Cameroon - Oil Palm (supplementary) Project

FILE COPY DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Niot For Public Use RETURN TO R. AFICA FILES Report No. B-P-1175-CM REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED SUPPLEMENTAL LOAN TO SOCIETE CAMEROUNAISE DE PALMERAIES (SOCAPALM) WITH THE GUARANTEE OF THE UNITED REPUBLIC OF CAMEROON FOR THE OIL PALM PROJECT January 26, 1973 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 It may not be published, quoted or cited without Bank Group authorization.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.  Currency Unit CFA Franc (CFAF) US$ 1 = CFAF 256 CFAF 1 = US$ 0,0039 CFAF 1,000 = US$ 3,91 CFAF 1,000,000 = US$ 3,906 Fiscal Year - July 1 to June 30  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THIE PRESIDENT TO THE EXECUTIVE DIRECTORS ON, A PROPOSED SUPPLEMENTAL LOAN TO SOCIETE CAMEROUNAISE DE PALMERAIES (SOCAPALM) WITH THE GUARANTEE OF THE UNITED REPUBLIC OF CAMEROON FOR THE OIL PALM PROJECT 1. I submit the following report and recommendation on a proposed supplemental loan to Societe Camerounaise de Palmeraies (SOCAPALM), to be guaranteed by the United Republic of Cameroon, for the equivalent of US$1.7 million to help finance a cost overrun of the revised Cameroon Oil Palm Project, for which the Bank made a loan (No. 593-CM) of US$7.9 million in 1969. The supplemental loan would have a term of 14 years, including five years of grace, with interest at seven and one-fourth percent per annum. Fonds d'Aide et de Cooperation (FAC) would make a grant equivalent to US$0.8 million for the project and Caisse Centrale de Cooperation Economique (CCCE) a loan equivalent to US$1.1 million with a term of 11 years including 5 years of grace, with interest at 4.5 percent. PART I - THE ECONOMY 2. The report "The Recent Economic Development of Cameroon, No. AW-39a, was distributed to Executive Directors on October 19, 1972. An updating economic mission and an agricultural sector mission are tentatively scheduled to visit Cameroon in April/May 1973. 3. Cameroon is endowed with varied, although not abundant natural resources. The country has good agricultural potential based on a range of soils and climatic conditions which permit the cultivation of a number of export crops. The economy, however, is still vulnerable to fluctuations in the output and price of its two main exports, cocoa and coffee. 4. Cameroon's rural areas sustain 80 percent of the population mainly in agriculture. There is no evidence of serious malnutrition, although a careful study of the condition of the rural population is needed. However, there are wide income disparities within rural areas and between the rural and urban populations--rural incomes are about 50 percent of average per capita GNTP (US$180). Development strategy, therefore, should concentrate increasingly on raising rural productivity and developing the smallholders' sector. The opportunities in agriculture lie in tropical commodities for export, substitutes for imported agricultural products, and improvements in output, marketing and processing of traditional foods to meet the needs of a growing urban population.  - 2 - 5. Rapid urbanization is taking place and Cameroon's urban population is expected to rise from 20 percent of total population in 1970 to 38 percent by 1985. The rapid shift in population from rural to urban areas, particu- larly to the two main cities, reinforces the need for an effective rural strategy. Rapid urbanization has also increased the need for a national urban settlements policy, including measures to cope with rising urban underemploy- ment and inadequate public services. Industrialization is an essential part of a balanced rural-urban strategy. Industrial opportunities lie in process- ing agricultural and forestry products for export, and in producing import substitutes (particularly intermediate products and consumer goods) needed for the growing domestic market. 6. Also fundamental to exploiting Cameroon's development opportunities are investments to overcome the serious transport bottleneck which has ham- pered the development of some of Cameroon's more promising regions. 7. During the first decade of Cameroon's independence (1960-70), the Government made a successful start in tackling some of these development problems. Considerable progress was made in the establishment of a basic transport and communications network. Output of agriculture, industry and commerce grew rapidly. Real growth during the first decade of independence reached six percent a year, which was well ahead of population growth. Until recently, however, economic management was complicated by a top-heavy federal structure which had three separate administrations (the Federal and two State Governments) with fragmented responsibility for public services and develop- ment. Creation of the United Republic of Cameroon in May 1972 opened pros- pects for better programming of available domestic and foreign financial re- sources in relation to economic and social development priorities and for more efficient project preparation and implementation. 8. Cameroon's third five-year Plan (1971/72-1975/76) was announced at a time when exports prospects had deteriorated. Since early 1970, Cameroon's terms of trade have been declining and in spite of some recovery of cocoa prices the outlook for primary export crop prices and output is now less favor- able than it has been in the recent past. Furthermore, private investment based in the past on substitution of imported consumer goods has levelled off and may not resume until the opportunities for the next, more complicated phase of industrialization can be exploited. In the light of these develop- ments, the Plan's investment target of CFAF 280 billion (US$1.1 billion), 70 percent more than in the last Plan, appears ambitious. Total development spending of CFAF 200 billion, of which half would be public, would appear more in line with availability of domestic and foreign capital, and absorp- tive capacity. 9. With reduced growth rates, public savings are likely to be well below the estimates of the new Plan. Recently, Cameroon was able to generate adequate current budgetary surpluses, amounting to 2.2 percent of GDP, to f'inance an expanded current expenditure and to cover a rising capital budget. In addition, Treasury resources were increased by the sharp rises in stabili- zation fund reserves during a period of high export prices. In 1971/72, the  -3- current budget surplus is forecast at about CFAF 9 billion, the same as in 1970/71; receipts are levelling off because of reduced export values and current spending is continuing to rise. The current surplus is sufficient to cover debt service and the regular capital budget. However, in the last year and a half, some large new investment projects have been authorized outside the budget and are to be financed directly from stabilization fund reserves. In 1971/72, the draw down of reserves may have amounted to ScGme CFAF 10 billion. Although the stabilization funds are no longer supportLng domestic prices, it is clear that total public investment cannot be continued at the 1971/72 high level. 10. While plan priorities are basically correct and most of the proposed investments are desirable for Cameroon's development, the pace of plan execution will have to be reviewed in the light of available resources. In the past, Cameroon has followed sound fiscal and monetary poxlicies and, when similar financial problems occurred in the mid-Sixties, the Government curtailed expenditures and exercised the necessary discipline to 'Live within its means. 11. As yet, Bank Group lending accounts for a small proportion of Cameroon's external debt of about US$230 million as of December 13, 1971. Due to our relatively recent involvement, only US$31.2 million out of US$79.8 million in commitments has been disbursed so far. Cameroon's ability to make an effective use of external resources, and the Government's dedication to development are reasons for increasing Bank Group support. Although debt service is still low (currently 4.5 percent of export earnings, about 6.5 percent by 1976/77), the country can support only modest increases in its hard-term debt. Expected lower growth of export earnings spells years of slimmer public savings. At the same time, the volume of high priority proj- ects in the public sector is rising. Under these conditions, a rapid increase in debt service charges should be avoided and most of external financing should therefore be on concessionary terms. Given the limited scope for rais- ing public savings in the next few years, donors,including the Bank Group, should be prepared to finance a high proportion of projects costs. For proj- ects with a high local currency component, such as certain agriculture and education projects, the Government might not be able to finance the total amount of local expenditures and in these cases the Bank should be willing to include in its financing also a proportion of local costs. PART II - BANK GROUP OPERATIONS IN CAMEROON 12. Annex I contains a summary statement of Bank loans and IDA credits as of December 31, 1972, and notes on the execution of ongoing projects. The Bank Group's commitments in Cameroon now total almost US$80 million. The loans and credits outstanding cover nine projects: three in agricul- ture, three in transportation, two in education and one in public utilities. Agriculture, transportation and the other sectors taken together have ab- sorbed about one-third each of the total amount of our past commitments. Projects have generally been satisfactorily implemented, although consider- able delays have occurred in some cases.  - 4 - 13. The Bank Croup's strategy for the future is to support the Govern- ment in its efforts to equip the country with infrastructure, to accelerate rural development and to increase the efficiency of Cameroon's institutions. 14. When Cameroon became independent its transport infrastructure was appreciably less developed than in most other West African countries. In its first Development Plans, the Government gave priority to the improvement of its transportation system and particularly to the construction of a long north-south rail and road link which was aimed at helping unify the country, enabling the benefits of economic development in the South to spread to the less developed Northern Region and strengthening Cameroon's position as a regional transit center. This program is nearing its end and the Garoua- Mora road, which will be included in our next road project to be presented to the Executive Directors by mid-1973, constitutes the last missing link in the north-south transport route. 15. Transport will continue to represent an important proportion of future public investments and Bank Group lending in Cameroon. lie have under consideration a possible railway modernization project and, more importantly, the expansion of Douala's port capacity, which are essential to enable Cameroon to fully realize the benefits of its agricultural and forestry potential. Beyond these projects which we hope to present to you during FY 74, we plan to identify other high priority transport investments in access roads in rural areas and in the large southeastern forestry zone. 16. Investments in agriculture have so far been affected by the weakness of government agencies responsible for project preparation and implermientation. The Government has recently stepped up its efforts to formulate viable rural development programs and we have under consideration a cocoa rehabilitation and planting project (FY 74) in the southern region as well as a livestock project (FY 74) in the northern central region, which will benefit an as yet untouched segment of Cameroon's population. We are also exploring with the Government new ways of raising output and productivity in rural areas; we have begun to study ongoing integrated agricultural development projects to de- termine their relevance to the country's agricultural problems and prospects and an agricultural sector survey is scheduled for April 1973. 17. Following the recent action to give the country a unitary structure there are good prospects for improving the effectiveness of agricultural services with the creation, within either the Planning Department or each main Technical Ministry, of units responsible for project preparation and supervi- sion with which we propose to work closely. 1i. Bank Group assistance to Cameroon is provided in close cooperation with other donors, France and the EEC representing the major sources of for- eign assistance to Cameroon. The proposed supplemental loan is a good example of this collaboration.  - 5 - PART III - THE AGRICULTURAL SECTOR 19. As in many other West African countries the agricultural sector is dominant in the Cameroonian economy, providing a livelihood for 80 percent of the population and producing over 80 percent of the country's foreign ex- change earnings. 20. While two crops, cocoa and coffee still account for 75 percent of the value of agricultural exports, Cameroon is making good progress in di- versifying its economy. In addition to the two major cash crops (cocoa and coffee), bananas, palm oil and kernels and some rubber are produced in the South and cotton in the North. Among food crops, rice production is increas- ing. Forest exploitation is also a large source of income and foreign ex- change. 21. Agricultural production comes mainly from many family smallholdings, most of which are between one and three hectares. Food crops are frequently interplanted with cash crops. In the eastern part of the country, practically all agricultural produce, other than palm oil and rubber, is derived from over 600,000 smaltholdings and plantations are scarce: they include SOCAPALM's oil palm plantations, a private rubber plantation and some small sugar-cane, banana and coffee plantations. Larger industrial plantations are found in western Cameroon, where the Cameroon Development Corporation (CANDEV, a state corporation), has developed, partly with Bank/IDA assistance, about 30,000 ha comprising mainly oil palm and rubber, but also bananas, cocoa, tea and pepper. 22. Past Bank Group assistance to Cameroon has helped the country to diversify its production. Our two first agricultural projects were to pro- mote cultivation on large government-owned plantations of a variety of cash crops, other than cocoa and coffee, in western Cameroon (CAMEFV) and of oil palm in eastern Cameroon (SOCAPALM). The latter is the project for which supplemental financing is proposed. Nevertheless, Cameroon has still a largely untapped agricultural potential and it is expected that current efforts to develop the rural sector will lead to further diversification of our agri- cultural operations. 23. The Semry project approved in January 1972, aimed at developing irrigated rice cultivation in the North, was our first operation supporting smallholder agriculture. Two further projects now under active consideration for cocoa and livestock development will give further support to integrated rural development and smallholder operations.  PART IV - THE PROJECT Background 24. In 1969 the Bank made a US$7.9 million loan (593-CM) to Societe des Palmeraies de Mbongo et Eseka (SOPAIE) for an oil palm project. The project consisted of an oil palm planting program on two estates (Mbongo and Eseka) totalliag 9,000 hectares and included construction of two oil mills, roads, buildings and other infrastructure. Total project costs were estimated at US$14 million equivalent and were financed by the Bank loan, a US$1.8 million grant from FAC, a US$1.8 million loan from CCCE and a gov- ernment equity investment of US$2.5 million. SOPAME was established as an autonomous state-owned corporation. Its name has since been changed twice, the last one being Societe Camerounaise de Palmeraies (SOCAPALM). 25. Considerable difficulties were experienced during project execu- tion. The original plan called for planting of 4,500 ha of oil palms at Mlbongo and 4,500 ha at Eseka. IThile the Mbongo site proved to be satisfac- tory, it became apparent, after the start of field operations at Eseka, that swamps, ravines and numerous small streams made land-clearing more costly than originally estimated and that the objective of planting 4,500 hectares at Eseka would not be attainable. The mechanical land-clearing method rec- ommended by the consulting firm proved to be overly expensive. Overhead charges largely exceeded appraisal estimates because SOCAPALM had to rent expensive headquarters in Douala. This location had been selected to strengthen relations with Government in the initial phase of project execution. The cost of oil mills and other items increased due to price inflation. Finally construction of a warehouse in Douala, which was not contemplated in the original project, was found necessary for economical storage and distribution of fertilizers, building materials, mechanical equipment and spare parts. 26. To offset the reduction in plantings at Eseka, additional areas were surveyed at Mbongo and found suitable. It was therefore proposed to expand the Mbongo plantation by 1,500 ha to a total of 6,000 ha, while only 2,500 ha would actually be planted at Eseka. This in turn required expan- sion of the oil mill capacity at Mbongo to cope with the increased plantings there as well as the higher yields per hectare wwhich are now expected. 27. These proposals and the overall problem of the cost overrun on the project were discussed by the Bank with the Government, FAC and CCCE. The Bank and the colenders recognized that the Government would find it very difficult to cover the financing gap, at a time of declining public resources resulting from a weakening in world cocoa prices. Although the borrower's management had occasionally proved insufficiently cost conscious its overall performance had been reasonably good: the planting program had been carried out promptly and efficiently and the standards of maintenance were high. Ta addition, the Government was prepared to adopt measures to reduce invest- ment and operating costs and to improve its supervision of the plantations  - 7 - sector. Agreement was reached on changes to be made in the project scope and the revised project was appraised in May-June 1972 1/. Negotiations for a supplemental loan were held in Washington with a Cameroonian delegation headed by His Excellency, Mr. Tchoungui, Cameroon's Ambassador to the United States. FAC and CCCE were also represented. The Revised Project 28. 'fhe revised project, as now proposed, would consist of: (a) establishment of about 8,500 ha of oil palm, of which about 6,000 ha at Mbongo estate and about 2,500 ha at Eseka estate; (b) construction of a palm oil mill on each of the two estates with capacities of 20 tons/hour at Mbongo and 12 tons/hour at Eseka, respectively; (c) building of a warehouse and office at Douala; and (d) provision on each estate of necessary roads, buildings and other infrastructure. In connection with the project, the Government has also undertaken: (a) to arrange for visiting agents to inspect the SOCAPALM planta- tions in detail, to report on their findings and to suggest any necessary improvement to the Board of SOCAPALM, the Gov- ernment and the Bank; (b) to exchange views with the Bank with regard to the oil palm smallholder development programs to be undertaken by SOCAPALM; (c) to initiate a study of improvements of the palm oil and kernels marketing system; and (d) to exchange views with the Bank on the best way of strength- ening the organization and supervision of its industrial plantations through the newly created Ministry of Agriculture; and to make a study of the possibilities for cooperation, co- ordination and integration in the industrial plantations sector. 1/ Re-appraisal Report No. 8a - CM dated January 22, 1973 is being circulated separately to the Executive Directors. A Loan and Project Summary is given in Annex III of this report.  29. In 1969, total project costs had been estimated at US$14 million equivalent. Following the 1972 reappraisal, total project costs are now estimated at USS19 million equivalent with a foreign exchange component of US$12.2 million. This represents an increase of US$5.8 million (including US$0.6 million of taxes) over the present-day dollar equivalent of the 1969 estimate. The following table shows the breakdown of the incremental cost (in US$'000): Cost Estimates Item Appraisal Reappraisal Increment Land clearing 2,598 3,410 812 Plantation development 4,419 5,595 1,176 Vehicles and Equipment 229 904 675 Housing and Buildings 764 1,555 791 Oil mills 2,532 4,294 1,762 Sub-total 10,542 15,758 5,216 Contingencies 611 1,420 809 Operating losses 185 - (185) Capitalized interest on first Bank loan 1,860 1,860 - Total 13,19 / 19,038 5,840 Financing Plan 30. As a result of fluctuations in the dollar exchange rate above the 1969 parity, the total funds available in CFA francs under the original financing have increased by CFAF 172 million, equivalent to about US$0.6 mil- lion. After taking into account these extra funds, the amount required to finance the incremental cost of US$5.8 million is US$5.2 million equivalent. It is proposed that this would be met as follows: a supplemental Bank loan of US$1.7 million equivalent; a FAC grant ar.d a CCCE loan of respectively US$0.8 and 1.1 nillion; and a Government equity contribution of US$1.4 million and US$159,000 from SOCAPALM's self-generated funds. The supplemental Bank loan would have an amortization period of 14 years including 5 years of grace. The CCCE loan would be for 11 years including 5 years of grace and would bear interest at 4.5 percent. Wlhile the Bank loan would be made to SOCAPALM, the FAC grant and the CCCE loan would be made to the Government and passed on to SOCAPALM on the same terms. The revised financing plan assumes that the terms of the existing Bank and CCCE loans and the FAC grant remain unchanged, that interest on the proposed supplemental Bank loan would not be capitalized and that adequate working capital would be available. 31. In the proposed financing plan, the Bank would finance 33 percent of the cost overrun, FAC and CCCE 37 percent and Cameroon 30 percent. This 1/ Today equivalent of the 1969 estimate, taking into account that the exchange rate has altered and that disbursements have been made at rates higher than the rate anticipated in 1969 (CFAF 247/US$).  - 9 - would bring total Bank, FAC/CCCE and Cameroon contributions to about 50 per- cent, 28 percent and 22 percent respectively of total project costs. In the 1969 financing plan, the Bank was expected to contribute about 57 percent, FAC and CCCE about 24 percent and Cameroon about 19 percent of project costs. Economic Justification 32. As revised the project would contribute to the diversification of Cameroon's agricultural production. At full development it would generate about US$1.5 million annually in gross foreign exchange earnings on exports and save about US$2.9 million annually in foreign exchange expenditure on imports of vegetable oil. It would also provide fuller and more remunerative employment to about 600 worker families and 1,000 single workers previously involved in subsistence farming. The project would also lead to better health and education services. 33. The economic benefits to be derived from the project would actually be appreciably higher than estimated in 1969 since increased costs would be more than offset by increased benefits: domestic consumption of palm oil exceeds the original forecast and the bulk of project production would be consumed locally and is therefore valued at the import substitution price, which is higher than the export price originally taken for calculation of benefits. Thus the economic return on the investment which was estimated at 7.6 percent in 1969 is now expected to be about 10 percent without shadow pricing and about 12 percent with appropriate shadow pricing. Procurement and Disbursement 34. With the exception of the Mbongo oil mill which is financed by FAC and CCCE, all goods for the project are to be procured by international competitive bidding. Provisions are made allowing SOCAPAIM to grant a margin of preference to preferred domestic manufacturers in bid comparisons. Dis- bursements from the proceeds of the 1969 Loan and the Supplemental Loan would finance: - the c.i.f. cost of imported goods or a percentage of total expenditures (representing the foreign exchange component of goods purchased locally); - 100% of total expenditures for machinery and equipment for and design, installation and construction of the Eseka oil mill, ancillary installations and buildings, as had been agreed under the 1969 Loan; - 55% of total expenditures for land-clearing and 40% of total palm planting expenditures. 35. The consolidated Bank loan would be disbursed over the period 1968/69-1976/77. The FAC supplemental grant and the CCCE supplemental loan would be disbursed during 1972/73-1976/77, but the FAC funds would be with- drawn first.  - 10 - PART V - LEGAL INSTRUMENTS AND AUTIIORITY 36. The draft Supplemental Loan Agreement between the Bank and Societe Camerounaise de Paimeraies, the draft Supplemental Guarantee Agreement be- tween the United Republic of Cameroon and the Bank, the Report of the Commit- tee provided for in Article III, Section 4 (iii) or the Articles of Agreement and the text of a draft Resolution approving the proposed Supplemental Loan are being distributed to the Executive Directors separately. 37. To the extent possible, the Supplemental Loan Agreement incorporates by reference the substantive provisions of the 1969 Loan Agreement. In addi- tion, the following features are of particular interest: (a) provision has been made for the merging into a Consolidated Loan Account of the proceeds of the 1969 Loan and the Supple- mental Loan, and for the exhaustion of the proceeds of the 1969 Loan before withdrawals on the Supplemental Loan can begin (Section 2.02 of, and Schedule 1 to, the Supplemental Loan Agreement); (b) to the extent necessary to assure consistency between the Supplemental Loan Agreement and the 1969 Loan Agreement, the latter has been amended (Section 10.01 (a),.(b), (c) of the Supplemental Loan Agreement) and cross remedies have been provided (Sections 8.02 (a), (b), (c), (d) and (g), 8.03 and 10.01 (e) and (f) of the Supplenmental Loan Agree- ment); (c) the effectiveness of the Supplemental French Agreement and the Supplemental Caisse Centrale Loan Agreement, and the approval by the Bank and subsequent execution and delivery of the agreement between the Borrower and the Guarantor defining the terms and conditions for the transfer of pro- ceeds of the two aforementioned Agreements are made additional conditions to the effectiveness of the Supplemental Loan Agreement (Section 9.01 of the Supplemental Loan Agreement); (d) provisions are made for the suspension of disbursements and acceleration of repayment of the Supplemental Bank Loan in connection with the suspension of disbursemeAts or accelera- tion of repayment of the Supplemental French Grant and the Supplemental Caisse Centrale Loan (Sections 8.02 (a), (b), (c) and (d) and 8.03 of the Supplemental Loan Agreement). 38. I am satisfied that the proposed Supplemental Loan will comply with the Articles of Agreement of the Bank.  - 11 - PART VI - RECOMNENDATION 39. I recommend that the Executive Directors approve the proposed Supplemental Loan. Robert S. McNamara President Attachments January 26, 1973   ANNEX I Page 1 THE STATUS OF BANK GROUP OPERATIONS IN CAMEROON A. STATEMENT OF BANK LOANS AND IDA CREDITS (as of December 31, 1972) Loan or US$ millions Credit Amount (less refunding) Number Year Borrower Purpose Bank IDA Undisbursed 100 1967 Cameroon CAMDEV 11.0 490 1967 CAIDEV CAMEV 7.0 5.4 i9593 11969 Sopame Oil Palm 7.9 4,5 (SOCAPALM) 604 1969 SNEC Water Supply 5.0 0.2 161 1970 Cameroon Education 10.5 10.2 180 1970 Cameroon Roads 7.0 1.4 663 1970 Cameroon Roads 12.0 11.8 687 1970 Regifercam Railway 5.2 1.2 229 1971 Cameroon Ports 1,5 1.2 302 1972 Cameroon Rice 3.7 3.7 320' 1972 Cameroon Education 9.0 9.0 Total 37.1 42.7 of which has been repaid 0.1 Total now outstanding 37.0 42.7 Total now held by Bank/IDA 37.0 42.7 Total undisbursed 23.1 25.5 48.6 ' Not yet effective  ANNEX I Page 2 B. PROJECTS INT EXECUTION Performance under existing loans and credits has been generally satisfactorv, though there are some difficulties. CAMDEV Project; UTS$11 mil- lion Credit No. 100 of March 28, 1967: Closing Date: June 30, 1972; and US$7 million Loan No. 490 to CAMDEV of same date; Closigj Date: December 31, 1974: Project implementation is satisfactory but funds have been seriously depleted by cost increases due to general inflation, lower than expected yields, the fall in rubber prices and excessive overheads. Disbursements for this project are slightly behind schedule. Government has agreed in principle to economy measures to reduce expenditure. A new contract is being negotiated for the continuation of the present managing agency arrangements with COMDFV until December 31, 1974. Oil Palm Project; US$7.9 million Loan No. 593 to Sopame of April 15, 1969_CloslLn__ate: Deceiber 31, 1976: This is the project for which supplemental financing is being preposed. W4ater Supply Project US$5 million Loan N1o. 604 to SNEC of June 2, 1969; Closing Date: December 31, 1972 (Intermediate Closing Dates: May 31, 1972; September 30, 1972): This project was completed ahead of schedule with substatitial savings which have been approved for investment in further water distriburion works; however, disbursements have lagged due to the strong working capital position of the borrower and the closing date has been postponed twice in order to allow remaining funds to be disbursed. Nevertheless, there was still an un- used balance of US$218,000 by December 31, 1972. First Education Project; US$10.5 million Credit No. 161 of September 23, 1969,; Closing Date: June 30, 1974: This project is about 12 months behind schedule due to delay in ap- pointing consulting architects and the need to call for new bids for 14 proj- ect schools in the South after revisions of the proposed design xyhich were accepted by the Government. Construction of the schools in the North is ex- pected to be completed in October 1973. The new bids for the schools in the South were accepted by the Association and the contracts were expected to be signed in January 1973. All contracts are within appraisal estimates and con- struction of the schools in the South is expected to be completed early in 1974. Highway Project; US$7 million Credit No. 130 of March 27, 1970; Closing Date: December 31, 1973- and US$12 million Loan No. 663 of same date. Closino, Date: December 31, 1973: :This project had a slow start due primarily to adminis- trative delays on the part of the implementing mininistries. By December 1971, however, all construction and consultants contracts had been signed and since then work has been proceeding satisfactorily. Railway Project; US$5.2 million Loan No. 687 to REGIFERCAM of June 9, 1970; Closing Date: June 30, 1974: Project execution is progressing very satisfactorily as far as delivery of motive power and rolling stock is concerned. Track renewal work over one section has been delayed by six months due to a strike of personnel of the contractor. Unforeseen technical difficulties, such as extremely bad nature of the subsoil of the river, make a further study necessary before selecting the optimum design of the railway bridge at Japoma near Douala and it is likely that new bids will have to be invited which may lead to an extension of the closing date of June 30. 1974. The dtaft economic study of the pro- posed realignment of the Douala-Yaounde main line has been discussed with the Government and RECIFERCAM and will be finalized in February 1973. Douala Port Proiect; US$1.5 million Credit No. 229 of January94, 1971; Closing Date:  ANNNEX I Page 3 June 30, 1973: After considerable delay in starting the project, largely because of institutional changes required and time consuming Government pro- cedures involved, the project is now proceeding satisfactorily. The revised estimated date for full credit disbursement is December 1973, 12 months later than originally planned. SETRY Rice Project; US$3.7 million Credit No. 302 of April 26, 1972; Closing Date: June 30, 1976: This project was approved by Executive Directors on January 25, 1972, was signed on April 26 and be- came effective on July 28, 1972. The project is proceeding satisfactorily. Second Education Project; US$9 million Credit No. 320 of June 28, 1972; Closing Date: June 30, 1979: This credit was approved by Executive Directors on June 20, 1972. The date of effectiveness had to be postponed successively to November 15, December 31, 1972, January 31 and March 30, 1973 from the original date of October 2, 1972. The latest extension was necessary in order to allow the Government to arrange for the employment of consultant architects.   ANNiC II Page 1 COUNTRY DATA - CA4ROON AREA 2 POPULATION DENSITY 75,O450 km 5,9 million (mid-1971) per kin 12.5 Rate of Growth: 2.1% (froml963 to 1970) per of arable land POPULATION CHARACTERISTICS (year) HEALTH (year) Crude Birth Rate (per 1,000) * 40.0 (1970) Population per physician: 22,000 (1971) Crude Death Rate (per 1,000) 19.0 (1970) Population per hospital bed 393 (1971) Infant Mortality (per 1,000 live births) INCOME DISTRIBUTION (year) DISTRIBUTION OF LAND OWNERSHIP (year) % of national income, lowest quintile .. 7% owned by top 107o of owners highest quintile %.. % owned by smallest 10% of owners ACCESS TO PIPED WATER (year) ACCESS TO ELECTRICITY (year) % of population - urban .. % of population - urban - rural ..-- rural NUTRITION (year) EDUCATION (year) Calorie intake as % of requirements . Adult literacy rate %7 Per capita protein intake .. Primary school enrollment % 70 (1970) 1/ a/ GDP PER CAPITA in 1970/7].:US $ 152.05 GROSS DOMESTIC PRODUCT IN 19E7071 ANNUAL RATE OF GROWTH (7.. constant prices) US $ Mln. % 196,0-6 1964/65,1969/70 1969/70.4970/71 GDP at Market Prices 897.1 100 0 6.4 2.6 Gross Domestic Investment 130.9 14.6 .. 7.0 3.7 Gross Domestic Saving 82.7 9.2 Current Account Balance Exports of Goods, 163.7 18.2 * 4.