THE WORLD BANK GROUP ARCHIVES PUBLIC DISCLOSURE AUTHORIZED Folder Title: Appraisal for Ingavi Rural Development Project - Bolivia - Report Number 936-BO - February 5, 1976 Folder ID: 1061181 Project ID: P006122 Dates: 2/5/1976 Fonds: Records of the Latin America and Caribbean Regional Vice Presidency ISAD Reference Code: WB IBRD/IDA LAC Digitized: 1/18/2019 To cite materials from this archival folder, please follow the following format: [Descriptive name of item], [Folder Title], Folder ID [Folder ID], World Bank Group Archives, Washington, D.C., United States. The records in this folder were created or received by The World Bank in the course of its business. The records that were created by the staff of The World Bank are subject to the Bank's copyright. Please refer to http://www.worldbank.org/terms-of-use-earchives for full copyright terms of use and disclaimers. M THE WORLD BANK Washington, D.C. @ International Bank for Reconstruction and Development / International Development Association or The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org 1061181 196R984-085 Other #:C-2 Box # 78302B - Number SSIFIED Appraisl~forIngavi Rura Development Project - Bolivia Report DECLASSIFIEDeDECLA WBG Archives HLE COPY Report No. 936-B0 Appraisal of Ingavi Rural Development Project Bolivia February 5, 1976 Projects Department Latin America and Caribbean Regional Office FOR OFFICIAL USE ONLY ECLASSilk intrnaona~evfopment AssociatIon T1*, doMUMvnt has a, restete vanuiond m 4y We iise by recipienJ75 -nyhePerkomac of t16i ute t OntniMay'Pca not otheltwise be diclosed wvtthout Wor*Wan atiatk m CURRENCY EQUIVALETS US$1 = $b 20.00 $b 1.00 = US$0.05 $b 1 million = US$50,000 WEIGHTS AND MEASURES 2 1 hectare (ha) - 10,000 m = 2.47 acres 1 kilometer (km) = 0.62 miles 1 square kilometer (km2) = 0.39 sq. miles = 100 ha 1 kilogram (kg) = 2.20 pounds 1,000 kilograms = 1 metric ton= 0.98 long ton 1 liter (1) - 0.26 gallons (US) = 0.22 gallons (Imperial) GLOSSARY OF ABBREVIATIONS BAB - Agricultural Bank of Bolivia BC - Central Bank BPC - Bolivian Power Company CORDEPAZ - Department of La Paz Development Corporation DESEC - Center for Social and Economic Development GEOBOL - Geological Survey of Bolivia MACA - Ministry of Peasant Affairs and Agriculture MPSSP - Ministry of Social Security and Public Health PIL - Industrialized Milk Plant SNC - National Roads Service SNDC - National Community Development Service GOVERNMENT OF BOLIVIA FISCAL YEAR January 1 - December 31 FOR OFFICIAL USE ONLY BOLIVIA INGAVI RURAL DEVELOPMENT PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ................................. 1-i I. INTRODUCTION .............................................. 1 II. BACKGROUND ................................................ 1 A. General . ......................................... 1 B. Rural Sector ........................................ 2 C. Project Area ........................................ 4 III. THE PROJECT ............................................... 5 A. Brief Description .................................... 5 B. Detailed Features ................................... 6 C. Cost Estimates ...................................... 10 D. Financing ........................................... 11 E. Procurement ......................................... 12 F. Disbursement ........................................ 13 G. Organization and Management ........................ 13 H. Accounts and Auditing .............................. 17 IV. PRODUCTION, MARKETING AND PRICES, AND PRODUCER BENEFITS 17 V. BENEFITS AND JUSTIFICATION .............................. 20 VI. AGREEMENTS REACHED AND RECOMMENDATION .................. 23 SCHEDULE A - Project Unit Guidelines SCHEDULE B - Consultants Terms of Reference SCHEDULE C - Lending Terms and Conditions SCHEDULE D - Implementation Schedule This report is based on the findings of an appraisal team which visited Bolivia in May 1975. Members of the team were Messrs. G. Luhman, and F. Lucca (LCPA1), W. Cuddihy and B. Kanchanalak (AGPOP), and C. Chisholm, W. Farnsworth, and J. Ticas (consultants). 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. TABLE OF CONTENTS (Cont'd) ANNEXES 1. Agriculture and Livestock Development Tables 1 to 8 - Model 1: Irrigated Development on Communally- Operated Land Tables 9 to 15 - Model 2: Rainfed Development on Communally-Operated Land Tables 16 to 18 - Model 3: Rainfed Development on Group of Individual Farms Tables 19 to 21 - Model 4: Marketing Development 2. Irrigation System Table 1 - Project Water Requirement Assessment Table 2 - Unit Investment and Current Cash Table 3 - Investment and Current Cash 3. Credit System 4. Technical Services Table 1 - Project Unit Organization Table 2 - Investment Cash Cost 5. Road System Table 1 - Project Roads Table 2 - Investment and Current Cash Costs 6. Health System Table 1 - Investment Cash Cost 7. Water and Waste System Table 1 - Well and Pit Privy Unit Investment Cash Costs Table 2 - Investment and Current Cash Costs 8. Investment Cost Phasing 9. Estimated Schedule of Disbursements 10. Economic Analyses Table 1 - Economic Rate of Return MAP BOLIVIA INGAVI RURAL DEVELOPMENT PROJECT SUMMARY AND CONCLUSIONS i. This report appraises a rural development project for which a Bank loan of US$9.5 million equivalent is proposed. The project would cover an area of about 800 km2 , approximately 20 km southeast of La Paz. About 4,000 small farm families would benefit from on-farm investment (deep well irriga- tion systems, tractors, improved pasture and livestock facilities, and storage facilities), incremental production credit (for improved seeds, fertilizer, insecticides, and services), and technical assistance financed under the project, while most of the 10,000 families in the project area would benefit from improved roads (85 km), health facilities (including six health posts), and drinking water and waste facilities (4,000 shallow wells and 3,000 pit privies, respectively). The Project Unit, a semi-autonomous agency under the aegis of the Ministry of Peasant Affairs and Agriculture would implement the project. The Government would be the Borrower and would bear the foreign exchange risk. ii. The Bank Group has granted two loans and 10 credits to Bolivia for US$55.5 million and US$60.3 million equivalent, respectively. The largest portion of the financing, 55%, has been for transportation, with 25% for power, 15% for agriculture, and 5% for industry. Financing for agriculture has consisted of four credits: three for livestock, totalling US$10.2 million equivalent and one for agricultural credit of US$7.5 million equivalent. Some difficulty had been experienced in the execution of the Third Livestock Project (261-BO), but the situation has improved and the credit probably will be dis- bursed on schedule. Execution of the other project has been reasonably satis- factory. iii. Bolivia's gross domestic product (GDP) has increased at 6% per year since 1971, but per capita income at US$302 (1974) is still among the lowest in the hemisphere. Moreover, the major stimulus to growth has been in the modern sector: agricultural production for export and hydrocarbon extraction and refining. Distribution of the income is very skewed, with the lowest 40% of the population receiving only 13% of national income. This poorest segment consists largely of small farmers and agricultural laborers engaged in subsistence agriculture in the altiplano. The Govern- ment recently has taken measures to improve the economic performance of the country, but substantial external assistance will be required to support its efforts. iv. The farmers in the project area are largely representative of producers throughout the altiplano. They have an average of 6 ha each on which they plant potatoes for home consumption and sale and forage crops (barley and oats), which are fed to a few cows and some sheep. The land is tilled with steel-pointed wooden plows drawn by oxen and is fertilized with animal manure. The use of improved seeds, chemical fertilizers, and insecti- cides is limited. The average family income is about US$345, of which about - ii - US$75 is in cash. Most of the previous efforts to develop the altiplano have been based on a sectoral approach and have been mostly unsuccessful. The pro- posed project seeks to combine substantial increases in yields and income (which would more than double) with investments in productive infrastructure (roads and storage facilities) and also investments in health, drinking water, and waste facilities that would have a direct impact on the quality of life of the target population. In addition, efforts would be directed toward groups of farmers rather than individuals. This integrated approach, based on group activities, is expected to achieve positive results, which eluded previous efforts. v. Total cost of the project would be about US$12.9 million equivalent of which the Bank would finance US$9.5 million, or 74%; Government, US$3.3 million or 25%; and beneficiaries, US$0.1 million, or 1%. In addition to the financial contribution, beneficiaries would make a substantial labor contri- bution valued at US$3.4 million. Bank financing would cover the foreign exchange costs (US$5.1 million, or 40% of project cost) and 56% of the local currency costs (US$4.4 million, or 34% of project cost). The consultant services of the technical