Downasutof The World Bank FOR OFmFCUILUSE ONLY Report No. P-4251-GM Public Disclosure Authorized REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE Public Disclosure Authorized INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 5.3 MILLION TO THE REPUBLIC OF THE GAMBIA Public Disclosure Authorized FOR A SECOND HIGHWAY MAINTENANCE PROJECT March 5, 1986 Public Disclosure Authorized This document hasa restricteddistribution and may be usedby recipientsonly in the performance of their officialduties. Its contents may not otherwise be disclosedwithout World Bank authorization. CURRENCYEQUIVALENTS Currency Unit = Dalasis (D) US$ 1.0 = D 5.2 1/ D 1.0 = US$ 0.19 US$ 1.0 = SDR 1.11 FISCAL YEAR Julv 1 - June 30 SYSTEM OF WEIGHTS AND MEASURES (METRIC) 1 meter (m) = 3.28 feet (ft) 1 square meter (m 2 ) 10.76 square feet (sq ft) 1 cubic meter (m3) 35.3 cubic feet (cu ft) 1 hectare (ha) 2.47 acres I kilometer (km) 00.62 mile fmi) I square kilometer (kM2) 0.39 square mile (sq mi) 1 metric ton (t) = 2,205 pounds (lb) I liter (1) 0.26 UTSgallons (gal) ABBREVIATIONS AND ACRON-YMS AfDF African Development Fund EEC European Economic Community GPA Gambia Port Authority GPMR Gambia Produce Marketing Board GPTC Gambia Public Transport Company GRTA Gambia River Transport Authority -.RTC Gambia River Transport Company GTTI The Gambia Technical Training Institute .UC Gambia Utility Corporation MDI Management Development Institute MED Mechanical FngineeringDivision MEPID Ministry of Economic Planning and Industrial Development MF&T Ministry of Finance and Trade rMWC Ministry of Works and Communications ODA(UK) Overseas Development Administration(UK) FWD Public Works Department SIDA Swedish InternationalDevelopment Association UNDP United Nations DevelopmentProgramme LTISO United Nations Sudano-SahelianOffice USAID United States Agency for InternAtionalDevelopment 1/ As of February 20, 1986. A flexible exchange rate system went into effect on January 20, 1986. - t- FIkOROMCAUL USE ONLY THE GAMBIA SECOND HIGHWAYMAINTENANCE PROJECT CREDIT AND PROJECT SUMMARY Borrower: The Republic of The Gambia Credit Amount: SDR 5.3 million (US$ 5.8 million equivalent) Terms: Standard Co-Lenders: IDA (US$5.8million equivalent); AfDF (US$4.5million equivalent);EEC (US$2.0 million equivalent);UNSO (US$0.6 million equivalent) and UNDP (US$0.7 million equivalent). Project Description: The project would support the efforts of the Ministry of Works and Communications (MWC) in carrying out its four-and-one-half-year (1986 to mid-1990) road maintenance program which is comprised of the following components: (a) rehabilitation of part of the paved network; (b) continuation and expansion of routine and periodic road maintenance programs; (c) strengthening of the organisation and management of MWC to improve the efficiency of road and equipment maintenance; (d) introduction of sound transport planning procedures; and (e) assistance to domestic contractors to enable their more effective participation in road maintenance activities. Project Benefits and Risks: The main benefits of the proposed project would be improvement in the physical condition of The Gambia's road network and in the functional efficiency of MWC. These two aspects are essential in the protection of highway investments, the reduction of vehicle operating costs, and the prevention of rising road user costs as a result of worsening road conditions. Other benefits include the positive effects on agricultural production because of reduced transport costs. Based on the satis- factory implementation of the First Highway Maintenance Project (1979) and the commitment of the Government to reorganize MWC and improve its management procedures, there would be no major risks concerning project imple- mentation. However, further aggravation of The Gambia's economic situation could limit the timely availability of the Government's contribution of funds for maintenance. This document has a rsdcted distribution and may be used by recipientsonly in the performance I of their officialduties. Its contents may not otherwise be disclosedwithout World Bank authoriztion. - it - THE GAMBIA SECONDHIGHWAY MAINTENANCE PROJECT Summary Project Cost Estimte - USS Thousands - Estimated Cost Local Foreign Total 1. Road Maintenance Program (a) Regravelling,Resealing, Paving 367 1,570 1,937 (b) Routine Road Maintenance 946 1,513 2,459 (c) Feeder Road Maintenance . 172 401 573 (d) Equipment and Vehicles 0 1,748 1,748 (e) Road Maintenance and Workshop Mgmt. 160 1,430 1,590 2. Road and Bridge Rehabilitation (a) Bund Road 188 784 972 (b) South Bank Road 376 1,558 1,934 (c) Brumen Bridge 172 748 920 3. InstitutionalStrengthening Ca) Planning, Studies, and Auditing 40 360 400 Cb) Management and Training for MWC 39 351 390 (c) Study and Training for Domestic Contractors 4 36 40 (d) Equipment, Materials, and Courses for MWC 70 110 180 4. Repayment of PPF Advance 55 495 550 Base Cost (February 1986) 2,589 11,104 13,693 Physical Contingencies 81 352 433 Price Contingencies 487 1,789 2,276 Total Project Cost a/ 3,157 13,245 16,402 Financing Plan (Rounded) Local Foreign Total IDA 580 5,220 5,800 UNSO 115 485 600 AfDF 480 4,020 4,500 EEC 35 1,965 2,000 UNDP 70 630 700 Government 1,877 925 2,802 Total 3,157 13,245 16,402 a/ Project items are exempt from all taxes and duties except for a small amount from local contracts for road maintenance activities. - iii- Estimated IDA Disbursements: IDA Fiscal Year (US$ Millions) FY87 FY88 FY89 FY90 FY91 FY92 Annual 1.6 1.4 1.2 0.7 0.6 0.3 Cumulative 1.6 3.0 4.2 4.9 5.5 5.8 Economic Rate of Return The estimated economic rate of return (ERR) for the project, based on quantifiablebenefits covering about 79% of overall cost, is about 38Z. Staff Appraisal Report: No. 5798-GM, Dated February 28, 1986 Map: IBRD 18944 INTERNATIONALDEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATIONOF THE PRESIDENT TO THE EXECUTIVE DIRECTORS.ONA PROPOSEDDEVELOPMENT CREDIT TO THE REPUBLIC OF THE AMBIA FOR THE SECONDHIGHWAY MAINTENANCE PROJECT 1. I submit the following report and recommendation on a proposed Development Credit to the Republic of The Gambia for SDR 5.3 million (US$5.8 million equivalent) to help finance the Second Highway Maintenance Project. The Credit would be on standard IDA terms. Additional external financing for the project will be provided by a loan from The African Development Fund (AfDF) in the amount of US$4.5 million equivalent on IDA's same terms. The European Economic Community (EEC) is expected to provide a grant of US$2.0 million equivalent. In addition, the United Nations Sudano-SahelianOffice (UNSO) would provide a grant of US$0.6 million, and UNDP a grant of US$0.7 million. PART I - THE ECONOMY 2. The latest economic report on The Gambia dated September 6, 1985 (The Gambia - Development Issues and Prospects Report No. 5693-GOM has been circulated to the Executive Directors. Its conclusions are reflected in the following assessment of the state of the economy and its prospects. Country data appear in Annex I. The Land and its People 3. The Republic of The Gambia comprises a narrow east-west strip of land bordering the Gambia River and surrounded on three sides by the Republic of Senegal. The terrain is extremely flat, maximum elevation being only 35 meters above sea level. Three regions can be distinguished from the mouth of the River inland: the mangrove belt, which extends upstream for over 240 km; the "bantofaros",areas that become swamps in the rainy season and parts of which are under rice cultivation; and, finally, the plateau of the eastern portion of the country which is intensively cultivated in groundnuts, millet, and other crops. 4. The population (about 700,000 in 1983) is predominantly rural, some 75Z of the work force being engaged in agriculture and animal husband- ry. Average population density is 90 persons per km2 of arable land and reaches higher levels in some areas. Population pressure and persistently disappointing harvests have in recent years prompted emigration to urban districts and aggravated urban employment, particularly in and around the capital and commercial center of Banjul. Structure of the Economy 5. The Gambian economy is traditionally centered on the production of groundnuts. its major foreign exchange earner. Apart from groundnuts, -2- cereals (millet, sorghum and rice) and livestock represent the principal products of the agricultural sector. Manufacturing activity is limited, with the principal activities being groundnut crushing and a few modest manufacturing enterprises supplying the domestic market, all of these located in Banjul. Fishing resources exist but appear to be substantially underexploited at present. The country is heavily dependent on trade, importing about half of its food supplies, all of its fuel and capital goods and most other manufactured goods. Exports are highly concentrated , with a single commodity, groundnut products, accounting for 85-90Z of the value of domestic exports. Other domestic exports include small amounts of fish, hides and skins, cotton, and palm kernels. 6. Outside of agriculture, the most important features of the economy are its tourism industry, and a well-developed commercial sector, which for most of The Gambia's history has been involved in reexport trade to other countries in the region. This trade expanded rapidly in the 1970s, as The Gambia maintained its traditional open-trade policy, while neighboring countries increasingly resorted to high tariffs and quotas to protect domestic industries. The Gambia's small size, substantial openness and heavy dependence upon a single export crop make it an inherently vulnerable economy, highly sensitive to shortfalls in agriculturalprouuc- tion caused by drought and to changes in the terms of trade. Evolution of the Economy 7. In the 1960s and 1970s, The Gambia grew at close to 5Z per year, one of the best performances in Africa.