Document of FILE COPYThe World Bank

FOR OFFICIAL USE ONLY

Report No. P-3107-SU

REPORT AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED CREDIT

TO THE

DEMOCRATIC REPUBLIC OF THE SUDAN

FOR A

WESTERN SAVANNAH PROJECT

August 6, 1981

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 1/

Currency Unit = Sudanese Pound (hSd) = 100 piasters = 1,000 milliemes

Official Market Parallel Market

US$1.00 = I-Sd 0.50 US$1.00 = bSd 0.80bSd 1.00 = US$2.00 bSd 1.00 = US$1.25

WEIGHTS AND MEASURES

Metric Units English Units Sudanese Units

1 Hectare (ha) = 2.47 acres (ac) = 2.38 feddans (fd)

Metric Units English Units US Units

I liter = 0.22 Imperial gallons = 0.26 U.S. gallons1 metric ton (ton) = 2,202.6 lbs

ABBREVIATIONS

ARC - Agricultural Research CorporationLMMC - Livestock and Meat Marketing CorporationODA - Overseas Development Administration of the

United KingdomSFD - Saudi Fund for DevelopmentWSDC - Western Savannah Development Corporation

GOVERNMENT FISCAL YEAR

July 1 - June 30

1/ On September 16, 1979, the Government established a dual exchange ratesystem: An official rate of US$2.00 per Sudanese pound was adopted alongwith a parallel market rate of US$1.25 per Sudanese pound. Valuationof all imports for customs purposes has been changed to the new officialrate (LSd 1 = US$2.00) from the previous official rate (hSd 1 = US$2.50).On September 21, 1980 the Government moved to the parallel market allexports except cotton and all imports except wheat, sugar, petroleumproducts, medicines and inputs for cotton production. With the exceptionof petroleum products and import duties, all cost estimates are based onthe parallel market rate.

FOR OFFICIAL USE ONLY

SUDAN

PROPOSED WESTERN SAVANNAH PROJECT

CREDIT AND PROJECT SUMMARY

Borrower: Democratic Republic of the Sudan

Beneficiary: Western Savannah Development Corporation (WSDC)

Amount: SDR 11.2 million (US$13.0 million equivalent)

Terms: Standard IDA terms.

Project The proposed Project would be a smaller, pilot version ofDescription: an existing project--Savannah Development Project (Credit

718-SU), which could not be implemented as originallyplanned because of Sudan's economic crisis. The proposedpilot operation would retain the long term objective of theearlier project, however, by helping lay the foundationfor long term development of Western Sudan. It would:(a) test strategies for improving livestock and rangeproduction; (b) identify and test agronomic packagesand extension methods for crop production, both for areaexpansion and yield increase; and (c) test approaches tosettlement and soil conservation. The major risks nowforeseen include establishment of a relatively stablesystem of animal husbandry and crop production in anarea where transhumant populations have traditionallypredominated. The pilot project is intended to providethe incentives and support facilities to help carry outthis transformation.

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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-- (US$ Million) -----------Estimated Cost: Local Foreign Total

Development Centers 0.7 1.1 1.8Settlements 1.0 0.8 1.8Flood Irrigation 0.1 - 0.1Range Services 0.4 0.5 0.9Veterinary Services 0.9 0.9 1.8Water Supply 0.3 0.9 1.2Management and Administration 2.0 3.6 5.6Engineering and Logistics 1.3 1.9 3.2Planning, Monitoring, Evaluation 0.1 0.7 0.8Total Baseline Cost 6.8 10.4 17.2

Physical Contingencies 0.5 1.1 1.6Price Contingencies 1.4 1.3 2.7Total Project Cost 8.7 12.8 21.5

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

IDA 3.0 9.0 12.0 1/Overseas Development Administration - 1.2 1.2Saudi Fund 1.8 2.6 4.4Government 3.9 - 3.9 2/

Total 8.7 12.8 21.5

---------(US$ Million)--------Estimated Disbursements: IDA FY82 FY83 FY84 FY85

Annual 6.0 3.0 3.0 1.0Cumulative 6.0 9.0 12.0 13.0

Estimated Rate of Return: Not applicable (pilot project).

Staff Appraisal Report: Report No. 3426-SU of July 17, 1981.

Map: IBRD No. 15642.

1/ The IDA Credit proposed is actually US$13.0 million; however, US$1.0 mil-lion of this would be used, upon effectiveness, to prepay funds disbursedand outstanding, including charges, from Credit 718-SU.

2/ The Sudanese Government contribution includes taxes and duties estimatedat US$1.5 million equivalent.

INTERNATIONAL DEVELOPMENT ASSOCIATION

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

TO THE DEMOCRATIC REPUBLIC OF THE SUDANFOR A WESTERN SAVANNAH PROJECT

1. I submit the following report and recommendation on a proposedDevelopment Credit to the Democratic Republic of the Sudan for SDR 11.2million (US$13.0 million equivalent) to help finance the Western SavannahProject. The Credit would be on standard terms; US$12 million would be onlentto the Western Savannah Development Corporation on a grant basis and theremaining US$1.0 million would be used, upon effectiveness, to prepay fundsdisbursed and outstanding, including charges, from Credit 718-SU, which isproposed to be cancelled. The Overseas Development Administration (U.K.)is providing a grant of US$1.2 million equivalent and the Saudi Fund forDevelopment a Loan of US$4.4 million equivalent, repayable over 20 yearsincluding five years grace at 2 percent interest per annum.

PART I - THE ECONOMY

2. An economic updating mission visited Sudan in November, 1978 andin mid-1979; its report (No. 2652-SU) was circulated on October 24, 1979.Major conclusions are reflected in this report along with the principalfindings of an economic mission which visited the country in January/February1981. The report of the latter mission will be issued in the near future.Summary tables of social, economic and financial data are presented inAnnex I.

Background

3. Sudan, with an area of 2.5 million square kilometers, is thelargest country in Africa. It has a population of about 17 million and isclassified by the UN as a least developed country. Per capita GNP isestimated at about US$470 (1980 Atlas methodology) 1/. Much of the countryis unoccupied or very sparsely populated and there is relatively littlepopulation pressure on the land. Although much of the country is desert orsemi-desert, the Sudan has great untapped potential for agricultural develop-ment. About two-thirds of the total land area is suitable for crop orpastoral production, but only a small fraction of this land is under inten-sive use. The economy is heavily dependent on exports of cotton, the majorcommodity from irrigated land, and on groundnuts, sesame and gum arabic.The manufacturing sector is relatively small and is limited to processingagricultural commodities such as cotton, oil seeds and sugar and to the pro-duction of consumer goods and building materials. A development of potentialsignificance to Sudan's prospects is the discovery of oil reserves in the

1/ Based on the official exchange rate, which now applies only to a limitedgroup of products (ref. para. 16). The 1980 per capita GNP at theparallel exchange rate would be about US$265.

southwestern part of the country. Proven reserves are not large enough forexport production. However, they are large enough to help satisfy part ofthe country's domestic requirements and a project to meet this objective isnow being considered. The public sector has long been important in theSudanese economy. It embraces all modern irrigation facilities, the railways,virtually all power and water supply and a significant proportion of industry,commerce and finance. Although some industrial enterprises are being returnedto the private sector, about half of industrial GDP is still generatedwithin the public sector.

Past Performance

4. Following the Addis Ababa accord of 1972, which brought an end tothe civil war in Sudan, the Government began to focus on the country's develop-ment needs. Government's development objectives were spelled out in 1973 inan Interim Action Program, which aimed mainly at removing the severe infra-structural bottlenecks, attaining self-sufficiency in a number of consumergoods and expanding agricultural exports to increase foreign exchange earnings.At the time, prospects for financing this program through external assistancelooked very hopeful, particularly from Arab oil-exporting countries whichregarded Sudan as the future "breadbasket" of the Arab world. Governmentdevelopment expenditure did expand rapidly, from LSd 42 million in 1973/74to around LSd 170 million per year on average during the last three years ofthe seventies, and it was generally directed towards high priority sectors.Substantial amounts of foreign capital were forthcoming -- over the five years1974-78 total commitments amounted to almost US$3 billion -- but the amountsfell short of what was required, while limited absorptive capacity sloweddisbursements and delayed seriously the completion of the projects. Today,despite several years of accelerated development effort, GDP is now stagnatingand the country is financially much worse off than when the development thrustbegan.

The Current Crisis

5. The most immediate problem facing Sudan is the balance of paymentscrisis. Between 1972/73 and 1975/76, the deficit on current account increasedfrom US$39 million to nearly US$520 million and averaged around US$450 until1980/81 when the combination of a doubling of oil prices and a serious declinein cotton p-oduction pushed the current account deficit to more than US$750million. In spite of high levels of external aid commitments, disbursementsactually declined between 1976 and 1978. International reserves fell from alevel equivalent to two months' imports in 1973/74 to only a few days worthof imports today. External payments arrears of about US$1.3 billion haveaccumulated.

t. The crisis is largely the consequence of inadequate economic manage-ment compounded by external factors such as the sharply increased cost ofpetroleum imports. Adverse developments in foreign trade were accompanied byother adverse forces -- reduced flows of external capital after 1976, mountingdebt problems and absorptive capacity difficulties.

7. The rapid increase in the value of imports came about partiallybecause of the sharp increase in oil prices and the steep rate of interna-tional inflation, particularly in 1974 and 1975. Though there was a sharprise in real terms between 1973/74 and 1975/76, imports have increased atthe much more moderate pace since then of 2 to 3 percent a year on average.Since 1977/78 imports have declined in real terms by about 10 percent peryear. Exports declined in real terms by some 20 percent between 1972/73 and1979/80. The decline was concentrated in cotton and this occurred because ofa shift from cotton to other crops and also because of falling cotton yields.The volume of cotton exports in 1979/80 was about 20 percent lower than in1972/73. Transport difficulties and other infrastructural problems contri-buted to this Cecline, as did declining maintenance in many public irrigationschemes.

8. The rise in development expenditures after 1973 wd5 finaaced inlarge measure by external capital, but because of the absorptive problems,disbursements of this capital declined unexpectedly after the first fewyears, dropping from US$463 million in 1974 to US$183 million in 1977.Because of the slow disbursements and accumulating arrears, external donorsbecame less willing to make new commitments. Sudan faced a difficult choice:either to cut back on projects just started or to maintain the projects byrunning down foreign exchange reserves and borrowing from banks or othersources abroad. The Government decided to try to sustain the developmenteffort by using reserves and by borrowing heavily on relatively hard terms.International reserves declined from US$124 million at the end of 1974 toUS$22 million at the end of 1977/78. As foreign reserves ran out, the accum-ulation of arrears became unavoidable. Meanwhile, annual external publicdebt service obligations increased from US$54 million in 1973 to over US$300million at present. The debt service burden as a proportion of exports ofgoods and services increased in those years from 12 percent to over 35 percent.The reasons were (a) the huge amount of external borrowing in 1974-77 and(b) the fact that a large proportion of the borrowing was on relatively hardterms. This unfavorable debt profile has not only led to a very difficultdebt service burden but also has critical implications for future debt serviceobligations (ref. para. 23).

9. Sudan's balance of payments problems reflect a number of fundamentaldeficiencies in absorptive capacity and in economic policies. For example,the inadequacies and unreliability of the transport system, which in a countrythe size of Sudan is absolutely crucial for effective development, remains aserious constraint on implementation capacity. Because of the scarcity offoreign exchange, maintenance of the capital stock has been insufficient.These and other infrastructure bottlenecks have been exacerbated by an exodusof qualified Sudanese managers and craftsmen to the oil producing Arab coun-tries.

10. A major reason behind Sudan-s current troubles has been the wide-spread price distortions in the agricultural sector, which have hamperedexpansion in output, particularly of cotton. This, in turn, has jeopardizedexport performance and resulted in a net drain on the central governmentreserves for the past five years. Although the exchange rate has beenadjusted several times in recent years, cotton has generally received anunfavorable effective rate compared to other products.

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11. The system of explicit and implicit disincentives to growing cottonalso has helped make the situation worse. For example, under the historicprofit sharing formulae in the main irrigation schemes, the expenses of allcrops are generally deducted from the proceeds of cotton sales alone. Returnsfrom other crops accrue to the tenant, giving them a strong disincentive togrowing cotton, despite the fact that the country's international comparativeadvantage would be greatest in that crop.

12. The structural weakness in Sudan's public sector finances becameincreasingly pronounced during the course of the 1970s. Sharp increasesin expenditures were not matched by increases in revenue. The consequentsharp rise in public sector demands on the domestic banking system led to arapid acceleration in the growth of money supply, which peaked at 43 percentin 1976/77. This in turn contributed to an acceleration in annual priceincreases from about 10 percent in the early 1970s to over 20 percent inmore recent years. Most of the increases in current expenditures have beenfor social and community services, transfers to local government and generaladministration. The sharp increases in general administration expendituresare due in large part to wages and salaries of civilians in the centralgovernment, cost of living subsidies and extra-budgetary expenditures. Onthe revenue side, tax revenues have increased over the past few years; sincethe tax system is relatively inelastic, this increase has been made possibleonly with frequent new tax measures.

13. Another contributing factor to Sudan's current crisis is the poorperformance of the public enterprises, which dominate all non-traditionalactivities in the country. These enterprises have not contributed to economicdevelopment as expected. Instead of yielding surpluses, they have reliedon the central Government and domestic borrowing to cover their deficits.A study of the public enterprises was carried out in 1977 by a team consistingof Government, University of Khartoum, private sector and Bank Group represen-tatives; the final report was issued in April 1978. The main shortcomings ofthe public enterprises, as portrayed in the report, included poor management,inadequate internal organization and control, contradictory and unclearobjectives and often changing relations with ministries and departments.

Policy Changes

14. Against this background of serious payments imbalances and generaleconomic crisis stemming from structural maladjustments in production andtrade, the Government in the last three years has taken several significantdecisions aimed at re-establishing financial equilibrium and restoring theeconomy's development momentum.

(a) Financial Stabilization and IMF Agreements

15. In June 1978, a stabilization program was announced as part of astandby agreement with the IMF that involved a drawdown of 51 million SDRs.The agreement included a devaluation of the Sudanese pound, effectively by 25percent, and declarations of intent by the Government to keep deficit financingand short and medium term foreign borrowing within certain limits. Also, the

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Government announced that the pricing system in the irrigated agriculture

sector would be reformed and that land and water charges would be imposed on

most crops. Implementation of these measures is still in progress. In May

1979, agreement was reached on a set of policy actions to be taken by Govern-

ment in order to obtain access to a three year Extended Fund Facility (EFF)

for SDR 200 million. The policy actions involve essentially an extension of

those agreed as part of the Fund standby in June 1978. Simultaneously with

these developments, the Government has taken steps -- abolition of the cotton

export tax, and revamping of agricultural production relationships -- which

should help considerably to recast the pattern of financial incentives in the

agriculture sector along lines that are consistent with Sudan's comparative

advantage in international trade.

16. On September 16, 1979, the Government enacted additional signiticaut

measures with respect to the exchange rate system. These included: (i) estab-

lishment of an official rate of US$2 per Sudanese pound, with valuation of all

imports for customs purposes at the new official rate; (ii) abolishment of a

special incentive rate for remittances and establishment of a parallel exchange

market with an initial rate of LSd 1 = US$1.25; and (iii) agreement to allow

residents and nonresidents to have current accounts with Sudanese banks

denominated in foreign exchange. Under this system, some 90 percent of

exports, 70 percent of imports, and all official invisibles, cash loans and

debt service came under the official rate while all other transactions were

under the parallel market rate. It was believed that the availability of

interest-bearing domestic accounts denominated in foreign currency would

encourage the flow of private sector funds to the Sudan, especially from

expatriate Sudanese working abroad. On September 21, 1980, the Government

decided to apply the parallel market rate to all exports except cotton and all

imports except petroleum, wheat, sugar, medicines and inputs to cotton produc-

tion. As a result, the proportion of exports channeled through the parallel

market has increased, as a result, from about 6 percent to about 64 percent

and imports from 48 percent to about 56 percent.

17. Subsequently, on November 12, 1980, the Fund Board approved a

second year program under the EFF. The program includes important measures

to improve the incentives for cotton production, to reform further the ex-

change system and to limit credit expansion in the economy to a level which

is consistent with a substantial reduction in the rate of inflation. The

exchange system reform involves basically a further widening of the scope

of operations under the parallel market (ref. para 16). The objective of the

second year financial program under the EFF is to achieve a further reduction

in the rate of inflation to about 12 percent by June, 1981. Approval of the

second year program means that Sudan now has access to a further 176 million

SDR's under the EFF, 76 million of which was disbursed immediately upon

approval by the Fund Board and the remainder to be made available in tranches,

depending on Government performance. Disbursements under the second year

program have been slowed, among other things, by difficulties encountered

in restricting net domestic asset creation; the tranche based on a review

as of the end of December 1980 was not released, but the IMF Board did on

April 9, 1981 approve release of 19.8 million SDR's under the first credit

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tranche (which had been expanded by the general IMF quota increase) and of45.7 million SDR's under the Compensatory Financing Facility. In June 1981an IMF mission was unable to reach agreement with Government on a third-yearprogram for the EFF, which was to have begun on July 1, 1981. This waslargely because of problems associated with the impact on prices and subsi-dies that a devaluation, originally scheduled for June 30, would have had.Discussions between Government and the Fund on this and related mattersare continuing.

(b) Export Promotion and Public Investment Programs

18. An essential ingredient in the Government's stabilization programis a concerted drive to increase foreign exchange earnings through increasedexports. This is being carried out under the Export Action Program (EAP),initiated in mid-1979. The EAP is designed to raise the volume of cottonexports at an average rate of 7 percent per annum during the period 1979-91.Investments and actions towards this goal would also contribute to largerexports of groundnut and sorghum, since these crops would also capture some ofthe benefits of the program. The EAP comprises (a) a series of urgentlyneeded investments aimed mainly at satisfying immediate requirements for spareparts, replacement equipment and inputs of various types, principally in themajor irrigation schemes where the zhief export crops are grown (proceeds ofthe recently approved Agricultural Rehabilitation Program (ARP) (Credit No.1000-SU) would help fulfill this aspect of the EAP); (b) a series of rehabi-litation projects to be carried out in the 1980's, also in the irrigatedsubsector (the New Halfa Irrigation Rehabilitation Project, (Credit 1022-SU),approved in May, 1980 was the first of these), and (c) policy and otheractions such as institutional reform and revision of cost recovery systemsintended to provide a conducive framework for accelerated production. Someof these actions have already been taken; others are being implemented aspart of the ARP Credit, still others will be done in the context of plannedrehabilitation projects.

19. Simultaneously with the EAP, the Government has reduced the overalldevelopment program, as reflected in the six year plan, to a more realisticframework consistent with expected external and domestic financial resources.The Government in 1979 completed the Three Year Public Investment Program,for the period 1978/79-1980/81. The program has recently been updated tocover the years 1980/81-1982/83. A central objective of this program is asignificant redirection in Sudan's development effort to those activitiesthat hold greatest promise for increasing exports and revenue. To that end, anew interim strategy has been adopted which sets essentially two criteria forthe selection of development projects: (i) concentration on the completion ofongoing projects, particularly those in the most productive sectors, and(ii) limiting new undertakings to those that rehabilitate existing produc-tion schemes or that help alleviate the major infrastructural bottlenecks.The revised three year program also provides for a substantial reduction inthe total investment that had been envisioned in the plan for the three years,this has brought resource requirements into line with resource availabilities.One result of this exercise is that two separate development projects origin-ally planned to be implemented in Western Sudan have had to be consolidatedinto a single, smaller pilot project proposed here.

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(c) Public Corporations

20. For some time, a special inter-ministerial committee has been dis-cussing the recommendations of the study group on public enterprises (rEf.para. 13); the Government has begun to take some action to help remedy thesituation. For example, in September, 1979, the Government announced theabolition of a cumbersome and overly centralized corporate setup in agricul-ture, and replaced it with more autonomous agricultural entities. Organiza-tional change are expected shortly in the in'`_iqtrial and commercial sectorsas well. This is only a beginning, however, with more reforms expectedin the future.

(d) Manigement of External Debt

21. As indicated earlier (ref. para. 8), Sudan's external debt burdenhas been quite heavy for a number of years. The total disbursed c^ tstandingexternal debt at the end of 1978 amounted to more than US$2 billion andscheduled debt service payments (principal and interest) for 1979 were almostUS$300 million (excluding payment of arrears). Until very recently, theauthority to engage in foreign borrowing and the administration of foreignloans was scattered among many different ministries and agencies. The absenceof a central authority or unit which had a complete picture of the total debtand which could render sound judgments on the appropriateness of variousforeign borrowing options further compounded the external debt problem.This inefficiency has now been ameliorated through the decision to vest soleauthority for foreign borrowing with the Ministry of Finance. Also, a newdebt management unit in the Ministry of Finance became operational in 1979,however its effectiveness is unsatisfactory and special assistance is beingprovided under the recently approved Second Technical Assistance project.

22. Equally significant, however, are the moves to deal with the severedebt and arrears problems. In November 1979, a Paris Club meeting was held onthe rescheduling of Sudan's debt. Participating countries (Austria, Belgium,Denmark, France, Germany, Italy, Japan, the Netherlands, Switzerland, theUnited Kingdom, the United States) and the Government reached agreement on (a)a rescheduling or a refinancing of amounts falling due before October 1, 1979and not paid (arrears); and (b) a rescheduling or a refinancing of amountspayable between October 1, 1979 and June 30, 1981 inclusive and not paid(future debt service obligations). This will apply to loans from governmentsor public agencies which had original maturities of more than one year andwhich were concluded before January 1, 1979.

23. The Paris Club accord involved rescheduling of about $300 millionworth of arrears (out of a total of about US$1.2 billion) and about $150million of future debt service obligations. While the Paris Club agreementswere more generous in terms of period and percentage of debt service coveredthan most other such Paris Club agreements and reduced the country's financinggap to more manageable proportions in 1980 and 1981, they still fall shortof resolving Sudan's medium term external payments problems. Negotiationsare expected to be completed shortly on the rescheduling of debt to commercial

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banks. This is now estimated to include about US$450 million of arrears. Inaddition, about US$650 million of suppliers credits are in arrears and need tobe rescheduled. But even with these reschedulings completed, the country willhave debt service ratios above 50 percent by 1985 in the absence of furtherrelief. These reschedulings must therefore be seen as the first step in alonger process of restructuring the nation's burden of external debt. As partof the effort to help the Government obtain the foreign assistance requiredto maintain the development effort, the Bank Group convened a meeting of theSudan Consultative Group in Paris from April 9-11, 1980.

24. The Bank/IDA share of Sudan's medium and long-term debt service isabout 3 percent (based on scheduled liabilities for 1979) and of debt out-standing and disbursed is almost 9 percent. We foresee relatively littlechange in these ratios by 1985, though this will depend on the amounts andforms of debt relief obtained.

PART II - BANK GROUP OPERATIONS IN THE SUDAN

25. World Bank Group gross commitments to Sudan to date total US$784.5million. Of this, US$32.9 million are IFC commitments. There have been eightloans (two on Third Window terms) and 28 credits for a total of 34 projects.Twenty projects are under implementation as well as one planning assistanceproject, funded by UNDP and executed by the Bank. About 50 percent of thetotal Bank/IDA lending has gone into agricultural development: six irriga-tion projects; three rainfed mechanized farming projects; three smallholderdevelopment projects, two in the southern region and one in the west, alivestock marketing project; an agricultural research project; an AgriculturalRehabilitation Program. Projects in other sectors include: three powerprojects, two education projects, two highway projects, a domestic aviationproject, four railway projects, a port project, two technical assistancecredits and two credits to the Industrial Bank of Sudan. Annex II contains asummary statement of Bank loans, IDA credits and IFC investments as of May 31,1981 and notes on the execution of ongoing projects.

26. Physical progress in implementing development projects in Sudan hasbeen poor. Many projects have difficulty in getting key materials--cement,fuel, timber, of which there are periodic shortages. Belated delivery ofequipment and supplies due to transportation difficulties also affects mostprojects. The continuing drain of skilled manpower from Sudan to the MiddleEast oil rich states, where job opportunities are better, takes its toll oneffective preparation and implementation of projects. Partly as a resultof these problems, as well as the current economic crisis in Sudan, theSavannah Development Project (Credit 718 of June 24, 1977) has had to beredesigned into the pilot project proposed here. Also, the Domestic AviationProject (Loan 1287-T; Credit 643 of July 7, 1976) has encountered a seriouscost overrun problem and may have to be terminated. The future of thisproject is now being discussed with Government. Beyond these difficultiesthere are other shortcomings traceable to inordinately cumbersome Government

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procedures. For example, there have been protracted delays in getting par-liamentary ratification of agreed development projects and, subsequently, inobtaining legal opinions from Government. There have also been inordinatedelays in meeting effectiveness conditions, mainly because of problems inestablishing new institutions or project accounts, hiring key staff, completingnecessary legal documentation or concluding required cofinancing arrangements.Effective project implementation has been adversely affected by slowness incarrying out proper tendering and procurement requirements or in completingproject accounts and audits. These problems have been brought repeatedly tothe notice of Government authorities, and efforts are being intensified tohelp resolve them. The recently approved Second Technical Assistance projectis designed to address the problems.

Strategy

27. Bank Group lending continues to emphasize agricultural and infra-structural investments. For the near term, and in accordance with the Govern-ment's current economic and development objectives, more importance will beplaced on the rehabilitation and intensification of existing irrigationschemes and on helping to alleviate key infrastructure bottlenecks. Theobjective here will essentially be to help the country generate increasedexport earnings to support the recovery effort. The emphasis in Bank Grouplending will be in support of those activities that contribute prominentlyto the rehabilitation of the economy, in particular those that help increaseexports and expand government revenues. In the interim, less emphasis will beplaced on equity considerations or on regional balance in investment programs.Recent experience has demonstrated that projects that were designed in largepart to help meet equity, as well as productive and regional balance goals,will very likely take much longer to implement because of problems of inade-quate infrastructure, lack of skilled manpower, absence of reliable institu-tional support.

28. This lending strategy is fully consistent with the Government'spolicies, as reflected in the Export Action Program and the Three Year PublicInvestment Program (ref. paras. 18, 19). An Agricultural RehabilitationProgram Credit and the New Halfa Irrigation Rehabilitation Project, bothhaving the objective of helping the country generate increased export earningsin order to help carry it through the stabilization period, were approved inFY1980, along with a third power project. More recently, two projects wereapproved to help rehabilitate pump schemes along the White and Blue Nilerivers. A second Technical Assistance project was also recently approved.Other projects under consideration include rehabilitation of the Gezirairrigation scheme (Sudan's largest), an agricultural services project, asecond port project, a petroleum development project, a sugar rehabilitationproject and a river transport project.

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PART III - THE AGRICULTURE SECTOR

29. Sudan's agriculture contributes about 40% of GDP, over 90% of thecountry's exports and provides a livelihood to about 80% of the population.A key feature is the division between a modern sector comprising mainly theirrigation and rainfed mechanized farming schemes and a traditional sectorbased largely on shifting cultivation and transhumant animal husbandry.Historically, investment has been heavily concentrated in the modern sector inthe east-central region. Past development efforts were largely geared towardsarea expansion and have been accompanied by static or declining yields whichhave contributed to Sudan's present economic and financial crisis. Under therevised Three Year Investment Program and the Export Action Program, Governmentaims at promoting export production from this sector through the rehabilita-tion of existing production infrastructure, in particular in the irrigationsubsector.

30. The traditional agriculture sector, by contrast, has received littleGovernment assistance although its contributions to employment, food produc-tion and exports (livestock, millet, sesame, groundnuts, gum arabic) areimportant. The combined value of these exports may amount to about one-fourthof the total agriculture exports. Of major concern is the western savannaharea located in the Darfur and Kordofan regions, where growing population,increasing settlement of former pastoralists and lack of land use planninghave led to environmental degradation and conflicts between farmers andpastoralists. The main constraints to development in this area are poorinfrastructure (communication, transport, water supply, institutions), andfailure to adjust the social systems and production techniques to the changingenvironment.

31. A number of studies and limited research have been done in recentyears which indicate opportunities may exist to achieve sustained productionincreases in the western savannah through support to existing smallholders andpastoralists. The means to do this include land use planning and management,allocation of areas for grazing, stock routes and cultivation, a strengthenedresearch base, improved animal husbandry and management as well as provisionof reliable water sources and transport infrastructure. This set of proposedactions needs to be tested. If proven successful and implemented properly, itshould be possible to arrive at higher levels of economic activity which couldassist the country's development effort and help redress regional imbalancesas well.

The Project Area

32. The project would be located in parts of the eastern and southerndistricts of Southern Darfur province and its area would comprise some 92,000km (see map). Project headquarters would be located at Nyala, which isconnected with Khartoum and Port Sudan by a railway line. There are no allweather access roads into this area.

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33. The population of the project area is estimated at about 500,000people, half being transhumant pastoralists and half sedentary cultivators.In the wet season (July - October) movements of the pastoralists are directedtowards the desert fringe north of the project area and the sandy soils inthe east and west, which offer fresh grazing and surface water. In the dryseason (December - March) herders return to the floodlands in the south whichthen offer grazing and water.

34. During the migrations, pastoralists cross twice a year (June/Julyand October/November) the patches cultivated by settled farmers in the centralpart of the project area, in search for water, grazing and to plant and harvestsome crops of their own. Population density is highest then. Althoughpastoralists normally use well established stockroutes and grazing areas,population growth, development of water points, expanding settlement andcultivation are causing an increasing strain on the environment. Conflictsbetween farmers and pastoralists about land and water usage are becomingincreasingly frequent.

35. Rainfall in the project area varies between 400 mm in the northand 800 mm per year in the south with an average of 500 - 600 mm in thecentral parts where cultivation takes place. Soils belong to three majorgroups--qoz (sandy soils), alluvium (clay soils) and basement (quartziticsandy soils). The natural vegetation of the area is low rainfall woodlandSavannah with different composition on clays and sands.

36. Principal sources of water in the rural areas are seasonal streamsand natural lakes and ponds supplemented by shallow wells. Since 1947 theRural Water Corporation, now renamed the National Water Authority, has con-structed a network of deep boreholes in the sandy areas. Most of theseboreholes have been equipped with pumps, diesel engines, elevated water tanksand a distribution system ("wateryards"). Due to lack of maintenance some150 of about 222 wateryards in the area are no longer fully operational. Thebreakdown of wateryards has led to an ever increasing concentration of thepopulation and animals around the few remaining boreholes with adverse effectson the environment and health.

37. Under the Unregistered Land Act of 1970, all land in the projectarea except urban sites is Government owned. Customary rights of access anduse have evolved over time, and are associated with specific local communities.Access to these rights are dependent on community membership, usually bykinship or marriage, although outsiders may be assimilated provided they areacceptable to the local community.

38. Rainfed crop production is largely confined to the sandy soils, whichare easily worked and allow extensive areas to be cultivated by hand. Bulrushmillet is the staple, occupying around two-thirds of the annual cropped area;the balance is planted mainly to groundnuts and also some sorghum and sesame.The area is increasingly becoming deficient in staple foods but producessubstantial exports of groundnuts and a minor surplus of sesame. An averagefamily of six persons cultivates about 5 ha with hand tools.

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39. There are some 1.5 million cattle, 0.8 million sheep, 0.5 milliongoats and about 50,000 camels in the project area. These are owned mainly bythe migratory pastoralists, but sedentary cultivators to a considerable extentalso rely on livestock production. Stocking density varies with season, thehighest concentrations occuring in the dry season at which time migratory herdsgraze along the Bahr el Arab river and other areas with permanent water sources.The traditional pastoral system has come under pressure from increasing humanand animal populations which are inducing settlement. These new settlementshave, in turn, put added stress on limited water resources and have oftenblocked access to the stock routes so essential to the free migration ofthe pastoralists.

40. During the last 12 months, Sudan's Government has been reorganizedon a regional basis. The relationship between the different levels of Govern-ment is still evolving, however, and not yet fully developed. Project insti-tutions are not affected directly by these changes. The Western SavannahDevelopment Corporation (WSDC) was established by Presidential Decree in 1978to plan and implement rural development projects in Western Sudan. The Corpo-ration's capability to undertake these tasks has been gradually built up overrecent years, with technical and financial support from ODA of U.K. It is nownearly fully operational. The National Water Authority is responsible foroperation and maintenance of all wateryards in the area. It operates threeworkshops at Nyala, Ed Da'ein and Buram and is adequately staffed and equipped.Its effectiveness suffers from insufficient operating funds which prevent theproper operation and maintenance of the water facilities. The Livestock andMeat Marketing Corporation (LMMC) is being assisted by the IDA supportedLivestock Marketing Project (Credit 782-SU). It is developing two primarylivestock markets and railway holding yards in the area of the proposed SavannahProject. LMMC will also organize transport by rail of live animals from theholding yards to the consumption centers in the Central Region and for exportthrough Port Sudan.

41. The Agricultural Research Corporation (ARC), under the IDA/USAIDsupported Agricultural Research Project (Credit 834-SU), is developing theGhazala Gawazat Livestock Research Station, located in the eastern part of theproject area, into one of its major research centers in western Sudan. Theresearch at this station will study the production systems of (a) semi-aridlivestock production and (b) integrated crop/livestock production on stabi-lized sands. The proposed project would complement the larger ARC program.

PART IV - THE PROJECT

42. The proposed project would replace the Savannah Development Project(Credit 718-SU), approved in May, 1977. Because of implementation problems,the latter project could not be carried out as originally planned. Forexample, due to delays in establishing the Western Savannah DevelopmentCorporation (WSDC) as project implementing agency, the credit did not becomeeffective until August, 1978, when the full force of Sudan's current economic

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crisis was beginning to be felt (ref. paras. 5-13). Remoteness of the projectarea, staffing and logistical problems, exacerbated the situation. Severecost overruns developed and the extensive scope of the original project couldno longer be justified, given the country's economic problems and reviseddevelopment priorities. Government requested the Association, along withother donor agencies financing a similar project in the area, to consolidateall their activities into one smaller pilot effort costing about one-third ofthe two original projects. The Government's revised objective is to maintainexperimental-type activities to help lay the foundation for future developmentof the area. In addition to the earlier mentioned Savannah Developmentproject, financed by IDA and the Saudi Fund, the proposed project wouldreplace another project financed jointly by the ODA and the Abu Dhabi Fund. Atotal of US$16 million uncommitted out of the original Credit of US$17 millionwould be cancelled upon signing of the proposed project. The remaining US$1.0haillion, disbursed and outstanding, would be prepaid from the proceeds of theproposed Credit upon effectiveness. Negotiations were held in Washington onJune 29 and 30, 1981, and the Sudanese delegation was headed by Sid AhmedOsman, Chairman and Managing Director, Agricultural Bank of Sudan. A Creditand Project Summary is at the front of this report and further details on theproject are at Annex III.

Project Objectives and Scope

43. The proposed project would retain the long term objectives of theoriginal Savannah Development Project: namely to provide measures designedto improve the economic potential of the region and the standard of living ofthe people by arresting the degradation of natural resources and by improvingfarming systems and technologies. The project itself would be a pilot opera-tion and the first phase of a long term program. It would lay the foundationfor a long term strategy for a more balanced agricultural development inSudan.

44. The project would aim at: (a) testing strategies for improvinglivestock and range production; (b) identifying and testing agronomicpackages and extension methods for crop production, both for area expansionand yield increase; and (c) testing approaches to settlement. The projectwould also rehabilitate existing water facilities in order to decrease popula-tion pressure and environmental degradation around operating wells. Addition-ally, cost recovery systems for water supply and veterinary services would beintroduced and a start would be made to establish land titles in rural areas.

45. The project would be implemented over three years and include thefollowing components:

(a) Further development and operation of three existing developmentcenters (trial farms) including adaptive agronomic research andtesting of ox-drawn equipment;

(b) Development of four settlement schemes around underutilized orunused wateryards including rehabilitation of water facilities;reorganization and establishment of individual holdings (about30 ha each) under long term leases; strengthening of public

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services (veterinary, crop protection, education, health);introduction of agronomic improvements as they become available(extension);

(c) Development of about 400 ha for flood irrigation;

(d) Initiation of a livestock and range development program includingdemarcation of dry season grazing areas for (i) the herds of about20 transhumant pastoralists using a small traditional well-field;(ii) a similar number of pastoralists within a larger community;and (iii) a group of sedentary graziers;

(e) Strengthening of the regional veterinary services to re-establisha prophylactic disease program and monitor the control oftrypanasomiasis;

(f) Rehabilitation of existing water facilities (boreholes andponds) through the National Water Authority;

(g) Improvement of access tracks in critical locations; and

(h) Strengthening of WSDC and planning of a follow-up project.

Project Cost and Financing

46. Project costs are estimated at US$21.5 million, of which US$12.8million, or 60 percent, is the foreign exchange component. The total costincludes taxes and duties estimated at US$1.5 million; however, it does notinclude expenditures of about US$1.0 million under Credit 718-SU, which wouldbe prepaid upon effectiveness of the proposed project (ref. para. 42). Thetotal costs are based on February 1981 prices adjusted to June 1981 pricelevels. A physical contingency of 15 percent was applied to all project itemsexcept local and foreign staff costs and allowances. Price escalations for allcomponents have been estimated at the following inflation rates: (a) for theforeign exchange component, 6 percent for the first year (calculated for 7months only); 8.5 percent the second year and 7.5 percent the third year; (b)for the local component, 20 percent for goods and civil works and 7.5 percentfor local staff costs in the first year (calculated for 7 months only); 15percent for goods and civil works and 7 percent for local staff costs in yeartwo and 10 and 5 percent respectively in year three. An advance of US$1.0million from the Project Preparation Facility was approved to help facilitateproject start-up and implementation:

47. The proposed financing plan would be as follows:

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

IDA 3.0 9.0 12.0 /1Saudi Fund 1.8 2.6 4.4ODA - 1.2 1.2Government 3.9 _ 3.9

Total 8.7 12.8 21.5 /1

/1 The proopsed IDA Credit is actually US$13.0 million;however, US$1.0 million of this would be used, uponeffectiveness, to prepay funds disbursed and outstanding,including charges, from Credit 718-SU.

The proposed Credit would be on standard terms to the Government and wouldfinance 60 percent of net project cost. Government would pass on US$12.0million of the Credit to WSDC as a grant under a Subsidiary Agreement,execution of which is proposed as a condition of effectiveness (ref. Section5.01, Draft Development Credit Agreement). The remaining US$1.0 millionwould be used, upon effectiveness, to prepay amounts disbursed and outstandingfrom Credit 718-SU. Part of the Credit would be used to finance about 40percent of local costs net of taxes; Government would finance 35 percent oflocal costs in addition to taxes and duties estimated at US$1.5 million equi-valent. The Saudi Fund would finance 25 percent of net local costs as well as20 percent of the foreign costs. The ODA's contribution would be solely forforeign costs. The Saudi loan and the ODA grant have already been approved.Total external financing--US$17.6 million equivalent--represents 88 percent ofnet project cost. The proportion of the Credit proposed to be used forfinancing of local costs (about 40 percent on a net basis) is slightly higherthan the 36 percent financed in the first project (Credit 718-SU). In view ofthe limited potential for cost recovery in this pilot project, the poverty ofthe beneficiaries, the deteriorating economic situation in Sudan and the factthat local costs account for more than one-third of total project costs ona net basis, a significant contribution towards local costs is consideredjustified. In order to facilitate implementation, Government has agreed todeposit 200,000 Sudanese pounds into a project account in the Bank of Sudan.

Project Implementation

48. The Western Savannah Development Corporation (WSDC), which wasestablished in March 1978 as a public corporation under the Ministry of Agri-culture, would be responsible for planning, coordinating and monitoring allproject activities and for implementing a major part of them. Implementationof the rest would be carried out by regional government units on the basis ofannual work plans agreed with WSDC as follows: National Water Authority forwateryard improvements; regional Veterinary Services Department for carryingout animal health programs; regional Range and Pasture Administration forassisting with the livestock and range development program. (All projectactivities would, however, be coordinated by the WSDC.) It is proposed thatGovernment be required to maintain staffing and operational capacities of the

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three regional units at 1980/81 levels (ref. Section 3.06, Draft DevelopmentCredit Agreement); this would mean providing annual operating funds as follows:(a) NWA, not less than 500,000 Sudanese pounds; Veterinary Department, 200,000and Range Administration, 100,000.

49. WSDC is directed by a board of 13 directors including representa-tives from the central Government ministries of Agricultural and Planning, theAgricultural Research Corporation, the Agricultural Bank of Sudan, the regionalDarfur government, local councils, farmers and pastoralists associations.WSDC headquarters are located at Nyala (see map) where an office building, sixsenior staff houses and workshop and storage facilities are being built withsupport from ODA and IDA funds (Credit 718-SU). WSDC has three operatingdivisions which report directly to the Director General of the WSDC, who wouldserve as project director. The director general is a qualified experiencedSudanese; however, because of the importance of this position it is proposedthat the Government consult with the Association prior to appointing anyreplacement (ref. Section 3.07, Draft Development Credit Agreement).

50. Twelve senior staff of WSDC are in post. The Corporation alsoemploys about 30 middle and junior level staff and about 110 laborers. Underthe project, provision would be made for technical assistance staff (about14 man-years) as well as about 41 man-months of consultancies covering landmanagement, cartography, training, etc. Base costs for technical assistancestaff have been estimated at US$150,000 per man-year, which is consistent withrecent Sudan experience; consultancy costs have been budgeted at US$12,500per man-month. Technical assistance staff would be financed on a parallelbasis between IDA and ODA. Technical assistance staff to be financed by ODA(Senior Agriculturalist, Settlement Agriculturalist and Chief Engineer) wouldbe appointed in consultation with the Association (ref. Section 2.03, DraftProject Agreement). The qualifications, experience and terms and conditionsof employment of technical assistance staff and consultants financed under theCredit (Financial Manager, Agricultural Economist, Clerk of Works) would besatisfactory to the Association (ref. Section 2.02, Draft Project Agreement).Staff training would be carried out at all levels, basically in the form ofon-the-job training by senior and expatriate staff. Training would be coor-dinated by a new Training Section to be established in WSDC. In addition,the Project would provide funds for three overseas fellowships and also for aconsultancy to plan and monitor staff training as well as to identify, at alater stage, future needs for training of staff, farmers and pastoralists.

Detailed Features

51. The project would be executed through annual work programs preparedby the WSDC. Annual work programs would be prepared at two levels (a) Programsand budgets of the other agencies involved in project implementation (ref.para. 48) would be prepared by January 31 for the following fiscal/projectyear, for review by the WSDC, and (b) an annual work program for the entireproject (including (a) above) would be prepared by WSDC not later than March 1of each year, for review by the Government. After review it would be submittedto IDA no later than April 15 (ref. Section 2.04, Draft Project Agreement).

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The first annual work program for the period ending June 30, 1982 was discussed

and agreed during negotiations. Work programs are intended to facilitate afull annual review of the project implementation. They would also serve as

instruments against which project funds from the Government and foreign donors

would be released.

'2. In specific terms, the project would involve the following:

(a) Development Centers. Three existing trial farms located at Dimsu,Umm Rakuba and Jumeiza and covering the two major soil types of the

area would be further developed. This would include the provisionof buildings, water supply, vehicles, equipment, staff and otheroperating costs. The Umm Rakuba Center would be incorporated into a

settlement scheme to enhance direct contacts between WSDC staff andfarmers. Adaptive agronomic research including testing of ox-drawn

equipment would be carried out under the responsibility of the head

of WSDC's Agricultural Services Division. The agronomic trialswould concentrate on selection of improved varieties of currentlygrown crops, identification of possible new crops suited to localconditions, and the testing and adaptation of improved crop husbandry

practices.

(b) Settlement. A settlement program would be initiated under theproject to help relieve population pressure in already settled areasand to safeguard migratory stock-routes against encroaching cultiva-tion. Two of the settlements would be located in the easterndistrict and two settlements in the southern district. Settlerswould be selected by WSDC in cooperation with the local councilsfrom applications, and according to certain eligibility criteriaincluding age, origin, farming experience and ability. The mainattraction to the settler would be the provision of exclusive landuse rights, water and services (agricultural services, school,health room). Each settlement scheme would be designed for about350 farms of 30 ha each or a total area for cultivation of about10,500 ha. Settlers would follow the traditional land use pattern,i.e. use a 20 year rotation with four crop years of millets andgroundnuts and 16 years fallow. Gum arabic trees would be gradually

planted on the border lines and serve as windbreaks. To cultivate6 ha effectively at full development, a settler would need to useox-drawn cultivating equipment and Project Staff would foster use ofthis equipment. The WSDC has already identified land suitable forsettlement. The Government would assign this land to the WSDC whichwould survey and demarcate the farms and issue individual leases to

settlers. These leases would be valid for 20 years and be renewable.The land lease titles would be deposited and recorded at the existingland registry office at Nyala. The leases would be subject to anannual land rent payable after harvest to the regional Government.The lease contract would also provide for dispossession of settlerswho do not abide by its conditions and in particular those who did

not follow proper husbandry practices.

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(c) Flood Irrigation. Currently about 400 ha in different locations ofthe Project area are used by farmers to produce grain sorghum andvegetables under systems of uncontrolled flood irrigation. Thecrops are transplanted into humid patches of cracking clay indepressions or along seasonal water courses which have been fillednaturally with water from flash floods. The area suitable for floodirrigation in the Project area is estimated at over 3,000 ha. Thepresent flood irrigation area near Tullus would be expanded byabout 400 ha. About 150 ha of these would be developed for vege-table production by directing high flow water through gated channelsinto bunded plots along the river banks. A further 250 ha would bedeveloped for the production of winter sorghum. The Project wouldprovide the major construction works against the understanding thatthe farmers would undertake all the land clearing and internalbunding.

(d) Livestock and Range Development Program. The principal cause forthe decline in animal production and the deterioration of the rangein the Project area is increase of the cattle beyond the sustainingcapacity of the range. The Project would attempt to rectify thissituation on a pilot basis, granting exclusive tenure of dry seasongrazing areas to selected individuals or small groups of pastoralists,while maintaining the transhumant movements of the cattle during theremainder of the year. Under such a scheme, there would be anincentive to optimize cattle numbers to the sustaining capacity ofthe land during the critical dry season. Pastoralists' cooperationwould be engendered through discussions with WSDC and the regionalRange and Pasture Administration staff. The range demarcationscheme would be tested with three different groups of livestockowners: (i) a small group of about 20 to 30 transhumant pastora-lists who make up the total population around a small well field;(ii) a similar number of transhumant pastoralists grazing an areawithin a larger community and well field; and (iii) a group ofsedentary livestock owners. The regional Range and Pasture Adminis-tration would define the areas by constructing firebreaks or bycutting trace lines. Where possible, lessees would be encouraged toplant trees (gum arabic or edible legumes) or make thorn fences toreinforce boundaries. This will be particularly important in thesedentary area where considerable pressure from migrating stock maybe expected. An efficient Animal Health Service is essential to thesuccess of all components of the Project as most of the benefici-aries keep some livestock. Under the Project, the operationalcapability of the regional Veterinary Services Department would bestrengthened through the provision of buildings, vehicles, facili-ties, equipment and drugs incremental to the Department's currentbudget. This would enable the Department to: (i) carry out aneffective vaccination campaign against prevelent diseases suchas Rinderpest; (ii) meet any epidemic disease outbreak; (iii)stock and supply owners with drugs and vaccines against endemicdiseases, and (iv) facilitate the monitoring of total herd treat-ment against trypanasomiasis. Drugs and vaccines against endemic

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diseases would be paid for by the beneficiaries. These revenueswould be collected by the Veterinary Department and deposited intoa revolving fund administered initially by the WSDC (ref. Section3.03, Draft Development Credit Agreement).

(e) Rehabilitation of Water Supply Facilities. Under the Project,wateryard spares and construction materials would be procured byWSDC to bring about 150 wateryards back to a serviceable status.Spares and construction materials would be issued to the NationalWater Authority (NWA) in South Darfur which would carry out specificrepair programs in agreement with WSDC using NWA labor and equipment.WSDC would supervise the implementation of this program. In addi-tion, the project would introduce a new system of water charges.Currently water charges are levied but rates, collections andaccounting are inadequate. Under the project, responsibility forcollecting water charges would be assumed by the NWA as soon aseach wateryard has been rehabilitated. Water rates would bereviewed by WSDC and increased to levels adequate enough to coveroperation and maintenance costs (ref. Section 2.05, Draft ProjectAgreement). The regional Government has already agreed to increasewater charges in rehabilitated wateryards to reflect the full costof operation and maintenance. Approval by local communities ofthe new water rates would be obtained by WSDC prior to the startof the rehabiltation works. Revenues from the rehabilitatedwateryards, collected by NWA, would be deposited into a revolvingfund administered by WSDC and NWA. This fund will be used tofinance the operation and maintenance of rehabilitated wateryardscarried out by the NWA (ref. Sections 2.05 and 3.02, Draft ProjectAgreement). These arrangements would be in effect during projectimplementation, after which it is envisaged that the administrativefacilities would be transferred to the NWA which would then becomea self sustaining public service. As an additional experiment totest the feasibility of self-administered water points, some fiverehabilitated wateryards with easy access and previous self-helpexperience, would be administered by their users under arrangementssatisfactory to the WSDC and the NWA. All arrangements pertainingto wateryard rehabilitation were discussed and agreed at negotiations.

(f) Track Improvement. The Project would provide funds to improvetracks in critical places, in particular wadi crossings. The workswould be carried out by WSDC hand labor under force account anddifferent designs, structures and materials would be tested fortheir applicability. Where feasible the local population would beinvolved in these works. -

(g) Strengthening of WSDC. The project would help strengtheri WSDC'soperational capabilities further through the provision of vehicles,equipment, aircraft hire, vehicle operating costs, local staff,technical assistance staff and consultancies. As indicated earlier(ref. para. 50) a new training section would be established in WSDC

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headed by a qualified Sudanese training officer. In addition, aplanning, monitoring and evaluation unit would be established atWSDC headquarters, headed by an internationally recruited agricul-tural economist reporting directly to the Director General of WSDC.The unit would be responsible for monitoring project and implementa-tion, evaluating its results, preparing current work programs, amongother duties. Details were discussed and agreed during negotiations.

Procurement and Disbursement

53. Contracts for the supply of equipment, supplies and general spareparts, estimated to cost more than US$100,000 per contract, would be procuredon the basis of international competitive bidding (ICB) in accordance withWorld Bank Guidelines. The items would be aggregated to the extent practi-cable to attract major suppliers. ICB would thus amount to about US$0.9 mil-lion. Under this procedure, local suppliers would qualify for a 15% preferenceduring bid evaluation. Contracts for the supply of equipment, supplies andgeneral spare parts, estimated to cost less than US$100,000 per contract, andin aggregate totalling no more than US$1.7 million, would be procured on thebasis of local competitive bidding in accordance with standard GOS procedureswhich were reviewed during appraisal and found acceptable to IDA. For con-tracts under US$10,000 up to an aggregate of US$100,000 comparative shoppingor purchasing off-the-shelf would be used.

54. Proprietary spare parts for vehicles, equipment and water facilitiesand replacement equipment amounting to a total of about US$2.0 in the aggre-gate, would be procured directly by negotiated contract with the principalmaniufacturers or by limited international tendering as appropriate. Servicesfor aircraft hire would be tendered under international bidding limited toneighboring countries and Europe to allow for effective back-up services andmaintenance, or by negotiated contract with other Government agencies providingaircraft services. The programs for rehabilitation of water facilities, vete-rinary services and range demarcation would be implemented by the Governmentagencies concerned under agreements with the WSDC. WSDC would handle allforeign procurement related to these programs and would pay the agencies fortheir incremental outlays for these programs. Supply of construction materialsand construction of buildings (US$2.4 million), construction equipment, officefurniture (US$0.5 million) and vehicles (US$1.5 million) to be parallelfinanced by the Saudi Fund would be procured in accordance with that agency'sprocedures.

55. The proceeds of the credit would be disbursed over four years.

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Disbursement of IDA Funds

Amount of CreditCategory Allocated % of Expenditures

(US$ Million) to be Financed

(1) Equipment and supplies, including 1.7 100% of foreign expendituresveterinary drugs and 90% of local expenditures

(2) Consultancy Services, 2.3 100% of foreign expendituresFellowships, WSDC Staff Salaries 30% of local expenditures

(3) Aircraft Hire and Vehicle Operation 4.0 100% of foreign expendituresCosts Including Spares, Lubricants, and 90% of of expendituresand Fuel

(4) Additional Operating Costs, 1.2 100% of foreign expenditures(including force account wages, and 80% of local expendituressupplies, field allowances andrentals for houses, offices,stores)

(5) Refund of Project Preparation 1.0 100% of principal amount andFacility charges outstanding at

effectiveness date

(6) Repayment of principal and charges 1.0 100% of principal amount andunder Credit 718-SU charges outstanding at effec-

tiveness date.

(7) Unallocated 1.8

Total 13.0

56. Disbursements for expenditures under Category 1 and for foreignexpenditures under Categories 2, 3 and 4 would be fully documented. Disburse-ments for local expenditure under categories 2, 3 and 4 would be made againststatements of expenditure (SOE) certified by the Director General of WSDC, thesupporting documents of which would not be submitted for review, but retainedby the WSDC for inspection by IDA missions.

Accounts, Audit and Government Funding

57. The WSDC would, under the direction of the internationally recruitedFinancial Manager, strengthen its accounting system in a way which would allowidentification of the investments and revenues included under the Projectand the sources of funding. The Statements of Expenditure (SOE's) would beaccounted for separately. The existing institutional arrangements within theWSDC are adequate to prepare such statements. SOE's covering periods of sixmonths would be verified by the Auditor General within three months of the endof each period.

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58. Separate accounts would also be kept for the two revolving funds forveterinary drugs and wateryard operation. Unaudited financial statements ofthe WSDC including the accounts for the two revolving funds, would be preparedby the WSDC and submitted to the Association in English, no later than sixmonths after the end of each fiscal year. All accounts would be audited bythe Auditor General of Sudan. The audited accounts, together with the auditor'sreport, would be submitted in English to the Association annually, not laterthan nine months after the end of each fiscal year. The above accounting andauditing procedures have been agreed by Government (ref. Sections 4.01 and4.02 Draft Project Agreement).

59. Government has opened a project account on behalf of WSDC throughwhich all local and foreign project funds would be channelled except forrevenues from wateryard operations and sale of veterinary drugs (ref. para.51(d) and (e)). The project account would be replenished every three monthsto a level consistent with the planned expenditures of each three month periodas contained in the approved Annual Work Program (ref. Section 3.02(a) and(b), Draft Development Credit Agreement). In order to ensure the operation ofthe revolving funds for the purchase of wateryard spareparts and of veterinarydrugs, assurances were obtained from the Government that it would make avail-able adequate foreign funds to WSDC (ref. Supplemental Letter to Draft Develop-ment Credit Agreement).

Environmental Impact

60. A major objective of the project would be to develop effectivemethods to reduce ecological degradation by overgrazing and overcultivation.Rehabilitation of broken-down water facilities and resettlement would relievepressure from animal and human population around existing settlements andoperational boreholes and would give them a chance to recover. Range manage-ment techniques would be tested which would improve the use of existingresources. Overall, the project interventions are designed to reverse theongoing environmental degration.

Benefits, Justification and Risks

61. The fundamental justification of the project is to obtain furtherexperience with smallholder agriculture in marginal rainfall areas. Thiswould include identification and subsequent testing of improved technologyaimed at sustained productivity, which would form the basis for progressivedevelopment. Growing human and animal populations, lack of technoloRicaladvances, poor maintenance of existing infrastructure, and unorganized settle-ment are producing environmental degradation in the western savannah areas.The already low incomes and living standards of the people are bound tofurther decline and conflicts over land and water use would intensify. Unlessa solution is evolved, the situation will continue to deteriorate, probably atan ever-increasing rate. The longer the delay in tackling this problem, thegreater it will become and the greater the costs and difficulty to find andimplement a solution to it. If viable solutions emerge from this Project,then it would have made a major contribution by opening up prospects for the

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development of the Savannah areas. Regardless of this, the experiences wouldstill provide some lessons, technical knowledge and show reactions of thepeople and the local administration to efforts at integrated rural development.The project would not lead to significant incremental production, with theexception of the production from the expanded area under flood irrigation.The project would test a number of approaches for technological improvementsbut would not be expected to provide for their introduction at a significantlevel. Production benefits would be long-term and would consist of stabiliz-ing production in a degrading environment rather than in incremental produc-tion. In addition, most of the investments under the project are experimentaland the objective is to gather more information on the technical and socialparameters. No attempt has therefore been made to calculate an overalleconomic rate of return for the Project.

62. The project would rehabilitate about 150 existing water facilitieswhich are not operational at present. This would allow the existing concentra-tion of human and livestock population to disperse over a wider area. This inturn would (i) improve the overall use of natural resources by reopening upareas for crop and livestock production which were not accessible due to lackof water; (ii) provide the opportunity for the degraded surroundings of thewater points in use to recover; (iii) reduce haulage distances to watersources thereby saving time and energy for more productive activities; and(iv) reduce the risk of breakdown of the water supply and thereby the risk ofproduction losses caused by these breakdowns. Based on a model calculationof the incremental livestock production which would be obtained through therehabilitation and seasonal operation of a wateryard for the provision ofstockwater only, the economic rate of return of wateryard rehabilitation isestimated at 11 percent.

63. The Project would deal with about 1,700 families of cultivators andpastoralists, or about 10,000 people, who would be affected by the introduc-tion in the area of land use rights on the limited scale proposed. Theaverage cost per beneficiary in the land allocation programs would amount toabout US$2,000 per family or about US$333 per capita. In addition, a largemajority of the total population of about 500,000 people would benefit fromimproved water supply through the rehabilitation of wateryards and ponds.The strengthening of veterinary services, tsetse control and the supply ofveterinary drugs would be to the benefit of a significant proportion of thepastoralists.

64. Government and WSDC staff involved with the Project would gainvaluable experience and training in project planning, implementation andevaluation by working together with expatriate advisers. Of particularimportance is the direct interaction between Government planners and the localpeople to ensure that their concerns and suggestions are fully considered infuture plans. These training experiences would be most valuable for theimplementation of a possible follow-up project. The Project would alsopromote and introduce to the area new concepts such as cost recovery fromdirect beneficiaries.

- 24 -

65. The technical economic, social and environmental problems facingthe Savannah areas are considerable and have no obvious simple solution whichcould guarantee long-term effectiveness. The three-year time frame for theProject is short to test proposals for an economically viable follow-up project.However, the WSDC is already established and equipped and it is expected thatfor this reason, no time would be lost for start-up operations. The success orfailure of the Project would depend on whether it will be possible to developa system of controlled land use and create a social and economic environmentwhere the system was acceptable to the land users. The system would not workif it had to be imposed on the people by coercion. The system must be onethat is understood and adopted by the people because of a realization that itoffers a solution to their problems. There is, however, no guarantee that asystem will be developed that would be both effective in the long run andacceptable to the people. Much will depend on the goodwill and ability ofthe traditional, elected and appointed leaders. It is expected that Governmentofficials will give active support and be influential in pursuading thetraditional leaders to support the project and cooperate in its activities.

PART V - LEGAL INSTRUMENTS AND AUTHORITY

66. The draft Development Credit Agreement between the Democratic Republicof the Sudan and the Association and the Recommendation of the Committeeprovided for in Article V, Section 1 (d) of the Articles of Agreement of theAssociation are being distributed separately to the Executive Directors.

67. Special features of the draft Development Credit Agreement arementioned in the text and are listed in Section III of Annex III.

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

PART VI - RECOMMENDATION

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

A. W. ClausenPresident

Attachments

Washington, D. C.August 6, 1981

- 25- AN=- IPafo I

TAULS 3ASUDAUNESClL INDICATOR DATA SUETI

SUDAN REFERENCE CROUPS (WVICITED AVWGESLAND AREA (THOUSAlD SQ. EM.) - MST RECEIT ESTIMATEa-

TOTAL 2505. 8 oS t RNCETr LOWI INCOME MIDDLE INCOMEAGRICULTURAL 315.2 1960 /b 1970 /b ESTIMATE /b AFRICA SOUITH vF SAHARA AFRICA BOUTH OF SAHARA

GNP PER CAPITA (US$) - 140.0 170.0 370.0 238.3 794.2

ENERGY CONSUMPTION PEIR CAPITA(ItLOGRMS OP COAL EQUIVAEWNT) 54.2 151.6 141.4 70.5 707.5

POPULATION AND VITAL STATISTICSPOPULATION, NIDYEA (THOUSAND6) 11256.0 14090.0 17862.0URBAN POPULATION (PERCENT OF TOTAL) 10.3 16.4 23.9 17.5 27.7

POPULATION PROJXCTIONSPOPULATION IN YEAR 2000 (MILUIONS) 31.4STATIONARY POPULATION (MILUONS) 86.0YEAR STATIONAkY POPULATION IS RACHED 2105

POPULATION DENSITYPER SQ. KM. 4.5 5.6 7.1 27.7 55.0PEh SQ. KR. AGRICULTURAL LAND 37.0 46.0 55.1 73.7 130.7

POPULATION AGE STRUCTURE (PURCENT)0-14 YRS. 43.7 43.7 44.1 44.8 46.0

15-64 YKS. 53.2 51.6 53.1 52.4 51.265 YRS. AND ABOVE 3.1 2.9 2.8 2.9 2.8

POPULATION GROWTH RATE (PERCENT)TOTAL 1.9 2.2 2.6 2.6 2.8UR8AN 6.8 6.9 6.8 6.5 5.1

CRUDE BIRTH LATE (PER THOUSAND) 45.3 45.7 45.7 46.9 '46.9CRUDE DEATH RATE (PER THOUSAND) 25.0 21.0 18.0 19.3 15.8GROSS REPRODUCTION RATE 3.3 3.2 3.2 3.1 3.2

FAMILY PLANNINGACCEPTORS, ANNUAL (THOUSANDS)USERS (PERCENT OF MAlRIED WOMEN) .. ..

FOOD AND NUTRITION1NDEX OF POOD PRODUCTION

PER CAPITA (1969-71-100) 92.0 100.0 100.0 89.5 89.9

PER CAPITA SUPPLY OFCALORIES (PERCENT OF

REQUIR131ENTS) 71.0 86.0 93.0 90.2 92.3PROTEINS (GRMS PER DAY) 53.0 61.0 65.0 52.7 52.8

OF WHICH ANIMAL AND PULSE 23.0 19.0 19.0 17.8 16.1

CHILD (AGES 1-4) MORTALITY RATE 46.5 37.5 28.5 27.3 20.2

HEALTHLIFE EXPECTANCY AT BIRTH (YEARS) 39.2 43.2 47,3 45.8 50.8INFANT MORTALITY RATE (PER

THOUSAND) .. 132.0/c

ACCESS TO SAFE WATER (PERCENT OFPOPULATION)

TOTAL .. .. 46.0 23.9 27.4URBAN .. .. 49.0 55.0 74.3

RURAL .. .. 45.0 18.5 12.6

ACCESS TO EXCYETA DISPOSAL (PERCENTOF POPULATION)

TOTAL .. 16.0 22.0 26.2URBAN .. .. .. 63.5RURAL .. .. .. 20.3

POPULATION PER PHYSICIAN 33500.0 14304.6 8694.4 31911.8 13844.1POPULATION PER NURSING PERSON 3041.0/d 1740.3 1282.6 3674.9 2898.6POPULATION PER HOSPITAL BED

TOTAL 951.0/d,c 936.7/e 998.3 1238.8 1028.4URBAN 118.Od e 188.77l 444.9 272.8 423.0kURAL 4479.07;; 5213.37T 1742.0 1745.2 3543.2

ADMISSIONS PER HOSPITAL BED .. .. 16.9

HOUSINGAVERAGE SIZE OF HOUSEHOLD

TOTAL .. 5.1URBAN .. 5.7/fRURAL .. ..

AVERAGE NUMBER OF PERSONS PER ROOMTOTAL .. ..URBAN .. 2.5/fRURAL .. ..

ACCESS TO ELECTRICITY (PERCENTOF DWELLINGS)

TOTAL .. 26.4/f

URBAN .. ..RURAL .. ..

* Most recent estimate on economic mission report is US$470 (1980).

- 26- MNEX IPagte 2

TABLE 3ASUDAN - STAL INDICATORS DATA SHEET

SUDAN REFERENCE GROUPS (WEIGHTFED AVE AGES- MOST RECENT ESTIMATE>-

MDST RECENT LOW INCOHE MIDDLE INCONE1960 /b 1970 /b ESTIMATE /b AFRICA SOUTH OF SAHARA AFRICA SOUTH OF SAHARA

EDUCATIONADJUSTED ENROLLMENT RATIOS

PRIMARY: TOTAL 25.0 38.0 50.0 56.4 73.7MALE 35.0 46.0 58.0 70.7 96.8FEMALE 14.0 29.0 42.0 50.1 79.0

SECONDARY: TOTAL 3.0 7.0 16.0 10.0 16.2MALE 5.0 10.0 20.0 13.6 25.3FEMALE 1.0 4.0 11.0 6.6 14.8

VOCATIONAL ENROL. (5 OF SECONDARY) 3.0 1.4/g 3.O/g,h 8.0 5.3

PUPIL-TEACIhER RATIOPRIMARY 41.0 47.0 35.0 46.5 36.2SECONDARY 20.0 17.0 19.0 25.5 23.6

ADULT LITERACY RATE (PERCENT) 13.1 14.7/1 20.0 25.5

CONSUMPTIONFASSENGER CARS PER THOUSAND

POPULATION 1.4 1.9 .. 2.9 32.3RADIO RECEIVERS PER THOUSAND

POPUIATION 17.0 79.0 82.8 32.8 69.0TV RECEIVERS PER THOUSAND

POPULATION 0.8 3.2 5.9 1.9 8.0NEWSPAPER CDAILY GENERALINTEREST-) CIRCULATION PERTHOUSAND POPULATION 4.0 .. 1.6 2.8 20.2CINEMA ANNUAL ATTENDANCE PER CAPITA 0.8 .. 0.7 1.2 0.7

LABOR FORCETOTAL LABOR FORCE (THOUSANDS) 3731.6 4623.1 5702.0

FEMALE (PERCENT) 9.6 10.2 10.7 34.1 36.7AGRICULTURE (PERCENT) 85.7 82.0 78.4 80.0 56.6INDUSTRY (PERCENT) 6.2 7.8 9.8 8.6 17.5

PARTICIPATION RATE (PERCENT)TOTAL 33.2 32.8 31.9 41.7 37.2MiALE 59.3 58.2 56.2 54.3 47.1FEMALE 6.4 6.8 7.0 29.2 27.5

ECONOMIRC DEPENDENCY RATIO 1.4 1.4 1.5 1.2 1.3

INCOME DISTRIBUTIONPERCENT OF PRIVATE INCOMERECEIVED BY

HIGHEST 5 PERCENT OF HOUSEHOLDS 20.97a ..

HIGHEST 20 PERCENT OF HOUSEHOLDS 50.11 49.2/kLOWEST 20 PERCENT OF HOUSEHOLDS 5.O01 5.17 *-LOWEST 40 PERCENT OF HOUSEHOLDS 13.9ft 14.57kr

POVERTY TARGET GROUPSESTIMATED ABSOLUTE POVERTY INCOMELEVEL (US$ PER CAPITA)

URBAN .. .. 137.0 136.0 381.2RURAL .. .. 80.0 84.5 156.2

ESTIMATED RELATIVE POVERTY INCOWELEVEL (USs PER CAPITA)

URBAN .. .. 115.0 99.1 334.3RURAL .. .. 100.0 61.2 137.6

ESTIMATED POPULATION HELOW ABSOLUTEPOVERTY INCOME LEVEL (PERCENT)

URBAN .. .. .. 39.7RURAL .. .. 85.0 68.8

Not availableNot applicable.

NOTES

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

/b Unless otherwise noted. data for 1960 refer to any year between 1959 and 1961; for 1970. between 1969and 1971; and for Most Recent Estimte, between 1976 and 1979.

/c 1970-73 average; /d 1962; /I Government hospital establishments; /f 1965; A Beginning 1970, theduration of general secondary education was reduced from 8 to 6 years; /h Includes programs of 5training centers operated by Dept. of Labor and 17 short-term centers operated by Min. of Youth andSport; /i 1966; LI 1963, Omdurman -urban;- /k 1967-68.

May. 1981

- 27 - ANNEX IPage 3

OZPIAIIOOUS OF SOCIAL INDICATORS

Sete:dlhaa.rh data ore deanfrom catre issoaelly jodged the seer eothorjttaI, ad relible, it should sleo be aotd that they sp eot be la.te-saclooell reeparblth bscaos of the oko etaa"dndtad deLiltio- aad roorapte and bY differeet reteerica in rllertiog the data. k data Ate,noethelese.. ... sfo to decrien order, of agatoda, inIcate treads, ad oh-ateriee renters -.ao differesoc berwe tnatnie-

Nba refernc stoops are (1) the eas coutry rror of tho tobjere cootry red <2) a oetty groop-nith -oseha btghe a-rge Ieres thor the onryroof th sbjert_ootry (esopt for 'Ospital Sorpit o il lap .etoa stoop aton "Middle Iso-m North Aftia sad Middle Ltact Is chees her- of strongeraoni-oaletta. aff=ie IoVe. Ia tha tafeesre stoop dtr the aveags. ars ppe.ltla weighted atitheetio esn far sor indictotr end ohot oely etmajority tof th r_otaie. i asroof he. dta for that iodicator. Sinr. the novrag of r t.onrr. .-Se rho Itdroatore dapnda or the -nelehiliry of data

edI. ar e-iform. reotis most he esr.i.ed Sn celortog avrgs. of ea Wsia.tvr tr rether. The.e ovorge ar on...ly ..sofo1 In -ptirin the value OfoeLodi--tr at r time amon the r..ootr and rfeer r

iAND ARIA, (thenead eq.ko.) Pooero e gsia Sod - torel. robot, red total - popolatirn (total.Total - nasrfaeaeropi la ea area cad lalacd waters. o:the. red meal)ivided by thiat respective bho of hooltite1 bade

qentealrtl -stimats at eriroltora. are oaed temporarily or permnetly aalhsi olradpiaegttlrdeoilrdheia e otof ee poore market and kitthen erdas or to its tallow: 1975 date. heblliteri.a ronrt.- HoSpitolsot.-stblehnoots porasretly staffed

by an leas oec phyotriet. nstoIh-iheet providiro P pitriPlly .. rst-GNP PU tAPIA (Uc$) - SO pat -pite estieatae At r--ea macht prinee. ra1- di. tare see sot iolrdsd. total hospital.. h-ont, n-lad. health

ealeted by esaor ter machod as World Sak Atlee (1977-79 basia); 1960, sad eadoa rteae. eat peosaretly etaffad by a physlirie (hot bya1970. end 1919 date. media ... terast, rea, midwife, act.) which otter is-patiat ers

dattos acd pnovide a limited cono of medi.l t Foit r. a steno-lOUSY CfNf5ffTISNPSI CAPFITa - A--oa -oaeptiar of romrim1 crery (oral tiral ptopoeeare hosl.pitals laloa as ptnrpa/gaealhopotale.

Aed ligaite. pettolet, a,ttura eae and loydro-. * tr1r en 14aothema olr- and rurl oe PItal4 - Is or coral hospital .sd edita1 and macaitYtriodr. In kllogrsm r oal.. eqoilve-t pen tapit.; 1960, 1970, en 1979 aent-a. Sp.eriallrd hespitale ar landed only eadec total.data. ddioa a "Msita1 Sod - Tocal nosha of admissions to or disohergee

fton hoepitele dtividd hy the aebhr of bade.POPULATION AND, VITA. STATISTICS

Tota Porulat. Mi-er(b ad)-A. of July 1; 1960, 1970,. ad 1919 ffOSflhdAt. Av-r..e Sloe of Hoo...l rcetsathhold ol)-ntatl. orba. red ror-I

mtba Pno,lata (reoet at total) Ratio of orha to ototl pnpelrtio; A hoead rsss fasoo fidihl rho chore living j-t-ttdifferent df tiorro of ocher acee say effeoc roepahilily of data and their -it md.Ahadro ogrsa csyath elddt

am otoeries.; 1960,10970, and 1979 data. the htoehold fo. tritclpapeoor.pa.tjia Projeotona .vrr cme of .e.. IOtrom-tre.ohr, and -1e -Aeac n

Pee Ioni ya 2.! 010 - Cotret popolattor porJnctiras Ott hose.d on 1980 her of peooe e roam 10 all orhant,. od tore. otoa..pied teetatotni pop. oia byorsden d tlactr orttlity sad fertility rarsa. dwellings, c-p-otiv-ly. D-cliogs enclde to-.potmeet erotor d h

ytoeoic pretors P. or erraity rates . ptepi.e attreeloel ses_nrtpind parce.

lee, and f-1al Ife sapecotry eabliieios at 77.5 yas Th. pear- Cearetinea dwellings with eeti Ityi ltioae q--tt as pe-ttetgaeter for fertilityf rtct also hav three Itol. asola derIlne Ir of total, orbon, end r-ra dvllitge rsepe-tiosly.

feotilicy o....rdi.g to Inoer 1rat end post f saly plerroA petfnta-aSaab cottry Ia chat aesigoed .e of theec aloe toebietires of aortsiity EflUCATISONond fertility t-eds for prniontio_ ynree. I dutdtrlnn Ratios

Seinsaryu oroeor-i tatir...ty prpolottro thert o or groth, since Primr= ool oa,soerdfman-ioa oa,mleadfthe hirth rtot It rqool to rho doath ntot, ord sler oh. e eg st--.oar- -troilmet of all agr at the primary leve aep-tn_tgee of trp-tir-solos to...toot. Thie In uchievod orly adtot fertility retee derlina er prisay ehrleeptpjoltirae; ttmaly i-oldes children egd 6-11th. teplocamnt I..rl or itno teptod-Ucio atot, whe -.rh eaa-tion years bar djoetad fro differet longhb of primary adarerine; for

owoetslceitelI, onrttly.The etotirer. ppolto sloe -toi.trie with reivorsa eurto entoliot may eac 1ff portost:P.sra or ho et of the projected hr-otacistios of ths pnaaiedr reppl r eo r abets the afitie1 enhool age.

in the Y-a 20100 eed the rute rf dolite or f-rtility rattoroelasteoaavso tl- oe.1 malsd emae oepated e above; setdreaysea loya. ederttoa reqaitest leat foeyaers rt apprevd primary inrti

Neat ettiosary oruatorI rearhrd - The year ehon etatite y ppopatine prerie g --al vreiotal, tr teacher training iett...tit- tplioi.. hoe hea macbed. ostsil of 12 re II Yso of age; ronrspoadono anros - -Aecuy

Potola.tto Sceeto seOded.Per so,.. -Mid-year popolotirt pat oqoaro kilomter (155 hctrtae) of V ... rioleaoent(roartsoday-Vraie saeteo

Pe r.6. earicol1tu_l load - Compard as above for eg.IoultoraI land early or -a deprctmatt of e_.odacy institotos.only; 1990. 1970 ard 1978 drta. Poi-ere aIo - eri_mry ad seneo TatsI etdonts ence11d Ie

PPorleio Age Stru_tjce rr c - hIldtr- i0-lu years). corkine-ego (15- pIseI edsceeylvesdvddb ebc tFtrahc.. in rho6i yaac), ta rented (h5 y.rer end over) a pa ta E oaid-year poor- "ocr-p-eding levl..

lsio 90, 1970, ea 979 data. Molt liten.scy rate rrte)-Litractardolts (able to td end -rits)Poroltira iroth Mt.t (rct)- toc-I - dA-ra groth ratee rf tota sid- aa a .. pcetage tf creel edrlt ptre aS.d 15 years and -v-r

yerrplatirt. for 1950-60. 1960-70,. ad 1970-79.Po.uato cat Rata (r-tn - othet - _a_Ia $__h rtes. of othar row- CONSUSPTIOe

lotioe. dot 1950-iS,1960-.70, and 1971-79. P---ease are leer thb...aAdrolain - Peesagr art-ts eterCrude Sooth tar (tar chr.snd - MA_al lIre birth. p.r th-ot..ad tf mid-year osre estieg lea thor sight parsoes; onlads mbnlaeoe. heaceas aed

pnyalacirn; 1960, 1970, aad 1979 data. military -hbIe.ICrude Dteah Rat (Preth .h...ad) - MoAl Ideath. per thr....de tf mid-year Redia. Reanr lee thonednorltio - All typee of roretneIe for eaL

nrlto;1960, 1970, end 1970 deta.bodet. t saa poblirpr hase P.f poolle eacldea-ir... Fmprduo LR_o t ".--A Stas -bsh of daughtots aw nwill hea to lirensed ts..eivers Sn rountnies a Id Ye yeac e regiarratio of tedie

her otta reprodrv t periodtif :h. anperi..oce preeret gs-apeticl f_ en sta ec Ie effect; data ftr ratr year. may sat be -opa-ble sieotduty races; ro..ally ti-poet -veragee odim to 1960, 1970, and 1979. east rotries abolished iioenc..

Pails Plauita - M-ctoo... IAn.-1 (th ...arda A - ..ote robee of arcptte eoivete(netth-taa rolacior - 9- teeiot tar brosdr...t taofbirtb-r-rl d-rite ocdsr ..oepi.n. of reieto fadly plenire pnogas gaaa-oltptoosndpplto;eroe eirsned TV -ecever

Panly iorit-tarairrc- r f ere rm)-ilPa,toe 4 of matisd In -too iole aad Io year h-r raeitratite of 15 sacs see In effeor.-me ofiohi1d-herig ge(1-6 ea b)ro oehit -tt 1r devires to Soenta CIrcal'tio lee rhnrse~td eistill, 1-Obe the -vre ot- -

all marrid woe it sea age groop. . oltn r diy eee ieteatWappr dtted a.a pacIiodluepablicatira devted primarily to cec..tdleg 5eara1 tow. It Is reidered

FOOr AoND NUTRITISS to ha 'daily" if it pp.r-s at leant foo tines week.Inan of Prod Prodo-ciro ret Capite ( -1-150 - ltdea of pet .ePita anel Cleam nasl Aotsadaeo ro Cpotre pre seo-m-aad tr the ea r of

prodootiot ofeI foo craritd e Prdctr scode en ed fend Ma tiokte -Ild doting the peer. ioloding adeiastee ot drin-In J.-sIa ot caletdur year leaie. Comeditinecrvt primay good. (e.g. eracaead mobilc -nite.,instead of ager tythochtore tdiblo . ... otoit -ocierte c codg -ffas andtee ace enolode) Aggreat prod_ot io of -. h country Ie hosed InlABOR POtiE-o .-Ira vrg pr dtr cceeshie; 1981-S 190,ad 1979 deca., Toa Labor Pr-o (thorte namrlyatiepeas aldn

Per terit etrl or c_orte_ rro of rs'lirmcce - Upatd foarmed farrssae.d oneplope hot -nirding hoeelive., atadeata, etc.,anrg aqoivlti of ret food euppliee available In oratory per caPita _teing ~pplotin of all agee. Dafiititn in vottora .. ototinecr:ratday. AooilhlbI oplio opries doaasit prodootior, isprte. loeet compa-bl.; 1960,11970 end 19PS date.ePoce,ad Nhiei to .tSe epylice etolodo aaine fend, eed,-ael aret) P-l lebot forte a- p--otag of total Iebr fort..

jun00titie use it food proceia -rd loeoS itioio.Rqie eioloa(oon)-Le ot nrrcg.frsty huetieg redeai eetimatedby PMO booed orpylologicol neds for .- Ima ottI- fiehiag .. poroerees of ctct1 labor forte; 1960, 1970 end 1i979 date.

city oed hoolth t..eidetti evrrece topror body nights, ego Industry_(tor-et) - Lahot forte Ir eting., taitotit afeotorLegand ser distr ibotio of popetirt, rod ol11eig 10 percet tor twet atad 1tatnicny , roter and gases. pa-otege of total labor ferct; 19d0,

hue:=l 1rveL; 1961-65. 1970, r 1977 dote 1970 end 1979 date.Pe -att rolr or oroocir fe-n oar dev7 - Pro talc trott of psr .vtarr snoetorRt tret total. cab, and ta-is - Pattioipetioe or

unt eapply of tuod per day. Set -pply of f nod ie defimed asoa. Ra-. rniyraeaeroptd os total, sae1 ndfemal Ibr fPrre qtlr teoo for oil --onole retobliehed by USDA p-oide f. orelisa p-etencgee total balad fa-1e poptiata of oi agon te -pcivly;

elvoeof 60 grao of torel protiri p.r day aed 20 Vos of onimel and 1960. 1970, end 1979 data.. Th...esro bae on. d iX ..paeiiprle reepolce Pr-tao, of biob10 -ca hbrod hebttail.p prteit. Theee earod- refLeon g age-oar .trocare of theP.po-otlo."ad long tine trend. A:eds roerooI hose oP75 grom f o onI protoit ood 23 Srea ofdnfe- ee at=rm ai l -ote.1

eniso proena or -veao f-th ib -rld,pr-pr..ed by PAO In teTird troi endryRtio - Ratio of poultonader 15 and 65 Md ovrWarl Prd Survy; 1961-65, 1970 end 177 tua to the total lbhor forto

Po ttrarott etryfo o lsdple-ProteIn aopplp of fond de-rived cram acloals rod pubes ir green yet day; 19165, 1970 and 1977 dora. INOMtEt olaTRBTeIpru

ibtid(ear 1-0)Ourtlort ate car toosrd) - rton dnathn per tho-ac t. -P.rrontaa r Privat Iorcr (both Ic .eoh aed kind) -Rceived by rtohestago grop 1-4 yearn, to chOldoo-i ibi tar. grSoup; tot mnt developing tor- S peront. rioheat 20 porcet. poorest 00 portent ead poot_ t us arreatire doto d-ircd 0 roe lift tobles; 1960, 1970 erd 1979 deco, of bo---eholde.

StAllSU POVERiTY ITAREl GOUPSLIf a tatett..cy at rb (cat) -irerge rober of year. of lift -eoting. The fll1wing soimre ar eycp t.st meereof prvcrcy levels,

or brth;196, 100 od 195 rte. and ehorid be Inttproted etch -.. oidcn... oso titoInfan rtaiySae(et ra-ed7-ano n-tha of ifotre andor ru year rEtioatd Oelt Poat noehvL- (uis$ rot -erit. - rten anroral1

of ego.per oheao...d loe hitch.. Abanlote p-voty Snr _ vo Ia thor -tao leve h1m obich . mlieL1Moms t Oaf acto (rnrect o roroltior; tocu. ochr, sa rura - N-r aorritio...lly adequnte diet ploeeeta atrod teqoirem te Is not

her of pnple (total, orhan, rod tota) with voosotble ocoeo to arfe ffordeble.netereopply(itde tinted ocf roe vatrre or at'tctd but orrotsebnatd tEti-rtd Ralocive P-octr Onto- Level (US ororrie -arhen ed cral -rater erob .. that from protected brhblee, eprirga, tad snattasy wells) a.-ieal r tiscv povery fIrame leve I. ro-third of -v-ee Poe eaice

prstoe of heir -rptotire pryoletione0. -oocrhe ursa t pobtlr oenliom fto tnr.Ohrlvl derived from the total

fountalo or accodyrac lorrtcd not arm thea 250 meter, fine a bo Y mob-lve with djunt--o for hihr t..st of living In otheratmctoadrrd tohoa cioblo ree -obc ca of that hat... On rura at E.timated Pn..latine Solon Aberlto PovryIoseLvl(eret- re

reeotalootteooidimpy tatthe horevifo or aembor of the he...shold en ae nreto oooto obra coal)wo-r eelrbadr rot hav to-se-drdi"pP1yportirute Part of ch. day in fotohiog tha _.

nbeofpele(to-1, orbe, rod o.rr1) eavdby rorto disposal as

pst -ae of ther Ic rptttvn popoleoiore. loconce diepr...l ery ittldeth cinotio red Ioepa, th on itiro-tr croteet, of h-.o enotet to-eoi end irolal Dato Drislon

and w-ete-wtr by nere-boro.. .ysa- o0 the roe of pit prlire end id.i tE-oaic Adlycto aci Projeoti... Dlprt-tetler itata1ltiree. Nay 1991

Pe .Peionta Physioiet - Popolatiro divided by tam,ba of prectiring phy.i-

Prettocprnosn ero oplto dtvtdad by tochar of pra..tiringsolo oc dEma1o grad .tat Iorare prootitel orr.... an d ... siotort e-n.

- 28 -ANNEX 1Page 4

SUDAN - COUNTRY DATA

ECONOMIC INDICATORS

GROSS DOMESTIC PRODUCT IN 1977/78 1/ ANNUAL RATE OF GROWTH (%, constant prices)

US$ Mln. % 1972/73-1977/78

GDP at Market Prices 8,279.1 100 8.0Gross Domestic Investment 1,188.1 14.4 11.4Gross National Saving 645.1 7.8 -2.6Current Account Balance 542.0 6.5 -30.6Exports of Goods, NFS 701.0 8.5 -2.7Imports of Goods, NFS 1,437.0 17.4 9.8

OUTPUT, LABOR FORCE ANDPRODUCTIVITY IN 1974/75

Value Added 2/ Labor Force 2 V. A. Per WorkerUS$ Mln. % Mln. % US $ %

Agriculture 1,681 41.2 3.25 68.7 517 59.9Industry 657 16.1 0.30 6.3 2,190 253.8Services 1,745 42.7 1.18 24.9 1,479 171.4

Total/Average 4,083 100.0 4.73 100.0 863 100.0

GOVERNMENT FINANCE

Central Government - 1979/80(LSd. Mln.) % of GDP -

Current Receipts 643 15.4Current Expenditure 672 16.1Current Surplus -29 -0.7Capital Expenditures 4/ 164 4.4External Assistance (net) 238 5.7

MONEY, CREDIT AND PRICES 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80(million LSd outstanding end period)

Money Supply 292.5 369.6 530.0 669.1 877.0 1,047.5Bank Credit to Central Government 212.8 300.8 466.0 593.5 913.7 1,130.2Bank Credit to Private Sector and 296.7 393.3 432.5 490.8 652.9 814.3Parastatals

(Percentages or Index Numbers)

Annual percentage changes in:General Price Index (estimates) 21.1 1.6 17.9 16.7 37.4Bank Credit to Public Sector 37.6 41.4 54.9 27.4 54.0Bank Credit to Private Sector 48.4 32.6 10.0 13.5 33.0

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

1/ This is the last year for which reasonably reliable GDP data by expenditure are available.2/ Total labor force; unemployed are allocated to sector of their normal occupation. "Unallocated" consists mainly

of unemployed workers seeking their first job.3/ At market prices.4/ Expenditures from Development Budget (includes some capital expenditures by other public entities).

Not available.Not applicable.

EA2DBApril, 1981

-29.- ANNEX 1Page 5

SUDAN - COUNTRY DATA

TRADE BALANCE AND CAPITAL FLOWS

BALANCE OF PAYMENTS ESTIMATES MERCHANDISE EXPORTS (AVERAGE 1977/78-79/80)

1976/77 1977/78 1978/79 1979/80 US $ Mln. xallions US $)

Exports Goods, NFS 708 701 699 833 Cotton 315.7 56.7Imports Goods, NFS 1,192 1,437 1,345 1,611 Gum Arabic 38.3 6.9Resource GAP -486 -736 -646 -779 Groundnuts 39.6 7.2

Sesame 41.3 7.5Interest MLT Debt (net) -51 -51 -69 -49 Other 122.5 21.7Other Factor Payments (net) -- -- -- -- Total 557.4 100.0Transfers 173 221 240 209Current Balance -362 -566 -475 -619*

Public Grants 11 24 17 84 EXTERNAL DEBT, DECEMBER 31, 1978Public MLT Loans, disb. 324 210 405 532Public MLT Loans, amort. -57 -66 -55 -90 US $ Mln.Total Public, net 267 144 350 442 Public Debt, incl. guaranteed 2,100.2

Inras n reas34 25 39 3Non-Guaranteed Private Debt ..Increase in Arrears 345 325 309 93 Total Outstanding and Disbursed

Change Net Foreign Assets -2 76 -6 48 /a DEBT SERVICE RATIO FOR 1978(- increase) %

Errors and Omissions b/ -259 -3 -195 -48 Public Debt, incl. guaranteed 35.0 d/Non-Guaranteed Private Debt ..

Gross Reserves (end year) c/ 23 22 27 33 Total Outstanding and Disbursed

RATE OF EXCHANGE e/ IBRD/IDA LENDING, (Jan. 31, 1981) (Million US $):

Annual Averages End Period IBRD IDA1977 1978 Aug 79 Sep 79 Outstanding and Disbursed 128.5 196.7

Undisbursed 30.7 326.3Official: Outstanding incl Undisbursed 15_9.2 232.LSd 1 = US$ 2.872 2.662 2.500 2.000

Effective:LSd 1 = US$ 2.500 2.225 2.000 --

Parallel Market:LSd 1 = US$ -- -- -- 1.250

a/ Includes use of IMF resources.b/ Includes short-term and private capital movements.c/ Based on IMF statistics (line 1. d of IFS) which accounts for the variations between this line and the reserves

implicit from the proceeding line.d/ Based on amounts owed, not what was actually paid.e/ Prior to September 1979, the official rate differed from the effective rate by the amount of export tax/subsidy

charges. After September 1979, these were abolished and a parallel market rate was established for transactionsother than a limited category including government purchase and a few "essential" items.

Not available.EA2DBApril, 1981

*Current account deficit for 1980/81 is estimated at US$750 million.

- 30 -

ANNEX IIPage 1

A. STATEMENT OF BANK LOANS AND IDA CREDITS - SUDAN(as of May 31, 1981)

Amount (US$ Million)(Net of cancellations)

Credit No. Year Borrower Purpose Bank IDA Undisbursed

Six Loans and eight Credits fully disbursed: 127.2 117.4

Credit 364-2 1975 Sudan Rahad (Supplement) 20.0 5.3Credit 547 1975 Sudan Education II 10.0 4.9Credit 564 1975 Sudan Power II 23.0 1.1Credit 589 1975 Sudan Industrial Bank of Sudan II 7.0 0.3Credit 614 1976 Sudan Technical Assistance 4.0 0.9Credit 643 1976 Sudan ) 9.0 8.4Loan 1287T 1976 Sudan ) Domestic Aviation 20.0 - 20.0Credit 718 1977 Sudan Savannah Development 17.0 16.6Credit 727 1977 Sudan ) 8.0 4.2Loan 1467T 1977 Sudan ) Railway IV 12.0 - 9.2Credit 781 1978 Sudan Port 22.0 6.0Credit 782 1978 Sudan Livestock Marketing 25.0 24.1Credit 804 1978 Sudan Mechanized Farming III 16.0 14.5Credit 834 1978 Sudan Agricultural Research 15.0 14.3Credit 882 1979 Sudan Highway II 41.0 33.1Credit 904 1979 Sudan Southern Region

Agriculture Project 15.0 11.8Credit 1000 1980 Sudan Agricultural Rehabilitation

Program 65.0 53.9Credit 1006 1980 Sudan Third Power Project 65.0 59.1Credit 1022 1980 Sudan New Halfa Rehab. Project 40.0 39.8Credit 1118 1981 Sudan 1/ Blue Nile Pump

Rehabilitation Project 32.0 32.0Credit 1119 1981 Sudan 1/ White Nile Pump

Rehabilitation Project 35.0 35.0Credit 1153 1981 Sudan 1/ Second Technical Assistance

Project 6.0 6.0

Total 159.2 592.4of which repaid 84.2 7.1

Total now outstanding 75.0 585.3Amount sold 5.8

of which repaid 5.8 - -Total held by Bank & IDA 2/ 75.0 585.3

Total Undisbursed 29.2 371.3 400.5

1/ Not yet effective.2/ Prior to exchange adjustments.

- 31 -ANNEX IIPage 2

B. STATEMENT OF IFC INVESTMENTS(as of May 31, 1981)

Fiscal (Amount in US$ Million)Year Obligor Loan Equity Total

1964 and Khartoum Spinning & Weaving Co.1972 Textiles 1.9 0.3 2.2

1976 Cotton Textile Mills 8.7 1.3 10.0

1978 Seleit Food Production Ltd. 11.2 1.2 12.4

19/) Gezira/Managil Textile Co. Ltd. 6.7 1.4 8.1

1980 Promotional Cement Company - 0.2 0.2

Total gross commitments 28.5 4.4 32.9

Less cancellations, terminationsrepayments and sales: 6.9 0.3 7.2

Total commitments now held by IFC 21.6 4.1 25.7

Total undisbursed by IFC 1.2 0.5 1.7

C. PROJECTS IN EXECUTION 1/

The Bank and IDA have so far made eight loans and twenty-four creditsto the Sudan. Disbursements are either in progress or about to commence forthe following projects.

1/ These notes are designed to inform the Executive Directors regardingthe progress of projects in execution, and in particular to reportany problems which are being encountered, and the action being takento remedy them. They should be read in this sense, and with theunderstanding that they do not purport to present a balanced evaluationof strengths and weaknesses in project execution.

- 32 -

ANNEX IIPage 3

Credit No. 364 Rahad Irrigation Project; US$62.0 million Credit of March 30,and 1973 and July 11, 1975; Effective Dates: August 29, 1973364-2 and November 17, 1975; Closing Date: December 31, 1981

The Rahad Irrigation Project commenced agricultural productionin 1977 with cotton grown over 50,000 feddans (15 percent of the totalproject). Major project civil works have now been substantially completed onsome 206,000 feddans, with 154,000 feddans under cultivation; both are shortof the planned target of 300,000 feddans. Project implementation has beendelayed because of continuing managerial, financial and logistical problems,cotton yields also have been disappointing and there is a service shortage oflabor for harvesting crops. The project is undergoing careful review in aneffort to identify mechanisms to minimize the risks to this and other projectsin the agricultural sector in the future.

Credit No. 547 Second Education Project: US$10.0 million Credit ofMay 16, 1975; Effective Date: September 30, 1975;Closing Date: June 30, 1982

The second project is some 18 months behind the original 1975appraisal schedule. The delay is due to the lack of construction material,transportation difficulties and weakness in project management. Some changein project scope has been necessary in surmounting these difficulties.Physical execution of the project is improving, with the award of the bulkof the construction contracts, although transportation remains a constraint.Close monitoring of the project is to continue.

Credit No. 564 Second Power Project; US$23.0 million Credit of June 25,1975; Effective Date: October 29, 1975; Closing Date:June 30, 1981

Contracts for supply, erection and commissioning of generatingplant, transmission lines and ancillary equipment were placed mostly accord-ing to the program. However, delays in award of contracts for civil works atthe Burri diesel station, Roseires hydroelectric station and the Juba dieselstation are likely to delay commissioning of various components of the Projectby about two years. The project cost estimate is now 53% higher than atappraisal and the Government has received a loan of US$9.5 million from theOPEC Special Fund to help meet the foreign exchange cost overrun. PEWC hasincreased its electricity tariffs by 100 percent and its water supply tariffsby 200 percent. The Government changed the composition of PEWC's board ofdirectors, removed PEWC's departmental managers from the board and replacedthem with ministerial under-secretaries.

- 33 -ANNEX IIPage 4

Credit No. 589 Second Industrial Bank of Sudan Project: US$7.0 millionCredit of November 11, 1975; Effective Date: April 16, 1976;Closing Date: December 31, 1980

Funds under the first Industrial Bank of Sudan project (Credit 447)have been fully disbursed, and the credit was closed on June 30, 1979. Underthe second project (Credit 589), US$5.3 million has been committed and US$4.4million disbursed. There have been problems with overall management respon-sibility and effectiveness within IBS and doubts about IBS' future role in theindustrial sector. These issues have been brought repeatedly to Government'snotice but no appropriate action has been taken. Consequently, considerationof a proposed third line of credit for IBS has been postponed.

Credit No.. 614 Technical Assistance Project; US$4.0 million Credit ofApril 7, 1976; Effective Date: Octoter 5, 1976;Closing Date: December 31, 1981

The project, supported by IDA and the Kuwait Fund, is helping tofinance preparation studies of high priority projects to facilitate Sudan'spublic investment. The Project Preparation Unit has been established, but isonly moderately effective. Overall project progress has been good, however.All funds are fully committed.

Credit No. 643 Domestic Aviation Project; US$20.0 million Loan ofJuly 7, 1976 and US$9.0 million Credit of July 7, 1976;

Loan No. 1287T Effective Date: January 11, 1977; Closing Date:September 30, 1981

Management problems have resulted in delays in project implementa-tion; in addition, the project has encountered serious financial problems.Tenders for construction of the Wau and Malakal airports came in at levelsfar above the appraisal estimate and retendering was initiated, based onrevised design and bills of quantities. However, the new tenders also came inat levels greater than available financing. The future of this project is nowunder discussion with the Government, including the possibility of cancellation.

Credit No. 718 Savannah Development Project; US$17.0 million Creditof June 24, 1977; Effective Date: August 31, 1978;Closing Date: June 30, 1984

Due to organizational delays and logistical and financial con-straints, this project as well as the parallel ODA/Abu Dhabi Fund-supportedSouthern Darfur project, cannot be implemented as envisaged at appraisal.The Government proposed that both projects be rephased, reduced in scopeand consolidated into a single pilot operation.

- 34 -ANNEX IIPage 5

Credit No. 727 Fourth Railway Project; US$12.0 million Loan of July 8, 1977and and US$8.0 million Credit of July 8, 1977; Effective Date:

Loan No. 1467T January 12, 1979. Closing Date: December 31, 1982.

Procurement under the project is progressing well, with nearlytwo-thirds of the credit/loan already committed. Rapidly rising prices, alongwith a protracted delay between signing and effectiveness of the project, maynecessitate some reduction in project scope. Co-financing is being providedby the Kuwait Fund, Arab Fund, Abu Dhabi Fund, and European Development Fund.

Credit No. 781 Port Project: US$22.0 million Credit of June 9, 1978;Effective Date: February 2, 1979. Closing Date:December 31, 1982

The project provides for expansion of the capacity of the existingberths in Port Sudan and mechanization of cargo handling and movement, improve-ment of layout and working surfaces, and improvement of bulk, container androll on/roll off facilities, as well as management assistance and training.Project works are well underway.

Credit No. 782 Livestock Marketing Project: US$25 million Credit ofJune 16, 1978; Effective Date: July 9, 1979Closing Date: December 31, 1984

The Project provides market and transport infrastructure, technicalassistance, a headquarters building and additional staff for the Livestockand Meat Marketing Corporation (LMMC), which is implementing the project.Construction of the LMMC headquarters is 50 percent complete, and selectionof sites for 13 markets and 10 holding yards has been finalized. The SudanRailways Corporation has contracted to purchase livestock wagons, vans andunderframes, as well as light locomotives.

Credit No. 804 The Third Mechanized Farming Project: US$16 millionCredit of July 13, 1978; Effective Date; August 13, 1979Closing Date: March 31, 1984

The second Mechanized Farming project (Credit 311) was closed onDecember 30, 1980 and an undisbursed balance of US$3.6 million cancelled onMarch 5, 1981. The objectives of the third project are to (a) develop andintroduce improved mechanical farming methods, and (b) support programsdesigned to develop mechanized farming methods for smallholders. Theseobjectives will be pursued through improvement and expansion of the extensionactivities of the Mechanized Farming Corporation (MFC), programs of adaptivetrials and related research, access road building, importation of spare partsfor the mechanized dryland farmers and reorganization and strengthening ofthe MFC. The project became effective eight months later than expected. Lateappointment of staff and delayed procurement prevented full implementation ofagronomy and farm machinery trials during the 1980/81 season. MFC's futurefunctions have been discussed with Government and agreement in principle hasbeen reached to reorganize MFC as a service organization.

- 35 -ANNEX IIPage 6

Credit No. 834 Agricultural Research Project; US$15.0 million Creditof July 27, 1978; Effective Date: March 21, 1980;Closing Date: Jure 30, 1985

Over a six year period, the project would develop the researchcapability of the Agricultural Research Corporation (ARC) in Western Sudan,implement research programs in this region and strengthen ARC's new Khartoumheadquarters. The research program would be concerned with integrated live-stock and crop production systems, pure livestock production systems and waterand land use management. USAID is co-financing the project. In order tolimit projected cost escalation, reductions in staffing and housing have beenagreed. Contracts for the building program and for aircraft rental have beenlet. USAID is providing additional funding to permit inclusion of one addi-tional research station.

Credit No. 882 Second Highway Project; US$41.0 million Credit ofMarch 16, 1979; Effective Date: January 23, 1980;Closing Date: December 31, 1984

The first highway project (Credit 331) was closed on June 30, 1980.The second project will facilitate the transport and export of agriculturalproduction through construction of the Jebel Aulia to Ed Dueim road along theWhite Nile; improve accessibility of currently settled but isolated areas;provide access to new areas of agricultural development; develop appropriateorganizational, planning and technical skills in the Roads Department of theSouthern Regional Ministry of Communications, Transport and Roads, particularlywith respect to highway maintenance; and provide detailed engineering forfuture priority roads. The contracts for road construction and supervisionhave been let, and construction work has recently started. Selection of theconsultants for technical assistance to the Southern Region has been completed.

Credit No. 904 Southern Region Agriculture Project: US$15.0 millionCredit of May 11, 1979; Effective Date: February 14, 1980;Closing Date: June 30, 1984

The present project, a follow-up to the earlier rehabilitation project(Credit 476), will assist the Southern Regional Government to implement partof its regional agricultural development program by strengthening agriculturalservices, planning capacity and management and improving physical infrastructure.

Credit No. 1000 Agricultural Rehabilitation Program: US$65.0 millionCredit of March 25, 1980; Effective Date: May 12, 1980;Closing Date: March 31, 1982

The objective of the project is to provide foreign exchange financingfor high priority imports (spare parts, fertilizers, etc.) to help increaseutilization of productive capacity in the irrigated agriculture subsector fromwhich Sudan derives the bulk of its foreign exchange earnings. The project

- 36 -ANNEX IIPage 7

will also encourage macro economic and agriculture sector policy and institu-tional reforms and provide financing for technical assistance to help implementthe program. An EEC Special Action Fund Credit of about US$11 million willsupplement the program. This program is progressing well and the secondtranche has been approved for release by senior management.

Credit No. 1006 Third Power Project: US$65.0 Million Credit of April 17,1980; Effective Date: August 14, 1980; Closing Date:December 31, 1985

This project will help expand power supply and distribution inSudan's Blue Nile grid through the provision of hydro, thermal and dieselgeneration. The project will help meet the expected increased demand through1986. The Overseas Development Administration (United Kingdom) and theMinistry of Economic Cooperation (Federal Republic of Germany) are cofinancing.

Credit No. 1022 New Halfa Irrigation Rehabilitation Project: US$40 millionCredit of May 15, 1980; Effective Date: February 18, 1981;Closing Date: June 30, 1986.

This is the first of a series of rehabilitation projects in theirrigated subsector designed to support Sudan's Export Action Program. Itwill revitalize the second largest irrigation scheme in the country, wherecotton and groundnuts are grown. The International Fund for AgriculturalDevelopment and the African Development Fund are cofinancing.

Technical Planning Assistance and Training: US$1.8 million Credit;Assistance Effective Date: July 1, 1977; Termination Date:

June 30, 1983

This technical assistance project, funded by the UNDP and executedby the Bank, provides the services of seven advisers to the Ministry ofNational Planning to assist in national, sectoral and annual planning andimproved project identification and preparation. The advisers have encoun-tered some difficulties in trying to introduce appropriate systems for annualplanning and monitoring, as required by their terms of reference, but other-wise the project is making satisfactory progress.

Credit No. 1118 Blue Nile Pump Schemes Rehabilitation Project:US$32.0 million Credit of March 26, 1981; Effective Date:Not yet effective; Closing Date: December 31, 1986

The project is one of a series of rehabilitation/modernizatonefforts under the Export Action Program, which is designed to increase cottonexport earnings by means of stepped-up production in existing irrigationschemes. The project would, over a five-year period, rehabilitate theShasheina Region of the Blue Nile Agricultural Corporation (BNAC) and provideagricultural machinery and workshops for cotton cultivation in the rest ofthe BNAC area. The African Development Fund is confinancing.

- 37 -

AIINEX IIPage 8

Credit No. 1119 White Nile Pump Schemes Rehabilitation Project:US$35.0 million Credit of March 26, 1981; Effective Date:Not yet effective; Closing Date: December 31, 1986

This project is one of a series of rehabilitation/modernizationefforts in the irrigated subsector. It is designed to support the Govern-ment's Export Action Program. This program has the objective of increasingthe volume of cotton exports at an average rate of 7 percent per annum duringthe 1979-91 period. The White Nile project would help achieve this objectiveby rehabilitating, over five-years, some 174 ongoing pump schemes along theWhite Nile south of Khartoum.

Credit No. 1153 Second Technical Assistance Project: US$6.0 million Creditof July 2, 1981; Effective Date: Not yet effective;Closing Date: March 3, 1985

This project is designed to help Sudan implement its economicrecovery program by providing assistance in project preparation, projectimplementation (accountancy training, tendering and procurement, financialmanagement) and macro-economic management (debt management, national accounts).Main beneficiaries are the Ministries of Finance and Planning.

- 38 -ANNEX III

SUDAN

WESTERN SAVANNAH PROJECT

SUPPLEMENTARY PROJECT DATA SHEET

I. Timetable of Key Events

(a) Identification mission: November 1980

(b) Appraisal: February 1981

(c) Negotiations Completed: June 30, 1981

(d) Planned date of credit effectiveness: October 30, 1981

II. Special Bank Implementation Actions

PPF advance of US$1.0 million approval to facilitate project implementa-tion (ref. para. 46).

III. Special Conditions

(a) As additional condition of Credit effectiveness:

ratification and execution of a Subsidiary Loan Agreementbetween Government and WSDC (ref. para. 47);

(b) Government to consult with Association prior to appointingreplacement for director general of WSDC (ref. para. 49).

(c) Government to submit annual work programs for the project to theAssociation for review by April 15 each year (ref. para. 51).

(d) Cost recovery system for wateryards to be established and imple-mented on terms acceptable to Association (ref. para. 52(e)).

IBRD 15642

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