Senegal - Forestry Project

Document of The World Bank FILE COPY FOR OFFICIAL USE ONLY Report No. P-2946a-SE REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE REPUBLIC OF SENEGAL FOR A FORESTRY PROJECT January 22, 1981 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: - CFA franc (CFAF) US$1.00 - CFAF 210 CFAF 1 million = US$4,762 SYSTEM OF WEIGHTS AND MEASURES METRIC 1 stere 3 1 m3 of stacked roundwood 1 m3 natural forest firewood - 1.6 steres - 640 kg 1 m3 Eucalyptus firewood - 1.6 steres - 720 kg 24 Eucalyptus poles - 1 m3 ABBREVIATIONS AND ACRONYMS CCCE Caisse Centrale de Cooperation Economique FAC Fonds d'Aide et de Cooperation FAO Food and Agriculture Organization ISRA Institut Senegalais de Recherche Agricole POU Project Operations Unit SEEP Secretariat d'Etat aux Eaux et Forets SODEVA Societe de Developpement et de Vulgarisation Agricole UNDP United Nations Development Programme FISCAL YEAR July 1 - June 30  REPUBLIC OF SENEGAL FOR OFFICIAL USE ONLY FORESTRY CREDIT AND PROJECT SUMMARY Borrower: Republic of Senegal Amount of IDA Credit: SDR 7.1 million (US$9.3 million equivalent) Terms: Standard Project Description: The proposed project has been designed to meet the steadily increasing demand for fuelwood and forest products in the urban center of Dakar and in rural areas of the heavily populated Groundnut Basin, where rapid population growth is resulting in serious deforestation. The project provides for: (i) establishment and mainte- nance of 2,000 ha of state-managed tree plantations and maintenance of 600 ha of pilot state-managed tree plantations; (ii) establishment of rural rainfed tree plantations, of which 1,500 ha would be in family plantations and another 1,500 ha would be in rural community plantations; (iii) improvement in productivity and management of about 10,000 ha of existing natural forests; (iv) financing an applied forestry research program; (v) establishment and operation of a training center to provide refresher courses for forestry agents; (vi) strengthening the Forestry Department by providing a high level forestry economist and consultants for the Planning Division of the Forestry Department and establishment at Kaffrine of a Project Operations Unit (POU); and (vii) con- sulting services for studies. The Forestry Department Direc- tor would be the overall supervisor of the project and would pay special attention to the implementation of the project's institution building aspects. Implementation of the forestry operations, research and training components would be done by the POU which would have its own Manager who would be responsible to the Forestry Department Director. This unit would be financially autonomous but would coordinate closely with other units of the Forestry Department. In addition to the quantifiable project benefits in increased wood produc- tion,, the project would set the stage for an expanded program of reafforestation and forestry management over the next five years. The project would inevitably involve some risks, since certain of these forest activities (particularly the estab- lishment of rural tree plantations) are fairly new undertak- ings in Senegal. However, measures have been proposed in the project, such as timely preparation of plantations, and improvement of efficiency of the Forestry Department to minimize these risks. | This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - Es tima ted Project Cost: A summary table of cost estimates is shown below: Local Foreign Total US$ million I. FORESTRY OPERATIONS Civil W4orks 0.4 0.3 0.7 Machinery and Vehicles 0.1 0.9 1.0 Field Forestry Works Operating Costs 0.4 0.9 1.3 Seasonal Labor 1.7 - 1.7 Permanent Staff 0.3 _ 0.3 Supervisory and Support Staff 0.4 - 0.4 Expatriates and Consultants - 1.2 1.2 Other Operating Costs 0.5 0.3 0.8 3.8 3.6 7.4 II. TRAINING CENTER, APPLIED RESEARCH PROGRAM AND OPERATIONS UNIT Civil Works 0.2 0.2 0.4 Machinery and Vehicles - 0.1 0.1 Supervisory and Support Staff 0.3 - 0.3 Expatriates and Consultants - 1.7 1.7 Other Operating Costs 1.0 0.2 1.2 1.5 2.2 3.7 III. STUDIES AND AUDIT 1/ 0.1 0.4 0.5 TOTAL BASE COSTS 5.4 6.2 11.6 CONTINGENCIES - Physical 0.3 0.3 0.6 - Price 2.8 2.1 4.9 TOTAL PROJECT COSTS 2/ 8.5 8.6 17.1 1/ Including refunding of an advance of $50,000 from the Project Preparation Facility that was made available by IDA to finance some preliminary project preparation works. 2/ Net of identifiable taxes and import duties.  - iii - Financing Plan: The financing plan is as follows: Local Costs Foreign Costs Total Percent -------US$ million-------------- IDA 4.7 4.6 9.3 55 CCCE 2.0 1.4 3.4 20 FAC - 1.8 1.8 10 UNDP/FAO - 0.8 0.8 10 Government 1.8 - 1.8 10 Total 8.5 8.6 17.1 100 The IDA funds will be used to finance US$4.7 million of local costs. Estimated Disbursements: FY81 FY82 FY83 FY84 FY85 FY86 Annual p.m. 1/ 2.2 2.0 1.8 1.9 1.4 Cumulative p.m. 1/ 2.2 4.2 6.0 7.9 9.3 Rate of Return: The economic return on directly productive components of the project (representing about 64 percent of pro- ject costs) is estimated at 12.8 percent. Staff Appraisal Report: Report No. 3120-SE dated December 15, 1980 Maps: IBRD 15131 and 15132 1/ Comprising the $50,000 of funds under the PPF.   INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO T1HE REPUBLIC OF SENEGAL FOR A FORESTRY PROJECT 1. I submit the following report and recommendation on a proposed Development Credit to the Republic of Senegal for the equivalent of SDR 7.1 million (US$9.3 million) to help finance a Forestry Project. The Credit would be on standard IDA terms. Additional external financing for the proposed project is expected from the French Caisse Centrale de Coopera- tion Economique (CCCE) in the form of a credit of about US$3.4 million equivalent; also, grants would be provided by the French Fonds d'Aide et de Cooperation (FAC) to finance three expatriate technical specialists at an estimated cost of US$1.8 million; and by the United Nations Development Programme (UNDP) and the Food and Agriculture Organization (PAO) to finance one expatriate training expert and specialized consulting services at a total estimated cost of US$0.8 niillion. PART I - THE ECONOMY 2. A report entitled "The Economic Trends and Prospects of Senegal" (1720a-SE) was distributed to the Executive Directors on March 10, 1980, followed by a president-s report for a structural adjustment loan/credit (P-2869a-SE) dated November 26, 1980, containing an expanded section on the economic situation. The following paragraphs reflect the conclusions of these reports. Country data appear in Annex I. Economic Structure and Past Developments 3. Three-quarters of Senegal's territory lies in the Sahel zone, which suffers from low rainfall and periodic droughts. The mainstay of the tradi- tional economy is millet cultivation and nomadic cattle-raising for domestic consumption, and groundnut cultivation for exports. Soils are generally poor, and periodically food shortages occur in the months between the sowing and harvesting of the next crop. The large river basins--some of them fed in the tropical rain zone--have so far been exploited only marginally. Land distribution is fairly even. In the western part of the country arable land is becoming scarce, but in the extreme southeast some good land is still available. The modern sector of the economy is concentrated in Dakar, the capital, a city of about one million inhabitants, the economic base of which consists of excellent port facilities, an important industrial sector, and a small but fast-growing tourism industry. With a population of 5.5 million, Senegal's per capita GNP for 1979 was estimated at US$429. 4. During the 1960s, the Senegalese economy experienced virtual stagnation as real output increased at a rate estimated at 2.7 percent per annum, hardly more than the population. Two factors were responsible for this situation. Firstly, with independence, Senegal lost its privileged  - 2 - position as the center of French West Africa, and subsequently had to adapt to its reduced economic, administrative, and political position. Secondly, in the latter part of the decade, production of groundnuts (its principal export) fell, due to unfavorable weather and declining export prices. - 5. In the 1970s, Senegal's narrow-based export sector was hit by sharp fluctuations in volumes and prices, and even with the achievement of higher rates of both private and public investment, average annual growth was not raised above the earlier 10 years' level. Output and incomes were depressed in 1972 and 1973 by the Sahel's most severe drought in over a century, which brought a decline in real national income. Thereafter, when weather conditions improved, the purchasing power of the rural population was substantially restored and both agricultural and industrial production increased markedly. However, the late 1970s saw another series of bad crops, which adversely affected the economy in 1978 and 1980 and will in 1981 also. The magnitude of these downswings is reflected in the variations in groundnut crops; from a historical record of 1.45 million tons in 1975/76, output fell to less than 0.6 million tons in 1977/78; it recovered to about 1.0 million tons in 1978/79, but fell again, to less than 0.8 million tons in 1979/80 and to a new low of about 0.5 million tons in 1980/81. Industrial output (excluding groundnut processing) did grow at a fairly even rate of about 5 percent a year. After recovery from the earlier droughts, real GDP increased at about 5 percent between 1973 and 1977, but in 1978 it is estimated to have declined by 9 percent reflecting the effect of the 1977/78 drought; similarly, due to the bad crops in 1979/80 GDP is expected to remain below its 1977 level in 1980. 6. The large fluctuations in physical production were aggravated by the price movements of Senegal's major export and import commodities. In 1974, the terms of trade improved by over 21 percent, because of excep- tionally high prices for phosphate rock, Senegal's second export commodity, but in 1975 export prices for groundnuts declined sharply, followed in 1976 by a fall in the export prices for phosphate rock. The recent increase in oil prices brought a further deterioration in the terms of trade, causing a loss in income of roughly 5 percent of GDP. These swings in international prices, together with the fluctuations in output, had serious consequences for domestic prices, public finance and balance of payments. Public Finance 7. The Government has shown some flexibility in adapting its finan- cial policies to changes in the economic environment. In 1974, the retail prices for rice, sugar and groundnut oil were raised by 40 to 90 percent in order to reduce consumer subsidies that had ballooned following the price hikes for these commodities on the world market. Government also aligned producer prices for groundnuts closer to world prices which were particu- larly high at that time. The loss of revenue to the Treasury because of this latter step was expected to be compensated by additional revenues from the phosphate mine, such as an 80 percent excess profits tax and dividends from increased ownership. In 1974, the phosphate price quadrup- led, and in 1974 and 1975, Government did indeed receive high revenues from phosphates amounting to roughly US$45 million a year, or 12 percent of tax receipts.  - 3 - 8. Public savings after debt service rose from a yearly average of US$25 million during 1971-73, to US$46 million during 1974-76. This higher level of public savings was doubtless an important factor in stimulating Government to increase public investment outlays from a yearly average of US$24 million to US$49 million during the same two periods. In addition, however, Government purchases of equity and lending to domestic enterprises increased sharply, mainly because of the increased participation in the phosphate mine and the acquisition of two foreign-owned public utility companies. The total capital outlays of the Government were thus substan- tially in excess of public savings, and were financed in large part through medium-term foreign bank loans. As a consequence, foreign debt service borne by the Government increased from US$8 million in 1972/73 to US$38 million in 1975/76, representing about 10 percent of its revenues. 9. A sudden fall in world phosphate prices in 1976 eliminated Govern- ment revenues from this source. In the following year, Government raised tax rates, limited recurrent expenditures, and undertook some new commercial borrowing for its investment program. When it became clear that the 1977/78 crop would fail, Government endeavored to avoid famine in the countryside and maintain rural incomes by importing more cereals and absolving farmers' debts; however, the added financial burden which these measures entailed was not accompanied by reductions in capital expenditures, which were financed through heavy commercial borrowing amounting to US$122 million in 1977 and US$200 million in 1978. As a consequence, in 1980/81, when grace periods are over, debt service obligations of the budget will reach about US$145 million (or 19.5 percent of Government revenues). 10. In August 1978, the National Assembly was called from summer recess to approve a new fiscal package amounting to US$20 million in addi- tional revenues. The 1978/79 budget presented a tax reform aimed at removing tariff distortions and administrative deficiencies, which also increased Government receipts through reductions in exemptions. Further tax measures in 1980/81 will bring the ratio of Government receipts to GDP to 29 percent, as compared to 19 percent in 1970/71 and 23 percent in 1976/77. Balance of Payments 11. Since 1973 the balance of payments has been under heavy pressure, resulting in a very large negative balance in the net foreign assets by the end of 1980. Underlying the deterioration in the external accounts is the sluggish growth of exports combined with fast growing imports, leading to increasing current account deficits that could not be covered anymore by the normal flow of concessionary aid and an acceptable level of commercial borrowing. Between 1974 and 1976 exceptional high phosphate revenues slowed the deterioration in the current account, but Government's purchases of large participations in existing enterprises, created considerable out- flows of private foreign capital, and foreign reserves were not replenished. The deterioration in the external accounts accelerated in 1978, fueled by losses in groundnut revenues, strong import demand and the oil price hike, and could not be arrested by EEC STABEX fund receipts, commercial borrow- ings, nor the use of monetary union facilities and higher net short-term  -4- commercial banks' liabilities. At the end of 1979, net foreign assets stood at minus US$319 million, including drawings on the IMF of US$61 million. The balance of payments picture in 1980 is characterized by a loss in groundnut revenues of almost US$200 million, partly due to the small harvest and partly to exceptionally low world market prices. Moreover the net effect of the 1979 increase in petroleum prices was close to US$90 million. The resulting deficit on the current account is expected to be absorbed by the first tranche of an exceptional international aid package amounting to almost US$300 million, of which US$101 million will be provided by the IMF in the form of drawings on the Compensatory and Extended Fund Facilities taking some pressure off the monetary union and the commercial banks. Net foreign assets are expected to remain in the order of minus US$323 million. 12. Although exogenous factors such as droughts and variations in world market prices explain part of the fall in net foreign assets since 1973, it is also due to more perennial factors such as sluggish growth of export volumes, slow drawings on public aid commitments, increasing debt service related to heavy reliance on commercial funds, and excessively expansionary monetary policies. Senegal's basic problem has been the failure of production and exports to respond to higher investment levels and other expansionary policies. Government's Economic and Financial Rehabilitation Program 13. In December 1979, during his annual speech to the National As- sembly, the Prime Minister explained the urgency of modifying prevailing tendencies in the economy, and outlined a medium-term stabilization and rehabilitation program. This program was informally but extensively dis- cussed with the Bank and the Fund and provided the basis for an agreement with the IMF for the purchase of US$243 million equivalent in currency under the Extended Fund Facility, an agreement which was approved by the IMF Board in August 1980, and a US$60 million structural adjustment loan/credit pre- sented to the Board on December 18, 1980. The letter of intent from the Government to the IDS and the statement of economic policy sent to the Bank emphasized various aspects of the Government's program. 14. The global objectives of the Government's program are to stabilize the economy during the first two of the five years and to achieve a modestly higher rate of economic growth of 4 percent a year in the following three years. 15. Under the program, public savings after debt service would in- crease from about 1 percent of GDP in 1978/79 to over 3 percent of GDP in 1985, mainly through a freeze of recurrent expenditures in real terms. This savings target would allow the Treasury to finance at least 15 percent of the public investment program in the near future, to be improved to 25 percent by 1985. The 15 percent minimum contribution serves as a planning basis and is likely to be exceeded in favorable years, but may fall short in years of bad crops. Consequently, financing of local costs by foreign donors for specific projects is likely to be essential.  - 5 - 16. Increased private savings will be encouraged by the 2.5 percentage points increase in interest rates on deposits and savings certificates (an increase that was introduced in May 1980 together with a similar increase in the rediscount rate of the Central Bank), and through the allocation of preferential housing loans to borrowers with good savings performance. In rural areas, the savings of farmers will be mobilized. However, the bulk of private savings will have to come from private enterprises. To achieve this goal, the Government has eased price policies and tightened credit policies, in particular for non-productive projects. 17. Recognizing that the recent bad crops and the ongoing savings drive will dampen domestic demand and that production costs in Senegal are high compared with foreign competition, the Government is taking steps to provide more protection to domestic producers by raising import duties while achieving greater uniformity in their application, and by subsidizing export industries with excess capacity. This policy allows for the fact that parity of the local currency is fixed in the framework of the monetary union to which Senegal belongs. 18. The level of investments is being reduced somewhat to facilitate economic stabilization but is planned to increase moderately over the five-year period of the Rehabilitation Plan. The emphasis of Government's program is on a shift of total investments toward more productive projects. A minimum rate of return requirement will weed out the less viable projects in the public sector, and an improvement in the incentives for private investors is expected to encourage private undertakings. The propensity to invest in Senegal is still low because of limited domestic markets and high production costs, and following the period of active state intervention, private entrepreneurs have tended to seek Government participation or loan guarantees for new ventures, to reduce their risks. 19. The parapublic sector (public enterprises and mixed companies) represents a serious drain on Government finances and will be placed on a sounder footing through the conclusion of medium-term program contracts ("contrats-plan") between the Government and individual parapublic enter- prises, that aim at setting sector objectives and reducing present levels of budgetary support. More scope will be given to these enterprises to adjust tariffs to more economic levels. Government's program imposes ceilings on commercial borrowing abroad and restricts its use to enterprises and pro- jects that generate a sufficient cash flow to service such debt. It intro- duced a fee for Government guarantees on debts of mixed enterprises. Treasury advances and loans to mixed enterprises in financial difficulties have been drastically reduced and made conditional on the conclusion of a program contract. 20. In the agricultural sector, the liabilities resulting from the uncovered recurrent expenditures of parapublic enterprises had accumulated to the extent that the Treasury and, indirectly, the money and credit system were threatened. Moreover, because of weak management, some public institu- tions had become an obstacle to project implementation. In August 1980, Government dissolved the central cooperative organization (ONCAD) which controlled individual cooperatives, as well as the delivery of agricultural  - 6 - inputs, the extension of agricultural credits and the marketing of crops, restoring some of its functions to the private sector. The cooperatives will be reorganized to assume responsibilities for agricultural credit and seedstocks, and to allow greater farmer participation. Technical assistance to cooperatives would in future be provided by the regional rural development agencies that are in charge of extension services to the farmers. The remaining parapublic agencies in the agricultural sector will also be reorganized with a view to restore their financial soundness and increase their operational efficiency. Subsidies on agricultural inputs were removed with the exception of those for fertilizer for which studies are under way. The agricultural reform will lead to a substantial reduction in the number of staff, reduce the annual deficits that have been supported by the budget, and may eventually allow higher net revenues to farmers. Prospects 21. The Government's long-range development strategy continues to be based on the promotion and diversification of agriculture and export-oriented activities. The agricultural program calls for the development of areas less afflicted by drought (Casamance and Eastern Senegal), where cash crops other than groundnuts can be grown. Irrigated cereal production is being developed in the arid northern part of the country along the Senegal River. This approach will make the country less dependent on the uncertainties of its climate and world market prices, and reduce the heavy burden of food imports. The overhaul of institutions in the groundnut sector is expected to restore production to previous levels and even to increase production by 1.8 percent a year if, in the medium term, the groundnut prices paid to the farmer can be raised as expected. Agriculture research will be oriented more to farm systems than to individual crops, with the objective of lowering the costs of the agricultural techniques propagated, and better adaptation to farmers needs. 22. The Government also aims at a modest expansion of phosphate mining, and development of light export industries and tourism; moreover, contracts have been signed for construction of a ship-repair yard, and plans for a phos- phoric acid plant are in an advanced stage. However, with limited prospects for export growth in the groundnut sector, and because of the modest scale of the export subsidy scheme, no spectacular improvements in export perfor- mance can be expected. Government counts heavily on the implementation of a number of large investments in irrigation to diminish the heavy dependence on rice imports. However, since such investments have long gestation periods and are difficult to implement, a cautious view of the long-term outlook is warranted. Even if economic growth could be raised to a modest 4 percent a year between 1982 and 1985, the annual growth rate between 1977 and 1985, because of the decline in GDP in 1978 and 1980, would probably not exceed 2.4 percent a year, which is still below population growth. 23. The economic and financial rehabilitation plan, and the excep- tional foreign aid based on it will help Senegal to overcome the effects of the recent bad crops, the higher oil prices, and the high debt service built up over the past five years. Strict implementation of this plan is there- fore crucial for Senegal's prospects for economic growth and creditworthi- ness.  - 7 - PART II - BANK GROUP OPERATIONS IN SENEGAL 24. The Bank Group has had 48 operations in Senegal to date. Total outstanding funds amount to US$345.5 million, including 25 IDA credits, 14 Bank loans, four blends of Bank and IDA funds, four IFC operations, and one blend of Bank and IFC funds. Annex II contains a summary statement of Bank loans, IDA credits, and IFC investments as of November 30, 1980, and notes on the implementation of ongoing projects. Physical execution of these pro- jects is progressing reasonably well, although some operations are affected by the shortage of counterpart funds due to the Government's continuing difficult public finance situation, as well as by lack of qualified local staff for key positions. But institutional bottlenecks in several sectors constitute the largest obstacle to efficient project implementation. 25. The Government is well aware of the need to increase absorptive capacity and particularly of the importance of assuring good management supervision of projects in all sectors. In this respect, the ongoing Para-public Sector Technical Assistance Project initiates and implements measures necessary to resolve on a sectorwide basis some of the issues regarding financial management and Government control of public enterprises and mixed companies, particularly those that are channels for Bank Group assistance. The project, now at its halfway stage, is progressing reason- ably well despite a difficult start but it is still too early to assess its impact. The Government created in late 1978 an Inter-ministerial Committee (Comite de Relance des Investissements) which works closely with foreign aid donors, to expedite preparation of new investment projects, and to identify bottlenecks in project execution and take remedial action. The work of this committee has already begun to produce some positive results, and will be strengthened under the recently approved Technical Assistance Project for Economic and Financial Planning through reinforcement of its secretariat. 26. The Bank Group's share in total external aid disbursements to Senegal over 1979-85 will stay at around 12 percent, of which roughly 52 percent in IDA financing. The Bank Group's share in outstanding disbursed debt was 18 percent in 1979, and will remain at around that level until 1985. The Bank Group's share in public debt service is expected to increase from 3.8 percent in 1980 to about 7 percent in 1985, a rise which is mainly due to the increase in Bank loans from 32 percent of the Bank Group's total outstanding and disbursed funds to Senegal to about 41 percent by 1985. 27. The Bank Group's project financing and economic and sector work, which is designed to support the Government's development strategy, has five main objectives. First, priority continues to be given to rural development, including development of irrigation in the Senegal River Valley Region, rainfed agriculture in the well-watered southern regions of the country, intensification of groundnut production and diversification into new crops and new regions, national projects for improvement of agricultural research and for reforestation, and a Small Rural Operations Project which was approved in FY80. Agricultural lending over the next few years is expected to account for about 20 percent of the total. Second, the Bank Group has supported diversification of the economy by lending to the growing  industrial sector through the Societe Financiere Senegalaise pour le Develop- pement de l'Industrie et du Tourisme (SOFISEDIT), a development finance company established with Bank Group assistance in 1974, and through an ongoing project for development of tourism infrastructure. Third, Bank Group projects have supported modernization and expansion (where economi- cally desirable) of the country's infrastructure. A Second Aviation Project was approved in FY79 and a Fourth Highway Project in FY80. An engineering project approved in FY79 finances studies and technical assistance for water supply and sanitation development in eleven secondary centers and is expected to pave the way for future Bank Group involvement in that sector. Similarly the Power Engineering Project should identify possibilities for Bank financing in this sector. Fourth, assistance in the field of social services is being provided under the Third Education Project approved in FY79 to help the Government re-orient and expand the country's education system at all levels. Bank strategy in the education sector has focussed on: (a) meeting the need for trained high- and middle-level managers and technicians in the modern sector and in agricultural development activities, by supporting technical training in secondary schools and specialized institutions for technician training; and (b) improving access to primary education, particularly in rural areas. The Bank remains conscious of the need to support the social services (within the limits of the Government's ability to bear the recur- rent costs involved) by preparing carefully identified projects; to that end, funds under the Project Preparation Facility were approved recently for a proposed Primary Health Care Project. Finally, continuing assistance is being provided to help Government increase its absorptive capacity for planning, executing, and managing development projects through institutional support within individual Bank Group projects. Several Bank Group opera- tions, notably in tourism, telecommunications, port infrastructure, loans to SOFISEDIT, and in airport development, have the additional merit of generating revenues for the Senegalese Treasury. 28. While project aid is vital, Senegal's long-observed economic stagnation and the deep-seated problems that have culminated in the present crisis call for additional, special remedies. One is economic advice. In 1979, for instance, the Bank helped Government devise a policy package aimed at improving the balance of payments while maintaining whatever growth momentum was left in the economy, through waste reductions, cutting consumer subsidies, and higher taxes on urban dwellers, rather than through cuts in groundnut producer prices or curtailing productive investments. Second, and far more importantly, Government's needs for financial and technical assistance during the period of structural adjustment have led the Bank/IDA to propose the Structural Adjustment Loan/Credit which was presented to the Board in December 1980. PART III - THE FORFSTRY SECTOR A. The Rural Environment 29. Senegal has a total land area of almost 200,000 km2 and a population of about 5.5 million (1979 estimate). The urbanized population  _ q _ represents about 30 percent of the total. The rural population is in- creasing at 2.1 percent per year as against 4 percent for the urban popu- lation (total 2.7 percent). About 60 percent of the rural population is concentrated within about 150 km of Dakar in the central groundnut basin. Significance of the Rural Sector for the Economy 30. Despite poor soils and erratic rainfall, and although its contri- bution to GDP is much lower than in most countries of West Africa, the rural sector remains a key one in the Senegalese economy. In the last five years the sector accounted for about 35 percent of GDP; with crops accounting for about 60 percent, livestock 18 percent, fishing 15 percent and forestry 7 percent of this total. The sector also produces half of export income (of which ground- nuts represent 90 percent) and employs about 70 percent of the labor force. Almost all rural sector output is produced by small-scale farm units from rainfed agriculture, though there exists diversity in farm size, labor avail- ability, ownership of agricultural capital, productivity and revenues. 31. Government in February 1972 launched a major administrative reform program to encourage greater popular participation in local affairs and development, through the creation of Rural Community Councils or "Communautes Rurales". These are the smallest administrative units above the village level and generally cover about 40 villages with a total population of 10,000 people. The reform has been successfully implemented in several regions and the project proposed in this report would work through these rural community councils to establish the community plantations (see para. 46(b)). Recently, the Government has recognized that a further reorganization of the rural sector is called for in order to counteract the stagnation in agricultural production and exports. Under the Structural Adjustment Loan and Credit, the Bank would be associated with the Government in financing studies to restruc- ture institutions and policies in the agricultural sector. B. The Forestry Sector Forest Cover. 32. Distribution of the natural forest cover (about 10 million ha) is heavily influenced by rainfall (see Map IBRD 15131). Forest and fauna re- serves, parks, and controlled forest areas cover about 7 million ha. Forest plantations cover some 15,000 ha, mostly for production of fuelwood and building poles. Numerous woodlots have been planted by villagers, schools, youth organizations and other groups, but many of them are in poor condition due to lack of maintenance; however, as wood becomes more scarce, there are encouraging signs that people are taking better care of their plantations. Significance of Forestry for the Economy 33. Fuelwood accounts for 60 percent of domestic energy consumption. The forest areas are a significant dry-weather grazing reserve, and supply an important part of the fodder required for sustaining nomadic populations. Subsidiary forestry products such as gums, various fruits and nuts, as well as thiatching and weaving materials and other forest products, are widely  - 10 - used by the rural population. The forests have pronounced climatic effects, mainly through the provision of shade, which help to protect the soil and aid temperature regulation in both human and livestock populations. Tree and shrub roots fix the soil and protect it against wind and rain erosion, and in some areas improve soil fertility by tapping soil nutrients at appreciable depths and returning them to soil surface layers through the shedding of leaves. Consumption of Forest Products 34. As a result of population growth and rising demand for forest products, as well as extension of farming and grazing areas, forest re- sources are being decimated in an area of some 200 km around Dakar and, in the last thirty years, the natural forest cover all over the country has been reduced by about one third. Future fuelwood supplies for Dakar will of necessity have to come from more and more remote areas of natural forest in Sine Saloum, Eastern Senegal, and Casamance. The situation can be remedied by better management of natural forests and the establishment of large- and small-scale, fast-growing tree plantations, as close as possible to Dakar but, because of the lack of available land, outside of the heavily populated areas of the Groundnut Basin. Because of climatic and ecological limita- tions, such forestry operations can only be undertaken in the forest zones of Thies and the east-central part of Senegal. USAID is currently financing a project in the Thies area, and the project proposed in the present report would be in the east-central regions. Exploitation of Forest Products 35. Unlike the situation in many other West African countries, marketing of forest products is well organized in Senegal. Exploitation of the forest may be done by forestry cooperatives, forestry companies (sawmills and match- producing operations), or private individuals. These groups, however, need to obtain licenses for wood-cutting and collection from the Forestry Department. The majority of fuelwood so produced is sold in the urban markets, with about 80 percent going to Dakar. Both the cost of the permit and retail prices for firewood and charcoal are fixed by Government, with the consequence that in periods of high demand or low supply the wholesale price in Dakar exceeds the official retail price, especially for charcoal. In such cases, retailers adjust the weight in order to obtain a profit. Substitutes and Better Uses for Wood 36. Despite the increasing prices of fuelwood, demand and consumption remain quite high among Senegalese households both in the urban and rural areas. The Government in recent years has tried to reduce the rate of urban fuelwood use (and hence decrease the rate of deforestation) by instituting a "butanization" campaign in the Dakar area through a large subsidy (62 percent) on butane gas. This policy has assumed, a priori, that butane gas substitutes for fuelwood. Observations in Senegal and data from elsewhere (especially in the Middle East) indicate that there is a high consumer preference for fuelwood and, even when butane gas prices are several times lower than fuelwood as in Senegal, consumers would still purchase the latter  - 11 - in large quantities. Furthermore, gas is a non-renewable fossil fuel, the price of which would certainly increase in real terms over the coming decades and such price increases would further limit its use. Other fuels, like kerosene and electricity, are even less widely used in Senegal and their substitutability for fuelwood would be subject to the same constraints. In the rural areas, the fuelwood shortage has not been acute up to now. If continuous deforestation reduces available fuelwood supplies, however, the use of farm products as fuel would reduce fodder for livestock, stalks for housing and animal manure for fertilization. The use of manure for fuel especially could affect crop production, because manure serves as an impor- tant fertilizer on the fields adjacent to village compounds. 37. In order to meet household energy demands, therefore, Senegal in- tends in the near future not only to improve forestry production, but also the efficiency of converting firewood to charcoal as well as the energy yields of cooking stoves. This question has not been addressed in the proposed project because it is the subject of a detailed ongoing USAID/VITA renewable energy project to develop more efficient cooking stoves. Whether or not this program meets its objectives, the residual energy demand to be met by firewood or charcoal is so large that there is no risk of overplanting over the planned five-year project period. Alternative Sources of Fuelwood 38. A theoretical possibility would be for the less wooded sahelian countries to import fuelwood mainly in the form of charcoal from their more wooded neighbors where, because of high rainfalls, artificial plantations and natural forests would have yields about three to four times higher than in the Sahel. In the context of this project a financial analysis was made of importing charcoal from Liberia and comparing it with that produced in Senegal. Liberia has been chosen because it is the nearest country which has data on costs of industrial charcoal production and, although not yet a charcoal exporter, it is the most likely source of supply to Senegal. On a financial basis, imported charcoal would cost at the wholesale level in Dakar about the same as charcoal produced in Senegal from plantations. In economic prices, the cost of comparison moves in favor of fuelwood produced in Senegal. Thus, given: (i) the uncertainty in imports, because of a lack of a well established international charcoal market; (ii) the absence of any well organized charcoal exporting enterprises in the countries of the region; and (iii) the absence of any comparative disadvantage in producing fuelwood domestically, it would make sense for Senegal to have its own fuelwood plantations. C. Forestry Institutions 39. Government, which is becoming increasingly concerned with the need for conservation and management of natural resources, has recently created a permanent State Secretariat for Forestry and Inland Fisheries (Secretariat d-Etat aux Eaux et Forets--SEEF) within the Ministry of Rural Development (MDR) to facilitate coordination and better integration of forestry activities in the rural sector. The Forestry Department, which is under SEEF, has, up to now, emphasized controlling forestry resources and  - 12 - has no formal structure for establishment of tree plantations or management of natural forests on a large-scale basis. The two divisions at Forestry Department headquarters responsible for forestry production and reafforesta- tion have a total staff of less than ten and would therefore not be able to undertake any large-scale reafforestation or natural forest management in addition to their other duties, without the assistance proposed in this project. D. Training and Research 40. Forestry training is provided for forestry technicians, and for middle-level personnel at institutions that are under the Ministry of Higher Education. Forestry education curricula need to be modified to emphasize reafforestation as well as state management of natural forests, and to provide field staff with appropriate refresher courses. The proposed project makes appropriate provisions for such training (para. 49). Senior forestry officers have until now been trained abroad, but will in future be trained at the Institut National de Developpement Rural to be established under the IDA/CCCE-financed Third Education Project (Cr. 908-SE). The National Forestry Research Center is part of the Senegalese Agricultural Research Institute (Institut Senegalais de Recherche Agricole--ISRA). These organizations are formally linked to the State Secretariat for Scientific and Technical Research responsible directly to the Prime Minister. Several major research programs aimed at improving forestry technical packages are being satisfactorily implemented by the Center (para. 48). E. Ongoing Activities in the Sector 41. As part of its strategy for this subsector, Government has asked FAC and CCCE to finance, under a Sahelian emergency fund, a forestry master plan, preparation of which has just begun and should be completed by late 1981. The objectives of the proposed project are in line with the master plan priorities as defined by Government. Within the framework of its Fifth Development Plan (1977-81), and with the assistance of several sources of foreign aid, the Forestry Department is carrying out several small-and medium-scale pilot or experimental forestry projects. The results of these projects have not, however, been uniform. Some have had satisfactory results (such as family plantations in Sine Saloum and sand dune stabilization); others have had less satisfactory results (such as fodder tree plantations and state-managed rainfed tree plantations). These uneven results are mainly due to the lack of means and capacity of the Forestry Department and to the competition between forests, cropping and grazing requirements, which in some areas give rural populations little incentive to participate in forestry projects. F. The Bank Group's Role in the Sector 42. The Bank Group has financed forestry activities within the frame- work of four previous Credits. The Drought Relief Project (Credit 446-SE) provided financing for a bushfire control subproject to conserve dry season pasture and retain tree cover (construction of 60 km of firebreaks). This  - 13 - subproject completed in 1977 was a successful operation and permitted con- trol of about 60 percent of the total number of fires reported in 1975/76 and 1976/77, a significant improvement over pre-project periods. This finding was confirmed in the Project Performance Audit Report of July 2, 1979. The following projects are still under implementation. The Sine Saloum Agricultural Development Project (Credit 549-SE/Loan 1113-SE) pro- vided financing for a rural tree plantation component aimed at promoting the planting of trees for windbreaks and fuel through the distribution of planting materials. Tree planting has had varied results with high planting rates for eucalyptus for building poles and fruit trees, successful implemen- tation of family neem nurseries, and average planting rates for windbreaks. The Eastern Senegal Livestock Project (Credit 644-SE) is providing financing for the construction of about 2,400 km of firebreaks to protect the range, and consequently trees and shrubs, against bushfires. The Small Rural Operations Project (Credit 991-SE) provides financing to establish woodlots, of which half act as windbreaks (60 ha), within the small rice perimeters subproject. PART IV - THE PROJECT A. Background 43. In October 1978, the Government of Senegal asked the Association to help finance a project for reafforestation and natural forestry manage- ment, and to help strengthen the Forestry Department. A joint IDA/CCCE reconnaissance mission visited the country in February 1979 and recommended the start of preparation work on a project for possible external financing. Since much of the data considered necessary for project preparation was already available, the mission-s report was expanded to the status of a draft preparation report issued in August 1979. After further elaboration of the report and detailed review and acceptance of the proposals by Govern- ment services, the project was appraised in April 1980 by a joint IDA/CCCE/ FAC mission, assisted in the field by a representative of FAO and a Senega- lese sociologist/geographer. Continued preparation work in the form of soil surveys and provision of expert financial and accounting services is being financed under an advance of US$50,000 from the Project Preparation Facility approved in September 1980. Negotiations for the proposed Credit were held in Washington in November with a Senegalese delegation led by the Minister of the Plan Mr. Louis Alexandrenne. A representative of FAC was present at negotiations. B. Project Objectives and Description 44. The primary objective of the proposed project is to improve supplies of fuelwood and building poles for rural and urban populations. The project includes the following components: (i) establishment and maintenance of 2,000 ha of state-managed tree plantations and maintenance of 600 ha of pilot state-managed tree plantations; (ii) establishment of rural rainfed tree plantations, of which 1,500 ha would be in family plantations  - 14 - and another 1,500 ha would be in rural community plantations; (iii) improve- ment in productivity and management of about 10,000 ha of existing natural forests; (iv) financing an applied forestry research program; (v) establish- ment and operation of a training center to provide refresher courses for forestry agents; (vi) strengthening the Forestry Departments by providing a high level forestry economist and consultants for the Planning Division of the Forestry Department and establishment at Kaffrine of a Project Operations Unit (POU); and (vii) consulting services for studies. C. Detailed Features of the Project 45. State-managed rainfed tree plantations. About 2,000 ha of rainfed tree plantations would be established in several blocks already exploited by private loggers in the forest reserves located between Kaffrine and Koumpen- toum. Plantation sites have been identified from results of the preliminary soil surveys carried out under FAC/CCCE financing and additional surveys financed under the PPF. The results of these soil surveys were provided prior to negotiations. Plantation works as well as all the other field forestry works under the proposed project, would be carried out by force account with material provided largely by the ongoing FAC/CCCE pilot project in Kaffrine and additional machinery and equipment provided under the proposed project. Experience to date has demonstrated better survival and faster growth rates when land preparation has been carried out with machi- nery rather than manual labor. The project also provides for the simulta- neous construction and maintenance, also by force account, of access roads, tracks, firebreaks and accommodation for laborers and supervisory and support staff. The work program would include nursery improvement, clearing and destumping, land preparation, ripping, planting and weeding. Since one of the aims of the proposed project is improvement of know-how on state- managed plantations, the project would also maintain the 600 ha of planta- tions established in the Kaffrine area under the FAC/CCCE financed pilot project. 46. Rural rainfed tree plantations. This component attempts to improve the extent of participation of the rural population in the reaffores- tation effort. If successful, particularly where its cost recovery mecha- nisms are concerned, the project would set the stage for a second phase project that would give greater emphasis to rural tree plantations. (a) Family plantations. Seedlings would be provided to rural popula- tions at cost from existing nurseries that are to be improved or rehabilitated under the project (Section 3.08(a) of the draft Credit Agreement). The project would also provide nursery and fencing supplies to improve and develop family nurseries estab- lished under the ongoing IDA/CCCE Sine Saloum Agricultural Develop- ment Project (Loan 1113-SE/Credit 549-SE). Seedlings would be provided through established extension services which would offer technical advice and follow up on results. Working agreements on seedling distribution and extension support would be reached between the Forestry Department and several rural development agencies, and an agreement with SODEVA, acceptable to IDA, should  - 15 - be signed before providing the first seedlings to farmers in Sine Saloum. An assurance to this effect was obtained during negotia- tions. (b) Rural Community Tree Plantations. The project would provide assistance to rural populations, through their Rural Communities, in establishing medium-scale tree plantations (about 5 ha each). The project would provide tree seedlings at cost (Section 3.08(a) of the draft Credit Agreement), and machinery to carry out ripping and forest weedings as well as to construct firebreaks. Part of the operating costs would be recovered through wood sales. To that effect, the POU, through the Forestry Department, would enter into an agreement with the Rural Communities which would be reviewed by IDA, before providing them with machinery and other services, that 20 percent of all wood sales at maturity from community plantations would be paid to the Forestry Department as the community's contribution towards the cost of establishing its plantations (Section 3.09 of the draft Credit Agreement). The project would finance about 75 percent of the manual labor required, while rural communities would provide the remaining 25 percent as free labor; but project management would pay special attention to increasing the unremunerated participation of the rural population as the project progresses. The work program would be similar to that of the state-managed tree plantations (see para. 45). These rural community tree plantations should, in the medium-term, constitute the main element of a network whereby a wooded land- scape would be re-established in the relatively populated areas. Wood produced from the rural community tree plantations is expected to amount to 64 m3 per hectare over a sixteen year period, of which 80 percent would be fuelwood and 20 percent would be building poles. Between 50 to 75 percent of the fuelwood and building poles produced would be used by the participating villages in their respective rural communities and the remainder would be sold by these communities to derive resources for repayment to the Forestry Department and for the communities- own investments. 47. Natural forest management. Management of the Koumpentoum forest reserve (about 10,000 ha) in Sine Saloum and Eastern Senegal would be undertaken on a large-scale -experimental basis in order to define effi- cient techniques for natural forest management allowing better natural regeneration and regrowth. Application of the selected techniques would be preceded by the setting up of a working plan including division of the forest reserve into compartments, undertaking of a forestry inventory, marking of trees, construction of access roads, tracks and firebreaks, as well as building of accommodations for laborers, supervisory and support staff. Promising results have been obtained from similar natural forests in other countries in West Africa, with sustained yields increasing from 0.5 m3/ha/year up to 2.0 m3/ha/year. It is estimated that about 15 man-days of labor input per hectare would be required over five years. 48. Applied Research Program. The project would finance an applied forestry research program, to be headed by an internationally recruited  - 16 - forestry researcher. Given the lack of well-adapted forestry technical packages for arid and semi-arid zones, special emphasis would be given to trials with fast-growing species, seed selection, plantation and natural forest management techniques. The researcher to be seconded by ISRA would be based in the Project Operations Unit (see para. 54 below) to be estab- lished at project headquarters in Kaffrine (Section 3.02(b) of the draft Credit Agreement). The Forestry Department would sign a working agreement with ISRA for the secondment, and would elaborate jointly with ISRA a well-defined research program appropriate to project needs and within the framework of the national research effort (para 40). The agreement with ISRA, acceptable to IDA, should be signed before establishing the applied research unit. An assurance to this effect was obtained during negotiations. 49. Training. The project would establish and operate a training center at Kahone to provide refresher courses on state-managed and rural reafforesta- tion techniques for project staff dealing with field activities, and occasional training opportunities for other forestry staff not directly related to the project, as well as for trainees of the existing forestry schools at Bambey and Ziguinchor. Appropriate training would also be provided for extension personnel of the rural development agencies and center staff would provide on-the-job training to project staff. Annual curricula for courses to be offered at the training center would be reviewed and agreed with IDA (Section 3.10 of the draft Credit Agreement). Additionally, the project provides for short-term fellowships for forestry officers. The center would be headed by an internationally-recruited forestry training specialist for a total of 4.5 years. 50. Planning, Monitoring and Economic Studies. The project provides for strengthening the Planning Division at Forestry Department headquarters in Dakar. The Division would be assisted by an internationally recruited economist with a background in forestry (Section 3.02(b) of the draft Credit Agreement), who would report directly to the Director of the Forestry Depart- ment. The Division would help the Department to plan and install a regula- tory system that would permit a more balanced and economic exploitation of Senegal's forests and ensure a more systematic renewal and extension of forestry resources in the country. The POU would provide IDA with semi- annual reports on project progress and evaluation and would prepare the completion report (Section 3.06(d) and (e) of the draft Credit Agreement). 51. Studies and Audits. To ensure proper accounting and financial control, the project would finance one man-month of audit services each year over the project period. The project would also provide consulting services to assist the Planning Division of the Forestry Department to carry out three complementary studies: (a) a rural forestry study (12 man-months): receptivity of rural populations to afforestation in Senegal has been limited by several constraints tied to land availability and tenure systems, competition with crop production, and the institutional support given to such activities. The project would finance 12 man-month3 of consultant services to carry out a study aimed at identifying and overcoming the constraints of large-scale rural reafforestatiorn;  - 17 - (b) an economic study (3 man-months): the project would finance three man-months of consultant services to assist the Planning Division of the Forestry Department in its work on economic aspects of the forestry subsector concerning optimal pricing, marketing structures and policies for forestry production, and recurrent cost implications of all forestry activities in the country, including the proposed project. The Division would also study the comparative benefits and costs of state-managed and rural forestry operations in different parts of the country; (c) a project preparation study (3 man-months): the proposed con- sulting services would be provided only in the last two years of the present project to prepare a second-phase operation and would take into account the findings and recommendations of the studies described in (a) and (b) above. The Government and IDA would exchange views from time to time on the progress of the rural forestry and economic studies, and on means to implement the recommendations of the study (section 3.06(b) (ii) of the draft Credit Agreement). D. Project Costs and Financing 52. The cost of the proposed project (net of identifiable taxes and import duties from which the project would be exempt) is estimated at US$17.1 million equivalent, of which US$8.6 million (about 50 percent) are foreign exchange costs. Total costs include physical contingencies equal to 10 percent of estimated costs for civil works, machinery and vehicles, forestry works operating costs and inputs, and other operating costs. The allowance for expected price increases over the five years of the project is about 40 percent of base costs plus physical contingencies. Average costs of short-term consultant services, which total 36 man-months, are estimated at US$11,900 per man-month (including benefits and subsistence); average costs of expatriate staff (a total of six for a combined total of 28 man- years) are estimated at US$100,000 per man-year, of which about US$60,000 represents salary and benefits. 53. The financing plan is as follows: (a) FAC would provide three expatriates (Workshop Manager, Forestry Technical Advisor, and Forestry Researcher) for a total of 13.5 man-years, valued at about US$1.8 million or 10.5 percent of total costs; (b) CCCE would finance through a credit, the terms and conditions of which are yet to be negotiated, about 19.9 percent of the total costs (or 40 percent of infrastructure, all light machinery and vehicles, and 40 percent of forestry works), which would amount to about US$3.4 million; (c) UNDP/FAO would provide one expatriate training specialist for the training center (4.5 man-years) and consultants for the rural forestry study (12 man-months) valued at a total of about US$0.8 million or 4.7 percent of total costs;  - 18 - (d) The Senegal Government would pay salaries of civil servants (US$0.7 million), support staff (US$0.5 million) as well as part of the operating costs (US$0.5 million), which will be appropriated in the "Budget d'Equipement" (section 3.02(e) of the draft Credit Agree- ment). The total of the Senegal Government's contribution, includ- ing receipts from seedlings and wood sales (about US$0.1 million), would amount to about US$1.8 million or 10.5 percent of total costs; (e) IDA would finance the remaining project costs amounting to about US$9.3 million (55 percent of total costs), of which US$4.7 million would be local costs. Meeting all the conditions precedent to the effectiveness of the proposed CCCE Credit and FAC and UNDP/FAO grants would be a condition of effective- ness of the proposed IDA Credit (Section 6.01(e) of the draft Credit Agree- ment). As indicated in paras 58 and 59, CCCE financing would be a mix of parallel and pari passu financing, depending on the total amount that is being financed by CCCE of each component. E. Project Execution 54. The Forestry Department Director would be the overall supervisor of the project and would pay special attention to the project's institution- building aspects. Implementation of the forestry operations, research and training components would be done by a Project Operations Unit (POU) to be set up at Kaffrine, with its own manager responsible to the Forestry Depart- ment Director (Section 3.02(a), (b) and (c) of the draft Credit Agreement). The unit would be responsible for execution of all project activities other than the studies; and it would be responsible for coordinating the activi- ties of different agencies and institutions and other divisions of the Forestry Department that would be involved in the execution of the project. A Senegalese forestry officer has been nominated as the Operations Manager and he would be assisted by forestry specialists including a forestry officer responsible for the tree plantations and natural forest management; a forestry technical advisor; a financial expert responsible for finance and administration; and a workshop manager responsible for the upkeep of heavy project machinery and equipment (Section 3.02(c) of the draft Credit Agree- ment). Most of these specialists would be expatriates working with Senega- lese professionals, and the expatriates would provide training for those skills which the country is not yet able to furnish (see para. 54). The Government has agreed to provide the required number of professionals to work with the expatriates (Section 3.02(d) of the draft Credit Agreement). The Government has agreed that the Operations Manager and all posts to be filled by key staff would have qualifications and experience acceptable to IDA (section 3.02(c) of the draft Credit Agreement). Establishment of the POU and appointment of the Operations Manager and specialists in charge of tree plantation and natural forest management, finance and administration, as well as the forestry technical advisor, would be a condition of effective- ness (Section 6.01(b) and (c) of the draft Credit Agreement). 55. The POU would prepare an annual work program and budget which would be forwarded before the beginning of each fiscal year to IDA for  - 19 - its approval (Section 3.06(b) of the draft Credit Agreement). The POU would have some degree of financial autonomy with only a posteriori expenditure control, with the exception of contracts for major items to be awarded on the basis of competitive bidding (para. 58). The POU would keep separate accounts for the proposed project, and evidence of establishment of the project accounting system, which is being prepared under the PPF (see para 57), would be a condition of effectiveness for the proposed Credit (Section 6.01(d) of the draft Credit Agreement). 56. The Government has little capacity to prefinance expenditures to be reimbursed under the IDA Credit and preparation and planting periods during the rainy season are short; therefore a revolving fund of US$0.5 million, financed by an advance of $300,000 from the IDA Credit and of $200,000 from the CCCE Credit, would be established in a special account to avoid any delays in plantings. This account would be opened in a commercial bank in Dakar, and would be managed by the POU under terms and conditions acceptable to IDA. IDA would replenish the account upon receipt of evidence of disbursements from the revolving fund for allowable expenditures. Should any disbursements be made from the revolving fund which are not acceptable to IDA, the Government would deposit the corresponding amount in the account (Section 2.02 of the draft Credit Agreement). A project account would also be opened in the Treasury for handling the Government's contribution. Opening of the two project accounts as well as Government's payment of its initial deposit of CFAF 8.4 million (US$40,000), representing its estimated quarterly contribution to project costs, would be a condition of credit effectiveness (Section 6.01(a) of the draft Credit Agreement). The project-s Government account would be replenished at least quarterly on the basis of supporting documentation for expenditures incurred and cash forecasts made by project management in order to have sufficient funds to meet project expenditures for the following three months (Section 3.03 of the draft Credit Agreement). 57. To accelerate project implementation scheduled to begin in July 1981, some preliminary project works are being undertaken in 1980 and early 1981, for which, the Government applied for an advance of US$50,000 from the Project Preparation Facility, which would be refinanced by the Credit. These funds are financing: (a) complementary soil surveys in 1980-81 of the forest reserves located between Kaffrine and Koumpentoum not covered by the ongoing FAC/CCCE financed soil surveys; and (b) financial consulting services (one man-month) to prepare the project accounting system prior to project implementation. Procurement 58. Procurement of heavy machinery and tractors to be financed under the IDA Credit that are similar in nature and time of purchase, would be grouped in packages of over US$100,000 where possible and would be awarded on the basis of international competitive bidding (ICB) in accordance with IDA guidelines. ICB is expected to cover US$0.5 million. Domestically manufactured goods would be allowed a preference of 15 percent, or the applicable level of import duties, whichever is lower. Contracts for these items for less than US$100,000 but for more than US$25,000 would be procured  - 20 - on the basis of competitive bidding procedures advertised locally and contracts for less than US$25,000 would be procured by direct shopping on the basis of at least three quotations (the amounts involved are expected to be US$0.4 million); these procurement procedures permit foreign participa- tion through local agents. All light vehicles, motorcycles and trucks (US$0.7 million) would be financed under the CCCE credit. Because of their location and small size, contracts for civil works, houses, offices and wor~kshops (a total of US$1.6 million of which US$1.0 million would be financed by IDA) are known to be unattractive for international contractors and would, therefore, be awarded on the basis of competitive bidding adver- tised locally. Services of expatriates and consultants (US$4.4 million of which US$1.8 million to be financed by IDA) would be obtained in accordance with procedures acceptable to IDA. Field forestry works (total of US$5.2 million of which US$3.1 million to be financed by IDA) would be done through force account. The remaining project items (US$4.3 million, of which US$2.5 million financed by IDA) would not be suitable for competitive bidding as they would involve: (a) wages, salaries and allowances; (b) operating costs of machinery, equipment, vehicles and offices; and (c) scholarships and training. Disbursement 59. Proceeds from the proposed IDA Credit would be disbursed over five years as follows: (a) 60 percent of civil works costs (US$0.8 million); (b) 100 percent ofKheavy machinery and tractors (US$0.9 million); (c) 60 percent of field forestry works including operating costs and inputs, seasonal labor and permanent staff (US$2.8 million); (d) 100 percent of expatriate and consultant salaries excluding salaries paid by FAC and UNDP/FAO (US$1.45 million); (e) 80 percent of all project operating or supervisory staff costs not directly related to the field forestry works (US$2.1 million); (f) Revolving Fund (US$300,000); and (g) Refunding of PPF (US$50,000). An amount of US$0.9 million would be unallocated. Applications for credit withdrawal would be fully documented, except for those under (c) and (e) above which would be against certified statements of expenditures; documen- tation for these will be held by the Forestry Department and will be veri- fied by the independent auditors, as well as reviewed by IDA Supervision missions (Section 4.02 of the draft Credit Agreement). F. Financial and Economic Analysis of the Project 60. Production and Marketing. At full project development in PY9 annual wood production would be about 45,800 m3 (excluding 6,000 m3 of  - 21 - wood to be produced under the FAC/CCCE pilot operation and maintained under the proposed project). In both tree plantations and natural forests about 80 percent of incremental wood produced through the project would be used as firewood; in tree plantations, the remaining 20 percent would be building poles, but in natural forests the balance would be both timber and building poles. Given the shortage of fuelwood from natural forest sources, no marketing difficulties are foreseen for project output which would be less than 6 percent of current Dakar demand. Building poles are already being imported from neighboring Guinea Bissau; thus the poles to be produced by the project should find a ready market given the consequent lower transport costs from the project site to the consumption centers. Timber products from Senegal's forests are of high quality and timber from the project should be easily marketed to local sawmills and artisans. 61. Prices. Government is now fully aware that wood from natural forests can no longer be considered a "free good" and that the low permit price charged for fuelwood from these forests has led to increased demand and unduly rapid exploitation of fuelwood resources. Adequate measures would need to be taken to ensure that, through reasonable pricing policies, fuelwood is used economically and incentives are given to individual farmers and communities that would want to establish plantations. Thus, official permit and retail prices would need to be monitored carefully during imple- mentation. The Government has agreed to review, in consultation with IDA, and not later than December 1982 its stumpage pricing policy, so that increased stumpage prices will reflect the value of wood to the economy and encourage wood conservation. The Government would also harmonize the stumpage price of firewood from all sources by bringing the price of the permit for cutting wood from natural forests to about 30 percent of that from plantations by 1986 and to about 80 percent by 1990 (Section 4.04 of the draft Credit Agreement). The average annual fuelwood output from the project would not be enough to meet annual increases in consumption due to population growth; in the medium-term, therefore, real prices of fuelwood and, because of shortages, of building poles, would keep increasing. 62. Over the five-year implementation period, the Project would dis- tribute a total of some CFAF 818 million (US$3.9 million) in salaries to nationals involved in the execution of the Project. In addition some CFAF 219 million (US$1.0 million) would be generated as profits for domestic enterprises and about CFAF 73 million in indirect taxes. Overall, the value added to the economy would be about CFAF 1,141 million (US$5.4 mil- lion) over the five years excluding direct and indirect expatriate salaries. After the five-year implementation period, the Project would continue to generate salaries to workers engaged in plantation maintenance and incomes to loggers, wood wholesalers and retailers and generate a considerable amount of value added through the marketing process. During implementation, wood produced from the natural forests and seedlings sold to the rural population would give income to Government and thus would be used to off- set some of the project costs. For an average lot of 5 hectares the in- come accruing to a participating village would be CFAF 240.00 (US$1,143) per year from PY6 at present prices, representing 3 percent of the average total annual income for a typical village population of 250 people (US$150 per person). At the rural community level and assuming 20 lots  - 22 - per rural community the income accruing to such a community from wood sales after deduction of repayments due to the Forestry Department, would be CFAF 1.3 million (US$6,190) per year from PY6. This represents 12 per- cent of an average rural community budget of CFAF 11 million (US$52,380) per year. 63. Government Cash Flow. After the first five years of project implementation, recurrent costs required to maintain the project would amount to about CFAF 67 million per year for the next 15 years, including running of the research and training facilities established by the project and replacement of some equipment and vehicles. These costs, plus debt service for both IDA and CCCE credits, should be covered by the expected revenues from wood permit sales and indirect taxes generated through the marketing of the project's output. On the basis of the above assumptions, the cumulative cash-flow deficit should be fully eliminated by PY8. The negative cash-flow of the first five years represents the Government-s contribution to project financing. G. Project Benefits and Risks 64. Direct Benefits. Economic benefits have been calculated only for the directly productive components of the project (64 percent of project costs), with economic benefits counted as fuelwood, poles and timber. The economic stumpage prices for timber and building poles were derived from border prices and the Bank's projections for timber prices through 1985. The valuation of fuelwood is more difficult because there are at present no imports into Senegal, nor is there any regular international market in fuelwood. Two approaches have been adopted: (a) a low valuation assumption in which project output is valued at domestic prices, with the assumption that fuelwood prices would continue to increase in real terms by 2 percent per year for the next 10 years; and (b) a ceiling assumption in which project output is valued at a border price derived from production costs in Liberia (see para 38). The first case gives a weighted average economic return for directly productive components of 12.8 percent, while the average return in the second case would be 15.5 percent. Over the five-year imple- mentation period, the project is expected to generate about 2,400 man-years of direct employment for unskilled labor, and about 350 man-years for skilled and semi-skilled labor. A large part of the employment generated would be unskilled jobs and would benefit the poorer members of the project region. No attempt has been made to quantify the benefits that would result from maintaining environmental stability through reducing the pressure on natural forest resources, thereby enhancing inter alia their potential for commercial timber and fuelwood production, grazing and minor forest products. Furthermore, the rural forestry component should help reduce wind and soil erosion by providing trees as windbreaks. 65. Indirect Benefits. The estimated rates of return do not fully reflect the importance of the Project to SenegalVs forestry sector since they exclude benefits from (i) the reduced pressure on existing natural forests (which would be greater to the extent to which demand is less than perfectly elastic and project output would then substitute for current  - 23 - production rather than add to it), (ii) the results of trials and experi- ments to be conducted, and (iii) the increased scope for investment in the sector afforded by a strengthened and more experienced Forestry Department. 66. Risks. Since the establishment of tree plantations and management of natural forests on a large scale are fairly new undertakings in Senegal, the proposed project would inevitably involve some risks. Perhaps the greatest risk attaches to the rural tree plantations component, since its establishment and, to a lesser extent, maintenance would entail competition with the demands of other farming activities for family labor. However, rural plantation maintenance will be scheduled as much as possible in periods most compatible with agricultural operations and studies have been proposed in the project that would tackle problems related to rural forestry (see para 51(a)). PART V - LEGAL INSTRUMENTS AND AUTHORITY 67. The draft Development Credit Agreement between the Republic of Senegal and the Association, and the Recommendation of the Committee pro- vided for in Article V, Section 1 (d) of the Articles of Agreement of the Association, are being distributed to the Executive Directors separately. 68. Features of the Development Credit Agreement of special interest are referred to in Section III of Annex III. Special conditions of effective- ness of the proposed Development Credit (Section 6.01) are: (i) opening by the Government of a special account at Dakar and of a Project account within its Treasury, and payment by Government of an initial deposit of CFAF 8,400,000 into the latter account; (ii) establishment of the Project Operations Unit; (iii) appointment of four key project staff; (iv) evidence of establishment of a project accounting system acceptable to IDA; and (v) meeting conditions precedent to effectiveness of the CCCE, FAC and UNDP/FAO Credit agreements. 69. I am satisfied that the proposed Development Credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 70. T recommend that the Executive Directors approve the proposed Development Credit. Robert S. McNamara President Attachments Washington, D.C. January 22, 1981  -24 - Annex 1 TABL! 3k SgEEGAL - SOCIAL INDICATORS DATA SHNgg SENEGAL RENFRENCE GROUPS (IECUTED AVE4JGES LAND AREA (THOUSAND SQ. KM.) - HDST R___RC _ gSTIHATg)__ TOTAL 196.2 AGRICULTURAL 81.0 MOST RECENT LOW INCOME MIDDLE INCOME 196O /b 1970 lb ESTIMATE ft AFRICA SOUTH OF SAHAA AFRICA SOUTH OF SANARA GNP PER CAPITA (US$) 180.0 240.0 340.0 228.9 726.2 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 121.0 139,0 181.0 80.0 699.4 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (MILLIONS) 3.4 4.4 5.4 URBAN POPULATION (PERCENT OF TOTAL) 22.6 23.7 24.9 17.3 28.9 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 9.0 STATIONARY POPULATION (MILLIONS) 24.0 YEAR STATIONARY POPULATION IS REACRED 2150 POPULATION DENSITY PER SQ. 1M. 17.0 22.0 28.0 27.4 61.7 PER SQ. EM. ACRICULTURAL LAND 43.0 55.0 67.0 82.6 126.0 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 44.0 42:9 44.3 44.9 45.5 15-64 YRS. 54.0 54.2 52.8 52.2 51.6 65 YRS. AND ABOVE 2.0 2.9 2.9 2.8 2.8 POPULATI,O GROWTH RATE (PERCENT) TOTAL 1/ 2.2 2.4 2.6 2.7 2.7 URBAN 3.5 2.9 3.2 6.8 4.9 CRUDE BIRTH RATE (PER THOUSAND) 48.0 47.D 49.0 47.4 46.8 CRUDE DEATH RATE (PER THOUSAND) 27.0 23.0 22.0 19.6 16.4 GROSS REPRODUCTION RATE .. 3.0 3.2 3.2 3.2 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) USERS (PERCENT OF MARRIED WOMEN) .. . . FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 125.0 83.0 104.0 91.8 94.0 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 92.0 95.0 95.0 90. 2 92.7 PROTEINS (GRAMS PER DAY) 62.0 64.0 64.0 53.0 53.0 OF WHICH ANIMAL AND PULSE 19.0 20.0 19.0 18.4 15.6 CHILD (AGES 1-4) MORTALITY RATE 41.0 35.0 32.0 27.7 21.3 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 37.0 40.0 42.0 45.3 50.1 INFANT MORTALITY RATE (PER THOUSAND) 93.0 .. ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. . 37.0 23.2 31.0 URBAN . .. 68.0 58.0 66.8 RURAL 23.0 16.8 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. .. .. 28.9 URNAN .. .. . 67.0 RURAL .. .. POPULATION PER PHYSICIAN 22376.0 16673.0 15704.0 30910.4 14508.2 POPULATION PER NURSING PERSON 4110.015 2684.0 1608.0 5793.2 3279.5 POPULATION PER HOSPITAL BED TOTAL 840.0 810.0 900.0 1198.9 1141.5 URBAN 281.0 356.0 RURAL 2001.0 1171.0 ADMISSIONS PER HOSPITAL BED .. 22.2 26.7 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL .. .. URBAN .. .. 7.6 RURAL .. .. 6.0 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL .. .. UR8AN .. .. RURAL .. .. ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. .. URBAN .. .. .... RURAL .. . . 1/ UN estimates; Government estimates population growth at 2.7 percent a year.  - 25 - Annex 1 Page 2 TABLE 3A SENEGAL - SOCIAL INDICATORS DATA SHEET SENEGAL REFERENCE GROUPS (WEIGHTED AVERAGES - MOST RECENT ESTIMATE) MOST RECENT LOW INCOME MIDDLE INCOME 1960 lb 1970 /b ESTIM1ATE /b AFRICA SOUTH OF SAHARA AFRICA SOUTli OF SAHARA EDUCATION ADJUSTED ENROLLMIENT RATIOS PRIMARY: TOTAL 27.0 43.0 47.0 57.7 61.7 MALE 36.0 53.0 57.0 74.2 69.2 FEMALE 17.0 33.0 37.0 54.1 51.4 SECONDARY: TOTAL 3.0 10.0 11.0 10.0 20.6 MALE 4.0 15.0 16.0 13.7 29.2 FEhALE 2.0 6.0 7.0 7.1 14.7 VOCATIONAL ENROL. (% OF SECONDARY) 23.0 9.0 10.0 6.8 7.0 pUPIL-TEACHER RATIO PRIMARY .. 45.0 49.0 45.0 36.6 SECONDARY 34.0 29.0 22.0 25.2 24.3 ADULT LITERACY RATE (PERCENT) 5.6/d 10.0 10.0 25.5 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 6.0 9.0 9.2 3.6 38.8 RADIO RECEIVERS PER THOUSAND POPULATION 40.0 68.0 64.0 31.5 83.5 TV RECEIVERS PER THOUSAND POPULATION .. 0.4 0.4 1.8 NEWSPAPER ('DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 6.0 5.0 7.0 4.6 24.2 CINEMA ANNUAL ATTENDANCE PER CAPITA .. .. 0.7 .. 0.7 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 1590.3 1911.8 2232.8 FEMALE (PERCENT) 39.7 39.1 38.0 33.5 38.1 AGRICULTURE (PERCENT) 83.6 79.7 77.0 80.7 54.3 INDUSTRY (PERCENT) 5.4 6.6 8.0 8.1 17.8 PARTICIPATION RATE (PERCENT) TOTAL 46.6 44.3 42.8 42.2 38.8 MALE 56.7 54.5 53.0 55.1 48.4 FEMALE 36.8 34.3 32.8 29.5 29.4 ECONOMIC DEPENDENCY RATIO 1.0 1.1 1.1 1.2 1.3 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS 36.8/e HIGHEST 20 PERCENT OF HOUSEHOLDS 62.5/e LOWEST 20 PERCENT OF HOUSEHOLDS 3. 2/e LOWEST 40 PERCENT OF HOUSEHOLDS 9.4/. POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. .. 138.2 RURAL .. .. 82.0 86.1 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 194.0 107.0 RURAL .. .. .. 65.0 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. RURAL .. .. .. 66.9 Not available Not applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is not uniform. lb Unless 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 1974 and 1978. /c 1964; /d African population only; /e Population. April, 1980  - 26 - Annex 1 DEFINITIONS_OP _SOCIAJL IND.ICATORS Sotet Although rodn e ie fro sore ge.erally judged Ill mooneutrtteOv and reiale Insould also be noted than they may Tot be ns oattonatlyco_porshlebecus ntthlck of onandordleed definnitl adonc ar sd byd-fer11cusressc llenln the dote. Tednes then,_ usiu to .descrh orden of eagninude, ind-toas trends, and oteonr.ecrat ao dnfferenoss bear.en... nne on th suboct cuntr (excpt fr 'CaltelSurplus Oi1 tsporsere" grouP eber "ttiddle Incree North A Eilt and NOddle, les'Isc ..e b-o-e of srne least helf ci ths ceutrisa Inauroup baa dte for then, _~ .. d. conh s. S Inc tPePnoverag of.. ooontrte son th Indiosnors dspesdo en t11he soa Ylbhly nf d_s n s u nfor_,cote euh5 benerisd In r_lnlg aergso re twnaroaohr Rhs eoeh e are enl dsfltcsprn.i au of m En cao at tier eorg hoh cootry sod refsre.c -groups. b Tuo-To1stacaecsre11-ilngenoean- sed eser. lcu1dalf.c..sa.e.ce.coo..t..sret..r.l fr crePe., ca--r, norket aud kItchen Sardeno or no lie fel.P. ..los l97 oe saPI.is fmlega uste r"Pe prcicl Ides ndssee uss 1977at dapeta.s ta Nef_dcdlyan osS-Ppualn ttl mNy P- CAPITA IPS$) - iN? Perr c-itastt- a at cretmre rcs d ra,adrtS bddbterepcu obro optlbd cu9eted by dae oserto mehod asWorld tenk Atll.. 1976-7t baits); 19N0, sanbeipbicad pneregeerl adspc ofie hespitl band r EuNERG CONtUttPTION PIn CAPtITA -blss oaatn ft-ecaleeg ts ya es n bytts salsen rmda prinr.ailycesfdl trtlty O kIogrmsof tsrquoolntpenceofs NO 97.odl coes Pdeo eno.Y I hlhfferb, h inpaies IrcnstOby andl precde... Rdat,ls te a .teofsdsifclts.PsstlictprseubaAoi rri~ ~ ~ hyd --r1--T:ZLa1.'Nh:jyI(r lhsdncade NesprIcipa geers so h-pecieosed hotla,h and rural. ennAlsAOlVTl eTAISIC heptlelcl rrrs rpnpsanla.Oa-mdntres eses fetl oplaIo.1 No-Ta ...... a -q An rf JuPly ; 196i, 1970,..ed 1978 AulsosucNeOe e ea aes1fooisostr shrs data, fees, osctai diode by t~her fafbr ofp beds.P d Orhen renulosue,, Irarosni of total)--oanio oP-otbPn to Pntel popohottem asotocruntrlse; ONhO,A 1970,y end96, 197. .19ff7 dae.Ae.o le f oseodhImee per.. hoseod) -J _re,pshe. sdspl youotn rjcInsAAueol nees fearI fidelol b eAse Itlgqatt PouainOTeao00-Cret euelnooeott p aedr NO adncanml el.Ahere rOdgrmye a Oth nlddO cbiff epleloa y geon set edther oraltyan finSdneresa ny hushod nrsttbsialpupoes drtcoepraessfrsotluyrte rpier these Osealsast osaeese n sss ntmg rsl sa,en ae Aeeese ordf Ltut trnd fo prjcaddt5OO5.o toal rbo and ruAl dwel osIapeted y Snetloney ronulston-leessttosarypopulatIn nhsrs s no orlit altos la cs fbirt 'rtratO equa te thedeth rats,i cud else the. holdstructure pj- l .CATII of eserslaces . btalt i-ecly. ThIsaloayh oultessAsdessrollebst of all -.a. th p rimary level as d prcetge fepetr ooItmtde h s Pa-h rjatdoeeoelc of Pits popalat.. primry tbsofg pouenos eralyiclds hId ge - sldehas...lyi beer hoe...ig. h..i- .b.J. f Aetn sys.ot-tta,maesdfeis-C pudab'o;crdy Peoato ltttv ndanfslon reqiresetissifea yse o apIt priar IntrutaInn Per s. Am - NO-yea popuatIo per -asshteens110henrefe pruondesgi nseI d ocaslosel, er tache eling qsaeis o u Strall a..res. usuilh, g.h .. f oallyof1 -b e. 17 years ofad a crssnd li eues r gaal PeIo.h.aeoulua lu doepted asr. abev fnarah s adseldd enl. Irasonlatn_nstIrI_s oIecadrof Tcatna isnnttn PouatnAeSrcur prst blrt)-oh eas)Aurin-ge11- incld E.rac1nir al,Indsra,r te rgassiboeosOdp Porulatdlon trhna tate . frren)-iiath.ue eot ae of hcipl osd- pimr ndsa de Is hal divided b.y nmesofnsirsIh perti oeaos h nt19y-Ni 1960-7I a: 97-9.crePd.glees PuugtnI 2000sab Net )p ro )-urba- nAofsothrtedo rbnPup- Autlrc esi Ysehral P ) -Lteat ad lults falehnIred- sad ovine lattoe fur195-i NOf.sd17-t Ysaprceraab f otl aj.df,dul ..t populhtlos aged 15 parssd e... r. f Crude Otrib ans less nboaaid) --ednelyloveobobb per thoosfe ofiaid-pea Crude hei asfart at)- nuldahsprtosn uf mtd-ysshdasseee Case Pinst salln erlett)-basegr1aeIo Prsaco Cm.Errdoidna - POs1as -Anrg P-mr ofdksilses a ID hcat Ol ber. to soPlisdry vehIcles.. he eralrprdctv prodO_seesaierv rsetag-peiicfr- nal Noivs Ie tesadrou-to) ll_pe f eaies o rd too Otyranas; suail lee-year Ceerput.edIn in. 1960, -1970tu. ad197bucst in -ll g12sato pb17 per rhof ss ad --ofdo peolanor;soludas usplO- ers ft tld-besd ag 1-4pas t s tahcnrldvnet Atcier rrtoga ouots fT 1c.dryctes o rada n alsrodcnsIsesa g gru. gnrlpb pedtru or ppn otrw sola alhh pc-ase TA re pOvet foul - 196 SOtI I970 lncdu1978seddIsa. rs heaargiatratof o Top ets as Ic ffect Pndepuf.i Groo Prdcuo-t eat 1997.yl ordeo ercptasma NesaerCrulto d Isas-l tofu...sd rynltul-te teaaeecra Rprodocttent lic 9 th... . ttl d- Pet irel dseted primaril n -endisg-- ges Ts l sews I.t is ro 1lidere natInalaveageprouce poc esin d lA, 90 n 19ff data, u- And mahi nit Pertca for 19501 encaoie Iacas pretoeeod)-Cipoe go quantirtIesRued i Io rcslg sad esas it tsnt dulrf Osquyre- Sslettn1 inoll n u tteerne oprbil; 19Nr1. 1970 end . ma eta sre seimosed r PAP ased n bhaooioines o rea oi iSIt data.1a, Y.. a huuuiehe9ld 0 19ee0; OA-AN 1970,ad1f data, fishIngA. Casprceoage . en ..r.. lao1 eos"90i11 n"O aa har contr urnlv . of orotein (sPans r.oflId- ylr uen "u IIu bPpr cIptc Inusry sarcen) -Z labor force.s.ino. res bucle-, heoufatius- co scyy P oo erda. etsupy f on O df esd asshoes.aland l honrn,unssdgsa ecntg fttllbrfre 9i quirsann forall euntI.s es. lse by.. tAprnd foeaIonumt .. dp,l,o l tplo o d birth-.... (th-usands) - Arroo-l l-b.r'Por-tto -npoots te )pwcbulI -. ttal, mals ad tamele-Petictauten orj Fiy leprotein, onwhch10 grasst shul beaimal protIn. 'lThes ad arugivoip na Is are .. copteda asttlmt,sd InYale la or frcedio arser oerteesos Pf7 garas P oalpusidad gras 0t.percentages oflt dptl. sale saYealea- populbniut ofall. ages teeeivly AerlA Poud Aurosy; 1961-5 9ied17 dat. ss-sw .... ot trf she1 populi ietu,adltgtm re. .e es Percoitd prtI. up fe nie n us rleespl ffn e masse a-re fPro nthiutnd arpoma., - -i- f brd t ageD group 1-RIIO g..re,In oPolrar tpar thsogrou;.for oatpdseoptt coon tceeliselc .st (per Capitaoed 96-7u1o1uel deaths o uciec undrhoe eardOTIT Thil o V I.on uge pnr l yhonco l:~ice hirh. tetoma otie- dal Abslut Povrt ..cem . Level IPSO Iesrt)-or sadrr Accessd tofht icier Isirc dI ofIplel)- t't P Y urse ad: rarelf;-d Absolute drortyd pincel tvlIsta fcm Seds Pela which a pni neteouhnthtrsprecd beeole sotga n ssttrya lgl Esimated.. tIao Po rt ICampLeet tt par Y-- en.d ts) .- bar sedof e doethrst" pn q o- diprpotiuet ar of te spinfuchsgth ad url eren o-ppeatweluhe ad osllsh ae adoltemo" rual- ume cf -ep ftena urba,l and rsL) eodOpsrt -cp nylcld tec-lolo n dIsposal.leLb orForcto(thr...matd! -oe Eosc ocilsisy and Prjcio lpre ofhue o drt andg. Iet-eetsrk hyt s Panec-bovee I -yt Loaa ueol.Arl.10 ctpoostdsclac.fo p-scl..lanioc.d . L b,:Idl .., nld  SENEGAL ECONOMIC DEVELOPMENiT DATA SHEET Actoala Estimates .fypjections ~~~~~~~~~~~~~~----Growth Dates (% _ % Shares in CDY_ 1974 1975 1976 1 97 7 1970 1979 19B0 1981 1902 1903 1984 1985 ~1990 1971-75 1975-79 1979-83 1985-90 1971 1975__1979 1985 1l990 (in bililors of D921 CFAF( 1. 1.DP 257 2 7 7 297 299 769 303 287 311 323 L335 3408 367 439 . f3 2j8 3,0 3.9 100.0 DOD.7 101.0 10h,3 104.8 2. rT a3s~rt 6 -7 -89 --3 -6 .10 _tO -11 -13 -14 -5 -2 - - - x = -0.7 -0.D -4.3 -4.8 3. GDol 263 273 -288 299 270 300 281 301 3D5 324 ,335 347 419 2.7 7.7 7.5 3.0 100.0 1009 10.0 1000 O.0 100.8 4. Import (Eo- NS0) 03 86 DOS 113 EDO 175 09 DES 110 112 115 DD9 144 1.2 9.0 -0.8 3.9 33.2 3D.3 41.7 34.3 54.4 5. Eopo-ts (inc NS0) 68 77 95 101 73 04 69 92 96 101 106 112 047 4.7 2.7 4.9 5.h 25.9 70.0 20.0 32.3 35.1 6. Exports, TT adj. _74 73 8h 101 74 61 63 07 80 90 93 97 127 4.8 1.9 3.0 5.5 73.9 27.3 '27.9 272.9 30.3 7. "es gap, TY adi. I1 _11 _-19 -14 _-36 _44 -36 -26 -22 -22 -77 -21 -17 - - - - 7.3 4.0 14.7 6.1 4.1 0. Coosomprios 225 243 257 366 763 298 774 280 208 796 304 313 367 1.9 3.2 0.0 3.2 91.0 00.4 99.3 90.2 87.6 9. Dros -.nLessen 49 43 5C 47 41 46 43 48 49 51 53 55 69 1.0 1.7 3.0 4.6 16.7 13.6 15.3 15.9 16.5 ID. Private "nvo 'loo 70 13 19 19 14 13 lh 07 18 18 10 19 73 -3.1 0.81 4.0 3.9 6.9 5.5 5.0 9.3 5.5 Dl. _oDr oesoo 10 16 21 21 22 23 13 3 25 7 29 3D 32 47 7.9 4.9 5.7 5.6 3.7 6.9 7.7 0.2 10.0 12. I Csn ntoch Il 9 D I 7 3 04 4 4 4' 4 4 - - - - 3h 6 3.3 2.7 11.2 10 13. Domestic lvSo- . TT dj 30 32, 313 33 3 27 7 21 77 70 31 34 32 7.0 -50.0 60.0 0.9 0.9 11.6 0.7 0.0 12.4 .4, Notional Sovi,,g, TT adj. 40 33 35 33 6 911 6 37 34 36 9 58 7.4 -27.7 27.7 0.3 17.1 12.0 3.0 11.2 13.8 13. COP(scoofocot) 1441 1900 19 14 1979 20172 2402 76872 3110 3521 3904 4311 51 05 9525 70.0 6.9 17.0 13.3 - - - S. SECTOR OUTPUT 1. Salon added 73 7 277 297 799 249 303 207 311 323 335 348 367 439 2 .9 2.3 3.0 3.9 100.0 100.0 130.0 108. m0 100.0 2. A0i_Illte- 59 72 79 74 63 01 70 04 00 92 96 100 124 4.0 3.0 3.6 4.4 21.0 28:6 26.7 22.6 28.2 2. Indos-y 60 64 69 72 63 70 67 74 80 84 89 04 173 4.3 2.3 5.0 5.5 21 .9 71.6 23.1 26.0 28.0 4. Privotor S_ri_o 111 113 119 120 100 110 116 119 120 126 120 133 150 0.2 1.1 2.0 2.5 45.3 39.6 38.9 36.7 34.2 3 PobEir S-cior 27 28 30 33 33 34 34 34 39 33 35 35 42 -0.9 3.0 0.9 3.5 11.7 10.2 11.2 8.7 9.6 C. PR1CE0 INDICES (1971 1001 1. Eop-t Fnloe (goods -olpl 271 192 087 207 217 214 230 23 289 304 320 377 490 17.7 7.7 9.9 5.4 7. Impor Price 104 190 195 709 211 777 277 301 329 356 385 417 613 18.6 3.5 10.7 0.0 3. Tea ol Trade 114 07 06 99 103 94 8h 84 80 85 83 90 00 -0.0 .0.8 '00.7 -2.3 4. DIP Inflator 132 147 124 159 169 174 190 207 236 246 2h8 292 410 10.1 4.3 9.0 9.0 3.Cnoa Ino 130 131 103 304 211 233 268 295 324 359 398 441 736 16.0 6.1 11.2 10.8 6 PFo-d 1-vet-et Prsna 138 166 167 300 195 200 729 252 277 305 335 368 593 13.5 5.8 10.0 10.0 - 7. Es-4. ERnt (CPAF pee USD2 240.5 714.3 239 243.7 725.6 217.7 20712707.1 207.1 707.1 707.1 207.1 207.1 - - -- 4/ 4/ 4/ 4/ D. SELECTED INDICATORS 2/ 1960/65 1965/70 1970/75 1975/79 1980/84 1985/89 E. IABOO FORCE 1970) Thousan.d Percet 1. IGOR 5/ ~~~~2.4 0.1 4.7 9.0 3.9 3.9 1. Agrlnsalt-n 812 69.4 2. An. Nat. Savings RaIn 11.3 9.4 13.4 0.8 9.3 12.5 2. MIinlg 2 0.7 3. Mac. Nat.-.looa o.o,,9' -13.6 18.7 14.3 -10 3.8 41.0 25.0 32. .a.ntat--rlg 69 5.9 4. PFsod Inva-te ... Ff 12.6 12.3 17.1 12.9 13 .0 04.4 4.Fsblie Utilitles 4 0.3 5 Lopo- El-sini,,- -0.0 -0.O 0.0 249 0.46 0.00 5 C.- Enastansi 17 1.5 6. 0n~~~~oorta/G0F ~~~~32.0 29.9 3. 37.4 32. 23.6 6. Prinata lrvi-e 115 9.8 7. Eooporls/EPF 28.9 24.9 2.4 20.8 23. 27.0 7. Pnhl, -Senders 127 10.9 8.DanrnaEp/CDP -3.1 -5.1 -5 .5 -8.6 -0.1 _-4.7 8.Other 24 2.1 Total 1170 1D0.0 F. PUBLIC FINAN_ __ _ _ _ _ __ _ _ _ _ __ _ _ _ ___ _ _ _ _ __ _ _ _ __ _ _ _ _ _ (ss billions at coret CPAF AntosEn - ttasa PreietOma I/ Grouch5 rates8 ITSShre innaneF GP 7. and fi-1a y-.)a 9/ FY74 FY75 FY76 FYFY7 Y7FY7 Y7 FY80 . P88 PY85 PYLS F7-o FF0O Y1 0Y75 ~FF7 9 FY80 V1 F 1. Bodget R-onnoc 55.4 (7.3 87.2 104.3 110.1 176.7 154.7 163.7 289.0 13.6 14.8 15.3 19.0 20.7 25.9 28.7 29.0 2. Corent Esp. (eon. intena) 48. 9 65.8 80.2 06.3 97.6 104..0 121- 128-1. 262.0 11.2 D.0. 13.9 17.3 (7.6 21.4 72.6 70.3 3. Rodgm -an hof- Dohbt Demte 6.5 11.5 7.0 18.5 12.5 21.8 32.8 43.6 87.0- - 1.2 3.1 4.5 6.1 8.7 4. Onher Pohlio Savinga 9/ 7.7 E.3 4.0 10.' 0.5 7.8 -7.1 ta - 06 0.1 -.6 -9,_4 ___ - - - ~~~~ ~~~~ ~~~~ ~~~~ ~~~~~~~~~~~~~~~~~~~~~2.3 3.2 5.1 5.7 8.7 5. Pobi. Sa- befnee Debt Se-ite 1. 11.8- 11.8 2-8.7 13.0 24.6 ~30. 7 45.4 87.0 9___011 4. . 417 .Debt _uiEn 2.5 4.0 8.7 9.7 12.5 19.7 3.0 0 33.4 46.9 12.. 5.2 2 1.0_1.1 4.0 5. 4.7 7. I-oerble So-pls -11.2 7.0 3.1 19.0 0.5 4.9 0.7 12.0 40.1 0.3 2.1 11 0.0 3. 8. PobhiE Inoxatnnta IO/ 7972 3970 47t7 T!5 -45.6 50.6 60.1 70.0 l'W283 114 189 3 9.4 10.3 11.2 14.1 9. Pee_ntage of self Ele-nclg (%6 38.4 72.3 7.7 41.8 1.1 0.7 1.2 17.1 28.6 10. Debt Seevin Is pe-etrge of 4.5 3.7 10.0 9.3 11.3 13.5 19.5 20.4 16.2 1/ Th-oP prjeeton .. as..an that G--eneet'a st-t1hilativ PI.. will he inpl-etnd. 2/ Cast ofIving imd.. Of traditional Efille- in Dar.kcosyISvnIo o S 98/i60ndn rp 3/ Cal-lated Ersnle sc olpie rcntant pri-n adjosted for ebhagen -xrrasO ae evove is.. 'inf`oate - Oen thniat9o0and IF ron.ti...d 4/ Adjostad for tens oF s.1.-t ii~tm.s traesiaa prdrar.es edo n,Gb, Err pyOo jnportjpoe Cr10 9/ Calnisro-d onth-n peer averag Of CDP sod tho floe Y--c now of fixed iselat nc-nalant prints Dy oone 1010 millIon,19 6/ Clcolated onh-e year averges foe the ba ... ay-a inn--es prijes. 2/ Calcolaled onh-re peace -ve-ae Ear the boat y. peas eonntant pr,na.. / Fierol year fets Jnlp I to lon 30. 91 Islodes saings Pro S-oblail-o Food and pcbltnnepeus 107 Pobli. -.ntoonts as dofinod by 140 fD.4intp cf p"annIng; c-ontoep to Lso oaltooa aelnato defloitins, the- i-xrslxloda sha f.1 -ots of p-oJe-n j mined ooeplos1 shich l.oveesnasko tales a , m fjo ..an.a raj posdbi"lrp, projool Ee-p--noIhtd ntcpro flood -aPitlfosstio c aohP-oja-ta aad aa- siuitory aopsadixoeeo  - 28 - AN32X 1 Page 5 SENECAI. - BALANCE OF PAYMENTS AND EXTERNAL ASSISTANCE (millions of current US$) Actualo Estinates Proiections 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1990 A. SUMMARY BALANCE OF PAYMENTS Exports, incS. NfS 602 693 698 853 691 864 841 1,190 1,396 1,551 1,739 1,962 3,778 Imports, inc. NFS -691 -793 -852 -979 61,030 -1,337 1,318 -1,566 -1,742 -1,928 -2,148 -2,394 -4,270 Reorce Bla-ce -89 -100 -154 -126 -339 -473 -472 -376 -346 -377 -409 -432 -492 Factor Serviceo (oet) -48O -55 -8 -13 -27 -56 -74 -73 -76 -83 -92 -103 -161 Ret inrvot-eat iscooe -26 -37 -20 -24 -28 -38 -46 -38 -41 -42 -44 -45 -70 lnterert on poblic debt -14 -19 -18 -21 -29 -44 -49 -49 -48 -47 -45 -45 -51 Oth-r intereot 2 -3 -1 -4 -4 -11 -20 -25 -28 -36 -47 -59 -98 Workers' remittaoces -20 -6 17 18 15 17 19 20 21 23 25 27 33 Other 10 10 14 18 19 20 22 19 20 19 19 19 25 Current Transfers (net) f4 67 66 71 97 93 140 106 114 123 133 143 210 Current Accou t Balance -73 -88 -96 -68 -269 -436 -411 -343 -308 -337 -368 -392 -443 Prioate Capital (oet) -5 12 16 26 36 42 46 51 57 62 69 77 136 Capitol Graots 19 22 23 24 29 33 35 36 ' 38 39 40 42 54 Public M - T Loans (net) 60 56 60 56 135 136 236 /14 145 /17 179 214 -265 281 267 Disbutreme-ts 80 76 84 92 204 214 342 249 277 325 402 457 641 Repaym-nts -20 -20 -24 -36 -69 -78 -106 -104 -98 -111 -137 -176 -374 Short-tsrm Capital (net) 1/ 23 10 - -38 -39 36 5 LI LI - - - - - Copital n.e.i. 2/ 31 -22 -13 -9 24 L. 70 j11 40 15 71 /8 6 /19 -- Increase in Reserves (