Afghanistan - Third Highway Project

Document of FL COPY The World Bank FOR OFFICIAL USE ONLY Report No. P-2 5X64-AF REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT AND EEC SPECIAL ACTION CREDIT TO THE DEMOCRATIC REPUBLIC OF AFGHANISTAN FOR A THIRD HIGHWAYS PROJECT MAY 22, 1979 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.  CURRENCY EQUIVALENTS Currency Unit: Afghani (Af.) Calendar 1978 February 22, 1979 US$1.00 = Afs 40.24 US$1.00 - Afs 0.025 Afs 1 = US$0.02485 Afs 40 = US$1.00 Note: An exchange rate of Afs 40.00 = US$1.00 has been used to calculate project costs. FISCAL YEAR March 21 to March 20 ABBREVIATIONS ADT - Average Daily Traffic EEC - European Economic Community ICB - International Competitive Bidding IDBA - Industrial Development Bank of Afghanistan MPW - Ministry of Public Works PDPA - People's Democratic Party of Afghanistan RCMD - Road Construction and Maintenance Department RDD - Rural Development Department USSR - Union of Soviet Socialist Republics  FOR OFFICIAL USE ONLY DEMOCRATIC REPUBLIC OF AFGHANISTAN THIRD HIGHWAYS PROJECT CREDIT AND PROJECT SUMMARY Borrower: Democratic Republic of Afghanistan. Beneficiaries: Road Construction and Maintenance Department, Ministry of Public Works. Amount: US$17.6 million equivalent. Terms: Standard. Project Description: A principal objective of the project is to strengthen the capacity of the Road Construction and Maintenance Department (RCMD) of the Ministry of Public Works to execute its respon- sibilities for maintaining and upgrading the highway network in Afghanistan, including primary. secondary and tertiary roads. The principal components of the project would be: (i) a three-year time slice of a pavement strengthening program; (ii) a three-year time slice of a road maintenance and improvement program; and (iii) technical assistance for RCMD. The recurrent costs of the maintenance and improvement program, amounting to $17.3 million, would be met in full by the Government. The project works would be carried out by RCMD, which needs an expanding capacity for executing work of the type envisaged. There are no domestic highway contractors, and, given the history of International Competitive Bidding (ICB) for road contracts in Afghanistan, prospects for effec- tive ICB for the proposed work are considered poor. The principal direct beneficiaries would be road users, but due to the keen competition in the road transport industry, the savings in transport costs are expected to be soon passed on to producers and consumers. The principal risks relate to RCMD's capacity to execute the project on schedule . Some technical assistance to RCMD is therefore considered necessary and is provided. Estimated Cost: Local Foreign Total --------- (US$ Million) --------- Highway Maintenance and Improvement - 4.8 4.8 Pavement Strengthening Program 3.5 18.1 21.6 Technical Assistance 0.1 0.6 0.7 Total Base Cost 3.6 23.5 27.1 Price Contingencies 1.1 5.0 6.1 Grand Total 4.7 28.5 33.2 | 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.  - 11l Financing Plan: Local Foreign Total _ -----(US$ Million)----- Government 4.7 6.5 11.2 34 IDA - 17.6 17.6 53 EEC Special Action Fund - 4.4 4.4 13 Total 4.7 28.5 33.2 100 Estimated IDA Disbursements: FY 1981 1982 1983 1984 --------(US$ Million)--------- IDA Annual 1.5 5.5 6.7 3.9 Cumulative 1.5 7.0 13.7 17.6 EEC Special Action Fund Annual 2.0 2.4 Cumulative 2.0 4.4 Economic Indicators: Pavement Strengthening and Preservation - Economic Rate of Return 42 percent - Maintenance and Improvement - Benefit/Cost Ratio of 2.3. Estimated Completion Date: December 31, 1983 Staff Appraisal Report: Report No. 2360-AF dated May 1979 Regional Projects Department, EMENA  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE IDA TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT AND EEC SPECIAL ACTION CREDIT TO THE DEMOCRATIC REPUBLIC OF AFGHANISTAN FOR A THIRD HIGHWAYS PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Democratic Republic of Afghanistan for the equiv- alent of US$17.6 million on standard IDA terms to help finance a Third Highways Project. The EEC Special Action Fund would help to finance the project with a credit of $4.4 million equivalent expressed in the currencies of the EEC member countries on standard terms for the Fund. PART I - THE ECONOMY 1/ General 2. The Basic Economic Report distributed to the Executive Directors in April 1978 (Report No. 1777a-AF) - The Journey to Economic Development - provides an assessment of the economic situation, development achievements and prospects, and constraints for future economic and social development in Afghanistan. The findings of that report were summarized in my report to the Executive Directors, dated June 20, 1978 (Report No. P-2357-AF) in which I recommended a credit for a Kabul Water Supply and Sewerage Project. The broad issues discussed in these reports give perspective to a summary of the recent developments in the economy. Current Situation 3. The performance of the Afghan economy rests heavily on the agricul- tural sector. Yearly changes in agricultural production reflect primarily weather conditions. In the four years from 1972/73 - 1976/77 agricultural production grew steadily at an annual average rate of 2.6 percent peaking at a level of food self-sufficiency in 1976/77. In 1977/78 insufficient rainfall during the winter and spring followed by hot weather during the growing season resulted in a drop in crops of 10 percent and in heavy animal losses. The decline in food-grain production led to an important price increase during the second part of the year, partly because the Government wheat imports were ordered too late. A substantial recovery of agriculture production occurred in 1978/79. Food grain production rose by 6 percent. It is possible that the level of output in 1979/80 will fall because of insufficient rain and snowfall during the winter. In addition, the land reform will, for reasons discussed below, certainly disrupt production temporarily to some degree. Accordingly - and given the large share of agriculture in GNP - economic growth is likely to be small in the next 18-24 months. 1/ Part 1 of this report is essentially unchanged from that contained in the President's Report dated March 19, 1979 (P-2491-AF) for the Third Education Project.  -2- 4. The overall budget deficit expanded sharply in 1976/77 to a level equal to one-third of total expenditure. Foreign aid fell short of expecta- tion, and the Government relied heavily on the banking system to finance the deficit. In 1977-1978 the budget deficit declined by 10 percent while revenue rose by only 6 percent after a period of continued growth. After a dramatic increase in 1976/77, development expenditures levelled off in 1977/78 partly as a result of delays in project preparation and implementa- tion. Due to abandonment of the Seven-Year Plan by the new Government (see para 14 below), some slackening of major new investment decisions before the new Plan targets are formulated in the fall of 1979 can be expected; only then will the domestic resource position come clearly into focus. 5. Although the trade deficit was large from 1974/75 to 1977/78, net receipts from services and capital flows exceeded the deficit. As a result, the surplus on the balance of payments doubled in 1975/76 and tripled in 1977/78 compared with the 1974/75 level. Cumulative balance of payment surpluses are reflected in the accumulation of official foreign exchange holdings, in the accumulation of reserves up to a level of almost 12 months of import requirements in 1978, and in the substantial appreciation of the Afghani. The Afghani has appreciated more or less continuously in the bazaar market since 1971, but since 1976, policy measures were introduced to restrain this appreciation. During 1978/79, the central bank successfully intervened in the market so that the exchange rate which for a period reached Afs. 32 to the dollar, fell to Afs. 40 to the dollar by the end of 1978. A large part of the recorded surplus originates in remittances of Afghan workers living in Iran. The official figures, however, do not fully reflect the actual flows, due to the importance of the informal financial sector. The level of these remittances, and hence the current payments surplus, must be considered uncertain as a consequence of events in Iran. Economic and Social Priorities of the New Government 6. On April 27, 1978 the People's Democratic Party of Afghanistan (PDPA) overthrew the regime of the former President Daoud; the new Government is headed by Noor Mohammad Taraki, President of the Revolutionary Council and Secretary General of the Central Committee of the PDPA. The Prime Minister is Hafizullah Amin. The PDPA has committed itself to an ambitious program of action, and particularly to the following goals: land reform, adult literacy, expansion of primary education, increased access to secondary and to higher education, provision of basic health services, equal rights for women, reduc- tion of unemployment, revision of the tax system, and strengthening of the public sector. In addition - and in fact as a pre-condition for significant progress on any of these issues - the new Government is in the process of instituting a major overhaul of the administrative system to make it more a action-oriented and more effective in responding to economic, political and social conditions. 7. These goals and the initiatives taken to accomplish them correspond to a large degree with the recommendations contained in the Bank's recent basic economic report. The "basic needs" program recommended in the basic report as an integral part of the development strategy is also a key element  - 3 - of the program of the PDPA and the Government, under the corresponding label of "food, health and shelter" for all citizens. The basic report was dis- cussed with the new Government in February 1979. The mission found itself in broad agreement with the Government with respect to the diagnosis of the economic, social and institutional constraints to development. 8. With the new Government only one year in office, and in view of massive personnel changes in the upper and middle echelons in the adminis- tration, the Bank's assessment of the progress made so far is necessarily derived less from the analysis of firm economic data than from the accumula- tion of subjective impressions brought back by a large number of Bank missions which have been in Afghanistan during the past year and from the effective- ness of various Government agencies in regard to requests for information or decisions made by these missions. All these missions have noted a new commit- ment to development, combined with an impressive seriousness of purpose. A very open and rewarding dialogue has been possible on effective approaches to achieve the various goals. However, the Government recognizes the far- reaching nature of the changes it seeks to bring about and the potential this offers for difficulties of a political, economic or social nature. Given reasonable stability, however, there is a confidence that considerable headway in tackling Afghanistan's formidable development problems is now within reach. Development Issues 9. Land reform and reform of the social structure of the rural sector are the Government's first priorities. Three recent decrees address themselves to these problems. Decree No. 6 cancels all debts owed by sharecroppers and agricultural laborers. Debts owed by farmers owning less than 2 hectares and secured by land or crops are written down, and their terms are reduced; Government has indicated that institutional credits will not be affected. The Decree may however, have a serious impact on the supply of private credit and place a heavy burden on institutional credit. Decree No. 7 promulgated for '"ensuring of equal rights of women" raises the legal age of marriage and places a limit on financial transfers at marriage, hitherto a major cause of indebtedness. Decree No. 8 deals with land reform (the previous land reform law of 1973 had not been enforced and led to insignificant transfer of owner- ship). The land reform decree limits the size of land holding to 6 hectares of Class I land (irrigated and suitable for double cropping) or its equivalent in lower grade land, and it provides for the distribution of expropriated land primarily to landless labor and sharecroppers, up to a limit of 1 hectare of Class I land or its equivalent per family. The decree also limits future fragmentation of redistributed land and requires equitable distribution of water on irrigated land. To implement the land reform, the Government has set up 100 expert teams which are carrying out the complex task associated with the redistribution, initially in 10 of the 26 provinces of the country, on a village-by-village basis. Land distribution began in early December 1978 and by the end of March, about 250,000 hectares were officially reported to have been distributed among over 100,000 families. The Government has announced that the land reform will be completed in all provinces within about a year and that about 675,000 families will benefit ultimately, probably more than one-third of all families in rural areas.  - 4 - 10. One severe transitional problem to be faced in connection with the land reform is the provision of implements and inputs for the new farmers, who as tenant farmers relied on credit from money lenders and landowners. For obvious reasons - because of the sheer size of numbers and the absence of any bankable collateral of the great majority of farmers - an extension of conventional institutional lending cannot completely resolve the problem. The Government, therefore, is pinning its hopes on a rapid expansion of the cooperative movement. The number of cooperatives has already increased from 150 one year ago to 250, and is expected to reach several thousand upon conclusion of the land reform. Although Government spokesmen assert that membership would be voluntary, the cooperative movement is expected to ulti- mately comprise almost all farmers. Although a revised cooperative law has been issued and encouragement given to the creation of farmer's credit unions, it is recognized that the rapid expansion of cooperatives does not by itself resolve the credit supply problems, and that during the difficult transitional phase ahead severe shortages of qualified staff in the cooperatives, the lending agencies (essentially the Agricultural Development Bank of Afghanistan) and in the Government extension service will most likely impede agricultural production temporarily. 11. Another high priority program of the new Government is the rapid expansion of elementary education. Primary schools are being set up with voluntary labor and teacher training is being stepped up as a part of the expansion of secondary and higher education. In addition, the PDPA has launched an ambitious adult literacy program, using volunteer teaching staff and make-shift facilities. One of the most severe tests ahead - stimulated by Decree No. 7 mentioned above - is the extension of both primary education and the adult literacy program to women, who in the rural areas were all but completely left out in the past. 12. For industrial development, following the nationalization measures of 1973, large-scale industry has been almost entirely in the public sector, where the record has been poor. The new Government is making efforts to correct some of the most severe deficiencies, such as virtual absence of enterprise accounting, and bureaucratic management practices with a minimum of independence and accountability. While the future industrialization policy will, for a number of reasons, continue to emphasize the expansion and pro- motion of large-scale public enterprises, the Government exhibits awareness that for purposes of employment generation, as well as for processing agri- cultural products, procurement of basic consumer goods and production inputs, the promotion of small- and medium-sized industry - by necessity largely in the private sector - cannot be disregarded. While the Government has not expressed a strong formal commitment to that end, there are indications that it is in the process of gearing up institutional arrangements for the promotion of small and medium-sized industries. 13. In the past, domestic resource availability was not a major con- straint for development since resources (both domestic and foreign) tended to exceed absorptive and implementation capacity. In the coming years, however, domestic resources are likely to emerge as a major new bottleneck of development. The programs of social and economic transformation are likely to be accompanied or followed by a rapid rise of development and current expendi- tures in these areas, even under the most generous assumptions about the  -5- impact of self-help and voluntary services. In addition, sizeable debt service payments for public external debt will put additional new burdens on the budget. In fact, the new Government is facing an almost insoluble dilemma, because of its commitment to social progress and the identification of these subsidized services with that goal. On the revenue side, the major traditional sources of revenue - like import duties, income from public enterprises, export sales of natural gas, and corporate and individual income taxes - are unlikely to grow fast, and for some items (like progressive land tax and personal income tax) may even shrink. The Government is aware of this dual squeeze and is looking for remedial measures. These are being sought through measures affect- ing foreign resources. First, the Government is seeking a debt moratorium from a number of previous lenders; and second, the Government is seeking long-term commodity credits from abroad, which would provide counterpart funds for discretionary use by the Government. Meanwhile, in its first budget, the Government has followed the prudent course of its predecessors and has budgetted for a 6 percent expenditure increase, of which about 30 percent would be for- eign financed. In this situation, of a narrow tax base and low domestic savings capacity Afghanistan requires special consideration from external lenders, including IDA, in financing the local costs of development projects. 14. Foreign resources did not generally constrain development in the recent past; the country not only failed in the past to use all foreign assistance available, but for years has run a balance of payments surplus and correspondingly increased its reserves, beyond the level necessary for securing import requirements. As with domestic resources, the chief problem was limited absorptive and implementation capacity. The new Government is committed to increase it through administrative reforms and accelerated investment and growth. The Government also expects a sustained flow of external assistance (including sizeable commodity aid), in particular from the USSR, other COMECON countries and IDA. How and at what level resource requirements and their availability will eventually balance is impossible to gauge at this juncture; this problem reportedly is one of the reasons the new Five-Year Plan will not be finalized until September 1979. 15. The most pervasive past constraint to development - archaic admin- istrative procedures and practices which choked decision-making, initiative and any sense of achievement - is recognized by the new Government. While the perceived need to deliver on the postulated goals of development has begun to reduce bureaucratic red tape and remove some delays within the existing institutional framework, the requirement to overhaul the framework itself is acknowledged. The problems associated with this less conspicuous revolution are truly formidable and will continue to stretch the patience of aid donors for some time to come. 16. In order to achieve its goal of development and to accomplish some progress on the issues sketched above, Afghanistan will continue to require external financial and technical assistance. As indicated above, foreign financial assistance per se is not likely to become a development bottleneck in the near future; more likely is a shortage of external resources for certain priority tasks which do not match the capacity or wishes of donor agencies. A second, but no less important problem is the continuing need to cover some of the domestic resource requirements, in particular those connected with project financing, by way of foreign aid. Negotiations are currently under  - 6 - way with a large number of countries and several international organizations to establish an aid pipeline for the new Five-Year Plan, which started for- mally on March 21, 1979. Technical assistance, organized within a clearly defined and recognized framework, linking assistance to institutional changes and project preparation, remains a third matter of high priority. In this connection - through the institution-building ccnsequences of its project work, usually incorporating a sizeable portion of technical assistance, directed at increasing absorptive capacity of the country and improving its efficiency - the Bank expects to continue to make a major contribution to Afghanistan's future development. PART II - BANK GROUP OPERATIONS IN AFGHANISTAN 1/ 17. The proposed credit would bring total IDA commitments to Afghanistan to US$210.1 million (net of cancellations) for nineteen credits in various sectors. Annex II contains a summary statement of IDA credits to Afghanistan as of March 31, 1979 and notes on the execution of ongoing projects. Start- ing in 1964 with a credit of $3.5 million, IDA lending to Afghanistan has grown steadily to reach an annual average of about $31 million for FY76-78, compared to an annual average of about $16 million for FY73-75. IDA has financed eight projects in the agricultural sector with credits totalling $109 million, three credits totalling $19 million for transportation, one of $2 million for an industrial development bank project, two for a total of $23.5 million for water supply, sewerage and sanitation, one of $10 million for a thermal power project, and two for a total of $27 million for educa- tion. A $0.3 million IFC investment in the Industrial Development Bank of Afghanistan (IDBA) was repaid to IFC following the nationalization of IDBA in 1975. 18. Initially, the Bank Group's lending to Afghanistan was attended by considerable difficulties. In addition to a limited knowledge of the economy, there were a number of serious practical difficulties related to relatively weak institutions and cumbersome bureaucratic procedures. Thus, the Bank Group's lending has tended to be directed at projects and institu- tions where the possibilities for effective lending were best. The analytical framework provided by the basic economic report and several sector studies (agriculture, horticulture, livestock, industry), the development orientation of the Government and a growing implementation capacity among Afghan institu- tions, provide the basis for the Bank Group's future lending activities in Afghanistan. While the emphasis will remain on the productive sectors, with a search for improved productive efficiency (especially in the agricultural sector), expanded foreign exchange earnings and domestic revenues, an increas- ing knowledge of the economy makes possible a well focussed response to the basic needs of the Afghan people. 19. A number of further projects are under consideration. A credit for a rural development project was recently negotiated and a wheat production I/ Part II of this report is essentially unchanged from that contained in the President's Report dated March 19, 1979 (P-2491-AF) for the Third Education Project.  project is currently being appraised. A fourth education project is being prepared and will be appraised in June 1979. Preparation of a third irri- gation project, a second industrial development bank project, a second power project and a fourth agricultural credit project is also in progress. Government has indicated that it intends to focus on regionalized rural development, and has requested IDA assistance in devising an appropriate organizational framework for it. 20. In addition to its lending activity, IDA is executing several UNDP- financed projects in Afghanistan which have been of great benefit in expanding the country's limited administrative capability. To help ease the managerial and administrative constraints, a long and difficult task, IDA has placed emphasis on institution-building and training for Afghans. IDA has helped establish several semi-autonomous agencies, (for example: the Agricultural and Industrial Banks, and the Herat Livestock Development Corporation), the aim being to provide the entities with the operational autonomy needed for a viable venture. The establishment of project implementation units in operat- ing ministries is a further step in this direction. For example, the Project Implementation Unit in the Ministry of Education, established under the second education project, is to be commended for its work in preparing, the Third Education Project. Similar units have been established for a Fruit and Vege- tables Export Project which recently became effective. 21. Project implementation, which has been variable in the past has shown improvement and in recent months prompt action on the part of the Government to remove project-specific bottlenecks suggests that this improve- ment will continue. On the other hand, we should not misunderstand the far- reaching nature of the changes which the Government is attempting to bring about in Afghanistan, for example land reform, and the potential this offers for difficulties of various kinds. Insecurity in the Herat area in recent weeks has hindered implementation of the two livestock projects. Close coordination between the authorities and Bank staff, facilitated by the Bank's resident mission office, will be essential to maintain the past improvements in the process of identifying, preparing and implementing projects. The overall picture of disbursements is now a satisfactory one. Disbursements under earlier IDA credits were slow initially, but this situation has improved considerably since 1976, and disbursements are now at a satisfactory rate of about $20 million per annum. The IDA share of Afghanistan's total external debt outstanding and disbursed were about 6.0 percent and 4.0 percent, respectively, at March 20, 1978. For the future, the IDA share of total debt outstanding and disbursed are estimated to reach about 6 percent and 6 per- cent, respectively in 1980/81. It is estimated that in 1980 debt service payments due to IDA will represent about 1.1 percent of service payments due on Afghanistan's external debt. Afghanistan's debt service ratio in 1977/78 was about 13 percent. PART III - THE TRANSPORTATION SECTOR 22. The rugged and mountainous terrain of Afghanistan is both a cause of the isolation of large areas of the country and a major obstacle to  - 8 - creation of an effective, modern transportation system. The country's predominantly agricultural population is dispersed and its principal urban areas widely separated. The country is landlocked, and therefore especially dependent upon the transportation system of other countries. Despite the economy's dependency on transportation, it is estimated that in 1975/76 transporation contributed only 2.4 percent to Afghanris-tan's Net Domestic Product. A recent summary description of the sector appeared in the Bank's Basic Economic Report dated March 17, 1978 (Report No. 1777a-AF). 23. The transportation system is relatively simple (see map attached). A roughly circular all-weather road from Herat in the west via Kandahar and Kabul to Mazar-i-Sharif and Shebergan in the north, links the country sur- rounding the central mountainous area. From this ring road, main roads radiate outwards to Iran, Pakistan and the USSR. Most other roads, of a lesser standard, branch off these roads, penetrating into the rural areas. Many of these roads are closed seasonally by snow or floods. In general, the length of the primary highway network is reasonable and adequate to serve the major regions of the country, although completion of the ring road is required. The principal need is to strengthen certain existing sections of the primary roads, improve their maintenance, and to expand the presently inadequate network of secondary and tertiary roads in the rural areas. There are no railways in Afghanistan, although railways approach the borders of the country within Iran, Pakistan and the USSR. Gas pipelines carry natural gas to the USSR. Some of the traffic with Russia is carried part of the way by barge on the Amu-Darya, a river which separates the two countries for a substantial distance. There is a network of regional airfields, and inter- national airports at Kandahar and Kabul. Air services meet an important and growing need for more rapid domestic transport. 24. Afghanistan faces considerable restrictions on its international traffic, which serve to exacerbate its isolation and increase transport costs. Approximately 70 percent of freight entering and leaving the country passes through the USSR. Road traffic across the border is currently prohibited by the USSR, so all freight is carried by Russian rail, shipping and road services. Pakistan does not permit the operation of through trucks between India and Afghanistan and nearly all freight to or from the port of Karachi must be transhipped on to Pakistan railways. Although Afghan vehicles transit- ing Iran have in the past been permitted to operate without difficulties, the transit treaty, with the exception of traffic between Herat and Meshed, does not permit the through movement of commercial vehicles from a city in one country to a city in the other country. These international transport routes are of vital significance to Afghanistan and it remains a constant preoccupation of the Government t) secure improved facilities. In a recent move, Pakistan and Afghanistan have decided to establish an inter-ministerial commission to oversee traffic between the two countries. The Highway System, Transport Market and Vehicle Fleet 25. The statistical information on transport demand is scarce and some- times contradictory. The main sources of information are annual road traffic counts performed by the Ministry of Public Works (MPW), toll station data,  -9- airport and port traffic statistics, and special traffic studies conducted by consultants for specific projects. On a national basis, road freight was estimated by the Government at about 800 million ton-km in 1968 and at 1,300 million ton-km in 1975, representing an annual growth rate of around 7 percent. Annual growth of road traffic between 1973 and 1977 averaged about 13 percent, substantially higher than the GNP growth rate of about 3 percent during that period. The volume of traffic varies substantially from one part of the country to  ''r. TRAFFIC VOLUME EASTERN REGION OTHER REGIONS Average Average Length of Daily Length of Daily Road (Kms) Traffic Road (Kms) Traffic Primary Roads 650 500-1,500 1,800 100-800 Secondary Roads 950 100- 500 1,900 50-100 Tertiary Roads 2,600 K 100 5,300 K So Based on the results of RCMD Traffic Department counts, the regional distri- bution of inter-city road traffic volumes in the period 1971-75 has been roughly the following: Eastern Region: 50 percent; Northern Region: 30 per- cent; Southern Region: 13 Percent; and Western Region: 7 Percent. Map IBRD 14049 (attached) presents the 1977 ADT information on different links of the network. The total road vehicle fleet increased during 1973-75 at an annual growth rate of approximately 15 percent, with the highest increases in buses (26 percent), taxis (25 percent) and trucks (13 percent). Unfortunately, information on the fleet is available only for three years, and, therefore, no firm trends can be established from it. 26. Concerning vehicle characteristics, about 55 percent of inter-city buses are mini-buses, with a load capacity of up to 20 passengers, relatively new, and normally used for rather short distances of less than 100 km. Most of the trucks are small: 71 percent have a load capacity of 6 tons or less, 20 percent between 6 and 8 tons, 7 percent between 8 and 10 tons, and only 2 percent with a capacity greater than 10 tons. The age range of trucks is extremely wide with some units over 30 years old; most have an average age between 5 and 10 years. In general terms, there are enough trucks on the primary roads and on part of the secondary road network, especially of 6-10 tons. The situation is different for the remaining secondary, tertiary and feeder roads on which it is more difficult to find adequate transport; as a result competition among truckers i5 less strong, and the transport cost tends to be high. The predominant type of operator is a small one, owning only one or two trucks. Access to the transport market is free. Some of the individual transporters are organized in transport associations which procure and distribute shipments among their members. Consignments by Government agencies, which account for about 40 percent of the total haulage, are handled by the larger associations. The main goods shipped by the Government are con- struction materials, cement, petroleum products, sugar, wheat, fertilizers, wood, and minerals.  - 10 - Government Regttlations and Taxation of Road Transport 27. At the present time, there are practically no enforced regulations on weights and dimensions of vehicles, and trucks especially are often over- loaded. A study on this subject, financed with the proceeds of Credit 449-AF, provides the technical basis for establishing regulations and the Bank is seeking promulgation of the necessary legislation under the provisions of the Credit Agreement for the proposed project. (Section 4.01 of the Credit Agreement). While it is important to establish optimum limits for axle loads and vehicle dimensions, it is even more essential to enforce them. The recent creation of a Ministry of Transportation is expected to strengthen the pressures for enforcement, but enforcement can be a gradual process, spreading gradually to cover the principal roads as the enforcement mechanism grows. Improved enforcement will also be required of regulations governing roadworthiness, highway codes and other regulations. The level of customs duty encourages purchase of second hand vehicles, which while helpful to the small operator, may well be costly to the economy. 28. Data on road user taxation are inadequate and it is not possible to draw any conclusions except that by comparison with most other countries it is low. Since there is, for the most part, no competing mode of transport this is not a serious information gap; questions of intermodal price distortions do not arise. However, for general revenue purposes, increased taxation on petroleum or other forms of road user taxation is likely, and it will be important to ensure that taxes and duties are designed so that they do not have undesirable effects on the transport industry. Institutional Framework for the Highways 29. Two organizations bear responsibility for the construction and main- tenance of roads: the Ministry of Public Works (MPW), which operates largely through the Road Construction and Maintenance Department (RCMD), and the Rural Development Department (RDD). In the East, South and West of the country, the Road Construction and Maintenance Department (RCMD) has responsibility for primary and secondary roads outside the municipalities and it is in these areas that the two previous IDA projects have been concentrated. In the North of the country, assistance is received from the USSR and much of the work is carried out by the Army Labour Corps under MPW's general supervision. RDD's responsibilities are limited to feeder roads from farming areas to the dis- trict centers and the main roads. Area development authorities have respon- sibility for roads in some project development areas. Despite a lack of clarity in the institutional arrangements, the maintenance of the primary road network has been generally adequate, although some of the main paved roads are now in urgent need of strengthening. The principal weakness has lain in the relatively limited capacity for maintenance and improvements to secondary and tertiary roads. The proposed project addresses both of these problems -- strengthening and preservation of paved roads through a specific work program and highway maintenance through continued support for an expanded maintenance program.  - 11 - 30. There is a long history of road construction and maintenance in Afghanistan by departments of Government and the conscripted Army Labour Corps. This policy and the lack of a highway construction program have discouraged establishment of private Afghan road construction firms. Tech- nical assistance in the two previous IDA projects has been directed at bring- ing about more efficient and cost-effective methods in the RCMD. Although technical assistance provided under previous IDA financed projects has re- sulted in substantial improvements, further time is needed for RCMD to reach a fully satisfactory standard of operation. RCMD currently has the services of Russian and Indian technical assistance teams, but an expansion in RCMD's activities will require additional technical support. The proposed project will provide a few specialists to assist in executing the road strengthening program. Transport Planning and Financing 31. The wide dispersion of population calls for a rather extensive trans- port network, mainly of low-cost, low-volume roads. However, the physical features of the country inhibit creation of the road network by raising construction and maintenance costs, even on tertiary roads, and raising transportation costs. As mentioned at paragraph 24 above, high costs also characterize Afghanistan's external transportation facilities. The success of the Government's development strategy must be measured by the extent to which it can come to terms with these geographic and physical constraints on the nation's development. During the first two Five-Year Plans (1957-66) priority was given to reducing geographical isolation and integrating the regions of the country, and about 40 percent of total development expenditures was spent on the primary road network. During the third and fourth plans, (1967-73), priorities changed and transport received about 10 percent of planned expenditures. Within the reduced allocations there were significant shifts in allocations, and in the third and fourth plans maintenance and improvements accounted for 21 percent and 47 percent of total highway expendi- tures respectively. The first Seven Year Plan 1976-83, which has now been abandoned by the new Government, was to have seen a massive expansion in transportation investment, the emphasis being on railways however, highway construction being limited to 6 percent of total planned expenditures. Allocations for highway construction in the new Plan now under preparation have not yet been finalized. 32. The Bank's review of priorities in the Basic Economic Report con-- cluded that while new construction of primary roads should have its place, continued priority should be accorded to improvement and maintenance of the existing road network and upgrading of secondary and tertiary roads. The latter are now critical to the development process in that they open up previously inaccessible regions and permit access to outside markets and to such public services as schools and medical facilities. The emphasis in IDA financed projects in the subsector, including the proposed Third Highway Project and Rural Development Projects, accords with these priorities.  - 12 - Previous IDA Transportation Lending 33. IDA has financed two highways projects in Afghanistan, Credits 158 and 449. Emphasis has been placed in these projects on strengthening the Government organizations responsible for road maintenance and improvement through organizational modifications, supply of road maintenance and workshop equipment, training and technical assistance for a variety of studies, pre- paration of manuals and procedures, selection and engineering of improvement programs and other technical services. While progress on the maintenance and improvement programs has been broadly satisfactory, although attended by delays, progress in strengthening RCMD has been slow. The technical assis- tance available to RCMD has had a considerable impact, but further improve- ments are needed. Despite provision made for training programs, RCMD has remained weakly staffed. The Government has not yet adopted and implemented regulations restricting axle loads, which are provided for under Credit 449 (see para. 27 above). 34. The priorities adopted for the previous two projects remain largely valid, and have been followed in the selection of the components for the proposed project. Here the emphasis will remain on further strengthening RCMD's capacity for maintenance and improvement work on existing roads, on improved management and planning, and on training of Afghan staff. Periodic maintenance by pavement overlays of sections of the most heavily used roads in eastern and southern Afghanistan would form the major project component and the project would also provide continued support for RCMD's on-going routine maintenance work on about 4,000 kms of roads and improvement of 300 kins of tracks. 35. IDA has also financed an Aviation Project in Afghanistan (Credit No. 374-AF). While the physical implementation of this project, which improved flight information services, has been completed satisfactorily, the institutional objectives of the project have not been fully accomplished. Further discussions are in progress with the Government on this matter and disbursement of the remaining funds available under the Credit will depend on satisfactory progress on these project components. The feasibility study financed under the project demonstrated that a new airport for Kabul cannot be justified at the present time. PART IV - THE PROJECT Project Description 36. The proposed project has emerged from the continuous dialogue which has taken place during implementation of the Second Highways Project. During discussions with the new Government in July 1978, it was agreed to continue to give priority to maintenance of the existing road network, including strength- ening of some major national roads, rather than to the upgrading of two roads studied under the Second Highways Project. The project was appraised in  - 13 - September 1978 and preparation of pavement overlay design for part of the overlay program has proceeded concurrently with the appraisal process. Engineering has been completed on 50 kms of road and, together with some preliminary engineering for the remaining road sections, provides an adequate basis for the appraisal (see para. 39 below). Negotiations were held in Washington in March/April 1979. The Afghan negotiating team was led by the President of the Road Construction and Maintenance Department and included a representative of the Ministry of Planning. A staff appraisal report (No. 2360-AF) is being circulated separately. The project would consist of: (i) A three-year time slice of a pavement strengthening program extending to about 450 kms of the Kabul- Torkham, Kabul-Kandahar and Kandahar-Spin Boldak roads and surface dressing for preservation of about 160 kms of these roads; (ii) A three-year time slice of a road maintenance and improvement program, including the provision of spare parts for existing mechanical equipment and of replacement of equipment, to be used for improve- ments on about 300 kms of secondary and tertiary roads and for road maintenance on about 4,000 kms of such roads; and (iii) Technical assistance for RCMD. 37. The asphalt pavements of the Kabul-Torkham, Kabul-Kandahar and Kandahar-Spin Boldak roads, constructed in the early 1960s, were designed on the principle of staged construction, involving timely strengthening. Strengthening of these pavements is now a high priority. About 670 kms of overlays is ultimately required for the three roads. The 450 kms included in the proposed project is appropriate to the implementation capacity of RCMD over a three-year period and to the available financing. The surface dressing of 160 kms of road would retard deterioration of road sections which cannot be strengthened at the present time, until such time as the necessary resources become available. The procedures to be followed in selecting 450 kms out of the 670 kms requiring overlays are described at para. 41 below. Part of the equipment for the overlay program was procured under the two earlier IDA credits; the remaining equipment requirements would be met under the proposed project. The project would also finance part of the other foreign exchange costs of the overlay program, including asphaltic bitumen. 38. The maintenance and improvement program in the Eastern, Southern and Western regions would be a continuation of the program which is currently under implementation under the Second Highways Project, which is expected to be completed at the end of 1979. The recurrent costs of the maintenance and improvement program, amounting to $17.3 million would be met in full by the Government. The technical assistance program, amounting to 90 man months, would fill gaps in RCMD's technical expertize and would help strengthen RCMD's planning and execution of the highway maintenance and improvement operations.  - 14 - A cost accountant included in the technical assistance program would make a start in establishing improved cost control in RCMD. Other institutional improvements which will be addressed during the course of project implementa- tion are an expanded training program in RCMD, highway planning and road transport policies. Cost Estimates and Financing 39. Project costs, excluding taxes and duties which are not significant and are waived for foreign financed items, are estimated at US$33.2 million over the three and a half year project implementation period with foreign exchange costs amounting to $28.5 million. No provision is made for physical contingencies since the scope of the construction component of the project is defined in terms of tons of asphaltic concrete to be laid. The equipment list for the overlay program has been agreed; any variation from the appraisal assumption for the overlay thickness would result in either more or less than 450 kms being strengthened. The new equipment for the maintenance and improve- ment program would be replacement for existing equipment which is now beyond repair; the list of spare parts for existing equipment has already been prepared. Price contingencies are in accordance with Bank guidelines, and are reasonable. The unit cost of internationally recruited staff is estimated at $6,100 per man month. The cost estimate for the overlay program is based on visual inspection and estimated overlay thicknesses, supplemented by detailed pavement design on a 50 kms section and preliminary design for the remaining sections. Since the Government has demonstrated its ability to undertake the design, this proczedure is appropriate for a program of this nature, in which the final design work proceeds section by section a few months ahead of construction. The design work is relatively simple in concept. 40. The IDA credit of $17.6 million would finance the spare parts, the technical assistance, a proportion of the foreign exchange costs of the new equipment for road maintenance and improvements, asphalt for the surface dressing work, equipment for the second asphalt mixing and laying unit and 40 percent of the remaining foreign exchange costs of the overlay program. The EEC Special Action Fund loan of $4.4 million would finance $3 million of asphalt required for the road strengthening program and the rest of the foreign exchange costs of the new equipment for road maintenance and improve- ments. The remainder of the foreign exchange costs amounting to $6.5 million and the local costs amounting to $4.7 million would be met by the Government. Implementation, Management and Training 41. RCMD would be responsible for the implementation of the entire project. RCMD has completed the selection of 450 kms of overlay for the three year time slice of its overlay program, on the basis of preliminary technical and economic justification. Because the thickness of the pavement overlay, apart from the 50 km section, will not be known before pavement overlay design is completed, RCMD would later submit to IDA, for its approval prior to the start of the works, an updated technical and economic evaluation of each overlay section (Section 3.07 of the Credit Agreement) based on final design  - 15 - and cost criteria. The methodology for the economic evaluation has been agreed during negotiations. With some technical assistance, RCMD has imple- mented a substantial program of road maintenance and improvement in the past and, with continued technical assistance, should not experience difficulty in continuing this program. 42. Improvements in the capacity of RCMD to execute its responsibili- ties are a function of many factors - equipment availability,adequate finan- cing, practical experience and, perhaps especially, the quality of management, staffing and training. While RCMD has made considerable progress during the course of implementation of the two previous IDA credits, much remains to be done. The depth of management and professional skills is still limited and the quality of technical supervision of road building and maintenance needs further strengthening. RCMD has been slow in implementing the training program provided for in the previous IDA project. The Government recognizes the urgent need for an effective training program, has recently taken steps to reinvigorate its training program with the assistance of the School of Engineering of Kabul University, and has agreed to regular reviews of progress of the training (Section 3.06 of the Credit Agreement). Bank staff will give this matter particular attention during project supervision. The technical assistance component of the project is designed to fill gaps in expertise available to RCMD, especially for the overlay program. 43. The technical assistance team would have two principal functions - training, cost control and advice, and certification of the quality of the overlay program. These roles are of a very different nature and offer a potential for conflict in the team's relationship with RCMD. For this reason, it is considered preferable for the technical assistance contract to be with the Ministry itself rather than RCMD. There are risks attached to this arrangement, as there would be to any possible arrangement, but in the light of experience elsewhere and the discussions with the Government we believe this arrangement offers satisfactory prospects of amicable and effective working relations. Signature of the Technical Assistance contract would be a condition of effectiveness of the proposed credit (Sections 3.02 and 7.01(b) of the Credit Agreement). 44. The project would be implemented over a period of four and a half years, with the field work lasting three years. Preparation of equipment and spare parts lists has been completed and preparation of bidding documents was to begin immediately after negotiations. Provision is made for the early purchase, and direct payment to the supplier of $3 million worth of asphalt, as well as the equipment, to help ease the Government's financing needs and to help overcome the long lead time for delivery of such materials to a landlocked country. Once the work commences, disbursement will be on the basis of units of work completed, as described in paras 45 and 46 below. Procurement and Disbursements 45. Procurement of the equipment for the road strengthening and road improvements to be financed by IDA and the asphaltic bitumen for the overlay  - 16 - and surface dressing would be by international competitive bidding (ICB) in accordance with the Bank's "Guidelines for Procurement". The spare parts would be bought from the original supplier or through international shopping. Technical assistance would be carried out by qualified and experi- enced consultants and specialists to be employed by the Ministry of Public Works on terms and conditions acceptable to the Association. Procurment of the bitumen and equipment to be financed by the EEC Special Action Fund would be in accordance with the procedures established for the Fund. RCMD would execute both the pavement strengthening and preservation program and the improvement and maintenance program. An alternative means of executing the pavement strengthening program might have been construction by local or foreign contractors. As indicated in paragraph 30 above, there is a long history of road construction and maintenance in Afghanistan by departments of Government and the conscripted Army Labour Corps, and there are no private Afghan road construction firms which could carry out this work. There has been little recent history of highway construction work in Afghanistan by international contractors. The landlocked and remote location, lack of assured long-term construction programs and the role seen for the State in the economy are the main reasons for this situation. The use of ICB proce- dures in this case would almost certainly lead to a long, protracted and abortive bidding procedure, during which the paved roads would continue to deteriorate. Since RCMD can anticipate a need for this form of road strengthening capacity for the foreseeable future, as the need for main- tenance of the primary roads expands, it is considered essential that RCMD build up a capacity and capability for this kind of work. 46. Disbursement of the IDA credit would be made against 100 percent of the foreign exchange expenditures or 100 percent of the local expenditures ex-factory on equipment; 100 percent of the foreign exchange expenditures on spare parts and asphalt; 100 percent of the foreign expenditures on con- sultants and experts' services; and $17.5 per metric ton of asphaltic con- crete, mixed and laid according to acceptable engineering standards. The amount of $17.5 per metric ton is a residual derived from the amount of the IDA credit available for this component after the other project items have been financed. The leader of the Technical Assistance team would provide a certificate as to the quantity and quality of the overlay as a condition of disbursement for this component (para 5 of Schedule 1 of the Credit Agree- ment). Disbursement of the EEC Special Action Credit would be against 100 percent of the foreign exchange expenditures or 100 percent of the local expenditures ex-factory on equipment; and 100 percent of foreign expenditures on asphalt. Disbursement on the basis of a fixed amount per ton of asphaltic concrete laid would strengthen RCMD's incentive to execute the pavement strengthening program in a businesslike manner. Benefits, Justification and Risks 47. As indicated in paragraph 32 above, the priorities in the highway sub-sector are maintenance of the existing road network and improvements and upgrading of secondary and tertiary roads. In a general sense, a major  - 17 - benefit of the project would be continued support of RCMD by IDA during a period when it is expanding its capacity to undertake these tasks. The bene- fits of this institutional strengthening cannot be quantified, but are, of course, very important. More specifically, parts of the primary road network are reaching the end of their working life and a strengthening program is now a high prioriLy. The proposed project would make a substantial contribution to this program, with savings in vehicle operating costs and in maintenance and eventual reconstruction costs. Although the precise thickness of the overlay has still to be defined for some sections, the economic return for the road improvements, even on the most costly assumptions, lies between 19 percent and 59 percent with an overall return of 42 percent. Under less costly assumptions, the economic return for individual sections would rise accordingly. Although practical considerations of plant location and general logistics have been taken into account in selecting the 450 kms, the sections to be included under the project are generally those which have the higher economic returns. The benefits of the road maintenance and improvement program are reduced transport costs and savings in road rehabilitation which would become necessary in the absence of adequate maintenance. The economic rate of return of this program is estimated to exceed 70 percent and the benefit/cost ratio at 2.3. 48. The principal direct beneficiaries of the project would be road users. However, due to keen competition in the transport industry, it is expected that savings in transport costs would soon be passed on to producers and consumers. Since about 75 percent of traffic on paved roads consists of buses and trucks, most of the direct benefits would accrue to work and business related traffic. On the lesser roads, competition is less keen due to the lower level of traffic. Improvements are, however, expected to result in higher traffic levels and more competition; thus any degree of monopoly pricing would tend to be eroded. 49. The principal risks to the project relate to the ability of RCMD to execute the project on schedule. RCMD has proved its ability to execute a road maintenance and improvement program, but the overlay program is a larger task, which demands a higher level of managerial and technical ability. While RCMD's capacity to fulfill such tasks is increasing, technical assistance is still necessary, and is provided under the project. PART V - LEGAL INSTRUMENTS AND AUTHORITY 50. The draft Development Credit Agreement between the Democratic Republic of Afghanistan and the Association, the draft Credit Agreement between the Democratic Republic of Afghanistan and the Association as Admini- strator of the EEC Special Action Fund, and the recommendation of the Com- mittee provided for in Article V, Section I(d) of the Articles of Agreement of the Association are being distributed separately to the Executive Directors. 51. Special Conditions of the Project are listed in Section III of Annex III.  - 18 - 52. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association, and that the proposed Special Action Credit would be in conformity with the agreement between the Associ- ation, the EEC and its member states dated May 8, 1978. PART VI - RECOMMENDATION 53. I recommend that the Executive Directors approve the proposed Development Credit and the proposed Special Action Credit. Robert S. McNamara President Attachments May 22 , 1979 Washington, D.C.  19- Annex 1 Paoe 1 of 5 Dages TABLE 3A ACIHANISTAN - SOCIAL INDICATORS DATA SHEUT UnREP cE CROUPS (ADJUSTED AVERAGS LAND AIM (TBOUSARD SO. E MOST RECENT ESTI SATE) CZ TOTAL 435.0 SAME SmE NUT HIGHER AGRICJIUUAL 14.5 MOST RCItZT GEOGRAPHIC IHIUH( INCOME 1960 a 1970 lb ISTIATE lb REGION jc GR0t37 d CRO01 jj cs Pr CAPITA MU 90.0 110.0 190.0 117.6 182.9 432.3 URGT CONSKPTIOUN PER CAPITA (ILOGRM Of AL EQUIVALENT) 15.0 33.0 43.0 65.7 U.9 251.? POPULATION AND VITAL STATlSTICS TTAL OPULATION, ID-TR (MILLIONS) 9.9 L[ 12.3 A 14-15 . 051 POPULATIa (PUcENT OF TOTAL) 6.0 10.7 14.3 125. 15.0 24.2 POPULATIN DOuSiT PER SQ. 3X. 16.0 19.0 23.0 05.2 46.6 42.7 PSI SQ. Dl. AG4CULTURAL LA=D 71.0 87.0 99.0 322.6 254.1 9.0 POPMLATION1 ArE STRUCTURE (PRCUT) 0-14 YES. 41.9 43.2 45.5 44.0 43.6 44.9 15-64 YEns. 54.6 14.2 51.3 52.9 53.3 52.8 65 YnS. AND ADo 3.3 2.6 3.2 2.9 2.9 3.0 POPULATIO CaUIrS RATE (PUCU) TOTAL 2.2 L 2.2 L 2.2 2.2 2.4 2.7 URNA 5.2 5.2 7.2 h 4.2 4.0 8.8 CRUDE BIRTH RAT?. (PER THDUSAND) 49.0 48.7 51.4 45.1 46.3 42.2 CRUDE DEATH RAT1 (PEP THOUSAND) 34.1 27.6 30.7 17.3 19.7 12.6 GROSS REPRODUCTIl AN .U. 3.4 3.4 3.2 2.9 3.2 PAMILY PLANNING ACCEPTORS, AMAL (THOUSANS) . 15.3 USERS (PRCINT OF XARRIZD Was) .. .. 1.0 13.7 14.6 14.2 OOD A9D NUATRITION INDEY OF OOD PoOHCTIoN PUR CAPITA (1910-100) 113.5 100.0 106.7 95.6 96.4 104.3 PR cAPITA suPpLY or CALORItES (PEnCEPT OF RlQUIMTS) 66.0 78.0 83.0 91.1 92.3 99.5 PSOTEINS (GRAMS PER DAT) 65.2 58.0 61.5 49.6 50.0 56.8 OF WLICH ANIAL AD PUSS .. 11.0 8.5 12.6 13.9 17.5 CHILD (ACZS 1-4) I3TALIrY RATS .. . 2A.1 .. .. 7.5 REALTR L-FE ESPECrANCY AT BIRTH (TEARS) 3t.8 37.6 35.0 43.1 45.8 53.3 INFANT MIRTALITE RATS (PR THOUSAND) .. .. 269.4 99.5 102.7 82.5 ACCESS TO SAP! WATER (PESCOT OP POPULATII) TOTAL .. 3.0 9.0 30.0 26.4 31.1 U38Am .. 18.0 40.0 66.3 63.5 0.5 RURAL .. 1.0 5.0 17.2 14.1 16.2 ACCESS TO EXCUTA IISPOSAL (PE3CUT OP POPULATION) TOTAL ,, 21.0 21.0 15.7 16.1 37.5 URR .. 69.0 63.0 66.9 65.9 69.5 RLAL .. 16.0 15.0 2.5 3.4 25.6 POPUlATIN0N PER PHYSICIAN 22450.0 Li 14660.0 12930.0 8830.8 13432.7 9359.2 POPULATION PER NURSING PERSQ3 23210.0 l 21080.0 11660.0 8479.3 6983.3 2762.5 POPULATICI PER HOSPITAL BED OTAL 5950.0 Li 5240.0 5210.0 1624.5 1157.6 786.5 U1543 .. 1090.0 .. .. 183.3 276.4 1 .. 9650.0 .. .. 1348.8 1358.4 ADMISSIONS PER HOSPITAL BED .. 9.6 .. .. 19.5 19.2 HOUSINC AVERAGE SIZE OF HOUSEHOLD TOTAI. .. .. .. .. 5.2 URBAN .. .. .. .. 4.8 RURAL .. .. .. .. 5.3 AVERAGE NUMbER OP PERSONS PZR ROO TOTAL .. .. .. UR .. .. .. .. 1.8 2.3 RWEAL .. .. .. ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. .. .. .. 25.9 28.3 URB" .. .. .. RURAL .. .. .. .. 8.7 10.3  - 20 - Annex 1 Paae 2 of 5 pages TABLE 3A AFGHAYISTAN - SOCIAL INDICATORS DATA SHEET REFERENCE GROUPS (ADJUSTED AVERAGES Ai7GHANISTAN a{ - MOST RECENT ESTIMATE) SAME SAME NEXT HIGCER IDST RECENT GEOGRAPHIC INCOME INCOME 1960 b 1970 Lb ESTDMATE Lk REGION /c GROUP /d GROUP Le EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 9.0 /k 21.0 Lk 29.0 k/ 59.1 62.9 75.8 FEMALE 2.0 /k 6.0 /k 5.0 k/ 38.4 45.9 67.9 SECONDARY: TOTAL 1.0 /k 6.0 /k 8.C k/ 19.9 14.4 17.7 FEMALE 0.3 /k 1.0 I 1.0 k/ 9.9 8.8 12.4 VOCATIONAL (PERCENT OF SECONDARY) 11.01k 4.2 Sk 9.0 k/ 1.5 6.6 7.4 PUPIL-TEACHER RATIO PRIARY .. 41.0 ft 37.0 k/ 38.2 38.5 34.3 SECONDARY .. 24.0 ft 18.0 k~/ 23.5 19.8 23.5 ADULT LITERACY RATE (PERCENT) 8.0 10.0 11.0 I/ 35.6 36.7 63.7 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 0.5 3.0 3.0 /i 2.2 3.1 7.2 RADIO RECEIVERS PER THOUSAND POPULATION 2.0 6.0 6.0 14.9 31.1 71.1 TV RECEIVERS PER THOUSAND POPULATION .. .. .. .. 2.8 14.1 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 5.0 6.0 27.0 6.4 6.0 16.3 CINEMA ANNUAL ATTENDANCE PER CAPITA .. 1.1 .. .. 1.4 1.6 EMPLOYMENT TOTAL LABOR FORCE (TEOUSANDS) .. .. 4700.0 /1 FEMALE (PERCENT) 16.9 17.9 18.3 21.3 24.2 28.0 ArRICULTURE (PERCENT) .. .. 52.9 62.8 60.7 54.1 INDUSTRY (PERCENT)m/ .. .. 19.7 PARTICIPATION RATE (PERCENT) TOTAL 36.0 35.1 34.2 35.8 39.8 37.8 MALE 59.1 56.4 54.7 52.4 53.3 50.3 FEMALE 12.4 12.8 12.8 15.6 19.6 20.9 ECONOMIC DEPENDENCY RATIO .. .. 1.5 1.3 1.3 1.3 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS .. .. .. 18.6 20.3 19.5 HIGHEST 20 PERCENT OF HOUSEHOLDS .. .. .. 42.8 45.1 48.9 LOWEST 20 PERCENT OF HOUSEHOLDS .. .. .. 7.3 5.7 5.9 LOWEST 40 PERCENT OF HOUSEHOLDS .. .. .. 19.3 16.8 15.7 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 86.0 80.2 88.5 155.9 RURAL .. .. 84.0 67.2 71.9 97.9 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 53.0 .. 100.8 143.7 RURAL .. .. 53.0 39.8 42.0 87.3 ESTLMATED POPULATION BELOW POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 18.0 50.3 46.0 22.9 RURAL .. .. 36.0 44.6 48.0 36.7 Not available Not applicable. NOTES /a The adjusted group averages for each indicator are population-weighted geometric means, excluding the extreme values of the indicator and the most populated country in each group. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unlesa otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1973 and 1978. /c South Asia; /d Low Income ($280 or less per capita 1976); /e Lower Middle Income ($281-550 per capita, 1976); /f Population (and also GNP per capita) data relate to fiscal year beginning March 21; a Dif- ference between UN rate of satural increasa and World Bank nonulation growth rate due to different popu- lation estimate; /h 1970-76; /i Based on the latest appraisal mission estimate. /j 1962; /k Public education only; /I aged 8 years and over. /m Industry including Handicrafts. I/19772 September, 1978  - 21 - Annex I DEFINITIONS OF SOCIAL INDICATORS Pa 3 of 5 pages Note: The adjusted group averages for each indicator are population-weighted geometric Means, excluding the extreme values of the iSdicator and the most populuaed cou try in each group. Coverage of countries a.oog the indicators depends on availahility of data and is not uniform,. Due to lack of data, group averages for Capital Sryla Oil Expurters and indicators of access to .ater and excreta disposal, housing, income distribution and poverty are ninple population-weighted geometric means without the exclusion of extreme values. LAND AREA (thousand sq. km) Population per hospital bed - total, urban. and rural - Population (total, Total - Total surface area comprising land area and inland waters. urban, and rural) divided by their respective number of hospital beds Agricultural - Most recent estimate of agricultural area used temporarily available in public and private general and specialieed hospital and re- or permanently for crops, pastures., market and kitchen gardens or to habilitation -eters. Hospitals are establishments permanently staffed by lie fallow. at least one physician. Establishments providing principally custodial care are not included. Rural hospitals, however, include health and medt- GNP PER CAPITA (US$) - GNP per capita estimates at current market prices, cal centers not permanently staffed by a physician (bht by a medical an- calculated hy sane converstio method as ford bank Atlas (1975-_7 bahos); sistant, nurse, midwife, etc.) which offer is-patient accnmeaodation and 1960, 1970, and 1977 data. provide a limited range of medical facilities. Admissions per hospital bed - Total nuaber of admissions to or discharges iNERGf CONSUMPTION PER CAPITA - Annual consumption of conercial energy fron hospitals divided by the eucber of beds. (coal and lignite, pecroleun, natural ges and hydro-, nuclear and geo- thermal electricity) in kilograms of coal equivalent per capita. HOUTSISG Average sian of househnld (persoos per household) - total, urban, and rural- POPULATION ANDI VITAL SIATISTICS A household consists of a group of individuals who share living quarters Total population, mid-pear (millions) - As of July 1; if not asaiahie, and their main meals. A boarder or lodger may or may not be included in average of two end-year estimates; 1960, 1971, and 1977 data. the household for statistical parposes. Statistical definitions of house- urban populasion (percent If cotal) - Ratio of urban to total popula- hold vary. tion; different definitions of urban areas may affect co-parability Average number of persons Per room - total, urban, and rural - Average nun- of data among coantries. ber of persons per room in all, urban, and rural occupied conventional Population density dwellings, respectively. Swellings exclude non-permanent structures and Per so. km. - Mid-year population per square kilo=eter (100 hectares) unoccupied parts. of total area. Access to electricity (percent of dwellings) - total, urban, and rural - Per as. km. agriculture land - Computed as above for agricultural land Ccnventional dwellings with electricity in living quarters as percentage only. of total, urban, and rural dwellings respectively. PoPulation age structure (sercest) - Children (0-14 yearn), working-age (15-64 years), and retired (65 years and over) as percentages of aid- EDUCATION year population. Adjusted enrollment ratios Population growth rate (percent) - total, and urban - Compound annual Primary school - total, and female - Total and female esroll=eot of all agec growth rates of total and urban mid-year populations for 1950-60. at the primary level as percentages of respectively pr-nary school-age 1960-70, aod 1970-75. populations; normally includes children aged 6-11 years but adjusted for Crude hirth rate (per thousand) - Annasl live births per thousand of different lengths of primary education; for countries with universal eda- mid-year population; tan-year arithmetic averages ending in 1960 and cation enrollnent nay emceed 100 percent since none pupils are below or 1970 and five-year average ending in 1975 for most recent estimate. above the official school age. Crude death rate (per thousand) - Annual deaths per thousand of mid- Secondary school - total, and female - Computed as abooe; second-ry educa- year population; ten-yeararrithmetic averages ending in 1960 and 1970 tion requires at least four years of approved primary instruction; pro- and five-year average ending In 1971 for Most racent esti=ate, ides generrl vocationol, or teacher training instructions for pupils Irons reproducticn rate - Average enhber of daughters a woman will bear usually of 12 to 17 years of age; correspondence courses are generally in her normal ,eprodactive period if she experiences preunt age- excluded. specific fertility rates; usually floe-year averages ending in 1960, Vocational enrollment (percent of secondary) - Vocational institutions ;n- 1970, and 1975. clude technical, industrial, or other progra=s vhich operate independently Family planning - acceptorsa annual (thousands) - Annual nuxber of or as departments of secondary institutions. acceptors of birth-controi devices under auspices of national faoily Pupil-teacher ratio - primary, and secondary - Total students enrolled c planning program. primary and secondary levels divided by nu=bers of teachers in the carre- Family planning - usera (Percent of married women) - Percentage of spnnding levels. married wanes of child-bearing age (15i-4 years) who use birth-control adult literacy rate (percent) - Literate adults (able to read and write) as devices to all Married women in same age group. a percentage of total adult population aged 15 years and over. tOOD .041 NUTRIIOlN CONSUMPTION Index of food production per capita (1970-lDO) - .nion nu=ber of per 7assenger cars (per thousand population) - Passenger cars comprise motor oars capita annual production of nil food cormodities. seating less than eight persons; e-ciudes ohbulances, hearses and military fer capita supply of calories (percent of requirements) - Computed from vehicles. energy equivalent of net food supplies availahle in country per capita fadio receivers (per thousand population) - All types of receivers for radio por day. Available suppliea comprise domestic produtc-on, imports less broadcasts to general public per thousand of population; excludes unlicensed exporte, and changes in stock. Net supplies exclude animal fend, sends, receivrer incountries and is years wArs regisirarion of radio sets was in quantities used in food processing, and losses in distribution. Re- effect; data for recent years may not be comparable since eost coutries quire=ennt were estimated by FAO based on physiological seeds for nor- abolished licensing. mal activity an.d health considering environmental temperature, body TV receivers (per thousand copulation) - TV receivers for broadcast to genera weight., age ard sex distributions of population, and allowing 10 per- public per thousand population; e-cludes unlicensed TV rec-ivers in coon- cent for ounte at household level. tries and in years when registration of TV sets was in effect. Far capita eupply of protein (arams per day) - Protein cosnant of par fewocoser circulation (per thousard opaplatiom) - ihowa the average ciocula- capita net supply of fed par day. Net supply of food is defined as tian of "daily general interest newspaper", defined as a periodical puhlt- above. Requirements for all countries established by USDA provide for cation devoted primarily to recording general news. It is considered to a minixum allowance of 60 grams of total protein per day and 20 grams be "daily" if it appears at leant four tines a ceek. of animal and pulse protein, of which 10 grams should be animal protein. Cinema annual attendance per capita per year - Bnsed on the number of tioketo These stondards are lower than those of 75 grams of total protein and sold during the year, including admissions to drive-in cine=as and nubile "3 grams of animal protein ao an average for the world, proposed by units. 'AP in the Third World Food Survey. Per capita protein supply from animal and pulse - Protein supply of food EhPLOYMENT derived from animals and pulses in grams per day. Total labor force (thousands) - Efonomtcally active persons, including armed Child (ages i-b) mortality rate (per thousand) - Annual deaths per thous- forces and unemployed but excluding housewives, stnudnts, etc. Defini- and in age group 1-4 years, to children in this age group. tions in various countries are not comparable. ale rcent) - Female labor force on parcentage of total labor force. tEALTH Agriculture (percent) - Labor force in farming, fooresty, hunting and fishing Life expectancv at birth (yearn) - Average number of years of life as percentage of total labor force. remaining at birth; usually five-year averages ending in 1960, 1970, Industry (percent) - Labor force in mining, construction, =anufacruring and and 1975. electricity, water and gas as percentage of total labor force. Infant mortality rate (per thousand) - Annual deaths of infants under farticipation rate (percent) - total, male, and female - Total, male, and one year of age per thousand live bihts,. tmale labor force as ptrcentages of their respective populations. Access to aafe water (percent of population) - total, urban, and rural - These are ILO's adjusted participation rates reflecting ace-sec Number of people (total, urban, and rural) with reasonbale access to str-cture of the popcltion-, od Iong tine trend. safe water supply (includes treated surface waters or untreated but iconomic dependency ratio - Ratio of population under 15 and 65 and I--- tc uncontaminated water such as that from protected boreholes, spritrg, the labor force in age group of 15-64 years. and sanitary wells) as percentages of their respective populatiors. In an urban a la a puhiic fountain or standpost located not more INCOME DISTRIBUTION than 20 meters fro= house. may ho oosidered en being within rea- Percentage of private income (both in cash and kind) received by richest s nonable access of that bous. In rural areas reasonable access co. Id perct, rhest 20 percent, poorest 20 perct, and p-nss 40 percnt imply that the housewife or members of the household do not have to of hou hold. spend a disproportionate part of the day in fetching the family's water needs. POVERTY TARGET GROUPS Access to encreta disposal (percent of population) - total, urhan, and Estimated absolute poverty income level ((US per capita) - urban and rural - rural - Number of people (total, urban, and rural) served hy 55cm no Absolute poverty income level Is that income level below whIch a minimai disposal as percentages of their respective populations. Excreta nutritionally adequate diet plus essential non-food requirements is not disposal may include the collection and disposal, with ar without affordable. treatment, of human excreta and waste-water by water-borne systema Estimated relative poverty income level (US$ per capita) - urban and rural - or the use of pit privies and similar irstallations. Relative poverty income level is that income level less than one-third Population por physician -Population divided by number of practicisg Per capita persona inoun of the coun.try. physicians qualified from a medical school at -niversity 1evel. tinni tcd P.uatis below p-rc Incne leve (pr-c - urpao and rural - Populanion per nursing person - Population divided by number of Pronnt o population (urban and rural) who are either "absolute poor" or practicing male and female graduate nurses, practical nurses, and "relati-e poor" whichever is greater. assistant nurses. Econunic and Social Dta lDivision Efonotic Analysis and Projections Depart=e-t  -22- Annex 1 Page 4 of 5 pages ECONOMIC INDICATORs ANNUAL RATE OF GROWTH1' ( constant Prices) GROSS NATIONAL PRODUCT IN 1975176 (At 1975/76 constant prices) 1965/66- 1968/69 1976/ 1977/ US$ m1. 1968/69 1975/76 1977 1978 GNP at Market Prices 1976 100.0 .. 3 Gross Domestic InvestDt --t Gross National Saving- Cuirrent Account 1aWA -54 - 3 1 -7