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World Bank Document Dowmsnz Of The World Bank FOROMCLFCL USE ONLY Public Disclosure Authorized Report No. P-4290-CD REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE Public Disclosure Authorized INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS FOR A PROPOSED DEVELOPMENT CREDIT OF SDR 17.1 MILLION TO THE REPUBLIC OF CHAD Public Disclosure Authorized FOR A HIGHWAY MAINTENANCE PROJECT June 2, 1986 Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their officialduties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currency Unit = CFA Franc US$1.00 CFAF 360 FISCAL YEAR January 1 - December 31 WEIGHTS AND MEASURES 1 kilometer (km) 2 = 0.6 mile (mi) 2 l ssuare kilometer (km ) = 0.39 square miles (mi ) I m = 1,000 liters (1) = 6.37 barrels = 267.54 gallon ABBREVIATIONS AND ACRONYMS AfDF - African Development Fund BDEAC - Banque de Developpement des Etats de l'Afrique Centrale BIAT - Banque Internationale pour l'Afrique au Tchad BTCD - Banque Tchadienne de Credit et des Depots CARE - Cooperative for American Relief Everywhere CCCE - Caisse Centrale de Cooperation Economique CFAF - Communaute Financiare Africaine (CFA) Francs CFDT - Compagnie Frangaise pour le Developpement de Textiles CTT - Cooperative des Transporteurs Tchadiens DGT - Direction Generale des Transports DPW - Department of Public Works EDF - European Development Fund EEC - European Economic Community ENTP - Ecole Nationale des Travaux Publics ERR - Economic Rate of Return FAC - Fonds d'Aide et de Cooperation FAO/OSRO - Food and Agriculture Organization/Officeof Sahelian Relief GDP - Gross Domestic Product IBRD - International Bank for Reconstruction and Development IDA - International Development Agency LBF - Live Aid/Band Aid Foundation LENTP - Laboratoire d'Etude National des Travaux Publics MPWHUD - Ministry of Public Works, Housing and Urban Development MCT - Manufacture de Cigarettes du Tchad MTCA - Ministry of Transport and Civil Aviation NGO - Non Governmental Organization OFNAR - Office National des Routes SDR - Special Drawing Right SIMAT - Societe Industrielle de Materiel Agricole SME - Small and Medium Scale Enterprise SONASUT - Societe Nationale Sucriare du Tchad STEE - Societe Tchadienne d'Energie Electrique _ STT - Societe Tchadienne du Textile ND?P - United Nations Development Program UNDP/OPE - UNDP/Office of Project Execution USAID - United States Agency for InternationalDevelopment vpd - Vehicles per day WFP - World Food Program FOR OMCAL USE ONLY CHAD HIGHWAYMAINTENANCE PROJECT CREDIT ANDPROJECT SUMMARY Borrower: The Government of Chad Beneficiaries and Implementing Agencies: The Ministry of Public Works, Housing and Urban Development; The Ministry of Transport and Civil Aviation. Amount: SDR 17.1 million (US$20.0million equivalent). Terms: StandardIDA terms. ProjectDescription: This project is an emergencyoperation in the road transportsector which is a top priorityin Chad's post-war reconstruction effort. It would assist the Ministries of Public Works and Transport to rebuild their capacity to rehab- ilitate and maintain the country's high priority network, address important institution building objectives in the transport sector, help resolve constraints on the efficiency and competitive- ness of the road transport industry, and coordi- nate and complement other donors' activities in the sector. The principal components of the project are: (a) routine maintenance of up to 2,000 km of high priority roads; (b) rehabili- tation and routine maintenance of a road linking the industrial center of N'Djamena with the country's primary road network; (c) rehabili- tation of the ferry at Moissala and replacement of the ferry at Onoko, and construction of short access roads; (d) reconstructionof the bridge at Lere and constructionof accessroads; (e) provisionof buildingsand equipmentto sup- port the priorityprogram for routinemainte- nance; and (f) studiesand technicalassistance to supportproject implementationand prepara- tion of a follow-upoperation in the sector. Project Benefits and Risks: The projectwould help to re-establishnormal trade flows and would supportrestructuring of the cotton sector. It would reduce transport costs on 2,000 km of priorityroads, and avoid higher costs that would be incurredif recently rehabilitatedroads were allowedto deteriorate. Rehabilitationand maintenanceof the N'Djamena | This documenthas a restricteddistibution andmay be usedby recipientsonly in the performance of their officialduties Its contentsmay not otherwisebe disclosedwithout World Bank authorization. - ii - industrial road would significantly reduce transport costs and relieve urban congestion. Rehabilitation of the bridge and ferries would improve internal and external communications and effect significant operating cost savings. The project would have a substantial institutional impact on the Ministries of Public Works and Transport, OFNAR, and the trucking industry by developing the management and technical skills necessary for managing the road sector and by increasing productivity and competitiveness in the road transport industry. The physical components of the project are lo- cated in areas unlikely to be affected by po- litical unrest. Although the general economic situation and depressed cotton prices could constrain the rate of recovery in economic acti- vity, the most important risks would be an in- crease in project costs and inadequate absorp- tive capacity. Even with a 20% increase in total project costs, including technical assist- ance, the project would still be justified. The risks arising from possible limits on adminis- trative capacity are addressed through technical assistance and on-the-job training and through possible recourse to private contractors. Nevertheless implementation of the project will require intensive monitoring and supervision by IDA staff. Rate of Return: The overall economic rate of return is 21%, covering about 82% of project costs. The rates of return for individual project components vary from 12% for the bridge and access roads and 16% for the N'Djamena industrial road, to 46% for routine maintenance of rehabilitated roads and 59% for the ferries. os -no INTERNATIONALDEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATIONOF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSEDDEVELOPMENT CREDIT TO THE REPUBLIC OF CHAD FOR A HIGHWAYMAINTENANCE PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Republic of Chad for SDR 17.1 million (US$20.0 million equivalent) to help finance a Highway Maintenance Project. The credit would be on standard IDA terms. PART I. THE ECONOMY11 2. The last economic report on Chad (Report No. 1340-CD) was distri- buted to the Board on June 30, 1977. Bank activities,including economic and sectorwork, resumedin May 1985 after several years of interruptiondue to civil war. A new Country EconomicMemorandum is scheduledfor FY87. Annex I contains country data. Background 3. Chad is a landlocked,sahelian country with an area of 1,284,000 kM2 and three climaticzones. In the northern saharan zone, where rainfall is less than 300 mm per annum, the dominant activity is nomadic and transhumant livestock herding. Agricultural production is undertaken infre- quently and is only possible in oases and in lowlands during periodic flooding. In the middle sahelian zone, one finds transhumant and sedentary livestock herding as well as extensive rainfed cultivationcentered on mi,let and sorghum. Because of the dependence on rainfed cropping, this zone is particularly vulnerable to climatic variability. The southern sudanian zone makes up a quarter of the country's area. The region receives rainfall ranging from 600 mm to 1,200 amper year, allowing the production of cotton as a cash crop and cereals, tubers, and groundnuts as major food crops. 4. The populationof Chad was estimatedat approximately5 million in 1985, with about 40% in the southernsudanian zone, 57% in the middle sahelianzone, and only 3% in the northern saharan zone. Approximately 80% of the population lives in rural areas, although the urban population has 1/ Parts I and II are substantially the same as those in the President's Report for the EmergencyCotton ProgramCredit, which was presented to the ExecutiveDirectors on June 24, 1986. - 2 - been growing at an annual rate more than three times faster than that of the total population (6.4%compared to 2.1%). The capital city, N'Djamena, is estimatedto have about 400,000 inhabitants. EconomicConstraints and Potential 5. With an estimatedper capita income of about US$130 in 1985, Chad is one of the poorest and least developed countries in the world. It ranks at or near the bottom of the low-income economies with respect to life expectancy,literacy and health-relatedindicators. Moreover, in recent years, political conflict has disrupted economic activities and social servicesand has discouragedinvestment. Developmentis constrainedby: (i) the country'slandlocked position, which creates high transportation costs; (ii) internal distances,which hinder politicaland economic inte- gration; and (iii) climaticvariability, which leads to fluctuationsin agriculturalproduction. Chad does have, however,a number of factors in its favor. The economic system is liberal and has produced a dynamic informalsector. The country is also blessedwith considerableagricultural potential, thanks to its extensive areas of arable land, two perennial rivers
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