MlRCULATING CopyTo BE RETURNED TO REP D

DOCUMENT OF INTERNATIONAL DEVELOPMENT ASSOCIATION

Not For Public Use

CIRCULATtNG COPY <

N tTURNED TO REPORTS DESK Report No. P-1686a-GM

REPORT AND RECOMMENDATION

OF THE

PRESIDENT

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED CREDIT

TO THE

REPUBLIC OF THE GAMBIA

FOR AN

INFRASTRUCTURE AND TOURISM PROJECT

December 18, 1975

This report was prepared for official usc only by the Bank Group. It may not be published,quoted or cited without Bank Group authorizationi. The Bank Group does not acceptresponsibility for the accuracy or completeness of the report.

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THE GAMBIA

INFRASTRUCTURE AND TOURISM PROJECT

CURRENCY EQUIVALENTS

Currency Unit: Dalasi (D) = 100 BututUS$1.00 = D 1.8US$0.56 = D 1.00

WEIGHTS AND NEASURES EQUIVALENTS

1 meter (m) = 3.28 feet (ft)1 square meter (m2) = 10.76 square feet (f 2)1 cubic meter (m3) = 35.29 cubic feet (ft1 kilometer (km) = 0.62 miles (mi)1 square kilometer (km2) = 0.39 square miles (sq. mi2)1 centimeter (cm) = 0.39 inch (in)1 hectare (ha) = 2.47 acres1 liter (1) = 0.22 British gallons (gal)

o.246 U.S gallons1 kilogran (kg) = 2.205 pounds (lb)

ABBREVIATIONS AND ACRONYMS

GUC = Gambia Utilities CorporationPWD = Public Works DepartmentTLB = Tourism Liaison Board

ADB = African Development BankKfW = Kreditanstalt fuer Wiederaufbau

FISCAL YEAR

July 1 to June 30

INTERNATIONAL DEVELOPMENT ASSOCIATION

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

TO THE REPUBLIC OF THE GAMBIAFOR AN

INFRASTRUCTURE AND TOURISM PROJECT

1. I submit the following report and recommendation on a proposed creditto the Republic of The Gambia for the equivalent of US$4.0 million on standardIDA terms to help finance an infrastructure and tourism project. The FederalRepublic of Germany, through the Kreditanstalt fuer Wiederaufbau (KfW), and theAfrican Development Bank (ADB) would make loans equivalent to US$5.2 millionfor the same project. The ADB loan of US$2.1 million equivalent would be ata 6 percent interest rate with a 1 percent commission on the amount disbursedand repayable over 12 years following 5 years of grace and the KfW loan ofUS$3.1 million equivalent would be at an interest rate of 2 percent and re-payable over 20 years following 10 years of grace. Part of the IDA credit,up to US$ 1.2 million, is to be onlent to the Gamlia Utilities Corporation(GUC).

PART I: THE ECONOMY

2. A report entitled "The Economy of The Gambia" (907-GM) dated December12, 1975 is being circulated to the Executive Directors. Its conclusions arereflected in the following analysis. Country data sheets appear as Annex I.

3. The Gambia is a small but densely populated country with 500,000inhabitants occupying a narrow strip along both sides of The Gambia River andforming an enclave of 10,400 Km2 inside Senegal. The population growth rateis estimated at about 2.5 percent for the country as a whole but, due to theurban drift, at 5 percent in the capital area. The population is predominantlyilliterate (90 percent). Economic growth is slow in real terms, about 2.6percent p.a., i.e. about equal to the population growth rate. In 1974 percapita GDP was estimated to be US$200.

4. The economy consists mostly of traditional small holder ruralactivities; agriculture, livestock and fisheries account for 60 percent ofthe country's total GDP and employ about 85 percent of the active population.Agriculture is mostly rainfed, characterized by a short production periodlimited to the six months of the rainy season, and dominated by groundnuts,which are almost the only cash crop of The Gambia. Groundnuts are the mainsource of foreign exchange, and constitute the basis for the country's majorindustrial activity, groundnut oil milling. Income per capita of the 98,000urban population, estimated at US$470 i.s 3.6 times higher than the average percapita income of the 400,000 rural population, estimated at US$130.

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5. Economic activity in The Gambia reflects its structural weaknesses:(a) low productivity of the rural sector; (b) wide seasonal fluctuations inoutput and employment; there is full employment at the height of the agri-cultural season but this is followed by six months of sharply reducedactivity in most economic sectors, including trade, transport and industry,all linked to groundnuts; and (c) extreme vulnerability to variations ingroundnut prices and production levels (the latter essentially a function ofrainfall).

Recent Developments

6. The Government has undertake;a both to diversify the Gambian economyin order to reduce its dependence on groundnuts, and to increase the produc-tivity of the rural sector, as shown by the shift in capital expendituresbetween the 1967/68-1970/71 and the 1971/72-1973/74 Development Programs toemphasize rural development. Under the latter program, the Government hassuccessfully undertaken action aimed al. diversifying agriculture by developingirrigated rice along The Gambia River, cotton in the East, and vegetablesaround the urban areas. Irrigation has allowed year-round rice productionand the IDA financed Irrigated Rice Project (333-GM) is estimated to haveprovided 1,500 families with additional production of 5,000 tons of rice p.a.(i.e. about 12 percent of t'he ngtional, consumption requirements of rice).The Government also requested the U.K. to conduct a Land Resource Survey onwhich to base a comprehensive rural devrelopment strategy. This survey wascompleted in February 1975 and is now being reviewed by Government. InNovember 1975, an IDA mission appraised a project focusing on the develop-ment of The Gambia's major crops ancl of' livestock, a hitherto largelyneglected subsector.

7. The Government has also actively promoted establishment of hotelsand modern fish processing pLants, mostly with private financing, by ensuringprovision of infrastructure facilities, participating in the equity of some ofthese enterprises, and granting tax holidays and other incentives. Theseactivities have had a beneficial impact on the balance of payments and haveresulted in the creation of about 2,500 jobs (i.e. about 20 percent of employ-ment in the modern sector). Although the employmenl: generated by tourism islargely seasonal, it comes at: a time when employment in the agriculturalsector is at a low ebb. In order to spur small-scale industrial and servicesdevelopment, mobilize local savings and channel them together with foreignfinancing to local entrepreneurs, the Government established in 1972 TheGambia Commercial and Development Bank.

8. The foregoing measures have already had some impact on The Gambia'seconomy but performance conti.nues to be dominated by developments in thegroundnut sector. Thus, the doubling of groundnut prices was the majordeterminant in the marked upt:urn of the Gambian economy in 1973/74. Combinedwith an increase in the volume of produ,ztion, the price increases resultedin a near doubling of farmers' income; a jump in public and semi-public (TheGambia Produce Marketing Board) sector .;avings which rose to a record high of

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about US$20 million (i.e. about the equivalent of two years of Central Govern-ment tax revenues); an improvement in the current account of the balance ofpayments from minus US$4 million in 1972/1973 to plus US$10 million in 1973/1974; and an increase in foreign exchange reserves to US$35 million (equiva-lent to over 10 months of imports) by the end of 1974. This dramatic priceincrease more than compensated for the increased petroleum bill and the effectsof world wide inflation and contributed to an improvement in The Gambia'sterms of trade.

Development Prospects and Constraints

9. This favorable situation is not expected to last. Projecteddecreases in groundnut prices together with increases in the prices of importsare expected to cause a substantial deterioration in The Gambia's terms oftrade from 120 in 1973/74 (base 1967/63 = 100) to only 67 in 1979/80. Express-ing these changes in terms of the real purchasing power of the economy, in1973/74 gross domestic income was 8 percent higher than GDP, while in 1979/80it is expected to be 13 percent lower.

10. The Government is working on its first Five-Year Development Planwhich will cover the 1975-80 period. This Plan is expected to continue empha-sis on the productive sectors: agricuLture, livestock, fisheries, tourism,and possibly a small mining project (exploitation of rutile and kaolin depo-sits). The Plan is further expected to include urban and transport infra-structure and to stress the development of skilled manpower.

11. Lack of skilled manpower is one of the major bottlenecks hinderingeconomic development and has slowed down the preparation and execution ofdevelopment projects in the past. The Plan will include a human resourcesdevelopment program which will aim at creating in the shortest possible timea stock of trained manpower at all levels. The Agricultural DevelopmentProject recently appraised and the proposed Infrastructure and Tourism Projectwill both have substantial training components, but improvement is needed inthe education/training system to make it more responsive to the needs of thelabor market; there is an oversupply of secondary school graduates coupledwith a lack of persons with specialized skills.

12. Gross public investment undeir the Five-Year Development Planis estimated at US$67 million in current prices. This corresponds to annualexpenditures of about 11 percent of GD]', a sharp increase over the past, whentotal public investment averaged only i-6 percent of GDP.

Financial Prospects and Foreign Aid

13. The financing needed to implement the Development Plan is expectedto come from a combination of foreign aid, depletion of existing reserves, andpublic savings generated during the Plan period. In recent years the Govern-ment has managed to generate small budgetary surpluses as a result of itsefforts to improve tax collection and restrain the growth of recurrent

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expenditures. However, these surpluses will disappear by 1979-80 because ofthe implementation of agricultural and public works programs which willrequire larger recurrent expenditures and because of the need to compensatefor inadequate material and maintenance expenditures in the past. Assumingthat groundnut prices decline as forecast, the Gambia Produce Marketing Boardwill be unable to generate significant surpluses over the Plan period. Con-sequently, total public savings, which reached a high of US$17 million afterdebt service in 1973/74 are expected to total only US$1 million for theperiod 1975 to 1980.

14. With respect to foreign aid, IDA, the U.K., the Federal Republic of

Germany, the People's Republic of China, the ADB, and the European CommonMarket countries are expected to providle about US$50 million in assistance(at current prices) during the Plan pe:riod. The balance (about US$15 million)of the necessary financing to implemenz the Plan would be provided from thepresently high reserves of the public sector and would require that foreignexchange reserves be reduced from the equivalent of 10 months of imports to4 months of imports over the period 1975 to 1980.

15. In summary, our projections show that the Government will be ableto finance approximately 20 percent of its Five-Year Development Plan, princi-pally from reserves. However, these pr-ojections are particularly sensitiveto the groundnut situation. A single bad crop, a slower rate of growth ingroundnut output, a drop in groundnut prices beyond forecasts or a combinationof these factors could seriously affect: realization of the Plan's objectivesand cause a sharp drawdown of the country's reserves.

16. Borrowing from abroad will be mostly on concessionary terms; there-fore the external debt servic:e ratio should remain relatively low, notexceeding 5 percent by 1985. Similarly, debt service will not impose anunduly heavy burden on budgetary receipts. Because of the diversificationof foreign aid donors, the exposure of IDA is expected to decrease from 40percent of total outstanding debt in 1973/74 to 20 percent in 1985.

PART II: BANK GROTP OPERATIONS IN THE GAMBIA

17. To date, the Bank Group has approved two IDA credits to The Gambia.One credit, of US$2.1 million in FY70 (187-GM), was for rehabilitation ofthe port of Banjul, essential for a country so vitally dependent on foreigntrade. Due to a sharp increase in construction costs following appraisal, aUS$2.4 million supplementary credit was added in FY74. The second operation

was a US$1.3 million credit (333-GM) fcr the irrigation of 3500 ha underrice cultivation and for the preparation of a follow-up project. Annex IIcontains a summary statement of IDA credits as of November 30, 1975 andnotes on the execution of these two projects. The present project focuses

on the development of the tourism sector, in which The Gambia has some com-parative advantages. It also aims at improving public utilities to betterserve the needs of both the Banjul urban community and tourism areas.

18. We will continue to support Government in its efforts to increaserural productivity and to diversify the economy. The next project, justappraised, is the follow-up to the first agricultural project. It will pro-vide a package consisting of extension services, training of farmers, trans-port and marketing infrastructure, and agricultural credit and will be aimedat increasing the yields of The Gambia's main rainfed crops (groundnuts,millet, rice and vegetables) and the quality of the livestock herds. Beyondthis, efforts will be directed toward improving the educationand training facilities of the country through a Bank identification missionwhich visited The Gambia this fall to determine possible operations in theeducation sector.

19. Due to the shortage of IDA fujnds and the relatively high cost ofprojects in The Gambia, the Associatioli is actively promoting co-financingwith other donors. The present projecl; is co-financed, as will be the secondagricultural development project.

PART III: TOURISM SECTOR AND PUB116IC UTILITIES IN THE GAMBIA

I. Tourism Sector

20. Introduction: The Gambia has natural advantages for the developmentof tourism. It offers attractive and sjafe beaches, summer-like weather duringthe European winter, and a location reasonably close to Europe. Having noairline of its own nor any financial ir,terest in a regional air company, itsupports an "open skies" policy that facilitates charter operations. Moreover,the climate for private investments is favorable: Government has adopted aliberal policy for repatriation of capital and dividends and has exempted thehotels from customs duties on imports of equipment and construction materials,and from income tax for up to 7 years after the start of operations. Finally,prices in The Gambia compare favorably with other West African tourist desti-nations. Major drawbacks, vis-a-vis other destinations, are the lack oftrained staff and the almost total absence of long term financing for hotelconstruction. Investors in The Gambia have had to resort to short-term loansfrom overseas banks, and high interest rates on the international capitalmarket have restrained investments in The Gambia. In addition, the limita-tions of The Gambia's international airport preclude the use of large jets,resulting in increased air travel costs.

21. Past Development: Tourism development in The Gambia has been mostlysupported by private foreign initiative, starting in 1966/67 with the estab-lishment of inclusive charter tours operated from Sweden by a private tourcompany which also undertook the construction of hotels. The Governmentconcluded an agreement with that company, granting it a monopoly on charterflights to The Gambia for five years and committing it to increase thenumber of visitors by 30 percent per annum. This contract was revised in1971, and since then both British and Danish firms have also operated inThe Gambia.

22. The tourists going to The Gambia are mostly sun seekers and beachbased tourists; they are usually middle aged, middle income couples spendingsome 12 days in the country on packaged tours costing about $400 per person.Faithfulness to The Gambia is particularly high for a new destination, with a15 percent repeat rate. The total number of visitors rose rapidly from about500 in 1966/67 to nearly 25,000 in 1973/74, although a small decline (about4 percent) was experienced during the 1974/75 season due to economic diffi-culties in Europe. Hotel accommodations have also increased quickly, fromabout 170 beds in 1966/67 to 1,880 in 1973/74. The hotels, mostly foreignowned, were constructed on a modest basis at an average cost of US$5,000 perbed.

23. Tourism has two major advantages for the economy of The Gambia. Itbrings foreign exchange, which can be spent to expand other sectors of theeconomy, and it creates employment during a period of the year when agricul-tural activities are at a low point. The hotel industry is estimated todirectly employ about 1,100 people, mostly local, while indirect employmentin restaurants, shops, tour agencies, handicrafts, transportation and otherservices is estimated at 1,000 jobs. This represents about 15 percent of thetotal employment in the modern sector (although on a seasonal basis only).Gross foreign exchange earnings generated by tourism investment amounted toabout US$5 million in 1973/74, or some 15 percent of commodity exports. Netearnings amounted to about half of this amount, because of both the foreignowned and managed character of the hotel industry, which results in substantialtransfers abroad, and the large import content of the hotels' consumption.Because of production, marketing and storage problems, foodstuffs locallyproduced are not up to hotel standards; presently about 85 percent of thefoodstuffs consumed in the hotels are imported.

24. Prospects: Although tourism will continue to largely rely on privateinitiative and management, The Gambia is expected to capture progressivelylarger benefits from tourism activities with the increasing Gambianization ofmiddle management, the expiration of the tax holiday period, and an expectedincrease in consumption of locally produced foodstuffs. By the early 1980's,tourism is expected to generate US$25 million gross foreign exchange perannum, i.e. about 40 percent of the country's projected commodity exports.Assuming a ratio of 0.6 emplcoyees per bed, the employment in the hotel indus-try is expected to increase from 2,000 to 3,500 by 1985. The value added bytourism is expected to increase by 6 percent per annum in real terms and toaccount for 10 percent of GDF by 1985. In view of the very few industrial orcommercial opportunities in The Gambia, tourism is presently the only poten-tially high growth element in the economy outside the rural sector.

25. Market: Projections are based on the assumption that the number oftourists will increase from its present 25,000 to 45,000 by 1985/86. This isa reasonable assumption in the context of the probable evolution of theEuropean long distance travel market and the likely parallel growth of visitortraffic to Africa. A market survey assessing tour operators' interest in TheGambia has concluded that Germany could become an important source of tourists,

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provided the Yundum Airport runway is improved. An expansion of tourismoriginating in Scandinavia, The Netherlands, Great Britain and Switzerland isalso expected. The expected increase in the number of tourists would requireconstruction of about 250 beds per year within the next decade (from 1,800 bedsin 1975 to 4,500 in 1986), for which the tourism component of the proposedproject would provide the necessary infrastructure.

26. Government's Participation i*a Tourism Development: Up tot date,development of tourism has cost the Government relatively little. Now, how-ever, the situation is changing. It would be difficult to expand tourismwithout the provision by the Government of new infrastructure, incLuding theimprovement of the Yundum Airport, long term capital for hotel con;truction,and training facilities. The tourism zomponent of the proposed project pro-vides for the infrastructure and training needed over the next five years.Government has undertaken to finance the improvement and the extension of theYundum runway, in time for the 1978 tourist season, as well as to insure theprovision of a line of credit for hotel construction (Sections 4.08 and 4.04of the draft Development Credit Agreement). The necessary funds will comeeither from Government's own resources or through external borrowing.

27. Social Implications: The development of tourism in The Gambia ishaving beneficial and detrimental effe,zts: the benefits are the tangibleextra income and the intangible stimulus provided by contacts with foreignersof different cultural, social and economic background. These contacts, however,create new needs and aspirations for the local population which they cannotimmediately satisfy because of their low level of income. Proper planningand educational measures can, however, considerably alleviate these problemsand increase the value of tourism as a positive developmental factor for thecountry. The Government has planned a labor support area adjacent to thetourism area, which will be provided with basic infrastructure (financed underthe proposed project), educational and health facilities, and where tourismemployees will be able to keep their traditional patterns of family housing.To ease cultural adjustments the Ministry of Education began in 1974 a tourisminformation program for school children. The socio-economic study financedunder the project is aimed at formulating further recommendations and advicein this field.

II. Public Utilities

28. Public utilities in The Gambia are concentrated in the capital area.Power facilities consist of the Half Die generating station supplying theBanjul/Kombo St. Mary area and some small generating capacity supplying sixsecondary centers. Water supply facilities are largely limited to the Banjul/Kombo St. Mary area, where out of the nearly 100,000 people living in thearea more than 60,000 are on or near water lines; some 40,000 being servedby public standpipes, and another 20,000 by 2,700 private connections. Thereis no public sewerage system in The Gamv'bia. However, studies for such asystem for Banjul are presently being ixndertaken.

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29. The Banjul power plant serves the capital and the present and pros-pective tourist centers. Some parts c!f the generating station are 20 yearsold, spare parts are lacking, and the main transmission and distribution net-works are overloaded and subject to heavy losses and frequent breakdowns. Thepresent project aims at improving and expanding the Banjul power plant soas to satisfy future demand, which is expected to increase by 11 percent perannum under the impulse of expanding industrial, commercial and tourism activi-ties in the Banjul area.

30. The Banjul water system alsc, has weaknesses; a number of the bore-holes are not in good working order and break down frequently; the consequentoverpumping of the remaining working boreholes sometimes leads to furtherbreakdowns. Also, distribution networks rely on very old pipes. The presentproject aims at improving the existing water system and expanding it to boththe tourism and labor support areas.

31. The Gambia Utilities Corporation (GUC), which was created in 1972from a department of the Ministry of Works and Communications, has nationwideresponsibility for the supply of electricity and water. It has, since itsestablishment, incurred losses due to the inadequacy of its inherited tariff

structure, inexperienced management, and poor collection of bills and controlof both water and electricity losses. In an effort to improve the weak finan-cial position, tariffs were raised in August 1974 and again in December 1975.GUC has undertaken (Section 4.03 (b) of the draft Project Agreement) to takeall necessary steps (includin-g further increases in its tariffs) to producean annual rate of return of not less than 3 percent in 1978 and 1979 and4.5 percent in 1980 on the value of its net fixed assets in operation. Speci-fic to its electricity services, GUC has agreed to produce an annual rate ofreturn in 1981 and thereafter of 8 percent on its net fixed assets. Withrespect to water services, it has agreed to an annual rate of return in 1985and thereafter of not less than 3 perc,ont. An improved financial positiontogether with the proposed project invwstments, technical assistance, trainingof personnel and improved administration are expected to result in a streng-thening of GUC.

PART IV - THE PROJECT

32. In 1972 a Bank mission and Government officials identified a coastalarea west of Banjul suitable for tourism development. In the following twoyears the Government, with assistance from UNDP and consultants, preparedphysical planning and engineetring studies for a tourism investment program.While these studies were being prepared it was decided to extend the publicutilities component of the project to improve the whole of the public utili-ties system of the Banjul/Kombo St. Mary area. As a consequence, the proposedproject now has two major comlponents: tourism infrastructure and public utili-ties development. The proposed project, covers the initial 5-year phases ofthe Government's 15-year program for tourism development and its 10-yearexpansion program for electricity and water supply. In November 1974 the

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project was appraised by an IDA mission. Negotiations took place on September9 and 10, 1975. The Gambian delegation was led by Dr. Langley, PermanentSecretary, Ministry of Economic Planning and Industrial Development.

Project Description

33. The components of the project primarily related to tourism infrastruc-ture are:

(a) extension of an access road to the tourism area and constructionof secondary roads and paths between the resort sites and withinthe adjacent villages;

(b) extension of telecommunications facilities to the resort sites andadjacent villages;

(c) construction of a sewerage system to serve the resort sitesconsisting of a collection system, pumping station and stabilizationponds;

(d) construction of public facilities and market stands for the saleof local handicrafts, fruit, and other goods at the resort sites;

(e) establishment of a hotel training school and facilities includingthe construction of classrooms, equipment, and the provision offunds for technical assistance;

(f) establishment of a food storage and marketing program to increasethe amount of locally produced food purchased by hotels;

(g) funds for the project managenent unit, a program of tourisminvestment promotion, and two studies, one on the social,economic and fiscal impact of the anticipated tourism develop-ment and one on the possibility of using groundnut shells as analternative to imported oil for generating electric power.

34. The components of the projecL primarily related to public utilitiesdevelopment are:

(a) expansion and improvement of the electric power and water supplysystems in the Banjul/Kombo St. Mary area including the resortsites and adjacent villages;

(b) equipment for converting existing electricity generators to useheavy fuel oil and construction of a fuel storage reservoir andfacilities to pump heavy fuel from the reservoir to GUC's generators;

(c) consulting services and technical assistance to strengthen GUC.

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Costs and Financing

35. The total cost of the project (net of taxes) is estimated at US$11.3million with a foreign exchznge component estimated at US$8.8 million (78 per-cent). These costs reflect the conclusions of an updating mission which visitedThe Gambia in November 1975.

36. It is proposed that the entire foreign exchange component as well asa small portion of local costs be financed from foreign sources. The projectwould be co-financed with the African Development Bank (ADB) and the GermanKreditanstalt fuer Wiederaufbau (KfW) which would, respectively, finance theexpansion and improvement of the electricity and the water supply systems.The IDA credit will be directed primarily to the tourism infrastructure compo-nents of the project. The proposed financing plan is the following:

Project Cost (net of taxes) and Financing(US$ million equivalent)

Cost Financing Percent ofForeign

Local Foreign Total ADB KfW IDA Total Govt. Total Financing

Tourism Infra-structure /1 1.3 4.0 5.3 - - 4.0 4.0 1.3 5.3 75

Electricity 0.4 2.1 2.5 2.1 - - 2.1 0.4 2.5 84Water Supply 0.8 2.7 3.5 - 3.1 - 3.1 0.4 3.5 89TOTALS 2.5 8.8 11.3 2.1 3.1 4.0 9.2 2.1 11.3 81

/1 Including heavy fuel conversion equipment and technical assistance for GUC.

37. Part of the IDA credit, US$0.5 million, is to be onlent t:o GUC undera subsidiary loan agreement satisfactory to the Association betweert Governmentand GUC (Section 3.01 (d) of the draft Development Credit Agreement)to financethe sewerage component of the project. In the event that satisfactory arrange-ments are reached concerning the supply of heavy fuel oil to GUC, an additionalUS$ 0.7 million would be onlent to finance the heavy fuel oil component ofthe project. The subsidiary loan would be at an interest rate of 8 percentrepayable over 17 years after four and a half years of grace, during which timeinterest payments would be financed by Government.

38. Since the Government had to assume substantial costs for projectpreparation in close cooperation with IDA, it is proposed that part of theexpenditures for consultants' services, studies, and the project managementunit be financed retroactively. This retroactive financing would cover expendi-tures incurred after February 1, 1975, up to a maximtm of US$150,000.

Procurement

39. The procurement of equipmen; financed under the proposed credit,with the exception of those items whii,h cannot be combined into contracts ofUS$50,000 and over, would be through international competitive bidding inaccordance with IDA guidelines. Civil works contracts for roads and seweragewhich can be combined into contracts pf US$100,000 and over would be let onthe basis of competitive bidding, advertised locally, and awarded in accord-ance with local procedures which are s!atisfactory to the Association. Civilworks contracts could be tendered either individually or combined into biddinggroups, at the bidder's option. Foreign firms would be eligible to bid, andit is expected that firms established in Senegal would actively compete. GUCor the Public Works Department (PWD) would undertake other civil works on forceaccount or contract for them locally.

40. KfW financed items would be procured under its own regulations,whichare basically similar to IDA guidelines and involve international competitivebidding. ADB financed items, under th,e terms of a line of credit to ADB fromSweden, would be procured in Sweden.

Disbursement

41. Disbursements would cover 1ao percent of the value of directlyimported equipment and materials, and 75 percent of the value of such equip-ment and materials when procured locally, 100 percent of the foreign exchangecost of professional services and 65 percent (representing the estimatedforeign exchange component) of the cost of civil works. The latter percentagewould be adjusted if necessary during the implementation period of the projectin order that withdrawals from the credit would continue prorata with remain-ing expenditures. Disbursement on the items needed for conversion of thegenerator power plant to heavy fuel oil would only be made if Government hadreached agreements satisfactory to the Association with regard to the deliveryof heavy fuel oil (Schedule 1, para 4(b) of the draft Development Credit Agree-ment).

Project Execution

42. The project would be carried out by various agencies of the Govern-ment: the Public Works Department for construction of roads; the Post andTelecommunications Department for tele:ommunications facilities; the Ministryof Information and Tourism for the hotel training school, shopping areas,and beach facilities; the Department of Agriculture for the food storage andmarketing facilities; and the Ministry of Economic Planning and IndustrialDevelopment for the various studies and the program for the promotion oftourism investment (Sections 3.01(a) anid 1.01(g) of the draft DevelopmentCredit Agreement). The GUC would carry out the water, electricity, andsewerage components of the project (Section 2.01 of the draft Project Agree-ment). The overall execution of the project would be coordinated by theTourism Liaison Board (TLB), an interministerial body established in 1972under the Town and Country Planning Act. A project management unit, headed

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by a Project Manager financed under the Credit, would be located within the

TLB and would be responsible for day-to-day operations. The TLB would be

reorganized and would operate under t1le chairmanship of the Deputy Secretary

General in the Office of the President: (Section 3.03 of the draft Development

Credit Agreement). Approval by the Association of the terms of reference for

the project management unit and appoir,,tment of a Project Manager acceptable to

the Association would be conditions of effectiveness of the credit.

Economic Justification

43. The project provides infrastructure and services that will improve

public utilities facilities in Banjul and promote the development \f tourism.

It will also increase the share of the Government and Gambian natip,nals in

the benefits of the tourism industry, improve living conditions in the labor

support areas, provide hotel training facilities, and help promote sales of

local products to hotels and visitors. For purposes of the econom:c analysis,

the project has been split into two components, the public utilities works

and the tourism works.

44. Tourism; The rate of return of this component of the project,

including the capital cost of the hotels and the water and power investments

attributable to tourism but excluding the improvement of the airport, is

estimated at 15.4 percent. Including the cost of the airport, the rate of

return is 12.1 percent. A sensitivity analysis shows that the rate of return

of the tourism works of the project--including the airport--would vary between

9.5 percent, with a 20 percent decrease in gross operating profits, and 13.3

percent, with a 10 percent increase in those profits. An increase of 20 percent

in investment costs would yield a rate of return of 10.7 percent.

45. Public Utilities: Using expected revenues for water sales as a

proxy for project benefits the internal rate of return on the water supply

component is 2.3 percent. The assumed level of rates for hotels and industrial

users is higher than economic cost and will result in cross-subsidization of

domestic and stand-pipe consumers, who will be charged at tariffs below econo-

mic cost because of their limited ability to pay. Nevertheless, the imbalance

between the amounts of water consumed by the different categories (domestic

and stand-pipe consumers account for 66 percent of total water consumption

compared to only 21 percent for hotel and industrial consumption) will act to

limit the rate of return. However, this rate is undoubtedly a conservative

estimate of the net benefits of the component because it does not reflect the

consumer surplus or the health and social benefits accruing to the population.

With respect to the electricity component of the project,the tariffs which will be

introduced ove the next few years are expected to ensure an internal rate of

return of 7 percent, again taking expected revenues as a proxy for project

benefits. As in the case of the water supply component this rate underestimates

the net economic benefits, particularly those of consumer surplus and from new

consumers.

46. Distribution of Benefits: In addition to the rate of return calcu-

lations reflecting the benefits of the tourism related works to the Gambian

- 13 -

economy, an assessment of the distribution of benefits between the hotels,other operators of tourist facilities (taxis, handicrafts, and recreation)who are mostly Gambian, and the Government has been carried out. This assess-ment shows that Government receives a fair share of the benefits of theproject (in the form of incremental taxes) with a 10.9 percent rate of returnon its investment. The rate of return for hotel operations (9.6 percent) isconsidered satisfactory in view of the fact that it is an after-tax figureand does not include expected capital gains on subsequent disposal of property.Assuming a debt/equity ratio of 70/30 and borrowing at 8.5 percent repayableover 15 years, the return on equity would be 12.5 percent. The Governmenthas undertaken to provide funds for a program of long-term lending to hoteloperators. The main beneficiaries are the operators of tourist facilities(other than hotels) since, with negligible investments, they receive about18 percent of the project total gross operating profit.

47. The rate of return on national investment outlays confirms thatthe Gambian economy is the major beneficiary of the development of tourism.Computed on the basis of the Government's investment in infrastructure andlocal investment in hotel facilities (about 1/4 of total investments in hotelfacilities), and the revenues from the project accruing to the national economy(earnings of residents and taxes) the rate of return on national investmentsamounts to 13.0 percent; it is slightly higher than the overall project rateof return (12.1 percent) and substantially higher than the rate of returnof hotel operations (9.6 percent). The benefits taken into account in theeconomic analysis do not include economic and social benefits that willresult from better living conditions in the labor support areas, increasedparticipation of Gambian nationals in the tourism industry through trainingand improved marketing of local products. Finally, the development of thetourism industry and the charging of appropriate tariffs for water and elec-tricity to that industry will assist in providing low cost public utilitiesservices to the poorest segments of the urban population.

PART V: LEGAL INSTRUMENTS AND AUTHORITY

48. The draft Development Credit Agreement between the Republic of TheGambia and the Association, the draft Project Agreement between the Associa-tion and the Gambia Utilities Corporation, the recommendation of the Committeeprovided for in Article V, Section 1 (d) of the Articles of Agreement of theAssociation, and the text of a draft Eesolution approving the proposed Creditare being distributed separately to the Executive Directors.

49. Features of special interest are referred to above in paragraphs26, 31, 41 and 42. The following conditions of effectiveness are includedin the Development Credit Agreement;

(a) the signing of the ADB and KfW Loan Agreements;

- 14 -

(b) receipt of the terms of reference for the ProjectManagement Unit; and

(c) the appointment of a Project Manager.

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

PART VI: RECO1jENDATION

51. I recommend that the Executive Directors approve the proposeddevelopment credit.

Robert S. McNamaraPresident

AttachmentsWashington, D.C.December 18, 1975

ANNEX I

Page I of 3 pages

WOUNRTy DATA - THE GMANA

AREA POPULATION MST11,295 kel 0~~~~~~~~~~~.38 niia (mid-1973)

0Per k.2of arable land

SOCIAL IDMICATORS

Referenae CotntriesThe Gambia Togo Seuigl Syrian

GN? PER CAPITA US$ (ATLAS BASIS) 4I *.itO 160 260 /p 320

DEMOGRAPHTCCrde'SErlthrote (perth,ousand) 39/ 63 kc5 SOA h66L LI gCrude death rate (per thoueand) 21/ 23 4 264 23 / 15~Infant mortality rate (per thousand live births) 674 . . 5 4 9

Life expectanay at birth (yearn) * 1Li.60e Lo B.- 5'

Green repraductian rate 2.833 3035/P.pulation growth rate i 1.6 2027 2133ZPopulatima geawth rate - urban 3 36/pI

Age structure (percent)0-ll 38k 41 65 p 62 65-6L 69/g 5 2c 5 6 7a

65 and aver 13 /t h/i 3/p Aoge dependenny yrtio ]00 J0.9 /p 0.

Urban popu-lation an peracnt af tatal 9 4b ia4 /a.h 15 /h.1 29 /4 66 Li.,Fanily planning, No. Of acaeptarn cuouulative (thouse.) .No. af soars (9 of married wo,smn) . .

EJEPIOINETTotal lao arn(hosns)lOL 230 /l.o 720 /.d 1,7010 4r 1,700 /Percentage employed bn agriculture 96 / 85 / 78 73 5Pe rcentage unemployed . .. 7

INCOME DISTRIBUTIONPercen-t o_fnational inc-me reamivad by highest 5% .Percent of national income received by highest 20% ..Percent of natiana1 income received by lowest 20% .Percent of national income received by l-owst 40%*..

DISTRIBOTCON OP LAND SbBERSNIPS Owned by top 10% of owners . .9 Owned by smallest 10% of owners ..

NEALTH AND NUTRITIONFFp_ulatio pr hyicn .18,950 4 22,70 a 16,520 4e 3,860 Population per nuring person . 15, 00/a 3,390 4e 2,033 /A 3,920 /Population per .aspita1 bed 650 /t.s 690 7.v 65o /e,u 750 . 1:,190 rPer capitn calorie supply as 9 of requirenants 14 7 PL 100 96 97 102Per oapita Protein supply, total (grase per day) /6 60 63 91 616 70Of which, animal and pulse, - 20 4x 19 28A/ 16De ath rate 1-6 years /7

KEDUCATIONAdjusnted /8 primary school enrollment ratio 15 32 / 56 38 Iday 88 Z4Adjusted oecanday school anrollsnt ratio 6 10a4 7 15 /Y 39 jTearsa of eaooflig provided, first and eaoond level 12 12 13 13 124Voctional enrmllmect an 9 of sea, school enroillment i.6 / 10 7/6tAdult -interacy rate 9 .. 10 40i~

NOOSINGAver age No. of persans per roan (urban)...Perce.nt of occupied units without piped water...Acces as to electri cIty (as 9of total population)...Percent of tural population anoected in electricity.....

CONSO)WTIONRadOreies per 1000population 6 157 a22/ u? 5 a7Passengr cars pee 1000 Population, 3 8 5c / - 1 /iEletric pwer cennumptian (kwh p.c.) 0 4 2 T. 634 a7F 153aNewsprint oonsnption p.c. kg per year .. .I 0.1 o.i :

Notes: Figuren. refer either to the latest periodsoar to amccount of environmental tesipeature, bodY -eighta, andthe latenat years. Latent periodo refer in principle to distributian by age and sex af atianal POPu1atlane.the year- 1956-60 or 1966-70; the latest Years In, pri- /6 Prtatin standarda (requfresente) far all coantriesa am sat-ciple to 1 960 and 1970. lished by LEDA Ecnonaic Resaarah Service pravide far a oln-icts/I The Per Capi ta OhP estimate is at markct pricco for allawancs of hO grams af total protein per day, andl 20 grana, afycar. other than 1960, calculated by th aane convereon animal ca puiae protein, of which 10 groan shauld be animaltechnique as the 1972 World Bank Atlas. pr~otein, Theme Standardt are somewhat lover than thoea af 7542 Average nucbhr of daughtern per wo-a of repreductiva gramus af total protein and 23 grams of animul protein as anage. average for the world, propoend by PAO in the Third World ToadZa Pupulatica growth reins are for the decdade eadlg inS-7

1960 and 1970. /7 S50c studins hav suggested that crude death rates of childrenA~Ratio of population under 15 and 65 and! over to' popula- ages I through 4 may be used -an a first apprasisatisn index ofbloc af agen 15-66 for age dependency ratio and to labor eal-trition.

fares of ages i5-66 for econoclc dependency ratio. /8 Peoentags enrolled of correopoading population of schocl age1j FA0 reference standards represent physiological ro- an defined for each country.

qirneneto for nornal activIty and health, baking

I 972; /b Banjul enly; 4c 1965-70 ON eetimate; ad 1968; 4o 1971; 4t AID aetisate; 4 L1960-72;~h Localities having been given the status of communes; -7i Cape-Vert regim and the citices of Saint isi, Thlem,Kacolck, Diourbel and Zigiunchos; 4 Ci ties, Mahafaza center.m ad Nantika centre; /k 1963; aI 1973;4 Estimate; /n 15-66 years; /o 6,5 years and over; /p Ratio of population under 15 and 65 end over to popua.tion15-6). years; 4q Estimate of active population, in age group l6-50, based un 1973 Cansus; Ir 1972-73 officialantimate; /a 1969; /t 1962, u Go-nrnent hospital eatablishmentn and andical centern; 4, 1966; 4. 1961;L 1966-66; /Yinadjuated; /. Including UJNWA nchools; lina bower necandary level; lab Definition not available;/acis5 yearn and ovnr; /ad Excludes unemployment.

a Lticated popua4ibo according to i973 Censu Is 0.69.

ccSyria baa been selected as an objective country because of iL. recent nubotania1 pr-greso in the agriculturai sector,lhibh is alcsa priority cbjective for The Gabhia.

82 Ocicbcr IL., i975

GAMBIA ANNEX I

- ECONOMIC DEVEc PMENT DATA Page 2 of 3 pages(Aounts inmlin r ..dlas

Actual I 90 97t 17 17d181 970 193 174 17 97 901975 198075_

RATIONAL ACCOUNiTS 2_ 17 195 17 19017 19 90 174 98

Gross Domes3-eatAergeat197-1c6 ries&oduhaceRaes Average Annual Growth Rates As Percent of GDTGross Domestic Product ~32.4 36.7 38.1 39. 7 41.6 5. 4. 7T 5.0 94 98 113

Gisfrom Terms or Trade (+) 2.0 1.5 .9 .6 -1.8 -5.8

ome - 75-.-2 ~~~~~ ~~~~~~~~2'.5 2.'3 oED-f00- T-O

Import (incl. NF'S) 19.2 19.5 19.3 19.1 20,6 26.4.1 675 49 8

~ports " (import capacity) 20.3 16.5 23.1 21.9 19,7 19.78Resource Gap cr 21. 197 1. 2.6 -2.2 59 59 43

3 94 15

ConsumPtion Expenditures 31.0 32.9 34.7 :34.7 33 4 35.3 2.3 .3 90 89 78

Investment '1 (cine. stocks) 3.4 5.3 4.2 5.6 6 4 9.9 4.3 12.0 10 11 22

Domestic Savisngs 4.5 2.3 8.0 8.4 5.5 3.2 12.0 -21.0 13 21 7

National Savings

MERCHANDISE TRADE 1~~~~~~~~~~~~~~~D *.5 $US before 73MENCHANDISE TRADE ~~~~~~Annual Oats at Current Prices and exchange rates ID = .625 $US5 after 73AsPretoTta

Imports L-H2-tfT .-

Capital goods 2.4 5.8 6.4 9.1 11.0 22.0 30 19 14 16 25

Tnteneediate goods (wc1fssels) 1.1 3.8 4.0 4.9 5.7 10.4 35 16 6 1i 11

Fuels and related materials .6 1.6 2.1 2.6 3.3 4.9 36 12 3 5 5Of which: Petroleum

Consumptiongod 13.6 22.8 27.1 340 3. l20 1.... .6S. ....Total March. Imports (nit) 17.7 34.0 3~~~9.6 50.8 54.6 90.8 24 13 100 10 t5o

Ex-ports 10 10 io

Primary procducts (Eml. fuels) 8.0 9.0 21.9 24.6 20.3 20.9 25 -3.5 49 53 49

Fuels and related materialsof which: PetroleumMauatrd od . 11.0 19.1 17.7 19.9 21.3 16 3.5 51 47 51

Total March. Exports Cf oh) fF19 20o.0 5Th- SF57 40.2 5373 21 0 Th0 .r0 n-fTos.risn and Border. Trasoe 2.2 7.3 10.2 10.4 11.5 22.7 316 17 13 25 54,

Merchandise Trade Indlices Average 1967-69 .. 10Export Price Index 123.0 134.0 210.0 205.0 198. 0-581.0 10 -2.5 - -

import Price Index 108.0 135.0 175.0 207.0 223.0 273.0 1 - -

Teems of Trade Index 113.0 99.0 120.0 99.0 89.0 66.0 -3 96

Exports Volume Index 3 9

VALUE ADDED HY SECTOR Annual Pats at 1967-69 Prices and Exchange Pates Average Anual Growth Rates As Percent of Total

Agriculture 17.2 19.2 20.0 21.0 22.2 27.3 4 5 50 51 51

Industry and Mining services 16.7 1,7.6 19.5 20.6 21.6 26.4 4 5 50 49 49of wflich tourism .. 7j (2.2) (SAl-4) (2.7) -CL 8- 15 &. ..... 5) .. J2

Total 33.9 36.8 39.5 ~~~~~ ~~~~~ ~~~~~43.6 43.8 53.7 - 5.2 100 100 100

PUBLIC FINANCE As Pe________

(Central Government)_ retoGD

Cuirrent Receipts 8.7 11.9 13.8 14.8 16.4 24.7 11 1 27 26 48

Current Expenditures 8.2. 97 li-a 1915 14.2. 2.l.. 7 13 .l -ABudgetary Savings -0.2 2.2 2.5 2.0 1.9 1.1 13 1 6 26

Other Public Sector13 6

Public Sector Investme-nt 2.1 4.8 4.7 8.2 7.7 14.5 31 12 6 12 21

C"JRRENT EXPENDIT7JRE DETAILS Actual ~~~~~~~~~~~~~~~US $ million

CUPRENT ExPENDITURE DETAILS Actual ~~~~~~~~Prelim. Not. Proj. DETAIL ON At end 19 P and EN

As % Total Current Expend.) 1970 1974 197L5 19 76 i'jap PUBLIC SECTOR First Plan % of Total

Education 1.1 1.2 14.0 7.0 7.0 INVESTMIENT' PROGRAM (19 / 19 /Other Social Services 8.7 8.0 9.0 10.0 10.0 Social Sectors

AghriEculture Sevcs9.8 9.3 11.3 15.0 15.0 AgricultureOther Economic Services ~4.4 23.5 26.4 25.0 2 5. 0 Industry and Mining

Administration and Defense 13.1 24.0 26.0 25.0 25.0 Power

Gibher 62.9 34.0 13.3 18.0 18.0 Transport and coomuLnications

Total Current Expenditures 100.0 100.0 100.0 100.0 100.0 Other

____ ___ ____ ___ ____ ___ ____ ___ ____ ___ ____ ___ ____ ___ ____ ___ ____ ___ Total ExPenditures

SELECTED INDICATORS 1960- 19659- 1970- 1973- FINANCING(Calculated from 3-year averaged data) 1965 19,70 1975 1978Average ICON Puli Sctr avng

Import Elasticity .Progric aidctounterpart

Maroginal Domestic Savings Rate -- I .. Foreign Project Aid

Marginal National Savings Rate Total Finanzing

LABOR FORCE AND Total Labor Force Value Added Per Worker (19 - Prices & REx. Rates)

OUTPUT PEN WORKER Is Millions 31of Total. 19 -isn..Jolr Percent of Average 19 -

19 19 19 19) Growth Rate 19 19 19 19 Growth Rate

AgricultureIndustryService .-

Total

not app-licable -nil or negligible

not available --less than haLlf the

smallest unit shown

GAMBIA Pegs 3 of 3 pegee

BA2ANSE OPF PA3MSNT5 ESUIAIL ASSISTANCE AND DEST(a-nts in silli-s of U.S. do.lars et currant prices)

I D 6 25 .eof t973

Avn. OnusiAetuwa Eatiatod Pro ected Oroteh RBte1.871 1972 1973 1974 9S 75 176W L_ 1978 1979 3980 1975-1980

S LUMMAY ALANCE OF PAYMENTS

Eportes (iel. NFS) 18.9 23.0 30.1 52.3 54.6 53.7 55.3 50.2 54.2 60.0 1.9IDOrt&L(inecldNFS) 21.9 23.6 35.7 41.2 52.5 56.5 65.8 68.3 79.0 85.6 10.3ceeouros YalancolX-M) -3.0 -0.6 -5.6 11.1 !.1 -2.8 -1.5 -10.1 -24.8 -25.6

Interest (net) 0.1 0.0 0.9 0.6 01.2 0.3 0.1 0.0 -1.0 -2.4Direct InveT t-ent Th_nesWurkent fers' (nottaret) -12 12 - 6 -1.2 1.7 -7 23 4 3 8 - 9 -4.2 -4.4C399U7t.TrOoSr.7N)2.1 1.6 2:1 234 2.7 2.8 3.1 3.3 4.1 3.7 4.5Eelaco on Currene.Aeeounts -. 0.7 -6.3 11.6 t 7 3. 1 -8.7 -25.9

Private Direct Dlvestnent (set) 2.5 2.8 3.2 -1.25 0.8 0.6 0'4 1.3 2.2 2.3 23.0Official Capital Qrat- - - - - - - - -

Public MhLT LoansDiebursemente 3.5 1.5 2.9 3.6 l 1 8.2 10.0 11.9 13.0 15.4 20.0-REpay henta __-1.2 -0.3 ' -0.3 -0.5 -u.4 -0.4 -0.4 -0.4 -0.4 -0.6 8.4Net 5D socnts 2.3 1.2 2.6 3.1 5.7 7.8 9.6 11.5 13.4 14.8 21.0

Other M&LT LoansOieborsfeuoto

Act. 1 EotitetdCapitol Transactions c.e.i. 1.8 4.7 -0.4 6.9 TM94 7 193 7Change in Net Ress-eec 0.8 8.1 1.1 6.5 l,.6 DEEb AND DEBT SERVICE

GRANT AND LOAN DOMMITMN8fS Public Debt Out. & Diobured .EING Up DATED:Official Oracto & Orant-like Intareet on Public Debt

Repaymenta on Public DebtPublic M81 Loano Total Public Debt Service

IbRD Other Debt Service (net)IDA 1.9 1.6 2.3 2.4 0.4 Total Debt Service (net)OtherOther Multilateral (AfDB) 0.6 us-don no Roqret EBringe (S)Govercmecto (UK) 3.5 4.8 7.4 9.4 6.6Suppliera Public Debt ServiceFinancial Institutions Total Debt Servicelond. TDoSLirent Co-eet. Inc.

Public Loans n.e.i.Total Public MhLT Loans Average Terse of Public Debt

Actual Debt Oettading on D. 31. IOt. ae S Prior Tear DO&DElbTERdAL DiET Dibrsed Daly Percent Ancrt. as 9 Priar Teer DO&DWorld Banj

IDA IR01 Debt Out. & Diebur-edOther Multilateral c ae S Public Debt ODGoveronecto

" so 9 Public Debt Se-vinesuppliersFinancial lostitutiono IDA Debt Out. & DisbureedBSnds " as 9 Publlc Debt ODPublic Debts c.e.i " as 9 Public Debt SoricseT.tal Public M&LT Debt

Other M&LT DebtsShort-ten Debt (dieb. srly)

.nt applicable a staff eeticste

..ot nvai able - nil or nagligible

.nt available separately -- lees then half thebut incladed in Loitn seallest -mit ehocrn

ANNEX IIPage 1

THE STATUS OF BANK GROUP OPERATIONS IN THE GAMBIA

A. Statement of IDA credits (as of November 30, 1975)

Credit Amount (US$ million)

Number Year Borrower Purpose IDA Undisbursed

187-GM 1970 Republic of ImprovementThe Gambia Port of Banjul 2.1 0

333-GM 1972 AgricultureDevelopment 1.3 0.2

187-GM /1 1974 ImprovementPort of Banjul 2.4 1.1

Total 5.8 /2 1.3

/1 Supplementary Credit./2 Net of exchange adjustments.

ANNEX IIPage 2

B. Projects in Execution

CR. No. 187 Banjul (formerly Bathurst) Port Project; US$2.1 MillionCredit of May 26, 1970; Effective Date: August 14, 1970;Fully disbursedSupplementary Credit of US$2.4 Million of April 1, 1974;Closing Date: December 31, 1975

This project consists mainly of construction of the replacement ofan old berth and the repair of an existing wharf. It also provides forpurchase of a dredger and other equipment, and for engineering and consultingservices.

The project experienced a cost overrun on civil works, explainedby the fact that (a) appraisal was based on preliminary engineering; in thecourse of completing final engineering, quantities needed had to be increased;and (b) there was a sharp increase in the cost of building material betweenthe times of appraisal and tenders.

On March 26, 1974, the Board approved a supplementary IDA Credit ofUS$2.4 million to finance the cost overrun. Total project cost has increasedfrom US$2.4 million to US$5.3 million; correspondingly, IDA financing hasincreased from US$2.1 million to US$4.5 million.

The Project is now progressing satisfactorily and nearing completion.

CR. No. 333 Agricultural Development Project; US$1.3 MillionCredit of September 29, 1972; Effective Date: April 20, 1973;Closing Date: June 30, 1976

Agriculture is the principal economic activity in The Gambia, pro-viding about 85 percent of total employment and accounting for about 60 percentof GDP and 90 percent of the country's exports. This project supports Govern-ment's efforts to diversify output, reduce dependence on groundnuts, andincrease productivity in the rural sector. The project has developed irrigatedrice production along The Gambia River. It is making satisfactory progressand is estimated to have provided 1,500 families with an additional 5,000 tonsof rice p.a. (about 12 percent of the national consumption requirements). Afollow-up integrated agricultural development project has been prepared andwas appraised in November 1975.

ANNEX IIIPage 1

The Gambia

Infrastructure and Tourism Project

Credit and Project Summary

Borrower: Republic of The Gambia

Beneficiary: The Government of The Gambia and The GambiaUtilities Corporation (GUC)

Amount: US$4.0 million

Terms: Standard

Co-lenders: The Federal Republic of Germany, through theKreditanstalt fuer Wiederaufbau, and the

African Development Bank

ProjectDescription: Components Primarily Related To

Tourism Infrastructure

(a) extension of an access road to the tourism

area and construction of secondary roadsand paths between the resort sites andwithin the adjacent villages;

(b) extension of telecommunications facilitiesto the resort sites and adjacent villages;

(c) construction of a sewerage system to servethe resort sites consisting of a collectionsys:tem, pumping station and stabilizationponds;

(d) construction of public facilities and marketstanids for the sale of local handicrafts,fruit, and other goods at the resort sites;

(e) establishment of a hotel training school andfacilities including the construction ofclassrooms, equipment, and the provisionof funds for technical assistance;

(f) establishment of a food storage and market-ing program to increase the amount of locallyproduced food purchased by hotels;

ANNEX IIIPage 2

(g) funds for the project management unit,a program of tourism investment promotion,and two studies, one on the social, economicand fiscal impact of the anticipated tourismdevelopment and one on the pcqsibility ofusing groundnut shells as an alternative toimported oil for generating elec.ric power.

Components Primarily Related ToPublic Utilities Development

(a) expansion and improvement of the- electricpower and water supply systems in theBanjul/Kombo St. Mary area including theresDrt sites and adjacent villages;

(b) equipment for converting existiTrg electri-city generators to use heavy fucl oil andconatruction of a fuel storage reservoirand facilities to pump heavy fuesl from theresoervoir to GUC's generators;

(c) conA;ulting services and technical assistanceto strengthen GUC.

Estimated Cost:

The estimated cost of the project, net of taxes, is US$11.3 mil-lion with a foreign exchange component of US$8.8 million. Details are givenbelow:

ANNEX TIIPage 3

Local Foreign Total(US$'000 Equivalent)

A. Water Supply 517 1,905 2,422

B. Electricity 310 1,568 1,878

C. Heavy Fuel Adaptation 27 508 535

D. Telecommunications 8 100 108

E. Roads 257 692 949

F. Sewerage & Solid Waste45Disposal 131 326 457

G. Public Beach Facilities

and Shopping Areas 31 77 108

H. Hotel Training School 95 131 226

I. Food Storage and

Marketing 128 369 497

J. Project Unit 99 207 306

K. Studies and TechnicalAssistance 72 284 356

L. Investment Promotion 10 101 111

Sub-total 1,685 6,268 7,953

M. Contingencies 794 2,582 3,376

Total 2,479 8,850 11,329

(rounded figures) (2,500) (8,800) (11,300)

ANNEX IIIPage 4

Financing Plan:

(US$ million equivalent)

Locfal Foreign Total

ADB - 2.1 2.1

KfW 0.4 2.7 3.1

IDA 4.0 4.0

Government 2.1 - 2.1

Total 2.5 8.8 11.3

Estimated Disbursement:

(US$ thousands)

FY76 FY77 FY78 FY79 FY80 FY81 Total

IDA Credit: Annual 47 1030 1719 812 328 64 4000

Cumulative 47 1077 2796 3608 3936 4000 4000

Procurement Arrangements:

The procurement of equipment financed under the proposed credit,with the exception of those items which cannot be combined into contracts ofUS$50,000 and over, would be through international competitive bidding inaccordance with IDA guidelines. Civil works contracts for roads and seweragewhich can be combined into contracts of US$100,000 and over would be let onthe basis of competitive bidding, advertised locally, and awarded in accord-ance with local procedures which are satisfactory to the Association. Civilworks contracts could be tendered either individually or combined intobidding groups, at the bidder's option, Foreign firms would be eligible tobid and it is expected that firms established in Senegal would activelycompete. GUC or the Public Works Department (PWD) would undertake other civilworks on force account or contract for them locally.

Consultants:

Total consultants' services would amount to 350 man-months.

Rate of Return:

Tourism component: 15.4%(including airport: 12.1%)

Electricity and Water Supply: respectively 7% and 2%

Appraisal Report:

Report No. 844a-GM.

THE GAMBIAA T Z A NV / C 'oe INFRASTRUCTURE AND TOURISM

PROJECTTOURISM DEVELOPMENT

O C E A N ResResort Sites

>/ \abLabor Support Area

FAJA~~A ___________ ~. Project Roads

. ... . . . Foot and Bicycle Paths

~:UssALOW BEACH 1KVLnKOTU STRAND HOTEL O _KV Line

A U 33/1 1KV Substation

'KOTL\ * 11/0.4KV Substations

....... > ,yo 5 \ ~~~~~~~~~~~~~~~~~~Water Mains

Water Tower

/ &~ " n STABILIZATION Sr~&8~ /\ Sewage Pipeline

KOTU POINT wg R <+tt _~~~~~~~~~~~POOND ' \Sewage Pumping StatiorisKOTU POINT), . -Existing Roads

, . > ;| , ̂/ \ ~~~~~~~~~~~~~~~~- Future Development Roads

KOTU BEACH .34 / -<U KOTA KN A_ KN BANJ*L

. \ \C/ e~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-UNDUMt 'I1

ALTERNATIVE T rH E G A M B I ASTABILIZATION POND\ \/|

w 0 'O 000 1500 BAKOTI, :OS S E N, G A L

_CO0/17/.tn / 1 : METER ,:,iz. .\_

O / ~~~~~~~~~~~~~~~~rO K()I9KU.IANG 8 t;1. ;t tIZ' ( X.S I.

IBREFEBRU

THE GAMBIAINFRASTRUCTURE AND TOURISM PROJECT

THE PROJECT AREAPROJECT AREA FUTURE DEVELOPMENT

Li.JResort Sites- IHW

Labor Support Area

Main Roads KOTU STRAND j

Secondary Roads - -. Foot and Bicycle Paths

0 33/11 kV Substations KOTU POINT

Water Mains

Existing Villages 0KOTU BANJHExisting Main Roads/

Existing Secondary Roads

- - District Boundary Pll_...... .. o..o Divisional Boundary .. FOOD,

International Boundaries - COMPLEX

-24---- Contours in Meters (Approximate) > kv iinding

KILOMETERS

B 9UFUT ;-;IGIOfT S reh-

pi S 1 , t gfA A/ ~~~~~~~~~~~~W¢LINGARA ' ...... >,...../.1~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~C

. i . ~~~~ | \ 0 /> ~~~~S<, / 7\ r t .Ew . e ~~~~~~L AMIN ) SOUTH BRUFUT

J~ cZ\ / FIi

( K~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

*^e / *<s. I . . .s~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~h ranaC ta

-mpty -nd--met o-

/odd a-k a-d In 'fiea

\MAUI

f~~~~

0 ['A K4 SENEGAL

/~ -in-…- JIR V-N A7/ | ~t~ IL-------___ | _ ,;r~ BISSAJ ,,S GUIr