Benin - Cotonou Port Project

Document of FILE COPY The World Bank FOR OFFICIAL USE ONLY Report No. P -2 301 -BEN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE PEOPLE'S REPUBLIC OF BENIN FOR A COTONOU PORT PROJECT May 26, 1978 This doument has a restricted distibution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = CFA Franc (CFAF) US$1.00 - CFAF 245 CFAF 1 million = US$4,081 FISCAL YEAR January 1 - December 31 SYSTEMS OF WEIGHTS AND MEASURES: Metric Metric British/US Equivalents 1 meter (m) 3.28 feet (ft) 1 kilometer (km) 2 0.62 mile (mi) 1 square kilometer (km ) 0.386 square mile (sq mi) 1 metric ton (m ton) 2,204 pounds (lb) 1 hectare (ha) 3 2.47 acres a cubic meter (m ) 1.308 cubic yards ABBREVIATIONS AND ACRONYMS ADF Abu Dhabi Fund AfDB African Development Bank BADEA Arab Bank for Economic Development in Africa BCEOM Bureau Central d'Etudes pour les Equipements d'Outre-Mer BOAD Banque Ouest Africaine de Developpement CCCE Caisse Centrale de Cooperation Economique CIDA Canadian International Development Agency EDF European Development Fund FAC Fonds d'Aide et de Cooperation GDP Gross Domestic Product NTF Nigeria Trust Fund OBEMAP Office Beninois des Manutentions Portuaires OCBN Organisation Commune Benin-Niger des Chemins de Fer et des Transports PAC Port Autonome de Cotonou PPF Project Preparation Facility UNCTAD United Nations Conference on Trade and Development UNDP United Nations Development Programme  FOR OFFICIAL USE ONLY BENIN COTONOU PORT PROJECT Project Summary Borrower: People's Republic of Benin Beneficiary: The Port Autonome de Cotonou (PAC) Amount: US$11 million Terms: Standard IDA terms Relending Terms: 7.5 percent interest for a period of 20 years, including 5 years of grace Project The project would expand the physical capacity of the port Description: from 720,000 tons per year to about 1,100,000 tons, increase productivity by improving port and cargo handling operations and training, and assist the Government in introducing an adequate tariff structure for the transit of goods. It would develop the transit traffic which constitutes one of Benin's most important economic activities by removing one of the major bottlenecks on the Cotonou-Niger and Cotonou- Nigeria axes. The project risks are linked to Benin's undertaking an investment which would also serve Niger and Nigeria without a formal commitment by these two countries to the project. However, the competitive advantages of Cotonou are strong enough to assure that both Niger and Nigeria will continue using it. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - Estimated Cost (net of duties and taxes) 1/: --------US$ million-------- Local Foreign Total Preliminary Studies 2/ 0.03 0.57 0.60 Civil Works 8.08 24.24 32.32 Supervision Civil Works 0.69 1.03 1.72 Technical Assistance, Training and Studies 0.83 1.49 2.32 Contingencies 2.37 6.76 9.13 Physical (0.81) (2.42) (3.23) Prices (1.56) (4.34) (5.90) TOTAL 12.00 34.09 46.09 1/ From which the project is exempted. 2/ $0.5 million financed under Project Preparation Facility; $0.1 million financed by BADEA. Financing Plan (in US$ million): / Supervision Technical Assist. PPF Civil Works- Civil Works - Training & Studies- TOTAL Joint IDA 0.50 6.50 1.70 2.30 11.00 Norway - 8.30 - - 8.30 AfDB (NTF) 2/ - 2.94 - - 2.94 FAC - 1.50 - - 1.50 Parallel CIDA - 10.00 - - 10.00 BADEA 0.10 4.50 - - 4.60 Abu Dhabi - 2.62 - - 2.62 CCCE - 3.12 - - 3.12 Government/PAC - 1.30 0.30 0.41 2.01 TOTAL 0.60 40.78 2.00 2.71 46.09 1/ Including contingencies. 2/ Nigerian Trust Fund administered by the AfDB.  - iii - Estimated Disbursement (US$ million): FY78 FY79 FY80 FY81 FY82 Annual 0.50 1.14 7.22 1.82 0.32 Cumulative 0.50 1.64 8.86 10.68 11.00 Economic Rate 37 percent for the region (including Niger and Nigeria); of Return: 25 percent for Benin alone. Staff Project Report: No. 1983-BEN   INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOIMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE PEOPLE'S REPUBLIC OF BENIN FOR THE COTONOU PORT PROJECT 1. I submit the following report and recommendation on a proposed development credit to the People's Republic of Benin for the equivalent of $11.0 million on standard IDA terms to help finance the Cotonou Port Project. The project would be co-financed by the Abu Dhabi Fund for Arab Economic Development (ADF), the Banque Arabe pour le Developpement en Afrique (BADEA), the French Caisse Centrale de Cooperation Economique (CCCE), the Canadian International Development Agency (CIDA), the French Fonds d'Aide et de Cooperation (FAC), the African Development Bank (AfDB) as agent of the Nigerian Trust Fund (NTF) and the Kingdom of Norway (see paragraph 54). From the proceeds of the Credit $9.7 million would be relent to the port of Cotonou (PAC) for 20 years, including 5 years of grace, with interest at 7.5 percent per annum; $0.7 million would be passed on by the Government to OBEMAP and OCBN 1/ in the form of a grant. PART I - THE ECONOMY 2. The last economic report on Benin, Report No. 191a-DA entitled "Economic Position and Prospects of Dahomey" was issued on August 20, 1973. An economic mission visited Benin in the fall of 1977. The following para- graphs include the main findings and conclusions of that mission. Discus- sions of the report are scheduled for this summer. 3. With a GNP per capita of only $130, Benin is classified by the UN as one of the world's 29 least developed countries. It is an overwhelm- ingly rural nation: about 70 percent of the population is dependent on agri- culture which accounts for about 40 percent of GDP and a large share of foreign exchange earnings. Insufficient and irregular rainfall limits the production of high value tree crops. Seventy percent of the total agricultural output consists of subsistence low-value root crops (yams and cassava). Palm oil, cotton and groundnuts are the country's major export crops. GDP per capita in the rural sector is very low, averaging about US$70. 4. Transport and commerce constitute the second most important activ- ities in Benin. The Port of Cotonou has traditionally been the door to the sea for landlocked Niger and a transit port for the western part of Nigeria. Due to the recent congestion of the port of Lagos, the transit function of the Cotonou Port has further developed. 5. The country has an embryonic industrial sector, consisting of vegetable oil processing and import substitution. The few known mineral resources--limestone and phosphate--have not yet been exploited, although 1/ Office Beninois des Manutentions Portuaires (OBEMAP) and Organisation Commune Benin-Niger des Chemins de Fer et des Transports (OCBN).  - 2 - there are plans in the near future to start exploiting the Onigbolo lime- stone deposit. There is also evidence of the existence of oil offshore. Political Situation and Recent Economic Development 6. Since independence in 1960, there were numerous changes in govern- ment, largely due to a tripartite power struggle based on the three tradi- tional kingdoms which formed the country. No single leader was able to maintain political domination for very long. This unstable situation cul- minated in 1970 with the establishment of a ruling triumvirate which brought the decision-making process to a virtual halt. 7. A major turning point occurred at the end of 1972, when the pres- ent military government came to power and established a socialist regime which took immediate measures to replace the foreign domination of the modern sector by state control and to strengthen the Government's involvement in the agricultural sector. Foreign private interests in key sectors (banking and credit, gasoline distribution, services related to the port and industry) were nationalized, and the various technical assistance programs in the rural sector were scaled down. These measures initially disrupted the economy since there was an inadequate number of Beninese to replace the departing expatriates. Another consequence of the policy shift was the leveling off of total investment which remained at a relatively low level ($23 per capita per year, compared to $50 in Togo and $110 in the Ivory Coast) between 1972 and 1976. Foreign aid donors limited their intervention to infrastructure projects which did not involve controversial policy issues. However, the Government also pursued conservative financial policies which resulted in budgetary surpluses and the maintenance of the debt service ratio at less than five percent. 8. In the agricultural sector, the institutional changes did not succeed in reversing a stagnation in food crop and palm oil production while cotton production decreased. New provincial agricultural agencies, marketing organizations and support institutions were set up from 1974 onwards which, because of financial and technical shortcomings, have not yet reached their full efficiency. Official prices for most cash crops have been held too low to be worthwhile for the farmer, as the Government has mostly been guided by its desire to keep the cost of living and the level of salaries low in the urban areas. In late 1976, when a poor harvest drove prices up, the Govern- ment attempted, without success, to hold down the prices for maize and to prohibit traditional border trade with Nigeria, which constitutes an impor- tant outlet for the maize produced in the eastern part of the country. The situation improved greatly in 1977, when the fixed price formula for grain was abandoned. The Government is looking for alternative solutions to control traditional trade with Nigeria, such as the creation of provincial marketing agencies which would buy grain production at fixed floor prices. 9. Industry, transport and commerce have grown rapidly (about 10 per- cent per year) between 1972 and 1976, largely due to the proximity of Nigeria. Benin's relatively low prices, availability of low cost manpower (although unskilled), good transport facilities and a convertible currency give it some comparative advantage as a manufacturing base for the Nigerian market  (beverages and textiles). The fast growth in transport and commerce is linked to Benin's increasing importance as an "entrepot" for Nigeria, in addition to its transit role for Niger. 10. There has been a significant improvement in the central Govern- ment's current financial situation over the last decade. The chronic cur- rent budget deficit of the 1960's, financed by French Treasury transfers, was eliminated during the first half of the seventies. In 1976 and 1977 the budget registered surpluses averaging a high 25 percent of current reve- nues, permitting a $32 million build-up of gross reserves over the two-year period. During 1972-77 the Government controlled the growth of current expenditures, which did not increase in real terms during the period. The 1976/77 surplus was due to the sudden rise of tax revenues resulting from the growing transit trade to Nigeria and also, to a lesser extent, to the development of industrial activities. This recent improvement should ease the burden of recurrent cost financing. 11. The Government is committed to broad based socio-economic poli- cies, but the Government's main concern hitherto has been to keep wages and salaries low because of limited public revenues. In real terms, both public and private sector salaries have declined. Cash incomes of the farmers may have increased slightly; the losses resulting from the drop in cotton pro- duction probably having been made up by increased exports of maize to Nigeria. Thus Benin is one of those very rare West African countries where the gap between urban and rural income may have shrunk in the recent years. Educa- tion is one of the Government's top priorities. It is in the process of implementing reforms aimed at both adjusting the education system to the needs of the country, and reducing the high cost of formal education which absorbs about one-third of the Government's budget. Prospects 12. In the medium term,the outlook for economic growth in Benin is more favorable than in the recent past as a result of the recovery induced by Nigeria's continued strong demand for food, re-exports, and services and by the impact on the economy of a higher level of investment, supported in large part by foreign aid. This outlook assumes a higher level of investment in transport and the initiation of two large industrial projects financed jointly with Nigeria to produce sugar and cement for the Nigerian market. These projects are in an advanced stage of preparation, but the extent of their benefits to the Benin economy will depend on the negotiation of favor- able prices with Nigeria and the efficiency of their operations. Benin's growth prospects will, moreover, depend on effective pricing and marketing policies in the rural sector and on the maintenance of good relations with Nigeria and Niger. Subject to these reservations, growth during 1977-1983 is thus expected to average 6 percent p.a. In the long term, Benin's growth potential will be limited by poor resources to perhaps 4 percent per year, and even the achievement of this rate will depend on the ability of Government to channel resources and orient programs (in social and economic infrastructure, training, marketing, etc.), to the development of food and, to a lesser extent, cash crops.  - 4 - 13. The country's capacity for project preparation, financing, and administration is insufficient to permit execution of the large investment program (which would represent more than 50 percent of GDP) presently en- visaged in the Three-Year State Plan, and many projects in industry and infrastructure will need to be scaled down and extended over a longer period. A level of public investment of $170 million per year, equivalent to some 17 percent of GDP over the 1978-82 period, appears realistic. This may include for example, in addition to the proposed port project and some complementary work on the Benin Route, the two enclave projects in sugar and cement men- tioned above. Investment in the rural sector will be limited before the early 1980's until institutional reforms have been consolidated and foreign donors are willing to commit additional resources to the sector. 14. Under these conditions, and also assuming that the Government con- tinues its orthodox financial policy, the public finance situation should remain quite satisfactory, allowing for some badly needed increases in re- current expenditures, and a 15 percent contribution to the investment program (compared to zero over the 1970-1975 period). The balance of payments would remain in equilibrium with public capital inflows making up for the widening current resource gap. However, the situation is very sensitive to the success of the large industrial undertakings mentioned earlier. For example, the Save sugar plant alone could result in a deficit that would cancel out most of the Central Government's surplus if adequate prices are not obtained from Nigeria. 15. Benin's total external debt (including undisbursed), which until 1976 had remained relatively low amounting to $200 million with a debt service equivalent to less than five percent of the country's exports, is expected to substantially increase as investments increase and borrowing conditions harden. Debt service is expected to account for 10 percent of export earnings in 1980,and 12 percent in 1985. These ratios approach the upper limit of Benin's debt servicing capacity in view of the size of its economy and its dependence on a few exports. 16. In view of the country's low per capita income, the growing need for external funding of priority projects in an expanding economy, and Benin's exposure to widely fluctuating world market conditions, the major part of foreign financing necessary to sustain economic growth should continue to be provided on concessionary terms. Benin is expected to be able to finance only about 15 percent of its overall public investment program. Thus foreign donors should continue to provide a large share of total project costs, in- cluding the financing of local costs. PART II - BANK GROUP OPERATIONS IN BENIN 17. To date the Bank Group has extended 8 credits to Benin, totalling US$56.8 million. Three of the credits were for agriculture (22 percent of total lending) and four for highway construction and maintenance (70 percent). The seventh operation was an education project with a large rural training  component. Annex II contains a summary statement of Bank Group operations in Benin as of April 30, 1978, as well as notes on the execution of ongoing projects. 18. The Hinvi Agricultural Development Project (1969), which provided for palm plantings and food crop development, was IDA's first operation in Benin. The project has been completed satisfactorily although two con- secutive years of drought have retarded the growth of palm trees. Yields are expected to be 20 percent below appraisal estimates because of limited rainfall. The Second Agricultural Credit was the Zou-Borgou Cotton Project (1972). This operation, co-financed by FAC, was aimed at expanding cotton and food crop production in the Zou and Borgou provinces. Due to organiza- tional and managerial problems in the agricultural sector and to insufficient producer prices and low rainfall, the project failed to achieve its main objective, resulting in a severe setback to Benin's cotton program. A tech- nical assistance project to help remedy the situation and to prepare for a possible follow-up project is now underway. The project Performance Audit Report for the Zou-Borgou project was issued in April, 1978; the one for Hinvi is expected to be circulated shortly. 19. The Bank Group's involvement in the transport sector in Benin began in 1969, when the Bank acted as Executing Agency for a UNDP "Land Transport Study." This study led to the financing of a four-year (1970-74) Highway Maintenance Project, followed by a Second Highway Project in 1973. Under the first project, the government department then responsible for maintenance was re-organized and a training program was carried out. The Second Highway Project, co-financed by USAID, comprises principally the reconstruction of 320 km of the Parakou-Malanville road, Benin's most important north-south trunk road which links Cotonou to the Niger border, and the continuation of the road maintenance program. This project was completed in June 1977 with the help of a supplementary credit of $9 million due to severe cost overruns. The Third Highway Project, approved in November 1977, provides for the rehabilitation of a 107 km section of the southern part of the north-south axis (between Godomey and Bohicon) and the expansion of the maintenance program, including the elimination of the backlog in resurfacing bituminous and laterite roads. In addition, a Feeder Roads Project which provides for the construction and maintenance of about 1,270 km of feeder roads and for the preparation of a long term feeder road development program in support of agriculture, was approved in FY 1977. 20. The First Education Project provides for the improvement of ongoing rural youth training programs and the construction and equipment of a skills upgrading center in Cotonou. The project also includes a pre-investment study for a follow-up training/education project currently under preparation. 21. In the future, IDA operations will focus mainly on education and the development of rural areas, including the oncho-free zones. In the transport sector, IDA will continue to assist the Government in developing its road network and in strengthening maintenance.  - 6 - PART III - THE TRANSPORT SECTOR Background 22. The Ministry of Transport is in charge of overall transport activi- ties (infrastructure and transport industry). The Port is operated by the Port Autonome de Cotonou (PAC) which is responsible for the pilotage and berth- ing of vessels and for operating and maintaining the Port. The Office Beninois des Manutentions Portuaires (OBEMAP) is responsible for practically all cargo handling and stevedoring within the Port. The railroad is operated by the Organisation Commune Benin-Niger des Chemins de Fer et des Transports (OCBN)-- an autonomous agency--established by the governments of Benin and Niger to manage all transport on the Benin Route with the exception of uranium, which is carried exclusively by the Societe Nationale des Transports Nigeriens. 23. Transport and commerce, which rely heavily on Benin's entrepot and transit function, accounted for 25 percent of GDP in 1976, thereby generating a large share of foreign exchange and employing 15,000 persons in the modern sector. 24. Benin's transport system consists of about 7,200 km of roads, 580 km of railways, a deepwater port and an international airport in Cotonou. The Port of Cotonou is the starting point for the Benin Route which extends from Cotonou to landlocked Niger. This transport link consists of the Port, a 440 km railway extending from Cotonou to Parakou, and is completed by a 320 km two-lane paved road from Parakou to Malanville, hence through Niger to Niamey. The Benin Route carries most of Niger's overseas trade. Because of the con- gestion in Lagos since 1976, Cotonou has also become a transit port for Nigeria and its general cargo traffic doubled to 700,000 tons between 1974 and 1977. 25. The Government's two main objectives in the transport sector consist of strengthening the main transit axes (Cotonou-Niamey and Cotonou-Lagos) and building up a satisfactory road network, including feeder roads and road maintenance capacity. The proposed project should help implement the first objective, since it would remove the main bottlenecks on the two transit axes. The Association has helped with maintenance under three highway projects and the feeder road project. Upon completion of the third highway project, Benin should have the technical capacity to maintain its road network. Financing of recurrent costs may, however, remain an issue. Transit Function 26. The Benirn Route provides the shDrtest and cheapest ocean access for the western part of Niger, including Niamey. Niger is expected to achieve rapid growth with the further development of uranium mining over the next 5-10 years. The import traffic through Cotonou for these mines has already substantially increased over the last two years. In 1977, Niger's general cargo traffic (140,000 tons) accounted for 20 percent of the general cargo traffic of the Port of Cotonou and 70 percent of the railway freight.  - 7 - 27. Limited port and rail facilities in Nigeria, coupled with the dramatic increase of its imports, have resulted in extraordinary congestion in Nigerian ports. Waiting time for berths can be counted in months and ships have to be diverted to ports in neighboring countries. Nigeria-destined transit traffic, which was small until 1974, jumped to 330,000 tons in 1977, of which 190,000 tons consisted of direct transit trade and 140,000 tons of goods consigned to Benin for later shipment to Nigeria. In 1977, traffic to Nigeria accounted for 50 percent of the general cargo traffic of Cotonou. 28. Present traffic in Cotonou considerably surpasses the existing capacity. Congestion at Cotonou has caused an increase in waiting time and ship servicing which resulted in freight rate surcharges of 20 to 35 percent in 1977. Congestion has also caused the diversion of traffic to other ports. In 1977, 300,000 tons of transit traffic for Nigeria had to be refused and 60,000 tons bound for Niger had to be diverted to Lome. Traffic Projections 29. The total cargo (imports and exports) handled by the Port of Cotonou is projected to increase from its present level of 700,000 tons (1977) to 1.4 million tons by 1990. This figure is made as follows: traffic for Benin alone which will increase from 225,000 tons to 500,000 tons during the period; traffic for Niger which will increase from 140,000 tons to over 500,000; and traffic for Nigeria which is expected to increase from 330,000 tons in 1977 to about 420,000 in 1981 and to stabilize thereafter at about 300,000 tons, i.e. about half of the present demand (600,000 tons), as port congestion in Nigerian eases. On the basis of recent trends, it is assumed that about 50 percent of this traffic (150,000 tons) would be direct transit to Nigeria. This re- presents about 1.5 percent of the total break-bulk cargo traffic expected to be handled at Lagos in 1983/84 and possibly 5 percent of break-bulk cargo imports destined for the western part of Nigeria which, geographically speak- ing, constitutes a part of the hinterland of the Port of Cotonou. The proposed project, which would be completed in 1981, would meet projected traffic requirements through the mid-eighties. The expansion of the port thereafter could be done rapidly and at a relatively low marginal cost since the dredging is already sufficient to accommodate a future berth length of 790 m. Transport Investments 30. The achievement of these goals however requires substantial invest- ments and institutional improvements. Improving the Benin Route is one of the Government's priorities and the first step was to pave the Parakou-Malanville road in 1976/77 ($30 million). Investments now underway which cover the most urgent needs of the Benin Route total about $70 million, i.e. 15 percent of the Government's total investments over the next three years. These invest- ments comprise, in addition to the proposed project, new motive power and rolling stock for the railroad in order to increase its capacity to 500,000 tons per year (cost estimated at $11 million and financed by CCCE, FAC and suppliers' credits), an interim investment program consisting of open storage areas, and a mobile crane at the road/rail terminal of Parakou, two barges, a tug and a transit shed for the port (cost estimated at $4.0 million and financed by the West African Development Bank-BOAD). On longer term, the Government is committed to prepare a plan of action by June 30, 1979  - 8 - to improve the average time of transshipment and to increase the transshipment facilities of the Parakou terminal and to have these improvements effective by December 31, 1980 (Development Credit Agreement, Section 4.01). 31. The Government is also considering completing the paving of the road parallel to the railroad (between Bohicon 100 km north of Cotonou and Parakou) which would allow direct shipment from Cotonou to Niamey and thus would prob- ably result in reduced transport costs. But the paving of the road would inevitably result in a loss of traffic for the railway. This has led the Government to adopt a prudent investment policy in the railway, keeping the investments to a strict minimum. Funds are included under the proposed project for a study of the traffic forecasts and the investments needed to cope with expected railway demand over the next decade. 32. Insofar as the Cotonou-Lagos link is concerned, the Government of Nigeria has financed at its own initiative a 30 km road linking Porto Novo (in Benin) to the Nigerian border. The Government of Benin is presently building a two-lane bridge across the lagoon which separates Cotonou from Porto Novo (cost estimated at $15 million and financed by USAID). Some complementary investments in access roads to the bridge and side roads from the Cotonou-Malanville axis to western Nigeria are being studied. 33. Institutional improvements underway range from strengthening cargo handling and stevedoring operations within the port and at the Parakou road/ rail terminal, to improving and simplifying the customs clearance formalities, thereby giving easier access to Niger and Nigeria for transit goods passing through. Transport Industry 34. Presently, there is no agency governing the transport industry. I/ The railroad has the responsibility de facto. It charters the trucks which carry freight between Parakou and Niamey. In principle, two-thirds of the goods destined for Niger are to be carried out by Niger truckers and one-third by Benin truckers. The transport industry presently consists of about 350 small operators with less than 4 trucks. To make up for the insufficiencies of the private sector, the Government has recently established several regional transport companies at the province level and a large semipublic company-- Transbenin--to carry out the Nigeria traffic. Under the Third Highway Project, the Government is committed to undertake a study of the supply and demand of transport facilities to avoid possible overcapacity. 35. The freight rates offered to the trucking companies are too low and result in a lack of competition and poor standards of vehicles. The proposed project provides for a study of tariffs which will probably recommend tariff increases. But the greater productivity resulting from the proposed project and other investments envisaged on the Benin Route should counterbalance any negative effect of higher tariffs. 1/ This is to be changed under the IDA-financed Third Highway Project which provides technical assistance to the Ministry of Transport to strengthen its transport planning and coordination functions.  - 9 - PART IV - THE PROJECT 36. The proposed project is described in detail in the Staff Appraisal Report No. 1983-BEN dated May 22, 1978, and summarized at the beginning of this report. Annex III contains supplementary Project data. A master plan for the development of the Port, financed by FAC, was prepared by consultants BCEOM (France) in 1975. BCEOM also carried out the pre-feasibility studies. The preparation of the economic engineering and financial aspects of the project was financed under the Project Preparation Facility (PPF) with a contribution from BADEA. Funds from the PPF were also used to finance an appraisal by Delft Laboratories (the Netherlands) of the erosion problems of the coast. FAC financed a study of cargo handling which was carried out by FAC and the Port of Marseilles. 1/ Representatives from four of the co- lenders participated in the appraisal in October 1974. Negotiations took place in Paris at the beginning of May 1978. The Beninese delegation was led by Mr. F. Dossou, Minister of Planning, Statistics and Coordination of Foreign Aid. 37. The present Port facilities date from 1965 and no development or improvements have been made since then. The proposed project would increase the Port capacity from about 700,000 to about 1.1 to 1.2 million tons annually and its productivity would increase from the present average rate of 7.1 tons/ gang/hour for general cargo to a minimum of 10.0 tons. The Government is committed to this target (Development Credit Agreement, Section 4.02). 38. The location of the port dictates the areas of expansion: develop- ment can only occur immediately to the west of the port by demolishing part of the west breakwater and by using land areas created by sand accretion caused by the breakwater itself. However increased land areas for future expansion are needed and a new cut-off breakwater would be built extending further into the sea in order to continue the process of accretion. This new breakwater would also alleviate siltation of the port entrance for some years. As a consequence of the original port construction and the interruption of the littoral sand transport, severe erosion has occurred and will continue to occur downdrift (east) of the port. This erosion has led to many prob- lems and considerable expenditure on protection works. 39. The proposed project has several objectives: (a) to increase the capacity of the port to handle at least 1.1 million tons of general and break-bulk cargo a year; this increased capacity should suffice until 1985; 1/ At the request of the Government, an UNCTAD "Port Congestion Task Force" visited Cotonou twice in 1977. The task force commented on the Port of Marseilles Study and reinforced many of the recommendations incorporated in the project.  - 10 - (b) to improve the efficiency of PAC and OBEMAP operations through training programs and technical assistance; (c) to ensure that Benin derives the maximum benefit from the use of the Port of Cotonou for the transit of goods destined to neighbouring countries by introducing an adequate tariff structure, in particular on the Benin Route; (d) to improve the operations of OCBN's central line from Cotonou to Parakou through technical assistance and training; and (e) to study the downdrift erosion problems to permit the Govern- ment to plan shore protection works. Project Description 40. The proposed project would have two components--civil engineer- ing works (including supervision), and technical assistance, training and a study. The civil engineering works, which have been divided into six lots to simplify the parallel and joint financing, consist of (i) construction of 610 m of 11 m deep berths, (ii) dredging of the entrance channel and the new basin, (iii) demolition of part of the existing west breakwater and construc- tion of a cut-off breakwater, (iv) paving, roadworks, services and fencing, (v) transit sheds, and (vi) electrical works. Technical assistance and training would include assistance to PAC, OBEMAP and the railway to help improve their operational effectiveness and capacity. Civil Engineering Works 41. The civil engineering works would comprise: Lot I - Berth construction: the existing berths would be extended by 610 m with a depth of 11 m, plus a further 50 m with a depth gradually decreasing from 11 m to zero to be used as a service berth for the port's tugs, pilot boats and launches. Tender documents provided for a sheet piling. However, a number of tenderers submitted a variation for an in situ concrete quay wall which may be adopted following further study by the consultants. Also included within this lot is the provision fora simple roll-on/roll-off facility to be studied under the project. Lot 2 - Dredging and filling: this lot is divided into two sections since the dredging of the port entrance channel demands the use of floating equipment which can cope with the swell wave conditions, whereas dredging the new basin can be done using a land-based plant or simple floating equip- ment. The sturplus material from the channel dredging would be deposited close to the shore downdrift to the east of the port, and surplus from the basin dredging would be deposited to the west of the new basin;  - 11 - Lot 3 - Demolition of part of the west breakwater and construc- tion of a cut-off breakwater: in order to provide access to the new basin, it would be necessary to remove 320 m of the west breakwater. Suitable materials from the demo- lition of the west breakwater (heavy rocks and tetrapods) would be used in the construction of the cut-off breakwater. The latter is the most difficult of the project's civil engineering operations, since its extremity is located in deep water (13 m); Lot 4 - Shoreworks: this includes all the works behind the berthface including provisions for storm-water drainage, water distribution, roadways, sidewalks, weighbridge and railway trackwork; Lot 5 - Two transit sheds; and Lot 6 - Electrical works: this comprises all the electrical works involved in the expansion of the port facilities. Technical Assistance and Training 42. PAC, OBEMAP and OCBN would receive technical assistance and training to improve their efficiency. Four experts (60 man-months) would work in PAC to advise on port operations and control; reorganize the accounting system; introduce cost control and cost-based tariffs; revalue the assets; set up a maintenance program; establish training programs for various personnel; and establish appropriate policies on pilotage charges and the training of pilots. 43. Three experts (60 man-months) would work in OBEMAP to help develop training programs and train various personnel, institute a program of regular equipment maintenance and renewal; and provide assistance in accounting and tariffs. Training for most of PAC and OBEMAP personnel would be in the port. Short-term overseas training missions could be included for senior personnel. 44. Two experts (22 man-months) would serve in OCBN (Cotonou and Parakou) to recommend improvements in operations and management (including training), to design a new layout for the Parakou terminal, to review the traffic fore- casts and determine investments needed over the next decade, and to prepare a new tariff structure for its services,including road transport. 45. In addition an engineering firm (40 man-month) would work in PAC to study the need for a simple but economic form of roll-on/roll-off facility for the port, to develop and design the facility and to assist PAC in imple- menting and commissioning it. It has been agreed that the study would be reviewed by the Association before the facility is implemented (Development Credit Agreement, Section 3.12).  - 12 - 46. The study of coastal protection would determine the future action needed and estimate the costs of any civil engineering works proposed. The Government would employ consultants to carry out the study by March 31, 1979, and the study would be completed by March 31, 1980 (Development Credit Agree- ment, Sections 3.03(a) and 3.08). 47. The Government has agreed to employ experts for the tasks listed in paras 42-45 above whose qualifications and conditions of employment would be acceptable to the Association (Development Credit Agreement, Section 3.02). The Government has also agreed to coordinate the three tariff studies carried out under the Project by PAC, OBEMAP and OCBN (Development Credit Agreement, Section 3.07). Implementation 48. The Government has set up an ad hoc commission with the overall responsibility of supervising the execution of the port project, as it has done for other major projects underway in the country. The Chairman, Mr. Baba Moussa, is Director General of the "Banque Beninoise de Developpement". Members of the commission are drawn from various Government departments and agencies concerned with the project. The Chairman is responsible directly to the President. 49. The Ministry of Transport remains responsible for ensuring that the decisions of the commission are carried out. The Ministry of Transport would be assisted by engineering consultants in addition to the technical assistance identified above. It is proposed to appoint a project coordinator, financed by UNDP, who would act as a liaison between the Government, the ad hoc commis- sion, the implementing agencies and the co-lenders, particularly with respect to loan and credit effectiveness procedures, procurement and disbursements. The appointment of the engineering consultants and the project coordinator would be a condition of effectiveness of the credit (Development Credit Agreement, Section 6.01 (b) and (c)). The coordinator would have a Beninese counterpart acceptable to the Association,financed under the project (Develop- ment Credit Agreement, Section 3.03(b)). The Government has agreed to second senior staff acceptable to the Association to work alongside the engineering consultants, by September 30, 1978 (Development Credit Agreement, Section 3.02 (b)). Cost Estimates 50. The total cost of the proposed project is estimated at $46.1 mil- lion, excluding taxes and duties from which the project would be exempted, with foreign costs of about $34.1 million (73 percent). The costs for the civil engineering work are based on the consultants' preliminary report on the evaluation of the tenders received on April 15, 1978. The estimate used for Lot 2, dredging and filling, was provided by CIDA. The estimates in- clude physical and price contingencies. Physical contingencies amount to 10 percent since the cost figures are still provisional. Price contingencies assume annual increases as follows: 1978, 8 percent; 1979, 7.5 percent; 1980 and onwards, 7 percent.  - 13 - 51. The cost of technical assistance is estimated at $8,000 per man- month based on recent costs for technical assistance in the region. In addi- tion to the man-month costs which total $1.46 million, an additional sum of $0.35 million has been allowed for international travel and transportation, small items of training equipment, expenses for Benin staff to be trained overseas and the costs of printing reports. Financing Plan 52. The Association would provide a credit of $11 million, i.e. 24 percent of total project costs. Total external financing from the eight co-lenders would amount to $44 million (about 95 percent of total project costs) and would cover $10 million of local costs. IDA's share of the local cost financing, measured in proportion to its share of total external financ- ing (minus project components financed on a parallel basis) would be about $2.7 million. The local contribution to the project provided by the Govern- ment ($0.4 million) and PAC ($1.6 million), would total $2.0 million (about 5 percent of total project costs). 53. US$9.7 million of the IDA credit would be onlent by the Government to PAC at 7.5 percent interest for a period of 20 years, including 5 years grace. The funds made available by the Government to OBEMAP and OCBN for the financing of the technical assistance would be in the form of a grant. The conclusion of a subsidiary agreement between the Government and PAC would be a condition of effectiveness of the proposed credit (Development Credit Agreement, Section 6.01 (a)). 54. The Norway grant would be onlent by the Government to PAC under the same conditions as the IDA credit. The probable terms for the Abu Dhabi and BADEA loans would be 20 years including 4 years grace, with interest at 4 per- cent and 6 percent respectively. AfDB and CCCE would lend directly to PAC with the Government's guarantee. CCCE's loan would be at 6.0 percent interest for 15 years including 3 years grace; and the AfDB loan, at 4.0 percent interest for 25 years including 5 years grace. The effectiveness of the BADEA and AfDB loan agreements, the CIDA, FAC and Norway grant agreements, and the authoriza- tion of the Abu Dhabi and CCCE loans by these two institutions would be a condition of effectiveness of the proposed credit (Development Credit Agree- ment Section 6.01 (d) and (e)). 55. The financing would be allocated as follows: Lot 1 (berth construction) and Lot 4 (shore works) would be financed on a joint basis by IDA ($6.5 million), Norway ($8.3 million), AfDB/NTF ($2.9 million), FAC ($1.5 million), and PAC ($0.6 million); Lot 2 (dredging and filling) would be financed in parallel by CIDA ($10.0 million); Lot 3 (breakwaters) would be financed in parallel by BADEA ($4.5 million) and PAC ($0.7 million);  - 14 - Lot 5 (transit sheds) would be financed in parallel by CCCE ($3.7 million); Lot 6 (electrical work) would be financed in parallel by the Abu Dhabi Fund ($2.6 million). The supervision of the civil works, the technical assistance and training, and the coastal protection study would be financed by the Association, the Government and PAC. Disbursements 56. The IDA Credit would be disbursed to cover 33 percent of Lots 1 and 4 on a pari passu basis with Norway, AfDB and FAC; 85 percent of the cost of the supervision of the civil works, technical assistance and training, and the studies. 57. Three studies, essential to project preparation, were financed from the Association's Project Preparation Facility (PPF) in the amount of US$500,000. They were: (i) a study of alternatives for a phased development of the port; (ii) a study of the coastal regime; and (iii) the detailed engineering and economic and financial studies. Procurement 58. International competitive bidding in accordance with Bank Group Guidelines (with the exception of Lots 2 and 5) has already taken place for civil works. Tenders were opened in public on April 15, 1978 and 24 con- tractors submitted bids. Lot 2 is intended to be procured by CIDA using only Canadian contractors and under CIDA's own procurement procedures; tenders are expected to be invited in May 1978. Tenders for Lot 5, financed by CCCE, were open only to French contractors. 59. Consultants for the supervision of the construction of all civil works and the detailed study of the coastal protection works would be selected according to Bank Group Guidelines. Consultants for the supervision of the civil works have been preselected; their offers were received by May 15, 1978 and are now being evaluated. Financial Evaluation PAC's Past Performance 60. The analysis of PAC's financial situation reveals several weak- nesses. First PAC's balance sheet does not include all its assets and the accounted ones are valued at their original cost. Second, among the current assets, receivables showed a marked increase from 1974 to 1976 reaching about 53 percent of gross revenues in 1976. Third, PAC's revenues are too low. Fixed in 1965, PAC's tariffs remained at the same level until 1974 when they were increased by 25-30 percent. Its rental rates were again increased in  - 15 - mid-1977. These increases were, however, not even sufficient to cover in- creases for inflation. Pro forma accounts, including an estimation of all PAC assets at their historical value and annual provision for depreciation adjusted correspondingly, show a deficit in 1974 and 1975 and a small net income in 1976. The situation would have been worse if depreciation had been computed on the assets at their replacement value. To redress this situation the Government has agreed to incorporate in PAC's accounts by December 31, 1979 the replacement value of all fixed assets in use, and thereafter to have PAC revalue its assets at appropriate intervals determined as a function of inflation rates but in no case exceeding five years. Agreement has also been reached on reducing the balance of PAC's receivables by December 31, 1979 to about two months average gross revenue (or not more than 20 percent of gross revenue) and to introduce measures such as advance deposits to restrict its receivables (Development Credit Agreement, Schedule 4). PAC's Future Performance 61. There is scope for increasing PAC's cash generation through improved efficiency resulting from the proposed project and more importantly through periodic port tariff increases on an expanding volume of cargo. Since sub- stantial benefits would accrue to port users from planned investment already taking place in 1978, including the purchase of port equipment (see para. 30) which would improve port productivity and reduce ship waiting and service time, port tariffs should be increased by June 1979 by at least 30 percent. This would allow cost inflation to be offset for 1978 and 1979 (6 percent per year), and to generate additional revenue in real terms of about 15 percent annually. Until completion of the project in late 1980, tariff increases should be only moderately in excess of inflation to avoid the risk of traffic diversion; an annual tariff increase of 10 percent would be adequate for this purpose. At completion of the project, the competitive position of Cotonou would improve substantially, particularly if, as expected, the present freight surcharge of 35 percent is abolished as the new berths come into use and ship waiting time is reduced. However, any further tariff increase would have to be carefully assessed. Present estimates suggest that, in 1981, PAC's tariffs could be increased by a further 75 percent above the 1980 tariffs without risking any traffic diversion from Cotonou provided that OBEMAP's tariff increases were limited to offsetting inflation. This limitation would also apply to PAC after 1981 when 10 percent annual increases have been assumed. Since shipping lines are highly sensitive to the charges borne by them in selecting ports of call, most of the higher charges should be borne by the landed cargo, subject to the findings of the costing study. This should enable PAC to achieve a minimum rate of return before income tax on net fixed assets in use, revalued from time to time, of at least 5 percent in 1980 and 8 percent thereafter. The Government has agreed on these targets which would provide for a satisfactory recovery of project cost (Development Credit Agreement Schedule 4).  - 16 - 62. Since most donors, other than IDA and Norway, have decided that their contribution would be passed on to PAC by the Government on relatively soft terms, (grants for $11.5 million to be passed as equity and loans at concessionary terms for $13.2 million), PAC is expected to have a favorable debt/equity ratio 27/73 in 1983 and an equally favorable debt 6ervice ratio. Cash generation is expected to be substantially in excess of PAC's needs since no other major investments are planned. The bulk of PAC's cash genera- tion would be transferred to the Government through appropriate mechanisms like the income tax and net profit transfer. The Government has agreed that PAC would not incur non-project capital expenditures exceeding CFAF 100 million per year until December 31, 1985, except in agreement with the Association (Development Credit Agreement, Schedule 4). 63. Over the 1981-84 period, the Government is likely to receive net additional revenues of about $35 million (in constant 1977 prices) from the expansion of the port and related transport activities. Benefits and Risks 64. General cargo traffic through the Port of Cotonou has grown rapidly in recent years and the port has reached its operational capacity. This combined with inefficient operations has caused some diversion of traffic destined for Niger and Nigeria to neighboring ports. The most significant benefits of the proposed project for Benin accrue from the avoidance of this diversion, since this traffic would be the source of substantial revenues for Benin. 65. Other quantifiable benefits directly attributable to the project are savings on periodic maintenance dredging; reduction of freight for clinker imports; transport cost savings for Niger; reduction in handling costs; and savings in ship waiting and servicing time. Considered but not quantified are the benefits generated through the storage, repacking and processing of Nigeria transit traffic induced by the project. 66. The proposed project would yield an overall rate of return of 37 percent. This includes the benefits that would accrue to all port users, i.e. Benin, Niger, Nigeria and the foreign shipping companies only to a marginal extent with respect to the latter. The economic return expected from the extension of berthing facilities (ship waiting time savings, handling cost savings, and avoidance of traffic diversion), the economic cost of which would be about $32 million is the highest of the various components (38 percent). The return from the construction of the cut-off breakwater and the silt sand trap dredging (savings in maintenance dredging and the creation of new land), the economic cost of which would be about $5 million, is 20 percent. 67. Benin itself would recover only a part of the benefits from the project, since some of them would be passed on to Niger and Nigeria and to a marginal extent to the shipowners. The rate of return for Benin alone would be 25 percent, excluding the unquantified benefits mentioned above which would accrue to Benin.  - 17 - 68. The project risks are linked mainly to Benin's undertaking a rela- tively large investment, which would also serve Niger and Nigeria, without any formal commitment by these two countries to the project. However, the competitive advantages of the Cotonou port and the Benin Route are strong enough to assure that both Niger and Nigeria, especially the former, will continue using Cotonou, and that tariffs can be substantially increased with- out serious risk of diversion. In the most unfavorable event that Nigeria's direct transit traffic using Cotonou would disappear,the overall rate of return would fall to 25 percent and the return for Benin alone would be 13 percent. This reflects a risk of about 25 percent over-capacity in the proposed berth extension project until the mid-1980's. But considering the traffic congestion at Lagos and the willingness of Nigeria not only to use Cotonou port facilities but also to participate substantially in industrial and infrastructure investments in its neighboring country, this is unlikely. The participation of the Nigeria Trust Fund in the financing of the project is also a clear sign of Nigeria's interest in the project. PART V - LEGAL INSTRUMENTS AND AUTHORITY 69. The draft Development Credit Agreement between the People's Republic of Benin and the Association and the Recommendation of the Committee provided for in Article V, Section 1 (d) of the Articles of Agreement of the Associa- tion are being distributed separately to the Executive Directors. 70. Special conditions of the project are listed in Section III of Annex III. Special conditions of effectiveness included in the Development Credit Agreement would be the conclusion of a subsidiary loan agreement between the Government and PAC, the effectiveness of the financing agreements with AfDB, BADEA, CIDA and Norway, the authorization of the loans by the Abu Dhabi Fund and CCCE, and the appointment of the engineering consultants and the project coordinator. 71. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 72. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President Attachments May 26, 1978  - 18 - ANNEX I TABLE 3A Page lof 4 BENIN - SOCIAL INDICATORS DATA SHEET LAND AREA (THOU KM2) BENIN REFERENCE COUNTRIES (1970) TOTAL 112.6 MOST RECENT AGRIC. 33.9 1960 1970 ESTIMATE TOGO LIBERIA IVORY COAST*** GNP PER CAPITA (US$) 70.0 100.0 130.0 170.0 280.0 350.0 POPULATION AND VITAL STATISTICS POPULATION (MID-YR MILLION) 2.1 2.7 3.2 2.0 1.3 5.4 POPULATION DENSITY PER SQUARE KM. 19.0 24.0 28.0 35.0 12.0 16.0 PER SQ. KM. AGRICULTURAL LAND 62.0 80.0 94.0 83.0 217.0 32.0 VITAL STATISTICS CRUDE BIRTH RATE (/THOU, AV) 51.4 50.6 49.9 51.0 42.8 46.1 CRUDE DEATH RATE (/THOU.AV) 31.5 26.6 23.0 26.6 23.5 23.3 INFANT MORTALITY RATE (/THOU) 110.0 /a,b .. * - 137.3 LIFE EXPECTANCY AT BIRTH (YRS) 34.3 38.5 41.8 38.5 41.0 41.0 GROSS REPRODUCTION RATE 3.3 3.3 3.3 3.3 2.6 3.1 POPULATION GROWTH RATE ()) TOTAL 3.1 2.8 2.7 2.7 3.3 3.4* URBAN .. 5.9 4.2 5.4 . . 8.7 /a URBAN POPULATION (X OF TOTAL) 9.3 12.6 13.5 13.0 26.2 28.0 AGE STRUCTURE (PERCENT) 0 TO 14 YEARS 44.2 44.9 46.1 '49.8 40.7 42.5 IS TO 64 YEARS 53.2 52.6 50.2 46.0 56.0 54.8 65 YEARS AND OVER 2.6 2.5 3.7 4.2 3.3 2.7 AGE DEPENDENCY RATIO 0.9 0.9 1.0 1.2 0.8 0.8 ECONOMIC DEPENDENCY RATIO 0.9 /c I .0 /a 1.1/1 1.51a 1.0/a 0o./b FAMILY PLANNING ACCEPTORS (CUMULATIVE. THOU) . . . . USERS (% OF MARRIED WOMEN) .. .. .. .. EMPLOYMENT TOTAL LABOR FORCE (THOUSANO) 1100.0 1300.0 1500.0 720.0/b 580.0 2600.0 LABOR FORCE IN AGRICULTURE (%) 55.0 52.0 47.5 75.0 72.0 82.0 UNEMPLOYED (X OF LABOR FORCE) .. .. ..0.0b INCOME DISTRIBUTION X OF PRIVATE INCOME RECDO 0Y- HIGHEST 5% OF HOUSEHOLDS 31 4/d 61 7/C HIG1EST 20% OF HOUSEHOLDS 51.7 76. .. ..267t . LOWEST 20% OF HOUSEHOLDS 5.5 . . . *. S.37- LOWEST 40% OF HOUSEHOLDS 15.8 .. .. . 10o97E * OISTRIBUTION OF LAND OWNERSHIP X OWNED BY TOP 10% OF OWNERS . .. .. X OWNED BY SMALLEST 10% OWNERS .. .. .. .. HEALTH AND NUTRITION POPULATION PER PHYSICIAN . 29260.0 32740.0 27940.0 11590.0 15320.0 POPULATION PER NURSING PERSON 2440.0 2370.0 4170.0 4590.0 2830.0 /c POPULATION PER HOSPITAL BED .. 870.0 /b 780.0 860.0/c 580.0 1150.0 PER CAPITA SUPPLY OF - CALORIES (X OF REQUIREMENTS) 96.0 97.0 87.0 94.0 84.0 114.0 PROTEIN (GRAMS PER DAY) 54.0 55.0 56.0 51.0 36.0 60.0 -OF WHICH ANIMAL AND PULSE 14.1 18.0 /c - 19.0/d 10.0 /d 19.0 /d DEATH RATE (/THOU) AGES 1-4 45.0/b .. .. .. 18.2 EDUCATION ADJUSTED ENROLLMENT RATIO PRIMARY SCHOOL 26.0 40.0 44.0 72.0 53.0 76.0 SECONDARY SCHOOL 2.0 5.0 11.0 7.0 9.0 11.0 YEARS OF SCHOOLING PROVIDED (FIRST AND SECOND LEVEL) 13.0 13.0 13.0 13.0 12.0 13.0 VOCATIONAL ENROLLMENT (I OF SECONDARY) 13.0 4.1 2.1 10.0 8.4 7.4 ADULT LITERACY RATE (X) 20.0/e .. .. 12.0 15.0 20.0 HOUS I NG PERSONS PER ROOM (URBAN) .. .. .. .. OCCUPIED DWELLINGS WITHOUT PIPED WATER (X) .. .. .. .. ACCESS TO ELECTRICITY (% OF ALL DWELLINGS) . .. .. RURAL DWELLINGS CONNECTED TO ELECTRICITY (X) .. .. .. .. .. CONSUMPT ION RADIO RECEIVERS (PER THOU POP) 13.0 32.0 52.0 132.0 PASSENGER CARS (PER THOU POP) 1.0 4.0 5.0 4.0 11.0 10.0 ELECTRICITY (KWH/YR PER CAP) 5.0 12.0 18.0 33.0 330.0 95.0 NEWSPRINT (KG/YR PER CAP) .. .. 0.1 0.2 SEE NOTES AND DEFINITIONS ON REVERSE  -1 9- ANNEX I Page 2 nf 4 NOTES Conothecoiso noted, data for 1960 refer to any year between 1959 and 1961, for 1970 between 1969 and 1971 and for Moat Recent Estimate between 1973sand 1976. * .ec to lootgration population growth rate is higher than rate of nataral increasae. T1. Nocy Co-nt hoe been selected am an objective country becaus.e of its geographic proniMity acd its more advanced stege of economic development. tLfNIN 1960 is African population only; lb Eased on deatba reported for 12 monthe period; Is Ratio of population under 15 and 65 and over to total labor force; Id Population; Ie Prior to 1965. 1970 Ia RLatio of population under 15 and 65 and over to total labor force; lb Government hospital establishmen ts only; Ic 1964-66. MOST RECENT ESTIMATES: Ia Ratio of population under 15 and 65 and over to total labor fore, TOGO i970 Is Ratio of Population under 15 and 65 cod over to total labor force; lb Pigures do noct include unemployed; /c Govern- ment hanpital eatablishmetna only; /d 1964-66. LIBERIA 1970 /a Ratio of population under 15 and 65 and over to total labor force; /b Unemployed and partially employed; IC Popola.- tion, 1975 Sank Economic Report, higher income calculated em residual, includem expatriates; /d 1964-66. * I~~~~VORY COAST 1970 Ia 1965-75; /b RLatio of population under 15 end 65 end ove r no total labor force; /0 Government only, including mid- wies d 1964-66. R5, May 22, 1979 DEPflETfl05 OF SOCIAL IlNDICATORS Land Area (thee ko2) fpomlatino Mr cocaine perso - Popelation divided by cober of practicing Total -Total -uf-c area cmprising land area and inland watrcs, male and female graduate curses, "trained" rc 'Icertified' uaa and ugric. -Moor recent estimate of agricoture1 area need temporarily or pan- antliary parsoeme with training or emparlesee. en.tly for crpa, poatorec, cachet & kitchen gardnen or to lie fallow. Population per hoamital bed - Population divided by ntebee of hospital beda available in pobliceand private general and apecisitmed hospital and GNPer ..pita (US$) - GNP per capita aetianates at correct macbt prices, rehabilitation necter; ...ludaa mursing homes and satblisle.eeta foe calcolatd by eon conversion eathod as World Sank Atl.a (1976-76, basis);. cotodi1 and pcaventive ears. 1960; 1970 and 1976 data. Pee .aPit. supply of cal-cisa ft of regnircemects) - tCmporad free energy equivalent of net fond aupplies available in coutry per capita pee day; Poculation and vital a tatistic_ available auppliis nomprise domestic production, impacts less soporte, end Pop,latton (mid-year illioc) no of July first: if cot available, averge thanees In stock; net supplies meclods animal food, seeds, qu-titias used of ru ncd-year eetieaatee; 1)60, 1970 and 1926 data. in food procee..ing and lonesa in distribution; raquiraeente were estimated by PAO based on physiological needs for noreal activity end health -onid- Popolatioc density -p.r auceca ho - Mid-year population par aquorc kilomter acing enirn tnna tsperatuce, body asiehts, age and see disteihutiona of (lii hecteree) of total area. popula tion, and a11ieig lOt for wars ath-- honehld level. oecialtlon deceity pare snaca lea of sari-. land - Computed as above for lPar .apit. surely of protein feces set day) - Protein cotntac of par capita agricoltuca1 land only. net supply of fend par day; met supply of fomad is defined aa above ; require- mects for all countries, established by USDA EconMic Research Services Vital statistics provide far a minione sllwasnee of 60 gramss of total protein per day, sod Crude birth race par thousnand. evereas - dAnne1 live birtho par thoasend of 20 grass of animal and pulse protein, of which 10 gras should he a.nial old-year popula tion; ten-year ritlastic avarage ending in 1960 sod 1970, protein; these atanedad ors lowe then thoea of 75 gres of total protein and five-year averge ending in 1975 for wart recent estimate, end 23 grem of animal protein as an average for the world, proposed by FAO Crude death rein met thousa.nd. aversee - Annua deaths par thousand of mid-year in the Third World Peed nervey. population; ten-year aritleastic vavrages ending is 1960 and 1970 and five- Par osnits crotein sceplc from animal and mulses - Protein sepply of food year avrg en ding ia 1975 for cost recent estimate, derived Inns a.nials and pulesa in garsa par day. Infant mortalIity rate I/thou) - Annual destho of infante under one year of age Death rate (/thou) sees 1-4 - Annua deaths par thousand In age group 1-4 per thousand liv births. years, to children in this age group; euggeated me an indicator of iifeea.pota.cc at birth lyre) - Average comber of years of life remaining at malnutrition. birth; ....ally fiv-yea avrages ending In 1960, 1970 and 1975 for davelop- iog onor .Education Gr..a -ep-oductio tate-Average cober of lIve daughters a woman will bear Adjusted erollment ratio - priasary school - E-1o1lont of all ages as par- in her noonol repr-d-ctive period if she.meine presen.t age-specific centaga of prim,ary school-age population; includes children aged 6-11 peace fertility catne; usually five-year averagea ending in 1960, 1970 and 1975 hot adjusted for different lengths of primary educa.tion; for coutrisa with for developing countries. univereal education, enrollment may asensed lOt sime ses pupils are below Population ucowth rate 17,) - total - Compoed annual grocth rates of mid-yea or abov the official school age. population for 1950-60, 1960-70 and 1970-75. Adjisted enrollanen ratio - secondary school - Computed as abov; secondary Population orowth rate It) - urban - Computed like growth rate of total educa.tion requires at least four peace of approved primary instruction; population; different definitiona of urban areas may effect cmparability of provides genra, .octional or teacher training lustr-ntiona, for pp5 data onoog c-utrine. of 12 to 17 years of age; correapendenee.. coures aer generally secluded. Urban popciacbon (% or tota) - genie of urbac to total population; different Tears of achooling provided Ifirt and second levels) - Total peace of definitions of orbo areas nay affect csmparabllity of data am,ong countries, schooling; at secondary level, vctiona insrwtmti may ha partially or completely secluded. Age trucur (pecen) -Children (i-li years) , working-age (15-64 ya),vocation alsceimtC fscnay oainliaiain nld and retired (61 years and over) as pertentages of mi-erpopulation. tehia,idsra-tohrpo s wh-ichopeate indepetindenl or as hoe depeod-ey ratio - Rstio of .poplation under 11 and 65 and over to those deparusentsiof secondary institutions . of ge- 15 cbrcugb 64. Adult lit-ercy ae t - Literate adults fable to red and stite) as per- iconmicdepndeny rtio-RStin of population under 15 sod 65 and ovr to cetage of total adult population aged 11 peace end over. the labor forte in age group of 15-64 years. faIypecc aceptors imlative thou - Cuslative oohe of -ccptorn Sousing of irt-cntrl evicsune ceiceo ntional fenily planning pregrat Person par room (urban) - average cober of persona per roo in occpied 1crInception covetional dwellinga in urban areas; dwellings eeclude o-peru,anect Fonily plann.ing - umer It of married women) - Percencagee of maried o-e of ntructotes sod neoccpied parts. child-beaing age (15-44 years) ab. us birth-control devices to all maried Occomied dwellings without need ester it) Occupied conventional doellinge oenin san ofe grop. in urban andruaass without isside orotside piped neater facilities as:. ...cetage of all occUpiad dwellings. Total esbot Access ...nd to electricity ft of all dwellings) -Conventional dwellings with Tota laor ort (tousnd)- Economically active pereons, including ranud electricity in living quarters as percent of total dwellings in ochas and farces and uneployed hut aectudiag bo roie, tdents, etc.; definitions rural ares. in naio o ootriea are not comparable. focal dweling ne e t lctiiy t Computed as above for rura iaho fore inagrcultre f) -Agriculture1 labor forca (in farming, forestry, doeIinge only. h-tring aod fishing) as prerentage of total labor force Uooseloyed It of labor farce) U- eployed are uaually defined as parson who Conutibo ore able end willing to take ajob, out of a job on a given day, caselod out Radio rateivera (per thou pop) - All types of receivers for radio broodrasto of a joh, and aseking work for a epeified minionas period nor neceeding on to gene ral Public per thousand of POPulation; e..clodee onli.eseed receirer week; my nt he comparable between coutries due to different definition to couctrina and in years when registration of radio eats was in efface; of uneployed and source of data, e g., employment off its sttatis _eple d.at for recent Year may not be -oparbhi since mostconre aboliahed -onys, compulsory unmployment insurance . licemaing. Passeneertare: fee hou roe)_ - Passenger care romprias ma-ctare seating lame dieibocion - Prcntage of private Incom (both is cah and kind) lestaPihIpros'mlds muate eresadmltr received by richest It, richest 201, poorest 2lit, and p-oret 4Alt of house- ghveronhiclle-eh....a.diitr holds. ~~~~~~~~~~~~~~~~Electricity Ikh/nyr pec nap) - annua co__pti_n of induatrial,criS Di.trib.tt- of land owner.bip ftr-t.g.. f I ~public and private ale-triciry Is kilowatt hours Per espies, geneall Oletibuton f lad aeeerhispcrtntsea o led owned by wealthiest lOt base.d on prodUction data, without alsusane far losses in grids but silo- and pooceat 107% of land onmers. ing for imports and aspects of electricity. H-11h and N.trition ~~~~~~~~~~~~Neaproint (hg/yr Per tee) - Per eaPita annua consomptlon is bilogres Meal U~~~~~ and nutrition es~~~~~.timated Prom domaa,tie Prodentlan plea met iaprta of newsaprint. PPopulaion Per physician - Population divided by o,mber of pracicing physiciana q-1lified free a medical achl at university level.  - 20- ANNEX I Page 3 of 4 ECONOMIC INDICATORS CROSS NATIONAL PRODUCT IN 1976 ANNUAL RATE OF GROWThI (%, current prices) US$ Mln. % of GDP 1972-1976 GNP at Market Prices 556.0 103.1 13.7 GDP at Market Prices 539.3 100.0 12.8 Gross Domestic Investment 108.2 20.1 24.0 Gross Domestic Saving 26.4 4.9 87.0 Current Account Balance -47.5 -8.8 -27.0 Exports of Goods, NFS 144.8 26.8 12.5 Imports of Goods, NFS 226.6 42.0 13.9 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1976 Value Added Labor Force V.A. Per Worker US$Mln. % Mln. % US$ Ze Agriculture 186.7 37.9 0.848 58.7 220.2 64.5 Industry, Construction & Public Works 72.3 14.6 0.031 2.1 2,332.3 683.6 Government 56.1 11.4 0.063 4.4 890.5 261.0 ,Commerce and Transport 137.0 27.8 0.504 34.9 271.8 79.7 Other Services 41.0 8.3 .. .. .. .. GDP at factor cost 493.1 100.0 1.445 100.0 341.2 100.0 GOVERNMENT FINANCE Central Government (CFAF Bln.) % of GDP 1976-77 1976-77 1972-75 Current Receipts 23.8 16.7 14.9 Current Expenditure 16.6 11.7 14.0 Current Surplus 7.1 5.0 0.9 Capital Expenditures 19.0 13.4 9.2 External Debt Disbursements (gross) 7.6 5.3 3.6 MONEY, CREDIT AND PRICES 1971 1972 1973 1974 1975 ____ 1977 - - (Billion CFAF outstanding end period) Money and Quasi Money 12.26 13.89 14.79 18.45 31.86 30.63 33.32 Bank Credit to Public Sector -0.82 -0.51 -1.16 -2.42 -2.95 -2.30 -5.34 Bank Credit tc Private Sector 8.53 10.41 12.73 16.45 32.45 32.10 37.00 (Percentages or Index Numbers) Money and Quasi Money as 18.4 17.5 23.7 19.3 29.6 23.8 21.4 Z of GDP General Price Index (1969 = 100) .. 117.3 118.9 141.8 155.3 167.8 182.11/ Annual percentage changes in: 2/ General Price Index 4.4 . 1.4 19.3 9.5 8.0 15.2- Bank Credit to Public Sector .. 37.8 -127.5 -108.6 -21.9 22.0 -132.2 Bank Credit to Private Sector 15.3 22.0 22.3 29.2 97.3 -1.1 15.3 Note: All conversions to dollars in this table are at the exchange rates noted on the following page. 1/ June 1977. 2/ First six months of 1977, on adjusted annual basis. .. not available  - 21 - ANNEX I Page 4 of 4 TRADE, PAYMENTS AND CAPITAL FLOWS BALANCE OF PAYMENTS 1972 1975 19761/ 19771/ MERCHANDISE EXPORTS (AVERAGE 1972-1976, RECORDED) (US $ million) US $ million % Exports of Goods, NFS 85.8 117.9 144.8 190.4 Cotton 13.3 35.2 Imports of Goods, NFS 127.5 182.8 226.6 297.1 Cocoa Beans 5.8 15.4 Resource Gap (deficit = -) -41.7 -64.9 -81.8 -106.7 Palm Products 14.2 37.7 All Other Commodities 4.4 11.7 Interest Payments (net) -2.9 -1.3 -0.4 -0.3 TOTAL 37.7 100.0 Workers' Remittances 3.0 15.0 17.1 15.1 Other Factor Payments (net) 0.0 0.0 0.0 0.0 Net Transfers 7.3 8.4 17.6 13.9 Balance on Current Account -34.2 -42.8 -47.5 -78.0 EXTERNAL DEBT, December 31, 1976 Direct Foreign Investment 4.8 1.9 0.0 10.6 US $ million Net MLT Borrowing 4.8 9.3 24.7 20.8 Capital Grants 19.0 20.6 25.9 44.7 Public debt (disbursed), incl. guaranteed 101.3 Other Capital (net) 1.9 12.0 10.9 1.9 Non-guaranteed private debt Other Items n.e.i. 2.8 -7.2 -9.6 0.0 Total outstanding and disbursed Use of Reservea (increase . -| 0A- 6.2 -4.4 0.0 Gross Reserves (end year)2! 28.4 15.0 19.2 20.6 Net Reserves (end year)V 23.7 23.8 22.7 12.8 DEBT SERVICE RATIO FOR 1976 -/ Petroleum Imports 4.0 15.1 17.1 21.2 - x as 2 of Total Imports 3.1 8.3 7.5 7.1 Public debt (disbursed) incl. guaranteed 4.2 Non-guaranteed private debt Total outstanding and disbursed EXCHANGE RATES (CFAF per US $) Year Period Average Fnd of Period 1972 252 256 IBRD/IDA LENDING, April 30, 1978 IBRD IDA 1973 223 230 (US million) 1974 241 222 1975 214 224 Outstanding and disbursed 0.0 31.4 1976 239 248.5 Undisbursed 0.0 25.4 1977 246 235 Outstanding inc. undisbursed 0.0 56.8 1/ Gross foreign assets of Central Bank. 2/ Net foreign assets of monetary system. 3/ Estimated. 4/ Preliminary estimate of ratio of debt service to exports of goods and non-factor services. not available WA2DA May 12, 1978  - 22 - ANNEX II Page 1 of 3 pages THE STATUS OF BANK GROUP OPERATIONS IN BENIN A. STATEMENT OF IDA CREDITS (as of April 30, 1978) Amount /1 US$ Million Credit (less cancellations) Number Year Borrower Purpose IDA Undisbursed One Credit fully disbursed 3.5 144-DA 1969 Dahomey Oil Palm 5.2 /2 0.0 /4 307-DA 1972 Dahomey Cotton 6.1 0.0 /5 415-DA 1973 Dahomey Roads 20.8 /3 4.7 583-DA 1975 Dahomey Rural Education and Training 4.0 3.8 716-BEN 1977 Benin Technical Assistance 1.7 1.7 717-BEN 1977 Benin Feeder Roads 5.5 5.2 746-BEN 1977 Benin Third Highway 10.0 10.0 TOTAL 56.8 25.4 of which has been repaid 0.0 TOTAL now outstanding 56.8 TOTAL now held by IDA 56.8 TOTAL undisbursed 25.4 /1 Prior to Exchange Adjustment. /2 Including a Supplementary Credit of $0.6 million made in 1974. /3 Including a Supplementary Credit of $9 million made in 1976. /4 Balance $24,448.00. /5 Balance $11,125.96.  - 23 - ANNEX II Page 2 of 3 pages B. PROJECTS IN EXECUTION Credit No. 307 Zou-Borgou Cotton Project; US$6.1 million Credit of May 24, 1972 The Project was to comprise the provision of staff and equipment to the National Agricultural Society for Cotton (SONACO) to administer agri- cultural extension, credit and primary marketing services; the establishment of a revolving fund to supply credit to cotton growers; construction of two cotton ginneries; rehabilitation of 620 km of feeder roads; applied research; and a feasibility study for agricultural diversification in the project area. The project initially reached appraisal production estimates but production has fallen considerably in the past three years. This was due to a com- bination of deficiencies in project management, input supply and extension services, unfavorable Government pricing policy and unfavorable climatic conditions. The project has been more successful in expanding the produc- tion of rice and hybrid maize and introducing ox-drawn cultivation. A non- quantifiable but important benefit of the project has been the organization of effective farmers groups. Credit No. 415 Second Highway Project; US$11.8 million Credit of July 3, 1973; Closing Date: December 31, 1977 Due to inflation and currency realignments, project cost estimates increased to US$23.2 million or 77 percent above the original cost estimates. The Association provided a supplementary credit of US$9.0 million on March 10, 1976. Construction of the Southern section of the Parakou-Malanville road was successfully completed in June 1977. Credit No. 583 Rural Education and Training Project; US$4.0 million Credit of September 5, 1975; Closing Date: June 30, 1981 This project consists of two main components: (i) buildings and equipment for a skills upgrading center in Cotonou; and (ii) technical assis- tance, buildings and equipment for an ongoing rural youth training program. The project is proceeding well, about on schedule. Constuction contracts have been awarded. The two project directors and the technical assistants are now in post. Credit No. 716 Technical Assistance Project US$1.7 million Credit of May 30, 1977; Closing Date: June 30, 1980 This project is designed to prepare the way for a rural development project. It would be carried out over two years and would include mainly provision for technical assistance to SONAGRI, the project's executing agency, in financial management and project preparation and evaluation, procurement of trucks and staff vehicles, provision of consultant services to make investment proposals for areas to be cleared of onchocerciasis, and in adaptive research in cotton and foodcrops. The six experts are in post and the project is starting well.  - 24 - ANNEX II Page 3 of 3 pages Credit No. 717 Feeder Roads Project; US$5.5 million Credit of May 30, 1977; Closing Date: September 30, 1981 This project consists of a three-year program for the improvement and subsequent maintenance of about 1,270 km of feeder roads, the purchase of highway maintenance equipment and spare parts, and technical assistance to the Ministry of Equipment. The equipment has been delivered and the technical assistance team recruited. Credit No 746 Third Highway Project US$10 million Credit of November 18, 1977; Closing Date: December 31, 1980 This project is designed to facilitate access to the Port of Cotonou by providing for the rehabilitation of a 107 km section of the country's main north-south highway; it also aims at expanding the highway maintenance program begun under the two previous highway projects, including the elimina- tion of the backlog of bituminous and laterite roads resurfacing. The credit is not effective yet, but the equipment has been ordered and the technical assistance has been recruited. The work is expected to start on schedule.  - 25 - ANNEX III Page 1 of 2 pages BENIN COTONOU PORT PROJECT Supplementary Project Data Section I: Timetable of Key Events 1. Project Preparation a. Port master development plan: BCEOM January 1975 b. Study of development alternatives: BCEOM November 1976 c. Study of port operations and cargo handling: April 1977 Port of Marseilles/FAC d. Detailed engineering, economic and financial August 1977 studies: BCEOM December 1977 2. Date of first mission to Cotonou April 1975 3. Date of first project brief May 13, 1975 4. Date of departure of appraisal mission September 26, 1977 5. Negotiations May lst-5th, 1978 Section II: Special Implementation Actions None Section III: Special Conditions The Government would: (a) prepare a plan of action by June 30, 1979 to improve the average time of transshipment and to increase the capacity of the transshipment facilities of the Parakou terminal and to have these improvements effective by December 31, 1980 (para. 30); (b) increase the productivity of the general cargo handling opera- tions within the port to ten metric tons per gang/hour within six months from the time that the civil works included in the project become fully operational (para. 37);  - 26 - ANNEX III Page 2 of 2 pages (c) assure the coordination of the tariff studies carried out by PAC, OBEMAP and OCBN (para. 47). (d) second senior staff acceptable to the Association to work alongside the engineering consultants and a Beninese counterpart to the project coordinator (para. 49); (e) incorporate in PAC's accounts by December 31, 1979 the replacement value of all fixed assets in use, and there- after to revalue its assets at least every five years (para. 60); (f) agree to reduce the balance of PAC's receivables by December 31, 1979, to about two months average gross revenues, or not more than 20 percent of gross revenues, and to introduce deterrents such as advance deposits (para. 60); (g) take necessary measures including tariff increases to achieve a minimum rate of return, before income tax, on average net fixed assets in use as revalued from time to time of 5 percent in 1980 and 8 percent thereafter (para. 61); (h) not to incur non-project capital expenditure exceeding CFAF 100 million per year until December 31, 1985 (para. 62). 2. Conditions of Effectiveness: (a) the appointment of the engineering consultants and the project coordinator (para. 49); (b) the conclusion of a Subsidiary Agreement between the Government and PAC (para. 53); (c) effectiveness of the financing agreements with the AfDB, BADEA, CIDA, FAC and Norway and the authorization of the loans of ADF and CCCE (para. 54).  _ x S N o