Ivory Coast: a Basic Economic Report Annex 4: the Transport Sector February 1977

FILE COPY Report No. 1147b-IVC Ivory Coast: A Basic Economic Report Annex 4: The Transport Sector February 1977

Public Disclosure Authorized Western Africa Region

FOR OFFICIAL USE ONLY Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of the World Bank

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS

Currency Unit: CFA Franc (CFAF)

A fixed parity exists between the CFA franc and the French franc: FF 1 = CFAF 50

The CFA franc floats against the dollar. Between February 12, 1973 and the end of 1976, the rate has fluctuated as follows:

US$1 = CFAF 205-255

Throughout this report the following rates have been used for the conversion of CFA francs into US dollars and vice versa:

1968 and earlier years: US$1 = CFAF 247 1969 US$1 = CFAF 256 1970 US$1 = CFAF 278 1971 US$1 = CFAF 278 1972 US$1 = CFAF 252 1973 US$1 = CFAF 223 1974 US$1 = CFAF 241 1975 US$1 = CFAF 214 1976 and beyond: US$1 = CFAF 230

WEIGHTS AND MEASURES

1 Metric Ton (t) = 2,205 lbs. 1 Kilogram (kg) = 2.2 lbs. 1 Kilometer (km) =,0.62 mile 1 Meter (m) = 3.28 feet

FISCAL YEAR OF THE GOVERNMENT

January 1 - December 31

This report comprises: a separate volume of Summary and Conclusions, a Main Report, and separate annexes on Agriculture, Industry, Tourism, Transportation, Urban Development and Education. FOR OFFICIAL USE ONLY

ANNEX 4: THE TRANSPORT SECTOR

TABLE OF CONTENTS

PaRe No.

LIST OF ABBREVIATIONS ...... *.*...... lii

CHAPTER 1: INTRODUCTION ...... * **....*.*...*..*...*.... **.*.*.* ...... 1

A. General. 1 B. Transport in the Economy 1 Historical Developments 1 Recent Trends ...... *...... 2 Transport Policy . 3 C. Implementation of the 1971-75 Five-Year Plan 4 Objectives. . 4 Plan Evaluation ...... *** 4 Achievements ...... 5

CHAPTER 2: SECTOR ANALYSIS .- -o .... o-o ...... o....o.... 7

A. Roads and Road Transport 7 General .o...... 7 Infrastructure ...... 8 Road Transport ...... 8 Highway Maintenance ...... 10 Financing and Road User Revenues. 11 Future Investment .o ...... 13 B. Railways.. o ...... 15 General. 15 Traffic. 15 Finances and Investment . .16 Future Investment. . . .18 C. Ports and Waterways ... . .19 General ...... 19 Port Operations.. . 20 Investment ...... - ... 21 Future Development. .. 22 D. Maritime Transport ...... 25 General. . 25 Objectives. .. 26 Proposed Strategy...... 27 E. Airports and Air Transport .. 28 General . .... 28 Air Transport. 29

CHAPTER 3: DEVELOPMENT STRATEGY AND INVESTMENT PRIORITIES ..... 31

A. Future Orientation .. 31 Ongoing Projects . .31 Investment Strategy . .33 B. Policy Issues in the Sector . .34 Management in the Transport Sector . .34 Shifting Emphasis in Road Investments 36 Coordination in Port Development . .38 Railway Investment and Road/Rail Coordination . 39 Low-Priority Investment . .40 C. Investment Program .. 41

LIST OF TABLES IN THE TEXT

Table 1: Inter-Urban Passenger and Freight Traffic: 1974 3 Table 2: Transport Sector Investments Under the 1971-75 Plan 5 Table 3: Estimated Highway Maintenance Expenditures: 1975 11 Table 4: Expenditures for Highways: 1968-74 12 Table 5: Proposals by the Ministry of Planning for Road Sector Investments: 1976-80 13 Table 6: Proposed Road Investment Program: 1976-80 14 Table 7: RAN Traffic: 1970-74 16 Table 8: RAN Income Accounts 17 Table 9: Typical Road and Rail Transport Costs and Rates for General Goods 17 Table 10: RAN Investment Program: 1976-80 19 Table 11: Abidjan Port Traffic: 1969-75 20 Table 12: San Pedro Port Traffic: 1972-75 21 Table 13: Port Investments as Proposed by the Government During 1976-80 Plan Preparation 24 Table 14: Port Investment Program for 1976-80 as Proposed by the Mission 25 Table 15: SITRAM Income Account: 1974 26 Table 16: Summary of Transport Investment Program Proposed by the Mision: 1976-80 43

STATISTICAL APPENDIX TABLES

Table 1: Development of Highway Network: 1961-1974 Table 2: Capacity of Trucking Industry: 1969 and 1975 Table 3: Proposed Road Investment Program: 1976-1980 Table 4: Typical Road Construction and Maintenance Costs

MAP: Transportation - iii -

LIST OF ABBREVIATIONS

AfDB - African Development Bank ARSO - Autorite pour l'Amenagement de la Region du Sud-Ouest ASECNA - Agence pour la Securite de la Navigation Aerienne en Afrique et a Madagascar BCEOM - Bureau Central pour les Etudes d'Outre-Mer (France) CAA - Civil Aviation Agency COMARAN - Compagnie Maritime de l'Afrique Noire DPW - Department of Public Works (in MPWT) EIB - European Investment Bank FED - Fonds Europeen de Developpement ICAO - International Civil Aviation Organization MPWT - Ministry of Public Works and Transport OTAM - Omnium Technique d'Amenagement (France) PAA - Port Authority of Abidjan PRU - Planning and Research Unit (in MPWT) RAN - Regie Abidjan-Niger Railway RTD - Road Transport Division (in MPWT) SETEC - Societe d'Etudes Techniques et Economiques (France) SITRAM - Societe Ivoirienne des Transports Maritimes SNTVM - National Union of Passenger and Freight Carriers SONITRA - Societe Nationale Ivoirienne de Travaux SONAGECI - Societe Nationale de Genie Civil UNDP - United Nations Development Program

CHAPTER 1: INTRODUCTION

A. General

1.01 The Ivory Coast's relatively well-developed transport infrastructure has been instrumental in the spectacular growth performance of the country's economy over the past 25 years. The Government, placing major emphasis on transport investment, has provided reliable and efficient transport infrastructure for the shipment of the country's major export products, in line with its objective of rapid economic growth.

1.02 The transport network of the southeastern region of the Ivory Coast links the area with the port of Abidjan. In this densely populated area, economic development took place initially in agriculture and forestry activities, the products of which were shipped to Abidjan by rail and later over a system of paved roads. Commercial agriculture logically followed forestry activity, and the increasing demand for export products resulted in the densification of the primary road network centering on Abidjan. A similar pattern of development is currently underway in the sparsely populated southwestern region where, in 1971, the deep-water port at San Pedro was opened. The ongoing program of road construction in that area is designed to repeat the process of tapping the latent resource potential and thereby boost development.

1.03 This pattern of growth has served to highlight the regional im- balance between the south and the north, an area which has not been allocated comparable investment funds in the past. As a result, the Government is now conscious of the need to promote a more balanced system of regional development and better income distribution, both of which have important implications in terms of transport investment strategy.

B. Transport in the Economy

Historical Developments

1.04 Over the years, the Government has made vigorous efforts to develop and improve transport, building upon a network linking the main centers whose origins date back to colonial times. Since then there has been considerable upgrading and expansion. In 1975 the network consisted of more than 38,000 km of roads, of which some 2,200 km paved, 640 km of railways, two major seaports, 400 km of navigable lagoons--the rivers are not navigable--two airports of international standard, and eight domestic airfields.

1.05 The development of the transport network of the Ivory Coast has been marked by four major events: (i) the construction of the Regie du Chemin de Fer Abidjan-Niger (RAN) railway which began as early as 1904; (ii) the opening of the Vridi Canal in 1950 and the development of a modern port in Abidjan; (iii) expansion of the primary road network centered on Abidjan; and (iv) the inauguration of the port of San Pedro in 1971. -2-

1.06 The RAN railway, built over the period from 1905 to 1954 and running northward from Abidjan to Ouagadougou in Upper Volta, provided an important link with the interior; it contributed to the growth of small towns along its route, the development of agriculture and forestry activities in the southeast, and ultimately cotton production in the central region. Later, following the development of the Port of Abidjan in the early 1950's, the upgrading and expansion of the road network and the clearing of the forest led to the expansion of export production of coffee, cocoa, palm oil and other crops. In- creased demand for the shipment of these commodities, particularly during the last two decades, has resulted in further upgrading of the road network. Paved roads now link Abidjan with all major centers of population in the southeastern and central regions of the country.

1.07 With the westward progression of forestry and cash crop production during the 1960's, transport costs increased. A logical step in this pattern of development was to provide an export outlet nearer to the new areas of production. The subsequent efforts to develop the southwest, encompassing a port, roads and urban infrastructure, will be a major accomplishment for the Ivory Coast. San Pedro, the country's second deep-water port located some 300 km west of Abidjan, started operations in 1971. Although general cargo traffic has not yet developed as expected, mainly due to delays in the construction of paved roads into the hinterland, the project represents a major effort on the part of the Government to tap the resources of the southwest, which include timber, cocoa, coffee, rubber, palm oil, and iron ore deposits near Mont Klahoyo (Bangolo) some 300 km north of San Pedro. The similarity in development patterns between the Abidjan-Ouagadougou corridor and the area north of San Pedro is striking indeed.

1.08 Through these efforts, transport has not been a bottleneck to development. On the contrary, it has provided a major stimulus to the rapid growth of the Ivorian economy. Furthermore, the three land-locked countries-- Mali, Upper Volta and Niger--using the Ivory Coast as an outlet, have also benefited from the well-developed road/rail system and an efficient seaport; an important share of transport capacity has been allocated to satisfying much of the foreign trade needs of these countries.

Recent Trends

1.09 Funds allocated to transport investment during the early 1960's amounted to about 30 percent of public investment, attesting to its importance in the development of the economy. More recently, in a rapidly growing public investment program, the overall share devoted to transport infrastructure de- creased to about 20 percent, some of the basic needs in transport infrastructure having been met. Due to the wide dispersion of economic activity and the heavy transport requirements of forestry production, the contribution of the transport sector to GDP is fairly high--8 percent during the early 1970's. The transport sector constitutes an important source of employment, and the well-developed trucking industry provides a potential vehicle for the development of Ivorian entrepreneurship. - 3 -

1.10 Roads are the principal mode used for domestic transport and carry about 78 percent of inter-urban passenger traffic and 70 percent of freight traffic. Annual traffic growth has been rapid over the last decade -- 10 percent for passenger traffic and 7 percent for freight traffic.

Table 1: INTER-URBAN PASSENGER AND FREIGHT TRAFFIC: 1974

Passengers Passenger/KmA Average length Passenger Traffic (thousands) % (millions) x of Haul (Km)

Road 18,000 88 3,100 78 172 Rail 2,384 12 850 22 356

Total 20,384 100 3,950 100 194

Tons Ton/Km Freight Traffic (thousands) % (millians) %

Road 5,000 87 1,200 70 240 Rail 750 13 515 30 687

Total 5,750 100 1,715 100 298

Source: RAN and mission estimates.

1.11 As the road network has improved over the years, the role of the railway as a long-distance hauler has been accentuated. Road transport has now captured virtually all short-to-medium distance freight traffic between Abidjan and Bouake and, except for points located directly on the rail route and for bulk transport, rail transport is no longer competitive in this area. However, the railway is basically well-suited to development in the north, and recent Government policy has been to locate new raw-material processing industries within the rail corridor. Moreover, RAN carries about 90% of Upper Volta's foreign trade to the seaport of Abidjan. The railway is also of importance to Mali, particularly its southeast region; in recent years, the Abidjan route has handled about 50 percent of Mali's foreign trade, about half of which was carried by the RAN.

Transport Policy

1.12 A major element in the Government's development policy is to diver- sify the economy. In the agricultural sector, broadening the product base has been emphasized, and special efforts will be made in food crop production in order to limit the food import bill. In industry, more attention is being given to the local transformation of raw materials than to import substitution. Also the policy of achieving more equitable income distribution and of promot- ing more balanced regional development will receive more emphasis. In effect, faced with the growing dominance of Abidjan--the capital, port and center of public administration and commerce--the Government has become increasingly - 4 -

preoccupied with efforts to decentralize economic activities and to break down the present center/periphery relationship. Within a system of development poles represented by the major urban centers, it is hoped that greater regional specialization and the development of market-oriented economic activity on a regional basis will be achieved.

1.13 This policy will entail an important shift in emphasis in terms of transport investment strategy. To support expanded production of cash and food crops, secondary and feeder roads will be needed to complement the existing primary routes. As the planning of such projects requires considerable inter-sectoral coordination and because priorities are less apparent than in the primary network, increasing care will be required in the formulation of policies, programs and project selection in the future. Similarly, the high cost of developing and integrating the northern region underlines the danger of spending large sums of money with little foreseeable economic return. Therefore, transport investments must be planned as integral parts of specific development projects in order to maximize return on investment. These demands will place an increasing burden on subsectoral planning capabilities and on overall coordination and policy formulation in the transport sector.

C. Implementation of the 1971-75 Five-Year Plan

Objectives

1.14 In the transport sector, plan preparation was largely based on the recommendations of the 1969 Transport Survey--financed by UNDP with the World Bank as executing agency--which identified a pipeline of projects for implementation over the 1970-80 period. The main thrust of the program under the 1971-75 Plan focussed on four areas of development: (i) upgrading of the primary road network to meet increased transport demand; (ii) construction of a deep-water port and supporting road infrastructure in the southwest; (iii) further development of the Port of Abidjan for increasing traffic demand; and (iv) modernization of the RAN railway system with emphasis on rehabilitation and realignment of track betwen Agboville and Bouake. All the above priorities are sound and in line with the objectives of rapid economic growth. The 1971-75 Plan, however, also included a few projects of questionable economic justification, like the paving of low-priority b secondary roads in the cocoa circuit and construction of an airport of international standard at Yamoussoukro, the President's hometown about 275 km north of Abidjan.

Plan Evaluation

1.15 Based on actual expenditures incurred between 1971 and 1974 and estimated expenditures for 1975, implementation of the transport plan will have exceeded the initial financial targets by over 20 percent (Table 2). Sector investments as a whole during the 1971-75 period are expected to be on the order of CFAF 53 billion in 1968 prices as against the initial target of CFAF 43 billion, or 22 percent higher. The financial targets were exceeded in all sub-sectors, with a notable 30 percent increase in the railway program. As a whole, the program represents about 22 percent of total public investments planned, with the road program accounting for 50 percent of total sector investments.

1.16 The increase in total sector investments has been due in part to cost overruns, but also to the addition of new projects. A detailed analysis of the road program shows that only about 50 percent of the original proposals will have been implemented during the Plan period. This has been due to: (i) delays in the implementation of projects as demonstrated (a) by Government indecision in the construction of the Man-Duekoue-Yabayo road, (b) in pavement strengthening works, and (c) in delays in construction of the Abidjan-N'Douci road; and (ii) the addition of a number of projects, such as low-priority roads in the cocoa circuit, not initially foreseen in the Plan. Taking into account these additions, approximately 800 km of road will have been upgraded, or about 75 percent of the total initially foreseen. Significant delays have also occurred in the railway subsector. Realignment of the Dimbokro-Bouake line finally started in late 1974, and about 40 percent of the program will now be implemented during the late 1976-1980 Plan. Implementation of only part of the transportation program at considerably higher cost than envisaged for the entire program suggests a serious underestimation of costs during Plan preparation.

Table 2: TRANSPORT SECTOR INVESTMENTS UNDER THE 1971-75 PLAN

(CFAF billion: 1968 prices)

Planned Actual Actual/Planned % Investment % Investment %

Roads 21.0 48.9 25.8 49.0 123 Railways 9.0 21.0 11.7 22.3 130 Ports 8.4 19.5 10.3 19.5 123 Maritime Transport - - 0.1 0.2 - Airports 2.0 4.6 2.4 4.6 120 Civil Aviation 2.6 6.0 2.3 4.4 88

Total 43.0 100.0 52.6 100.0 122

Source: Ministry of Planning and Mission estimates.

Achievements

1.17 Based on developments during the 1971-1975 Plan and the program of ongoing projects, the primary transport infrastructure of the Ivory Coast can be considered generally adequate in that relatively good connections are or will shortly be available between all areas of major economic importance. The densely populated southeastern and central regions of the country are now endowed with a well-developed highway network linking the area with the port of Abidjan. Continuing programs in this area are concerned mainly with the rehabilitation and upgrading of existing paved roads, which are deteriorat- ing under very heavy traffic volumes, and to a lesser extent the provision of key secondary roads to support agricultural development. The main gaps in the trunk road network are found in the southwestern region where the missing road links to the port of San Pedro are now scheduled for completion around 1978. Completion of the program of improvements to the primary network seems justi- V fied and consistent with the Government's development objectives. ,V ,&} 1.18 In contrast to the progress made in implementing the investments identified by the 1969 Transport Survey, not much has been achieved in institutional improvements recommended for the transport sector. This state of affairs is evident in the recent escalation of investment proposals in the sector. Such escalation has resulted in premature investment in certain projects. The only substantive move in this direction has been the reorganization of the Department of Public Works (DPW) for the purpose of strengthening maintenance operations. Still to be accomplished is greatly increasing the capacity for sectoral and sub-sectoral planning, policy formulation, and overall coordination of the transport sector. - 7 -

CHAPTER 2: SECTOR ANALYSIS

A. Roads and Road Transport

General

2.01 Since independence in 1960, the Government has pursued a policy of road improvement on routes where substantial traffic volumes ensured a reasonable return on investments. The improvements were undertaken on a relatively modest basis, amounting to about 100 km of road paving each year, and were implemented without detailed prior economic studies. However, during the latter part of the 1960's when most of the heavily trafficked roads were paved or under improvement, it became evident that further allocation of scarce resources for transport investments should be based on a master plan which would establish priorities and select projects for detailed economic and engineering studies. Accordingly, the UNDP/Bank Transport Survey was undertaken in 1968. At the same time and as an interim measure to ensure continued investment in the road sector, a number of feasibility and design studies were financed as part of the World Bank's First Highway Project. Planning in the road sector during the late 1960's and early 1970's was, therefore, relatively sound and was based on a systematic and rational approach in the identification, preparation, timing and financing of projects.

2.02 Since this period of improved Government road investment policies, reflected in the well-conceived 1971-75 Plan, the situation has deteriorated. The main reason for the decline lies in the inability of the Ministry of Public Works and Transport (MPWT) to analyze the implications of subsequent changes in policy and project priorities during plan implementation. More- over, recourse to suppliers' credits and over-design of infrastructure seem to have become a rule rather than an exception. There is a real need for coordinated investment proposals in the road sector. The Government's recently- initiated updating of the highway master plan by consultants should provide a sound basis for planning and project selection in the sector over the 1976-85 period. Similarly, needs in terms of feeder road improvements will be defined under a general feeder road study which is to begin shortly.

2.03 Road transport demand is estimated at some 3.1 billion passenger-km and 1.2 billion ton-km in 1974, representing respectively 80 and 70 percent of total passenger and freight traffic. The traffic data, secured through traffic studies conducted in 1968-69 as part of the Transport Survey, are currently being updated under the highway master plan study. An analysis of road traffic growth between 1969 and 1975 shows that in 1975 the paved roads converging on Abidjan carried average traffic volumes in the range of from 350 vehicles per day on the stretches farthest from Abidjan to over 4,500 vehicles per day near Abidjan. A number of laterite roads in the vicinity of Bouake and Gagnoa carried relatively heavy traffic volumes ranging from 200 to 350 vehicles per day. By contrast, with the exception of the main route north of Katiola towards Korhogo and the Mali border, and the Korhogo-Boundiali road, traffic volumes on roads in the savannah zone are all less than 90 vehicles per day. As a whole, traffic has increased on the primary road network at an average annual rate of about 10 percent over the period 1969-75, passenger vehicle traffic having increased at 14 percent and truck traffic at about 7.5 percent. Higher growth rates are also in evi- dence on roads paved during this period, indicating the importance of induced traffic. Traffic on secondary roads has increased at a modest growth rate of 7.5 percent per year.

Infrastructure

2.04 The distribution of the road network corresponds well to population densities and to economic activity and potential. The classified road network totals some 15,000 km of all-weather roads, of which about 2,200 km are paved, and about 23,000 km are unimproved tracks (Statistical Appendix, Table 1). Additionally, an undetermined number of tracks in forestry areas have been opened up by lumber companies and partly state-owned agricultural development corporations. Investments under the 1971-75 Plan, in constant 1968 prices, averaged CFAF 4 billion annually during the early years of the Plan period, but show a marked increase to CFAF 6 billion in 1974 and an estimated CFAF 9.4 billion in 1975 1/. These figures emphasize the recent escalation of investments in the subsector. A detailed analysis of the status of project proposals initially foreseen under the 1971-75 Plan indicates that almost 50 percent of the initial program will now spill over into the 1976-80 Plan period, representing an investment of some CFAF 50 billion in 1975 prices.

2.05 The main gaps in the trunk road network are found in the southwestern and central regions of the country. In the southwest, the missing road links to the port of San Pedro (San Pedro-Issia and Yabayo-Gagnoa) are now scheduled to be completed around 1978. Other ongoing programs are concerned with: (i) rehabilitation of certain sections of the primary system which are deteriorat- ing under heavy traffic volumes; (ii) the upgrading of the road north of Katiola towards Ferkessedougou; and (iii) an ambitious expressway construction program between Abidjan and N'Douci. In the past, relatively little attention has been given to the betterment of secondary and feeder road networks.

Road Transport

2.06 The road transport industry is regulated by the Road Transport Division (RTD) of MPWT. For passenger transport, RTD's role is limited services such as vehicle and driver's licensing and periodic vehicle inspection. Freight transport "for-own-use" has been similarly regulated, except that vehicle weights and dimensions are also controlled. The existing regulations have posed no problems to the healthy development of these components of the transport industry. For-hire passenger transport, handled almost exclusively by Ivorian owner-operators, has flourished over the past decade due in part to the dynamic management of the National Union of Passengers and Freight

1/ In current prices, the figures are: CFAF 5 billion for the early years, CFAF 10 billion in 1974 and CFAF 18 billion in 1975. Carriers (SNTVM) and the absence of undue governmental interference. Pas- senger fares--CFAF 3.5 per km on paved roads--have kept pace with costs. Concerning "for-hire" transport for goods, the RTD regulates market entry and fixes tariffs for loads over 3 tons and for hauls exceeding 100 km.

2.07 In contrast to passenger transport, the trucking industry has fared less successfully especially for Ivorian owner-operators and Ivorian-owned small firms who have suffered high bankruptcy rates. In the past this situation appears to have been due to an oversupply of capacity, which created a buyer's market, and to the limited participation of small operators in the more lucrative expatriate-controlled heavy goods transport.

2.08 The Government attempted to solve these problems by instituting entry and tariff regulations aimed at adjusting supply more closely to demand and at ensuring that trucking charges at least covered actual costs. Even though the objectives were sound, the approach adopted by RTD to achieve them proved unsuccessful. Entry regulations failed to achieve the intended results, due principally to: (i) the difficulty in estimating total demand and conse- quently, the number of additional entries to grant; and (ii) the failure to ensure that new entries were employed where the increase in demand occurred. In an attempt to enforce price regulations, the Government established a freight office in Abidjan in 1972. However, the office was boycotted by both merchants and truckers not only because of the tariff regulations, but also because of the fear that the existing work relationships established between merchants and truckers would be broken. The Government was, therefore, forced to redefine the tasks of the freight office, emphasizing its role as a forwarding agent and as a provider of information on road transport. Since the enactment of a decree in September 1973 which made no mention of entry restrictions or policing of tariffs, the freight office has been handling a significant share of freight traffic demand.

2.09 Data provided recently by SETEC (Societe d'Etudes Techniques et Economiques) as part of the updating of the highway master plan study, indicate that overcapacity in the area of general goods transport is not as serious as sometimes suggested (Statistical Appendix, Table 2). Under these conditions, the continued acceptance of lower-than-cost rates by small operators--CFAF 6 to 10 per ton-km compared with operating costs of about CFAF 14--can only be explained by: (i) the lack of necessary managerial and accounting skills on the part of the small operators; and (ii) the financing of truck purchases for them by merchants who subsequently impose low transport tariffs for their goods. The basic problem appears, therefore, as one of providing information on profits to be earned, proper pricing of services, risks involved, and methods and sources of finance. Another factor is that many small operators are also traders, the profits from the latter activity compensating for any transport losses, usually making the overall balance positive. Together with new operators' general lack of information, the abundance of operator-traders tends to explain the continued expansion of general goods trucking. The SETEC data also indicate a chronic over-supply of log truck capacity which is due in part to a recent (1975) decline in forestry - 10 - output. As production in this sector may not entirely return to the levels of two or three years ago, log trucking firms may enter other areas of road transport. Because this requires applications for new licenses, the RTD should be able to exert leverage on a number of firms for increased local participation in the heavy trucking industry.

2.10 The axle-load limit is restricted to 10 tons, but is not enforced; most imported trucks have 13-ton permissible axle loads and are usually over- loaded. The Government is now studying the question of instituting a legal axle load limit of 11 tons following the decision of the European Communities to adopt this level. Such a change would be compatible with the technical standards of the road system.

Highway Maintenance

2.11 The Ministry of Public Works and Transport (MPWT), through its Pub- lic Works Department (DPW),,is responsible for administration of most of the classified network, except for a few road sections located in the San Pedro and Kossou Dam areas which are temporarily under the jurisdiction of special agencies. DPW carries out its highway functions through Headquarters divisions which handle general administration and accounting, equipment, engineering, and periodic highway maintenance (a newly created division), and through seven regional divisions responsible for routine maintenance operations.

2.12 The SETEC study of highway administration and maintenance stressed the necessity of: (i) reorganizing maintenance operations, (ii) training DPW personnel, and (iii) increasing budgetary appropriations for maintenance; these recommendations are now being implemented. Substantial progress has been made in the reorganization of maintenance. The periodic maintenance division now executes regravelling and minor betterment works with its own brigades, while the field subdivisions are now being reorganized to specialize in routine maintenance. Ultimately, the periodic maintenance division will also be responsible for maintenance on paved roads; although this type of maintenance has not yet been practiced to any great extent in the Ivory Coast, there is an increasing need to monitor conditions on newly paved roads, and seal-coating operations are expected to be a more important aspect of road maintenance in the future.

2.13 Maintenance funds have increased steadily at about 7 percent per year from 1968 to 1972. Estimates for the 1975 maintenance budget are as follows: - 11 -

Table 3: ESTIMATED HIGHWAY MAINTENANCE EXPENDITURES: 1975

Average Unit Cost Total Cost Length (km) Traffic CFAF/km CFAF millions

Maintenance

Paved Roads - Routine 2,200 600 vpd 250,000 550 - Additional periodic 150 600 vpd 3,000,000 450

Laterite 10,000 100 vpd 300,000 3,000 4,000

Administration 1,200

TOTAL Maintenance and Administration 5,200

Source: DPW and Mission estimates.

2.14 As part of the "Programme du Nord", the Government has recently purchased five maintenance units for the northern region, representing a 20 to 30 percent increase in highway maintenance capacity. They will be responsible for maintenance and betterment of secondary and feeder roads according to a program to be defined by the relevant subdivision and will be based on the aspirations of the local population. While this type of programming has certain merits in that the local population is more directly involved in the development process, it will obviously lead to a non-optimum allocation of resources and, moreover, may conflict with existing programs. There is therefore an urgent need to organize and program the work of these units on a regional basis. This task, of course, will eventually be covered by the upcoming general feeder road study, which should be implemented as soon as possible.

Financing and Road User Revenues

2.15 Total highway expenditures have averaged about CFAF 6 billion annually over the period 1968-1972. However, total expenditures increased to some CFAF 15 billion in 1974, of which some 70 percent represented new construction under the ongoing road paving program (Table 4). New construction is financed by the public investment budget, through contractor financing, and by loans/credits received mainly from the World Bank Group, France, Italy and the Federal Republic of Germany; about 65 percent of total road investment during the 1971-75 Plan period will have been financed by foreign loans or grants. - 12 -

Table 4: EXPENDITURES FOR HIGHWAYS: 1968-1974 Ia /b (CFAF millions)

1968 1969 1970 1971 1972 1974 /c

Administration 467 520 555 664 819 976

Maintenance financed from: - Road fund 1,314 1,467 1,790 1,550 1,524 3,005 - General Budget 515 533 276 585 1,072 874

1,829 2,000 2,066 2,135 2,596 3,879

Construction 2,736 2,944 1,838 3,395 5,606 10,333

TOTAL 5,032 5,464 4,459 6,194 9,021 15,188

/a Excluding urban roads. lb 1973 data not available. /c Budget estimate.

Source: Road User Tax Study, August 1974, and Loi-Programme 1973 and 1974.

2.16 Road users contribute to Government revenues through annual vehicle registration fees, import duties and value-added taxes on vehicles, spare parts, fuel and lubricants, and two separate taxes on fuel--the "taxe speciale" and the "taxe specifique" 1/. A consultant study on road user charges completed in August 1974 estimated total revenue from these sources at CFAF 12 billion in 1972, of which revenue from fuel and licensing fees accounted for CFAF 10 billion. Although these receipts far exceeded the total road expenditures of CFAF 9 billion in 1972, they are now more in line with the current road maintenance and investment program, with expenditures of CFAF 15 billion in 1974. Through the implementation of a system of performance budgeting for the highway sector, it would be possible to address as a central issue the efficiency of overall highway sector investments and to develop a capacity to plan and implement sound highway programs. Highway projects would compete directly with other investment priorities and might be selected or rejected on the basis of more rigorous project evaluation criteria.

1/ The two taxes add up to CFAF 30 per liter for "regular", with a pump price of CFAF 74 per liter. Import duty and value-added tax are CFAF 2.3 per liter. (Prices valid after increase in March 1974.) - 13 -

Future Investment

2.17 Details of investment proposals as defined by the Ministry of Plan- ning during preparation of the 1976-80 Plan, including ongoing projects initiated under the 1971-75 Plan, are summarized below.

Table 5: PROPOSALS BY THE MINISTRY OF PLANNING FOR ROAD SECTOR INVESTMENTS 1976-80

(CFAF billions, 1975 prices /a)

Actual Proposed 1971-75 Plan 1976-80 Plan

Primary roads 38.9 118.8 Secondary roads 9.1 30.0 Feeder roads 1.0 10.0

Total 49.0 158.8

/a Implicit price index for investment of 100 in 1968 is 190 in 1975.

Much of the program will obviously extend beyond the 1976-80 Plan. The Ministry of Planning has emphasized that final priorities, design standards, and timing of construction will not be defined until the results of the SETEC Highway Master Plan Study are available; recommendations from this study will only become available later in 1976.

2.18 The basic thrust of the proposed program clearly focusses on the paving of roads linking the major urban areas or "development poles" of the country, with a continued emphasis on north-south linkages. International links also figure prominently in the proposals, and while the links with Ghana and Mali appear as viable projects, the proposed links with Liberia (San Pedro- Liberia border and Guiglo-Liberia border) lack economic justification. Con- trary to previous expectations, only limited attention appears to be given to the improvement of domestic east-west routes. With the exception of the ongoing paving of the Yamoussoukro-Sinfra road and the proposed paving of the Toumoudi-Oume road, no specific projects are included for the improvement of secondary routes. However, the Government is forecasting a general investment outlay of CFAF 25 billion for the upgrading and reconstruction of secondary roads. In addition, an investment outlay of CFAF 10 billion is foreseen for the betterment of feeder roads.

2.19 The mission has developed a tentative program of "hard-core" projects for possible implementation over the 1976-80 period (see Statistical Appendix,Table 3 for details). - 14 -

Table 6: PROPOSED ROAD INVESTMENT PROGRAM: 1976-80

(CFAF billions, 1975 prices)

Ministry of Planning Hard-Core Draft Proposal Mission Proposal

Primary roads 118.8 73.3 Secondary roads 30.0 18.1 Feeder roads 10.0 5.0

Total 158.8 96.4

Of course, the ongoing and planned studies may lead to important modifications. However, it is felt that this program provides a balanced distribution of investment among the different categories of projects and is likely to be within the means of the country during the next five years. The program takes full account of ongoing projects (CFAF 51.1 billion out of CFAF 96.4) and those projects currently being considered by lending agencies. In view of the magnitude of these investments, new project possibilities are severely limited during the early years of the Plan. In establishing priorities for road improvements, the mission has attempted to provide a minimum economic justification based on the limited information available. The main factors that have been considered are:

(a) an economic threshold analysis establishing minimum traffic levels for various stages of road improvement which was used in conjunction with preliminary results from the 1975 SETEC traffic surveys;

(b) limited information available on the condition of secondary roads;

(c) needs in terms of greater regional integration with specific reference to east-west linkages in the central and northern parts of the country; and

(d) requirements for improved access within the main agricultural areas.

Cost data are based on estimates provided by DPW which are considered accurate and reasonable; where such data were not available, estimates are based on the typical cost figures shown in Statistical Appendix, Table 4. - 15 -

B. Railways

General

2.20 The Regie du Chemin de Fer Abidjan-Niger (RAN) is jointly operated by the Ivory Coast and Upper Volta. Cooperation between the Governments in the administration of the railway appears to be good.

2.21 In most fields, the management of the RAN can be considered in need of improvement: management information is inadequate; central coordination and planning are weak; quantitative evaluation of investment programs is lacking; and there is little effort towards cost and productivity control. Moreover, a recent attempt to set up a commercial form of organization was not successful. On the other hand, the departments of maintenance, engineering and new construction are well managed. In order to improve both cost- effectiveness and quality of service, the World Bank is considering co- financing a medium-term plan of action which would include: (i) introducing a corporate planning unit to focus on project evaluation and general coordination; (ii) strengthening the day-to-day operations of the railway through the provision of technical assistance; (iii) providing senior advisors to major department heads; and (iv) providing facilities for the training of a large part of RAN's staff at most levels.

Traffic

2.22 RAN carries essentially long-distance freight traffic. As the link with the seaport of Abidjan, RAN is of great importance for land-locked Upper Volta, Mali and Niger. For instance, about 90 percent of Upper Volta's imports and exports are presently transported by RAN. However, RAN accounts for less than 15 percent of the Ivory Coast's total transport volume by weight. This is due to the virtual absence of large quantities of long-haul bulk transport in the Ivory Coast and to the well-developed road transport industry. However, the zone of influence of the railway covers only about 30 percent of the area of the country, within which, therefore, it plays a much more important role than the gross overall proportion of national traffic suggests.

2.23 Passenger traffic, including local Upper Volta traffic, amounted to some 870 million passenger-km in 1974, having increased at about 8.5 percent per year since 1970. This has been accounted for by a 2 percent annual increase in the number of passengers and a 6.5 percent annual increase in the average journey length. In 1974, domestic Ivorian traffic accounted for 71 percent of total passengers and 31 percent of passenger-km. - 16 -

Table 7: RAN TRAFFIC: 1970-1974

Passengers Freight Number Passenger-km Average Haul Tons Ton-km Average Haul (thousands) (millions) (km) (thousands) (Millions) (km)

1970 2,565 625.6 244 756 404.1 535 1971 2,631 700.9 266 801 448.4 560 1972 2,596 777.5 300 872 480.1 551 1973 2,655 827.3 312 922 538.8 584 1974 2,778 867.1 312 750 514.1 685

Average Annual Growth Rate

1970-74 2.0% 8.5% 6.3% -0.8 6.2% 6.4%

Source: RAN

2.24 Freight traffic, in terms of ton-km carried, increased at a rate of 6 percent per annum between 1970 and 1974, with tonnage falling in 1974 to the level of 1970. Domestic Ivorian freight traffic currently accounts for about one-third of the total in terms of tonnage carried and only 17 percent in terms of ton-km.

Finances and Investment

2.25 During the last few years, RAN's financial performance has been rather poor. Operating revenue is expected to double over the period 1970-75, due inter alia to several tariff increases which accumulate to 46 percent for passengers and 27 percent for freight. Operating costs have increased over the same period in a pattern roughly parallel to operating revenue, despite an average annual growth of staff productivity of more than 4 percent. Staff costs per man employed, however, increased during the same period by 58 percent and will reach about CFAF 900,000 per head in 1975. Fuel and other material costs increased even faster due mainly to rapid inflation. Due to higher energy costs since the oil crisis, the proportion of fuel to total expenditures has increased from 6.5 to 12 percent. - 17 -

Table 8: RAN INCOME ACCOUNTS (CFAF million)

1970 1971 1972 1973 1974 /a 1975 /a

Operating revenue 4,061 4,562 5,151 6,093 6,868 8,238 Cash outgoing 3,486 4,196 4,488 4,926 5,968 7,310 Cash generation 575 366 663 1,167 900 928 Depreciation 696 757 810 998 1,127 1,299 Total operating expenditures 4,182 4,953 5,298 5,924 7,095 8,609 Net operating revenue /b (loss) (121) (391) (147) (169) (227) (371) Government subsidies 233 231 251 290 320 431

/a Estimates only. /b Before interest charges (not available) and Government subsidies.

Source: RAN.

The next table shows some typical road and rail costs and tariffs in 1975:

Table 9: TYPICAL ROAD AND RAIL TRANSPORT COSTS AND RATES FOR GENERAL GOODS

Freight: CFAF/ton-km Passengers: CFAF/pass.-km Road Rail Road Rail

Average cost 11.5 /a 10.0 /b 2.0 /a 4.0 /b Official tariffs 15.0 7.4 /c 3.5 3.7 /c Rates practiced 7.0-12.0 7.4 /c 3.5 3.7 Ic

/a For 20-ton tractor trailer and 24-seat mini-bus under normal operating conditions. /b Average costs. Ic Average revenue.

Source: Directorate of Road Transport, RAN, and mission estimates.

2.26 During the last five years, RAN's investment was mostly concerned with realignment of track on the Abidjan-Bouake section of the railroad. Investment in motive power included the purchase of seventeen 1,800-hp locomotives, while priority for rolling stock was apparently given to increasing passenger transport capacity higher than freight capacity. The ongoing program of investments beyond 1975 includes the completion of track rehabilitation between Dimokro and Bouake at an estimated cost of CFAF 2.3 billion (1975 prices), and the purchase of locomotives, railcars, and second-class passenger coaches totalling CFAF 5.2 billion. - 18 -

2.27 Investments under the 1971-75 Plan averaged CFAF 3.5 billion annually of which about 40 percent was allocated to track modernization, and a further 40 percent to purchases and renewal of locomotives and rolling stock. Of the total program about 40 percent or an annual average of CFAF 1.4 billion has been financed from RAN revenues as part of the normal renewal program. Normally, 60 percent of the costs of maintenance and improvements to infrastructure are covered by grants from the Government, or through foreign loans on which debt is served by the Government. New construction is entirely at the expense of the Government.

Future Investment

2.28 The RAN has drawn up a major investment program for which no economic analysis or justification was available at the time of the mission's visit. As a whole, the program is very ambitious and reflects RAN's policy of overcoming operational difficulties with heavy capital investments rather than improvements in operations and maintenance standards. The main thrust of the program is the completion of the ongoing program of track realignment to Bouake and the modernization of the only remaining low-standard section between Bouake and Tafire. Other projects in the program include proposed double tracking from Abidjan to Bouake, the relocation of workshops and offices in Abidjan, the construction of a new switch-yard, and the purchase of motive power and rolling stock for both freight and passengers.

2.29 The program as a whole, including ongoing projects, would cost CFAF 95 billion at 1975 prices. Aware of the impossibility of financing such a huge program over the next five years, RAN has established, largely on a qualitative basis, different degrees of priority. The core program, known as "prioritaire", will still cost CFAF 52 billion, excluding the ongoing projects which are valued at CFAF 7.5 billion. The main items of the priority program include: (i) the Bouake-Tafire realignment; (ii) the doubling of track between Abidjan and Yapo; (iii) the transfer of workshops and yards from Abidjan to Abobo; (iv) a program of motive power and rolling stock procurement; and (v) the construction of a new double-track line serving the proposed Abidjan port extension in the Banco area.

2.30 Of the projects included in the program, the mission considers that priority should be given to modernization of track between Bouake and Tafire, and the procurement of rolling stock and motive power for freight traffic. A 1976 World Bank preappraisal mission considers that if realignment is not carried out, the whole section would have to be rehabilitated, at least partly during the 1976-80 period, and partly during the 1980's. However, while RAN envisages the realignment of virtually the whole 170-km section, the mission considers that a more modest solution, comprising mainly realignment, but also with an important share of rehabilitation, would be technically feasible. This type of solution would probably result in essentially the same level of benefits and hence bring a higher return on investment.

2.31 RAil management maintains that the railway is at present losing traffic due to a lack of sufficient equipment, principally main-line locomotives. Efforts to improve the railway's managerial and operational efficiency - 19 - may eventually remedy this to a certain degree but will not have a major impact on the availability of locomotives and wagons in the short run. Other investment proposals in the RAN program must be given much lower priority. In effect, preliminary analysis shows that no capacity constraints will exist on the section between Abidjan and Yapo in the next 10 years, and, as such, doubling of the track on this section would be difficult to justify. Similarly, only low priority can be given to the costly removal of workshops and yards to the Abobo area. A start on this project, which possibly implies double tracking as far as Abobo, might be made towards the end of the plan period. Construction of a new line serving the proposed Banco extension of the Abidjan port also deserves relatively low priority, as port operations in this area are not expected before the 1980's; double tracking of this extension would not appear to be justified.

2.32 Based on these considerations, the mission estimates that the RAN program is unlikely to be allocated more than CFAF 35 billion over the period 1976-80, including the ongoing projects estimated at CFAF 7.5 billion. The program is summarized and compared with RAN proposals in Table 10.

Table 10: RAN INVESTMENT PROGRAM: 1976-80 (CFAF billions, 1975 prices)

RAN Proposal Mission Priority Optional Complementary Total Estimate

Infrastructure 24.2 7.7 5.9 37.8 13.0 Buildings 7.3 7.9 7.1 22.3 2.0 Equipment 18.8 5.1 - 23.9 11.3 Miscellaneous 1.8 1.7 - 3.5 1.0 Ongoing _ 7.5 7.5

Total 52.1 22.4 13.0 95.0 34.8

C. Ports and Waterways

General

2.33 The Ivory Coast has two deep water ports, one at Abidjan and the other at San Pedro, about 300 km west. Abidjan is the country's main commercial port and currently handles some 6 to 7 million tons of traffic annually. The port has generally expanded in unison with traffic growth and has been a powerful influence in the development of Abidjan as a city and indeed of the whole of the Ivory Coast. The port is also of considerable importance to Mali, Upper Volta and Niger. The port of San Pedro was inaugu- rated in 1971 with the aim of opening up the potentially rich southwest. - 20 -

2.34 The navigable waterways of the Ivory Coast (lagoons and river mouths) total about 400 km in length and are used mainly for transport of logs in rafts and, to a much lesser extent, bananas and pineapple. Until operations were ceased in 1971, manganese ore was barged from a mine near Grand Lahou on the coast.

Port Operations

2.35 The Abidjan port is operated by an autonomous agency, the Port Autonome d'Abidjan (PAA). It has 22 berths for general cargo, four specialized ones for handling fertilizer, ore, oil, and petroleum products, as well as facilities for handling bananas and timber. Traffic has increased at some 7 percent per year since 1965, reaching 6.6 million tons in 1974 of which 3.3 million tons was general cargo. Dry cargo traffic has developed very rapidly over the period, increasing at about 10 percent per year. In 1973 container traffic amounted to 207,000 tons representing 8 percent of total general cargo traffic; in 1971 this was only 4 percent.

Table 11: ABIDJAN PORT TRAFFIC: 1969-1975 (1,000 tons)

1969 1970 1971 1972 1973 1974 1975

Logs 2,013 1,560 1,616 1,623 1,774 1,408 1,010 Petroleum 943 959 1,015 1,358 1,492 1,618 1,625 Clinker 359 371 478 500 482 n.a. n.a. Manganese 5 94 16 negl. negl. negl. negl. Banana/Pineapple (fresh) 167 181 193 234 205 240 219 Fish 26 24 29 36 24 12 10 General Cargo 1,560 1,830 1,859 1,973 2,289 3,318 3,197 Container Cargo negl. negl. 81 103 1207 '__

Total 5,073 5,019 5,287 5,827 6,473 6,597 6,062

n.a. = not available negl. = negligible

Source: Port Authority of Abidjan.

2.36 The port of Abidjan which operates for about 18 hours per day for 300 working days per annum has a good record in that in general there is very little ship waiting time. The average berth occupancy rate is about 75 percent and the annual productivity of the general cargo berths is about 140,000 tons, if due allowance is made for bulk movements. While this throughput can be considered satisfactory, berth productivity levels could be increased by introducing three 8-hour shifts and by overcoming minor operational problems. On the whole, however, the port is operated efficiently. In effect, the role of the port authority is restricted to overall coordination and to the provision of infrastructure and superstructure necessary for port operation. The actual day-to-day operations of the port are in the hands of a number of large and - 21 - efficient forwarding agents whose interests are to ensure maximum efficiency throughout the whole transport chain.

2.37 Financially, the port's performance is good. Detailed information was not available to the mission, but port revenues are estimated at CFAF 2.5 billion; in the past about 50 percent has usually been earmarked for investment in warehouses and utilities, while major construction work is usually financed by foreign loans and funds provided by the Government. Existing port charges for piloting, berthing, taxes on goods, and rentals on land, buildings and equipment are comparable with those of other ports on the West African Coast.

2.38 The San Pedro port was constructed over the period between 1969 and 1971 as a deep-water port serving the southwest. The port handled 1 million tons of traffic in 1973 comprised almost entirely of logs, but the total throughput declined in 1974 due to a 25-percent reduction in timber exports.

Table 12: SAN PEDRO PORT TRAFFIC: 1972-1975 (1,000 tons)

1972 1973 1974 1975

Logs 850 986 738 824 Petroleum 10 11 15 16 Palm Oil negl. negl. 10 14 General Cargo 6 20 57 80

Total 866 1,017 820 934

negl. = negligible Source: Port Authority of San Pedro.

2.39 Present facilities at San Pedro include 6 mooring buoys for log traffic and two general cargo berths. However, general cargo traffic has not developed as forecast, mainly because access routes are still under construction and the berths have remained underutilized. On the other hand, the region offers sizable potential and the port can be expected to handle substantial increases in traffic during the next ten years.

Investment

2.40 Port investment in Abidjan during the 1971-1975 Plan has been focussed mainly on improving access to the port and dredging operations in the Vridi Canal (with financial aid from the European Investment Bank and the African Development Bank), and the construction of four general cargo berths on reclaimed land in the Vridi area. Total investments over the period 1971-1975 amounted to an anual average of CFAF 2.5 billion of which just less than one-half was concerned with basic infrastructure, the remainder being applied to the construction of warehouses and supporting facilities. Investment in the port of San Pedro took place mainly between 1969 and 1971 at a total cost of some CFAF 4.5 billion of which only CFAF 1.2 billion was incurred under the 1971-75 Plan. Development since 1972 has been in supporting facilities such as warehouses and roads; total investment under the 1971-75 Plan will have amounted to about CFAF 2 billion. - 22 -

Future Development

2.41 The short-to-medium term expansion program currently envisaged by the Port Authority of Abidjan (PAA) appears realistic and reasonably well- tailored to meeting the expected increases in general cargo traffic. Present plans foresee the construction within the next two years of two container berths in the Vridi area on the only available land in the present site at a cost of CFAF 3.5 to 4 billion. The proposed berths preclude previous plans to construct five general cargo berths, and assuming a containerization rate of 25 percent, they should be able to accommodate increases in general cargo traffic up to 1980.

2.42 Further development of the Abidjan port involves moving out of the present site. It would appear that three basic options exist:

(a) the Banco (Locodjo) area lying across the Ebrie Lagoon to the northwest of the existing site. Development in this area would tie in with proposed urban development but would probably require relatively large quantities of earthworks, as the terrain rises rather sharply behind the proposed port area;

(b) the Ile Boulay, lying west of the present site, provides ideal conditions for port construction. However, access to the island would require major construction works in the form of a bridge or causeway; and

(c) the inland side of the littoral west of the Vridi Canal which would again appear to offer relatively good conditions for port expansion. This option would require access across the canal, probably in the form of a tunnel.

2.43 The PAA favors the Banco solution although no detailed studies have been undertaken on the three options. Present plans foresee a start on a first phase of expansion in the Banco area towards the end of the 1976-1980 Plan. The estimated cost of this first phase would be around CFAF 6 billion in 1975 prices and would cover the construction of two container berths and a general cargo berth for operations in about 1981. The ultimate capacity of the Banco area would include an additional 10 berths for container or general cargo traffic, a mineral terminal, and a new fishing port. As an alternative to a start on extensions in the Banco area during the 1976-1980 Plan, the mission recommends that consideration might be given to converting existing general cargo berths to container facilities on the existing site. The overall strategy to be followed and the timing of investment would depend upon: (i) developments in traffic and particularly the amount of diversion to San Pedro following the completion of access routes; (ii) the extent to which port productivity could be improved; and (iii) future levels of containerization. Moreover, as there is hardly any waiting time of ships in the port of Abidjan, while a certain amount of waiting time would be normal in an optimum situation, there may have been an overinvestment in port capacity. - 23 -

2.44 In contrast to the Abidjan port, the Port Authority of San Pedro foresees a major program of expansion during the next six years. This program includes the construction of two general cargo berths in the existing site, and four specialized berths in the East Basin, two for cement/clinker and two for paper-pulp. A mineral wharf is also foreseen along the coast to the east of the port to cater to the Mont Klahoyo iron ore traffic: this installation would be financed by the mining consortium. Inherent in the problem of planning for San Pedro port are uncertainties concerning the level of traffic diversion following completion of the access routes in 1978, and the amount of industrial development and construction activity in the San Pedro area. These problems are also compounded by technical difficulties facing any major expansion of the port; the two alternatives, which involve either moving out to sea or excavation of an inland basin, are both likely to be very costly. Current investment proposals for both ports are summarized in Table 13. - 24 -

Table 13: PORT INVESTMENTS AS PROPOSED BY THE GOVERNMENT DURING 1976-80 PLAN PREPARATION (CFAF billion - 1975 prices)

Project Nature Investment Project Status

PORTS

Port of Abidjan

2 container berths Vridi extension 3.5 Studies completed a/ Banco extension New berths 6.0 b/ Miscellaneous Signals/dredging 0.5

Total Port of Abidjan 10.0

Port of San Pedro

2 general cargo berths Construction 3.2 Studies completed c/ 2 clinker/cement berths Construction 2.4 Studies completed d/ 2 paper pulp berths Construction 2.2 Studies unavailable e/ Miscellaneous Supporting infra. 1.3

Total Port of San Pedro 9.1

TOTAL PORTS 19.1 a/ Proposed construction of 2 container berths (400 m) on only available land in present site precludes previous plans to construct five general cargo berths over period 1976-1980. b/ First phase of major port extension in Banco area would include 2 container and 1 general cargo berths for operation in 1981-82. Total cost of first phase estimated at CFAF 6 billion at 1975 prices.

c/ Construction of 2 general cargo berths (400 m) adjacent to existing berths originally foreseen in 1975. Part of construction material will come from dredging of East Basin (CFAF I billion), site of future port extension.

d/ Size and timing of projects are dependent upon industrial development.

Source: Port Authorities of Abidjan and San Pedro.

2.45 In view of the uncertainties with regard to traffic developments and the costly technical options open to future development at both ports, the mission recommends that a comprehensive port study concerning medium and longer- term investment plans should be considered at the earliest possible time. Pending the results of a detailed analysis of traffic growth, including the rate of containerization, and of the potential for increased productivity, - 25 - investment should be limited to the construction of the two container berths at Abidjan. The mission feels that total investment in port facilities during the 1976-1980 Plan is unlikely to exceed CFAF 13 billion at 1975 prices. A tentative program is summarized in Table 14 below:

Table 14: PORT INVESTMENT PROGRAM FOR 1976-1980 AS PROPOSED BY THE MISSION

CFAF million: Port of Abidlan 1975 Prices Start of Construction

Two container berths 4,000 1976 Banco extension or conversion of existing berths to containers 2,500 1980 Miscellaneous (lighting in harbor) 500 1976

Total Abidjan 7,000

Port of San Pedro

Two General Cargo Berths 3,200 1977 Clinker/cement berth 1,500 1979 Miscellaneous (road access to East Basin) 1,300 1977

Total San Pedro 6,000

TOTAL PORTS 13,000

2.46 About CFAF 7 billion would apply to extensions at Abidjan including: (i) the construction in 1976 and 1977 of the two container berths; and (ii) a start on extensions in the Banco area or the conversion of existing general cargo berths for container traffic. Based on the existing budget and capacity to invest, the port authority considers that these relatively modest extensions could be financed out of port revenues. For the San Pedro port, traffic developments in the form of processed wood, agricultural products, and other general cargo will probably require the construction of two additional general cargo berths before 1980; the exact timing of this extension will depend on the estimated importance of traffic diversion following completion of access routes in 1978 and the development of timber processing capacity. Other needs during the plan period are likely to be limited to the provision of a specialized berth in the East Basin to handle imports of cement or clinker.

D. Maritime Transport

General

2.47 Ivorian involvement in maritime transport has increased in importance over the past few years and the Government currently attaches a relatively high priority to the development of the local maritime transport - 26 - capacity. There are at present two local shipping lines--COMARAN which is entirely private and SITRAM which is a semi-public enterprise 1/. COMARAN currently operates six vessels and has plans for acquiring a further four vessels over the next five years.

2.48 SITRAM was created in 1967 through a merger between two small Ivorian firms with a fleet comprising one refrigerated banana ship and two cargo ships, one of which was on dry lease. State ownership in the company increased to 60% in 1970, the remainder being held mainly by the French shipping lines, Delmas Vieljeux and Compagnie Fabre. In 1975 the fleet comprised eight cargos and two refrigerated vessels, all of which are company-owned, and five vessels on lease, of which three are refrigerated. All of the vessels have been purchased second-hand; the average age is about 16 years, and while most are almost fully written-down, operating costs are relatively high.

2.49 SITRAM's operating revenue amounted to CFAF 7.3 billion in 1974, of which 88% was provided by revenues from cargo traffic. Over the same period, operating costs were of a similar order of magnitude. The accounts for 1974 are summarized in the next table.

Table 15: SITRAM INCOME ACCOUNT: 1974

CFAF Millions

Operating Revenue 7,309 Operating Expenses 7,013 Cash Generation 296 Depreciation 345 Total Operating Expenses 7,358 Net Operating Revenue (loss) (49) Interest charges 134 Government Subsidy 100 Net Surplus (loss) (83)

Source: SITRAM.

Although SITRAM showed a small operating loss during 1974, the overall financial results are rather satisfactory.

Objectives

2.50 SITRAM has a very ambitious program of expansion over the next five years with a basic objective of capturing 15 to 20 percent of Ivorian maritime traffic, as against only 3 percent in 1974. For expansion and replacement SITRAM would buy 19 new vessels before 1975 and 1980. The Government considers

1/ SITRAM became a 100 percent state enterprise in 1976. - 27 -

that the program is justified on the basis of its: potential savings in foreign exchange, influence on the level of freight rates, and promotion of exports. While these objectives are basically sound, the mission considers that the strategy currently proposed does not sufficiently take into account other needs of the economy and should be considered within a more modest framework. Obviously, major expansion would ultimately be required in order for SITRAM to achieve the necessary economies of scale in connection with its 17 countries and 51 ports. Similarly, until the line is able to control a significant share of traffic, it will be unable to exert any important leverage on freight rates. On the other hand, rapid expansion implies heavy investment, and also introduces problems in relation to qualified local personnel which, together with repayments of expensive suppliers' credits and high energy cost, would tend to negate to a certain extent the important balance-of-payments aspect. Clearly, these are relatively long-term objectives which should not be attained within a period of just a few years. In addition, the Government also plans to establish a Marine Academy for the purpose of training officers and crew for the Ivorian merchant marine at an estimated cost of CFAF 4.5 billion, excluding costs of operation. A large share of the cost of this academy must clearly be ascribed to the SITRAM operation.

Proposed Strategy

2.51 The mission recommends that expansion should be limited to those areas where demand is assured, such as in the transport of bananas and palm oil. A possible program might include (i) the replacement of half of the eight vintage company-owned cargos with new vessels in the 12-15,000-ton class, (ii) three refrigerated vessels for the transport of bananas, and (iii) an 8,000-ton tanker for palm oil. This would imply a total investment of about CFAF 20 billion of which under certain conditions CFAF 3.5 billion could be provided by the Government. Based on this program, the Government's contribution to financial charges on loans can be roughly estimated at CFAF 2.5 billion over the same period. Requirements for officers and crew would continue to be met mainly from abroad. Alternatively, the Government as part of its Ivorianization policy could consider reducing its direct financial involvement in SITRAM and put more emphasis on investments in training facilities for Ivorian officers and crew. 1/

1/ As SITRAM is now a 100-percent state enterprise, the state will probably have to participate 100 percent, unless the decision is reversed and private Ivorians and foreigners are found willing to participate. - 28 -

E. Airports and Air Transport

General

2.52 The air transport network includes two airports of international standards at Abidjan and Yamoussoukro, and eight regional airports served by Air Ivoire, the domestic airline. Only three of the airports--Abidjan, Yamoussoukro and Bouake--have paved runways, the other seven having laterite runways and very little in the way of navigational aids. However, all the airports can accommodate the YS-II turboprop aircraft operated by Air Ivoire, although payload restrictions have to be imposed at a number of locations. The nine most important airports are operated by ASECNA (Agence pour la Securite de la Navigation Aerienne en Afrique et a Madagascar). Other public airports and a number of smaller airfields are managed by the Civil Aviation Agency (CAA), under the Ministry of Public Works and Transport. On the whole, airport facilities are efficiently managed, although the CAA is considerably understaffed. In 1974, traffic volumes at the Abidjan airport were on the order of 420,000 passengers; traffic at the regional airports varied from 20,000 passengers annually at San Pedro to only 200 passengers at Odienne, the main regional facilities being San Pedro, Bouake, Korhogo, and Man.

2.53 Airport investment during the last five years has been mainly concerned with the costly conversion of the Yamoussoukro airport to international standards (about CFAF 1.7 billion), and the expansion of terminal facilities and parking options at Abidjan (about CFAF 1.1 billion). Little attention has been paid to the improvement of regional airports. Few investments have been the object of prior economic justification, and the construction of a 3,000- meter paved runway at Yamoussoukro to accommodate DC 10 aircraft, both day and night, would be particularly difficult to justify on economic grounds. The ongoing and proposed program includes: (i) the completion of improvements at Yamoussoukro, including a regional radar facility also to be used for Abidjan airport (CFAF 1.5 billion); (ii) the strengthening and extension of the runway at Abidjan to 3,100 meters to accommodate Boeing 747 aircraft (CFAF 5 billion); (iii) runway extension of domestic airports; (iv) the relocation of airports at Man and Daloa; and (v) the creation of 15 new domestic airports to standards comparable to existing facilities. Clearly, the scope of the program is vast 1/ and it appears inconsistent with the limited domestic air transport potential of the Ivory Coast. As in the case of past airport investments, no quantitative economic analyses underlie the investment program.

2.54 The mission considers that the proposed extension of the Abidjan airport appears unjustifiable unless it is possible to forecast a major influx of tourists necessitating the frequent use of large-capacity aircraft.

1/ Recent statements of the Government indicate that an expansion program for Abidjan is envisaged between 1977 and 1982 at a cost of CFAF 40 billion. Doubling of the runway seems to be part of it. - 29 -

Of the airlines serving Abidjan, only a few operate Boeing 747s and it is unlikely that such aircraft will be used on their low-density West African routes in the near future; Pan American Airways may prove to be the only exception with the new lower-payload Boeing 747SP. The mission would therefore recommend that investment at Abidjan be limited to the strengthening of the existing runway, and to meeting the current ICAO (International Civil Aviation. Auth6rity) requirements. Extensive investment in domestic airports would also appear difficult to justify and priority should be given only to improving or relocating airports at which Government-owned Air Ivoire is currently experiencing operating difficulties. This program might include the relocation of the MIan airport and a start on a first stage of improvement or relocation of the San Pedro Airport. Based on these considerations, the mission feels that a total investment allocation of CFAF 5 billion should be adequate for airport infrastructure during the 1976-1980 Plan; this would be comprised of CFAF 2 billion for Abidjan, CFAF 1.5 billion for Yamoussoukro (on-going improvements), and CFAF 1.5 billion for other domestic airports. Users of civil airport facilities contribute some CFAF 400 to 500 million each year to the construction and maintenance of airports; as such, about 40% of the investment program could be financed through user charges accruing to ASECNA.

Air Transport

2.55 Reflecting the good surface transport infrastructure, domestic air transport in the Ivory Coast is relatively insignificant in terms of volume, but performs a useful function in meeting a specialized demand from execu- tives and tourists. Air Ivoire carried 51,000 passengers and 400 tons of freight in 1974, representing increases of 20% and 9% respectively over traffic in 1974. The airline currently operates two YS-II turboprops (55 seats), one DC-3 and two small 5-seat aircraft (Aztec and Baron). While scheduled services are provided to eleven airports, the four routes linking Abidjan with San Pedro, Bouake, Korhogo and Man, account for over 80% of total traffic. Load factors are currently on the order of 60% but aircraft utilization is very low, being less than three hours per day for the two YS-IIs.

2.56 In recent years, Air Ivoire has shown a modest profit on turnover volume of about CFAF 20 million, but this was reduced by 50% in 1974 following a major increase in operating costs. The present situation is one of unstable equilibrium because revenues do not generate a sufficient margin to allow for renewal of aircraft. Recent experience with fare reductions has confirmed the inelasticity of domestic air traffic in that lower fares did not induce significant traffic increases. Fares were increased in 1974 by 20%, the first increase since 1969, but they were not sufficient to offset the rise in operating costs. Changes in fare structure should therefore be considered an urgent matter at the present time. - 30 -

2.57 Aircraft purchased by the Government over the past five years include: (i) the two YS-IIs acquired from Air Ivoire (CFAF 400 million); and (ii) a Grumman Gulfstream business jet for Government use (CFAF 1.6 billion). Recently two Fokker F-28 jet aircraft have been purchased by the Armed Forces. The purpose behind this order is not clear as the Armed Forces currently operate two F-27 turboprop aircraft with a low rate of utilization. However, the mission understands that these aircraft may be assigned to Air Ivoire, a situation which would imply considerable overcapacity, as the airlines existing fleet is underutilized, and the possible paving of runways at key domestic airports unless the aircraft are adequately equipped with ground protection kits. The management of the airline is not in favor of such a scheme in view of their existing excess capacity which is considered adequate to meet demand up to 1980. - 31 -

CHAPTER 3: DEVELOPMENT STRATEGY AND INVESTMENT PRIORITIES

A. Future Orientation

3.01 In preparing the 1976-1980 Plan, the methodology was changed from a sector approach to one of "planning-by-objectives". This implies estimating investment on a cross-sector basis according to each specific objective. While this type of planning has significant merits, Government services do not appear to have the necessary capacity to implement it successfully; it requires considerable discipline and, moreover, a high degree of coordination at a sectoral level.

3.02 During the mission's meetings with the Government in 1975, it was evident that at that time there had not yet been enough coordination in plan preparation between the Ministry of Planning, the DPW and the various bodies responsible for initiating transport investment plans. As such, future investment proposals at the time of the mission consisted basically of project lists prepared by DPW, RAN and the Port Authorities, with little in the way of discussion or arbitration having taken place. Officials at the Ministry of Planning fully realize that the resulting project proposals exceeded the country's means and that a "hard core" of priority projects must be selected for the 1976-80 Plan. Current transport sector investment proposals can therefore only be considered as simple project listings, with possible implementation extending beyond the next five-year plan to a period of 10 and sometimes 15 years.

3.03 In determining future priorities and the size of the investment program, consideration should clearly be given to the following:

(a) the importance of ongoing projects and projects currently being considered by the Government and financing agencies;

(b) the merits of the remaining projects recommended by the 1969 Transport Survey not covered in (a);

(c) new investment needs with particular reference to Government objectives for diversification and expansion of the economy, and emphasis now placed on better income distribution, more balanced regional development and greater regional integration; and

(d) financial resources available.

Ongoing Projects

3.04 Due to delays in implementation, a large number of projects will now continue into the 1976-80 Plan. In the primary road sector, these projects - 32 -

include: (i) the San Pedro-Issia road with financial aid from FED and EIB; (ii) the Yabayo-Gagnoa road financed under the World Bank's Fourth Highway Project; (iii) rehabilitation of paved roads in the southeast comprising 110 km tinder the World Bank's Third Highway Project and 200 km under the Fifth Highway Project; (iv) construction and realignment of the Anyama-Agboville and Anyama-Adzope roads under the Fifth Highway Project; (v) the paving of the Katiola-Korhogo-Ferkessedougou road, financed locally; and (vi) the Abidjan-N'Douci expressway financed under a Swiss supplier credit. Ongoing projects in the road sector as a whole account for a total investment of some CFAF 51 billion at 1975 prices to be carried forward into the 1976-80 Plan. In the other sub-sectors, programs include: the completion of railway track modernization between Dimbokro and Bouake, which at 1975 prices will account for CFAF 2.3 billion during the 1976-80 Plan, railway equipment purchases estimated at CFAF 5.2 billion, and the completion of improvements at the Yamoussoukro airport, including the provision of a regional radar facility estimated at CFAF 1.5 billion.

3.05 In addition to the above programs, a number of projects are currently being considered by the Government and lending agencies for possible financing during the 1976-80 Plan. In the road sector, feasibility and design studies have been completed for the Daloa-Issia route and two international roads, namely the Ouangolodougou-Mali Border road and the Accra-Abidjan link; all three projects are being considered for AfDB financing, overall construction costs being estimated at CFAF 11.3 billion. Finally, in the railway sector the World Bank is considering assistance in the track rehabilitation/ modernization program between Bouake and Tafire, in the procurement of motive power and rolling stock, and in the provision of training facilities.

3.06 It is therefore evident that much of the 1976-80 Plan will be pre- empted by ongoing programs and projects under examination. In effect, the total investment implied by these projects can be estimated at about CFAF 80 billion in 1975 prices; at constant prices this represents about 80 percent of public investment in the transport sector during the current five-year plan. The magnitude of this investment suggests that new investment possibilities will therefore be precluded to a great extent, particularly during the early years of the Plan.

3.07 Obviously, in determining new project possibilities and priorities, the merits of the remaining projects recommended by the 1969 Transport Survey should be investigated. In effect, this has been the basic approach followed by the Government in drawing up project lists for future investment. However, probably due to a lack of technical and economic data, it appears that not all projects have been reviewed in the light of changed economic conditions since the 1969 recommendations. A review of these projects was undertaken by the mission and was described in the preceeding chapter. The review indicated that a number of projects must now be considered as redundant following program changes and transport network development. Moreover, it is necessary to emphasize the dangers in limiting such a review to new project possibilities in the light of emphasis now placed by the Government on greater regional development. - 33 -

Investment Strategy

3.08 Investments under the 1971-75 Five-Year Plan are predominantly aimed at improving the primary network. The program is characterized by (i) the rehabilitation and upgrading of the primary transport network centered on Abidjan with the main objective of reducing transport costs; and (ii) the construction of a deep-water port at San Pedro together with supporting road infrastructure. This program of improvements will be completed by the middle part of the 1976-80 Plan and, at that time, it can be considered that the basic needs in terms of the primary network will have been met.

3.09 Beyond the provision of the basic primary network under the ongoing program, emphasis should now be placed on:

(a) the improvement of east-west secondary routes to complement the north-south linkages and to stimulate the development of regional economies; and

(b) the provision of secondary and feeder roads to complement the primary network and to stimulate diversification and further development of cash and food crops.

3.10 This strategy, which is expected to form a basic element in the medium- and longer-term investment policy in the transport sector, should not preclude the continued rehabilitation and upgrading of the primary network where this is warranted by traffic growth. In the short term, primary network investments will be necessary for RAN's continued track modernization and equipment renewal program and for work on the port of Abidjan and San Pedro to meet expected increases in traffic. Nevertheless, a special effort is called for to concentrate resources on intra-regional transport needs in line with investments in primary production.

3.11 Transport development in the densely populated southeastern region and parts of the central region, which account for the bulk of the export production of timber, coffee, cocoa, palm oil, cotton and the like, will be one of providing continued support to earlier development efforts. Emphasis in the southwestern region will first be on completion of basic primary infrastructure within the hinterland of the port of San Pedro. Secondary and feeder road programs will be required in the medium term. Finally, transport investment in the northern region, where development of resource potential is a slow process, will be relatively modest as only an integrated approach can meet the Government's objectives here. The basic problem will be one of providing a minimum transport infrastructure to further develop livestock and cash and food crop production. It is expected that transport investment in the north will be oriented towards secondary and feeder road programs implemented as integral parts of specific agricultural projects. The upgrading of key east- west routes linking the region with the Bouake-Ferkessedougou axis should help integrate the region within the economy as a whole. - 34 -

3.12 In short, it is expected that beyond the ongoing program of improvements to the primary network, transport investment will be increasingly oriented towards improving access within the main agricultural regions. This also happens to be consis,tent with the Government's increased emphasis on processing of local raw materials in the areas of production. Such orientation will play an important role in supporting further expansion in the agricultural sector and, along with other inputs, will contribute to improved income distribution. This strategy underlines the need for considerable care in the selection of projects and the definition of priorities, and for greatly reinforced sectoral coordination and subsectoral planning. Weakness of the latter has constituted a central problem in the transport sector (and in other sectors as well) and is responsible for the absence of sound guidelines and well-defined programs for future investments. Stemming directly from the lack of planning and coordination are many of the basic issues to which attention has been drawn in the sector analysis.

B. Policy Issues in the Sector

3.13 The current policy issues in the transport sector may be summarized as follows:

(a) The lack of planning capacity at the subsector level and an absence of overall coordination in transport policy and investment matters;

(b) The shift in emphasis now required in road investments, away from upgrading of primary routes towards improvement of secondary and feeder roads, a strategy which has important implications in terms of design standards and local construction industry capacity;

(c) The problem of overall coordination in the development of the ports of Abidjan and San Pedro and of the technical options open to expansion at each port;

(d) The magnitude of the railway investment program and its implications in terms of road/rail competition; and

(e) The importance attached by the Government to investments in areas with relatively low priority, such as maritime shipping and airports.

Management in the Transport Sector

3.14 The Ministry of Public Works and Transport (MPWT) is responsible for management of the transport sector and discharges these functions through the - 35 -

Department of Public Works (DPW) for road infrastructure, the Road Transport Division (RTD) for road transport regulation, and through RAN for railways. In the port and maritime transport subsectors, overall coordination and planning is now the responsbility of the newly created Ministry of the Marine, while technical aspects remain the responsibility of MPWT. However, both ministries discharge the part of their functions related to the ports through the port authorities of Abidjan and San Pedro.

3.15 Investment plans for roads, railways and ports are initiated by DPW, RAN and the port authorities respectively, usually on the basis of consultants' studies. These plans are then reviewed by the Ministry of Planning which coordinates transport investments with those in other sectors of the economy. Project lists are then prepared for examination by a technical committee (con- sisting of a representative each from the Ministries of Planning and Finance, and from the transport authority directly involved) with due regard to project viability and to funds available. This procedure is used in the preparation of the Five-Year Plan ("Loi-Plan") and in the annual updating of the Plan in the form of the "Loi Programme"--a three-year rolling investment program-- the latter taking into account changes in transport demand, cost overruns, and other factors influencing investment priorities.

3.16 The system has in practice a number of major limitations. The first relates to MPWT's inability to analyze and evaluate policies and investment plans before these reach the Ministry of Planning; the only forum for discussion of the sector investment program as a whole is the technical committee, at which level it is usually too late to make any major changes. A second limitation, as mentioned earlier, lies in inadequate planning capabilities at the sectoral and subsectoral level which have clearly created a tendency towards over-investment in transport during the current five-year plan. During plan implementation the scope of investments in the different subsectors has been modified with a trend towards over-design of infrastructure. Planning problems have been compounded by political considerations as exemplified by the construction of the four-lane Abidjan-N'Douci expressway, the paving of the Katiola-Korhogo and the Man-Odienne roads, and the premature upgrading of low- priority roads in the cocoa circuit. Finally, as in many cases--rail, port, airport and maritime transport--the Government is providing part of the investment funds. The return therefore has to come out of increased development rather than out of a company's income; thus, the tendency to overinvest and to misallocate scarce resources is permanently present. These combined limitations have resulted in a situation where the ability to secure financing, usually in the form of suppliers' credits, has become a major criterion for project selection. As such, they have contributed to the major spillover of investment into the 1976-80 Plan and the consequent bottleneck to immediate new investment possibilities.

3.17 The shortage of planning staff is critical considering that transport is such a vital sector of the economy; and that high priority projects have already been implemented or are in the pipeline, with the consequent - 36 -

proj- need for careful attention in the formulation of policies, programs, and ect selection for future investment. As a solution to the planning problem the Transport Survey had recommended the establishment of a Planning and Research Unit (PRU) to perform the MPWT's sector coordination and updating functions, in addition to other duties including policy matters. As the for recent escalation of investment proposals has underlined the real need the closer investment analysis, the Government has now decided to establish World PRU with technical assistance and fellowships to be financed under the Bank's Fifth Highway Project. However, in order to reap maximum benefits a from the planning unit and to ensure proper coordination of investment on the selec- continuing basis, the Government will need to give high priority to tion of appropriate candidates for counterpart training. Some of the immediate tasks of the unit will be to coordinate the 1975/76 highway master plan study with upcoming studies in rail and port investment and with developments in other sectors.

3.18 At the subsectoral level, increased technical assistance and further consultant studies will, as in the past, form a necessary part of improving planning. Here too, much greater emphasis will be needed on training counterparts and on developing a local management and planning capability. While the desire to achieve this goal certainly exists, greater efforts are required on behalf of the Government, technical assistance and consultants. At the col- same time, particular emphasis must be placed on institutionalizing data lection and the major administrative functions such as analysis, planning, project preparation and evaluation. The establishment of simple data collec- tion systems which can be used on a continuing basis, after the departure of consultants should be given high priority.

Shifting Emphasis in Road Investments

3.19 In line with the Government's regional production and income distribution objectives, the mission believes that an important shift in emphasis is now required in the road sector. While the importance of developing a primary network cannot be denied, such a program can only have priority up to the point of developing a minimum interregional network. Beyond this, however, the emphasis should be directed towards improving access to the producing areas and forging additional links between rural and urban populations. In effect, experience has shown that increased agricultural production and the development of market-oriented economic activity on a regional basis cannot be achieved where roads are impassable or in poor condition. The betterment of secondary and feeder road networks, along with other inputs such as farmer credit, fertilizer, pesticides, and social infrastructure, access to which can be greatly improved with an appropriate transport infrastructure, will be an important element in a successful regional development policy.

3.20 A program of upgrading and betterment of secondary and feeder roads has important implications in terms of the design standards to be adopted. During implementaiton of the current plan, higher design standards were - 37 - adopted for several road projects than had been initially planned. While in a few cases, greater than anticipated traffic growth could justify better standards, a number of low-priority roads were not only implemented prematurely, but were also constructed with a 7-meter pavement width rather than a 6-meter pavement as originally foreseen.

3.21 The 1975/76 highway master plan study will provide a basis for defining a network development plan in which the role and status of each road link will be identified within a hierarchy of road types (primary, secondary and tertiary). Based on the proposed program, typical design standards should be defined including possibilities for stage construction of secondary roads. Government adoption of the recommended technical standards should be considered as an important precondition for efficient use of resources.

3.22 A second important factor implied by the proposed shift in emphasis towards the upgrading and betterment of secondary roads, is the capacity of the local construction industry. In effect, this type of work would be better suited to local contractors than would be maintenance or new construction projects on primary roads, and would provide an important vehicle for the development of Ivorian road construction capacity.

3.23 Of the 22 major civil work contractors operating in the country, only two, SONITRA, jointly owned by Government and a foreign contractor, and SONAGECI, an autonomous state-owned enterprise, are Ivorian. The number of Ivorian-owned local firms engaged in construction of buildings has increased rapidly over the past four years, but not many are branching out into civil works. This is unfortunate since most of the elements for the developoment of a healthy local construction industry exist in the country and the volume and continuity of work is adequate. Technical and managerial know-how, as well as capital in the quantity required to run road construction, may be deficient but these are elements which can be supplemented with foreign assistance in the short term and built up locally with a well-designed long- term program.

3.24 Consideration might be given to a first-phase assistance program for the development of a local road construction industry and which could provide, among other things, that:

(a) relatively large firms are encouraged to form joint ventures with experienced foreign contractors, with the latter benefitting from the investment code;

(b) financial aid is available through local development banks;

3.25 Gravel road construction and rehabilitation would thus offer an excellent opportunity for the development of the road contracting industry, and contracts could be awarded in portions tailored to fit the capacity of - 38 - individual firms. A second phase of assistance in strengthening local road construction capacity might involve contracts for periodic maintenance of paved roads calling for resealing operations that are relatively funda- mental and repetitive. The construction of paved roads would constitute a final phase in the development of the local industry.

3.26 For the planning and execution of an expanded feeder road program, special institutional arrangements will be required. In effect, the extent of improvements preclude the possibility of detailed design studies and as such it is difficult to use contractors for the execution of this type of program. Current feeder road programs financed with World Bank assistance are to be executed by DPW in the case of the cotton feeder road program, and by the construction division of Palmivoire in the case of the cocoa feeder road program. The possibility of reinforcing DPW capacity in this area, including the creation of a special service for the planning, execution, and maintenance of feeder roads, should be given early consideration.

Coordination in Port Development

3.27 There is need for coordinating port development in the Ivory Coast for the following reasons:

(a) no systematic port development study has.been undertaken since the 1969 Transport Survey, and traffic and technical developments, such as containerization, have been such that the initial recommendations are no longer valid;

(b) medium to long-term expansion of both the Abidjan and San Pedro ports implies costly investment; a number of technical options are available;

(c) there is uncertainty as to the level of traffic development at San Pedro given that access routes are not yet completed and that port expansion depends to a great extent upon potential industrial development; and

(d) there is a lack of cooperation between the port authority of San Pedro, MPWT, and ARSO, the special Government agency charged with programming the development of the southwest including the port.

3.28 The development of port traffic at San Pedro will have a significant effect on the level of demand at Abidjan. The establishment of proper coordination between the two ports, including an analysis of hinterland potential and the size and timing of industrial development, is therefore an important prerequisite to any major expansion of facilities. In parallel with this study, an analysis should be made of the technical options which are open to further expansion. At Abidjan port there are three basic options--the Banco area, the Ile Boulay, and the littoral west of the Vridi Canal--all of which imply costly expansion of the existing site. At San Pedro, major expansion - 39 - would involve either a move inland, at the cost of major excavation works, or an extension seawards. In the light of these considerations, the mission recommends that urgent consideration be given to a comprehensive port development study with the possibility of UNDP financing. In order to ensure maximum effective coordination with other studies on transport and with developments in other sectors of the economy, such a study might suitably be located within the PRU.

Railway Investment and Road/Rail Coordination

3.29 RAN's recently established investment program for the 1976-80 period, including ongoing projects, amounts to a global volume of CFAF 95 billion. Aware of the impossibility of financing such a program, a core program has now been approved but which would still cost CFAF 60 billion. This ambitious investment plan has been prepared at a time when inadequate performance in terms of both cost effectiveness and quality of service is threatening the railway's future viability. As in the past, the proposed program reflects a choice of heavy capital investment over improvements in operations and maintenance standards.

3.30 The principal reasons for RAN's operational deficit are its high operating costs and its tariff system. The former results from poor operational management and inadequate cost and productivity control. With regard to tariff levels (situation around 1974), average revenue is below average costs, the former being CFAF 7.4 per ton-km and CFAF 3.7 per passenger-km and the latter about CFAF 10 and CFAF 4 respectively. While the spread of rates around costs is not wide, many commodities which dominate RAN's long-haul freight, such as cement, cotton, cereals and flour, are charged below-average costs. With recent increases in tariffs for road transport there is some scope for increases in freight tariffs. Also passenger traffic, which accounts for 40 percent of revenue, has been inelastic to fare changes and a case could therefore be made for increasing passenger fares.

3.31 Competitive road freight rates over the shorter distances and the recent decline in short to medium-haul rail freight traffic would seem to indicate that RAN should concentrate more on the longer hauls for which it should have clear cost advantages. Such a strategy would enable the railway to improve those services to which it is better suited and to hold off road competition. A certain rationalization of services in favor of long-haul traffic would ultimately enable costs for this traffic to be reduced. This consideration is especially important to land-locked Upper Volta, Mali and Niger, whose interests should be given due consideration. Development of these countries would be made even more difficult with high tariffs for transport services. However, it is not clear that the Ivory Coast should bear the cost of "development tariffs" for these countries.

3.32 In the light of the above considerations, the basic question is the extent of modernization and streamlining or curtailing of operations and services which would be necessary in order for the railway to retain its viability. A more modest investment program than that currently envisaged - 40 - may result in essentially the same level of benefits. Moreover, improvements in management and operational efficiency will be as important as the selection of well-tailored, productive investments in track, motive power, and rolling stock. It is therefore imperative that RAN's investment programming and planning be properly directed and that emphasis be placed on management assistance and staff training at all levels.

Low-Priority Investment

3.33 Between 1971 and 1975 it is expected that investment in airport facilities will have amounted to about CFAF 3.5 billion, with a similar amount having been allocated to aircraft purchases for Air Ivoire, the Government, and the Armed Forces. In total, these investments account for almost 10 percent of total transport sector investment under the current five-year plan. Plans for the 1976-80 period imply a total investment for airports of about CFAF 9 billion (1975 prices); at constant prices this would represent a twofold increase over previous levels of investment.

3.34 As in the past, so far no quantitative economic analysis underlies investment decisions in the development of airport facilities. While certain improvements are required at key locations such as Abidjan and San Pedro, the program currently envisaged seems out of line with the limited domestic air transport potential. Given the fact that the development of airports and civil aviation contributes little to economic growth, investment in these areas as a whole should be limited to a smaller proportion--say 4 to 5 percent--of the total transport program.

3.35 The Government places much emphasis on the development of a local maritime transport capacity (SITRAM). In view of the export orientation of the economy, the promotion of Ivorian--and regional multinational--maritime shipping could be defended as a valid objective. On the other hand, it must be asked whether, considering other needs of the economy at this stage, the Ivory Coast should get involved in developments in this area to the extent proposed. In effect, maritime shipping capacity is becoming increasingly concentrated among a relatively small number of countries; it is, moreover, a very specialized field in which competition is very keen and the economics of backward linkages and scale are often important.

3.36 In order for Ivorian maritime shipping to control a significant share of traffic and thus to achieve its aims in reducing freight rates and savings in foreign exchange, major expansion of the merchant fleet would be required. This would imply very heavy investments which cannot be considered justified within the context of the Government investment program. At this stage of development, Government contributions might be more appropriately concerned with consolidating the position of SITRAM rather than embarking at this time on a major program of expansion. - 41 -

C. Investment Program

3.37 The proposals put forward by the mission for public expenditure in the transport sector under the 1976-80 Plan are based on the following considerations:

(a) the basic objectives of the Government;

(b) the program of ongoing projects which will spill over from the current five-year plan;

(c) projects at an advanced state of preparation (feasibility/ design studies undergoing completion or projects being appraised); and

(d) Government proposals in the sector, including projects remaining under the 1969 Transport Survey recommendations.

3.38 On this basis, the mission has drawn up an investment program for the transport sector amounting to some CFAF 160 billion at 1975 prices; of this amount some 40% is already committed in the form of ongoing programs, and projects amounting to at least a further 10% are currently being considered by lending agencies. Total sector investment represents about a 60% increase in constant prices over that during the current plan; the overall share of transport investment in relation to total public expenditure will probably be similar to that under the 1971-75 Plan, namely on the order of 20%. The road sector is expected to account for an increased share of total sector investment, namely some 60% as opposed to 50% under the 1971- 1975 Plan, while the share of investment for ports should decrease from 20% to about 8%. The share of railway investment will be similar to that under the 1971-75 Plan. The overall program is shown in Table 16 and is summarized as follows:

(a) Roads. Emphasis in the road sector will first be on the completion of access routes to the port of San Pedro, followed by a shift away from investment in primary roads towards the betterment of secondary and feeder networks. Emphasis in this area will be on (i) east-west secondary routes in order to complement the existing north-south linkages and to stimulate the development of regional economies based upon the major urban centers; and (ii) the provision of secondary and feeder roads necessary to stimulate further development of cash and food crop production. However, due to the importance of spillover from the current plan, primary roads will account for the major share (76 percent) of a total of CFAF 96 billion proposed for the road sector. - 42 -

(b) Railways. Some CFAF 35 billion are foreseen for continued modernization of the railway including rehabilitation/realignment of the only remaining low standard section of track between Bouake and Tafire, and a program of purchases of motive power and rolling stock. These investments must be paralleled by equally important improvements in the management and operations of the railway where deficiencies are currently threatening its viability. This program represents the optimum require- ment at this stage of traffic development and absorptive capacity.

(c) Ports. Investment in the port sector is expected to be relatively modest, particularly at Abidjan where the development of container traffic will forestall the immediate need for major investment and expansion. Total investment requirements are estimated at CFAF 7 billion for Abidjan of which CFAF 4 billion would be applied to the construction of two container berths within the next two years. Further investment, estimated at CFAF 6 billion, will be required at the San Pedro port to meet expected increases in traffic following the completion of access routes and proposed industrial developments in the southwest.

(d) Airports, Civil Aviation and Maritime Shipping. Further development of airport facilities and Government assistance in the expansion of the merchant fleet do not represent priority investments in the sector. As a whole, they will probably account for less than 10 percent of the total investment program. - 43 -

Table 16: SUMMARY OF TRANSPORT INVESTMENT PROGRAM PROPOSED BY THE MISSION: 1976-80

Investment (CFAF billion: 1975 prices) Ongoing New Projects Total %

Roads

Primary 47.6 25.7 73.3 46.7 Secondary 2.0 16.1 18.1 11.5 Feeder 1.5 3.5 5.0 3.2

Sub-Total 51.1 45.3 96.4 61.5

Railways /a 7.5 27.3 34.8 22.2 Ports - 13.0 13.0 8.3 Maritime Transport /b - 6.0 6.0 3.8 Airports 1.5 3.5 5.0 3.2 Aircraft 1.5 - 1.5 1.0

Total 61.6 95.1 156.7 100.0

/a RAN. /b Government contribution.

3.39 The escalation of investment under the 1971-75 Plan has emphasized the need for coordinated planning in the transport sector. At a time when most priority projects have been implemented or are in the pipeline, there is an increasing need for more continuous and careful attention in the formulation of programs and project selection. Establishing planning capabilities on a more permanent basis than in the past is required in the years to come, a concerted effort must also be made by all parties in the selection and training of counterparts to develop a truly Ivorian planning and managerial capacity.

3.40 The longer-term implications of the proposed investment program point to a reduced transport share of total public expenditure, as the needs for upgrading and modernization of the primary network are met during the 1976-1980 period. The absolute importance of investment in primary roads and in rail facilities will decrease following the completion under the plan of ongoing and proposed programs. On the other hand, given the technical difficulties facing longer-term port expansion, port investment will probably increase in importance and may eventually account for a major share of total transport investment. On the whole, however, transport investment during the 1980s is likely to diminish as a proportion of total investment, as the Ivory Coast gradually enters a phase of network consolidation rather than extension and expansion.

APPENDIX TABLE 1

IVORY COAST

Development of Highway Network 1961 - 1974

1961 1965 1969 1971 1972 1973 1974 1/

Paved Roads 284 899 1,293 1,353 1,678 1,969 2,200

All-weather earth roads 10,000 13,070 13,000 13,000 12,254 13,008 13,000

Unimproved Tracks 14,600 18,500 20,000 20,000 22,133 23,238 23,500

TOTAL 24,884 32,469 34,293 34,353 36,065 38,215 38,700

Source: Department of Public Works

1/ Mission estimate APPENDIX TABLE 2

IVORY COAST

Capacity of Trucking Industry, 1969 and 1975

1969 1975 Average Annual Increase

A - DEMAND (million ton-km)

General Goods 450 735 8.5 % Logs 650 555 -2.5 %

Total 1,100 1,290 2.5 %

B - CAPACITY

No. of Vehicles

Small/Medium Trucks (8 t) 6,070 6,770 2.0 % Tractor Trailors (20 t) 583 760 4.5 % Log Trucks (25 t) 840 1,790 14.0 %

Total 7,493 9,320 3.5 %

Vehicle Capacity (tons)

General Goods 60,200 69,400 2.5 % Logs 21,000 44,700 14.0 %

Available Capacity (million ton-km)

General Goods (1) 810 940 2.5 % Logs (2) 525 1,120 14.0 %

C - EXCESS CAPACITY % (deficit)

General Goods 80 % 28 % Logs (24 %) 102 %

Source: SETEC Transport Survey Preliminary Report, March 1975 for transport demand and vehicle fleet estimates.

(1) Assumes low 30,000 km/vh/yr due to large proportion of vehicles engaged in urban delivery, load factor of 60 % and 25 % empty vehicles. (2) Assumes 50,000 km/vh/yr with load factor of 100 % and 50 % empty vehicles. APPENDIX TABLE 3 Page 1 of 4 Proposed Road Investment Program: 1976-1980 Cost estimate CFAF billion 1975 prices Length 1976-80 Start oc ONGOING PROJECTS (Km) Nature Total Plan Construction

Abidjai-N'Douci (Switz.) 71-: rxp5eskway S.O 12.0 19.95 San Pedro-Issia (FED) 225 Paving 9.3 5.1 1974 Katiola-Ferke (local) 225 15.8 11.5 1974 Yabayo-Gagnoa (IBRD) 69 " 4.1 3.1 1975 R habilitation I (IBRD) 110 Rehabilitation 4.7 2.1 1974 Rehabilitation II (IBRD) 245 it 6.9 6.9 1976 Anyama-Agboville (IBRD) 45 Reconst/paving 6.9 6.9 1976 Yamoussoukro-Sinfra (France) 75 Paving 4.4 2.0 1973 Cocoa Feeder Roads (IBRD) 300 Betterment 0.7 0.5 1975 Cotton Feeder Roads (IBRD) 900 "I 1.0 1.0 1976

Sub-total ongoing proJects 68.8 51.1

NEW PROJECTS

Primary Roads

Daloa-Issia 49 Paving 2.4 2.4 1977 Gagnoa-Issia 65 4.01 4.0 1978 Agboville-Akoupe 60 " 3.0 3.0 1979 San Pedro-Nero 40 " 2.8 2.8 1979 Ouango-Mali 90 " 4.8 4.8 1979 Accra-Abidjan 85 14.1 4.1 1979 Agnibelikrou-Boudoukou 130 7.6 2.6 1980 Korhogo-Boundiali 95 "4.5 2.0 1980

Secondary Roads

Toumoudi Oume 50 Paving 3.0 3.0 1977 Mankono-Tenigboue 65 Improved laterite 0.8 o.8 1978 Korhogo-M'Bengue 75 " 0.9 0.9 1978 Bouake-Botro 40 Paving 1.6 1.6 1979 Boufle-Zeonoula 60 Improved laterite 0.8 o.8 1979 Bouake-Satama 85 1.0 1.0 1979 Daloa-Seguela 50 0.7 0.7 1979 Biankouma-Touba 70 o.8 o.8 1979 Gagnoa-Sinfra 60 Paving 2.5 2.5 1980 Nero-Liberia 100 Improved laterite 1.5 1.5 1980 Mankono-Seguela 75 " 0.9 0.9 1980 Agboville-N'Douci 60 " 0.8 0.8 1980 Abobo-Alepe 60 0.8 o.8 1980

Feeder Roads

FRAR Program 1,600 Betterment 2.0 2.0 1977 Other Feeder 1,200 " 1.5 1.5 1978

Sub-total new proJects 52.8 45.3

TOTAL COST OF PROGRAM 121.6 96.4

Source: Mission estimates APPENDIX TABLE 3 Page 2 of 4

Brief Description of the Program

a) A fairly limited program is suggested for further extension

of the primary highway network. In effect, the SETEC traffic

data shows that needs in this area have to a large extent

been met, or will be met under the ongoing program. In

view of the current low traffic volumes (less than 90 vpd),

the Man-Odienne and Daloa-Seguela roads should possibly be

reconstructed as all-weather laterite roads, postponing paving

until justified by traffic developments. While these roads

form part of the development program for the north, the pos-

sible paving of the Korhogo-Boundiali road might be more

viable and might have a much greater impact on development

in the northern region. In effect, this road drains an impor-

tant cotton-producing area centered on the Korhogo ginnery and

the RAN railway at Ferkessedougou, and its improvement as a

first section of an east-west route would tie in well with

the feeder road improvements scheduled for the region. Other

new project proposals are limited to the proposed paving of the

Gagnoa-Issia and Agboville-Akoupe roads. In closing the trunk

network gap between east and west, the former project should

be given priority over the Daloa-Guessabo link, as its up-

grading would be in line with the recent paving of the

Duekoue-Issia road and the ongoing heavy rehabilitation

program between N'Douci and Gagnoa. Finally, following recent APPENDIX TABLE 3 Page 3 of 4

betterment of the Agboville-Akoupe road, traffic volumes are

already in excess of 330 vpd, indicating that this should soon

Qualifv for Davin2. b) The recent SETEC traffic data indicate relatively high traffic

volumes on a number of secondary routes in the south and

central regions of the country. Traffic volumes on certain

sections are already in excess of 250 vpd and these would qualify for upgrading to paved standards during the next five years. Three

sections are proposed for paving: (i) Toumoudi-Oume serving

a rich agricultural area in the Bandama Valley; (ii) Bouake-

Botro, an east-west route draining a major cotton producing

area centered on Bouake; and (iii) Gagnoa-Sinfra which would

complete a paved link between the south-west and the Yamoussoukro

area. Many other secondary routes show traffic volumes in the

range of 100 to 200 vpd and it is considered that these routes

should be reconstructed as all-weather laterite roads with

paving only when warranted by traffic developments. A

tentative list of projects has been identified by the mission

but the final selection will depend on traffic volumes and

existing road conditions, as identified by the SETEC Highway

Master Plan Study. However, as important elements in

furthering regional integration and in supporting develop-

ment and diversification of the agricultural sector, the mission

recommends that emphasis be placed on: (i) east-west routes

particularly in the central part of the country; and (ii) roads

serving the important cotton-producing areas of the center and

the north. APPENDIX TABLE 3 Page 4 of 4 c) In order to support extension and marketing activities and to

meet the Government's objective of increased agricultural

production, road betterment must be extended to cover the feeder

road network. During the 1976-80 Plan, some 300 km of feeder

roads will be constructed and/or rehabilitated under the World

Bank-financed Second Cocoa Project, and about 900 km of feeder

roads will be improved under the World Bank-financed Cotton Areas

Development Program (Appendix IV). Rates of return on these pro-

grams vary from 20 to 25 percent. A general feeder road study

to begin shortly will define needs in other areas; ultimately

it is expected that a 10,000-km program will be identified for

improvement over the next 10 years. The mission considers

that some 4,000 km of high-priority sections could be the sub-

ject of a betterment program during the 1976-80 Plan, on the con-

dition that DPW's capacity for the construction, betterment and

maintenance of feeder roads be reinforced. APPENDIX TABLE 4

IVORY COAST

Typical Road Construction and Maintenance Costs (CFAF million)

Length Total Cost Cost Expected Total Cost Expected Cost Road Construction (km) (Contract) per km after Construction per km Date of Award CFAF million US$'000

Primary Roads Bouake-Katiola 49 1,320 27 1,350 28 120 September 1972 Yabayo-Gagnoa 79 2,640 33 3,440 44 180 May 1974 Man-Kuekoue-Issia 120 6,580 55 6,480 54 230 July 1972

Bridges (m) (Cost/linear meter) (Cost/linear meter) Boube 90 140 1.6 190 2.1 9 October 1973 N'Zi 180 180 1.0 250 1.4 6 October 1974

Road Strengthening (ki.) (Cost/km) Major trunk roads 110 3,330 30 4,146 38 158 April 1974

Source: DPW

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