Document of t v 7 p . .P

The World Bank i

FOR OFFICIAL USE ONLY

Report No. P-3294-RW

REPORT AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED CREDIT

TO THE

RWANDESE REPUBLIC

FOR A

FIFTH HIGHWAY PROJECT

May 3, 1982

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

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CURRENCY EQUIVALENTS

US$1.00 = Rwandese franc (Rf) 91.91RF 100 = US$1.09

FISCAL YEAR

January 1 - December 31

GLOSSARY OF ABBREVIATIONS

AfDB - African Development BankBADEA - Arab Bank for Economic Development in AfricaFED - European Development FundKFAED - Kuwait Fund for Arab Economic DevelopmentMC - Ministry of CommunicationsMPW - Ministry of Public WorksPED - Planning and Engineering Department

of the Roads BranchRB - Roads Branch of the Ministry of Public WorksSTIR - Societe des Transports Internationaux du RwandaUNDP - United Nations Development Programmevoc - Vehicle Operating Costsvpd - Vehicles per Day

WD - Works Department of the Roads Branch

WEIGHTS AND MEASURES

Metric System

Metric British/US Equivalents

1 meter (m) 3.3 feet1 hectare (ha) 2.47 acre1 kilometer (km ) 2 0.62 miles1 square kilometer (km ) = 0.39 square mile (sq. mi.)1 kilogram (kg) 2.2 pounds (lb)1 liter (1) 0.26 US gallon (gal)

0.22 British gallon (imp gal)1 metric ton (m ton) 2,204 pounds (lb)

FOR OFFICIAL USE ONLY(i)

RWANDA

FIFTH HIGHWAY PROJECT

Credit and Project Summary.

Borrower: Rwandese Republic

Amount: SDRs 23.3 million (US$25.9 million equivalent)

Terms: Standard

Project (i) Objectives: To foster economic integration of theDescription: southwestern region with the rest of the country, to

facilitate agricultural development in this regionand to improve overall transport planning capacity.

(ii) Components: The project would consist of the following:(a) construction to paved standard of the Butare-Kigeme-

Kitabi section (53.5 km) of the Butare-Cyanguguroad;

(b) consulting services for (i) completion of prepa-ration studies and supervision of construction workunder (a) above, (ii) engineering studies for therestoration of the Kigali-Gatuna road (80 km),(iii) preinvestment studies, and (iv) technicalassistance to the Ministry of Public Works;

(c) procurement of materials and supplies for main-tenance of the Kigali-Gatuna road; and

(d) procurement and installation of weighing scales forcontrol and enforcement of vehicle weight regulations.

(iii) Benefits: The project would reduce vehicle operatingcosts (voc) for normal traffic and reduce totaltransport costs for the cement works which are beingcompleted near Cyangugu. Such cost reductions wouldderive not only from the effects of a better roadsurface, but also from the feasibility of using largerand hence more economical vehicles once the road hasbeen upgraded. The expected impact of reducing voc inthe influence area of the road would include increasedfoodcrop production (highly sensitive to transportcosts and perishability). Major direct beneficiariesof voc savings would be the traders/truckers. As roadimprovement increases competition and encourages newtraders/truckers to enter the local transport market,

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

(ii)

most of the benefits would likely be passed on toproducers and consumers. Regarding the cement plant'soutput, direct beneficiaries are likely to be thecement company and/or the trading/trucking sector; itis expected that a significant portion of the savingswould be passed on to the construction industry.

(iv) Risks: Past experience in the sector has shownfrequent cost overruns due to periodic shortages ofconstruction materials and fuel caused by borderclosings in neighboring countries through whichthese commodities must be transported. To minimizeinterruptions in construction works, provision wouldbe made for a larger than usual stock of material andfuel. In addition to physical and price contingen-cies, project cost estimates include a special 10 per-cent risk allowance to cover unforeseen increases inconstruction costs should unexpected interruptionsoccur and an additional 10 percent risk allowance totake into account the wide variations in bids expe-rienced in Rwanda. Difficult soil conditions alsopresent some risk. Therefore, periodic services of anexperienced soils engineer are proposed, in additionto supervisory consultants. The soils engineer wouldhelp the Government, Association and supervisoryconsultants in reviewing soil and geologic conditions,the use of appropriate construction materials and theapplication of proper work techniques.

Estimated Costs:

Local Foreign Total--------(US$ million)-

(a) Construction of Butare-KitabiRoad (53.5 km) 4.5 12.1 16.6

(b) Consulting Services 0.5 2.5 3.0

(c) Materials & Supplies &Weighing Scales 0.1 0.6 0.7

(d) Contingencies (physical, price& special risk allowance) 2.7 7.7 10.4

Total 7.8 22.9 30.7of which taxes and duties 0.6 0.0 0.6

(iii)

Financing Plan: Local Foreign Total-(US$ million)-------

IDA 4.2 21.7 25.9UNDP . 0.3 1.2 1.5Government 2.7 1/ - 2.7

Total 7.2 22.9 30.1

Estimated DisbursementsIDA Fiscal Year

(US$ millions equivalent)

1983 1984 1985 1986 1987

Annual: 0.6 8.6 10.2 5.7 0.8Cumulative: 0.6 9.2 19.4 25.1 25.9

Rate of Return: 16 percent

Appraisal Report: No. 3860a-RW of May 11, 1982

Map: IBRD 16034

1/ Government would in addition provide about US$0.6 million for taxes ifincluded in the contracts.

l

INTERNATIONAL DEVELOPMENT ASSOCIATION

REPORT AND RECOMMENDATION OF THE PRESIDENTTO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT

TO THE RWANDESE REPUBLIC FOR AFIFTH HIGHWAY PROJECT

1. I submit the following report and recommendation on a proposedCredit to the Rwandese Republic for the equivalent of SDRs 23.3 million(US$25.9 million) on standard IDA terms to finance a Fifth Highway Project.The UNDP would cover costs (US$1.5 million) for technical assistance andstudies under the project.

PART I - THE ECONOMY

2. A report, "Memorandum on the Economy of Rwanda" (No. 1108-RW), wasdistributed to the Executive Directors on July 27, 1976. Rwanda was visitedby an economic mission in February 1979 and again in November/December 1981.The major findings of this recent mission are reflected below. Country dataare provided in Annex I.

3. Rwanda is a small landlocked country in sub-Saharan Africa, sur-rounded by Uganda, Tanzania, Burundi and Zaire. It has the third highest

population density of low income countries, at 207 persons/km (followingBangladesh and Sri Lanka), and its GNP per capita is among the lowest in theworld, at US$200 in 1980. Rwanda-s population (nearly 5.2 million in 1980) ispredominantly rural (with only 4.5 percent in urban areas), and lives in smallindividual farms scattered over hilly terrain. The balance between foodproduction and population is precarious, as potentially arable land is almostfully exploited, and population is expanding at an estimated 3.6 percentannually. Twice recently (1974 and 1980), Rwanda had to resort to emergencyfood imports. Agriculture (coffee, tea, pyrethrum, cinchona) provides most ofthe country-s foreign exchange earnings. Coffee is, by far, the most importantsource (62 percent) followed by mining products (20 percent), mainlycassiterite and wolfram. Rwanda-s manufacturing base is narrow, and itsgrowth is limited by the small size of the market, and the lack or rawmaterials, marketing facilities, entrepreneurial skills and skilled manpower.The country, consequently, imports petroleum products, capital goods, cement,steel, construction materials, and virtually every other modern manufacturedproduct. Its merchandise trade is hampered by high transportation costs anddependence on neighboring countries for access to the seaports at Mombasa andDar es Salaam.

4. A quantitative assessment of Rwanda-s economic performance can onlybe tentative because of deficiencies in the statistical data base. Availableestimates indicate that during the period 1977-79 the rate of growth of realGDP averaged 5 percent, but declined to about 4 percent in 1980. The average

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contribution of the agricultural sector to GDP, from 1977 to 1980, was 45percent, and the sector's performance reflected mainly variations in foodcropproduction, which during this period accounted for 79 percent of the valueadded by the sector. Foodcrop production oscillated with weather condition-.but is estimated to have been, on average, slightly above the rate of popula-tion growth. The remaining 21 percent of the value added by the agriculturalsector is shared by livestock, fishing, and export crops. As a consequence ofthe pressure of population on land, the cattle herd has been reduced, and thusthe contribution of livestock to the growth of the primary sector; fishproduction remains very low, as there is no tradition of fish consumption.Export crops, involving only 6 percent of Rwanda's arable land and contributingan average of 11 percent to the value added by the agricultural sector, are ofcrucial importance to the economy. Coffee is not only the principal source offoreign exchange but also a major source of cash income to a large proportionof the population and has accounted for a significant proportion of theGovernment's budgetary revenue.

5. The contribution of mining production to GDP averaged only 2 percentin 1977-80, and has declined in recent years. Output of cassiterite andwolfram has stagnated, owing to low international prices aggravated recentlyby the appreciation of the Rwandese franc, which is linked to the UnitedStates dollar. Furthermore, supply of necessary fuels has at times beenirregular (as in 1979, with the closing of the Uganda border), and access toadditional deeper seams by small-scale independent miners has becomeincreasingly difficult.

6. The contribution of the manufacturing sector to GDP averaged 15percent from 1977 to 1980. There are indications that manufacturing hasexperienced some significant real growth in recent years, principally intraditional production (mainly of banana and sorghum beer), which is estimatedat nearly three-quarters of the value added in industry. Important also arethe agro-industries (coffee, tea, pyrethrum), sugar refining, and beer andfruit juice production (lemon, passion-fruit etc.). Rwanda's modern manufactur-ing base has grown slowly, often in response to foreign aid. Examples includea cement plant under construction in the south, financed by China, and a matchfactory financed by Japan. The construction sector contributed, on average,4 percent to GDP in the period 1977-80. Its recent growth has been limited tothe building of dwellings, mainly in Kigali (Rwanda's capital), and publicbuildings.

7. The assessment of performance of the tertiary sector is particularlytentative, partly because of the difficulties associated with evaluatingcommercial activities in the rural areas (traditional trade in coffee andfoodcrops), but also because of probable tax evasion. The data availableindicate that commerce and transportation contributed nearly 18 percent toGDP, on average, during 1977-80. Other tertiary activities seem to haveexpanded in real terms, especially public administration, whose contributionto GDP averaged 8 percent in that period.

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8. Traditionally, Rwanda-s fiscal policies have been prudent, andhave taken into account the variations of revenue from export taxes, notablyon coffee. As a result, current budgetary surpluses averaged 3 percent of GDPin 1977-80. The budget structure reflects the narrow revenue base, highrecurrent expenditures, and development expenditures which are contingent uponexternal assistance. In 1977-80, more than 50 percent of central governmentrevenues came from import and export taxes, with coffee exports alone contribu-ting 25 percent; taxes on beverages (17 percent), and on income and profits(18 percent), accounted for the remainder. Recurrent expenditures weredistributed mainly among Government-s administrative services (25 pecent),education (24 percent), and defense (20 percent), but expenditures on agricul-ture and public works have expanded faster in recent years. Budgeted develop-ment expenditures have been particularly important in agriculture (18 percent,in 1977-80), transport and communications (13 percent), education (13 percent)

and other social services (16 percent).

9. The fiscal situation, however, is being affected by a number ofunfavorable trends. Preliminary estimates indicate that in 1981, contrary tothe preceding years, increases in revenue fell short of increases in expendi-tures. Coffee prices declined, and in spite of higher export volume, budgetaryreceipts from this source also fell. At the same time, there was a sharpexpansion in government expenditures reflecting, inter alia, the impact of thegeneral wage increase granted in September 1980 and the costs associated withthe addition of a new ministry of education and the establishment of a newlegislative assembly. In an effort to expand the revenue base and increaserevenue, the Government introduced a new business tax which, however, has notyet yielded sufficient resources to compensate for the fall in revenue fromcoffee, and the overall treasury position shifted from a surplus of Rwf 1.4billion (US$15.1 million equivalent) in 1980 (equivalent to 1.3 percent ofGDP) to an estimated deficit of Rwf 2.1 billion (US$23.1 million equivalent)in 1981 (equivalent to about 2 percent of GDP). Even if growth in governmentexpenditures is slowed, continued deficits are likely in the medium-term, asrevenue from coffee is expected to remain depressed, and the possibility ofrecourse to other taxes (or to increased tax rates) is limited.

10. Conservative monetary and credit policies were followed during the1977-80 period, and thus did not contribute to inflationary pressures. Thesehave arisen mainly from supply shortages caused by frequent disruptions ofsupply routes through neighboring countries, increased international transportcosts, and increased prices of imports and domestic foodstuffs. Inflationaveraged 12.5 percent per annum during 1977-80; it peaked at 16 percent in1979, primarily as a result of the closing of the Uganda border, but alsoreflecting higher transport costs following the 1979-80 oil price rises.The inflation rate declined to 7.2 percent in 1980, and remained at this levelin 1981 as trade through Uganda was back to normal, the prices of domesticfoodstuffs did not increase, and there was a significant slowdown in the rateof increase of import prices.

11. Rwanda's balance of payments generally reflects coffee marketconditions, and has benefited in recent years from significant net capitalinflows. During the period 1977 to 1980, the current account deficit averagedUS$105 million. Nevertheless, it was substantially lower in 1977 and 1979,and higher in 1978 and 1980, in line with fluctuations in coffee exportreceipts. Sustained net capital inflows led to overall balance of paymentssurpluses each year, and Rwanda's gross official foreign reserves, at end-1980,were equivalent to seven months of projected 1981 imports of goods and non-factor services. The decline in coffee export receipts observed in 1980continued in 1981. Preliminary estimates indicate that in spite of a signifi-cant net inflow of capital, Rwanda suffered its first reserve loss in manyyears, bringing gross official foreign reserves down to the equivalent of fivemonths of projected 1982 imports of goods and non-factor services. Medium-term prospects are not encouraging, as the terms of trade are expected todeteriorate. Because there are no viable alternatives, in the medium-term, tothe products currently exported, export receipts are likely to increase onlyslightly (on the strength of increased volumes of coffee and tea), whileimport payments will probably remain at a high level, as Rwanda's needs willincrease if growth is to be sustained.

12. Rwanda's development plan for the period 1977-81 included as itsmain priorities to increase food production, improve living standards throughmore widespread access to better health care and basic social services,increase employment and improve utilization of human resources, and strengthenthe country-s external position (through reducing its dependence on coffee asthe principal source of foreign exchange earnings and its vulnerability toexternal factors, such as transportation). The Government has made seriousefforts to pursue these objectives, but structural, financial, and institu-tional constraints have limited the success of its policies. Particularly,institutional weaknesses stemming from lack of skilled personnel, fragmentationof institutional responsibilities, and poor coordination among concernedagencies have hindered project preparation and implementation and publicsector management, and have thus contributed to the sluggishness of planimplementation. The Government's efforts to increase agricultural production,especially of foodcrops, have had modest results, and food supply remainsinadequate. This situation is likely to be aggravated in the medium-term, aspopulation is increasing rapidly. The work of the National Population Office,recently created and still being organized, will take time to produce results.There has been a gradual increase in the number of health/nutrition centersand hospital beds, but health services in rural areas are still sparse, andwater supply has tended to deteriorate in some rural areas. The implementationof the 1979 education reform has been hampered by financial and administrativeconstraints and by the limited number of teachers. The only significantincreases in employment have occurred in the public administration and con-struction sectors. While Rwanda succeeded in diversifying somewhat its exportcrops by increasing the production of tea, this did not serve to reducesignificantly its vulnerability to volatile world market conditions.

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13. One of the 1977-81 Plan's main objectives was to reduce the country's

vulnerability to transportation through neighboring countries; improvement ofinternal transportation is also needed to stimulate agricultural productivity.Rwanda's rudimentary road network has hampered agriculture specialization andmonetization, and thus modernization of the agricultural sector. External

donors finance most of Rwanda's infrastructure projects, and investment inroads and road maintenance has increased in recent years. However, a large

proportion of the road network is still not passable during the rainy seasonswhich sometimes disrupt trade. The trans-Africa highway through Uganda andKenya to the port of Mombasa carries most of Rwanda's external trade.

* Interruptions of this trade have had strongly negative impacts on the economy,as during the Uganda/Tanzania war in 1978-79 when the Government was forced toresort to expensive air transport. Air Rwanda, the state-owned airline,purchased a used Boeing 707 cargo plane which has been used since July 1979 totransport all kinds of merchandise. Kigali's airport has been equipped forall-weather operation and, since its recent extension, can now accommodate widebody jets. It appears likely that air transport will continue to grow inimportance, given the risks of political disruptions in the region and theprohibitively high cost of shipment over alternative routes.

14. External agencies have financed the largest proportion of developmentexpenditures in Rwanda. The principal sources of foreign assistance and theiraverage share during 1977-80 were Belgium (26 percent), the European Develop-ment Fund (13 percent), the Federal Republic of Germany (9 percent), theUnited Nations System (14 percent), and France (8 percent). IDA contributedover half of the United Nations system share. Japan, Switzerland, non-govern-mental organizations, Canada, and the United States account for the remainder.External aid has been mainly in the form of technical assistance and financinginfrastructure development. Most of the technical assistance (58 percent) hasbenefitted three sectors: agriculture, education, and health care. Investmentin transport and communications accounted for about two-thirds of infrastruc-ture financing in 1980. Together, these four sectors received nearly 62percent of the aid extended to Rwanda in 1980, an emphasis which is in linewith the country's avowed objectives and priorities.

15. Rwanda's need for external assistance will increase in the next fewyears as its fiscal and balance of payments prospects are less favorablethan in the past, principally as a result of depressed world prices for itsmajor exports (coffee, tea, cassiterite and wolfram). Agricultural production,particularly of foodcrops, is not expected to increase significantly in theshort run, as it will take time to raise yields on arable land, most of whichis already under cultivation. Large increases in mining production will onlybe possible if the financing for currently planned investments materialize.The performance of the other sectors, which depend heavily on importedgoods, can only be maintained with further reserve losses and/or increased netinflow of capital, and these sectors will probably compete with food items forscarce foreign exchange. Thus, the medium-term outlook for Rwanda is notencouraging, especially at a time when the external agencies themselves alsohave financial constraints. Fortunately, however, the country's external debt

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is still low. At end-1980, the public- and publicly-guaranteed external debtamounted to US$170 million, or 14 percent of GDP, and the debt service ratiowas equivalent to only 3.2 percent of exports of goods and non-factor services.Hence, there remains considerable scope for further borrowing. Neverthelessgiven the poverty of the country, the vulnerability of its economy and its

poor medium-term prospects, external funds should continue to be providedmostly in the form of grants or loans at highly concessionary terms.

PART II - BANK GROUP OPERATIONS IN RWANDA

16. Bank Group assistance started in 1970 and initially focused onthe improvement of the road network and the strengthening of agriculturalproduction. Rwanda has received fifteen IDA credits totalling US$135.5million, of which four (totalling US$43.1 million) were for roads, six(US$64.3 million) for agriculture, two (US$9.2 million) for DFC projects, one

(US$8.0 million reduced to US$6.4 million) for education, one (US$7.5 million)for telecommunications and one (US$5.0 million) for technical assistance.There have been no Bank loans. An IFC loan of US$535,000 for a tea factorywas signed in 1976; a second IFC loan of US$226,000 and contingent equitycommitment of up to US$60,000 to expand the tea factory were signed in Sept-ember 1980. Annex II contains a summary statement of IDA credits, IFC invest-ments and notes on the execution of ongoing projects.

17. The first three highway projects are completed and totally disbursed.A fourth credit for a highway maintenance project (Credit 769-RW), whichbecame effective in August 1978, is three-quarters completed and is pro-gressing satisfactorily (further details on Bank Group operations in the high-way subsector are provided in para. 34, below).

18. The first agricultural development (Mutara) project was completedin July 1979 and funds have now been completely disbursed. 1/ A second creditof US$8.8 million, which supports the second phase of a long-term developmentfor the Mutara region, was declared effective on May 30, 1980, but has experi-enced start-up problems due to difficulties in recruiting technical assistance.The Cinchona Project (US$1.8 million) is nearing satisfactory completion;the Bugesera/Gisaka/Migongo mixed farming and rural development project(US$14.0 million) is expected to be completed in December 1982. Construction,procurement and budgeting are proceeding satisfactorily, though the results offoodcrop and plant improvement components are below appraisal estimates due to

1/ A Project Completion Report (August 1980) concluded that even though theincreases in agricultural production were less than originally expected,substantial achievements had been realized under the project in theareas of infrastructure development and in experience acquired byRwandese staff in project management. In addition, the project hadserved as a positive instrument for IDA and the Government in developinga sectoral dialogue for the Mutara area.

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a failure to come up with appropriate technical packages for the relativelydry project area. A project to support reforestation programs in Kigali,Butare and Gisenyi Prefectures (IDA Credit 1039-RW for US$21.0 million) becameeffective on November 11, 1981; the project includes a study of renewableenergy sources for Rwanda. A US$15.0 million credit for a coffee improvement/foodcrops project in the Lake Kivu region became effective January 18, 1982.A credit for an education project (US$8.0 million) became effective in 1975;physical implementation has been slow and complicated by procurement problems.More recently, however, project performance has improved (para. 19 below).The first credit of US$4.0 million to the Development Finance Company (BRD)has now been fully committed. BRD's performance under the credit has beenhighly satisfactory. A second credit of US$5.2 million to BRD was signed onJuly 13, 1979, and became effective on January 4, 1980. A credit for atelecommunications project (US$7.5 million) which aims at reducing Rwanda'sgeographic isolation from other countries and at improving internal telecom-munications facilities, became effective July 7, 1981.

19. In fiscal years 1979-81, disbursements for Rwanda totalled US$28.9million compared to new commitments of US$42.4 million. In the same period,the average annual disbursement rate (ratio of change in disbursements toundisbursed balance) was 20 percent; this is about average for other countriesof the East Africa Region. While disbursement performance in general issatisfactory, notable difficulties have arisen in the case of the FirstEducation Project. The lack of acceptable record keeping has impeded theprocessing of disbursement requests. However, following a UNESCO-assistedfinal inspection and evaluation mission for the workshops financed under theproject, disbursements have resumed. Implementation of a second educationproject should be less affected by similar weaknesses given the familiaritywith Bank Group procedures now acquired in the Ministry of Primary andSecondary Education where, in addition, a new and more positive managerialclimate now prevails since the Ministry was reorganized about a year ago.

20. One of the major constraints on Rwanda's development is the shortageof technical/managerial capacity. This affects all sectors and inhibitsproject preparation and implementation. Intensive technical assistance andon-the-job training of Rwandese staff are salient feature of the Bank Group'sprogram for Rwanda, either under individual projects in the various sectors orthrough the recently approved Technical Assistance Project.

21. For the future, the primary emphasis of Bank operations will remainon rural development, the main objective being to increase food production aswell as export crops, while maintaining soil fertility. A major emphasis willalso be placed on the development of human resources, focusing on populationcontrol and support to basic education and skills training to improve agricul-tural productivity, provide skilled manpower, and influence attitudes on thepopulation issue. Further investment is also justified for infrastructureand, in particular, transportation to reduce the country's isolation andprovide incentives to further intensification of agriculture as well asincreased specialization and diversification through better marketing. Theproposed project is in harmony with these objectives.

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Another area requiring our special attention includes renewable sources ofenergy to lessen the demand for fuel imports and mitigate their impact on thebalance of payments. A study of renewable energy sources is being financedunder IDA Credit 1039-RW (para. 18). A second Bugesera rural developmentproject will include a population/nutrition component, the Association's firstoperational effort in the critical area of population education and control.A second education project would address clearcut manpower needs and supportthe training of middle level technicians and managers; the project will alsoinclude selective support for basic education through pre-service and in-servicetraining of teachers. It is expected that the Bank Group will continue tosupport industrial development through the Rwandese Development Bank (BRD).

PART III - THE TRANSPORT SECTOR

22. The topography of Rwanda, dominated by rugged mountainous terrainand rolling plateaus scattered with swampy valleys, makes it difficult toattain reliable and efficient transport of imports and exports and all-weatheraccess within the country. The present infrastructure consists of a verydense network of mainly low standard earth roads, limited water transport(on Lake Kivu) and the international airport of Kigali (which was upgraded in1981 to handle widebodied aircraft). Since Rwanda is too small to use domesticair transport extensively, this mode serves primarily external transportneeds. In times of severe bottlenecks on surface routes (such as resultedfrom the 1979 hostilities between Uganda and Tanzania), air transport offersthe only means to evacuate exports and receive essential imports. There areno railroads in Rwanda.

23. The Government has assigned high priority in its investment plansto improve the country's transportation system. In so doing its avowedgoals are to (i) upgrade the main road network to facilitate the country'seconomic, social and administrative integration, (ii) improve vital externaltransport connections, and (iii) improve the road network through bettermaintenance. Under Rwanda's second five-year plan (1977-81), strong emphasiswas placed on the transport sector: 26 percent of all planned investment wasallocated to transport, and roads alone accounted for 22 percent.

The Road Subsector

24. The road network, totalling about 6,300 km, is one of the densestin Africa, with an average of 240 m per km . It is divided into two groups:(i) the classified (or national) network (about 2,300 km), maintained bythe Roads Branch (para. 29) and comprising about 500 km of paved roads, about800 km of mostly gravel roads, and about 1,000 km of earth roads and tracks;and (ii) the unclassified (or rural) network, consisting of about 4,000 km ofearth roads, maintained by local authorities. All roads that are not paved orrecently regravelled are low standard earth roads characterized by corrugatedsurfaces, large ruts and potholes, and, in wet weather, by deep mud. Themountainous terrain, heavy rainfalls and poor soil conditions call for construc-tion of paved roads in most of the country due to the high cost of maintaininggravel and earth roads.

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25. Road Usage. In 1980 Rwanda's vehicle fleet numbered about 11,800

(of which 1,800 were owned by the public sector). The fleet is composed ofabout 4,400 cars registered mainly in Kigali, 5,700 pick-ups and minibuses,

1,300 trucks and 400 other vehicles. The total fleet increased by 87 percent

in four years (1976-80). The number of pick-ups more than doubled during that

period. This growth is related to small scale trade, which is rapidly gaining

in importance. While this type of transport may suggest less efficient use of

energy, it is well adapted to the country's trade and distribution requirementscharacterized by small loads. The most trafficked road sections are intercity

trunk routes carrying about 500 vehicles per day. Average traffic growth in

recent years is estimated at 7 percent a year with slightly higher growth for

light vehicles. Heavy vehicles represent about 50 percent of intercity

traffic.

26. The road transport industry is largely composed of traders/truckers

who own one or two vehicles and engage mainly in trading with trucking as a

second activity. Vehicle owners normally use their vehicles for their own

account but will offer spare capacity when there is demand. Transport routes

are not regulated, and competition appears to be stronger on improved roads

where transport flows are higher. It is expected, therefore, that road

upgrading will not only foster economic integration of the country (especially

needed for the southwestern region) and facilitate agricultural development,

but also reduce transport costs through increased competition. Althoughuniform tariffs for freight are set by the Government, the regulations do notprovide penalties for non-compliance, and actual prices agreed between operators

and shippers can differ from the official rates according to supply and demand

and road conditions on a particular route. Passenger transport is mainly

undertaken by traders who carry both goods and passengers in pick-ups and

trucks. The public bus company ONATRACOM, under the Ministry of Communications(MC), operates about 48 buses between Kigali and provincial centers and 8minibuses in Kigali where private minibus transport has recently made its

appearance and has potential for growth.

27. For its foreign trade, Rwanda's landlocked and isolated geography

forces it to rely heavily on road or road/rail transport that is undertaken at

high cost through Uganda and Kenya to the Indian Ocean Ports. Clearing and

forwarding agents established in Rwanda handle transit formalities and inter-

national transport. They do not engage in transport themselves but contract

out this work to truckers or pools of truckers. The Societe des Transports

Internationaux du Rwanda (STIR), a semi-public organization created in 1974,is the main Rwandese international carrier. It has a fleet of about 90tractor combinations of which about half are tank wagons. The truckingindustry is dominated by carriers from the transit countries which account for

about 75 percent of the total volume while Rwandese carriers transport the

remaining 25 percent.

28. Road users contribute to government revenues through import duties

and taxes on vehicles, spare parts and lubricants, through registration and

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licensing fees and a border toll on commercial vehicles. Revenues collectedfrom road users in 1980 are estimated to have amounted to about US$9.3 million.These revenues more than covered recurrent maintenance expenditures of US$3.1million and also contributed to meet the costs of new road construction an'urban roads. The level of road-user taxes is adequate at present, but asmaintenance expenditures increase with the growing maintenance needs and theexpanding capacity of the Roads Branch (para. 29), they will need to bereviewed.

29. Highway Administration. The Ministry of Public Works (MPW) throughits Roads Branch (RB) is responsible for design, construction and maintenanceof the classified network (para. 24(i)). The RB is divided into two depart-ments: the Planning and Engineering Department (PED), whose responsibilitiesinclude construction supervision, and the Works Department (WD), responsiblefor road improvement and maintenance and for the mechanical workshops. TheRB's main handicap is its shortage of experienced local staff. The RB,therefore, depends on foreign technical assistance and employs 24 expatriatesfinanced by the Federal Republic of Germany and Belgium and by the Associationunder the Fourth Highway Project (para. 37). The formal and on-the-jobtraining provided by this technical assistance is helping local staff togradually replace the expatriates, but the RB will continue to depend onexpatriates until sufficient staff can be trained. It is expected that by1983, however, the RB wil be predominantly manned by local staff with onlypockets of specialized expatriate assistance including technical assistanceand training being provided by the Federal Republic of Germany for the PED andthe mechanical workshop (see also para. 46).

30. Engineering and Road Construction. The PED is charged with engineer-ing and construction supervision tasks; it also operates a soils laboratory,which is adequately staffed and equipped. The department is headed by aRwandese engineer, but its daily operations and administration are supervisedlargely by expatriate staff. Engineering studies and supervision for majorprojects are normally entrusted to foreign consultants, since the departmentcan handle only minor engineering and work supervision tasks and since thereare no local consultants. For major construction projects, the PED employscontractors; contracts are generally let out on a unit price basis followinginternational competitive bidding. Road construction is expensive because (i)the terrain is rugged and (ii) materials have to be transported long distancesfrom seaports. There are four local road construction firms established inthe country, all subsidiaries of foreign companies. Rwanda has no domesticroad construction firms due not only to lack of skilled and experienced staff,but to the limited financial capacity of the domestic contractors (who workonly in the building sector and have not yet ventured into major civil works).

31. Maintenance. The RB's Works Department (WD) is responsible formaintaining the classified network (para. 24 (i)); district authorities areresponsible for the maintenance of unclassified roads (para. 24(ii)). Since

district authorities lack the resources to carry out this task adequately, theWD maintains about 1,600 km of the most important unclassified roads. Roadmaintenance operations have been steadily improving. This is due in part tothe Government's recognition of the importance of maintenance and the assist-ance provided by the Association and other donors, principally the Federal

Republic of Germany.

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32. Planning and Financing. The PED is responsible for planning highwayinvestments but lacks sufficient staff to carry out all the tasks assigned toit. Two areas of planning--the strategy for the improvement of externaltransport and the relative weight to be given to main roads and feeder roads--require particular attention. The Government therefore has set up atransport planning unit in the Ministry of Public Works (para. 45). To thepresent, a large volume of preinvestment work has been financed by externalsources and carried out by consultants. However, since clear priorities forthe gradual implementation of Rwanda's road reconstruction program and develop-ment of regional and feeder roads still need to be set, the transport planningunit will (i) recommend policies for the development and utilization ofinternal and external transport routes and (ii) prepare a road investmentprogram consistent with national priorities.

33. Road construction is financed by the development budget and externaldonors, while road maintenance and improvement are financed from the Govern-ment's recurrent budget, with financial and/or technical assistance from theFederal Republic of Germany, Belgium and the Association. The UNDP hasprovided complementary technical assistance. The Government's recurrentbudgets have been adequate in recent years, increasing from US$1.14 millionequivalent in 1975 to US$3.14 million equivalent in 1980.

Bank Group Operations in the Subsector

34. The Association began lending for improvement of Rwanda's roadstwelve years ago. Since that time its investments have been geared to supportGovernment's avowed policies and the priority needs of the country to (i)improve external transport connections; (ii) upgrade the main road network tofacilitate the country's economic development and social and administrativeintegration; and (iii) improve the road network in general through bettermaintenance. The First Highway Project (Credit 196-RW, US$9.3 million)financed the purchase of maintenance equipment and the paving of the Kigali-Gatuna road, the final link of an all-weather road joining Kigali to the portof Mombasa. Repair works on sections of the road damaged by torrential rains,severe inflation in 1973/74 and a currency realignment gave rise to a sub-stantial cost overrun: total project costs increased from the appraisalestimate of US$10.9 million to US$28.1 million. The Credit Agreement wasamended in 1975 to increase the credit by US$9.5 million (Credit 196-1-RW) tofinance this overrrun. The Saudi Fund also provided US$5.0 million towardfinancing the road. The project was completed five years behind schedule.Since completion, sections of the Kigali-Gatuna road, particularly on thefirst 50 km, have deteriorated and require extensive restoration. While theexact causes of the deterioration have yet to be determined, it appears thatthe problem lies in inadequate design for difficult soil conditions, poorexecution of the drainage works and overloading of trucks using the road. Inview of the importance of the road, the proposed project includes a study toinvestigate the causes of its premature deterioration and to identify thetype, scope and cost of restoration works (para. 41(b) (ii)). The ProjectPerformance Audit Review (PPAR) estimated the project's economicreturn at 13 percent, the same as at appraisal, the increased projectcosts having been compensated for by higher than expected traffic.

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35. The Second Highway Project (Credit 299-RW, US$4.2 million, 1972)

financed the initial phase of a comprehensive maintenance program and thestrengthening of the Ministry of Public Works to enable it to carry out roadmaintenance and improvement works more efficiently. Project implementationwas delayed by slow mobilization of technical assistance, late delivery ofequipment, fuel shortages resulting from frequent border closings betweenKenya and Uganda, and shortages of Government funds. The Credit Agreement wasamended in 1977 to provide an additional US$1.2 million to help finance anincrease in project cost. Although the project did not meet its maintenancetargets (which the PPAR concluded were overly optimistic) it succeeded insetting up a basic road maintenance administration and improving the skills oflocal staff.

36. The Third Highway Project (Credit 475-RW, US$6.3 million, 1974)provided for the paving of the Ruhengeri-Gisenyi road (60 km), feasibilityand detailed engineering studies of the Kigali-Ruhengeri and Ruhengeri-Cyanikaroads (financed by Belgium), and technical assistance to the Ministry ofPublic Works to train maintenance staff. Completion of the paving componentwas delayed about one year due primarilly to the need for additional designwork in the course of implementation. The feasibility and detailed engineeringstudy of the Kigali-Ruhengeri road was satisfactorily completed as scheduled;the feasibility and detailed engineering of the Ruhengeri-Cyankia road weredeleted due to cost overruns as were the technical assistance and trainingcomponents (which were included in the Fourth Highway Project). The projectwas completed by mid-1977, about one year behind the appraisal estimate. Theactual cost was US$8.9 million compared to US$7.7 million estimated at appraisal.Part of this increase (US$400,000) was financed by the Association under thesupplementary financing credit for the First Highway Project and the remainderby the Government. The rate of return upon project completion (as noted in thePPAR of June 18, 1979) was calculated at 18 percent, the same rate estimated atappraisal, the increase in construction costs being offset by an increasein vehicle operating cost savings.

37. The Fourth Highway Project (Credit 769-RW, US$15 million, 1977)is financing the second phase of the maintenance program begun under the SecondHighway Project and continuing the strengthening of the Ministry of PublicWorks road maintenance operations. It comprises a four-year improvementprogram covering 1,500 km of roads, routine maintenance of 3,850 km of roads,improvement of equipment repair facilities, and training of maintenance per-sonnel. Although the project is about one year behind schedule, implementationis now at its anticipated progress rate and the project is proceeding satis-factorily.

38. Experience with the aforementioned highway projects has shown thatconstruction works have frequently been interrupted due to periodic shortagesof materials and fuel caused by border closures in Uganda and Kenya. Further-more, difficult soil conditions in certain parts of the country have resultedin unforeseen additional construction works and have been the cause of extensivedamage to roads requiring comprehensive repair and rehabilitation. As aresult, road construction works have frequently required more time to completethan foreseen and costs have been substantially above those originally estimated.

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However, Bank Group operations in the sector have produced substantialbenefits, including those deriving from the institution-building efforts begununder the Second Highway and continued under the Fourth Highway Project; goodprogress has also been made in establishing the highway organization (RB) andin training staff (para. 29).

PART IV - THE PROJECT

39. The proposed project was appraised in August 1981. Negotiationswere held in Washington from April 5 to 8, 1982. The Government delegationwas led by H. E. Joseph Nzirorera, Minister of Public Works. A detaileddescription of the project components can be found in the Staff AppraisalReport No. 3680-RW, dated May 11, 1982, which has been distributed separatelyto the Executive Directors. The main features of the project, which shouldstrengthen elements already financed by the Association (and other donors),aim at pursuing Government policies in the sector (para. 34), and are high-lighted in the Credit and Project Summary at the beginning of this report.Special conditions of the Credit are summarized in Annex III.

Objectives and Description of the Project

40. The main objectives of the proposed project are (i) to fostereconomic integration of the southwestern region with the rest of the countrythrough more reliable and economical transport, (ii) to facilitate agriculturaldevelopment in this region and (iii) to improve planning and programming ofactivities in the transportation sector.

41. The proposed project consists of the following:

(a) construction to two-lane paved standard of the Butare-Kigeme-Kitabi section (53.5 km) of the Butare-Cyangugu road;

(b) consulting services for (i) completion of preparationstudies and supervision of construction works under(a), (ii) engineering studies for restoration workson the Kigali-Gatuna road (80 km), (iii) preinvestmentstudies, and (iv) technical assistance to the Ministryof Public Works;

(c) procurement of materials and supplies for maintenanceof the Kigali-Gatuna road; and

(d) procurement and installation of weighing scales forcontrol and enforcement of vehicle weight regulations.

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42. Construction of Butare-Kigeme-Kitabi road (53.5 km). The projectroad is a section of the Butare-Cyangugu road (156 km), one of the country'smost important transport links. It connects the second largest city, Butare(population 35,000), to the southwestern region which is an agriculturalsurplus area. The present road is of an earth surface with poor drivingconditions; during the eight-month rainy season, it is often impassable forall but four-wheel drive vehicles. The road surface is uneven and there aredeep ruts and potholes. As a result, the driving speed is about 20 km/h formost of its length and transport costs are high. The road is also costly tomaintain. Improvement of the road to all-weather standard is essential toyear-round transport of agricultural products and consumer goods and of theoutput of a cement plant currently under construction near Cyangugu. Con-struction of the Kitabi-Cyangugu section (102.5 km) will be financedby the African Development Bank (AfDB), the EEC, BADEA and the Kuwait Fund forArab Economic Development (KFAED). Signing of agreements between these fourcofinanciers and Government would constitute a condition of effectiveness ofthe proposed credit (Section 6.01 of the Development Credit Agreement).

43. Consulting services. (i) Completion of preparation studiesand supervision of construction of the Butare-Kigeme-Kitabi road.Consultants carried out a preliminary engineering study and an update of thefeasibility study of the project road in 1981 under a PPF, since earlier

studies did not provide an adequate assessment of improvements requiredand the related costs. In view of staff constraints in PED, consultants wouldbe engaged to supervise construction of the project road. In addition,because of difficult soil conditions, the proposed project would provide forthe services of a soils engineer with experience in soils and geologicalconditions similar to those of the project region. This expert would carryout periodic reviews of project implementation (about two man-months per year)with regard to the use of appropriate construction materials and proper worktechniques.

44. (ii) Engineering studies for restoration works and maintenance ofthe Kigali-Gatuna road. Construction of this road was completed in 1977 withfinancing under the First Highway Project. Inspite of normal maintenanceefforts, the road already shows considerable surface damage (para. 34). Inorder to determine the cause for the failure and the type, scope and cost ofrestoration works, the proposed project includes consultants services tocarry out this investigation. The consultants services will include a soilsexpert. The study is expected to cost about US$100,000 equivalent. TheGovernment has agreed to undertake the study and thereafter to prepare anaction plan and identify sources of financing by June 30, 1983 for carryingout restoration works (Section 3.08 of the Development Credit Agreement).However, given the importance of the road and the rapid rate of deterioration,immediate steps are required to keep the road passable. Therefore, as aninterim measure pending completion of the study, the proposed project wouldprovide materials and supplies for routine maintenance of the road. Thismaintenance would be carried out by the maintenance brigade set up andequipped under the Fourth Highway Project (para. 37).

45. (iii) Preinvestment studies. Once the transport planning unitin the Ministry of Public Works (Section 4.02 of the Development CreditAgreement and para. 32) has defined priorities for the transport sector, theAssociation will approve the type and scope of the studies to be financedunder the project and identified by the unit for the highway subsector

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(Schedule 2 Part (C) (5) of the Development Credit Agreement). These studies,which will prepare future investments in the highway sector, are expected toinclude a feeder road study to assist the Government in defining prioritiesfor improvement of its feeder road network.

46. (iv) Technical assistance. Technical assistance provided under theBank Group's Fourth Highway Project will conclude at the end of 1982. Theproposed project therefore includes three road maintenance engineers who willbe assigned to the Ministry of Public Works (MPW) to assist in planning, budget-ing, carrying out and monitoring road maintenance operations; a transporteconomist to help strengthen the Government's transport planning capabilities;and one mechanic to strengthen the MPW's equipment maintenance and repaircapability. Two of the three road maintenance engineers will serve for twoyears each; the other experts will serve for three-year periods and complementtraining activities for local staff being provided by German and Belgiantechnical assistance. This should make an important contribution to institu-tion building efforts (para. 29).

47. Procurement of weighing scales. To enable the Government to controland enforce vehicle load regulations, the project would provide for theprocurement and installation of two fixed weighing scales and procurement ofthree mobile ones. The two fixed scales would be installed at the borderposts of Gatuna and Kagitumba, through which nearly all Rwanda's imports byroad must pass. The mobile scales would be used for spot controls of vehicleloads over the country-s entire network. The Government has agreed to install

the fixed scales by December 31, 1983 (Section 3.06(b) of the DevelopmentCredit Agreement). Government has further agreed to establish vehicle weightregulations and an enforcement mechanism, acceptable to the Association,and to put the new regulations (updated to comply with the country-s needs andconditions as well as the regulations currently in force in neighboringcountries) into effect by December 31, 1982 (Section 3.06(a) of the DevelopmentCredit Agreement).

Project Cost and Financing

48. Total project cost is estimated at US$30.1 million, net of taxes andduties, with a foreign exchange component of US$22.92 million or 76 percent oftotal costs. Taxes and duties amount to about US$0.6 million. A physicalcontingency allowance of 10 percent has been provided to cover increases inquantities. In light of past experience, a special 10 percent risk allowancehas been added to cover price increases for construction works that mightresult from interruption of imported essential supplies such as cement,bitumen and fuel due to border closures or other transportation bottleneckssuch as have occurred in the past (para. 22). An additional risk allowanceof 10 percent has been prov-ded to cover the risk of bids being higher thanexpected. (This will take into account the wide variations in bids sometimesexperienced in Rwanda.) If not required for physical execution of theproject, the balance of funds would be cancelled and not reallocated to otheritems. Price contingencies are based on the following estimates of inflationrates worldwide for the foreign cost of civil works and in Rwanda for thelocal cost of civil works: 1981--9 percent foreign, 15 percent local;

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1982--8.5 percent foreign, 15 percent local; 1983--7.5 percent foreign, 15percent local; 1984--7.5 percent foreign, 15 percent local; 1985--7.5 percentforeign, 15 percent local. Cost estimates for construction works were derivedfrom consultants' estimates based on final design quantities. The supervisionof construction is estimated at US$1.0 million, equivalent to 100 man-monthsof consultants' services. Estimates for the engineering study for restorationworks of the Kigali-Gatuna road are based on eight man-months of consultants'services and total about US$100,000. A lump sum of US$250,000 has beenallocated for preinvestment studies. Technical assistance will require about156 man-months of consultants' services, estimated at about US$9,000 per monthcovering salary, overheads, international travel and subsistence, localtransportation, housing, report preparation and other minor expenditures.Procurement of the weighing scales and of materials and supplies from main-tenance of the Kigali-Gatuna road are based on recent costs for similar itemsunder other Bank Group projects.

49. The proposed project would be financed by (i) an IDA credit of

US$25.9 million which would cover about 95 percent (US$21.7 million) of theforeign cost and 58 percent (US$4.2 million) of the local cost; (ii) a UNDPcontribution (to finance technical assistance and studies) of US$1.5 million,which would provide for the remaining 5 percent (US$1.2 million) of theforeign cost and 4 percent (US$0.3 million) of the local cost; and (iii)Government's contribution, totalling US$2.7 million (excluding taxes of US$0.6million), equal to about 9 percent of total project cost or 38 percent oflocal cost. Included in the proposed IDA credit is provision for therefinancing of a US$250,000 advance from the Project Preparation Facility.

Implementation

50. The Ministry of Public Works (MPW) would be responsible for theimplementation of all project components. Within the MPW, the Planning andEngineering Department (PED) would be responsible for road constructioncarried out by contractor and supervised by consultants, the procurement andinstallation of weighing scales, and the execution of the study for therestoration of the Kigali-Gatuna road and of the preinvestment studies; theWorks Department (WD) would be responsible for technical assistance for roadmaintenance, equipment maintenance and repair, and for procurement of materialsand supplies and carrying out by force account maintenance of the Kigali-Gatunaroad. It is expected that one consulting firm will supervise the entireButare-Cyangugu road (para. 42). This is the intention of both the Governmentand the Association.

51. Road construction would start in the fourth quarter of 1982. Itwould take about three years to complete the entire road from Butare toCyangugu. Procurement of weighing scales is expected to take about six months;the equipment is expected to arrive in mid-1983. The road maintenance engineerand mechanic (financed by UNDP) will start in January 1983 and work for threeyears; the two road maintenance engineers (financed by the Association) willstart in January 1984 (at the conclusion of the Fourth Highway Project) andwork for two years. Following establishment of the country-s list of priorityinvestments (expected, mid-1983), by the transport planning unit in the MPW

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the type, scope and schedule of execution of the preinvestment studies to befinanced under the project would be subject to the Association's approval.The engineering study for restoration of the Kigali-Gatuna road would mostlikely start in January 1983 and be completed within six months. The totalproject is expected to be completed by the end of 1986.

Procurement

52. The award of the contract for the construction component (US$16.6million, excluding contingencies) would be subject to ICB in accordance withBank Group guidelines. To minimize the risk of construction delays due tointerruption of supplies, tender documents would include provision for aconsiderable stock of materials and fuel. The Butare-Cyangugu road will bedivided into four sections, financed by the various donors (para. 42), andeach contractor would be required to quote his bid price for each individualas well as for all the sections to be financed. It is thus hoped that thiswill enable Government to obtain lower unit costs. Because of the specializednature, low cost and small amount of equipment being purchased, procurement ofthe weighing scales (US$0.15 million, excluding contingencies) would bethrough international shopping under procedures that are satisfactory to theAssociation. Materials and supplies (US$0.8 million) for maintenance of theKigali-Gatuna road will be procured from suppliers from whom such items havebeen previously purchased on the basis of reasonable, negotiated prices.

53. Consultants services (US$3.6 million, including contingencies)would be needed for supervision of construction, technical assistance, astudy for the restoration of the Kigali-Gatuna road, and preinvestment studies.The Government intends to recruit an individual consultant for the position oftransport economist. The Association has agreed that the three road main-tenance engineers and mechanic would be recruited from consultants Rhein-Ruhr, who have assisted the Government in strengthening road maintenancewith financing under the Second and Fourth Highway Projects. Consulting firmswould be selected for supervision of construction works, the study for restora-tion of the Kigali-Gatuna road and for preinvestment studies. Consultantswould be selected in accordance with the 1981 Bank Guidelines for Use ofConsultants; because of the specialized nature of the services required andgiven the rather difficult terrain and soil conditions in the project areas,price would not be a factor in the selection of the consultants for technicalassistance, the soils engineer and supervision of construction works.

Disbursement

54. Credit funds would be disbursed on the following basis: (a) 90percent of total expenditures for road construction; (b) 100 percent offoreign cost or 90 percent of local cost for procurement and installation ofequipment (weighing scales) and for materials and supplies for maintenance ofthe Kigali-Gatuna road; and (c) 100 percent of consultant services for super-vision of construction. All disbursements would be fully documented.

Accounting and Reporting Requirements

55. MPW has not kept accounts for payments made from its investmentbudget, RB will therefore introduce accounts registering all expendituresunder its investment budget and separate accounts for payments under theproposed project. Project accounts would be audited by independent auditorsacceptable to the Association, and the audited accounts would be submitted tothe Association not later than six months after the end of each fiscal yearduring project implementation (Section 4.01(b) of the Development CreditAgreement). The Government has agreed to provide the Association with projectprogress reports as well as with a project completion report, the latter notlater than six months after the closing date of the Credit (Section 3.04 ofthe Development Credit Agreement).

Benefits and Risks

55. The construction to paved standard of the Butare-Cyangugu roadwould provide the southwestern region with all-weather access, thereby accel-erating its economic, social and administrative integration with the rest ofthe country. Paving the road would bring year-round transport for the region-sagricultural products to the densely populated area around Butare. Theproject road also traverses the Nyungwe forest, which holds economic potential:a number of forest-exploitation and reforestation projects for this area areunder preparation or consideration. Furthermore, a cement plant, being builtnear Cyangugu (30 km from Ntendezi), necessitates improved road communicationsfor supplying the plant and evacuating its output.

56. The construction of the Butare-Kitabi section (of the Butare-Cyanguguroad) which would be financed under the proposed credit, is expected to yieldan economic return of 16 percent. This economic return is dependent on thepaving of the entire Butare-Ntendzi road. No economic return has been cal-culated for the small technical assistance component which is clearly justifiedbecause it will result in an improved maintenance capability as well as inimprovements of MC-s transport planning capacity.

57. The main benefits to be derived from the project are reducedvehicle operating costs (voc) for the normal traffic and reduced totaltransport costs for the cement traffic diverted to the project road fromthe lake/road route via Kibuye. The reduction in total transport costswould result from the combined effect of a better road surface and from theuse of larger and hence more economical vehicles. The reduction in voc on theeconomic activity in the influence area of the road is taken into accountthrough the benefits assigned to generated traffic included in the analysis.In the short term the major direct beneficiaries of voc savings would be thetraders/ truckers. Later, as the road improvement increases competition andencourages new traders/truckers to enter the local transport market, most ofthe benefits are likely to be passed on to producers and consumers. Becausemarketing and distribution is dominated by traders/truckers whose trading andtrucking activities are not easily separable, the savings in voc would bepassed on in the form of higher farm-gate prices for agricultural products

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and/or lower prices for the products sold by the traders/truckers. As for thecement traffic, direct beneficiaries may be expected to be the cement companyand/or the trading/trucking sector. Most of the savings are anticipated to bepassed on to the construction industry.

59. Experience with the Association's previous projects in Rwandahas shown frequent cost overruns due to periodic shortages of constructionmaterials and fuel caused by border closings in neighboring countries throughwhich these commodities must be transported. To minimize the risk of inter-ruptions in construction works, provision would be made in the contractdocuments for the construction of the Butare-Kitabi road for a larger thanusual stock of material and fuel. The project cost estimates include aspecial 10 percent risk allowance to cover unforeseen increases in constructioncosts should any such interruptions occur. Another 10 percent risk allowancehas been added to cover the possibility of bids being higher than expected(para. 48).

60. Difficult soil conditions and unexpected shortages of constructionmaterials in some regions have also caused considerable increases in roadconstruction materials, construction time and project costs under previousprojects. Even though consultants were especially careful in their soilsand geologic surveys and design and an Association-financed consultant visitedthe road to review consultants work, an element of risk still remains.Therefore the proposed project provides for periodic visits of a soils engineerwith wide experience in soil and geologic conditions similar to those of theregion, in addition to the supervisory consultants. This expert would helpthe Government, the Association and the supervisory consultants to review thesoil and geologic conditions, use of appropriate construction materials andapplication of proper work techniques.

PART V - LEGAL INSTRUMENTS AND AUTHORITY

61. The draft Development Credit Agreement between the Rwandese Republicand the Association, and the Recommendations of the Committee providedfor in Article V, Section 1 (d) of the Articles of Agreement of the Asso-ciation are being distributed to the Executive Directors separately.

62. Special Conditions of the Project are listed in Section IV ofAnnex III of this report.

63. I am satisfied that the proposed Credit would comply with theArticles of Agreement of the Association.

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PART VI - RECOMMENDATIONS

64. I recommend that the Executive Directors approve the proposedCredit.

A. W. ClausenPresident

AttachmentsWashington, D.C.

May 3, 1982

ANNEX I- 21 - Page 1 of 5

TABLE 3ARWANDA - SOCIAL INDICATORS DATA SHEET

RWANDA REFERENCE GROUPS (WEIGHTED AVEiAGESLAND AREA (THOUSAND SQ. KM.) - MOST RECENT ESTIMATE)-

TOTAL 26.3 MOST RECENT LOW INCOME MIDDLE INCOMEAGRICULTURAL 14.6 1960 /b 1970 /b ESTIMATE /b AFRICA SOUTH OF SAHARA AFRICA SOUTH OF SAHARA

GNP PER CAPITA (US$) 70.0 100.0 200.0 238.3 794.2

ENERKY CONSUMPTION PER CAPITA(KILOGRAMS OF COAL EQUIVALENT) .. 15.8 29.5 70.5 707.5

POPULATION AND VITAL STATISTICSPOPULATION, MID-YEAR (THOUSANDS) 2916.0 -3847.0 5169.0UREAN POPULATION (PERCENT OF TOTAL) 2.4 3.2 4.5 17.5 27.7

POPULATION PROJECTIONSPOPULATION IN YEAR 2000 (MILLIONS) 9.5STATIONARY POPULATION (MILLIONS) 29.0YEAR STATIONARY POPULATION IS REACHED 2110

POPULATION DENSITYPER SQ. KM. 110.9 146.3 188.1 27.7 55.0PER SQ. KM. AGRICULTURAL LAND 193.1 253.1 328.8 73.7 130.7

POPULATION AGE STRUCTURE (PERCENT)0-14 YRS. 44.3 45.7 46.6 44.8 46.0

15-64 YRS. 53.0 51.6 50.7 52.4 51.265 YRS. AND ASOVE 2.7 2.7 2.7 2.9 2.8

POPULATION GROWTH RATE (PERCENT)TOTAL 2.8 2.8 3.6/d 2.6 2.8URBAN 5.6 5.6 5.8 6.5 5.1

CRUDE bIRTH RATE (PER THOUSAND) 51.1 49.8 49.6 46.9 46.9CRUDE DEATH RATE (PER THOUSAND) 26.9 22.1 18.7 19.3 15.8GROSS REPRODUCTION RATE 3.4/c 3.4 3.4 3.1 3.2FAMILY PLANNING

ACCEPTORS, ANNUAL (TiHOUSANDS) ..USERS (PERCENT OF MARRIED WOMEN) .. ..

FOOD AND NUTRITIONINDEX OF FOOD PRODUCTION

PER CAPITA (1969-71-100) 81.0 102.0 107.0 89.5 89.9

PER CAPITA SUPPLY OFCALORIES (PERCENT OF

REQUIREMENTS) 80.0 96.0 98.0 90.2 92.3PROTEINS (GRAMS PER DAY) 49.0 61.0 51.3 52.7 52.8

OF WHICH ANIMAL AND PULSE 25.0 34.0 .. 17.8 16.1

CHILD (AGES 1-4) MORTALITY RATE 41.0 32.2 25.4 27.3 20.2

HEALTHLIFE EXPECTANCY AT BIRTH (YEARS) 37.2 42.4 46.7 45.8 50.8INFANT MORTALITY RATE (PERTHOUSAND) .. 127.0

ACCESS TO SAFE WATER (PERCENT OFPOPULATION)

TOTAL .. .. 35.0 23.9 27.4URBAN .. .. 41.0 55.0 74.3RURAL .. .. 35.0 18.5 12.6

ACCESS TO EXCRETA DISPOSAL (PERCENTOF POPULATION)

TOTAL .. 53.0 57.0 26.2URBAN .. 83.0 87.0 63.5RURAL .. 52.0 56.0 20.3

POPULATION PER PHYSICIAN 138095.0/c 62048.4 38916.7 31911.8 13844.1POPULATION PER NURSING PERSON 11197.07 9181.4 10494.4 3674.9 2898.6POPULATION PER HOSPITAL BED

IOTAL .. 822.9 652.1 1238.8 1028.4URBAN .. 47.8 45.4 272.8 423.0RURAL .. 3224.4 1604.8 1745.2 3543.2

ADMISSIONS PER HOSPITAL BED .. 21.2 21.3

HOUSlNGAVERAGE SIZE OF HOUSEHOLD

TOTAL .. ..URBAN .. ..RURAL .. .. 4.5

AVERAGE NUMBER OF PERSONS PER ROOMTOTAL .. ..URBAN .. ..RURAL .. ..

ACCESS TO ELECTRICITY (PERCENTUF DWELLINGS)

TUTAL .. ..URiAN .. ..RURAL .. ..

- 22- ANNEX IPage 2 of 5

TABLE 3ARWANDA - SOCIAL INDICATORS DATA SHEET

RWANDA REFERENCE GROUPS (WEIGHTED AVERAGES- MOST RECENT ESTIMATE)-a

MOST RECENT LOW INCOME MIDDLE INCOME1960 /b 1970 /b ESTIMATE lb AFRICA SOUTI OF SAHARA AFRICA SOUTH OF SAHARA

EDUCATIONADJIUSTED ENROLLMENT RATIOS

PRIMARY: TOTAL 49.0 73.0 64.0 56.4 73.7MALE 68.0 83.0 68.0 70.7 96.8IEIALE 30.0 64.0 59.0 50.1 79.0

SECONDARY: TOTAL 2.0 2.0 2.0 10.0 16.2MALE 2.0 3.0 3.0 13.6 25.3FEMALE 1.0 1.0 1.0 6.6 14.8

VOCATIONAL ENROL. (7 OF SECONDARY) 40.0 12.0 17.0 8.0 5.3

PUPIL-TEACHER RATIOPRIMARY 39.0 60.0 53.0 46.5 36.2SECONDARY 14.0 13.0 15.0 25.5 23.6

ADULT LITERACY KATE (PERCENT) 16.4/c 23.0/e .. 25.5

CONSUMPTION

PASSENGER CARS PER THOUSANDPOPULATION 0.4 0.9 1.6 2.9 32.3

RADIO RECEIVERS PER THOUSANDPOPULATION .. 7.8 17.1 32.8 69.0

TV RECEIVERS PER THOUSANDPOPULATION .. .. !- 1.9 8.0

NEWSPAPER ("DAILY GENERALINTEREST") CIRCULATION PERTHOUSAND POPULATION .. . 0.04 2.8 20.2CINEMA ANNUAL ATTENDANCE PER CAPITA .. .. 14.6 1.2 0.7

LABOR FORCETOTAL LABOR FORCE (THOUSANDS) 1650.6 2089.7 2582.3

FEMALE (PERCENT) 49.1 48.6 48.1 34.1 36.7AGRICULTURE (PERCENT) 95.4 93.2 91.2 80.0 56.6INDUSTRY (PERCENT) 1.1 1.6 2.0 8.6 17.5

PARTICIPATION RATE (PERCENT)TOTAL 56.6 54.3 52.2 41.7 37.2M1ALE 58.9 56.9 55.0 54.3 47.1FaIALE 54.4 51.9 49.5 29.2 27.5

ECONOmIC DEPENDENCY RATIO 0.8 0.9 0.9 1.2 1.3

INCOME DISTRIBUTIONPERCENT OF PRIVATE INCOMERECEIVED BY

HIGHEST 5 PERCENT OF HOUSEHOLDS .. ..

HIGHEST 20 PERCENT OF HOUSEHOLDS .. ..

LOWEST 20 PERCENT OF HOUSEHOLDS .. ..

LOWEST 40 PERCENT OF HOUSEHOLDS .. ..

POVERTY TARGET GROUPSESTIMATED ABSOLUTE POVERTY INCOMELEVEL (USS PER CAPITA)

URBAN .. .. 148.0 136.0 381.2RURAL .. .. 85.0 84.5 156.2

ESTI1ATED RELATIVE POVERTY INCOMELEVEL (US$ PER CAPITA)

URBAN .. .. .. 99.1 334.3RURAL .. .. 43.0 61.2 137.6

EST IMATED POPULATION BELOW ABSOLUTEPOVERTY INCOME LEVEL (PERCENT)

URBAN .. .. 30.0 39.7RURAL .. .. 90.0 68.8

Not availableNot applicable.

NOTES

/a The group averages for each indicator are population-weighted arithmetic means. Coverage of countriesa.ong the indicators depends on availability of data and is not uniform.

/b Unless otnerwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969and 1971; and for Most Recent Estimate, between 1976 and 1980.

/c 1962; /d 1978 census; Ia 1973.

May, 1981

- 23 - A1NEX IPage 3 of 5

DEPfIITINlit OF SOCIA IbIICATIOS

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-24 - Annex I-24- Page 4 of 5

COUNTRY DATA - RWANDA

GROSS NATIONAL PRODUCT IN 1979-80 1979 19801/

US$ Mln. % US$ Mln. %

GNP at Market Prices 1035.0 100.0 1172.5 100.0Gross Domestic Investment 194.9 18.8 18707 16.0Gross National Saving 113,0 10.9 21.8 1.9Current Account Balance 46,8 4.5 54.3 4.6Export of Goods, NFS 226.6 21.9 165.6 14.1Import of Goods, NFS 3G8.6 29.8 331.5 28,3

GOVERNMENT FINANCECentral Government

(RF Mln) % of GDP

1 8& l/ 1980 1972

Current Receipts 13,259 12.0 8.3Current Expenditure 10,468 9.5 10.7Current Surplus 2,791 2.5 -2.4Capital Expenditures 2,113 1.9 1.2

MONEY, CREDIT AND PRICES 1976 1977 1978 1979 1980

(RF Million outstanding, end period)

Money Supply 2/ 8,047 10,173 11,224 14,113 15,209Bank Credit to PublicOrganisations 480. 221 225 233 219

Bank Credit to Private Sector 2,392. 4,169 4.908 4,330 6,296

(Percentage of Index Numbers)

Money and Quasi Money as %of GDP 13.0 14.2 13.9 14.5 14.0

Consumer Price Index (Jan-Mar1976 = 100) 101.9 116.7 131.3 152.1 163.0

Annual Percentage Changes in:

Consumer Price Index 6.9 14.5 12.5 15.8 7.2Bank Credit to PublicOrganisations 5.1 -54.0 1.8 3.6 -6.0

Bank Credit to Private Sector 40.1 74.3 17.7 -11.8 45.4

NOTE: All conversions to dollars in this table are at the average exchange rateprevailing during the period covered.

1/ Provisional

2/ Includes Money and Quasi Money.

- 25 -

ANNEX I

COUNTRY DATA - RWANDA Page 5 of 5

TRADE PAYMENTS AND CAPITAL FLOWS

1/BALANCE OF PAYMENTS 1977 1978 1979 1980 MERCHANDISE E:XORTS (AVERAGE

1977 -80)

Exports of goods, f.o.b. 125.2 110.4 202.9 133.6 USS Mhn 'Imports of goods, f.o.b. -102.3 -144.9 -159.5 -204.4 Coffee 80.3 55. 9Trade balance 22.9 -34.5 43.4 -70.8 Tea 10.5 7.3

Cassiterite ,.7 5.3Services (net) -72.4 -106.3 -127.4 -90.0 Wclf rar. 6.- 4.3Net transfers 66.9 94.1 130.8 106.5 ?yrethrum i.8 1.2

Cinchona 2.1 1.3Balance on current account 17.4 -46.7 46.8 -54.3 Other 34.9 24.3

Total 143.7 100.3

Direct Investment 5.9 4.7 12.5 17.0 EXTERANI DE3B,Net MLT Borrowing 23.3 20.1 17.6 33.2 DECE'23ER 31. _910

USS FlnOther Capital (net)and capital n.e.i. -24.1 26.1 -7.2 17.4 Public Debt, incl.

Increase in reserves (-) -22.5 -4.2 -69.7 -13.3 guaranteed 170.0Non-GuaranteedPrivate Debc --

Gross Reserves ToEal Outs-rad_-.g(end year) 96.8 99.7 177.3 204.5 and Disburse_ -_

Petroleum Imports 12.3 11.8 14.5 22.8 EXTERNAL _DEBS--ERVICEPetroleum Exports - - - - RATIO FOR

Public Debt incl.guaranteed 3.2Non-guaranteed PrivateDebt __Total outstanding and

RATE OF EXCHANGE disbursed --

Annual Averages End Period

1974-80 December 1981 I3PB/IDA LENDING (nec. ,1.1980)

US$ 1.00 = RF 92.84 92.84 (USS MYlnRF 1.00 = US$ 0.011 0.011 Outstanding and

Disbursed 58.12yUndisbursed 57.48

l/ Provisional .* Outstanding incl.1/ Provisional Und'sbursed 115.602/ Debt Service as a percentage of Exports of Goods and Nonfactor Services.

-- = Not available.

- 26 -

ANNEX IIPage 1 of 5

THE STATUS OF BANK GROUP OPERATIONS IN RWANDA

A. Statement of IDA Credits(As of March 31, 1982)

Amount US$ million(Less cancellations)

Credit No. Fiscal Year Borrower Purpose IDA Undisbursed

(Four credits have been fully disbursed) 31.90

567-RW 1975 Rwanda Education 6.38 2.87

655-RW 1977 DFC I 4.00 0.13

656-RW 1977 Agriculture Cinchona 1.80 0.31

668-RW 1978 BugeseraGisaka-MigongoMixed Farming andRural Development 14.00 0.70

769-RW 1978 Road Maintenance 15.00 4.14

896-RW 1979 DFC II 5.20 4.71

937-RW 1979 Mutara Agriculturaland LivestockDevelopment 8.75 5.84

1039-RW 1980 Integrated Forestry andLivestock Development 21.00 10.59

1057-RW 1981 Telecommunications 7.50 7.05

1126-RW 1981 Coffee/Foodcrops 15.00 14.50

1217-RW 1982 Technical Assistance 5.00 5.00

Total 135.53 55.84

Repaid .38

Total Held 135.15

B. Statement of IFC Investments(As of March 31, 1982)

In 1976, IFC made a loan of US$535,000 for a tea factory. A secondIFC long-term loan of US$226,000 and contingent equity commitments of up toUS$60,000 for an expansion of the tea factory were signed in September 1980.

Note: Rwanda has received no Bank loan.

- 27 -ANNEX IIPage 2 of 5

C. PROJECTS IN RWANDA 1/(As of March 31, 1982)

Credit No. 567-RW Education Project; US$8.0 Milion Credit of June 30, 1975;Date of Effectiveness: December 1, 1975;Closing Date: December 31, 1982

As now constituted, the project includes construction, equipping andfurnishing of 250 primary-school workshops, a school-textbook printshop, andan office building for the School Financing and Construction Services (SFCS)as well as furnishing and equipping of the Rural Agricultural Training Centerof Gitarama. The project also provides technical assistance, vehicles andoperating expenses for the SFCS. The project has been hampered by implementa-tion difficulties centering on two misprocurements (an amount of US$130,000was cancelled because of misprocurement of certain construction materials; asecond amount of US$1,491,000 was cancelled due to misprocurement of paper).Most of the 250 workshops are nearly completed. The lack of acceptable recordkeeping, however, has impeded the processing of disbursement requests.Therefore, a final inspection and evaluation mission for the workshops,organized by the Government (with IDA approval) was undertaken successfully inNovember 1981 with UNESCO assistance. Disbursements have resumed. Theprintshop is now operational and construction of the office building for theSFCS completed.

Credit No. 656-RW Cinchona Project; US$1.8 million Credit of August 20, 1976Date of Effectiveness: March 2, 1977Closing Date: June 30, 1982

The project provides over a five year period inputs and extensionservices to grow cinchona for export. Progress is satisfactory and there isstill a demand from farmers for planting material. World market pricesfor cinchona derivates, however, remained low during 1979 and 1980, and OCIR(the implementing agency) had to reduce the farm gate price for cinchona barkand abolish the export tax and the OCIR levy. In September 1980 it wasdecided to establish a cinchona bark processing plant in the Kirambo area, andconstruction has since started and the factory is scheduled to be open inearly 1983. This should give Rwanda a stronger position in the future tocompete with cinchona derivates on the world market.

* _/ These notes are designed to inform the Executive Directors regarding theprogress of projects in execution, and in particular to report any problemswhich are being encountered, and the action being taken to remedy them.They should be read in this sense, and with the understanding they do notpurport to present a balanced evaluation of strengths and weakness inproject execution. The original Closing Date was extended to December 31,1982 by which time the project is expected to be completed.

- 28 -ANNEX IIPage 3 of 5

Credit 668-RW Bugesera/Gisaka/Migongo Mixed Farming and RuralDevelopment Project; US$14.0 Million Credit ofMarch 31, 1977;Date of Effectiveness: November 23, 1977;Closing Date: September 30, 1982

The project consists of the promotion of mixed farming and ruraldevelopment in two recently populated zones; it aims at strengthening thecentral services responsible for rural development. The project includestsetse control, field extension and infrastructure, credit, improvement offeeder roads and water supply, a limited number of schools and health centersand establishment of two cattle ranches. The project is cofinanced with BADEA(US$5.0 million equivalent for livestock development and water facilities) andFrance (US$2.6 million for six technical assistants). Satisfactory progresshas been made with programming of work, budgeting and construction. Theresults of the foodcrop and plant improvement components, however, are belowappraisal estimates due to technical packages which have not taken adequateaccount of the relatively dry project area. A follow-up project will build oninfrastructure put in place under the first project and focus primarily onapplied research, training and extension.

Credit 769-RW Fourth Highway Project; US$15.0 Million Creditof April 1978;Date of Effectiveness: August 4, 1978;

Closing Date: July 1, 1982

Implementation of the Fourth Highway Project (a US$15.0 millionCredit for road maintenance) started in January 1978. Specialists financedunder the technical assistance program are performing satisfactorily. Procure-gent of equipment is completed. On the suggestion of the Association, anexpert on labor intensive methods visited Rwanda for three weeks in June 1978and recommended that one mechanized unit be replaced by one unit utilizinglabor intensive methods. Following the consultant's recommendation, theGovernment has introduced labor-intensive methods for road maintenance.Although the project is about one year behind schedule, implementation is nowat its anticipated progress rate and the project is proceeding satisfactorily.Project completion is expected for end-1982.

Credit 896-RW Second Rwandese Development Bank Project; US$5.2 Million;Credit of July 13, 1979;Date of Effectiveness: January 4, 1980;Closing Date: June 30, 1983

The Project aims at providing further assistance to the industrialsector by supporting the activities of the Rwandese Development Bank. Itincludes two components: (a) a second line of credit of US$5.0 million (whichis now about 80 percent committed) to finance BRD's foreign exchange require-ments and (b) a feasibility study for the establishment of an auditing firmin Rwanda (US$0.2 million). Government has just finished reviewing the auditstudy and its comments are currently under consideration by the Association.

- 29 -ANNEX IIPage 4 of 5

Credit 937-RW Mutara Agricultural and Livestock Development Project;US$8.75 Million Credit of July 13, 1979;Date of Effectiveness: May 30, 1980;Closing Date: December 31, 1983

The project is the second phase of a long-term development programfor the Mutara region. It aims at developing techniques, procedures, and aninstitutional environment which will make it possible to preserve theproduction potential of the area, make a rational and more intensive use ofavailable resources, improve farming and ranching techniques, and integratethe project into the local administration. Settlement of cattle owners hasproceeded in an orderly way and pasture production has improved, but destockingactivities and credit recovery have been disappointing due to lack of clearpolicies and enforcement mechanisms.

Credit 1039-RW Integrated Forestry and Livestock Development Project;US$21.0 Million Credit of July 7, 1980;Date of Effectiveness: November 11, 1981;Closing Date: September 30, 1986

The project is the first phase of a long-term program to developthe forestry resources of Rwanda and to strengthen the livestock industry.Technical assistance personnel and key local staff have been recruited andstart-up activities are progressing satisfactorily.

Credit 1057-RW Telecommunications Project; US$7.5 Million;Credit of August 13, 1980;Date of Effectiveness: July 7, 1981;Closing Date: June 30, 1985

The project aims at improving the quality of existing telecommuni-cations services, while extending the coverage to geographical areas andsegments of the population which at present do not benefit from suchservices. In addition to improving international and domestic telecommuni-cations (telephone and telex) the project provides technical assistance andtraining to the Ministry of Post and Telecommunications. The project iscofinanced with FAC and CCCE (US$3.9 million equivalent) and CIDA (Can$4.95million) and is proceeding satisfactorily.

Credit 1126-RW Lake Kivu Coffee Improvement and Foodcrops Project;US$15.0 Million Credit of April 29, 1981;Date of Effectiveness: January 18, 1982;Closing Date: December 31, 1986

The project aims at building up an effective extension servicewhich would assist farmers in increasing foodcrop and coffee production usingfield-tested techniques and also helping OCIR-Cafe (the implementing agency)improve its financial management. Technical assistance personnel and keylocal staff have been recruited and start-up activities are progressingsatisfactorily.

- 30 -ANNEX IIPage 5 of 5

Credit 1217-RW Technical Assistance Project; US$5.0 MillionCredit of April 5, 1982; Date of Effectiveness:July 5, 1982; Closing Date: December 31, 1986

The project aims at increasing Rwanda's absorptive capacity,improving interministerial coordination in project preparation and monitoring,and strengthening the Ministry of Planning. The project credit agreement wassigned April 5, 1982.

- 31 -

ANNEX III

RWANDA

Supplementary Project Data Sheet

Fifth Highway Project

I. Timetable of Key Events

(a) Origin of Project: Request of Government based oneconomic study of Butare-Cyanguguroad completed December 1979 byconsultants SEDES (France)

(b) Identification Mission: June 1980

(c) Appraisal Mission: August 1981

(d) Negotiations: April 5-8, 1982

(e) Planned Date of Effectiveness: September 1982

II. Special Implementation Action

None

III. Additional Condition of Effectiveness

Signing of supplemental financing agreements for the Kitabi-Cyangugu roadwith the African Development Bank, BADEA, the EEC and the Kuwait Fund(para. 42).

IV. Special Conditions

(a) Government would establish appropriate vehicle weight regulations,including an enforcement mechanism, and put the new regulations intoeffect by December 31, 1982 (para. 47);

(b) Government would install a weighing scale at Gatuna and anotherat Kagitumba by December 31, 1983 (para. 47); and

(c) Government to prepare action plan and make financing arrange-

ments for restoration works on the Kigali-Gatuna road byJune 30, 1983 (para. 44).

I

IBRD 16034

2K- 1 1 | = ; ~; | ;; -; - m i -- l , ;_ ; \5Q SUTURSure aaU ; IBR1a

FIFTH HIGHWAY PROJECT

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