World Bank Document...Document of The World Bank FOR OFFICIAL USE ONLY JÙl_ Report No. 2661-CM CAMEROON SECOND HEVECAM RUBBER PROJECT STAFF APPRAISAL REPORT December 10, 1979

Document of

The World Bank

FOR OFFICIAL USE ONLY JÙl_

Report No. 2661-CM

CAMEROON

SECOND HEVECAM RUBBER PROJECT

STAFF APPRAISAL REPORT

December 10, 1979

This document bas a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents niay not otherwise be disclosed without Worid Bank authorization.

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CURRENCY EQUIVALENTS

Currency Unit = CFA franc (CFAF)US$ 1 = CFAF 210

CFAF 1,000 = US$ 4.762CFAF 50 = FF 1

WEIGHTS AND MEASURES

1 kilometer (km) = 0.621 miles1 hectare (ha) = 2.471 acres

1 kilogram (kg) = 2.205 pounds1 metric ton (t) = 0.984 long ton

1 kilowatt (kW) = 1.360 cheval-vapeur (cv)1 kilowatt (kW) = 1.341 horsepower (hp)

ABBREVIATIONS

CAMDEV - Cameroon Development CorporationCCCE - Caisse Centrale de Cooperation Economique (France)

(Central Bank for Economic Cooperation)CDC - Commonwealth Development Corporation (U.K.)CFA - Communaute Financiere Africaine

(African Financial Community)ENSA - Ecole Nationale Superieure Agronomique

(Higher National School of Agronomy)FONADER - Fonds Nationale de Developpement Rural Fonds

(National Rural Credit Fund)HEVECAM - Societe Hevea - Cameroun

IRCA - Institut de Recherches sur le Caoutchouc(Rubber Research Institute)

PAMOL - Societe Pamol Cameroun (Unilever Group)SAFACAM - Societe Africaine Forestiere et Agricole - Cameroun

(African Forestry and Agricultural Company - Cameroon)SATET - Societe Africaine de Travaux et d'Etudes Topographiques

(African Company for Topographical Works and Studies)SEDA - Societe d'Etudes pour le Developpement de l'Afrique

(Research Company for the Development of Africa)SOCAPALM - Societe Camerounaise de Palmeraies

(Cameroonian Oil Palm Plantation Company)

FISCAL YEAR

Government and HEVECAM

July 1 to June 30

FOR OFFICIAL USE ONLY

CAMEROON

SECOND HEVECAM RUBBER PROJECT

STAFF APPRAISAL REPORT

TABLE OF CONTENTS

Page No.

I. BACKGROUND .... **...*................ ** .......* * * .............. 1

A. General ............................................... 1B. Agriculture ........................................ 2C. Performance under the First Project ................... 4

II. THE PROJECT AREA . .................................... . 7

III. THE PROJECT .......................... ....... .. 10

A. Summary Description ................................... 10B. Detailed Features ... .. ................................. . ilC. Project Costs ......................................... 15D. Proposed Financing . ....... .. .......... . .......... 17E. Procurement ............................................ 19F. Disbursement ................... 0.................................. 21G. Accounts, Audit, and Reporting Requirements ........... 22

IV. ORGANIZATION AND MANAGEMENT .......... . ............... . . . . . . 23

A. Plantation Development ............. ....... . ... ......... 23B. Rubber Smallholdings .......... . .......... 25

V. PRODUCTION .................................................... 26

VI. MARKETS AND PRICES ... .................. 26

VII. FINANCIAL ANALYSIS .. 28

VIII. BENEFITS AND JUSTIFICATION 31

IX. AGREEMENTS AND RECOMMENDATION. 35

This report is based on the findings of an appraisal mission comprisingMessrs. A. Green, A. Berthier, and Y. Sylla which visited Cameroon inMarch/April 1979.

This document has à restricted distribution and may be used by recipients only in the performanceof their oScial duties. Its contents may not otherwise be disclosed without Worid Bank authorization.

TABLES IN THE MAIN TEXT

Page No.

1.1 Niete Planting Program 1975/76 - 1978/79 ................. . 51.2 HEVECAM Expenditures 1975/76 - 1978/79 .............. 63.1 Project Timetable .................................................... 12

3.2 Proposed Repartition by Types of Planting Material ... ..... 123.3 Summary of Cost Estimates ................................. 163.4 Repartition of Project Costs between Phases ............... 173.5 Proposed Financing Plan .................. ................. 183.6 Loan Terms ........... ....... ......... 20

7.1 Investment Costs and Net Benefits ............ .............. 297.2 Financial Rates of Return .................................. 29

7.3 Repartition of Costs ..... .......................................... 30

8.1 Economic Returns from HEVECAM's Niete Plantation ......... . 328.2 Net Present Values ... .................................... . 33

8.3 Sensitivity to Price Changes ..... ......................... 338.4 Sensitivity to Variations in Costs and Benefits ........... 348.5 Crossover Values .. . .. .. . .. . .. .. ..................................... 34

SUPPORTING TABLES

III.1 Production Forecast for 15,000 hectares ......... .......... 37III.2 Annual Cost Estimates ...... ............................... 38III.3 Schedule of Estimated Disbursements ....... ................ 39

V.1 HEVECAM's Production Forecast for the Second Phase ........ 40VII.1 HEVECAM's Projected Profit and Loss Accounts to FY2000 .... 41VII.2 HEVECAM's Projected Balance Sheets ....... . ................. 42VII.3 HEVECAM Cash Flow .................... .............. 43

v ii.4 Government Cash Flow ...................................... 44VII.5 HEVECAM's Debt Service .. 45VII.6 Governnent's Debt Service ........ . 46

VIII.1 HEVECAM's Benefit Streams First and Second Phases ......... 47VIII.2 HEVECAM's Benefit Streams Third Phase and Total ....... o ... 48VIII.3 Economic Costs and Benefits and Net Benefits .... .......... 49

CHART

1. HEVECAM Organization Chart ..... ........................... 50

GRAPHS

Figure 1 Yield Projections .51Figure 2 Net Present Values and Rates of Return 15,000 ha .52Figure 3 Net Present Values and Rates of Return for First

and Second Projects .53Figure 4 Sensitivity to Cost Increases and Shortfalls in Benefits... 54

MAPS

IBRD 14373 Population, Rainfall, Transportation and Project AreaIBRD 14374 Niete Rubber Estate

CAMEROON

SECOND HEVECAM RUBBER PROJECT

I. BACKGROUND

A. General

1.01 The United Republic of Cameroon is located on the Gulf of Guinea inCentral Africa. It extends northward to the shores of Lake Chad and isbounded by Nigeria to the west, by Chad and the Central African Republic to theeast and by Equatorial Guinea, Gabon and Congo to the south. Covering 475,000km2 (183,000 sq. miles) the country embraces a wide range of climatic condi-tions, from Sahelian in the extreme north to tropical rain forest in thesouth, permitting a well diversified agricultural sector and near self suffi-ciency in food production.

1.02 The country's mineral resources are being increasingly exploited.An oil refinery is planned near Victoria to process offshore oil reserves andimportant aluminium deposits (bauxite) are to be processed at Edea. Iron isbelieved to exist in workable quantities in the Kribi region. Other industrialdevelopment is largely based on agriculture and forestry and involves domesticprocessing of primary commodities, such as cocoa and palm kernels, and theconversion of logs into lumber and paper products.

1.03 Infrastructure developments include improvement of the road network,particularly rural roads critical for the evacuation of agricultural produce,modernization and expansion of the railway system, expansion of the portfacilities at Douala and the creation of a new port at Rocher du Loup (WolfRock) between Kribi and Campo. The country is favored by a number of sitessuitable for the generation of hydro electric power, and the first majorinstallation has been created on the Sanaga river at Edea. This serves theprincipal towns in the North-West, West, South-West, Coastal and South-Central Provinces.

1.04 The population, estimated at 7.9 million in 1978, is currentlygrowing at about 2.3% per year, and over 40% is under 15 years of age.Of the adult population of 4.5 million, 74% or 3.3 million, are engaged in therural sector and 25% are in urban employment. Population density varieswidely between regions. It is highest in the northwest, where it reaches 200or more per km2 , and lowest in the east when it falls to about three.

1.05 The GNP, currently estimated at US$3.6 billion is equivalent to aper capita income of US$460. Although per capita incomes were increasing at6% a year in the 1960s, they are now growing at only about half that rate.The drop was attributed initially to a decline in commodity prices, notablycoffee and cocoa, and then to a slowdown in the investment rate. Governmenthas set itself the objective of re-establishing a 6% growth rate under the 4thNational Plan (1976/7-1980/81) with an increase in the investment budgetduring the period from an originally planned CFAF 685 billion (US$3.3 billion)to CFAF 930 billion (US$4.4 billion). Twenty four percent of this increase,CFAF 59 billion (US$280 million), is to be allocated to rural development.

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B. Agriculture

1.06 Agriculture playg a major role in the economy of Cameroon andagricultural expansion is likely to remain the cornerstone of the country'seconomic development strategy. The rural sector contributes 40% of theGNP, 70% of the country's export earnings and employs about three quartersof the total labor force. Per capita incomes vary widely between regions,the main distinction being between the forested areas in the south, US$90-160, and the Northern savannah areas, US$66-90, where income is less than athird of the national average.

1.07 Cameroon's diversity of soil and climatic conditions are reflectedin the variety and geographic distribution of its principal agriculturalproducts. In the North, millet, sorghum, rice, maize, groundnuts and cottonare produced and there is potential for wheat. In the Center and EasternProvinces, marked by low population density, root crops, groundnuts, coffee,tobacco and some cereals are grown and livestock production is also an impor-tant feature. In the Center South, comprising the principal urban concentra-tions, 80% of the country's cocoa is produced while plantain and taro aremajor food crops. In the coastal provinces, robusta coffee, cocoa and bananasare produced by individual farmers, while palm oil and rubber are producedon industrial estates. In the heavily populated Western Provinces maizeand tuber crops are the main food sources supplemented by groundnuts,beans and vegetables.

1.08 Smallholder farming is the predominant source of agriculturaloutput. Nearly a million farm families, cultivating an average of about 2 ha,contribute 90% of total production. Of the export crops, coffee and cocoacome principally from peasant producers. Three other important crops, namelycotton, tobacco and rice are also supplied largely by small farmers.

1.09 Attention in the past, particularly in the field of research,technical support and extension has been focussed on export crops such ascocoa, coffee, cotton and oil palm. By contrast, food crop production hassuffered from weak rural institutions, limited access to credit and seasonalinputs and lack of training and agricultural research dissemination to thesmall farmer.

1.10 Recent agricultural production trends have varied. Food crop andcereal production have remained stable over the past 5 years following poorresults during the drought of the early 1970s. Root crop production hasgrown at an appreciable rate over the past decade. Cash crop production hasfollowed an uneven trend: expanding between 1967 and 1972; regressing between1972 and 1976; and, more recently, increasing as a result of improved producerprices, stronger Government support and intervention policies, and the matur-ing of investments from earlier years. Potential for increased production isgreat as Cameroon possesses considerable unexploited land resources: it isestimated that little more than 4% of potentially cultivable land is currentlyunder production. Only in the Western Province and North Western Highlands is

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there a density of population which puts pressure on available cultivableland. Government is currently pursuing measures to encourage migration out ofthese areas by opening up new productive lands such as those envisaged as partof the present project.

1.11 In terms of Government commitment to the agricultural sector, theFourth National Plan accords an inerease of 4% of the investment budget toagricultural and rural sector activities (US$740 million) over provisionsmade in the Third Plan (US$575 million). In pursuing overall objectives ofimproving income distribution and regional disparities, modernizing socialfacilities and living conditions and developing local technology, Government'sagricultural policy is concerned with improving: (i) extension coverage;(ii) availability of agricultural credit; (iii) farmer organization throughcooperatives; and, (iv) research dissemination to smallholders for majorcrops. In pursuing attempts to stem the growing exodus of young people fromrural areas, funds have been earmarked to help establish young farmers incash and food crop production.

1.12 The Bank's activities in Cameroon include a number of integratedrural development projects although almost 60% of sector lending to date hasbeen to industrial crop projects for rubber and oil palm such as CAMDEV,SOCAPALM and HEVECAM. These projects are assisting Cameroon to diversify itsproduction of export crops. Rubber production now amounts to about 18,000tons a year and palm oil about 50,000 t (primarily for domestic consumption)as against coffee and cocoa at 90,000 t and 100,000 t respectively. Govern-ment is also considering diversifying into coconut production for whichvariety trials are underway and seed gardens are being established in a pilotcomponent of the CAMDEV II project (Loan 1508-CM).

1.13 In line with Government's wishes to involve smallholders in treecrop projects, CAMDEV II and SOCAPALM II (Loan 1392-CM) include plansfor 3,000 ha of smallholder oil palm and 1,000 ha of smallholder rubber,and the presently proposed HEVECAI Il project incorporates trials of 250 haof rubber to be planted by some 100 smallholders. Smallholdings wouldbe developed alongside the estates so that participating farmers couldbenefit from the technical expertise of the nucleus organization and fromthe estate processing facilities. This would make possible a higherquality end-product than would be attainable using traditional smallholdermethods, thereby benefitting the economy and providing the individualfarmer with a greater return from his labor. The overall size of suchsmallholder components is however constrained for at least the next fewyears by the low population density in areas adjoining the estates currentlybeing developed.

1.14 The total area under rubber in Cameroon at the present time isabout 25,000 ha, two thirds of which are in tapping. The major contributioncomes from CAMDEV with about 11,000 ha in tapping and an annual productionof 12,000 tons. SAFACAM with 4,000 ha in tapping, produces about 4,000tons and PAMOL, with 1,600 ha, about 2,000 tons. Long-term plans for

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further expansion of the area under rubber wiLl depend on the outcome oftwo regional master plan studies for which financing has been providedunder ongoing Bank projects. In terms of land availability, it is probablethat the area under rubber could be increased to 100,000 ha without jeopardiz-ing other important agricultural developments, in particular the expansionof production of staple food crops.

C. Performance under the First Project

1.15 HEVECAM (Hevea-Cameroon) a wholly state owned development company,was established by decrees 75/284 bis of April 30, 1975, and 75/346 of May 23,1975, and was charged with the development of a 15,000 ha rubber estate withina 40,000 ha concession traversed by the Niete river (Map IBRD 14374). Thecompany's operations are regulated under law 68/LF/9 relating to "Societesde Developpement" (Development Companies).

1.16 The land value was assessed at CFAF 400 million (US$1.9 million) andconstituted a part of Government's contribution to the establishment of thenew company. Initial finance, totalling CFAF 300 million (US$1.4 million),was contributed by Government, CFAF 50 million; the National Office forMarketing of Primary Commodities (ONCPB), CFAF 200 million; and the NationalInvestment Company (SNI), CFAF 50 million. An IDA credit (574-CM) of US$16million, and a CCCE (Central Bank for Economic Cooperation-France) loan ofFF 20 million were granted in 1975. This external financing contributed to theadministrative costs of the company, its investment in equipment and materials,and the civil works and agricultural operations required to initiate the firstphase with a target of planting 5,800 ha of plantation rubber. Also financedunder the project were associated activities which included technical assistanceto HEVECAM and the preparation of a Plan Directeur (Master Plan) for the KribiRegion. The latter work is being carried out under contract by a consortiumof local companies comprising SEDA (Societe d'Etudes pour le Developpement del'Afrique), SATET (Societe Africaine de Travaux et d'Etudes Topographiques)and SAFACAM (Societe Africaine Forestiere et Agricole du Cameroun).

1.17 The problems and difficulties of implementing a plantation projectin this hitherto largely undeveloped region, particularly the difficulty ofattracting and retaining labor, and climatic conditions unfavorable to highlymechanized deforestation, resulted in a slow start, and plantings achieved inthe early years lagged behind appraisal estimates. However, these problemsare gradually being cvercome and at the end of four years HEVECAM had comewithin 5% of achieving the physical objectives set for that period. Qualityof the plantings is generally good, the company's operations have beenwell managed, and yield expectations at maturity (2.3 tons dry rubber per ha)should be realized.

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Table 1.1: Niete Planting Program 1975/76 - 1978/79

1975/76 1976/77 1977/78 1978/79 Total

As Appraised - 600 900 1,800 3,300

Actual 94 280 680 2,094 3,148

Difference + 94 - 320 - 220 + 294 - 152

1.18 However, costs have been much higher than originally estimatedand available financing will be exhausted by the time the 1979 program, whichwill bring the total planted area to 4,200 ha, has been completed. It isproposed that the balance of 1,600 ha be financed under the second project.

1.19 The Company's accounts at June 30, 1979, showed a total cost overrunon the four years' operations of CFAF 1.6 billion (US$7.6 million) an increaseof 38 percent over appraisal estimates. Table 1.2 summarizes these over-expenditures.

1.20 The greatest cost overrun has been on the construction of housingfor estate labor, an increase of 128% (US$3.1 million). For social reasons,the Government decided that the standard of accommodation originallyenvisaged was no longer acceptable and the housing program was revised.Both the quality of construction and the habitable area per worker weresubstantially increased.

1.21 An over-expenditure of US$2.7 million (an increase of 52% over theappraisal estimate), was incurred on plantation development and is attribut-able in large measure to a change in the method of land preparation. Atappraisal it was not expected that windrowing of the felled timber would benecessary. The intention was to fell the forest and then open plantingrows with a V-blade attached to the front of a heavy tractor. Because ofthe difficulty of getting a satisfactory burn without piling the logs, andbecause windrowing was considered to reduce the risk of root diseases(particularly Fomes) infecting the young rubber trees, the more expensivemethod was subsequently approved and adopted. Heavy losses due to rodentdamage, particularly severe where seed was planted directly in the field,necessitated a revision of planting techniques with a greater use ofcontainer grown, 'polybag', plants raised in irrigated nurseries. This,too, had a significant impact on costs.

1.22 An important ancillary activity financed under the first project hasbeen the preparation of a Plan Directeur (Master Plan) for the economicdevelopment of the Kribi region, within which the Niete concession is located.Although primarily designed to identify areas suitable for further expansion

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Table 1.2: HEVECAM Expenditures 1975/76 - 1978/79

CFAF million US$ million 1/ Cost

As As OverrunAppraised Actual Appraised Actual X

I. Construction Costs

Administrative buildings 102 174 0.5 0.8 71Housing 508 1,156 2.4 5.5 128Other constructions 113 179 0.5 0.9 58

Sub-Total I 723 1,509 3.4 7.2 109

II. Investment in Vehicles,and Equipment

Heavy agricultural tractors 732 949 3.5 4.5 30

Other agricultural equipmentand vehicles 156 161 0.7 0.8 3

Other equipment 161 238 0.8 1.1 48

Sub-Total II 1,049 1,348 5.0 6.4 29

III. Agricultural Investment

Plantation development andfoodcrops 1,089 1,654 5.2 7.9 52

IV. Overheads and Operating Costs 1,348 1,277 6.4 6.1 (5)

Total 4,209 5,788 20.0 27.6 38

1/ Throughout this report the present nominal exchange rate of CFAF 210:US$1 has been used even when referring to the first project which wasappraised at a rate of CFAF 225: US$1. All calculations have been madein CFAF and tables including US$ equivalents will show some apparentinconsistencies in sub-totals and totals due to rounding.

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of the tree-crop sub-sector, particularly rubber, oil-palm and coconut, theterms of reference included the investigation of other possibilities, such asforestry, mining, tourism and cottage industries, and the infrastructure needsassociated with such economic development.

1.23 Implementation of the study was delayed, and the final report is notexpected until early 1980. However, a report on the first phase has beenissued, and this tentatively identifies a number of possible sites for newindustrial estates. While the work is not yet far enough advanced to allowthe formulation of a regional plan, all the required data exist to permitcompletion of the development of HEVECAM's plantation at Niete.

II. THE PROJECT AREA

General

2.01 The project area, a 40,000 ha concession, is located 25 km south-east of the port of Kribi to the south of the main Kribi-Ebolowa road; thegeographic center of the plantation is located at map coordinates 1007' Eastand 2044' North (see Map IBRD 14374). The estate headquarters, alreadyestablished within the concession, are 40 km by road from the port.

Population

2.02 Prior to the start up of the first project the area was practically

devoid of population. Such villages as existed were concentrated along theKribi-Ebolowa and Adjap-Zuingui roads. The future interests of these villageshave been protected by the establishment of concession boundaries which leavea substantial band of cultivable land at the disposition of local farmersalong these two main axes.

2.03 The Ocean department, although one of the least populated areas ofthe country, shows remarkable ethnic diversity. At least ten differentpeoples are represented including some pygmies, believed to number about3,000, whose interests are specially protected by the state.

Topography

2.04 The concession area lies for the most part less than 100 m above sealevel and is relatively flat. There are, however, chains of low hills risingto 200 m. Prospections to date show that some 16,000 ha, or 40% of theconcession, are sufficiently level, with slopes of 15% (about 80) or less, formechanized land clearing and the creation of industrial blocks. Flood liableareas along the river banks and swampy areas between streams would be excluded,as would slopes steeper than 15%.

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Soils

2.05 Soils are mostly sandy-clays with up to 40% clay and a high propor-tion of fine sand. These are considered very suitable for rubber. Lesssuitable, but still plantable, are areas where there is a significant propor-tion of lateritic gravel mixed through the soil profile. Soils are moderatelyacid, pH about 5, and are generally deficient in potassium. Provision hasbeen made for complete manuring of all plantings during immaturity and correc-tive doses of selected fertilizers, principally potash, during exploitation.

Hydrography

2.06 The concession is traversed by the river Niete which would providean adequate year round water supply for the factory and industrial area.Potable water for the residential areas would come from new wells to beconstructed at each village site.

Climate

2.07 Prior to the commencement of the first project no precise meteo-rological data existed for the Niete area. On the published rainfall mapsthe concession lies between the isohyets for 1,850 and 2,700 mm and con-siderable variations in total annual precipitation occur over rather shortdistances, with more than 3,000 mm of rain at Kribi, and less than 2,000 mmat Ebolowa. Essentially, however, the pattern of distribution results in amain dry season of 3 to 4 months between the end of November and March, asmall dry season in July and August and adequate rainfall during theremainder of the year. In the two full years for which estate records areavailable the mean rainfall has been about 2,200 mm (87 inches) with anestimated annual moisture deficit of 100-200 mm. No accurate data areavailable on sunshine hours or solar radiation. Sunshine would be expectedto vary between 1,500 and 1,800 hours annually with a mean daily solarradiation of about 350 gram calories/cm2/day. Temperature averages about26 C0 (79OF) and seasonal variations are slight. One possible hazardis wind damage, and this has had to be taken into account in selecting theplanting material to be used under the project. In rubber cultivation thematerial planted usually consists of seedling root-stocks budgrafted withselected high yielding clones - that is collections of genetically identicalmaterial obtained by vegetative multiplication from single parent trees ofproven productivity. Some of the highest yielding and most vigorousclones, such as RRIM 600, are very susceptible to wind damage and would notbe planted extensively at Niete.

Vegetation

2.08 The dominant vegetation type is dense, low altitude, evergreentropical forest. Although the Niete concession has already been logged over,and most of the top-class timber has been taken out, some merchantable logsremain. Since all standing timber has anyway to be felled prior to theplanting of rubber the cost of extracting these logs would be minimal. Therecovery of as little as 8 m3 per hectare of salvage logs, at a stumpage value

of CFAF 10,000 per m3, would repay more than 50% of the costs of land clear-ing. This would improve the financial rate of return by about one percentagepoint. Assurances were obtained during negotiations that Government would engagea suitably qualified forestry consultant to undertake a study to determine byspecies and volume the quantity of merchantable timber remaining on the Nieteconcession. This work would be completed not later than December 31, 1980, andGovernment would thereafter take appropriate measures to ensure the commercial-ization of this resource (para 9.01).

Communications

2.09 The estate is linked to the national road network by a 12 km accessroad maintained by HEVECAM. This main road connects with Kribi, 33 km, andEbolowa, 138 km. From Kribi there is a northward link to Edea which providesaccess to Douala and Yaounde. However, these roads are generally in poor

repair and are scheduled for upgrading. Meanwhile, much use has to be made oflocal air transport, with scheduled services between Douala and Kribi, and,now that an airstrip has been constructed, chartered flights direct to theestate. Douala, 254 km from Niete, is likely to be the main port for shipmentof the plantation rubber in the early years. Eventually, the new port to beconstructed at Rocher du Loup (Wolf Rock), 38 km south of Kribi, will providea less costly evacuation route. Assurances were obtained during negotia-tions that Government would give priority to completing the public worksrequired to ensure year round road communications between the estate, Kribiand Douala, via Edea, and that these works would be carried out by December 31,1980 (para 9.01).

Services

2.10 Kribi, the administrative center of the region, is served by theusual public utilities and services. While the estate itself has a policepost all other services will have to be provided under the project. Thesewill include a hospital, additional schools and recreational facilitiesassociated with each new village and the installation of water and electricity.There are already 3 schools, which include kindergarten facilities, 4nursing centers with qualified staff, 3 clubs, 4 sportsfields, 3 coveredmarkets, a number of stores and "boutiques" and a mobile cinema. Assuranceswere obtained during negotiations that the schools built, and to be built,at Niete would be operated in conformity with the regulations governing thepublic educational system.

Labor

2.11 The project is heavily dependent on labor recruited from outside theregion. Such recruitment is costly and the turnover rate is high, with two tothree workers being recruited for every one retained. However, the situationis expected to improve as the estate develops and the social ambiance becomesmore attractive. Nevertheless, the difficulty of establishing a stable,adequately skilled, and disciplined work force constitutes one of the most

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serious problems facing the Niete operation. At present 45% of the laborcomes from the South-Central and Eastern provinces. Eighty percent of theworkers are less than 30 years old, and the majority are unnarried. Whilemost do come from rural areas fewer than 5% are from the north which is,currently, one of the major areas of underemployment in Cameroon. Agricul-tural wages are fixed by Government decree. Although the legal minimumremains below US$2 equivalent per day the average wage paid by HEVECAM,including bonuses, seniority pay, and overtime earnings, is about US$3.Workers also enjoy substantial fringe benefits, such as housing provided bythe company. Wages are expected to continue rising faster than the generallevel of inflation, resulting in further increases in living standards forplantation workers.

III. THE PROJECT

A. Summary Description

3.01 The project would comprise a second five-year phase in the develop-ment of an industrial rubber estate within the 40,000 hectare Niete concession.

3.02 It would include:

i. felling and preparing for planting, a further 9,800 ha of forest:

(a) 2,300 ha to complete the 7,500 scheduled for clearing under thefirst project,

(b) 6,000 ha to bring the plantation to a total of 13,500 haunder the proposed second project, and

(c) 1,500 ha in preparation for the planting of 1,500 ha under athird phase, thus completing the 15,000 ha developmentenvisaged by Government;

ii. planting a further 9,300 ha with selected rubber clones:

(a) 1,600 ha to complete the 5,800 ha planned under the firstproject and,

(b) 7,700 ha to extend the estate to 13,500 ha;

iii. maintaining during the pre-production period the 4,200 ha plantedunder the first project together with the 9,300 ha that would beplanted under the proposed project;

iv. bringing into tapping the first 1,500 ha planted under the firstproject;

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v. establishing the infrastructure necessary for the expansion of

the estate, including the construction of housing for workers,

the installation of water and electricity services, and the provi-sion of a hospital, schools, markets, stores, recreational build-

ings, and sports facilities;

vi. constructing the first stage of the rubber factory and installing

processing capacity to treat 30 t/day;

vii. establishing nurseries to provide material for the 1,500 ha that

would be planted under phase 3 in order to complete the 15,000 ha

development;

viii. completing the prospection of the Niete concession and preparatory

topographical and soil studies on a new site to provide for thecompany's further development;

ix. providing technical assistance to HEVECAM under the existing manage-ment contract with SAFACAM; which includes provision for the train-

ing of Cameroonian staff at all levels of responsibility;

X. continuing the ongoing program of applied experimentation andfield trials on rubber;

xi. clearing forest and making land available for food crop husbandry by

the estate workers and their families and provide them with improved

seed and other planting material for the major subsistence crops;

xii. clearing about 250 ha of land outside the concession area, conduct-

ing trials and making other preparations, such as establishment ofcredit facilities for participating growers, for the introduction of

rubber as a smallholder crop in association with the industrialplantation. About 100 participants would be expected during theproject period; and

xiii. conducting a survey to determine the amount of merchantable timberremaining in the areas of forest that would be cleared under the

project.

B. Detailed Features

3.03 The area of forest to be cleared would exceed the net area to be

planted by about 15%. About 3% would be required for the creation of roads

and tracks, and 12% would be unplantable due to steep slopes, unsuitablesoils, impeded drainage and other technical problems. Unless it is specified

to the contrary figures in this report refer to net planted hectares. Fellingwould be completed a year in advance of field planting and, wherever possible,

trees would be uprooted in order to minimize the risk of root diseases affecting

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the development of the young rubber. After knocking down, the salvable logswould be extracted, and the remaining material would be pushed into windrows40 m apart and burnt. As at present, local contractors would be employedwhenever possible for chain-sawing operations; felling the large trees thatcannot be pushed over by tractor and opening lines in preparation for plant-ing. Other than this it is proposed that all land clearing operations becarried out on force account. HEVECAM has demonstrated its ability to achievethe annual programs of around 2,000 ha required to meet the project timetableand, with its existing fleet of 14 large and several smaller crawler tractors,which are already equipped for deforestation work, has practically all thematerial resources required to complete a 15,000 ha estate.

3.04 The following schedule summarizes the proposed timetable for theprincipal field operations:

Table 3.1: Project Timetable(hectares)

Project Year PY 1 PY 2 PY 3 PY 4 PY 5 Total

Land Clearing 2,210 2,200 2,190 1,700 1,500 9,800Planting 998 /a 2,210 2,200 2,192 1,700 9,300Opening for Tapping - - 131 243 1,093 1,467

/a Planted in the first half of 1980, an additional 1,052 ha would havebeen planted during the second half of calendar year 1979 to completethe 4,200 ha of the first project.

3.05 Under the first project it was intended that two-thirds of thearea would be planted with "seed at stake" (seedlings raised directly inthe field and bud-grafted subsequently with selected clonal material) andone-third with nursery grafted container-grown plants (seed sown and raisedin "polybags"). Losses due to rodent attack and increasing evidence of thesuperiority of polybag plants have led to a change in policy (para 1.21).

Table 3.2: Proposed Repartition by Types of Planting Material

First Second ThirdType of Material Phase Phase Phase Total

ha % ha % ha % ha %

Seed at stake 1,683 40 860 9 - - 2,543 17Budded stumps /a 1,305 31 2,170 23 - - 3,475 23Polybag plants 1,212 29 6,270 68 1,500 100 8,982 60

4,200 100 9,300 100 1,500 100 15,000 100

/a Seedlings raised and bud-grafted in nurseries, cut-back, !Lifted andtransferred to the field as bare-root stumps.

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3.06 Experience has also dictated a change in the choice of the varietiesto be planted. Clone GT.1 has made the best early growth under the firstproject and would be the main variety planted under the proposed secondproject. Other clones that have performed well elsewhere, and should beincluded in future Niete plantings, are PB.217, PB.235, PR.261 and Avros2037. Although not yet widely grown in West Africa, PB.217 has already beenapproved by the Rubber Research Institute of Malaysia for large scale commer-cial planting. An additional eight hectares of budwood gardens would beestablished and maintained under the project in order to ensure an adequatesupply of top quality material. Initial planting density would be 555 treesper ha (8 m x 2.25 m) with an average of 420 trees being brought into tappingby the eighth year after an initial opening with 300 trees in year six. Inthis report seed at stake is considered as being planted in year NO. Polybagmaterial and budded stumps would be planted in Ni, or occasionally even in N2.

3.07 On all areas a leguminous cover crop (Pueraria) would be established,and maintenance would as far as possible be achieved using chemical herbi-cides, in preference to hand weeding. The use of herbicides both reduceslabor costs and minimizes soil erosion hazards. The major risk to the youngtrees is root disease, caused by Fomes, and provision has been made forroutine inspection and control measures. Once in production the trees wouldbe susceptible to various diseases of the tapping panel; "black-stripe" causedby Phytophthora palmivora being the most serious. The cost of appropriatetreatment has been taken into account. All chemical products used on theproject would be selected with due regard to their environmental safety.

3.08 Manuring during immaturity would be based in a complete NPK mixture,using principally rock phosphate, urea, diammonium phosphate and muriate ofpotash. Detailed schedules are given in the project file. Once in productionit is unlikely that an economic response would be obtained to anything otherthan muriate of potash.

3.09 Tapping would be twice weekly, 3 and 4 day intervals alternating,on a half-spiral cut (S.2; d3/d4) and trees would be stimulated from theoutset by the application of an ethylene generating compound. "Ethrel", basedon 2-chloroethylphosphonic acid, is currently recommended, but other formula-tions such as "Ethad" are under test and may become commercially available ata later date. Exploitation costs have been calculated on the assumption thatEthrel would be used. It is probable, however, that further advances will bemade both in the formulation of stimulants and in tapping techniques. Mostpromising at present would appear to be a combination of conventional tappingwith the system of puncture tapping first tested by IRCA (Rubber ResearchInstitute in the Ivory Coast) and now being developed in a number of rubberproducing countries. Since labor costs are expected to go on rising in realterms there will be a continuing incentive to evolve less labor intensivemethods.

3.10 Yields forecast for the Niete program start at 200 kg dry rubberper ha in year six and rise to 2,300 kg at full maturity. A tapping life of32 years is assumed for each planting, with some yield decline in the lateryears. This would result in an overall mean annual yield of 1,972 kg per ha.

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The yield of 2,300 kg per ha at maturity is the same figure as was adoptedfor the first project. Available evidence, based on performance of theselected clones on older estates, indicates that these forecasts are realisticand, given good management, should be achieved. Production is compared inFigure 1 with some recent forecasts from Malaysia. The better early yieldsexpected at Niete are due to the high initial planting density and the con-trolled use of Ethrel from the outset of tapping. This technique, prudentlyapplied, reduces tapping costs, by allowing less intensive tapping for a givenyield target, without adversely affecting the development of the trees oryield at maturity. The alternative approach, advocated at present by theRubber Research Institute in Malaysia, gives a less favorable distribution ofproduction over time with a dramatic, though short-lived, increase in yieldabout year 17 when Ethrel stimulation is first applied. A summary of produc-tion estimates for the estate is given in Table III.1.

3.11 The use of yield stimulants prolongs latex flow and reduces theproportion of the crop that can be economically collected as liquid latex.The late drippings are allowed to coagulate in the tapping cup and have to becollected subsequently as "cup-lump". The estimate retained in planning thefactory has been 75% liquid latex and 25% secondary grades, comprising cup-lump, tree-lace, bark-scrap and ground-scrap. The factory would produce crumbrubber from all grades. This would be marketed in standard bLocks of 33.3 kg,30 to the ton, and shipment is planned in 18 ton containers. The factorydesign provides for ponding of the effluent, and the eventual discharge intothe Niete river would have an acceptable biological oxygen demand.

3.12 The total number of people employed by HEVECAM at the end of thefirst phase, 4,200 ha planted, will be about 1,600. During the periodcovered by the proposed second project this number would increase to about3,000. Accommodation would be provided under the project for the additional1,400 employees and, where these are married, for their immediate dependents.Medical and other social services would also be expanded to cater for theadditional numbers.

3.13 Costs have been assessed on the assumption that, amongst the skilledand unskilled laborers, the percentage of married men accompanied by theirfamailies would increase from 25% to 50% between 1979 and 1985, and that forartisans and specialist workers the proportion would rise from 50% to 70% overthe same period. Eventually, the estate would provide direct employment forbetween 6,000 and 7,000 workers of whom 80% would probably be married. Atypical estate village, would house 400 workers and would supply the laborrequired to operate 1,000 ha of plantation in full production.

3.14 In immediate proximity to each village an area of 60 ha offorest would be cleared by HEVECAM, and allotted to individuals wantingland to grow their own food. Provision has been made in the projectfinancing for HEVECAM to establish and maintain a food crop unit that wouldmultiply, and distribute free of charge to the workers, supplies of improvedplanting material. This work would be conducted in collaboration with IRAF(Agricultural and Forestry Research Institute).

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3.15 Government is anxious to develop smallholding rubber in associationwith the industrial estate and a sum of CFAF 109.0 million (US$0.5 million) hasbeen included in the financing plan for the launching of a smallholder pro-gram. This is seen as essentially experimental in nature and would involveonly about 250 ha, and perhaps 100 participants during the project period. Itwould be unrealistic to attempt a more ambitious program under the proposedproject. Rubber is an unfamiliar crop, population density in the area sur-rounding the concession is low, and local farmers already have time and laborconstraints in the practice of their traditional husbandry. Of particularimportance for the long term success of the small holding venture would be theestablishment of an integrated farming system that takes into account theconditions under which the small farmer operates. In particular, the inclu-sion of food crops, and perhaps small livestock, in the system would bothimprove farm incomes and reduce risk of roct diseases infecting the youngrubber trees.

C. Project Costs

3.16 The total cost of the proposed project during the five year invest-ment period is estimated at CFAF 20.0 billion (US$95.0 million) inclusive ofall identifiable taxes. Substantial investments already made under the firstproject would contribute to the implementation of the second. For example,the fleet of heavy tractors already purchased would suffice to complete 15,000ha of deforestation. In consequence the foreign exchange component of thesecond project would be only 36% or CFAF 7.3 billion (US$34.5 million).

3.17 The tax element accounts for CFAF 1.3 billion (US$6.2 million) or 7%of total project costs, leaving a net of tax total of CFAF 18.7 billion(US$88.8 million). Physical contingencies have been estimated at 10% on civilworks and buildings and 5% on all other costs except salaries. Price contin-gencies have been calculated throughout at 10%, compounded annually, onJanuary 1979 base costs, plus physical contingencies. This is consistent withthe judgment made in respect of other recently presented Cameroon projects andis again considered appropriate in the present case. Total contingencies,thus calculated, amount to 42% of base costs. Although differently consti-tuted, this overall percentage is identical with that applied in the firstproject.

3.18 A summary of project cost estimates is given in Table 3.3. Fora more detailed presentation see Table III.2. Since the project wouldcomprise a time-slice out of an ongoing and continuing development programthe costs to be incurred during the five year project period would bedistributed between a continuation of the first phase (4,200 ha), implementa-tion of the second phase (9,300 ha), and preparation for a third phase (1,500ha), under which Government plans to bring the estate to completion (15,000ha).

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TABLE 3.3 - SUMMARY OF COST ESTIMATES

----------- CFAF millionS--- ---------- $ million…-----------

% Foreign -Local Foreign Total Exchange Local Foreign Total

1 Field operations 3,517 1,732 5,249 33 16.8 8.2 25.0

2 Civil works, constructions 1,586 196 1,782 il 7.6 0.9 8.5

3 Utilities, water, electricity 48 192 240 80 0.2 0.9 1.1

4 Vehicles, tractors 161 646 807 80 0.8 3.1 3.9

5 Other equipment 31 122 153 80 (1.1 0.6 0.7

6 Factory (building & equipment) 240 389 629 62 1.1 1.9 3.0

7 Overheads & Management expenses 2,863 1,442 4,305 33 13.7 6.8 20.5

8 Technical assistance, SAFACAM 157 293 450 65 0.7 1.4 2.1

9 Foodcrop development 71 16 87 33 0.3 0.1 0.4

10 Applied rubber research 58 15 73 21 0.3 0.1 0.4

il Small holders Program 91 18 109 17 0.4 0.1 0.5

12 Project related studies 68 44 112 39 0.3 0.2 0.5

i TOTAL BASE COST 8,891 5,105 13,996 36 42.3 24.3 66.6

CONTINGENCIES

Physical 435 246 681 36 2.1 1.2 3.3

Price 3,380 1,901 5,281 36 16.1 9.0 25.1

II TOTAL CONTINGENCIES 3,815 2,147 5,962 36 18.2 10.2 28.4

III TOTAL COST (including taxes) 12,706 7,252 19,958 36 60.5 34.5 95.0

IV TAXES 1,300 - 1,300 - 6.2 - 6.2

V TOTAL COST (net of taxes) 11,406 7,252 18,658 39 54.3 34.5 88.8

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Table 3.4: Repartition of Project Costs between Phases

CFAF PercentagePhase Ha million of Total

First 4,200 7,522 38

Second 9,300 11,445 58

Third 1,500 679 4

I plus Il 13,500 18,967 96

Total 15,000 19,646 100

3.19 All expenditures during the project period attributable to the thirdphase of development, expansion of the estate from 13,500 to 15,000 ha, wouldbe financed 100% by Government under part B.2 of the project (Table 3.5).

D. Proposed Financing

3.20 A Bank loan of US$16.5 million and an IDA credit of US$15 millionare proposed, making a total Bank Group participation of US$31.5 million. Inaddition, the Cameroonian Government would receive two loans from the CCCE(Central Bank for Economic Cooperation - France) totalling FF80 million(US$19.0 million) and a loan of É12 million (US$25.7 million) from the CDC(Commonwealth Development Corporation - U.K.). The proposed financing plan isset out in Table 3.5.

3.21 Contributions of the Bank Group would cover eligible expendituresunder part B.3 of the project (Table 3.5) incurred between January 1, 1980,and June 30, 1984, or such later date as may subsequently be agreed.Retroactive financing would be provided for a total amount not exceedingUS$400,000, the anticipated reimbursable costs prior to Loan/Credit signature.The CCCE loans would be divided between parts B.1 and B.3 of the projectinvolving US$4.9 million of parallel financing and US$14.1 million paripassu with the other participants. CDC would finance 80% (US$4.9 million)of expenditures under Part A (July 1 -December 31, 1979) and 26% of expendi-tures under part B.3. Government would contribute CFAF 3.9 billion (US$18.8million) of equity which would cover 20% of the costs of Part A, 100% ofthe costs of part B.2, and 16% of the costs of part B.3 of the project.The Government would, also contribute CFAF 1,012 million (US$4.8 million)of additional equity to finance HEVECAM's working capital requirementsduring the project period and would pay a total of CFAF 2,542 million (US$12.1million) in debt service (Table VII.6) on its external borrowings -- firstproject CFAF 399 million (US$1.9 million) and second project CFAF 2,143million (US$10.2 million). Thus the total Government contribution during thefive years would be CFAF 7.5 billion (US$35.7 million).

Table 3.5 - Proposed Financing Plan(US$ million)

IBRD/IDA CCCE CDC Government TOTAL

A. First Stage July 1 - December 31, 1979

Field Operations - - 2.0 0.5 2.5Civil Works, Construction - - 0.8 0.2 1.0General Overheads - - 1.6 0.4 2.0Unallocated - - 0.5 0.1 0.6

Total First Phase (including taxes) - - 4.9 1.2 6.1Percentage - - 80 % 20 % 100 %

B. Second Stage - January 1, 1980 - June 30, 1984

B.l 100% CCCE

Cars and light tractors 1.0 - - 1.0Technical Assistance, SAFACAM - 2.7 - - 2.7Project related studies - 0.7 - - 0.7Unallocated . 0.5 - - 0.5

Sub-Total B.1 - 4.9 - - 4.9

B.2 100% Government

Field Operations (1,500 ha) - - - 2.7 2.7Workers Housing (for 1,500 ha) - - - 0.2 0.2Food Crop Development - - - 0.5 0.5Applied Rubber Research - - - 0.4 0.4Smallholder Program Management - - - 0.3 0.3

"l "l Credit - - - D.4 0.4Unallocated - - - _.5 0.5

Sub-Total B.2 - - - . ° 5.0

B.3 Pari-Passu

Field Operations 10.7 4.8 6.9 4.3 26.7Civil Works, Construction 4.1 1.9 2.7 1.7 10.4Utilities, Water, Electricity 0.6 0.2 0.4 0.2 1.4Vehicles, Heavy Tractors 1.5 0.7 1.0 0.5 3.7Other Equipment 0.4 0.1 0.2 0.2 0.9Factory (Building & Equipment) 1.7 0.8 1.1 0.8 4.4General Overheads 9.4 4.2 6.1 3.9 23.6Unallocated 3.1 1.4 2.4 1.0 7.9

Sub-Total B.2 31.5 14.1 20.8 12.6 79.0Percentage 40 % 18 % 26 % 16 Z 100 %

TOTAL PROJECT COSTS 31.5 19.0 25.7 18.8 95.0Percentage Including Taxes 33 % 20 % 27 % 20 % 100 %

TOTAL PROJECT COSTS NET OF TAX 31.5 19.0 25.7 12.6 88.8PERCENTAGE NET OF TAX 35 % 21 % 29 % 14 % 100 %

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3.22 All external loans would be made to Government and would berelent to HEVECAM with a 10 year interest free period. Lending andrelending terms are set out in Table 3.6. The general principle agreedduring negotiations for calculating relending rates was that Governmentshould recover its outgoings but would not seek any additional returnon the monies relent to HEVECAM. It was, however, agreed that: (i) theIDA Credit would be relent on terms equivalent to those applying to therelending of the IBRD loan, (ii) the CCCE credit of FF 20 million (US$4.8million) would be passed to HEVECAM as equity, and (iii) CFAF 781 million(US$3.7 million) of the CCCE credit of FF 60 million (US$14.3 million)would be passed to HEVECAM as a grant. At the assessed opportunity costof capital in Cameroon (9%), these arrangements represent a net presentvalue to HEVECAM of US$25.1 million, derived in approximately equalamounts from the terms of the external donors (US$12.7 million) and theonlending terns granted by Government (US$12.4 million). The signing ofa project financing agreement between HEVECAM and Government givingeffect to the arrangements set out in Table 3.6, Part B, would be a condi-tion of effectiveness of both the IDA credit and the Bank loan (para 9.02).The smallholder component of the project, which would be financed 100% byGovernment, would be managed by HEVECAM under a credit administrationagreement with FONADER which would be concluded on terns acceptableto the Bank (para 9.01). The Government would ensure that HEVECAM main-tained at all times cash and bank balances, including overdraft facilitiesguaranteed by Government, to cover HEVECAM's expenditures for a four monthperiod. Assurances to this effect were obtained during negotiations (para9.01). Effectiveness of both the IDA Credit and the IBRD Loan would becontingent upon the Government's contracting loans with CDC and CCCE tocover the balance of projeet costs. Government would also ensure additionalfinancing, after the project period, sufficient to bring all plantings tomaturity, and to extend the factory facilities to handle the full production.

E. Procurement

3.23 Contracts of US$100,000 or more would be awarded through inter-national competitive bidding (ICB) in accordance with Bank guidelines.Goods so purchased would be expected to total about US$7 million, of whichthe Bank/IDA would finance US$2.3 million, and would cover vehicles andequipment, fertilizers and chemicals, and factory equipment. Purchaseswould be grouped wherever practical to derive maximum advantage from bulkprocurement. CCCE would finance, under its own procurement rules, lightvehicles and wheeled tractors to a value of FF 4.4 million (US$1.0 million).Contracts for goods and services worth less than US$100,000 would beprocured through local competitive bidding under procedures acceptable tothe Bank, while those of less than US$50,000 would be on the basis ofquotations, from not fewer than three suppliers. Such contracts would notbe expected to exceed US$5.5 million (Bank/IDA US$1.7 million). Civilworks totalling US$12.3 million (Bank/IDA US$4.1 million), comprisingindustrial and, social buildings, workers' housing, site preparation, and

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TABLE 3.6 - LOAN TERMS

CCCE CCCEIDA IBRD CDC Second Window Firit Window

CREDIT LOAN LOAN CREDIT CREDIT TOTALA. TERMS TO GOVERNMENT

Amount USS 15m US$ 16.5- b 12m FF 20m FF 60m -us$ million equivalent 15.0 16.5 25.7 4.8 14,3 76.3Loan period 50 years 20 years 20 years 15 years 20 year. -

Grace period 10 years 5 years 7 years 5 years 8 yearsAnnual interest rate - la 7.95% 7.5% 10.25% 5.5%Annual service charge on amount

withdrawn and outotanding 0.75% - - - - _Annual comsitment fee o. undisbarsed amount - 0.75% 0.75% - -Repayment of principal

(number of equal half-yearly instalments) 80 /b 30 26 20 24

A. Total Debt Service (US$ million equivalent) 18.6 28.2 47.9 8.9 23.4 127.0

B. TERMS OF GOVERNMENT 'S ONLENDINC TO HEVECAM

Total Amounts (US$ million equivalent) 15.0 16.5 25.7 4.8 14.3 76.3

Pa.sed ta HEVECAM as Grant - - - - 3.7 3.7Passed ta dEVECAM as Equity - - - 4.8 - 4.8

Onlent to hEVECAM lc 15.0 16.5 25.7 - 10.6 67.8

Loan period 20 years 20 year, 20 years - 20 years 20 yeareInterest free grace period 10 years 10 years 10 years - 10 yeara 10 yearsAnnual ioterest rate /d 13.6% 11.5% 13.7% - 10.5% 12.6%Repaynent of principal and interest

(number of equal half-yearly instalmenta) 20 20 20 - 20 20

E. Total Debt Service (US$ million equivalent) 27.9 28.2 47.9 - 17.3 121.3

C. GOVERNMENT SUPPORT TO HEVECAM (A-B)

US$ million equivalent ( 9.3) ° '0 8.9 6.1 5.7

D. NET PRESENT VALUE OF LOANS le

US$ million equivalent: To External Donar ( 9.7) 0 ( 1.1) 0.3 ( 2.2) ( 12.7)To Governmene 5.2 ( 3.5) ( 6.3) ( 4.3) < 3.5) ( 12.4)

TO hEVECAM 4.5 3.5 7.4 4.0 5.7 25.1

a/ The actual interest rate on the IERD Loan would be that prevailing at the time f Board presentation.b/ IDA Credit repaid in 20 payments of 0.5% followed by 60 paynents af 1.5%.c/ Consolidated inta a single loan of US$67.8 million eqaivalent at an annual interest rate of 12.6%.d/ Onlending ter,m of the IDA Credit calculated as though the money were borrowed by Gaverament at the IBRD rate.e/ At an assamed opportunity cost of capital in Cameroon f 9Y..

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other works, would mainly be carried out by HEVECAM on force account with alimited amount of local sub-contracting. Past experience has shown thatsuch work is unlikely to attract foreign bidders, and suitable localcontractors are not available in the area. Deforestation and plantationdevelopment work, costing US$35.1 million would also be carried out byHEVECAM on force account. The continued use of force account for deforesta-tion is justified on two counts: (i) the possibility to put to effectiveuse the substantial residual capacity now at HEVECAM's disposal forcarrying out these operations (heavy equipment, workshop facilities andtrained manpower), and (ii) on the basis of HEVECAM's current performanceand recent international tenders for deforestation work in Cameroon, forceaccount affords the less costly alternative. As under the first project,HEVECAM would sub-contract operations such as tree felling with chain-sawsfor which local contractors are available. Since the purchase of landclearing and other agricultural equipment was financed under the firstproject, depreciation costs would be specifically excluded in calculatingreimbursable amounts on force account operations. HEVECAM's management andadministrative expenses would total US$28.2 million of which US$9.4million would be covered by Bank/IDA financing. The company alreadyemploys a number of expatriates amongst its managerial and technical staffwhose services would be retained under existing contracts, satisfactory tothe Bank, during the proposed second project. About 720 man months ofexpatriate time would be involved during the project period at an averagesalary cost of US$4,000 per man-month, total US$2.9 million (Bank/IDA US$1million). CCCE would finance the cost of continuing the SAFACAM managementservices, provided under an existing technical assistance contract approvedunder the first project and estimated to cost US$2.7 million during thefive years of the proposed second project (para 4.02).

F. Disbursement

3.24 The Bank Group financing (US$31.5 million, an IDA credit of US$15million and an IBRD loan of US$16.5 million) would be disbursed over aboutfive years. It would cover 40% of the costs of part B.3 of the project(Table 3.5) representing 33% of total project costs including taxes and 35%of total costs net of taxes. The IDA credit would be disbursed first. Itis expected that no claim would be made against the IBRD loan until thesecond semester of FY1983. Costs during the first three quarters of FY1980(July 1979 - March 1980) would be financed by Government and CDC. Aschedule of disbursement for both credit and loan is shown in Table III.3.

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Bank Group Financing Covering 4 1/2 Years' Expenditures

Category US$ million _

1. Plantation costs 10.7 40

2. Civil works, construction 4.1 40

3. Utilities (water, electricity) 0.6 40

4. Vehicles, heavy tractors 1.5 40

5. Other equipment 0.4 40

6. Factory (building and equipment) 1.7 40

7. General overheads 9.4 40

8. Unallocated 3.1 40

Total 31.5 40

All disbursement claims against contracts would be fully documented. Dis-bursements for management expenses and force account operations would bemade against statements of expenditure. Full supporting documentation,showing costs incurred and works completed, would be retained for inspectionby the Bank during project supervision. HEVECAM has already installed acost accounting system, and experience under the first project has shownthe statements provided to have been accurate. Control would be reinforcedby specific verification provided by the external auditors (para 3.26).

G. Accounts, Audit, and Reporting Requirements

3.25 HEVECAM would, within the context of its financial accountingsystem, keep records consistent with sound accounting practice and adequateto reflect both its general financial situation and the detailed costs ofits operations. HEVECAM would submit quarterly reports to Government andthe colenders containing summary financial information. The report wouldshow actual against budgeted expenditures and would also relate physicalprogress achieved to target objectives. In addition to these quarterlyreports, half yearly inspection reports would continue to be preparedjointly by SAFACAM and HEVECAM and would be submitted to Government and thecolenders. HEVECAM's annual budgets would be made available to the colendersfor comment prior to final ratification by the Board of Management.

3.26 HEVECAM would continue, as under the first project, to appointindependent auditors acceptable to the Bank for the annual auditing of itsaccounts. The audit report would be submitted to the Bank within 4 months

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after the close of each financial year, that is not later than October 31in respect of the year terminating June 30. The auditor's opinion onproject expenditures would include verification whether: (i) goods andservices had been procured from member countries of the Bank or Switzerland;(ii) goods had been received or work performed; (iii) payment had beenmade; (iv) goods and services financed by the colenders were eligible forsuch financing and had been used exclusively for the project; and (v) aspecial opinion on HEVECAM's submissions of statements of expenditurescovering its force account operations. In addition the auditor's opinionwould include a verification of HEVECAM's debt to equity ratio. Assurancesregarding the application of these arrangements were obtained duringnegotiations (para 9.01).

IV. ORGANIZATION AND MANAGEMENT

A. Plantation Development

4.01 Existing arrangements, which have worked well, would be continued.HEVECAM (Hevea-Cameroon) is a state-owned development corporation establishedby Government decrees in 1975 (para 1.15) to create a 15,000 ha industrialrubber estate within a 40,000 ha concession in Ocean department (see MapIBRD 14373). The company's management structure is illustrated in theorganization chart (Chart 1). Control is exercised by a Conseil d'Adminis-tration (Board of Management) composed of nine to twelve members eachappointed for a three-year term. The President of the Board is nominatedby the President of the Republic, and the Prefect of Ocean Department isan ex-officio member. The "Office National de Commercialisation desProduits de Base", (National Office for the Marketing of Primary Commodities)has two seats on the Board by virtue of its contribution to the company'scapital, the "Societe Nationale d'Investissements" (National InvestmentCompany) has, likewise, one seat. The Ministry of Agriculture and theMinistry of Economy and Planning each have two representatives, the Ministryof Finance and the Government Commissary one each. The Managing Director(Directeur General) is responsible to the Board for the day to day managementof the company's affairs.

4.02 Responsibility for the creation of the plantation, its maintenance,and eventual exploitation has been assigned to SAFACAM (Societe AfricaineForestiere et Agricole-Cameroun), a plantation company with internationalaffiliations, under the terms of a technical assistance contract concludedat the commencement of the first project, and scheduled to last for eightyears. This contract has operated satisfactorily to date and is expectedto continue through the five-year period of the project now proposed.SAFACAM puts at the disposition of HEVECAM its technical expertise in allsubjects relating to rubber cultivation, and the processing and marketingof the crop. It assists HEVECAM in the preparation of annual budgets and,through formal inspection visits conducted twice a year, keeps the HEVECAMBoard advised on all matters relevant to the successful implementation of

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the program of development. Either by secondment or separate recruitment,SAFACAM ensures that key posts in HEVECAM are staffed by suitably qualifiedpersonnel. HEVECAM would at all times employ a Technical Manager, anIndustrial Manager and a Financial and Administrative Manager with qualifica-tions and experience acceptable to the Bank. Assurances to this effectwere obtained during negotiations (para 9.01).

Training

4.03 Under Article 7 of the agreement SAFACAM undertakes to ensureappropriate training for HEVECAM's Cameroonian staff. At the field levelthis is essentially a question of on-the-job training in the special skillsrequired, for example, bud-grafting and tapping. Despite the high turnoverrate, and the continuing need to train new recruits, the system has provedeffective and HEVECAM now disposes of sufficient skilled labor to ensuremeeting its planting targets of around 2,000 ha a year. At the intermediatelevel, foremen, supervisors and technicians on-the-job training is alsoproving effective and the company has a good nucleus of staff on which tobuild. Incremental numbers required during the project period would berelatively small and no insuperable problems are foreseen. At the managementlevel the problem is rather one of structured career development within thecompany than of basic training. Most management recruits have a soundagricultural background derived from an ENSA (Higher National School ofAgronomy) education and it is management experience which is lacking.HEVECAM is, however, very conscious of these problems and a training anddevelopment program anticipating the long term needs of the company hasbeen approved by the Board of Management. Management trainees who areconsidered to show potential for career development in plantation manage-ment would be given the opportunity to gain experience by being sent onassignments with established plantation companies either within Cameroon orabroad.

Applied Research

4.04 While fundamental research is the task of the national researchinstitutes, an organization the size of HEVECAM requires qualified staffof its own able to deal with project specific problems as they arise.Provision has, therefore, been made for the creation of a small appliedresearch unit with an annual budget equivalent to about IJS$55,000. Thisunit would carry out field trials on a variety of subjects includingmaintenance techniques, the relative performance of different clones,disease control, and, later, tapping systems. Arrangements have also beenmade for periodic visits to the estate by specialists from IRCA (RubberResearch Institute with headquarters in France). The total cost of thisunit during the project period would be about US$0.5 million, whollyfinanced by Government.

Food Crops

4.05 A second small ancillary unit, also Governient financed, would becreated to ensure the provision of planting material to HEVECAM's workersfor their food farms. This would have a budget comparable with that of the

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applied rubber research unit and would work in collaboration with IRAF, theNational Agricultural and Forestry Research Institute.

Project Related Studies

4.06 Government's plans for the future expansion of HEVECAM's activitiescall for the selection of a new site that could be developed to providethe company with a second industrial estate. The choice should await the

completion of the Master Plan study for regional development. But, oncethe site is finally selected on the basis of an integrated land use plan,the detailed survey work required for the proper planning of the estatewould be carried out by HEVECAM which has the expertise required for thistype of prospection. The studies would be financed by CCCE at a cost ofUS$0.7 million.

Sector Plan

4.07 Assurances were obtained during negotiations that Governmentwould prepare, and submit to the Bank not later than December 31, 1981, along term plan for the future development of perennial tree crops in thecoastal zone of Cameroon. This study would take into account the manpowerand financial requirements of such a plan and would make recommendationsregarding the allocation of resources between industrial plantations,intermediate scale operations and smallholding activities (para 9.01).

B. Rubber Smallholdings

4.08 During the project period, efforts would be concentrated onestablishing techniques suitable for the incorporation of rubber into thelocal farming system. For reasons discussed in para 3.15 a large-scaleprogram could not be realized under existing circumstances. The limitedexperience acquired to date from other tree crop projects has shown that itis difficult for farmers to give sufficient time to the tree crop duringimmaturity to ensure its successful establishment. Other more urgent matters,such as the sowing or harvesting of food crops, intervene and absorb allavailable labor at critical periods.

4.09 Both because of the root-disease problem, and because of laborconstraints, it would be unwise to encourage farmers to clear forestand plant immediately with rubber. The system that is likely to prove boththe most practicable and the most profitable to the farmer, would involvean initial period of food crop husbandry, followed by combined rubberestablishment and food farming, with the area only being devoted purely torubber when the canopy closes and there is insufficient light for inter-rowcultivation. During at least the first two project years, the approachwould be essentially experimental with HEVECAM preparing areas that wouldeventually be handed over to selected individuals or cooperative groups.It would be premature at this stage to create a full extension service.This would be disproportionately expensive, with so few potential partici-pants, and the technical package is not yet sufficiently well defined toensure success. Because of the low population density in the area, and the

- 26 -

time required for any spontaneous settlement to occur in such a region,substantial small holding activity in association with HEVECAM's estatewould not be expected until well beyond the project period, probably byabout 1987, with 1,000 ha of small holdings being created by 1990.

V. PRODUCTION

5.01 The first rubber production would be obtained in 1982 from areasplanted in 1976 under the first project. However, the tonnage would bevery small and, in the first two years, arrangements would be made for thecrop to be processed in the SAFACAM factory at Dizangue, near Edea (MapIBRD 14373). A summary of production year by year, from 1982 through 2022,is given in Table III.1. This shows separately the tonnage attributable toeach phase. In Table V.1 production is shown per hectare and by individualplanting year, for the 9,300 ha that would be planted under the secondproject. Maximum yield of 34,500 tons would be attained by about the year2000 when the full 15,000 ha would have attained peak production of 2.3tons a hectare. The area planted under the second project would contributean estimated 21,000 tons of this total.

5.02 A problem inherent in this type of project is the maintenanceof production in the long term. Economic considerations call for a rapidinitial development, and the failure to achieve the early planting targetsis one reason for the low financial rate of return now expected from thefirst project alone (Table 7.2). However, a rapid development leadsinevitably to an equally rapid decline in production at the end of theeconomic life of the first generation of trees. Unless new extension areasare planted, and brought in to tapping to compensate for the decline inyield from the original stand, the installed factory capacity would befully utilized for only about five years. To maintain production at 35,000tons a year would call for the creation of a plantation of at least 20,000ha, so phased that about 3% of the area would be replanted each year.Although the completion of a 15,000 ha plantation within the Niete concessionis envisaged in the project cost estimates, any subsequent Bank Groupparticipation in the further expansion of HEVECAM would be contingent uponthe acceptability of the sector plan (para 4.07) and evidence of thelong term financial viability of the Company's operations.

VI. MARKETS AND PRICES

6.01 Long-term prospects for natural rubber, its competitiveness withsynthetic elastomers, and the chances of its retaining the present propor-tional share of the total elastomer market have been the subject of muchdebate and intensive study. A recent World Bank/FAO report -- "The WorldRubber Economy: Structure, Changes, Prospects", (June, 1978) provides afull treatment of the subject.

- 27 -

6.02 The long-term cost competitiveness of natural rubber wouldseem to have been further strengthened by the recent increases in energyprices. It was estimated in 1977 that, to be profitable, new investment instyrenebutadiene production in Western Europe would require a future realprice (1977 terms) of USi 88 per kg. At that time the natural rubberindustry in Malaysia would have expected to achieve comparable profitabilityat a price of only USe 77 per kg. The total world demand for elastomersis expected to increase at a rate of about 5% over the next decade andabout 3% between 1990 and 2000. If this demand is to be met, presentproduction of around 15 million tons has to be doubled over the next 20years, to reach 30 million tons by the year 2000. For natural rubber tomaintain its present 30% to 35% of the market, production must be increasedto at least 10 million tons.

6.03 To put this in perspective, Malaysia, at present the world'slargest producer of natural rubber with a 45% market share, would have toincrease its area of rubber in tapping by about 60%, that is from 1.7 to2.7 million hectares, making a total of over 3 million hectares devoted tothis one crop. Quite apart from the difficulty of finding another millionhectares of suitable land, in competition with currently more profitablecrops such as oil palm, there is the even more formidable problem ofattracting another 250,000 workers to the industry in order to ensure theharvesting of the additional crop. Indonesia, the second largest producer,with a smallholder-dominated rubber sector and a high proportion of over-aged trees, would also be expected to have problems mobilizing the capitaland manpower resources required to maintain its market position. It may beconcluded, therefore, that there are excellent prospects for West Africancountries, such as Cameroon, to acquire an increasing share of the trade.

6.04 The proposed HEVECAM project would produce technically specifiedblock rubbers equivalent to the Malaysian "SMRR" grades. The top qualitythat would be aimed at, and should be attained by 60% of the crop, wouldbe grade "5L", light rubber with a dirt content below 0.05%. This currentlycommands a small premium, about 5%, above the price of RSS1 (first qualityribbed smoked sheets) which is the basis for market price forecasts.However, the remaining 40% of the crop would be of lower quality, withhigher dirt content and darker color, and would command a price marginallybelow RSS1. In estimating the price that HEVECAM rubber would fetch, ithas been assumed that the overall average would equal the RSSI price, andthat sales would be to Western Europe. Available data are based on cifLondon forecasts. For 1982, when the first rubber would be marketed, theprice predicted by the Bank's Economic Analysis and Projections Departmentis USel3l.5 per kg (CFAF 276) in constant terms, or USe2l3.3 in currentprices. No forecasts have been issued beyond 1990. However, since maximumproduction from the Niete plantings would not be achieved until 1999, andthe economic life of the plantation extends to 2022, alternative assumptionshave been tested in order to calculate a rate of return. A continuation ofthe 1979-90 trend until 2000 would mean a real price increase of 1.5% peryear, or a price, in 1999, of CFAF 317 per kg (US151 in constant 1979

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terms). One hypothesis tested ('A') is that the price, having risen tothis level, would remain constant in real terms during the remaining lifeof the plantation. An alternative hypothesis ('B'), allowing the realprice to continue rising at the same rate, would give a price of CFAF 447per kg (USe2l3) in 2022. The average over the 41-year exploitation _period would be CFAF 301 per kg under the first hypothesis and CFAF 327under the second. These figures may be compared with the current (November,1979) price of CFAF 310 per kg.

VII. FINANCIAL ANALYSIS

7.01 The proposed project would form an integral part of HEVECAM'sdevelopment program. Financial rates of return have, therefore, beencalculated on the basis of a number of different options: (a) terminatethe program on completion of the 4,200 ha estateifinanced under the firstproject (CR 574-CM); (b) proceed with the second project, adding another9,300 ha, to make an estate of 13,500 ha; or (c) envisage a third phase,planting 1,500 ha in 1984/85, to bring the planted area to 15,000 ha, asoriginally proposed by Government in 1974. Yield and price assumptions areas described in Chapters III, V, and VI. In view of the very high initialinvestment in creating an industrial plantation of this type, and thecomparatively low cost of a replanting operation to take the estate into asecond generation, it would have been of interest, had it been practicable,to extend the analysis over a longer time scale, encompassing two cycles.Unfortunately uncertainties regarding (a) future prices, and (b) the yieldpotential, under more advanced technology, of the improved clones that willbe available in 20 to 30 years' time, make such an exercise too speculativeto be of real value.

7.02 Table 7.1 shows, in constant 1979 terms, the total investmentrequired per hectare, excluding debt service charges, for each phase up tothe time when the cash flow becomes positive, and also the net benefit perhectare over the life of the plaptation.

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Table 7.1: Investment Costs and Net Benefits /a(per hectare of plantation)

Phase I II III I + II Total

Hectares 4,200 9,300 1,500 13,500 15,000

Investment period years /b il il il 13 13

US$ '000 (a) costs 14.7 6.7 4.9 9.0 8.4(b) net benefits 17.1 36.9 48.5 30.7 32.5

CFAF million(a) costs 3.1 1.4 1.0 1.9 1.7(b) net benefits 3.6 7.7 10.2 6.5 6.8

Ratio - net benefits:costs 1.2 5.5 10.2 3.4 3.9

/a Price assumption 'A' para 6.04.

/b Number of years before a positive cash flow is achieved.

Payback periods range between 21 and 25 years, as compared with an assumedeconomic life of 37 years for individual plantings.

Table 7.2: Financial Rates of Return

Phase I I + II Total

Hectares 4,200 13,500 15,000

Rates of Return % % %

1. Point Estimate 3.8 7.6 8.1

2. Sensitivity

Costs up 10% 2.2 6.2 6.6down 10% 5.4 9.1 9.6

Benefits up 10% 5.2 9.0 9.4down 10% 2.0 6.0 6.5

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7.03 The second phase alone, based on the incremental costs of creatingan additional 9,300 ha of plantation, shows a higher rate of return,about 11%. For the final 1,500 ha, again based on incremental costs, therate of return would be about 17%. However, these figures are of lesspractical importance than those set out in Table 7.2 which show rates ofreturn for estates of different total areas.

7.04 With a 15,000 hectare plantation at full maturity HEVECAM'sannual operating costs would be about CFAF 5.5 billion (US$25 million), inconstant 1979 terms. Revenues from sales of rubber would exceed twice thisamount, CFAF 11.5 billion (US$52 million). Table 7.3 shows approximately

how the costs at maturity would be distributed over the major categories ofexpenditure.

Table 7.3: Repartition of Costs

CFAFmillion %

General overheads (headquartersadministration) 550 10

Other management expenses 550 10

New investments (replacement of vehicles,reneval of buildings, factory equipment,etc.) 550 10

Agricultural field costs 1,650 30

Production costs proportional to tonnage(transport, processing, and packing) 1,100 20

Marketing costs 1,100 20

Total 5,500 100

7.05 Table VII.1 shows HEVECAM's Projected Profit and Loss Accountuntil FY2000 based on the assumption that the company's expansion wouldcease after completion of a 15,000 ha estate within the Niete concession.By FY1986, when annual rubber production would have reached some 6,000tons, with average yields of 1.2 tons per hectare, HEVECAM's first netprofit of CFAF 249 million (US$1.2 million) would appear. By the year2000, when yields should reach the estimated peak of 2.3 tons per hectare,annual income from sales would be almost double the operating costs. Overthe period 1975-2000 cumulative net profit in current terms would be CFAF98 billion (US$467 million). With cumulative depreciation of CFAF 41billion (US$194 million), the internal cash generation during the periodwould be CFAF 139 billion (US$661 million).

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7.06 Table VII.2 provides estimated Balance Sheets at the end ofthe first project, 1978-79, and annually thereafter through the year2000. The present debt:equity ratio of about 1:1 rises to 2:1 by theend of the project period as a result of additional long term borrowingsof CFAF 14.2 billion (US$67.8 million) during the five years. The debt:equityratio presented in Table VII.2 assumes that all further financing requiredto complete the 15,000 ha development at Niete would be provided by Govern-ment in the form of equity. All self generated funds are shown as retainedearnings.

7.07 Although long term plans for HEVECAM's future expansion remaintentative, it is probable that, rather than being distributed as dividendsthese self generated funds would be reinvested in new plantings. Given thatHEVECAM were required to sustain annual planting programs of 2,000 ha for afurther 15 years, a figure compatible with Government's regional planningobjectives, the company would continue to need external financial supportthroughout the period. Cash flows for HEVECAM and Government, based on the15,000 ha Niete development only are shown in Tables VII.3 and VII.4.

VIII. BENEFITS AND JUSTIFICATION

8.01 The project would provide continuing support to Government's plansfor the economic development of the Kribi region. Initiated under the firstHEVECAM project in 1975, the development of this sparsely populated, andhitherto largely neglected, forest region is keyed to the expansion of indus-trial scale plantation agriculture. Depleted, logged-over forest of littleeconomic value would be rèplaced by perennial tree crops, principally rubber,oil palm and coconut. Concentration on these three crops, all well suited tothe region, would reduce the country's present heavy dependence on cocoa andcoffee for its agricultural export earnings. Moreover, tree crops of thistype are probably the most satisfactory alternative, in environmental terms,to the maintenance of a forest cover on these erodable, fragile soils.Reforestation with hardwood timber, or pulpwood, plantations might provide aviable alternative if labor constraints should prove a limiting factor toplantation development on the scale currently envisaged.

8.02 While industrial estates would provide the focal points fordevelopment of the region, Government's long-term plan calls for thecreation of associated smallholding complexes. The estates would providelocal farmers with technical guidance, processing facilities, and anassured market for their crop. However, the success of smallholder programsin this underpopulated region would be contingent upon Government's abilityto mobilize labor and create new settlements. When the first HEVECAMproject was prepared, the assumption was made that most of the estate'slabor requirements would be met by unemployed workers coming down from thenorth. This has not happened; the northern plainsmen are not attracted bythe totally alien environment of the southern forests and fewer than 5% ofthe present work force are northerners. About 45% come from the southcentral province, 32% from the west and 16% from the coastal province, allareas where there is competition for labor. Although the problem ofavailability of sufficient labor does not pose an immediate threat to

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HEVECAM, it could, nevertheless in the long term, hamper the programsenvisaged by Government for the three major agro-industrial developmentcorporations, CAMDEV, SOCAPALM and HEVECAM (para 8.09).

Economic Rate of Return

8.03 The readily quantifiable benefits directly attributable to theproject would derive from sales of rubber on the export market. The real,but difficult to evaluate, additional benefits that would accrue to theregion as a result of this development initiative have been excluded fromthe following analysis, which deals only with HEVECAM's industrial estateoperations. All costs and benefits (revenues from rubber sales) have beenexpressed in constant 1979 terms, net of identifiable taxes, but inclusive ofphysical contingencies. Foreign exchange costs have been calculated on thebasis of US$1 = CFAF 210, while local costs have been adjusted by a standardconversion factor of 0.73 to take account of present distortions in theeconomy. Labor has been costed at market rates.

8.04 Under the above assumptions the economic rate of return (ERR)expected from phase two, the development of an additional 9,300 hectares ofplantation, would be about 15%. The originally planned 5,800 ha firstphase would have been expected to have a rate of return of about 10% buttermination of HEVECAM's development at 4,200 hectares, the area actuallyachieved under first project financing, would result in an ERR for thefirst project of under 8%. The two phases combined, making an estate of13,500 hectares, would yield a return of about 11%; this would be increasedby 0.4% by completion of the 15,000 ha.

Table 8.1: Economic Returns from the Niete Plantation

Economic Rate Net Presentof Return Value /a

Phase Ha % CFAF'000/ha

I 4,200 7.5 -316

II 9,300 15.1 676

III 1,500 21.2 859

I + II 13,500 11.3 362

Total 15,000 11.7 412

a/ Net present value = (benefits-costs) both discounted at 9%, the estimatedopportunity cost of capital in Cameroon, with benefits estimated onprice hypothesis 'A' (para 6.04).

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8.05 In order to facilitate comparisons between the different phasesnet present values in Table 8.1 were calculated on a per hectare basis.The total amounts are shown in Table 8.2. Figures are given for twodifferent opportunity costs of capital.

Table 8.2: Net Present Values Attributable to the DifferentPhases of Plantation Development at Niete atOpportunity Costs of Capital (OCC) of either 9% or 10%

Phase I II III I + II TotalHectares 4,200 9,300 1,500 13,500 15,000

OCC = 9%

CFAF billion -1.4 6.3 1.3 4.9 6.2US$ million -6.7 30.0 6.1 23.3 29.2

OCC = 10%

CFAF billion -2.1 4.4 1.0 2.4 3.3US$ million -9.9 21.1 4.6 11.3 15.9

8.06 In the without project situation the only activity expected inthe area would be some sporadic subsistence food crop husbandry from whichno net benefit would be derived.

Sensitivity

8.07 The following sensitivity analysis compares the impact of changesin costs and benefits on the rates of return and net present values forestates of 4,200 ha, 13,500 ha and 15,000 ha.

Table 8.3: Sensitivity to Price Changes

Economic Rateof Return Net Present Value /b

Effect of Variations % CFAF '000/hain Price Assumptions /a 'A' 'B' 'A' 'B'

4,200 ha 7.5 7.9 -336 -26413,500 ha 11.3 11.6 362 44915,000 ha 11.7 12.0 412 501

/a For details of price assumptions 'A' and 'B', see para6.04 and Table VIII.1.

/b OCC = 9%

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Table 8.4: Sensitivity to Variations in Costs and Benefits

Economic Rateof Return Net Present Value

_____ __ _ CFAF '000/haVariations 'A' 'B' 'A' 'B'

Costs uV 10%

4,200 ha 6.3 6.8 -634 -56213,500 ha 10.0 10.5 171 25715,000 ha 10.5 10.9 231 320

Benefits down 10%

4,200 ha 6.2 6.6 -600 -53613,500 ha 9.9 10.3 135 21315,000 ha 10.3 10.8 190 270

Benefits lagRed one year

4,200 ha 6.7 7.1 -554 -48813,500 ha 10.0 10.4 174 25415,000 ha 10.4 10.8 229 310

Table. 8.5: Crossover Values /a(CFAF'000 per Hectare)

PercentageAtppraisai Estimates Crossover Value ChangesPrice Price Price Price Price Price'A' 'B' 'A' OB, 'A' 'B'

4.200 haCosts 2,980 2,980 2,643 2,716 -11 -9Benefits 2,643 2,716 2,980 2,980 13 10

13.500 haCosts 1,912 1,912 2,274 2,361 19 24Benefits 2,274 2,361 1,912 1,912 -16 -19

15,000 haCosts 1,806 1,806 2,218 2,307 23 28Benefits 2,218 2,307 1,806 1,806 -19 -22

La Crossover values indicate the changes in costs or benefits requiredto reduce the net present value to zero (cost - benefits) or,alternatively, to bring the economic rate of return to 9%, theassumed opportunity cost of capital in Cameroon.

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8.08 Table 8.4 shows the impact on rates of return and present values

of: (î) a 10% increase in costs, (ii) a 10% decrease in benefits, and(iii) a one-year lag in the realization of benefits. In a follow-upproject of this nature, where appraisal estimates were based on current

performance, real cost increases greater than 10% are considered unlikely.It is also considered unlikely that benefits would be more than 10%below the appraisal estimates. Table 8.5 shows that for the first project,either costs would have to go down by 9% or 11%, or benefits rise by 10% or

13% (depending on price assumptions), before the ERR would reach theassumed opportunity cost of capital. However, a 13,500 hectare plantationshould prove an economically sound investment: costs could increase by 19%or benefits fall by 16% before the rate of return would drop below the 9%opportunity cost of capital. On a 15,000 ha estate, using price assumption'B', cost increases of 28% or a fall in benefits of 22% would be requiredto reduce the net present value to zero or the rate of return to 9%.

Risks

8.09 It is expected that measures already taken by HEVECAM would

ensure the availability of sufficient labour to implement the project asplanned. In the longer term, however, there may be some difficulty inobtaining the skilled tappers needed to realize the full production poten-tial of these high yielding rubber clones. A sound regional developmentplan, based on the as yet uncompleted Kribi Master Plan study financedunder the first project, should ensure that appropriate measures are takento resolve the labour issue before it becomes critical. The principalagricultural risk would be 'Fomes' root disease. However, the precautionsthat have been incorporated in the project design (methods of deforestationand land preparation) are considered adequate to ensure a satisfactorystand of trees at maturity.

IX. AGRElà4ENTS AND RECOMMENDATION

9.01 During negotiations assurances were obtained on the followingpoints:

(a) Government would undertake to provide financing to maintain,bring to maturity, and effectively exploit plantings made underthe first, and proposed second, projects and also to plant,and subsequently maintain, under a third phase, the additional1,500 hectares required to complete a 15,000 hectare estate,(paras 3.19 and 3.22);

(b) Government would ensure that HEVECAM maintained at all timesof sufficient funds to cover its needs over a four-month period,(3r 3M<.3 2)

3.22);

(cj dLVflCAi4 would at all times employ a Technical Manager, anrIlCincLr-1aL Manager and a Financial and Administrative Manager> k:-i ual-ffcations and experience acceptable to the Bank

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(d) Government would prepare, and make available to the Bank forcomment, not later than December 31, 1981, a plan for thefuture development of perennial tree crops in the coastalzone (para 4.07).

(e) Not later than December 31, 1980, Government would submit tothe Bank proposals for the commercialization of the merchantable timber remaining on the Niete concession (para 2.08);

(f) The schools at Niete would be operated in conformity withthe regulations governing the public educational system(para 2.10);

(g) Arrangements acceptable to the Bank would be made regardingHEVECAM's reporting and budgeting procedures, and the annualauditing of the company's accounts, (paras 3.25 and 3.26);

(h) Good all-weather road communications between the plantationand Douala would be assured not later than December 31, 1980,(para 2.09); and

(i) The Credit Administration Agreement between Government, FONADERand HEVECAM would be acceptable to the Bank (para 3.22).

9.02 Conditions of Effectiveness would be:

(a) the conclusion of a financing agreement satisfactory to theBank, between REVECAM and Government, (para 3.22);

(b) the effectiveness of the CCCE and CDC loans providing cofinancingfor the project (para 3.20).

9.03 With the above assurances and conditions the project would besuitable for an IDA Credit of US$15 million and a Bank Loan of US$16.5million; making a total Bank Group participation of US$31.5 million.

- 37 - Table III.1

CAMEROON

SECOND HEVECAM RUBBER PROJECT

Production Forecast for 15,000 hectares

Tons of Dry Rubber per Year

(1981/82 - 2021/22)

First Second Third Total TOTAL

Fiscal Phase Phase Phase I and Il 1, II and III

Year 4,200 ha 9,300 ha 1,500 ha 13,500 ha 15,000 ha

1981/82 26 - - 26 26/83 206 - - 206 206/84 708 - - 708 708/85 2,385 - - 2,385 2,385

/86 5,279 438 - 5,717 5,717/87 6,590 3,106 - 9,696 9,696/88 7,424 6,602 - 14,026 14,026/89 8,116 10,362 - 18,478 18,478

/90 8,567 14,051 240 22,618 22,8581990/91 8,974 16,294 1,500 25,268 26,768

/92 9,356 17,745 2,160 27,101 29,261/93 9,629 18,927 2,490 28,556 31,046/94 9,660 19,906 2,790 29,566 32,356/95 9,660 20,617 2,970 30,277 33,247/96 9,660 21,088 3,120 30,748 33,868/97 9,660 21,340 3,270 31,000 34,270/98 9,660 21,390 3,420 31,050 34,470/99 9,660 21,390 3,450 31,050 34,500/00 9,660 21,390 3,450 31,050 34,500

2000/01 9,647 21,390 3,450 31,037 34,487/02 9,623 21,390 3,450 31,013 34,463/03 9,501 21,390 3,450 30,891 34,341/04 9,233 21,390 3,450 30,623 34,073/05 9,079 21,172 3,450 30,251 33,701/06 8,812 20,932 3,450 29,744 33,194/07 8,660 20,493 3,450 29,153 32,603/08 8,393 20,051 3,450 28,444 31,894/09 8,241 19,562 3,330 27,803 31,133/10 7,973 19,121 3,300 27,094 30,394

2010/11 7,820 18,632 3,180 26,452 29,632/12 7,553 18,191 3,150 25,744 28,894/13 7,401 17,702 3,030 25,103 28,133/14 6,924 17,261 3,000 24,185 27,185/15 6,395 16,773 2,880 23,168 26,048/16 4,403 16,332 2,850 20,735 23,585/17 483 15,843 2,730 16,326 19,056/18 - 11,900 2,700 11,900 14,600/19 - 7,790 2,580 7,790 10,370/20 - 4,069 2,550 4,069 6,619

2020/21 - 800 2,430 800 3,230/22 - - 480 - 480

TOTAL 265,021 586,830 94,650 851,851 946,501

- 38 -

CAMEROON TABLE III.2

SECOND HEVECAM RUBBER PROJECT

Annual Cost Estimates

(CFAF million)

PYI PY2 PY3 PY4 PY5 TOTAL FOREIGN EXCHANCE% Amount

1. Plantation Costs 897 1,033 1,140 1,105 1,074 5,249 33 1,732

2. Civil Works, Construction 336 301 207 437 501 1,782 il 196

3. Utilities, Water and Electricity 58 60 40 39 43 240 80 192

4. Vehicles, Tractors 199 211 121 126 150 807 80 646

5. Other Equipment, Furniture 43 48 15 38 9 153 80 122

6. Factory (Building & Equipment) 8 - 59 434 128 623 62 389

7. Overheads and Management Expenses 752 809 860 927 957 4,301 33 1,442

8. Technical Assistance, SAFACAM 80 87 90 90 103 450 65 293

9. Food Crop Development 33 13 13 L4 14 87 18 16

10. Applied Rubber Research - 34 13 12 14 73 20 15

11. Smallholders Program - 18 26 31 34 109 17 18

12. Project Related Studies 13 14 58 27 - 112 39 44

TOTAL BASE COST 2,419 2,628 2,642 3,280 3,027 13,996 36 5,105

CONTINGENCIES

Physical 115 121 118 176 151 681 36 246

Price 254 579 916 1,595 1,937 .5,281 36 1,901

TOTAL 369 700 1,034 1,771 2,088 5,962 36 2,147

TOTAL PROJECT COST 2,788 3,328 3,676 5,05L 5,115 19,958 36 7,252

- 39 -

CAMEROON TABLE I11.3

SECOND HEVECAM RUBBER PROJECT

Schedule of Estimated Disbursements

(US$'000)

IDA Credit US$15 million IBRD Loan US$16.5 millionBank Fiscal Year Cumulative Undisbursed Cumulative Undisbursed

and Quarter Disbursements Disbursements Amount Disbursements Disbursements Amount

FY80- 1 - - 15,000 - - 16,500

2 - - 15,000 - - 16,500

3 - - 15,000 - - 16,500

4 - - 15,000 - - 16,500

FY81 1 1,700 1,700 13,300 - - 16,500

2 900 2,600 12,400 - - 16,500

3 1,600 4,200 10,800 - - 16,500

4 1,600 5,800 9,200 - - 16,500

FY82 1 1,300 7,100 7,900 - -

2 1,400 8,500 6,500 - - 16,500

3 1,700 10,200 4,800 - - 16,500

4 1,700 11,900 3,100 - - 16,500

FY83 1 1,500 13,400 1,600 - - 16,500

2 1,600 15,000 - - - 16,5003 - = 2,400 2,400 14,100

4 - - 2,400 4,800 11,700

FY84 1 - - 2,000 6,800 9,700

2 - - 2,000 8,800 7,700

3 - - 2,100 10,900 5,600

4 - - 2,100 13,000 3,500

FY85 1 - - 1,800 14,800 1,700

2 - - 1,700 16,500 -

l/ July 1, 1979 - June 30, 1980.Closing date: December 31, 1985.

- 40 -

CAMEROON

SECOND HEVECAM RUBBER PROJECT

HEVECAM'S PRODUCTION FORECAST FOR THE SECOND PHASE

Tons of Dry Rubber per year

(1985/86 - 2020/21) TABLE V. 1

Year ot Openlng

Fiscal Yield 1985/86 1986/87 1987/88 1988/89 1989/90 TOTALYear Kg/ha 2,188 ha 2,400 ha 2,200 ha 2,012 ha 500 ha 9,300 ha

1985/86 200 438 - - - - 438/87 1,200 2,626 480 - - - 3,106/88 1,500 3,282 2,880 440 - - 6,602/89 1,700 3,720 3,600 2,64) 402 - 10,362/90 1,900 4,157 4,080 3,300 2,414 100 14,051

1990/91 2,000 4,376 4,560 3,740 3,018 600 16,29492 2,100 4,595 4,800 4,180 3,420 750 17,745

/93 2,200 4,814 5,040 4,400 3,823 850 18,927/94 2,300 5,032 5,280 4,620 4,024 950 19,906/95 2,300 5,032 5,520 4,840 4,225 1,000 20,617/96 2,300 5,032 5,520 5,060 4,426 1,050 21,088/97 2,300 5,032 5,520 5,060 4,628 1,100 21,340/98 2,300 5,032 5,520 5,060 4,628 1,150 21,390/99 2,300 5,032 5,520 5,060 4,628 1,150 21,390/00 2,300 5,032 5,520 5,060 4,628 1,150 21,390

2000/01 2,300 5,032 5,520 5,060 4,628 1,150 21,390/02 2,300 5,032 5,520 5,060 4,628 1,150 21,390/03 2,300 5,032 5,520 5,060 4,628 1,150 21,390/04 2,300 5,032 5,520 5,060 4,628 1,150 21,390/05 2,200 4,814 5,520 5,060 4,628 1,150 21,172/06 2,200 4,814 5,280 5,060 4,628 1,150 20,932/07 2,100 4,595 5,280 4,840 4,628 1,150 20,493/08 2,100 4,595 5,040 4,840 4,426 1,150 20,051/09 2,000 4,376 5,040 4,620 4,426 1,100 19,562/10 2,000 4,376 4,800 4,620 4,225 1,100 19,121

2010/11 1,900 4,157 4,800 4,400 4,225 1,050 18,632/12 1,900 4,157 4,560 4,400) 4,024 1,050 18,191/13 1,800 3,938 4,560 4,180 4,024 1,000 17.702/14 1,800 3,938 4,120 4,180 3,823 1,000 17,261/15 1,700 3,720 4,320 3,960 3,823 950 16,773/16 1,700 3,720 4,080 3,960 3,622 950 16,332/17 1,600 3,501 4,080 3,740 3,622 900 15,843/18 - - 3,840 3,740 3,420 900 11,900/19 - - - 3,520 3,420 850 7,790/20 - - - 3,219 850 4,069

2020/21 - --- 800 800

Total 63,100 138,061 151,440 138,820 126,959 31,550 586,830

Mean y:eld over tapping life of 32 years = 1,972 kg/ha/annum

- 41 -

CANEROON TABLE VII.1

SECOND HEVECAM RUBBER PROJECT

hEVEC0M'S PROJECTED PROFIT AND LOSS ACOUNT

_CA _il_i_n)

81-82 82-83 83-84 84-85 85-86 86-87 87-88 88-89 89-90 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-2000

Overhe.d. <,tn.r. are.) 13 46 192 311 354 744 799 1,059 1,342 1,478 1,721 1,868 1,986 2,119 2,257 2,401 2,560 2,724 2,902Field cots (,aat.re area) 7 37 145 596 714 1,428 2,064 2,989 4,077 4,707 5,438 5,819 6,093 6,398 6,720 7,059 7,441 7,903 8,418Production cnet. 1 9 35 168 372 654 990 1,382 1,810 2,228 2,584 2,904 3,211 3,510 3,805 4,094 4,386 4,672 4,977Ta on cpital - 10 10 10 il 12 19 24 29 34 41 52 52 52 52 52 52 52 52Marketing coste /1 1 10 34 125 319 576 884 1,244 1,636 2,088 2,379 2,685 2,975 3,260 3,537 3,809 4,083 4,349 4,633Fi-ancial eApenen - - - - - - - - - 899 1,922 1,806 1,676 1,532 1,366 1,182 973 736 471 168

Sb-Total 22 112 416 1,201 1,770 3,414 4,756 6,698 9,793 12,407 13,969 15,004 15,849 16,705 17,553 18,388 19,258 20,171 21,150

Depreciation 20 63 246 624 718 1,151 1,674 2,051 2,490 2,575 2,804 2,790 2,811 2,865 3,063 3,244 3,564 3,872 4,070

1. BEV,CAM operating costs 42 177 662 1,825 2,488 4,565 6,430 8,749 12.283 14,982 16,773 17,794 18,660 19,570 20,616 21,632 22,822 24,043 25,220

2. Sales incone 8 75 289 1,058 2,737 5,017 7,815 11,148 14,870 18,780 22,298 25,502 28,728 31,883 35,151 38,446 41,854 45,265 48,502

3. Profit/lous before ta. (34) (102) (373) (767) 249 452 1,385 2,399 2,587 3,798 5,525 7,708 10,068 12,313 14,535 16,814 19,032 21,222 23,282

4. C-opany ta. (30% of 3) - - - - - - 243 720 776 1,139 1,658 2,312 3,020 3,694 4,360 5,044 5,710 6,367 6,985

5. Net profit los. (3) - (4) (34) (102) (373) (767) 279 452 1,142 1,697 1,811 2,659 3,867 5,396 7,048 8,619 10,175 11,770 13,322 14,855 16,297

6. Cusulative profit/Ios. (34) (136) (509) (1,276) (1,027) (575) 567 2,246 4,057 6,716 10,583 15,979 23,027 31,646 41,821 53,591 66,913 81,768 98,065

7. Cu-1lative depreniation 20 85 331 955 1,673 2,824 4,498 6,549 9,039 11,614 14,418 17,208 20,019 22,884 25,947 29,191 32,755 36,627 40,697

8. Internal cash generation (6) + (7) (14) (51) (178) (321) 646 2,249 5,065 8,795 13,096 18,330 25,001 33,187 43,046 54,530 67,768 82,782 99,668 118,395 138,762

I I Financiel eppenses include intnrest repsymente for first and second pro3jc-t financing ns set o-t i TABLE VII.5.

81289ND VE7C.9M RUBBER FR8LE21

BALANCE 81HEE7

(CFAF îî:o

78/79 79/90 80/81 81/82 S2/83 _3/94 84iS5 B5/86 86/87 87/88. 888 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 99/99 99/2000

CLR.RENF ASSETS, 44 648 758 917 7113 1037 1700 1108 1504 1500 2482 3596 6381 11056 17027 23503 32036 41442 51467 61418 73641 88955

080R0T109G ASSIETS

AccoufltSreceîvtbîe 9~~~~4 94

Fo-fi ... e -'s ..l.5970d-d oremng 497 327 917 957 10892 7229

Fnaî cphll .. d G.,t ..bsidi- 760 - - - - - - - -- - -- ------

Iav~~~~o9or9eo ~~~~374 500 380 1088 1000 1500 1500 1500 2000 2000

OPERATIN00 A8SET0: 1715 l1in 1501 1541 1666 1822 584 594 1084 1084 1584 1584 1584 2084 ~2084

Frop-ry, pl..L, .nd equip-eo 7193 10450 14137 18494 24397 28783 32905 37124 41011 45045 46271 47816 49554 46555 47611 47417 47410 46453 49490 52097 54560 56095

Uns comulaîlve /eprecîsîion1003 1474 1833 2547 3510 3224 4198 3269 6768 8623 9157 10890 12724 14631 15486 16590 18033 20027 21739 23140 25417 27412

NET F1000 A98SE2S: 6108 8976 12304 15947 20887 25559 28787 31855 34245 36417 27114 36936 33930 33924, 3125 30827 29377 28426 27742 26947 29943 28673

T0TAL A0S01S: 7947 10735 14563 18405 23666 28408 30571 33939 36329 38501 401808 41616 43295 46066 30236 53914 62997 71432 85293 92449 104873 119712

0208901F LO,4100I000S 351 3501

004/OssA ~~~~~ ~~~2991 3525 4738 6089 7951 9606 9606

FCCE 019 1023 1416 1891 2489 3037 3037

CDC - 1377 2193 3073 4305 5400 5400

T.-Is borromsd f-nds 3809 5925 8367 11053 14743 L8043 18043

L-S -c....a1-d rsPsy-,er - - - - - - - - - -375 1355 2431 3677 5047 6583 0303 10232 1~2596 14929 16287

NET7 48510-TERM DE8T: 3809 5925 8367 11053 14745 10043 19843 47666 16688 15392 14366 12996 11460 9740 7011 5645 3214 1756

C.piFl1 -s 0F ... 30, 1979 3400 3400

L..9-tSFm d8b1 caPitlîalld Li 369 554, 949 1230 1710 2150 --- ___ - -- _______ - 21309G-verrost ... tib.tlon cspiîl.1i.d 18 525 1596 2405 3596 - 973 7903 11022 12960 83990 ------------- 13990

Rnîtlr-d ar0g1ss - - - (34) (1367 (589) (12167 110271 :575> 367 2246 4057 6716 10833 15979 23027 31646 41821 33591 66913 91768 98065

TOTAL E8UITY: 3787 4459 1845 7001 /570 70014 12077 13543 17933 20107 21796 25597 26236 30123 35519 42567 31196 61361 73131 86453 101050 117605

10184 41814110S: 7947 10735 14563 18405 23666 28408 30571 33939 36329 58081 40160 41616 43295 46066 50236 55914 62997 71452 91293 92449 104873 119712

0Q0I11 94110

E0UIT70 o 500 507. 454 411, 3974 3 71 3 6 4 774 461! 504 5Z 54 33 5 37 6 1 665. 7 1-7 7 7 621 961 90% 944 9 74 994.

1/ EqoOtl, -olo b.FosO ..- 0d Fr-j-n p-riod tsoe hal ail 0d11ioFaacO9 raq.imed -0 -opl.t. Lh5 develop-re ooold b p-ovded by -oelmeîa eqot 81 17Fp 9,017 mtlli-rl

SECONS HEVECAM RBiBER R0IIECT TABLEI I- 3

(CFAF illil.)-

__ __ _ INFLSOU _____ _ _ OUTFLOW_

Balance Firnt Second Additio-al Sales Total Plantation tan Cs opany Bebi Service Total Yearly CLuI aine US$

Begininmg Projoot Projoct EovorOooot lotal îeven-ories Firot Second

Period Einancing Fioancicg Fiasoing Intore Imflon C-nst Capital T-x P-ojent Project Inoloa BSalane Cash FlPo Million

1974/75 0 5,691 915 L,606 6,188 374 6,562 44 44 -

8û 44 497 2,261 760 3,518 2,788 126 2,914 604 648 3

81 648 2,938 500 3,438 3,328 3,326 110 758 4

82 758 3,636 200 i 3,844 3,685 3,685 159 917 4

83 917 4,926 312 75 5,313 5,107 10 5,117 196 1,113 5

84 1,113 4,969 - 289 5,258 5,324 10 5,334 76) 1,037 5

85 1,037 1,228 2,930 1,058 5,216 5,043 10 5,053 163 1,200 6

86 1,200 3,119 2,737 5,856 5,545 il 5,556 300 1,500 7

87 1,500 1,938 5,017 6,955 6,943 12 6,955 - 1,500 7

88 1,500 1,030 7,815 8,845 8d583 19 243 8,845 - 1,500 7 f59 1,500 11,148 11,148 9,422 24 720 10,166 982 2,48Z 12

90 2,482 14,870 14,870 il1,77 500 29 776 1,274 13,756 1,114 3,596 17

91 3,596 18,780 18,780 11,920 34 1,139 354 2,548 15,995 2,785 6,381 30

92 4,381 22,298 22,298 13,020 41 1,658 354 2,548 17,621 4,677 11,058 53

93 11,058 25 ,02 25 502 14626' 52 2,312 354 2,548 19,533 5,969 17,027 81

94 17 027 28,728 28,728 15,778 500 52 3,020 354 2,548 32,252 6.476 23,503 112

95 23,503 31,883 31,883 16,702 52 3,694 354 2,548 23,350 8,533 32,036 152

96 32,036 35,151 35,151 18,431 52 4,360 354 2,548 25,745 9,406 41,442 197

97 41,442 38,446 38,446 19,923 500 52 5.044 354 2,548 28.421 10,025 51,467 245

98 51,467 41,854 41,854 23,239 52 5,710 354 2,548 31,903 9,951 61,418 292

99 61,418 45,265 3,265 23,716 52 6,367 354 2,548 33,037 12,228 73,646 351 -

2000 73,646 48,502 _-.8,502 24,531_ 52 6,985 354 1,272 33,193 15,309 88,955 424 t

CFAF million 6,188 19,958 11,704 379,42 L'',276 254,659 2,000 616 42,028 3,540 25,478 328,321 88,955 -

VSS million 2S 95 56 1,807 1,907 1,213 10 29 200 17 121 1,563 424 -

1/ All i correct retern aomning l0 price soClaston 1979/80 to 1981/84 a-d 6.5/ *here aites

CAMEROON TABLE VII. 4

SECOND REVECAM RU3BER PROJECT

GOVENESENT CASH FLOW

(CFAF million) /1

IN10OW O5TFL13W CUMUL8ATIVEBalance en _ iHEVECAM TAXES HEVEDFGVENMEN FINANCIN4 EXT.FIN ON-LENT DEBT SERVICE AddtEonnl NALANCEBlginnlig Fin-t Second Rubbor Ta. on Compooy Debt TOTAI. First Second PEnn Second Fi-it Second Government TOTAL Cash CFAF US $Period Projeci Onoinct Sndiroct Dopont Copilol Ton Service 7NFIOW Projoct Projent Projoct Project Proleot Project Financiog OUTFLOW Ploi Million Mlillion1975-79 0 3,681 - 424 - - - - 4,105 1,592 - 3,681 - 76 - 915 6,264 (2,159) (2,159) (10)1979-AD (3,459) 497 1,B33 228 - 2,558 - 507 497 1,833 75 104 760 3,776 (1,218) (3,377) (16)1300-01 (3,377) - 2,382 249 _ - - - 2,631 - 571 _ 2,382 81 262 5OO 3,796 (1,165) (4,542) (22)1981-82 (4,542) _ 2,998 351 1 - - _ 3,350 - 609 - 2,998 81 379 200 4,267 (917) (5,459) (26)1982-0 3 (5,459') 3,996 353 S 10 - - 4,364 _ 879 - 3;996 81 568 312 5,836 (1,472) (6,931) (33)1993-04 (6,931) - 3,652 370 16 10 - - 4,048 - 1,377 - 3,652 81 830 - 5.940 (1,892) (8,823) (42)1984-85 (0,023) - 1,134 300 42 10 - - 1,594 - - - 1,154 81 1,131 2,930 5,296 (3,702) (12,525) (60)1985-86 (12,525) - - 486 76 il - - 573 _ - - - 116 1,265 3,119 4,500 (3,927) (16,452) (78) ta19A6-87 <16 452) - - 601 116 12 - - 729 - - - - 135 1,438 1,930 3,511 (2,782) (19,234) (92)1907-00 (19,234) - 660 163 19 243 _ 1,085 - - - - 144 1,586 1,030 2,760 (1,675) (20,909) (100)1908-89 (20,909) - - 702 215 24 720 - 1,741 - - - - 152 1,766 - 1,918 (177) (21,086) (100)1909-90 (21 086) - - 1,191 260 29 776 1,274 3,530 - - _ _ 159 1,693 - 1,852 1,686 (19,400) (92)1990-91 (19,400) - - 1,302 312 34 1,139 2,9072 ,689 - - - - 175 1,651 - 1,826 3,863 (15,537) (74)1991-97 (15.537) - 1,427 3)3 41 1,650 2,902 6,381 - - - - 201 1,575 - 1,776 4,605 (10,932) (52) .1992-93 (10,932) _ - 1,578 391 52 2,312 2,902 7,235 - - - - 224 1,514 - 1,738 5.497 (5,435) (26) >1993-94 (5,435) - - 1,670 428 52 3,020 2,902 8,072 - - - - 245 1,430 - 1,675 6,397 962 41994-95 962 - - 1,843 465 52 3,694 2,902 8,956 - - - - 266 1,307 - 1,973 7,383 8,345 401995-90 8,345 - _ 1,992 900 92 4,360 2,902 9,006 - - - - 345 1,194 - 1,539 8,267 16,612 791996-97 16.612 - - 2,324 536 52 5,044 2,902 10,858 - - 128 1,131 - 1,259 9,599 26,211 1251997-90 26,211 - _ 2.372 571 52 5,710 2,902 11,607 - - - - 128 1,068 - 1,196 10,411 36,622 1741990-99 36,622 - - 2,453 609 52 6,367 2,902 12,383 - - 127 1,003 - 1,130 11,253 47,875 22899-2000 47,875 - - 2,417 608 52 6,985 1,626 11,688 - - - - 126 628 - 754 10,934 58,809 280

CFAF MILLION 4,178 16,015 25,461 5,675 616 42,028 29,018 122,991 1,592 3,943 4,178 16,015 3,227 23,523 11,704 64,182 58,809 - -US) MILLION 20 76 121 27 3 200 138 586 8 19 20 76 15 112 56 306 280 - -

A,' 41l c cornent tonni ansoning IOR prico inflation in 1979/80 tf 1903/04 and 6.5E theneafter.

CAOEROON TABLE VII.5

SECOND HEVECAM RUBBER PROJECTHEVECAM DEBT SERVICE

(CFAF illion)

PIRST PROJECT SECOND PROJECT

IDA CREDIT and CCCE LOAN IDA CREDIT IBRD LOAN CDC LOAN CCCE CREDIT /I SECOND PROJECT TOTAL

Fiscal Intteret Interstz Sub- Interest Sub- Interest Sub- Interest Slb- INTEREST

Year Principal 5.5X Total Principal 13.6 /, Total Principal 11.5 % Total Principal 13.7 X Total Principal 10.5 'X Total PRINCIPAL 12.6 % TOTAL

1975/761976/771977/781978/791979/801980/81 FIFTEEN YEARS

1981/82 INTEREST FREE GRACE PERIOD

1982/831983/84 ai-----------------------------------------------------------a- TEN YEARS INTEREST FREE GRACE PERIOD ---------------------------------------------------------------

1984/851985/861986/871987/88 .

1989/90 79 214 293 97 199 296 134 369 503 65 117 182 375 899 1,274

1990/91 159 195 354 173 413 586 211 381 592 296 710 1,006 141 223 364 821 1,727 2,548

1991/92 168 186 354 198 388 586 235 357 592 338 668 1,006 157 207 364 928 1,620 2,548

1992/93 177 177 354 226 360 586 263 329 592 386 620 1,006 174 190 364 1,049 1,499 2,548

1993/94 187 167 354 257 329 586 294 298 592 440 566 1,006 192 172 364 1,183 1,365 2,548

1994/95 198 156 354 294 292 586 329 263 592 503 503 1,006 212 152 364 1,338 1,210 2,548

1995/96 208 146 354 335 251 586 368 224 592 574 432 1,006 235 129 364 1,512 1,036 2,548

1996/97 220 134 354 381 205 586 412 180 592 655 351 1,006 261 103 364 1,709 839 2,548 -

1997/98 232 122 354 436 150 586 461 131 592 748 258 1,006 289 75 364 1,934 614 2,548 r

1998/99 245 109 354 497 89 586 515 77 592 854 152 1,006 320 44 364 2,186 362 2,548

99/2000 259 95 354 274 14 288 280 15 295 472 37 509 173 7 180 1,199 73 1,272 r

2000/01 273 81 354 _

2001/02 289 65 354

2002/03 305 49 354

2003/04 322 32 354

2004/05 340 10 350

TOTALS 3,582 1,724 5,3 06 3,150 2,70 ,85 ,46 2,454 5,919 5,400 4,666 10,066 j419 363j 14,234 11,244 25,478

vIs$ MN /2 17.1 8.2 25.3 15.0 12.9 27.9 16.5 11.7 28.2 25.7 22.2 47.9 10.6 6.8 17.4 67.8 53.5 121.3

/i HEVECAM is repaying CFAF 2,219 million nf the CCCE First-Windnw Credit to Government. 17.1 8.2

/2 CŒAF 210 = US$ 1. FIRST PROJE1. . 25.3

TOTAL US5 MN: 84.9 61.7 146.6

CAMEROO0. TABLE V1,.6SECOND IEVECAOi EUBBER PROJECT

GOVERNtfENT DEBT SERVICE

(CFAF million)

.1 i DS PROJFCT SECOND PROJECI

IDA CRF1IT IDn CR1011 /US5 1S miîIn) IBRE L_2l_ CDC LOAN CCCE FOISI-WISLAW CR0DIT CCOE SICER-l0 U CR011? SECONO PROIECI TRIALS F

Fiscal ANi SnUSicc/l (US516.5 m11lion) /3 (S 12 million) /4 (Fr 60 m(llînni /S (FF 20 million) /6 Fisca

Ye= CCCE LiAco/l Principal C ITOALS Principal interaist IA3AI,S Principal Intrei TIOTAIS prin nial otrerest iRIALS Principal IlcLeresr TOTALS PRINCIPAL INTEREST TRIAL en

1975/79 76 _ - _ - _ - - 1975/791676)11 75 _ _ - 13 13 _ 65 65 - - - 26 26 104 104 1979/SE

l98A/RI S1 - 5 5 - I6 26 _ 167 167 _ 13 13 - 5I 51 - 262 262 1980/81

1981/82 8l - 14 14 - 2G 26 - 224 224 - 5l 51 _ b4 64 -3379 379 1981/82

1982/83 81 _ 24 24 - 64 64 293 293 - 97 97 - 90 9R 368 568 1982/83

1983/S4I SI 24 24 192 192 _ 372 372 _ 139 139 - 103 103 830 B30 1983)84

1984/85 I1 24 24 116 271 387 - 405 4A5 - 165 165 50 1RR 150 166 965 1131 1984)85

1995/R) 116 _ 14 24 231 250 41H 405 405 _ 165 165 10R 90 190 331 934 1265 1985)86

1986/S7 135 24 24 231 234 465 207.7 391 605 - 165 165 IRG 79 179 539 B99 1438 1986/87

1987/R8 144 _ 24 24 231 216 447 415.4 366 782 - 165 165 100 69 169 746 840 1586 1987/88

Il88/89 152 _ 24 24 73l *97 428 415.4 335 750 25G 155 405 100 59 159 996 77R 1766 1988)891989/90 159 24 24 231 179 41R 415.4 304 719 250 141 391 lIR 49 149 996 697 1693 1999/98

.99R/91 175 31.5 23 5 231 162 393 415.4 273 689 250 123 377 100 38 138 1028 623 1651 1990/91

1991/92 211 31.5 23 55 231 142 237 415.4 241 65G 25R) 113 363 100 28 128 1028 547 1575 1991/92

1992/93 224 31.5 23 54 231 124 355 415.4 211 626 250 11 360 R00 18 110 1028 486 1514 1992/93

I93/994 245 315 23 54 231 1R6 337 415.4 179 594 250 86 336 R00 R 108 1028 402 1430 1993/94

1994/95 Z66 31.5 22 34 231 87 318 415.4 148 364 250 72 322 50 50 938 329 1307 1994/95

1995/9G 345 3 22 54 231 89 300 415.4 117 532 250 58 308 - - - 928 266 1194 1995/96

1996197 12 31 22 53 231 5O 2SI 415.4 86 5R2 250 45 295 928 203 1131 1996/97

199 7/98 128 31 22 53 231 32 263 4.3.4 I5 471 25R 31 281 -9210 14016 597919;/99 27 3i 5 3253 231 32 243 415.4 23 438 250 17 267 928 75 10103 1998/99

99/2010 126 , 21 53 1IS - IIS 207.7 208 250 3 253 - - - 604 24 628 99/2008

20R0/01 125 94,5 21 1IS - _ _ _ _ _ _ 9S 21 116 2000/01 .

2001/032 124 Y49 2() 114 - - _ _ _- 95 20 1IS 2001/022002/03 12.' 94.5 19 114 - - -_ _- 95 19 114 2002/032 OO C 3/ O 1 2 3 9 4 . 5 2 1 1 1 3 - - 9 5 1 9 1 1 4 2 00 3 / 042003/0 122 59~I 2 113 0

2 304/l3 122 9 112 95 18 113 204/05

2005/06 121 9 V 112 - _ 95 17 112 2005/06

27100/Y 120 1. 1 111 95 16 711 2006/07

2070 O 94,5 16 110 95 16 111 200/8

20608/0 ll4 n« 5 lS lO9 - _- 95 13 110 2008/092110)9/10 liS oz. )4 119 - - 95 14 109 2009/10

5 0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~- .9 1 R 111

2010/11 17 945 14 108 I l -_ _ 95 13 108 2011/12

2011/12 116 13 07 _20

2012/13 116 . 12 107 - _ 95 12 107 2012/13

.113/11 115 Il 106 - - - _ _ _ _ _ _ 95 11 106 2013/14

2014/15 114 94 S IOIRS - 95 I 106 2014/15

201)516 113 94. 10 10îîs~_ -- 91 lAn 105 2015/16201/1i 113 99 14 95 9 104 2016/17

2011/12 112 94.5 n 103 7 _ 95 9 104 2017/18 7

2018/19 111 951.5 8 1R2 - -5 2 3

2019/20 017 94, 2 7 102 195 7 102 2919/20

7720/212 119 94.5 111 95 7 102 202/2C1

I02/22 119 94.5 il IRE - -9 1022/2

2012/23 i08 94.. 5 IE0 95 9 100 2022/23

2023/24 17 94.5 4 99 -9 4 99 2023)24

7124/25 106 94,54 99 - 95 4 99 2024/25

2025/26 94.5 3 97 - - 95 3 98 2025/26

2026/27 - 94.5 2 97 _9 2 97 2026/27

.011122 . 191 .5 2 96 - _ 95 2 97 2027/28

202i/29 29. I 95 _ 95 1 96 2028/29

2029/30 94, 9.2 95 _ _ I I 95 - 95 2029/387 NTA L5 _ _ __ __ ~~~ ~~~ ~~~ ~~~ ~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~- 0 7 2

CFAF N 6,119 3,150 746 3,896 3,465 2,454 ,919 5,400 4,666 6 3,000 1,918 4,918 1,000 872 1,872 16,015 10.656 20 671

!!',95.`^: g 1S.O 3.6 18.6 16.5 11.) 28,2 | 25.7 22.2 47-9 14.3 -_9.1 23.4 - 4.8 4.1 89 733 . 5. 7 127 0

21 Thnrviee- arnlco tIc rDA Cédi r is 0I75, in-g i-cladea capayasesa of prircipal d ch arges. F180 125 706 2

3/ Th, 1BRD Ioan son-a inclrde inrerrin payernis at 7.95/. par anPma and a c-ccit...c fee nf 0.75/. p-r annum nn the -ndibhuraed ennuis.

4/ (he Cnc ioan tenir i-Indo intrrrecL paymerts as 7.5S. pcc annai aid a crmmirmni Occ nI 0.154 p-r ann on the ondinred acosi. GRA1D IAL: 97.8 58.3 156.1

5/ lihe incereal race os the CCCE Fir-t-Window Credir i .5. par canns.

6/ Ihr interernrae Eon chr CCCO Oecnd-Aindnn C-cdit is 10.253 par -annn.

CAMEROON TABLE VIII.1

SECOND HEVECAM RBIBBER PROJECT

hEVECAM'S BENEFIT STREAMS FIRST AND SECOND PHASES

(CFAF mlllion)

-- =-------Producti-n Tons Dry R bber --------- ------------- Ben.efits t Price 'A B---------------eit t Pri

Fiscal First Second Prce 'A' (CFAF rillion) Price 'A' _' (CFAF sillion)Year Phase Phae- Cnmbi-ed CFAF/kg First Second CFAF/kg Fir.t Second

4,200 ha 9,300 ha 13,500 ha Phase Phase Corbined Phase Phase Co.bined

1975/76 - _

/77 - - --

/78 -

/79 -- --

/80 --

1980/81 _ _ _ _ _ _ _ _ _ _ _

/82 26 - 26 246 6 - 6 246 6 - 6

/83 206 - 206 250 52 - 52 250 52 - 52

/84 708 - 708 254 .180 - 180 254 180 - 180

/85 2.385 - 2,385 258 615 - 615 258 615 - 615

/86 15,279 438 5,717 262 1,381 115 1,495 262 1,381 113 1,495/87 6,590 3,106 9,696 265 1,749 824 2,573 265 1,749 824 2,573

/88 7,424 6,602 14,026 269 1,998 1,777 3,775 269 1,998 1,777 3,775

/89 8,116 10,362 18,478 273 2,216 2,829 5,044 273 2,216 2,829 5.044

/90 8,567 14,051 22,618 277 2,371 3,889 6,261 277 2,371 3,889 6,261

1990/91 8,974 16,294 25,268 281 2,518 4,572 7,091 281 2,518 4,572 7,091

/92 9,356 17,745 27,101 285 2,670 5,064 7.734 285 2,670 5,064 7,734

/93 9,629 18,927 28,556 289 2,785 5,474 8,259 289 2,785 5,474 8,259

/94 9,660 19,906 29,566 294 2,840 5,852 8,692 294 2,840 5,852 8,692

/95 9,660 20,617 30,277 298 2,877 6,140 9,017 298 2,877 6,140 9,017

/96 9,660 21,088 30,748 303 2,923 6,381 9,304 303 2,923 6,381 9,3Qb

/97 9,660 21,340 31,000 307 2,969 6,559 9,528 307 2,969 6,559 9,528

/98 9,660 21,390 31,050 312 3,015 6,676 9,691 312 3,015 6,676 9,691 r

/99 9,660 21,390 31,050 317 3,061 6,778 9,840 317 3,061 6,778 9,840

/00 9,660 21,390 31.050 317 3,061 6,778 9,840 322 3,107 6,880 9,988

2000/01 9,647 21,390 31,037 317 3,057 6,778 9.835 326 3,149 6.982 10,132

/02 9,623 21,390 31,013 317 3,050 6,778 9,828 331 3,187 7,085 10,27I

/03 9,501 21,390 30,891 317 2,011 6,778 9,789 337 3,201 7,207 10,408

/04 9,233 21,390 30,623 317 2,926 6,778 9,704 342 3,155 7,309 10,464

/05 9,079 21,172 30,251 317 2,872 6,709 9,586 346 3,146 7,336 10,482

/06 8,812 20,932 29,744 317 2,792 6,633 9,426 352 3,104 7,372 10,476

/07 8,660 20,493 29,153 317 2,744 6,494 2,238 357 3,092 7,316 10,407

/08 8,393 20,051 28,444 317 2,660 6,354 9,014 363 3,044 7,273 10,317

/09 8,241 19,562 27,803 317 2,612 6,199 8,811 368 3.036 7,207 0o,244

/10 7,973 19,121 27,094 317 2,527 6,059 8,586 373 2,976 7,136 10,112

2010/11 7,820 18,632 26,452 317 2,478 5,904 8,382 379 2,963 7,060 10,024

/12 7,553 18,191 25,744 317 2,394 5,765 8,158 385 2,905 6,997 9,903

/13 7,401 17,702 25,103 317 2,345 5,610 7,955 390 2,889 6,911 9,800

/14 6,924 17,261 24,185 317 2,194 5,470 7,664 396 2,743 6,837 9,580

/15 6,395 16,773 23,168 317 2,026 5,315 7,342 403 2,576 6,756 9,332

/16 4,403 16,332 20,735 317 1,395 5,176 6,571 408 1,799 6,672 8,471

/17 483 15,843 16.326 317 153 5,021 5,174 414 200 6,563 6,763

/18 - 11,900 11,900 317 - 3,771 3,771 421 - 5,009 5,009 -

/19 - 7,790 7,790 317 _ 2,469 2,469 428 - 3.331 3,331

/20 - 4,069 4,069 317 _ 1,289 1,289 433 - 1,763 1,763

2020/21 - 800 800 317 254 254 440 - 352 352

1/ Price 'A' based on Bank forecast to 1990/91 and continuing to i-crease at 1.5% p... until 1999, constant thereafter.

2/ Price 'B' as 'A' but 1.5% p.a. increase -ontinued throughout exploitation period.

- 48 - TABLE VIII.2

CAMEROON

SECOND HEVECAM RUBBER PROJECT

HEVECAM'S BENEFIT STREAMS THIRD PHASE AND TOTAL

(CFAF million)

Production Tons Dry Rubber Benefits at Price 'A' Benefits at Price 'B'Fiscal ___ ___ __Year Third Phase Total Third Third

1,500 ha 15,000 ha Phase Total Phase Total

1975/76 - - - - - -

/77 - - - - _ _/78 - - - -

/79 - - - - _ _/80 - - - - _

1980/81 - - - - - -/82 _ 26 - 6 - 6/83 _ 206 - 52 - 52/84 _ 708 - 180 - 180/85 - 2,385 _ 615 - 615/86 - 5,717 - 1,495 - 1,495/87 - 9,696 - 2,573 - 2,573/88 - 14,026 - 3,775 - 3,775/89 - 18,478 - 5,044 - 5,044/90 240 22,858 66 6,327 66 6,327

1990/91 1,500 26,768 421 7,512 421 7,512/92 2,160 29,261 616 8,351 616 8,351/93 2,490 31,046 720 8,979 720 8,979/94 2,790 32,356 820 9,512 820 9,512/95 2,970 33,247 884 9,901 884 9,901/96 3,120 33,868 944 10,248 944 10,248/97 3,270 34,270 1,005 10,533 1,005 10,533/98 3,420 34,470 1,068 10,759 1,068 10,759/99 3,450 34,500 1,093 10,933 1,093 10,933/00 3,450 34,500 1,093 10,933 1,110 10,098

2000/01 3,450 34,487 1,093 10,929 1,126 11,258/02 3,450 34,463 1,093 10,921 1,143 11,414/03 3,450 34,341 1,093 10,882 1,162 11,571/04 3,450 34,073 1,093 10,798 1,179 11,643/05 3,450 33,701 1,093 10,680 1,195 11,677/06 3,450 33,194 1,093 10,519 1,215 11,691/07 3,450 32,603 1,093 10,332 1,232 11,639/08 3,450 31,894 1,093 10,107 1,251 11,568/09 3,330 31,133 1,055 9,866 1,227 11,470/10 3,300 30,394 1,046 9,632 1,232 11,343

2010/11 3,180 29,632 1,008 9,390 1,205 11,229/12 3,150 28,894 998 9,156 1,212 11,114/13 3,030 28,133 960 8,915 1,183 10,983/14 3,000 27,185 951 8,615 1,188 10,768/15 2,880 26,048 913 8,254 1,160 10,492/16 2,850 23,585 903 7,474 1,164 9,635/17 2,730 19,056 865 6,039 1,131 7,894/18 2,700 14,600 856 4,627 1,136 6,146/19 2,580 10,370 818 3,286 1,103 4,434/20 2,550 6,619 808 2,098 1,105 2,868

2020/21 2,430 3,230 770 1,024 1,069 1,421/22 480 480 152 152 214 214

49 - TABLE VIII-3

CAMEROON

SECOND IIEVECAM RUBBER PROJECT

Summary of Economic Costs and Benefits

(CFAF million)

Economie Costs Benefits tl Net BenefitsFiscal Phase 1 Phases 1+2 Total Phase 1 Phases 1+2 Total Phase 1 Phases 1+2 Total

Year 4,200 ha 13,000 ha 15,000 ha 4,200 ha 13,500 ha 15,000 ha 4,200 ha 13,000 ha 15,000 ha

1975/76 630 630 630 - - - - 630 - 630 - 63077 1,296 1,296 1,296 - - - -1,296 -1,296 -1,296

78 1,957 1,965 1,965 - - - -1,957 -1,965 -1,965

79 1,399 1,597 1,597 - - - -1,399 -1,983 -1,98480 926 1,983 1,984 - - - -926

1980/81 726 2,106 2,109 - - - -726 -2,106 -2,110

82 635 2,090 2,095 6 6 6 -628 -2,083 -2,08983 1,185 2,665 2,697 52 52 52 1,134 -2,613 -2,645

84 885 2,103 2,412 180 180 180 -705 -1,923 -2,23285 1,095 2,233 2,363 615 615 615 -480 -1,619 -1,748

86 1,212 2,254 2,350 1,381 1,495 1,495 169 758 85587 1,145 2,629 2,711 1,749 2,573 2,573 607 -56 -13888 1,168 2,926 3,169 1,998 3,775 3,775 830 850 606

89 1,195 3,174 3,240 2,216 5,044 5,044 1,020 1,870 1,804

90 1,228 3,285 3,521 2,371 6,261 6,327 1,144 2,976 2,807

1990/91 1,225 3,368 3,567 2,518 7,091 7,512 1,294 3,722 3,94592 1,255 3,395 3,636 2,670 7,734 8,351 1,415 4,340 4,71593 1,267 3,483 3,742 ,785 8,259 8,979 1,518 4,776 5,237

94 1,253 3,513 3,909 2,840 8,692 9,512 1,587 5,179 5,60395 1,286 3,566 3,859 2,877 9,017 9,901 1,591 5,450 6,042

96 1,321 3,689 3,987 2,923 9,304 10,248 1,602 5,615 6,26197 1,410 3,742 4,047 2,969 9,528 10,533 1,559 5,786 6,486

98 1,757 4,090 4,399 3 ,015 9,691 10,759 1,258 5,601 6,36099 1,612 3,936 4,232 3 ,061 9,840 10,933 1,450 5,904 6,701

00 1,367 3,822 4,121 ,061 9,840 10,933 1,694 6,018 6,812

2000/01 1,264 3,765 4,064 3,057 9,835 10,929 1,793 6,070 6,86502 1,267 3,693 3,992 3,050 9,828 10,921 1,782 6,135 6,93003 1,356 3,859 4,158 3,011 9,798 10,882 1,655 5,930 6,72404 1,344 3,855 4,175 2,926 9,704 10,798 1,582 5,849 6,62205 1,273 3,800 4,099 2,877 9,586 10,680 1,604 5,787 6,581

06 1,219 3,536 3,835 2,792 9,426 10,519 1,574 5,890 6,684

07 1,204 3,646 3,945 2,744 9,238 10,332 1,541 5,593 6,38708 1,191 3,444 3,867 2 ,660 9,014 10,107 1,469 5,570 6,24009 1,178 3,455 3,749 2,612 8,811 9,866 1,434 5,355 6,11710 1,166 3,411 3,792 2,527 8,586 9,632 1,361 5,175 5,839

2010/11 1,158 3,325 3,611 2,478 8,382 9,390 1,320 5,058 5,778

12 1,146 3,292 3,577 2,394 8,158 9,156 1,248 4,866 5,579

13 1,139 3,262 3,542 2,345 7,955 8,915 1,206 4,693 5,37414 1,093 3,199 3,478 2,194 7,664 8,615 1,101 4,466 5,137

15 1,018 3,113 3,395 2,027 7,342 8,254 1,008 4,229 4,860

16 720 2,864 3,143 1,395 ,571 7,474 675 3,707 4,331

17 79 2,298 2,595 153 5,174 6,039 74 2,875 3,443

18 - 1,758 2,079 - 3,771 4,627 - 2,013 2,54719 - 1,123 1,436 - 2,469 3,286 - 1,346 1,85120 - 591 919 - 1,289 2,098 - 698 1,178

2020/21 - 119 448 - 254 1,024 - 134 575

22 - - 66 - - - -

1/ Benefits calculated on the basis of price hypothesis 'A' (para 6.04 of main text). Average price CFAF 301 (USd143)

per kg.

CAMEROONSECOND HEVECAM RUBBER PROJECT

ORGANIZATION CHART DURING EXPLOITATION

MINISTRY OF _ - GENERALAGRICULTURE rASSEMBLY

| L---t-----_ _ BOARD OF J| I---1 § _ _ MANAGEMENT

| GOVERNMENT I GENERALCOMMISSIONER - - - - - - MANAGER

D EP UTYGENERAILMANAGER

MANAGER CHIEF MEDICAL INDUSTRIAL TECHNICAL FIELDADMINISTRATION OFFICER AND MANAGER _ MANAGER __ MANAGER

AND FINANCE 2 ASSISTANTS

DEPUTY EPUTY ~~~~~~~~~~~~AGRONOMS ECOPRONLDEPUTY NANCE DEP& MECHANICAL | MANAGERS MNGER

ENGINEER MANAGER

PURCHASES& MANAGER GARAGE FACTORY 15 FIELDSALES ACCOUNTANT - STORE MANAGER ASSISTANTS

- WORKSHOP + ASSISTANT

- BUILDING + ASSISTANT |ZZi

ASSISTANT JWorld Bank - 20629

- 51 -

CAMEROON Figure 1SECOND HEVECAM RUBBER PROJECT

YIELD PROJECTIONSA Comparison Between Appraisal Estimates and

Some Recent Forecasts From Malaysia

3,000

2,800 -

2,600 -

2,400 -

2,200 - ,'7 *

f-tn 1,0t.

c> _ %

Lu 2,000 - %%

w 4

ir 1,800

- 1,400 -,

< 1,200 -CD io

> 800 _ RRIM Forecast for GT1 on Class 1 Soîls- -Forecasts Provided by a Commercial Company

..... HEVECAM Appraisal Estimates600 -

400

200

O6 8 10 12 14 16 18 20 22 24 26

YEARS FROM FIELD PLANTING

World Bank-20515

Note: The Malaysian data are reproduced by courtesy of theRubber Research Institute of Malaysia from RRIMAgricultural Series Report No. 7, published in KualaLumpur, 1979.

- 52 - Figure 2

CAMEROONSECOND HEVECAM RUBBER PROJECT

NET PRESENT VALUES AND RATES OF RETURNFOR A 15,000 HA ESTATE

4000 ;, l- -_

3500 -

3000 N*É ___

Financial ROR 8.1%

NPV (financial) -CFAF 150,000/ha

E 2000 _______- tLL

NPV (economic) - ' > & *;a"t r. 1500 CFAF 412.000/ha QP4

1000 ;/=Economic ROR = 11.7%

500

5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0

DISCOUNT RATE

Legend= Opportunity Cost of Capital (9%)=Financial Costs

- - Economic Sosts..... ...------.-- = Benefits Based on Prize 'A'

Note: A change of 1% up or down in the est,mated opportunity costof capital would change the net present value as follows:

Net Present Values CFAF '000 per haOCC Financial Economic8% 13 663

10% -268 222

World Bank - 21105

- 53 - Pigure 3

CAMEROONFIRST AND SECOND HEVECAM RUBBER PROJECTS

NET PRESENT VALUES AD ECONOMIC RATES OF RETURN4000 " X

., ,X /_ -~~ER R (4,200 ha) =7.5%

3500

NPV (4,200 ha) =-CFAF 336,000/ha3000 ' . r

E, a

> 'E 2000

< NPV (13,500ha)a, 15 0 0 = CFAF 362,000/ha

1000 e _ E R R (1 3,500 ha) = 113.3%

5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0

DISCOUNT RATE

Opportunity Cost of Capital (9%)CostsBenefits for 13,500 Ha Estate

................ Costs for 4,200 Ha Estate, _- Benefits;

A comparison between the net present values and economic rate of return expected fromthe first project along (4,200 ha) and from the first and second projects combined (13,500 ha)

Explanatory Note:The plotted cost and benefit lines show variations in the net present values in response to changesin the discount rate.

World Bank - 21106

- 54 - Figure 4

CAME ROONSECOND HEVECAM RUBBER PROJECT

SENSITIVITY TO COST INCREASES AND SHORTFALLS IN BENEFITS

25 -

4% Any expected changes in costs and benefits yield positive NPVS at OCC of 9%

20 s44 for the 15,000 ha estate.

C,~~~%

< 10 5

0 2 4 6 8 10 1 2 14 16 18 20

Percentage Shortfall ini Benefits

................ w = Maximnum Expected Fall in Bernefits is 10.0%:l m _ = Maximnum Expected Rise Costs is 10.0%

Locus of combinations of cost increases and shortfalls in beneftis resulting irn anet present value of zero

._, . . _, ._ 1 5,000 ha estate1 3,500 ha estate

Crossover Values 15,000 ha 13,500 haBenefits -18.0% -15.9 %Costs + 22.8% + 18.9%

(A): Ail cost and benefit connbiniation for the 13,500 ha estate yield positive NPVS at OCC of 9%.

IB)- NPVS at OCC of 9% for the 13,500 ha estate are negative for those cost and benefitconnbinations.

World Bank -21107

M A L 4

N I G E R I C H A D I CHACA a»d 5D SIUDA N "pt,hcn theh ,t.t 'ra .- h'd

UPPER( NiGERIAVOLTA rr an ml ohpn/h O

E,.1As 1

EPR

;~~ ~ ~ ~ ~~~~ 'O -77 etr lan meeeni F

C (g "- - GI N C E N T R A L A I R E C A N

UNTE RAMEROONPBI 0F CAMERO

Gu E<i6^TO«^f- 1 !v *`X C H A D

; _D'_~~~~jCOGO :- z Ag H SECOND HEVECAM RUBBER PROJECT

POPULATION, RAINFALL, TRANSPORTATION, AND PROJECT AREA27.2 nhobîta,,ts per Square k,lometer

< 5 1- 20 1ru`t-L1g 7 L 201-50 tInhobitants pe,,/X\ fg F

550.1-100 [square kilomete X

More than 1501 } » $ \r\ , Niete Rubberl Estote Project Arez o\V\ s> ,éÉo +'rK'Existing Rubber onid Oil Pzlm Estztes ,\>i\ \>>\o

Soczpolm Czncessio 'w, X '\> h Ezved Rozds 0\;t\< > G,aVel Roods f\ \9\1\\ \:\ X

r~~~~~~~~~~~Rvr

2' AllANT/C-IohEt, Mlletr

B.- sw doeie, J

n ~~~~~~~MILES |, J-r :X% `\\\\t'\8-~>S 0 20 40 6D 80Iq 100 120I0 160 | / f \ $X\ v \\

| rl ~~~~~~~~~KILOMdETERS jonMl X g

OCEAN EQUA RIAL GUINEA ~ ~ ~ ~ ~ ~ ~ ~ C N RA

-' ' F R C

1 2. ~~ATORALV/ 2.8, s -

O OC£/ GEUtUINEA j<r G ABON C O N G O 0

L koz t j - r , tv j. 6n olituj~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4

(SPD 14374

UNITED REPUBLIC OF CAMEROON 1RNE 197.

Second Hevecam Rubber Pro ject -NIETE RUBBER ESTATE

PLANTING PROGRAM, 1975-1984I.LENDAR/

YEAR HECTARES

So".975 6

977 52 ,s Poot ,200 nu. .

:&CtVi'5

1978 346

1979 2,002

'1980 2,308

i981 2,200jAS? 2,200 Second Proint, 9,300 ne

984' 600*F-1 se nestce, orny (rsoo,oCt encoclded)

Projecl bcundory ZN

Vile gos

- Monogemerrt Staff hendqorter,,

OH~~~~~~~~~~~~~~~~~~~M

4» S~~~~~~~~~~~~~IT

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J , V I . - ,.' ' ,.0 < X Sf X~~~~~~~~~~~~~~~~~~~~~~~~~ *~

f7 1 0 t -: -- / | ~~~~~~~~~~~~~~~~~~~CAMEROON

3: ' ' '.. |,5

~~~~MIE I 1 2 -r,