Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. P-3706-SE

REPORT AND RECOMMENDATION

OF THE PRESIDENT

OF THE

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED DEVELOPMENT CREDIT OF SDR 2.6 MILLION

AND A

PROPOSED SPECIAL FUND CREDIT OF SDR 4.7 MILLION

TO THE REPUBLIC OF SENEGAL

FOR THE

DAKAR CONTAINER PORT PROJECT

March 29, 1984

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

Currency Unit = CFA Franc (CFAF)US$1 = CFAF 392

CFAF I m = US$2551

SYSTEM OF WEIGHTS AND MEASURES (METRIC)

Metric British/US Equivalent

1 meter 3.28 feet (ft.)1 square meter (m2) 10.76 square feet (sq. ft.)1 cubic meter (m3) 35.50 cubic feet (cu. ft.)1 kilometer (km) 0.62 mile (mi.)1 square kilometer (km2) = 0.39 square mile (sq. mi.)1 hectare (ha) = 10,000 m2 = 2,47 acres1 metric ton (t) 2,205 pounds (lb)

ABBREVIATIONS AND ACRONYMS

ACC Agent Comptable CentralBADEA Banque Arabe pour le Developpement Economique en AfriqueBMOP Bureau de Main d'Oeuvre PortuaireBOM Bureau d'Organisation et MethodesCCCE Caisse Centrale de Cooperation EconomiqueCEP Centre des Etablissements PublicsCIF Cost, Insurance and FreightCVCCEP Commission de Verification des Comptes et de Controle des

Etablissements PublicsDSP Directorate of Studies and Programming, Ministry of EquipmentDWT Dead Weight TonEPIC Etablissement Public a Caractere Industriel et CommercialGDP Gross Domestic ProductGRT Gross Registered TonnageICS Industries Chimiques du SenegalINNA/DPB Association Internationale des Aides a la Navigation/Direction

des Phares et Balises (France)KF Kuwait Fund for Arab Economic DevelopmentKfW Kreditanstalt fUr Wiederaufbau (German Aid Agency)LCL Less Than Container LoadLLW Lowest Low WaterONCAD Office National de Cooperation et; d'Assistance pour le

DeveloppementPAD Port Autonome de DakarPAM Port Autonome de MarseilleRCFS Regie des Chemins de Fer du SenegalSEFICS Societe d'Exploitation Ferroviaire des ICSSEMPAO Syndicat des Entreprises de Manutention des Ports d'Afrique

OccidentaleTEU 20' Equivalent Unit Container

FISCAL YEAR of PAD

July 01 - June 30

FOR OFFICIAL USE ONLY

SENEGAL

DAKAR CONTAINER PORT PROJECT

CREDIT AND PROJECT SUMMARY

Borrower: Government of Senegal

Beneficiary: Port Authority of Dakar

Credit Amount: SDR 2.6 million (US$2.65 million equivalent) fromIDA. SDR 4.7 million (US$4.85 million equivalent)from the Special Fund administered by IDA.

Terms: Standard

Relending Terms: At current IBRD interest rate -- 20 years, includ-ing four years' grace.

Project Description: The primary project objective is to reduce freightcosts for Senegal's external trade and enhanceDakar's position as a port of transfer for neigh-boring countries by provision of additional facil-ities and rehabilitation of existing ones and bystrengthening the Port's management and opera-tions. The project provides for (i) constructionof new infrastructure for container handling,including construction of a 430 m long quay wall,reclaiming of an 8.2 ha area for container hand-ling, paving and installation of related utili-ties; (ii) rehabilitation of some port facilities;(iii) consultant services and technical assistancefor project supervision, financial management andoperations, information systems and procedures,and tariff and port management studies; and (iv)training of port staff in operations, managementand finance.

Benefits and Risks: The quantifiable economic benefits from the pro-posed project include savings in ship service timeand in handling costs stemming from more efficientoperations resulting from the project and avoid-ance of double handling of containers which wouldhave resulted due to saturation of existing portstorage areas. Costs include physical construc-tion costs, incremental maintenance and all asso-ciated capital costs, i.e., project supervision,

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.

training and studies, representing 90% of totalproject costs. On the basis of a 25 year economiclife, the proposed project yields an economic rateof return of 23%.

There are no significant economic risks associatedwith the project since the larger part of projectconstruction costs are based upon actual bidprices. Additionally, adequate safeguards havebeen taken to ensure that the new terminal will beefficiently operated and that expected benefitswill materialize. On the financial side, thePort's finances are sufficiently robust to with-stand reduced leveLs of tariff charges and a dropin forecast traffic. The base financial analysishas been tested under adverse conditions of traf-fic, tariff and operating cost changes which showthat the downside risk is minimal. The main riskis ultimately institutional in that PAD's internalstructure may not develop as envisaged and that,as a result, PAD's management would not improve tothe extent forecast. The provision of technicalassistance and the action plan measures to betaken early in the project would minimize thisrisk.

Estimated Cost:

---I$M;11ions--.cal Foreign Total

i. Civil Works 2.53 9.13 11.66ii. Consultant Services 0.14 0.99 1.13

iii. Technical Assistance 0.10 1.20 1.30iv. Training -- 0.13 0.13v. Deferred Maintenance 0.44 0.19 0.63

Base Cost (Feb. 1934 prices) 3.21 11.64 14.85Physical Contingencies 0.43 1.72 2.15Price Contingencies .63 2.C0 2.63

Total Preect Cost (Net of Taxes) 4.27 15.36 19.63Taxes and Duties 5.55 __ 5.55

Total Project Cost 9.82 15.36 25.18Interest d-uring Construction 1.23 1.14 2.37

TOTAL F2ACING REQU= 11.05 16.50 27.55

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Financing Plan:

U$ MXiIJons-

Local Foreign Total

Special Fund Admin;steredby MA - 4.85 4.85

IDA - 2.65 2.65CCCE 1.8) 4.85 6.65Kuwait FTmd 1 .08 3.01 4.09

Total External Sources 2.88 15.36 18.24PAD 8.17 1.14 9.31

TOML 11.05 16.50 Z7.55

Estimated Disbursements of Special Fund Administered by IDA:

- US$ MillioncFYB5 FY86 FY_7 _

Amual. - 1.4 2.6 0.85Cumulative - 1.4 4.0 4.85

Estimated IDA Disbursements:

-U$ Millions-FY85 FE36 FY_7 _ FY_9

Am2al 0.7 1.1 0.6 0.15 0.1Gumulative 0.7 1.8 2.4 2.55 2.65

Economic Rate of Return: 23%

Staff Appraisal Report: Report No. 4625-SE, dated March 29, 1984

Maps: IBRD 17165 Port of Dakar -- Existing Port andApproaches

IBRD 17166 Project Detail

INTERNATIONAL DEVELOPMENT ASSOCIATION

REPORT AND RECOMMENDATION OF THE PRESIDENTOF THE INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE EXECUTIVE DIRECTORSON A PROPOSED DEVELOPMENT CREDIT AND SPECIAL FUND CREDIT

TO THE REPUBLIC OF SENEGALFOR THE DAKAR CONTAINER PORT PROJECT

1. I submit the following report and recommendation on a proposedDevelopment Credit to the Republic of Senegal for SDR 2.6 million (US$2.65million equivalent) on standard IDA terms and a proposed Special Fund Creditadministered by IDA of SDR 4.7 million (US$4.85 million equivalent) on termsadopted by the Executive Directors of IDA 1/ to help finance the Dakar Con-tainer Port Project. The Caisse Centrale de Cooperation Economique (CCCE) ofFrance would make a loan of FF 52 million (US$6.7 million equivalent) for 17years, including four years of grace, at 7% per annum. The Kuwait Fund forArab Economic Development (KF) would make a loan of KD 1.3 million (US$4.1million equivalent) for 20 years, including five years of grace, at 4% perannum.

PART I - THE ECONOMY 2/

2. A report entitled "The Economic Trends and Prospects of Senegal"(1720a-SE) was distributed to the Executive Directors on March 10, 1980,followed by a President's Report for a Structural Adjustment Loan/Credit(P-2869a-SE) dated November 26, 1980, which contained an expanded section onthe economic situation. . A new Country Economic Memorandum on Senegal iscurrently being prepared. Country data appear in Annex I.

Economic Structure and Past Developments

3. Three-quarters of Senegal's territory lies in the Sahel zone, whichsuffers from low rainfall and periodic droughts. The mainstays of the tradi-

* tional economy are millet cultivation and nomadic cattle-raising for domesticconsumption, and groundnut cultivation for exports. The modern sector of the

1/ Resolution No. IDA 82-6 of October 26, 1982.

2/ The text of this Section remains substarntially unchanged from thatincluded in the President's Report for the Fifth Highway Project whichwas distributed to the Executive Directors on February 23, 1984.

economy is concentrated in Dakar, the capital, a city of over one millioninhabitants, the economic base of which consists of excellent port facilities,an important industrial sector, and a small but fast-growing tourism indus-try. With a population of 6.0 million in mid-1982, Senegal's per capita GNPfor 1982 was estimated at US$440.

4. At Independence in 1960, Senegal lost its privileged position as thecenter of French West Africa, and subsequently has had to adapt to reducedeconomic, administrative and political circumstances. In the latter part ofthe 1960s, income from groundnuts (the principal export) fell due to unfavor-able weather and declining export prices as a result of loss of EEC specialpreferences. Over the decade, the Senegalese economy experienced virtualstagnation as real output increased at a rate! estimated at 2.5% per annum,hardly more than the rate of population growth.

5. During the 1970s, Senegal's groundnut production was again hit bysharp climatic fluctuations, and even with higher rates of pri-vate and publicinvestment, average annual growth did not rise above the level of the previousdecade. Buoyed by a series of good harvests andi relatively high internationalprices, real GDP increased at about 5% a year between 1973 and 1977, butdeclined by 2% a year between 1977 and 1981 , reflecting the effect of threesevere droughts during this period. A marked recovery from the previousdepression occurred in 1982 with an estimated 10% real growth in GDP. Resultsof the 1982/83 agricultural season were also good, leading to an estima-ted 3%growth of GDP in 1983. However, indications for the 1983/84 crop year suggesta disastrous groundnut and cereal harvest, due to another severe drought inthe Sahel region this year. The FAO has recently estimated Senegal's food aidrequirements for 1984 at over 250,000 tons and is coordinating pledges for theadditional aid required.

6. Fluctuations in physical output have been aggravated by the pricevolatility of Senegal's major exports and imports. For example, in 1974, theterms of trade improved by over 21% due to exceptionally high prices forphosphate rock, Senegal's second export commodity; however, in 1975, exportprices for groundnuts declined sharply, followed by a decline in export pricesfor phosphates since 1976. Increases in oil and rice prices brought a furtherdeterioration in the terms of trade, causing a total loss in income of roughly6% of GDP between 1974 and 1982. This deterioration in terms of trade, alongwith the unsatisfactory performance of the economy as a whole, led the Govern-ment to launch an economic and financial stabilization program in 1980. Themain objectives of the Government' E five-year program were to stabilize theeconomy during the first two years and to achieve an economic growth rate of4% per annum in the following three years. This program was supported by anExtended Fund Facility (EFF) of US$243 million equivalent approved by the IMFin August 1980, and a US$60 million Structural Adjustment Loan/Credit (SAL)approved by the Bank in December 1980.

7. The structural adjustment program consisted of an economic stabili-zation plan (agreed with and monitored by the IMF), introduction of new produ-cer incentives, reorientation of the public investment program, a change in

the national policy on parastatal enterprises, and a package of structuralreforms in the agricultural sector. Despite delays caused by a record low1980/81 groundnut crop and by the change of government in early 1981 , theGovernment achieved significant progress in arrears reduction, investment pro-gramming, parapublic sector management and industrial incentive policies.However, in other areas, and especially in the reform of agriculture policiesand control of government expenditure, action was disappointing.

Balance of Payments

8. The new balance of payments policies introduced under the 1980stabilization program were based on strict control of overall demand throughimport tax and consumer price increases, combined with increased producerprices for major export crops and the introduction of special incentives formanufactured exports. However, the hoped-for reduction in the trade balancecould not be achieved, mainly because of the 1980/81 drought and difficultiesin implementing reforms in groundnut marketing. The fall in groundnut oil andseedcake exports from a past five-year average of US$220 million/year to US$94million in 1980 and US$34 million in 1981 , together with exceptionally highimport bills for petroleum and rice, increased the current account deficit in1981 to US$590 million, or 23% of GDP. In 1980 and 1981, the Governmentreceived exceptional aid averaging US$170 million a year from bilateral andmultilateral donors. Even this, however, was insufficient to avoid a furtherfall in net foreign assets, from US$80 million in 1980 to a level of negativeUS$460 million at the end of 1981. The resource gap was estimated at 20% ofGDP in 1981, narrowed to 14% in 1982, and is estimated at about 13% for1983. Good rainfall during the 1981/82 growing season permitted a five-foldincrease in the 1982 value of groundnut exports, despite exceptionally lowworld market prices for vegetable oils. However, the CFAF value of importsrose by about 13%, despite the policy measures introduced to contain urbandemand. With total imports for 1983 estimated at about 42% of GDP (as com-pared to around 30% in the early 1970s), further economic adjustment needs tobe achieved in the coming years, in order to reduce the current account def-icit to a level which can be financed on acceptable terms. This will have tobe achieved mainly through containment of consumption levels, and improvedinvestment efficiency, and through food import substitution and strong promo-tion of non-agricultural exports.

Producer and Export Incentives

9. The structural adjustment program addressed the need to improve thecountry's trade balance by increasing the basic rate of import duties from 10%to 15% of f.o.b. value and by introducing an export premium system for certainmanufactured goods. The export premium system has already had a positiveimpact on export and employment levels in the five industries to which it wasapplied, especially fishing. An extension to 20 other agricultural and indus-trial branches, as well as a refinement of the payment system, is being imple-mented during the current fiscal year. To contain imports, in February 1982the Goverrnment adopted a 31% lncrease in the official consumer price for rice,which was again raised substantially (24%) in August 1983, in order to reflect

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increased import costs and to provide a measure of protection for domesticcereal production. The net producer price for groundnuts was increased sub-stantially in 1981 but has subsequently had to be reduced in order to limitthe losses borne by government on both input and output marketing operations.

Public Finances

10. Although the Government successfully implemented a 1981/82 StandbyArrangement with the IMF, the new program initiated in 1982/83 could not becompleted due to the Government's inability to restrict domestic creditgrowth, to remain within public borrowing targe)ts, and to reduce its paymentarrears. This was partly due to an unforeseen 50% drop in export prices forgroundnut products and to a less-than-expectecl inflow of foreign budgetarysupport. In August 1983, the Government signed a new Standby Program with theIMF for the current 1983/84 fiscal year, under which it is committed to ob-serving strict limits on civil service recruitment, new foreign borrowing,domestic credit expansion, and public sector payment arrears; the Governmentis also repaying a large volume of outstanding crop credit and ONCAD debtsheld by the commercial banks. As part of the austerity program, in August1983 the Government announced a series of sharp increases in domestic consumerprices for rice, vegetable oils, and petroleun products. Even with theseimprovements in fiscal performance, however, the! Government will be left witha financing gap equal to roughly 10% of the FY84 budget and the outlook for1984/85 is even less encouraging, given the extremely poor groundnut cropexpected this year. It appears unlikely that by 1985 the Government will beable to finance from budgetary savings 25% of the public investment program,the target the Government set itself in the original structural adjustmentprogram. A major constraint on the Government's finances is the serious andgrowing burden represented by service of the external debt, which amounted toUS$1.4 billion in June 1983. In November 1982, the Government was required toobtain from the Paris Club a second debt rescheduling and agreed on a thirdround of rescheduling with the Paris Club and commercial banks in December1983.

Investment Program

11. The outlook for the national investment program has deteriorateddramatically since establishment of the structural adjustment program in1980. While the latter imposed ceilings on the investment program to re-establish macroeconomic equilibrium, implementation of even the reduced pro-gram has become problematic. Private investment has stagnated and publicinvestment is suffering from financing problems because the country is notcreditworthy for foreign commercial loans, and domestic credit expansion hasto be constrained. In the present climate, a carsful screening of new invest-ment projects according to economic criteria is especially needed, togetherwith an increased attention to rehabilitation and. maintenance needs of exist-ing assets.

Parastatal Sector

12. Reform of the large parastatal sector in Senegal continues to be ahigh government priority. Over the last three years the Government has takensignificant steps to reduce the budgetary burden presented by non-viableenterprises (through the liquidation of close to 20 comparies) and has trans-ferred ownership of several other companies to the private sector. For someof the remaining public enterprises, the Government has moved to increasemanagerial autonomy by negotiating multi-year contrats-plan which set clearfinancial objectives for company operations and spell out the reciprocalobligations of the Government and enterprise managers.

13. To date, the Government has signed six contrats-plan and severalothers are well advanced. The main objective of the Second Parapublic Tech-nical Assistance Project, approved by the Board in July 1983, is to providetechnical assistance to 12 public enterprises for the development cf rehabili-tation programs, which can serve as the basis for realistic contrats-plan, andto strengthen the institutional framework for contrats-plan monitoring insupport of Government efforts to improve the financial performance of theparastatal sector as a whole. These objectives are also supported by otherprojects in the Bank's lending program, including the proposed TechnicalAssistance Project for Urban Management and Rehabilitation.

Long-term Prospects

14. The Government's long-range development strategy continues to bebased on the promotion and diversification of agricultural and export-orientedactivities. The agricultural program calls for the development of areas lesssusceptible to drought (Casamance and Eastern Senegal) where cash crops otherthan groundnuts can be grown, and increased incentives for domestic milletproduction to replace imported rice. Agricultural research will be orientedmore to farming systems than to individual crops, with the objective of lower-ing the costs of yield-raising agricultural techniques and better adaptingthem to farmers' constraints. Irrigated cereal production is being developedin the arid northern part of the country along the Senegal River. Construc-tion has started on the two large dams planned for the Senegal River by theOrganisation pour la Mise en Valeur de la Vallee du Senegal (OMVS), but thehigh level of state subsidies required on irrigated rice will severely con-strain the pace of new irrigation development.

15, The phosphoric acid and fertilizer project is now well advanced, andthe combination export subsidy/import duty increase designed to effect arealignment of the Senegalese CPA currency should help to attract more lightexport industries once the international economy has improved. However, inthe medium-term, at least, export diversification is unlikely to offset theuncertain prospects for groundnuts, still Senegal's main export commodity.Groundnut oil exports suffer from irregular supplies and from an increasedsupply of competing vegetable oils; exports of groundnut cake have also beendepressed due to the risk of aflatoxin contamination, which has resulted inthe complete closure of some export markets. As a consequence, in the next

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few years, the share of total exports in GDP is expected to remain below thelevels attained in the early 1970s.

16. The exceptional foreign aid granted to Senegal in support of theGovernment's 1980/85 stabilization program has helped the country survive in aperiod of extraordinary economic difficulty, but these efforts have not beenenough to bring the economy back to a path of balanced growth. The over-extended public sector, as well as heavy domestic arrears and external debtservice charges, continue to impose serious burdens on public finance and willmake necessary further debt rescheduling. The Treasury will not be able toabsorb substantial additional recurrent cost charges from development projectsand will continue to need exceptionally high shares of foreign financing forthe investment program. The unfavorable balance of payments situation callsfor a reassessment of Senegal's longer term development strategy and theestablishment of a new program of action to azhieve the required structuraladjustments. The Bank will continue to focus its country dialogue on theseproblems and, in the interim, will finance its lending programi in Senegal onIDA terms.

PART II - BANK GROIJP OPERATIONS IN SENEGAL

17. As of March 51, 1984, the Bank Group had approved 55 operations inSenegal for a total of US$551 .1 million, including 30 IDA Credits, 12 Bankloans, five blends of Bank and IDA funds, five IFC operations, two blends ofBank and IFC funds, and one blend of Bank, IDA and IFC funds. P'hysical execu-tion of projects is progressing reasonably well,, although some operations areaffected by the shortage of counterpart funds due to the Government's continu-ing difficult public finance situation. Annex II contains the Status of WorldBank Operations in Senegal.

18. Until a few years ago, our assistance was mostly project-orientedwith a strong emphasis on diversification of the economy and improvement andexpansion of basic infrastructure. The acuity of the financial crisis of thepast two or three years has led to a major shif-t in our strategy, with empha-sis being placed on assisting the Government in (i) implementing investmentpolicies and incentives to develop and diversify Senegal's production andexport base; (ii) increasing the efficiency and savings capacity of thepublic sector; and (iii) redirecting investments towards rehabilitation andmaintenance of existing social and economic infrastructure and developmentalrecurrent costs, rather than expansion investments. The Bank Group plans tocontinue financial and institutional support through project lending andtechnical assistance for operations or reforms that would encourage a strongerrole for the private sector, as in the phosphate and petroleum industries.Bank Group operations now cover a wide spectrum cf sectors.

19. In agriculture, operations have aimed at improving productivity fortraditional food and cash crops, together with diversification into new cropsand new regions. In recent years, the portfo:Lio was somewhat modified by

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finarclng a forestry project and arn agricultural research project which focus-

ses on improving agricultural systems. In August 1983, the Board approved a

cotton/food crop project in the rainfed regions of Eastern Senegal and Upper

Casamance. A dialogue is currently underway with the authorities on prospects

for developing irrigated rice farming in the Senegal River Valley along the

northern border of the country. The feasibility of new activities in the

heavily-populated Groundnut Basin will depend on further progress with struc-

tural reforms in input distribution, extension services, crop marketing, and

agricultural credit.

20. Diversification has also been supported by lending to the growing

industrial sector through the Societe Financiere Senegalaise pour le Develop-

pement de l'Industrie et du Tourisme (SOFISEDIT), a development finance compa-

ny established with Bank assistance in 1974, in which IFC is a shareholder and

for which three lines of credit hEave been approved. The Bank has assisted in

the realization of a major phosphoric acid/fertilizer complex by financing the

rail infrastructure component; the project, for which IFC has been an impor-

tant lender, is now well underway and commercial operations are expected to

start in the fall of 1984. The Bank also responded to the effects of the past

oil crisis by assisting the Government in its search for new energy re-

sources: a petroleum exploration project was approved in FY83. Finally,

diversification has been encouraged by assisting in the promotion and develop-

ment of tourism, one of Senegal's major resources; a project, which consists

of basic infrastructure and includes a line of credit to provide long-term

financing as a catalyst for potential private investors in hotel construction,

is virtually completed.

21. Past projects have strongly supported modernization and expansion of

the country's infrastructure in a:Ll modes of transport: highways, rail, port

and airport. But with a stagnant economy and heavy past investments, emphasis

is now being placed on better utilization and maintenance of existing facili-

ties. The recently approved Fifth Highway Project supports the Government's

limited capacity to provide funds for priority maintenance, and the proposed

Dakar Container Port Project presented in this report would also emphasize

rehabilitation and maintenance. Similarly, the proposed Technical Assistance

Project for Urban Management and, Rehabilitation emphasizes maintenance and

rehabilitation of urban infrastructure in support of industrial development.

22. While Barik strategy has supported the emphasis on financing produc-

tive projects and rehabilitation needs, it has also recognized the need to

support the social sectors, with due consideration to the capacity of both the

Government and users to bear the recurrent costs involved. In education,

efforts have been directed at primary education and at technical and vocation-

al training to support activities in the productive sectors. A health project

directed at primary care in the rural regions was approved in FY83, and a

water supply project in secondary centers is in the final stages of prepara-

tion.

23. As it became increasingly clear that many of Senegal's economic and

financial problems run across the board and could not be addressed exclusively

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through project lending, the Bank program began to shift in the late 1970stowards multi-sectoral technical assistance and structural adjustment lend-ing. In 1978, a technical assistance project was directed at improving theGovernment's knowledge and management of the parapublic sector. In July 1983,a second parapublic project was approved to help consolidate results alreadyachieved and to begin rehabilitation of some key public enterprises throughdetailed action plans. Under another technica:L assistance project, assistanceis being provided to the Ministry of Planning t:o prepare and select projectsand to monitor the investment program. In December 1980, a structural adjust-ment program, supported by a Bank Loan and an IDA credit, aimed at supportingthe Government's efforts to control aggregate demand, redireclt public invest-ments, and promote industrial exports and other productive act5.vities throughimproved price and incentive policies. The lDcal currency counterpart fundsof the Structural Adjustment Loan were used fDr the financial rehabilitationof several parapublic enterprises which had agreed with the Government oncontrats-plan. However, since the performance of the Government in some areasof its agricultural policy was deficient, the second tranche of the StructuralAdjustment Loan was cancelled in June 1983.

24. Given the need to focus Senegal's public investment program on high-priority rehabilitation and maintenance needs and developmental recurrentcosts, improved donor coordination is now assuming increased importance. TheBank is pursuing its economic dialogue with Senegal in close coordination withthe IMF and bilateral and multilateral donors. In this connection, Senegalhas requested the Bank to convene a consultative group meeting in the secondhalf of 1984 to which it would submit its priority financing needs. The Bankis assisting the Government in preparing documentation for this meeting and iswilling to play a major role in coordinating donor activity. The Bank isprepared to play an active role in aid coordination for Senegal, but on condi-tion that Senegal's expectations are realistic and that the aid coordinationeffort is based on extensive preparatory work.

25. The Bank Group's share in total external aid disbursements to Sene-gal over 1980-82 averaged approximately 18%, cf which roughly two-thirds wasIDA-financed. The Bank Group's share in outstanding disbursed debt was 17% in1980 and may approach 20% by 1985. The Bank Group's share in external debtservice is expected to increase from 3.7% in 1980 to about 7.5% in 1985.

PART III. THE TRANSPORT SECTOR

Introduction

26. Senegal has a fairly well-developed transport system, whose maincomponents, based in or linked to Dakar, serve also an important internationaltransit function. The Senegalese road system, comprising about 14,000 km ofroads (including 3,500 km paved), carries some 95% of all domestic traffic,.Over the past ten years, with relatively impressive investments, the roadnetwork has become one of the best in West Africa. The Senegalese Railway,

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covering about I ,000 km, has gradually lost traffic to road transport due inlarge part to operational inadequacies and the unreliability of its ser-vices. Currently, the railway handles mainly imports for Mali and short-haulphosphate exports, each accounting annually for some 140 million tons-km,while only some 10 million tons-kn correspond to general cargo and ground-nuts. Passenger traffic declined some 70% over the past decade. Coastalshipping and river navigation are also declining as better road connectionsare developed. The main international airport at Dakar experienced irmpressivetraffic growth during the 1970s and was upgraded accordingly. The nationalairline, Air Senegal, plays a relatively minor role in domestic passengertransport.

2,. Dakar has a major international deep-water port located on the maininternational shipping routes connecting Europe with West and South Africanports and the East Coast of South America. While its important bunker oiltraffic has sharply dropped following reopening of the Suez Canal, as havetransshipments of cargoes for Nigeria, its general cargo import traffic hasgrown slowly but steadily during the last decade, and container traffic hasincreased substantially during recent years. With continued development ofcontainer traffic, Dakar now has an opportunity to reestablish its position asone of the major ports of transit for West Africa. However, while the exist-ing port facilities are adequate to handle most general cargo and bulk traf-fic, they are inadequate to handle the increasing container traffic. Thecontainer handling facilities are practically saturated causing inefficientoperations. Thus, while there is no ship-waiting time, service times areunnecessarily high.

Sector Planning and Investments

28. Transport planning and coordination are shared by three agencies:the Ministry of Planning has overall responsibility for the preparation of thedevelopment plans; the Ministry of Equipment proposes and executes governmentpolicy and works in the transport sector; and the Ministry of Finance deter-mines investment ceilings, tax policy and allocations of operating funds. In1981, a National Transport Plan was prepared with Bank assistance, as a firststep in strengthening permanent planning institutions. It identified thepriority projects for Senegal in all modes and made policy recommendations.Transport system planning can be considered generally adequate, althoughqualified staff is in short supply.

29. Investments in transport absorbed 21% of total public investmentduring the Fifth Plan period (1977-81) and a 16% allocation for the Sixth Plan(1981-1985) was foreseen. A significant scale-down of the Plan is likelyinasmuch as financing has been secured for only some 25%, and the Government'stransport strategy, with the Bank's encouragement, gives priority to maintain-ing the already extensive investments in the transport sector, improvingefficiency, and focussing investments on renewals. This policy is particular-ly important in the current situation where the transport network is alreadywell developed and where the Senegalese economy is in a crisis which does notallow generation of a surplus for investments or create additional demand for

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services. The recently approved Fifth Highway Project (exclusively for main-tenance) and the proposed Dakar Container Port Project (aimed at reducing thecost of Senegal's international trade and regaining its position as port oftransit) support this investment strategy.

30. In addition to the Bank Group's activities, the Government hasreceived external assistance for transport-related investments from severalbilateral and multilateral sources including the Fonds Europeen de D'veloppe-ment (FED), the Federal Republic of Germany, the Saudi Fund, and commercialbanks (for road construction); the Caisse Centrale de Cooperation Economique(CCCE) (for feeder road development, railways, and ports); the Arab Bank forEconomic Development in Africa (BADEA) (for ports); and France (for avia-tion).

Role of the Bank Group

31. The Bank Group adheres to the Government's policy of maintaining,rehabilitating and upgrading the transport irLfrastructure needed to supportdevelopment of the productive sectors. Since the start of operations inSenegal in 1966, the Bank has invested about US$140 million under 13loans/credits in addition to financing feeder roads under agricultural pro-jects.

32. Projects have been approved at an average rate of almost one peryear, and there are now active operations in every sub-sector. Bank Grouplending has helped finance: four railway projects (Cr. 96-SE, 1966;Cr. 314/Ln. 835-SE, 1972; Ln. 1518-SE, 1978; and Ln. 2025-SE, 1981); twoprojects in the aviation subsector (Ln. 867-SE, 1972, and Ln. 1665-SE,1979); four projects in the road subsector (Cr. 198-SE, 1970; Cr. 366-SE,1975; Ln. 1222-SE, 1976; and Ln. 1810-SE, Cr. 993-SE, 1980); a fifthproject in the highway subsector was approved by the Executive Directors onMarch 13, 1984; and two projects in the ports subsector (Ln. 493-SE, 1967 andLn. 1405-T-SE, 1977).

33. The first two railway projects concentrated on improvements inphysical infrastructure, while the third project, almost completed, emphasizesmanagement and organization improvements and maintenance. The most recentrailway project supports the transport needs of the Industries Chimiques duS'negal (ICS), a fertilizer complex financed by IFC and other bilateral andmultilateral agencies. The aviation projects emphasized expansion and devel-opment of airport infrastructure at Dakar and two domestic airports. Whilethe first road project emphasized feeder road construction, subsequent pro-jects have concentrated on road main-tenance and the development of the Govern-ment institutions in this vital area.

34. The first port project improved the Port of Dakar's infrastructureand operations. The second project, cofinanced with CCCE and BADEA, provided

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for construction of a fishing wharf and ancillary works. The Project Perform-ance Audit Report of the First Port Project stated that it had been a success-ful investment with a satisfactory rate of return and well-executed engineer-ing works. The facilities of the Fishing Port were completed well within costand became operational in 1981; they are being efficiently utilized by thefishing sector. The technical assistance components are now being completedand therefore the PCR has not yet been prepared.

The Port of Dakar

Facilities, Operations and Traffic

35. The Port of Dakar, located on the westernmost tip of West Africa,enjoys an excellent sheltered location free from heavy swells and siltation.Two long breakwaters enclose a large port basin providing a total of 37 gen-eral cargo and five petroleum berths with various alongside drafts in varyingmaintenance conditions. Most facilities were constructed according to thetraditional system of providing narrow finger piers with substantial berthingspace for vessels but with very limited operational areas. The recentlycompleted Fishing Port Project provides some 1,500m length of new berth and10.5 ha of reclaimed land, capable of handling all forecast fishery-relatedactivities. Dakar also has the largest ship repair facilities on the WestAfrican coast comprising a 60,000 DWT floating dock, a 25,000 DWT drydock and1,200 DWT synchrolift.

36. Port operational areas now available for general cargo handlingamount to some 16.7 ha, of which 3 ha are reserved for container handling.The container handling areas are, however, dispersed and generally unsuitablefor modern operations. Vessels unload and load a large number of containersin a few hours, thus requiring large operational areas and adequate equip-ment. Despite these shortcomings, the Port handled some 59,000 containers in1983. However, the utilization of the available areas has reached its limit,and any additional container traffic will further decrease the overall effi-ciency of operations, causing congestion on the wharfs and delays to ves-sels. The Port owns limited, but run-down, cargo-handling equipment. Mostcargo is handled by the ship itself with its own gear or onshore, with equip-ment belonging to the private stevedoring companies.

57. From the operational point of view, the Port is managed and operatedon the traditional French concept whereby the Port Authority, the owners ofthe Port, operate the Port as a Landlord Port (Port de Service). Privatecompanies perform all cargo handling and stevedoring operations, tugboatservices and other traditional port operational activities, using their ownequipment. This concept has its merits as it removes from PAD managerial andoperational burdens relating to employment of labor, handling of cargo anddealing with vessels, but it does not always ensure efficient use of facili-ties and limited operational areas. Mere addition to operational capacitywill not suffice; hence, the proposed project includes technical assistanceto the Port management to improve operations, optimize use of existing areasfor general cargo handling and improve operating efficiency so that the Port

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becomes a more active manager of its infrastructure and facilities. An actionplan based upon a consultants study was agreed upon during negotiations andwould be implemented under the project in accordance with an agreed time-table; under the action plan, the recruitment; of a suitably qualified portoperations expert would be a special condition of Credit effectiveness (suchan action plan was agreed in accordance with Sections 3.01 (a) of the draftDevelopment Credit Agreement and of the Special Fund Agreement and Article IIIof the draft Project Agreement; see also Section 5.01 (d) of the draft Devel-opment Credit Agreement).

38. An analysis of port traffic data and foreign trade statistics showsthat liquid and dry bulk traffic declined by about 30% over the past decade,caused mainly by the reduction of imports of petroleum products (due to thedecrease in bunkering activities) and exports of phosphates. However, generalcargo imports have increased steadily since 1975 reaching some 1 .25 milliontons in 1982. The composition of general cargo is changing and rapid contain-erization is taking place. Dakar handled 5,800 containers in 1975, 36,000 in1982 and 39,000 in 1983. In addition, Dakar Port is continuing its tradition-al transit role for Mali and Mauritania, handling some 80,000-100,000 tons and30,000-40,000 tons per year for each, respectively, during the pas-t fiveyears.

39. Container traffic is expected to grow rapidly in coming years mainlyas a result of changes in shipping technologies. These changes stem fromeconomic considerations in a highly competitive market as shipping lines haveintroduced larger vessels and moved toward increased containeriza-tion. Fur-thermore, in an effort to streamline operations and reduce costs, liner con-ferences serving West African ports are expected to concentrate their routestructure on a few major ports, viz., Dakar, Abidjan, Lagos and Douala, wherethey would provide regular scheduled services and use these ports as maintransshipment points.

Organization and Staffing

40. The Port Authority of Dakar (Port Autonome de Dakar, PAD) was formedin 1959, and since 1960 has been an "etablissement public a caractere indus-triel et commercial" (EPIC). This arrangement, which permits permanent con-trol by numerous Government agencies with frequently conflicting and overlapp-ing responsibilities and interests, limits the Port's financial autonomy by apriori control of all budget expenditures and -hy the Central Treasury cbtain-ing all revenues. As PAD is one of a few profit-making public enterpriseswith a large positive cash flow, i-t effectively subsidizes deficits of otherpublic enterprises in the Central Treasury pool but is unable to use its owncash balances in a timely fashion for its own needs. Under the proposedproject, major modifications to this restrictive system were agreed with theGovernment and will be progressively implemented during project execution toenable full financial and managerial autonomy by 1988. In order to achievesuch an objective, the Government agreed to review, in consultation with theAssociation, the suitability and the modalities of transformation of PAD'slegal status and to communicate to the Association, prior to June 30, 1986,

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its conclusions and proposals in this respect (in accordance with Section 3.02(ii) of the draft Development Credit Agreement and of the draft Special FundAgreement).

41. PAD's Board of Directors comprises 18 members, of which eight repre-sent the Government, five the Port users, one the Government of Mali, one theNational Assembly, one the Chamber of Commerce, and two the Port's person-nel. All executive functions are vested in the General Manager of PAD, whoalso acts, under the authority of the Minister of Equipment, as coordinator ofall activities of various Government departments and agencies in the Port--health and immigration services, gendarmerie, customs, and railways. Theseagencies, however, not only act completely independently but interfere attimes in the smooth operation of the Port as PAD has very little actual say intheir day-to-day activities.

42. PAD has a total of 727 employees engaged mainly in the non-opera-tional service sectors organized into five departments, each reporting direct-ly to the General Manager. This organization is not very satisfactory and,excluding the Director of the Engineering Department, none of the other direc-tors is an active decision-making 'Line manager. In particular, the lack of afinancial manager and well-organized financial staff has resulted in non-existent internal controls, poor follow-up of financial matters and confusionin PAD'S financial information flow. The problems of the Port's financialorganization have been well studied under a recently completed audit, and itsrecommendations form the major thrust of the organizational reform to becarried out under the proposed project.

Accounting and Finance

43. PAD's accounting system broadly follows the Senegalese AccountingPlan, itself a deviate of the French system. There is as yet no cost account-ing system in place, but consultants financed under the Fishing Port Projectare helping PAD set up and implement one. Major weaknesses in PAD's account-ing procedures and practices were revealed by the external audits carried outunder the Fishing Port Project. As a result, an action program has beendefined and is being implemented to rectify major errors, reorganize account-ing records pertaining to receivables and fixed assets, and introduce propersystems and procedures. Under the proposed project, long term technicalassistance will be provided to organize the accounting and financial manage-ment functions.

44. A fixed asset revaluation was carried out by PAD in 1980. However,as a result of the recently completed audit, the validity of the revaluationis in doubt; it had relied on an inaccurate fixed asset inventory and inade-quate procedures. Consequently, it has been agreed that PAD would firstrectify and update the fixed asset ledger per the balance sheet of June 30,1985, before undertaking a new revaluation exercise. Furthermore, it islikely that some existing assets will need to be retired from the fixed assetbase, once the proposed container terminal is completed and certain existingfacilities are rendered obsolete or are transformed to other non-port uses.

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Hence, incorporation of new asset values will take some time to achieve.Moreover, as PAD may not be able to legally upvalue its assets under Senegal-ese accounting legislation, it has been agreed that by no later than December31 , 1985, PAD would present annual pro forma balance sheets incorporating therevalued asset base, to be corrected from time to time for retirement of non-productive assets.

Tariffs

45. Port tariffs are set by PAD's Board and approved by the Ministers ofEquipment and of Finance. PAD has not experienced any delays in obtainingsuch approvals, and tariffs have more or less kept pace with inflation inrecent years, averaging 10% a year. Under the Fishing Port Project, PADsubstantially revised its tariff structure applying to the new facilities.However, a more general revision of port tariffs for a cost-based structurehas rnot been carried out pending implementation of a cost accounting system.A comparative study of port tariffs at major West African ports reveals thatDakar is substantially cheaper by some 15-20% on the average in all aspects ofport services and operations.

46. The presence of such significant differences suggests underchargingby PAD for its services, due not only to inability to accurately record costs,but to the obsolete nature of the basic tariff structure. PAD's inefficientmanagement of port space also stems from inadequate use of charging policiesas a means of achieving improved performance from the private cargo handlingoperators. Weak and passive port management has sustained inadequate tarifflevels and led to non-optional use of port areas. As stated in para. 37, thePort has agreed to implement an action plan to improve its operational andmanagerial performance. In parallel, PAD hais also agreed to undertake athorough tariff study both in preparation of appropriate charging policies forthe proposed new facilities, and to restructure the tariffs for its existingfacilities and services, such restructuring to be carried out not later thanJuly 1, 1987 (Sections 4.03, 4.04 and 4.05 (EL) of the draft Project Agree--ment). A preliminary restructuring will be carried out on July 1, 1985, whenthe results of an ongoing review of tariffs will be available.

PART IV: THE PROJECT

Origin and Background

47. Under the Fishing Port Project (Loan 1405-T-SE, 1977), funds wereprovided for a feasibility study to assess the need for the Port of Dakar todevelop more substantial container handling facilities by the mid-eighties, inlight of rapid containerization that was becoming apparent in the late-seven-ties. The consultants Port of Marseille (PAM) carried out the technical andeconomic feasibility studies. The proposed pro,ject emerged from the review of

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the consultants' recommendations. Project preparation, preappraisal andappraisal missions were carried oul; by the Bank in 1982 and 1983, with activeparticipation of both CCCE and the Kuwait Fund.

48. The physical dimensions of the project emerged as a result of thefeasibility studies, after careful review of alternatives, while an evaluationof PAD's operations left no doubt that PAD's performance could be substantial-ly improved both in managing port operations and in its administration.Negotiations were held in February 1984, in Paris, with a Senegalese delega-tion led by the Minister of Planning. Staff Appraisal Report No. 4625-SE,dated March 29, 1984 is being distributed separately to the Executive Direc-tors.

Project Objectives and Description

49. The proposed project would reduce freight costs for Senegal's ex-ternal trade and enhance Dakar's position as a port of transfer for neighbor-ing countries by the provision of additional facilities and rehabilitation ofexisting ones and by strengthening the Port's management and operations sothat it may fully carry out its role as a vital public service in Senegal. Tomeet these aims, the proposed project would consist of:

(i) Civil Works involving:

(a) construction of a quay wall in a total length of 430 m suitableto berth simultaneously two large container vessels;

(b) dredging of areas alongside the berth and from the Port en-trance to the terminal area; hydraulic sand filling of thearea behind the quay wall to reclaim the terminal's containerhandling area of 8.2 ha;

(c) paving of the container handling area, installation of utilityservices and fuel lines, and connection of the terminal area tothe national railway network; and

(d) repair and rehabilitation of certain port facilities.

(ii) Consulting Services and Technical Assistance

(a) consultants' services to supervise the construction of thecontainer terminal and train PAD engineers to work on construc-tion supervision;

(b) study of the management of the container terminal;

(c) training of PAD personnel in container terminal management andoperations;

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(d) technical assistance, consultant services and training toimprove the Port's financial management, carry out accountaudits, study tariffs and recommend structural changes, andprovide data processing support; and

(e) technical assistance and training to improve the Port's opera-tional management.

Project Implementation

50. PAD will be responsible for project execution with the assistance ofqualified consultants to be employed on terms and conditions to be acceptableto the Association and co-lenders. Civil works are expected to take about 27months to complete, starting in October 1984. Some activities of the techni-cal assistance program will continue into FY87/88. An action plan to improvethe Port's operations and management, based upon a consultants' study, wasprepared and agreed upon during negotiations, and its implementation willstart following review by the other co-lenders. The Port also requestedconsultants' proposals for technical assistance in accounting and financialmanagement, and recruitment of experts is expected to be carried out by July1984. Funds available under the ongoing Fishinag Port Project (Loan 1405-T-SE)would finance a part of the above two items until funds to be provided underthe proposed Credit and from the other co-lenders are effectively available.PAD's Engineering Department will prepare and advertise the bids and supervisethe works to be completed under the deferred maintenance program component,which will start in early FY85.

Project Cost and Financing

51. The estimated cost of the project, net of taxes and financial costs,is US$19.63 million equivalent (including physical and price contingencies)with a foreign exchange component of US$15.36 million equivalent. The projectwill not be exempted from taxes and duties, which amount to some US$5.55million equivalent. Interest during construction would amount to aboutUS$2.37 million equivalent. Thus, the total cost, including taxes and in-terest during construction, would equal US$27.55 million. The cost estimatesfor the civil works Lots #1 and 2, comprising construction of the quay walland dredging and reclamation works, are based Dn actual bid prices received inDecember 1983--which are valid without escalation until April 1984--and thebid evaluation carried out by PAD. The cost estimates for the remaining civilworks prepared by consultants and PAD are baEed on final engineering designsand on costs of recent similar works, including the Fishing Port Projectcompleted in 1980/81 and updated to early 1984 cost levels; they comparefavorably with international bids received recently for similar port works onthe West African Coast. The project also includes provision for consultantsand advisory services totalling some 206 man-months. Physical contingenciesassumed vary between 10%-20% depending upon the type of work. Price contin-gencies have been calculated for local costs at 10% a year and foreign costsat 7.5% for 1984, 7.0% for 1985, and 6% a year thereafter.

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52. Of the total project cost (net of taxes), the proposed Kuwait Fundloan would finance the equivalent of about US$4.1 million or 21%, the CCCEloan US$6.7 or 34%, and the IDA and Special Fund Credits US$2.65 million andUS$4.85 million or 13% and 25%, respectively. PAD would contribute aboutUS$9.3 million equivalent from internal cash generation. PAD's contributionwould cover all taxes and duties on the project, the interest during construc-tion and 7% of the net-of-tax project cost. Any potential cost overruns orexchange rate losses would also be covered by PAD, as there is at all timessufficient cash flow from operations. The proposed IDA and Special FundCredits would be made on standard terms to the Government who would onlend theproceeds to PAD on standard Bank terms, under a Subsidiary Loan Agreement, theexecution of which would be a special condition of effectiveness (Section 5.01(a) of the draft Development Credit Agreement). The onlent funds would berepayable by PAD in equal semi-annual installments over 20 years including afour-year grace period. The proposed CCCE loan of FF 52 million would be ablend of soft and hard terms, bearing approximately a 7% interest rate, andwould be repayable in equal semi-annual amortizations over 17 years includingfour years' grace. The proposed KF Loan of KDinars 1.25 million would be madeto the Government at a 4% interest rate, repayable over 20 years includingfive years' grace. It would be onlent to PAD on the same terms. 1/ TheGovernment would impose a 1% guarantee fee on the CCCE loan.

Procurement and Disbursement

53. The construction of quay walls would be procured under competitivebidding which was limited to the Franc Zone and would be financed by the CCCEand PAD. Procurement of Lot #2, dredging/fill, following Bank Group guide-lines for international competitive bidding, would be financed jointly by theKuwait Fund and IDA. The KF earlier agreed to the list of prequalified bid-ders. Lot #3 (US$4.93 million), utilities, would be financed by proceeds fromthe Special Fund Credit, and procurement would be limited to goods producedin, or services from, any of the following countries: (a) any Part II memberof the Association and (b) those countries who at the time of signing theCredit Agreement have notified or advised the Administrator in writing thatthey intend to make a Special Fund Contribution in a minimum amount conformingwith paragraph 4 of the Special Fund Resolution, or (c) which had notified oradvised the Association in writing that they intend to make a Special Contri-bution in such a minimum amount to the FY84 Account and had advised the Asso-ciation in writing that such Special Contribution was to be treated in thesame manner as a Special Fund Contribution for purposes of any future adjust-ment of the voting rights of the members of the Association. The deferredmaintenance work would be financed by PAD and the Association and would followlocal procurement procedures acceptable to the Association. The training

1/ The KF has already agreed to a loan of KDinars 2.1 million based onthe financing plan at appraisal. As a result of lower-than-forecast bidprices, the new financing plan is substantially lower and any excessamounts would be cancelled at the end of the project.

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programs would be funded entirely by the CCCE. The other project items--consultant services and technical assistance contracts--would be procuredfollowing Bank Group guidelines for employment of consultants, and fundedjointly by PAD, the Kuwait Fund, and the Association. Project supervisionwould be carried out by PAM and funded jointly by IDA, CCCE and PAD. Consul-tant services for the Action Plan would be funded jointly by KF, CCCE andIDA. The data processing component would be funded entirely by the Associa-tion. All contracts would be financed by -the co-lenders on a net of taxbasis, and the relevant taxes and duties will be separately invoiced, accoun-ted arnd paid by PAD.

54. The IDA Credit, covering 13.1% of the estimated total project cost,would be disbursed over a five-year period, FY885-89. It would cover specif-icall;y the following expenditures: 35% of the total cost of Civil Works Lot#2 (dredging and fill); 48% of the cost of the Project supervision contract;23% of the total cost of Consultant Services for tariff and container terminalmanagement studies, audit, and financial management; 100% of the data proces-sing component; 17% of the cost of consultant services for Action Plan imple-mentation; and 35% of the total cos-t of deferred maintenance works carried outafter signature of the Credit Agreement. The! Special Fund Credit, covering25% of the estimated total project cost, would finance 98% of the total costof Lot #3 (paving and utilities). It would be disbursed over a three yearperiod from FY86-88.

Environmental Impact

55. No adverse ecological impact is expected to occur with the construc-tion of the proposed container port, nor disturbance to marineX ecology in thevicinity of the existing port.

Economic Evaluation

56. The proposed project would enable PAD to handle the growing numberof containers (estimated at 115,000 by 1995) efficiently and at a reasonablecost. The proposed new container terminal would allow container ships usingit and general cargo ships using the existing port to be serviced much moreexpediently and cargo to be handled more efficiently, eliminate the need fordouble handling of containers, and would alleviate congestion at existingberth-side and storage areas. The consultants analyzed three basic alterna-tives for a container terminal. The proposed projet is the Phase I develop-ment of the recommended alternative and comprises the construction of 430meters of quay and 82,000 m2 of container handling and storage areas. Theterminal's Phase II development, to be built at a later stage, foresees theextension of the quay to 725 m and increasing the operational areas to 175,000m2. The terminal, when fully developed, would allow adequate coverage ofberth and storage needs beyond the year 2000, would have good road and railtransport access, and its construction would only minimally disrupt ongoingport operations. Without the project, container handling would be increasing-ly slowed and expensive at ill-adapted facilities, adding unnecessary costs to

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Senegal's international trade. The project would also reinforce the role ofDakar as a transit port for Mali and Mauritania and for transshipment to andfrom other West African ports.

57. The institutional components of the project are expected to improveproductivity, efficiency of port operations in general and cargo and containerhandling in particular, improve the level of management and its informationsystem and increase the Port's financial autonomy.

58. The economic rate of return of the terminal is estimated at 23%. Asensitivity analysis, including increases in costs and shortfall as well aslag in benefits, showed satisfactory results even under pessimistic assump-tions: if all benefits were to lag by two years, the return would be 18%, andif investment costs were 20% higher and all benefits 20% lower, the returnwould be 17%. No rate of return has been calculated for the maintenancecomponents, but such works generally have extremely high returns.

Financial Evaluation

59. PAD's long-term financial objective is to be a fully autonomous,commercially oriented public enterprise. In recent years, however, the Gov-ernment has exercised an over-zealous control over PAD and has not permittedPAD to achieve the autonomy foreseen in its statutes. This situation wouldchange under the proposed project. As a first step, the Government agreed topermit a portion of PAD's revenues (15% in FY84, 30% in FY85, rising to 40% inFY86 and beyond) to be isolated from the currency pool in a Special Accountheld with the Treasury, and then to be transferred to an external bank accountheld with a commercial bank; this move would permit PAD to ensure that itscash contribution to the project financing plan is clearly set aside withoutfear of delays in paying contractors, as does occur now under the currencypooling arrangement (Section 4.08 of the draft Project Agreement). It wouldalso permit PAD to finance its annual renewal programs without the delays itcurrently experiences. The Government agreed that PAD would not be exemptfrom taxes and duties on the project. As a step towards ultimate financialautonomy, PAD has already been permitted to raise the ceiling on its revolvingfund for current expenditures substantially so that PAD's budgeted maintenanceworks and other recurrent expenditures can be carried out more independentlyof the normal channels of Government payment procedures. The Government andPAD also agreed to present for Association review and comment no later thanJune 30, 1986, a plan, including proposals for any legislative/statutorychanges needed, to achieve the basic objective of financial and managerialautonomy free of counterproductive constraints imposed by the present system(para. 40 above). In addition, as a special condition of Credit effective-ness, the Government and PAD should agree to a plan and timetable for clearingof arrears on payments of mutual debts (payments for services performed by PADfor the Government and/or its agencies, and tax and interest payments due fromPAD) and to a mechanism to ensure regular payments by the Government for PADservices (Section 5.01 (b) of the draft Development Credit Agreement).

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60. The translation of full cost recovery into action would requirechanges both in PAD's tariff structure and levels. A revised tariff structurebased on an ongoing review of PAD tariffs would be put into operation by July1, 1984. However, incorporation of a revalued asset base in the tariff set-ting formulae would be feasible only by July 1, 1986, i.e., after completionof a revaluation exercise in FY85. However, the levels, and possibly struc-ture, would need further adjustment once the new container terminal is com-pleted and once proposals have been made for re-use and/or temporary closureof certain facilities that would no longer be needed, at least for the nextseveral years. As this second phase of tariff changes cannot occur beforeFY88 (i.e., when the container terminal project; is completed), it was agreedthat a rate of return covenant would only be set as a long-term target. Atarget of 6% return on revalued net fixed assets, in use appears appropriateand satisfactory to cover PAD's future financial needs (Section 4.04 of thedraft Project Agreement). However, it was agreed that no later than June 30,1987, this proposed target would be reviewed and adjusted as deemed neces-sary. In the meantime, the main operative financial covenant would be a cashflow target. This target would ensure that each year, PAD's net; internal cashgeneration after debt service would cover at least 40% of total capital in-vestment expenditures averaged over a three-year period (prior, current andfollowing years). Such a criterion would permit PAD to fuLly finance itsannual renewals and other investments, allow for necessary working capitalincreases, and contribute 33% to the project financing plan, including taxesand duties and interest during construction (Section 4.03 of the draft ProjectAgreement). PAD's financial performance would be reviewed annually at least90 days prior to the close of its fiscal year, so that any corrective action,including tariff increases if needed, may be taken (Section 4.05 of the draftProject Agreement).

61. PAD's projected financial performance in line with the above short-term and long-term targets shows that, in addition to the recently enactedtariff increase averaging 12.7% for FY84, PAD would need to increase its totalrevenues by about 10% at the start of FY85 in order to meet the target cashflow requirements. As this tariff increase is critical to satisfactory pro-ject execution, its enactment is a special condition of effectiveness (Section5.01 (c) of the draft Development Credit Agreement). Beyond FY85, revenueincreases averaging about 10% in FY86 and in FY87 would be needed to ensure asatisfactory flow of funds to the project. These increases could partly comethrough the restructuring of tariffs (para. 46), partly through tariff increa-ses to keep pace with inflation, and partly through cost reductions, as pro-ductivity improves.

62. PAD would pay the taxes and duties on the project (estimated at CFAF2,176 million equivalent) under a flexible arrangement which would permit PADto schedule the payments up to June 30, 1989, should cash flow be lower thanforecast. PAD would set up and maintain separate tax liability accounts thatwould be eventually cleared against payments out of the Special Account (para.59). A Government/PAD agreement spells out the mechanism in detail and pro-vides PAD the flexibility to defer payments up to a maximum of two years butnot beyond June 30, 1989.

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63. PAD's projected financial position remains satisfactory with amaximum debt/equity ratio of 46/54 and with adequate current ratios exceeding2.0 in each of the intervening years through to project completion. Debtservice coverage is adequate. However, in order to ensure that PAD's capitalstructure and debt service burden are not strained further until the containerterminal is in full operation, a debt limitation covenant has been agreed(Section 4.07 of the draft Project Agreement). It provides for prior consul-tation with the Association before incurrence of any additional debt thatwould tend to lower overall debt service coverage of the maximum debt serviceburden below 2.0.

Risks

64. No economic risks of significance are associated with the projectsince there has been a good base for estimation of construction costs andadequate safeguards have been taken to ensure that the new terminal would beefficiently operated and that expected benefits would materialize. The mainrisk is institutional in nature. If PAD's internal structure does not developas envisaged and its financial management does not improve to the extentforecast, one result would be inefficient use of a heavy investment by Senegalin a container port facility and possible loss of tax revenues to the Govern-ment, due to PAD's inability to generate the level of revenues for which itwould have been equipped. A sensitivity analysis of financial factors wascarried out to determine the robustness of PAD's finances under adverse oper-ating conditions. The base analysis was carried out on a fairly conservativetraffic forecast; nevertheless, an even lower rate of overall traffic growth(2.5% a year versus 3.5% a year under the base forecast) compounded by higherrate of inflation of working expenses (12.5% a year against 10% in the basecase) was analyzed. The results demonstrate that even in the worst scenario,PAD would still be able to fully cover its financial contribution to theproject out of its own earnings and would be able to pay the taxes due on theproject investment no later than June 30, 1989. Marginal additional tariffincreases, however, would be needed to achieve the financial targets. Thesensitivity analysis also shows that the projected tariff/revenue increasesare critical to achieve the financial targets. Nevertheless, even if suchincreases are limited, PAD's financial position remains acceptable, althoughcontinued delays in appropriate tariff setting could jeopardize PAD's financi-al prospects. The agreement to hold annual consultations would, however,ensure that corrective action is taken well before serious deterioration ofPAD's finances occurs.

PART V - LEGAL INSTRUMENTS AND AUTHORITY

65. The draft Development Credit Agreement and Special Fund Agreementbetween the Republic of Senegal and the Association, the draft Project Agree-ment between the Port Autonome de Dakar and the Association, and the Recommen-dation of the Committee provided for in Article V, Section 1 (d) of the

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Articles of Agreement of the Association, are being distributed to theExecutive Directors separately.

66. The following are additional conditions of effectiveness of theCredits, namely:

(a) execution of a Subsidiary Loan Agreement between the Republic ofSenegal and the Port Autonome de Dakar (Section 5.01 (a) of thedraft Development Credit Agreement);

(b) execution of an Agreement between the Republic of Senegal and thePort Autonome de Dakar providing for the full settlement by June 30,1987, of existing reciprocal debts as of December 31, 1983, and forall necessary arrangements to ensure prompt settlement of such debtsarising between January 1 , 1984 and June 30, 1985 (Section 5.01 (b)of the draft Development Credit Agreement);

(c) effecting of a tariff increase as of July 1 , 1984, of at least 10%on all PAD services (Section 5.01 (c) of the draft DevelopmentCredit Agreement); and

(d) appointment of a suitably qualified port operations expert (Section5.01 (d) of the draft Development Credit Agreement).

67. Special conditions of the Development Credit and Special Fund Creditare listed in Section III of Annex III.

71. I am satisfied that the proposed Development Credit and Special FundCredit would comply with the Articles of Agreement of the Association.

PART VI - RECOMMENDATION

69. I recommend that the Executive Directors approve the proposed Devel-opment Credit, and Special Fund Credit.

A. W. Clausen.President

Washington, D. C.March 29, 1984

Attachments

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T A B L F 3A PAGE I

SENEGAL - SOCIAL. INDICATORS DATA SHEETSENECAL REFERENCE GROUPS (WEIGHTED AVERAGES) /a

MOST (MOST RECENT ESTIMATE) /b__b /b RECENT MIDDLE INCOME MIDDLE INCCME

1960/ 1970- ESTIMAT/- AFRICA S. OF SAHARA N. AFRICA & MID EAST

AREA (TROUSAND SQ. KM)TOTAL 196.2 196.2 196.2AGRICULTURAL 99.2 104.5 1D9.3

SNP PER CAPITA (US$) 180.0 240.0 430.0 1147.9 1340.0

ENERGY CONSUMPT ION PER CAPITA(KILOGRAMS OF COAL EQUIVALENT) 555.0 519.0 364.0 724.2 810.4

POPULATION AND VITAL STATISTICSPOPULATIOON,MID-YEAR (THOUSANDS) 3498.0 4391.0 5862.0URBAN POPULATION (T OF TOTAL) 23.0 30.0 33.8 28.5 47.4

POPULATION PROJECTIONSPOPULATION IN YEAR 2000 (MILL) 10.2STATIONARY POPULATION (MULL) 36.4YEAR STATIONARY POP. REACHED 2155

POPULATION DENSITYPER SQ. RM. 17.8 22.4 29.1 56.5 36.0PER SQ. KM. AGRI. LAND 35.3 42.0 52.2 131.8 449.0

POPULATION AGE STRUCTI[RE (1)0-14 YRV 42.7 43.9 44.8 45.9 43.9S-64 YRS 54.3 53.2 52.4 51.2 52.865 AND A30VE 3.0 2.9 2.8 2.8 3.3

POPULATION GROWTH RATE %l)TOTAL 2.4 2.3 2.6 2.8 2.9URBAN 3.0 4.9 3.7 5.3 4.6

CRUDE BIRTH RATE (PER THOUS) 47.9 46.8 47.9 47.6 42.5CRUDE DEATH RATE (PER THOUS) 26.5 23.2 21.0 15.2 12.0GROSS REPRODUCTION RATE 3.2 3.2 3.2 3.2 3.0

FAMILY PLANNINGACCEPTORS, ANNUAL (THOUS)USERS (; OF MARRIED WOMEN) .. .. ..

FOOD AND NUTRITIONINDEX OF FDOD PROD. PER CAPITA(1969-71=100) 125.0 83.0 90.0 95.7 97.5

PER CAPITA SUPPLY OFCALORIES (1 OF REQUIREMENTS) 97.0 96.0 100.0 97.1 102.3PROTEINS (GRAMS PER DAY) 65.0 64.0 71.0 56.0 72.0OF WHICi ANIMAL AND PLLSE 20.0 20.0 19.0/c 17.2 17.8

CHILD (AGES 1-4) DEATH RATE 41.9 36.8 31.1 23.6 15.2

HEALTHLIFE EXPECT. AT BIRTH (YEARS) 37.2 40.3 43.9 51.9 57.2INFANT MORT. RATE (PER THOUS) 181.7 164.4 144.6 117.6 104.2

ACCESS TO SAFE WATER (%POP)TOTAL .. .. 37.0/d 25.4 59.3URBAN .. .. 68.07d 70.5 84.9

RURAL .. .. 23.07; 12.3 37.5

ACCESS TO EXCRETA DISPOSAL(% OF POPULATION)

TOTAL .. ..URBAN .. .. ..

RURAL .. .. ..

POPULATION PER PHYSICIAN 24990.0 16700.0 13800.0/e 12181.6 3536.0POP. PER NURSING PERSON 2840.0/ 3 1940.0 1400.0/c 2292.0 1820.7POP. PER HOSPITAL BED

TOTAL 840.0 810.0 900.0/c 1075.4 643.3URBAN 390.0/f 450.0 560.0/c 402.3 545.0RURAL 1810.0o7 1240.0 1280.07W 3926.7 2462.0

ADMISSIONS PER HOSPITAL BED .. 22.2 29.2/c .. 26.4

HOUSINGAVERAGE SIZE OF HOUSEHOLD

TOTAL .. ..

URBAN .. 7.6/h .. .

RURAL .. 6.0/h

AVERAGE NO. OF PERSONS/ROOmTOTAL 1. 5/i ..

URBAN .. ..

RURAL .. .. .. .

ACCESS TO ELECT. (T OF DWELLINGS)TOTAL .. .. .. .. 46.2URBAN .. .. .. .. 77.6

RURAI, .. .. .. .. 16.1_- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ -_ _ -_ _ -_ _ -_ _ _ - -_ - -_ - -_ - -_ - -_ - -_ - -_ - -_ - -_ - -_ - -_ - -_ - -_ - -_ - -_ - -_ - -_ - -_ - -_ -

-24 - ANNEX I

T A B L E 3A PAGE 2

SENEGAL - SOCIAL INDICATORS DATA SHEETSENEGAL REFERENCE GROUPS (WEIGHTED AVERAGES) /s

MOST (MOST RECENT ESTIMATE) /bRECENT lb MIDDLE INCOM4E MIDDLE INCOME

1960/ 1970- ESTIMATE- AFRICA S. OF SAHARA N. AFRICA & MID EAST

EDUCATIONADJUSTED ENROLLMENT RATIOS

PRIMARY: TOTAL 27.U 38.0 44.0 97.2 89.6MALE 36.0 47.0 53.0 103.1 104.8FEMALE 17.0 30.0 35.0 88.5 72.4

SUCONDARY: TOTAL 3.0 9.0 10.0 17.2 41.7MiALE 4.0 13.0 14.0 23.5 52.oFEMALE 2.0 5.0 7.0 14.2 31.2

VOCATIONAL (X OF SECONDARY) 23.1 9.2 8.8 5.2 10.3

PUPIL-TEACHER RATIOPRIMARY 43.0/f 45.0 43.0 42.9 31.9SECONDARY 34.0 34.0 21.0/c 23.7 23.3

ADULT LITERACY RATE (X) 5.6/j 10.0 10.0/c 37.1 43.3

CONSUMPTIONPASSENGER CARS/THOUSAND POP 5.7 8.7 9.2/k 18.8 18.0RADIO RECEIVERS/THOUSAND POP 35.7 61.0 52.6 97.8 138.1TV RECEIVERS/THOUSAND POP .. 0.3 0.7/d 18.6 45.6NEWSPAPER ('DAILY GENERAL

INTEREST") CIRCULATIONPEE THOUSAND POPULATION 5.7 4.6 4.5 18.2 31.0

CINEMA ANNUAL ATTENDANCE/CAPITA .. .. 0.7 0.6 1.7

LABOR FORCEfOTAL LABOR FORCE (rIOUS) 1598.0 1931.0 2468.0

FEMALE (PERCENT) 40. 40.2 39.8 36.1 10.7AGRICULTURE (PERCENT) 84.0 80.9 76.9 56.8 42.5INDUSTRY (PERCENT) 5.0 7.0 10.0 17.5 27.8

PARTICIPArIIN RATE (PERCENT)IOTAL 45.7 44.0 43.3 37.0 25.6MAL. 54.4 53.1 52.6 47.1 45.4FEMALE 37.1 35.0 34.1 27.0 5.6

ECONOMtIC DEPENDENCY RATIO 1.U 1.1 1.1 1.3 1.8

INCOME DISTRIBUTIONPERCENr OF PRIVATE INCOMERECEIVED BY

HIGiEST 5X OF iOUSEHOLDS 36.8/1 ..

riIGHEST 20% OF HOUSEiOLDS 62.5/1LOWEST 20% OF HOUSEHOLDS 3.2/1LOWEST 40X OF HOUSEHOLDS 9.47

POVERTY TARGET GROUPSESTIMATED ABSOLUTE PUVERTY INCOIMELEVEL (US$ PEE CAPITA)

URBAN .. .. .. 534.2 276.1RURAL .. .. B2.0/e 255.9 177.1

ESTIMATED RELATIVE POVERTY INCOMELEVEL (USS PER CAPITA)

URBAN .. .. 194

.0/e 491.5 400.0RURAL .. .. .. 186.1 283.3

ESTIMATEiD POP. BELOW ABSOLUTEPOVERTY INCOiE LEVEL (X)

URBAN .. .. .. .. 22.0RURYAL .. .. .. .. 3U.o

.. aOT AVAILABLENOT APPLICABLE

N OT E S

/a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among theindicators depends on availability of data and is not uniform.

lb Unless otherwise noted, "Data for 1960" refer to asy year between 1959 and 1961; "Data for 1970" between 1969 and1971; and data for "Most Recent Estimate' between 1979 and 1931.

Ic 1977; /d 1976; /e 1978; /f 1962; /g 1963; /h 1973; /i 1955; /j African population only; /k 1974; /1 Population.

May 1983

ANNEX I

- 25-3

TOT FIMTOIi OF SOCIAL iOOlOaOon

aenstin 50000 r cim odo nr Icnot toos .and tioacttioncoraloeas Oft~ "r ,In-n hrto Iccn .r.5 -

morbadt o-_bt_ issr fsr5 aoaeA it- tins a-se ie bodletor de-rte atoronr Latobo tAo no. n tsf ,n-ff ,rto aeh

aRI thoado.ahssstosn 5 n. soeolci-ib nnco peon ic-c

1Tssod 8P ant, Pslotcore Nartloc _r ea- TnOnnt- jit-de-Scosr01pofs

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TSP lid 1001rA IPI) - - lO o 000 s'tsssF sosr- oI= rIesettoo is I polls- ah rct rns s poor -i b-sn -a ad

faS, APP7, Ona IN As at ln r Oysra e-lI iaonncidig poI I a O ato s

SMIf CONSUI(MON F~ ~ ~ ~ ~ ~ ~~~~~~~~nssne nt csafd.las)bopiel, nlos, n-si rsIt n

IN6T. NIP, and 1i8P oats-oho tsyel nni550clcnlarrlboel,odc i

in5a. loss ras~~~~~~~~~~~~~~~ipist,5 ilnldod by sb nn)sttOrn

llros npf oianiPrrss o eal -tell ra ssboo enIt,tlpy.I'll,dLtfsts eif oo r tr rsare Ie- snaotaltly of seljAsiNS

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pess.Pt paansst ir s-llilty -nsa also hsslnlseeasofciprs

Neetoso asslanls- lo a -saLoIr popfos-- s-en f-n gro

roslscs n.tOol he sctselslb oP- nrsIs sitadosogorenoOsodal r a asceaoesrlosotslressrnssosro,sa- ronayrnrnnofaanross-rseooe saradrrlgsosotii nnsano rOlots farloesaef

5.Onesis Ossrn rsf rsn al kranS hc ftean lon o oo-snsgssoP rnpeelo

rssfatnslssaeo si-innoh hss a n pn;ssd hoarer potn- nbs- fo0sletin nr all ns".l ons -n5 lro sps -lIdlso oeynasfa arsot-Ic saos -t riel-.n o r--tad1-a nsderonLioOD e Klrst --ss o

rsrteitr Vta e atylcsrs- ieat. cn it-sa at, 5555al nosalss nn-al-nes ns -Ln in rssc

555 onsbssrsnyooetto s oaosod- b Str aee5stalnaryslonne -nf aasnh-Is r bts he...oralos'ofOre

tossnr.tesft O tso soOrn 5 o oryar5O ppnr-rsarpts-oOtn

oo.lp;, Ini- Ao- an--0N naa Osalotnollotyrn lnIasn aaloa otoP-ooslaslns hi icser orst -Iiin -iaSao shn-t i- ollssobl tAa - nt 0 Ir p -opo -sn-s ..r.s isProd-

p lio iSI'f, i acT, ner r ng 70 -Iota. snnpl-l-tehcnisotnyadsonots-Ooison srlldoI~jslniss Onstt oes lso-esl - ensal- Osslaoe otsn ola -claoa aop0 onsdot. cns.

lrd _ ab rr la onotot -d hi-n rosP nsn nod-ertnsgsas-trosssdpolsoioeesn npspioioo;fnl,IPO.ns ioi Oos --,,,sosnp ons-he sghtrfcoo sand-s sho\a t,Sessonso

nnn on Ksto sas-nnnf na-ore ..dogotsa..a sl to.s U scysndl

11bes "asI rernoslsprs0

Iet nytnns saosnsathoi ndsOclss sso.tniopltis dgiprarnes'ntrai

ss-grnn. 00 hsnofnarasi',E-iy - LeLb --btnaznlnln -01 rs os ob sn

a)0 onart Onnr n 5.55 Ann trst. O-.tyoppr-trnl-ndta yffl lnna i-j4oa - hfO ro ..ss

am ts- -d Toll en Ot s---rsttnoieY-n.r- 0 a - niOn

sAt nnlsaatag rrnioenernfi--lradPOn bps 0 0501~~~~aa , 60

Prplsos otn rso prsc n o~insns -Isyrd ro hTlIs -sans-Its-ottol -,bs-srlso asIs.-ernnItonlaeo aotssgrinoabes d Io on oplr-aaoal -ssntr per noiac osssaaabnrnhsocolgInnato odonnes.ssrn

day. honfisols ooiplIea nssprtn dnssstl p5sdoonn. fs)nnroe '55 5opointocs o li nfss. eoebnviann In sopsoa-nnnrP Oa gre 0 d

essorot, sri nnnessnaotoaob. list nypslns noolods nfoal toad, sneda anparoIte-NoP, 105 no-s 1P5 doss

naaoiliio ansi o food rarseelg, coOIassos I iftcb P ., t-sbtnraoP ai ao ansa erne--Oma oo oeteonirrnoroesrsetneoa -dbsralhso dss Iy-alnn:elssdntnPaoI _&slotOoorr-anrs--oaobgfsr y.osio_anlsspnssnsonadrirottrr- soi- epraaJebi_etcteOtolp- prssoo--bsaoanratsop-lrl-odNtd-s

a5sosl ssdleo Hth an II'pnnlss. If osdaibolsrerOrs- ddbr i eeU-lnntno nso. osiri,asbroo

si ooebod nos; OuNI,lNn nd hO ot. nastore-n,lasr ndinnasPr250 .a.rss .sn ts... ihi

Pee apeoa arrlsof rrisln trers Lor lay) - rtlssnsstratnOPalnO nsne aloy r ta pnsda. seaplpofesais drenosa sears asnpoh- asIsssnI- oa,sn,oasns-rrbtaln

Iof aeeePr Ofnm fsstn ISao hOproi s fbs-n-alpossnr9nyno Anto esesn'na-lbr0pba

* Psr sasise peseeto sopolc tenn and) olrPnet npp Os rhcoano Pat-rn -- kd) R- -dhoeie rt nsi n, pntni aIsyslp' niSo INT d-sat. 2ml) -1 -- t

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atas t' oyopnsos ssono oes fe-el, sniat sboth; 1960, JP9 an iNtO sa-- .h......reoosstaslsaneaos

peat, of anspeP tins-ni lire. tI'rePe; INoC IN I so [Nil data. slesoa anoy_nos fsl sasbin enb enoslo aost_ien Oisis djoersd I__nes It npplot -1- -oa ,1 o-lasad co-ni ootet ~Isis) i pd --ros dIs Iftesrn Ia sn-rod sol nar- n- o

Nooses s ressltltsiai, shos, si sIsl-tsit-nssaf ares tosJ atna.-I.erea so pry tnollat te-s's n_t _ oosooronco. o batd Oslois Pbt Ilnl P-oosms tirhss -fto) ItIr yes oblo -sro oi-oa

aaeoreorhatsr-ss.bd . boss psto-id -ao -ns,sslh ,f asd sar_af rotspoee ro reln ------------ o-a--r---------s

s'sheseasbasnothoid A.ssssss, snpossonoesae psait Ifocr.

Soes a rss ros bn,nn I eso sOrntao l- sss a-ban, andraes-hsnsr O pesIaIrstl. n-ia, tl noafonsna..byenrs

dlesea onpsnanafs o~soat ee ertro soalsiso. rorsadlapa-otsossnood ti rslarts o b Iinss l , U tsr slhs rooaO,o r-'snOsilhm Ios

SENEGAL-ECONOMIC INDICATORS

°¢rtlJl at Ictr,: 53;.3 (rnsd--19------------, th-------

G,NP per capitai 430 US$(1981)- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - --_ _- - - - - - - - - - --_ _- - - - - - - - - - - - - --_- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - --__ _ _ _ _- - - - - - -

Amournt(rni 11,USi$ Annual growth rates(%) at constant priceat current ----------------------------------- -----prices)

1980 1977 1978 1979 1980 1981 1982 1983 1984 1985 1990

NAT I ONAL ACCOUNTS

Cross DOsr.estic Product 3042 -1,3 -3.9 10.1 -1.5 -2.4 9.8 3,0 2.7 2,6 2.6All-:lJULTURE 568 -6,9 -23.6 27.1 -18.3 -5.6 24.3 2,5 2,4 2,4 2.4IND:USTRY 796 5,1 -9.0 11.1 -15.8 4.7 8.8 4,1 .3,9 3,8 3,8OTHER 1678 -3.7 9,3 3.3 13,.0 -3.7 5.3 2.7 2.2 2.2 2.2

C0n21.JFPwT l C)N 3lk1es I, 2.6 8.7 -1.4 -0,7 EJ, 7 0r1 4.0 2.6 2.8fROSS lliV-Sr!'IJNT 522 3,2 -5,9 9.8 -161. 14.5 6,0 5.6 3,2 2.6 1.4EXJPuBS OF CI4rFS 785 6,8 -31.8 25,0 -27.2 -9,9 41.2 6,2 -1.2 3.1 3.3VIIP0RTS OF GNFS 1265 15.6 -15.9 16.8 -25.0 4.0 4.5 -0.1 2.9 3.0 3,0

CRO O S NAT 1 O'tFW SfiVING3 -31 - -76,6 -5 .3 - 132.4 - -7.9

PRiC S3

GDP DLFLP.TuR (1979-100) 88 94 100 112 123 134 147 163 180 266EXCHANGE RfTE (USl.- ) Z46 226 213 211 272 329 365 Na

Share .- f GDP at rw3rket prices(/.) Averag.e lArnual lrcrease (1)(at currert prices) (at cc'r.tar.t pricQs1

1975' 1975 3980 19s5 1990 1970-75 1975-80 1980-8:i 1985-90

GR`SS OD6MESTIC PRODUCT 100,0 1 00. 0 100,02 I) 100.0 100. 0 2.4 2.0 -,6 2;6ICJL ULTURE 24,1 30.2 18.7 19.2 18.7 2.2 -3.3 E5 8 2.4

21,5 24.0 26.2 25,1 26,9 3,2 -0,2 5.1 :3.aOTHER 54,4 45.8 55,1 55.7 54.4 2.1 5,2 2.2 Z22

CE JFFOl 1 ON 88.9 87,7 98.6 92.7 93,7 1,7 4,7 1.4 2,0,RCu3$, lNELSTrENTr 15.7 17.8 17.2 21.0 19.0 3.9 -1,1 5,8 1,4

EXFORTS 'S C-NFGS 27,4 36,4 25.8 30.5 31. 5 1.2 -3,6 B,4 :5.311-`1ORT,3 OF WNFS 32.0 41,9 41.6 42.0 41,9 1., 0,9 2.6 3.0

PU2LbZ fINONIE FY78 FY79 FY80 FY81 FY82 FY83

r yrRL.r FEVEN_J- 97.1 122.6 132.9 125.5 151.9 175.5CU(RORfcT EYRFNDITURE 94,1 105.5 144.9 151.3 165.5 189,9Cl.IRPERINT rEL8:E 3,10 14,1 -12.0 -25.8 -13,6 -14.4CAPiTaL EXPIENDI-URE a 9.5 12.0 13.2 21.3 4.3 16,3SURPLUi OR DEFICIT(-) -6,5 2.1 -25.2 -47,1 -17,9 -30,7

a*. Central governrment on1j,e.xc ludes parastata1 s,b. Inc ludir.g 8,8 bill.CFAF for settlerent of the Fifth Plar. operations.

SENEGAL - EXTERNAL TRADE Sept.28, 1983

P,P-rlation: 5863 (mid-1981 ,thous)GNP pr _ capita: 430 USS (1981)

Af,,o,r,tINDICATOR (mill US$ Arnual growth rates (%) at constant prices

at current -----------prices)

1980 1977 1976 1979 1980 1981 1982 1983 1984 1985 1990

EXTERNRL TRADE

MERI Hf-, DISE EXPORTS 491 6.0 -47,1 37.2 -31.9 -12.8 50.2 15.1 -2.8 3.0 3.1PRIMPRY 329 0.5 -52.0 46.6 -31.9 -18.1 74.7 15.4 -3,4 3.1 3.ZFETROLEUM 87 87.5 41.8 -42.5 -25,3 17,0 -13,0i 32.5 3,0 3.0 3.0OTHERS 75 19,5 -81,0 309,3 -36,2 -11.3 11.2 -0.7 2.7 2.7 2.7

MERCHANDISE IMPORTS 999 13,b -13.2 15.4 -25.7 -1.4 4.7 0.2 2.8 2.9 2.9FC'CD AND REVERACES 210 7.6 5.8 13.3 -30.5 10,2 2 2,6 27.0 0,0 0.1 0,1FETRC,LEUM 275 12,8 1Z,7 -12,0 16.1 -10.0 3.6 -8.5 4.2 4.0 4,0MR:OHINARY AND EOUIPRENT 157 18.4 -2,1 3.8 -40.0 -0.3 6,8 -3.5 4.0 3.5 4.0OTHERS 357 14.5 -32.6 37.4 -28.9 -2,9 5.4 -7.8 3,5 4.0 3,7

PRICES

EXPORT PRICE INDEX(1979=100) 91.8 95.3 10r,.0 114,3 148,5 134,7 137,6 157.7 182.6 270.6IMPORT PRICE INDEX(1979-100) 89.2 90,9 100,0 129.0 154.0 166.9 179.8 194,9 214.3 310.6TERMS OF TRfiDE INDEX 102,9 104,8 1 00,0 88,6 96,4 80,7 76,5 8kl,9 85,2 87.1

COMPFOSITION OF MERCHANDISE TRADE)'.) AVERAGE ANNUAL INCREASE(%)(at current price) (at c.nstant prices)

1975 1980 1985 1990 1975-80 1980-85 19B5-90

MER04HRA.DISE EXPORTS 100,0 100.0 100.0 100.0 -0,1 11,3 3,1F<IPMiJiRY 70,5 67,0 75,7 76,7 0.1 12.8 3,2PETROLEUM 7.0 17,7 10.6 10.9 6.8 7.4 3,0OTHcR5 22.5 15,3 13.7 12,4 -1,2 1.5 2.7

MERiHONDISE IMPORTS 100,0 100,0 100.0 100.0 2.2 1.9 2.9FOOD AND PEVERAGES 23.2 21,0 23.7 21.4 2.3 8,5 0,1PETROLEUM 12,0 27,6 22.8 25.5 7,1 -1.5 4.0MrOfHINARY AND EOUIPMENT 18.4 15,7 17,1 16,9 -3.9 1.9 4,0OTHERS 46.4 35.7 36.4 36,2 -3,r0 0,1 3.7

SHARE OF TRADE WITH SHARE OF TRADE WITH SHARE OF TRADADE WTHINDUSTRIAL COUNTRIES( N) DEVELOPING COUNTRIES(%) OIL EXPORT ING DEVELOPING COUiTRN:ES(%

DIRECTION OF TRADE a 1975 198B 1981 1975 1980 1981 1975 1980 1981

EXPORTS 66,4 50,4 47.5 Z0,0 35,6 36,3 2.5 2,aIMPORTS 67.1 60.6 68.4 11.5 18.8 15,8 4,1 18,1 12,9

a. Exports ,f.o.b, and lsports,c,i,f,(sourc.IIMF,SM/83/199)

Sept.29, 19683SENEGAL - EALANCE OF PAYMENTS ,EXTERNAL CAPITAL AND DEBT

( ftillions US$ at current prices)

------------------------------------------------------------ __---------------__-----------------------------------------------------------__----------

Actual ProjectedIndicator P_________________________ _

1977 1978 1979 19r30 1981 198Be 1983 1984 1985 1990

BALANCE OF PAYMENTS

E>pcrts c.f gz.c,ds & NFS 852 665 944 785 671 764 760 769 903 15S1of w6-ich:Nerchan.-ism(f.o,b) 467 402 627 491 433 488 517 519 619 lC70

Imcpcrts c-f goods & NFS 1024 965 1339 1Z65 1190 1114 1086 1093 1239 2G95of which:MercFhandise(f,o.b) 773 744 10i5 999 914 857 833 833 942 1578

Net factor income -55 -75 -96 -111 -1 03 -93 -131 -142 -150 -l185Net tra-nsfers 28 28 33 38 31 30 30 33 36 50

Current Accourt Balance -199 -347 -458 -553 -591 -413 -427 -433 -450 -66?

PrivAte direct investment 36 43 71 86 70 55 47 52 56 76Official Grant Aid 79 93 72 1i4 122 1I00 104 113 124 169Net MLT Losr.s(DRS) 64 155 145 124 176 104 182 216 204 254

Dsstl ririlant2100l 224 224 245 228 197 275 322 317 419Pe'rj, jer ts 36 69 78 121 52 93 93 106 114 166

Other Capital a 11 -28 90 92 58 39 -3Z -76 -72 -47Dscr c a'e irn reserves 9 84 80 117 165 115 12b 128 138 2.7i;et forcjc i c;-4 ac .cets(incl.IMF) -55 171 -298 -413 -490 -526

a Irnc lvd's errors aand ornissior,r.

EXTERNAL CAPITAL AND DEBT_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 00

GROSS DI SEURSMEN rs

OFFTI:IAL GRANTS 79.4 92,6 7Z,4 133.5 122.2 1i80.3 13,6 113.4 124.2 169.4CON:ESSIoNJAL LOANS 37,6 54.7 63.8 65,4 157,7 139,1 1868, 219.8 212.7 275.4

D t 15,4 12,8 18.5 12.5 33.8 4Q).8 43.2 51.4 60.3 E-,.C,Or_G-: 2,2 .1 6,7 01.8 55.6 25,1 69.1 92.2 71.2 62.7IDR 7.7 9.7 ;16.2 i2.1 47,5 21,0 27.6 30.5 34.,3 4_.6OTNER IZ,3 3,2Z 22.4 40.0 20.8 42,2 46.9 45,7 4S.9 68,7

NON-CC4NCESSIONAL LOANS 62.2 169,4 159,9 179.7 70.0 68.2 88.3 12.0 104.7 145.9OFFICIAL EXPORT CREDITS 6,9 26.7 4i.5 70.6 30,1 26.LI 11.0 3S,l 33b6 44,8I ERD 12,9 6,6 11.0 18.0 21.9 4,8 27,8 ),9 lo.: 12.1OTHER MOL)TILATERAL 0.2 6.6 1.8 13.6 10.4 9,8 a8,3 25.0 25.6 38.5FrIVA TE 42.2 129.5 136.6 77.5 7,6 27.6 Z1.2 Zl ,k' Z5.2 44.5

EXTERN.AL DE8T 824.8 1177.6 13Z5,I 1634.2 1925.1 2182.7 Z3a849 2525.9 27Z7.4 4044.8DEDT Ot-'ST. & DISBUIRSED 424,6 609.3 792,1 926.2 1120.0 1206.2 1388.4 1604.3 1838.0 2790,1

o :FICIAL 241,7 :45,4 459,3 608.6 817.6 956,9 165 ,7 1396.6 1605,1 2.5I Z ,4FF,IVllTE 182,9 263.9 332,8 317.6 284,4 249.3 222,7 207.7 202.9 19S,7

UNDISDURSED DEBT 400.2 568,3 533 ,0 7118.0 823.1 976,5 996.5 921,6 929.4 1254.7

DEDT srPr ICEo1 L SE-RVICE PAYMENTS 1/ 56.5 99,5 122,5 177.0 92,2 136,3 153.9 185.8 199.3 274.6

1rirmLiLST 20,8 30.5 44,1 56,2 40.3 43,1 61,0 79.8 85,5 13a. 8Pfk','rENT RS % OF EXPORTS 6,6 15,0 13,0 22,5 13.7 17.8 20.3 24.2 22.1' 17.6

PVERRAE INTEREST RATE ON NEW LOANS 4,7

4,9 5,7 .S.5AVERAGE MaTURITY OF NEW LOANS(YEARS) 11,2 12.8 20.5 21.4 19.6 22.0 24.0 21 .3 210,2 1l.oAVERAGE GRARE PERICD(YEARS) 5,7 - 6,2 5.3 6,0 6.3 6,0 5.6 4.8AVERAGE GRANT ELEMENT(%) Z,8 28.1 23,9 21,E

1, Exclucding IMF repurchases

- 29 -

ANNEX IIPage 1 of 2

STATUS OF WORLD BANK OPERATIONS IN SENEGAL

A. Statement of Bank Loans and IDA Credits (as of September 30, 1983)*

Amount, (less cancellations) 2/Loan/Credit (US$ Million)Number Year Borrower Purpose Bank IDA 3/ Undisbursed 4/Ten Loansl/ and seventeen Credits fully disbursed 50.78 108.7530-SE 1975 Senegal Education II 15.0 2.20633-SE 1976 Senegal Eastern Senegal Livestock 4.2 0.141405-T-SE 1977 Senegal Dakar Fishing Port 6.0 0.541412-T-SE 1977 Senegal Petite Cote Tourism 8.0 2.351413-SE 1977 Senegal Petite Cote Tourism 5.6 1.63775-SE 1978 Senegal Debi-Lampsar Irrigation 20.0 3.331518-SE 1978 RCFS Railways III 11.0 1.221665-SE 1979 Senegal Second Airport 7.0 2.18S-23-SE 1979 Senegal Water Supply Eng. & T.A. 2.5 0.79908-SE 1979 Senegal Education III 22.0 11.33991-SE 1980 Senegal Small Rural Operations 11.0 7.87993-SE 1980 Senegal Fourth Highway 28.0 8.401810-SE 1980 Senegal Fourth Highway 10.0 10.00S-26-SE 1980 Senegal Power Eng. and T.A. 3.3 1.881061-SE 1980 Senegal T.A,. for Planning 5.3 2.731931-SE 1981 Senegal Structural Adjustment 13.8 0.111973-SE 1981 SOFISEDIT Investment Promotion 6.5 5.401136-SE 1981 Senegal Investment Promotion 2.5 1.602025-SE 1981 SEFICS Rail Transport 19.3 18.411103-SE l981 Senegal Forestry 9.3 7.271176-SE 1982 Senegal Agric. Research 19.5 17.061310-SE 1983 Senegal Rural Health 15.0 13.881323-SE 1983 Senegal Petroleum Exploration 9.5 8.371360-SE 1983 Senegal Phos. Ind. Dev. Eng.5/ 7.7 7.501398-SE 1983 Senegal Second T.A./Parapublic 11.0 10.401406-SE 1983 Senegal E.S. Rural Dev. 5/ 16.1 15.75

Total 137.98 310.60 162.34of which has been repaid 15.67 2.56

Total now outstanding 122.31 308.04IBRD IDA

Amount sold 3.43 0.10of which has been repaid 3.24 0.03 0.19 0.07

Total now held by Bank and IDA 4/ 122.12 307.97Total undisbursed 41.84 120.50 162.34

1/ A loan of US$3.5 million for agricultural credit (584-SE) made in 1969 was cancelledon March 25, 1971.

2/ Prior to exchange adjustments.3/ Computed at the rate of the approval date.4/ Computed at the September 30, 1983, rate of SDR = 1.05684 US$.5/ Not yet effective.

* The status of the projects listed in Part A is described in a separate report on allBank/IDA financial projects in execution, which is updated twice yearly and circulatedto the Executive Directors on April 30 and October 31.

- 30 -

ANNEX IIPage 2 of 2

B. Statement of IFC Investments (as of September 30, 1983)

Amount (US$ Million)Equity

Fiscal Obligor Type of Business Loan Investment Total

1967 Societe Industrielle Fertilizer Plant 2.45 1.01 3.46d'Engrais du S6negal

1972) B'UD Senegal S. A.

1973) Vegetable Export - 0.84 0.84

1976)

1974 SOFISEDIT DevelopmentFinance Company - 0.24 0.24

1980 Banque de l1:4abitat Money and Capitaldu Senegal, S.A. Market - 0.47 0.47

1980 Societe Hotelieredu Barachois, S.A. Tourism 3.00 - 3.00

1982 Industries Chimiquesdu Senegal Fertilizer 25.00 25.00

Total Gross Commitments 30.45 2.56 33.01

Less Cancellations, Terminations,Repayments, Sales and Losses 2.45 1.89 4.34

Total Commitments now held by IFC 28.00 0.67 28.67

Undisbursed Balance 24.00 0.00 24.00,~

- 31 -Annex IIIPage 1 of 2

REPUBLIC OF SENEGAL

DAKAR CONTAINER PORT PROJECT

Supplementary Project Data Sheet

Section I: Timetable of Key Events

(a) Time taken to prepare the Project: 36 months

(b) Project prepared by: PAD with the assistanceof port consultants

(c) Date of first IDA mission to considerthe Project: March 1982

(d) Date of departure of appraisal mission: April 1983

(e) Negotiations completed: February 1984

(f) Planned date of effectiveness: October 1984

Section II: Special IDA Implementation Actions

None

Section III: Special Conditions

During Credit negotiations, the Government and PAD providedassurances for the following principal items:

(a) Plan of Action for: improving operations in the Mali Port Zone,cleaning and reorganizing port operational areas; reducingcontainer dwell time; improving customs' and gendarmeries'activities within the Port area; improving deployment of PADstaff; improvement of maintenance (para. 37);

(b) draft compensation plan for settlement of reciprocal debts (para.

59);

(c) financial targets on rate of return, accounts receivable, netinternal cash flow as a percent of capital expenditures (para.60);

(d) revaluation of fixed assets (para. 44);

(e) annual consultations on PAD's financial performance (para. 60);

- 32 -

Annex IIIPage 2 of 2

(f) debt limitation (para. 63);

(g) mechanism for payment by PAD of Project taxes and duties (para.62);

(h) comprehensive plan to free PAD from cash pooling arrangements andrestore full financial autonomy (para. 40); and

(i) mechanism for transfer of part of PAD revenues into a SpecialAccount (para. 59).

(j) Special Conditions of Credit Effectiveness would be:

i) finalization of compensation plan (para. 59);

ii) implementation of 10% tariff increase beginning July 11984 (para. 61);

iii) execution of a Subsidiary Loan Agreement on terms andconditions satisfactory to the Association (para. 52); and

iv) appointment of a suitably qualified port operations expert(para. 37).

AT'' \ 2 7 ' X ' ; 3 ' 'M SAY; i- 0 i - SEN EG A L.t _ , . i racHrtLrs N C tg ;$ f DAKAR PROPOSED CONTAINER PORT PROJECT

: g J ~ =' Existing Port and Approaches

4K I~~~~~~~DA

_ll A ALA tSLrA'^ -FL/ t<>? obc .eAFLEA LAS G

t~~~~~~~~~~~~~~~~~~~~~~~~~~~~LL ?wc W''l B g Aed'. , RF -' ' - P Pundory

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0~~~~~~~~~~~~~~~~~~~~~~~A CH,A'TS< AT K ASK

4~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

AT5 AT A1t05 I

. X -.2 . d P. bicL

TEE'sD

:, _ -' =' = L- = ' =:' IA 22

~~ '-_ .- , 'VIA - _

= * ~~~~ ~~ - ~ ~ - F F 7. _; GA /

-~~~~~ ,-D -K- X= R-.

SAT AAF,C,ACC C ~ ~ ~ ~ ~ ~ ~ ~ .C

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,A ;8'IJINA-BISA, _p *=_ 15') GUINE r X-G

10 ~~20 ' ALGER [A

20 MAURITANIA 2'< 20 l " Zlz EEA

M A LIf DAKAR PROPOSED CONTAINER PORT PROJECT/NI GEFR 0, PROJECT DETAIL

OAMRsA /-~ UPPER r. GUNA ~ N 'VOLTA '-

0 ISU <GiEA.-

fT -, _G H T2 1

SIRE 2, VR/~SI{IE

LiO I 7~vrrrrxr REFRIGE RATED CONTAINERS

-CUSTOMS FENCE

I0 2 - - -RAILWAYS

7ZL!:ziPARKING (Trucks)

a - -. - ~~~~~~~~~~INTERNATIONAL BOUNDARIES

f-N. ~~~~~~~~~~~~~~, ~~~~Note: depths indicated, refer to zero (0)0 ,?, ~~~~~~~~~~~~~~~~~~~~~~~~~~hydrographic of the port, which is 0.4

~~~~ ~~~meters below LLWI.

r-. ~~~~~) Ok~~~~e ,rrs roapras~~~~~~bl or,,rP-d baa

&- (I(0 0O<)~ 0 5,0 100 150 200 rarrtorfner,re

OK ~~~~~~~~~~~~,METERS .rre Thr,r W.orr d B,'crr

<V A~~~~~~~~5 an~~1 d thrrnrtna,on-afFra,.p ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~C-p-trarOf Tme d-noT-rra,rr

, Parr~~~~~~~~~~~~~~~~~~~~~~~~~' of The Wcrrkf B,rdk -rd fo

'K 7 rrertrF F -,rr Cop-r-t-

/ 0 P~~~~~-H0

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0 5 5~~~~~~~M0

Rank Project(Loan, 1405 T SE 1977)

0110 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~m _vm ~

o ____~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~