Dahomey - Rural Education and Training Project

FILE COPY DOCUMENT OF INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use Report No. P-1646-DA REPORT AND RECOMMENDATION -OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF DAHOMEY FOR A RURAL EDUCATION 'AND TRAINING PROJECT June 2, 1975 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 It may not be published, quoted or cited without Bank Group authorization.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)I/ Present Rate US$ 1 CFAF 225 CFAF 1 US$ .00444 CFAF 1,000 Us$ 4.44 CFAF 1,000,000 US$4,444.00 FISCAL YEAR The Borrower's fiscal year is January 1 to December 31. 1/ The CFA Franc is tied to the French franc in a ratio of 1 French franc to 50 CFA francs. The French franc is currently floating.  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE REPUBLIC OF DAHOMEY FOR A RURAL EDUCATION AND TRAINING PROJECT 1. I submit the following report and recommendation on a proposed Development Credit to the Republic of Dahomey for the equivalent of US$4 million on standard IDA terms to help finance a Rural Education and Train- ing Project. The UNDP would provide a grant in the amount of US$780,000. PART I - THE ECONOMY 2. The most recent economic report on Dahomey, Report No. 191a-DA entitled "Economic Situation and Prospects of Dahomey" was issued on August 20, 1973. An economic mission is scheduled to visit the country later this year and the findings of the mission's preparatory studies are incorporated below. Annex I contains basic country data. 3. With per capita GNP estimated at US$110, Dahomey is one of West Africa's poorest nations and is classified by the UN as one of the world's 25 "least developed countries." It is an overwhelmingly rural nation and agriculture is the source of livelihood for 90 percent of its people as well as the only major foreign exchange earner. The country's industrial sector is embryomic and its few known mineral resources have not yet been commercially exploited. Dahomey's first decade as an independent nation was a trying period marked by a series of political upheavals and government changes reflecting, in great part, the country's diverse regional interests. Dahomey's political instability made orderly decision making, vital for economic development, difficult. This is exemplified by the country's weak planning mechanism which has historically operated under arduous conditions and has had few direct links with the different ministries. 4. Economic growth during the sixties barely kept pace with population increases which averaged 2.8 percent yearly. Chronic fiscal problems also characterized this period. Government budgets showed annual deficits which usually exceeded 10 percent of current budgetary receipts. These deficits, caused mainly by the growth of the civil service and mounting outlays for education, were largely covered by French Government subsidies. Because of heavy current expenditures averaging 15 percent of GDP in recent years, successive Dahomean Governments were unable to fund any significant invest- ments during this period or to finance proper maintenance of existing facili- ties, such as roads. Consequently, most of the rural, industrial, and infra- structure development which did take place since independence was financed by foreign funds.  5. Dahomey's economic situation showed some improvement in the late sixties and early seventies. Most of the population benefited from this development which was mainly due to increased agricultural output as the result of Government supported food and cash crop development projects, favorable world market conditions for the country's exports and booming unofficial trade with Nigeria. At the same time, the Government's financial difficulties eased somewhat and the 1970 and 1971 budgets showed small sur- pluses for the first time in Dahomey's history. This economic upswing proved short lived and, in recent years, the economy has been beset by poor rainfall -- an extension of the Sahelian drought -- and by falling agricultural produc- tion and exports as well as declining unrecorded border trade with Nigeria. Per capita income in real terms has tended to decline in recent years. Further- more, rising imports combined with falling exports roughly doubled Dahomey's trade deficit in the 1972-74 period over what it had been in 1968-71. In 1973, the country's resource gap was estimated at about US$45 million or approximately 13 percent of GDP. The widening resource gap was largely fin- anced by higher foreign aid and a drawdown of reserves which have now fallen to about two months of import requirements. The Development Committee has listed Dahomey as one of the LDCs "most seriously affected" by recent economic developments including world market conditions and commodity prices. 6. Although the deteriorating economic conditions outlined above have been largely beyond the Government's control, they have led to a worsening of the country's traditionally difficult financial situation. Despite Government efforts to inuroduce austerity measures and to step up tax collection, the courntry is once again facing deficits in its current budgets. These deficits, which have reached nearly 10 percent of current revenues, have been financed mainly by borrowing from the Central Bank and from some parafiscal institutions such as the Caisse Autonome d'Amortissement. Even after taking savings from parafiscal agencies into account, however, the country's overall net public re- source mobilization has been, at best, marginal. 7. During the next few years, Dahomey's economic situation will continue to be difficult because of its dependence on international trade, i.e. exports equal about 25 percent of GDP and imports 35 percent. Despite a temporary improvement in the country's terms of trade in late 1973 and 1974, prospects for Dahomey's principal exports -- palm oil products, cotton and cocoa -- are generally not favorable. With this outlook and expected rising import prices, the country's terms of trade can be expected to deteriorate significantly during the remainder of the decade. Even assuming continued Government efforts to pro- mote agricultural output and to diversify the economy, overall economic prospects are modest. At the same time, the Government will be under pressure to expand the civil service and to face growing social demands, particularly with regard to education. Under these conditions, the Government will have to exercise close control over recurrent expenditures and explore possibilities for increased resource mobilization to attempt to improve fiscal performance. 8. The present military Government which came to power in October, 1972, has evidenced concern over the country's slipping economic and fiscal performance and has indicated that one of its principal policy objectives is to foster Dahomey's economic development within a framework of sound finan- cial management. Dahomey's planning office has been attached directly to the  - 3 - Presidency to enhance its effectiveness and, in an effort to improve the budgetary situation, the Government has also pursued a policy of austerity. It has, for example, abolished fringe benefits for civil servants, frozen salary scales in the public administration (except those of some low income earners) and continued to remunerate army officers serving in Government -- including all cabinet ministers -- according to much lower military pay scales. The Government is also making efforts to improve tax collections and intends to keep 1975 current expenditures roughly at 1974 levels. Even so, it is unlikely that the Government will be able to balance the 1975 budget which shows a projected deficit of US$3.1 million or about five percent of current revenues. 9. Late in 1974, the Government declared itself to be Marxist-Leninist and opted for socialism in the economy. Foreign interests in some financial institutions and in the gasoline storage and distribution fields were nation- alized. The value of the expropriated assets was, however, comparatively small and the Government has announced its intention to fully compensate the expropriated parties. In this regard, the Government has already compensated some of the foreign companies affected and entered into negotiations with the others. 10. Dahomey's long range development prospects appear limited due to severe structural and other constraints but there is still scope for improved performance in the future. To achieve this the Government will need to emphasize the country's directly productive sectors, particularly agriculture, by, for instance, promoting a wider utilization of largely unused tillable land for both food and cash crop production. As part of its investment strategy, the Government should also expand and improve the existing transport infrastructure to facilitate both domestic and international transit traffic. Other appropriate policies include greater regional cooperation, which the Govern- ment is actively seeking -- especially with Nigeria -- and measures aimed at exploiting natural resources, diversifying the economy and improving traditional commercial links with neighboring countries. Large projects under consideration by Dahomey and foreign capital suppliers include a sugar complex, a cement factory, and an oil mill, but marketing and financing arrangements pose par- ticular problems in view of the small size of the domestic market as well as the extremely limited possibilities for domestic financing, including contribution to equity capital. Finally, there is much need for reform in education to better tailor the present classical system to the needs of Dahomey's essen- tially rural population. 11. Generating domestic financial resources will continue to be a difficult task for Dahomey. Even if under current and expected future economic conditions the Government is able to improve its economic performance, public savings are likely to be modest and will not represent more than a small contribution to the countryts total development effort. Consequently, foreign aid donors should continue to provide the lion's share of the funding required to finance Dahomey's development. As in the past, traditional donors such as FAC (France), FED, the U.S. and the Association can be expected to remain active in the country but, in recent years, Dahomey has successfully managed to  diversify its sources of foreign financing. In 1973, for example, the People's Republic of China extended a US$41 million line of credit to Dahomey. Moreover, Dahomey has received loans from other African countries including, most notably, Nigeria. The country's total external public debt outstanding at the end of 1973 stood at US$93 million, or approximately twice the debt as of December 1970; however, this includes the Chinese line of credit which is apparently being used very slowly. IDA's share in the 1973 external public debt amounted to 29 percent. This increase in foreign borrowing, however, was accompanied by a substantial softening of terms; moreover, it included a marked growth of grant financing and the total aid package throughout 1965-72 contained an average grant element of 84 percent. The debt ser- vice ratio to exports, which averaged 5-6 percent in recent years, is likely to in- crease in the future and may reach 10 percent by the end of the seventies because of growing debt service obligations combined with only modest prospects for higher export receipts; more serious is the fact that debt service has already reached 16 percent of Government revenues in 1975, since the prospects for an increase in public revenues are also rather mixed. In recent years, IDA accounted for less than 1 percent of total debt service payments and this share will not increase significantly during the rest of the decade. Given the country's poverty, limited development prospects, difficulty in mobilizing domestic resources, and growing but still manageable debt service obligations, foreign donors should continue to provide aid on the softest possible terms while covering a high proportion of pro- ject costs including a large part of local expenditures. PART II - BANK GROUP OPERATIONS IN DAHOMEY 12. To date, the Bank Group has extended five Credits totalling US$26.6 million to Dahomey. One of these was a small (US$600,000) supplementary Credit to cover cost overruns on one project due to currency realignments. Of the four projects the Association has financed in Dahomey, two have been for agricultural development and the other two have been in the highway sector. All four undertakings are briefly described below. In addition, a note on the execution of these ongoing operations as well as a summary statement of IDA Credits to Dahomey as of May 31, 1975, are contained in Annex II. 13. The Bank Group's first lending operation in Dahomey was for the Hinvi Agricultural Development Project (Credit 144, March 5, 1969, US$4.6 million and Supplementary Credit 144-2, March 22, 1974, US$0.6 million). This project, which IDA co-financed with FAC and for which the Association recently provided the supplementary Credit referred to above originally called for the construction of an oil palm mill and maize storage silos as well as for palm plantings, food crop development and related infrast- ructure. As originally defined, however, the project encountered technical difficulties and changes in the Credit Agreement were agreed to by the Execu- tive Directors on September 13, 1971, and signed on September 24 of the same year. Under the amended accord, IDA financing of the project's food crop and maize storage silo components was dropped and the funds thus released were reallocated to cover the increased construction cost of an enlarged oil palm mill. At the same time, FAC agreed to provide financing for reduced food crop and maize storage silo programs in the project area. 14. The Association's other agricultural project in Dahomey was the Zou Borgou Cotton Project (Credit 307, May 24, 1972, US$6.1 million). This operation aims at expanding cotton and food crop production in the country's  Zou and Borgou provinces by providing for (i) staff and equipment to administer extension, credit and marketing services; (ii) construction of two ginneries and provision of six rice hullers; (iii) rehabilitation of 620 km of feeder roads; and (iv) a preinvestment study leading to a follow-up rural development project. As in the case of the Hinvi Project referred to above, FAC provided joint financing for this operation. 15. The Association's first Credit for transportation in Dahomey was for a Road Maintenance Project (Credit 215, September 9, 1970, US$365 million). This operation consisted of a four year program to improve highway maintenance in the country by providing for the overhaul and renewal of Dahomey's main- tenance fleet, for the reorganization and renovation of the maintenance work- shop and for necessary technical assistance. Credit funds were also earmarked for preinvestment studies which led to the Association's most recent and largest Credit to Dahomey for a Second Highway Project (Credit 415, July 3, 1973 US$11.8 million). This project,which we co-financed with USAID, provides, principally, for the reconstruction to a paved two-lane standard of the 320 km Parakou-Malanville Road and for a continuation of the road maintenance program successfully launched under Credit 215. The Parakou-Malanville Road is an important part of the 760 km north-south "Dahomey Route"t, a network consisting of roads, a railway and the Port of Cotonou which, together, form the backgone of the country's transport system and also land-locked Niger's main link to the sea. The "Route's" importance is enhanced by the fact that its railroad and port components are among Dahomey's major employers and are also significant foreign exchange earners. 16. Because of agriculture's dominance in the national economy, the country's rural development -- the improvement of the agricultural produc- tivity, education, skills and welfare of its rural population -- is of the highest priority. In addition to the Rural Education and Training Project which I recommend in this report, therefore, the Association is also considering a rural development project -- a follow-up to the Zou Borgou Cotton Project mentioned above -- which may be ready for Board action in FY76. Other aid donors such as FAC and FED have also been active in financing agricultural development. 17. Dahomey's economic progress also calls for substantial investments in transportation, a sector in which FAC, FED, USAID and the Bank Group are active. The Association is presently preparing a secondary-cum-feeder roads project and is considering financing an expansion of the Cotonou Port's facil- ities. Both of these projects may be ready by FY77. PART III - THE EDUCATION SECTOR Formal Education 18. Dahomey's formal education system is under the responsibility of the Ministry of National Education and is patterned after the French model. It provides for six years of primary schooling, for a two-tiered secondary  program consisting of a four year lower and three year upper cycle and for four or more years of university. The system reaches only a fraction of the country's school-aged population. Although enrollments have increased rapidly particularly in recent years, fewer than 230,000 students presently attend formal schools at all levels. About a third (200,000) of primary school-aged youngsters are in the system but the corresponding figures at the lower and upper secondary school levels drop off sharply to only 7.4 and 4.1 percent, respectively. Since educational facilities tend to be concentrated in urban areas, low enrollments are even more marked in the countryside. 19. Dahomey's formal education system is plagued by high repeater and drop out rates and is costly. Only an estimated three percent of those students who enter primary schools eventually earn secondary school degrees, and, in 1970, the average per student cost at the primary level stood at US$50 compared to only US$25 and US$22 in Mali and Sierra Leone, respectively, and to US$66 in Senegal, a country whose per capita income is more than twice that of Dahomey's. Translated into fiscal terms, the system's high costs are even more obvious. In 1973, 29 percent of the Government's budget was earmarked for educational outlays. 20. The problems highlighted above are exacerbated by the fact that Dahomey's formal education system is not turning out appropriately trained manpower. Instead of preparing students for productive lives in an over- whelmingly rural society, the system is geared to preparing students for jobs in the modern or urban sector, i.e. the civil service, commerce and industry. In Dahomey, however, only about 55,000 persons or four percent of the labor force is employed in the modern sector and the sector's modest development prospects limit its demand for newly trained middle and higher level manpower. As a result, about half of today's school leavers with nine or more years of formal education are unable to find employment and the number of these that are presently unemployed in Dahomey's towns -- presently about 15,000 -- is growing. Paradoxically, despite the long odds against completing secondary school and the growing number of unemployed school leavers, Dahomean society still perceives the formal education system as the primary stepping-stone to a better life. Formal schooling is seen as a pre-requisite to more remun- erative occupations in government, industry and commerce and parents and students are putting increasing pressure upon the Government to expand enroll- ments. Non Formal Education 21. Rural Youth Training: Parallel to the classical, formal education system described above, Dahomey has set up, over tne years, a non formal training system as well. Its most important element has been the rural youth training program started in 1967. This program, which is under the auspices of the Ministry of Rural Development and Cooperative Action, encourages the establishment of voluntary youth or 4-D clubs in the country- side at the village level. The term 4-D stands for Decision, Duty, Develop- ment and Dahomey. These clubs train illiterate young adolescents of both  -7- sexes in functional literacy and numeracy, improved agricultural techniques and better nutrition, health and hygiene habits. The accent is on "learning by doing" and the program's aim is to prepare the 4-D clubs' participants to become productive members of their rural communities by the time they leave the clubs as young adults. Each 4-D club's agricultural component is intended to be self-sufficient, i.e., the cost of needed agricultural inputs is to be covered by the proceeds from the sales of the club's output. 22. Since its founding, the 4-D clubs' movement has enjoyed considerable popularity. By late 1973, there were about 235 clubs scattered throughout the country and their total membership was about 3,500. Despite this success, the clubs' movement also faces several weaknesses. In the first place, its national administration -- the Rural Youth Services -- suffers from administrative and organizational problems and from a shortage of funds and qualified staff. Consequently, it has been unable to properly run the move- ment and has allowed the number of 4-D clubs to proliferate at a rate far in excess of the growth in complementary services. In a related problem, coordination at the regional level between the clubs and the Government's regular agricultural development agencies has been uneven; in those areas where it has been weak, the Government's extension services have not given adequate technical support or inputs to local clubs, undercutting their training ability. A third drawback has been that most clubs are not providing their members with the proper mix of training. The emphasis has been on the teaching of agricultural techniques to the detriment of the other elements of the training program -- literacy, numeracy, health, crafts, nutrition and hygiene -- which are often neglected. As the result of the rural youth move- ment's defects, many of the established clubs have not measured up to expec- tations. They have often been financially non-viable and have had poor per- formance records; their members' interest and motivation have suffered accord- ingly. 23. Despite the 4-D clubs' admitted present inadequacies, the idea behind them represents a sound, innovative approach to the problem of imparting basic, relevant training to youngsters in the countryside. Fron the cost standpoint, the 4-D clubs also make good sense since the expected cost per member in 1985 would be only 40 percent of the projected per student cost within the formal primary education system. 24. Vocational Training: The Ministry of Civil Service and Labor is responsible for what little vocational training presently exists in Dahomey. In 1967, the Government established a center.in Cotonou, the country's capital, to upgrade the skills of office workers, mainly in typing. The center had little initial success and was actually forced to shut down in 1968-69 because of a lack of Government support and funding. Since then, the center has reopened but its principal user is now the civil service. Aside from this center, there are no facilities for the vocational training and skills upgrading of industrial and commercial workers in Dahomey. What training is offered is made available by the private sector on a limited scale. Never- theless, available information shows that one reason for low industrial productivity in the country is that those working as semi-skilled and skilled workers are not adequately trained. Those fields in which skills  - 8 - upgrading is most urgent include (i) mechanics, both specialized and general; (ii) metal working (iii) electricity; and (iv) construction. In the training of office workers, the emphasis should be on bookkeeping, shorthand and typing. Manpower Needs and Sectorial Strategy 25. The discussion in this section demonstrates that Dahomey's manpower constraints are more qualitative than quantitative. In this predominantly rural country, what is needed is not an increase in the number of students exposed to the formal education system as it is now structured but rather the preparation of persons with basic training in those skills -- agriculture, animal husbandry and functional literacy, among others -- which are appropriate for the development of an agricultural society. In the modern sector, a qua- litative manpower problem also exists stemming from the fact that the country has virtually no vocational training facilities. As a result, an estimated 19,000 artisans, craftsmen and office workers -- a third of the modern sector's work force -- are only partially trained and require skills upgrading. This already substantial demand for vocational training will increase in the future. 26. The Government is aware of the need to better tailor the existing formal education system to the country's real needs and to reduce per student costs. In 1973, it appointed an Education Reform Commission to study the problem. After deliberation, this Commission submitted a report which the Government is presently considering. In view of the uncertainties regarding the Government's reaction to the Commission's recommendations and their educational and financial soundness, an investment now by the Association in Dahomey's formal education system would be untimely. The Association can, however, support much needed training efforts outside the formal system which have as their objective improving living conditions in the country- side and upgrading the skills level of the existing industrial and commercial work force. The project described in Part IV aims at this. PART IV - THE PROJECT 27. The proposed project was identified by a Bank Group mission in February/March 1973. Detailed preinvestment studies for the project, finan- ced by UNDP with IDA as executLng agency, were completed in May, 1974. The project was appraised by a Bank Group mission in June/July, 1974, and the mission's report (No. 701a-DA dated May 23, 1975) entitled "Appraisal of a Rural Education and Training Project in Dahomey" is being distributed separ- ately. Annex III contains a Credit and Project summary. Following a post appraisal mission to discuss the project's scope with Government officials in February, 1975, negotiations of the Credit took place from May 15 to May 20. The Dahomean delegation was headed by Mr. Taimiou Adjibade, Dahomey's Ambassador in Washington and included Messrs. Soglo and Ahouansou, also of the embassy.  -9- Description 28. The project consists of three main elements: (i) improving the effectiveness of the ongoing rural youth training program by establishing, at the national and regional levels, an effective administrative structure and by providing facilities, technical assistance and equipment for the program; (ii) construction of a skills upgrading center in Cotonou and provision of instructional materials, equipment and technical assistance to it; and (iii) preinvestment studies for a follow-up training/education project. The proposed project would be carried out over a five year period beginning in mid-1975 and ending in mid-1980. 29. The Rural Youth Training Component is the project's major feature accountingf auT6ercentof net project costs. This componentts main thrust would be to help establish an effective administrative structure through which the Government and aid donors, including the Association, could assist in the development of rural youth training and in the expansion of the 4-D club network. Some direct assistance would, nevertheless, be extended to existing youth clubs. More specifically, the project would provide: (i) at the national level, for the establishment of a new planning and coordinating body and of its executive arm, the National Support Center (NSC) and for the construction of facilities and provision of equipment and 15 man years of technical assistance to the NSC; (ii) at the provincial level, for the establishment of Regional Support Centers (RSCs) in the Zou, Atlantique and Atacora provinces and for the construction of facilities, provision of equipment and training of staff and extension workers for the RSCs; and (iii) at the village and individual 4-D club level, technical assistance and material support (necessary inputs) through the RSCs for up to as many as 45 clubs in each of the three provinces mentioned above. 30. From the organizational standpoint, the national planning and coordin- ating body -- chaired by the Minister of Rural Development and Cooperative Action and attended by representatives of other interested ministries and agencies -- would set broad policy for the Rural Youth Program and approve  - 10 - long term development plans for the clubs network as well as implementation programs and budget proposals. Subject to this body's general policy directives, the National Support Center would be responsible, inter alia, for preparing the development plans referred to above and for supervising their execution. It would also monitor the program's performance and provide direct technical and other support to the Regional Support Centers. The RSCs would actually implement the 4-D clubs program at the provincial level and would be integrated into, and closely cooperate with, the Government's provin- cial rural development agencies (Section 3.05 of the Credit Agreement). The RSCs would provide specific clubs within their jurisdictions with necessary agricultural inputs and specialized technical assistance. Tney would also assist youth "graduating" from the 4-D clubs in starting their own farms or in joining existing cooperatives or pre-cooperativ,e village groups and would upgrade the training of extension workers frequenting the clubs, particularly in non-agricultural fields such as functional literacy, nutrition and crafts where these have often been weak. Successfully dealing with the Rural Youth Program's past administrative shortcomings is crucial to this component's success. Consequently, a condition of this Credit's disbursement, insofar as funds earmarked for rural youth training are concerned, is that the Gov- ernment duly establish the administrative structure outlined above (paragraph 4 (iiiA) of Schedule 1 to the Credit Agreement). 31. At the individual club level, the emphasis would be on consolidating the 4-D club movement in the Zou, Atlantique and Atacora provinces and on improving the quality of existing clubs. This would be done in two phases. In the first, the RSC would strengthen the programs and staffing of a small number (ten) of nearby clubs and meet their agricultural input requirements as well. If this pilot phase proves successful, an additional number of clubs -- up to 35 more in each province -- would also be strengthened in a follow-up effort. By the time this project component is in full operation, up to 135 clubs with a combined membership of 2,000 youngsters may be affected. In order to maximize each club's efficiency, membership would normally be limited to boys and girls at least 13 years old or over (Section 3.06 of the Credit Agreement) and each club would be provided with sufficient suitable land as well as all necessary inputs to develop a productive agricultural base (Section 3.07 of the Credit Agreement). 32. The Director General of Rural Action within the Ministry of Rural Development and Cooperative Action would be responsible for executing the project's youth clubs component (Section 3.02 (b) of the Credit Agreement). He would be assisted by a "chef de projet" who would also be the director of the NSC and whose experience, qualifications and terms of reference would be acceptable to the Association (Section 3.03 (b)). Furthermore, as has been mentioned in paragraph 29, he would count on fifteen man years of technical assistance consisting mainly of specialists in management, agro-pedagogy, zoo-technology, functional literacy, health, nutrition and crafts. 33. The Skills Upgrading Center to be constructed, equipped and staffed under the project would provide training to industrial and clerical workers already employed in the private and public sectors. Its program would incorporate and expand the commercial studies presently being offered at Cotonou's upgrading center but would also include training in general and auto-mechanics, metal work, electricity and in construction. The center would be located in Cotonou, the country's industrial, commercial and admin- istrative hub. Its physical plant would consist of three workshops with storage space, one classroom and administrative offices. It would have a capacity for 190 trainees but since the courses it would offer are to be of short duration, the Center would be able to provide skills upgrading for over 2.200 workers annually by the time it enters into full operation.  - 1l - 34. The proposed project's skills upgrading center component would be carried out by the Ministry of Civil Service and Labor's Director of Vocational Training (Section 3.02 (a) of the Credit Agreement). He would be assisted by a "chef de projet" whose qualifications, experience and terms of reference would be acceptable to the Association (Section 3.03(b)of the Credit Agreement). The appointment of this "chef de projet" is a condition of the proposed Credit's effectiveness (Section 6.01 (b)). 35. Once operating, the Center would be under the auspices of the Directorate of Vocational Training in the Ministry of Civil Service and Labor. It would, however, enjoy a high degree of administrative and financial autonomy under an Administrative Council to include representatives of Government, private employers and workers (Paragraph h (iiA) of Schedule 1 of the Credit Agreement). While IDA would finance the Center's construction and initial stock of instructional materials and UNDP/ILO its equipment and technical assistance, the Government would have to meet its operating costs. To this end, the Government should, as a condition of disbursement, take the necessary measures to ensure that as much of the existing "training tax's" proceeds be earmarked for the Center as would be necessary to cover the Center's recurrent costs (Paragraph 4 (iiB) of Schedule 1 of the Credit Agreement). 36. The Preinvestment Studies to be financed under the proposed Credit call for an estimated forty man months of consultants services to prepare, if justified, a follow-up education project. This second operation would have not only a non formal, training component but would also, if possible, provide support for a program of action in Dahomey's formal education sector. Cost and Financing 37. The project's cost, net of taxes and duties, is estimated ac US$5.2 million (US$6.4 million including taxes and duties). Its foreign exchange component is about US$3.7 million or 72 percent of the project's net costs. The proposed IDA Credit would be for US$4 million and would account for approximately 77 percent of the project's net costs; it would cover US$3.1 million in foreign expenditures and US$0.9 million in local costs. UNDP/ILO has also indicated its willingness to provide parallel financing for a part of the project -- technical assistance and equipment for the skills upgrading center -- and is expected to contribute a US$780,000 grant for this purpose. The conclusion of an agreement between UNDP, ILO and the Government providing for UNDP/ILO's contribution to the project is a condition of effectiveness under this Credit (Section 6.01a). The project's remaining net costs, US$420,000, would be borne by the Government. A breakdown of the project's cost is given in Annex III. 38. In order to ensure that the Government's contribution to the project would be made in an effective 'and timely manner, the Credit Agreement commits tie Government to establish two revolving project accounts -- one for the rural youth training component and one for the skills upgrading center -- into which Dahomey would deposit its counterpart funds on a quarterly basis (Section 3.08 of the Credit Agreement). The establishment and deposit of CFAF 2 million and CFAF 1 million, respectively, into each account is a condition of effectiveness to this Credit (Section 6.01 (c)).  - 12 - Procurement and Disbursements 39. Procurement: The civil works contract for the skills upgrading center (US$600,OOO would be awarded through international competitive bidding in accordance with Bank Group guidelines. Bona fide domestic civil works contractors would receive a 7-1/2 percent preference in bid evaluation (Schedule 3, paragraph C of the Credit Agreement). Because of their small size and geographical dispersion, civil works contracts associated with the rural youth training component of the project (US$800,000) would be awarded on the basis of locally advertised competitive bidding in accordance with local procedures which are acceptable to the Association. Contracts for fur- niture and equipment (US$800,000) would be let in packages of at least US$20,000 and awarded following international competitive bidding in accor- dance with Bank Group guidelines. Local manufacturers of furniture and equipment may be allowed a preferential margin equivalent to either 15 percent of the c.i.f. price of competing imports or to the total of appli- cable customs duties and import taxes, whichever is lower (Schedule 3, paragraph B of the Credit Agreement). Draught animals and small agricul- tural implements required for the rural youth training component which are not suitable for competitive bidding or cannot be grouped in packages of at least US$5,000 will be procured locally on the basis of quotations follow- ing local procedures acceptable to the Association. The total of such pro- curements may not exceed US$200,000 over the duration of the project. 40. Disbursements for eligible project items under the proposed Credit would cover: (a) 100 percent of foreign expenditures (c.i.f. costs) for imported equipment and materials, or 80 percent if the equipment is purchased locally; (b) 100 percent of foreign expenditures for consultants and technical assistance experts; (c) 85 percent of total expenditures for civil works including water wells; (d) 80 percent of total expenditures for furniture. PART V - LEGAL INSTRUMENTS AND AUTHORITY 41. The draft Development Credit Agreement between the Republic of Dahomey and the Association, the Recommendation of the Committee provided for in Article V, Section l(d) of the Articles of Agreement of the Association and the draft resolution approving the proposed Development Credit, are being distributed separately to the Executive Directors.  - 13 - 42. The draft Development Credit Agreement conforms substantially to the pattern of recent agreementsfor education projects. Features of special interest are referred to above in paragraphs 30, 31, 32, 34, 35, 37, 38 and 39. The following conditions of effectiveness are included in the Credit Agreement: (a) appointment by the Government of a "chef de projet" for thp skills upgrading center (Section 6.01 (b)); (b) conclusion of an agreement between IJNDP, ILO and the Government provi- ding for UNDP ILO's contribution to the project (Section 6.01 (a)); and (c) the establishment by the Government of two revolving project accounts, one for each of the two main components of the project, and the deposit of CFAF 2 million and CFAF 1 million, respectively, in each account (Section 6.01 (c)). 43. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 44. I recommend that the Executive Directors approve the proposed Credit. Robert S. McNamara President Attachments Washington, D.C. June 2, 1975  ANNEX I MP.T-of 3 pages DUN~TR DATA - DAHOMEY AREA. POPULATiol rusiTT 112,622 ka !-2lo (.id-1972) Per hmofs arabic land SOCIAL INDICATORS Refrerne Coun,tries DiLhomay Toeo naLibria lyor7 Coa,;tc M960 iff-0 IY7V 1970u 1>1 DIP PER CAPITA US$ (ATLAS BASIS) /1 110 La 160 /a 250 3.0 /a DEIMOGRAPHIC CUrude birrth rate (per thouand) 5Sb 51 561 1 0 4g 6 IS Crude death rate (per thousand) 26 Zn 2 8 262 1 d 23 Infant mortality rate (par thousand lice births) 210 Zn . .159 d IL f Life expectancy at birth (years) 37 39 Zn Lo 53 dg L20j Grow reproduction rats 12 ).3 /b 333n . 3.1 Population growth rate A-11 9 2827 . . Population grovth rate - urban 6. .. 91jj Age atruoture (,perootj 0-1h 46 jbk 45 f i ~f 4O 52 j 12 Z 15-6). 50 Fk 52 f 52 fr 55 $5 f 65 and vr 43 ~ 3f 3 d S