World Bank Document

Document of F\LX t0§?Y The WorldBank FOR OFFICIALUSE ONLY Public Disclosure Authorized ReportNo. P-2376-CoJ REPORT AND RECOMMENDATION OF THE Public Disclosure Authorized PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT Public Disclosure Authorized TO THE FEDERAL ISLAMIC REPUBLIC OF THE COMOROS FOR A HIGHWAY PROJECT September 19, 1978 Public Disclosure Authorized 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. CURRENCYEQUIVALENTS Currency Unit - Coorian Franc (CF) (The CF is fully convertible into French Francs at CF 50 = FF 1) Calendar 1977 July 1978 US$1 CF243 CF222 CFl,o0o US$4.12 US$4.51 CF1O00,000 US$4,120 US$4,505 (The AppraisalReport is based on US$1=CF245) FISCAL YEAR January 1 to December 31 FOR OFFICIAL IJSF ONLY ,ufiW9K(uS h1GhWA rxU0JE CT CREDIT AND PROJECT SUMMARY Borrower: Federal Islamic Republic of the Comoros Beneficiary: Ministry of Equipment, Improvement of Territory and Quality of Life Amount: US$5.0 million equivalent Terms: Standard Project Description: a) Objectives: To assist the Government in strengthening its road administration, to upgrade and expand the main road network, and to assist in preparation of a subsequent highway project and of an integrated rural development project. b) Major Components: (i) Road construction (about 20 km) and supervision; (ii) Establishment and operation of one road improvement unit, two patching units and one resealing unit; (iii) Improving mechanical workshops and equipping a soils laboratory; (iv) Technical assistance and training; and (v) Feasibility study and detailed engineering for a future highway project, and preinvestment study for a future integrated rural development project. c) Benefits: Strengthening of planning, coordination and implementation capacity of road administration; upgrading the road network through road maintenance, improvement and construction programs providing increased accessibility and reduced transport cost for rural populations; preparation of future projects in roads and rural development. d) Risks: Government ability in handling first Bank Group project, providing local funds and recruiting necessary qualified staff, which could result in implementation delays. Estimated Project Costs: US$ million Local Cost Foreign Cost Total Cost Road construction and supervision 0.54 2.84 3.38 Road improvement and maintenance 0.43 2.94 3.37 Workshops and soils laboratory 0.01 0.23 0.24 Technical assistance and fellowships 0.11 0.97 1.08 Studies 0.09 0.46 0.55 Subtotal 1.18 7.44 8.62 Contingencies: Physical 0.14 0.88 1.02 Price 0.20 1.22 1.42 Total Project Cost, net of taxes 1.52 9.54 11.06 This document has a restricteddistribution and may be used by recipientsonly in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. - ii - Financing Plan: US$ million Percent of Local Foreign Total Total IDA Credit 0.24 4.76 5.00 45 African Development Fund Loan 0.72 3.78 4.50 41 OPEC Special Fund Loan - 1.00 1.00 9 Government 0.56 - 0.56 5 Total 1.52 9.54 11.06 100 Estimated US$ million Disbursements: IDA FY 1979 1980 1981 1982 Annual 1.55 1.55 1.10 0.80 Cumulative 1.55 3.10 4.20 5.00 Rate of Return: 13 percent Staff Appraisal Report: No. 1930b-COM, dated August 1, 1978 INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE FEDERAL ISLAMIC REPUBLIC OF THE COMOROS FOR A HIGHWAY PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Federal Islamic Republic of the Comoros for the equivalent of US$5.00 million on standard IDA terms to help finance a hignway project. The project would be cofinanced on a parallel basis with a loan of US$4.5 million equivalent from the African Development Fund for a period of 50 years including 10 years grace, with an administrative charge of 0.75 percent per annum, and a loan of US$1.0 million equivalent from the Opec Special Fund for a period of 20 years including 5 years grace, with an administrative charge of 0.75 percent per annum. PART I - THE ECONOMY 2. A report entitled "The Economy of Comoros" (Report No. 1626a-COM) was distributed to the Executive Directors on July 26, 1977. An updated summary of the conclusions is set out below. Country data sheets are provided in Annex I. 3. The Comoros Archipelago, located at the northern end of the Mozam- bique channel, consists of four islands: Grande Comore, Anjouan, Moheli and Mayotte, about 100-300 km distant from one another. Following a referendum held in December 1974, Grande Comore, Anjouan and Moheli declared unilateral independence in July 1975, while Mayotte decided to remain French. 4. The country's relatively small land area is characterized by a rugged topography of volcanic origin and lush vegetation. The climate is marine tropical marked by heavy rains during the six month rainy season. The vast majority of the 380,000 people (1977) live in rural areas and derive their livelihood from agriculture. The staple crops are rice, bananas and coconuts; meat, and fish in the coastal areas, are a minor part of the diet. High-value export crops such as ylang-ylang, cloves and vanilla grow well in the coastal areas up to an altitude of about 500 m. However, as population is dense and agricultural practices are rudimentary, food crop production is insufficient to meet local needs and most of the export revenues are spent on food imports. Malnutrition is widespread. Non-agricultural activities are limited, and consist mainly of ylang-ylang distillation into perfume essences, a small soft drinks bottling plant, a sawmill, a brickworks, a furniture factory and a soap factory. 5. Social services are also limited. Although all children attend koranic schools until they are able to read classical Arabic, only half of -2- the children of school age attend primary classes. Furthermore,these classes are overcrowdedand about two thirds of the teachers are insufficiently trained. Thereafter,only 7 percent of the relevant age group enter secondary schools, which are almost entirely dependent on expatriate teachers. Between 1970 and 1975 enrollment ratios doubled at the primary level and tripled at the secondary. Little vocational training took place until 1975 when the InternationalLabor Organizationhelped establish an artisan training center. During the period 1966-76 only about 40 Comorian graduates from foreign universities(10 percent of the total) returned home. Medical services are as limited as the educational system. There are 5 doctors in state service, with an undeterminednumber in private practice; 2 hospitals and 6 health centers, totaling about 660 beds; 4 rural maternity wards, totaling 26 beds; and 46 health posts. These resourceshave proven insufficientto curb endemic diseases such as malaria, which affects 80 percent of the population,and to reduce the high infant mortality rate. 6. Lack of adequate infrastructureis another constraint to development. The transport of food and export crops requires all-weather roads, but many villages are not linked to the main road system or at best are con- nected by tracks that only four-wheel drive vehicles can manage. Public power supplies are available only in two cities and fall short of demand. Water supply is scarce on Grande Comore where there are no perennial rivers. 7. The French Administrationincreasingly supplemented the scarce local resources in the early 1970s, thereby improving considerablythe Comorian economy until independencein 1975. From 1970 to 1974, France financed about half the costs of administeringthe territories through a variety of services included in the metropolitanbudget, made available about 1,500 persons for local administrationstaffing, and provided direct budget support, representing a total of about US$80 million equivalent for the period. Investments,mainly in public works and house construction,accounted for about 30 percent of GDP. With an annual increase of 6-7 percent in the real domestic product, GNP per capita reached over US$200 in 1974, an average which partly reflectedhigher expatriate salaries. 8. Almost immediatelyfollowing Independence,Comoros faced a budgetary and financial crisis, as France withdrew its financial aid and most expatriate personnel. Comoros managed initially by cutting back drastically on most activities (e.g., closing secondary schools) and delaying a number of payments including, occasionally,salaries. Total public expenditure dropped by about half; investment plummeted. The national income fell by 13 percent in 1975 and 9 percent in 1976, leaving the per capita income at about US$150. In response to worldwide appeals for help, some free food and medical supplies were contributedin early 1976. A few months later, the Special Arab Aid Fund for Africa provided a concessionaryloan of US$10 million, and the People's Republic of China made available US$10 million equivalent. In spite of this assistance and in view of the traditionallylarge trade deficit, the Government had to curtail imports drastically. - 3 - 9. In 1977 the Government continued to confront an extremely tight financial situation. Tax revenues, mainly based on imports, declined while at the same time expenditures increased, owing in part to emergency assistance that had to be provided to about 18,000 Comorians repatriated from Madagascar and to victims of a volcanic eruption on Grande Comore. The Government reorganized the administration, substantially reducing the number of civil servants, halved the salary levels of remaining staff and authorized expenditures only on an ad-hoc basis as and when resources became available.

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