CIRCULATING COPY i l

70 BE RETURNED TO REPORTS DESK

DOCUMENT OF INTERNATIONAL DEVELOPMENT ASSOCIATION

Not For Public Use

Report No. P-1230a-UV

REPORT AND RECOMMENDATION

OF THE

PRESIDENT

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED CREDIT

TO

THE REPUBLIC OF UPPER VOLTA

FOR AN

EDUCATION PROJECT

June 7, 1973

This report was prepared for official use only by the Bank Group. It may not be published,quoted or cited without Bank Group authorization. The Bank Group does not acceptresponsibility for the accuracy or completeness of the report.

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CURRENCY BQUIVALENT

Unit = Franc CFA (GFAF)US$ 1 C CFAF 230.2

CFAF 1 = US$ 0.004344LCFAF 1,000 = us$ 4.344CFAF 1,000,000 = US$ 4,344

Fiscal Year: 1973

INTERNATIONAL DEVELOPMENT ASSOCIATION

REPORT AND RECOMMENDATION OF THE PRESIDENTTO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT

TO THE REPUBLIC OF UPPER VOLTAFOR AN EDUCATION PROJECT

1. I submit the following report and recommendation on a proposeddevelopment credit to the Republic of Upper Volta for the equivalent ofUS$2.85 million on standard IDA terms to help finance an education project.

PART I: THE ECONOMY

20 The basic problems of economic development in Upper Volta weresetout in a report entitled "The Economic Development of Upper Volta',dated November 27, 1970 (R70-237 and R71-2). An updating memorandum ofJanuary 13, 1972, was distributed to the Executive Directors on March 2, 1972(R72-47). Annex I contains country data, including data on foreign aid.

Background

3. Upper Volta has been classified by the United Nations as one ofthe 25 "least developed countries" in the world. It suffers from a numberof serious growth constraints: a landlocked situation, limited domesticmarkets and marketing facilities, poor soil, lack of water and naturalresources, endemic diseases, uneven population distribution and a low levelof education and technical ability, particularly in the rural areas.Moreover, the country's poverty is characterized by an insufficient nutri-tion level (animal protein intake is only half that of neighbouring Maliand Niger).

4. Upper Volta's economy is and will remain for some time almostentirely dependent on agriculture and livestock. Together these twosectors account directly for over one third of GDP and make the economyparticularly vulnerable to adverse weather conditions. A further 10 percentof GDP comes from the manufacturing sector which is closely linked to agri-culture. A succession of droughts in the past few years has caused a severesetback in agricultural (cotton, food crops, and livestock) production,with consequent adverse effects on exports, and has contributed largelyto the stagnation of the econony. With population growing at the rate ofabout 2 percent a year, real GDP per capita has revuai.ned virtually un-changed since the early 196 0's.

_2-

Last year's drought, the most serious so far in the past fewyeas, has aggravalted an already critical situation. Food productiondrop4ped 8 percent compared with 1971 and half the country's natural'last" s were destroyeed It is feared that the loss of cattle mayeXCeed l9691s catastrophic level when about 100,000 animals died.

Because of the limited economic opportunities at home, parti-czIi;xlarl in rural areas, young people frequently choose to migrate moreor less permaxtently to coastal countries, where wages are much higherthan in Upper Volta, It is estimated that over half-a-million Voltaicshave migrated to neighbouring countries, the majority being i, the IvoryCoast. Although, their contribution to Upper Voltats balance of pay-ip=_ts in the form. of forei,n exchange remittances is substantial, therurl&L ecaonrmy of -the country is thus drained of its most dynamic elements.

Public Fi.nxece

Econvouic development had been further hazpered by poor mana-gaemnt of public finances during the first years of independence (1960-66) and since then by strict controls over public expendituires. In1 the early1960's expenditurzes outran revenues to the extent thatt by the end of 1965 theGovewrment was heavily in debt an short-term account and could no longerpay the salariee of its employees. The rdlitary Governmt. which as-sumed power i. 1966 gave first priority to adoption and implementationof a stabilization program aimed at reducing outstanding debts and atbringing public expenditures and income into better balance. As a resultt-he uoverm.rit has been able to repa:y all its short-term debt and hasaccundated re'latfrvely large liquid reserVes and foreign assets (at theend of' 1972 official. foreign exchange reserves were equivalent to about7 monthst imorts), However, this has been achieved at the cost of cut-ting back development expenditures, and a number olf projects largelyfinanced by external assistance have been held up for want of localcounterpart funds.

3 Foreign sources have supplied more than two-thirds of totalinvestment- expenditures effected under the first Development Plan (1967-7O). The principal sources of aid have been tne "Fonds d'Aide et deCooperation" (FAC) of France and the "Fonda Euarop6en de D6veloppement"(FE) of the 3uropean Economic Community, These two agencies togetherhave so far provided about 80 percent of all foreign aid to Upper Volta(Annex i) About half of their aid has been in the fom of grants.About half of it was capital aid and one fourth technical assistance,A substantial part of French grants (a third in 1972) was for assistanceto the public administration; the rest was distributed (in 1972, almostequally)I bletwee.n agriculture, road maintenance, education, and telecom-i*inLeications. IM2s contributions were primarily for water supply (urban-s well as rural) anrid roads, For the 1967-69 period the average

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concessionary element for aid commitments was about 95 percent. Thisreflects the conviction of aid donors that Upper Volta needs the softestpossible terms in foreign assistance.

9. In addition to this development aid, the international com-munity is currently undertaking special action to assist Upper Volta asone of the six sahelian countries affected by last year's drought (Chad,Mali, Mauretania, Niger, Senegal and Upper Volta). The FAO has announcedan emergency program with which the World Food Prograxne and UNDP arealso associated. Under the program 50,000 tons of food grain havealready been allocated to these countries. This amounts to 77 percentof the WFP emergency resources for the current year. A task force isbeing sent to the area to ward off potential human starvation and tobuild a nucleus of generating stock for future herds. Helicopters willbe used to transport grain. A further 32,000 tons of food are beingsupplied by FED, and other bilateral aid donors are also contributing.

Prospects

10. The second five-year Development Plan (1972-76) was approvedin June 1972. Like the previous plan it is essentially a list of pro-jects to be presented to foreign aid donors for financing. Proposedtotal investments amount to an average of about bS$40 million per year.A minimum per capita GDP growth of 3 percent per year in current pricesis envisaged. The plan also gives increased attention to the problemof planning recurrent costs and the necessity of a closer cooperationthan in the past between the Ministries of Finance and Planning.

11. On the basis of the past correlation in Upper Volta between therate of growth and investments it seems that the planned investment levelwould be too low to achieve the growth target. However, it is doubtfulwhether an increase in the planned investment target would be compatible withUpper Volta's absorptive capacity or with the availability of domesticand external resources. The Government is hoping to interest foreigninvestors in the exploitation of the country's mineral deposits, parti-cularly the manganese deposit near Tambao, but there is considerabledoubt about the economic feasibility of such investments in view of theheavy transport costs involved. On the other hand, agriculture shouldbenefit substantially from the international campaign for the eradicationof riverblindmess, planned to start in 1974. Large areas currentlymade uninhabitable by the disease are likely to be resettled, and inview of the scarcity of good agricultural land, development of theseareas should yield high returns.

12. Foreign aid will continue to play a decisive role in thedevelopment of Upper Volta, but if this aid is to be truly effective,there will be need for better coordination within the Government and for

some relaxation of present budgetary controls over development expenditures,possibly linked with additional revenue measures to cover the increasein recurrent costs. An economic mission organized by the UNDP visitedUpper Volta towards the end of 1972, and a follow-up mission from theBank is tentatively planned for late 1973 to continue the identificationof projects suitable for external financing, together with related tech-nical assistance requirements.

_130 In view of the prospective resource gap, the level of povertyof the country and its limited growth potential, foreign aid shouldcontinue on concessionary terms. External debt service at present absorbsabout 7 percent of Upper Volta's export earnings, and although this figure

is fairly low in absolute terms, it is high in relation to the country's verylimited creditworthiness. Equally, Upper Volta cannot be expected tomake any large contributions to the financing of public investment, andexternal;lending agencies must continue to finance a high proportion oflocal costs if development projects are to move forward.

PART II: BANK GROUP OPERATIONS

14. To date the Bank Group's contribution to Upper Volta's develop-ment consists of four projects (Annex II). The telecomnmications project,for which an $0.8 million IDA credit was made in 1969, was initiallydelayed by difficulties in recruiting expatriate experts, but is nowproceeding satisfactorily. The West Volta cotton project, for which a

a $6.2 million IDA credit was made in 1970, is also proceeding satisfacto-rily, although drought conditions have kept production so far below expec-tations. The other two projects are only just starting: one is a road

project (42.8 million) and the-other a rural development fund ($2.2million) for both of which IDA credits were approved in FY1972. So farindications are that they are proceeding satisfactorily.

15. The Bank Group's strategy in Upper Volta is dictated by theextreme poverty of the country and the need to raise productivity inagriculture and animal husbandry on which the bulk of the population dependfor a livelihood. A certain minimal infrastructure is required for theoperation of the econony, and the IDA projects for telecommunications, anda possible future road project, are designed to help in providing this.For the rest, IDA lending is directed principally to the rural sector forprojects in agriculture, education and village improvements. The campaignfor the control of riverblindness in the Volta River basin should openup new opportunities for investment in land settlement and agriculturaldevelopment, and the Bank Group will be ready to consider assisting in thepreparation and financing of projects in this field when they are identified.

160 A second telecommunications project is being submitted to the

Executive Directors for their consideration concurrently with the proposed

education project. This would help finance a major part of Upper Volta's197h-1977 telecommunications development program. The project consistsmainly of improvement and expansion of local telephone lines and switchingfacilities, provision of microwave links for national and internationalcommunications, training of personnel and consultants' services. The projectwould particularly improve telecommunications services between the ruralareas and the principal regional centers.

17. A number of other projects are also under consideration for IDAfinancing. A second cotton project is currently being appraised and isscheduled for presentation to the Executive Directors in FY7h4 The feasi-bility of a livestock project and a rice project is being reviewed, androad studies now being carried out with financing from credit 316-UV areexpected to lead to a second road project in due course.

18. The Bank Group is also considering active participation in theinternational agsistance program aimed at alleviating the effects of thecurrent drough in the affected sahelian countries,including Upper Volta.A mission is currently in the field discussing such participation, and pro-posals for IDA assistance will be formulated in the coming weeks.

19. Upper Volta nevertheless remains one of the countries in whichexternal assistance is limdted at present more by shortage of projects thanby shortage of external fund B. The Bank Group has been a relatively smalllender to date by comparison with the FAC and the FED, and it is not provingeasy to raise substantially the level of IDA assistance. There is an acutescarcity of trained people in the country, and the administration is notgeared to a high level of public spending.

PART III: THE EDUCATION SECTOR

20. Upper Volta has both a formal educational system and a much smallersystem of non-formal rural training. The formal system closely follows theFrench pattern; it emphasizes general knowledge as a preparation to higherstudies, and is geared primarily towards the need of the civil service forclerical and administrative workers rather than towards supplying agricul-ture, industry and public services with managers, technicians and skilledworkers. Besides being ill-adapted to the economic needs of the country theformal system is also very costly. Primary school teacher salaries are, forinstance, up to 30 times per capita GDP. At this cost, formal education willalways be the privilege of a minority.

21. Under the present Government, education has enjoyed high priority.While the GovernmentTs operating budget has been expanding by 5 percent ayear current expenditures for education have been growing by 10 percent ayear, and those for primary education by 17 percent, so that education's shareincreased from about 18 percent in 1964 to about 28 percent in 1972. At thesame time the percentage of enrollment of school-age children has only rea-ched about 10 percent in primary and 2 percent in secondary education. More-over, class repeating and drop-out rates remained very high, with 18 percent

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of those who enter the primary cycle actually graduating from it.Therefore, to educate more of its people and fit them for relevanteconomiic occupations, Upper Volta will have to turn to a less expensive

syry texi of education better adapted to the country's needs.

22. Recognizing this need Upper Volta soon after independence es-tablished a non-formal village education system parallel to the expansionof its formal system and built around a network of Centres d'Education.Rurale (CERs). The primary aim of the CERs is to provide ruralyouth, hitherto mostly illiterate, with a minimum of practicaleduLcation so as to assist them in becoming more productive farmers.;YThe period of sducation in the CERs is 3 years, equally divided betweenpractical training on the CERst own fields and acquiring a basic general

education,

23. This system is less costly. The salary of a rural educationteacher is abou-t one third that of a primary school teacher, and thecost of a pupil in a CER is about CFAF 5,000 a year as coiWpared withCFA.TT 12,000 in orimary school, Also the drop-out rate is low and theschool relates closely to village life; productivity per worker on theCERs con;pares favorably with that of the average traditional farmer.Nevertheless3 and despite this partial success, the CFRs have fallenshort of their goals0 The use of French, which is a foreign languagefor the raral conunmities, as the medium of instruction makes learningco'nsiderablv maore difficult. Recruitment of teachers is based more onacademic achievements than on ability to teach agriculture. Pupilshave been gradually admitted at a younger age, which has tended to makerural edducation a less desirable system parallel to formal education andto reduce the likelihood that youngsters will thereafter settle in theirual areas.

24. The Government has recently come to recognize the necessityfor a major reform of the whole education system* The growth of theformal system will be reduced. At the same timle, with UNESCdOtICEFasslstance, -;he Government will review both structure and content ofprimary education, and will give to non-formal education (i.e., at this

stage, rural education) a higher priority than has been so far the case.Tn secondary education more emphasis will be given to practical subjectsincluding the teaching of science, as a basis for further training attechnical and professional levels.

25. The Government intends to raise the entrance ame for CERs to 15years for boys and 13 for girls, to experiment with teaching in the nationallanguages, to make the curriculum more practical and better related to

,re needs of rural communities and to strengthen the proficiency and interest

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of the teachers in practical matters relating to rural life. Moreover,the rural education system will be more closely coordinated with ruraldevelopment services, both at the national and at the regional level. TheGovernment has already undertaken action to place by May 1, 1974 the Direct-orate of Rural Education and the Directorate of Rural Development under theMinistry of Agriculture, which will be responsible for all aspects of ruraldevelopment; and the Regional Development Offices (ORDs) will providecoordination between the extension services and rural education.

26. Rural schooling will in future lead directly to rural employmentor to further training opportunities designed to bridge the intervalbetween adolescence and adulthood. This will be done in two ways. First,there will be the post-school cooperatives (GPS) grouping ex-CER studentsinto small cooperatives, assisted financially and professionally by theRegional Development Offices (ORDs). Second, there will be a small numberof centers which would enable selected leavers to have access to furthertraining as rural teachers or other rural development agents.

27. Higher education in Upper Volta is still at a very early stageof its development. In view of the limited number of disciplines offeredenrollment is low and cost per student is very high. The Institute ofHigher Education (CESUP), created in 1969 as a nucleus of a future uni-versity, prepares students for a diploma in literary studies* Togetherwith two affiliated institutes, the University Institute of TeachingTechnology (IUTP) and the Institute of Technology, Management and Ac*nin-istration of Firms, there was in 1970 a total enrollment of abou-t 120Voltaic students, During the same year about 600 further students werebeing educated abroad, mainly in France and in Abidjan.

28. The modernization of education in Upper Volta will be a slowprocess, and there are many obstacles to be overcome before the countrycan be equipped with an efficient educational system adapted to the re-quirements of economic development. However, the changes now proposedare a move in the right direction and justify the full support of theBank Group.

PART IV: THE PROJECT

29. The proposed project draws from various studies of Upper Volta'srural education system (FAC 1965, UNESCO 1968, FiDES 1969, FED 1970 and1972, IBRD Report No. AW-19a, Volume IV, November 1970). Two IDA recon-naissance missions visited the country in June/July 1971 and February1972, and the project was appraised in May 1972.

rormal Fducation,

30. In the formal education sector, the project would strengthenthe standards for science education by assisting 21 public secondaryschools which require practical facilities, More effective scienceteaching iS expected to benefit 6,150 secondary students and particularly950 students enrolled in science streams.

%iral Education

39. In the non-formal sector, the project would help the Governmentimprove raral education in the ORD's of Dedougou, Koudougou and Kaya by:

(') pro-diding for reconstruction and equipment of 40 CERs and forequipment of 80 other CERs out of abcut 350 now in operation;

(ii) creating and equipping about 350 post-school cooperativegroutps of 15 CER leavers each;

(iii) constructing and equipping 3 Rural Development TrainingCenters (CPR) for further training of 60 CER graduates ineach center towards mzallng them rural development agerts;

(iv) providing necessary technical assistance for the successof the project including an evaluation of the rural educationprogram; and

(v) studying the feasibility of an appropriate system to trainmanagers for rural development projects.

The project would be coordinated with, and complement* FED assistance forrural education of June 1972 (grant of $2.3 million) and the IDA creditfor a rural development fumd, which was approved last,year.

32. Prior to negotiations about 30 CERs had already been identifiedby the Government according to criteria acceptable to the Association. Afurther 90 would be selected out of the remaining CERs. Criteria for eli-gibility for assistance under the Credit include the enrollment of a suffi-cient number of students at least 15 years old (for boys), 13 years old (forgirls), operation for at least 5 years and the development of a variety ofcrops and raising of small animals on an adequate plot of land. Each centerwould develop at least four hectares of land with equip*ent provided under-iLhe project, under supervision of rural education supervisors attached tothe ORDs. In at least 15 of the CERs teaching would be given in nationallanguages on an experimental basis. A revision of the curriculum, entrancerequirements and teacher qualifications would be undertaken and completedby May 1, 1975 i.e. by the time the first group of CERs benefiting from theproject will be opened.

33. Since 1963 about 15,000 young people have gone through the CERsfin the project area, and 20,000 are expected to complete their trainingbetween 197h and 1977. It is estimated that these numbers will provide

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the potential for organizing about 800 GPS of 15 young men or women eachhaving reached at least 18 years of age for men and 16 for women. The pro-posed project would assist in the establishment of a pilot phase of 150GPSs. The groups are expected not only to provide their members with in-creased earnings and better nutrition, but also to reintegrate them intovillage life and help them in their role as propagators of improved techni-ques and practices. The groups to be organized under the project wouldbe selected on the basis of annual surveys. Selection methods and criteriahave been agreed between the Government and the Association. Each GPSwould have a farm of at least 6 hectares and would receive credit, market-ing and extension services, to be financed under the proposed credit.

3l. The 3 CPRs would provide two years of general education andagricultural training for graduates from the CERs. They would enablestudents to enter the rural education teacher training institutes, theagricultural schools and rural development services, and would providebasic training in management and agriculture for volunteer group leaderswithin the GPS.

35. Technical assistance of about 16 man-years for the rural educationitems would include one rural development specialist in each of the threeORDs, with experience in cooperatives, credit and training, and a principaltechnical adviser to assist the Directorate of Rural Education. It wouldalso include short-term specialists to assist in the initial survey andevaluation of the CERs and GPSs and to assess progress of the project andits final impact on rural communities. Two further man-years of the ser-vices of an equipment procurement specialist would be needed to help admin-ister the project. Foreign specialists would, where appropriate, trainlocal counterparts.

36. A further component of the rural aspects of the project willbe a feasibility study of a scheme for the training of project managersand executive personnel for rural development; this is estimated to requireabout 15 man-months. An initial study carried out by a French consultingfirm has recommended that such training should be given on the job withthe trainees assuming responsibility for the management of actual projects.

Implementation and Management

37. The project will be implemented over a period of five years. Itwill be administered by a project unit to be created within the Ministryof Agriculture and headed by the Director of Rural Education assisted by aproject manager. The project manager will be assisted by the directors ofthe project's ORDs, together with the three rural development specialistsattached to them, and by an equipment procurement specialist. The projectdirector will be responsible for all aspects of project implementation andwill coordinate these aspects within the Government as well as with theAssociation. The three directors of the project's ORDs are currently notresponsible for rural education in the areas under the jurisdiction of theirORDs. Assignment of this responsibility to them with regard to the proposed

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project, the creation of the project unit as well as the appointment of

a suitab-e project manager, are conditions of effectiveness of the proposed

credit.

38G Most sites for the project institutions have already been acquired.

Land for foarming activities will be provided by the local communities con-

cerned. Design and supervision of construction will be carried out by the

Ministry of' Public works.

Financing Plan

3-9 The costs of the project, including taxes, are estimated as

foLlows:

(in thousand dollars)

Local ForeSR Total

Science laboratories 250 430 680Rural component 655 1,205 1,860

Study on project maanagers 15 85 100

Project admLinistration 130 150 230Contiungencies 280 440 720

Total. 1,330 ,310,640

.l . The following table shows the costs of the project by type of

ex-penditure:

(in thousan.d dollars)

Local Foreign Total

Construction 500 500 1,000

Furniture 50 50 100

Equipment 110 450 560

Water Supply 90 90 1801'echnical assistance and

local personuel 300 780 1,080

Contingencies 280 440 720

Total 1,330

41. The proposed IDA credit of $2.85 million would be made to Upper

Volta on standard terms. The credit would finance the foreign exchange costs

of the project plus 40 percent of local costs, or an aggregate of 90 percent

of total project costs net of taxes. The credit would also finance retro-

actively up to $10,000 for expenditures incurred in connection with the

survey undertaken by the Government for the selection of project CERs.

Procurement and Disbursement

42. The dispersion of the project schools and the small amount of

construction work on each site make it unlikely that firms not alreadyoperating in Upper Volta or in neighboring countries would be interested

in bidding for the contracts. Therefore civil works contracts would

be advertised locaU y with copy to the local embassies of neighboring

countries. For furniture and equipment, local manufacturers would be

given a preferential margin of 15 percent of the c.i.f. cost of competingimports or the rn'te of import duties, whichever is less; this preference

would also apply to members of the West African Economic Community. Small

agricultural equipment for the rural education centers would be procuredby the project unit after calling for quotations from local suppliers.

43. The credit would be disbursed against 100 percent of totalexpenditures for fur-iture, cattle and equipment, 100 percent of foreignexpenditures or 80 percent of local expenditures for consultant services,80 percent of total expenditures for the operating costs of the projectunit and 73 percent of total expenditures for civil works. The creditis expected to be fully disbursed by June 30, 1979.

PART V: LE3AL INSTNM TS AND AUTHORITY

44. The draft Development Credit Agreement between the Republic ofUpper Volta and the Association, the Recommendation of the Gommitteeprovided for in Article V, Section 1 (d) of the Articles of Agreement ofthe Association and the text of a draft resolution approving the proposedcredit are being distributed to the Executive Directors separately. Thedraft Development Credit Agreement conforms generally to the pattern ofcredit agreement for education projects.

45. I am satisfied that the proposed credit would camply with theArticles of Agreement of the Association.

PART VI: RECONMEDATION

46. I recommend that the Executive Directors approve the proposedcredit.

Robert S. McNamaraPresident

Attachments: 3

Washington, D.C.June 7, 1973

ASl'EX TPage 1 of I

COUNTRf DATA - UPPER VOLTA

AREA: 274,200 iO 2 POPULATION: 5.49 mIllion (mid-1971) D/ PENSITY: LO per K."Rate of Growth: 2.0%t p.a. (1965-70) 57 per Ka- of arabir land 1 /

PO'IULATTON C8ARACTERIdTICS (H3E5-70): I{EALTII:

Crude Bi.rth Rote (per .1000) 49 Population Per physician 92,800 (1970)Crodn Death Rate (per 1,000) 29 Popoletino per hospital bed 1.64o (1969)

eiz:atn Morta,lity (per 1,000 live births) 120

I PIRITTON (1964-66): EDUCATION:

Calorie intake as 9 of reqoi re.ooets 90 Alult literacy rate 5-10%,Per capita protein intsnie 70.3 g/day Primary school eara]lneat tO%

GNP PER CAPITA in 1970: 01$60

CROSS DOMESTIC PRODUCT IN 1970:3/ ANNllJAL RATF OP 9ROWTl (%, cansott pries)Udi Mln. ,ti 1945-hir ± 1969-70

GDP at l.trket Prices 307.9 100.0 3.0Crane Dooestlc CtveotreI, t ,6 8.3 - 0.7 -2.7Gross Domestic loving - 2.9 - 0.7 77.8 5/Colrrent A,-:ost, Batlane 6.1 2.0 -i .7Eparto of Coods. NFS.8 7.7 16.7 0.8

Imtports of Cood., NFS 51.5 16.7 4.o 4.9

_Vlue idded _Lbrr PErca V.A. Per Worker

UP$ Mln,. Thi. 5 P13 TAgriculture 135.5 44.o 1,952 95.1 69 5.4In,,da.try 64.7 21.0 12 1.1 1 934.2Cerevices 107.7 15.0 5R 2.2 8 i

Tonal 307.9 101.0 2,032 100.0 150 1C1. 0

GOVMRPIEMET FINANCE IN 1970: §1Iratral lovernoenlt

CFAF Bin. of GDPC-reat Receipts 10.49 12.3Clament Expenlitures 8.61 10.1Currant Surplas 1.88 2.2Capital Expenditures 1.59 _2/ 1.9Eotro-al Asa[nstnuce (net) 6.39 7.5

MDPTEP, CREDIT AND PRICES: 1965 1969 1970 1971 June 1971 June 197

(Billions of CFAF outstanding ed period)Mosey ad Qasai Money 6.41 8.70 9.17 9.93 S. ,l64bank Credit to public Sectar (set) 0.13 - 2.24 - 3.64 - 4.46 - 5.3C 6.1,Bk C'redit to Privste Sector 4.o9 5.69 5.63 6111 5.8

loney and Qtsoai bney as 9. of GOP 11.4 .. 10.5Gccral Princ Iaier (196>3 . lOO) 101.2 108.3 110.2 112.5 113.8 111.0

Anual Peronotage Chslnge in:Gonrral Price Index . 9.6 1.8 2.1 1.7BPosk Credit Io Pablic loer (net) .

BRsk .recdit to Private Sector 1.7 4O.1 - 1.1, 5 - 3.4

BA1AICE OF PA PifE-IS: M _C:IAoCDIeE PXPOCPS AIERAI J 16(-11)70): '/1968 1969 1970

(Millions of us$) 093 lOn. p;Nusoorts of Go;ds, NFS 35.7 35.0 28.9 Lioveu.nock and livestok prodolcts '.1Inp-rta of Coeds, UPS 69.0 76.3 69.o Cotton and cotton sced 9.3 23.1Rcsrurce Gap - 33.3 -93 -. T ALl ether - omnodities 3.7`-oe-toeni tnee- Po,ymnot (-t) - 1.6 - 1.6 - 0.3 T.t,l 20.1/ En5IO

Net Trnaf-ers 4o.8 44.9 46.5Blslance on Current A-coult 5.9 1.0 Ta EXTERtAL DEBT, DECPEDER 31, 1971D'rect Ilveroneot (set) o.4 0.9 1.1 ,,;;$ MIl-.Net MLT Borrowi::g 2.0 1.6 o.8 lsublic Debt, including undisbursed 34.67

Disb,rsements (3.2) (3.1) (2.4) Public Debt, -cluding undi.lb-rnci 14.79REpawy-ets c-a ( 1.5) ( L . 6 Nos-0I-r-nteed Priv-tc DebteSubtotal .3 4-5 4.o Total Outotanding and Dishbroe, 24.79

OtLher PELT inpita1 (net) - 0.1 - 0.7 - 0.1Other Items, n.i.e. - 4.2 - 3.4 4.3 DEBT SERVICE RATIO FOR 1970:Allocation of SDRs - - 1.7Increane in Reserves 77 15. 9 Public Debt 7.0

Cent.ral Bonk Reserves 22.2 22.6 36.4

RATE OF EXCHANGE: IBRD/IDA LENDING, FEBRUARY 1973 (Milliaon of tr$):

Through August 10, 1969: U0$ 1.00 a CFAF 246.85 LBRI IDAAugust 11, 1969-August 14, 1971: 01$ 1.00 a CFAF 277.71 Outstanding and Disbursed - 1.59After December 20, 1971: us$ 1.31 a CFAF 255.79 Uniisburned - 10.44After Fbriary 26, 1973: US$ lE. - CFAF 230.21 Outtanding i-c. Usdinbursed - 12.03

1/ Tentative estimate; the last croneus was conducted between September 1960 and April 1961.

/ Arable land and land under permanent crops./ At constant 1958 prices.hi At current prince.

4/ Irons domestic nvoing declined from CFAF 1.0 billion in 196B to CFAF -o.6 billion in 1970.

9/ Prelinitiary actua.

I/teIdding expenditures of C1AP 0.45 billion finan-ed by external sources.

/ Otficinlly recorded ommats only.

ANNEX IPage 2 of 2

FOREIGN AID (1964-1969)

(Disbursements in US$ million)

1964 1965 1966 1967 1968 1969 Total %

Technical assistance 4.4 4.9 5.6 5.4 6.2 7.3 33.9 24

Capital aid 9.1 12.7 13.2 14.6 13.3 15.9 78.8 55

Other aid 3.4 4.1 414 6.9 7.0 4.5 30.3 21

Total 16.9 21.7 23.2 26.9 26.5 27.7 142.9 100

France 10.7 13.4 12.6 15.1 14.7 13.2 79.7 56

FED 4.3 5.7 6.5 2.8 4.9 8.7 32.9 23

Others 1.9 2.6 4.1 9.0 6.9 5.8 30.3 21

Total 16.9 21.7 23.2 26.9 26.5 27.7 142.9 100

Exchange rate US$ 1 = CFAF 277.71

ANNEX IIPage 1 of 3

STATUS OF BANK GROUP OPERATIONS IN UPPER VOLTA

A. STATEMENT OF IDA CREDITS (as of May 31, 1973)

Credit Fiscal Amount (US$ millions)Number Year Borrower e IDA Undisbursed

141-uv 1969 Republic of Telecommunications 0.8 0.2Upper Volta

225-UV 1971 Republic of West Volta Cotton 6.2 L.6Upper Volta

W16_TTN 1Y' Republic of Roads 2.2 2.8Upper Volta

317-UV 1972 Republic of Rural DevelopmentUpper Volta Fund 2.2 2.2

Total 12.0

of which has been repaid 0.0

Total now held by the Association* 12.0

Total undisbursed 9.8

* prior to exchange adjustment

B. PROJECTS IN EXECUTION YCr. No. 141-UV Telecommunications Project; US$0.8 million Credit of

February 1T, 1969; Closing Date June 30, 1973.

The project was intended to finance urgently required rehabi-litation and expansion works for local distribution networks in Ouagadougouand Bobo-Dioulasso, the reconditioning of obsolete iron-wire lines in theprovinces and the provision of carrier equipmnnt on trunk lines, After initialdelays, mainly due to difficulties in arranging for key expatriate staff toadvise on the works, this project is now proceeding satisfactorily. Completionis now expected in November 1973, 22 months behind schedule.

/I These notes are designed to inform the Executive Directors on the progressOY projects in execution, and in particular to report any problems which arebeing encountered, and the action being taken to remedy them. They should beread in this sense, and with the understanding that they do not purport topresent a balanced evaluation of strengths and weakaesses in project execution.

ANNEX IIIag 2f 3

Cr. NOe 225-T.v West Volta Cotton Pro.ect; US$6.2 million Credit ofDe_e_ber 30, 0Closig Date lune 30, 196._

FAC is pro-Tiding a grant of fiurther US$1.7 million for theproject. The project is the final stage of a cotton production developmentprogram in West Upper Volta which originally started with technical assist-ance from Comagnie Frangaise pour le D6veloppement des Fibres Textiles(CFDT) and FAC financing in 1963c It consists of both expansion of thearea under cotton cultivation on some 466,00C farms and improvement of fieldsthrough credit and extension services, and provision of better communicationsand processing facilities. The project also includes flundB for training ofC dff, detailed engineering of secondary roads and preparation of the Second(Black Volta) Cotton and Agricultural Development Project.

Although Upper Volta suffered a drought in. 1971 for thesecond year in a row, cotton production in the project area increased by33% in 1971/72 over the pre-project year of 1970 while elsewhere productiondecreased by about 10%, Processing and marketing of' cotton lint and seedsis the responsibility of a joint venture between Government and CFkDT whichmade a net profit of about US$)400,0)O in 1970/71 and af US6360,O000 in 1971/72.Tlhe 20,000 tons capacity ginnery financed under the project will be builtin time for operation by the end of 1974. The feasibility study of the BlackVolta Cotton asnd Agriculture Development projectl has been completed, and theproject is now being appraised.

The project is proceeding satisfactorily; the management isadequate. About us1:Lo3 r6 million are still undisbursed.

Cr, .No, 316-UV Road Project; US$2.8 million; Credit of June 26 i972;cios Dat B7cerner 71777

'The project comprises (a) the reconstruction of the Solenzo-Koundougou (70 km) and the Hounde-Bereba (27 kcm) roads, and (b) feasibilitystudies for about 400 lkm of primary roads, and engineering of those sections±' ouid to have the highest priority.

The pre-selection of contractors for part (a) above tookplace in November 1972, The bids were scheduled to be opened on March 1.The Government has not yet imnormed the Association about the result of theevaluation of bids. Regarding (b) above the Government proposed four roadsto be studied, and the Association agreed to only two, from Bobo-Dioulassoto Hounde and Bobo-Dioulasso to Banfora (a total of about 190 km), thesebeing the only ones considered likely to show a satisfactory rate of return,

ANNEX IIPage 3 of 3

Cr. No. 317-UV Rural Development Fund Project US$2.2 million; Credit ofJune-26, 1972 Closing Date September 30, _ _96.

The project is designed to alleviate constraints to develop-ment in rural areas, increase agricultural production, and assist rural acti-vities in most parts of the country where the Government can provide support-ing services. Between 300,000 and 450,000 people would benefit from theproject. The Rural Development Fund (RDF) Division has been established withinBanque Nationale de Developpement (BND) to execute the project; it startedoperating in September, 1972. BND's performance and project management aresatisfactory. Currently it is preparing its first annual program on the basisof proposals made by the Offices Regionaux de D6veloppement (ORD). Maincomponents of this program will be wells and village warehouses. The projectwhich started slowly mainly due to delays over project prefinancing and staffappointments is now proceeding satisfactorily. Arrangements are being madefor speedy progress in implementing the various sub-projects. Considerationis also being given to the financing of drought relief measures under -thisproject.

ANNEX IIIPage 1 of 2

UPPER VOLTA: EDUCATIONO J

Credit and Project Summary

CREDIT SUMMARY

Borrower: The Republic of Upper Volta

Beneficiary: Same

Purpose: Institution building - Education and iural Devel ]cnmn

Amount: US$2.85 million equivalent in various currencies

Terms: Standard

PROJECT SUMMbARY

Brief Description: The proposed project consists of:

a) the construction and equipping of sciencelaboratories in a total of 21 secondaryschools; the reconstruction and equippingof 40 and equipping of 50 rural educationcenters (CER); the organization, equippingand servicing of 150 post-school cooperatL egroup (GPS) and related supporting facilitiesas a pilot scheme; the creation of 3 ruraldevelopment training centers (CPR); about 18man-years of related technical assistance.

b) a feasibility study of a practical system 'tJotrain managers for rural development projects.

Estimated Costs:

Project item: Local .eii. 1 I(US$ miions

Science facilities in secondary schools 0.25 0.43 0.65,Rural Education Centers (CER) 0.20 0.23 0.43Post-School Cooperative Groups (GPS) 0.29 0.33 0.62Rural Development Training Centers (CPR) 0.06 0.06 0.12Project Administration Unit 0.11 0.05 O.lcTechnical Assistance 0.1)4 0.7` 0.91Contingencies:

a) Physical 0.112 0.1T '*3C

b) Price Escalation 0.16 C.26 0.4cTotal 1.33 T011

ANNEX IIIPage 2 of 2

Financing Plan

In US$ millions

IDA contribution 2.85Government's own resources 0.79

Total (including taxes) 3.64

ProcurementArrangements Furniture and equipment contracts would be subject

to international competitive bidding. Civil workswould be subject to competitive bidding with localadvertising only (including to local embassies).For bid comparison purposes local manufacturers offurniture and equipment to be allowed a preferentialmargin of 15 percent of the C.I.F. costs of competingimports or the currently applicable import duty.whichever is lower. This preferential treatmentwould also apply to members of the West AfricanEconomic Community. For equipment for the ruraleducation centers. competitive bidding in accordancewitlh Borrower's normal procurement procedures. upto an aggregate maximum of $150,000.

EstimatedDisbursements

In US$MillionsFY 1974 1975 1976 1977 1978 1979

0.21 0.68 1.31 0.44 0.16 0.05

ProjectManagement The project would be administered by a Project Unit

in the Ministry of Agriculture, headed by the Directorof Rural Education who would be assisted by a projectmanager. an equipment procurement specialist and theDirectors of the three project ORDs.

Estimated ProjecLCompletion Date November 30. 1978

Appraisal Report Report No. 102a-UV datedJune 5. 1973

Regional Projects Department -Western Africa Regional Office

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