Report No. 978a4MAG

Appraisal of a Fourth Highway ProjectDemocratic Republic of Madagascarjune 3, 1976 pRegional Projects Department[astern Africa Regional Office E Cop

FOR OFFICIAL USE ONLY

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Document of the World Bank

This doc Liment has a restric ted distrihution and may be used by recipientsonly in the performance of their official duties. Its contents may nototherwise he dis losed without World Bank authorization.

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CURRENCY EQUIVALENTS

Except as otherwise stated, all f:Lgures are quoted in U.S. Dollars (US$).

Currency Unit = Malagasy Franc (FMG)US$0.0047 = FMG 1US$1.00 = FMG 215

WEIGHTS AND MEASURES

1 meter (m) = 3.28 feet (ft)1 kilometer (kmn) = 0.62 miles (mi)1 hectare (ha) = 2.47 acres (ac)1 kilogram (kg) = 2.2 pounds (lbs)1 metric ton (m ton) 2,204 pounds (lbs)1 sq km (km2) = 0.386 sq miles (mi2)

ABBREVIATIONS AND ACRONYMS

AM - Air MadagascarCEBTP - Centre d'Etudes du Batiment et des Travaux Publics

Center for the Study of Public Works and ConstructionDIM - Direction de l'Infrastructure et de Maintenance

Infrastructure and Maintenance DepartmentDTN - Direction des Travaux Neufs

New Works DepartmentLNTPB - Laboratoire Nati'onal des Travaux Publics et du Batiment

National Laboratory of Public Works and ConstructionMA,T - Ministgre d'Amenagement du Territoire

Ministry of WorksMTP - Ministere des Travaux Publics

Ministry of Public WorksMTR - Ministere des Transports et du Ravitaillement

Ministry of Transport and SuppliesPA - Parcs et Ateliers

Central WorkshopRNCFM - Reseau National des Chemins de Fer Malagasy

Malagasy National Railway NetworkSCP - Service Central de la Programmation

Central Planning; ServiceSINPA - Societe d'Interet National pour les Produits Agricoles

National Agency for Agricultural ProductsSINTP - Societe d'Intere"t National des Travaux Publics

National Public Works AgencyUCA - Union des Cooperatives Agricoles

Union of Agricultural Cooperativesvpd - vehicles per day

DEMOCRATIC REPU'BLIC OF MADAGASCARFISCAL YEAR

January 1 - December 31

FOR COfICIAL USC ONLY

DEMOCRATIC REPUBLIC OF MADAGASCAR

APPRAISAL OF A FOURTHI HIGIHWAY PROJECT

TABLE OF CONTENTS

Page No.

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

1. INTRODUCTION . . ........... 1

2. THE TRANSPORT SECTOR. 1

A. Effects of Geography and thie Economy onTransport , .......... , ................... 1

B. The Modes . ................................ 2

C. Transport Policy, Planning and Coordination 5D. Bank Group Projects in the Sector 7

3. HIGHWIVAYS ............................. ,., 8

A. Administration .... 8B. Planning ............ .................. 8C. Financing ... 9D. Engineering ... 10

E. Construction ..... ................... ...... 10F. Mlaintenance . 11G. Training .................................. 12

4, THE PROJECT .12

A. Objectives ... 12B. Description .... 12C. Cost Estimates .... 161). Financing .. .. 17E. Implementation .... 181F'. Disbursements . . ................. . 19

5. ECONOMIIC EVALUATION .......... .. . 19

A. tain Benefits and Beneficiaries . .19B. Arivonimamo-Analavory Road .19C. Tsiroanomandidy-Maintirano Road .201). Road Maintenance Elements .21

6. AGREIMENTS REACHED AND RECOMMENDATION .......... 21

This report was prepared by Frida Johansen (Transport Economist), PeterLudwig (Engineer), and Mustafa Nour (Economist) and was edited by MarieGarcia-Zamor (Technical Editor).

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 disclosed without World Bank authorization.

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7. ANNEXES

1. Distribution of Benefits Accruing from Road Improvement2. Background for Eva.Luation of the Proposed Road

Construction3. Draft Terms of Reference for Engineering, Management

and Supervision of Tsiroanomandidy-Maintirano Road Construction4. Draft Terms of Reference for Study of Training Needs

and Implementatioi of Findings5. Draft Terms of Reference for a Study of DIM Reorganization

and Equipment ancl Spare Parts Needs6. Project Progress Re!porting Requirements

8. TABLES

1. The Highway Network, 19742. Development of the Primary Road System, 1964-743. Motor Vehicle Registration, 1958-714. Fuel Consumption, 1960-735. Highway Expeniditures, 1964-756. Revenues from Road Users, 1971-747. Highway Design Standards8. Estimated Schledule of Disbursements9. Equipment to be Procured for Force Account Works on

Tsiroanomandidy-naintirano Road10. Vehicle Operating Costs11. Economic Evaluation of Arivonimamo-Analavory Road12. Economic Evaluation of Tsiroanomandidy-Maintirano Road

9. CIIARTS

1. Organizationi of the Ministry of Public Works2. Organization of Ministry of Transport and Supplies3. Implementation Schedule

10. MAP

Madagascar, Transport System (IBRD 11744)

DEMOCRATIC REPUBLIC OF MADAGASCAR

APPRAISAL OF A FOURTH HIGHWAY PROJECT

SUMMARY AND CONCLUSIONS

i. Despite recent improvements, Malagasy transport infrastructure isfragmentary. Rugged topography translates into high construction costs which,combined with the country's meager resources and copious development needs inall sectors, slow the pace of higlhway network improvement. The Bank Grouphas been active in accelerating this pace; since 1966, it has helped financeconstruction of 649 km of roads, 535 km of which are paved. It has also as-sisted in improving the Tamatave port and the railway system; total transportsector lending, including studies and technical assistance, amounts toUS$63.6 million.

ii. This will be the sixth transportation, or the fourth highway projectin Madagascar. It will continue previous development efforts by upgrading theheavily-trafficked Arivonimamo-Analavory main road; constructing an all-weatherfeeder road between Tsiroanomandidy and Maintirano to serve a now-isolatedarea and connect the west coast witlh the central plateau; and identifying andsubsequently financing training, equipment and spare parts needs to improveroad maintenance.

iii. Estimated project cost is US$31.8 million (US$25.6 million foreignand US$6.2 million local), net of taxes and duties. The proposed US$22.0million IDA credit would finance 100% of foreign costs and some local costs, or69% of project costs net of taxes and duties. The Arab Bank for EconomicDevelopment in Africa (BADEA) will participate in the project with a US$5.0million loan, which will finance 16% of total project cost, but is earmarkedspecifically for the foreign cost of the earthworks on the Tsiroanomandidy-Maintirano road. Government will provide US$11.4 million, or US$4.8 millionnet of taxes and duties.

iv. The Ministry of Public Works is competent and will be responsiblefor project execution. Main road construction will be awarded to contractorsafter international competitive bidding and will be supervised by Ministrystaff. The Eeeder road will be designed and supervised by consultants, withearth works carried out by force account, and bridges constructed by contractors.Consultants will examine training and equipment needs and assist itl t:raining.Project execution is estimated to start in 1976 and finish by 1980.

v. Road construction should result in a 12% to 16% basic economicreturn, depending on the section; on average a 12% return. The main bene-fits, decreased transport costs on the main road and access to an area withagricultural potential where an IDA-assisted Livestoclc Project is underway,will accrue to low-income farmers. Transport, marketing and land tenuresystem structures appear adequate to foster growth and to permit fulfillmentof the possibilities the road betterment will create. The training programand the procurement of spare parts and equipment will improve maintenanceoperations which are essential to prevent deterioration of existing roads andloss of investments.

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vi. While overall performance under the previous highway projects has

been satisfactory, Government's adherence to some of the credit/loan

covenants has been less so. Therefore, during negotiations Government has

agreed on a program to enforce axle load regulations; to discuss annually

the appropriateness of proposed budget allocations for road maintenance;and to provide funds as required to cover local project costs. In addition,

Government has agreed to prepare a program and implementation schedule for the

improvement of the Infrastructure and Maintenance Department's maintenance

equipment renting and spare parts supply systems; to employ consultants

under terms of reference and conditions satisfactory to the Association; to

procure civil works and equipment: according to IDA guidelines; and to carry

out force account works under corLditions satisfactory to the Association.

vii. The project is suitable for an IDA credit of US$22.0 million on the

usual terms to the Democratic Republic of Madagascar.

DEMOCRATIC REPUBLIC OF MADAGASCAR

APPRAISAL OF A FOURTH HIGHWAY PROJECT

1. INTRODUCTION

1.01 The Malagasy Government has requested Bank Group and BADEA as-sistance to upgrade and expand the highway network. Several possible projectcomponents were evaluated by the Ministry of Public Works and Bank staff.Construction of National Road No. 1 from Arivonimamo to Analavory (RN1, 67 km)and of the Tsiroanomandidy-Maintirano road (370 km) and improvement of road main-tenance were given highest priority. The RN1 section had been included underthe Third Highway Project, but when the lowest bid was 70% higher than theappraisal estimate, upgrading to proposed standards was no longer justified.Reduced standards were proposed, but meanwhile cost overruns in the remainingproject elements had more than absorbed available funds plus supplementaryfinancing to cover currency realignment effects. Thus, the section wasdeleted from the project and a reduced, economically justified improvement ofRNI is included in this project. Another component is construction of theTsiroanomandidy-Maintirano road which is essential to successful completionof a current IDA-assisted Livestock Project. Under its Credit Agreement(506-MAG), Government gave assurances that it would upgrade the road butbecause of fund shortages has requested Bank Group financing. Equally impor-tant are the project components for improving maintenance capability, sincepresent low standards endanger preservation of investments. Provision ismade to identify and provide needed maintenance training, road maintenanceequipment, spare parts, portable scales and weighbridges. BADEA selectedthe earthworks of the Tsiroanomandidy-Maintirano road for their assistance.

1.02 The Third Highway Project financed detailed engineering for theAntsohihy-Ambanja road with the expectation that construction would be under-taken under a following project. However, consultants adopted designstandards above requirements resulting in high cost estimates. The worksas designed are not justified and the consultants are presently reviewingthe possibility of reducing the standards and finding a more economic roadalignment. Since the road's priority is lower than the components of theproposed project, construction has been postponed.

1.03 This report is based on information from the Livestock Projectappraisal report (Credit 506-MAG), on Ministry of Public Works studies, andon the findings of a. appraisal mission comprised of Frida Johansen (TransportEconomist), Peter Ludwig (Engineer), Mustafa Nour (Economist) and Peter Blom(Agriculturalist, Consultant) which visited Madagascar in April 1975. Thereport was edited by Marie Garcia-Zamor (Technical Editor).

2. THE TRANSPORT SECTOR

A. Effects of Geography and the Economy on Transport

2.01 The world's fourth largest island, Madagascar (590,000 km ) liesin the Indian Ocean 400 km off the east coast of Africa, from which it is

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rather isolated economically and culturally. Its climate is marine tropical;frequent cyclones and heavy rainfall, particularly on the east coast, periodi-cally disrupt transport and the economy.

2.02 The population, estimated at 8.3 million and growing at 3% p.a.,is 90% rural and engaged in the agricultural sector. Althouigh more than halfthe annual production (mainly rice) is used for subsistence, agriculturalproducts (chiefly coffee, spices, and meat) account for about 80% of thevalue of Malagasy exports. The country will continue to rely on agriculturesince industry, which accounts for 10% of GDP, is at an early stage ofdevelopment, and the numerous known mineral deposits are not commerciallyimportant, except for chromite iand graphite. Average per capita income hasincreased by less than 1% p.a. since 1960 and is currently about UTS$150 p.a.Available data indicate that there has been little economic growth since 1972.In view of the various political and social changes which have occurred sincethen, it will probably take some time for the economy to reach a substantialrate of growth.

2.03 The Malagasy population is unevenly distributed. Although averagedensity is 14 persons/km2, it can be as low as 2 or as high as 25. Half thepopulation is located on a quarter of the island's surface, in the centralTananarive and Fianarantsoa provinces. Almost no one lives in the surroundingregions, but nearing the sea concentrations are again found, especially on theeast coast. This distribution is determined by Madagascar's physical config-uration, rugged topography, and climate. These factors, together with a lackof suitable construction materials, inhibit infrastructure construction andmaintenance which, in turn, reinforce the relative isolation of the lesspopulated regions. An adequate transport system is lacking, notwithstandingconsiderable progress in this sector in the last 15 years. Transport needsare relatively well served only on the central plateau, with Tananarive citygenerating or absorbing half of the country's commodity flows. Other populatedareas are served mainly, if not only by coastal shipping. If the agriculturalpotential of presently unpopulated areas is to be realized, considerable roadimprovement and expansion are required, even though expansion may appear onlvmarginally justified because of the sluggishness of service area and trafficdevelopment.

B. The Modes

2.04 At present, the transport system comprises about 32,000 km of roads,of which 4,000 km are paved; two unconnected railway systems totalling 880 km;15 main ports, of which 11 are suitable only for lighterage; and 59 airfields,of which 17 are all-weather standard.

Roads and Transport

2.05 Network. A 1974 inventory of the road network is included in Table 1,and Table 2 shows primary system development since 1964. The paved highway

network, begun around 1950, consists of a main north-south artery intercon-necting Fianarantsoa, Antsirabe, Tananarive, and Majunga; an east-west roadlinking Moramanga-Tananarive and Tsiroanomandidy; and several short stretchesaround the major coastal towns. Other roads are generally low standard, narrow,badly aligned and often have weak, obsolete structures; heavy rains make manyroads impassable half the year. The north and part of the west have no all-weather land connections to the rest of the island; although links to thesouthern region are mere trails, the dry climate contributes to year-roundserviceability. Average density, considering all road types, is 54 m/km2.

2.06 Traffic. The vehicle fleet is composed of about 60,000 units, morethan half of which are cars (Table 3). About half the fleet is registered inTananarive, but the average of 135 inhabitants/vehicle is representativethroughout the country. Traffic volume on paved roads is less than 75 vpd onsome sections but reaches more than 1,000 vpd near main cities. On otherroads, flows range up to a maximum of 50 vpd. According to counts taken from1965 to 1972, road traffic has grown about 5% p.a. and near 10% on pavedroads; this is corroborated to some extent by a similar growth in the estimatedfleet and a 7% p.a. increase in fuel consumption (Tables 3 and 4). In 1971,about 1,000 million vehicle-km were driven, half by light vehicles in thetowns and surrounding areas; trucks of more than 2 tons accounted for only7% of the total. About 135 million vehicle-km were run on earth roads. Ap-parently, since 1972, however, traffic growth has slowed, as has the rest ofthe economy.

2.07 Road Transport Industry. This industry consists mainly of numeroushighly competitive small carriers and cooperatives, a few large companies,and traders. Almost no regulations or restrictions are imposed on providingservices; the main exception is a 5.5 ton vehicle load limit on the Tananarive-Tamatave road to protect the railway from road competition. As a whole, tariffsare close to costs. Ton-km tariffs vary from FMG 10 to FMG 125, according toroad condition, season, and demand; passenger-km tariffs by taxi-be 1/ varyfrom FMG 2.70 on good paved roads to FMG 10 on earth roads. Services aregenerally provided near or below cost ou paved roads where competition isstiff, but high tariffs are charged for the few services provided on poorroads. For additional details see Annex 1, Section B.

Railways

2.08 Infrastructure. The country is served by two unconnected railwaysystems between Antsirabe and Tamatave and from Fianarantsoa to the east coastat Manakara, totalling 880 km. They were constructed before 1920 and areoperated by the Government-owned Malagasy National Railway Network (RNCFM),under the Ministry of Transport and Supplies (MTR). The RNCFM operates underquasi-monopoly conditions (para. 2.19).

2.09 Traffic. From 1967 to 1971, freight traffic grew at 13% p.a. andin 1971 was more than one million tons, or about 300 million ton-km. The

1/ Cars which provide bus-type service and which are more common than buses.

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increase was partly due to the opening of a chromite mine near Vohidiala.Reflecting general economic trends in the country, traffic declined on alllines during 1972 and 1973, and about 250 million ton-km were carried in thelatter year. In 1974 traffic increased slightly. Petroleum products, chromite,rice, cement, empty bottles and containers account for more than 60% of traf-fic. On the other hand, passenger transport has grown continuously since1969, and more than 3 million passengers, 244 million passenger-km, were trans-ported in 1974. The 375 km secticon from Tananarive to Tamatave carries 75%of freight-km and 50% of passenger-km.

2.10 Tariffs are based on commodity values and range from FMG 15 perton-km for less than a carload of general freight to FMG 3 for chromite.Passenger fares per km are RIG 5.90 (US$.027) first class and second class,FMG 2.95 (US$.014). However, fares on the Tananarive-Antsirabe line arelower because of strong road competition. Tariffs have remained almostunchanged since 1964, and operations show a deficit. A 1974 R4CFM proposalto increase freight rates by 25% and passenger fares by 18% is, however, stillawaiting approval.

Waterways, Ports and Navigation

2.11 Infrastructure. Inland water transport is limited by a lack ofnavigable rivers. The exception is the Pangalanes Canal which is used tomove agricultural products along the east coast. Fifteen ports are classifiedas imain", even though most are suitable only for lighterage. MTR gives con-cessions to private enterprises to operate the ports under MTR-established portauthorities. Tamatave became the only autonomous port in January 1972 at BankGroup suggestion, under a project which provided for the port's extension andimprovement (para. 2.24).

2.12 Traffic. Most imports and exports are moved by sea. Shipping alongthe 4,000 km coast is also important, since it is the only means of transportingfreight between many areas. Tonnage has steadily increased by 3% p.a. since1969 and import tonnage is double that of exports; about 1.8 million tons wereimported or exported in 1973. Tamatave handles 78% of this traffic, and fourother ports, the rest. Coastal tonnage has increased about 6% p.a. since 1969,despite the portst unfavorable natural features and climatic conditions, espe-cially on the east coast, and despite poor services, e.g., only one boat permonth between such major ports as Majunga and Nossi-Be. About 380,000 tonswere moved by coastal shipping in 1973, of which 50% was sent from Tamataveand 30% received in Majunga, with the broad participation of the remaining13 ports. There are several coastal companies, but only Societe Malgached'Activites, de Participations et d'Affretements (SOMAPAMAR), 51% Government-owned, is authorized to serve the whole coast. Tariffs are established bythe private sector, based on length of trip and port category, and are lowerfor essential commodities. The fleet consists of 250 registered sail boatsand 25 cargo ships, only 5 of which have a carrying capacitv above 400 tons.150-ton landing craft 1/ are being introduced to overcome the lack of ports.

1/ The hulls of these boats are specially shaped so that they can dock onan ordinary sandy beach.

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Airports and Civil Aviation

2.13 Infrastructure. Internal air transport is important in a countrythe size of Madagascar, with its many isolated regions. Accordingly, thereare 59 airports, including 17 all-weather airports and 5 appropriate for inter-national traffic. All are operated and administered by MTR. More than 50% ofall air traffic is handled by Ivato Airport at Tananarive.

2.14 Traffic. Most air services are provided by the 60% Government-owned and 40% Air France-owned Air Madagascar (AM), which has a virtual mono-poly over scheduled air services. Landing rights have been denied to inter-national carriers, except Alitalia, and only a few private aero clubs undertakenon-scheduled internal flights. AM's fleet comprises 21 aircraft, includingone 737 for internal services; two 737's for regional use; one 707 for longdistance; and 15 small airplanes for agricultural spraying. This fleet isexpected to be adequate for the next 10 years' needs, especially since averageoccupancy is only slightly above 50% and most aircraft were acquired recently.

2.15 After a precarious start in 1969, AM has greatly expanded servicesand become increasingly viable; in 1973 it carried 264 million passenger-kmand 9 million ton-km. The company provides internal services on 52 scheduled,regular stops. Forty of these account for only 20% of traffic and producelosses but are subsidized and continued for social reasons and for lack of analternative surface transport infrastructure. In 1973, 63 million passenger-km and 2 million ton-km (or 158,000 passengers and 4,600 tons) were carriedinternally; volume increases since 1969 have been 13% and 9% p.a., respectively.The company also undertakes regional flights, which logged 37 million passenger-km and 2 million ton-km in 1973 (21% and 15% growth p.a., respectively), andlong distance flights to Europe, which in 1973 carried 164 million passenger-km (a decrease of 25% compared to 1971) and 5 million ton-km. These flightsare the most profitable and cover losses on internal routes. Minor activitiesare spraying services, mainly insecticides for cotton fields, and car rentalsat main airports.

C. Transport Policy, Planning and Coordination

2.16 Government has endorsed the 1973-77 Development Plan's broadlyoutlined transport policy objectives. Further, the "Charter of the Revolution",dated August 1975, indicates that it is considered essential to: a) connectregional capitals gradually by all-weather roads; b) construct the Tananarive-Moramanga-Tamatave road; c) maintain the road network effectively and d) re-view the transport organization to improve services. The Corps of Engineersof the Army, a "Youth Army" and the Fokonolonas 1/ are to assist in road

1/ Organized under elders' leadership, a Fokonolona is the traditionalvillage group, the dominant social organization and a powerful influenceon social and economic issues. Government expects these groups to playa development role similar to that of the "ujamaa" villages in Tanzania.

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building and maintenance. Although highways have priority ranking in theplan, budgetary constraints are severe and, as a result, Government is under-taking projects only on an annual basis according to fund availability. BankGroup sector lending would not be feasible at this time because of thesecontraints.

2.17 Twice after recent political changes, Government departments res-ponsible for transport policy implementation have been administratively reor-ganized. In 1972, the Ministry of Works and Communications was replaced bythe Ministry of Works (MAT). In Februarv 1975, the short-lived MAT was splitinto three ministries: the Ministry of Posts and Telecommunications; theMinistry of Public Works (MTP), responsible mainly for infrastructure con-struction and maintenance (Chart 1); and the MTR, responsible for transportregulations and basic goods supply planning; RNCFM and AM are attached toit (Chart 2), However, transport rates proposed by MTR are approved by theMinistry of Finance which also establishes taxes on transport activities;transport fiscal receipts go mainly to general revenues. Both MTP and MTRtransport plans are reviewed by the Ministry of Planning, which is responsiblefor sector coordination although, in fact, there has been little coordination,partly due to a lack of clearly defined programs in any sector.

2.18 In addition, Madagascar lacks sufficient qualified transport expertsto assess the increasingly complex technical and economic issues involved inplanning and coordination, such Ets stage construction, modal allocation ortransport regulations and taxation. MAT's Central Planning Services (SCP) hasremained under MTP and is now responsible for coordination among the differentdepartments of the MTP, for MTP's annual budget proposals and for highwayplanning. MTR has no general planning unit but is being strengthened by theIDA-financed transport planning team which was originally assigned to MAT(Credit 488-MAG); this team, which has been fully operational since late1975, will work in close collaboration with Government officials who, it ishoped, will be able to take charge when the team leaves.

2.19 Because of high construction costs and low traffic levels, theupgrading of main roads should be coordinated with the needs of other sectors,as well as with a program to close some minor ports wiose traffic would becarried by road to and from main ports. These tasks will be undertaken by theplanning team. Up to now, there has been little need for modal coordinationsince the system's stage of development affords little possibility of competition,except in the Tananarive-Tamatave corridor where preference has been givento RNCFM by not upgrading the roacd to all-weather standard and by imposinga 5.5-ton truck load limit. Noneltheless, traffic has increased. The firststep seems to be to decrease the railway monopoly. Government now is preparedto take this action, realizing that the railway cannot cope with presenttraffic volume and that road construction would reduce total transport costs.According to a feasibility study undertaken by SETEC (consultants, France) in1973 (Credit 90-MAG), the alignmernt via Anjozorobe-Ambatondrazaka wouldmaximize the return on investment, but Government instead intends to constructthe road parallel to the railway track, via Brickaville, with assistance fromthe People's Republic of China.

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2.20 As is apparent from the description of transport modes, Governmentrelies on parastatal entities to provide public transport services in everysphere except road transport: rail and air (quasimonopolistic) and longdistance and coastal shipping (in competition with the private sector). Roadtransport, on the other hand, is virtually unrestricted, but increased controland a parastatal trucking organization are envisaged (Annex l, Section B).Govermuent has asked the IDA-financed planning team to study these matters also.

D. Bank Group Projects in the Sector

2.21 The Bank Group began transport activities in the country in 1966.The First Highway Project (Credit 90-MAG, US$10.0 million) provided for recon-struction to paved standards of two sections of the Tananarive-Majunga road,totalling 145 km. The works were completed satisfactorily. A surplus re-mained under the credit, part of which was used to finance engineering andfeasibility studies of high priority road sections; the studies were satis-factorily completed by mid-1973.

2.22 The Second Highway Project (Credit 134-MAG/Loan 570-MAG, 1968,US$8.0 million) helped finance reconstruction of two roads to paved standards,Fanjakamandroso-Tsiroanomandidy (55 km) and Ambilobe-Ambanja (91 km), andconstruction of three major bridges, one near Ambanja and two in the vicinityof Tamatave. These works have also been satisfactorily completed, althoughchanges in the design of one road, due to unexpectedly difficult materialsproblems which were not revealed until work was well underway, resulted in a27% increase over the original project cost estimate.

2.23 The Third Highway Project (Credit 351/Loan 896-MAG, 1973/75, US$35.6million) provided for construction of 417 km of primary roads, detailed engi-neering of the Antsohihy-Ambanja road and a review of the traffic countingsystem. Construction of RN44 from Vohidiala to Ambatondrazaka (24 km paved)was completed in late 1974; work is nearing completion on RN34 from Antsirabeto Malaimbandy (220 km paved and 114 km gravel). RN1, from Arivonimamo toAnalavory, was deleted from the project and is included in this one. Detailedengineering of the Antsohihy-Ambanja road has been completed to standardsabove requirements and is being revised. No action has been taken regardingthe traffic counting system, but the planning team provided under the railwayproject will look into it.

2.24 In addition, there was a port project (Credit 200-MAG, 1970, US$9.6million) which provided for the extension of Tamatave Port, construction ofa tanker terminal, creation of the Tamatave Port Authority, and technicalassistance for management personnel and training. The port extension wascompleted in 1974; the Tamatave Port Authority has been established but needsimprovement; the question of whether or not to proceed with the tankerterminal is under review in light of higher-than-estimated costs.

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2.25 A railways project, the latest in the country (Credit 488-MAG, 1974,US$6.0 million), provides for a 60 km main track renewal, a few buildings, somefreight and passenger wagons, and consulting services to RNCFM and MAT. Thisproject is being executed behindi schedule; cost increases have reduced thenumber of wagons to be purchased.

3. HIGHWAYS

A. Administration

3.01 MTP has been responsible for highway administration (Chart 1) sinceMAT was reorganized in 1975. The split-up involved no major changes in per-sonnel or lines of authority. The New Works Department (DTN) of MTP is incharge of new construction and the Infrastructure and Maintenance Department(DIM) is responsible for highway maintenance. The functional organization isadequate.

3.02 Staffing, on the contrary, is not adequate. Most of the Frenchexperts left the country after the 1972 revolution. Of the 60 then in theMAT Public Works Department, only seven remain in the present MTP. Theresulting gap has not affected new construction, design or supervision, whereuse of consultants is possible, but maintenance has deteriorated because theMalagasy staff is inadequately trained. Government is preparing nationalsto fill positions formerly occup:ied by expatriates and, to assist in this,the project will help finance a study of training needs and subsequentimplementation of its findings (para. 4.07).

3.03 The roads under MTP are administratively classified as national(primary, or main) and provincial (secondary). Road regulations set vehicleweight and dimensions, inspection, speed limits, and vehicle and drivinglicenses. Vehicle dimensions and! weight regulations are generally adequate(allowing loads up to 10 tons/axle, except on some paved road sections orbridges). However, enforcement of these ordinances, the responsibility ofthe national police, is lacking. This is a serious problem, especially withthe trend to increase vehicle dimensions and to overload units. To alleviatethis, the project will help finance procurement of portable scales, necessaryvehicles and, after a weighing campaign with the former, permanent weigh-bridges on strategic sites (para. 4.09).

B. Plannning

3.04 A highway master plan (Plan de l'An 2000) drawn up in 1961 bythe Bureau Central d'Etudes pour Les Equipements d'Outre Mer (BCEOM, France),in cooperation with Government ofiicials, was geared to linking major pop-ulation centers with paved roads; the plan was based on political and adminis-trative considerations. However, since 1972 Government has recognized thatsecondary road construction to open areas with good agricultural potential

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also has high priority. This concern is reflected in Government's requestthat this project include construction of the low-standard Tairoanomandidy-Maintirano road.

3.05 Highway planning is the responsibility of the SCP, in cooperationwith DTN. However, because SCP is poorly staffed, Government engages con-sultants to evaluate major highway projects. The IDA-financed planningteam, which has taken up its duties within MTR, will assist SCP in establishingpriorities for improving and maintaining the road network. This team will alsostudy traffic counting needs and propose a counting system. Counts of dubiousreliability were recorded from 1965 to 1972, and although the Third HighwayProject included a provision to improve traffic counts, they were discontinuedbecause adequate personnel was lacking.

C. Financing

3.06 Yearly expenditures in the highway sector amount to about US$10million for recurrent expenses and US$30 million for investment. Totalexpenditures have been declining in real terms since 1969 (Table 5). Since1971, yearly fiscal revenues from road users have been declining even innominal terms and were only about US$33 million in 1973 (Table 6). Theserevenues amount to about 85% of total highway expenditures, but allocationsfor highway expenditures are not related to road user revenues. Administrationand road maintenance are financed out of the general budget and upgrading andnew construction from the development budget, which since 1972 includes asmall amount for secondary road construction under the "programme de relanceeconomique". 70% of the development budget consists of grants and creditsfrom bilateral and multilateral aid programs; the remaining 30% is the localcontribution for these programs. Since 1966, the Bank Group has contributeda yearly average of about US$4 million to the highway sector. Other agenciesor donor countries are: the European Development Fund, France, the FederalRepublic of Germany and Italy.

3.07 Inadequacies in Government's budget and payment procedures causedifficulties. A budget is prepared by MTP and submitted to the Ministry ofFinance for approval by the Government. The latter, due to financialconstraints and priorities, regularly allocates less funds than requested.Sometimes, budgeted funds are not made available to MTP when requested; forinstance, execution of the Third Highway Project was endangered becauseGovernment's financial constraints precluded timely payments of the localcurrency part of contracts. In 1975 contractors had reached the ceiling ofcredit availability at local banking institutions and only the expeditionof direct payment for the foreign currency part of the contract enabled themto continue temporarily until local currency payments were made. However,the Government has now redressed its payment default to contractors, madeappropriate allocations for remaining works under the Third Highway Projectand agreed to provide funds as needed for implementation of this fourthhighway project.

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D. Engineering

3.08 Up to 1972, most of the preliminary design, detailed engineeringand construction supervision, even of major road projects, had been carriedout by the Central Technical Services of the former MAT, corresponding toDTN in the present MTP organization. However, with the gradual departure ofFrench experts, MTP has relied increasingly on consulting services. TheNational Laboratory of Public Works and Construction (LNTPB), a financiallyautonomous agency of MTP managed by the Center for the Study of Public Worksand Construction (CEBTP, France), is still capable of carrying out allnecessary soil investigations and material tests for highway design construc-tion and supervision.

3.09 The design standards adopted by MTP are appropriate (Table 7). Therural road standards are well-suited to the traffic levels and the sometimesdifficult terrain. Primary road network design standards should be appliedflexibly in accordance with economic conditions, traffic levels and terrain,which vary considerably from region to region.

E. Construction

3.10 Major road projects are executed by contractors which are eitherlocal subsidiaries of French or Italian firms or foreign firms. A domesticcontracting industry for highway construction has not developed, due to lackof professional skills and scarcity of capital and credit facilities. InitialGovernment efforts to encourage private domestic contractors have beenabandoned. Instead in early 1974 the capital-financed National Public WorksAgency (SINTP) was created as an independent and financially autonomous corpo-ration whose sole stockholder is the Government, and it was equipped, withUS$9 million worth of equipment, to compete with local and foreign contractors.A first contract, for the reconstruction of RN3 between Ankzondandy andAnjozorobe (42 km), was negotiated between MTP and SINTP in October 1974 forabout US$5 million. SINTP's performance under this contract is being watchedto see whether it could be prequalified for international competitive biddingfor Bank Group-financed projects. A force account construction unit withinthe MTP maintenance department carries out earth works and gravelling ofsecondary roads; its performance, although hampered by insufficient equipment,is satisfactory.

3.11 Usually, construction contracts are awarded on the basis of local orinternational competitive bidding. Administrative procedures for biddingand contract award follow well-established and appropriate regulations; workspecifications are comprehensive and precise. Construction supervision iscarried out either by DTN or by consulting engineers as its representatives.DTN's dealings with contractors are generally satisfactory but sometimesstrained because the Ministry of Finance does not disburse payments due underbudgeted and approved contracts (para. 3.07).

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F. Maintenance

3.12 Maintenance of the primary highway network and, since 1973, of thesecondary network is the responsibility of the DIM in the MTP. In eacharrondissement 1/, DIM has a division whose subdivisions and sections executethe maintenance (Chart 1). In line with the decentralization policy, it isintended to give more responsibility to the divisions, which then would reportdirectly to the Secretary General and receive technical advice from DIM. Inaddition to DIM, the Malagasy Army's Corps of Engineers carries out limitedlocal road maintenance and has recently received a loan of about US$4 millionfrom the Federal Republic of Germany to purchase road maintenance equipment.Tertiary road and track maintenance is the responsibility of the Fokonolona,whose individual efficiency and motivation determine maintenance quality,which varies considerably from village to village and is generally inadequate.

3.13 DIM maintenance operations are largely mechanized. Equipment avail-ability is below requirements, in some cases simply due to lack of spareparts. Equipment is procured, distributed and repaired by the well-equippedCentral Workshop (PA) in Tananarive, under DIM authority but financiallyautonomous. PA rents equipment to the divisions and subdivisions and chargesfor operating costs but not for the time equipment is idle. Thus, there islittle incentive to minimize idle equipment time; each superintendent requestsas much equipment as possible and retains what is obtained even if it isno longer needed or funds are not on hand to operate it. In addition, sub-divisions are not authorized to exchange equipment directly among each other,which could reduce total requirements. Minor repairs, the responsibility ofdivisional workshops, are often neglected or cannot be made due to lack ofspares. Since present procedures are wasteful, the project provides financingfor a study on how to improve DIM*s organization, its equipment rentingsystem and the spare parts supply system (para. 4.08).

3.14 Budget allocations for road maintenance have been insufficient inrecent years; in 1974 maintenance expenditures per km for the primary highwaynetwork averaged US$250 for paved roads and US$650 for unpaved. Updatedfigures from a 1966 BCEOM maintenance study indicate that yearly expendituresper km should be about US$450 for a paved road and US$1,100 for an unpavedone, plus administrative costs. Furthermore, allocated funds are not avail-able on time. The present Government recognizes the priority of road main-tenance (para. 2.16) and has increased the budget allocation in 1976 (Table 5).Even so, because of the backlog, additional funds are required for spare partsto rehabilitate existing equipment and for equipment renewal. Therefore,the study mentioned in para. 3.13 will also determine spare parts and equip-ment needs, and the project will also assist in financing procurement of theelements identified (para. 4.08). During negotiations, it was agreed in aside letter that, in the future, the Association and the Government willannually discuss the appropriateness of proposed budget allocations for roadmaintenance.

1/ Administrative unit of a province.

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G. Training

3.15 After professional training abroad (usually in France), about twoengineers a year are recruited inlto MTP Central Services for relatively high-ranking positions. The Higher Technical Teaching Institute (Etablissementd'Enseignement Superieur Polytechnique) of the Malagasy University yieldsabout 10 civil engineers per year who are mainly recruited by the Administra-tion as division or subdivision chiefs. While the curriculum and number ofengineers graduated appear adequate, most graduates lack practical experienceand management training, which are indispensable to running a division or sub-division efficiently. The 30 technical assistants who graduate annually fromtechnical high schools either continue their studies at university or areemployed in the administration as section chiefs or deputy division chiefs.Practical engineering experience and personnel management training arecompletely missing, even though a chief may supervise as many as 60 persons.

3.16 The MTP training center (Centre de Maitrise des Ponts et Chaussees)was created in 1963 and has since trained road supervisors, foremen, equip-ment operators and mechanics. 84 were trained in 1971, but only 18 in 1974,and the center has been closed since 1975 for lack of teachers and operatingfunds. Since MTP's maintenance operations are seriously affected by theshortage of skilled staff, assistatnce will be provided under the project toidentify training needs and implement an agreed-upon training program (para.4.07).

4. THE PROJECT

A. Objectives

4.01 The project will assist Government in reducing transport costs ona heavily trafficked road, in opening up for development areas with highagricultural potential, and in improving overall road maintenance quality.

B. Description

4.02 The project consists of:

(i) reconstruction of the two-lane paved NationalRoad No. 1 between Arivonimamo and Analavory(RN1), 67 km;

(ii) construction to gravel standards of thesecondary-feeder roacl between Tsiroanomandidyand Maintirano, 370 Icm;

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(iii) consulting services to supervise (i) and toengineer, manage and supervise constructionof (ii); and

(iv) road maintenance elements comprising:

a) a study of MTP training needs to improvemaintenance;

b) implementation of the study's recommenda-tions;

c) a study of DIM's operational organization,including the spare parts distribution andequipment renting systems, in order to improveequipment availability; and of DIM's equipment,in order to determine the need for spare partsand additional road maintenance equipment;

d) procurement of the spare parts and equipmentidentified in c) above; and

e) procurement of portable scales and vehicles,and weighbridges.

(i) Reconstruction of RN1 (67 km)

4.03 Reconstruction of this road had been included in the Third HighwayProject; it was later deleted because of substantial cost overruns of ongoingcomponents in that project. The reconstruction of this road, which was pavedbetween 1952 and 1956, continues to have high priority and is therefore in-cluded in the project. For the purpose of analysis and design the road hasbeen divided into three sections:

Section A: (19.5 km 1/ from Arivonimano to Pk 65.6) This section hasa poor alignment with continuous narrow curves and a poor-to-regular surface.There are two decaying major bridges which have to be replaced if the roadis to carry expected future traffic. The overall condition of this sectionis too poor to justify a mere improvement of the existing road. Thereforea new alignment has been selected, resulting in a distance saving of 3.2 km;furthermore, 2 km of this alignment, from Arivonimamo to the Arivonimamoairport are already paved and in good condition. The remaining 14.3 km willbe constructed to two-lane paved standards as set out in Table 7.

Section B: (30.4 km 1/ from Pk 65.6 to Pk 96) The existing align-ment and base on this section are adequate. Construction works will there-fore be limited to an overlay with a 4 cm bituminous premix, improvement of

1/ Length of existing road.

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draining and drainage structures and reconstruction of one major bridge.Pavement width averages about 5 m, 50 cm less than provided for in the generaldesign standards for the primary road network. The 5 m pavement width is,however, judged adequate to accommodate, without major impediment, expectedtraffic over the 20-year life of the road.

Section C: (24.0 km 1/ from Pk 96 to Analavory) The alignment ofthis road section is generally adequate, but due to difficult soils andtraffic, pavement is so deteriorated that strengthening by bituminous overlayis not possible. The road will therefore be reconstructed on the existingalignment with some minor improvements in geometric standards, which willreduce the present length by 1.7 kXm.

4.04 DTN has prepared the detailed engineering and tender documents forthis road and will carry out construction supervision in close cooperationwith LNTPB. For further details of the project road, see Annex 2, Section A.

(ii) Construction of the Tsiroanomandidy-Maintirano Road (370 km)

4.05 The present link between Tsiroanomandidy and Maintirano, about 390km, is almost impassable even by four-wheel drive vehicles in dry season.Alignment follows water sheds and presents numerous curves; it crosses manyrivers, including three major ones. Only one has a bridge and all otherrivers and streams have to be waded across, which is possible only fourmonths of the year. About 100 km from Tsiroanomandidy to Ambaravanala havebeen recently improved to a 6 m wide earth road; the following 140 km toMorafenobe is only a track presenting gradients up to 20%, and the remaining150 km from Morafenobe to Maintirano is an earth road about 4.5 m wide.The road will be constructed to all-weather gravel standards as set out inTable 7. It will connect Tsiroancmandidy, Ambaravanala, Beravina, Bemahata-zana and Maintirano and provide access to Morafenobe from Bemahatazana. Thealignment was chosen following investigations by MTP's Central PlanningServices, with preappraisal mission assistance. About 120 km of the proposedalignment runs through rather difficult and rugged topography and the remain-ing 250 km through flat to rolling terrain. Several major bridges will bebuilt to one-lane width which is adequate for present and future traffic. Formore details of the road areas see Annex 2, Section B.

(iii) EngineeriTg, Management and Supervision Consulting Services

4.06 For the low-standard, low-cost Tsiroanomandidy-Maintirano road, theexpense of full engineering, including working drawings and bills of quanti-ties, is not justified. DTN has undertaken only preliminary investigationon the basis of aerial photography, and engineering will be carried out byconsultant's site staff ahead of construction as it proceeds, under theirmanagement (para 4.16). Agreement has been reached during negotiations thatthe consultants will be employed under terms and conditions satisfactory tothe Association (Annex 3).

1/ Length of existing road.

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(iv) Road Maintenance Elements

4.07 Training. Because maintenance performance is hampered by lack ofexperienced and qualified technical personnel (paras. 3.02 and 3.16), Govern-ment agreed during negotiations to employ consultants, under terms and condi-tions satisfactory to the Bank Group (Annex 4) to study MTP training needs,giving particular attention to maintenance. The study should make proposalsconcerning the employment of training officers, training methodologies,didactic equipment procurement, the re-opening of MTP's training center,and/or creation of new decentralized training facilities throughout the coun-try. The recommendations the study makes will be reviewed by Government andthe Association and an agreed-upon program will be implemented, possibly withthe assistance of the same consultants who carry out the study.

4.08 Spare Parts and Equipment. Maintenance performance has also beenhampered by inadequate operational systems (para. 3.13) and by budgetaryconstraints (para. 3.14). Concerning the former, the Government agreed duringnegotiations that it will, not later than December 31, 1977, prepare in con-sultation with the Association a work program and implementation schedule toreorganize DIMts maintenance equipment renting system and improve the organi-zation's spare parts supply system. To facilitate this, the Government alsoagreed that consultants, under terms and conditions satisfactory to theAssociation, will be financed under this project to study present operationsand to make recommendations for their improvement (Annex 5). Regarding bud-getary constraints, which are reflected in depleted spare parts stocks andalmost no equipment renewal during recent years, Vhe Government agreed toinclude in the above-mentioned terms of reference a study of spare partsand additional equipment needs. The study's recommendations will be reviewedby the Government and the Association, and an agreed list of goods will thenbe procured under the credit to ease the serious shortage.

4.09 Axle-load control. Though adequate regulations exist, axle-loadcontrol is not enforced (para. 3.03). During negotiations, the Governmentagreed (a) to take all measures reasonably required to ensure that the di-mensions and axle-loads of vehicles using its national highway network shallnot exceed limits consistent with the design standards for such roads, and(b) not later than December 31, 1976, exchange views with the Associationon its proposed program for implementing the measures. To assist Governmentin this, the project provides financing for the portable scales and vehiclesrequired for a year-long axle-weighing campaign on the paved network to deter-mine the sites where permanent weighbridges, also to be procured under theproject, should be installed.

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C, Cost Estimates

4.10 Total project costs are estimated at US$38.4 million includingtaxes (US$31.8 million net of taxes and duties), with a foreign exchangecomponent of US$25.6 million, or 67%. Detailed costs are as follows:

X Financineg FMG niillion US$ million Foreign US$ million

Item Local Fcreign Total Local Foreign Total Costs IDA BADEA- Gov't

I. Construction:

a) RN 1 722 1,178 1,900 3.36 5.48 8.84 62 6.15 - 2.69b) Tsiroanomandidy-

Maintirano Road:i) Bridges 380 520 1,000 1.77 2.88 4.65 62 3.25 - 1.40ii) Earthworks 664 798 1,462 3.09 3.71 6.80 55 - 3.60 3.20

1I. Engineering and Super-

vision of Construction: 64 :256 320 0.30 -1.19 1.49 80 1.19 - 0.30

III. Road Maintenance

a) Study of Training Needs 2 18 20 0.01 0.08 0.09 90 0.08 - 0.01b) Implementation 40 :160 400 0.19 1.67 1.86 90 1.67 - 0.19c) Study of Equipment and

Spare Part Needs 2 20 22 0.01 0.09 0,.10 90 0.09 - 0.01d) Equipment and Spare Parts 84 776 860 0.39 3.61 4.00 90 3.61 - 0.39e) Weighbridges, Portable

Scales and Vehicles 10 1.08 118 0.05 0.50 0.55 90 0.50 - 0.05

Sub-total I-IIIl 1,968 4,134 6,1052- 9.17 19.21 28.38 16.54 3.60 8.24

'IV. Contingencies:

a) Physical: 10% on 1,11 183 235 468 0.85 1.33 2.18 1.06 0.35 0.77b) Price: 22% on Ia 175 235 460 0.81 1.33 2.14 1.50 - 0.64

36% on Ib (i) 150 245 395 0.70 1.14 1.84 1.29 - 0.5527% on Ib (ii) 232 198 430 1.08 0.92 2.00 - 1.05 0.9520% on II andITI 43 357 400 0.20 1.66 1.86 1.61 - 0.25

Sub-total IV 783 1,370 2,153 3.64 6.38 10.02 5.46 1.40 3.16

Total Project Cost 2,751. 5,504 8,255~- 12.81 25.59 38.40 67 22.00 5.00 11.40

(Total Project CostExcluding Taxes) (1,326) (5,5C4) (6,830) (6.18)(25.59)(31.77) 80 22.00- 5.00 4.77

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4.11 The estimates were obtained as follows:

(i) Construction: Cost estimates for RNI are based on updlated bid pricesreceived for this road in July 1974 and on the modified design. The cost forthe Tsiroanomandidy-llaintirano road has been estimated by DTN and the missionon the basis of preliminary design and a survey of costs per-km for similarroads and bridges.

(ii) Supervision: Costs are estimated at 5% of construction cost forRN1 and 9% for the Tsiroanomandidy-MTaintirano road, the latter percentagereflecting consultants' increased workload for field engineering and teammanagement during supervision.

(iii) Road Maintenance: Lump sums are included, based on experience withsimilar projects in Kenya and Tanzania.

(iv) Contingencies: A 10% physical contingency is provided for con-struction and supervision to allow for quantity variations and extensions.Price contingencies are calculated for each component, taking into accountthe period from April 1976 to completion and price escalation rates of 13%for 1976, 12% p.a. for 1977 to 1979, and 10% for 1980, for civil works, and9% for 1976 and 8% annually for 1977 and 1978, for equipment.

(v) Foreign Cost Component: Under the Third Highway Project, this wasestimated at 66% for the construction of RN1, now reduced to 62%, reflectingtax and local labor cost increases higher than foreign cost increases. Theforeign exchange cost for the earthworks of the Tsiroanomandidy-Maintiranoroad construction is estimated at 53% of total cost, reflecting the use offorce account. These estimates were made by DTN and the Association, withBADEA participation in the case of Tsiroanomandidy-Maintirano road. Equipment,spare parts, imported materials, fuel, expatriate personnel, management over-head and profit are the principal foreign exchange items. The foreign com-ponent for supervision, has been estimated by the Association at 80% and fortraining and equipment procurement at 90% of the total cost.

n). Financing

4.12 Total project costs are US$31.8 million net of taxes. The US$5.0million BADEA loan, which will finance 16% of total project cost, net of taxes,is earmarked specifically for the foreign cost of the Tsiroanamandidy-Raintirano earthworks, or 53% of these works' total cost, including taxes.The US$22.0 million IDA credit will finance 69% of total project cost, netof taxes, covering some local costs in addition to 100% of the foreignexchange costs. The remaining 15% (US$4.8 million) of total project costs,or US$11.4 million, including taxes, will be met by the Government, which,(luring negotiations, agreed to make funds available as and when required.

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E. Implementation

4.13 DTN in the MTP, assisted by consultants, will be responsible forroad construction; this organization has the necessary competence, as shownby its performance under previous projects.

4.14 Reconstruction of RN1, its bridges, and the bridges of theTsiroanomandidy-Maintirano road 'will be executed under three separate unitprice contracts awarded after international competitive bidding in accordancewith Bank/IDA guidelines.

4.15 All bidders will be required to prequalify. Since Madagascar has

a GNP per capita of less than US$200, the credit agreement contains provisions

for 7.5% preference in bid evaluation for domestic contractors, includingSINTP in the event that it is a bidder (see para. 3.10). Procurement arrange-ments for contract construction were agreed during negotiations.

4.16 Earthworks on the Tsiroanomandidy-Maintirano road are, in fact,an intensive maintenance operation to upgrade the existing track to an all-weather road, rather than a full construction operation. The scope of theworks and their dispersion over :370 km are likely to result in high costsif executed by contractors. A force account unit of the MTP has recentlysatisfactorily upgraded a feeder road near Tsiroanomandidy at low cost.Therefore, execution of the eartliworks on the project road by force accountappears the most economic alternative, which provides, in addition, an ex-cellent opportunity to train Malagasy staff at all levels on the job. Con-sultants will be employed to assist the MTP with the engineering. managementand supervision of the force account works and to coordinate the earthworkswith the bridge construction by contractors. Administrative arrangements forthe force account works and conditions of consultant employment were agreedduring negotiations.

4.17 Also assisted by consultants, the SCP and the DIM in the MTP will be

responsible for implementing the training program and the maintenance program,respectively. Terms of reference and the study results will be disculssedwith the Association, and associated procurement will be in accordance withBank/IDA guidelines.

4.18 Construction works on RNI are expected to start by October 1976and be completed in about 2 years. Works on the Tsiroanomandidy-Maintiranoroad are expected to start in the second quarter of 1977 and finish 3-1/2years later. Studies are to begin by January 1977 and, following their

results and analyses, training, equipment procurement and DII reorganizationare to start within a year. The axle-load weighing campaign with portablescales would be carried out during 1977, and installation of weighbridges at

selected sites would proceed in 1979. The project is expected to becompleted by mid-1980. The implementation schedule (Chart 3) as well as theprogress reporting system for works (Annex 6) were agreed with the Governmentand recorded in a side letter during negotiations.

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F. Disbursements

4.19 Financing sources for specific project components are shown in thecost table in para. 4.10. The IDA credit will finance 70% of contract con-struction work costs, including taxes, and the foreign exchange cost of theremaining elements (except force account works), estimated at 80% of engineer-ing consultant fees and 90% of road maintenance component costs. All disburse-ments will be fully documented. A disbursement schedule is given in Table 8.

4.20 BADEA's loan will cover 100% of the foreign exchange cost of theforce account works. About US$4 million will finance the initial purchase ofrequired equipment and spare parts, according to the side letter includingan equipment list (Table 9) agreed during negotiations and US$1 million willcover the foreign cost of operating expenditures throughout the constructionperiod. All these disbursements will also be fully documented. The Governmentwill provide the balance of required funds.

5. ECONOMIC EVALUATION

A. Main Benefits and Beneficiaries

5.01 The project roads are located in the mid-west and west and willprovide a direct connection from Tananarive to the west coast, supporting agri-cultural development. The main project benefits are the savings that will beproduced for normal traffic on the main road and access to an area with agri-cultural potential where an IDA Livestock Project is underway. Transportsavings benefits are expected to be passed on to the small-scale farmers,since the highly competitive structure of the transport industry will exertpressure to reduce tariffs. Further, the reduced transport costs andincreased services expected from small operators may render productionprofitable in now marginal areas. Unit vehicle operating costs are shown inTable 10. The structure of the marketing and land tenure systems is such thatit should not constrain the development process (Annex 1).

B. Arivonimamo-Analavory Road

5.02 This section of RN1 is paved but in poor condition and incapable ofadequately serving the increasing traffic. About 70,000 persons live in thearea of influence of the project road. Density gradually increases towardsthe east, and small rural villages are seen continuously along the road.About 670 vpd are expected in 1979, the year it opens. The population derivesits livelihood from agriculture and related services. Average annual incomeper capita is less than US$120. Annex 2, Section A, contains additionaldetails about area of influence, traffic and benefit estimates.

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5.03 Reconstruction of the Arivonimamo-Analavory section of RN1, asenvisaged in the Third Highway Project, would have been on a new alignmentover half of its length, reducing the distance by 20 km. Appraisal evaluationgave a 16% economic return, but when the low hid received was 70% above esti-mates, construction was no longer justified to proposed standards. Alter-native technical upgrading possibilities for each of the three sections intowhich the road was divided were then evaluated and the best are included inthis project.

5.04 The rate of return for the whole road to revised standards isestimated at 13% (13% for the new alignment from Arivonimamo to PK 65.5, 16%for resurfacing the middle section and 12% for reconstructing the last sectionto Analavory). If the foreign exchange component is shadow priced, the ratesdecrease about one point. Operating savings plus reduced maintenance costsjustify the works. No benefits have been attributed to bridge reconstructioneven though it is essential for traffic continuity; if its cost is excluded,the average rate becomes 15% (or 14%, 22%, and 14%, respectively). Asensitivity test on the first section in which the old alignment is neitherused nor maintained results in a 14% return (Table 11).

C. Tsiroanomandidy-Maintirano Road

5.05 From Tsiroanomandidy to Maintirano, development is hampered by lackof communications. This project will finance the first all-weather road inan area of about 100,000 km2 . As in the case of RNI, about 70,000 personslive in this road's area of influence and derive their livelihood from agri-culture and related services. Sonme major towns have emerged, mainlv asmarket centers (for instance, Tsiroanomandidy, with about 18,000 inhabitants).Population density is lowest in the middle section, partly reflecting thelack of transportation which isolates that area. Per capita income is aboutUS$80 on average.

5.06 Crop extraction or passenger transport is almost impossible in thearea that the proposed Tsiroanomandidy-Maintirano road will serve. Itsopening will allow achievement of the potential developmental benefits ofthe IDA Livestock Project, will produce savings for the traffic that nowuses the existing track and for traffic that will be diverted from other modes,and could produce other social and economic benefits which are not quantifiedin this analysis, such as those generated by crop development and new settle-ment programs. Estimated opening year (1980) traffic is 36 vpd fromTsiroanomandidy to Ambaravanala, 14 vpd in the middle section and 42 vpd fromMorafenobe to Maintirano. Cattle is not expected to be moved by truck, sincethe cattle-transport price structure does not justify it. For further details,see Annex 2, Section B.

5.07 The best estimates result: in a 12% economic return for the wholeroad; since their benefits are interdependent, sections have not been eva-luated separately. Introduction of shadow exchange rate does not modify the

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results; if construction costs were 15% higher, the economic return changes to

10% (Table 12).

5.08 In addition to supervising works, the consultant management team

will train Malagasy staff on the job. The value this training may have,of eventually enabling Malagasy to undertake works of similar magnitude andquality without assistance, has not been quantified, and the training component

is, therefore, not included in thie above-mentioned rates of return.

D. Road Maintenance Elements

5.09 No rate of return calculation has been attempted for the elements

intended to improve maintenance operations. however, thley will undoubtedly

result in improved work organization, increased efficiency in operating andmaintaining equipment, better road maintenance procedures, and better capabi-

lity for enforcing axle-load regulations. Overall, the maintenance elementsunder the project are expected to result in reduced vehicle operating costsand increased efficiency of the road transport industry; these benefits willaccrue to thie economy as a whole and will be passed on to different segmentsof the population in varying degrees. Reduced vehicle operating costs willdirectly benefit the owners of private cars and commercial vehicles; since

transport prices are determined in a competitive framework, part of thisbenefit should be passed on to producers and consumers. There will also beGovernment savings in future road rehabilitation costs.

6. AGREEMENTS REACHED AND RECOMMENDATION

6.01 During negotiations agreements were reached on:

(a) an annual review by the Association and the Government

concerning the appropriateness of proposed budgetallocations for road maintenance (para 3.14);

(b) terms of reference and employment conditions forconsultants to be provided under the project(paras. 4.06-.08 and 4.16);

(c) a program and implementation schedule to reorganizeDIM's maintenance equipment renting system and toimprove the organization's spare parts supply system(para. 4.08);

(d) an implementation schedule for enforcing axle-loadregulations (para. 4.09);

(e) provision by thie Government of funds required to coverlocal project costs (para. 4.12); and

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(f) procurement arrangements for contract constructionand administrative arrangements for force accountconstruction (para. 4.16).

6.02 The project is suitable for an IDA credit of US$22.0 million on theusual terms to the Democratic Republic of Madagascar.

June 3, 1976

ANNEX 1Page 1

DEMOCRATIC REPUBLIC OF MADAWAFCAR

APPRAISAL OF A FOURTH HIGHWAY PROJECT

Distribution of Benefits Accruing from Road Improvement

A. Introduction

1. Road improvement is essential for development in rural areas becausetransport cost reductions stimulate agricultural production. To have thiseffect, however, road improvement benefits must be passed on to primary pro-ducers by transporters and other intermediaries. To predict whether thiswill happen, the road transport industry, marketing system, and land tenuresystem must be examined.

B. Road Transport Industry

2. Access to the Malagasy transport industry is relatively open.Vehicle dealers offer easy credit to virtually anyone with a driving licensewho can raise the relatively small down payment from his own savings or fromfriends and relatives who then become his associates.

3. Public transportation registries exist in MTP divisions 1/ but areincomplete and out-of-date. The most reliable source is the Ministry ofFinance, Tax Office, which estimates that there are about 5,000 public trans-porters.

Structure of the Transport Industry

4. Transporters fall into four categories: (i) transport companies;(ii) individual transporters; (iii) transport cooperatives; and (iv) merchanttransporters.

(i) Transport Companies

5. Transport companies are often family enterprises, some of themEuropean. Company managers are normally experienced, know the market well andensure good quality service. Large industrial companies deal with these enter-prises, rather than with individual transporters, and often have annual con-tracts with them.

1/ Arrondissements des Ponts et Chaussees.

ANNEX 1Page 2

6. Transport companies confine their activity mainly to freight and

usually hesitate or refuse to send their trucks on bad roads, such as the

Ambanja-Antsohihy. Few companies venture into passenger transport; if they do,

they use large buses on main roads such as Tananarive-Majunga. Only one com-pany is known to use "taxi-be" 1/ and "car-brousse" 2/ in Finanarantsoa.

(ii) Individual Transporters

7. Individual transporters are usually Malagasy. The vehicle operatormay be the owner, an operator on his account, or a salaried driver employedby a wealthy merchant or government employee. Owners and operators havelittle managerial knowledge and often consider neither vehicle depreciationnor maintenance costs. The vehicle is simply used, generally overloaded andthe income spent as it comes. When major repairs or change of tires arenecessary, they borrow money, accept a new associate who pays the expenses,or go bankrupt. Their attitudes are also reflected in prices charged. Ongood roads, such as the Tananarive-Majunga, where competition is stiff, theyaccept prices near operational cost or even lower, and on bad roads, suchas the Ambanja-Antsohihy, where competition is low or nonexistent, tariffsmay be double operating costs.

8. Individual transporters predominate in the passenger business, andCihere are also many in the trucking industry.

(iii) Transport Cooperatives

9. All Malagasy cooperatives, normally considered nonlucrative organ-izations, are grouped under the National Federation of Malagasy Cooperatives(Federation Nationale des Cooperatives Malagaches) and supervised by theState Secretariat for Cooperatives.

10. Transport cooperatives' mnain income sources are members' contribu-tions and discounts received when purchasing supplies. Surplus income afterexpenses is distributed to members, but some transport cooperatives use thesurplus to acquire and operate transport vehicles for members' benefit. Thisthird income source is, of course, subject to taxes like that of any othertransport company.

11. Cooperatives offer supply facilities and sometimes garage servicesto their members and impose standards on vehicle condition. They fix tariffs,schedules, and organize the rotation of members' vehicles on roads in theirarea of influence.

12. Cooperatives are more act:ive in passenger transport than in trucking.

1/ Peugeot or Renault cars.

2/ Bus of 12 to 23 seats.

ANNEX IPage 3

(iv) Merchant Transporters

13. Some large commercial companies have truck fleets to transport theirown merchandise. Smaller merchants who have pick-ups or trucks for their ownuse also offer transport services, which are concentrated on good roads andgenerally refused on poor ones.

14. These merchants usually keep their vehicles in good condition butdo not keep separate accounts for commercial and transport activities, whichmakes it difficult to assess the importance and cost of each. They tendto consider the transport activity a by-product and accept very low rates,sometimes below operating cost.

Transport Tariffs

(i) Fares

15. Only one transport company still offers regular interurban busservice. It operates between Tananarive and Majunga at FMG 2650 for firstclass passengers (FMG 4.61/passenger-km) and 1850 for second class (IMG 3.22/passenger-km). All other interurban passenger traffic is carried by individualtransporters and cooperatives.

16. Provincial traffic rates are fixed by provincial authorities whotake road condition into consideration. Passenger-km fares vary betweenFMG 2 and 3 on paved roads, 3 and 5 on regular earth roads, and between 5 and7 on poor earth roads.

17. Interprovincial tariffs are determined by supply and demand andthus vary considerably according to road condition, season, region and, onroads parallel to the railway, according to passenger train schedules. Thefollowing table shows April 1975 average fares and operating costs per passen-ger-km; the latter are based on officially authorized occupancy, but over-loading is a current practice and it is common to see a "Renault 4" designedfor three passengers carrying 5 or even 6; the same is true for other carmakes and for "car-brousses", thus, profits from operation are larger thanthe table suggests.

ANNEX 1Page 4

Taxi-Be 1/ Car-Brousse 2/

Fare Operating Cost 3/ Fare Operating Cost 3/

(FMG/passenger-km)

Paved Roads: Good 2.70 to 5.50 4.62 to 5.82 2.20 to 3 2.26 to 2.38Poor 5 to 7 5.63 to 7.10 3 to 4 2.38 to 2.72

Earth Roads: Good 5 to 9 6.30 to 7.63 4 to 6 3.00 to 3.70Poor 10 or more 8.32 to 10.48 5 to 7 3.70 to 4.33

1/ Peugeot 404 and Renault 4 are the most common. The first has a capacityof 6 passengers and the second 3.

2/ Car-brousse are busses with 12 to 23 seats; average, 17.

3/ Vehicle operating costs are mission estimates based on SETEC's "Etudedes Tariffs des Transports Roujtiers," 1974; and current April 1975prices.

(ii) Freight

18. There is an official nat:Lonal tariff only for cement, which is FMG15/ton-km. It is generally respecl:ed, as the sole cement factory has mediumterm contracts with transport companies based on it. All other inter-provin-cial transport tariffs are determined by supply and demand and consequently,like passenger tariffs, vary consicLerably 1/. Transport companies chargehigher rates than individual transporters, who in turn charge more thanmerchant transporters.

19. Each province fixes tariffs for transport within its limits. Ratesvary from as little as FMG 15/ton-km on stretches of the Tananarive-Majungapaved road to as high as FMG 62.5/ton-km on the Mahasolo-Sakay earth road.Tariffs are more or less respected on good roads. On earth roads, they areobserved during the dry season but bypassed during the rains; on the Mahasolo-Sakay road, for example, the rainy :season tariff charged is double the officialrate.

20. The table below illustrates the wide range of tariffs charged inrelation to road condition. The freights reported were obtained from transportcompanies and individual transporters. No meaningful average could be obtainedfor merchant transporters but in 1972 a study reported that they accepted aslittle as FMG 4/ton-km. The operating costs/ton-km reported are for the mostcommonly used vehicles, trucks between 4 and 10 tons. The cost is higher forsmall 1 or 2 ton trucks and lower for trucks over 10 tons.

1/ However, the Ministry of Transport and Supplies intends to fix tariffsfor haulage on all major roads.

ANNEX 1Page 5

Tariffs Operating Cost(FMG/ton-km)

Paved Roads: Good 10.43 to 22.73 7.80 to 12.20Poor 18.26 to 37.31 9.60 to 14.02

Earth Roads: Good 23.58 to 43.48 10.80 to 19.35Poor 62.50 to 125.00 13.20 to 22.86

1/ Vehicle operating costs are mission estimates based on SETEC's "Etude deFactibilite Routiere," 1973; on the Ministry of Transport's "Etude desTariffs des Transports Routiers," 1974; and current April 1975 prices.Operating cost is calculated for 4- and 10-ton trucks during dry season;it can almost double on earth roads during the rainy season.

C. Marketing System for Agricultural Products

21. In 1973, Government created the National Agency for AgriculturalProducts (SINPA) for the marketing of agricultural products. It has a monopolyover rice, the country's main staple, and competes with the private sector forother products, such as corn and peanuts.

22. Members of the Union of Agricultural Cooperatives (UCA), are particu-larly active in marketing coffee in competition with traders. The cooperativesuse their benefits to extend and improve services to affiliates.

23. However, most agricultural products are marketed by individuals.Farmers deposit their crops at Fokonolona buying centers 1/ where they aresold to SINPA or UCA. Alternatively, farmers may sell them at the villagemarket to representatives of large exporters or to small dealers.

24. For rice, Government fixes farm-gate and countrywide wholesaleprices. In 1974, the paddy price was fixed at FMG 30/kg to farmers plusFMG 2/kg to the Fokonolonas for administrative expenses, and the wholesaleprice of white rice at the sale centers 2/ was fixed at FMG 65/kg. However,because production falls short of local demand, it was estimated that farmerssold one-sixth of the rice crop on the black market for as much as FMG 50/kg,and wholesale white rice reached FMG 150/kg in some remote areas.

25. For other major crops, including coffee, corn, cotton, and cocoa,Government fixes a price or a minimum guaranteed price. Official pricesdiffer from region to region, approximately reflecting transport cost tomajor ports or markets. They are respected by SINPA and UCA, but private

1/ Centres d'achat.

2/ Centres d'eclatements.

ANNEX 1Page 6

dealers may pay more or less according to the transport cost from village toport of export and the area's competitiveness. For example, in 1974 Govern-ment fixed the coffee price in Ambanja at FMG 162/kg, but effective pricespaid to producers by private merchants varied from FMG 158 to 163/kg, depend-ing on transport cost between the Fokonolona where coffee is bought and theAmbanja port where it is shipped to Nossi-Be for export.

26. For all other products, prices vary from one Fokonolona to anotherin relaton to transport costs and competition; both factors are, of course,affected by road conditions. In 1972, the most recent date for which statis-tics on average prices paid to producers in different provinces are available,manioc prices varied from FMG 8/kg in Tulear to 20 in Finanarantsoa. Cornvaried from FMG 8/kg in Antsohihy to 30 in Diego-Suarez; green beans variedfrom FMG 43/kg in Tulear to 80 in Tamatave. 1974 prices were different butthe mission was told that they varied as much as in 1972.

27. For the time being, road improvement would have little, if anyeffect on cattle prices, since most cattle are walked to market becausetransport cost by truck is higher than that of the animals' weight loss.At present, for example, there are only two trucks transporting cattle fromTsiroanomandidy to Tananarive. However, cattle owners should also benefitfrom transport cost reductions, although perhaps less than other producers.

D. Land Tenure

28. The Malagasy rural land tenure system is complex. The fundamentallegal assumption is that all land belongs to the Government unless an individ-ual holds formal title and the land is fully exploited. The 1960 laws govern-ing property rights spell out rights and procedures for granting land titles.There are three different systems of property rights: (i) "modern" privateland ownership, which was introduced in 1881 and follows French legal and admin-istrative procedures. Official title is granted by registration or cadastralsurvey, provided the applicant can demonstrate a 10-year uninterrupted andundisputed possession of the property; (ii) customary land use rights, grantedunder traditional common law by the rural community, the Fokonolona, which isregarded as the rightful owner; and (iii) state land ownership. Two maintypes of land holdings have developed: the few large plantations usuallyowned by private or public companies and the large majority of family farms,which are smaller than one hectare in overpopulated areas, 3 to 4 in lesspopulated areas and 10 to 12 ha per family in the newly-developed mid-west.

ANNEX 1

Page 7

E. Concluding Remarks

29. At present, transport industry competition is stiff on good roads,limited on poor ones and slight or nonexistent on the poorest. Accordingly,tariffs are near or lower than operating costs on good paved roads; theyincrease on fair and poor roads and may be more than double operating costson poor earth roads in rainy season. Consequently, road improvement inMadagascar effects tariff reductions equal or superior to effective operatingcost savings and aids development of new services.

30. It is equally true that,at present, competition in marketing agri-cultural products is quite healthy and, as a result, transport cost reductionsshould increase farm-gate prices, provided that Government-fixed prices arerevised accordingly.

31. Land tenure in Madagascar should not constitute a constraint onagricultural production or marketing, nor in any way prevent road improvementbenefits from reaching producers.

32. However, it should be noted that: (i) the newly created Ministryof Transport and Supplies is thinking of regulating and fixing transporttariffs for passengers and freight and of creating a transport company whichmight have a monopoly over the transport of some products; (ii) SINPA is tohave a monopoly over the marketing of all agricultural products as a firststep towards transferring this responsibility to the Fokonolona or to theFiarisam-pokonolona, an administrative unit which will include a group ofFokonolonas; no schedule has been set for this change and the details of thesystem are not yet known. Whether these things will be done in the nearfuture, and if so, how, might drastically change transport and marketingconditions.

33. Consequently, the favorable conclusions above should be regardedas temporary pending clarification of Government's new policies and reforms.

June 1976

ANNEX 2Page 1

DEMOCRWTIC REPUBLIC OF MADAGASCAR

APPRAISAL OF A FOURTH HIGHWAY PROJECT

Background for Evaluation of the Proposed Road Construction

A. Arivonimamo - Analavory (RNI)

Area of Influence

1. RN1, the main route westward from the capital in Tananarive province,is paved as far as Tsiroanomandidy 1/, an important marketing center in thefertile mid-western region. The section under consideration traverses thedensely populated and cultivated central plateau. Although it is a ruralarea, population concentrations can be seen all along the road, decreasingin number and size from east to w,est. The three major towns are Arivonimamo(about 9,500 inhabitants), Mia5inarivo (5,100) and Analavory (1,350). Averagedensity is about 60 persons/km in the Arivonimamo subprefecture and about 9in the Miarinarivo subprefecture. Approximately 65,000 inhabitants are in thedirect area of influence and an additional 100,000 persons are indirectlyserved by the road. From 1963 to 1972, population growth averaged 3.2% p.a.in the Arivonimamo subprefecture and 3.9% in Miarinarivo but is-higher intowns because of migration. These trends are expected to continue. About85% of the areas' population depends on small scale agricultural activities.Paddy, manioc, potatoes, maize and other crops are produced, while cattleraising and secondary and tertiary activities are few.

Traffic

2. Traffic volume is almost the same throughout the road according tothree counting stations. Average growth rate has been about 10% p.a. from1966 to 1971, the date of the last complete count. In the section westwardsto Tsiroanomandidy, the rate has been as high as 19% p.a. during the sameperiod. However, since 1972, traffic growth has decelerated and will probablygrow at not more than 7% p.a. until 1987 and decrease to 5% thereafter. Aver-age traffic on the Pnalavory to Arivonimamo road is projected as follows:

1, The Second Malagasy Highway Project (Credit 134/Loan 570-MAG) helpedfinance the paving of the 55 km section from Fanjakamandroso toTsiroanomandidy, which was undertaken from 1970 to 1972.

ANNEX 2Page 2

vpdVehicle 1971 1978 1997

(openingyear)

Cars 159 256 765Light vehicles 46 74 221Buses 138 221 662Trucks, 2-6 ton-load 46 74 221Trucks, 6-10 ton-load 18 29 86Trucks, over 10 tons 10 16 48

Total 417 670 2,003

3. The 14 km of new alignment between Arivonimamo and PK63.5 areexpected to attract not more than 85% of the traffic from the existing roadwhich passes through a settled area where part of the traffic origin-destina-tion is.

4. Neither diverted nor generated traffic is considered, althouRh somemay be generated by the reduction in overall travel time from shortening theroad and reducing congestion and by trucking industry competitiveness, whichmay effect teriff reductions and pass operating savings to local dealers orProducers and consumers. Neither has any additional long distance traffic onthis RN1 section, due to the Tsiroanomandidy-Maintirano road upgrading, beenincluded.

Benefits

5. Estimated benefits are indicated in Table 10. The main projectbenefits are normal traffic operating savings from shortening the distance andeliminating the worst curves (an overall 5 km reduction, 3.2 km in Section Aand 1.7 km in C), decreasing congestion and improving the surface. UInit oper-ating costs are shown in Table 9.

6. Maintenance costs will also be reduced, but maintenance will haveto continue on the existing alignment of Section A since some traffic willuse it after the new alignment is open.

B. Tsiroanomandidy-Maintirano Road

Area of Influence

7. The Tsiroanomandidy-Morafenobe-Maintirano axis traverses the mid-west and west of 2the country, where no all-weather road exists in an area ofabout 100,000 km (about one sixth of the country's surface). The topography

ANNEX 2Page 3

is difficult and erosion widespread. Throughout the central plateau thereare smaller plateaux of not more than 100 ha separated by small valleys,rivers or streams. The altitude decreases continously westwards, especiallyfrom the Bemarivo river where the plateau abruptly changes to flat rollingterrain which descends smoothly to sea level at Maintirano. The rainyseason from about November to April, during which an average of 1.5 metersof rain falls, increases the difficulty of communications.

8. Partly due to the lack of roads, the population is scattered, withdensity lowest in the middle area,about 2 persons/km2, increasing toabout 4 in the Maintirano subprefecture and to 8 in the Tsiroanomandidy sub-prefecture. Population in the direct area of influence amounts to about70,000 inhabitants, if a strip of about 20 km on each side of the road isconsidered. The population is mainly rural even though throughout the areathere is emigration to towns. Only three of them exceed 1,000 inhabitants;Tsiroanomandidy, which has had an explosive 14% p.a. growth since 1963, nowhas about 18,000; Maintirano has increased at about 9% p.a. to 9,630 inhabi-tants; and Morafenobe has increased about 7% p.a. to 1,