for new sheltered deepwater berths, eqeuipment and technical assistance to introduce efficient port operations. It would include: (i) the construction of a 770 m breakwater, three berths (two of 16C) m and one of 140 m), a dolphin berth (65 m) for mooring livestock vessels, a marshalling area for livestock, an access road, and two transit sheds, one warehouse and ancillary buildings; (ii) the purchase of cargo-handling equipment, a tug, and harbor and navigational equipment; (iii) the provision of engineering supervision services and technical assistance and training in port operations, accounting, tariffs, and management. The project would be implemented over a four-year period. The Department of Civil Engineering of the Ministry of Public Works would be responsible for construction of the port. SPA will be responsible for the technical assistance and equipment elements and for the operation of the completed port. Cost and Financing Plan 31. The estimated total cost of the project (net of customs duties) is $25 million. The bids for the civil works element (over 90 percent of the project) were received in January (see paragraph 40 on procurement) and are being evaluated. Since an award has not yet been made, a firm contract price is not available, but the bidding indicates that the actual contract price will be well within the above estimate. The $20 million foreign exchange component is high (about 80 percent) because Somalia lacks most of the suitable construction materials. A local sub-contractor might be employed on a limited scale. FED has agreed to provide a grant to finance the project jointly with IDA. The IDA credit and the bED grant would each finance 50 percent of the project cost, i.e. up to about $12.5 million equivalent each.  9 - 32. The proposed IDA credit also includes an amount of $450,000 to refinance the outstanding balance of Credit S5-6O of March 3, 1969. Thus, the total amount of the IDA credit would be $12.95 million. 33. IDA and FED between them will finance the whole cost of the project. Since independence, Somalia has been faced with a severe finan- cial constraint and has had to rely on external resources not only for the whole of its development budget, but also to finance a large part of its recurrent budget. It is to Somalia's credit that the Government has now achieved a small surplus in the recurrent budget and, with careful huisband- ing of its resources, should be able to cover the increase in recurrent expenditure arising from its development program. One of the means employed by the Government to balance its recurrent budget has been to require SPA and other autonomous agencies to cut their costs and remit all surplus revenues to the Government. Perhaps in the future, the Government will be able regularly to achieve a surplus which would permit a small contribution to the capital cost of the development program, but for a long time Somalia will have to rely on external sources of capital to finance virtually the whole c,f its investment program. Management and Operations of SPA 3h. SPA, established in 1962, would be responsible for the operation of the port after completion of the construction work. SPA's functions are to administer the country'e ports, to promote the development of ports and to render services to port users. SPA is headed by a President responsible to the Secretary of State for Transport. The Government recently amended the relevant law to restructure SPA, providing for a Board of Directors and a Managing Director to strengthen its management; it also undertook to appoint a qualified and competent financial manager. The project would provide services of management consultants to review the organization and administration. 35. SPA's financial condition is satisfactory and its operating ratio is expected to remain stable at its current acceptable level of around 70 percent. The debt/equity ratio is not expected to exceed 42/58 after completion of construction of the project, which is also acceptable. An assurance was obtained during negotiations that SPA would not incur any debt unless its net revenue would be at least 1.5 times the maximum debt service requirements of succeeding years. Assurance was also obtained that all necessary steps shall be taken to maintain SPA's financial rate cf return on net fixed assets of at least 5 percent; during negotiations it was also agreed that SPA's tariff policy would properly reflect the costs of relevant facilities and services. Onlending Terms 36. The onlending terms in this case have been determined in con- sultation with FED, taking into account that in such cases it is normal FED policy that the ultimate beneficiary enjoy the same terms as the recipient government. RED has agreed that its grant to the Government would be passed on as equity investment in SPA, but on condition that the  - 10 - proceeds of the iDA credit be passed on to 'rA on 1JA terms. We have accepted this arrangement since in fact this departure from our usual policy on onlending terms will not result in any subsidy to port users. As pointed out in the preceding paragraph, SPA is to fix port tariffs at levels necessary to maintain at least a 5 percent financial return on its net fixed assets. Furthermore, under the Law on finances of Public Enterprises and Agencies, SPA will be required to remit to the Government (a) al1 revenue surpluses remaining after provision for operating costs, adequate depreciation, and other reserve funds and any necessary increase in working capital, and (b) depreciation not required by SPA for the re- placement of equipment, improvement of operations and construction of certain administrative facilities. Financial forecasts show that such payments by SFA in addition to actual debt service on IDA terms would to- gether exceed the amounts which the Government would receive from SPA if the credit were relent on noimal Bank terms. 37. Consistent with the foregoing, past Government borrow-ings for port development will be charged to SPA on the same terms and conditions as those on which the loans were incurred, and past grants received by the Government for port development will be treated as Government equity capital in SPA. The exchange risk in all instances will be borne by the Government. Benefits 38. Total quantifiable project benefits are estimated at $3.3 million in 1977 and are expected to increase to $5.2 million by 1986 and have been assumed to remain constant at that level for the remainder of the project port's life. Based on the cost estimates, the economic rate of return is conservatively estimated at about 15 percent, but on the basis of the low bid prices actually received for civil works, the return would be closer to 18 percent. About 75 percent of benefits are in foreign exchange. The following is a summary of the project benefits: (i) The largest source of benefits would be the elimination of a port surcharge on dry cargo for Mogadiscio, which shipping lines impose because of the extended time in port caused by the unprotected anchorage and inefficient lighterage operations; (ii) The proposed new port should virtually eliminate cargo losses at Mogadiscio port; (iii) Dry cargo imports destined for Mogadiscio are fre- quently unloaded at Chisimaio and trucked to the iogadiscio area during the monsoon season. The new port would eliminate this uneconomic practice;  - 11 - (iv) Because of inadequate facilities, the present port of Mogadiscio now handles only a fraction of the livestock exports originating in its hinterland. Most animals from the area are transported on the hoof, at substantial cost, to the recently con- structed port of Berbera some 1,250 km north of Mogadiscio. Diversion of this traffic would reduce inland transport costs and improve the earnings from livestock exports; (v) The present use of the lighterage port of Merca for banana exports from the Afgoi-Genale area results in substantial costs in ship waiting time and in damage to and loss of banana cargo. Construction of a banana berth in Mogadiscio and termination of banana exports through Merca would shorten ship waiting time and substantially reduce cargo losses; and (vi) More efficient operations at the new port would generate marginal traffic that would not otherwise materialize, but this benefit cannot be quantified because of lack of data. The generated traffic would also create additional employment in the port and elsewhere, which would help to offset the immediate unemployment to be caused by the elimin- ation of lighterage operation and termination of Port Merca's function. The Government plans to take active measures to create employment around Merca including the expansion of Crash Programs and the establishment of a new administrative capital. It is expected that the combined effect of (iii) through (vi) would help to increase the total volume of dry cargo traffic through Mogadiscio from an annual average of 160,000 tons in 1970 and 1971 to about 525,000 tons in 1981 and 660,000 tons in 1986. 39. Port regulations will be promulgated as necessary to enforce upon port users the proper use of facilities to eliminate environmental pollution and the avoidance of acts likely to induce such pollution. Procurement and Disbursement 4o. The civil works contract, accounting for about 90 percent of the total project cost, will be awarded on the basis of international competitive bidding. Past experience in Somalia shows that bids sometimes substantially exceed estimates. To ensure before presenting the credit to the Executive Directors that the proposed financing plan would be adequate, it was therefore decided to conduct the bidding in advance, and  - 12 - bids were received early in January 1973. Wide interest was showi in prequalification and nine bicds (several well below the estimate) were received and have been evaluated by the Government and its consultants SOGREAH. Port operating equipment costing about $600,000 would also be procured on the basis of international tender. FED's usual requirement is that contracts under its financing be awarded only to firms in the EEC and its associate member countries, but in this instance it has waived this requirement and firms from any member of IDA and from Switzerland may compete. For engineering consulting services the Government has con- tinued to retain SUGREAH, who carried out preliminary and detailed engineering satisfactorily. A management consultant would also be employed. Disbursements under the FED grant and IDA credit would be made pari passu and would cover 100 percent of the cost of civil works, equip- ment, technical assistance and engineering services. The proposed credit includes p--ovision for retroactive financing of engineering consulting services expenditures made after March 1, 1972 up to $30,000. PART V - LEGAL INSTRIJNENTS AND AUTHURITY h1. The draft Development Credit Agreement between the Somali Demo- cratic Republic and the Association; the draft Project Agreement between the Somali Port Authority and the Association; the draft Administration Agreement among the Somali Democratic Republic, the Association, and the European Developnent A?nd; the Recommendations of the Committee provided for under Article V, Section I (d) of the Articles of Agreement of the Associ- ation; and the text of a Resolution approving the proposed Development Credit are being distributed to the Executive Directors separately. 42. The draft Administration Agreement sets forth various adminis- trative procedures, such as withdrawal of the proceeds, procurement, exchange of information, and consultation, which are of common interest to the three parties concerned. 43. In addition to the standard conditions of effectiveness, the following conditions would apply: (a) the execution and delivery of the Agreement between FED and Somalia providing the grant has been duly authorized or ratified by the Somali Government; (b) al1 conditions prece- dent to the effectiveness of this Agreement have been fulfilled; and (c) the execution and delivery of the Administration Agreement on behalf of the Somali Government have been duly authorized or ratified. 44. I am satisfied that the proposed credit will comply with the Articles of Agreement of the Association.  - 13 - PART VI - RECOMMENDATION 45. I recommend that the Executive Director:s approve the proposed Development Credit. Robert S. McNamara President by J. Burke Knapp Attachments Washington, D.C. February 22, 1973   ANNEX 1 Page 1 of 2 COUNTRY DATA - SOMALIA AREA 2 POPULATION DENSITY 2 637,000 km 2.86 million (mid-1971) 4.4 persons per km Rate of Growth: 2.2 (from 1965tol970 ) 36 persons per km2 of arable land POPULATION CHARACTERISTICS (1965-70) HEALTH (1968) Crude Birth Rate (per 1,000) 46 Population per physician Crude Death Rate (per 1,000) 24 Population per hospital bed 670 Infant Mortality (per 1,000 live births) INCOME DISTRIBUTION DISTRIBUTION OF LAND OWNERSHIP 7. of national income, lowest quintile %.. % owned by top 10% of owners highest quintile .. % owned by smallest 10% of owners ACCESS TO PIPED WATER ACCESS TO ELECTRICITY % of population - urban.. % of population - urban - rural .. - rural NUTRITION EDUCATION Calorie intake as % of requirements . Adult literacy rate % 1971: 5 Per capita protein intake .. Primary school enrollment % 1970: 8 1/ CNP PER CAPITA in 1970 : US $70 GROSS NATIONAL PRODUCT IN 1971 ANNUAL RATE OF GROWTH (%. constant prices) US $ Mln. % 1960-65 1965-70 1971 GNP at Market Prices 100.0 .. Gross Domestic Investment *. .... Gross National Saving Current Account Balance 0.8 Exports of Goods, NFST h8.3 .. 3.2 3.1 9.8 Imports of Goods, NFS2_ 66.3 10.3 -2.0 39. 0 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1971 Value Added Labor Force V. A. Per Worker US Mln. % Mln. % US $ _% Agriculture .. .. .. Industry .. . .. Services .. . .. .. Unallocated Total/Average .. 100.0 100.0 * . 100.0 GOVERNMENT FINANCE General Government Central Government (omali Sh.Mln.) % of GDP (Somali Sh.Mln. % of GDP 1971 1971 1969-71 1971 197 1 1997 1 Current Receipts .. .. .. 337 Current Expenditure *- 32L Current Surplus .. ..13 Capital Expenditures .. .. .. 139 External Assistance .. .. .. 152 1/ The Per Capita GNP estimate is at 1970 market prices, calculated by the same conversion technique as the 1972 World Atlas. All other conversions to dollars in this table are at the average exchange rate prevailing during the period covered. 2/ The rate of growth relates to merchandise in current prices. not available not applicable  ANNEX 1 Paee 2 of 2 COUNTRY DATA - SOIALIA Sept. Sept. MONEY, CREDIT and PRICES 1965 1969 1970 1971 1971 1972 (Mils. of Somali Sh. outstanding end period) MNoney and Quasi Money 220 327 365 392 Bank Credit to Public Sector 38 67 126 72 Bank Credit to Private Sector 178 234 182 25, (Percentages or Index Numbers) Money and Quasi Money as 'A of GDP .. .. .. .. .. 1/ General Price Index (1963 = 100) 127.7 135.L 136.6 135.8 135.8-' 130.33- Annual percentage changes in: General Price Index 12.7 6.3 0.9 - o.6 0.0/ - .11/ Bank credit to Public Sector - 11.2 8.0 88.0 -43.. Bank credit to Private Sector 1C.0 1CA4 -22.2 39.3 BAI,ANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1969-71) 1969 1970 1971 US $ Mln % (Millions US $) Bananas 8.5 25.9 Live animals 17.5 53.I Exports of Goods, NFS h8.2 L0.0