Mauritania - Irrigation Engineering Project

'r-3 -- PU~~~IRCUJLATtNG COPY EETURNF) TO REPORTS DESK DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use Report No. P-1396-MAU REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE ISLAMIC REPUBLIC OF MAURITANIA FOR AN IRRIGATION ENGINEERING PROJECT May 8, 1974 Western Africa Regional Office 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 It may not be published, quoted or cited without Bank Group authorization.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 EQUIVALENTS Currency Unit = CFA Franc (CFAF) - until June 29, 1973 2 Ouguiya (UM) - since June 29, 1973 EXCHANGE RATES Currency Unit Official Floating (as of February 15, 1973) (as of February 1, 1974) UM 1 CFAF 5 CFAF 5 US$ 1 CFAF 230.21 CFAF 250.00 US$ 1 UM 46.04 UM 50.00 CFAF 1,000 Us$ 4.34 us$ 4.oo CFAF 1,000,000 US$ 4,340 US$ 4,o0o UM 1 US$ 0.02 US$ 0.02 UM 1,000 US$ 21.72 US$ 20.00 UM 1,000,000 US$ 21,721 US$ 20j,000 The Ouguiya is officially valued at 0.016 gram of fine gold or the equivalent of FF 0.1 or CFAF 5.0. As the French franc and the CFAF are now floating relative to the US dollar, the US dollar/Ouguiya exchange rate is subject to change. The exchange rate in February 1974 was US$ 1 = CFAF 250 Ouguiya 50.0, which was retained for conversions made in this report. FISCAL YEAR January 1 - December 31  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE ISLAMIC REPUBLIC OF MAURITANIA FOR AN IRRIGATION ENGINEERING PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Islamic Republic of Mauritania for the equivalent of US$1.1 million to help finance an irrigation engineering project. The credit would have a term of ten years, including two years of grace, with a service charge of 3/4 of one percent per annum. The credit would be refinanced under any later credit that the Bank Group might make for the irrigation project itself. PART I: THE ECONOMY 2. Based upon the findings of an economic mission to Mauritania in February/March 1973, a report entitled "The Current Economic Situation and Prospects of Mauritania" (243-MAU) will be distributed to the Executive Di- rectors on May 10, 197h. Country data sheets aDpear as Annex I. 3. Mauritania is not an integrated economic unit. It consists of three isolated economic centers: the modern mining and fish processing industries in the northwest around Nouadhibou, the capital city of Nouakchott, and the livestock and agricultural activities in the South. This latter is one of the poorest regions in the world and forms, with the western part of Mali and the northeastern part of Senegal, an almost entirely closed economic system. Between the Nouadhibou region and the south, the capital city of Nouakchott, built since 1960 in a semi-desert region with no natural resources and no basic infrastructure, is only an administrative center and a port. 4. In the past, Mauritania's main political and economic links were with France and the French speaking African countries south of the Sahara. But recently it has established close relations with North Africa and the Arab League countries. In June 1972, it asked for the revision of the 1961 Cooperation Treaty with France in the economic, monetary, technical, cultural, and military fields, and a new agreement was reached in February 1973, except for monetary affairs. As a result, Mauritania left the W4est African Monetary Union and the franc zone and introduced its own currency, the ouguiya, in June of that year. However, it still wishes to keep and develop economic ties with all its West African neighbors and is a member of the West African Economic Community, which replaced the West African Customs Union (UDEAO) in January 1974.  - 2 - 5. The factors limiting economic growth in Mauritania are many. First, the country is one of the poorest in terms of natural resources, except for iron ore and fish, and its climate is one of the most difficult, even among the Sahelian countries, as its most southern regions (about 7 percent of the country) do not receive more than 400-600 mm. of rain per annum. Second, distances are great and transport to all but a few places is arduous and costly; for example, freight schedules for the journey from Nouakchott (in the west) to Nema (in the east) allow nine days each way for a journey of less than 900 miles. Under such circumstances, the exchange of food products between the surplus and deficit areas is limited and production incentives are considerably decreased. Third, adult literacy in the country is low, while primary school enrollment does not exceed 15 percent of the school-age population. Past Economic Performance 6. Between 1960 and 1968, the Mauritanian economy grew in real terms at 10-11 percent annually. This was mainly due to a rapid expansion in the mining sector. Although little of the value added generated in the modern sector spilled over into rural areas, per capita income of the rural poor has increased at about three percent annually in the first half of the 1960's. From 1969 to 1972, overall economic growth slowed down to three to four percent per year as mining companies reached their capacity and as a result of a series of severe droughts, unprecedented in this centurv. 7. Mauritania was particularly affected by these droughts. Agricultural production decreased by about 60 percent in 1972, while the cattle herd was reduced by an estimated 40 percent between 1969 and 1973. This wiped out all the progress made in the rural sector in the early sixties and further widened the gap between per capita incomes in the traditional (US$70) and modern sectors (US$750). In spite of the substantial effort undertaken by the international community to provide emergency aid to Mauritania, the consequences of the drought will be felt for many years to come in the form of: i) lower output in the livestock sector; ii) a difficult public finance situation as a result of new demands on the national budget for the food relief operation and social and health services; iii) social problems created by the concentration of refugees around the emergency food supply centers; iv) malnutrition and starv- ation resulting in higher death rates among children and older people and causing a marked increase in the incidence of physical and mental damage among the sur- viving children. Strategy for Economic Development and Public Investments 8. The Government's economic policy in the first decade of independence focused on the development of infrastructure in an effort to equip Mauritania with a modern capital and the facilities needed to run the country. The infrastructure development effort also aimed at decreasing the dependence of Mauritania on Senegal for the transport of goods in and out of the country. Thus, about 80 percent of public investments between 1963 and 1972 were absorbed by projects in transport and urban infrastructure. Public investments increased at about nine percent per annum in current prices during this period to reach  - 3 - an annual average of US$19 million in 1968-72, or 7.8 percent of GDP. Besides the general constraints on economic development mentioned in para 5, plan implementation has suffered from the limited capacity of government services to identify, prepare, and execute projects. The technical ministries and the planning department are understaffed and not adequately equipped to set priorities or analyze and prepare investment projects. 9. Future growth in the modern sector is essential to improve the public finance situation and provide a substantial part of the revenues needed to finance investment and recurrent expenditures for the development of the rural sector. However, even if the contemplated substantial new investments for the Guelbs iron ore mines are undertaken (a continuation of the present MIFERMA operation), mining alone cannot provide employment for more than a very small fraction of Mauritania's active population and its indirect effects on the rest of the economy will continue to remain limited. Similarly, establishment of manufacturing industries--so far strongly supported by the Government--cannot provide the answer to the question of raising the standard of living for the mass of the Mauritanian population, as high production and transport costs and small local markets severely limit possibilities. The Government's basic strategy therefore should be to develop the country's few natural resources in livestock, agriculture, arabic gum and fisheries. Although details of the Government's investment program for the Third Plan period (1975-79) are not yet known, indications are that a much larger share of public invest- ments will be devoted to the rural sector than in the past, as shown by the number of projects presently under preparation in this sector. The development of irrigated agriculture in particular is expected to play an important role in ensuring that the consequences of a recurrence of the recent droughts would not be so drastic. Two irrigation projects totalling several thousand hectares are already underway. In addition to the Gorgol project, other irrigation programs are being considered in the context of the development of the Senegal River Basin. Financing Public Investment 10. The public finance situation improved markedly in the 1960s. From a negative US$7 million in 1960, budgetary savings reached a positive US$5 million in 1972 or about 15 percent of Central Government revenues. Public savings (after debt amortization) financed about 20 percent of the public investment program in the past three years, the rest being financed by foreign aid (US$15 million per annum). During this period, the Bank has been the third largest aid donor (providing about 18 percent of Mauritania's external capital assistance), after France (21 percent) and the European Communities (19 percent). About 70 percent of foreign development assistance financed transport and urban infrastructure. Also important was technical assistance, mainly in education, which amounted to US$5.2 million per annum in the past three years, mostly financed by French bilateral assistance and UNDP. Conditions of foreign aid have progressively hardened with the share of grant aid decreasing  - 4 - from 100 percent in the early sixties to about 35 percent in 1970-72, although the terms of the loans have remained soft. The external public debt outstand- ing as of December 1972 amounted to US$36.4 million; the average interest rate was 3.8 percent. The debt service ratio remains low (3-4 percent). Prospects 1/ 11. Even assuming normal rainfall conditions, growth in the rural sector will at best reach an estimated 2-3 percent per annum for the rest of the decade, and would be well belowx this level should there be a recurrence of the drought. Therefore, the standard of living on a per capita basis in the rural sector cannot be expected to reach its 1968 level again before the early 1980s as the effects of the investments planned in this sector will only be felt after a substantial lag. The modern sector rate of growth during the same period could reach about five percent, a small decline from the perform- ance of the past four vears. This is mainly due to the fact that mining production which stagnated between 1969 and 1972, but increased again in the last two years, is expected to remain at its 1974 level until MIFERMA begins exploiting low grade iron ore deposits at Guelbs. As a result, economic growth for the country as a whole could reach about four percent between 1971/72 and 1980. 12. The need to broaden the base of economic development appears to justify fully the Government's plans to increase public investment from US$19 million equivalent in 1968-72 to US$28 million per annum in the Third Plan (1975-79). Assuming tight budgetary policies, combined with a substan- tial increase in current expenditures in productive sectors, public savings could perhaps reach 13 percent of Central Government revenues or an annual US$9.5 million over the Third Plan period. However, public debt amortization will probably absorb about 40 percent of public savings. On that basis, public savings could not finance more than 20 percent of the public invest- ment program, and foreign aid would have to cover at least 90 percent of the cost of each individual project eligible for foreign financing, including the financing of some local expenditures. The projected low government contribu- tion toward financing public investments underestimates the development effort of the countrv. Over the coming years, the Government is expected to make avail-able considerably more resources for current development expenditures than in the past. For instance, if one takes into account recurrent expen- ditures in the rural and transport sectors, the Government's share in the financing of total public development outlays during 1975-79 could reach 25 percent. 13. On the basis of the assumptions made in the preceding paragraph, implementation of the proposed public investment program will require an increase in foreign aid of about 50 percent over 1969-72 levels. The World 1/ This section was written before the recent revisions in commodity price forecasts and therefore it does not include the effects of these revisions on the prospects of the economy. This analysis will be undertaken very shortly.  - 5 - Bank Group, FED, France, the People's Republic of China and several Arab countries are likely to be the main donors. The projected increase in foreign aid appears to be a reasonable target and is entirely justified particularly considering the extreme poverty of Mauritania's rural population after several years of drought. For the same reason and in view of the limited public savings likely to be available for the rest of the seventies, most of public inflows should be on soft terms. Assunming that Mauritania continues to borrow on very favorable terms, the debt service ratio would remain around 4 percent in the coming years. Borrowing on harder terms would seriously endanger the public finance situation. PART II: BANK GROUP OPERATIONS IN MAURITANIA 14. The Bank Group has had 7 operations in Mauritania to date. Total lending amounts to US$106.2 million, including one Bank loan of US$66 million for the MIFERMA iron ore mining operation in 1960, five IDA credits, totalling US$20.2 million, and one IFC operation of US$20.0 million for the development of copper mining in 1968. Two credits were for projects in the transport sector (US$6.7 million in FY 1966 for the road Nouakchott-Rosso and US$3.0 million in FY 1969 for a four-year road improvement and maintenance program), two in the rural sector (US$4.2 million for livestock development in FY 1972 and US$2.5 million for a Drought Relief Fund Project in FY 1974), and one for education (US$3.8 million, also in FY 1974). Annex II contains a summary statement of Bank loans, IDA credits, and IFC investments as of March 31, 1974, and notes on the execution of on-going projects. 15. The Iron Ore Mining and the 1966 Road Construction projects have been fully disbursed. Of the remaining projects, the First Road Maintenance Project (FY 1969) is progressing satisfactorily. All equipment is in operation according to appraisal schedule. The remaining funds for training will be entirely disbursed by mid-1974, at which time a follow-up project should be ready for Board consideration. With respect to the Livestock Development Project (FY 1972), the start-up of the vaccination and firebreak components was delayed by about one year to the fall of '1973, as animals left the project area and pastures were destroyed due to the recent drought. The well component subproject is now progressing satisfactorily, after some delays in equipment delivery. The remaining constraint, limited availability of trained personnel, is expected to be substantially alleviated by forthcoming hiring under the project of specialized technical assistants. The Drought Relief Fund Project, is progressing satisfactorily: bidding documents have been issued with IDA approval for the subprojects dealing with vegetable production and small irriga- tion schemes, while the feasibility study for the cattle production center is well underway. The credit for the education project, signed on February 11, 1974, is not yet effective. 16. In line with the development strategy outlined in paragraph 10, the primary objectives of the Bank Group operations in Mauritania are to help the Government (i) build a base for economic development outside the mining sector, particularly by developing the potential of the rural sector  - 6 - and decreasing its vulnerability to drought; and (ii) increase the country's absorptive capacity, one of the major constraints to Mauritania's development, by developing its educational/training svstem and making it more relevant to the country's needs. These objectives will be pursued while continuing to support, first, the development of mining activities which are essential to strengthen the fiscal and balance of payments positions of the country and, second, the development of transport infrastructure which is a prerequisite to promoting agricultural development in remote rural areas. Due to the extreme poverty of the country, its verv difficult climate, large distances, an insufficient transport network, and a lack of trained personnel at all levels, project preparation and implementation particularly in the rural sector has proved much more time consuming than anticipated. However, the efforts made by the Bank Group are starting to bear fruit, as indicated by the fact that it has been possible to present two projects to the Board in FY 74 (besides the Drought Relief Project) and the progress made on projects which we hope to present to the Board in FY 1975, i.e., a second Road Mainte- nance Project and the Nouadhibou Port Extension Project. The latter will substantially increase the participation of Mauritania in the exploitation of its fish reserves. 17. As of December 1973, the Bank Group held 25 percent of Mauritania's external public debt (disbursed) of US$39 million. This proportion is expected to remain at about that level during the remainder of the 1970s. The Bank Group accounted for about 3 percent of total debt service payments in 1973. This ratio is expected to increase slowly in the coming years to reach about 10 percent by the mid-eighties. PART III: TILE RURAL SECrOR IN MAURITANIA Past Performance is. The rural sector in Mauritania includes about 85 percent of the cotntry's population, yet accounted during 1969-1972 for only one-third of GDP. Most of the sector's production consists of livestock products; crop production represents less than 20 percent of the rural output, or 6 percent of GDP. The bulk of crop production consists of millet and sorghum (75,000 tons/yr under normal rainfall conditions), niebes (6,000 tons), and maize (4,000 tons); 75 percent of crops are grown under a system of flood recession cropping in the flood plain of the Senegal River and 25 percent under rainfed cond'tion. Mauritania also produces about 12,000 tons of dates annually and very small amounts of wheat, barley, vegetables and groundnuts. Rice culti- vation has started more recently and production reached 2,000 tons in 1972. It is estimated that under normal rainfall conditions, domestic production covers about 60 percent of the country's annual cereal requirements. In the past few years, however, agricultural production has fallen sharply as a result of drought and it is estimated that the production drop in 1972/73 was as much as 60 percent; this meant semi-starvation for a large proportion of the rural population.  7- Obstacles to Development 19. The poor performance of Mauritania's agricultural sector can be attributed to a wide range of constraints. Ecological conditions impose severe limitations on the number of crops which can be cultivated economically. Rainfall is limited and unevenly distributed and drought common and occasion- ally, as now, of disastrous proportion; flood levels of the Senegal River are irregular, making it impractical to employ low cost irrigation by controlled flooding; and within 200 km of the sea, salt water backs up during the dry season making the river water unusable for irrigation. Physical character- istics of the country make transportation difficult and costly, and exchanges of goods between surplus and deficit areas are extremely limited. Human resources are also limited and at present most human effort is diverted to assuring mere survival. The education level of farmers is low, health and nutrition are poor, infant mortality is high, and physical resistance is low due to the poor control of such endemic diseases as malaria and urinary schistosomiasis. Socially, efforts to reallocate land and to modernize here- tofore antiquated agricultural techniques are often complicated by a rigid land tenure system. Finally, Government budgetary allocations for agriculture have been inadequate. Development Strategy 20. There is some potential in Mauritania for the intensification of rainfed millet and sorghum cultivation. This could be achieved in the south- eastern region by introducing extension credit, and marketing services, and through improving feeder roads and water supplies. The Government has identi- fied such a project which is under preparation. Although the feasibility study has yet to be completed, indications are that such a project, if well managed, could lead to some increases in production levels and in the standard of living of the area's agricultural population as a whole. 21. However, the improvement of rainfed crop cultivation does not offer a solution to Mauritania's agricultural problems; areas with sufficient rain- fall for rainfed crop production are far too limited in extent. Consequently, any major improvement in the sector will depend primarily on the development of controlled irrigation to produce cereals and other crops as well as crop residues and fodder for livestock feed. Since 1961, several small pumping schemes have been installed along the Senegal River, and these now cover some 400 ha of rice. These schemes were inadequately prepared, organized and funded and most have now fallen into disrepair. They are now being rehabili- tated, equipped with appropriate institutional arrangements and expanded to 1,000 ha with financing by FED and IDA (Drought Relief Fund Credit - 444-MAU). The only major irrigation project so far initiated is the 4,000 ha M'Pourie project near Rosso, started in 1969/70 with bilateral aid from the People's Republic of China. Some 500 ha have been developed to date, and yields have averaged more than 4.0 tons/ha of paddy per crop. The remainder of the scheme is expected to be developed at the rate of 600 ha per annum.  - 3 - 22. For the future, regulation of the Senegal River, an objective sought jointly by Mauritania, Senegal and Mali in the context of the Organization for the Development of the Senegal River Basin (OMVS), would permit controlled year-round irrigation of about 300,000 ha on both sides of the river; of this about 60 - 70,000 ha would be in Mauritania. Two principal regulatory dams are under study; a storage dam at '1anantali (estimated to cost US$100 million) on the Bafing, a tributary of the Senegal River in Mali; and the Delta dam (US$30 million) near Rosso, which would prevent salt water intrusion from the sea at low river flow, as well as provide complementary water storage. lIowever, the implementation of these projects will take a long time and involve very high levels of expenditure. Estimates indicate an overall cost in 1973 prices of over US$3,000 per ha develciped, when the cost of dams is included. In the meantime, Mauritania, while actively participating in the efforts of OMtVS to develop the Senegal River Basin, has identified a number of irrigation projects which can be implemented more rapidly since they do not require the involvement of neighboring countries and because the total cost of individual projects is moderate. Among such projects, the Gorgol !Basin Development Scheme has been given the highest priority. PART IV: TIE PROJECT 23. The proposed engineering project provides for the execution of the engineering studies needed for the implementation of the first phase of the Gorgol Basin Development Scheme; the carrying out of related health and education studies; the preparation of final designs, tender documents and technical schedules; assistance to the Government in bid evaluation; and technical assistance to the Ministry of Planning for the analysis of rural development projects. 2/i. Corgol r,asin Development Scheme. At the Government's request, in 1970, 1!NDP financed preparation of a master plan for the development of the entire Corgol Valley and a feasibility study of a first phase project. The plan and study were reviewed by the Bank in 1973 and found satisfactory. True laster plan concludes that full utilization of the Gorgol River would eventually permit the irrigation of about 9,500 ha, and proposes that this be developed in three phases. Because of the remoteness of the project site and the uncertainty attached to preliininary cost estimates, it was decided that appraisal of the Gorgol project by the Bank would be possible only after completion of the final engineering studies and submission of bids for civil works construction. Appraisal of the dngineering project discussed in this report took place in D)ecember 1973 and negotiations were held on April 15 and 16, 1974. The Mauritania delegation at these negotiations was led by Mr. Ba, Director of the Plan. A credit and project summary is attached as Annex III. There is no separate appraisal report for this project. 25. A number of characteristics of the Gorgol Valley explain the priority it was given by the Government for the development of irrigated agriculture. The Corgol River is the principal tributary of the Senegal River in 14auritania  - 9 - and its valley extends over about 35,000 ha. The valley is regularly flooded bv both the Gorgol and Senegal Rivers. This flooding permits cultivation of 8,000 ha of crops, mainly sorghulm, under a flood recession system (the crop is planted as the flood recedes, and grows and matures through utilizing the residual soil moisture). Yields are very low, averaging about 0.3 ton/ha because of a generally inadequate water supply. It is estimated that more than three-quarters of the area to be developed ultimately for irrigation is not presently cultivated because of excessive flooding; thus problems of land reallocation, which are now being studied, are not expected to be sig- nificant. 26. D)evelopment of the Gorgol Valley will be phased. Phase I would involve the development of 3,500 ha for double-crop rice cultivation over a ten-year period, from the beginning of the investment period to full develop- ment. Subsequently, Phase II would provide for the development, between vears ten and fifteen of the project, of an additional 3,000 ha of rice. Phase III is envisaged as consisting of the eventual development of an addi- tional 3,000 ha for suigar cane and other crops in the late 1980s. This quite slow pace of development is predicated on the limited experience in Mauritania of modern irrigation andI existing logistical and manpower constraints; how- ever, if shown feasible, the pace of development in respect of the second and third phases could be accelerated. 27. Basic infrastructure works required for Phase I would consist of two small earth dams for water retention and flood protection (the Foum-Gleita dam on the Gorgol Noir and the El-Bir dam on the Gorgol Blanc), and two pro- tective dikes. WIater storage made available by these dams would suffice for cdeveloping Phases II and III. Phase II would only require elongation of the northern protective dike, construction of irrigation networks and land develop- ment on 3,000 ha. Additional protective infrastructure would be required for Phase III. Preliminary estimates indicate that construction costs for Phases I and II would total about US$17.5 million for the development of 6,500 ha (UIS$2,700 per ha) of which some US$11 million would be expended on the construction of Phase I (Annex IV). 28. The success of the Gorgol Basin Development Schleme will depend on experienced and effective management, the efficient provision of support services to farmers, and the timely supply of inputs. To gain experience, particularly of the social problems involved in a shift from primnitive traditional agriculture to modern irrigated cultivation, a 700 ha pilot project would be undertaken prior to Phase I. The pilot project would be adjacent to the site of the Gorgol scheme and would be irrigated by pumping fronm the Senegal River. The final design of the pilot project has been financed by UNDP, and FrD has indicated its interest in financing the project itself which would cost about US$3 million. Implementation could begin as early as Decenmber 1974.  - 10 - 29. Implementation of the Gorgol Easini Development Scheme will consti- tiLte a major effort for the Government, especially in terms of manpower and budgetary allocations. Thiese aspects wili be studied under the proposed engineeriip project. As far as senior manpower is concerned, it is envisaged that Mauritanians, presently being trained abroad or who will undergo such training in the near future, will progressively replace the foreign technical assistance which will be needed in the first years of the project. With the expansion of the existing NIDP-financed agricultural school at Kaedi, the training of extension service agents should pose no particular problems. Finally, Mauritania's deficient supporting infrastructure is expected to be considerably improved in the southern regions by the Second Ilighway Mainte- nance Project, now in its final stages of preparation by the Bank Group-. The Engineering Project 30. The Engineering Project to be financed with the proposed IDA credit would comprise employing consultants to assist the Government to: a. conduct topographic surveys and geophysical and geo-technical investigations; b. conduct hydrological measurements of the Gorgol Blanc and Gorgol Noir Rivers; c. prepare final designs and tender documents for the development of the 3,500 ha Phase I of the Gorgol River Basin Development Scheme; d. prepare technical schedules, including cost estimates, for the operation and maintenance of the proposed irrigation and drainage networks and for the construction of storage buildings and a rice mill required for the implementation of Phase I; e. prequalify bidders, evaluate bids and award contracts for Plhase I; f. study the irpact of the proposed irrigated development on health conditions; g. study the manpower and educational requirements needed for the efficient implementation of both the Gorgol Basin Development Scheme and other irrigation projects presently under preparation in Mauritania; and h. assist the Ministry of Planning in the economic and financial analyses of rural development projects by the provision of one agro-economist for a two-year period.  31. Execution and Timing. The Director of Rural Public Works of the Ministry of Rural Development would be responsible for supervising the imple- mentation of the Project. As the French consulting firm SCET International satisfactorily executed the Gorgol feasibility study and master plan, and as SCET is also engaged in the final design of the pilot project (para. 28), the Government has proposed that this firm undertake the engineering studies to be financed under the credit. Given the experience acquired by SCET International through several years of studies in the project area, and the delays that would be incurred in the course of inviting proposals from other firms, we agree with the Government's position. A draft contract has been drawn up between the Government and SCET, the terms and conditions of which are satisfactory and acceptable to the Association. SCET has already initiated work in the project area under a letter of intent issued by the Government. This early start was dictated by climatic conditions which, for field survey work, are most suitable in the period January to May. 32. It is estimated that the Gorgol Engineering Project including its technical assistance component would be completed in about 2 1/2 years, and require (excluding field surveys) a total of 14.4 man-years of professional expertise. Field work would be completed by June 1974 and final designs and bidding documents would be ready for final review by September 30, 1974. Prequalification of bidders, essential due to the complexity of the works, would be executed concurrently, allowing invitations to bid to be issued in November 1974. Bid openings would follow after 90 days, and allow their examination in March 1975. Appraisal of the Phase I project would be possible immediatelv thereafter and could permit award of the contract for civil works in late 1975. Allowing for a five-month mobilization period, this could permit work to start in April 1976 (Chart 8319). 33. Cost Estimates and Financing. Total cost of the project, net of taxes, is estimated at US$1.3 million with a foreign exchange component of US$1,043,000 (83 percent) based on the quotation obtained for the engineering contract. Detailed cost estimates are provided in Annex III. The proposed IDA credit of US$1.1 million would finance the foreign exchange costs of the project plus some local costs, or an aggregate of 87 percent of total project costs, net of taxes. The credit would finance retroactively up to US$280,000 for expenditures incurred after January 15, 1974 on consultant services. 34. The proposed IDA credit would be for a term of ten years, including a two-year grace period. The borrower would be the Government of Mauritania. The credit would be refinanced under any credit that the Bank Group might make for Phase I of the Gorgol Basin Development Scheme. 35. Disbursement. The credit would be disbursed against 100 percent of total expenditures for consultant services rendered in relation to the engi- neering, health and education studies, 80 percent of the technical assistance to the Ministry of Planning, and 38 percent of total expenditures for com- plementary surveys and investigations to be carried out by Government services.  - 12 - 36. Benefits and Justification. The justification for proceeding with the credit for the engineering project is that tentative estimates indicate a satisfactory internal economic return from investment in the Gorgol Basin Development Scheme. With an annual yield of about 8 tons of paddy per ha from two crops, Phase I development of the Gorgol Valley would provide about 18,000 tons of rice per annum, and Phase I and II combined about 34,000 tons. The latter would account for almost 20 percent of Mauritania's current cereal consumption and for more than 30 percent of annual cereal import requirements. The internal economic return of Phase I has been estimated at 12.9 percent, and that of Phase I and II combined at 14.6 percent. This calculation assumes that the price of rice 1/ will decrease to about US$2071 metric ton by 1980 (having reached an all time high of US$350 per metric ton in 1974) and will remain constant thereafter. Sensitivity tests indicate that, even if investment and recurrent costs rise by 15 and 25 percent res- pectively, the internal economic return of Phases I and II combined would remain at about 10 percent (Annex IV). Benefit/cost calculations for Phase III are not advanced enough to include them in the above analysis. However, there is no reason to believe that the return for the overall scheme of 9,500 ha would be lower than that of Phases I and II combined. 37. It is estimated that about 7,000 farmers and their families could benefit from the development of the first phase of the project and thereby increase their standard of living from one of precarious subsistence at present to one where the family food supply would be-assured even in drought years. The project would therefore substantially contribute to-reducing the risk of starvation which has plagued a large proportion of the rural population in the southeastern region in recent years. PART V: LEGAL INSTRUMENTS AND AUTHORITY 38. The draft Development Credit Agreement between the Islamic Republic of Mauritania and the Association, the Recommendation of the Committee pro- vided for in Article V, Section 1 (d) of the Articles of Agreement of the Association and the text of a draft resolution approving the proposed. credit are being distributed to the Executive Directors separately. 39. The draft Development Credit Agreement provides that the effective- ness of the Development Credit is conditional upon the signing of the contract for the engineering services between the Government and the consultants (Section 7.01 (a) of the Credit Agreement), and the appointment of the Project Director (Section 7.01 (b) of the Credit Agreement). 40. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. 1/ 35 percent broken, c.i.f. Nouakchott, in constant terms.  - 13 - PART VI: RECOMMENDATION 41. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President Attachments Washington, D.C. May 8, 1974   EDUNTRT DATA -- Mauritania Pag 1 of 3 Pagess ARLEA POPUL.ATION DENSITY r,10,01O,'0kms 25t--t--.llton (mid-1971) 1.1 Per kM5 Per kasSo! arable land SOCIAL INDICATORS Reference Countrios itania France Norocco Peru 1970 ~~1970 1970 17 GN? PER CAPITA U5$ (ATLAS BASIS) 80/a lb,) 3,100 230 i50 DEMOGRAPHIC rMrTe=ith rate (per thousand) .. 3 'lb c 16.6 50 12 Crude death rate (per thousan.d) ..27 /ic11.9 17 12 Infant mortality rate (per thousand live births) ...15.1 150 75 Life expectancy at birth (yearn) ..0t / 71.5 50 58 Cross reproduhction rata 2 . 2.8/h 1.2 ..2.9 Population growth rate _37 ...9- 0.9/d 2.7 3.1 Population growth rats - urban ...2.177 5.3iZ... Age struc.ture (percent) 0-lb ..i 23.7 46 / 5 15-6L 51h 62.9 L') 52 65 and over 5 It3t 5 ~ 3 Deornden,v- ratio AL O.. ..2 1.6 Urban population as percent of total 10 /c,k 70 Ic 35 /g,] 52 /n Fanily planning: RN. of acceptors cumulative (thous.) ,*. . 67 No. of users (3 of married women) . .. 3 Total lance force (thousands) ..530 LIg 2,0 4oo 10 Percentage esnployed in agriculture 5P 5 Percentage unemployed27 1 INCOME DISTR.IAUTION Percent of national. income received by highest 5 .... .I Percent of national income received by highest 20% ... . .t T. Perccant of national income received by lowest 20% ... . ..a 7;o Percent of national income cecoiva~d by lowest 40% .... ..7 7o DISTRIBUTION OP LAND OedERSHIP 3 owned by top 10 of -owners . .. 3 owned by smallest 10% of owners HEALTA AND NUTRITION PopulatIon Tee physicIan ~~~~~~ ~ ~~~~~30,000O 25,510 750 13,160 / 2,070 Population per nursing person 6,620 3,120 f1 260 Irn, 760 q,s 760 /r Population per hospital ted 1,11o 7 3,720 7V110- 680o / Lie Per capita calorie supply as 3sof requirements 8 3 I 120 91 /a 9 Per capita protein supply, ntotl (gra,ms per day ,j~L6 71 7u 103 56 7- 58 Of which, animal and p,ulse ..1 7; 66 lb 7. 13 Deato rate 1-1 years /7 0.. .9 .l EDUCATION Adjusted IS primary school enrollment ratio 9 15 /n 120 /i 55 101 Adjusted 7; secondary school enrollment catio 0.1 2 7;_ 70 7 1 3 Years Of 7;-hooling provided, first and second level 1L 12 12 11 Vocutional enrollment as % of sec. school enrollment -5 I.n 23 j 3/IL 15 Adu,lt literacy rate 3 .... 2 y _ HOIISINO Ae-cage Nu. aof persons per coon (urban) 0. .n 2.u/c223/o Prerent of occupied units without piped water 77 7; 76 Access to electricity (as 3 of total population) T . 1 7; Percent of 'oral population coonected to electricity . .. 67; CONSUMPTION Radio receivero per 1000 nopulutinoi 16 17 311 /, 6o 131 Passenger cars per 1000 pepulation 0.1 253, 15 17 El1ctinc pewur conamuption (kwh p.o.) 3 a 62 2,781 132 i02 Ne,wsprYint consomption p.c. hg pc- year... 12.0 0.2 3.5 Notes: Figures refer either to toe latest periode or to account of environ,enta1 temperature, body weights, ~n the latent yearn. Latest periods refer in prinCiple to distribution by age aned sex of national populations. the years 1956-60 or 19V6-10; the latdst yea-s it. prin- /6 Protein standards (requirem,ents) for all countries us estab- ciple .o 1960O and 1970. Only ignificaznLly diA.,e-nt lisned by UISDA Economic Research Service provide for a minimums per-ses c yea.rs are footnoted separately, allowance of 60 grains of total protein per day, ard 20 grams of /1 The Per Capita GNP estimates for years other than. 1960 animal and pulse protein,, of whu-ch 10 grams should he animal is at market prices, calc',lated by the naie cooscroiso protein. These standards are soneehat lower than those of 75 technique as the 1972 World Bank Atlas. gra.ms of total protein and 23 grams of animal protein as an /2 Acerage number of daughters per woman or reprodcntive average for the world, proposed by FAQ in the Third World Food age. Sur-vey. /3 Population growth rates axe for the decode- ending in /7 Some stu~dies bane suggested that crude death rates of children 1960 and 1970. ages 1 through L nay he used as a first approximaticn index of /4Ratio of under 15 and 65 and over age irachets to malnutrition. those i-n labor force bracket of ages 15 through 61. /C Percentage enrolled of cor,responding population of school age Li FAO r,eference standards represent physiological re- as defined for each country. soirements for normal activity and health, taking /a Computed b'y applying to s.he 1970 figaro the geusth rate of the 71f/cap. in real term fro. 1960 to 1970. /b 1961-u5. Lu lading to u 1iS population grxeth rate, lower than the one 19 of the IBRD Atlas- and the tIBR population division estimate (2.3). 1~~-0 /, loot 2,000 population. If Definitions homogeneous with those of the 19060 census. iQ7l, /h 15-59 years. Pi60 years ace ovr. L 1969. /b Over 10,0D population. . I Urban centers an per enumeration. In Capitals of districts a.nd thvue populaned coters with such urban characteristics an streets, plazan, water supply system, sewerage system.:, electric lights, etc. /:196d. In Relates to economically active population. /p 1962. /LiIncluding nidwives a,nd assistant nu~rses. /1r including midwives. Ls Government only. /t 1965. Iu 1961-66. /v Excludes Undian jungle populatims. /w Read aned rite. T; 5 yearn and over. /y 1961. Is Urba.n only. laa Percent of household.. lab 1963. Jafitiary 1S, 19T4  ANNX I Page 2 of 3 p..gss A Actual Projected 1.96o- 1965 - 1970 - 1973 - 1959 1970 1979 1959 io6 970 19 73 1975 L 9 65 1970 52 1212 NATIONAL ACCC~~~~~~~~~~~~~~Th ~~1969 Price. Average Annual Growth Rates A As Percent of GDT Gross Domestic Product 78.5 160.4 18o.6 275.7 285.2 515.2 12.3 6.5 5.5 2.3 084 9 9. Gakins from Terms of Trade (a) n.m. 5.3 6.8 - 19.1 -10.9 2. 3.6 0.7 Gross Domestic income 1a ld. lTT 257 277.3 31774 . 6 . 5.710. 100 67.6 136.o NtLP .. Prices As 21centufoi. 51; 67.6 136.0 183.5 'A8~~~~~~~~~~~~~~~~~3 321.7 591.3 ~~~~~~~~ 15.1 '.1 6.1. 5.2 101. 0 100.0 100.0C Import (inell. NI'S) . *. 106.2 167.8 136.1 26ii.3 . . 7.7 7.9 .. 7.8 67.6 9rts j1 (import capacity) ' r ~ 72.2 198.3 265.1 9.4 6.. .. 7.5 62.9 Resource Getp T7.7~.51 ~ T 2.1 771/. -5.6 . 5 -4.7 Balance -r co'r, account. $iscluu!r< rico actor payent) 6.5 18.2 -15.5 <5. 6 -9.6 -45. 9 ..9.6 .8.4 -12.0 Consumption Expenditures 63.6 119.3 115.2 2s6.5 ,62. 6 318.30 1. . . . 40 '86 8. Investment 1(mncl. stocks) 7.7 24.7 40.3 27.4 47.0 9'. 156 5 5.2 5. 3.2 9.0 8i4 2.6 81.3 Domestic Savings 6.0 1.6.6 39.2 31.7 59.1 7