Benin - Third Feeder Roads Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-3802-BEN REPORT AND RECDMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT AND SPECIAL FUND CREDIT IN AMOUNTS EQUIVALENT TO US$6.0 MILLION EACH TO THE PEOPLE'S REPUBLIC OF BENIN FOR A THIRD FEEDER ROADS PROJECT May 2, 1984 This document has a restricted distribution and may be used by recipients only in the performance ofl their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  ( ii.) CURRENCY EQUIVALENTS Currency Unit = CFA Franc (CFAF) US$1.0 = CFAF 418 CFAF 1/ 1 million = US$2,392 1/ The CFA Franc (CFAF) is tied to the French Franc (FF) in the ratio of FF1 to CFAF 50. The French Franc is currently floating. SYSTEMS OF WEIGHTS AND I4EASURES: METRIC Metric British/US Equivalents 1 meter (m) = 3.28 feet (ft) 1 square meter (m2) = 10.76 square feet (sq. ft.) 1 cubic aeter (m3) = 35.30 cubic feet (cu. ft.) 1 kilometer (km) = 0.62 mile (mi) I square kilometer (km2) = 0.39 square mile (sq. mi) 1 hectare (ha) = 2.47 acres 1 metric ton (m ton) = 2,205 pounds (lb) ABBREVIATIONS AND ACRONYMS CARDER - Regional Development Agency (Centre d'Action R6gionale pour le D6veloppement Economique Rural) CNAERDR - Rural Road Development and Maintenance Coordinating Committee (Comite National d'Amenagement et d'Entretien des Routes de Desserte Rurales) CNERTP - National Soils Laboratory (Centre National d'Essais et de Recherches des Travaux Publics) DEP - Directorate of Studies and Planning (Direction des Etudes et de la Programmation) DPTP - Provincial Directorate of Public Works (Direction Provin- ciale des Travaux Publics) DROA - Directorate of Roads and Bridges (Direction des Routes et Ouvrages d'Art) EDF - European Development Fund FRMS - Feeder Roads Maintenance Section MTC - Ministry of Transport and Communications (Ministere des Transports et des Communications) MTPCH - Ministry of Public Works, Construction and Housing (Minis- tere des Travaux Publics, de la Construction et de l'Habitat) OCBN - Benin-Niger Railway (Organisation Commune Benin-Niger) PPF - Project Preparation Facility SEMTP - Equipment Maintenance Division (Service d'Entretien du Materiel des Travaux Publics) SER - Road Maintenance Division (Service d'Entretien des Routes) SERC - Division of Studies, Planning and Control (Service des Etudes, de la R6glementation et du Controle) SRDR - Feeder Roads Division (Service des Routes de Desserte Rurales) UNCDF - United Nations Capital Development Fund FISCAL YEAR January I - December 31  (iii) FOR OFFICIAL UfSE ONLY PEOPLE'S REPUBLIC OF BENIN THIRD FEEDER ROADS PROJECT CREDIT' AND PROJECT SUMMARY Borrower: The People's Republic of Benin. Beneficiary: Feeder Roads Division (SRDR) of the Ministry of Public Works, Construction and Housing (MTPCH). IDA Credit: SDR 5.7 million (US$6.0 million equivalent). Special Fund Credit: SDR 5.7 million (US$6.0 million equivalent). Terms: Standard IDA terms. Project Description: The major objectives of the project are to: (a) support rural development through the construction/improvement and maintenance of feeder roads; (b) improve the local planning, coordination and work execution capacity; and. (c) test the effectiveness of accompanying feeder roads constructioni with upgrading some contiguous footpaths to trafficable low standard tracks. To achieve these objec- tives, the project would consist of: (a) construction- /improvement of: (i) 840 km of feeder roads; and (ii) on a pilot basis, low standard tracks connecting selected remote villages to these feeder roads; (b) maintenance of about 2,000 km of feeder roads; (c) procurement of equipment and tools to complete equipping four labor intensive brigades and one bridge brigade and to replace some of the aging existing equipment; (d) technical assistance: (i) to SRDR for implementation of the proj- ect and of the training program; (ii) for carrying out a socio-economic impact study to monitor the growth of traffic and analyze motives for trips generated, assess the medium-term (10 year) needs for feeder roads, and monitor the pilot scheme for low cost tracks; (iii) to Directorate of Roads and Bridges (DROA) for the MTPCH training school in Cotonou and for the Equipment Mainte- nance Division (SEMTP); and (e) preparation of a future project. Project Benefits and Risks: Project benefits would be derived from the incremental value added to agricultural production, which would accrue to farmers whose incomes are currently in general 30-70% of the national average. Additional but non- quantified benefits would be derived from transport of non-agricultural goods, improved road safety, comfort 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.  (iv) and reduced journey time. The project would help the Government realize a part of -its rural development ob- jectives. The main risks are slow and uncoordinated implementation and insufficient maintenance of the roads resulting in reductions in the anticipated volumes of agricultural production marketed. These risks would be minimized by: (i) strengthening SRDR's management and training office and field staff; (ii) basing SRDR's an- nual work programs on the priorities of local development agencies (CARDERs) and requiring that such work programs be approved by the national Rural Road Development and Maintenance Coordinating Committee (CNAERDR) and sub- mitted for IDA approval prior to starting construction; Kiii) creating in SRDR a feeder road maintenance unit and implementing an Action Plan tc, ensure timely maintenance of feeder roads; and (iv) as a condition of approval of the second and third year work programs, requiring SRDR's budget to show line items for the counterpart funds and feeder road maintenance needs. Summary Project Cost Estimate US$ (thousan-ds Estimated Costs: a/ Local Foreign Total 1. Technical Assistance, Training and Consultants Services for future project preparation 465 1,614 2,079 2. Equipment 96 861 957 3. Road Construction and Periodic Maintenance (a) Feeder roads 3,788 1,540 5,328 (b) Low standard tracks 345 158 503 (c) Periodic maint. 245 100 345 4. Maintenance _ 436 133 569 Total Base Cost 5,375 4,406 9,781 Physical contingencies 752 617 1,369 Price contingencies 1,129 925 2,054 Total Project Cost 7,256 5,948 13,204 Rounded 7,255 5,945 13,200 a/ Net of taxes and duties.  (v) Financing Plan: US$ (thousands) Local Foreign Total IDA 3,120 2,880 6,000 IDA Special Fund 2,935 3,065 6,000 Government 1,200 -- 1,200 Total 7,255 5,945 13,200 Estimated Disbursements (US$ Thousands): IDA Fiscal Years 1985 1986 1987 1988 1. IDA Credit Annual 60 2,580 2,580 780 Cumulative 60 2,640 5,220 6,000 2. Special Fund Credit Annual 420 2,940 2,220 420 Cumulative 420 3,360 5,580 6,000 Economic Rate of Return: The estimated overall ERR for the first year tranche of the project is 29%. To be eligible for financing, individual roads in the second and third year tranches of the project must yield a minimum ERR of 12%. Staff Appraisal Report: No. 4901-BEN Map: IBRD 17313 R I WAPT2 Apr. 1984  I I  - I - INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT AND SPECIAL FUND CREDIT TO THE PEOPLE'S REPUBLIC OF BENIN FOR A THIRD FEEDER ROADS PROJECT 1. I submit the following report and recommendation on a proposed Development Credit and Special Fund Credit to the People's Republic of Benin for an amount in various currencies equivalent to Special Drawing Rights 5.7 million (US$6.0 miLlion equivalent) and Special Drawing Rights 5.7 (US$6.0 million equivalent) respectively on standard IDA terms to help finance a Third Feeder Roads Project. PART I - THE ECONOMY 2. The latest economic report on Benin (Report No. 4686-BEN) was distributed to the Executive Directors April 1984. The paragraphs below are based upon this report and other information that has since become available. Annex 1 provides basic country data. Political Background 3. After independence in 1960, a period of instability character- ized by frequent changes in Government prevailed in Benin until the revo- lution in 1972, which brought to power the military Government of Lieutenant-Colonel Kerekou. The country has since then enjoyed a compa- ratively long period of political stability under a one-party system. Following the adoption of a new constitution, President Kerekou was con- firmed in 1980 and he now heads a Government composed mainly of civil- ians. Structure of the Economy 4. Benin is a small, poor nation with a population of 3.5 mil'Lion and an estimated 1982 per capita GDP of US$280. Agriculture, the most important sector of the economy, employs three-fourths of the active population and accounts for 40 percent of GDP and 36 percent of foreign exchange earnings. There is a small industrial sector consisting of a few import substitution and agricultural processing plants. It contri- buted an estimated 11 percent to GDP in 1982. The tertiary sector is dominated by trade and transit activities that link economic activity in Benin to conditions existing in neighboring economies.  5. The agricultural sector is predominantly foodcrop oriented, producing maize, sorghum, yams, cassava, beans and small quantities of rice. Benin at present enjoys an overall food surplus; it is estimated that a significant portion of domestic foodcrop output (perhaps as much as 20 percent) is exported unofficially to Nigeria and Niger. This off- sets Benin's foodgrain imports which have been rising in recent years. The main export crops are palm oil, cotton and peanuts. Cotton, which is well-suited environmentally to conditions in northern Benin, is rising in importance while oil palm in the south is in relative decline because of insufficient rainfall. 6. The production of petroleum, cement and sugar which have signif- icant export potential began recently. For cement and sugar, however, major marketing hurdles will need to be cleared to permit export sales to take place, particularly to Nigeria. Recent Economic Developments 7. Real GDP growth during 1978-1982 averaged about 5 percent per annum, up substantially from the C.7 percent annual average during the 1972-76 period. Growth was strong in 1977, 1981 and 1982 when there were sharp increases in construction, manufacturing, trade and public adminis- tration. This growth was linked to the heavy public investment program and to strong growth in commercial activi-ties due to the oil boom in Nigeria and the uranium boom in Niger. Agriculture, on the other hand, consistently grew at less than one percen-t per annum through the mid- seventies, and fluctuated over the next five years through 1981. Agri- cultural performance improved substantially in 1982 and 1983 with a sharp rise in cotton output attributable to higher producer prices and the availability of modern inputs. 8. During the mid-seventies, t;he Government expanded its presence in the modern sector of the economy by nationalizing the major industrial enterprises as well as extending its involvement in the agricultural sector. The First Development Plan (1977-1980) went further by invest- ments in three large projects; Seme Petroleum, Save Sugar and Onigbolo Cement. This policy of greater Government involvement has determined the course of the recent evolution of the public finances, external indebt- edness and external balance. 9. Until the late seventies, the Government maintained a conser- vative public finance posture. A tight control over expenditure resulted in a current budget surpluses, which averaged 31 percent of revenues between 1977 and 1979. Modest foreign borrowing financed the limited public investment program. More recently, the current surplus in the public finances has been declining, partially because of rising current expenditures, about three-fourths of which are wages and salaries. The other factor contributing to this decline is the weakened revenue base. Over half of public revenues are derived from import duties, of which a significant proportion is levied on imports (officially or unofficially) re-exported to Nigeria and Niger. The downturn in economic activities in  - 3 - these neighboring countries has reduced demand and limited the inflow of dutiable goods that transit through Benin. 10. Public enterprise difficulties also pose a liability for Gov- ernment finances. Two-thirds of the 60 public enterprises in Benin are in financial difficulties. Losses have been financed by the state-owned banks, rather than through transfers from the budget. As many of these advances cannot now be repaid, the Government, either as shareholder or as banker, will have to cover these deficits. Public enterprise diffi- culties have stemmed from poor initial project design, undercapitali- zation, inexperienced business management, inadequate Government pricing and personnel policies, and other inefficiencies. In 1982, the Govern- ment announced a series of measures to strengthen the public enterprise's, including more realistic pr:icing policies, better incentives for managers and workers, tougher controls, and the liquidation of non-viable units. A program is now being prepared -to support these decisions. 11. In the external sector the growth of exports has been modest while imports have grown rapidly, mainly because of capital imports asso- ciated with the major public investments. In 1981, the resulting current account deficit reached 34 percent of GDP as the investment ratio reachled 35 percent of GDP. Financing came mainly from external loans, princi- pally supplier credits and long-term official lending. Policy Changes and Future Prospects 12. Confronted by many problems, the Government has begun to elimi- nate economic distortions and to lay the foundation for growth. Agricul- tural producer prices have been raised and input subsidies are being eliminated in a planned faEshion. Major reforms have been decided in the pricing, personnel and management policies affecting the public enter- prises, and some marginal enterprises have been closed. The Government has sought to strengthen its ability to manage its public finances in- cluding external debt and *to improve planning functions. Meanwhile, Government's direct involvement in productive activities will be reduced and private capital will be accorded a greater role in the developmenl process. These policy changes, which are reflected in the new medium- term Development Plan (1983-1987) should lay the basis for more vigorous growth in the longer term. 13. Benin's growth performance over the medium term will be limited by several constraints which make it unlikely that GDP will grow by more than an average of 3 to 4 percent per year during the 1982-90 period, even taking account of Seme oil output. Key constraints include the slowdown in demand in neighboring countries and the poor initial perform- ance of the cement and sugar projects. 14. The public finance situation is likely to remain difficult in the years ahead due to the recurrent cost implications of recent major investments, the need to re-finance a number of public enterprises, and the external debt problem.. On the revenue side, the buoyancy in import duties over the last few years associated with goods re-exported to  - 4 - neighboring countries is not likely to continue in the mid-1980s. The exploitation of Seme oil is not expected to maake even a modest contri- bution to fiscal resources until 1986. Imporl duties are projected to continue providing slightly over half of totELl Central Government reve- nues. 15. Benin's balance of payments is difficult to project because of the large size of unrecorded exports. It is estimated, however, that the current account deficit in relation to GDP will decrease during the rest of the 1980se This results from expected new exports of petroleum, cement and sugar by 1985 and from a decline in the real value of capital imports from the high levels of 1981-82, following completion of the cement and sugar projects. The foreign borrowings that financed the three recent industrial projects (para. 8) rapidly raised the stock of debt outstanding and debt service obligations. As a result of a more modest level of public investment, fewer loans will be required in the near-term. Therefore debt service ratios should begin to stabilize, although at a higher level than in the past. After having risen from 7 percent of exports in 1981 to 24 percent in 1982, the debt service ratio is projected to remain at about the 25 percent level through 1990. The first two Seme loan maturities have been rescheduled. To address the financial disequilibrium in general, the Beninese authorities have begun a dialogue with the IMF with the hope that this will result in an IMF- supported stabilization program. 16. Benin remains a very poor country with large needs for directly productive investment and supporting infrastruicture. The increased debt burden constrains future access to commercial loans. The Government has recognized the need to mobilize increased concessionary financing from bilateral and multilateral sources, as reflec-ted in the Donors' Round- table Conference convened in March 1983. In view of Benin's poverty and the inability of public savings to finance more than 5-10 percent of the future public investment program, the country will continue to need foreign financing on concessionary terms. Foreign donors should provide a large share of total project costs, including, where possible, some financing of local costs. PART II - BANK GROUP OPERATIONS IN BENIN 17. To date there have been eighteen IDA credits to Benin including two supplementary credits, totalling US$170.47 million. Five of the credits were for agriculture, six for road construction and maintenance, two for education, two for energy, and one each for port expansion, urban water supply and development of small-sceLle enterprises. Annex 2 con- tains a summary statement of Bank Group operations in Benin as of September 30, 1983. 18. In the past, the Bank Group's dialogue with Benin was conducted on a case-by-case basis. More recently, however, the policy and lending dialogue has intensified and Government has displayed considerable  interest in and responsiveness to Bank lending and policy assistance. In roads, the Government is increasing emphasis on maintenance and looking into ways to increase efficiency of transport operations. 19. A large proportion of the Bank's assistance to Benin's develop- ment so far has been in the agricultural sector. IDA's earlier oper- ations in this sector were met with mixed success and in fact during the execution of an IDA-FAC Zou-Borgou credit for cotton development made in 1972, cotton production actually fell. In 1977, a technical assistance credit was made to help the Government better prepare rural development projects. The assistance provided with this credit was instrumental in preparing the Borgou, Zou and Atacora provinces' rural development proj- ects. Under the Borgou project, for which a US$17 million IDA credit was approved in April 1981, cotton production in the Borgou province doubled in the 1982-83 season. The Zou Project (FY83 IDA US$20 million) is ncte- worthy for its inclusion of financing of fertilizer imports on a de- clining scale as a response to a Government decision to phase out fertil- izer and pesticide subsidies. The proposed Third Feeder Roads Projeci; would support agriculture through improving feeder roads transport. 20. The Bank Group's involvement in the transport sector in Benin began in 1969, when the Bank acted as Executing Agency for a UNDP "Land Transport Study." This study led to the financing of a four-year Highway Maintenance Project in FY69. The Project Performance Audit for this project (Report No. M77-758) of October 25, 1977 indicated that signi- ficant strengthening of the Government department then responsible for maintenance operations occurred under the project. The Second Highway Project (FY73), co-financed by USAID, comprised the reconstruction of 320 km (Parakou-Malanville) and short sections (between Godomey and Bohicon) of Benin's south-north trunk road, the continuation of the road maintenance program initiated under the first project, and training. The project was satisfactorily completed. The rate of return of the Pare,kou- Malanville road is estimated a-t 16 percent versus 13 percent at appraisal and 30 percent versus 19 percent at appraisal when including benefits to Niger from its transit traffic. 21. The Third Highway Project (FY78, US$10 million), completed in June 1983, rehabilitated a 107 km section of the country's main north- south highway and expanded the maintenance program begun under the first two highway projects. The project completion report for the Third High- way Project notes that there were cost overruns and the project scope had to be reduced during implementation. Although the economic rates of return compared favorably with the appraisal estimates, the project com- pletion report notes that; institutional development objectives were only partially met. The Fourth Highway Project (FY82, SDR 9.3 million), to be completed by 1985, provides for the resealing of a 54 km stretch carried over from the Third Highwiay Project, plus rehabilitation of 500 km cf gravel roads. 22. The Government has aLso requested and IDA has approved a Project Preparation Facility (PPF) for preparation of a transport infrastructure rehabilitation and maintenance project, following the dialogue between  -6- IDA and the Government aimed at shifting priorities from coastruction of new roads to maintenance of the existing network. This project is now being prepared. The major objectives of this project are to create capa- city arid improve effic;iency of road maintenance, restructure the road maintenance finances with a view toward increasing maintenance funding and streamlining budgetary allocations and improve efficiency of trar,sit &perations through Benin. 23. Another area which is emerging is the provision of assistance to the Government to improve economic planning and to rehabilitate the pub- lic enterprise sector. These initiatives are in response to Government requests for such assistance. D)iscussions are in progress which are expected to lead to a project which will provide studies which will be the basis for public enterprise rehabilitat-ion and sector reforms. A second project undcer preparation is a technical assistance effort de- signed to strengthen Benin's macroeconomic planning and public finance administratiorn. Other assistance to Benin is expected to continue in the education, urban and energy sectors. Bank involvement in the energy sector includes two projects under preparation: the proposed S6me Oil Field Phase II Development Project and the proposed Nangb6to Hydro- electric Project to be implemented jointly by Benin and Togo. 24. Benin's performance with respect to project implementation and disbursement has been generally satisfactory. The Government is gene- rally familiar with the Bank's procurement and disbursement procedures. Delays are sometimes encountered, however, because of the Government inability to make timely contributions of counterpart funds. This pro- blem has recently been exacerbated by the difficult budgetary position. PART III - THE TRANSPORT SECTOR The Transport System 25. The transport sector is important in Benin and has absorbed about a quarter of the public investments and provided about a fifth of the formal employment. In addition to satisfying domestic demand, the sector supplies transit services for land-locked Niger. Prospects for major sector developments, however, remain modest because of the small size of the domestic market, together with economic difficulties at home and in neighboring countries. 26. Roads are the dominant transport mode; three-fourths of all freight and 90% of passenger movements are by road. Overall, the extent of the main network is adequate for Benin's needs. The Government is planning to pave by 1988 the remaining unpaved section of the main south- north route, the Dassa-Parakou (210 km) section. A feasibility study to determine the economic viability of this project is expected to be completed by end-1984. There is a need to exoand coverage of feeder roads to integrate areas of agricultural potential within the economy. The deteriorated feeder roads are a constraint to expansion of agriculture. Equally critical is the condition of paths and trails  -7- connecting farms to markets and collection points along the feeder roads. Expansion of agriculture partly depends on farmers being confi- dent that farm surpluses can be transported at a reasonable cost. Im- proving paths and tracks would permit use of more efficient transports than porterage (motorcycles, bicycles and public transport vehicles) to serve farms located some distance away from feeder roads. 27. The heart of Benin"s transport system is the international Port of Cotonou. Port capacity was recently expanded to about 1.2 million tons of general cargo a year with assistance from several donors includ- ing IDA (Credit No. 826-BEN). Port traffic has ranged from 1.0 to 1.5 million tons over the past five years, including substantial transit traffic for Nigeria through 1979 when Nigerian port capacity was ex- panded. Although the alternative transit routes for Niger traffic have begun to attract a part of the transit traffic, particularly through Togo, Niger continues to rely on Benin's transit corridor and accounts for about a third of Cotonou's total tonnage. Cotonou Port capacity is sufficient for the foreseeable needs, although the rust-damaged pilings of the eastern jetty will require rehabilitation soon. 28. A bi-national autonomous agency, the OCBN, operates a 440 km railroad line from Cotonou north to Parakou where goods bound for Niger and northern Benin are transferred to trucks. OCBN controls the trans- shipment and also runs two sparsely used coastal lines: (a) the 107 km eastern link between Cotonou and Porto Novo-Pobe; and (b) the 33 km west- ern extension connecting Segboroue to Cotonou. OCBN has been making losses on operations since 1975. (In 1982 OCBN lost about CFAF 850 mil- lion on revenues of CFAF 3.04 billion). IDA's policy dialogue with the Government is based on the recognition that while increased efficienc;y and some increase of capacity in the main north-south corridor are desirable, there is probably not enough traffic demand for a paved road and a railway to co-exist in this corridor. The feasibility study mentioned above (para. 26'1 will propose alternative courses of action to optimize investment in the corridor. 29. Several airlines serve the international airport at Cotonou. Domestic civil aviation and internal waterways account for a minor share of transport activities. The Road Transport Sub-Sector 30. The classified road network is reasonably adequate, amounting to about 7,500 km, of which 930 km are paved and 3,640 km gravelled. The remaining 2,930 km are seasonal earth roads which, due to the lack of maintenance, have regressed to the status of tracks and foot paths. Many villages located along these roads are now cut off from markets and have few commercial exchanges with the rest of the country. The road density averages 0.065 km/km2 for the whole country, ranging from 0.050 km/km2 in the less populated northern region to 0.130 km/km2 in the more densely populated coastal region in the south.  - 8-- 31. The Ministry of Public Works, Construction and Houu:K:.g admin- isters roads through its Directorate of Roads and Bridges (QROA) and sIx provincial dlrectorates of public works (DPTPs). DROA is respons.ble for all national aspects of road administration. DROA's oreanization includes a Division of Studies, Planning and Control (,iC), hquipnent Maintenance Division (SEMTP), a Road Maintenance Division (SER) and the Feeder Roads Division (SRDR). SRDR is responsible for the planning, construction and maintenance of feeder roads. The DPTPs are responsible regionally for execution of maintenance and minor constructio.. -ork on the classified roads in coordination with the SER. DPTP-s`perforrmance has improved over the years, but; is still hampered by inadequate management, poor equipment maintenance and insufficient local funds. 32. Preparation and supervision of new main road projects lies with SERC. Since the domestic construction indus-tGry does not have sufficient capacity to undertake major new works, including tnose fin~Lr.iced by foreign aid agencies, most are undertaken by foreign contractors. Local contracting organizations, however, generallyT carry out minor road works such as culverts and other drainage works. Labor intensive force account brigades managed by SRDR have been particularly successful in carrying out construction/improvements of feeder roads under the Second Feeder Roads Project. 33. Roads expenditures over the past four years have averaged CFAF 5,300 million (US$13.5 million) per year. Maintenance expenditures have accounted for an increasing proportion of the total -- 35% in 1979- 1982, compared with 13% in the previous three years. Expend tu-ee on feeder roads have increased from 4% of the total in 1979 to 20% in 1982, and are expected to continue to grow rapidly. Foreign aid has financed 60-75% of total road outlays in recent years and 85% of expenditures on feeder road construction. Although other donors are involved to some extent in the feeder roads, IDA is playing a special role in improving the planning, coordinating and efficiency of work execution and develop- ing a maintenance capacity. IDA's strengthening of institution building, in concert with local staff training, is now producing good results: the output of the construction brigades is improving. Nevertheless much remains to be done before SRDR can effectively discharge its responsibi- lities. Funding for maintenance, especially for feeder roads, continues to be below the needs. 34. Revenues raised by taxes on road users appears adequate for covering the costs of maintenance, but the majority of the revenues thus raised is allocated to the general budget with the main and feeder road maintenance remaining underfunded. The proposed project will provide temporary relief by financing maintenance expenditures. The proposed transport infrastructure rehabilitation and maintenance project (para. 22) will address long-term maintenance requirements, including appropriate arrangements for raising revenues commensurate with mainte- nance needs. 35. SRDR is responsible for planning and coordination of feeder roads construction and maintenance. A data base for rural road planning  was established in SRDR under the Second Feeder Roads Project. Although the quality of SRDR's data base is improving, there remain deficiencies particularly regarding traffic on feeder roads. SRDR compiles provin- cial-level data on population, agricultural production and social infra- structure. The regional development agencies (CARDERs), taking into account the level of interest of local communities, suggest road imprcve- ment priorities to SRDR, which uses its data base to evaluate the local prlorities and tc develop its annual work program. This program is sub- mitted for approval to the National Rural Road Construction and Mainte- nance Coordinating Committee (CNAERDR)o The minister of MTPCH is the chairman of CNAERDR and the commaittee comprises representatives of the technical, finance, planning and rural development mini-stries and direc- tors of CARDERs. The inclusion of the directors of CARDERs in this com- mittee is a positive step to ensure that SRDR's work programs reflect local development needs and are coordinated with the complementary investments planned by the Ministry of Rural Development. 36. Althoughi responsibility for unclassified roads rests in prin- ciple with the provincial authorities, the Second Feeder Roads Project provided short-term capacity in SRDR to ensure maintenance of 1,200 km of feeder roads because under funded local efforts have rarely ensured all weather usability of feeder roads. Although late in starting, SRDR has made satisfactory prcgress in mLaintaining designated feeder roads. Pend- ing the development of maintenance capacity at the provincial level, the Government agreed during negotiations to implement an action plan for feeder road maintenance and its financing incorporating about 2,000 k.m of priority feeder roads under the proposed project and creating a temporary feeder roads maintenance section (FRMS) in SRDR (paras. 52 through 54 ). An important feature of this action plan is that the Government would assume increasing responsibility for financing the maintenance costs of feeder roads and SRDR's annual budgets would show line items for the counterpart funds and maintenance needs (Schedule 3, para. 3 (e) to the draft Development Credit Agreement (DCA) and Special Fund Credit Agree- ment) . IDA Involvement in Feeder Roads 37. The First Feeder Roads Project (Credit No. 717-BEN approved in 1977) was conceived as the first phase of a longer term feeder roads improvement and maintenance program. In addition to successfully esta- blishing an effective Feeder Roads Division in MTPCH, the project tested three different construction methods comprising equipment intensive, moderately equipped and labor intensive brigades, and demonstrated that under proper management, labor-intensive construction methods are compe- titive with equipment-initensive methods. In retrospect, the project implementation schedule wias ontimistic. It took 18 months before the project was operating at the planned speed. The delay was due to cuLmber- some administrative procedures and to the pilot nature of the project. During this period the exchange rate of the US dollar with respect to the CFAF deteriorated significantly and inflation was of the order of 18 percent ann-ally. As a result of this and of cost increases over the  - 10 - appraisal estimates, only 350 km of the t;arget 845 km were constructed with available credit funds. 38. The follow-up Second Feeder Roads Project (Credit No. 1090-BEN), underway since February 1981, provides for construction of 700 km of feeder roads and maintenance of 11250 km Snd continues institutional development through technical assistance and training. Overall project implementation is satisfactory with the exception of the equipment-inten- sive brigade. Labor-intensive works have progressed well due to adequate site management with assistance from project-f:inanced technical assist- ance, regular and timely payment of wages to laborers, and local communi- ties' providing sufficient and disciplined labor at modest wages. Avail- ability of labor, however, is now becoming a constraint in some parts of the country and for certain types of work such as quarry operations. Works executed with the equipment intensive brigade have suffered in- terruptions due to SRDR's relative inexperience in managing and main- taining heavy equipment. By about June 1984, when the Second Feeder Roads Project is expected to be completed, about 650 km of the targeted 700 km are expected to be constructed. The main reason for the shortfall in the construction target is SRDR's relative inexperience in managing the equipment intensive construction brigade and the resulting poor per- formance of that brigade (para. 41). 39. SRDR now operates a total of seven construction brigades, one specialized bridge construction brigade and twc, maintenance brigades. (The seven construction brigades include four labor-intensive brigades, the problem-prone equipment intensive brigade, all financed by IDA, and two UNCDF labor intensive brigades in the north.) With its current com- plement of 10 brigades, including some 1,800 field and headquarters per- sonnel, SRDR has reached the limits of effective capacity to provide site management and logistic support to feeder road operations. 40. A socio-economic impact study carried out during the Second Feeder Roads Project suggests that the project roads have had a positive effect on the villages served. New marke-ts have developed after provi- sion of roads. Traffic on the sample of roads studied has exceeded the appraisal estimates and is predominantly local as opposed to through traffic. Choice of Construction Technology 41. For construction, the proposed project will utilize four labor- intensive, one mechanized and one bridge brigade. For maintenance, the proposed project will use two existing brigades (para. 39) and a third brigade to be created from breaking up the equipment intensive construc- tion brigade. The use of two different construction technologies appears the most viable solution to achieve the goal of about 300 km of works per year. The existing equipment-intensive brigade, which has too much equipment and as a result is relatively difficult to move between con- struction sites, will be dismantled and its equipment shared for: (a) creating a lighter and more mobile mechanized construction brigade to be used under the project; and (b) creating a mechanized maintenance brigade  - 11 - for the southern region. Additionally, the quarry operations of the labor-intensive brigades w-lll be mechanized. The transfer of equipmerLt should: (a) result in improved performance and manageability of the mech- anized brigade; and (b) improve the productivity of the labor-intensive construction brigades by a'bout '10% and reduce the critical problem of labor recruitment by reducing the size of these labor-intensive brigades from 275 laborers to only 175. Road Transport and Road Transport Industry 42. Size and composition of Benin's vehicle fleet can only be appro- ximately determined. The vehicle fleet appears to have remained almost constant at about 13,000 vehicles since 1970, although its composition has changed: passenger cars and pick-ups decreased from 83% (1970) to 56% (1979); light trucks (up to 7 tons) increased from 7% to 25%, and heavy trucks and trailers from 10% to 19%. Fuel consumption has growna at an average rate of 4.5% per annum between 1970 and 1981, partly attribu- table to the changes in vehicle fleet composition. Currently, the retail prices of gasoline and diesel in Benin are CFAF 163/lt and CFAF 132/lt respectively, which are well above the border prices. 43. The road transport industry consists of para-public and private enterprises. The para-public companies are engaged in own account oper- ations and are generally inefficient, with the fleet averaging about 20,000 km per year. IDA's ongoing dialogue with the Government is aimed at increasing the efficiency of transport services in Benin. Most of' the international and nationa-L trarlsport is handled by the larger private transporters. Some 400 siall private trucking concerns, with four ve!hi- cles or less, handle shor-t distance transport and operate fairly effi- ciently, however, at tariffs which may be below cost due to insufficient demand. 44. Freight and passenger tariffs, set by inter-ministerial decree and infrequently revised, do not generally provide transporters suffi- cient margin to allow for proper equipment maintenance and renewal. Since, however, private transporters do not strictly adhere to official tariffs, in reality it is supply and demand and road conditions which determine rates. Transport on feeder roads is particularly sensitive to the physical condition of these roads. SRDR estimates that because of advanced deterioration on some of the roads included under the proposed project, up to about one half of the potentially marketable crops from the farns served by these roads could not be evacuated during the 1980-81 harvest for lack of transport other than porterage. PART IV. THE PROJECT 45. The Feeder Roads Division (SRDR) of the Ministry of Public Works and Housing prepared the project. The technical assistance team financed under the Second Feeder Roads Project (credit 1090-BEN) helped in project preparation. An IDA team appraised the project in May 1983. Negotia-  - 12 - tions were held in Washington in April 1984. The Beninese delegation was led by the Minister of MTPCH. Annex 3 contains supplementary project data. The Staff Appraisal Report No. 4901-BEN of April 27, 1984 is beir.g circulated separately to the Executive Direct,ors. Project Objectives 46. The main objectives of the proposed project are to support rural development through the construction and maintenance of feeder roads; improve local capacity to plan and execute such works; and complement feeder roads construction with upgrading some contiguous footpaths to trafficable low-standard tracks. Project Description 47. The proposed project would finance a three-year program for construction/improvement and maintenance of feeder roads. It would fi- nance the strengthening of SRDR and of the Directorate of Roads and Bridges (DROA), the latter in part to make more efficient the implement- ation of the ongoing Fourth Highway Project. In line with the Govern- ment's priority to rural development, the project provides for construc- tion/improvement of 840 km of feeder roads and the maintenance of another 2,000 km of priority feeder roads. 48. The proposed project would consist of': (a) construction/improvement of: (i) 840 km of feeder roads; and (ii) on a pilot basis, low standard tracks connecting selected remote villages to these feeder roads; (b) maintenance of about 2,000 km of feeder roads; (c) procurement of equipment and some tools to complete equip- ment of the existing 4 labor intensive brigades, I bridge brigade and to replace some of the aging existing equip- ment; (d) technical assistance for project implementation and training; and (e) preparation of a fu-ture project. The proposed project provides about US$0.63 million for preparation of a future rural transport project in Benin. The allocation would be used to finance consultant's services for detailed economic and engineering studies. 49. The Feeder Roads construction program has been established by SRDR to reflect the local priorities of the CARDERs and is based on an expected productivity of 100 km per year for the mechanized brigade and 50 km per year for each labor-intensive brigade. All the roads have been  - 13 - evaluated individually for economic feasibility and are important for ongoing rural development projects and/or the local development pr:ori- ties of the CARDERs. 50. The 3-year program. covers four provinces and includes 840 km of roads of which 340 km are of particular importance for the Zou rural development project and 182 km for the Borgou rural development project both of which are supported by IDA. The first year construction program, consisting of 240 km is firm, and has been approved by CNAERDR. The second and third year programs remain indicative and subject to change because they have not yet been approved by CNAERDR. During negotiations, the Government agreed that in case of modification of the second and third year tentative programs, roads substituted for those included in the indicative program would have a minimal economic rate of return of 12% and each year's work program would reflect a reasonable geographic coverage in the four provinces. Additionally the CNAERDR approved second and third year work programs would be submitted for IDA review at least three months before the beginning of their implementation and construc- tion work would start only after IDA approval of the work program (Sche- dule 3, paras. 2 (b) and (c) to the draft DCA and Special Fund Credit Agreement). 51. In view of its experimental nature and its modest cost, the list of tracks in the pilot program of low standard tracks has not been speci- fied as yet. The works will consist of upgrading some existing foot paths linking remote villages to feeder roads. The works would be li- mited to provision of drainage, widening the carriage way to 3.50 meters and minimal graveling to provide all-year accessibility for four-wheeled light vehicles. During negotiations the Government agreed on the fol- lowing criteria to select tracks for upgrading: (a) individual trackE do not exceed 10 km in length, (b) each track links one or more small communi- ties to a feeder road constructed under the project; (c) the beneficiary communities are willing to provide labor for maintenance of the track; and (d) the provincial authorities include in the annual budgets sufficient funds to cover the recurrent costs of track maintenance (Schedule 3, para. 2 (e) to the draft DCA and Special Fund Credit Agreement). The project would provide hand-tools and training to maintain the tracks during the first year. 52. Because of the uncertain quality of current maintenance efforts, the project would provide for the maintenance of about 2,000 km of prior- ity feeder roads. These priority roads include those constructed under first and second IDA-financed projects and those financed by UNCDF and. EDF. Three hundred kilometers of these priority feeder roads are already being maintained by the DPTPs and will continue to be so maintained under SRDR's supervision. 53. To ensure proper maintenance of feeder roads and adequate fi- nances for this purpose, the Government agreed during negotiations to implement an Action Plan for the maintenance and financing of feeder roads. As part of this action plan, a feeder road maintenance section (FRMS) would be created in SRDR by December 31, 1984, and would be fully  - 14 - operational by June 30, 1985. The FRMS will be headed by an experienced Beninese engineer and assisted by a road supervisor experienced in road maintenance. FRMS would, inter alia, plan, program and execute routine and periodic maintenance. It would have three regional offices: one for the smaller southern provinces, and one each for the larger Atacora and Borgou provinces. During negotiations, Government should agree that each regional office will be headed by an experienced technician and assisted by a road supervisor to be in position by December 31, 1984, to make sure that planned maintenance is executed. Routine maintenance will be done b- gangs oi about 20 laborers attached to each ragional office (Schedule 3. paras. 3 (b) and (c) to the draft DCA and Special Fund Credit Agree- ment). The number of gang.3 in each regional office will vary depending on the number of the feeder roads to be maintairned. Each gang will maintain about 100 km of feeder roads. For unforeseen needs, each regional office will have one gang of 15 laborers trained to handle emergency mainte- nance. Technical assistance would be provided to assist the management and operations of this section and the project would finance the sec- tion's operating costs. FRMS would be integrated in the SER after SER's road maintenance capacity is developed under a future transport infra- structure rehabilitation and maintenance project. 54. Routine mainrtenance operations would be done essentially by la- bor-intensive methods while seasonal grading would be carried out by me- chanized methods. A second mechanized brigade for use in the south would be created (with part of the equipment made available from dismantling the existing heavy mechanized brigade) to supplement the existing mecha- nized maintenance brigade (para. 41). 55. The project includes a total of 160 man-months of technical assistance and 60 man-months of volunteer's service to be provided by the Netherlands: (i) to SRDR for implementation of the project and of the training program; (ii) for carrying out a socio-economic impact study to monitor the growth of traffic and analyze motives for trips generated, assess the medium-term (10-year) needs for feeder roads, and monitor the pilot scheme for low-cost tracks; (iii) to DROA for MTPCH training center in Cotonou and the Equipment Maintenance Division (SEMTP). 56. The heavy infusion of technical assistance under the project is justified since counterpart staff were made available late in the Second Feeder Roads Project and, therefore, have nct yet been fully trained. The main objective of the technical assistance component is to enable SRDR staff to assume gradual responsibility for management, planning, operation and execution of all feeder roads projects. To make sure, inter alia, that the needed counterpart staf'f are available in order not to delay transfer of technology and ensure smooth transition of functions when the technical assistance is being phased out, Government, during negotiations, agreed to assign by December 1984, and thereafter continue to maintain in employment, qualified counterpart staff for the duration of the project (Section 3.02 (b) to the draft DCA and Special Fund Credit Agreement).  - 15 - 57. A training program has been established in consultation with the Government. The technical assistance team will be responsible for the training program's implementation. The training needs have been evalu- ated for SRVR's staff only. DROA staff Members, however, will be wel- comed to participate in the trainirg nroRram. The trainees will be trained at various locations based on their geographical work site. The project provides funds for purchase of training equipmert and Material and also for the travel and subsi.stanice of local instruct;ors and trairees on a slidin: scale based on the grade levels of );ne instructor and trainees. During negotiations, the Government confirmed that it will implement the training program (Schedule 3, para. 4 to the draft DCA and Special Fund Credit Agreement). Cost Estimate and Financing Plan 58. The total cost of the project, net of taxes and duties is esti- mated at US$13.2 million equivalent. Foreign exchange costs are esti.- mated at US$5.95 million equivalent or 45% of the total cost. The pro- posed project would be financed on the following basis: Financing Plan US$ thousands Local Foreign Total IDA 3,120 2,880 6,000 IDA Special Fund 2,935 3,065 6,000 Government 1,200 -- 1,200 Total 7,255 5,945 13,200 Implementation 59. Implementation of the project will be the responsibility of MTPCH through DROA. Civil works will be carried out by force account, under management of SRDR and maintenance of equipment entrusted to SIBMTP. The undisbursed credit under the Second Feeder Roads Project still per- mits SRDR to execute works until around June 1984. Implementation of the proposed project is expected to start at the beginning of the dry season, in September 1984, and the project is expected to be completed by Septem- ber 1987.  - 16 Procurement 60. Procurement arrangements are summarized below: Amounts and Methods of Procurement (US$ million equivalent) ProcurEment YMthod a/ Total Project Category Items to be procured ICB LCB C'he - N.A. Cost 1 Technical assistance, 2.11 b/ 2.E0 volunteer services, (1.40) (1.40) training, socio-economic study, future project preparation 2 Road construction equipment, 1.30 1.52 2.82 spare parts, equipnent (0-00) (1.52) (1.52) repairs and maintenance 3 Locally purchased 0.62 0.62 materials and tools (O.C0) (O.00) 4 Fuels and lubricants 1.31-/ 1.31 (0.92) (0.92) 5 Wages and salaries 5-65 -/ 5.65 (2.16) (2.16) Total project 1.30 2. 4.11 6-1 a/ Amounts enclosed in parenthesis indicate amount of Special Fund Credit participation. b/ From sole source national supplier. c/ Of which Government will contribute US$1.2 million equivalent. Technical assistance services will be procured in accordance with IDA guidelines. Goods manufactured locally would be given a preference mar- gin of up to 15% or the applicable custom's duties, whichever is less. All contracts whose estimated costs are expected to exceed US$100,000 4 equivalent would be subject to IDA's prior review. Government intends to exempt all project components from taxes and other transfer payments. Disbursements 61. Disbursements from the IDA Credit and Special Fund Credit would be on the following basis:  - 17 - Allocation and Disbursements of IDA Credit and Special Fund Credit (US$ million equivalent) % Total Estimated cost to be disibursed from Category Item No. Amounts b/ IDA Credit IDA Special Fund Credit (USs'000) 1 Technical assistance, 2,100 50 -- volunteer services, -- 50 training socio-economic study, future project preparation 2 Road construction equipment 1,000 100 __ spare parts, equipment (1,200) -- 100 repairs and maintenance 3 Locally purchased 500 100 materials and tools 4 Fuels and lubricants 300 30 (700) 7C 5 Wages and salaries 1,695 40 (1,605) 38 6 Unallocated 1,455 (1,445) Total 12,000 a/ IDA and Special Fund Credits will finance routine maintenance on a declining percentage basis: 85% in 1985; 50% in 1986; 30% in 1987; and 0% thereafter. b/ Amounts enclosed in parenthesis indicate amount of Special Fund Credit. 62. During negotiations, the Government agreed, in support to the monthly statements of-expenditures, to prepare for each brigade monthly reports showing operating costs, actual and expected productivity, and the unit construction cost incurred by each brigade (Section 3.05 (c) of the draft DCA and Special Fund Credit Agreement). No disbursement appli- cations less than US$20,000 equivalent would be accepted by IDA. Sepa- rate IDA and Special Fund revolving funds of US$200,000 equivalent (each to cover about three months of project expenditures) will be established and will be replenished on the basis of the regular Government reimburse-- ment applications in equal proportions from the IDA and the Special Fund Credits. The opening of two accounts in a commercial bank for the revolving funds would be a condition of effectiveness (Section 6.01 (a) of the draft DCA and Special Fund Credit Agreement).  - 18 - Benefits and Risks 63. Project benefits which are amenable to quantification are the incremental value added to agricultural production. Value added is de- rived as a function of production increases plus the reduction of spoil- age of potentially marketable crops which would not be evacuated in the "without" project scenario for lack of reasonable transport. Agricul- tural production increases will occur as a result of (a) inaputs from extension services; and (b) additional lands which will be brought under cultivation as a result of population increases over the years. These changes are dependent on the better access which will be provided by the project roads. 64. By 1986, an estimated 290,000 rural residents of Borgou, Mono, Oueme and Zou provinces representing about 8% of the nation's population would be direct beneficiaries. Of the bene?ficiaries, about 20,000 would be people who are expected to migrate to the project's zone of influence after the roads are improved. 65. At this stage, only the first year's program has been identified in detail. For the 19 roads included in the first project year, the ERRs range from a low of 16% to a high of 46%. One-third of the ERRs are in the 16% to 20% range while about one half are in the 20% to 40% range with the rest falling in the 41% to 46% range. The overall ERR for the first year program is a satisfactory 29%. Assuming a pessimistic scena- rio whereby the construction costs increase by 20% and the benefits drop simultaneously by 20%, the overall first year program's ERR still remains a satisfactory 14%. Risk Minimization 66. There are no special risks beyond slow and uncoordinated imple- mentation and insufficient maintenance. The risk of slow implementation would be minimized by: (a) strengthening SRDR through technical assist- ance and training of field and office personnel; (b) annual reviews of SRDR's work programs prior to starting construction; and (c) coordination of complementary activities through the CARDERs. In an effort to assure adequate maintenance the project provides for FRMS to be set up in SRDR, and for its operating costs to be financed on a decreasing percentage basis. The project would involve use of sorae state-owned land for late- rite excavation and improvement to the alignment of existing tracks; this is not expected to produce any major environmental risks. PART V - LEGAL INSTRUMENTS AND AUTHORITY 67. The draft Development Credit Agreement between the People's Republic of Benin and the Association, the draft Special Fund Credit Agreement between the People's Republic of Benin and the Association as Administrator of the Special Fund established with funds contributed by  - 49 - certain members of the Association, and the Recommendation of the Comm4+ tee provided for in Article V, Section 1 (d) of the Articles of Agreement of the Association, are being distributed separately to the Executive Directors. 68. Special conditions of the project are listed in Section III of Annex 3 to this report. Special conditions of effectiveness of the Development Credit Agreement and Special Fund Credit Agreement would be: (a) the opening of two special accounts; and (b) cross-effectiveneis of the two Agreements (Section 6.01 of both the draft Development Credit Agreement and Special Fund Credit Agreement). 69. I am satisfied that the proposed Development Credit would comply with the Articles of Agreement of the Association and the proposed Special Fund Credit would comply with Resolution No. IDA 82-6 of October 26, 1982, of the Executive Directors. PART VI - RECOMMENDATION 70. I recommend that the Executive Directors approve the proposed Development Credit and Special Fund Credit. Attachments A.W. Clausen Washington, D.C. President May 2, 1984 by Ernest Stern  - 20 - ANNEX I Page I of 4 BENIN BENIN - SOCIAL INDICATORS DATA SHEET BENUL REFERENCE GROUPS (WEIGHTED A4ERAAC-E) /a KOST (MOST RECENT ESTIMATE) /b 1 Lb 197(/b RECENT LOW INCOME MIDDLE INCOME 1960j'b t970- ESTIMATE/-b AFRICA S. OF SAHARA AFRICA S. OF SAHARA AIuA (THOUSAND SQ. CM) TOTAL 112.6 112.6 112.6 AGRICULTURAL 19.8 20.4 22.4 GNP P! CAPITA (US$) 100.0 140.0 320.0 254.6 1147.9 ENUY CONSUMPtION PSU CAPITA (KILOGRAMS OF COAL EQUIVALENT) 38.0 55.0 70.0 79.8 724.2 POPULATIO AND VITAL STATISTICS POPULATION,MID-YEAR (THOUSANDS) 2050.0 2659.0 3595.0 URBAN POPULATION (X OF TOTAL) 9.5 12.6 14.b 19.5 26.5 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILL) 6.8 STATIONARY POPULATION (MILL) 24.5 YEAR STATIONARY POP. REACHED 2135 POPULATION DENSITY PER SQ. KM. 18.2 23.6 30.3 29.5 . 56.5 PER SQ. KM. AGRI. LAND 103.4 130.2 155.5 94.1 131.8 POPULATION ACE STRUCTURE (X) 0-14 YRS 44.1 45.3 46.i 45.0 45.9 15-64 YRS 53.3 52.0 51. 52.1 51.2 65 AND ABOVE 2.6 2.7 2.3 2.9 2.8 POPULATION CROWTH RATE (X) TOTAL 2.2 2.6 2." 2.8 2.8 UENAN 5.8 5.4 4.] 6.2 5.3 CRUDE BIRTH KATE (PER THOUS) 50.6 49.3 49.0 47.9 47.6 CRUDE DEATU KATE (PER THOUS) 26.8 22.1 17.1. 19.2 15.2 GROSS REPRODUCTION RATE 3.3 3.3 3.2 3.2 3.2 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUS) .. USERS (% OF MARRI