The World Bank FOR OFFICIAL USE ONLY REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN

Transcription

1 Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY FILW MUX Report No. P-2618-MOR Public Disclosure Authorized Public Disclosure Authorized REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE KINGDOM OF MOROCCO FOR A VEGETABLE PRODUCTION AND MARKETING PROJECT Public Disclosure Authorized August 22, 1979 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents n,ay not otherwise be disclosed without World Bank authorization.

2 Currency Equivalents Currency Unit: Moroccan Dirham (DH) US$1.00 = DH 4.0 DH 1.00 = US$0.25 Fiscal Year: January 1 - December 31 ABBREVIATIONS BNDE CNCA EC ERR FAO/CP FRR MARA MEPN OED OCE SASMA Banque Nationale pour le D6veloppement Economique (Moroccan Industrial Development Bank) Caisse Nationale de Credit Agricole (National Agricultural Credit Bank) European Community Economic Rate of Return Food and Agriculture Organization/Cooperative Programme Financial Rate of Return Ministare de l'agriculture et de la REforme Agraire (Ministry of Agriculture and Agrarian Reform) Ministare de l'equipement et de la Promotion Nationale (Ministry of Public Works) Operations Evaluation Department Office de Commercialisation et d'exportation (National Marketing and Export Agency) Societe Agricole de Services au Maroc

3 KINGDOM OF MOROCCO FOR OFFICIAL USE ONLY VEGETABLE PRODUCTION AND MARKETING PROJECT LOAN AND PROJECT SUMMARY Borrower: Amount: Terms: On-Lending Terms: Project Description: The Kingdom of Morocco. $58 million. Amortization 15 years including four years of grace at 7.9 percent interest per annum. The Government would on-lend $50.0 million to the Caisse Nationale de Credit Agricole (CNCA) for 14 years, including 2 years of grace, at the same interest rate as the Bank loan to finance long and medium-term farm investments and incremental short-term production costs and $2.8 million to the Office de Commercialisation et d'exportation (OCE) for 14 years, including 2 years of grace at 9 percent interest to finance vegetable quality control centers, two small producer packing stations, seedling greenhouses and short term consultants. The balance would be retained by the Government to help finance civil works and equipment for the research, demonstration and training, the agricultural extension services, the rural feeder roads and the port storage facility components, as well as for the hydrogeological survey and consulting services for the technical assistance program. The proposed project would constitute the first phase of Morocco's development plan ( ) for off-season vegetables for export. Out of about 18,000 hectares planted in off-season vegetables, the proposed project would cover about 9,000 hectares, the production area destined for exports. It would be implemented over four years and would aim at (i) doubling Morocco's exports of off-season vegetables by introducing modern prodluction techniques, including greenhouse technology and highyielding hybrids, (ii) strengthening subsectora1 production planning and monitoring, and (iii) establishing a separate marketing structure for off-season vegetables. It would also seek to diversify vegetable exports. At full development, the project would generate incremental foreign exchange earnings of $85 million annually, equivalent to about 26 percent of Morocco's agricultural exports in It would benefit about 8,000 farm families and employ the equivalent of an additional 16,000 full-time workers at an average cost of $6,000, considerably below the cost per job in small-scale industry. Project risks are relatively low as most costs are divisible and cropping decisions are taken annually by This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

4 - ii - farmers. The major risk relates to marketing uncertainties where the possibility of substitution between crops limits this risk. In addition, the project exhibits a low sensitivity to changes in size. Project Cost Estimates: US$ million Local Foreign Total On-farm investment Incremental production costs Agricultural support services Marketing services Feeder roads Technical assistance and consultants Subtotal Physical contingencies Price contingencies Total Of which taxes Financing Plan: US$ million Benefi- Govern- Item IBRD OCE CNCA ciaries ment Total On-farm investments Incremental production costs Agricultural support services Marketing services Feeder roads Technical assistance and consultants Total Estimated US$ million Disbursements: CY79 CY80 CY81 CY82 CY83 CY84 Annual Cumulative Rate of Return: Apprdisal Report: Economic Rate of Return: 46 percent. Staff Appraisal Report of the Vegetable Production and Marketing Project No MOR, dated August 16, 1979.

5 REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE IBRD TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE KINGDOM OF MOROCCO FOR A VEGETABLE PRODUCTION AND MARKETING PROJECT 1. I submit the following report and recommendation on a proposed loan to the Kingdom of Morocco for the equivalent of US$58 million to help finance a Vegetable Production and Marketing Project. The loan would have a term of 15 years, including 4 years of grace, with interest at 7.9 percent per annum. The Government would onlend US$50.0 million equivalent to the Caisse Nationale de Credit Agricole (CNCA) for 14 years, including 2 years of grace, at the same interest rate as the Bank loan to finance long and medium-term farm investments and incremental short-term production costs, and US$2.8 million equivalent to the Office de Commercialisation et d'exportation (OCE) for 14 years, including 2 years of grace, at 9 percent interest for control centers, two small producer packing stations, seedling greenhouses and short term consultants. PART I - THE ECONOMY I/ 2. A report entitled "Country Economic Memorandum on Morocco" (1473- MOR) was distributed to the Executive Directors in June An economic mission which visited Morocco in February/March 1978 was followed by a basic economic mission in November A basic economic report is under preparation; preliminary findings and conclusions of these missions are reflected in the following paragraphs. An updating mission is scheduled for September Country Data Sheets are attached as Annex I. Recent Developments 3. In 1977, Morocco completed the return towards a constitutional monarchy. Having marshalled a strong national consensus over the Western Sahara issue, King Hassan II called municipal, provincial and national elections between November 1976 and April Opposition parties with platforms stressing social reform scored strongly in municipal elections in the larger cities, while at the provincial level, rural constituents supported Government candidates, who eventually obtained a majority of 141 seats out of 264 in the National Assembly. With the Government formed in October 1977, both the Istiqlal party which had been in the opposition since 1963, and the! Mouvement Populaire whose main support is in the Berber population returned to political responsibility. The Cabinet was appointed with the mandate to prepare and implement economic austerity measures, the first of which were introduced in the 1978 Budget Law, and to pursue the social development objectives set out in the Development Plan. A new Cabinet formed in Marchl 1979 is expected to pursue the same policies. 1/ This Part is identical to paragraphs 2 to 16 of the President"'s Report No. P-2567-MOR on a Loan for a Second Water Supply Project, dated May 24, 1979, approved on June 11, 1979.

6 Morocco's economic and financial situation became increasingly unbalanced towards the end of the Plan. Rapid growth of investments and imports, carried over from when phosphate export revenues reached an all-time high, and despite some Government restrictions, did not slow down, while the world demand for Morocco's main exports, especially phosphate, recovered only moderately. At the same time, efforts to increase budgetary savings were insufficient to meet the continued increase in investment and military expenditures. As a result, in 1977 Morocco faced again a large resource gap (21 percent of GDP) and overall budget deficit (19 percent of GDP). To cover these, it sharply increased external borrowing to $1.9 billion (commitments), from $909 million in 1976 and $780 million in 1975; most were from commercial sources. Despite these borrowings, the country's net foreign assets stayed at a low level (1.2 months of 1977 imports by year's end). On the domestic side, external borrowings fueled monetary expansion which remained rapid in 1977; consumer prices rose 12.5 percent over 1976 compared to about 8 percent in the previous 2 years. 5. By and large, the new Government has succeeded in regaining control over the excessive increases in investment and external borrowing experienced towards the end of the Plan. Investment has since been reduced by an estimated 25 percent in real terms, and so has external borrowing which at $1.3 billion of new commitments was, however, still large and mostly on commercial terms. The Government has achieved these improvements through budgetary austerity, including severe cuts in public investment, restraint in current spending and some tax increases; it applied selective import restrictions and controls on private credit preserving as much as possible the growth momentum of private sector output and exports. A good agricultural crop in 1978 helped sustain growth, despite a sharp decline in construction activity largely resulting from cuts in public investment plans; overall, GDP grew by an estimated 4 percent in real terms in The Government will have to pursue austerity policies for a while, considering the continued excessive resource gaps and low exports and savings which cannot be increased quickly for reasons largely beyond the Government's control. Instead of the Plan, the Government has introduced a threeyear interim plan ( ) which was approved by Parliament in December 1978, together with the 1979 Budget Law. Its main objectives are to further reduce the budget and current balance of payments deficits, and to concentrate available resources (after meeting defense requirements) on productive projects, education and health, especially insofar as these benefit the neediest population groups. Implementation of major public projects not meeting these criteria has been postponed, while the measures designed to preserve growth in the private sector have been strengthened. The Government agreed with the IMF on a short-term financial rehabilitation program for This program calls for continued limitation of budgetary expenditures, domestic credit expansion and new external borrowing, while maintaining selective import restrictions and credit controls favoring productive private activities. It is aimed at reducing the overall budget deficit by 15 percent, and narrowing the current balance of payments deficit by more than 30 percent. Assuming harvests are equal to those of 1978 and phosphate exports increase by 6 percent in quantity and 7 percent in value, real GDP growth in 1979 again may still not exceed 4 percent. Gross official reserves would stay around 1.5 months of imports.

7 While the interim measures may be effective in re-balancing the economy, because of the short-term constraints on exports and savings, t:hey might cause a rise in social pressures. The Government is therefore anxious to resume the more dynamic social policy stance which characterized Moroccan development during the Plan. Preparation of the Plan has begun and attention is being given to long-term reforms which are needed if an early resumption of more rapid economic and social progress is to be achieved. Economic Development Issues and Prospects 8. Bank projections summarized in Annex I reflect the Governmzent's keen concern to avoid a liquidity crisis in the next two to three years. They assume sharp policy adjustments to keep the economy on a financially viable growth path over the long run, but also reflect the desire to maintain adequate GDP and employment growth during the interim period, and to achieve further progress towards the country's social objectives. The projections show that investment and GDP growth will have to be curtailed for the next two to three years, given the constraints on savings and exports. In this period, Morocco will need substantial capital transfers from abroad on terms as favorable as possible to sustain the project investment and GDP growth. Beyond 1982, export prospects should enable Morocco to resume more rapid growth of investments, output and employment while progressively reducing the relative burden of debt and debt service. 9. Following the large windfalls in foreign exchange and domtestic savings caused by high phosphate prices in , the investment target was raised to meet cost increases, permit some real expansion of original investment programs, and undertake large capital-intensive projects geared to import substitution (in particular sugar, chemicals, shipping and steel). Thus the GDP growth target for was nearly met, and investment rose to nearly 32 percent of GDP in 1977 from less than 14 percent in In the process, Morocco built up its capacity to prepare and implement projects not. only in traditional sectors such as irrigation, import-substitution industries and physical infrastructure, but also in new and more difficult sectors such as rainfed and small-scale agriculture, export industries, and socially-oriented programs. There is little doubt that Morocco can achieve the investment levels assumed in the Bank projections, the main constraints being domestic savings and foreign exchange availability. 10. Domestic savings have been falling in relation to GDP afi:er the brief increase during the phosphate windfall years, mainly due to low public savings of only 4.7 percent of GDP in Successful efforts to raise public revenues to 28 percent of GDP in 1977 were offset by increases in current spending, partly for education and health, but particularly for price subsidies and military expenses. Tax reform measures (which are being prepared with IMF assistance) and unpopular price policy decisions, such as reduction of subsidies to urban consumers, farmers and industrial investors, will be required to increase public savings. Interest rate adjustments to reflect changes in the rate of domestic price inflation would also be called for.

8 During the Plan period, exports rose by less than 2 percent p.a. in real terms (the Plan target was 10 percent). This lackluster performance was largely due to weak external demand for Morocco's main export products since 1974, especially phosphate, other minerals and agricultural products. Moreover, with some exceptions, such as textiles, export production and marketing efforts were not sufficient, and new markets were not aggressively sought; Morocco continued to depend on demand from the EEC, especially France. Yet, it has considerable export potential if only products and markets were diversified. Programs designed to boost foreign exchange earnings are now under preparation particularly for phosphate and its derivatives, fresh and processed foodstuffs, and tourism. With regard to phosphate, for example, Morocco and the USSR signed agreements in March 1978 under which Morocco will export phosphate rock and phosphoric acid for the next 30 years for possibly up to 10 million tons per year by ; in return, the USSR will lend Morocco up to $2 billion on favorable terms to develop its phosphate export capacity and will export various commodities and goods to Morocco, including crude oil. These agreements substantially improve Morocco's longterm prospects for phosphate exports. 12. While the emphasis on completion of high-return projects will have to continue, Morocco should shift away from highly capital-intensive, import substitution investments, as well as from some ambitious programs for physical infrastructure. This would call for improvements in policy planning and investment programming. Consultants are currently completing a major study on industrial investment strategy, which should facilitate better investment selection. A changed investment pattern should reduce the external resource gap, and also contribute to higher growth and employment at lower investment and import costs than in recent years. Social Development Strategy 13. Comparatively slow economic growth and employment creation up to the early 1970's were accompanied by widening income disparities and a decline in real consumption for the weaker sections of Morocco's population. As a major objective, the Plan set out to reverse these trends. The Government's strategy since 1973 has emphasized: (i) acceleration of employment creation; (ii) measures aimed at reducing income disparities; and (iii) specific investment programs to benefit the least favored population groups. 14 Progress has been made towards these objectives, as witnessed by the increased expenditures for social sectors (from DH 1.3 billion in 1972 to DH 3.7 billion in 1977). However, the institutions created to meet social sector objectives are in many cases still fragile. Understaffing, weak policy analysis and inadequate program formulation are common. As a result, public programs to improve productivity, collective amenities and social services are reaching relatively small proportions of the population, especially in rural areas. In addition, during the period of financial stringency ahead, Morocco will not be able to sustain the current level of expenditures in socially-oriented sectors, and cuts have been made as part of the measures to re-balance the economy.

9 15. With the population growth rate now at about 3 percent, pressure to provide adequate social services will rise. Despite short-term financial constraints, efforts will be needed to limit such growth. Consequently, strengthening health and family planning services is now an integral part of the Government's social objectives. External Debt and Debt Service 16. Morocco sharply increased external borrowings after (para. 4). Nearly all of the increase came from Arab and commercial sources. With a hardening of terms on new commitments, average maturity dropped from 19 to 10 years and average interest rose from 5 to 7.5 percent between 1974 and Morocco also drew on the IMF automatic credit facilities in early 1976, and obtained about $70 million in IMF compensatory financing in August ]L978. From the low levels in , Morocco's external debt has risen rapidly to an estimated $4.0 billion (disbursed only) at the end of 1978, and in that year debt service amounted to $481 million (18 percent of exports and workers' remittances). As a result of recent and projected borrowings, debt and debt service may be expected to increase further, and debt service may exceed 25 percent of exports and workers' remittances by , and decline progressively thereafter. The country's net foreign assets would remain al: a relatively low level. Because of the expected upswing in debt service, external debt management has become more restrictive and selective since If debt service is to stay manageable, Morocco will have to continue this policy over the next few years. Additional commercial borrowing should be limited, and efforts should be increased to seek loans on softer terms. Yet, external borrowing needs would be sizeable. Beyond , however, the situation should progressively improve with the Government firmly controlling domestic demand and with good long-term prospects for exports and, in particular, with assured sales of phosphate rock and derivatives. Morocco should therefore be considered creditworthy for further Bank lending. 17. Loan commitments from multilateral and bilateral official sources to Morocco rose from $221 million in 1975 to $296 million in 1976, and dropped from $831 million in 1977 to $370 million in Major sources of aid were France, Saudi Arabia, the UAE, the U.S., Germany and the Bank Group. At the end of 1978, the Bank Group's share in Morocco's outstanding and disbursed external public debt was 11.2 percent. The share of the Bank Group in debt service was 24 percent in 1976 and declined to 18 percent in 1977, and 9.5 percent in By 1983 the Bank Group's shares in debt outstanding and in debt service are expected to be about 25 percent and 12 percent respectively. PART II - BANK GROUP OPERATIONS IN MOROCCO 18. Bank and IDA lending to Morocco has supported 41 projects, financing a total of $1,267.9 million (net of cancellations), of which $1,026 million has been lent since the beginning of FY73. IDA credits, totalling $50 million, have been made available for five projects. A Third Window loan for $25 million for the third education project was approved in March IFC

10 - 6 - investments have amounted to $27.4 million ($25.3 million after cancellations, terminations, repayments and sales). Annex II contains a summary statement of Bank loans, IDA credits and IFC investments as of July 31, 1979, and notes on the execution of ongoing IBRD/IDA projects. In some cases, delays in project implementation have been caused by management difficulties, and in 1974 cost overruns increased due to the upsurge in investment activity in Morocco and the acceleration of inflation. Overall performance in project execution has since improved and remains satisfactory. Total disbursements as of December 31, 1978, amounted to 72 percent of original appraisal forecasts and to 75 percent of revised forecasts. 19. Past Bank Group lending has been concentrated in the agricultural and industrial sectors, which have accounted for 24 and 29 percent respectively of total net commitments; the balance is represented by utilities (23 percent), education (12 percent), tourism (6 percent), roads (4 percent), and urban development (2 percent). Apart from the transfer of resources to Morocco (Bank Group gross disbursements amounted to 5.5 percent of total fixed investment in ), the main objectives of lending were to foster and strengthen development institutions, provide technical assistance especially for project preparation, and increase productive capacity, in order to improve the balance of payments. 20. While these objectives remain, greater emphasis is being given to prepare projects that support the Government's policy of fostering social development and improving income distribution. An increasing share of Bank Group lending will be devoted to projects directly or indirectly developing the productive capacity of the lowest urban and rural income groups and meeting their basic needs, including, possibly, Bank participation in the Government's program for promoting integrated regional development, which is under discussion. 21. Past lending for agriculture has supported irrigation development, credit and, starting in FY1975, improvement in the productivity of rainfed farming. Continued selective lending for irrigation is envisaged but emphasis will be increasingly given to support small farmers and shepherds and the development of rainfed areas. The Fes-Karia-Tissa Agriculture Project, approved in June 1978, directly addresses these objectives in the favorable cereal producing zone. An integrated rural development project, including livestock/forestry development, is under preparation in a rainfed zone in northern Morocco, as is an extensive livestock project in Central Morocco. A fourth line of credit to CNCA was recently approved. 22. Projects in industry and tourism have had as key objectives increased foreign exchange earnings or savings and the improvement of sectoral policies, which have taken on increased importance in view of the country's short-term resource constraints. The eighth loan to Banque Nationale pour le Developpement Economique (BNDE) which was approved in 1977, included a pilot smallscale industry component to promote labor intensive investments. This pilot effort led to the recently approved Integrated Project for Small Scale Industry Development. The loan to Maroc Phosphore made in 1978 will help increase Morc-co's foreign exchange earnings. Continued lending for industry through

11 the BNDE is contemplated as well as further lending to Credit Immobilier et Hotelier (CIH) for tourism development. 23. Previous lending for utilities has consisted of two loans for water supply, two loans for power generation, a loan for village electrification and an engineering loan for the preparation of a sewerage project for Casablanca. Additional projects designed to assist low-income groups are under preparation, including a water distribution and sewerage project in Agadir. 24. Education continues to need attention to ensure Morocco's manpower development. Two credits and a loan have been made to develop secondary education and teacher training, to improve technical and vocational training, and to expand facilities in rural areas. A fourth project with emphasis on technical education has been recently approved and preparation has begun on a fifth project focusing on vocational training. 25. The Rabat Urban Project (FY1978) was the first Bank-financed project in the urban sector. Preparation of a follow up project is nearing completion and would support the Government's program for slum upgrading and urban development through the provision of basic infrastructure, housing and social services and the creation of employment opportunities. PART III - THE AGRICULTURAL SECTOR AND HORTICULTURAL SUBSECTOR 26. Agricultural Sector Background. About 60 percent of Morocco's population of about 18 million live in rural areas. Since 1970, population growth in the rural sector has averaged 1.8 percent per annum compared with 2.9 percent growth overall, reflecting rural-urban migration. In 1977, agriculture contributed about 14 percent of GDP, employed about 40 percent of the labor force, and accounted for about 35 percent of total exports--a decline from figures for the early 1970s largely as a result of increased plhosphate production and exports. Out of a total land area of 50 million hecitares, 7.4 million have soils and moisture suitable for cropping and 20 million are in semi-arid or mountain regions suitable for grazing and forestry. About 5.8 million hectares are cultivated each year, with 4.5 million in cereals, 500,000 in pulses, 400,000 in fruit trees, 140,000 in vegetables, 60,000 in sugar beet, and the remainder in oilseeds, cotton and forage crops. Most of Morocco's rainfed areas are characterized by traditional agricultural practices which result in low crop yields and livestock productivity. Permanent irrigation covered 690,000 hectares. 27. Since 1965 agricultural output grew on average 2.4 percent per annum, with wide annual fluctuations due to climatic conditions. This growth was less than the increase in demand for foodstuffs caused by rapid urbanization and by income and population growth. The value of food imports increased on an average 21 percent annually, while the value of food exports grew at 6 percent. A generally adequate food supply was maintained by means of expanding agricultural imports and some switching of exportables to domestic consumption. However, increasing population pressures on cultivable land have

12 - 8 - led to a slow decline in per capita consumption levels and some nutritional deficiencies. Growth of output has been greatest for products for which the introduction of modern farming techniques has been accepted by farmers and prices set at attractive prices: sugar beet, sugar cane, milk and vegetables for processing. For other crops such as cereals and pulses where the Government has not yet been successful in modernizing farming practices, and for crops for which prices have been pegged at insufficiently remunerative levels-- oilseeds, cotton, maize--the Government has met with limited or no success. 28. The Interim Plan allocated to agriculture $963 million, 18 percent of planned investment, approximately the same percentage as during the Plan period. The intersectorial allocation of investments reflects the priority given to complete ongoing projects, mostly irrigation projects with considerable sunk costs: about 57 percent would go for irrigation and 16 percent for extension and rural development. A further $300 million equivalent would be lent for farm investment by the Caisse Nationale de Credit Agricole (CNCA). Agricultural Sector Issues 29. Until the late 1960s Morocco was consistently a net exporter of agricultural products. Since then, Government policies emphasizing import substitution and agricultural development in large irrigated perimeters coupled with a rapid growth in demand for foodstuffs have led to a constant deterioration of Morocco's agricultural balance of trade; traditionally exported products such as cereals, meat and certain fruits and vegetables were diverted to local markets. The Government is now committed to reversing this trend and has undertaken projects to increase production on traditionally farmed lands and to specifically promote production crops with strong export demand. The proposed project embodies the priority first phase program for off-season fresh produce, which offers the greatest potential for rapid growth of exports. 30. The Government purchases hard wheat and barley at official support prices and fixes prices for soft wheat, milk, most industrial crops, bread, sugar and vegetable oils. It also controls imports, foreign exchange transactions, interest rates, and the price of inputs such as fertilizer and high yielding seeds. Agrarian Reform Cooperatives and Farmers' Associations receive special subsidies. These price controls and subsidies are administratively cumbersome and inefficient: some agricultural prices have been kept artificially low, discouraging production and encouraging imports. The urban poor only benefit from a small percentage of consumer food subsidies while the wealthier farmers benefit most from agricultural input subsidies. The Government is studying this complex issue and an understanding has been reached that it would review the study's conclusions and recommendations with the Bank in the context of ongoing economic and sector discussions. The horticultural sector does not benefit from special agricultural subsidies and taxation on agricultural inputs generally exceeds the subsidies available to horticulturalists.

13 About 40 percent of the rural labor force is not permanently employed, and about 45 percent of farm families live at or below the absolute rural poverty level ($200 per capita in 1978). Despite a rise in the real average rural per capita income, there is evidence that population pressures have led to a decline in per capita income in mountain, forest, and arid areas where employment opportunities have not increased or emigration to other parts of Morocco or abroad has not been possible. Over the last four years, the Government has increasingly sought to reach the rural poor through its agricultural projects, including the Bank financed Fes-Karia-Tissa and Doukkala Irrigation Projects. Studies are progressing on a number of rainfed agriculture, extensive livestock and forestry projects, with a view to prep,aring them for Bank financing. 32. Land distribution is relatively skewed: about 75 percent of farm families own 5 hectares or less, accounting for 25 percent of agricultural land. These farms are for the most part below an economically viable size and suffer from excessive fragmentation. Morocco's 1.9 million farms are divided into 11.6 million parcels, many of which are too small to farm efficiently. Absentee landlord and tenancy arrangements afford tenants little security and consequently no incentive to improve the land. They have also unduly allocated agricultural credit in favor of large farms. A number of land reform measures are currently under study or being carried out on an experimental basis. A program for land consolidation on rainfed lands and for the creation of viable holdings on collective lands is being implemented in the Meknes Project. Given the labor intensive nature of vegetable production, land fragmentation would not adversely affect the proposed project. 33. Agricultural research is excessively theoretical and has developed in isolation from farm profitability considerations or production priorities. The extension service is encumbered with administrative tasks, employs agents with little practical farming experience, and lacks organization, materials, and a systematic method for extension. Moreover, the salary structure has become increasingly uncompetitive in attracting and retaining competent agents. These issues are addressed through the Bank supported Fes-Karia-Tissa Project. Coordination between agencies responsible for agricultural assistance has also improved. The organization of extension services in the horticultural subsector presents special features which are covered in para Direct taxation of the agricultural sector in Morocco has traditionally been maintained at very low levels. The present system institutes a progressive tax on the assessed value of each farm which, however, is based on outdated values of land and livestock. The Government is aware of the inadequacy of the present system and the desirability of substantially increasing the contribution of the agricultural sector to overall public reviews. Following a recently completed study of the fiscal system by the IMF, it is expected that the Government will introduce a tax reform legislation to Parliament in the autumn incorporating a major revision of agricultural taxes. This issue would be followed in the context of the ongoing macroeconomic dialogue between the Government and the Bank.

14 Horticultural Subsector 35. Morocco is a traditional producer and exporter of fruits, mostly citrus, and vegetables with about 70,000 hectares of orchards and 140,000 hectares planted to vegetables. The value of exports of fruits and vegetables ranks second only to phosphates. During the 1960's exports of citrus increased from about 350,000 to about 600,000 tons per annum. As a result of a major program to renew plantations during the 1970's, production and exports are expected to rise to 1.2 million and 720,000 tons respectively by 1980/81. Morocco is also a major producer and exporter of vegetables. About 20,000 hectares are planted for off-season production of which about 18,000 hectares in the Atlantic coastal area covered by the proposed project. Most of the production is grown under open field conditions. Total production in 1978 amounted to about 2.3 million tons of vegetables, of which about 500,000 tons during the November to April off-season. Exports, mostly tomatoes and potatoes, amounted to 200,000 tons in 1978, below the 275,000 ton average of the early 1970s. 36. The decline in Moroccan exports took place during a period of rapid increase in demand in the European markets for off-season produce, even though total imports of vegetables into member countries of the European Community (EC) stagnated as a result of measures taken to protect member countries' own production between May and October. These measures cut sharply into Morocco's traditional exports which were concentrated in late spring. Inadequate organization of the subsector, including an ineffective production programming, the absence of effective technical extension and inappropriate marketing practices have hindered efforts to get the large number of small farmers who produce the bulk of the vegetables to adapt their production to meet evolving market conditions and to keep abreast of technical developments in production. This contrasts with the relatively easy adaptation of citrus production which is typically produced on large, modern and efficiently-run farms. 37. As a result of the above trends, Morocco, which used to be France's almost exclusive supplier of off-season vegetables, has seen its market share decline to about 52 percent. For tomatoes, the drop in volume in exports to France was mostly compensated by a rapid expansion of sales to Germany. For other off-season vegetables, France remains the major market, and difficulties in marketing vegetables resulting in large part from an inappropriate marketing strategy, have led to a drop in exports from about 25,000 tons in 1972 to 13,000 tons in The proposed project directly addresses these issues. 38. The principal institutions involved in the horticultural subsector are the Ministry of Agriculture and Agrarian Reform (MARA), the Caisse Nationale de Cre'dit Agricole (CNCA) and the Office de Commercialisation et d'exportation (OCE). MARA has overall responsibility for the agricultural sector including provision of technical extension advice, carrying out agronomic research and supporting farmers' cooperatives. In the past MARA's efforts were principally directed to other products such as sugar and oilseeds. As a result, the horticultural subsector has been somewhat neglected and MARA has not developed a corps of extension agents with the specialized technical expe rtise.

15 CNCA, an autonomous Government-owned institution, is the principal source of finance for the agricultural sector. Six regional offices serve the project area and some 1,700 vegetable farmers, or about 15 percent, have borrowed from CNCA. A fourth line of credit to CNCA was approved in May 1979, which covered CNCA's medium and long-term lending program through August 1982, with the exception of investments included under the proposed project. In the past, CNCA has been active in supporting vegetable production. It has provided medium term credit for on-farm investments such as wells, pumps and irrigation equipment on standard conditions (70 percent of investment cost). An attempt to finance greenhouses under these conditions in 1978 failed as most farmers were unable to meet the 30 percent downpayment requirement. Short term credit to the horticultural sector is generally adequate to meet the working capital needs of traditional production under open field conditions. The present criteria are, however, insufficient to cover a reasonable proportion of production costs in the modern sector and have consequently hampered modernization efforts. This issue is directly addressed by the proposed project. 40. OCE was created in 1965 as an autonomous national marketing Board responsible for the export of agricultural products. Fruits and vegetables account for about 70 percent of the total. OCE's role includes supervision of packing and grading stations, quality control, shipment, and sales in foreign markets. Most of its 2000 staff are located in Casablanca and it also maintains an European office in Paris from which it directs its foreign sales. Operating costs are recovered through a 3.6 percent levy on the c.i.f. price of exports. During recent years OCE has become increasingly involved at the production level, both directly and through an affiliated company, the Societeo Agricole de Services au Maroc (SASMA) which is managed by members of fruit and vegetable growers' associations. OCE and SASMA work closely together to carry out applied research and to introduce, demonstrate and extend new production techniques, including hybrids and greenhouses. Their efforts were initially directed to large farmers receptive to following modern techniques; since 1978 they have also assisted small farmers grouped into cooperatives. SASMA's staff is qualified, efficient and highly motivated, thanks in part to a more favorable salary scale than applied in the public sector. OCE:'s performance in quality control has been effective, although at the price of a high rejection rate due to production problems. Its marketing performance for citrus has been generally successful. However a carrying over of these techniques for vegetables has proven inappropriate. The proposed project: would reinforce the extension effort and introduce a gradual but radical change in OCE's marketing policy for vegetables as well as strengthen its capacity to plan and monitor production. Bank Agricultural Sector Strategy 41. Over recent years, the Bank's strategy in the agricultural sector has supported the Government's objectives of increasing economic agricultural production to meet basic food needs and to work towards agricultural selfsufficiency, while placing increased emphasis on social aspecits, particularly the inclusion of the rural poor target group and a shift in investments from large scale irrigation towards rainfed agriculture. It also recognizes the

16 need to support highly productive export oriented projects as part of a national policy to promote exports. Within this framework, support of agricultural credit which finances a large percentage of directly productive farm investments figures importantly and should continue to do so; while irrigation and small scale agroindustry projects would also be supported in a manner which would develop their complementarity with rainfed farming. Performance Under Previous Bank Financed Agricultural Projects 42. Bank Group lending for agriculture in Morocco began in 1965 and to date 11 projects have been undertaken and supported by $343 million in Bank/ IDA funds ($24 million in IDA credits). They include five irrigation projects: Sidi Slimane (FY75, completed), Sebou I (FY70), Souss Groundwater (FY75), Doukkala I (FY76) and Doukkala II (FY77); four Agricultural Credit Projects (FY66, FY73, FY77 and FY79); an Agroindustries and Flood Control Project (Sebou II, FY74); and two Agricultural Development Projects focussing on rainfed agriculture in the Meknes (FY75) and Fes-Karia-Tissa (FY78) areas. Project performance to date is generally satisfactory although irrigation projects suffered initially from poor coordination between and within participating Ministries which resulted in delays in the construction and in acquisition of irrigation equipment. For the Meknes Project, the major issues, now resolved, have been the difficulties in establishing and delays in executing the land redistribution program, as well as insufficient coordination between the Project Authority and the Central Government. 43. The First and Second Agricultural Credit Projects (FY66 and FY73) have been audited by the Operations Evaluation Department (OED). The report on the first project attributed the project's mixed results principally to CNCA's shortage of qualified staff and Government's interference in CNCA's operations by directing it to lend to small farmers and by dissolving a State company receiving Bank financing without prior consultation with the Bank. It also reported that the most important achievement was the institutional development that took place. In its report on the Second Agricultural Credit Project, OED noted some discrepancies between project execution and the English language legal documents. It also calculated an economic rate of return to the project of about 20 percent, which it noted might have been higher had Morocco enjoyed an effective national agricultural extension service. PART IV - THE PROJECT 44. The Government of Morocco requested a Bank loan to help finance its development plan ( ) for off-season vegetables for export. The proposed project would constitute the first phase of the plan, to which it attaches a high priority. Out of about 18,000 hectares, planted in off-season vegetables, the proposed project would cover about 9,000 hectares, the area producing for export. It would be implemented over four years and aim at (i) doubling Morocco's exports of off-season vegetables by introducing modern production techniques, including greenhouse technology and high-yielding hybrids; (ii)

17 strengthening production planning and monitoring; and (iii) establishing a separate marketing structure for off-season vegetables. At full development the project would generate incremental foreign exchange earnings of $85 million annually, equivalent to about 8 percent of Morocco's total etxports in 1977 or 26 percent of its agricultural exports in The agricultural components would benefit about 8,000 farm families. The project overall would employ the equivalent of an additional 16,000 full-time workers at an average cost of $6,000, which compares favorably with the cost per job in small-scale industry. The project would seek to diversify Moroccan production while concentrating marketing efforts on the two principal European markets: France and Germany. 45. The proposed project was identified in early 1978 following the issuance of the development plan ( ) for off-season vegetables for export. Project preparation was carried out by the Government with the assistance of several FAO/CP and Bank missions. A Bank appraisal mission visited Morocco in January Negotiations for the proposed loan were held in Washington in July, The Moroccan delegation was led by Mr. Belkoura of the Prime Minister's office. An appraisal report of the Morocco: Vegetable Production and Marketing Project (No MOR) dated August 16, 1979 is being distributed separately. The main features of the loan and project are summarized in the Loan and Project Summary and in Annex III. Project Description 46. The project area consists of a narrow strip along the Atlantic coast between Kenitra and Agadir (Map No ) where climatic conditions are suitable for producing off-season vegetables. The project area falls into five regions and covers a total area of about 100,000 hectares, of which 31,000 hectares are planted to vegetables, including about 18,000 hectares to off-season vegetables. Soils are suitable throughout the project area. Good quality water is abundant in the Kenitra and Agadir regions. In the Casablanca, El Jadida and Safi regions known aquifers are fully exploited and some salinity problems have been encountered locally due to over pumping. In these areas, the proposed project, which aims at rationalizing and modernizing existing production, would restrict crops to varieties resistant to saline water. No increase in cultivated areas is foreseen, water conservation measures through improvement of irrigation systems would be introduced and a program of hydrogeological surveys would be carried out to determine the dynamics of water resources in these areas, monitor water quality and develop guidelines for the rational use of water resources. Almost all the land is privately owned and 83 percent of it is cultivated by the owner. Over 80 percent of the farms are smaller than 10 hectares. The area under vegetables is usually only a small fraction of the total farm size, averaging about 30 percent for all kinds of vegetables and 18 percent for off-season vegetables. Farms growing off-season vegetables are typically smaller than the average for the project area as the production process is more labor intensive. 47. The proposed project would include the following components:

18 (i) medium and long term on-farm investments for vegetable production, including (a) the construction of 1,000 hectares of production greenhouses and 10 hectares of seedling greenhouses; (b) provision of agricultural equipment on 9,000 hectares; and (c) soil disinfection and improved irrigation systems on 4,000 hectares of open fields. These investments would be financed through medium and long term loans to be provided by CNCA; (ii) incremental working capital to participating farmers to be financed through short term agricultural credit to be provided by CNCA; (iii) equipment, facilities and staffing to improve existing agricultural support services; (iv) construction or modernization and equipment of 42 packing stations, 12 quality control stations and a 6,000 m2 storage facility in the Port of Agadir to strengthen vegetable marketing services; (v) rehabilitation of 125 km, and construction of 125 km of feeder roads; and (vi) training, technical assistance and a hydrogeological survey. 48. Greenhouse technology was introduced to Morocco by OCE and SASMA in To date about 140 hectares of greenhouses have been constructed, mainly among the largest and most efficient vegetable growers. Yields and quality have been generally promising and confirm Morocco's considerable potential. Under the proposed project an additional 1000 hectares of unheated plastic tunnel greenhouses of an improved design would be constructed, of which about half would be equipped with drip irrigation systems. Over half the greenhouses would be located in the South where climatic conditions are most favorable to a large range of vegetables and soft fruit. The inclusion of greenhouse production would permit earlier and more precise timing of production, higher yields per hectare, better quality and protection against climatic risks. As such it would play an essential role in underpinning OCE's export strategy and permit OCE to enter marketing agreements with importers. It would also allow for a greater diversification of crops, including high-value crops which cannot be grown during the winter months in open field conditions. About 40 percent of the project's incremental production would come from greenhouses, representing about 15 percent of total Moroccan exports of offseason vegetables. The proposed project also includes the construction of 10 hectares of specially equipped greenhouses to produce seedling plants for sale to farmers. The first 3 hectares would be constructed by OCE at several locations within the project area. The subsequent 7 hectares would be carried out by local farmers and cooperatives and financed by CNCA. 49. Open field production, which would continue to provide the bulk of Morocco's exports, is constrained by poor agricultural practices and inappropriate choice of varieties. Failure to practice crop rotation has led to soil

19 infestation which, coupled with poor fertilization and pest control, has resulted in low yields and a high percentage of rejects. The project would seek to rehabilitate this sector through the introduction of diseaseresistant hybrid varieties, soil disinfection, provision of agricultural equipment, mostly sprayers and moto-cultivators, and strengthened extension services. It would also finance rehabilitation of farmers' water distribution system through the installation of plastic pipes. Replacement of pumps, rehabilitation of wells and provision of tractors would be financed by CNCA under the Bank's Fourth Agricultural project - Loan No MOR. 50. Since the working capital requirements of modern off-season vegetable production are very high, varying between three and seven times the requirements for traditional production, and since CNCA's resources, which cover the entire agricultural sector, would not permit it to provide the additional short-term credit required, the project would finance the incremental short-term credit requirements in the Project Area. Most of this increase is projected to take place during the execution period of the proposed project. Outside the project area, CNCA would continue to apply its present lending criteria which provide credit to cover a reasonable proportion of the working capital requirements of seasonal vegetable production destined for local markets. 51. The proposed project would provide infrastructure and equipment to strengthen agricultural extension services and farmers' cooperatives in the Project Area. Five development centers would be created and seven existing ones expanded and staffed by MARA and OCE/SASMA extension agents. Housing, vehicles and vehicle operating expenses for 32 additional MARA staff would also be provided. For OCE and SASMA agents, assurances were obtained that they would be provided with necessary transportation facilities and funds for their operating expenses (Section 2.08, draft Project Agreement with OCE). Three training, research and demonstration centers would be constructed, equipped and staffed to carry out applied research under both greenhouse and open field conditions and to demonstrate new production techniques. Each center would include a 0.8 hectare production greenhouse for demonstration purposes. The proposed project also calls for the creation of 10 intercooperative units to regroup the large number of small service cooperatives in the project area. For these the proposed project would include the construction of offices, storage space, workshops and milk collection centers. 52. Vegetable marketing services would be strengthened and extended. Ten packing stations with a 2,500 ton capacity would be constructed and equipped to handle incremental production. Thirty existing stations would be expanded and modernized. In order to handle the production of small farmers unable to join cooperatives, OCE would construct, equip and operate two 5,000 ton capacity packing stations. Twelve quality control stations would be constructed and operated by OCE in the principal production areas, thus enabling OCE to abandon its present practice of dockside control which involves unnecessary transport of goods failing to meet export standards and gives rise to unnecessary friction between OCE and the producers. A covered storage facility of about 6,000 m2 would be constructed at the Port of Agadir to handle the rapidly increasing fruit and vegetable production of the Souss- Massa region.

20 The proposed project would finance the rehabilitation of 125 km and the construction of 125 km of feeder roads, mostly in the Souss area near Agadir and the Oualidia region near El Jadida. It would also finance equipment for road maintenance which would be assured by MARA. The project includes about 86 man-months of consulting services at an average cost of $6,800 per man-month. Of these, about 74 man-months would be for vegetable production specialists to be attached to research, demonstration and training centers and 12 man-months in short-term consultancy to meet specific needs for marketing, monitoring and evaluation. Project Implementation 54. The proposed project would be implemented over four years starting September MARA would be responsible for overall project implementation. It would be primarily responsible for organizing and supporting farmers' cooperatives, for agricultural research and for the construction/rehabilitation and maintenance of feeder roads. It would also participate with OCE/SASMA in the extension and demonstration programs. CNCA would be responsible for providing credit and administering the Treasury Advance (para. 59) under the proposed project. OCE would be primarily responsible for marketing activities, control of packing stations, the purchase of greenhouses and hybrid seeds and for the initial production of seedlings. The Ministry of Equipment (Public Works - MEPN) would be responsible for construction and maintenance of the port storage facility and the hydrogeological survey. Project coordination would be entrusted to a National Coordinating Committee consisting of representatives of MARA, MEPN, OCE, SASMA and CNCA. It would meet at least every six months to define strategy, set production goals for each region and coordinate and monitor project activities. Regional Technical Committees would be established in each of the five major production areas consisting of the Provincial Director of MARA, and the provincial representatives of OCE, SASMA and CNCA. These committees would meet to review execution of production targets, quality requirements and delivery schedules for each crop in their region. They would organize extension work, determine input requirements, organize supply, monitor credit needs and carry out the research and training programs. They would also serve as liaison between OCE and the farmers in adjusting production to market conditions. The above six committees would be established by December 31, 1979 (Section 3.02, draft Loan Agreement). 55. The extension services under the proposed project would operate from 12 development centers and would have two main objectives: the organization of farmers into cooperatives and precooperative associations, and the provision of technical advice. MARA would be responsible for grouping about 5,000 small farmers into about 625 cooperative units of at least eight farmers each and assisting them in establishing cropping patterns, organizing input and equipment supply, filling out credit applications and fostering marketing contacts with OCE. MARA extension agents would also provide assistance to cooperatively-owned packing and grading stations. 56. Because of the close relationship between marketing and production on the one hand and the highly technical advice required for off-season vegetable production, about 85 technical advisors from OCE and SASMA would be

21 principally responsible for technical extension to farmers and the supervision of the greenhouse component which is expected to reach about 500 cooperatives grouping some 4,000 farmers and 400 individual farmers. Each technical advisor in the greenhouse program would serve 15 cooperatives or 20 individual farmers according to a fixed schedule of visits and each technical advisor in the open field program would be responsible for about 250 hectares. One day refresher courses would be held fortnightly for technical advisors at the research and demonstration centers and would stress the action to be taken during the coming fortnight. In addition, 10 supervisors would be appointed to backstop groups of 8-9 technical advisors, and would be required to spend 50 percent of their time with technical advisors in the field. They would also assure the link between the production level and the Regional Coordinating Committee, and would be responsible for providing estimates of the quantity, quality and scheduling of production in their areas. 57. Research, demonstration and training would be carried out in close cooperation between the research and extension services of MARA, OCE and SASMA on existing agronomic research stations in the project area and three demonstration and training centers to be constructed in their vicinity. Each station would be responsible for establishing and executing a region-specific applied research program covering greenhouse and open field production and addressing farmers' concerns and marketing requirements. The results of this program would subsequently be demonstrated and disseminated through the extension services. Two training programs would also be provided: (i) a five-day training session in basic greenhouse technology for first time applicants for greenhouses, and (ii) fortnightly training sessions for extension agents. The research, demonstration and training program for 1979/80 as well as proposals for staffing, management and operational arrangements (including an operational budget) would be prepared by MARA and OCE and submitted to the Bank by December 31, 1979 (Section 3.03, draft Loan Agreement). For subsequent years, the National Coordinating Committee would be responsible for preparing and supervising the execution of the research, training and demonstraticn activities. Specialized assistance in these fields would be provided by consultants who would be employed by December 31, 1980 on terms and conditions acceptable to the Bank (Section 3.07, draft Loan Agreement). 58. The accounting organization and audit system of CNCA, through which 86 percent of the Bank loan would be channelled, were reviewed under the CNCA IV project and were found satisfactory. The same procedures would be followed under the proposed project. Other government agencies and OCE would maintain separate accounts for project work which would be audited by the Mirnistry of Finance and forwarded to the Bank. The National Coordinating Committee would be responsible for preparing and sending to the Bank an annual progress report and for coordinating the preparation of a Project Completion Report. Lending Terms and Procedures 59. CNCA's lending procedures, interest rates and loan condit:lons were reviewed for the recently approved Fourth Agricultural Project (Loan No MOR) and found generally satisfactory. These conditions would also be adequate for the proposed project and would be maintained with the following

22 changes to take into account subsector specific conditions. Loans for vegetable production, in addition to meeting CNCA's creditworthiness criteria, would require a technical certification from OCE that the applicant is a vegetable farmer with the required expertise and that he is capable and has agreed to follow OCE's programming and the technical assistance to be provided under the project. As for investments in greenhouses, recent experience has shown that CNCA's requirements that the investor make a 30 percent downpayment from his own resources is beyond the means of all but the largest farmers given the high costs, risks and technicity of the investment. To develop greenhouse production at a rate which will make it possible for OCE to adopt the proposed marketing policies, promotional financing conditions raising the financing ratio to 90 percent would be applied under the project to farmers investing in greenhouses. In order to spread project benefits as widely as possible, the promotional financing would be limited to the first two hectares of greenhouses with the further understanding that 60 percent of the additional funds thus provided would be set aside for farmers owning less than 1/2 hectare of greenhouses. The typical greenhouse financing package meeting the above conditions would thus consist of a 7-year sub-loan from CNCA at 8.5 percent interest, including two years of grace, to finance 70 percent of the investment cost, and a two-year Treasury advance bearing 6 percent interest covering an additional 20 percent of investment costs. The Treasury advance would be administered and recovered by CNCA under terms of an agreement satisfactory to the Bank which would be entered into by the Treasury and CNCA before January 31, The conditions of greenhouse financing would be reviewed annually with the Bank (Section 3.01(c), draft Loan Agreement and Section 3.04, draft Project Agreement with CNCA). CNCA sub-loans for packing and grading stations would be processed following CNCA's standard agroindustry criteria and the first two applications for such packing stations would be submitted to the Bank for prior approval. Project Costs and Financing 60. Tables giving project costs and financing are presented in the Loan and Project Summary. The total project cost is estimated at $129.6 million, including $15.8 million in taxes and duties, of which $67.4 million or 52 percent would be in foreign exchange. These estimates include physical contingencies of 10 percent on equipment, civil works and on-farm investments and 5 percent for greenhouses, and price contingencies based on projected price inflation of 9 percent in 1979 and 8 percent thereafter, compared with 12.5 percent in 1977 and 9.1 percent in Total contingencies amount to 29 percent of baseline costs. The proposed Bank loan of $58 million would be for 15 years including 4 years of grace. It would finance about 51 percent of the project costs net of taxes. It would cover 86 percent of the project's foreign exchange component. The remaining project costs would be financed by OCE ($6.1 million), CNCA ($25.8 million), the Government ($17.2 million) and the beneficiaries ($22.5 million). The proposed loan would be made to the Kingdom of Morocco which would on-lend $50.0 million to CNCA to finance long and medium-term farm investments and incremental short-term production costs, and $2.8 million to OCE for control centers, two small producer stations, seedling greenhouses and short term consultants. The balance would be retained by Government to help finance civil works and equipment for the research, training and demonstration, the agricultural extension services, the

23 rural feeder roads and the port storage facility components, as well as for the hydrogeological survey and consulting services for the technical assistance program. The Government loan to CNCA would be for 14 years, including 2 years of grace at the same rate of interest as the Bank loan and its loan to OCE would be for 14 years, including 2 years of grace at 9 percent interest. The Government would enter into subsidiary loan agreements with OCE and CNCA on terms and conditions acceptable to the Bank by December 31, 1979 '(Section 3.01(c), draft Loan Agreement). Procurement 61. Contracts for farm inputs and farm equipment and machinery totalling about $14 million would not be suitable for bulk procurement as agricultural subborrowers would purchase them individually throughout the project execution period from well established local and foreign commercial channels. Suppliers of these goods are numerous in Morocco, competition is keen and prices competitive. For greenhouses (about $46 million), well established commercial channels do not exist in Morocco. To ensure standardization of equipment, lower prices and timely supplies, OCE, which prefinances this equipment, would procure it through international competition in accordance with procedures acceptable to the Bank and would submit tender documents, advertising procedures and a report on the evaluation of bids received to the Bank. Procurement for a large number of small contracts dispersed throughout the project area and totalling about $9.0 million for housing, buildings, vehicles and equipment for supporting services, as well as for the construction and rehabilitation of feeder roads, would be procured through local procedures already determined to be satisfactory to the Bank. Contracts totalling about $8.6 million for construction and installation of machinery for two small producers' packing stations, quality control centers, storage facilities and the hydrogeological surveys exceeding the equivalent of $300,000 and contracts for equipment exceeding $150,000 individually and $1.2 million in the aggregate would be procured following international competitive bidding (ICB) procedures in accordance with Bank guidelines. Civil works and equipment contracts not exceeding the above amounts would be procured through local competitive bidding procedures acceptable to the Bank. Contracts for civil works and equipment of cooperative packing stations totalling $6.4 million to be financed by CNCA would be procured by cooperatives through established commercial channels provided that (i) the cost of each individual contract for civil works and equipment does not exceed $300,000 and $150,000 respectively or (ii) the total cost of the investment does not exceed the equivalent of $1,250,000. Goods and works in excess of the amounts specified above would be procured following ICB procedures according to Bank guidelines. Disbursements 62. The Bank loan would be disbursed against 45 percent of expenditures for civil works and equipment; 45 percent of total expenditures for training and technical assistance; 50 percent of expenditures for the hydrogieological survey; 75 percent of medium and long term sub-loans extended by CNCA for on-farm investments, including greenhouses, irrigation and farm equipment; and 50 percent against annual increments in CNCA sub-loans for short-term

24 credit to participating farmers under the Project. For the credit component, the Bank would disburse against CNCA's statements of expenditures under the procedures applicable to the CNCA IV Project. Estimated annual and cumulative disbursements are given in the Loan and Project Summary. Production and Marketing 63. Morocco enjoys some basic advantages over its competitors in producing off'season vegetables. The climate is favorable for production during the off-season months (No,vember to April) without having recourse to heating; productloc; costs, particularly for labor and energy, are lower than those in the European countries; it enjoys a relative proximity compared to non-european competitorsj Moroccan products have a good reputation for quality. Despite the pncr performance of Moroccan vegetable exports in recent years, prospects are promising provided the production schedule is advanced into the off-season months when prices are highest and few competitors are able to supply European markets at competitive prices and provided the marketing channels for offsea-on vegetables are satisfactorily reorganized. 64. The proposed project, without significantly changing the total area under off-season vegetables, would diversify production and exports, placing greater emphasis on peppers, squash, green beans, strawberries and melons and introducing crops such as celery, lettuce, onions, cucumbers, etc. At full development in 1986 the area under tomatoes is expected to decrease by 15 percent to about 6,450 ha while production would increase from 228,000 tons to 338,000 tons, and exports from 94,500 to 243,700 tons reflecting a 56 percent increase in production per hectare and a 160 percent increase in exportable production per hectare under open field conditions. These figures are based on conservative yield estimates which have been exceeded by leading farmers in Morocco. Production of peppers and green beans would more than double to about 34,000 tons and 9,650 tons respectively and about 25,000 tons of other crops consisting principally of squash, strawberries, eggplants and melons are projected. 65. The major focus would be on the French and German markets, which have grown rapidly and presently absorb over 95 percent of Moroccan exports. Although the proposed project seeks to diversify Morocco's production, tomatoes would remain by far the largest crop. A detailed market analysis indicates that European imports between November and April have been growing at about 4 percent per annum for tomatoes and 10 to 25 percent per annum for other vegetables. This contrasts with a decline in seasonal imports (May to October) due to restrictive measures adopted by the EC to protect its own production during this period. Forecast growth in demand in Western Europe is sufficient to absorb the projected production increase without unduly affecting the market share of other exporting countries. Given the recognized superior quality of Moroccan tomatoes which can be delivered at very competitive prices, there is no reason to believe that Morocco would not be able to regain its previous market share for tomatoes and diversify into other crops, for which the prospects are brighter and returns better. 66. Morocco's major competitor in vegetable production is Spain. Its admission into the EC could have the effect of further shortening the period in which imports may freely enter EC markets. However, it is more likely

25 that Spain's admission, which would exempt it from EC restrictions during May-June and September-October would encourage Spanish farmers to concentrate production at this period when it would enjoy a clear competitive advantage over its EC competitors at the expense of production during the winter off-season, when costs are higher and its competitive advantage over non-ec producers less. 67. In order to take advantage of these potential markets, OCE would undertake a gradual but fundamental shift in marketing practices according to a program which would be reviewed annually with the Bank. Most importantly, OCE would change its marketing organization for vegetables in France. Starting with the most perishable and high-value products (e.g., strawberries, green beans) and then including larger volume items such as greenhouse tomatoes, the system of dockside auction sales, which has been successful for bulky and relatively non-perishable products such as citrus fruits, would be abandoned in favor of a separate commercial network of importers-distributors specializing in vegetables and having exclusive rights to annually determined quotas. These importers-distributors would be responsible to market Moroccan produce at prices above a floor price set periodically in consultation with OCE. A network of importers-distributors is being set up by OCE in France and will be operational by October 31, 1979 (Section 3.03, draft Project Agreement with OCE). This system is considered appropriate, has already been successfully implemented by OCE in Germany. It would bring OCE's marketing organization in line with the organization adopted by major competing countries exporting to Europe. The new arrangements would also increase OCE's influence over supply and demand factors and to associate it closely with the vegetable producers to permit effective planning and monitoring of production for export. This greater degree of control, especially over greenhouse production, would permit OCE to enter into marketing arrangements and enter into advance contracting with foreign purchasers. The proposed project also help improve information flows between producers and markets and vice-versa and strengthen packing and quality control. Project Benefits and Risks 68. At full development, expected in the seventh year, the net foreign exchange generated by the proposed project would amount to $85 million, equivalent to 8 percent of the value of Morocco's total exports in 1977 or 26 percent of its agricultural exports in It would accelerate economic growth and raise labor productivity by promoting cultivation of high-value crops that are labor intensive. It would also have considerable incluced effects through backward and forward linkages, which have not been ctuantified, and would directly employ the equivalent of an additional 16,000 full-time jobs at an average cost of $6,000 per job, of which about 10,000 jobs would be in vegetable production. About 8,000 farm families out of the 11,000 living in the project area would benefit directly from the proposed agricultural investments. These investments are not expected to reach a significant number of farmers in the rural poverty group, as they would focus on farmers with experience in producing off-season vegetables and water limitations preclude an increase in the area under irrigation. However, the project would create additional seasonal employment opportunities amounting to about 6,000 manyears annually in vegetable packing and grading, a number of which are expected

26 to benefit the rural poverty target group. Because of Morocco's traditionally low taxation of the agricultural sector (para. 34) recovery of benefits by Government is expected to be slight during the early years pending the introduction of new tax legislation for the agricultural sector. 69. The financial rate of return (FRR) of individual crops produced in the openfield varies between 27 percent for tomatoes and 80 percent for green beans. These results are not very sensitive to changes in costs or benefits. A sensitivity analysis of the openfield vegetable farm models shows that the financial rate of return is relatively insensitive to cost increases but sensitive to beaefit decreases, confirming the relatively speculative character of off-season vegetable production for exports. Returns on farmers' equity for open fieid investments are high (above 50 percent) but the risks are commen-drate. For the farm as a whole, the overall risk is, however, smaller, as oni- a part of the land is typically planted to off-season vegetables and crop di versification is practiced. For greenhouse production an analysis.,f incremental benefits over the project's openfield production levels was u.ndctekeol y2elding FRRs varying from 15 percent for melons to 37 percent for )epper:.- Gr. enhouse investments and farm budgets including greenhouse produc- -ion a-e cot very sensitive to changes in costs or benefits. For greenhouses the f&--mer's return on equity is lower than for openfield investments and giiven Lheir hiiigh risks would be only marginally attractive to small and medium Larmers without the promotional financing scheme proposed under the project. For the marketing services, FRR's of 32 to 42 percent have been estimated. The economic analysis results in economic rates of return (ERR) which in all cases exceed the FRR, varying between 50 and 129 percent for openfield production investments, 19 and 44 percent for greenhouse production, and 50 and 80 percent for packing and control stations. For the farm models, the project investments would result in ERR's ranging between 35 and 123 percent while for the project overall, a combined ERR of 46 percent was estimated. Overall project risks are relatively low, as most costs are divisible. Cropping decisions are taken annually by farmers. The major risk relates to marketing where the level in risk is diminished by the possibility of substitution between crops. The technology is known and conservative yield and price assumptions have been used. Sensitivity tests indicate that even a drastic reduction of the openfield area under tomatoes from 6,000 to 3,000 hectares would result in an ERR to the project of 17 percent; a 20 percent reduction in prices and a 20 percent reduction in benefits would reduce the overall ERR to 30 and 25 percent respectively. PART V - LEGAL INSTRUMENTS AND AUTHORITY 70. The draft Loan Agreement between the Kingdom of Morocco and the Bank, the draft Project Agreements between the Bank and CNCA and between the Bank and OCE, and the Report of the Committee provided for in Article III, Section 4 (iii) of the Articles of Agreement are being distributed to the Executive Directors separately.

27 Special conditions of the project are listed in Section III of Annex III. 72. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 73. I recommend that the Executive Directors approve the proposed loan. Attachments AuRust 22, 1979 Washington, D.C. Robert S. McNamara President by I.P.M. Cargill Senior Vice President

28 ANNEX I TABLE 3A Page 1 of 6 MOROCCO - SOCIAL INDICATORS DATA SLEET REFERENCE GROUPS (ADJUSTED AVERACES PDROCDD / LA"N AREA (THOUSAND SQ. KM.) - MOST RECENr ESTIMATE) TOTAL t * SAME SAME NEXT HICHER CRICULTURAL HDST RECENT GEOGRAPHIC INCOtt INCODM 1960 jt 1970 Lb ESTIMATE L RIPION L CROUP CROUP Rd Jo GNP PER CAPITA (US) ENERGT CONSUtMPTION PER CAPITA (KILOGRAKS OF COAL EOUIVALENT) POPULATION AND VITAL STATISTICS TOTAL POPULATION, MID-YEAR (MILLIONS) MLSAN POPULATION (PERCENT or TOTAL) POPULATION DENSITY PER SQ. 8M Ia PER sq. K0. AGRICULTURAL LAND POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS TRS ns. AND ABOVE POPULATION GROWTE RATE (PERCENT) TOTAL LnRAN CRUDE BIRTH RATE (PER THOOSAND) CRUDE DEATH RATE (PER THOUSAND) GROSS REPRODUCTION RATE 3.4 / FAMILY PLANYING ACCEPTORS, ANNUAL (THOCSANDS) USERS (PERCENT OF MARRIED WNMEN) P00D AND NUTRITION INDEX OF FOOD PRODUCTION PE2 CAPITA ( ) PER CAPITA SUPPLY OT CALORIES (PERCENT OP -EQUIEXE!ITS) noteins (GRAMS PER DAY) OF WBHICH ANIMAL AND FCLSE i CHILD (AGES 1-4) MORTALITT LATE HEALTR LIFE EXPECTANCY AT BIRTH (YEARS) INFANT MORTALITY RATE (PER THOUSAND) h ACCESS TO SAFE WATER (PERCrET OF POPULATION) TOTAL * * URBAN AL ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTrAL C1EAN 75.0 * AL POPULATION PER PHYSICIAN th POPCLATION PIR NURSING PER,ON POPULATION PER HOSPITAL BD WTAL UVBAN RURAL ADMSSIONS PER HOSPITAL SCD HOUSING AVERAGE SIZE OF HOUSEROLD TOTAL URBAN RUAL AVERAGE NUNBER OP PERSONS PER ROOM TOTAL URBAN RURAL ACCESS TO ELECTRICITY (PERCENT OF DIWELLINGS) TOTAL 76.0 / URBAN 85.4 / J RURAL ~~~~~~~~~~~~~~~~~~~~1. *- 12:; l.3.3_

29 ANNEX I TABLE 3A PageL 2 of 6 HOROCCO - SOCIAL INDICATORS DATA SHEET REFERENCE GROUPS (ADJUSTED AVIRAGES YO)ROCCO /s - MOST RECENT ESTIMATE) SAllE SAME NEXT HIGHER MOST RECENT CEOGRAPHIC INCOME INCOME 1960 lb 1970 Lb ESTIMATE Lb REGION /c GROUP Id GROUP /e EDUCAT ION ADJ3;STED ENROLLMENT RATIOS PRLYARY: TDTAL FEMALE * SECONDARY: TOTAL L FENLALE VOCATIONAL (PERCENT OF SECIDNDARY) O PUPIL-TEACHER RATIO PRLMARY SECONDARY * ADULT LITERACY RATE (PERCENT) CONSLU M?7ION PASS-SGER CARS PER THOUSAND POPULATION RADIO RECEIVERS PER THOUSAND PO?CLATION TV RECEIVERS PER THOUSAND POPULATION NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOCSAND POPULATION CINEA ANNUAL ATTENDANCE PER CAPITA EKPLOYI(ENT TOTAL LABOR FORCE (THOUSANDS) FEMALE (PERCENT) AGRICULTURE (PERCENT) INDUSTRY (PERCENT) PARTICIPATION RATE (PERCENT) TOTAL MALE FEKALE ECONOMIC DEPENDENCY RATIO INCOME DISTRIBUTION PERCE!T OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS 18.0 /k 20.0 Lk..., HIGHEST 20 PERCENT OF HOUSEHOLDS 43.3 Ik 49.0 /k LOW.EST 20 PERCENT OF HOUSEHOLDS 7.0 /k 4.0 /k LOWEST 40 PERCENT OP HOUSEHOLDS 18.0 Ak 12.0 /k POVERTY TA tget GROUPS ESTLMATE) ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN L91.9 RURAL ESTLMSATED RELATIVE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN RUAL ESTDIATED POPULATION BELOW POVERTY INCOKE LEVEL (PERCENT) URBAN RLUAL Not available Not applicable. NOTES /a The adjusted group averages for each indicator are population-weighted geometric means. excluding the extrem values of the indicator and the moat populated country in each group. Coverage of countries aong the indicators depends on availability of data and Is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 end 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1973 and sc North Africa 6 Middle East; /d Lower Middle Income ($ per capita, 1976); /e Intermediate Middle Income ( per capita. 1976); /f Including Moroccan provinces in Western Sahara; L Excludea Moroccan provinces in W. Sahara; /h 1962; I Av ; Li Brick building only; A Consumption expenditures of households. Septeber. 1978

30 ANNEX I DVNTO 07 &SLrMWagc~ 3of 6 J"A: The adju.s -group, averages for each Indicator are pop.lariom-wlihted geometric omeas, excluding the extreme, valumes of ch. indicatopopulated and country rno.ace in each~ sroup. Coversge of covattries among tha indicators depends ou availlbility of data and is not uniform. Due. to lach of deto, grupaerages fo, Capital Saopla Oil Exporters and ieditators of access to watar end excrete disposal. honaing. idcom distribution and po-erty Ate oilaple. pepulation-weighted ageomtria eeman without the exclualon of "trams valsas. L.hl_M%AE (thousand eq. ke) Ponulatiock por hospital bad - total, urban, end rural - To-tal Population (tta.-! - Total surface area coaprisisng lend area and inland.&arar. orban, and rural) divided by their r..pactive number of ho.pit.1 Eipricurtul cods - Most recent estimate Of agricultural area. used temporarily availasble in public sod private general adpcaiedhospita.! ar or re- permanently for crops, pastures. market and kitchen. gardens or to habilitation centers. Hospitals are sotablisitmeots praraneotl! sturf-e ' lie fallo.. at lesst one physician. Establishnents providzr.g principally Cutc~diai cars are no included. Rural hospit.ls. however, tocluda health and -od- GNP FER. CAPITA (US$)- GNP per capita ostixata. at current market prices, cal centers not permanantly st.ff.d bv a physiian. (but byans-dic.l cslculatad -0 by same convarsion method aso World Bank Atlas ( basis); sistast. nurse, mid-ife., etc.) which offer to-patient acccms.da-i n cd and 1977 data. provide a limited renge of medicalfcl1 is Admissions per hospital hed - rotal eumber of adeissions enertgy to or con4slimcon discharges PER CAPITA - Aanual consumption of cowmrcial energy from hospitals divided by the nunber of heda. (coal end lignite, petroleum. natural gas and hydro-. owclaar and geothermal electricity) in kilograms of coal equivalent par capita. HOUSING Average sixe of household (persons par household) - total. rban, and rotal - ppopulation A.ND VITAL STATISTICS A household consists of a group of individuals who share Total living popultion, quarters mid-vesr feliii=) - As Of JUly 1; If not available, and their main meols. A boarder or lodger may or myp not avrg fioend-year ~s included eaiats in 960, 197, and 1977 data, the household for statistical purposes. Statistical defioltions of bo-ne Uthan population foercent of total) - Ratio of urban to total popula- hold very. tion; different definitions of urban.rea. may affect oceparability Av-rase number of persons oer room - total, Orbsn, and rural - Average of data nn Among countries, bar of persons per rove in all, urban, and rure1 occupied Conventtcoal Poplaton ensty d-ellings, Pe o.k.-imid-year respectively. population Dwelling. per square exclude kilometer non-permanent (100 bectares) s'roctures unccupied cod parts. of total area. Access to electricity (percent of dweilina.) - total, urban, and rural1 - Pe r so. h. ugi.uture land - Computed as above, for agricultural land Conventional dwellings with electricity in living quarters as percentage only. of total. urban, and rural dwellings respectively. P.pulation am. structure (percent)- Children (I-li peers), working-age (l5-64 vsars(, and retired (is years and over) as parceotages of mid- EDUCATION ona.r population. Adjusted enrollment ratios Population arowth rate (percent) - total, and urban - Compound annual Primary school - total. and female - Total and feale enrollment of alt growth aes. rates of total end rbao mid-year populations for :906,at the primary level ae pernertgage of repcle primary , school-eqs and populations ; normally Includes children aged h-il years but adjueted Crude fobirth rate (per thousand) - Aannul live hirthm per thousand of different lengths of primary education; for countries with uciversal old-year odu- population; nan-year arithmetic averagam ending in i960 And cation enrollment may exceed 110 -ercent sinc.enoe pupils arm helow 1970 and o Piva-year average ending in 1975 for moat recant estimate, abvov the official school age. Crude death rats (per thousand) - Annual deaths per thousand Of old- isc.ndary school - total, and female - Computed y.ar population; us above; secondary nduca ron-year rnithtic arrae nding in 1960 and 1970 t100 r euna t It...t four yoacs Of approvd prisary toiitc;prcand five.-year -avrage ending In 1975 for most recent estimate, video general vocation.. 1or teacher training intucoofor C;roon pup:. reproduction 1 - rate - Average number of daughters A woman will beer usually of 12 to I7 vears of age; Correspondenca 10 art cou..ses nornal reproductive are genra-:. period if she experiences present age-... cludad. specidic fertility -ates;.. uuelly five-year evrarges codiog In 1960, Vocational onroll.ont (p.rcent of secondary) - VoCoconti to-co 0 And clods technical. incuettlal, or other r hrno ich uperatoclcoroti Pomii, Platting - -ccp-crs....ual (thousands) - Annual number Of or as d.partmsnta of -eccdary institutions. uccoptoro of birth-control d-idoes under auspices of national family PupIl-teache ratio - primary,_and necondary - otul. student. otldc ploo-iog program. primary and seco ndary Iav-te divided by -aub-v f teachers to tioc-rro- Pamo. clonioc-..ors (percent of sacreid women) - F-ro-taae of spendinglves o o... omn of chtld-b.aring age (15-hi years) ho use birth-control Adult literacy rate (percnt) - literate Adults (shin to read and tt.0 devices no all carried woman in s&ane ageroup.. a percentage of total adult popula.tion aged 15 easand over. FOOD ANiD NUTRITION CONSUMPTION indax of food production per fc:pit?a (97O-lO0)- Index number of per Passenger oars (per thousand population) - Passenger capita cars annual compruse production.ootr c.rs of all fd Commodities... atise Ieas than isiht pasos;scludos ambulances.. h-oros ane Per Capita supply illtary of calories (percent Of resuireamen) - Computed from vehicles. energy equivalent of net food supplies available in country per capita Radio receivers (par thousand population)1 - All types of recelv-rn fol r-di yer day. AvailAble supplies comprise doneetic production. imports less broadcast. to general public per th.. o..d of... exprts, lat-o; and e-cldes Changes -unl.c. in stock. nol Met supplies exclude Animal feed,.*ased, receivers, in Countries and 1n years oben registrutto- of radio sats va it quasntitie.s ted in food procassing. and lo.sse in distribution. Re- effect; duta for recent years nay not be cumparavtc 50cC noet wucmosesre estimated Co.-tries by FAO based on physiological maeed for nor- ubolished licensing.- vol activity and h- Ith considering environmental temperatrure body TV receivers (per thousand popu.latin) - TV cete.ivers 'ro broadust to oe. weight.,.ao und sax dimnribonions of pop.lanlen, and allowing 10 pen- public par thousand populatton; enclud.s unlicensed TV receiver in z000- Cent for waste tc household level. tries end In yeers when registration 'or of TV sets use in effect. capita.upoly of protein (grams p.lr y - protein content of par Newsapepr circulation (,en tho... d p-sul.tion) - Shows tho capiro ovrage oet cti.-- supply offodprda. ot supply of food io defined as ti.n of "disly general Interest oeusyaper". defined asa pot tdito p.:i ahoce. iaqcirem.ncs for all coun.trims oxtahilahad. by USDA provide for cation devoted pri-avfly to recordio.g g.nera1 news. Itis co-niderdd 0 a*nioloc Allowance of 60 grams of total protein per day and 20 grams he daily" if it a.ppear at Il.ser four t4nes o.. eek. ofanimal and pulse protein, of which if grams should he Animal protein. Cinema annual attendance oe- capits per yeer - ha... cv tho u.ber These vitcir stnad r oerta hs fy grams of total protein and sold during the year. 31 including rams adisooto driv-it of animal prorco ainan..an s inas An ovra efr the -bhile world, propose.d by.nits.. FAC in the Third Wforld Food Survey. Par capita procelo supply from Animal and piles - Protein supply of food EMPLOYMENT d.riv-d from An.ml ad poises in gram per day. Total labor ferns (thou...and)- Eccoomically otdes prsons, -inclding Child, c,r.ej fagse 1-4) ortali-ty rate (per thous..and) - Annual deaths pen thous- forces and unemployed hut occluding hounawi-o. st-ints, et-c. but-. und in ago group 1-h years, to Children in this age group. tions In various... cutries ore sot cooparanle. Fenal. (percent) - Pe.A.L. labor force us parcentage of total lobor forc.. HE-kLT-H ~~~~~~~~~~~~~~~~Asricu1tur (p.,..nt) - Labor force 'o farming, forenry, hunti9ngcd fiscirg life expectancy at birth (years) - Average nueber of years of life as percentage of total labor force. renaloing at birth; usually five-year averages ending in Industry (percent) - Labor force in mnling,..cnstru.tir. manufacturing and and electricity. water and gas Am percentage of tote) labor Infant mortality rats (per force. thousand) - Annual deaths of infants undr P.rticipatt.n rate (percent)- total. mii.and female - Total, mala, and one year Of age per thousan.d live birhta. '0 1. lbor Force as percentages of thei. epetv p.po1loiuc-. Accas. t o.sfe u-tar (percent of nopulation) - total. urban. and rural - These sre 7iLe' adjus ted participstioertes... relocting luaher oc.-se of people (total, urban. and rural) with reasonable access to str-tro- of tho popultion. -nd lton tine r-nd. safe cater supply (to-lcd.s treated surface waters or untr..erd but Iconomlc dependency redo. - Ratio of pvpulortcev -od- 15 -f vs ad ove-t uncontaminated water such As that fromm protected borehole, springs, the labor force i co age ro-pil-koo ond sanitary.silel as percentages of their respectivep- ltos lv on urban area A public fountaio or standpost located not norm INCOME DISTRISLI1N thn200.acare from a 'house nay he considered as being within rae- Percentageo of private incone (hotth in cash cod hoid) recoivec hr richn sonble accs of chat hos. In rural areas reasonable access would percenc, richest 20 percent, poorest 10 parcoor, imply that and poo..o-t the housewife -C porzocr or nexber of the house.hold do not have to of hoceaholde. spend a disproportiooata part of the day in fetching the family's water needs. pover7y CARGET irou'ps Access co ecreat disposal (p.r...t of p.pulatiaa( - total, urban. and Estinatad absolute poverty i.oone 1-v1 (USS per :aptra) -_,roon act :ri,-ro - lumber of people (total, urban, and rural) u.."ad by excrac Asout povertyv- onem level Is that coo lve -. below c,,,ch ot:ia disposal us percentages of their respective populations. Excrete nutritionally adequate diet plus essential non-food requivomnto Co Oct disposal say Icdethe collectiop end disposal, with Or without affordable. Zrecnot, f hmansocetaand waste-wter by water-borne sysct- Esti.aLed relacire p.ovrty Income 1eve (IS) cer c-oiba) - rcban and -- to or. t' t Is of hhe pot privis nd similar installations. Relative poverty Income level iu that income level leus than =r-.iirc,,pulat1cv our?hy*icline- Popolario divided by number of pr-ottolng yen Capita per...nal intono of the Cooctry. 1hysicia.e qualified from a medical school at...rsity level. E.tImated population below- poverty income l.vel ypercent) - orhan ond -oi-l Pooulalcn p ranrina erson - Pop.l.tion divded by number of Percent of populatioc u.rban end rural) who ore eith.r 'bs.iut. poor. c proctic - nsmle and feasle graduate nurses, prectical nurses, and "relative poor whichevr is greater. ositt.rse.. foononc-ic and Social Cata Dichuloonoic Analysi s ad Pro_ctioon Dopattn-r

31 O OR3 *in a.... s~~.r i; : e:~ n 0 n0 C f 1e 2024'7 * C O0.oc O ti.. - g~~~~ ~ I -"7 '_ or n 0 O0 Cabr 'ufl 20 - p......,,. *e lit-c--i. C 0,'.. I. :.12Z.a... R.- r... ~.. r,ab..~ a C... tn.o.gor r.cc* r :- r a -. N-wco 1 * r a.-.. era f !. * * t* ou.-eo a.-. o ^ 0-0 -wx- Crn 4 r 0C-. C CC~, ti.. 1 I _ ( o O, *.z a zo- - o 2: rtit. --- io.ta. O... _ o - o r...NO n * O_** 3. * a 0 U- oo.. S 0...* tc o.. o a e. o OO_Fo_* 0 00 o o 4. rea n..e..a.... * ;0 -,..... ea ea. r. a-' ito^. -.A, s a.9 -i _- I-j * * *.0 Z e 0._NN it. - e r 0 ea.. e e* *@eoe - i :... :.. *..,.... t.0 0.O...rl0c.. 4a a -.svew.*e** ' * * w~~~~~~~~~i -2 * -Vee, SDor7_e *O * 0rN _. N0 o ~~~~~~~~~~~~~~~~~~~~~~~~~* *0 * 0*;. *.. 00 e o a. a.oaoboo3 i** ** -* 0 * S** o~** O* 0O ot OOOOeOs, uee 01. sn0..*. a...., V.- _.*'t. _a e r.o* i S.0.. e e4 4 C * o - w * o * - -. O oc o.. o* a l-,00.t ea i~~~~~ -. S *~~~~~~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ S 200 _00 02 *.0 i0... i4. e *..oo a ** *0* * *** 00 e*o@ 4 w I C.o ot 0 _00* 00.o..o * ; a. * a-**! ocetoc~ ~ ~~~~~ ~ ~ 0 00,0= Nr C00O 4~~~ - C 4 0 i ~~~~~~~~~~ i *.o.~~~~~~~~~ ~ ~~~~~ ~~~~~~~~~~~~~ _00e * =0 _0 0 e 0 0 i***' 3 * 0 9 ea 0004 S.*~ 0 *''* *w** *N -.. E.y.5.4* I~~~~~~~~~~~~~~~~~ -. IC-

32 AITACH 9ENT 4A, BALANCE OF PAYMlNTS AND EXTERNAL ASSISTANCE P.S- 5 of 6 CRILL104I OF US DOLLARS# CURRENT MARKET PRICES) Actucls Projected 5/ 1.-, ,1,9v L9, * A. SQ4MANY UF KALAMCF P P9AYM6NTS * * * * * * * * 6 A J. EAPQRTS: ICL hfj , /096.8LO] , ,0 533T,0 930b, C, IMPoHTs, EXCL, NFS b23,0 97e,o 1519S , n c2,o 3. RESOURCE BALANCF o *225S,0 0*714,0 * ,0-5t ,0.s83i0 4, NET FACTUR StR09I0 S.07, , a ,0 4.1, NET INTERtSY PAYMNTs.17,0 *29q0.57,0.129, , , ,0.72a,0 4,9, NT I ONVESTMENT I-CUM , , ,0 4,3,.4RKERIS REMITIANCES 41,0 139,0 S47, , e5, ,0 4,4 (JTHko (NET) , *B4, , so.0.so,0 S. CkRRENT TRAhNFERSCNtT) 13,0 92,0 es,o S ,0 52, , b. CU9H6'hN ACC61 NT7 HALA4 CE *92,r S.S0.135,.0.1' *434,0.322, e.u a54,0 7, PoovATE 0141C9 INVES7TENI (NLT) 9,0 24,0 36,o ,0 70, ss,0 93, ,0. PUDLIC M & LI LOANS A * * * * 0,1. DlSbu9SEPENTS 88.0 I e, II. 0 1O 69,0 b,2, 4EPAYMLNIS , , ,0.B5S.0.9S,0 C 1954,0 b,3, NE 7 DI3 80 6EMt,Ib 59, ,0 1Ib8, , , H5.0 9, SH09T TEAr CAPITAL (Nth) * , * * * * 0.NtL ULSE OF IMF L3113URCES 0 12,0 195,0 * 34,0 70, , ,0 * 11, 1APIT.L N.E.3. 2/ s, *, A 6 * 14.C1ANGE I 9tbckVES _ 19,0.75,0-114, , e. u Lt VEL IIF RSVEO E * * * AMUUNI ,0 532, ,0 5o ,0 1.76, , MONZtH'S I 9PURTS 0,4 2,9 2,0 3, I, , 3,9 2,0 b. GkAhT b LuN u CU9mmlt15 T * * A * a * * 6 * * L. OFQPICIAL G0NTS 25, ,0 10,0 *, * a * * C, T016AL PULIL M i LT LONS b8,0 179,0 909, t44,0 * * * 2,1. 18RD/IDA 8, I5SG0 l * *0 2Zd. uthio lvr'l INSTITUTOuNS 0 0 4, ,0 * 6 * *..3. G0IYERE4NTS 60.0 b ,0 6s ,0 A. * *., C,4, SUPPLIWR0 CRL0T1S d,0 I ,0 * * * * *A e,5. CU"tMERCIAL 8ANKS 0 3,0 b03,0 93e.0 96S,0 6 * * * C. memo ITEM * * A * * * * 1, GRANT ELEMENTl), 6 10,60 13,9 I1,2 6,9 6 C, A9VRAG6 INTERESOtl) A ,5 7,5 * * * * 3, AVERA6L MATUMIT t0tars) * , , * * *,,,,,,,,,.,,...,,,,,,....,, _..._..... :...v / Including special military import pay.ent. wh,ch Are tentatively estimated by the mission at $590 illior in 1976 and $530 million in M-rEN rp 1979 EMENA 1P fic V1 Includtng grent.. 3/ Projections are being revised by the Bsic Economic Mi,.ion.

33 *.~ ~ ~ ~ ~~..... b j * oo S 0 * o * a o o 00.0 o v # X o * *,,,S O... a. J *00 41 I 0 A0 O * O F * O _ O a..... _...# *. *..- * 0-*w - a * a * - td ~ ~ ~ S a S C -. ; '5 ' S {~~~0 san..410 nfzt -c z las * a i a * * o 000 o o 0.- S s w._a 4*0r s www * S * ~ ~ ~ ~ ~ W O......,_ atw * _ * * - a * os 4' O 1 0. ela-~ 5 ^ U ~ ~ S S~~. a:: a~ ~~1 ODZ 000 _ C enn Os. 4. l* S 5 X~0 WW_oaeo * j OS, 40 IC -.- j _ w -* N,s,, -, * * C w w _,^ o C C t l o O 1 a.1 a W <a0>2 C S ~ 0 ;l z a 00C oo S a * x gszi * SC 0000 #500fiZr_ - _ 5 ;1 ono * * N 1o j _.....

34 -30 - ANNEX II Page 1 of S A. STATEMENT OF BANK LOANS AND IDA CREDITS (As of July 31, 1979) Loan or US$Million Creidt Amount (less cancellations) Number Year Borrower Purpose Bank IDA Undisbursed Thirteen Loans Fully disbursed Four Credits Fully disbursed Kingdom of Morocco Irrigation ONEP Water Supply Kingdom of Morocco Highway Maroc-Phosphore Industry Kingdom of Morocco Agriculture BNDE DFC Kingdom of Morocco Agriculture Kingdom of Morocco Agriculture Kingdom of Morocco Agriculture Kingdom of Morocco Tourism T 1976 Kingdom of Morocco Education CIH DFC (Tourism) Kingdom of Morocco Power CNCA Agriculture CIOR Industry Kingdom of Morocco Agriculture BNDE DFC S Kingdom of Morocco Engineering Kingdom of Morocco Urban Develop Kingdom of Morocco Fes Karia Tissa Maroc-Phosphore Industry / 1979 Kingdom of Morocco Education / 1979 Kingdom of Morocco DFC (SSI) / 1979 Kingdom of Morocco Power CNCA Agriculture / 1979 Kingdom of Morocco Water Supply Total 1, of which has been repaid Total now outstanding 1, Amount sold 20.4 of which has been repaid Total now held by Bank and IDA 1, Total undisbursed NOTES 1/ Prior to exchange adjustment 2/ Signed, but not yet effective B. STATEMENT OF IFC INVESTMENTS (As of July 31, 1979) US$Million Loan Equity Total 1963/1978 BNDE Develop. Bank CIL Canning Factory Marrakech Cement Cement Factory Temara Cement Cement Factory Agadir Cement Factory Total Gross Commitments less cnacellation, terminations repayments and sales Total commitments now held by IFC Total undisbursed

35 ANNEX II Page 2' of 8 pages C. PROJECTS IN EXECUTION 1/ Ln. No. 643 Rharb-Sebou Irrigation Project: US$46 million Loan of November 13, 1969; Date of Effectiveness: June 8, 1970; Closing Date: June 30, Progress in implementing the project was delayed by problems initially experienced with management and procurement of canalettes and severe flooding in February 1977 which caused damage to crops and irrigation works. The major project structure, Idriss 1 Dam, is completed and 32,400 ha out of a total of 35,200 ha are already equipped. Additional infrastructure for the project area, including a sugar cane processing factory, are being provided by Loan No MOR. Ln. No. 850 Water Supply Project; US$48 million Loan of July 19, 1972; Date of Effectiveness: May 2, 1973; Closing Date: October The dam which was the major component of the project was inaugurated in August All project elements are completed except for the training school, which is under construction and expected to be completed by Fall 1979; training courses are presently being given in temporary facilities. Although tariff increases were implemented in October 1977, the higher revenues did not compensate for steep increases in operating cost. The Government has established an interministerial commission to review the situation. Ln. No. 955 Second Highway Project; US$29 million of January 11, 1974; Date of Effectiveness: May 21, 1974; Closing Date: December 31, Construction of the Rabat-Casablanca expressway which began in early about 8 months behind schedule - is now almost complete an,d the maintenance equipment and highway improvement programs are complete. Work on the contract for technical assistance for the establishment of a Trarnsport Planning Office in the Ministry of Public Works is proceeding satisfalctorily. Ln. No Phosphoric Acid Project; US$50.0 million of June 27, 1974; Date of Effectiveness: February 27, 1975; Closing Date: December 31, The project was mechanically completed in October 1976 and the plant is now in commercial operation. 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered, and the action being itaken to remedy them. They should be read in this sense, and with the understanding that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution.

36 ANNEX II Page 3 of 8 pages Ln. No Sebou II Development Project; US$32.0 million of June 27, 1974; Date of Effectiveness: February 28, 1975; Closing Date: June 30, The sugar cane processing factory was essentially completed on schedule in Construction of the project area roads program was completed in 1977, and the farm roads program in The Government recently requested that funds earmarked for the construction of flood protection dykes be transferred to other infrastructure works related to the Sebou I and II projects, in view of the high costs of such works, the economic benefits which are less than originally estimated and the advancement of the construction of the M'Jara Dam which greatly curtails the risk of flooding. A decision on this request is under review. The study on pollution control is now proceeding satisfactorily. Since the start of the project, the Ministry of Public Health initiated a nationwide survey and control program of bilharzia; a separate survey on the Rharb plain is no longer required. Ln. No Seventh BNDE Project; US$30 million of December 30, 1974; Date of Effectiveness: January 15, 1975; Closing Date: December 31, The loan is fully committed. Disbursements are roughly in line with appraisal estimates. Ln. No Souss Groundwater Project; US$18.5 million of June 11, 1975; Date of Effectiveness: September 26, 1975; Closing Date: June 30, The 59 wells required for new irrigated area (6,300 ha) were completed and tested one year ahead of appraisal schedule. Land clearing and construction of the Project Headquarters and Development Centers have been completed. Land distribution to Agrarian Reform beneficiaries has been completed on about 55 percent of the project area. Works related to the social components of the project which suffered from substantial delay are now underway. Budgetary constraints facing Morocco have resulted in cutbacks in the operating budget and held back the assignment of additional personnel. While this issue has been partially solved for the area equipped so far, developments will need to be watched carefully as more area is put under irrigation in the future. Cr. No. 555 Meknes Agricultural Development Project; US$14.0 million of June 11, 1975; Date of Effectiveness: November 14, 1975; Closing Date: March 31, The Project initially faced substantial delays in project implementation. The studies are now underway, and commitments of funds under the project have been initiated. Project management and the coordination of project activities between the project authority and the central offices of the Ministry of Agriculture have improved but continue to require close monitoring. A revised land reform and redistribution program which meets the project's objectives is currently under preparation.

37 ANNEX II Page 4 of 8 pages Ln. No Doukkala Irrigation Project; US$30.0 million of February 27, 1976; Date of Effectiveness: July 20, 1976; Closing] Date: June 30, The project includes sprinkler irrigation for 15,400 ha and infrastructure and equipment. Progress of construction is satisfactory after initial delays. The first 4,200 ha have been completed and put in service. Completion of the remainder of sectors is underway and expected to be on schedule. Agricultural development has been very satisfactory. Ln. No Bay of Agadir Tourism Project; US$21.0 million of February 27, 1976; Date of Effectiveness: October 29, 1976; Closing Date: December 31, The project is intended to develop Agadir into a major tourism area and consists of infrastructure works and public facilities for the development of a new tourism section on 260 ha on which 7,000 hotel beds and 2,600 housing units are expected to be constructed. The project includes also regional infrastructure and facilities for the development of Agadir's tourism assets. The major project component, UAT-Forestry land development, has entered its construction phase and is expected to be completed by the end of The implementation of other components experienced some delays but these are not expected to affect overall project implementation. Ln. No Third Education Project; US$25.0 million of March 18, 1976; Date of Effectiveness: October 1, 1976; Closing Date: May 1, The project is designed to expand and improve primary and secondary education in rural areas and specialized training to meet urgent manpower needs in education, agriculture, health and tourism. Project implementation of physical aspects is slow with the exception of the rural development and extension training center, construction of which has recently started. All sites have been selected and design development is at an advanced stage. Recruitment of experts under the technical assistance program has been slow. It is expected that the overall situation will improve, and progress is being clearly monitored by supervision missions. Ln. No Third Hotel Development Project; US$25.0 million of July 2, 1976; Date of Effectiveness: November 18, 1976; Closing Date: December 31, Implementation of the project is proceeding well. The Loan is expected to be disbursed somewhat ahead of schedule. The loan is fully committed. CIH has been successful in mobilizing foreign exchange resources other than the Bank's and in reducing outstanding arrears in accordance with understandings reached during negotiations.

38 ANNEX II Page 5 of 8 pages Ln. No Sidi Cheho - Al Massira Hydro Project; US$49.0 million of July 2, 1976; Date of Effectiveness: November 16, 1976; Closing Date: December 31, The project comprises the construction of the Al-Massira concrete dam on the Oum er Rbia river, a 120-MW power station including a 225-KV substation, construction of about 200 Km of 225 kv transmission lines, and preparation of preliminary designs and bid documents for the Merija compensating dam and power station. Procurement of the main project items is underway and physical progress of the project is satisfactory. The hydro plant should start operation by early Ln. No Third Agricultural Credit Project; US$35.0 million Loan to Caisse Nationale de Credit Agricole (CNCA) of February 7, 1977; Date of Effectiveness: August 11, 1977; Closing Date: June 30, The project aims at increasing Morocco's agricultural production and at expanding the capability of CNCA as a sound agricultural institution. The project will cover most of CNCA's program for medium- and long-term lending through August 1979 and will include related technical assistance. Disbursements of IBRD funds aim at financing on-farm investments of small farmers, cooperatives and farmers' association. Over one half of the Bank loan has been disbursed, and the remainder is expected to be disbursed by August 31, 1979, as scheduled. Ln. No CIOR Cement Project; US$45.0 million of April 29, 1977; Date of Effectiveness: July 7, 1977; Closing Date: June 30, The project comprises construction of a 1.2 million tons per year cement plant near Oujda in the Eastern Region of Morocco, and related distribution facilities. Overall project implementation is satisfactory, within original cost estimates and with a delay of about three months. Training of key personnel is almost complete, and recruitment is adequate. The plant has started operation in January Ln. No Doukkala II Irrigation Project; US$41.0 million of June 16, 1977; Date of Effectiveness: December 1, 1977; Closing Date: June 30, The project aims at extending irrigation and related agricultural development in the Doukkala perimeter by 16,600 hectares; it also calls for provision of extension and credit services, and village infrastructure. Land consolidation program and the enlargement of the main canal are proceeding according to schedule. Equipment of the project area has been slowed down due to budgetary constraints facing Morocco and are likely to result in a 1 to 2 year delay in completing the project.

39 ANNEX II Page 5 of 8 pages Ln. No Eighth BNDE Project; US$45.0 million of June 16, 1977j Date of Effectiveness: December 21, 1977; Closing Date: September 30, The project is designed to meet part of BNDE's requirements for financing of the import component of specific industrial enterprises, and of a small-scale industry pilot project for which up to $5 million of Bank financing is included. The loan became effective on December 21, 1977 and commitments as of April 30, 1979 amounted to US$29 million. Ln. No. S-7 Sewerage Engineering Project; US$1.5 million of August 30, 1977; Date of Effectiveness: August 26, 1978; Closing Date: April 30, The project includes the preparation of a sewerage Master Plan for the Casablanca-Mohammedia region and a priority first stage project. It would assist Morocco in developing the design and planning criteria for urban sewer systems and strengthening the institutional and financial bases for the development of this sector. The loan became effective on August 26, 1978, and implementation is proceeding satisfactorily. Ln. No Rabat Urban Development Project; US$18.0 million of M[arch 31, 1978; Date of Effectiveness: November 21, 1978; Closing Date: March 31, The project is designed to improve living conditions of the urban poor in Rabat. It includes (i) comprehensive squatter upgrading; (ii) an experimental Sites and Services Housing Schemes; (iii) an employment generation program; (iv) community services equipment; and (v) technilcal assistance to strengthen the institutional arrangements and technical capabilities of the executing agencies. The loan became effective on November 21, 1978, construction is proceeding satisfactorily, although there has been some delay in the non-physical aspects of the project. Ln. No Fes-Karia Tissa Agriculture Project; US$65.0 million of September 6, 1978; Date of Effectiveness: February 13, 1979; Closing Date: June 30, The project aims at (i) improving the standard of living of about 33,900 farm families cultivating about 256,000 hectares in the Fes-Karia- Tissa region, and (ii) contributing to the growth of agricultural production and to a decline in Moroccan dependence on imported food commodities. These aims would be achieved through a reorganization and strengthening of agricultural services and provision of infrastructure. Implementation has been running about 6 months behind schedule. However, since operating funds have become available, the Project Authority has laid the ground work for future implementation and the situation is expected to improve.

40 ANNEX II Page 7 of 8 pages Ln. No Maroc Phosphore Expansion Project; US$50.0 million of October 27, 1978; Date of Effectiveness: March 23, 1979; Closing Date: June 30, The project consists of expansion of production facilities at Safi through (i) the erection, on the site of the existing Maroc Phosphore plant, of an additional unit to produce for export 165,000 tpy of phosphoric acid, complete with ancillary facilities and related civil works; and (ii) the construction of sulphur melting units and sulphur storage facilities; and the construction of new phosphoric acid concentration and storage facilities. Implementation is proceeding satisfactorily. Ln. No Fourth Education Project; US$113.0 million on April 25, 1979; Effectiveness Limit: October 1, 1979; Closing Date: December 31, The project consists of (i) construction, furnishing and equipping of 11 technical lycees, a technical teacher training college, two higher institutes of technology, an institute of applied engineering and an extension of Mohammedia Engineering College; (ii) technical assistance associated with the project items and for strengthening the Project Implementation Unit in the Ministry of National Education; (iii) pre-investment designs. Ln. No Small Scale Industry Integrated Development Project; US$25.0 million of April 25, 1979; Effectiveness Limit: October 1, 1979; Closing Date: December 31,1983. The project consists of a two-year slice of a Government program to assist small and labor intensive industries through policies, technical, managerial and financial assistance. Ln. No Village Electrification Project; US$42.0 million of May 22, 1979; Effectiveness Limit: August 28, 1979; Closing Date: June 30, This project which is the first stage of a 15-year village electrification program would provide electricity to about 60,000 dwellings in 220 villages located in 17 provinces. Ln. No Fourth Agricultural Credit Project; US$70.0 million of May 23, 1979; Effectiveness Limit: August 28, 1979; Closing Date: June 30, The project aims at increasing Morocco's agricultural production thereby improving the standard of living of about 475,000 of Morocco's farm families. The project will cover most of CNCA's medium- and long-term lending program and farm investment program through August 1982.

41 ANNEX II Page 8 of 8 pages Ln. No Second Water Supply Project; US$49.0 million of July 2_ 1979; Effectiveness Limit: October 3, 1979; Closing Date: June 30, The project is designed to improve access to safe water supplies of the population of the Mid-Atlantic Coast and the Greater Agadir area. It consists of: (i) the expansion of bulk water production and transmission facilities along the Mid-Atlantic Coast; (ii) the expansion of bulk water production and transmission facilities in Agadir and (iii) the establishment of a revolvery fund to facilitate house connections for low incomle families, and (iv) studies.

42 ANNEX III KINGDOM OF MOROCCO VEGETABLE PRODUCTION AND MARKETING PROJECT SUPPLEMENTARY PROJECT DATA SHEET Section I. Timetable of Key Events (a) Time taken by the Borrower to prepare the Project: 12 months (February January 1979) (b) Agencies responsible for the Project preparation: The Ministry of Agriculture and Agrarian Reform (MARA) and the Office de Commercialisation et d'exportation (OCE) (c) Project identified: February 1978 (d) Date of Appraisal Mission: January 1979 (e) Date of Completion of Negotiations: July 1979 (f) Planned Date of Effectiveness: October 1, 1979 Section II. Special Bank Implementation Actions None. Section III. Special Conditions (a) Transportation facilities and operating funds for the technical extension agents to be provided by OCE and SASMA (para. 51). (b) Establishment of a National Coordinating Committee and five Regional Technical Committees (para. 54). (c) Organization and staffing, and employment of consultants for research and demonstration training program (para. 57). (d) Treasury advance and CNCA financing conditions for greenhouses (para. 59). (e) Subsidiary Loan Agreements between Government and CNCA and OCE by December 31, 1979 (para. 60). (f) OCE to reorganize marketing organization for off-season vegetables and appoint network of importer-distributors in France (para. 67).

43 IBRD ;0 KENITR i2, APRIL 1979 KINGDOMOF MOROCCO VEGETABLE PRODUCTION AND AAARKETING Sale RABAT PROJECT MOHAMMEDIA Bouznika. : - ~~~~~~~~CASABi-ANCA 0. ~~~Dar i : Ff JADU). = /d : - % SJ S~~~~~~~~~~~~~idi Benl 4l af o(kh~emas ra Rbi'a SAF J Zemarnra \ ( <32 As,,C J I t~~~~~~~~~~~o < Tensf } Eti ESSAOUt RA PROJECT AREAS DEVELOPMENT CENTERS U * X QUALITY CONTROL CENTERS To Tarfaya 0 Jp ROADS / [ - : RIVERS Th,s map has been prepared by the tthe World Bank's staff euchas,ely for convenience of the readers of / > l World Buns odn ~~~O KILOMETERS the report to weh,c-l'tisatached. The denominations-sed and the boundaries sh-ow on this map do not Imp/f, on the part of the -,fflates unv ju~~~~idgment on the legal states of any territory or any endorsement or acceptance of such boundaries.