Djibouti - Technical Assistance Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-3257-DI REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF DJIBOUTI FOR A TECHNICAL ASSISTANCE PROJECT April 5, 1982 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 - Djibouti Franc (DF) (The DF is fully convertible into US Dollars at US$1.00 = DF177.72) Exchange Rate Calendar 1980 March 1982 US$1 DF177.72 DF177.72 DF1,000 US$5.63 US$5.63 DF1,OOO,OOO US$5,627 US$5,627 FISCAL YEAR January 1 - December 31 ABBREVIATIONS FAC - Fonds d'Aide et de Cooperation (Fund for Aid and Cooperation of France) ISERST - Institut Superieur d'Etudes et de Recherches Scientifiques et Techniques MTTT - Ministere du Commerce, Transport, et Tourisme (Ministry of Trade, Transport, and Tourism)  FOR OFFICIAL USE ONLY DJIBOUTI TECHNICAL ASSISTANCE PROJECT CREDIT AND PROJECT SUMMARY Borrower: Republic of Djibouti Beneficiary: The Planning Directorate, the National Directorate of Statistics, and Other Government Agencies Amount: SDR 2,600,000 equivalent to US$3.0 million. Terms: IDA terms for projects negotiated prior to January 5, 1982. Project Description: (a) Objectives: The objectives of the project are to improve the Government's capabilities to formulate an appropriate development strategy, to coordinate devel- opment efforts and to engage in planning, project preparation and monitoring. It would strengthen the Planning Directorate in the Presidency of the Republic, and the National Directorate of Statistics in the Ministry of Trade, Transport and Tourism. It would also provide training in planning, statistics, and project preparation and monitoring for qualified officials in these and other Government agencies. (b) Major components: (i) Provision of three long-term advisers: a macroeconomist and a financial analyst in the Planning Directorate, and a statistician in the Statistics Directorate; (ii) provision of three UN Volunteers: two statistical assistants in the Statistics Directorate and a documentalist in the Planning Directorate; (iii) provision of a Project Preparation and Sector Studies Fund (Studies Fund) to finance sector, prefeasibility, and feasibility studies, including related equipment and appropriate pilot schemes; (iv) a training program in statistics, planning and project work; (v) improvement of and equipment for the offices of the Planning and Statistics Directorates. (c) Benefits: Improvement of planning, policy-analysis and decision-making capabilities in the Government. This should help in identifying suitable development strategies and projects for outside financing, and in better coordinating foreign assistance. The efficiency of various aid programs received by the Republic of Djibouti should thus be improved. 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 - (d) Risks: Usual risks associated with handling of first Bank Group project; and Government's ability to strengthen the Planning Directorate while solving coordination problems. Implementation delays could accompany the recruitment of experts, the establishment of procedures to manage the Studies Fund and the selection of candidates for training. Estimated Project Costs: $ thousands equivalent Local Foreign Total Long-term Advisers 90 770 860 UN Volunteers 30 200 230 Studies Fund 230 2,000 2,230 Training 30 480 510 Office Space 80 70 150 Equipment - 140 140 Vehicles and maintenance 20 40 60 Contingencies: Physical 30 20 50 Price 90 660 750 Total Project Cost, net of taxes 1/ 600 4,380 4,980 Financing Plan: $ thousands equivalent Local Foreign Total Percent IDA - 3,000 3,000 60 UNDP 80 1,380 1,460 29 Government 520 - 520 11 Total 600 4,380 4,980 100 Estimated Disbursements: $ thousands equivalent IDA FY 1983 1984 1985 1986 Annual 700 1,000 1,000 300 Cumulative 700 1,700 2,700 3,000 Staff Appraisal Report: None Rate of Return: n.a. Map: IBRD 14324R Djibouti 1/ Taxes included in project costs are negligible, as all items would be exempt from import duties and local taxes.  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE IDA TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF DJIBOUTI FOR A TECHNICAL ASSISTANCE PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Republic of Djibouti for SDR 2,600,000 (US$3.0 million equivalent) on IDA terms applicable to projects negotiated prior to January 5, 1982 to help finance a technical assistance project. The project would be cofinanced with a parallel contribution of $1.46 million equivalent from the United Nations Development Programme (UNDP). The UNDP Project Docu- ment was signed by the Government, the UNDP, and the World Bank as Executing Agency, on May 25, 1981, and revised in March 1982. PART I - THE ECONOMY 2. A report entitled "Djibouti Economic Memorandum" (Report No. 3016-DJI) was distributed to the Executive Directors on November 3, 1980. An updated summary of the conclusions is set out below. Country data sheets are provided in Annex I. 3. The Republic of Djibouti, a small country of 22,000 sq. km. located at the mouth of the Red Sea, became independent in June 1977. The country, characterized by a rugged topography similar to the adjoining desert areas of Ethiopia and Somalia, is arid and hot. An estimated two-thirds of its indigenous population of about 325,000 people (1979) live in the city of Djibouti, the capital. There are a few small towns, but otherwise most Djiboutians in rural areas are semi-nomadic pastoralists. The country's economy is service oriented and consists of three economic sub-units: the city of Djibouti with its port/railway terminal and airport, and Government services; a French military base, the country's largest single source of economic and commercial activity; and the sparsely populated hinterland whose accessibility is difficult and which has little contact with the first two sub-units. 4. The country's limited known natural resources have prevented the development of any sizeable primary activity. It is estimated that no more than 50 hectares of the total land area of Djibouti are cultivated. Culti- vation consists mostly of fruit and vegetables grown on a few irrigated plots near towns. Practically all food is imported. Nomadic herders raise cattle, sheep and camels in the hinterland. There is no permanent fresh water course above ground and Djibouti is dependent on subterranean aquifers. There is some artisanal fishing, but there is no local tradition of fishing or sea- going. Manufacturing industries are few and the small-scale industry sub- sector is not extensive. 5. In addition to the indigenous population of around 325,000, about 30,000 foreigners live in Djibouti, including large communities of Yemeni and French origin. In addition to these temporary or permanent migrants, Djibouti has over 40,000 refugees from neighboring countries. Population is believed to be growing very rapidly, at a natural rate of about 3 percent per annum.  - 2 - Life expectancy is 45 and, although probably higher than in neighboring Ethiopia and Somalia, is slightly below the average for middle-income African countries. 1/ Malnutrition is severe and the incidence of pulmonary tuber- culosis is high (believed to affect about 15 percent of the population). Health services, provided essentially by aid agencies, are mostly curative. There is an acute need to focus on preventive-care medicine. 6. Djibouti depends heavily on expatriates for administrative and tech- nical skills (see para. 22). This situation is aggravated by the inadequacy of the education system. The sustained inflow of migrants makes it hard to keep up with potential demand, and provision of education to nomads is a serious challenge. Education is in French, with Arabic as the second language taught in schools. The adult literacy rate, below 15 percent, is low for a country that is geared to a service economy with two-thirds of its population urban. The primary school enrollment rate was about 36 percent in the mid-1970s (10,000 pupils in 1976-77 and 15,000 in 1980-81). In 1980-81, 950 pupils were enrolled in the country's only vocational school (Lycee d'Enseignement Professionnel) and 3,700 pupils attended public secondary schools (3,200 nationals and 500 expa- triates). A primary teacher college has recently been opened, but Djibouti continues to rely on expatriate teachers. In 1980-81, the country had 375 primary school teachers (221 nationals, 87 French, and 67 Tunisian) and 240 secondary school teachers (27 nationals, 195 French, 17 Tunisian, and one Egyptian). Djibouti has no university, but 150 Djiboutians had fellowships to study abroad in 1980-81. 7. Per capita income levels are difficult to estimate, because of inadequate statistics and of wide differences in income between expatriates and Djiboutians. A preliminary figure of $420 per annum (1979) has been established by the Bank, but other estimates exist. For example, a 1980 French mission estimated that 8 percent of the national population earns about $4,000 yearly, 45 percent about $450, and 47 percent about $85. The $420 level is higher than that of neighboring countries ($130 for Ethiopia), but it is not evident that the standard of living in Djibouti is substantially different, especially in the hinterland where sources of income are limited and poverty extreme. Even though the minimum wage in the formal sector is high for the region ($900 per year), unemployment is severe, so that few people benefit from the minimum wage. The extremely poor living conditions in the hinterland were aggravated by drought in 1978-80, and the limited resources have been further strained by the refugees whose presence has exacerbated the demand for water. Prices for basic goods are very high, and standards of living in most of Djibouti very low. 8. Djibouti-s economy is based on service activities related to the military base, the port and railway to Ethiopia, and the international, com- mercial and financial establishments operating in the capital. Thus its 1/ Demographic data are estimates and their reliability remains to be estab- lished. The UN Fund for Population Activities is in the early stages of taking a population census, with UNDP financing.  - 3 - fortune depends greatly on the demand for these services. In the recent past, demand for port services by Ethiopia has declined with the opening of the Ethiopian port of Assab. Most of the railway is in Ethiopia but contributes to much needed revenue for Djibouti and employment for Djiboutians. In 1979, the tertiary sector dominated in providing 69 percent of GDP, including 32 percent from commerce, hotels, etcetera, seven percent from transport and communications and 23 percent from public administration. In contrast, agriculture, livestock, fisheries and industry together accounted for only 17 percent of GDP. The military base's direct and indirect purchases of goods and services accounted for about a quarter of GDP. 9. From 1970 to 1976 real GDP increased at an annual average rate of about 6 percent, half the growth coming from construction of roads, schools and other public buildings. The economy has fluctuated since 1976 for four main reasons: (a) the closing of the railway line from March 1977 to June 1978 induced a reduction in service activities; (b) public capital expenditures slowed down after 1977; (c) a reduction in the number of French military personnel; and (d) private investment failed to come forward in part because of instability in the Horn of Africa, and, in part, because of uncertainties associated with the prospects of independence, even though transition to independence was peaceful. Since 1976, capital formation has remained fairly low, about eight percent of GDP, while in the first half of the seventies, it accounted for more than 20 percent of GDP. In 1980, the economy can be expected to have regained its 1976 level of activity as a consequence mainly of about $25 million of construction work financed by the public sector. 10. Djibouti has in recent years maintained surpluses on its balance of payments, so that its foreign assets were equivalent to $140 million at end December 1981, or nearly nine months of imports. This situation, however, is highly precarious: (i) this build-up accompanied low investment rates in the 1976-79 period, which may be increased in the near future; (ii) current and capital grants from friendly countries followed the first years of inde- pendence but may not continue at the same level; and (iii) there are virtually no domestic merchandise exports, and net earnings of the port, railway and airport together account for less than $6 million. The heavily negative balance of trade ($86 million) has for many years been compensated in part by a positive balance on services ($70 million in 1979) in which a large portion corresponds to spending on services by non-residents, including personnel of the military base. On the other hand, the import figure is inflated by goods used especially by the hotel and restaurant trade, in generating these service sector earnings. 11. In the first two years after independence in June 1977, the Govern- ment maintained a budgetary surplus due to relatively large external assistance, to conservative management of its ordinary budget, and to the low level of development expenditure which it has been able to undertake. Government current and capital expenditure together amounted to about 22 percent of GDP in 1979, and current outlays on social services were about 40 percent of the total. Most capital expenditure of the public sector is financed from extra- budgetary sources, so that the 20 percent of government spending devoted to  - 4 - capital expenditure understates the actual level of public sector investment which in 1978 accounted for about 60 percent of gross capital formation. The increased need for financial resources has been met by raising tax rates and mobilizing more external assistance. Ordinary government revenue receipts reached 23 percent of GDP in 1979 against 17 percent in 1976. In 1980, two-thirds of revenue came from taxes on goods and services. Income tax, first introduced in 1975 and levied on salaries, professional earnings and profits of enterprises provides about 17 percent of recurrent revenue. 12. Since Independence, France has remained the major source of aid through technical assistance (550 technical and advisory staff), FAC grants and budgetary aid. Direct budgetary aid in the form of grants amounted to about $8 million in 1978 and $7 million in 1979. The French civilian aid program has been mostly in the form of technical assistance. Aid is geared towards health, education, telecommunications and pilot irrigation schemes. Presently, budgetary aid is through income taxes paid by French troops and technical assistance personnel, through indirect consumption taxes levied on imported goods purchased by households paid by France, and through indirect financing of Djibouti's armed forces by France. 13. Djibouti is a newly independent country and is therefore just starting to develop and diversify its aid relationships. Initial results are fairly encouraging. Saudi Arabia is the second largest aid donor for Djibouti. In 1978, it gave a $60 million loan for specific sectors and to compensate for oil price increases, with project disbursals to occur as viable projects were implemented. Other sources of Arab assistance include the Arab Fund, the Arab League, which provides teachers, Abu Dhabi, Oman, Iraq, Bahrain, Morocco and Libya. USAID has an annual aid program of $5 million. It has carried out agricultural studies and is implementing technical education and small- scale fisheries projects. West Germany had a program for 1979-81 of about $5 million, including in particular financing a water resources inventory. KfW will join the Kuwait Fund in financing the container terminal in the port. UNDP is starting to develop a program with $2.2 million available in 1980-81: its first efforts were directed toward geothermal development. The 1982-86 UNDP program is for about $5.0 million, mostly for planning, social infrastructure, and energy. ADF will finance sewerage in Djibouti city and assist in maintenance and repairs of the port. The EEC is financing a master plan for development of the city, urgent rehabilitation needs of the railway, and a small pilot agriculture project; it is ready to finance projects in these sectors. a 14. Djibouti has thus far maintained a prudent policy about borrowing. Most assistance has been in the form of grants and, as Djibouti has practi- cally no external debt, the debt service will probably remain low in the near future. Djibouti has deposits with commercial banks in Djibouti and the French American Banking Coporation in New York, and the interest earned on these funds has been a useful source of budget revenue. Although needs for concessionary finance still remain important, the country must in priority take measures to establish greater absorptive capacity in terms of appropriate projects and satisfactory implementation capability. The Government recognizes this need, and it seeks assistance to develop its economic management capabilities, and to design and to implement a development strategy.  - 5 - 15. The Government intends to prepare a three-year development plan during 1982, but little work has been done to date. Work on the plan should provide Government with the opportunity to define specific long-term goals (desired level of per-capita income, growth rates, sectoral composition of the economy), to identify a series of graduated intermediate objectives, and to design yearly investment programs capable of reaching these intermediate objectives by making maximum use of domestic resources and foreign assistance. In designing its development strategy, Government is likely to maintain the type of liberal economy necessary for an international trading and financial center. 16. The administrative machinery and the skilled personnel necessary to design and implement an appropriate development strategy are, however, lacking (Part III). Technical assistance and training are necessary to help the Government outline an overall strategy and prepare yearly investment programs designed to implement it. Such a strategy would have to balance development between modern and traditional sectors, to build on available natural re- sources (geothermal energy and mineral deposits if they prove suitable for exploitation), to strengthen infrastructure (including the railway and the port), and to develop industrial activities capable of generating employment and foreign exchange. Emphasis would also be placed on low-cost housing and on basic needs, especially of the poor population living in shanty-towns around the capital and in the hinterland. Bank Group operations are planned to help Djibouti design and implement such a development strategy and to complement the assistance of other donors. PART II - WORLD BANK GROUP OPERATIONS IN DJIBOUTI 17. Djibouti joined the Bank and the Association on October 2, 1980. In preparation, the first economic mission visited the country in March 1979; its report (referred to in paragraph 2 above) was circulated to the Executive Directors on November 3, 1980. Our initial strategy aims at strengthening the country's economic management and development institutions, at infrastructure development, and at improving provision of the basic needs of the poorest parts of the population. Where possible, it would also allow for productive projects to generate income and to increase export earnings. 18. The proposed technical assistance project would be the first Bank Group operation in the country. In addition, the Bank acted as Executing Agency for a UNDP-financed road maintenance study, in preparation for a road maintenance project, which was appraised in November 1981 and is likely to be negotiated shortly. In August 1981, IDA advanced $0.5 million from the Bank-s Project Preparation Facility for preparation of an urban development project, which would include components for institution building, infrastructure development and maintenance, employment and income generation, and the provi- sion of shelter and basic urban services to the poorer segments of the popula- tion. Government has asked for Bank assistance in the education sector, while the Bank is prepared, should need arise, to consider assistance to the port and railways to supplement assistance at present provided by other agencies.  - 6 - The European Economic Community is financing a study of the longer term development requirements of the Djibouti-Addis railway, which is likely to involve heavy investment in years to come. 19. In order to assist the Government in coordinating assistance offered and in response to a resolution of the UN General Assembly, the UNDP is orga- nizing a "Donors Conference", to be held in Djibouti probably in 1983. The Bank participated in the preparatory "Round Table" held by UNDP and the Government in February 1981 and will assist in the conference as called for in the resolution. During the "Round Table" several project proposals and ideas were put forward by Government, but further work was needed before financing could be sought for them. The present project includes the strengthening of the Government's project preparation capabilities as one of its main objectives. PART III - SECTOR BACKGROUND: PUBLIC ADMINISTRATION AND THE NEED FOR TECHNICAL ASSISTANCE 20. Weak public administration hinders government decision-making in Djibouti. The administrative structures established under French rule remain, but a severe shortage of skilled nationals and poor coordination among minis- tries and agencies represent two important obstacles to their efficient func- tioning. As a result, Djibouti is experiencing difficulties in defining an appropriate economic development strategy and in submitting well prepared projects for outside financing. Shortage of Skilled Personnel 21. Fifteen Ministries, including the Presidency, the Prime Minister's Office and the services attached to them, employed about 6,000 Djiboutians in 1981, of which about 1,700 are permanent civil servants. Technical and administrative skills are seriously lacking essentialy at the upper and middle levels. This situation results from the current state of the educational system 1/ (para. 6) and has been aggravated by the necessity, following independence, to replace departed expatriate personnel by national managers who need time and training to adjust to their new responsibilities. 22. Many higher-level civil servants are assisted by foreign experts, most of them French. As of February 1981, the French Government was funding 221 technical assistance positions (teachers excluded). Of these, 198 were actually filled, and about 150 represented higher-level posts while there are about 230 Djiboutian civil servants at the highest level. French experts sometimes act as department heads. For example, they perform essential 1/ Trained Djiboutians are lacking at all levels. At the end of the 1980-81 school year, only 84 Djiboutians were enrolled in the highest grade of secondary education, and only 38 passed the graduation exam. In 1980-81, 150 Djiboutians were enrolled in foreign universities, under various fellowships.  - 7 - management and decision-making functions in the Ministries of Finance, Public Works, Public Health, Trade, Transport and Tourism. The role played by French assistance in Djiboutian public administration is likely to continue in the future. Djibouti is, however, encouraging a diversification of the sources of technical assistance, and in this context, the Bank's support has been sought (para. 33). 23. Allocation of foreign aid personnel is administered by the Ministry of Foreign Affairs and Cooperation, and national civil servants by the Public Administration Ministry. This division of responsibilities may have led to some misallocations of human resources. New arrangements to rationalize personnel administration should not, however, be proposed until the Government carries out a comprehensive survey of the staff and training needs of Djibouti-s public administration and assesses the policy implications of the survey results. French technical assistance is helping Government conduct a survey which would help to define a long-term training program and to plan the gradual replacement of expatriates by national personnel. ILO and UNDP are prepared to assist in implementing the survey's recommendations. Lack of Coordination 24. Newly independent, the Republic of Djibouti is still building and rationalizing its institutions. The lack of skilled personnel (paras. 21-22) and the need to carry out tasks formerly performed by the French administra- tion are making this a slow and difficult process, complicated by the lingering consequences of prior institutional arrangements. In particular, lines of institutional responsibilities are not always clearly drawn. Consequently, delays, duplications, and inefficiencies are created as different agencies work on similar aspects of development activities (generation of new project ideas, data collection, contacts with foreign donors) without proper coordination. Sometimes, key agencies, such as the Ministry of Finance, are not kept informed of the results of negotiations which concern them (para 29). 25. Government has begun to take measures to improve interagency coordi- nation. Some of these measures, however, will be slow to implement since they may involve a redistribution of authority in a Government where power and influence are carefully balanced. Nevertheless, the President of the Republic has committed his administration to prepare and to implement a Three-Year Development Plan. The President attaches importance to the planning process. This process, which would be a slow one because of the lack of skilled Djiboutians, should serve as a catalyst to coordinate public decision-making and to improve public administration. 26. The Planning Directorate is responsible for coordinating the prepara- tion of the First Plan. Created by a September 16, 1980 law, the Planning Directorate is attached to the Office of the President and constitutes its economic and technical arm. A Presidential Decree (October 30, 1980) specifies its responsibilities as follows: (i) to gather and to analyse economic and social data, (ii) to program on-going and future development operations,  - 8 - (iii) to elaborate sector policies, in collaboration with technical Ministries, (iv) to coordinate economic activities, (v) to establish a coherent program of projects and priorities among them, (vi) to prepare the basic economic strategy ("loi d'orientation economique") for adoption by the Council of Ministers, (vii) to comment and to advise on all development projects, and (viii) to be kept informed of all bilateral and multilateral aid and assistance. 27. Physically located within the Presidential compound, the Planning Directorate was staffed, in March 1982, by two Djiboutians (the Director and a planning officer with sectoral responsibilities) and two expatriate advisers (a French civil engineer and a Moroccan planner). The professional staff was supported by one secretary. Existing offices need to be enlarged and improved, and the office equipment upgraded and completed to allow the Planning Directorate to operate efficiently. Little documentation is available, and what exists is not easily retrievable. 28. To strengthen the planning process further, the Government has also created a National Programming Commission (Presidential Decree of April 19, 1981). Chaired by the Planning Director, the Commission has 28 members repre- senting the Prime Minister's office, the Ministry of Finance, the Central Bank, the Treasury, the Ministry of Foreign Affairs, technical Ministries (including education, public works, health, agriculture, labor, industry, and trade), the port, the airport, the National Institute for Scientific and Technical Research (ISERST), and the administrators of the country's four regional Districts. The Commission's mandate is to help the Planning Directorate to elaborate sectoral policies and the Development Plan. To study specific questions, the Commission may organize ad-hoc committees or sub-committees, which report to the entire body. 29. Before a project can be officially submitted to potential donors by the Ministry of Foreign Affairs, standard clearance procedures established by a recent directive from the Prime Minister, must be followed. The clearance procedures include the Planning Directorate, but not the Ministry of Finance. This oversight is being corrected. The enforcement of clearance procedures constitute an important step toward satisfactory coordination. 30. Besides improved coordination, the success of planning and invest- ment programming efforts will depend on the availability and reliability of statistical data. Until August 1981, statistics (essentially on modern sector prices and foreign trade) were prepared by a small statistical unit in the Ministry of Trade, Transport, and Tourism (MTTT). Staffed by one French adviser and a Djiboutian with no prior statistical background, this unit  produced insufficient and unreliable data for three essential reasons: (i) lack of skilled personnel; (ii) inadequate material and financial resources; and (iii) lack of authority over, and poor coordination with, other ministries possessing useful sources of information. In particular, no basic surveys (consumption, industrial firms, traditional sector prices) were undertaken and no macroeconomic data were kept on a regular basis. 31. In August 1981, to try to remedy the situation, Government estab- lished the National Directorate of Statistics in MTTT and is seeking assistance to strengthen it. The new Directorate has been given proper authority to obtain the information it needs, a French national accounts specialist has been seconded to it in addition to the expatriate statistician already there, and new Djiboutian staff has been assigned. This centralization of statistics, though a bit premature in view of the current lack of skilled personnel, clarifies lines of responsibilities for data collection. It constitutes a further step in improving institutions in charge of managing development activities. To become fully operational, the Directorate needs strengthening to enable it to undertake a comprehensive program of basic statistical surveys and to publish up-to-date information. The Lack of Well Prepared Projects 32. Governmental efforts, so far, have been largely directed toward institutional design. The country, however, also needs to improve the quality of preparation of development projects it wishes to submit to donors. Many financial sources are willing and ready to help Djibouti (paras. 12, 13), but they are often unable to find projects backed by properly prepared studies. The UNDP "Round Table" highlighted this fact. Over ninety projects were presented, but, with only a few exceptions, their viability had not been established by any kind of study. The Need for Technical Assistance 33. Until more Djiboutians are trained and acquire professional expe- rience, technical assistance will remain necessary. France will, most likely, continue to provide the bulk of it, but a diversification of the sources of assistance would be welcomed. In particular, the Government is interested in obtaining multilateral assistance. UNDP plans to emphasize meeting the country's training and technical assistance needs and wishes to cooperate closely with the Bank. The project proposed here, designed in collaboration with UNDP, addresses the three main weaknesses of the agencies responsible for the design and implementation of a strategy for economic and social development: (i) shortage of skilled personnel, (ii) lack of coordination, and (iii) lack of fully prepared projects and of the statistical base necessary for planning and project work. Because of the essential functions assigned to the Planning Directorate in the design and implementation of the country's first Three-Year Plan, the project focusses on strengthening the planning agency. To ensure that the Planning Directorate can have access to the necessary data, assistance would also be provided to the Statistical Directorate. Of necessity, in a small country like Djibouti, the staff of the Planning Directorate would have to remain small and composed mostly of generalists. The project proposes mixing local and foreign expertise to ensure that a technically and financially viable development strategy is elaborated and implemented over the next three years.  - 10 - PART IV - THE PROJECT Background 34. The Project presented here would be the first Bank Group operation in Djibouti. The Minister of Finance requested technical assistance in project preparation and monitoring in October 1980. The project was identified in November 1980 and UNDP agreed to co-finance it, on a parallel basis. The UNDP Project Document, prepared in February 1981, was signed by all parties on May 25, 1981, and revised in March 1982. Appraisal took place in June-July 1981. Negotiations were started in Washington from January 4 to 11, 1982, with a Djiboutian delegation led by H.E. Saleh Hadji Farah, Ambassador to the United Nations and the United States. They were completed, following another mission to Djibouti, in March 1982. A Credit and Project Summary is provided at the beginning of this report. Supplementary data on the project are contained in Annex III. There is no appraisal report. A map of Djibouti is attached. Project Objectives 35. The project objectives would be: (i) to improve the Government's capabilities to assess the country's natural and human resources, to formulate an appropriate development strategy, to prepare yearly investment programs (1983-1986), and to prepare and to analyse appropriate development projects, including those suitable for submission to outside donors; and (ii) to strengthen the staff of the Planning and Statistical Directorates. Project Description 36. Specifically, the project, cofinanced with UNDP on a parallel basis, would provide the following, over three years: (i) three advisers: a macro-economist and a financial analyst in the Planning Directorate, and a statistician in the Statistical Directorate; these experts would be financed by UNDP; (ii) three UN Volunteers: two statistical assistants in the Statistical Directorate and a documentalist in the Planning Directorate; they would be financed by UNDP; (iii) a Project Preparation and Sector Studies Fund (Studies Fund) to finance sector, prefeasibility, and feasibility studies (140 staff-months) as well as the equipment needed for these studies and for appropriate pilot schemes. An indicative list of needed surveys and sector and project related studies is provided in Annex IV;  - 11 - (iv) a training program in statistics (data collection, general statistics, national accounts), planning (macroeconomic and sector work), and project work (indentification, preparation, appraisal, monitoring), as well as the necessary pedagogical material; (v) improvement and extension of the Planning Directorate offices, m to provide space for the advisers, the national staff, and a documentation center; (vi) equipment for the Planning and Statistical Directorates; and, (vii) two four-wheel drive vehicles. 37. The UNDP-financed part of the project would be executed by the World Bank. Detailed Features A. Long-term experts: 38. The macroeconomist would help to organize the work of the Planning Directorate and assist in supervising the preparation and implementation of the Three-Year Plan. The financial analyst would advise and assist in manag- ing the Studies Fund (para. 40) and would provide general assistance in analysis and management of development projects. The statistician would help to design and to carry out surveys, and to publish periodic statistics on the economy. 39. French technical assistance will provide two additional experts to the Planning Directorate. One is already in Djibouti (para. 27), the other, a social sector planning specialist, is expected to arrive in 1983. These experts would work under the authority of the Planning Director, but would not be formally integrated into the project team. B. Project-Preparation and Sector Studies Fund (Studies Fund) 40. The Studies Fund would finance background studies necessary to elaborate a development strategy and feasibility studies for specific projects making up coherent investment programs. Experience gained in managing the Fund would help to establish and consolidate the planning process. In the long-run, procedures set up to manage the Studies Fund would lead to invest- ment programming and help implement the intersectoral and intrasectoral priorities chosen by the Government. The management procedures to be followed are specified in Schedule 4 of the draft Development Credit Agreement, and are set out in Annex V.  - 12 - C. Training Program 41. Besides on-the-job training of the experts counterparts and of staff working with consultants financed by the Studies Fund, the project would provide training through scholarships for overseas courses, seminars in Djibouti, and study tours: (i) scholarships: UNDP would finance three three-year scholar- ships to train three statisticians, and seven two-year 6 scholarships to train six statistical assistants and one documentalist; IDA would finance four three-year scholarships for graduate studies in planning; (ii) seminars in Djibouti: addressed to civil servants responsible for sector and project preparation work in the Planning Directorate and in technical ministries, the seminars would cover the various phases of the project cycle: sector work (two weeks), project identification and preparation (two weeks), project appraisal (five weeks), project implementation (three weeks). The entire cycle would be given twice during the project (total of 48 instructor-weeks). Each cycle would take place over a six- to nine-month period. Necessary peda- gogical material would be financed by the project; and, (iii) study tours: the project would finance study tours of a maximum of 30 days each, for about 20 civil servants. The tours would enable carefully selected participants to comple- ment their seminar training by studying various solutions to problems similar to those faced by Djibouti. The participants would review planning and project preparation methods used by other developing countries, by consulting firms, and by international organizations. D. Offices for the Planning Directorate 42. The existing offices of the Planning Directorate are cramped, and new staff and a documentation center need to be accommodated. Although office space could be rented outside the Presidential compound, the institu- tional advantages of keeping the Planning Directorate physically close to the Presidential Palace have led the Government to propose the improvement of existing offices. The Government, accordingly, has decided to rehabilitate offices at present used by the Planning Directorate, ind to build a new building which would provide, inter alia, about 135 m of new office space. When the new offices are completed, the full needs of the project for office space would be met.  - 13 - E. Equipment for Planning and Statistical Work 43. The project would finance equipment needed to help carry out surveys and studies. In particular, it is likely that two or three micro-computers might be needed during the course of the project (including the needs of the Statistical and Planning Directorates and of the census undertaken by the UN Fund for Population Activities). The project would finance micro-computers, up to $50,000 equivalent, with the understanding that procurement of this equipment * would take place only after a study had been carried out of the Government's computer needs, and of the best means of meeting these needs. The Association would be given the opportunity to comment on the results and recommendations X of the study. Its approval of these recommendations would be required before computer equipment could be procured (Schedule 1, paragraph 4-ii of the draft Development Credit Agreement). In addition to micro-computers, the project would finance office equipment for the Statistical and Planning Directorates. Project Implementation 44. The experts would be assigned to the Planning and Statistical Directorates; they would arrive in Djibouti only after the UNDP Resident Representative has informed the Association that the rehabilitation of offices has been completed and that adequate office space is available. The presence of the advisers in Djibouti would be a condition of disbursement for the proceeds of the Studies Fund (Schedule 1, paragraph 4-iii, of the draft Development Credit Agreement). 45. The Government would assign national professional and support staff in sufficient number to enable the Planning and Statistical Directorates to meet their responsibilities (Section 3.04 of the draft Development Credit Agreement). In addition, Government would organize the statistical work and statistical surveys necessary for the implementation of the project, so that they are coordinated by the Planning Directorate and the Statistical Directorate (Section 3.03(a) of the draft Development Credit Agreement). The Government would also ensure that statistical data are made available to all users, and especially to the Planning Directorate (Section 3.03(b) of the draft Develop- ment Credit Agreement). 46. The experts would help the Planning Directorate to manage the Project Preparation and Sector Studies Fund. Terms of reference for the studies and experts financed by the Fund would be established in consultation with IDA. The Association's prior approval would be necessary to begin the selection of consultants which would be in accordance with the Association's "Guidelines on the Use of Consultants" (Section 3.02(a) of the draft Develop- ment Credit Agreement). Because information on qualified consulting firms or experts is not readily available in Djibouti, the Association would consider assisting the Government, at its request, in identifying suitable experts and firms. Final selection would be made by the Government from lists approved by the Association. 47. The selection of candidates for the training program would be the joint responsibility of the Planning Directorate, the Statistics Directorate, the Ministry of National Education, and the Ministry of Public Administration  - 14 - (when civil servants are involved). Candidates selected by Government for the training program would be submitted to the Association, which could reject applicants deemed unqualified (Section 3.05(b) of the draft Development Credit Agreement). The project's training activities in Djibouti would be coordinated by a designated Government official (Section 3.05(c) of the draft Development Credit Agreement). Djibouti lacks contacts and experience in dealing with training institutions in different parts of the world, and its administration is weak. Hence, to alleviate the administrative burden of managing the financial aspects of the training program, IDA funds for training would be 0 channeled through UNDP by a cost-sharing arrangement. The Association would waive its administrative fee on the amount corresponding to the cost-sharing. In its capacity as executing agency, the Bank would, in collaboration with Government and UNDP, identify suitable training institutions in developed and developing countries, place candidates, administer fellowships, and organize study-tours and in-country seminars. These seminars would be set up with the advice and assistance of the Economic Development Institute and would focus on the specific needs of small African countries. 48. The Ministry of Public Works would be responsible for renovation and extension of the Planning Directorate offices (drawings, tender, and supervision of all necessary work). It is adequately staffed for this purpose. Project Cost 49. Total cost of the project has been estimated at about $5.0 million equivalent of which about $4.4 million equivalent or 88 percent are foreign costs. The costs are summarized in the Credit and Project Summary. 50. Project costs have been estimated as follows: (i) the Studies Fund would finance about 140 staff-months of expatriate consultants. An indicative distribution over the three years of the project would be as follows: 40 staff- months the first year, 50 the second, and 50 the third. Base costs for compensation and travel have been estimated at an average of $12,000 per staff-month. Subsistence costs have been estimated at $100 per day spent in Djibouti. The Studies Fund would also finance about $130,000 of equipment needed for studies and pilot schemes; (ii) the training program would finance: (a) fellowships for training three statisticians, four planners, six statistical assistants and one documentalist. Fellowship costs have been estimated, using UNDP Guidelines, at about $240,000; (b) study-tours estimated at about $100,000; (c) in-country seminars (48 weeks of instructor time estimated at about $150,000); and (d) pedagogical material estimated at about $20,000; and  - 15 - (iii) construction costs for the building that would house the new offices of the Planning Directorate have been estimated at about $150,000, following the Ministry of Public Works methodology. 51. Contingencies for the UNDP part of the Project have been estimated using UNDP Guidelines. For the IDA-financed component, contingencies have been estimated as follows: (i) price contingencies of 8.5 percent for 1982 and 7.5 percent * annually for 1983-1985 for foreign expenditures; (ii) price contingencies of 15 percent annually for local expenditures, estimated on the basis of available data and Ministry of Public Works methodology; (iii) physical contingencies of 10 percent for equipment and vehicles; and (iv) physical contingencies of 10 percent and cost escalation of 20 percent for the construction of new offices (Ministry of Public Works figures). Financing Plan 52. The financing plan proposed for the project is summarized in the Credit and Project Summary. IDA would finance about $3.0 million equivalent, almost entirely foreign costs; UNDP would finance about $1.38 million equi- valent of foreign costs and about $80,000 equivalent of local costs for a total of $1.46 million equivalent. The Government would provide $520,000 equivalent. A detailed financing plan, by component, is provided below: $ thousands equivalent UNDP IDA Government Long-term Advisers 860 - UN Volunteers 230 - Studies Fund - 2,000 230 * Training 120 370 20 Office Space - - 150 Equipment 30 110 - Vehicles and Maintenance 20 20 20 Contingencies 200 500 100 Total 1,460 3,000 520  - 16 - Procurement 53. The employment of long-term experts and consultants would be made in accordance with the Association's August 1981 Guidelines on the use of con- sultants. Vehicles and equipment would be purchased after quotations had been obtained from at least two suppliers represented in Djibouti who offer adequate guarantees of service and spare parts. Civil works for the Planning Directorate offices would be undertaken in accordance with local competitive bidding procedures which are satisfactory. Qualified local contractors are available in Djibouti. Disbursements 54. Funds from the IDA credit would be disbursed over three years on the following basis: (i) 100 percent of foreign and 60 percent of local expenditures for the consultants financed by the Studies Fund; (ii) 100 percent of foreign and 80 percent of local expenditures for vehicles and equipment; and (iii) 100 percent of foreign and 50 percent of local expenditures for the training program. Work Programs 55. The UNDP-financed expert designated as team leader would prepare a work program for the international personnel, in collaboration with the Planning and Statistical Directorates. This work program would be submitted to the Association's and UNDP's approval. It would be regularly updated and constitute the terms of reference of the work expected of the long-term advisers. Project Implementation Schedule 56. The proposed credit is expected to become effective in September 1982. The advisers would arrive after rehabilitation of the Planning Directorate offices has been completed. Training seminars would start in January 1983 for the first cycle, and twelve months later for the second. The project is expected to be completed by June 1985. The closing date is December 31, 1985. Benefits and Risks 57. The proposed project would help Djibouti to elaborate a development strategy and increase the number of fully prepared projects to be submitted for outside financing. Application by all concerned government agencies of uniform criteria for project preparation and implementation would improve inter-agency coordination. The project would also contribute to establishing administrative procedures through the design and implementation of a workable planning process. As a result, planning, policy analysis, and decision-  - 17 - making capabilities in key governmental institutions would be strengthened. This would help in better coordinating foreign assistance and in increasing the efficiency of various aid programs received by the Republic of Djibouti. 58. The risks associated with the proposed project include the usual need for familiarization to be expected for a first Bank Group operation. They may result in delays in implementation linked with the recruitment of experts, the establishment of procedures to manage the Studies Fund, and the selection of candidates for the training program. Other risks, specific to the project, are associated with the ability of Government to strengthen the Planning Directorate while solving coordination problems. The latter risks * are likely to be initially high, until the Directorate has had the opportunity to prove its usefulness. As planning work progresses, these risks are expected to diminish as responsibilities are sorted out and institutional mechanisms established. Close supervision by the Association and the detailed specifica- tion of the procedures for managing the Fund and selecting candidates for training which has been agreed should help alleviate risks. PART V - LEGAL INSTRUMENTS AND AUTHORITY 59. The draft Development Credit Agreement between the Republic of Djibouti and the Association, and the Recommendation of the Committee provided for in Article V, Section l(d) of the Articles of Agreement of the Association are being distributed to the Executive Directors separately. 60. Special Conditions of the Project are listed in Section III of Annex III of this report. 61. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 62. I recommend that the Executive Directors approve the proposed Credit. p. A. W. Clausen President Attachments Washington, D.C. April 5, 1982  -18- ANNEX I Page 1 of 4 TABLE 3A DJIBOUTI - SOCIAL INDICATORS DATA SHEET DJIBOUTI REFERENCE GROUPS (WEIGHTED AVl.RAGES LAND AREA (THOUSAND SQ. RKM.) - MOST RECENT ESTIMATE)- TUTAL 22.0 MOST RECENT MIDDLE INCOME MIDDLE INCOME AGRICULTURAL 2.5 1960 /b 1970 /b ESTIMATE /b AFRICA SOUTH OF SAHARA LATIN AMERICA & CARIBBEAN GNP PER CAPITA (US) .. 350.0 420.0 794.2 1616.2 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 291.7 330.6 298.0 707.5 1324.1 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (THOUSANDS) 81.0 160.0 325.0 URBAN POPULATION (PERCENT UF TOTAL) .. .. 71.0 27.7 64.2 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 0.6 STATIONARY POPULATION (MILLIONS) YEAR STATIONARY POPULATION IS REACHED .. . POPULATION DENSITY PER SQ. EM. 3.7 7.3 14.8 55.0 34.3 PER SQ. KM. AGRICULTURAL LAND 33.1 65.3 122.4 130.7 94.5 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. .. .. .. 46.0 40.7 15-64 YRS. .. .. .. 51.2 55.3 65 YRS. AND ABOVE .. .. .. 2.8 4.0 POPULATION GROWTH RATE (PERCENT) TOTAL 2.7 6.8 7.9/c 2.8 2.4 URBAN .. .. .. 5.1 3.7 CRUDE BIRTH RATE (PER THOUSAND) .. .. .. 46.9 31.4 CRUDE OEATH RATE (PER THOUSAND) .. .. .. 15.8 8.4 GROSS REPRODUCTION RATE .. 3.3 3.1 3.2 2.3 PAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) USERS (PERCENT OF MARRIED WOMEN) .. .. FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71=100) .. .. .. 89.9 108.3 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) .. .. .. 92.3 107.6 PROTEINS (GRAMS PER DAY) .. .. .. 52.8 65.8 OP WHICH ANIMAL AND PULSE .. .. .. 16.1 34.0 CHILD (AGES 1-4) MORTALITY RATE 23.0 16.0 10.0 20.2 7.6 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) .. .. 45.0/d 50.8 64.1 INFANT MORTALITY RATE (PER THOUSAND) 69.1 32.6 30.0/d .. 70.9 ACCESS TO SAFE WATER (PERCENT OP POPULATION) TOTAL .. .. .. 27.4 65.7 URBAN .. .. .. 74.3 79.7 RURAL .. .. .. 12.6 43.9 ACCESS TO EXCKETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. .. .. .. 59.9 URBAN .. .. .. .. 75.7 RURAL .. .. .. .. 30.4 POPULATION PER PHYSICIAN .. 4296.9 13844.1 1728.2 POPULATION PER NURSING PERSON .. 908.7 2898.6 1288.2 POPULATION PER HOSPITAL BED TOTAL .. 261.9 1028.4 471.2 URBAN .. .. 423.0 558.0 RURAL .. .. .. 3543.2 ADMISSIONS PER HOSPITAL BED .. .. HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL .. .. 7.0 URBAN .. .. RURAL .. .. AVERAGE NUMBER OF PERSONS PEE ROOM TOTAL .. .. URBAN .. .. RURAL .. .. ACCESS To ELECTRICITY (PERCENT OF DWELLINGS) TUTAL .. .. URBAN .. .. RURAL .. ..  -19- ANNEX I Page 2 of 4 TABLE 3A DJIBOUTI - SOCIAL INDICATORS DATA SHEET DJIBOUTI REFERENCE GROUPS (WEIGHTED AV - MOST RECENT ESTIMATE)-akE MOST RECENT MIDDLE INCOME MIDDLE INCOME 1960 /b 1970 lb ESTIMATE /b AFRICA SOUTH OF SAHARA LATIN AMERICA & CARIBBEAN EDUCATION ADJUSTED ENROLLMENT RATIOS PRIHARY: TOTAL .. .. .. 73.7 101.7 MALE .. .. .. 96.8 103.0 FEMALE .. .. .. 79.0 101.5 SECONDARY: TOTAL .. .. .. 16.2 35.3 MALE .. .. .. 25.3 34.9 FEMALE .. .. .. 14.8 35.6 VOCATIONAL ENROL. (E OF SECONDARY) .. 44.0 16.0 5.3 30.1 PUPIL-TEACHER RATIO PRIMARY .. 36.0 39.0 36.2 29.6 SECONDARY .. .. 14.0/e 23.6 15.7 ADtLT LITERACY RATE (PERCENT) .. .. 14.0 .. 80.0 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION .. 48.7 42.9 32.3 42.6 RADIO RECEIVERS PER THOUSAND POPULATION .. 43.8 58.2 69.0 215.0 TV RECEIVERS PER THOUSAND POPULATION .. 6.3 12.7 8.0 89.0 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION .. .. .. 20.2 62.8 CINEMA ANNUAL ATTENDANCE PER CAPITA .. .. .. 0.7 3.2 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) FEMALE (PERCENT) .. .. .. 36.7 22.6 AGRICULTURE (PERCENT) .. .. .. 56.6 35.0 INDUSTRY (PERCENT) .. .. .. 17.5 23.2 PARTICIPATION RATE (PERCENT) TOTAL .. .. .. 37.2 31.8 HALE .. .. .. 47.1 49.0 FEMALE .. .. .. 27.5 14.6 ECONOMIC DEPENDENCY RATIO .. .. .. 1.3 1.4 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS HIGHEST 20 PERCENT OF HOUSEHOLDS .. LOWEST 20 PERCENT OF HOUSEHOLDS .. LOWEST 40 PERCENT OF HOUSEHOLDS .. POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. .. 381.2 RURAL .. .. .. 156.2 187.6 ESTIMATED RELATIVE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. .. .. 334.3 513.9 RURAL .. .. .. 137.6 362.2 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. RURAL .. 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. /b 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 1976 and 1979. /c This high rate reflects steady immigration from neighboring countries; /d UNICEF data; /e 1975. May, 1981  ANNE I -20- Page 3 of 4 DFOINITlItON OF SOCIAL 1001 CATOF Not.: hlobouh the data are doooo from sorcs onraly lodgod the -oesooiao.ad reliable It oh 1-aa be co-d chat chap ay ac be IItar- ootioalpcopsoblobeeu o te ak of otoL,dari-d doftitions. sod concpts osed by differentl coIa . s. c cllc tg h de-. The data ea I.o.... theleso, useful odesceihe oodteof aegetoude,ildioont lr-da, and ohacot.. s erai njo lf trances hoto llr. The nefotcagup ant 1~1) the osn co ltygru of the tub Set cutr a Id COl oconcoy troop oth -oooba highor ararog %ocoo that th. o--to ercr of ci u tt oor tooefr''ete uplue Oil tPiporeet droa cea"Middle tIocn forth AfPr cretod rddle atl acoo h.c. aa. f tr--a totccotos aft.Ilsl Ic ibecIfarnoc goEl dt tho l .l . onaro e te pouainwIhe a etcoao o nitdttordtotcl bt- asotpo bt ocrt cgophsdote foe ti.t indictorl. Shot- h oa,, se f oartseatcectrtr oed rcoaolblt fdt Tnsl -Tnl eric arfro l -ope isint lcd area ocd Oclocdea-ea-b,'I, -cd partS) doo1tdrdh nice crorc Oco roae ohepal beds 1971, end 1970 dat. ocdlculoeeIacec , -orue,faldoifa hotr. hc fe tn-pariloa-fce- GNP01 PER horltPE CITA-daotcccrco fbocctl ocy(co ta popeo oa Ioeplnal E Itoclodo Wilt prcPel/iecra hoeplyInala. 70eo dopo79ct -c. Oidhee (hotIIIl- a o Jly ; 910 170iai 179 l- -O data.Y -AoereaeIE &PT- ,i .l -to of." doahljyao -9c c.uf cd- tto.ura. ndrrs1 hooPpuuieCorcc fccll-RtI dob ct ttlppoelc;Ibuohl 'rtr f ropot ttoduc h hReliggots acd.cagoute;190170 ad17Ide.th iaoh It.rau etclpuyoo PotYtnt erlI ura ccacc rjolr r ao c10 e of'I Seacnper noon- hpi-l eI-- ora. cdcl rurly ooccpledce to meneet for feenclttyreto alto _)- AI ha onibro t 1960a s 1ur0c dctde tt7 IOfUSI,N ra,so catdolerorctey ac9fn lp i ode for pooocco poYcac .. alfobatidytfeddlaere h.etot t rtocrm rrlliclotacloryppo.lo boht 0 r...ioaPrsc tona - eattla doocl -Y Iroo icYl -sl and f1edd th 1trhrta. byqa c I et rota, co alao th ago atruecr ro cclat faloraa t rndyloin pretgsofrson P1Nitononsuen.Tho Aoahoo cl ro atlc-rredilcAopluyscolaopplolo;or lrccoa ildt gdbl ofooncrplo lteol -ool.1 IIsutcr duaiatooaioctaec rcoolaoacnerlectspeoe 1 scr eshucdontetat c bapocia caarotttecfco ooenc soeae upt uobaec uoo oofiil cedae toroy P- I1 o h tt fdcloo eflcprertrpae eodr cto tnl acadfal-fsoo saaa scdr ant l"o.P nd-Ytocoqcroabicos iur asa fhoprcodpn.sr rsirone tanctceotee oculutoc o rcc od -Ihoyou tior aIuc ioary p.p..o.rodo coa oeiou,o erhrtaotcsruta o ot Oioa baa heocrouchnd. ~~~~~~~~~A---.l. l- .....17r. ac ao orareec cuseae easl Ptoolaniac laealiy occluded.~~d I he --m. IA. ethu-ot la9d - Ioe,td Pca P,or fo . ogicocnlltgol c-cdortct i uod--l lttot rnl; 91. 177ad 107 dec. Pul--eYcbe eti -peesuy.-o Ieooer-Ta,-,hhass arol i 'onh'ttot hu tcr drore th -Ch ldn 70d-1- er) ikn-g I-ptuyudocooylol ile ytoaeo rahohra In clo hlacan-11,I 17,sd17 dare. heult-1titYepuo litto -- (rrcI 7h - ictartoaI-c (ubt.. en- redsof ris pearpapoartca fo 195-WI,1961-70 uod 1970-79. t .- ..1.~ h. heoon for 2951-, -196h-70- end 1d7-I9lasna a PCcrhua. ouarol-Pasgrcaacsra e Crole itrb tate (c thacear) - uncol lica btih per h huac ofY--eu cr b-tn a tu tb pdr-ccl Focllas . s ildleas bot.d end1 popolaneca; lghi, 1977, aud 0979 Isec. ntlOOsryoehiclea.:I11,1 III l. 1.1 ir1ty 1-Itf:l CueDahRt(oP ohcoeanll I-h - kno dTch. cort ch-aa-cd of. .t..ea Radio te-icar (-op nicosod ..r III_ e -ll tetPfre-eaef p aio. poulrtn;191,170. ad 1979 do.bracen00gerlulIpr toonatp cf populato;toos a Irs Errdotoc _an.Inar-o _ohe Io daob-aroeocooa 111- hear -cllart receresIc cooe an- c er omrgir-no f ai 970yeosuaal fteyard oagtedt1i9i7890 al179 oo doonrir ahLshel ltceosite foll laIa-ieroo.ucu9-nito.d)- ona-roono corarn T rctor bor-"I o oclaicl-Pcceeoeafa rodasr ofhen-oEro ore oo oete feto faatChildootcgprogo14 geonralQ pubic e :ticto ooait e oe.aipea Ver er IaliPaoc -Rea(aroto andoen)-Pretg o oea counuac oyao bnrgarauno ' orasl fet nonoc of bild-te ,lg 9ie (it-u ar)eo00brbc,cc aier oaae iclci - PI,Y. lr.. I.. oaa y ocelatc l -Sosteacaao is 0 calndaryearhoa 6. fosaodllo'itopc.,ygodele. ogrrc al blecOa IIIcl rng pooe 19506 co196070 gA19o;_ IRh-S 1070, ccl 1979 demCONSUMPabOrN oc tcneo cnnclysuepeoe old orgEqorLent f..e fc-d eup i-n urilahe ctc_ rerh pe capit ocoto opIIco ofoIro letoIto..o.. toao...i r put- lI-y 1o9ah60 ty, tartcce 1c9oo0c poldccoo79tpcdceInnsNoccocyneblc 1960,-107 "P' 197 dtts. eaparD:tha, atd t ----d -hacgon t di-ch. t - ocpp ... corlod sota fed-y. soaPs I oell, e - Pel hlao pfoPre atprrrc f cold-o are Phouaohild 1960t; 19701-Wt 1970, ad-07 au 1970 and IO duil allcatcocf h 0rae fcora prinic.l,d, pa lp n 20grmsi ,9te ant90 90 o 99dc. f boao are Y-aed bcIt'spoecionorae poleeprocit. o ehlh 10grananbo,ld h eatnl prteIo Thsaad elctnbg-r tucoec h tolto.edln n ft isdi. a"I arlonernnic - -....afaalrotttlgeno faei...r.fccattloccs ChIbld-aa1-01111 t-l ..lc-Rae io ibcaod -tj. unuldeoopr hcad t Procer rihi ..r... (both Iclceorn hc)-)cecdhttba .ggop- ..s . .ncllnccctcagcp forondaolotooo--I- perc lic Pth,l ac,r cel lpcetadorekere inns aur lorcoedfrom Ott tho;I h.1 1070 a7 -197 daaIf uhlle. . yl, didifi poocoft rooltl bOOrS~~F 1 FOfO gepe aAND lo hUTrchION Pbslocai. po-ercy c ,ico ,rly IsIhnOcs eo ee ttbaasla jaarerscpf c (icd odoore II eufroto9o6 cruodhtucnarnrd Ltnaa eaie oeo caIton CI c ata - Irocsdroa eatenai" t1 no l f-et IoP-tdt-bcbcr,occg,cltatoyodn"nrps.oeio oe tisabre I oc-tird cfaeogh o rpn if l-. -hlcoeeip7odito - pcpiulp.-cdurucr d f- pbIcd peroorl. Icode of the ryn-.Ira lea a eiadfo do afs foocttcootacdoit ocotd 000l noo t...co20ntc to0hoocyh plete . .. blocc aducrc o bio oo fcisn urbi -,ra coaudooda Ahoog -iric eoIcl ccnIf ethcItc'oo oooalue,It-ffdProatc b holr roroloaohee pecn)d ro Naahr o petyl (tna, rho,ec upl)sece h occd dapeao dAr Onetallectoon.h- l AmRay 1091I. Pculitt ierPhoI'dcb FA Porleloc dIte bly. gt1 ouni III -_ rotion Coi-f 99d rtanaI bclttell -d Iron oir I acolat'coola lcl naeadfeaoaad cacol96,-5,190 loro .d rr9c 7 dca cueoo erFti  - 21 - 11 ANNEX I ECONOMIC INDrcATORs- Page 4 of 4 GROSS DOMESTIC PRODUCT IN 197gi/ Annual Rate of Grovtbz' USI Mlx 2 1970-75 1975-78 GDP at market prices 264.7 100.0 5.4 -1.4 Gross domestic investment 20.9 7.9 3.3 -18.1 Gross domestic saving 3.6 1.4 28.7 -2.0 Exports of goods, n.f.e. 99.5 37.6 5.8 -8.5 Imports of goods, n.f.a. 116.7 44.1 8.0 -8.5 4I OUTPUT IN 1978 Value Added-/ - US$Mln X Agriculture 7.6 2.9 Industry 38.9 14.7 Services 182.4 68.9 Unallocated 35.8&.' 13.5 264.7 100.0 GOVERNMENT FINANCE DP Mln X of GDP 1978 1978 1976-76 Current revenue 10556 22.4 20.2 Current expenditure 8281 17.6 17.2 Current surplus 2275 4.8 3.0 Capital expenditure 1459 3.1 2.9 External assistance 1419 3.0 1.8 GDP DEFLATOR 1976 1977 1978 Index (1975:1OO) 109.8 134.5 156.6 Annual percentage change 9.8 22.5 16.5 BALANCE OF PAYMENTS IN 1976-: KERCHANDISE EXIRTS US$Mln See note 7 US$Mln M o Exports of goods, n.f.s. 85.6 Imports of goods, n.f.s. 91.9 Resource gap -6.3 Current transfers (net) -4.5 Current account balance _10.8 RATE OF EXCHANGE Official capital transfers (net) 15.9 1976-1979 IBRD/IDA LENDING Net errors and omissions 5.8 Change in reserves -10.9 US$1.0 * DF177.721 (tncrease= -) DFP.O - US$0.005627 - None NOTE: -All conversions to dollars in this table are at the average exchag2e rate prevailing during the period covered. 1/ In view of the absence of an agreed concept of "nationality" in Djibouti, all data relating to this concept or that of resident are highly speculative. This affects national product, income, savings and to a large extent hampers the establishment of a balance of payments. 2/ Data for 1979 are very tentative. 3/ In 1970 prices. 4/ At market prices. 5/ Net indirect taxes. 6/ The most recent balance of payments is available for 1976 only. 7/ When ree.xports are deducted from total exports of goods and services, net exports account for less than 2 percent of GD?, consisting mainly of tbh value of the services exported by the port, since there are virtually no domestic merchandise exports. The only traceable exports are live animals and hides and skins.  - 22 - ANNEX II STATUS OF BANK GROUP OPERATIONS IN DJIBOUTI A. Statement of IDA Credits (as of September 30, 1981) None B. Statement of IFC Investments (as of September 30, 1981) None C. Projects in Execution (as of September 30, 1981) None  - 23 - ANNEX III Page 1 of 2 DJIBOUTI Supplementary Project Data Sheet Technical Assistance Project I. Timetable of Key Events (a) Origin of Project: Request by H.E. Minister of Finance, October 1980 (b) Identification mission: November 1980 (c) Appraisal mission: June-July, 1981 (d) Negotiations: January 4-11, 1982 (e) Planned Date of Effectiveness: September 1982 (f) Signature of UNDP Project Document: May 25, 1981 (revised in March 1982) II. Special Implementation Action: The World Bank, in its capacity as Executing Agency for the UNDP component, would send the long-term experts to Djibouti only after completion of rehabilitation of the Planning Directorate offices (para. 44). III. Special Conditions (a) The presence in Djibouti of the UNDP-financed experts is a condition of disbursement for the proceeds of the Project Preparation and Sector Studies Fund (para. 44). (b) Government would ensure coordination of statistical work between the Planning and Statistical Directorates (para. 45). (c) Government would make basic statistical data available to all national users, and essentially the Planning Directorate (para. 45).  - 24 - ANNEX III Page 2 of 2 (d) The Government would assign national and professional staff in sufficient number to enable the Planning and Statistical Directorates to meet their responsibilities (para. 45). (e) Terms of reference for all activities financed by the Studies Fund would receive approval of the Association prior to commencing the selection of consultants (para. 46). (f) The Association would have the right to review candidates for the training program and to reject those deemed unqualified (para. 47). (g) The Government would designate a coordinator for the training program (para. 47). (h) The Association would comment and review the recommendations of a study on the Government's computer needs and its approval of these recommendations would be needed before computers can be financed by the project (para. 43).  - 25 - ANNEX IV Page 1 of 4 LIST OF STUDIES NEEDED TO OUTLINE A DEVELOPMENT STRATEGY AND IDENTIFY NEW PROJECTS The following list, based on interviews with Government officials and multilateral and bilateral donors, is provided as an illustration of Djibouti's needs over the next three to five years. It comprises background studies, sector surveys, and, when identifiable, project feasibility studies. All the studies listed below would not be financed by the Studies Fund and total or partial financing has already been secured for some of them. I. EDUCATION, TRAINING, HEALTH I - 1) Education sector: to revise and update school mappings survey, and to use it to define an education strategy (6 man-months, plus equipment, printing, etc.). I - 2) Training in public administration: to survey and summarize all existing reports; to establish needs for training in public administration; to recommend and to prepare appropriate seminars and a time table for "Djiboutisation"; (3-12 months). I - 3) Education and health construction standards: to establish standards appropriate to needs and resources of Djibouti for construction and equipment of schools and rural dispensaries, with pilot schemes (12 man-months, and pilot schemes). I - 4) Accountancy and auditing: to revise facilities for training in accountancy and auditing procedures, prepare revised courses and seminars as appropriate (3 man-months). I - 5) Nomad education: to study education needs of nomads and to prepare a project to provide basic education (both) for children (and adults) (12 man-months). I - 6) Health sector strategy: studies to elaborate the health strategy already defined by the Ministry of Health with an emphasis on providing basic preventive and curative health services, including family planning services, throughout the country (4 man-months). I - 7) Population policy: Development of population policy and of measures to encourage family planning for health reasons (4 man-months).  - 26 - ANNEX IV Page 2 of 4 II. AGRICULTURE AND RURAL DEVELOPMENT II - 1) Rural development strategy: to make an inventory of rural resources based mainly on information available including German Hydrogeological survey, to survey the basic needs of the population of the interior of the country, including the nomads, and to define a strategy of rural development, estab- lishing priorities for different types of rural development projects (15 man- months plus some small pilot activities). II - 2) Marketing of fruits and vegetables: to advise on the most appro- priate methods for marketing produce of small producers in different parts of the country and to prepare a project if appropriate (4 man-months). II - 3) Animal resources: to carry out a census of livestock resources, including an analysis of animal health and to design a project to improve animal health standards (12 man-months plus aerial photography, laboratory work, etc.). II - 4) Projects: to prepare small agriculture projects with emphasis on training extension workers (12 man-months plus equipment). III. URBAN SECTOR III - 1) Small projects: preparation of small projects for housing and urban development in different parts of the country including the interior (24 man-months plus local survey work, etc.). III - 2) Construction materials: identification of appropriate, locally available, construction materials and building methods for low-cost housing, primary schools, and rural health facilities, using such methods, including building prototypes and training labor (12 man-months plus pilot construction). IV. INDUSTRY, FINANCE, NON-FORMAL SECTOR, COMMERCE IV - 1) Non-Formal sector: to analyse the scale and content of artisanal and non-formal economic activities, and to recommend means of supporting such activities where appropriate (6 man-months plus survey team). IV - 2) Industry projects: to prepare pre-feasibility studies for industrial projects (6-12 man-months). IV - 3) Renewable Energy: survey of possibilities for local use of renew- able energy sources and pilot schemes.  - 27 - ANNEX IV Page 3 of 4 IV - 4) Investment Code: to review the investment code and to prepare a revised draft appropriate to the needs in Djibouti (2 man-months). IV - 5) Financial sector: to analyse the facilities and services provided by the financial sector in Djibouti, the needs of industry and commerce, both domestic and international, for financial sector services, and the appro- priateness of financial policies for maximizing the benefits the sector can bring to Djibouti (3 man-months). IV - 6) Price policy: to analyse the economic costs and benefits of the present policy of price control, and to recommend any changes that may seem appropriate (3 man-months). V. PARASTATAL ENTERPRISES V - 1) Electricity Master plan: to plan development and tariff policy for the power sector (6 man-months). V - 2) Power generating capacity: pre-feasibility studies for plant expansion (4 man-months). V - 3) Power Distribution: pre-feasibility studies for distribution system (4 man-months). V - 4) Water supply: pre-feasibility studies for specific projects especially in the towns of the hinterland (12 man-months). V - 5) Water and sewerage tariffs: to prepare appropriate tariff systems for water supply and sewerage (4 man-months). V - 6) Sewerage: pre-feasibility studies to improve the sewerage system in Djibouti to complement studies financed by the European Development Fund; studies to recommend appropriate methods of sewerage disposal in other parts of the country (6 man-months and some pilot schemes). V - 7) Computerization: to assess the needs of the public sector for computer services, to recommend how these might best be met, and to assist in computerisation of appropriate services (6 man-months - 12 man-months).  - 28 - ANNEX IV Page 4 of 4 VI. STATISTICS VI - 1) Consultancy for Statistics Directorate: (3 man-months). VI - 2) Surveys: assistance in carrying out surveys of local consumption. VII. ROADS VII - 1) Tadjourah - Obock road: feasibility study VII - 2) Other Roads: Feasibility studies and designs for secondary roads. VIII. OTHER STUDIES VIII - 1) Mineral Resources: pre-feasibility studies for exploitation of mineral resources. VIII - 2) Perlite: proving study. VIII - 3) Tourism Sector: to review possibilities of developing tourism, and to conduct (pre)feasibility studies for tourism sector projects (6 man- months). la  - 29 - ANNEX V Page 1 of 2 MANAGEMENT PROCEDURES FOR THE PROJECT PREPARATION AND SECTOR STUDIES FUND The management procedures below would be followed (Schedule 4 of the draft Development Credit Agreement): (i) technical ministries would, periodically but no less than twice yearly, submit proposals for projects and sector studies to the Planning Directorate; (ii) these proposals would be discussed among concerned ministries meeting as an ad hoc sub-committee of the National Programming Commission (para. 28); these meetings, chaired by the Planning Director, would always include representatives of the Ministries of Finance, and Foreign Affairs and Cooperation; (iii) proposals would be selected for further study based on the following criteria: (a) studies necessary for preparation of a development strategy (including basic economic and statistical surveys, human and natural resources studies) would be accorded first priority until the strategy is elaborated; (b) studies for preparing projects for submission to the Bank and other foreign donors would need to be in accordance with the Government's development strategy. Special attention would be paid to criteria stressing employment creation, foreign exchange earning potential, sectoral distribution, and satisfaction of basic needs; and (c) in order to allow a reasonable number or variety of studies to be financed by the Studies Fund, studies selected for funding would be relatively small. Unless the Association agrees otherwise, no more than $250,000 would be contributed by the Fund toward the cost of any single study, although cofinancing would be possible; (iv) terms of reference would be prepared by technical ministries with the assistance of the Planning Directorate. The Planning Directorate would transmit all terms of reference to the Asso- ciation for its approval, prior to the selection of consultants (Section 3.02(a) of the draft Development Credit Agreement);  - 30 - ANNEX V Page 2 of 2 (v) the Studies Fund would finance individual consultants, consulting firms, equipment needed to conduct studies as well as pilot schemes when necessary; (vi) final selection of consultants would be made by the concerned agency and the Planning Directorate on the basis of the Guide- lines for the Use of Consultants published by the Association in August 1981; the Planning Directorate would submit the particulars of the selected consultants to the Association for its concurrence (section 3.02(c) of the draft Development Credit Agreement); and (vii) contracts with consultants would be signed by the concerned minister, after clearance by the Planning Directorate, which would assist in the execution and supervision of studies. AL  rg & . "