Zambia - Third Railway Project

Document of The World Bank FILE COPY FOR OFFICIAL USE ONLY Report No. P-2621-ZA REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN AND CREDITS TO THE REPUBLIC OF ZAMBIA FOR A THIRD RAILWAY PROJECT December 6, 1979 Ihis document has a restricted distribution and may be used by recipients only in the performance *if their official duties, Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit - Kwacha K 1.00 - US$1.30 WEIGHTS AND MEASURES 1 meter (m) 3.28 feet (ft) 1 kilometer (km) 2 0.62 miles (m{) 1 square kilometer (km ) 0.386 square miles (sq mi) 1 metric ton (ton) - 2,204 pounds (lb) GLOSSARY AND ABBREVIATIONS AfDB - African Development Bank CTC - Centralized Traffic Control EEC - European Economic Community KfW - Kreditanstalt fur Wtederaufbau M4PTC - Ministry of Power, Transport and Communications ODA - United Kingdom Overseas Development Administration OPECSY - OPEC Special Fund SIDA - Swedish International Development Authority TAZARA - Tanzania-Zambia Railway Authority URS - Unitary Railway System ZIMCO - Zambia Industrial and Mining Corporation Limited ZR - Zambia Railways Board GOVERNMENT OF ZAMBIA FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY ZAMBIA TIIIRD RAILWAY PROJECT LOAN/CREDIT AND PROJECT SUMMARY BORROWER: Republic of Zambia BENEFICIARY: Zambia Railways Board (ZR) AMOUNT: US$25.0 million (IBRD); US$15.0 million (IDA); and US$5.0 million (EEC Special Action Credit). TERMS: Loan is payable in 20 years, including 5 years of grace at an interest rate of 7.95 percent per annum. The Credits would be on standard IDA terms. RELENDING TERMS: US$45 million would be relent to ZR for a term of 20 years, including 5 years of grace at an interest rate of 7.95 percent per annum. PROJECT DESCRIPTION: The project comprises ZR's investment plan for 1980-83. It provides for renewing 112 km of track and extending and improving crossing loops; renewing the Centralized Traffic Control system and improving the telecommunications system; purchasing loco- motives and wagons, and the requisite spare parts; improving maintenance and handling facilities; and providing data processing facilities, technical assistance, training, and staff housing. The economic return on the total project over a 25-year period is 19 percent at both the official and shadow exchange rates. The most substantial uncertainty over the project concerns the expected traffic growth. However, even if traffic comple- tely stagnates, the project would still yield an economic return of 13 percent. The other uncer- tainty concerns the directional flow of Zambia's export/import traffic. In the event that more than presently estimated external traffic is carried via Dar-es-Salaam (the shortest route), the economic return would only decline to 15 percent. This docu_mot has a restricted distribution and may be used by recipients only in the performance of theif och) dties Its contents may not otherwise be disclosed without World Bank authorization.  - ii - ESTIMATED COST: US$ Million Local Foreign Total 1. Track 11.0 18.4 29.4 2. Signalling and Telecommunications 3.1 17.3 20.4 3. Locomotive and Rolling Stock 5.0 51.2 56.2 4. Workshops and Depots 1.2 2.7 3.9 5. Handling Equipment 0.3 2.6 2.9 6. Staff Housing 9.4 1.2 10.6 7. Data Processing Facilities 0.5 2.1 2.6 8. Technical Assistance 3.0 8.5 11.5 Total without contingencies 33.5 104.0 137.5 Physical contingencies 1.2 2.7 3.9 Price contingencies 19.4 23.5 42.9 Taxes 3.9 _ 3.9 Total 58.0 130.2 188.2 Total (net of taxes) 54.1 130.2 184.3 FINANCING PLAN: US$ Million Total _ World Bank Loan 25.0 13 IDA Credit 15.0 8 EEC Special Action Account Credit 5.0 3 KfW 23.3 13 Japan 16.3 9 SIDA 13.0 7 AfDB 9.7 5 OPECSF 4.5 2 EEC 8.4 5 ZR 50.1 1/ 27 ODA2/ 14.0 8 Total 184.3 100 ESTIMATED DISBURSEMENT: US$ Million (IBRD Fiscal Years) Bank/IDA 3/ 1980 1981 1982 1983 1984 Annual 0.25 5.25 14.5 14.0 6.0 Cumulative 0.25 5.50 20.0 34.0 40.0 1/ US$3.9 million in taxes not included. 2/ Tenative, reference para. 50. 3/ IDA funds will be drawn down first.  - tit - EEC Annual 3.0 2.0 CumulatLve 3.0 5.0 RATE OF RETURN: 19 percent APPRAISAL REPORT: Report No. 2541-ZA dated November 16, 1979   INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN AND CREDIT TO THE REPUBLIC OF ZAMBIA FOR A THIRD RAILWAY PROJECT 1. I submit the following report and recommendation on a proposed loan of US$25.0 million equivalent and proposed credits of US$20.0 million equiva- lent to the Republic of Zambia to help finance a Third Railway Project. The loan would have a term of 20 years including 5 years of grace at an annual interest rate of 7.95 percent. The credits would be on standard IDA terms. One credit of US$15.0 million equivalent would be made from IDA resources; a second credit of about US$5.0 million equivalent would be made from the European Economic Community (EEC) Special Action Account administered by the Associat:ion in accordance with the terms of the agreement of May 2, 1978, between the Association and the EEC. The grant element of the combined IBRD loan and IDA/EEC credits is 44 percent. IBRD/IDA/EEC funds totalling US$45 million would be onlent to Zambia Railways (ZR) for a term of 20 years, including 5 years of grace at an interest rate of 7.95 percent per annum. Additional iinancing has been arranged from a number of external sources. KreditanstaLt fur Wiederaufbau (KfW) is providing two loans totalling US$23.3 million equivalent for 30 years including 10 years of grace at an annual interest ral:e of 2 percent; the Government of Japan is providing a loan of US$16.3 mil:Lion equivalent fcr 25 years including 7 years of grace at an annual interest rate of 4.5 percent; the Swedish International Development Authority (SIDA) is providing a grant of US$13.0 million equivalent; the African Development Bank (AfI)B) is providing a loan of US$9.7 million equiva- lent for 15 years including 5 years grace at an annual interest rate of 8 percent; ithe European Economic Community is providing a credit of US$8.4 million equLvalent on terms similar to standard IDA terms; and the OPEC Special Fund (OPECSF) is provriding a loan of US$4.5 million equivalent for 20 years including 5 years of grace at an annual interest rate of 4 percent. PART I - THE ECONOMY 2. A basic economic report on Zambia (1589b-ZA) was issued in December 1977. An updating economic rmission visited in May 1979 and its salient find- ings are reflected below. The most recent economic data are summarized in Annex I.  3. With its mineral reserves and plentiful land area suitable for crops and livestock, Zambia, though a landlocked country, has the potential for rapid, sustained development. Economic and social goals since indepen- dence (October 1964) have been security of transport routes to the sea, diversification from copper dependency, more equitable distribution of income and expanded educational and training opportunities. Progress toward achieving these goals has been below potential due to structural imbalances in the econ- omy which have been exacerbated by the prolonged turmoil within the region. 4. Despite the high rates of savings and investment, both of which have averaged 31 percent of GNP since independence, real growth over the last decade has averaged only 2.6 percent per year, less than increases in popu- lation currently estimated to be 3.1 percent per annum. Diversification efforts have lagged; copper mining still provides 90 percent of foreign exchange earnings and 25 percent of gross value added, while agriculture accounts for only 14 percent of GDP, the same as at independence. Mean incomes in rural areas are well below the average per capita income level of US$480 in 1978 and are estimated to be less than one-third the average earnings of urban dwellers. This imbalance has caused migration (nearly 40 percent of the population is urban) and unemployment in urban areas. Increased educational opportunities and construction of the TAZARA railway through Tanzania to Dar-es-Salaam are the main areas where substantial pro- gress has been made. 5. The service and manufacturing sectors have grown at rates of 8-10 percent annually until the recent depression (para. 6). Performance in other sectors has been generally poor since independence. Manufacturing activity has provided additional employment opportunities for some urban dwellers but the sector is still relatively small (contributing 10 percent of GDP), very capital intensive and heavily dependent on imported inputs. Much of the growth in services can be related to the country's success in expanding educational opportunities and to increasing government activity to the point where the services sector now constitutes 38 percent of GDP. Output in the mining sector has stagnated, and in recent years fallen, indicating the economy's extreme sensitivity to copper price fluctuations and increments in mining costs. Miners' wages are still relatively high and, through demon- stration effects, continue to impart an upward bias to Zambia's labor costs. Expansion of agricultural output has averaged 2 percent per year over the past decade, less than the overall growth rate and well below potential. The Government has begun to make favorable alterations in agricultural development policy but the effects are yet to be fully felt. The Current Economic Crisis and the Government's Response 6. Since 1975 Zambia has been in the midst of an economic and financial crisis brought on by a long depression in copper prices and difficulty in transporting goods to and from the sea. By end of 1978 the impact of these problems had been severe enough to erase all of the per capita income gains made since independence. Copper prices fell by 40 percent in 1975 and,  - 3 - though higher now, are still (mid-1979) only half of their real 1974 level. These lower prices have markedly reduced foreign exchange earnings and govern- ment revenues, and precipitated the need for substantial economic adjustment. Government revenues from minirng fell from K 340 million (53 percent of total revenue) in 1974 to K 60 million in 1975 and to zero since then. Nominal government expenditures have been held constant and revenues obtained from non-mining sources have been increased by about 25 percent. Still, large deficits, averaging 15 percent: of GDP have occurred each year since 1975 and had been financed, until recently, largely by borrowing from the central bank. The nominal value of imports has remained at approximately its 1973 level meaning a drastic decline (by about 55 percent) in their real values. Even with the curtailment of imports, large current account deficits have occurred and have been financed to a significant extent by short-term capital inflows, notably a buildup in arrears -in import payments (at one point, US$625 million). Reserves have also fallen and net foreign assets, which are affected by borrowings from the IM, now equal a negative US$350 million. 7. Adding to Zambia's difficulties have been problems transporting imports and exports. After the closing of the border with Rhodesia in 1973, construction of TAZARA Railway was started. This, when completed in 1975, altered Zambia's traffic flows such that 75 percent of Zambia's freight began moving along transport routes through Tanzania to the port of Dar-es-Salaam. Effective capacity of these routes has recently fallen partly due to technical and economic problems (i.e., lack of spares, faulty locomotive design, road and rail-bed washouts, etc.) and partly for managerial reasons. The effects of the transport problems were so severe that by mid-1978 it was estimated that 140,000 tons of copper (nearly 25 percent of a year's output) remained unsold due to the transport difficulties. 8. The Government's reaction to the crisis, though belated, has been decisive and effective since the signing of the IMF Standby Agreement in April 1978. The devaluation of the Kwacha by 10 percent and the opening of the southern railway route in October 1978 have improved copper exports and profits. The Goverrment has controlled import values and reduced the rate of credit expansion and the use of deficit financing. Collections of non-mining taxes have risen, wage increments have been suppressed and arrears in import payments have been reduced, perhaps by as much as US$150 million. The effec- tiveness of these measures coupled with a reduction in copper stocks and an increase in copper prices (to about US$0.82 in mid-1979 as opposed to the average 1978 price of US$0.63 per pound), have halted the slide in Zambia's economic fortunes. Creditworthiness 9. Prior to 1975 Zambia's external borrowing was small. In 1974 total indebtedness was US$762 million (US$162 per capita) and the debt service ratio was under 10 percent of exports. Since then borrowing has risen sharply (over US$1,500 million by the end of 1978) and the debt service ratio has risen to about 25 percent of exports. Additionally, Zambia has allowed a buildup of external payment arrears, currently equal to about US$475 million, and has "borrowed" (purchased) about US$400 million of foreign exchange from the IMF. With a 24 percent share in debt outstanding and disbursed at the  - 4 - end of 1977, the Bank is the country's largest creditor, just ahead of the People's Republic of China (22 percent) and private banks (23 percent). 10. Although Zambia faces debt servicing difficulties for some time to come, government officials are aware of the potential magnitude of the problem and of the requirements for proper debt management. Government actions over the past 18 months, included tight control of imports, reductions in payments arrears and continued compliance with the terms of the IMF agree- ment. The Government has provided evidence of its resolve to deal with the debt service burden. Meanwhile, Zambia will continue to be creditworthy for some IBRD lending as well as eligible for some IDA credits. However, overall Zambia should benefit from higher concessionality in its external borrowings. We anticipate that between now and the mid-80s, debt servicing (on debt in existence at end-1978 and on projected new capital inflows) will continue to claim over 20 percent of export earnings. Thereafter, if projected real increases in copper prices occur, the figure would fall considerably and Zambia's creditworthiness enhanced accordingly. PART II - BANK GROUP OPERATIONS 11. Since 1956, the Bank has made 26 loans and three credits to Zambia totalling about US$517.1 million (net of cancellations). Thirteen loans and one credit have financed power, transportation and communications projects. Four loans for education have helped expand Zambia's secondary and higher education system, teacher training, and commercial, agricultural and tech- nical education. Two program loans have helped Zambia maintain its develop- ment program in periods of severe economic dislocation. In agriculture, the Bank has provided five loans and one credit for industrial forest plantations, livestock, commercial crops and integrated family farming and coffee produc- tion. Other loans have assisted Zambia's urban development program and, through the Development Bank of Zambia, its manufacturing and industrial sectors. A technical assistance credit was provided to help the Government improve its planning and project preparation capabilities. 12. Implementation of Bank-assisted projects in Zambia has proceeded reasonably well, although in recent years the sharp contraction of the economy (para. 6) and the resulting shortages and sharp budgetary cuts have had a deleterious effect on the general progress of most projects. Since the signing of the IMF Standby Agreement in 1978, budget deficits have been strictly controlled, and the Government has had extreme difficulty meeting local cost requirements in some Bank projects. In the telecommunications, transport, urban and education projects, budget cuts have slowed procurement and delayed implementation. 13. To date, IFC has made eight investments in Zambia. The first, in 1972, was US$1.1 million for expanding the Zambia Bata Shoe Company, Ltd. Subsequent investments in Bata were approved in 1973 and 1975. In 1975 and 1978 two investments in Century Packages, Ltd. for a packaging materials factory totalling US$1.1 million were made. An IIC investment of US$550,000 equivalent in the share capital of the Development Bank of Zambia was made  -5- in February 1976. A loan of $30 million to the Nchanga Consolidated Copper Mines Ltd. for a cobalt production project was approved on September 4, 1979, and is expected to be signed shortly. A summary statement of Bank loans, IDA credits, and IFC investments, together with notes on the execution of ongoing projects is contained in Annex II. 14. The Bank Group expects to continue supporting government programs to (i) diversify the economy to reduce dependence on copper; (ii) narrow the gap between urban and rural incomes; (iii) develop managerial and technical skills to accelerate development and reduce dependence on expatriates, and Bank Group lending reflects the Government's growing emphasis on directly productive sectors, particularly agriculture and related activities. A third program loan is under consideration, subject to the Government's decisions on appropriate adjustment policies and a medium-term investment program. A project to expand agricultura:L production in the Eastern Province, through strengthening extension and marketing services, and providing farm inputs on credit, is currently being appraised; and a similar project for the Southern Province is under preparation. 15. While the Bank Grouip's program will continue to emphasize agricul- tural and rural development, it also will help improve manufacturing, indus- try, and physical and social infrastructure. Projects are currently being prepared for constructing a mill to produce fiber board, wafer board and particle board, for improving and expanding water supply systems in several smaller towns and villages, and for extending a second line of credit to the Development Bank of Zambia. PART III - THE TRANSPORT SECTOR 16. Zambia depends heavily on its transport system which must move sizable volumes of exports and imports (each is 35-40 percent of GDP) and haul goods within the large, sparsely populated country. The transport net- work comprises approximately 35,000 km of roads, 2,000 km of railways, 150 airports and 1,700 km oil pipeline from Dar-es-Salaam to Ndola in Zambia's copper producing area. The internal transport system has mainly developed in conjunction with the railway which runs approximately north-south, beginning in Livingstone on the southern border, passing through Lusaka and then going north through the copperbelt. The bulk of Zambia's external trade traditionally has been carried by rail, to the west through Angola, to the east through Tanzania and Mozambique, or to the south through Rhodesia and South Africa. Recently road routes through Tanzania and Malawi also have become significant. 17. ZE' handles most internal rail transport while road haulage within the country is usually undertaken by private operators at rates influenced by a parastatal. company, National Transport Corporation. Parastatal organizations dominate 2xt:ernal transport. Three such companies, jointly owned by Zambia and Tanzania, control the oil pipeline, the TAZARA rail line and the Zambia- Tanzania Road Service. Zambia Airways Corporation, another parastatal,  provides domestic and international services, which link the major cities in Zambia with other eastern African countries and Europe. 18. Two problems beset Zambia's transport. One is the closure of the Rhodesia/South African and Angolan routes (para. 7) which has also been exacerbated by management, planning and technical problems. The other is a decline in transport capacity and the quality of services attributable to longer term neglect of maintenance and rebuilding needs for the rail and road networks. The result has been delays, loss of goods and marked increases in the real cost of transport services. 19. As government involvement in the transport sector is large, con- siderable planning and control is necessary. In the short term, control over external trade is maintained through the Contingency Planning Secretariat which was established under the President's Office following the border closure with Rhodesia in 1973. The contingency planners handle the day-to-day administration of the external transport network and also address the periodic transport crises that occur as a result of breakdowns, closures, or unexpectedly large freight shipments. Longer term planning, including allocation of invest- ment resources, is coordinated by the National Commission for Development Planning which is responsible for the drafting of the national development plans and for their implementation. The Second National Development Plan allocated K 311 million to the transport sector or 28 percent of total public investment. Investment in the transport sector will be a somewhat smaller percentage of the total in the Third National Development Plan inasmuch as the Third Plan places more emphasis on directly productive investments. The Railway Sub-Sector 20. Zambia has two separate railway lines: ZR which runs from Victoria Falls in the south, where it ties into the Rhodesia Railways, to the border with Zaire on the north, where it joins with the Societe Nationale des Chemins de Fer Zairois (which, in turn, is linked to the Benguela line in Angola). TAZARA, jointly owned by the Governments of Zambia and Tanzania, links ZR and Kapiri Mposhi, in Zambia's copperbelt, to the port of Dar-es-Salaam in Tanzania. 21. Prior to 1973, about two-thirds of Zambia's external rail traffic went through Rhodesia and Mozambique or South Africa. The remainder went through Zaire and Angola (the port of Lobito). These two routes have adequate capacity to carry Zambia's traffic but are vulnerable to political and other risks outside Zambia's control. Thus, the decision to construct TAZARA was to spread risk rather than to respond to insufficient carrying capacity. When the Rhodesian border was closed in 1973 and the Benguela Railway ceased oper- ating in 1977, TAZARA was left as Zambia's only direct railway link to the sea. 22. TAZARA was designed with sufficient capacity to carry all of Zambia's external rail traffic. Since completion in 1975, however, technical problems have severely limited its capabilities. As a result, the route via Rhodesia was reopened to Zambian traffic in October 1978 (para. 7). Although this route provides a link with East London and other South African ports (the Rhodesia/Mozambique border remains closed), it is subject to interruptions  from the war and is heavily congested, partly because traffic in Rhodesia moves only during daylight. 23. If the Benguela Railway reopens, the Southern route remains opera- tive and TAZARA's capacity improves, Zambia will have surplus external trans- port capacity. However, it is unlikely that Zambia will depend on any one external route, given its lack of control over events in neighboring countries and its essential need for at least one fully operating route to the sea. Moreover, the availability and capacity of seaports are important factors in Zambia's use of external routes. ZR 24. Prior to independence, what is now ZR comprised the Northwestern Region of the Rhodesia Railway. After the breakup of the Federation of Rhodesia and Nyasaland in 1963 and Zambia's independence in 1964, ZR was born. Ownership of all Rhodesia Railway motive power and rolling stock left in Zambia at that time was vested equally in Rhodesia and Zambia (and is still carried separately on ZR's books). Upon separation of the Zambian portion of the Rhodesia Railway, most expatriate management and staff chose to relocate in Rhodesia, leaving ZR critically short of qualified personnel. Since 1971, a Canadian Government-financed team has helped ZR in staffing, training and improving operations. 25. Organization, Management and Staff. ZR is a parastatal enterprise, headed by a General Manager who until recently reported to the Ministry of Power, Transport and Communications (MPTC) through a board of directors. From the beginning of 1979, however, in a major reorganization, the Govern- ment announced it was transferring responsibility for most parastatals, including ZR, to the Zambia Industrial and Mining Corporation Limited (ZIMCO), the Government's holding company. The Prime Minister is chairman of ZIMCO and the Chairmar. of ZR is one of ZIMCO's executive directors. The demarcation of responsibilities has not been fully clarified, but at present MTPC con- tinues to supervise policy matters, such as tariff changes and new invest- ments, while ZIMCO provides guidance on operational matters. This new arrangement is working satisfactorily. The Government, however, is in the process of preparing a bill for presentation to Parliament in the near future which would repeal the Zambia Railways Act and concurrently make provision for the incorporation of ZR under the Companies Act, with the same capitalization as at present, and with the majority of its shares held by ZTICO. 26. ZR's four operating departments (i.e., transport, telecommunications and civil and mechanical engineering) as well as supporting departments and activities report directly to the General Manager, who is assisted by an Assistant General Manager (currently the head of the Canadian railway manage- ment team). ZR's three operational districts, Northern, Central and Southern, report to the Operations Manager. 27. Present ZR management is young and aggressive, but dependent on expatriate staff for senior and middle management and for highly technical jobs. Total. staff numbers about 8,000, fifty of whom are expatriates. It is expected that expatriate assistance can be substantially reduced in about  - 8 - five years, when the ZR training school (Kabwe) and Zambian and overseas institutions have produced enough skilled Zambian personnel. While the school at Kabwe is able to train sufficient numbers of lower-level staff, it is not equipped to produce senior management and technical specialists. Some over- seas training for junior engineers and technicians also is required. 28. Track, Equipment and Facilities. ZR operates 1,273 km of single track, of which 848 km (Nkana-Kitwe to Victoria Falls) are main line. Although the Railway has been progressively renewing its track (replacing 80 lb/yd rails on the main line with heavier rails), at least 205 km of old track is badly in need of replacement. In addition, there is urgent need to replace a large number of old wooden sleepers, whose condition varies from fair to poor. Track conditions cause relatively few derailments, but do force speed restric- tions on many sections. 29. Similarly, ZR's locomotives, rolling stock and signalling facilities are inadequate to meet present demands. The signalling system is 20 years old and obsolete. (There is no signalling at all on part of the main line or on branch lines.) ZR has 64 main line and 12 shunting locomotives, but because six are heavily damaged and spare parts are insufficient, usually no more than 48 are available at any time for service. To supplement its fleet, ZR leases four locomotives from South Africa. While almost one-half of the Railway's some 5,900 wagons are in relatively good condition, approximately 2,000 (of the 3,296 acquired at the time ZR split from the Rhodesia Railways, para. 24) are more than 30 years old; many of these are older than 50 years. These wagons are in poor condition and cannot be used for transit traffic. Wagons also are idle due to a lack of spare parts. Maintenance and repair, in many instances, is inefficient and subject to delays, due mainly to the lack of certain tools and machinery, and inadequate diesel maintenance and wagon repair facilities. 30. Operations and iAnancial Performance. ZR's freight traffic over the past several years has averaged about 5 million tons yearly, but has fluctuated considerably depending upon the availability and capacity of the various links to the sea. In 1978, ZR estimates it carried 3 million tons of local traffic, 1.4 million tons of exports and imports and 0.6 million tons of Zairean transit traffic. Much of Zambia's domestic and almost all of its export traffic is connected with copper production. Passenger traffic, estimated at 1.5 million in 1978, has grown steadily. 31. Largely due to the loss of qualified personnel in 1964-65 (para. 24), ZR's efficiency declined steadily until 1974, when it incurred a K 6.1 million overall loss. (The Government offset ZR's losses during these years with subsidies.) After that, however, the Railway began to recover gradually, and has shown a net profit (K 3.7 million in 1978) each year since 1975. ZR has registered positive cash flows in all years except 1975 and 1978. A shortfall of K 4.1 million in 1978 resulted mainly from an unusually large investment in fixed assets not completely covered by long-term debt. ZR's liquidity also has steadily improved since 1973. Although liquidity currently is satisfactory, amounts owed ZR primarily by other government enterprises has risen to the equivalent of approximately 170 days' revenues.  - 9 - 32. The Government is the sole owner of ZR, but announced in January 1979 the transfer of its ownership to ZIMCO. In addition to its equity (K 35 million permanent and K 35 million redeemable capital), the Government holds K 27 million (1977) of ZR long-term debt. The Railways owes another K 8 million in long-term debt to other creditors. Reserves in 1978 were K 30.3 million. These reserves include a "depreciation reserve" to cover replacement of assets which ZR received at the time it was split off from the former Rhodesia Railway (para. 24). They are not carried in ZR's accounts since they are not considered to be assets wholly owned by ZR. However, approximately K 40 million owing from the Unitary System is included in ZR's assets. The final disposition of the Unitary System assets and its effect on the ZR's accounts will be determined only after the Unitary System is formally dissolved. Previous Bank Group Experience 33. The Bank provided two loans (guaranteed by the UK) totalling US$23.9 million to assist railway development in Zambia during its pre-independence period. The projects, which were completed satisfactorily, helped to finance locomotives, rolling stock, workshop equipment and track improvement. PART IV - THE PROJECT 34. The project was identified in September 1978 and prepared by ZR with assistance from the Bank. It was appraised in January 1979 and nego- tiations were held in Washington, D.C. from October 31 to November 2, 1979. The Zambia Delegation was led by Mr. B. Monze, Permanent Secretary in the Ministry of Power, Transport and Communications. A staff appraisal report entitled "Zambia: Third Railway Project" (No. 2541-ZA, dated November 16, 1979) is being circulated separately. A supplementary project data sheet is provided as Annex III. Objectives and Description of the Project 35. The project comprises the final four years of ZR's 1979-83 invest- ment plan. The proposed investments are urgently needed to avoid deterioration in the Railway's operations and to expand its capacity to handle increasing traffic up to 1986. 36. The project will provide for: (a) renewing and improving 112 km of track and extending and improving crossing loops; (b) renewing the centralized traffic control system and improving the telecommunications system; (c) purchasing locomotives and wagons and spare parts for locomotives and wagons; (d) improving maintenance and handling facilities;  - 10 - (e) improving and constructing staff housing; (f) data processing facilities; and (g) advisory services at senior and middle management levels and training at all levels to reduce and ultimately eliminate ZR's dependence on expatriate managerial and technical personnel. Project Details 37. Track. The 205 km of track between Mookamunga and Livingstone is due for upgrading. One hundred and ninety-one km of rail on this section is 30 years old and the remainder 18 years old; wooden and steel sleepers vary in age from 15 to 30 years. The ballast also is badly in need of replacement. The project will replace 112 km of 80 lb/yd rails with new 90 lb/yd rails, renew ballast, replace old sleepers with concrete ones and respace and lengthen crossing loops. Provision also is made to replace the main line bridge, more than 60 years old, over the Kafue River. 38. Signals and Telecommunications. The existing signalling system on the main line between Nkana-Kitwe and Livingstone is 20 years old, obsolete and costly to maintain. It will be replaced with a new Centralized Traffic Control (CTC) system, and the entire telecommunications network will be improved. The installation of the new signals and circuitry will be coor- dinated and carried out concurrently with the track renovation. 39. Locomotives. The existing locomotive fleet is insufficient for present traffic needs. Trains are standing waiting for locomotives, in some cases blocking yards. The project provides for rehabilitating four heavily damaged locomotives and procuring, ten additional locomotives to meet the forecasted traffic levels. 40. Rolling Stock. ZR is operating more than 3,000 wagons belonging to the Unitary Rhodesia-Zambia Railway System. Some 1,000 of these old wagons have to be scrapped during the project period. ZR needs 1,100 wagons to replace the 1,000 wagons and to provide adequate capacity to carry the forecast traffic until 1986. Of these, 185 were delivered early this year, leaving a gap of 915 which the project provides for. At present, numerous wagons used to store grain and other goods, are not available for regular service on the railway. To help with this problem, the Government will have ZR complete a feasibility study by December 31, 1981 to make recommendations concerning storage and handling facilities required by ZR and its major customers, to improve ZR's operations (Section 3.05 of the draft Development Credit Agreement). 41. Spare Parts. The availability of locomotives, wagons, passenger coaches and railcars is low, principally because of lack of spare parts. To bring idle motive power and rolling stock back into service, and to achieve acceptable levels of availability, the project provides for ZR's spare parts requirements for both rehabilitation and regular maintenance. To ensure that ZR can obtain imported spare parts in a timely fashion, the  - 11 - Government has provided assurances that it will take all reasonable action required for the prompt issuance of import and other permits and licenses required for acquiring and importing necessary spare parts (Section 3.06 of the draft Development Credit Agreement). 42. Workshops and Depots. The workshop in Kabwe, although well designed, lacks minor equipment and tools, thereby necessitating the high cost of sending critical items for repair abroad. In order to obviate this need, the project provides for minor equipment for repairing traction motors and generators. The project also provides for minor machinery and tools needed for the motive power, smithy and foundry shops, and for assembling new freight wagons which will be partly procured in a "knocked down" condi- tion; and a new wheel lathe with a higher capacity. 43. At present, the Kabwe depot for running maintenance of diesel loco- motives does not have sufficient capacity and locomotives have to be sent to the Kabwe workshop for service. Furthermore, the ceilings of the depot, which is an old steam locomotive shop, are too low to carry out exchange of heavy locomotive units conveniently. Present working methods are thus inefficient and costly. To improve maintenance and reduce costs, the project provides for extension of the depot. 44. The tracks for wagon repair are in the open air, primitive and of low capacity. Wagon repairs cannot be done for long periods during the rainy season, resulting in reduced wagon availability. The project provides for rebuilding the repair tracks at Ndola, Kitwe, Kabwe and Livingstone by laying the rail on concrete slabs, roofing over the tracks, and equipping the working area with small cranes. 45. Handling Equipment. ZR is short of equipment for loading and un- loading wagons, resulting in the wagons remaining at the terminals longer than necessary and thus reduced wagon utilization. The project provides for handling equipment at major stations to improve wagon utilization. 46. Staff Housing. Most of the employees live along the rail line, in small villages or in the bush, in houses ZR owns. ZR also provides housing for its employees at its head,quarters at Kabwe. No improvements have been made to these facilities for a number of years and to retain its staff, ZR needs to increase and improve its housing stock. The project will provide for improvements to the existing housing stock and for a limited amount of new staff housing. Most of the new staff housing, comprising four-room cottages, is for lower level staff. 47. Technical Assistance and Training. Until trained Zambian staff can take over all operations, ZR will need expatriates either in executing positions or as advisers. The project provides for 190 man-years of tech- nical assisi:ance which inclucles consultants needed for a productivity study at the Kabwe workshop, for a railway electrification feasibility study, for a study to determine whether the railway line between Mulobezi and Livingstone should be upgraded or replaced by a road and for improving the planning capability of MPTC and ZR. ZR has agreed that the qualifications, experience and terms of reference of the consultants would be acceptable to the Bank  - 12 - Group (Section 2.04 of the draft Joint Project Agreement). The project also includes overseas and local training for senior and middle level managers, and equipment and materials for the Kabwe training school to improve the training of skilled lower level staff. ZR has about 50 expatriates at senior and middle management levels who gradually will be replaced over the next ten years. During the project period, ZR expects to train 15 local staff to fill some of these positions, and it will provide the Bank Group with a detailed training program for senior and middle level staff as a condition of loan and credit effectiveness (Section 5.01(c) of the draft Development Credit Agreement). Project Costs and Financing 48. Projects costs are estimated at about US$188.2 million, of which US$130.2 million would be the foreign exchange component (69 percent). Local costs would amount to about US$58.0 million (31 percent), including US$3.9 million in taxes and duties. The cost estimates are based on recent quotations and bids for similar materials and equipment, updated to 1979 prices. A physical contingency of 25 percent has been provided for replace- ment of the Kafue Bridge, since only preliminary studies have been done so far. Quantities for the other items can be considered as fixed. Price contingencies have been provided as follows: for materials and equipment, 1980 onward - 6 percent; for local costs, 1980 - 15 percent; 1981 - 10 percent and 1982 onward - 7 percent. The staff month cost of advisory services is approximately US$2,300 and for consultant's services, about US$8,000. 49. External financing will meet the project's foreign exchange costs (US$130.2 million) and part of its local costs (US$4.0 million) with ZR providing the remaining local costs (US$54.0 million) from its internal resources. The proposed Bank Group financing of US$40 million (US$25.0 million IBRD/US$15.0 million IDA) will cover 21 percent of the project's total financing. The IBRD loan will be repaid over 20 years, including 5 years of grace, at an annual interest rate of not less than 7.95 percent; the IDA credit will be on standard terms. A US$5.0 million credit, administered by IDA, will be provided from the EEC Special Action Account in accordance with the terms of the Agreement of May 2, 1978 between IDA and the EEC. The loan and credits will be onlent to ZR, under a subsidiary loan agreement, on terms and conditions satisfactory to the Bank Group; these will include an annual interest of not less than 7.95 percent and repayment in 20 years, with 5 years of grace (Section 3.01(b) of the draft Development Credit Agreement). ZIICO/ ZR will bear the foreign exchange risk. Execution of the subsidiary loan agreement is a condition of effectiveness of the agreements relating to the proposed loan and credits (Section 5.01(a) of the draft Development Credit Agreement). The Bank Group financing and EEC Special Action Credit will provide all of the foreign exchange costs of track improvement (except for the Kafue bridge) and related plant and machinery, and telecommunications equip- ment, and part of the foreign exchange costs of wagons, spare parts, work- shops, data processing facilities and technical assistance. 50. Additional external financing (US$75.2 million) has been firmly arranged, on a parallel financing basis, from the following sources: KfW (US$23.3 million); Japan (US$16.3 million), SIDA (US$13.0 million); AfDB  - 13-- (US$9.7 million), EEC (US$8.4 million), and OPECSF (US$4.5 million). In addition, ODA has expressed a strong interest in providing about US$14.0 million equivalent for rehabilitating the Kafue Bridge, but is not in a position to make a firm commitment until a current review of available funds is completed,expected to be around April 1980. This schedule is acceptable since work on the Bridge carnot start until 1981, following the completion of design and engineering studies (also financed by ODA), currently in pro- gress. Hence, effectiveness of all external financing agreements, except for the ODA agreement, will be a condition of effectiveness of the proposed IBRD loan and IDA credit (Section 5.0l(b) of the Draft Development Credit Agreement). Project Implementation 51. ZR will implement the project through its existing operational staff, supplemented by project-financed technical assistance. To measure progress in meeting anticipated improvements in ZR's efficiency and produc- tivity, ZR has agreed to a comprehensive set of operational targets for 1982 and 1984 (Section 3.05 of the draft Joint Project Agreement). The major goals include: (i) increasing average diesel locomotive availability from 63 percent in 1978 to 70 and 75 percent in 1982 and 1984; (4i) improving average wagon availability from 80 percent to 85 and 90 percent during the same period; and (iii) reducing turnaround time for wagons carrying freight and minerals by an average of two days between 1978 and 1984. As a result, overall productivity per available wagon per year should increase from 240 ton-km to 300 ton-km in 1984, and staff productivity--as measured by 1,000 traffic units (ton-km plus passenger-km) per employee--will improve from 214 to 250 by 1984. Procurement and Disbursement 52. Equipment and material financed by the Bank Group will be procured through international competitive bidding in accordance with Bank Group Guide- lines, except for (i) small orders for under US$50,000 each, but for not more than US$500,000 in total; and (ii) critical spare parts, expected to cost about US$3 million, which are available only from the original equipment manufacturers. These items will be procured through selective competitive bidding procedures acceptable to the Bank Group. Equipment financed under the EEC Special Action Credit Agreement will be procured in accordance with provisions in the EEC Special Action Credit Agreement which limits bidding to EEC member countries and IDA member countries eligible to receive Special Action Credits. Goods and services financed by the other external financing agencies will be procured according to the standard procedures of these institutions. 53. Bank Group funds will be disbursed for (i) 100 percent of foreign exchange costs or 75 percent of local expenditures for track materials, telecommunications, equipment, wagons, spare parts and workshop and related equipment, and (ii) 100 percent of foreign exchange costs for data processing facilities, technical advisory services, staff training and studies. EEC funds will be disbursed for 100 percent of the foreign exchange costs or 75 percent of the local costs for telecommunications equipment for ZR's Southern district.  - 14 - Financial Covenants 54. In general, ZR has operated profitably, although for a period in the early 1970s it suffered net losses (para. 31). While the Government provided the necessary funds during the years of operating losses, this practice in general does not encourage financial discipline. In the future, government payments to ZR will be limited to those services which ZR performs at the Government's direction (Section 3.04 of the draft Development Credit Agreement). While ZR's liquidity has improved steadily during 1973-77, the amounts owed to ZR, primarily by other parastatals, have increased to the equivalent of approximately i70 days revenues. The Government and ZR will undertake to reduce the amount of ZR's accounts receivable to the equivalent of 45 days' revenue by December 31, 1980 (Section 3.03 of the draft Develop- ment Credit Agreement and Section 4.06 of the draft Joint Project Agreement). Furthermore, to ensure that ZR's cash flow during project implementation is not impaired, it will consult with the Bank Group whenever investments in any one year beyond those included in the proposed project are estimated to exceed US$2.0 million (Section 4.03 of the draft Joint Project Agreement). Regarding its overall debt position, ZR will not incur any further debt unless its operating surplus for the fiscal year, or the twelve consecutive months immediately before the date of occurrence (whichever is greater), is at least 1.5 times the maximum debt service requirements of any succeeding year (Section 4.04 of the draft Joint Project Agreement). 55. At present ZR's assets are valued on a historical basis, and con- sequently their true replacement cost is unknown. To permit a more accurate assessment, ZR will revalue its assets at current replacement cost, effective January 1, 1981, and at annual intervals thereafter (Section 4.05(ii) of the draft Joint Project Agreement). ZR expects to generate sufficient revenues to meet operating costs (including depreciation), debt service charges, and to finance approximately 30 percent of its future capital development program. To achieve this level of income, ZR will need to set tariffs to earn an 8 percent rate of return on assets in 1980 (valued on an historical basis). Thereafter ZR will be expected to earn an 8 percent return on revalued assets, provided, however, that if this return appears to yield a cash flow in excess of ZR's requirements, a revised return will be agreed upon mutually between the Government, ZIMCO, ZR and the Bank Group (Section 4.05 of the draft Joint Project Agreement). Project Justification 56. The project's benefits depend primarily on two factors: the growth of future traffic and the distribution of Zambia's external rail traffic between the Lobito, Dar-es-Salaam and the southern routes. Freight traffic is estimated to increase from 5.0 million tons in 1978 to 6.3 million in 1989, an annual growth rate of just over 2 percent (which is consistent with a pro- jected 4 to 5 percent annual increase in real GNP). Local traffic (64 percent of existing traffic), and export and import traffic (21 percent) will account for most of this growth, while Zairian transit traffic (15 percent) is fore- cast to decline with the reopening of the Lobito route. Passenger traffic is expected to continue to grow steadily (4 percent annually) during the project  - 15 - period. The directional breakdown of ZR's external traffic, although aver- aging only 21 percent of tota:L traffic, is important because of the large differences in the lengths of the various routes. The project assumes that 25 percent of ZR's external traffic will travel via the Lobito route (an average import/export haul of 50 km on ZR's track), 33 percent via the southern route (about 700 km) and 42 percent via Dar-es-Salaam (about 160 km). Based on these assumptions, the project will have an overall economic rate of return of 1S percent. Separate evaluations for (a) spare parts, workshops and depots, (b) track, signalling, telecommunicatons, and handling equipment, and (c) locomotives and wagons, show that each group yields an economic return exceeding 20 percent. The economic analysis assumes that without the project, an increasirLg amount of general goods traffic will be hauled by road at a higher cost (K 0.05 vs K.0.2 per ton/km). This is a conservative estimate of benefits, since it is unlikely the road network could carry the additional traffic without substantial improvements. 57. The Project will have an important impact on the Zambian economy beyond the improved profitability and efficiency of ZR. Without it, the capacity of the rail network will decline, causing a sizable amount of local and external traffic to be hauled by road at a higher cost. This would adversely affect Zambia's manufacturing and industrial sectors, which depend heavily on imported intermediate goods. Moreover, the project forms an important part of Zambia's program to remove the transportation bottlenecks which have constrained its economic development over the last decade. Risks 58. The project's major risks involve shortfalls in estimated traffic growth or unexpected shifts iLn the directional flow of Zambia's external rail traffic. Sensitivity analysis shows that even with a complete stagnation in the level of traffic (the project assumes 2 percent annual growth), the project will have an acceptable economic return of 13 percent. If ZR's external traffic pattern var-ied from that assumed in the project (25 percent via Lobito, 33 percent via the southern route, and 42 percent via Dar-es- Salaam), the returns would still be satisfactory. At present the Lobito route is closed, and given tlhe backlog of traffic and major repairs required on the line, it will be some time after the route opens before Zambia could move more than 25 percent of its external traffic through Lobito. A more likely possibility would be an increase in the amount of external rail traffic hauled via Dar-es-Salaam. While TAZARA has the capacity to handle all of Zambia's external traffic, problems along the line and with the port facili- ties at Dar-es-Salaam, plus Zambia's reluctance to entrust all its external traffic to one rail route, make it unlikely that more than 60 percent of ZR's external rail traffic will be carried via TAZARA. Assuming that TAZARA accounts for 60 percent of ZR's external traffic, and the other routes 20 percent each, the project's economic return will be 18 percent. If Tazara's traffic increases to 80 percent, with the remaining traffic split between the other routes, the return would be 15 percent. A combination of traffic stagnation and a drastic change in the directional break-up of the external traffic would decrease the return to below 10%.  - 16 - PART V - LEGAL INSTRUMENTS AND AUTHORITY 59. The draft Loan Agreement between the Republic of Zambia and the Bank, the draft Development Credit Agreement between the Republic of Zambia and the Association, and the draft Special Action Credit Agreement between the Republic of Zambia and the International Development Association, as Admin- istrator of the EEC Special Action Account established with funds contrihjated by the member states of the EEC and the draft Joint Project Agreement among the Association, the Administrator, the Bank, ZR and ZIMCO, are being dis- tributed to the Executive Directors separately. Also being distributed separately are the Report of the Committee provided for in Article III, Section 4(iii) of the Articles of Agreement of the Bank, and the Recom- mendation of the Committee provided for in Article V, Section 1(d) of the Articles of Agreement of the Association. 60. Special conditions of the project are listed in Section III of Annex III. Conditions of effectiveness of the agreements relating to the Credits and the Loan include execution of a subsidiary loan agreement between the Republic of Zambia and ZR, submission to the Association by ZR of a detailed training program for ZR senior and middle level staff, and a cross effective condition with the other external financing agreements, excluding the ODA agreement. (Section 6.01 of the draft Loan Agreement). 61. I am satisfied that the proposed Loan and the proposed IDA Credit would comply with the Articles of Agreement of the Bank and the Association, respectively, and that the proposed Special Action Credit would comply with the criteria established by the Agreement dated May 2, 1978 among the Association and the EEC and its member states. PART VI - RECOMMENDATION 62. I recommend that the Executive Directors approve the proposed Loan and Credits. Robert S. McNamara President Attachments Washington, D.C. December 6, 1979  ANNEX I TABLE 3A Page 1 ZAMEIA - SOCIAL INOICATORS DATA SHEET ZAMBWA REFERENCE GROUPS 0ADZSSTZD AYE14AS LAND AREA (THOUSAND S0. K2.1 LA - MOST RECENST sTrATE) - TOTAL 752.6 SAME ik4E NE:tS UCdER ACRIC8LTURAL 350.1 MOST RECENT GEOGRAPHtC I24COKE INCOME 1960 /b 1970 lb ESTIMATE lb REGION /C GROUP /d GROUP ;e GNP PER CAPITA iUS$I 190.0 320.0 4S0.0 306.1 .67.5 1097.7 ENERGY :ONSUMPTION PER CAPITA (KILOCRAMIS OF COAL EQUIVALENT) .. 495.0 548.0 80.6 262.1 730.7 POPULAT-ON AND VI T AL STATISTICS POPUL4TION, MID-TEAR (MILLIONS) 3. 1 4.2 5.1 UR8AN POPULATION (PERCENT OF TOTAL) 23.0 30.0 34.0 17.1 24.6 49.0 POPULATION PROJECTIONS POPULATION LN YEAR 2000 (NILLIONS) 10.0 STATIONARY POPULArION (MILLIONS) 29.0 TEAK STATIONARY POPULATION IS REACHED 2130 . POPULATION DENSITY PER SQ. IM. 4.0 6.0 7.0 18.4 45.3 44.6 PER SQ. icm. AGrICULTURA.L LAND 9.0 12.0 15.0 50.8 149.0 140.7 POPULATION AGE STRUCrURE (PERCENT) 0-14 YRS. 47.1 46.3 46.5 44.1 45.2 41.3 15-64 YRS. 50.5 51.5 50.9 52.9 51.9 55.3 63 YRS. AND ABOVE 2.4 2.2 2.6 2.8 2.8 3.5 POPULATION GROWTH RATE (PERCENT) TOTAL 2.4 2.8 3.1 2.7 2.7 2.4 UR8A.9 .. 5.4 5.4 5.7 4.3 4.5 CRUDE BIRTH RATE (PER THOUSAND) 51.0 50.0 50.0 46.3 39.4 31.1 CRLDE DEATH RATE (PER THOUSAND) 24.0 20.0 17.0 17.2 11.7 9.2 GROSS REPRODUCTION RATE .. 3.3 3.4 3.1 2.7 12.2 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. .. .. USERS (PERCENT OP MARRIED WOMEN) .. .. .. .. 13.2 34.7 FOOD AND NTTR'T.ON ENDE2 OF FOOD PRODUCTION PER CAPITA (1969-71-100) 103.8 95.0 106.0 94.3 99.6 104.4 PER CAPITA SUPPLY OF CALORIES (PERCENT OF PEQUIREMENTS) E0.0 84.0 90.0 89.5 94.7 105.0 PFRTEINS (GRAMS PER DAY) 55.3 59.2 58.8 55.8 54.3 64.4 CIF WHICH ANIMAL AND PULSE 13.5 16.3 16.5 17.9 17.4 23.5 CIlLE (AGES 1-4) MORTALITY RATE 36.0 29.0 23.0 22.3 11.4 8.6 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 40.0 43.5 48.0 47.0 54.7 60.2 INFAIT .0ORTALITY RATE (PER THOUSA.UD) .. 144.0 .. .. 68.1 46.7 ACCESS TO SAFE WATER (PERCENT OF POPUl.ATtON ) TOT'AL .. 37.0 .2.0 20.3 34.4 60.8 UR.AN .. 70.0 a6.0 53.9 57.9 75.7 RUIAL .. 22.0 16.0 10.1 21.2 40.0 ACCESS TO EXC?ETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 16.0 42.0 22.5 40.8 46.0 URIAN *. 12.0 87.0 62.5 71.3 46.0 RM;AL .. 18.0 16.0 13.9 27.7 22.5 POPULATION ?ER ?HYSICIAN 12860.0 13530.0 :0370.0 17424.7 6799.4 2262.4 POPW..ATION PER VURSING PERSON 9950.0/f 2430.0 .. 2506.6 1522.1 1195.4 POPULATION PER HOSPtTAL RED TOAL 350.0/f 320.0 250.0 502.3 726.5 453.4 URIIAN * *. 280.0 201.4 272.7 253.1 RURAL .. .. .. 1403.6 1404.4 2732.4 ADMISSI0NS ?ER HOSPITAL BED .. .. 300.0 Z3.4 27.5 22.1 AVERAGE ;ZE OF HOUSENOLD TO'7AL 4.4 4. 9 5.4 5. 3 URB3AN ... .4.9 s.: 3 .2 RURAL .. .. 4.6 5.5 5.5 5.4 AVERAGE NUM3ER Or PERSONS PER ROOM TOAL .- 2.6 .- ...1.9 LURAN 2.6 *. - * *. 1.9 RLUAL .. 2.6 2.5 ACCESS TO ELECTRICITY (PERCENT OF D;JELLINGS) .CO; A L 2. 7. S 81 50. 0 LILIAN 27.'5 .. . . 45.1 71.7 RU*(AL .. .. .. .. 9.9 17.3  ANNEX I TABLE 3A Page 2 ZA.f2EA - 30C:.L tDIf'D-;:RS DATA SHEZT MAMIA RE iERLNCE vROUPS (A.DJVS:D A4`EPAGCL - ItOSt RECENT ESTI.A:E) SAME SA