Cameroon - Third HEVECAM Rubber Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-3771-CM REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSE]) LOAN OF US$8.3 MILLION TO THE REPUBLIC OF CAMEROON FOR THE THIRD HEVECAM RUBBER PROJECT December 19, 1984 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS US$ = CFAF 418 CFAF 1,000 = US$2.55 The staff appraisal report is based on the exchange rate of US$1.00 = CFAF 392 prevailing at appraisal. WEIGHTS AND MEASURES 1 kilometer (km) 0.621 miles 1 hectare (ha) = 2.471 acres 1 kilogram (kg) = 2.205 pounds 1 metric ton. (mt)= 0.984 long ton ABBREVI:ATIONS CAMDEV - Cameroon Development Corporation CCCE - Caisse Centrale de Coop6ration Economique (France) (Central Economic Cooperation Agency) CDC - Commonwealth Development Corporation (U.K) CFA - Communaute Financiare Africaine (African Financial Community) EIB - European Investment Bank FONADER - Fonds National de Developpement Rural (National Rural Development Fund) HEVECAM - Societe Hevea-Cameroun IRCA - Institut de Recherches sur le Caoutchouc (Rubber Research Institute) PAMOL - Societe Pamol Cameroun (Unilever Group) SAFACAM - Societe Africaine Forest:iere et Agricole - Cameroun (African Forestry and Agricultural Company - Cameroon) SOCAPALM - Societe Camerounaise de Palmeraies (Cameroonian Oil Palm Plantation Company) UDEAC - Union Douaniare des Etats de l'Afrique Centrale (Customs Union of the Central African States) FISCAL YEAR Government and HEVECAM: July 1 - June 30  FOR OFFICIAL USE ONLY CAMEROON THIRD HEVECAM RUBBER PROJECT LOAN AND PROJECT SUMMARY Borrower: Republic of Cameroon. Beneficiary: Soci.te Hevea - Cameroun (HEVECAM). Amount: US$8.3 million equivalent, including the capitalized front-end fee. Terms: 20 years, including 5 years' grace, at the standard variable rate. Co-financing: CCCE, CDC and EIB, each US$11.8 million equ:ivalent. Onlending Interest Rate: Banlk rate plus one percentage point. Project Description: The project would comprise a third phase of four-and-a-half years in the development program of a rubber plantation estate within HEVECAM's Niete concession. Its main objective would be to complete the establishment of the planned 15,000 ha of rubber with its associated industrial and social infrastructure, bringing the plantation to a state of commercial exp:Loitatlon. It would consist of the fol:Lowing components: (i) maintenance until production of areas planted under previous Bank-financed projects and initial tapping of about 9,400 ha; (ii) continuation of the program of infrastructure establishment, including estate buildings, housing for estate workers, and expansion of crumb rubber processing facilities (to a total capacity of 64 tons/day for latex and 32 tons/day for lower grades); and (iii) associated programs, namely the expansion to 500 ha of the outgrower program (from the 250 ha achieved under the second phase), a pilot program of food crop production aimed at provision of basic foodstuffs for workers, and studies and rubber trials (in the areas of Kribi and the Southern and Eastern provinces). Benefits and Risks: The project would continue to be a focal point for the Government's plans for the economic development of the sparsely populated Kribi region. The expansion of rubber production would help reduce This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otheirwise be disclosed without World Bank authorization.  - ii - Cameroon's heavy dependence on cocoa and coffee for its agricultural export earnings. At maturity, the HEVECAM development would provide full-time employment for almost 6,000 workers. The major risk is that HEVECAM might face the difficulties in maintaining efficient commercial operation that have been experienced by other parastatal plantation companies in Cameroon. The SAFACAM management and marketing contracts are considered an adequate! safeguard. The principal technical risk would be Fomes and Gloeosporium diseases but promising control measures have been developed and are being actively refined by HEVECAM's technical department in association with the IRCA research institute. Precautions have been incorporated in the project design to attain the estimated yields and to cover reasonable price, exchange, and financing risks.  - iii - % of Estimated Project Costs Foreign Local Total Base Cost ---------US$ Million--------- Plantation Development and Operating Costs 8.8 15.9 24.7 43 Civil Works, Utilities 4.4 8.3 12.7 22 Vehicles, Equipment 2.0 0.5 2.5 5 Experimentation 0.4 1.0 1.4 2 Social Services, Smallholders 3.3 4.5 7.8 14 Working Capital 3.7 4.2 7.9 14 TOTAL BASE COST 22.6 34.4 57.0 100 Physical Contingencies 1.0 1.2 2.2 4 Price Contingencies 5.7 18.8 24.5 43 TOTAL COST (Including Taxes) 29.3 54.4 83.7 Taxes - (8.2) (8.2) TOTAL COST (Net of Taxes) 29.3 46.2 75.5 Financing Plan IBRD 8.3 CCCE 11.8 CDC 11.8 EIB 11.8 GOVERNMENT 29.0 HEVECAM 11.0 TOTAL 83.7 Estimated Disbursements ---------------------Bank FY----------------- (in US$ Million) 84/85 85/86 86/87 87/88 88/89 89/90 Annual - 1.9 1.9 1.7 1.7 1.1 Cumulative - 1.9 3.8 5.5 7.2 8.3 Estimated Rate of Return: 16 percent. Staff Appraisal Report (Prepared by CCCE): Report No. 5046-CM Maps: IBRD No. 18249 and 18369.   - 1 - INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUJBLIC OF CAMEROON FOR A THIRD HEVECAM RUBBER PROJECT 1. I submit the following report and recommendation on a proposed loan to the Republic of Cameroon for the equivalent of US$8.3 million to help finance a Third HEVECAM Rubber Project, a parastatal rubber plantation. The loan would have a term of 20 years, including five years of grace, at the standard variable interest rate. The loan proceeds would be made available to HEVECAM. The Caisse Centrale de Cooperation Economique (CCCE), who took the lead in appraising the Project, the Commonwealth Development Corporation (CDC) and the European Investment Bank (EIB) would participate in the f-Lnancing of the Project with loans amounting to the equivalent of US$11.8 million each. The terms of their loans would be: CCCE, 20 years, 5-year's grace, and about 8.6% annual interest; CDC, 20 years, 7-year's grace, and about 9% annual interest; and EIB, 15 years, 5-year's grace, and about 8% annual interest. PART I - THE ECONOMY 2. A report entitled "United Republic of Cameroon--Economic Memorandum" (Loan No. 2877-CM), was distributed to the Executive Directors on April 30, 1980. Since then, several economic and sector missions have visited Cameroon. Their maior findings are incorporated in the following paragraphs. Annex I provides basic country data. Background 3. Cameroon has a population of 9.3 million (1983) and covers an area of 475,000 km2. It is one of Africa's most diverse countries with a wide range of climatic zones, ecological conditions, population-densities, ethnic groups and traditional cultures. Its main opportunities for development lie in the expansion of agricultural, livestock, and forestry production; the exploitation of energy and mineral resources; and the processing of agricultural, forestry and mineral products for domestic consumption and export. Cameroon became an oil producer in 1978 and is estimated to have produced over 6 million tons of crude petroleum in 1983. In 1981, it also began producing refined petroleum products. 4. Basically an agricultural economy at independence in 1960, Cameroon has become increasingly urban, with more than one-third of the population living in cities in the early 1980s. Douala, the major port and industrial center, and Yaounde, the capital, together account for about 40% of the total urban population. The main economic centers are separated by  -2- large areas of low population dens:Lty, making it costly to develop an adequate transport network. Despite large investment over the past two decades, the network remains rudimentary when considering Cameroon's size, level of development and transit role vis-a-vis neighbouring landlocked countries. Large areas are still isolated from the rest of the country and manv major arteries are not passable during the rainy season or need extensive upgrading to handle rapidly increasing traffic flows. 5. Cameroon subscribes to a philoscphy of "planned liberalism" and the country's economic development has been pursued within a five-year investment planning framework. The Fourth Plan period ended in June 1981, and the Fifth Plan (1981-86) is nowt in effect. Cameroon's macroeconomic policies have been prudent with emphasis on balanced regional development as part of the Government's efforts to foster a sense of national unity. Thus, while until the second half of the 1970s growth was comparatively moderate, the country has enjoyed exceptional economic and social stability. 6. The years 1982-84 have been a period of transition. In November 1982, after about a quarter of a century in power, President Ahidjo resigned in favour of his constitutional heir, Prime Minister Paul Biya. Ten months later he resigned from the Presidency of the Union Nationale Camerounaise (UNC), the onlv political party, t:hus ending a bipolar power structure. In September 1983, Mr. Biya became President of the party and in January 1984 he was confirmed as President of Cameroon by popular vote. However, the country was shaken by an aborted cotup in April 1984. Over this past vear, Mr. Biya has promised a more open style of Government, more rigor in the management of public funds and greater social justice. The new Government is committed to economic liberalization, although still within the context of "planned liberalism', and to more open and participatory government. It has endorsed the objectives of preserving a strong agricultural base, maintaining a high degree of food self-sufficiency, and building up social and transport infrastructure, especially highways, via a moderately enlarged investment program. It has expressed strong interest in improving the efficiency of state enterprises, possibly, in some cases, through privatization. Economic and Social Developments 7. Over the past two decades the Government has managed to establish favorable conditions for accelerated economic growth and fiscal stability. Average growth was sluggish in the 1960s at 3.7% per annum, but accelerated to 6.3% per annum in the 1970s and about 8% in the early 1980s. Investment, which was at a low 10% of GDP in the early 1960s, grew to an average of about 20% in the early 1970s and to 25% in 1982. This growth was made possible by the gradual easing of constraints to absorptive capacitv, the increase in domestic savings and more recently, oil resources. Before the surge in oil export:s in 1978-79, Cameroon registered small trade deficits, though modest surpluses were recorded in 1973-74 and 1977-78. The small deficits on the current account were amply offset by capital account flows, mainly public borrowing. However, despite a tenfold  -3- increase in public indebtedness in current terms during the past decade, the debt service ratio has consistently remained under 12%. 8. Prior to 1978, Cameroon's economy, apart from a small manufacturing sector concentrated in heavily protected import substitution activities, was based essentially on agriculture. Agricultural products accounted for 72% of 1978 export earnings, with coffee and cocoa alone accounting for 53%. However, oil production began in 1978 and it rapidly assumed a dominant position in total exports (63% in 1982) as well as 4 representing an important fraction of total GDP (13% in 1983). 9. Although steady progress has been made in the well-being of the population over the past two decades, much remains to be done in the social sectors. Enrollments increased zonsiderably at all levels of the educational system, but its quality and efficiency deteriorated. Health-related indicators are on the low side, considering Cameroon's overall level of economic development. Life expectancy at birth is a low 50 years, the result of a still high infant mortality rate. Inadequate health coverage, poor access to water supply, lack of sanitation services in crowded urban areas, poor nutrition and health practices are the main reasons for this high rate. 10. In 1981, about 40% of the rural population was considered to live in absolute poverty, i.e., with an annual per capita income of less than US$105 (1981). This explained the heavy rural outmigration to the cities of Yaounde and Douala. However, conditions there are not much more favorable, with one quarter of the population in these major cities classified as absolutelv poor. Development Prospects and Issues 11. The basic issue for Cameroon is to adjust to the oil and post-oil era. Despite a variety of mineral resources, it is unlikely that their exploitation will make up for the expected slow decline of oil production in the late 1980s. Oil revenues offer a window of opportunity to meet pressing requirements for investment and introduce policies aimed at preparing the economy for the post-oil era. On the other hand, lack of caution in using these revenues could have highly disruptive effects on the economic and social fabric of the country. So far caution has prevailed. However, pressures for an accelerated improvement of living conditions are mounting. 12. In the longer term, the major issue is to cope with a fast-expanding population. Although its growth rate at 3.2% is not uncommon in the regional context, it is accelerating. Cameroon's population of about 9 million is expected to reach 17 million by the end of the century. Urban population of 3 million would increase to 9 million. Providing meaningful employment opportunities to a vastly expanding urban labor force is and will rem'ain the major challenge for the Cameroonian authorities. At present only 22% of the labor force is employed outside agriculture, 9% in industry and 13% in services. If large-scale unemployment is to be avoided in cities, about 2 million jobs would have to  - 4 - be added to the existing 750,000 outside agriculture. In the meantime, agriculture should generate employment at a higher rate than the 1% achieved annually over the past decade to absorb more than one-fourth of the incremental labor force. 13. The Government's major objectives in the Fifth Plan are to maintain food self-sufficiency, improve income and living conditions in rural areas as a means of slowing down migration to cities, provide health services and adequate drinking water to a, vastLy expanded portion of the population and greatly increase the supply of well-trained Cameroonians. These objectives are consistent with Cameroon's present requirements. The projected annual GDP growth rate of 7% over the Fifth Plan period appears comfortably attainable. External Borrowing and Creditworthiness 14. Total public external debt outstanding and disbursed rose from US$513 million at the end of 1976 to US$1.9 billion at the end of 1982. Debt service payments rose from US$39 million in 1976 to US$264 million in 1982, while exports increased from US$70C million in 1976 to about US$2.3 billion in 1982. However, Cameroon's traditionally modest reliance on external financing has been followed, during the oil era of increased financial independence, by diminished recourse to external borrowing and some prepayment of foreign loans. Gross disbursements against public and publicly guaranteed external borrowing have declined sharply from a peak of US$566 million in 1980 to USS181 million in 1982. Net transfers have fallen from a peak of US$389 millions in 1979 to minus US$83 million in 1982, when debt service payments exceeded gross disbursements. Rising interest rates, a hardening of average loan terms and the appreciation of the dollar increased Cameroon's debt service ratio to 11.6% in 1982. The debt service ratio appears likely to remain below 14% for most of the rest of the decade, even allowing for a continued descline in external lending to Cameroon on concessional terms. Cameroon is basically creditworthy. PART II - BANK GROUP OPERATIONS IN CAMEROON 15. Bank and IDA commitments in Cameroon as of August 31, 1984, amounted to US$812.6 million equivalent and covered 44 projects: 20 in agriculture, 13 in transportation, 3 in education, 3 in public utilities, 2 small- and medium-scale enterprise projects, 2 technical assistance projects and one urban project. Transport and agriculture account respectively for about 44 and 40% of these commitments. IFC has invested in six enterprises, with total net loan/equity commitments of US$14.4 million. The country was graduated from IDA in FY82. 16. Performance in project implementation is, on average, good in the transport sector, mixed in agriculture and mediocre in other sectors. The Government has generally shown willingness to collaborate with the Bank in finding solutions, but implementation delays and setbacks have occurred,  -5- notably over the last year in the wake of recent political changes. In particular, the overall disbursement rate, which used to compare favorably with that of most other countries, has slowed down due to administrative bottlenecks, notably in the central procurement agency. Discussions on ways to streamline procurement procedures are ongoing. 17. The Bank's initial :investment strategy in Cameroon was to support the Government's development efforts in three main directions: (i) strengthening and extending the road and rail trunk svstems and improving the port of Douala; (ii) raising agricultural output and exports; and (iii) improving education. Until 1975, apart from one water supply project, Bank lending was concentrated entirely in the transport, agriculture and education sectors. Since 1975, Bank lending has diversified into forestry, small- and medium-scale industrv, urban development, technical assistance and telecommunications. For the immediate future, projects are being prepared in agriculture to expand rural development and strengthen agricultural research; in transport to upgrade/expand and maintain the road system; in education/manpower training to support the demands of an increasing investment program; and in health for the underserviced rural areas. 18. Oil revenues are large enough to finance an expanded investment program, but are expected to start declining in the late 1980s. The Government of Cameroon would like the Bank to maintain an active assistance program as: (i) a way of ensuring a smooth and continued flow of resources for development; (ii) a vehicle for technical assistance in project design and implementation; (iii) a guarantee of impartialitv in providing guidance; and (iv) a source of advice for policy reform. The rationale for maintaining a sizeable Bank program lies in the need to meet the country's increased and more complex requirement for development assistance. In order to ensure productive use of its oil revenues and to prepare for the post-oil era, the Government must make critical decisions concerning the size and composition of the domestic investment program and the removal of the major development bottlenecks. The Bank's major objectives are to strengthen the Government's policy making, investment planning and implementing capabilities, promote private initiatives and reduce the role of the parapublic sector in the economy, develop the country's human resource base and improve the living conditions of lower income groups. 19. The Bank's objectives will increasingly be pursued through sectoral approaches combining lending, intensified economic and sector work and technical assistance to the central and technical ministries. The Bank is in the process of preparing and discussing with the Government strategy papers for the major sectors with a view to reaching broad agreement on a macroeconomic and sectoral policy framework. This dialogue is expected to pave the way toward a more sectoral approach to lending in support of well-defined Government programs. Key topics for discussion will be the role of the public enterprise sector, trade liberalization and pricing policies, the pace and pattern of resource development, skilled manpower constraints and needs, and Government administration reform. For the years ahead, the nature of the Bank's involvement is expected to shift towards fewer but larger sectoral operations.  -6- Donor Activities 20. Disbursements of official development assistance during the second half of the 196Os amounted to about US$45 million a year, mostly in the form of grants. France provided most of the assistance. In the 1970s, foreign aid increased to about US$90 million a year, with only one-fifth in the form of grants. Bank and IDA financinig amcunted to about 23 % of total disbursements and the Bank Group became the major public donor. Cofinancing has been featured in 22 of the Bank projects and is being actively sought for several projects under consideration. 21. Cameroon's borrowing from private sources accounted for 31.5% external financing in 1982, from only 11% in 1967-69. Public external debt outstanding and disbursed as of December 31, 1982, amounted to US$1.9 billion, 8.2% of which was in the form of Bank loans and 8.5% in IDA credits. Bank loans in 1982 accounted for 6.4% of public external debt service and IDA credits for 0.7%. IBy 1985, Bank loans and IDA credits are projected to account for about 26% of debt: outstanding and about 14% of debt service. PART III - THE AGRICULTURAL SECTOR Background 22. Agriculture has traditionally been the cornerstone of the Cameroonian economy, directlv accounting, until 1978, for about 75% of employment, 75% of export earnings, and 35% of t:ax revenues. The sector exhibits considerable regional variety of outpul:: livestock and Sahelian crops (cotton, rice, millet and sorghum) in the North; a range of industrial crops (coffee, cocoa, oil palm, rubber and sugar) and food crops (maize, manioc, etc.) in the West and South, and large, mainly unexploited forestry resources in the South-East. Smallholder farming contributed about 93% to total agricultural output (food crops for local consumption, coffee, cocoa and cotton for exports) while the remaining 7% is produced by plantations. Over the last few years, Government has promoted diversifi- cation and particularly the cultivation of food crops as a complement to the more volatile export cash crops. As a result, Cameroon is, by and large, self-sufficient in food. 23. The advent of oil in 1978 triggered a rapid decline in the relative share of the agricultural sector in the country's GDP and exports. Although these trends are expected to continue for some time, there are good reasons for Cameroon to maintain a strong and diversified agricultural sector based on both food and export crops. Firstly, the country needs to feed a rapidly growing urban population while avoiding substantial escalation of food imports or costs of living; secondlv, for the post-oil era, it must preserve diversified sources of foreign exchange earnings, as well as the economic viability of the various agricultural regions.  - 7 - 24. Conscious of the possible risks which accompany oil exploitation, the Government in the Fifth Development Plan (1981-86), stresses investment in the agricultural sector (24% cf total planned expenditures, as against 11% in the previous plan). The focus is on promoting food production and on slowing down rural exodus by improving smallholder productivity (hence income) and rural amenities, Fot the tree crop subsector, the Plan aims at consolidating rather than expanding planted areas, with the emphasis on modernization for coffee/cocoa, and efficiency improvements for the parastatal plantations, The! Bank has supported these objectives through its projects (para 33). Government success in developing the sector's potential will depend on the pace at which it can implement the needed policy reforms (para 34). The Rubber Subsector 25. Production of rubber has been supported by Government in order to diversify agricultural out-put and. the country's export base. To date development has been mainly in the form of parastatal plantations in the coastal area. The parastatal platntations were expanded to contribute to regional development, to foster the establishment of a network of roads, infrastructure and otner public services in largely underdeveloped areas, and to serve as nuclei for outgrow-er production. In this context, the Bank financed five projects for the twro parastatals in the rubber subsector (CAMDEV and HEVECAI4) for a t:otal, in loans/credits, of US$131.3 million. 26. The total area urdler rubber in Cameroon at present is about 40,000 ha, some 18,000 ha of which are being tapped. Production is around 20,000 tons per year, The major contribution comes from the parastatal corporation CAMDEV, with an annual production of 12,500 tons. Two private sector plantations produce about 6,000 tons (para 28). Rubber has considerable potential as an export crop. Taking into account the comparative climate and soi:L advantages of Cameroon, the selection of high-yielding clones and good marnagement could result in natural rubber production having yields equivalent to that in Asia. In terms of land availability, the area under rubber could be increased to several hundred thousand hectares without jeopardizing other important agricultural developments, in particular the expansion of staple food production. 27. However, due to miaagevtent problems in some of the parastatal plantation companies (paza 28), uncertainties concerning world market prospects and the potential effects of petroleum on the economy (inflation, pressures on wages), the Government decided in 1982 that it would be preferable to limit expansion and to concentrate instead on improving the efficiencv of present operations. Under the Oil Palm and Rubber Consolidation Project (Ln 2160-CCMS, the Government agreed that, except for the completion of HE'T CAMPs 15,000 ha program, there would be no extension of oil palm and rubber pa-astataL plantations until a subsector strategy would be submitted to the Bank for review before preparation of the Sixth Plan begins (June 1985). The agreed upon recommendations would serve as a basis to define the Plan's subsectoral objectives and the Bank's future involvement. Termis of reference to prepare a background paper for this strategy, which would cover, inter alia, proposals for the long-term  - 8 - organization and management of the parastatal p:Lantations, including the possibility of partial or total privatization, were agreed upon, and consultants have been recruited. These discuss:Lons, as well as the rehabilitation effort at CAMDEV (para 28), are expected to improve the operating environment of the subsector, preserve the heavy investments made by Government and set the conditions for a sound, rational development. Institutions 28. The rubber subsector covers a total of :39,500 ha, comprising two private sector plantations (SAFACAM and PALMOL), two parastatals (CAMDEV and HEVECAM), and a pilot program for smallholders. The two private firms which represent 15% (6,100 ha) of the planted area, are efficiently managed; they have low operating costs and good yields, but no immediate plans for expansion. CAMDEV, which is a multicrop company covering some 39,000 ha (including 21,000 ha under rubber), has received three Bank loans totalling US$83.8 million. It has had mixed results, as operating efficiency has been adversely affected by political interference and lack of controls. The Oil Palm/Rubber Consolidation Project (Ln 2160-CM signed on July 1982) set out to resolve these problems with strong remedial measures which, following a slow start-up, are beginning to bear fruit. CAMDEV and the Government have just entered into a "Contract Plan" which provides a sound framework for the company's long term rehabilitation. As a result, disbursements against the CAMDEV fraction of Loan 2160-CM have now begun. 29. HEVECAM (Hevea-Cameroon) so far has avoided the problems faced by other parastatals. HEVECAM was established by Government in 1975 to develop a 15,000 ha rubber estate within a 40,000 ha concession at Niete in the South Province. The concession is about 25 km southeast of Kribi and 250 km from the main port of Douala. Its start--up capital of US$3.3 million was contributed jointly by GDvernment, the National Office for Marketing of Primary Commodities (ONCPB) and the National Investment Company (SNI). Further financing totalling US$109.0 million to implement HEVECAM's development program was provided through two projects supported by the Bank Group (paras 35 and 36). These projects have been successful in establishing a well-run companv, about 15,000 ha of rubber plantation, a 250 ha pilot outgrower scheme, a 30 tons/day rubber processing factory, and associated programs (research, rural infrastructure, food crops). 30. HEVECAM operates under the auspices of the Ministry of Agriculture (MINAGRI). Its present cadre 2onsists of 13 expatriates and 30 Cameroonians. During the first two lprojects, the services of SAFACAM ("Societe Africaine Forestiere et Agricole du Cameroun"), a subsidiary of "Groupe Terres Rouges", an agro-industrial company with worldwide experience, were retained by HEVECAM to establish the rubber plantations and to provide the technical expertise and senicr management staff. SAFACAM makes semi-annual field inspections, and regular visiting consultants assist in the preparation of amnual work programs and related budgets. Training programs for the Cameroonian staff are effectively arranged and implemented, and the company has a precise management cameroonization plan. In view of the successful experience with the  - 9 - SAFACAM contract, and HEVECAM's imminent entry into commercial production and marketing activities, it is considered essential that SAFACAM continues at least for the execution period of the project to have responsibility for project management, with the amendments specified in para 43. 31. The services of MINAGRI at provincial and departmental levels are hampered by insufficient and inadequately trained personnel, and by the lack of coherent work programs and the means to implement them. Therefore, Government has increasingly been relying on the regional development agencies and parastatal comipanies to execute its infrastructure programs in rural areas. This reliance has become particularly burdensome for HEVECAM, which has been mandated to promote the economic development of an under-populated area. This problem would be addressed under the project (para 42). 32. FONADER (Fonds National de Developpement Rural) is an autonomous Government agency, established in 1973, and funded by annual subsidies and transfers from the Government. For lack of field staff, it has not played a major role as a rural development body and is now evolving into an agricultural credit institution. Its role under the proposed project would be limited to financing the outgrower credit component (para 41). Bank Group Involvement and Strategy 33. Since 1967 the Bank Group has been involved in 20 projects in the agricultural sector, amounting to a total of US$355 million in loans and credits. In line with Government objectives of developping an export base and reaching self-sufficiency in some staple crops, much of the earlier Bank Group lending was for rubber and oil palm production, undertaken by CAMDEV, SOCAPALM, and HEVECAM. Since the mid-1970s, smallholder projects and regional rural development projects, integrating productive and infrastructural components as well as food and export crops, have been given prioritv. In the years ahead, lending is expected to follow a more sectoral approach, with operations aimed at addressing issues identified as major bottlenecks to achieving productivity growth (e.g., research, extension, credit). 34. With the absorptive capacity of Cameroon to implement agricul- tural projects being increasinglv stretched, and alternative sources of financing being available to the Government, the Bank strategy is focussing less on resource transfer than on institution building and policy reform. The ongoing policy dialogue includes such areas as improvements in input/output pricing policies, increased beneficiary participation in the operation and maintenance of Government's rural investments, and the establishment of a sound institutional framework. The First Two Projects 35. The first project (Niete Rubber, Cr. 574-CM, US$16 million, signed on July 30, 1975, cofinanced by a CCCE loan of US$4.4 million) ran into financial difficulties due principally to: (i) the underestimation of land clearing costs at the time of appraisal; (ii) the introduction of new  10 C labor legislation requiring larger than expected investment for workers housing; and (iii) difficulties over obtaining adequate supplies of seed and budwood. Therefore despite a carry forward into the second phase, the economic rate of return of the first phase was reestimated from 13.6% at appraisal to 11.7% at completion of the first project. 36. Implementation of the second project (Second HEVECAM Rubber, Cr. 965-CM, Ln 1791=CM, totalling US$31.5 million, sjigned on April 18, 1980, cofinanced with a CCCE loan of US$19 million and a CDC loan of US$28.8 million) was fully satisfactory. With the increase in planting (9,821 ha had been planted by July 1984, compared to 9,300 ha originally estimated), the installation of two processing lines to starn: operation in 1984, stabilization of the labor population (encouraged by the social infrastructure program) and the expected time'y completion of the outgrower program, the economic rate of return for the 15,000 ha program is projected to be 16% compared with 111.7% estimated at appraisal. The project experienced a cost overrun of about 17% in CFA franc terms due mainly to higher than expected equipment prices, but achieved major cost savings in US dollar terms due to the depreciation of the CFA franc against major international currencies. This resulted in US$5.7 million from Loan 1791-CM being unspent at thea initial completion date (June 30, 1984). Since the start-up of the thlird project has been postponed by six months to January 1985, the Bank agreed, at Government request, to finance out of Loan 1791-CM the continuation of HEVECAM's program during this transition period. Any funds under Loan 1791CM unconmittedi as of the signing of the Loan Agreement for the third project would be cancelled. Project Rationale 37. At the time of HEVECA-1,'s establishment in 1975, the Government declared two objectives: W) to creat:e a 15,000 ha rubber production plantation in three phases, tCo which the donors pledged their support; and (ii) to promote the economic development of the Niete region. Following successful completion of the plantation ob,ectives during the first two phases, the main goal of the third phase is to bring HEVECAM to the commercial production stage At this crucial stage in HEVECAM development and in view of its good performance under the first two projects, continued support by the Bank (as well as the other donors) is required to help the company reach maturity and the Government fully reap the benefits of past investments. The proposed project aims at making HEVECAM an efficient and successful producer of rubber for world markets and at the same time a model for the other companies in the plantaition subsector. In the process, the project would contribute to foster the development of the region by creating jobs and establishing a bas-ic infrastructure network (para 54). PA fRT IV * THE 'PROJECT 38. The principal objective of the project would be to complete the development of the planned 139000 ha of rubber with its associated  - 11 - industrial and social infrastructure (including the expansion of the outgrower program), and to begin commercial production. The project preparation report was completed in March 1983. The project was appraised jointly by CCCE, the Bank, CDC and EIB in September/October 1983, with CCCE in the lead role. Negotiations were held in Washington on October 30 - November 2, 1984. The Cameroonian delegation was led by Mr. Zoa Oloa Secretary General of the Ministry of Plan. The main features of the proposed project are highlighted in the Loan and Project summary, supplemented by Annex III. Details of the proposed project are contained in the Project Appraisal Report prepared by CCCE, of which an annotated J1 English translation (including a Bank Addendum) is being circulated separately. Project Description 39. To assist Government :Ln achieving its objectives with regard to the HEVECAM rubber plantation, the project would: (i) maintain during the pre-production period the rubber trees planted under the first and second projects; (ii) carry out the initial tapping of about 9,400 ha in addition to the 1,000 ha already being tapped; (iii) construct esatate buildings and social infrastructure for workers; (iv) expand crumb rubber processing facilities, bringing total. capacity to 64 tons/day of latex and 32 tons/day of lower grade rubber; (v) continue the field trials on rubber varieties, disease control, tapping techniques and the trials on rubber drying, necessary for the maintenance of production potential and the improvement of rubber quality; and (vi) continue to provide technical assistance to HEVECAM under the recently renewed management contract and the proposed marketing contract with SAFACAM, which include provision for the training of Cameroonian staff at all levels of responsibility. In addition, to broaden the impact of the HEVECAM development, the project would: (i) expand the outgrower pilot program from 250 to 500 ha; (ii) execute a pilot program of food crop production; and (iii) initiate studies and trials of rubber in the areas of Kribi, and the South and East Provinces.  - 1 ,2 - 40. Technical Aspects. By December 1984, about 15,000 ha will have been planted. While about 60% of the area will have been planted with the internationally proven clone, GTI, the emphasis in the last two years has been on planting Indonesian and Malaysian cLones characterized by rapid maturity and higher yield. High-density planting (555 trees per ha) would maximize production during the early years of tapping, while the use of yield stimulants (Ethrel) would both enhance yield and keep down labor costs. Production is expected to comnence in year seven after planting, with a yield of 800 kg of dry rubber per hectare rising to 2,250 kg at full maturity, in about year 14. Over an expected tapping life of 30 years, this would give an average production of just under 2,000 kg per hectare per year. These yields are being regularly achieved on well-managed plantations in the Ivory Coast, and it is expected they will be reached by EEVECAM. The most important technical concerns are the root disease Fomes and the young leave disease Gloeosporium. Adequate provision for prevention and control has been made under the project and further research into control techniques are included in the project research program. Following an in-depth study on rubber-processing techniques, involving consideration of capital and operating costs and of production and selling prices, the factory is geared toward the production of crumb rubber. 41. Outgrower Production. Under the second project, a pilot program was successfully implemented to develop 250 ha oi- village rubber plantations, in line with Government policy emphasizing smallholders. Establishment and maintenance of these young plantings are adequate. To allow a more meaningful test of outgrower response, a further area of 250 ha would be developed under the third project. (Credit would be granted by FONADER for 20 years with a 10 year grace period at an interest rate of 11.25%. Because Government and the Bank have not vet reached an agreement on credit policy and because of the small size oE the credit component (US$0.6 million), no external financing would be allocated to this component. However, assurances were received at negotiations that: (i) by June 30, 1985, HEVECAM would enter with FONADER into a credit adminis- tration agreement, acceptable to the Bank, defining each party's responsibilities; and (ii) the Government would make adequate funds available to FONADER for financing outgrower credit under the program (Sections 3.02 of the draft Loan Agreement and 2.02 of the draft Project Agreement). 42. Infrastructure. The number of employees, presently 3,000, will reach about 5,700 in 1988, when there will be a major increase in production. The project would finance the construction of housing and the provision of medical and social services for the additional employees. In order to attract and retain labor, HEVECAM, located in an underpopulated area, has provided workers with social amenities (housing, stores, hospital). In addition, the Government has relied on HEVECAM for other regional development infrastructure (roads, schools, police stations, post office). As HEVECAM enters the commercial production phase, it is essential to establish in its accounts a clear distinction between its productive function and its regional development: funcltions, to specify the responsibilities of HEVECAM in carrying oul: the public and social services activities and to provide for their financing by Government. This would be  - 13 - done through specific covenants of the financing agreement between Government and HEVECAM, which is referred to in para 47. The Edea-Kribi road, which is a key section in the export route to Douala, has recently been upgraded to all-weather standards. Assurances were obtained at negotiations that Government would ensure regular maintenance of the Edea-Kribi and the Kribi-N:iete roads (Section 4.03 of the draft Loan Agreement). 43. Organization and Management. The on-going arrangement described in para 30 has worked efficiently so far. In order to adapt it to the transition from plantation development to commercial production, Government has submitted satisfactory draft amendments to the present management contract between HEVECAM and SAF1ACAM to: (i) give SAFACAM responsibility for marketing HEVECAM's rubber output; and (ii) as of 1987, when the contract is renewed, link SAFACAM's remuneration to its performance. Assurances were received at: negotiations that HEVECAM would: (i) continue the present arrangement with SAFACAM, with the above amendments, at least during execution of the project; (ii) consult with the co-financiers before any termination, suspension, or amendment of the SAFACAM management and marketing contracts; and (fii) employ, at all times, a General Manager, a Deputy General Manager, a Technical Manager, a Financial and Administrative Manager , an Industrial manager, and a Field Manager, all with qualifica- tions and experience acceptable to the co-financiers (Sections 2.03 and 3.01(b)(i) of the draft Project Agreement). As part of the dialogue initiated by the Bank with the Government on the overall management of the parastatal plantation sector, Government gave assurances that, following the review of the subsector strategy (para 27), it would submit to the Bank, by December 1985, satisfactory proposals for the subsector's long term organization and management, including a timetable for implementation and, thereafter, would start the implementation of these proposals. (Section 4.04 of the draft Loan Agreement.) Staff Training and Development Programs 44. On-the-job training of skilled labor and intermediate level staff has proved effective and would continue, particularly to meet the new requirement for tappers. Most local management recruits have a sound academic background but lack the experience necessary for the efficient operation of a large agro-industrial undertaking. HEVECAM, assisted by SAFACAM, would continue to implement the training and development program designed to meet the long-term needs of the company, including overseas training visits to efficient rubber plantation enterprises in other countries. To maintain HEVECAM's attractiveness as an employer, assurances were obtained at negotiations that adequate incentives would be provided to staff responsible for Project execution. (Section 3.01(b)(ii)) of the draft Project Agreement.) Project Costs 45. Total project costs during the four-and-a-half year investment period are estimated at US$83.7 million, including taxes and US$75.5 million without taxes. The foreign exchange component would be US$29.3  14 - million or 35% of total project costs. This relatively low figure is due to the substantial investments already made under the first and second projects in heavy equipment, vehicles, and materials. With the plantation now entering the production phase, local operating costs are corresponding- ly high in the third project. The cost estimates and financing plans prepared by CCCE in early L984 have been accepted by Government, HEVECAM, and the other donors. To retain consistency, the same cost base has been used here. Adiustments to take account of exchange rate variations since mid-1983, when project costs were estimated, could lead to savings in the loan amount of about 5% which, if materialized, would be cancelled upon project completion. 46. Total physical and price contingencies amount to 47% of the base cost and 32% of the total cost. Physical contingencies calculated at various rates depending on the nature of the operations, average 4%. Price increases since mid-1983 have been included in the contingencies; they have been verified through November 1984 and fcund acceptable. Price contingen- cies for local costs have been calculated at 15% p.a. and for foreign costs, 7.5% for 1983/84 and 1984/85, 7% for 1985/86, and 6% for the last three vears of the project. These price escalation factors follow forecasts of future inflation in Cameroon for local costs and international inflation for foreign supplied goods and services. Financing Plan 47. Total external financing would amount to US$43.7 million, equivalent to 52% of project costs, the remainder being provided by Government (US$29 million) and HEVECAM (U';$11.0 million). The Bank would provide a loan of US$8.3 million (11% of t:he net-of-tax project costs, including a capitalized front-end fee of about US$20,000) and the other three external cofinanciers would each provide US$11.8 million (15.5% of the net-of-tax project costs). The terms of the IBRD loan would be 20 years with a five-year grace period at the standard variable interest rate. The terms of the other loans would be: CCCE, 20 years, 5-years grace, and about 8.6% annual interest; EIB, 15 years, 5-years grace, and about 8% annual interest; CDC, 20 years, 7-years grace, and 9% annual interest. The CCCE and EIB loans were approved in July 1984. All four external loans would be made to Government and passed on to HEVECAM under a financing agreement agreed upon in draft form at negotiations. The CCCE, CDC and EIB loans would be passed-on to HEVECAM at the rate charged to Government; however, in line with Bank policy, Bank loan proceeds would be passed-on at a rate incorporating a premium of one percentage point. The foreign exchange risk would be borne by HEVECAM. SignaLture of the financing agreement to be acceptable to the Bank, would be a condition of effectiveness (Sections 3001(b) and 6.01(a) of the draft Loan Agreement). All four loans would be linked by cross-effectiveness clauses (Section 6.01(b) of the draft Loan Agreemernt). Parallel financing totalling US$29.6 million would cover: technical assistance and purchase of light vehicles and equipment (US$3.1 million, 100% CCCE); the cost of the factory (US$11.8 million, 100% EIB); indirect plantation labor costs (US$1.2 million, 100% HEVECAM), and research and social operations (IJS$13.5 million, 100% Government). Joint financing would be applied to the remainder of the  - 15 - plantation development program l:otalling US$42.6 million, and would be shared by the Bank (19%), (CCCE (20%), CDC (28%), HEVECAM (6%), and Government (27%). Working capit:al amounting to US$11.5 million would be provided by HEVECAM (63%) and Government (37%). Procurement 48. Items financed on a parallel basis (US$29.6 million) would be procured according to each co-donor's own procurement guidelines (para 47). Procurement for all other items would follow Bank guidelines. Contracts of US$150,000 or more for vehicles, equipment, fertilizer would be awarded through international competitive bidding (ICB). These purchases are expected to total about US$4.9 million (of which Bank: US$0.8 million) and would be grouped whenever possible to derive maximum benefits from bulk procurement. Contracts worth less than US$150,000 but more than US$50,000 would be awarded through local competitive bidding (LCB) procedures which are acceptable to the Bank; such contracts are not expected to exceed US$9.9 million (Bank: US$1.6 million). Because of the remote location of the estate, civil works would be carried out by HEVECAM on force account with a limited amount of local sub-contracting. Such works would amount to about US$7.4 million (Bank: US$1.4 million). The remaining expenditures (US$31.9 million) represent: contracts under US$50,000 (US$5.0 million, of which Bank US$4.5 million) and local costs and working capital (US$26.9 million) not financed by the Bank (SAR Addendum, p. 4). For these contracts, direct procurement on the basis of at least three quotations would be allowed. (See table on page 16.) Disbursement 49. The Bank loan would finance 19% of the following cost categories: civil works, vehicles and equipment, plantation development costs, and management and administrative services. Disbursements for vehicles and equipment would be fully documented. For all other categories, they would be made against statements of expenditures verifiable from supporting evidence, which would be made available during project supervision. It is estimated that the Bank loan would be disbursed over about five years, three years shorter than the Regionwide historical profile for the tree crop subsector in West Africa. This shorter disbursement period is realistic because of the lower probability of delays. First, HEVECAM is an ongoing operation, not subject to the start-up delays experienced elsewhere. Second, the planting program has been completed and the project does not include maior investment items that could be delayed. And finally, HEVECAM's disbursement department has an excellent track record in preparing and processing disbursement applications.  - 16 - Procurement Arrangements (US$ 000) Reserved Procurement Element ICB LCB Procurement Other Total Civil Works 500 7,400 a! 7,900 (140) (1,400) (1,540) Vehicles & Equipment 2,200 400 1,100 b/ 3,700 (400) (100) (0) (500) Plantation Development Costs 2,500 3,800 1,200 c/ 7,800 15,300 (400) (740) (0) (1,600) (2,740) Management & Administrative Services 3,500 2,000 d/ 14,500 20,000 (650) (0) (2,850) (3,500) Factory 11,800 e/ 11,5800 (0) (0) Other Activities f/ 13,500 13,500 (0) (0) Working Capital 200 1,680 - 9,600 g/ 11,480 (0) (0) (0) (0) Total 4,900 9,880 29,600 39,300 83,680 (800) (1,630) (0) (5,850) (8,280) a/ Construction of workers' housing and service buildings would be mainly carried out by HEVECAM on force account with a limited amount of local sub-contracting. Past experience shows that such work is unlikely to attract foreign bidders and suitable local contractors are not available in the area. Civil works in Douala, however, would be carried out through LCB (US$0.5 million). b/ Light vehicles and equipment which have been specifically identified in the agreed equipment list, would be financed by CCCE under its own procurement guidelines. c/ Indirect plantation labor costs, financed by HEVECAM. d/ Technical Assistance from SAFACAM would be financed by CCCE. e/ Factory construction, machinery and equipmaent would be financed by EIB under its own procurement guidelines. f/ Comprises experimentation and operations i-or Government's account (social services, smallholder program, food crops and studies). g/ Liquidity provided by Government and HEVECAM.  - 17 - Accounts, Auditing, and Financial Management 50. HEVECAM's accounting, financial and management system is satisfactory. To maintain this favorable situation, a number of assurances have been obtained at negotiations. The company would continue to submit to the Government and the Bank quarterly reports and half yearly inspections reports as well as its proposed annual operating and investment budgets for review (Section 2.06(c) of the draft Project Agreement). As under the first two projects, it would appoint independent auditors acceptable to the Bank for the annual audit of its accounts (Section 4.02(a) of the draft Project Agreement). To ensure HEVECAM's continuing sound financial management, its liquid assets would at all times have to be kept at a level sufficient to cover its investment and operating expenditures (including its tax liabilities for such period) for a four-month period. In addition, HEVECAM would not, without the Bank's consent, incur any new debt that would: (i) raise its debt/equity ratio above 2.8 until 1992 and 2 thereafter; and (ii) increase its annual debt service to more than half its projected annual revenues (Sections 4.02 of the draft Loan Agreement and 4.03 of the draft Project Agreement.) 51. Ideally, HEVECAMTs present tax exemption status should be extended until 50% of the planted area reaches full production (approximately in 1993). International agreements among the UDEAC countries, and the national laws of Cameroon, however, preclude the adaptation of tax arrangements to the long gestation period of a rubber plantation. The Government has formally agreed to extend these tax exemptions until the end of project execution (June 30, 1989). Thereafter, and depending on HEVECAM's projected cash flow requirements, tax levies would be either reimbursed ex post, or compensated by operating subsidies or capital increases so as to maintain an acceptable level of liquidity (para 50). To that effect, an understanding was reached at negotiations. Financial Analysis 52. The financial rate of return for the combined first, second, and third HEVECAM projects would be just over 10%. These calculations are based upon all (investment and operating) costs and benefits during the 34-year life of the 15,000 ha p:Lantation. If the costs of associated activities in food crop product:ion and rubber experimentation are taken into account, the firancial rate of return would be just over 9%. For cash flow analysis purposes, costs and revenues have been computed in current terms until FY88-89, and in conStant terms thereafter. HEVECAM's productivity (yield kg/ha) will slowly increase during the first ten years of production during which profits will be negative (FY83-84 to FY88-89) or slightly positive (FY89-90 to FY93-94). Up to that time, HEVECAM will have to be granted special tax arrangements (para 51). But thereafter, at full production, over 24 years (1995 until 2018), HEVECAM's self-generated funds would reach a yearlv average of US$33.0 million, enough to fully cover taxes (US$16.0 million p.a.), renewal of investments (US$3.0 million p.a.), and debt service (principal, TJS$4.0 p.a.), leaving an available balance of US$10.0 million p.a. for dividend distribution or new planting investments.  - 18 - Market and Prices 53. Production from the 15,00() ha p:Lanted under the three projects would reach a maximum of about 33,000 tons around 1997, all to be exported. From 1950 to 1979, world consumption of natural and synthetic rubber increased from 2.4 million to 12.2 million tons in 1983. During that period, the share of natural rubber decreased from 67% to approximately 32% of the total (3.9 million tons). Bank forecasts indicate a steady growth in elastomer demand to about 21 milLion tons in the year 2000 and relative stabilitv in the proportion of natural rubber. Assuming a share for natural rubber of 30%, the annual demand for natural rubber would therefore be some 6.3 million tons around the year 2000, an increase of 2.4 million tons (61%) over present production. Provided that HEVECAM rubber remains competitive, there should be no problem in marketing the relatively minor annual production of 30,000 tons. Because HEVECAM production and unknown quality could lead to initial markel: caut:ion, a 10% quality discount on the price has been prudently assumed for the five-year project implementation period of the project. It is expected that the average price obtained over the remaining exploitation period would be the world price, which is projected by the Bank to slowly increase i-rom its present level of US$1.1/kg, in constant terms, to US'$1.43 in 1995. Project Benefits and Risks 54. The project would continue to be a focal point for the economic development of the Kribi region. Development of this sparsely populated forest area is heavily based upon the expansion of industrial scale plantation agriculture. In this region, ithe depleted, logged-over forest of little economic value would eventually be replaced by perennial tree crops, principally rubber and oil palm, pLanted under the HEVECAM and SOCAPALM projects. The expansion o:F rubber prcduction would reduce Cameroon's heavy dependence on cocoa and coffee for its agricultural export earnings. The continuation of the pilot outgrcwer program, the studies for wider rubber development in the country and the production-oriented experimental program under the project, are important forerunners of an expanded national rubber program in the future. At maturity, the HEVECAM development would provide full-time employment for almost 6,000 workers. Ancillary employment opportunities, created by the existence of this large industrial complex, would also make a contribution to the future development and economic prosperity of the region. 55. The economic rate of return for the three projects combined (excluding the costs of social services, food crop and research programs) is estimated at about 16%. Completion of the 15,000 ha estate would provide an economically sound investment that could withstand considerable increases in costs or shortfalls in benefits while remaining viable. A sensitivity analysis shows that costs would have to increase by 24% or benefits drop by 19% for the rates of return to decline to 12%, which is the estimated opportunity cost of capital in CaLmeroon. The economic rate of return of the pilot outgrower program is 15%.  - 19 - 56. Until recently, the supply of adequate labor was a problem. This has been resolved through the provision of appropriate incentives and amenities, and prospective laborers now actively apply for work on the plantation. The major risk is that following the transition from the development to the exploitation stage, HEVECAM becomes beset with inefficiencies encountered by other parastatal plantation companies in Cameroon. The SAFACAM management contract is considered an adequate safeguard, provided the operating environment remains reasonably free from political pressures. For the longer term, the ongoing dialogue between Government and the Bank on the rehabilitation of parastatals and on the scope for increasing the role of the private sector in the management of these companies is expected to result in the continued efficient operation of HEVECAM and an improvement in the management of the subsector. The principal agricultual risk would be the Fomes and Gloeosporium diseases. Control techniques for both diseases in the susceptible young plantations have been developed in cooperation with IRCA. The precautions incorporated in the project design are considered adequate to attain the estimated yields and to cover reasonable price, exchange, and financing risks. PART V - LEGAL INSTRUMENTS AND AUTHORITY 57. The draft Loan Agreement between the Republic of Cameroon and the Bank, the draft Project Agreement between the Bank and HEVECAM, and the Report of the Committee provided for in Article III, Section 4(iii) of the Articles of Agreement, are being distributed to the Executive Directors separately. 58. Special conditions of the Project are referred to in this report and in Annex III. Special conditions of effectiveness would be: (i) signature of an acceptable financing agreement between Government and HEVECAM; and (ii) fulfillment of conditions precedent to disbursements of the loans made by CCCE, CDC and EIB (Section 6.01 of the draft Loan Agreement). 59. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank.  - 20 - PART VI - RECOMM-ANDATIONS 60. I recommend that the Executive Directors approve the proposed loan. A.W. Claussen President Attachments Washington, D.C. December 19, 1984  - 21- ANNEX I TA BL E 3A Page 1 of 7 CAMEROON - SOCIAL INDICATORS DATA SHEET CAMEROON REFERENCE GROUPS (WEIGHTED AVERAGES) /a MOST (MOST RECENT ESTIMATE) /b RECENT MIDDLE INCOME MIDDLE INCOME 1960/b 1970/b ESTIMATE/b AFRICA S. OF SAHARA N. AFRICA & MID EAST AREA (THOUSAND SQ. RM) TOTAL 475.4 475.4 475.4 AGRICULTURAL 143.9 142.8 152.4 GNP PER CAPITA (US$) 160.0 260.0 890.0 1112.9 1149.6 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF OIL EQUIVALENT) 61.0 84.0 122.0 529.0 622.1 POPULATION AND VITAL STATISTICS POPULATIUN,MID-YEAR (THOUSANDS) 5332.0 6506.0 9266.0 URBAN POPULATION (% OF TOTAL) 13.9 20.3 37.3 29.7 48.2 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILL) 17.2 STATIONARY POPULATION (MILL) 64.8 POPULATION MOMENTUM 1.9 POPULATION DENSITY PER SQ. KM. 11.2 13.7 18.9 55.8 36.3 PER SQ. KM. AGRI. LAND 37.0 45.6 58.9 111.5 461.7 POPULATION AGE STRUCTURE (X) 0-14 YRS 38.9 40.5 41.4 45.4 43.6 15-64 YRS 57.0 55.5 54.3 51.7 53.1 65 AND ABOVE 4.1 4.1 4.4 2.9 3.3 POPULATION GROWTH RATE (%) TOTAL 1.5 2.0 2.9 2.8 2.8 URBAN 5.0 5.8 8.0 5.2 4.5 CRUDE BIRTH RATE (PER THOUS) 38.2 43.0 46.3 47.0 40.4 CRUDE DEATH RATE (PER THOUS) 21.2 18.5 14.7 15.2 11.5 GROSS REPRODUCTION RATE 2.4 2.8 2.8 3.2 2.8 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUS) .. USERS (Z OF MARRIED WOMEN) .. .. 2.0 Ic ,, 22.2 FOOD AND NUTRITION INDEX OF FOOD PROD. PER CAPITA (1969-71=100) 89.0 101.0 102.0 91.6 97.3 PER CAPITA SUPPLY OF CALORIES (X OF REQUIREMENTS) 97.0 97.0 102.0 98.2 110.8 PROTEINS (GRAMS PER DAY) 52.0 55.0 58.0 56.7 70.1 OF WHICH ANIMAL AND PULSE 12.0 15.0 16.0 /d 17.0 17.8 CHILD (AGES 1-4) DEATH RATE 28.0 23.0 16.0 18.7 14.6 HEALTH LIFE EXPECT. AT BIRTH (YEARS) 43.0 47.5 53.3 51.7 57.5 INFANT MORT. RATE (PER THOUS) 134.0 117.0 92.0 102.7 101.5 ACCESS TO SAFE WATER (%POP) TOTAL .. .. 26.0 /e 35.6 59.7 URBAN .. .. 35.0 7e 54.1 84.5 RURAL .. .. 22.0 7eh 27.3 38.4 ACCESS TO EXCRETA DISPOSAL (% OF POPULATION) TOTAL .. .. URBAN .. .. RURAL .. .. POPULATION PER PHYSICIAN 45230.0 28920.0 13990.0 /f 11948.3 4345.1 POP. PER NURSING PERSON 3080.0 /gh 2610.0 1950.0 7 2248.9 1831.1 POP. PER HOSPITAL BED TOTAL 500.0 540.0 /i 370.0 /d 986.9 632.9 URBAN 480.0 /g,h 300.0 7 200.o 7 368.7 545.5 RURAL 500.0 /g,h 650.0 11 610.0 Id 4012.1 2513.5 ADMISSIONS PER HOSPITAL BED .. .. .. .. 26.2 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL . .. 5.2 /e URBAN .. .. 5.1 7.. RURAL . .. 5.2 7I AVERAGE NO. OF PERSONS/ROOM TOTAL . .. .. URBAN .. .. .. RURAL . .. .. ACCESS TO ELECT. (Z OF DWELLINGS) TOTAL .. .. 6.7 Ie .. 46.2 URBAN .. .. 22.6Th .. 77.7 RURAL .. .. 0.5 Ie .. 16.1  - 22 - ANNEX I TA BlIE 3A Pa'ze 2 of 7 CAMRROON - SOCIAL INDICATORS DATA SHEET CAMEROON REFERENCE GROUPS (WEIGHTED AVERAGES) / MOST (MOST RECENT ESTIMATE) /b RECENT MIDDLE INCOME MIDDLE INCOME 1960Lb 1970L