FILE COPYReport No. 1047a-RW

Rwanda: Appraisal ofthe Cinchona Project

June 30, 1976

General Agriculture DivisionEastern Africa Regional Office

FOR OFFICIAL USE ONLY

Document of the World Bank

This document has a restricted distribution and may be used by recipientsonly in the performance of their official duties. Its contents may nototherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

US$ 1.00 = RwF 92.84

RwF 100 = US$ 1.08

ABBREVIATION

OCIR - Office des Cultures Industrielles du RwandaISAR - Institut des Sciences AMronomiaues du RwandA

UNIDO - United Nations Industrial Development Organization

TITLES

Agronome = Agronomist

Vulgarisateur = Extension Supervisor

Moniteur = Extension Worker

WEIGHTS AND MEASURES

1 square kilometer (km2 ) = 100 ha

1 hectare (ha) = 100 ar - 10,000 m2

1 metric ton (t) = 1,000 kg

FISCAL YEAR

January 1 - December 31

FOR OFFICLA USE ONLY

RWANDA

CINCHONA PROJECT

TABLE OF CONTENTS

Page No.

SUMMARY AND CONCLUSIONS ... ...... ....... ...... ... . i - ii

I. INTRODUCTION .........................***.***........ 1

II. BACKGROUND 2...............* , ............. 2

A. General 2...... ....... 2B. The Agricultural Sector ...................... 2C. Agricultural Services ........................ 3D. Project Area ..... ............. .... *.. 5

Ill. THE PROJECT. ........ 6

A. General Description .......... ... ..... ... ... 6Bo Detailed Features ......... 6C. Project Costs so* 7D, Financing 000. ... ....... . .. 9E. Procurement . ... 9F. Disbursement ..... *- .. ^t .-.*.......... 10G. Accounts and Audit .............. ............ 11H. Ecological and External Effects ............. 11.

IV. ORGANIZATION AND MANAGEMENT ................... 11

V. PRODUCTION, MARKETING, BUDGETARY EFFECTS ANDFARMER BENEFITS ......................... ,....w.. 12

VI. ECONOMIC BENEFITS AND JUSTIFICATION .............. 15

VII. AGREEMENTS REACHED AND RECOMMENDATIONS ............ 16

This report is based on the findings of an appraisal mission which visitedRwanda in October 1974. The mission, which also appraised several componentsnot included in this Project, was composed of Messrs. E. Zimmer-Vorhaus,G. R. Henderson, P. Peperzak, F. Stubenitsky, Mrs. P. Soltani (IDA), andR. Crofts and A. Elcock (Consultants). A follow-up mission was undertaken inMay, 1975, consisting of Messrs. E. Zimmer-Vorhaus and H. van Voorthuizen.Mr. G. Ablasser prepared this report.

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

TABLE OF CONTENTS (Cont'd)

ANNEXES

1. Production and Marketing of Cinchona2. Consultancy Services3. Office des Cultures Industrielles du Rwanda (OCIR)4. Project Costs5. Government Budget.6. Foreign Exchange Inflows and Outflows7. Farmer Benefits8. Economic Analysis9. Schedule of Estimated Disbursements of IDA Funds

CHART

World Bank - 16198 OCIR Cafe - Organizational Chart

MAP

IBRD 111745 Cinchona Project

SUMI'IARY AND CONCLIJSIONS

i. Rwanda is one of the poorest countries in Africa. This situationis largely the result of its high population density and a steadily decliningland/farm family ratio, which have in turn led to deteriorating soil fertilityin many areas and an associated decline in crop yields. Farm incomes are lowand stagnant. The country's terms of trade have been deteriorating, thusaffecting adversely its balance of payments situation. The proposed Projectwould generate export earnings and enhance the income of participating farmers.

ii. The Project, over a 5-year period, would provide inputs, and exten-sion, marketing and other services to smallholders to assist in the expansionof cinchona production for export. It would be administered by the Office desCultures Industrielles du Rwanda (OCIR) which, with additional staff, wouldprovide all the necessary setvices and operate tree nurseries to produceseedlings for distribution to farmers. Plantings of cinchona would be about900 ha, or approximately as much again as the existing cinchona area, in threelocations in Kibuye, Gikongoro, and Cyangugu prefectures. Consultancy serviceswould be provided to augment Government's limited capabilities in the agricul-tural sector. The Ministry of Agriculture atid Animal Husbandry would haveoverall Project responsibility.

iii. An IDA credit of US$1.8 million is proposed which would cover theforeign exchange costs (US$1.2 million) and 78% of local costs over the five-year Project period. This would represent 90% of the total Project costs ofUS$2.0 million, net of taxes and duties. Project costs inclusive of taxes andduties would total IJS$2.1 million. Farm inputs (USS260,000) in orders exceedingUSS30,00O would be procured under international competitive bidding inaccordance with IDA guidelines. Vehicles and equipment (US$270,000) would beprocured following advertising in the local press and in adjacent countries.Civil works for staff houses, stores and an office (IJS$120,000) would becarried out by local contractors followin, local competitive bidding or by theMinistry of Public Works by force account. Consultants would be recruitedinternationally in agreement with IDA.

iv. The Project's incremental production of cinchona bark woul_. increasefrom 30 tons in Year 6 to 450 tons in Year 11. At full production, the in-cremental export value in constant 1976 prices would be about US$1 million peryear. After debarking, cinchona trees would be used as firewood which is inshort supply in many areas.

v. The internal economic rate of return of the Project would be 15%.Inputs and services would be provided to farmers for a nominal fee and Projectcosts recovered through levies and taxes on cinchona exports. With the assump-tions underlying the Project's analysis, individtual farmers would receive aboutUS$118 in additional net cash revenues per year during the years of full produc-tion, i.e. Years 6-10; the annual average increase throughout the productioncycle (12 years) would be IJS$57, or 25% above present levels. Some 3,600 farmfamilies and 150 persons employed by OCIR would directly benefit from theProject.

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vi. This would be the Bank Group's second lending for agriculturaldevelopment in Rwanda. The first credit for the Agricultural DevelopmentProject (CR 439-RW) concentrated on livestock development in the Mutara areaof northeastern Rwanda, and provided for settlement, the establishment ofgroup ranches, and other related agricultural services. The project becameeffective in September 1974 after delays in forming the project authorityand in selecting consultants. Progress to date has not been satisfactoryand the project is being revised.

vii. The Project is suitable for an IDA Credit of TJSS1.8 million onstandard terms to the Government of Rwanda.

I. INTRODIJCTION

1.01 Rwanda is one of the poorest countries in the world, and a root causeof its poverty is the high population density in the rural areas and a steadilydeclining land/farm family ratio as population increases and as few suitableareas available for settlement remain available. This in turn has led to de-teriorating soil fertility in many areas and an associated decline in cropyields. In the past, the country has concentrated its efforts on increasingproduction of cash crops, mainly coffee, with increasing emphasis on diversi-fication to provide export earnings. Recently, however, more attention hasbeen given to food crop production in an endeavor to reduce dependence on im-ports which have become a significant and serious factor in the last few years.

1.02 The basic need in Rwanda is thus to increase farm production. Inaddition to increasing its output of food crops, Rwanda also needs to expandits production of exportable Products in order to improve its balance of pay-ments. As elsewhere in Africa, this task presents problems requiring proventechnical innovations and a soundly based system of farmers' services forinputs, extension and marketing. In Rwanda, the situation is made particu-larly difficult because of its weak extension and distribultive systems whichin themselves are a reflection of the country's poverty. The proposed Projectwould assist in the expansion of cinchona plantings for export, and providetechnical assistance to Government.

1.03 This would be the Bank Group's second lending for agriculturaldevelopment in Rwanda. The first is concentrating on livestock developmentin the Muttara area of northeastern Rwanda and provides for settlement, theestablishment of group ranches, and related services. It became effectivein September 1974 after delays in forming the project authority and in select-ing consultants. Spontaneous and unorganized settlement in the area and manage-ment difficulties have made a revision of the project necessary which is beingdiscuissed withl Government.

1.04 This Project was prepared by Government with assistance fsm theWorld Bank Regional Mission in East Africa (RMFA) as part of a larger projectentitled "Commercial Crops Project" which, in addition to cinchona, comprisedgeneral agriculttural and coffee development, and improvement of lake landingpoints. Government, after reviewing the project, expressed reservationsabout the justification and high cost of these components and requested thatthe Project he confined to cinchona development. An appraisal mission whichvisited Rwanda in October 1974 comprised Messrs. E. Zimmer-Vorhaus, G.R.Henderson, P. Peperzak, F. Stubenitsky, Mrs. P. Soltani (IDA), and R. Croftsand A. Elcock (Consultants). A follow-up) mission was tmdertaken in May, 1975,consisting of Messrs. E. Zimmer-Vorhaus and H1. van Voortlhuizen. Mr. GottfriedAhlasser, assisted by Mr. Noel Brouard, prepared this report.

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II. BACKGROUND

A. General

2.01 Rwanda, 1,600 km inland from the Indian Ocean, is one of the smallest(26,400 km2) as well as one of the most densely populated (160 persons/km2)countries in Africa. The total population was estimated at 4.2 million in1975, and is growing at a rate of about 2.7% per annum; less than 4% of thetotal population is urban. Rwanda is also one of the poorest countries inthe world: total GDP was estimated at US$309 million in 1974, with a percapita income of US$74, as compared with about US$55 in rural areas. GDP isnow growing at a rate of around 4% annually. Agriculture accounted for 65%of GDP in 1974, and about 5% of GDP represented cash crops. Coffee is themain cash crop, accounting for well over 50% of all exports, and generatingabout 20% of all Government revenues. Other significant export crops includetea and pyrethrum; cinchona accounted for 1.2% of total exports. During theperiod 1967-1974, merchandise imports consistently exceeded exports, with thetrade deficit averaging RwF 896 million (US$9.7 million) per year and reachingRwF 1.9 billion (US$20.8 million) in 1974.

B. The Agricultural Sector

2.02 About one half of the country's land area is suitable for agricul-ture; of this about 37% is actually cropped and the remainder representsnatural pastures. The population density on these cultivated areas isextremely high--about 300 persons/km2--and the average holding is about 1 ha.As a result, about 90% of the cultivated land is used for the production ofsubsistence food crops such as bananas, beans, sorghum, maize and sweetpotatoes. Approximately one half of these farms grow some cash crops, usuallycoffee. Most arable land is on slopes, and consequently all cultivation andharvesting is done by hand. Due to population pressure marginal forest soilshave increasingly been brought under cultivation; this, combined with in-sufficient fertilization, has contributed to a deterioration of fertilityin these soils.

2.03 Most agricultural land is farmed on a usufruct basis, and Governmentclaims all unused land. Nevertheless, nearly all farmers have secure tenureand there are no landlord/tenant problems. Total food crop production still-falls short of the country's basic requirements, and Rwanda now spends about30% of its agricultural export revenues (18% of all export revenues) on importsof foodstuffs. In an effort to stimulate agricultural production Governmenthas undertaken a settlement program in different parts of the country uri-erwhich farmers are allocated 1-1.8 ha plots and are provided with basic irnfra-structure and some extension services. By 1974 Government had located abuut41,000 families in these settlements ("paysannats"), and had made land availablefor the planting of cash crops such as tea, coffee and pyrethrum; prospectsfor further settlement are limited, however.

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2.04 Coffee. There are approximately 46 million coffee trees in Rwanda.These are cultivated by some 400,000 farmers (about 50% of the total), withan average of about 115 trees per farmer. Total production stagnated between1959 and 1967, but has since shown an upward trend, rising from 11,000 tonsin 1967 to around 18,000 tons in 1975. Yield levels have declined, however,and the production increases have come entirely from new plantings. Coffeeis almost all of the Arabica type and, with the exception of minimal amountsconsumed locally, is entirely exported. Over the last decade Rwanda's shareof the world coffee market has remained at about 0.4%.

2.05 Cinchona. The cinchona tree is valued commercially for the alkaloids(principally quinine), which can be extracted from its dried bark; these areused in the production of anti-malarial and other drugs, as well as in the softdrink industry. Cinchona is grown mostly on plantations, but it is also wellsuited for smallholder production. Expatriate companies now maintain about600 ha of plantations, and state-owned plantations account for an additional68 ha. The Office des Cultures Industrielle du Rwanda (OCIR) is responsiblefor the promotion of smallholder production and marketing (para. 2.08); small-holder production now totals some 200 ha. Total production from all sourcesincreased by about 50% between 1968 and 1974 and totaled about 315 tons in1974; yields vary from 230 kg/ha on state-owned plantations to over 750 kg/haon commercial estates. Rwanda's share of world exports was about 5.3% in1975. The dried bark is exported mainly to seven European pharmaceuticalcompanies which dominate the world market. Government, advised bv UNIDO, isnow negotiating with an expatriate firm for the establishment of a cinchonaprocessing plant within Rwanda.

C. Agricultural Services

2.06 The Ministry of Agricttlture and Animal Husbandry has overall respon-sibility for the provision of various aoricultural services in Rwanda. TheAgricultural Department is responsible for extension services, seed production,soil conservation and settlement (paysannats). The Department's resp-nsibil-ities now again include extension services for coffee grovers which for a briefperiod in 1974/75 were entrusted to OCIR. The extension service now employsabout 1,100 officers of all grades; it is however under-staffed and suffersfrom a lack of technical expertise. Training of agronomists (grade A2) isbeing carried otut by the School of Agricultuire and Animal Husbandry (Ecoled'Agriculture) in Buitare, which onerates four-vear courses, and that of exten-sion supervisors (A3) by the Ecole des Vulgarisateurs in Kibuye in two yearcourses. In addition to local training, 75 students are now undertakinggraduate agricultural and veterinary training abroad. The extension serviceis supported by the Selected Seed Service which is in charge of productionand distribution of seedlings and seed of coffee, tea, fruit trees and foodcrops (grains, legumes and root crops). The service operates six seedmultiplication farms, and manages tea nuirseries and demonstration fields.During the two crop seasons of 1972 and 1973 the service sold 30 tons of grainand legumes and 26 tons of potatoes at subsidized prices. Government intendsto expand its activities in the future to include countrywide demonstrations

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of improved production methods and soil conservation practices. Agriculturalresearch in Rwanda is carried out by the Institut des Sciences Agronomiquesdu Rwanda (ISAR), which is well staffed under financing provided mainly byBelgian aid. ISAR is carrying out extensive research into the agronomy,processing and economics of Rwanda's main crops. In addition to its coffeeresearch, ISAR also operates an experimental coffee washing station. Noresearch is currently being done on cinchona, but the country cooperates inthis field with a nearby research station in Mulungu, Zaire.

2.07 The Ministry of Agriculture and Animal Husbandry also provides anumber of animal health and other livestock support services through its AnimalHealth and Animal Production Divisions within the Department of Animal Hus-bandry. The animal health service is under-staffed, and there are on averageless than 2 veterinarians per prefecture. The animal production staff havehad considerable success with the establishment of bull centers, as the useof crossbred bulls was readily accepted by the farmers. Stall feeding forcollection of manure and the planting of fodder crops has also been introducedin a few areas (mainly in settlements).

Office des Cultures Industrielle du Rwanda (OCIR) (Annex 3)

2.08 OCIR was established in 1964 as a parastatal organization with overallresponsibility for the production, processing and marketing of Rwanda's cashcrops. In 1974 the organization was divided into two separate departments:OCIR CafA with responsibility for coffee and cinchona, and OCIR ThA withresponsibility for tea. Each department has its own specialized staff and itsown accounts; however, both are under the same Board of Directors which com-prises mainly Government officials. Thus OCIR resembles more a Governmentdepartment with limited financial autonomy rather than a producer's organiza-tion.

2.09 OCIR Cafe has six divisions: Administration and Personnel, Account-ing, Coffee, Cinchona, Purchasing and Marketing, and Licensing and Grading.These carry out OCIR's extensive crop-related activities including qualitycontrol, pricing, marketing and export services. It also maintains about 500hand coffee pulping facilities, and through its subsidiary, Rwandex, controlsthe country's two main coffee hulling factories in Kigali and Gisenyi. At thepresent time, only one agronomist and one vulgarisateur advise smallholders oncinchona husbandry and harvesting. OCIR Cafe also produces cinchona plantingmaterial in its own nurseries which it distributes to smallholders at nominalrates.

2.10 Extension, Marketing and Pricing of Cinchona. The Cinchona Divisionhas been set up recently within OCIR Cafe with authority over: (a)cinchona nurseries, (b) a specialized extension service, and (c) two buyingand storage centers. Seed for the nurseries is imported from the Muluagu

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Research Station in Zaire which has been a reliable source of quality seedfor a nurmber of years. OCIR controls the marketing of cinchona and advisesGovernment on pricing policy. In 1974 OCIR introduced a producer pricingsystem based on grading of cinchona bark according to estimates of the quinineanhydrous alkaloids (QAA) content. OCIR is now the sole marketing agent forsmallholder production while private estate production continues to beexported under licenses granted by OCIR.

2.11 OCIR's Financial Position. OCIR main sources of funds are exportlevies on commercial crops. In 1975 three different levies were collectedon coffee exports: (a) a fixed operational levy (RwF 5.00/kg green coffee)to cover OCIR Cafe's operating costs including input supply services; (b) avariable levy (depending on the actual export price) for the price stabiliza-tion fund, administered by OCIR to guarantee suitable growers' prices; (c) asmall fixed levy (RwF 0.30/kg green coffee) for the coffee propaganda fund,also administered by OCIR to promote coffee sales. OCIR also collects afixed operational levy on cinchona exports (RwF 18/kg dried bark). The finan-cial position of OCIR Cafe as well as that of the coffee price stabilizationand propaganda funds is sound but an improved accounting system reflectingmore accurately OCIR's various operations is needed to enable OCIR to evaluateits efficiency more adequately. Currently OCIR is receiving technical assist-ance for this purpose from bilateral sources.

D. Project Area

2.12 The Project would be implemented in Kibuye, Gikongoro and Cyanguguprefectures, in Southwestern Rwanda (Map IBRD 11745). These areas are locatedat altitudes of between 1,400 and 3,000 m and have a rainfall of 1,100 to1,500 mm per annum; there is a three month (June-August) dry season. Thetopography is rugged, with numerous hills and swampy valleys, and most of thecultivable areas are located on fairly steep slopes. The soils, when ade-quately protected against erosion and poor husbandry, are generally fertile.However, in the deforested highlands with significant erosion and leaching,the residual soils Are very acldic, depleted of clay minerals and of littleagricultural value unless rehabilitated by farm manure or lime and mineralfertilizers. To prevent erosion on steep slopes, cinchona trees are plantedin hedge rows.

2.13 About 1 million people, or 25% of the country's total population,live in the three prefectures in which the Project activities would be con-centrated; the average population density is 165 persons/km2, as compared witha national average of 160/km2. In the three prefectures very little employ-ment outside the agricultural sector exists. All of the country's cinchonabark is presently produced in Cyangugu prefecture. Land travel and communica-tions are hindered by mountainous terrain, and much of the region's commerceis transported over Lake Kivu.

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III. THE PROJECT

A. General Description

3.01 The Project wotuld, over a five-year period (1976/77 to 1980/81)provide extension, inputs, marketing and other services to assist smallholderproduction of cinchona. Specifically, the Project would provide:

(a) farm inputs, and extension and marketing services tofacilitate smallholder cinchona production;

(b) additional staff for OCIR and staff training; and

(c) consultancy services to reinforce Government's limitedcapability in the agricultural sector.

Overall responsibility for the Project would be vested in the Ministry ofAgriculture and Animal Husbandry, and for physical implementation in OCIR.

B. Detailed Features

Farm Inputs, Extension and Marketing (Annex 1)

3.02 The Project would provide the nurseries, farm inputs and extensionservices required to enable smallholder producers to plant and maintain 900 haof cinchona in the Cyangugu, Gikongoro and Kibuye prefectures. The Projectnurseries would produce up to 4 million plants annually from seed producedat Mulungu Research Station in Zaire. Seed would also be available fromIndonesia, India and other cinchona producing countries if required. Theextension service would operate the nurseries and distribuite the seedlingsto farmers, along with fertilizers and other inputs; it would also advisefarmers on the maintenance of their plantings and organize pest control.Farmers would be charged only nominal prices for seedlings and fertilizersand costs would be recovered through crop levies (para. 5.05). In order toencourage as many farmers as possible to take up cultivation the area plantedunder the Project would be restricted to 0.25 ha per farmer. Assurances tothis effect were obtained during negotiations. Thus, with total Projectplantings of 900 ha, at least 3,600 farmers would be able to produce cinchona.Farmers would plant part of their cinchona either on slopes not under cultiva-tion or in boundary rows, and avoid, wlherever possible, planting in the areadevoted to other crops. Government would also make available some land onwlhich farmers could grow cinchona in blocks while retaining ownership of thetrees. OCIR would establish and operate four cinchona collecting centers asthe exclusive buyers in the cinchona producing communes, in addition to thetwo existing centers. Each center iwould be staffed withl a clerk and a store-man.

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Additional Staff, Staff Training and Project Evaluation

3.03 OCIR's technical staff would be strengthened through one inter-nationally recruited Cinchona Development Officer and two locally recruitedcinchona agronomists (para. 4.02). The cinchona extension staff would besupplemented by three extension supervisors (vulgarisateurs) and 12 extensionworkers (moniteurs). Offices, stores, transport and staff housing would alsobe included. Training would be provided in Rwanda and in neighboring countries.Project monitoring and evaluation would be among the responsibilities of theCinchona Development Officer. The principal monitoring indices during thefirst five years would be the number of participating farmers, the area ofcinchona planted on new and previously cultivated land, and the survival rateof planted seedlings; yields and production would be added to these indicesafter harvesting commences in Year 6.

Consultancy Services (Annex 2)

3.04 Agricultural development in Rwanda is hampered by the lack of tech-nical knowledge, and technical support is needed to redluce this bottleneck.The Project would provide consultancy services over a 5-year period to adviseGovernment and OCIR, as required, on immediate problems related to the Project,including OCIR's accounting procedures. The services could also be used morewidely as required to advise on future pre-investment activities, developmentprojects and sector policies. The type of consultants required and theirterms of reference and conditions of employment would be determined duringProject implementation in agreement with IDA. Such assurances were obtainedduring negotiations.

C. Project Costs (Annex 4)

3.05 Total Project cost, based on March, 1976 prices, is estimated atRwF 197 million (US$2.1 million), of which about RwF 113 million (US01.20 mil-lion) would represent foreign exchange expenditures. Total Project costs aredetailed below:

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ForeignLocal Foreign Total Local Forei_n Total Exchange----- RwF '000 … …(US$'000)-----

AgriculturalInputs 1,543 15,249 16,792 16 165 181 91

Vehicles andEquipment 7,365 10,725 18,090 80 116 196 59

Buildings 4,640 4,360 9,000 50 47 97 48

Personnel andTraining 37,178 30,150 67,328 402 325 727 46

Operation andMTaintenance 4,868 11,272 16,140 52 122 174 70

Constl tancyServices 2,000 8,000 10,000 22 86 108 80

Subtotal 57,594 79,756 137,350 622 861 1,483 58

PhysicalContingen-cies 5,559 7,175 12,734 61 77 138 56

Price Contin-gencies 20,630 26,256 46,886 222 284 506 56

Total ProjectCost 83,783 113,187 196,970 905 1,222 2,127 57

A physical contingency of 10% has been applied to all Project costs, exceptconsultancy services. Price contingencies, amounting to 34% of baselinecosts, have been calculated on the basis of assumptions as detailed inthe Appendix to Annex 4. Taxes and duties on Project items are estimated atRwF 13 million (US$140,000).

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D. Financing

3.06 The financing of Project costs would be shared in the followingamounts and proportions:

RwF US$Million Million %

IDA 167 1.8 90

Government 17 0.2 10

Project Costs netof Taxes and Duties 184 2.0 100

Taxes and Duties 13 0.1

Total Project Costs 197 2.1

The proposed IDA Credit would be on standard terms to Government; this wouldfinance all foreign exchange costs and 78% of local costs, or 90% of totalProject costs net of taxes and duties. Government would pass on the proceedsof the IDA credit and its own contribution for cinchona development to OCIR,whlich, as Government's implementing agency, would be reimbursed for 100% of itsProject expenditures. Farmers would pay only a nominal charge for inputs,while Government would recover their costs through levies on exports (para.5.04 and 5.05). Funds for consultancy services would be administered throughthe Ministry of Agriculture and Animal Husbandry.

E. Procurement

3.07 Farm inputs (US$260,000) in contracts exceeding US$30,000 would beprocured by international competitive bidding in accordance with IDA guidelines.Vehicles and equipment (US$270,000) would be procured followring advertising inthe local press and in adjacent countries, or through comparative shopping, asthe small orders of a number of different items, spread over five years, wouldmake procurement by international competitive bidding unsuitable; orders wouldbe grouped whenever possible. International firms are well represented bylocal agents both in Rwanda and neighboring countries and prices are competi-tive. Contracts for goods and services costing less than US$30,000 would followGovernment procurement procedures, which are satisfactory. In view of theirsmall size, civil works for staff housing, stores and the office (US$120,000)would be carried out by local contractors following local competitive biddingor by the Ministry of Public Works by force account. Appointments of consultants(US$0.5 million) would be made in agreement with IDA. Assurances as to the above

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procedures were obtained at negotiations together with assurances that drafttender documents for all contracts exceeding US$50,000 would be submitted toIDA for approval before bid invitation, as would bid evaluation with recommen-dations before award of contracts.

F. Disbursement (Annex 9)

3.08 Funds from the IDA credit account would be disbursed over five yearson the following basis:

US$ million

(a) 100% of foreign expenditures or 90% of totalcosts of equipment, vehicles, bicycles, andproduction inputs including fertilizer, lime,pesticides and implements 0.4

(b) 90% of total costs of civil works for housing,office and stores 0.1

(c) 90% of salaries of local staff, and operatingand maintenance costs of units employed underthe Project 0.6

(d) 100% of foreign expenditures or 90% of totalcosts of consultants, including the CinchonaDevelopment Officer, and of staff training 0.4

(e) An unallocated amount representing contingen-cies on the above categories and transferableto them as appropriate 0.3

Total IDA Credit 1.8

Disbursements against (a), (b) and (d) would be made against import documentsand appropriate records of expenditure certified by the Director General ofOCIR and the Project Director, or by the Ministry of Public Works' officerresponsible for civil works construction. Disbursements against (c) wouldbe made against certificates of expenditure; relevant documentation would notbe submitted to IDA for review but would be retained by the borrower and madeavailable for inspection by IDA during the course of Project supervisionmissions. Any funds remaining in the Credit account at the end of the Projectwould be reallocated with the .pproval of the Association.

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G. Accounts and Audit

3.09 OCIR's present accounting system does not accurately reflect itsvarious operations, nor does it allow effective cost control (para 2.11).Assurances were obtained at negotiations that OCIR would review its accountingprocedures, as necessary assisted by consultants (para. 3.04), and take stepstoward effective cost accounting. OCIR would keep separate Project accountsfor cinchona. Further assurances were obtained at negotiations that the OCIRaccotnts as well as all Project accounts would be audited annually by Govern-ment auditors until such time when independent auditors acceptable to IDA wouldstart operating in the country. The audited accounts would be submitted toIDA no later than six months after the close of the respective financial year.

H. Ecological and External Effects

3.10 With standard soil conservation measures to be followed, there wouldbe no adverse ecological effects in the Project area as a result of Projectactivities. Once the cinchona trees are established, the cover would helpto reduce soil erosion and maintain soil fertility, thus producing long-termbenefits.

IV, ORGANIZATION AND MANAGEMENT

4.01 Overall responsibility for Project execution would rest with theMinistry of Agriculture and Animal Husbandry. Under the supervision of theMinistry, OCIR would implement the Project. All consultants other than thosefor cinchona development would work under the direction of the Ministry ofAgriculture. The Chief of OCIR's Cinchona Division would serve as ProjectDirector and the Project office would be established at Kibuye. The CinchonaDivision would establish and operate the cinchona nurseries, distributeseedlings and fertilizer to farmers, and advise farmers on the planting, main-tenance and harvesting of cinchona. OCIR's Purchasing and Marketing Divisionwould be responsible for cinchona marketing and would also procure fertilizers,other inputs and equipment. The formulation of annual work programs andevaluation of programs under the Project would be the responsibility of theProject Director; he would be assisted in this task by the Cinchona DevelopmentOfficer and, in case of need, by consultants provided under the Project.

Project Staff

4.02 The Cinchona Development Officer would be recruited internationally.He would be an agronomist located in OCIR's Cinchona Division and serve asDeputy Project Director (terms of reference are included as Appendix 1 toAnnex 1). The Project's requirements for local staff are in line with theoutput of existing training facilities supplemented by in-service training under

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the Project. The total number of extension staff to be employed is indicatedbelow5

Extension Staff Requireiients

Agronomist Extension Supervisor Extension WorkerStaff Title (Agronome) (Vulgarisateur) (Moniteur)Staff Grade A2 A3 A4

a! b/ c/ a/ b/ c/ a/ b/ c/

Cinchona 1 2 3 1 3 4 12 12

a! In position; b/ To be recruited; c/ Total.

The agronomes would be recruited from among the graduates of the four-yearcourse of the Ecole d'Agriculture at Butare. The vulgarisateurs would bediplomates of the two-year course at the Ecole des Vulgarisateurs at Kibuye(which turns out 25 diplomates per year). The moniteurs would be recruitedfrom among secondary school leavers who would receive in-service trainingtnder the Project. Assurances were obtained during negotiations that theappointment of the Cinchona Development Officer would be made in agreementwith IDA before January 1, 1977.

V. PRODUCTION, MARKETING, BUDGETARY EFFECTS ANDFARMER BENEFITS

Production

5.01 Planting of cinchona would be phased, with the planting of 100 hain year 2, 200 ha in year 3, and 300 ha in bc2; years 4 and 5. About 10,000cinchona trees would be planted per ha; of these, 2,500 would be thinnedout annually in years 4, 5, and 6, and 625 would be uprooted annually in years7 through 10 when a new planting cycle would start. Based on present Rwandaexperience with smallholder production, yielcls of cinchona bark are estimatedat 300 kg/ha in year 4, 400 kg/ha in year 5, and 500 kg/ha in years 6 through10, as compared with 750 kg/ha from commercial estates. A farmer with 0.25 haunder cinchona 1/ would, therefore, produce 125 kg/year of cinchona bark atfull development. Total annual Project production would reach 450 tons in 1987,thus increasing Rwanda's total production to just over 1,000 tons, or 2.6 timesthe estimated 1975 total output of 382 tons (Annex 1, Table 5).

1/ For purposes of the financial and economic analyses, it has been assumedthat 0.10 ha would be planted on land previously producing other cropsand 0.15 ha on previously unproductive land.

- 13 -

Markets and Prices

5.02 OCIR is the sole buyer of smallholder cinchona bark, and licensesdirect exports by commercial estates. Four new buying centers would beestablished to handle Project production. Presently OCIR sells most of itsbark for processing in Belgium, the Federal Republic of Germany and theNetherlands. If a processing plant were to be established in Rwanda (para2.05), OCIR's marketing arrangements would change accordingly. Total worldproduction of cinchona was estimated at 7,000 tons in 1974; with a projectedincrease of 3% per annurm, this total should rise to about 10,000 tons in 1987and is expected to be in line with the expected demand at that time. Withthe incremental Project output, Rwanda's share of the world market is expectedto increase from about 5% in 1974 to about 10% in 1987.

5.03 As a result of growing world demand, average cinchona bark pricesf.o.b. Kigali have increased sharply from about RwF 55 per kg in 1968-197(to RwF 190 per kg in 1974 and to about RwlF 300 per kg in late 1975. Govern-ment increased the producer prices accordiingly and OCIR pays now RwF 220 perkg for bark from the trunks and roots and RwF 180 per kg for bark from thebranches which has a lower quinine anhydrous alkaloid (QAA) content. Futuredeclines to pre-1975 levels are unlikely in view of the rising non-pharmaceuticaldemand, the incomplete substitutability of synthetic drugs for quinine, andthe projected continuing high raw material cost of synthetic drugs. The fi-nancial and economic analysis of the Project has been based on a constantexport price, in real terms, f.o.b. Kigali of RwF 227 per kg bark with a con-tent of 4.5% QAA throughout the Project's life. It has been further assumedthat the present Government export tax and OCIR operational levy (respectivelyRwF 45 and RwF 18 per kg, or 28% of the projected export price) would be in-increased by a further Project cost recovery levy of RwF 40 per kg, bringingthe total of all levies to RwF 103 per kg (45% of projected f.o.b. Kigali price).Allowing for the cost of handling and transport this would leave the producerswith an average price of RwF 109 per kg. This price is lower than the presentproducer prices, but is justified since the farmers would receive the plants andother inputs free of charge (except for a nominal fee). Project farmers wouldstill increase their incomes by approximately 25%.

Budgetary Effects (Annex 5)

5.04 As a Government agency OCIR would be fully reimbursed for itsProject expenditures from the proceeds of the IDA Credit and Government'sown contribution. No separate cash flow has therefore been calculated forOCIR and the cash flow presented in Annex 5, shows the aggregate position forboth the Government and OCIR. With the present OCIR operational levy oncinchona exports (RwF 18 per kg) and the present Government export tax (RwF 45per kg), but without an additional cost recovery levy on cinchona exports, thec).mulative Government cash flow arising out of the Project would be negativeat all times except in Year 13 when there would be a small surplus. Assumingthat the opportunity cost of capital equals 8% per year Government would atthe present level of export levies and duties recover only 53% of the Project

- 14 -

cost, including recurrent expenditures, over a period of 24 years (twocinchona planting cycles). An increase in the level of export taxes andlevies on the Project's cinchona production (which will only start afterthe Project's completion) is therefore necessary to recover the Project'scosts.

5.05 On the basis of present cost estimates an additional levy of RwF 40per kg (in constant 1976 terms) would allow Government to recover fully, overa period of 24 years, the Project's cost, including interest at 8%, exceptfor the cost of the internationally recruited cinchona expert in excess ofthe local salary level. If the full cost of the expert were to be included,87% of the costs, including interest, would be recovered. With the additionallevy the annual Government cash position would become positive in Year 8 andthe cumulative surplus would reach RwF 200 million in Year 20. To maintainsufficient farmer incentives the additional levy should not exceed RwF 40 perkg. During negotiations it was agreed that Government would periodicallyreview the level of OCIR's operational levy and its export tax on cinchonaand make adjustments or establish a new levy, as appropriate, to recover at areasonable interest rate all capital and recurrent expenditures incurred bythe Government and OCIR, including subsidies on farmers' inputs, while main-taining sufficient incentives to farmers for cinchona cultivation.

5.06 The Project would have a very favorable impact on Rwanda's balanceof payments. Despite recurring foreign exchange expenditures resulting fromProject activities and debt service on the proposed IDA Credit, there wouldbe a net inflow of foreign exchange of RwF 51 million (US$550,000) during thefirst five years of the Project, and of RwF 375 million (US$4.0 million)during the first decade (Annex 6).

Farmer Benefits (Annex 7)

5.07 The analysis indicates that, while the long-term effect of theProject on farm incomes would be very favorablZ, there would be a potentialfor reduced incomes in the initial years after planting. For example, if afarmer planted all of his 0.25 ha in one year, then for the first three yearsafter planting, assuming intercropping in the first two years and the plantingof 0.1 ha on land previously cultivated, the net cash revenues of a farm of1 ha would, on average, be reduced by about 17% per annum. However, as thedrop in income would be reduced by staggering planting over several years,it would not deter smallholders from planting cinchona. Acceptability ofcinchona to smallholders has already been demonstrated in the field and isjustified on account of increased farm incomes in subsequent years. Underthe Project, smallholders' net cash revenues from the sale of cinchona barkwould rise to about RwF 11,000 per annum from years 4 to 10. Additionalbenefits would result from the use of debarked trees as firewood, whicl is inshort supply. The provision or planting material and fertilizers at a nominalfee by OCIR and the productive use of some previously uncultivated land would

- 15 -

reduce farmers' financial risk and make Project returns particularly attrac-tive. Estimated average annual family incomes of Project farmers would beincreased by RwF5,250 (US$57), and annual per capita incomes by RwF 1,170(USS13), or about 25% above present levels. Average annual rural income levelsin Rwanda of about RwF 5,100 (US$55) per capita are approximately 26% belowthe national average; the country's absolute poverty level in 1970 was esti-mated at RwF 3,700 (US$40) per year which would be eqxuivalent to aboutRwF 4,600 (US$50) at 1974 prices.

VI. ECONOMIC BENEFITS AND JUSTIFICATION (Annex 8)

6.01 The primary direct benefits of the Project would be increasedproduction of cinchona bark for export, leading to increased incomes to about3,600 farm families now living at near-subsistence levels, and increasedforeign exchange earnings for Rwanda. At full development, incrementalproduction would be 450 tons per year.

6.02 The Project's internal economic rate of return would be 15% over a24-year period. Project output of cinchona has been valued at prices f.o.b.Kigali less the cost of internal transport and handling; prices have beenassumed to remain constant at 1976 levels. The net market value of about360 ha of crops replaced by the Project has been deducted from the value ofcinchona output to arrive at net incremental Project benefits. Projectccsts include all components, except consultancy services. Skilled laborand hired store and nursery labor has been fully costed at market rates.Farm family labor has been shadow-priced at 25% of market wage rates. Therewould be no on-farm employment of hired labor. Farm inputs, supplied tofarmers at a nominal fee, have been fully costed. Taxes and duties generatedby the Project have been deducted from Project costs. Foreign exchange costsand benefits have been valued at RwF 111.00 = US$1.00 to reflect the opportu-nity cost of foreign exchange to Rwanda; if foreign exchange were valued atthe prevailing exchange rate of RwF 92.84 = US$1.00, the economic rate ofreturn would be 13%.

6.03 The risks most likely to affect the Project's economic rate ofreturn would be reduced prices due to lagging demand in a market situationof relatively few large buyers. But even with a price of 20% below expecta-tions, the rate of return would still be 11%. The perennial nature and longproduction cycle of cinchona which might involve a negative farm cash flowin the initial years after planting would pose another risk in a smallholderenvironment. The Project would seek to alleviate this risk by promoting theplanting of more than one-half of the new crop on previously uncultivated land,thus minimizing losses from the production of existing crops, by staggeringplanting on individual farms over several years, and by providing an attrac-tive financial return to farmers. Scattered smallholder production alsomakes quality control more difficult, but the resulting risk would be little

- 16 -

more than marginal in view of the relatively small size of the Project, thefact that planting would be restricted to three relatively contiguous areas,and the adequate level of staffing in the Project's extension service. Sensi-tivity analysis indicates that, should outptit be 10% less and costs 10% higherthan anticipated, the economic rate of return would be 11%.

VII. AGREEMENTS REACHED AND RECOMMENDATIONS

7.01 At negotiations agreements were reached on the following principalpoints:

(a) the area planted to cinchona by participating farmers wouldnot exceed 0.25 ha per farmer (para 3.02);

(b) consultants, whose qualifications and experience would besatisfactory to IDA, would be employed, as and when needed, andtheir terms of reference and conditions of employment would bedetermined by agreement between the Government and IDA (para 3.04);

(c) the appointment of the internationally recruited CinchonaDevelopment Officer would be made in agreement with IDAbefore January 1, 1977 (para 4.02);

(d) Government would periodically review the level of OCIR'soperational levy and its export tax on cinchona and makeadjustments or establish a new levy as appropriate torecover at a reasonable interest rate all subsidies to thefarmers as well as all other capital and recurrent expendi-tures incurred by the Government and OCIR, while maintain-ing sufficient production incentives for farmers (para5.05).

7.02 The Project is suitable for an IDA Credit of USS1.8 million onstandard terms to the Government of Rwanda.

ANNEX 1Page 1

RWANDA

GINCHONA PROJECT

PRODUCTION AND MARKETING OF CINCHONA

I. Present Situation

General

1. The cinchona tree is a native of the Andes cordillera in SouthAmerica and belongs to the family Rubiaceae. It has been planted in manytropical highlands of Asia and Africa. Commercial cinchona is extracted fromthe dried bark of roots, stems and branches of a few species and varietiesof the genus Cinchona, o� which C. ledgerlana is the most important.

2. Cinchona bark is chiefly used for the extraction of its alkaloids,of which quinine is the most important. The alkaloid content of the barknormally varies between 3% and 14%, according to the genetic characteristicsof the tree, its age and the part from which the bark comes, the highest beingfrom the base of the tree and the lowest from branch and root extremities.

3. Traditionally quinine was used as an anti-malarial drug, but duringand after World War II it lost ground to synthetics. However, the use ofquinine alkaloids has been growing steadily for other medical purposes, par-ticularly in cardiac depressants, while the use of some cinchona derivativesin beverages has increased rapidly in recent years, particularly quininehydra-chloride which is used as a flavoring agent in soft drinks.

4. In Rwanda, harvesting of the bark normally starts in the fourthyear after planting, the bark being stripped off pruned branches and t: 'esremoved by uprooting in regular thinnings. The final crop is spread over4 years from the seventh to the tenth year, when 25% of the remaining treesare removed annually. The bark is then normally air-dried in the open toreduce the moisture content to around 11%, after which operation the weight ofthe bark is reduced by about two-thirds. Air-drying is supplemented byartificial drying for 24 hours on private estates. The dried bark in piecesand chips is packed in jute bags containing 50-60 kg. Properly stored it canbe kept for up to a year without losing its alkaloid content.

Production in Rwanda

5. During the sixties about 20 small cinchona plantations of less than100 ha were established, mostly in Cyangugu prefecture. Subsequently some ofthese were taken over and extended by two foreign chemical companies (Pharmakinaand ACF Chemiefarma NV); others were neglected or abandoned as world market

ANNEX 1Page 2

prices remained depressed. The Government also managed two experimentalplantations, one at Mata in Gikongoro Prefecture and the other in KibuyePrefecture. With world market prices rising since 1970, smallholders plantedcinchona and the area and production position as of 1973 is as follows:

PLANTINGS AND PRODUCTION OF CINCHONA IN 1973

Areas (ha) Total Average YieldIn Production (kg per ha)

Prefecture Planted Production (ton) (for areas in production only)

Gikongoro

State-Owned 5O" 12 2.8 236

Cyangugu

Smallholders 219 134 72.2 540

Foreign Estates 600 324 237.8 733

Kibuye

State-Owned 18 _____

Total 887 470 312.8 666

/1 Includes 13 ha of Cinchona succeruba no longer harvested because of lowquinine alkaloid content.

Source: Ministry of Agriculture, Annual Report 1973.

As in previous years, foreign estates had the highest yields per ha, producedabout 80% of Rwanda's output and exported it under licenses from OCIR directlyto their processing plants in the Netherlands and the Federal Republic ofGermany. Rwanda exported the rest of its production to Belgium, France andthe United Kingdom.

Marketing and Prices

6. There are no generally accepted grading standards for cinchona bark,and importers' price offers take the form of a price range based on the percen-tage content of quinine anhiydrous alkaloids (QAA). For example, bark wich 10%QAA content can be priced at five times the price for bark with 3% QAA (Table 1).

ANNEX 1Page 3

Countries without laboratories to determine this percentage can sell eitheron results of prior overseas tests on samples or direct without testing andwithout an estimate of the QAA content. World market prices of quinine pro-ducts increased sharply in 1973-74, and increased further in 1975 (Table 2).

7. Between 1968 and 1974, Rwanda's average selling prices (f.o.b.Kigali) and export tonnages more than doubled (Table 3). Under these boomconditions, there has been much stealing from plantations, indiscriminate andpremature harvesting of bark, and considerable deficiencies in the marketingarrangements for the smallholders' production. To remedy matters, the Govern-ment has entrusted the development of smallholders' cinchona to OCIR. A newdivision to handle cinchona has been set up which operates: (a) nurseries,(b) a specialized extension service and (c) two buying and storage centers.OCIR is now the sole marketing agency for smallholder cinchona production,while estate production continues to be exported under licenses granted byOCIR.

8. In early 1976, OCIR's price to smallholders was increased toRwF 220/kg of bark from roots and stems and RwF 180/kg for bark from branches,irrespective of QAA content. The basic export value c.i.f. Antwerp of cinchonabark was 270 RwF per kilo bark with 5.43% SQ2 content. The actual c.i.f.market prices in January 1976 varied from RwF 195,000 (US$2,100) per ton forlow grade bark with an SQ2 content of 3.62% to RwF 975,000 (US$10,530) per tonof bark with a SQ2 content over 10.86% (1% QAA = 0.83% SQ2). Prices used inProject analysis are shown in Table 4.

II. Future Prospects

Agronomic Considerations

9. Cinchona ledgeriana requires an abundant and well distributedrainfall (1,400 mm and above), is not very exacting as to soil requirementsand grows on slopes as well as drained swamps between altitudes of 1,400 mand 2,000 m. It will grow in most areas supporting tea. In Rwanda's south-west, and in Cyangugu prefecture in particular, conditions of soil, rainfalland climate are most favorable and cinchona production is concentrated there.

10. OCIR's nurseries obtain selected seeds from the INERA researchstation at Mulungu (Zaire) which has been breeding and selecting cinchonafor the past 30 years. Seeds are tiny and 1 kg is sufficient to plant 100 ha.After 9 months in nursery, plants are ready for planting out. Previously, lessthan 1,000 trees/ha were planted and trees were cut back for bark harvest fromyears 4 to 12, followed by two coppice cycles of 8 years. A more flexiblesystem is now widely used under which 10,000 trees/ha are planted, thinnedout by removing 25% of them annually in years 4, 5, and 6, and 6.25% annuallyover the following four years, when all the stumps are uprooted and the plan-tation is replanted. Coppicing annually from years 7 to 10 has been aban-doned, as regrowth has a relatively low quinine content.

ANNEX IPage 4

11. Some damage has been caused, particularly in younger plantationsthrough a leaf-sucking insect, Helopeltis orophila, which attacks growing tipsand causes reduced growth and yields. Attacks are erratic and controllablethrough the application of suitable insecticides. Occasionally the larvae ofa moth may cause damage by defoliation, but this does not usually constitute aserious danger. Root rot (Armillaria mellea) is sometimes encountered,especially in poorly-drained soils; in general, however, as in the case of teain the same region, its incidence is limited, probably because the originalforest has long disappeared.

12. Estimates of yields are difficult to make because of the variabilityin harvesting methods and quinine content of the different kinds of bark.Actual figures obtained from the records of one estate, carefully recordedover a period, showed an average annual yield from year 4 onwards of 1 ton/haof dried bark of all kinds. For the hitherto unknown smallholder productionthe yields are likely to be considerably lower and for Project purposes ayield of 500 kg per ha/year has been assumed at full development (years 6 to10).

13. Cinchona is suited for smallholder production. Where land isavailable, it can be grown in blocks, but it can also be planted as a hedge-row or windbreak or around the homestead without affecting food crop produc-tion. When planted in single lines thinning is eased, and with increasingsunlight the bark quinine content is likely to increase. Food crops caneasily be interplanted during the first two years. Although labor intensive,the harvesting is simple: the bark is stripped off and then air-dried for5 to 10 days. Harvesting delays do not affect bark quality, nor yields,and smallholders can adjust their harvesting calendar according to marketprices. The wood from harvested trees is useful for fuel, and this is anadditional benefit to growers.

World Market Prospects

14. A few European pharmaceutical companies engaged in the extractionof quinine products dominate the world market. Through their ownership of orinterest in cinchona plantations, sometimes including processing plants inproducing countries, these companies control their sources of supply and onlysupplement their needs from other sources. Because of this monopolisticsituation and the secrecy surrounding new technical developments, marketinformation is scanty and forecasting difficult.

ANNEX 1Page 5

15. The world production of cinchona bark is roughly as follows:

Country Annual Production (1973)(tons)

Zaire 4,500Indonesia 1,000Guatemala 500Rwanda 350 (510 in 1974)Others /1 650

Total 7,000

/1 Including Tanzania, Kenya, India, Sri Lanka, Bolivia,Colombia, Costa Rica and Ecuador.

The recent nationalization of plantations in Zaire has not disrupted suppliesappreciably and production elsewhere, particularly in Indonesia, is expectedto increase during the next few years in response to recent price increases.

16. The extent to which this recent price increase has been caused byan increase in demand for quinine products is difficult to determine. Theconsumption of quinine sulphate in anti-malarial preparations is said to bedeclining because of synthetic substitutes, while demand for quinine sul-phate (used in cardiac depressants) and for quinine hydrochloride, obtainedfrom quinine sulphate and used in the soft drinks industry, is growing.By the end of 1973 the prices of all three products were nearly twice ashigh as two years before. Although there is always a danger that nationalstockpiles (particularly in the USA) may be released on the world market,thus causing some disruptions, growth forecasts for world quinine require-ments of 2% to 5% per annum do not seem to be unduly unreasonable.

Processing Possibilities in Rwanda

17. The Government wishes to promote the establishment of a cinchonaprocessing plant in the country and is already negotiating with a commer-cial firm to that effect. UNIDO is providing technical assistance to theGovernment in the evaluation of this project and in any negotiations withprivate interests that may arise.

III. Project Considerations

18. The Project would expand and reinforce the Cinchona Division of OCIRCafe in order to accelerate the cinchona smallholder planting program in theprefectures of Cyangugu, Gikongoro and Kibuye, through:

ANNEX 1Page 6

(a) increasing the supply of planting material;

(b) strengthening the extension services to smallholders; and

(c) improving both internal and external marketing arrangementsfor cinchona bark.

19. The Project would increase OCIR's existing nursery capacity in orderto produce from year 4 onwards nearly 4 million plants per year, i.e. suffi-cient for the establishment of 300 ha at a density of 10,000 trees/ha (allow-ing 30% for culling, losses and failures). A total of 900 ha would beplanted: 100 ha in year 2, 200 ha in year 3 and 300 ha each in year 4 and 5.Seedlings would only be distributed to smallholders planting not more than0.25 ha under cinchona. Some of the planting would be in blocks, whereverGovernment-owned land unsuitable for cultivation and grazing (e.g. slopes) isavailable. However, all harvesting, even in blocks, would be done indivi-dually.

20. Seedlings would be planted in pits, with an addition of farmyardmanure and fertilizer (NPK - 20:10:10). Liming would also be necessary.Farmers would pay a nominal charge for seedlings, fertilizer and lime madeavailable under the Project; the bulk of these input costs would be reco-vered by a levy on exports.

21. Of the 887 ha under cinchona in 1974, 470 ha were in production.Project plantings of 900 ha would bring Rwanda's cinchona area to 1,800 haby 1981. An expansion by more than 900 ha would be risky in the light oflimited world market demand. By 1978 existing plantations should be pro-ducing 560 tons annually, and by 1987 the Project plantations should beproducing an additional 450 tons annually. The total production would thusincrease from 312 tons in 1974 to 1,010 tons in 1987, thereby increasingRwanda's share of the world market from 4.5% to 10% on the assumption thatworld consumption would increase by 3% per year (Table 5).

22. The head of OCIR's Cinchona Division would serve as Project Director.The Cinchona Division has at present, besides it's chief, only one agronomistand one "vulgarisateur" and would be augmented under the Project by twoadditional agronomists, three "vulgarisateurs" and twelve "moniteurs," whowould work from two existing and four new centers, where nurseries and storeswould be established. In addition, an internationally-recruited CinchonaDevelopment Officer, acting as Deputy Project Director, would be in charge ofthe operational program. Draft terms of reference for the Cinchona DevelopmentOfficer are in Appendix 1. The Project would provide an office and staff hous-ing at Kibuye together with means of transport for all personnel. Besi esorganizing the planting program and the distribution of seedlings and fertil-izers, extension staff would advise farmers on harvesting, the extraction anddrying of bark and its separation according to its origin (root, trunk orbranch).

ANNEX IPage 7

23. The four new centers would operate as additional purchasing stationsfor smallholder production. The Cinchona Development Officer would supervisethis system and would assist OCIR Headquarters staff in administrative andaccounting matters related to the Project. Project accounts would be keptseparately in OCIR's accounts and on a commercial basis, showing costs ofpurchases, operational costs, levies to recover the costs of inputs and ex-port duties as deductions from sales proceeds.

24. OCIR's Purchasing and Marketing Division would handle the overseassales of cinchona bark. As production grows, it will need to widen itsoverseas contacts, unless a local processing factory is established (para.17), in which case special pricing arrangements would need to be negotiated.Duplicates of bark samples dispatched to potential overseas buyers would besent to ISAR for analysis for QAA content as a check on offers received.

25. Because there is a relatively long lead time between plant-ing and harvesting, and the possibility exists that some existing crops wouldbe displaced by cinchona, farmers would only have to pay a nominal fee of RwF1,000 for inputs and services. The attractive returns at full developmentshould be sufficient incentive to farmers to participate in the Project (Annex7). Input subsidies and other Project costs would be recovered through leviesand taxes on cinchona exports.

26. Cinchona exports accounted for about one percent by value of totalexports in 1973-74 (Table 6). Export earnings from cinchona, includingproduction outside the Project, would more than quadruple in real terms overthe next decade. While this would still represent a small share of totalexports, it would help alleviate Rwanda's trade deficit which was RwF 1.9billion (US$20.8 million) in 1974.

June 8, 1976

ANNEX 1Appendix 1Page 1

RWANDA

CINCHONA PROJECT

Draft Terms of Reference for the Postof Cinchona Development Officer

1. The Cinchona Development Officer would:

(a) be responsible to the Project Director;

(b) assist in the planning and implementation of the plantationprogram, in the carrying out of all cultural operations fromthe nursery to the cropping, and ensuring that adequate soilconservation measures are followed;

(c) assist in planning the best phasing of planting and croppingoperations by individual smallholders to ensure as regularand as high a financial return as possible to them, consistentwith the cultural cycle of cinchona;

(d) assist in providing technical advice and effective controlon the extraction, drying, stacking, storage and marketingof cinchona bark;

(e) assist in the setting up of suitable crop records, of sampleplot measurements, and of quality control of the cinchonacrop;

(f) assist in all management, administr'tive, budgetary, economicand financial matters;

(g) assist in the selection of technical staff;

(h) be responsible for on-the-job training of technical personnel;

(i) be responsible for the monitoring, evaluation and cost benefitanalysis of the program; and

(j) act as liaison with any consultant appointed within the frame-work of the Project.

ANNEX 1Appendix 1Page 2

2. Qualifications required:

(a) have a university degree or equivalent in agronomy,agricultural sciences or forestry;

(b) have no less than 10 years experience in tropicalagriculture or forestry, with some experience incinchona growing and cropping;

(c) have some experience in economics, more particularlyagricultural or forestry economics; and

(d) have experience in the management of a tropical agri-cultural or forestry project or operation, preferablyinvolving cinchona.

June 8, 1976

ANNEX/ANNEXE 1Table/Tableau 1

RWANDA

CINCHONA PROJECT

Price Quotations for Cinchona Bark(CIF Antwerp) in January 1976

% of SQ2- Price of Bark Equivalent Price of SQ2(Quinine RwF/tonne US$/tonne RwF/tonne US$/tonne

Sulphate) (000) (106) (106)

3.620-4.826 195-260 2,100-2,800 5.4 0.58

4.827-6.033 290-361 3,130-3,900 6 0.65

6.034-8.446 542-632 5,850-6,820 7.5 0.80

8.447-10.860 759-975 8,200-10,520 9.0 1.02

1/ SQ2 = Quinine sulphate with two water molecules attached (4.827% SQ2 =

4.0% QAA).

February 15, 1976

RWANDA

CINCHONA PROJECT

Prices of Selected Quinine Products_ 1971 - 1975 1/(US$ per Ounce)

1971 1972 1973 1974 1975

Quinine Sulphate, USP XVIII 1.61-1.75 2.04-2.05 2.97-3.33 4.51-6.21 5.44-6.95

QuinLie Hydrochloride, NF 1.60-1.61 1.93-1.99 2.85-3.25 4.45-6.20 5.40-6.90

Quinidine Sulphate, USP 2.39-2.45 2.73-3.00 4.08-4.62 6.82-7.71 7.68-8.74

1/ December list prices for lots of 2,000 ounces or more.

Note: List prices do not always reflect prevailing market prices.

Sources: Chemical Marketing Reporter, New York.

M t

Januar- 13, 1976

r3Y

RWANDA

CINCHONA PROJECT

Cinchona Export Quantities, Values and Prices 1968 - 1974

Unit 1968 1969 1970 1971 1972 1973 1974

1. Quantity Ton 221 265 269 180 246 311 510

2. Value: Customs- RwF million 9.5 11.6 12.5 12.6 17.2 23.3 42.6

3. Export Duty RwF million 1.5 1.0 1.9 1.9 2.6 3.5 n.a.

4. Value: Foreign ExchangeReceipts RwF million 12.3 12.7 17.1 15.6 25.2 30.2 98.0

5. Average Selling PriceFOB Kigali RwF/kg 56 48 64 87 100 97 192

1/ Valuation for customs purpose based on artificial unit price ("prix forfaitaire").

Sources: Ministry of Planning and Natural Resources, National Bank of Rwanda, OCIR.

January 30, 1976

F-3P) 2

a >

ANNEX/ANNEXE 1Table/Tableau 4

RWANDA

CINCHONA PROJECT

Breakdown of Expected Cinchona Prices

PercentageRwF/ton of FOB Price

Price CIF Antwerp

On basis of 4.5% QAA (5.43% SQ2) 1/ 270,000

Less

Freight Kigali/Antwerp 37,800

Wharfage, Insurance & other Costs 5,400

Price FOB Kigali (rounded) 227,000 100%

Less

OCIR Operational Charges 18,000 8%

Customs Duty and Export Tax 45,000 20%

OCIR Levy to recover Project Costs 40,000 18%

Transport Cyangugu/Kigali 10,000 4%

Analysis 3,000 1%

Packaging, etc. 2,000 1%

Price to Producer 109,000 2/ 48%

Price used in Economic Calculation 212,000 3/

1/ QAA: Quinine anhydrous alkaloid. SQ2: Quinine sulphate with two watermolecules attached.

2/ Producer price used in farmer's cash flow calculations - RwF 104,000/ton.3/ Price FOB Kigali less local transport, analysis and packaging.

June 2, 1976

RWANDA

CINCHONA PROJECT

Estimate of Development of Cinchona Production(tonnes of dried bark)

Area Year Year Year Year Year Year Year Year Year Year Year Year Year Year

ha 1974 1975 1976 1977 1978 1979 19dO 1981 1982 1983 1994 1985 1986 198,

1977 Total a.- planted- 887of wh .h:a) is, production 470 312 312 350 350 350 350 350 350 350 350 350 350 350 350

b) .ut yet producing 417 - 70 125 170 zl 210 210 210 210 210 210 210 210 210

312 382 475 520 560 560 560 560 560 560 560 560 560 560

1978 Project plantings 100 - - - - - - - - 30 40 50 50 50 5W

79 Project plantingo 200 - - - - - - - - - 60 80 100 100 100

!980 Project plantings 300 - -- - - - - - 90 120 150 150

1981 Project plantings 300 - - - _ _ _- - - -_ - 90 120 150

Rwanda Total 312 382 475 520 560 560 560 560 590 660 780 920 960 1,010

Total world production-/ 7,000 7,210 7,430 7,650 7,880 8,110 8,360 8,610 8,870 9,130 9,410 9,690 9,980 10,280

Rwanda production in 7 ofworld production 4.5 5.3 6.4 6.8 7.1 6.4 6.7 6.5 6.7 7.2 8.3 9.5 9.8 9.8

Total area under Ci-chona by 1981,

existing in 1974 887 haP-j-ect plentings 900 ha

Total 1,787 ha

/ Includes estates, of which average yields of 750 kg/ha are expected. Subsequent plantings are assumed to be by smallholders

with yields of 300 kg/ha in year 4, 400 kgIsa in year 5 and 500 kg/ha in year 6 and thereafter.2, world production estimated to increase by 3W/year.

.OTE: It is assumed that areas and yields from estates ressais constant.

June 8, 1976

RWANDACINCHONA PROJECT

Value of Exports and Imports, 1967-1974(RwF Million)

1967 1968 1969 1970 1971 1972 1973 1974

EXPORTS

1. Animal Products 26 13 26 40 41 61 105 134

2. Vegetable Productsa) Cinchona 4 10 12 14 13 17 23 43b) Other 838 934 767 1,541 1,30-5 1,065 2,010 2,507

3. Mineral Products 529 508 601 859 854 645 591 541

4. Industrial Products - 1 5 1 1 - 2 2

5. Re-exports 7 20 14 26 20 17 56 232

Total Exports 1,404 1,487 1,424 2,481 2,233 1,795 2,787 3,459

Total Imports 2,022 2,246 2,362 2,910 3,305 3,182 2,819 5,394

Balance -618 -759 -938 -429 -1,072 -1,387 -32 -1,935

Source: Ministere du Plan et des Ressources Naturelles, >Bulletin de Statistique, Kigali, January 1975.

January 30, 1976.

!WANDA

CINCHOINA PROJEC.T

impe-ntation Chart

Year 1976 1977 1978 1979 1980 1981

Production of 'qeedlings 1.3 million 2.6 milion 4 million 4 million

Planting 100 ha 200 ha 300 ha 300 ba

Rjecruitment -~f_New Staff

Cinchova Officer I/

AgronomeI

Vulgarisateur 2

Moniteur66

I1 Interniationally recruited.

June L0, 1976

ANNEX 2

RWANDA

CINCHONA PROJECT

Consultancy Services

1. With a high rural population density and limited scope for theexpansion of its cultivated areas, Rwanda needs to give high priority tothe increase of its farm production. Because of population pressures, farmsizes have become smaller, soil fertility has been reduced through the lackof sound husbandry and, as a result, crop yields have in many instancesdeclined. If recent trends continue, Rwanda would be faced with a serioussituation in which it may be difficult to sustain export earnings. Althoughthe broad directional needs can be clearly defined, the means of meeting themare far from certain and present many technological, organizational andeconomic as well as social problems. Past research efforts have generallynot been directed at producing workable systems which can effectively andeconomically be applied to a large number of small farmers. At the farm levelextension services are weak and poorly managed and input, credit and market-ing services inadequately provided.

2. A broad range of on-farm development opportunities to meet futureproduction needs exists in Rwanda, but the lack of sufficient technicalknowledge prevents the realization of these opportunities. The country needstechnical support, directed particularly at total on-farm needs, to expandthe body of knowledge necessary for accelerated development. Although theprecise nature of such support has to be determined according to priorityrequirements and aligned with Government's development strategy, it shouldinclude elements of applied research, extension, farm services, and economicanalysis of alternative systems. Consultations on specific problems andassistance in the preparation of projects are also needed.

3. The Project would provide RwF 10 million (US$108,000) overa 5-year period for consultancy services which are intended to fill themost urgent needs for technical support and to initiate studies andprograms to create a sounder basis for future pre-investment activities,development projects and sector policies. The funds would be administeredby the Ministry of Agriculture and disbursed according to precise terms ofreference to be agreed upon between Government and IDA during Projectimplementation.

June 8, 1976

ANNEX 3Page 1

RWANDA

CINCHONA PROJECT

Office des Cultures Industrielles du Rwanda (OCIR)

A. Origins and Present Conditions

1. During the period when Ruanda-Urundi was administered as one unitand as a UN Trust Territory, an office for native coffees of Ruanda-Urundi(Office des Cafes Indigenes du Ruanda-Urundi - OCIRU) was established toexercise control over coffee marketing in the interests of the small coffeeproducers.

2. The Office for the Industrial Crops of Rwanda (Office des CulturesIndustrielles du Rwanda - OCIR) was set up by a law in 1964 to take overwithin Rwanda OCIRU's operations for coffee and other industrial crops. Underthis law, the objectives of OCIR in relation to industrial crops are definedas:

(a) control of quality and grading;

(b) development of external and internal market outlets;

(c) organization and improvement of:

production, processing and grading;

establishment and enforcement of quality standards;

storage and handling;

marketing procedures;

agricultural cooperatives;

(d) aiding and representing the Government in international commoditynegotiations and agreements; and

(e) management of funds specifically intended for the promotionof the production and sale of industrial crops.

3. OCIR is governed by a Board of Directors consisting of:

Minister of Agriculture and Animal Husbandry (Chairman)

Minister of Economic Affairs (Vice Chairman)

ANNEX 3Page 2

Minister in charge of cooperative affairs (currentlythe Minister of Public Health and Social Affairs)

Director of Foreign Trade

Director - Agricultural Research Institute ofRwanda (ISAR)

Director - General, OCIR - Coffee Department

Director - General, OCIR - Tea Department

In addition to these ex-officio members, up to 15 members may be appointedby the President on the recommendation of the Minister of Agriculture. Thefew such coopted members that have been appointed were mainly representativesof semi-official bodies, thus underlining the fact that OCIR is essentiallya semi-autonomous parastatal agency rather than a producer's organization.In 1974 OCIR was split into OCIR Cafe, which is also responsible for cinchona,and OCIR The. Both organizations share the same Board of Directors. Theorganization of OCIR Cafe is shown in Chart World Bank - 16198.

4. For its main sources of funds, OCIR Cafe relies on:

(a) taxes and levies on industrial crops as fixed by the Board;

(b) profits resulting from its operations; and

(c) subsidies and loans granted or approved by the Government.OCIR's accounts are audited by two financial controllers nominated by theMinister of Finance and appointed by presidential decree.

B. OCIR Cafe Activities

Coffee

5. Coffee has been the main crop controlled by OCIR. Product pricesof coffee and traders' margins are fixed each year on the recommendationof OCIR. This recommendation is based on crop forecasts; change in market-ing, processing and export costs; world market prospects and the level ofOCIR's price stabilization fund (Fonds d'Egalisation) which is supportedby a levy on coffee exports. The stabilization fund is used to maintainguaranteed minimum coffee prices to producers, and excess funds are investedin short-term Treasury bonds, thus financing a substantial share (25% in 1973)of Government's Development Budget expenditures.

ANNEX 3Page 3

6. Another of OCIR's major functions is coffee marketing and exportconLrol. Since, under the marketing system in operation in Rwanda, theproducer is paid a fixed price and coffee is sold in a fluctuating worldmarket, it is necessary to control the remuneration received by all agencieshandling coffee and to ensure that any resulting margin accrues to OCIR andthe Government. This is sought to be achieved by the preparation each yearof a schedule ("bareme") setting out the remunerations applicable withina range of possible selling prices. At no point does coffee become the prop-erty of OCIR, but over the years its direct interventions in the marketingprocess have increased. OCIR also assists in the financing of coffee market-ing by borrowing from commercial banks and supervises overseas selling opera-tions through its Price Commission. Quality control is based on Ministerialdecree No. 1/65 of 1965 which defines exportable grades of coffee, and iscarried out by OCIR's Licensing and Grading Division through sampling andtesting.

7. Coffee extension was also under the responsibility of OCIR for abrief period in 1974/75 but is now again entrusted to the Ministry's Depart-ment of Agriculture. OCIR, however, distributes inputs, such as pruningknives and saws, and organizes pest control campaigns for which it suppliesthe dusting equipment and pesticides and the grower contributes his labor.Finally OCIR maintains hand pulping facilities for farmers' use in the prep-aration of semi-washed coffee.

Other Development Activities

8. OCIR exported pyrethrum until the processing plant at Ruhengericame into operation which is owned and operated by Usinex, a parastatalorganization on the Board of which OCIR is officially represented. Morerecently OCIR has assumed responsibility for the development of smallholderproduction of cinchona (Annex 1). In addition, OCIR has endeavored to reha-bilitate the coffee washing stations established oy cooperatives during the1950's at Nkora and Impara to produce fully washed coffee.

Achievements and Prospects

9. During the ten years of its existence, OCIR has played a major rolein the adoption and execution of a prudent agricultural price policy that hasgiven the growers of export crops a sense of long-term security and a reason-able share (nearly 60% on average) of the realized f.o.b. Mombasa sellingprice. This must be counted as a major achievement in view of the con-siderable fluctuations in world market prices during the period. Margins oncoffee allowed to other agencies, middlemen, hullers and exporters, expressedin values per kg appear to be reasonable; variations in quantities handled,however, could affect greatly thie return to agencies with high fixed costs,such as hulling mills.

ANNEX 3Page 4

10. The coverage of OCIR's operating expenses for which in 1974 alevy ("taxe remuneratoire") of RwF 5.00/kg green coffee was charged dependson the tonnage exported and differences are in fact made up by transfers fromOCIR's other funds--the price stabilization fund and propaganda fund ("fondsde propagande"). The revenue of the propaganda fund comes from a small fixedlevy (RwF 0.30/kg green coffee in 1974) and was meant to finance diversifica-tion out of coffee but was partly used to rehabilitate the old coffee washingstations at Impara and Nkora. Thanks to the recruitment of better staffthrough higher salaries and to better management and supervision, OCIR'scoffee extension service is now on a sound footing, but still under-staffedand under-equibped. The efficiency of the pest control service has improvedand the fact that nearly all the 500 hand pulpers are operating represents aconsiderable achievement.

11. On the financial side, OCIR Coffee Department accounts are kept up-to-date and, as required by the law, the accounts for the calendar year arepresented to the Board of Directors for approval at their meeting held inMarch of the following year. These annual accounts are prepared separately for(a) its operating fund; (b) the price stabilization fund and (c) the propagandafund. But since expenses are somewhat arbitrarily allocated between thesefunds and inter-fund transfers are frequent (para 10) the individual balancesheets and profit and loss statements do not accurately reflect the variousoperations of OCIR. Its operating fund covers not only its marketing controlactivities, but also the cost of inputs (tools, pesticides, etc). OCIR Cafe'sbalance sheets and income statements are shown in Tables 1 and 2.

June 8, 1976

RWANDA

CINCHONA PROJECT

OCIR Cafe: Balance Sheets as in December 31. 1972. 1973 and 1974(RwF '000)

1972 1973 1974 1972 1973 1974

Assets

Investments Liabilities

(a) Government bonds 224,550 278,500 248,500 Capital(b) Rwandex 1/ __ 10,000 33,478 Operational Fund 59,066 59,066 59,066(c) Other 25,000 25,623 Propaganda Fund 18,997 23,140 23,140

Stabilization Fund 276,796 333,673 335,075Land and buildings (after depreciation) 43,128 46,190 59,196 354,859 415,879 417,281

Vehicle, and equipment (after depreiation) 665 2,593 17,448 Reserve Funds 3/ - 17,959 67,937Sundry creditors 4/ 25,103 10,640 31,516Stock of materials 18,486 21,912 80,333 Loan from Banque Nationale Rwandaise - - 15,000 --Surpluses

Sundry debtors 2/ 121,232 145,932 217,439 Operational Fund 6,154 46,642 67,571

Cash and bank balances 39,124 38,221 22,664 Propaganda Fund 4,143 5,710 3,103Stabilization Fund 56,876 55,728 117,273

___Adjustment account 67,173 108,080 187,947Totals; 447,135 568,348 704,681 447,135 568,348 704,681

1/ Representing OCIR - Cafe's participation in Rwandex equity capital.

2/ Moetly outstanding balances of loass for vehicles granted to OCIR staff.

3/ Consisting of Diversification, 5tabilization, and OCIR Operatin-al m,nds.

4/ Loan for working capital needs.

5/ Representing net balance of inter-Fund transactions.

J 3-June 3, 1976

RWANDA

CINCHONA PROJECT

OCIR Cafe: Profit and Loss Accounts for Years Ending December 31, 1972, 1973 and 1974

1972 1973 1974 1972 1973 1974

Expenditure 2877 2,611396/__Materials used - 28,747 24,364 113,986 Income

Interest received

Staff 20,431 20,410 30,652 (a) Government bonds 7,420 8,385 9,41

Other operasional costs 14,790 12,242 41,634 (b) Other investments 912 911 1,178

Special cofiee transport allowance -- 8,185 758 8,332 9,296 10,5f

Propaganda expenses 1,480 2,457 -- 8 , 10_Levies on exports

SurplusesCoffee - stabilization 49,456 55,686 21,930

(a) operational fund 6,154 46,642 3/ 20,928 - propaganda 5,131 4,686 3/ 2,424

(b) Propaganda fund 4,143 5,710 (2,608) - operational 41,045 93,732 97,175

(c) Stabilization fund 56,876 55,728 61,728 95,632 154,104 121,529

67,173 108,080 79,868Pyrethrum 730 -- 20

Cinchona 346 418 --

Sale of goods 2/ 26,179 -- 144,940Operational surplus -- 6,154 --

Miscellaneous 1,402 5,766 (10,181)

TOTALS 132,621 175,738 266,898 132,621 175,738 266,898

1/ Includes materials used in both marketing operations (bags etc.) and ina, Žnsion operations (tools, pesticides etc.) supplied free to farmers.

9/ M . ly goods sold to tea plantations.H>

C// Cc fee operational levy receipts abnormally high in 1973 and 1974 because thisle-Ty also collected on exports of coffee of Ugandan origin.

4, 1976

RWANDACINCHONA PROJECT

Total Project Cost(RwF'000)

Table Foreign Exchange Percent DistributionReference Year 1 Year 2 Year 3 Year 4 Year 5 Total % Amount of Baseline Costs

A. BASELINE COSTS

1. CINCHONAInputs 2 330 1,693 3,503 4,283 6,983 16,792 91 15,249 12

Vehicles and Equipment 2 6,908 2,748 1,378 5,608 1,448 18,090 59 10,725 13Buildings 2 7,000 2,000 -- -- -- 9,000 48 4,360 6

Personnel and Training 2 9,798 12,770 14,060 15,350 15,350 67,328 46 30,150 49Operation and Maintenance 2 2,696 3,361 3,361 3,361 3,361 16,140 70 11,272 12

Subtotal 26.732 22.572 22,302 28,602 27,142 127,359 56 71,756 93

2. CONSULTANCY SERVICES 2,000 2,000 2,000 2,000 2,000 10,000 80 8,000 7

Subtotal 1 + 2 28,732 24,572 24,302 30,602 29.142 137,350 58 79,756 100

B. CONTINGENCIES

Physical 1/ 2,673 2,257 2,230 2,860 2,714 12,734 56 7,175 9Price 2/ 3,510 5,303 7,822 13,597 16,654 46,886 56 26,256 34

Subtotal 6,183 7,560 10,052 16,457 19,368 59,620 56 33,431 43

TOTAL PROJECT COSTS 34,915 32,132 34,354 47,059 48,510 196,970 57 113,187 143

1/ Ten percent of project costs of Cinchona component; no allowance was made forconsulting services.

2/ See Appendix 1.

June 4, 1976 -

ANNEX/ANNEXE 4Table/Tableau 2

RWANDACINCHONA PROJECT

Project Costs(RwF'000)

Unit Foreign Exchange Year 6Cost Year 1 Year 2 Year 3 Year 4 Year 5 Total % Amount Onwards

Personnel

Cinchona Development Officer 1/ 6,700 6,700 6.700 6,700 6,700 6,700 33,500 90 30,150 --Agronomist 2/ 280 560 560 560 560 560 2,800 -- -- 560Vulgarisateurs 144 288 432 432 432 432 2,016 -- -- 432Moniteurs 90 540 1,080 1,080 1,080 1,080 4,860 -- -- 1,080Clerks 105 210 420 420 420 420 1,890 -- 420Storemen 78 156 312 312 312 312 1,404 -- -- 312Driver 90 270 450 450 450 450 2,070 -- -- 450Store Laborers 38 380 912 912 912 912 4,028 -- -- 912Nursery Laborers 480 1,690 2.980 4,270 4.270 13,690 -- -- 2,670

Subtotal 9,584 12,556 13,846 15,136 15,136 66,258 46 30,150 6,836

Training 3/ 214 214 214 214 214 1,070 --

Buildings

Stores 1,000 2,000 2,000 -- -- -- 4,000 48 1,920 --Housing 3,000 3,000 -- -- -- -- 3,000 48 1,440 --Office 2,000 2,000 -- -- -- -- 2,000 50 1,000 --

Subtotal 7,000 2,000 -- -- -- 9,000 48 4,360 --

Vehicles and Equipmeet

4-Wheel Drive 1,180 1,180 -- -- 1,180 -- 2,360 45 1,062 392Pick Up 590 1,180 1,180 -- 1,180 1,180 4,720 81 3,823 587Motorcycles 85 190 190 -- 190l 190 760 71 540 85Bicycles 13 78 78 78 78 78 390 60 234 40Truck (2 tons) 1,490 2,980 -- -- 2,980 -- 5.960 85 5,066 598Nursery Equipment 1,300 1,300 1,300 -- -- 3,900 -- -- --

Subtotal 6,908 2,748 1,378 5,608 1,448 18,090 59 10,725 1,702

Inputs for Nurseries(Fertilizer, Pesticides, Seeds, etc.) 330 660 990 990 990 3,960 93 3,682 800

Inputs for Farmers(Fertilizer, Lice, Pesticides, Sprayers) -- 1,033 2,513 3,293 5,993 . 12,832 90 11,567 4,500

Operation and Maintenance

Housing (54) 150 150 150 150 150 750 47 353 150Office Building (5%) 100 100 100 100 100 500 48 240 100Stores (57.) 100 200 200 200 200 900 48 432 200Vehicles 4/ 1,065 1,630 1,630 1,630 1,630 7,585 74 5,613 1,630Truck 4/ 1,200 1,200 1,200 1,200 1,200 6,000 74 4,440 1,200Office 81 81 81 81 81 405 48 194 81

Subtotal 2,696 3,361 3,361 3,361 3,361 16,140 70 11,272 3,361

TOTAL 26,732 22,572 22,302 28,602 27,142 127,350 56 71,756 17,199

Physical Contingencies, 10', 2,673 2,257 2,230 2,860 2,714 12,734 56 7,175 1,719

Subtotal Project Costs 29,405 24,829 24,532 31,462 29,856 140,084 5' 78,931 18,918

Price Contingencies _/

Buildings 1,232 638 -- -- -- 1,870 49 916Personnel and Training 1,077 2,949 5,103 7,767 10,299 27,195 46 12,509Vehicles/Equipment, Inputs,

Operation/Naintenance 1,201 1,716 2,719 5,830 6,355 17,821 72 12,831

Subtotal Price Contingencies 3,510 5,303 7,822 13,597 16,654 46,886 56 26,256

TOTAL, INCLUDING CONTINGENCIES 32,915 30,132 32,354 45,059 46,510 186,970 56 105,187

1/ Internationally recruited. Includes overhead of consulting firm acting asvisiting agent.

2/ In addition to one agronomist who is already in existing position.3/ Includes training in Rwanda and in neighboring countries, and visiting,lectrrers.4/ Unit crots for 4-wheel drive RwF 5OO,00O/year, for pick up RwF 250,000/year, for motorcycle RwF 30,000/year,

for bicycle RwF 1,000/year, for truck RwF 600,000/year.5/ See Appendix 1.

May 27, 1976.

ANNEX 4Appendix 1Page 1

RWANDA

CINCHONA PROJECT

CONTINGENCIES

The Project Time Frame

1. The calculations and phasing in the appraisal report are basedon calendar years; the Project period is 1977-81. All baseline costs areup-to-date as of March 1, 1976.

Physical Contingencies

2. A 10% contingency has been allowed for all Project costs relatedto cinchona development. No contingency has been allowed for consultancyservices.

Price Contingencies

3. Price contingency allowances have been applied to cinchona Projectcosts only and not to consultancy services (para. 2). The allowances are inaccordance with World Bank guidelines on the projected international infla-tion pattern, supplemented by the Missions' projected escalation of Rwanda'ssalary levels. The projected annual price increases are as follows:

Vehicles LocalCivil Works and Equipment Salaries

1976 14% 10% 10%1977 12% 8% 10%1978 12% 8% 10%1979 12% 8% 10%1980 10% 7% 10%1981 10% 7% 10%

ANNEX 4Appendix IPage 2

4. Based on these annual projections, the compounded contingencies,which have been added to baseline costs, have been calculated as follows:

Price ContingenciesVehicles Local

Civil Works and Equipment Salaries

1976 9% 7% 0%1977 16% 11% 10%1978 29% 20% 21%1979 45% 30% 33%1980 61% 40% 46%1981 77% 49% 61%

The percentages shown for 1976 account for increases during the periodMarch-December, 1976. No further salary increases are expected for1976, and subsequent increases have been assumed to take effect earlyin the year. Contingencies for salaries have thus been compounded as ofJanuary 1 of each year, while all other contingencies have been compoundedas of mid-year.

5. Contingencies actually used were those for the Project period1977-81. The civil works contingencies have been applied to buildingcosts; local salary contingencies to personnel and training costs; andvehicle and equipment contingencies to the costs of vehicles, equipment,production inputs and operation and maintenance.

June 8, 1976

RWANDACINCHONA PROJECT

Governmet Cash Flea (i-cluding CICR)I/(R.FOPO00)

Ye- 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Yeer 10 Year 11 Year 12 Year 13 Year 14 Y.ar 15 Yea 16 Year 17 Yea 18 Year 19 Ye-r 20

CASH INFLCW

Governeent and OCIR Levies- 17on Ci-ce- Export. 27 -- - - -- -- 2,952 9.828 21,618 35,379 41,274 44,226 44.226 39,312 29,484 14.742 2,952 9.828 21.618 35,379 4,7

IDA DL,bucaee,et 29,340 26,859 28,840 40,167 41,461 -- -- -- -- -- --- -- -- -- -- - ---PayetbycrnsSI- 40 80 1,0 120 -- -. - -- -- -- 620 1,240 1,860 1.860 - -- --

Re_ial Benefit 4/ -- - - - -31 331 331 331 331 331 331 331 331 331 331 331 331 331 331Project Te-e and epert Duttes 1,919 2,281 1,843 3,718 3,188 2,560 2,560 2,560 2,560 2,360 2.560 2,360 2,560 2,560 2,560 2,560 2.560 2,560 2,560 2,560

Total Inflew wtha-tCoat Receery Levy 31,?59 29.540 31,483 45,085 45,849 5,843 12.719 24,509 38,270 44.165 47,117 47,737 43,443 34,235 19.493 5,843 12,719 24 5109 38,270 44,165

Cyst R ...very Levy / - - - - - 1,872 6,240 13,728 22,464 26,208 28,0830 28,080 24,960 18,720 9.360 1,872 6.240 13.728 22,464 '6,208

Total I.flle vOth Cast

R--lvery Levy 31,259 29,540 31,483 45.085 45,849 7,715 18,959 38.237 60,734 70.373 75,197 75,817 68,403 S2,955 28,853 7,715 18,959 38,237 60,734 70,373

CASH OUTFPWJ

Pr-Ject SEPenditrare 2/ 34,915 32,132 34,354 47,039 48,510 29,091 29,091 29,091 29,091 29,091 29,091 29,091. 29 091 29,091 29,081 29,091 29,091 29,091 29,091 29,091IDA Soevie- Charme 8/ 220 421 637 938 1,249 1,249 1,249 1.249 1,249 1,249 1,249 1,237 1,225 1,212 1,200 1,187 1,175 1.102 1,150 1,13:'IDA Repayne.ut / - - --. -- -- 1,666 1,666 1,666 1,666 1,666 1,666 1,666 1,666 1,666 1,946

Tytng 0u,flow 35.135 32,553 34,991 47.997 49,759 30,340 30,540 30,340 30,340 30.340 32,006 31,994 31,982 31,969 31.957 31,944 31,032 31.919 31,907 31,094

Ann,igl SarpI../ (D.fieit)Witth.at Cast Recove-ry Levy (3,876) (3.013) (3,506) (2,912) (3,910) (24,497) (17,621) (5,831) 7,930 13,825 15,111 15,743 11,461 2,266 (12,464) (26,101.) (19,2115) (7,410) 6,343 12,271With Cast Rec..very Levy (3,876) (3,013) (3,308) (2,912) (3,910) (22,625) (11,381) 7.897 58,594 40,033 43,191 43,823 36,421 20,986 (3,104) (24,229) (12,973) 6,318 28,027 30,479

Cue,altlve Scrplue/ (Deficlt)WLthout Cant ReCovery 3,ey (3.876) (6,889) (10,397) (13,3093 (17,219) (41,716) (39,327) (65.168) (57,238) (43,413) (28,302) (12,539) (1,098) 1,168 (11.2963 (37,397) (56,610) (64,0203 (57,6573 (41,386)With tear Recovry Levy (3.076) (6,889) (10,397) (13,309) (17,219) (39,844) (51,225) (43,526) (13,954) 27,099 70,290 114,113 120,534 171,520 168,416 144,187 131,214 t37.332 166,359 204,838

I/O v-rect pelcen for Years 1-5; thereafter ie Year 5 ...netact prices (Year I prices . 1.58).2/ Par Proiser's cicehana pradutlee.; See Annex B, Table 1. The actual 1976 levies, i.e. RntP 45,000 per ton fee Goaer-eet and

R.P 10, 000 per ton far OCIR, ere - ed Se a hess (see Ans.. 1, Table 4). These levies have here adjusted te Year 5 oanetantPrteca an basic of the World Rank's projected index of lcctrnatlonal inflation, ascaning thee prices af cinchana hark willfal1ew the general ieflatioaary trend, (i.e. 1076 priesa . 1.56).

/Fee ef Rn.F 1.000 per participatlag farme is the first yea of planting. SaeBe amout, c-rereted far inflation, d.ring firstyear af planting is neced planting cycle.

4/Fron hoo.. for interna tio-ally recruited Cinchen D-Invetop t Off finer to be vacated by Project Staff by the end of Year 5.5/Includes incom t.eas end oerial secu rity payments (15% of lIa sal1..aries), fuel re.ese (12% of vehfcle operating aepa.....and inp-rt duties on v-hicles (on avrage 18% of o.i.f. nest).

6/ Calcaleted en the bani. of RwF 40,000 per tee, correted for inflation aa seplei.ed ic footnote 2.7/ See Acnne6. 4,Table 1.01 0.757. en aetatandiag amout.

f/tO. pnr-ae of Credit amout for Years 11-20.

Joc- 8, 1976

CINCHIONA PRIOJECTPoreiaa E-henoe Oaf loe and Outflows I/

(RWP' 000)

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 13 Year 16 Year 17 Yea 18

INFLOW

IDA Dioborocat 2/29,340 26,859 28.840 40,167 41,461 --- ---- ---- .-Import of Ciochoro Bark 3/ -- -- -- -- 10,620 33,400 ~~~~~~~ ~~~77,880 127.440 148,680 159,300 159,300 141,600 106,200 53,100 10,20 35,40 7,8

Total loflow 29,340 26,859 28.840 40,167 41,461 10,620 35,400 77,880 127,440 148,680 159,300 159,300 141,600 106,200 53,100 10,620 35,400 77,&O

Fo-elo Emolixge Co,eP-,otoff Projeot Costs V/ 19,900 18,313 19,592 26,823 27,651 -- -- -- - -- -- -- --

Fo-ign E.cheoge Cooponemrof Reen-e,t Coats -/- -- 13,965 13,965 13,965 13,965 13,963 13,965 13,963 13,965 13.965 13,965 13,965 13,963 13,965

IDA Debt Service 220 421 637 938 1.249 1,249 1,349 1,249 1,249 1,349 2,915 2,903 2,891 2.878 2,866 2.853 2.841 2,828

Total lOtflo. 20,121 18.736 20.219 27,761 20,900 15,214 13,214 13,314 15,214 15,214 16,980 16,868 2,891 2,878 2,866 2.853 2.041 2,828

Net bifl. (OC~tflow) 9,219 8,123 8,621 12,406 12,361 (4,394) 20,186 62,666 112,226 133,466 142,420 142,432 124,744 89,357 36,239 (6,193) 18,394 61,007

Cusoo Ive flo. ~ 9.219 17,348 25,965 38,375 30,936 46,342 66,328 129,194 241,420 374,886 517,306 659,738 784,482 875,839 910,098 993.915 922,509 903,596

In current termss for YeaS 1-5; thereafter, debt service in acual a,scatst payable, sad eperta andcr .. rtant -ot. a Year 3 conetact terase (aee Anne. 5, footoote 2).

/From Aaae. 5.3/At price. adjoated to Yea 5. i.e. R.P 354/kg.4/Fco. Anne 4 ,Table I at 571 foreIgn echange, tontat./From Anoe 4 *Table 2 ,at 487, fo...igo echange -enate.

Joor 4; 1976

ANNEX 7

RWANDA

CINCHONA PROJECT

Farmer Benefits

The gross value to farmers of annual incremental production, atfull Project development, in 1976 prices, would vary between RwF 3.12million (US$34,000) and RwF 46.8 million (US$504,000) over the productioncycla. The value of annual production foregone on plots previously plantedwith other crops is estimated to average about RwF 10.4 million (US$112,000).The net value to farmers of annual incremental production would vary from anegative amount of RwF 7.1 million (US$76,000) to a positive RwF 36.0 million(US$388,000); if each farmer planted all his cinchona trees (0.25 ha) in oneyear, there would be two loss years out of ten for the aggregate of allfarmers. Virtually the only cash cost to farmers would be a nominal feeof RwF 1,000 per farmer per production cycle. With a total Project areaof 900 ha planted with cinchona trees and an average area per farmer of 0.25ha, there would be 3,600 beneficiary families. The average annual increase infarm family income would be RwF 5,250 (US$57), or RwF 1,170 (US$13) percapita. This compares with present average rural income levels of about RwF5,100 (US$55) per capita per year, and with RwF 6,870 (US$74) of GDP percapita for Rwanda as a whole. The country's absolute poverty level in 1970was estimated at RwF 3,700 (US$40) per capita; this would be equivalent to RwF4,600 (US$50) at 1974 price levels. Annual fluctuations in farm income couldbe reduced, and the negative cash flow projected for irntermittent yearsavoided, to the extent that harvesting and replanting on individual farmscould be staggered over several years. Table 1 shows the cash flow for atypical farmer.

June 10, 1976

RWANDA

CINCHONA PROJECT

Cinchona Farmers: Cash Flow

Year Year Year Year Year Year Years0 1 2 3 4 5 6-10

A. Cash Flow for One Hectare Cinchona

Output 1/ kg/ha _ _ _ _ 300 400 500Value @ RwF 104/kg - RwF/ha - - _ _ 31,000 42,000 52,000Nominal fee for planting material

for fertilizer 2/ 1,000

Other Cash Crops-/

Net value RwF/ha 22,500 17,000 7,000 - - - -

Net Value of Total Production RwF/ha 22,500 16,000 7,000 - 31,000 42,000 52,000

Incremental Surplus (deficit) - (6,500) (15,000) (22,500) 8,500 19,500 29,500from cinchonaFinancial Rate of Return: 34%

B. Cash Flow for Average Farmer

Area Under Cinchona 0.25 haof that on cultivable land 0.10 haon land not cultivated by him before 0 -15 ha4/

Incremental Benefits From

0.10 ha cultivable land (see A) RwF/farm (650) (1,500) (2,250) 850 1,950 2,9500.15 ha not previously cultivated RwF/farm (150) - - 4.650 6.300 7.800

Total RwF/farm (800) (1,500) (2,250) 5.500 8,250 10.750

Financial Rate of Return: 92%(D X

1/ See Annex 1, Table 4. x2/ Cost of 10,000 seedlings and 200 kg NP fertilizer about RwF 28,000; rest recovered by OCIR levy on cinchona exports.3/ Potatoes, sweet potatoes, grains, beans. Interplanting during first two years. 9

4/ Land made available by government or slopes on farmer's own land.

January 30, 1976

ANNEX 8Page 1

RWANDA

CINCHONA PROJECT

ECONOMIC ANALYSIS

1. Project incremental costs and benefits, expressed in constantvalue Lerms (base = 1976 prices), are presented in Table 1.

2. In the calculation of economic Project costs and benefits foreignexchange has been shadow-priced at a rate of US$1.00 = RwF 111.00 to re-flect the opportunity cost of foreign exchange to Rwanda. Project costsinclude all costs associated with cinchona development. The cost of con-sultancy services has been excluded since the resulting benefits are largelyunrelated to cinchona development and not quantifiable. All paid laboremployed by OCIR has been fully costed at market wage rates. Farm familylabor has been shadow priced at 25% of market rates to account for the factthat farm family members generally are not fully employed and have only verylimited alternative employment opportunities. There would be no hiring oflabor by Project farmers.

3. No allowance has been made for OCIR overhead costs related tocinchona development since such costs are already incurred without the Projectand would remain virtually unchanged as a result of the Project. The exten-sion services provided under the Project have been fully costed, however,even though existing cinchona production would also benefit from them andsuch benefits have been ignored in the analysis. Production inputs whichwould be provided to farmers at subsidy rates upwards of 80% have been fullycosted. Since OCIR would be subject to normal rates of taxation, Project costestimates include taxes and duties which amount to approximately 15% of localsalaries for income taxes and social security payments; 12% of vehicle operat-ing expenses for taxes on fuel and spare parts; and 18% duty on vehicleimporLs, although duties vary greatly by type of vehicle. All taxes andduties have been eliminated for purposes of the economic analysis.

4. The entire Project production of cinchona bark has been assumedto be exported in unprocessed form. Project output has thus been valuedat export prices f.o.b. Kigali, less the economic cost of handling and trans-port incurred between the Project area and Kigali. The economic price ofcinctiona has been assumed to remain constant throughout the Project period.Since the Project would probably displace some existing production of crops,the output foregone for 0.1 ha per farm has been valued at market prices anddeducted from the value of cinchona production to arrive at incrementalProjecL benefits. Since the displaced crops are largely for subsistencepurposes and not traded internationally, shadow-pricing of foreign exchangedoes not apply. But the entire value of cinchona represents foreign exchangeand has been shadow-priced. Rental value has been added to Project benefits

ANNEX 8Page 2

for one staff house built for the Cinchona Development Officer from Year 6

onwards, as this house would be vacated after Year 5 and subsequent occupantswould pay rent; the rental value has not been shadow-priced.

5. The economic rate of return of the Project would be 15%. At the

official exchange rate, the rate of return would be 13%. Sensitivity analysiswas undertaken to examine the effect of changes in the output and cost assump-

tions and revealed that the Project would be viable even under substantially

adverse circumstances. If output remained unchanged and costs increased by

20% the rate of return would be 12%. If costs remained unchanged and yieldsor the cinchona price remained 20% below expectation, the rate of return wouldbe 11%. A simultaneous reduction of 10% in output and increase of 10% in

costs would yield an 11% rate of return.

June 10, 1976

Y-o ISoar 2 0.3 33- I y.., .o Y- 7 0.o -7,, OT. 09.- Io I-. 1 1 1.12 7e-r13 0.3024 .8315 0216 Y.- 17 9.-r 03 II I..e0no 9.21 3., 22 21rO Tear24

Y.-.I _ P0 I-oP8665 8300- - - - - 30 40 50 SO 70 50 0 - - - 30 40 50 S. 3 53 30 - -

43)4 -- -O-- - -- -- -- 90m10 40 150 30 10W03.-- - -- 0 12

3m 9O I2. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~iso 13 130 193

O 300 -- ~~~~~~~~~~~~~~~~~-- - - -- - -- - ---- - - - - - - - -- --- -- --- . . . . . .. .-- _ 90 .. 120 .. . . 150 .. 450 ---- 50-50--- 90 42 150 250 48 ,

3(06.) P305313 063043 -- -- - 90 000 000 06042040) 450 400 000 031 30 100 000 043 410 430 450 443 300~----------------------- ---------------------------- ----------.....

(O 24gQA 4,54) o/ - - - - 430 21,200 44,40 303 89,040 95,400 95,400 040800 43.30 3200 4,4 21,,200 44,4640 76,320 80,04 91,.40 45,40 -4.30 43,300

Y-.o 2 -- 400 300 10.00 1,300 1,300 1,300 1,300 I,30 1.000 1.00 400 000 1,300 0,30 1,300 I.300 2,300 1530 ,300 1.300 20080 1,300

4 -- -. -- 1200 2,400 3900 3,100 3900 3,300 590 3,000 3.30 0,300 '.00 0,190 0,10 1.900 3.93 3390003.94.3,3W0g3,9003,330W 0,20

S .. oo.. ~~~~~~~~~~~~ ~~~~~~ ~~~~~~ ~~~~~1M 20 0400 3.900 3,93/ ,9399 3,00 390 3305900 0,90090 _M 1.20 0.40 3,900 3.0 3,300 3.900 3.300 3 W0 3,3 3,30

003.032003 P002)1010 -- 406 1300 4.100 ,900 10,20 11,000 1300 11.00 .... 00 11.701 10.300 9.400 0.000 3,500 00,30 16.000 0000I 1,700 027w 1.7f0 11.700 10,000 3,43 6,00

Valo. of Oooo.35.0 7402033403 -- 3~~~4041 (1,800) 3410003 37,5003 33,840) 9,500 34,940 04,42 373,40 03,7300 94,400 75,400 05,3000 24,300 33,4403 9,300 U4.4 34,620 70,344 83,700 96,80 75,400 53,00

3~3.2 7.Oo. 37 0.373 .43 -- .. .. -. .. 187 00 437 137 187 07 167 680 187 37 .1Jj 187 68 287 137 ~ .7 7

.1.7 L7 1.7 7!L1.7.....1.i

-ota 00.-.32. 3,.8208, =- 4003 iA) 1.00 750 33.451 I 433 .31J3 30 333 3333 67 0 3 .9439 04,433 39.633 3,4 5,3 4,300 70,320 33,000 -.lA78 09~,93 so-

06301031 03331003313 ~~~~~28,732 22,572 122.30 23,302 23,140 33,239 07,699 17,499 07,139 17,133 67,199 03,069 17,19 17,139 17,19 13,199 27,130 07,433 00,099 10,139 17.18 10,1- 00,033 173498

3917.186 Coo0,~ooo.. 313) 2,473 2 1,5 2,230 2,31 0,141,710 2 1 ,1 ,1 ,309I,714 ,733 _31 909743 _7 4j) 1.72 1.332 I 1 ,,,2 1.719 0,1 00 .LZ .1.713 .1.21

Soobtoosl 53 03~~~~~I,405 .14829 24,530 31,440 23,356 18.918 10,943 48,910 43,049 8,4 1,1 10.91 10.940 40,910 43,943 13,93 46,910 43'903 49,913 4.900 10.18 18,923 1383 2931

006 .o P8Iy Labor Cos - 613 1,323 7,00 2394 8933 33 4 915 783 3 9 ,3 0,73 1,73 53 90 4.050 945 TM0 3399. 33 +

I-- 71 I.013 1,39____ ___ 04" 31 LN - 131 -o( - __ I__31 _L_6L_ 1.631 I__31 1.431 1,631 13631 1391 0,631 1.631

27~~672 23,549 30,%I 18,18 _18M 15.33 18,232 18,06- -,,...- 3(,.IMS53 33.16733 192321300,13960 682332______ 29.0I

0. 0.3 00008..003)610.300. 33~~(7,4723 323.9403 (26,0513 (33,0453 (33,9043 212,83333 20.5933 14,734 40,575 59,452 45,97 4.00 06,17 1,4,029 3,327 10,33 (1,933 13,730 046,790 59,432 4597 0,-0 50,307 30,400

Eo..o36 f 12. Srlo8.I.8.83083-304)0.6%

Ooor.o.o4.1 43,48 4~~~~~~0,003 26,329 27,204 34,487 33,747 49,004 20,101 20,053 20,040 19,330 69, 73 2011 043 102,483 34.930 15,954 60,606 23,153 30,668 09.83 19.7s3 90,001 13,466 29,8S

Ioreeo .6 33 . . (00) (1,303) 14,100) (7,5007 (2.3313 1337 4043 0,071 33,333 002,347 030,307 42,547 33,147 30,347 (2,3813 13,327 40,455 93.017 33,335 132,967 233.3 93,30 3426

9.3 Iuorasnt.1 35o.flts (30,33) 326,329) 123,601) (38.187 341,2473 322,3773 (6,1343 24300 44,023 352444 33.230 33,66 52,061 47,259 9,371 322,37) 38.274) 24,311 40,003 79,447 83.204893,764 72,001 6 115

(loP 227/k41I..3 13, --334 -00 1o of ooo.oo . h .1d1.1g (.1. 15/kg).33 -o 603 of M .0 3, 33,900Th,., I334050322,300/0t 0 h 688 0 3,3/,

S/ Pro. 08 5.~0] ppotooly 3,0 t N'3375 -Or .. ) (25% of marke osgo 310).1

~ 0r3p eo.oe 3.,Is 44305 97 030,11o3p003 0 4044.0 144.0

3133 3, 4930 hX

ANNEX/ANNEXE 9

RWANDACINCHONA PROJECT

Schedule of Estimated Disbursement of IDA Funds(US$'000)

IDA Fiscal Year Disbursement Cummulative Disbursementand Quarter End in Quarter at End of Quarter

1976

SeptemberDecemberMarchJune

1977

September I/December 2/ --

March 50 50June 70 120

1978

September 70 190December 70 260March 80 340June 80 420

1979

September 80 500December 80 580March 80 660June 80 740

1980

September 90 830December 90 920March 90 1,010

June 90 1,100

1981

September 100 1,200December 100 1,300March 100 1,400June 1,500

1982

September 80 1,580December 3/ 80 1,640March 70 1,720June 70 1,800

1/ Estimated quarter of signing of Credit Agreement.2/ Estimated quarter of Credit effectiveness.3/ Estimated quarter of Project completion.

May 27, 1976

RWANDACINCHONA PROJECT

OCIR CAFE - ORGANIZATION CHART

BOARD OF DIRECTORS

I

FINANCE COMMITTEE

DIRECTOR GENERAL

ADMINIS N 1 1 L , | \ LICENSING PURCHASINGACCOUNTING CINCHONA COFFEE AND AND

PERSONNEL GRADING MARKETING

June 5, 1976 World Bank-16198

| 30' Mborora 8 Krmpala

RWANDACINCHONA PROJECT I KGANDA /a/Ar

im PROJECT AREA

; OVER 2,000 METERS ELEVATION Rushuru

MUTARA PROJECT AREA

lZ EXISTING LAKE LANDING POINTS REPUBLI N

.- '2 RIVERS AND LAKESZAR

MAIN ROADS

PREFECTURE BOUNDARIESINTERNATfONAL ROUNDARIES

$ o t. i B,, -A\surrtB

/\ ''' S / :) j g O fo 2~~~~~~~~~~~~~0 0 50 40 50O 60 70 SO

ZAUBIRE OF 5\ oi0 30 40 55

`7~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-

| \ \ ||<o \ 30° hmylY '"d2°nrd¢'irs Frb res o Pr.)~~~~~~~~~~~~~~~~~inpy nd,,r,f,t,, ~cewne y ~ A