Document of

The World Bank

FOR OFFICIAL USE ONLY

MICROFICHE COPY

Report No. P- 5625-UNI Type: (PM)HENLEY, DA/ X34854 / J6049/ AF4IN

MEMORANDUM AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED CREDIT

IN THE AMOUNT EQUIVALENT TO SDR 74.7 MILLION

TO

THE FEDERAL REPUBLIC OF NIGERIA

FOR A

FIRST MULTISTATE WATER SUPPLY PROJECT

MAY 5, 1992

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

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CURRENCY EOUIVALENTS(March 1992)

Currency Unit = Naira (N) = 100 Kobo (k)US$1 = N18.0Naira (N) = US$0.056

MEASURES AND EOUIVALENTS

1 kilometer (k:n) 0.62 milesI meter (m) = 3.28 feet25.4 millimeters (mm) = 1 inch1 cubic meter (m3) = 264 US gallons

= 220 imperial gallons= 1000 liters

3.8 liters (1) = 1 US gallon4.5 Iiters (I) = I Imperial gallon

ABBREVIATIONS AND ACRONYMS

ADP - Agricultural Development ProjectDWSQC - Department of Water Supply and Quality ControlERR - Economic Rate of ReturnFCT - Federal Capital TerritoryFGN - Federal Government of NigeriaFMF&ED - Federal Ministry of Finance and Economic DevelopmentFMWR - Federal Ministry of Water ResourcesKDSWB - Kaduna State Water BoardKTSWB - Katsina State Water Boardlcd - liters per capita per dayLGA - Local Government AuthorityML - million litersMLD - million liters per dayNEPA - National Electric Power AuthorityNTCWR - National Technical Committee on Water ResourcesNWRP - National Water Rehabilitation ProjectNWRI - National Water Resources InstituteRBDA - River Basin Development AuthoritySOE - Statement of ExpendituresSWA - State Water AuthoritySWB - State Water BoardUFW - unaccounted-for water

FISCAL YEAR

January 1 - December 31

FOR OmCIAL USE ONLY

FEDERAL REPUBLIC OF NIGERIA

FIRST MULTISTATE WATER SUPPLY PROJECT

TABLE OF CONTENS

CREDIT AND PROJECT SUMMARY ................................ i

PART I. COUNTRY POICIES AND BANK GROUP ASSISTANCE STRATEGY ... 1

A. Background .............. ......................... 1B. Assessment of Economic Performance under the Structural

AdjustmentProgram .................................. 2C. PoliticalTransition .......... ......................... 4D. Central Development Issues ............................. 5E. Crmposition of Past Lending ............................ 8F. Country Assistance Strategy and Priorities .................... 8G. IFC Activities ............. ......................... 11H. Rela¢ionswiththeIMF ................................ 111. Aid Coordination ........... ......................... 11J. Summary Assessment ................................. 12

PART H. THE PROPOSED CRED1T .............. .................. 13

=TABLES

1. Nigeria- Key Economic and Fiscal Data ........................... 5

ANX

1. Economic Indicators . ....................................... 18

SCHEDULES

A. Estimated Costs and Financing Plan .............................. 21B. Procurement Method and Disbursements ........................... 22C. Timetable of Key Project Processing Events ......................... 23D. The Status of Bank Group Operations in Nigeria ...................... 24

IBRD 23242R

This document ha a restricted distribution and may be used by recipients only in the performancmof their official duties. Its contents may not otherwise be disclosed without Wotld Bank authorization.

DF:RAL REPUBILC OF NIGERIA

FST MULTISTATE WATER SUPPLY PROJECT

CREDIT AND PROJECT SUMMARY

Federal Government of Nigeria.

BDeneficiaries: Katina State Water Board, Kaduna StateWater Board, and Federal Ministry of Water Resources.

Amnt: SDR 74.7 millioa (US$101.0 million equivalent).

Tenns: Standard IDA tems with 35 years maturity.

Relendin8 Terms: From FGN to the States for twenty years including 5 years ofgrace at the IBRD variable interest rate, and from the States tothe Water Boards for twenty five years including 6 years ofgrace at 15% interest. The States would bear the foreignexchange risk. A total of US$'.7 million would be passed to theWater Boards as equity to finance technical assistance and ruralwater supply. US$2 million will be retained by the FederdGovernment to assist other states in project preparation.

Lal Foreign Total==== tUS$ million

IDA 0.0 101.0 101.0Katsina State 14.5 0.0 14.5Kaduna State 12 7_0.0 12.7Total J ,

Rat fRtr. 9.8%

Staff AXraisal ReUo=: Report No. 9872-UNM

IBRD No. 23242R

MEMORANDUM AND RECOMMENDATION OF THE PRESIDENTOF THE INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE EXECUTIVE DIRECTORSON A PROPOSED CREDIT

TO THE FEDERAL REPUBLIC OF MGERIAOR TIRE ERST MULTISIATE WATER SUlPLY PJEQJCT

1. I submit for your approval the following report and recommendation on a proposeddevelopment credit to the Federal Republic of Nigeria for SDR 74.7 million, the equivalent ofUS$101 million, on standard IDA terms with a maturity of 35 years to help finance the FirstMultistate Water Supply Project. The project would help meet basic needs and promoteeconomic development by improving quantity and reliability of water supply to larger towns andsettlements in the two participating states and support the commercialization of the water boards.Part I of the document discusses Nigeria's development problems and prospects, the key prioritiesof the economic refotm program at the macroeconomic and sector levels, and the Bank Group'sassistance strategy. Part II of the document describes the proposed Credit.

L. COUNTRY POLICIES AND BANK GROUP ASSISTANCE STRATEGY

2. This section assesses the evolution of Nigeria's reform efforts since the mid-1980s.Nigeria's central development issues are discussed against the background of the ongoingtransition to democratic rule. This is followed by a discussion of the status of the Bank's policydialogue and country assistince strategy, whicA represents a response to uncertainties associatedwith economic management and the need to focus on the implementation of a portfoliocharacteized by large undisbursed balances. The section continues with a description of thecriteria for evaluating progress in key policy areas. This is followed by a description of aidcoordination efforts and collaboration with the IMF.

A. Background

3. Nigeria is the largest country in sub-Saharan Africa with around 20 percent of thepopulation. It has vast economic potential, with a wealth of natural resources, a vibrant privatesector, underutilized industrial capacity, a large labor force with a substantial reservoir of skills,and the potential for food self-sufficiency. Poverty, however, is extensive., Despite the fragilityof democratic rule over the last three decades, Nigeria either has or is developing many of theelements of a civil society: robust professional associations; an inquisitive press; a cultural

* commitment to freedom; a competent bench and bar; and decentralization in decision-making.The absence of other key parts until now-free and %air elections, accountability, effectivegovernment-reflects widespread adverse incentives that only structural change can remedy. Theunderlying realities of Nigeria's political economy, where ninety percent of foreign exchangerevenue is derived from oil and shared among the three levels of government in an effort tobalance often conflicting ethnic and regional interests across the Federation, have a major impacton the formulation of economic policies-with at times inconsistent outc'r;nes.

4. The oil boom of the 1970s provided the Government with the basis for a massive increasein public investments, most of which were undertaken without sufficient attention to theireconomic viability. Despite this investment, there was little growth in per capita consumption,which today stands at a level similar to that in 1970-before the oil boom. The rapid growth of

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the public sector exacerbated the distortionary impact of the oil boom on relative prices andundermined the country's non-oil productive base. When the initial decline in the oil markettranslatea into serious macroeconomic imbalances in the early 1980s, the Government'sdevelopment strategy unmlled and the economy's structural weaknesses, otscured by temporaryoil windfalls, became fully apparent. Nigeria was faced with a legacy of sustained agriculturaldecline, an uncompetitive, import-dependent manufacturing sector, an overvalued exchange rate,and a cumbersome regulatory framework. The principal challenge that Nigerian policy makershad to address was to reverse these economic distortions against the background of a decline inper capita incomes which was triggered in the early 1980s by a precipitous fall in the terms oftrade. The Government's initial response to the deepening crisis was to accumulate sizable tradearreas and to increase its borrowing abroad. In late 1983, the military replaced the civiliangovernment in an attempt to assert control over the economy. Fiscal austerity was imposed,characterized by across the board budgetary cuts, and administrative coni-ol over imports.Although there was some reduction in fiscal and external deficits, the crude austerity measuresimposed a heavy economic toll, and quickly proved to be politically unsustainable.

B. Assessment of Economic Perfbrmance under the Structural Adjustment Progam

S. On coming to power in mid-1985, the Babangida Government declared its intention tomove from "austerity alone to austerity with structural adjustment" and to seek support from theintemational financial community for its program. With a further collapse in oil prices addingto thie urgency of reform, in 1986 the Government adopted a far-reaching program to reverse thedeterioration in the economic environment. In parallel, the President announced a multi-yeartransition program for a return to civilian rule. The Structural Adjustment Program (SAP)combined exchange rate and trade policy reforms aimed at promoting the competitiveness of thenon-oil economy with stabilization policies designed to restore fiscal and balance of paymentsequilibrium and price stability. Emphasis was placed on downsizing the public sector andimproving the efficiency of public asset management. With respect to incentive reforms, theGovernment abolished import licenses, eliminated agricultural marketing boards, lifted most pricecontrols, and initiated the deregulation of the banking system. The World Bank played a leadingrole in supporting the SAP with two adjustment loans in 1986 and 1988. Although domesticopposition prevented the Government from drawing on its IMF-quota, the Fund endorsed theprogram through three stand-by arrangements.

6. The centerpiece of the SAP was the introduction of a market-determined exchange ratesystem. The foreigp exchange auction system facilitated a 70 percent depreciation in the realeffective exchange i4te. Other reforms, such as the creation of domiciliary accounts, abolitionof surrender requirements, and the licensing of bureaux de change improved incentives for therepatriation of foreign exchange receipts from private non-oil activities. Under the SAP, Nigeriahas seen evidence of a growth in formal and informal non-traditional exports, and witnessed arecovery in the real sector, particularly in agriculture and intermediate manufacturing. This hasbeen associated with a realignment in the structure of consumption and production to be moreconsistent with Nigeria's factor endowments. Notably in manufacturing, some of the earlier anti-export bias has disappeared, and producers have switched from imported to local inputs. Thetextile industry in Nigeria, for instance, which was highly dependent on imports of raw cotton,now mostly uses domestic cotton despite a big increase in demand. Following a shift in relativeprices in favor of the rural sector, agricultural growth has rebounded at an average rate of 5percent per annum since 1987. Cocec production, like cotton and other export crops, had almostcome to a halt due to an overvalued exchange rate, the monopoly of marketing boards andunremunerative producer prices. Compared to 1985, cocoa production, in volume terms, has

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increased by 144 percent. Food production has shown a similar upswing, thereby contributingtowards cutting Nigeria's food import bill to one fifth of its 1986 level.

7. A number of actions bave been taken to encourage an expanded and more efficient privatesector. The regulatory environment for private investment has been simplified, limitations onforeign investment have been reduced, and a debt equity conversion program has beenintroduced. As of end-1991, more than 70 of the 110 public enterprises targeted for privatizationhad been sold to private shareholders in one of Africa's most extersive privatization programs.

8. An important start has been made on much needed financial sector and monetary policyreforms. A major overhaul of banking regulation has been effected, and stricter supervision andprovisioning requirements were introduced in a new Banking Act. The Central Bank and therecently established National Deposit Insurance Corporation have begun to address the difficulttask of restructuring those banks that suffer from an overhang of non-performing loans. Initialprogress on interest rate deregulation was reversed, howxever, when controls on interest rates andspreads were re-introduced in early 1991. Ihe recent lifting of these caps now makes it possiblefor the authorities to move towards the introduction of indirect monetary controls and the liftingof credit ceilings.

9. TMe SAP also included actions to improve public expenditure planing and budgetaryprocedures, including the adoption of a rolling plan process. However, these reforms did notadequately deal with deep-rooted problems in public expenditure management which haveundermined the Government's fiscal stabilization efforts and jeopardized many of the SAP'sachievements. Consequent reversals in the stance on fiscal policy, compounded by unsatisfactoryimplementation capacity and persistent political uncertainty, have weakened the sustainability ofthe reform process and delayed the expected recovery in private investment. For example, theresurfacing of large industrial projects and other concessions to special interest groups, evidentin the reflationary budget of 1988, contributed to an increase in the budget deficit to around 11percent of GDP. The return to tighter fiscal policies in 1989 reduced the federal deficit to 6percent of GDP. However, stringent actions to tighten monetary policies with a subsequentcontracion of real credit to the private sector was required to bring inflationary pressures undercontrol.

10. The failure to resolve the underlying problems in public expenditure management laybehind the most recent slippage in macroeconomic performance. Increased reliance on off-budgetallocations and continued spending on non-viable investment projects in 1990 led to a severeerosion of fiscal and monetary discipline. The temporary oil windfall accruing from the MiddleEast crisis exacerbated these tendencies. The practice of spending oil revenues through dedicationaccounts and other devices outside the purview of statutory budgetary and accounting controlsre-emerged on a large scale. As a result, key performance targets under Nigeria's third Stand-byarrangement with the Fund were missed and no review could be completed. Instead, the federaldeficit worsened from around 2 percent of GDP in 1990 to nearly 6 percent in 1991, which waslargely attributable to extrabudgetary outlays. At the same time, the Government was unable toremove price controls on fertilizer and domestic petroleum products, resulting in large implicitsubsidies and videsprea1 fuel shortages due to increased smuggling abroad.

11. Although the Government managed initially to save much of the foreign exchangeearnings from the oil windfall, the naira counterpart funds were fully spent. Inability to sterilizethe windfall, together with the erosion of fiscal discipline underpinned a rapid growth in themoney supply, which was mirrored in a rapid depreciation of the naira and a steady increase in

-4-

the rate of inflation. Meanwhile, the foreign exchange auction was transformed into a bank-by-bank allocation system. As the authorities failed to tighten fiscal policies, which alone could havestemmed the downward silde of the naira, the spread between the official and the parallel marketexchange rates widened from 15 percent at end-1990 to 55 percent at end-1991, beforeapproaching 90 percent in early 1992. Until the authorities disbanded the foreign ixchangeauction system in March 1992, the implicit subsidy thus passed on to licensed dealers was inexcess of $1 billion for 1990-91 together.

-12. At the same time, Nigeria's external debt overhang constitutes one of the most importantobstacles standing in the way of long-term economic recovery. The Paris Club providedcontinuous cash flow relief over the years, but no concessional debt relief. Until the debt anddebt service reduction (DDSR) agreement in January 1992, which involved a cash buy-back ata 60 percent discount and a conversion of eligible debt into registered Par Bonds and loweredNigeria's commercial bank debt from an estimated $5.3 billion to $2.0 billion, the same was alsotrue of the London Club. 'ae repeated reschedulings kept average debt service payments toaround 28 percent of exports, but, in the end, contributed to a significant increase in the debtstock from around $17 billion in 1985 to $34 billion in 1991. Accounting for the effect of theMarch 1992 devaluation and the DDSR agreement with the London Club creditors, theDODIGDP ratio stands now at 135 percent. Of this, roughly 60 percent Is owed to Paris Clubcreditors, 21 percent to holders of promissory notes and other bilateral creditors, 13 percent tomultilateral institutions, and 6 percent to London Club commercial banks. Even with thecontinued build-up of debt stock, Nigeria's r.et resource transfer position has been persistentlynegative, averaging around 4.5 percent of GDP per annum between 1986-91 for a cumulativetotal of more than $11 billion.

13. Short-term outlook. The deterioration in economic management in 1990/91 has beenparticularly disconcerting because of its coincidence with the final stages of the politicaltransition. The adverse consequences oi these policy slippages have been widely recognized.The Government is trying to bring Nigeria's economic house back into order and restore theimpetus behind crucial reforms within the framework of a new stand-by arrangement, currendyunder negotiation with the Fund. The authorities have taken important steps in this direction overthe last three months by liberalizing interest rates and adopting an interbank foreign exchangesystem. The latter action brought about a 70 percent devaluation of the naira and aninstantaneous unification of the official and bureau de change markets.

14. For these renewed stabilization efforts to be effective, they will have to be accompaniedby a reduction in inefficient subsidies and cuts in fiscal spending, notably by eliminatingextrabudgetary expenditures. Inflationary pressures associated with the devaluation, resourcedeinands by newly elected State Governments, and high debt service payments will put theFederal Government under considerable strain in its attempt to implement a very tight program.However, credible fiscal efforts are of critical importance if Nigeria hopes to re-engage theinternational community in supporting economic reforms in the future. The more pessim'sticprice and production outlook for Nigerian crude suggests a tightening of the balance of paymentsconstraint for 1992. In the absence of direct balance of payments support, Nigeria will have toadjust to a substantial reduction in real import volumes in 1992. As a result, economic growthis projected to slow down to around 3 percent in 1992, before gradually recovering to around 5percent by the mid-1990s (see Table 1).

C. Political Transition

15. The transition program to democratic rule, first anmounced by President Babangida in1986, appears firmly on track for completion by the end of 1992. It involves an ambitious plan

-5-~~~~~~~.

: e~t tA.r h t e_ . .......

oror ecountry'semergingpolitical culture toward a. syste 44o

Yed4eration TheI$ eletion of , loca and stat exective and consttuen assemlie were$

year. Elections fo6r the National Assmbyillbehe,ol d by 9

16. Tgotbe transtionprogram has 5 be5n 13.0paie 25 imotn hne3n iei'eea

ledtoed* crato of ew st0atswino an8 attemp to .baaceNgei'sdves rgolan . hi

system, President~ P Babag kd formalyinaugurated. NK.igei' ne feerlcaialin.s .i lt

to91 reoisntin theountryos eegreng pymolitca culturetoancds hasstvemyhg ofts Fedrlldeocracy.Consoiderabelcto expenditresiwere y asscitd wthe the crationmandoinstallationlofathe twoN poialdpeartis,whc are fdrequmiisriedst cmpete forvoernmn dcsuportmatdn ever levfelcndinvery regione tof theFoederat,n wthe electiong olcaand strsrutraclties ecuiveshotspl and constituen massembinistwriessucclessfully compLeted, int1991andtenewl elecdinteoadimlenaonf governormsumdtereoiint earlytisy

16.e Thfer transibtiontpogam heays.be copne yipratcagsi iei' eea

syte ofgvenen t.a Thelpese changes icesdtersosblt o oa oenet o h

provi esion e ofcerantsca services, stomrenghensied thefndanca ineenec ofutua them jdicary andbleddesd to the rations of nhew ajstatsimatempt pormaeto balnecosldtdaJ Nigeria's diererosph adethni

inteest. A animpotan sinalof te aminstrtio's cmmimen tocemetin th feerasystem, Prsident Babngida forally inaugrated Nigria's new ederal caital In Abja in lat

191.Tisacin,thuh f ratsybli mprtne,ha er hg cst.Foloig hongoing elocatio of the residenc and thetop manaement ofthe Cental Bank CBN) an

17. Despiette rceuntr' efforgts, g compehnivia ute towendayse of stucurde~ral remainsacy.baosddressed,i thpengainurs ofete adjsoitment progrh areation bedinstallation of thNieria's prospicts

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for long-erm economic growth promoted. One of Nigeria's central development challenges willbe to break the destabilizing cycle of fluctuating oil revenue and expansionary fiscal and monetarypolicies and reduce the scope of rent-seeking and rent-creating actions, while, at the same time,expanding productive opportuaities for the accumulation of wealth *'rough privateentrepreneurship in a competitlve environment. Reforms In oublic eDenditurm ma.ge& willneed to play a key role towards improving the efficiency of public sector resource use. 7he fiscalreform program wIll need to encompass the consolidation of the planning, budgeting andaccounting procedures to enhance the, transparency of the whole budget process aLd makedecisions more responsive to economic and socW criteria. Specifically, this will need to involve:the elimination of extrabudgetary expenditures; transparent management of stabilization accounts;and integration of a foreign financing strategy into overall project management. Parallel effortswill have to be directed at the rationalization of the public investment program incl.zding:suspension of projects with marginal economic return; re-allocation of public spending towardspriority social and infrastructure needs within the framework of a core investment program; andinstituting non-recourse financing for new commercial projects. The third component of publicsector reforms would involve the phasin -out Of inefficient subsidies, which are neithereconomically nor sociallyjustifiable, notably for domestic petroleum products and fertilizer-whileat the same time maintaining 1%e newly achieved unified exchange rate.

18. The promotion of private sector activities will require the creation of a stable incentive.egim that restores investor confidence and reflects a qualified reduction in the public setoi'srole in economy. Private provision of services has an important role to play in areas currentlydominated by the public sector, for example road maintenance and utilities. The managementof public assets should be improved by accelerating the privatization of parastatals and contractingwith private operators. Adequate resources for private sector expansion will have to be ensuredby restraining government spending and borrowing which, in turn, will assist in stabilizingdomestic prices. In this context, Nigeria's financial system could become a more effectiveconduit for channeling oft revenue to productive uses in the private sector, provided theauthorities take steps to restructure the overhang of non-performing loans and remove remainingrestrictions on credit allocations. In view of Nigeria's exposure to oil price fluctuations, theauthorities should consider the implementation of an effective stabilization mechanism whichwould help mitigate the impact of oil-related shocks on the rest of the economy and ensuregreater fiscal and monetary stability. To facilitate the resumption of private investment and lowerthe cost of doing business in Nigeria, the public sector's capacity to provide adeinfrastructure facilities and complementary public services would have to be strengthened.Another area of priority sector reform concerns agriculture. Serious non-price constraints onfood production-including the slow pace of technological change at the farm level, the lack ofmarket integration due to poor infrastructure, and the neglect of special constraints faced bywomen farmers-need to be overcome.

19. A sustainable solution to Nigeria's debt pnroblem has to be found that ensures acontinuation of the economic reforn program and promotes a return of long-term capital tofinance domestic investments. Nigeria's total debt service burden, two thirds of which is due toofficial creditors, will remain virtually unchanged between 1992-1997. Medium-term projectionsindicate a continuing need for further rescheduling to meet Nigeria's financing requirements.Even if Nigeria continues to secure consecutive Paris Club agreements on terms granted to highlyindebted lower middle income countries, its annual debt service payments would still be in theorder of $3.6 billion over this period, equivalent to around 28 percent of projected exportrevenue. By adding to the stock of debt, however, conventional rescheduling does not provideNigeria with a viable option for extricating itself from a growing debt overhang, particularlysince its debt servicing capacity is unlikely to improve over the medium term.

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20. One of the nost critical long-term challenges facing the Government will be to implementan &Mlye rty geMv. Although real GDP growth averaged around five percent between19891, this has not been sufficient to reverse the staggering decline in per capita income to anestimated $280, down from $1000 in 1980. Real consumption and import levels are now diohigher than they were in the early 1970s, prior to the onset of the oil boom. Some progressnotwithstanding, basic social and infrastructure indicators place Nigeria among the twenty poorestcountries worldwide: it mortality rates exceed 100 per 1000 live births; half of all childres'aged 2 to S show signs of persistent malnutrition; and only about two-thirds of the relevant agegroup are presendy enrolled in primary schools-4own from 90 percent in *he early 1980s. Withpopulation growth outstripping food availability, Job creation and the provision of basic educationand heath services, there is mounting evidence of worsening social conditions. Women,particularly in rural areas, face serious disadvantages with respect to human capital development-as evidenced by poor health care, inadequate nutrition, high fertility, and low literacy-and toeconomic opportunities, where lack of access to land, credit, farming inputs, technology, andsupport services are important constraints. A major manifestation of the resulting gender-basedlow productivity trap is the enormous burden placed on women in terms of time spent on lowoutput, physically demanding activities such as water sad fuel wood transport, manual cropprocessing, and headloading of farm produce, in addition to their responsibilities for householdand family maintenance tasks.

21. Actions to address poverty in Nigeria thereform require commitment to (i) reallocatepublic resources-away from uneconomic projects which have tied up resources urgently neededin the social sectors, (ii) concentrate on the creation of income-earning opportunities, and (iii)ensure greater and more equitable access to adequate social services. The recent transfer ofresponsibility from the State to the Local Government Authorities for the provision of basicservices, including primary health care and education, signals an important initial step towardsgrea responsiveness to local needs. For this strategy to be sustainahle, it will have to beaccompanied by a fundamental overhaul of public expenditure priorities and a strengthening ofservice delivery systems, with a focus on: primary and secondary health care, especially formothers; primary and secondary education; nutrition policies aimed at Improving the diets ofchildren; and expanded access to clean water. This strategy will focus on those most in need-women and children in the rural areas, where roughly seventy percent of the population live.Given the central role of agriculture for both employment and nutrition, improving famingmethods and access to inputs will remain a key priority. In the past, women were often excludedfrom assistance programs. Through specially trained wonvn extension workers, recently addedto exension programs, women farmers are now receiving direct guidance on farming techniquesand on use and storage of their output. This work is now reaching most States through thenetwork of agricultural development projects. Enabling women to attain a higher level of

* productivity provides the basis for improving the lives of the poor.

22. To avert impending threats to Nigeria's long-term sustainability, more attention will haveto be focused on efforts aimed at reducing noplation growth and reversing the current trend ofg gnll -degadation. Although the recent census results indicate a population about 20percen less than previously assumed, with an estimated population growth rate near three percentper annum, Nigeria's resources will be severely strained to provide sufficient food, shelter andjobs. The recently approved National Population Policy, implementation of which Is supportedby an IDA credit, emphasizes efforts to improve the quality of life, especially of mothers andinfuts, and to increase the spacing of children. In view of the fact that most of the new entrantsinto the labor market will seek work in the agricultural sector, the Government is developingpolicies to contain deforestation and facilitate the use of Nigeria's limited agricultural resourcesin an intensive but sustainable manner under the recety approved Environmental ManagementProject.

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E. CoMsitin of Past lldin.

23. Since 1958, Nigeria has received eighty-three IBRD loans totalling $6,056 million andseven IDA credits totalling $537 million as of March 31, 1992. In view of the country'sworsening social conditions and the sustained decline in per capita income, the Bank restoredNigeria's status as an IDA eligible country in FY89. Between PY89-91 Bank lending to Nigeriashowed a marked increase, with new annual commitments averaging about US$886 millioncompared with around US$428 million in FY86-88, and US$222 million in FY83-85. 'This waslargely in response to the Government's comitment to pursue a far-reaching economicadjustment program which the Bank supported with two adjustment operations in 1986 and 1988.Over the last five years, Bank Group operations have fina 4d physical infrastructure (30percent), agricultural production (16 percent), industrial development (14 percent), and priorityactivities in the social sectors (14 percent). Structural adjustment lending accounted for theremaining 26 percent. In agriculture, an important aim was to strengthen the provision of publicservices to private producers, such as technology transfer, irrigation, roads, and soil conservation.Infrastructure projects focused on facilitating the supply response through rehabilitation oftransport and urban infrastucture, rehabilitation of state water supply systems, and improvingcost recovery and fiscal discipline in infrastructure agencies. Recently approved IDA creditswere focused in the areas of primary education, population policy, and agricultural research. IFCloans and equity investments since 1964 have amounted to $251 million.

24. The c Lent ogotfoloQ comprises 39 projects. Project implementation has traditionallybeen very slow in Nigeria. However, the increasing absorption of the administration with thetransition to civilian rule and associated changes in the federal system of government-includingcreation of new states, reallocation of responsibilities between the three levels of government, anda comprehensive reorganization of the ministerial structure coupled with the ongoing relocationof federal government functions to Abuja-has added to long-standing implementation difficulties.Thus, inadequate countrpart funding, cumbersome procurement procedures, delays in takingdecisions on critical project iss .A, and logistic and institutional complications have doggedimplementation eefforts in recent years. The average disbursement rate for investment lending hasremained at $200-300 million annually in FY88-89. The increase in new commitments sinceFY89 has not been matched by a commensurate rise in disbursements. Consequently, there hasbeen a large build-up of undisbursed funds in our project portfolio, amounting to $2.6 billioncurrently. In response to this situation, comprehensive efforts are underway to shift resourcesto implementation.

F. Country Assistance Strategy and Priorities

25. The main objective of the Bank Group in Nigeria is to promote equitable and sustainablegrowth of income. In the immediate future, the Bank's assistance strategy wIll be tailored tomeet the present realities of a large, slow moving portfolio, the uncertainties created by thepolitical transition and slippages in economic management, and Nigeria5 lack of creditworthiness.Accordingly, the Bank's assistance strategy is targeted at improving implementation andmaintaining a modest and tightly focused lending program, while e xpanding economic and sectorwork to support a dialogue on key policy and development issues to prepare for a resumption ofa lending program more consistent with Nigeria's size and needs. To help Nigeria find a durablesolution to its economic problems, the strategy will need to include efforts to re-engage theinteaonal community in supporting sustained economic reform and efficient exploitation of thecounty's development potential. The objective of revitalizing support from donors and creditorsunderscores the need for a sustained dialogue which bridges the political transiton. The most

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impotant areas which this dialogue must cover incluide: (i) promoting sound macroeconomicpolicies, particularly in the areas of public expenditure and financial sector reform; (ii) incentivereibrms geared at stimulating private investment, supported by fiscal restraint, more efficientprovisionofcomplementary services (transport, power, and telecommunication), and privatizationof public enterprises; and (iii) preservation of Nigeria's long-term development potential,particularly humar capital, essential infrastructure, and environment, and poverty alleviation.

26. Economic and Sector Work. At this juncture in the evoludon in Nigeria's parallelprograms of economic restructuring and political transition, economic and sector work will playa important role in underpinning a dialogue on the critical policy reforms still needed to reachthe central objectives of the structural adjustment program. Economic and sector work will alsobe needed to position the Bank to respond effectively when the conditions for a resumption of

* higher lending levels materialize. The strategy underlying the proposed ESW is predicated ontwo central premises: (i) that Nigeria is faced with deep-seated structural problems that requiresustained attention on policy and institutional issues; and (ii) that the Bank retains a comparativeadvantage in policy advice and a leadership role in donor coordination. Recent ESW on publicexpenditure management and the financial sector has helped draw the attention of decision makersin Nigeria to the urgency of addressing major deficiencies in economic management. Studies onenvironment, women in development, and food security have placed important issues of long-runsusainability on the agenda. A forthcoming Country Economic Memorandum will provide anassessment of Nigeria's performance under the SAP and outline the main elements to restorefiscal stability and deepen structural reforms. This report, which will provide the platform fordiscussions with the Government on a longer-term reform program, will be complemented by acomprehensive Public Expenditure and Sectoral Strategy Review. This review will be a vehiclefor policy dialogue with the incoming Government on appropriate sector strategies, and outliningpublic expenditure programs needed to implement them. It will also encompass an assessmentof public finance issues at the state government level, a critical step to support the Bank'soperational orientation under a civilian administration. Other policy studies will focus on (i) thepromotion of private sector activities; (ii) poverty assessment; and (iii) the implementation ofappropriate stabilization and risk management policies to mitigate the impact of oil price shocks.

27. Portfolio Implementation. High priority is being attached to improving projectimplementation. Several measures have already been taken. A recently installed departmentalimplementation task force is conducting an in-depth review of the portfolio. Drawing on theseefforts, the S3ank and the Government are currently engaged in a comprehensive restructuring ofthe Nigerian loan portfolio, including selective cancellation of non-performing loan components,and restructuring of potentially viable, but slow disbursing projects. The Resident Mission inLagos has been given an increased responsibility for implementation, and its capacity in thisregard will be strengthened through the posting of a procurement specialist to the field. Theorganization of sectoral donor meetings in Lagos, planned for later this year, should improve aidcoordination in the social and infrastructure sectors, and help focus attention on common* implemention problems. State-by-state implementation reviews are planned, and many of thenewly elected governors have shown considerable eagerness to remove administrative and fundingbottlenecks. In parallel, the Bank will aim to make new projects simpler, and inject greatersensitivity to the implementation constraints at the design stage. These efforts, together with theanticipated reduction in lending over the next two years, should translan into a significantreduction in Nigeria's undisbursed balance over the medium term.

28. Lending Pro&rm. The sizt and rate of disbursement of the current portfolio, coupledwith the uncertainties regarding the future direction of economic policy, suggest that it would beprudent to maintain new commitments at modest levels over the next two years, whilemaintaining a work program which will facilitate a return to a higher level of lending, more

- 10-

consistent with Nigeria's size and development needs, when conditions are appropriate. TheBank's lending progam over the near term will comprise about five to six projects, totallingUS$400 million a year. Given Nigeria's status among the poorest countries in Sub-SaharanAfrica, and the country's very limited access to concessional financing, IlDA support will bemaintained throughout this period. As has been the case since Nigeria was declared IDA-eligiblein 1988, IDA resources will address poverty alleviation and long-term issues of sustainability.

29. The proposed lending program will comprise: (i) projects in basic infrastructure (roadsand water supply) and operations to support the Government's program to privatize andcommercialize public utilities (e.g., electricity, railways, telecommunications); and (ii) projectsin education, health, agriculture and environmental protection. Lending in the first categorywould be contingent on progress in the Government's privatization and commerciizationprogram. In a similar vein, proposed operations in roads and water supply would depend onsatisfactory progress towards cost recovery and financial performance. 'ne proposed Fir MultiState Water Project, for example, combines measures to improve the financial condition of waterauthorities, involving reduced costs, improved investment efficiency, and increased incomegeneration.

30. Operations in the second category would make important contributions to povertyalleviation, human resource development and long-term sustainability, where Bank support wouldbe maintained even if progress in improving the policy environment is limited. In ohelh newlending will complement existing operations and concentrate on the development of a nationalnutrition program aimed at children and lactating women, and on improvements in basic healthservices, focusing on developing an integrated primary-secondary health care system. Proposedoperations in Blcation will focus on improving access at all levels, particularly for girls, andstrengthening vocational skills. The thrust of the Bank's environmna lending rantegy is tosupport government efforts to implement new regulatory and incentive policies which takeaccount of the social costs of environmental degradation in priority areas-including soilconservation, forestry management, and water contamination. Efforts are also underway toreduce gas flaring and CFC enissions. In a,ricuatur, the role of the private sector will befurther strengthened-notably in residual areas such as input supply and rural marketing, whileenhancing the Government's capacity to intervene efficiendy in areas where a role for the publicsector remains justified: technology transfer, irrigation, rural roads, water supply and soilconservation.

31. In Nigeria's present circumstances, prospects for sustained commitment to structuralreform and sound macroeconomic policies are uncertain, despite recent actions by the currentadministration to restore discipline into macroeconomic management and to revitalize programsof economic reform. A resumption of higher levels of lending will be predicated on progress ineconomic management, which would be evaluated on three criteria: firl the Government'sability to adhere to sound fiscal and monetary policies; second, significant improvements inimplementation over the next two years; and Ir, the resumption of structural reformsaddressing Nigeria's central development issues. The Bank will continue the policy dialogue ona medium term adjustment program with the outgoing administration so as to create an elementof continuity during this transition period.

32. The Bank expects to respond to improved performance with a gradual build-up of itslending program after FY93. When sector specific policy reforms are adopted andimplementation improves, the Bank would consider progressively increasing its project pipelineto levels more consistent with Nigeria's poverty and development needs.

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G. IFC Actii

33. Reflecting Nigeria's economic importance in Africa, IFC is pursuing a broad-basedstrategy aimed at financing private investments in all key sectors, supporting financial sectorinstitution building, and providing advisory work on privatization and large projects. IFC is alsoworking with the Bank on a private sector assessment to identify and address major constraintsto private sector development. These include a still cumbersome regulatory framework, whichcontributes to the high cost of doing business, and an incentive structure, which favors domesticproduction over exports, and short-term activities over long-term investments. IFC's currentportfolio of $111 million extends to companies in the petroleum, agribusiness, banking, textiles,transport, and tourism sectors. This includes a major Bank/lFC loan associated with a $900million project to develop and export 100,000 bpd of petroleum condensates. In the financialsector, IFC has helped establish one of Nigeria's first discount houses. In line with its broad-based stategy, IFC is currently considering investment proposals in manufacturing, crude oilexploitation, rehabilitationlexpansion of agro-allied enterprises, and a number of small-scaleenterprises through the African Enterprise Fund. IFC is appraising a major strategic $4.2 billionproject to liquefy 4.5 million tons of natural gas per year for export to Europe and the USA.

H. Raions wiih the IMF

34. The IMF has supported the Government's adjustment efforts with stand-by arrangementsin 1987, 1989 and 1991. The first arrangement, for SDR 650 million, was approved in January1987, but the scheduled reviews could not be completed because no understanding could bereached on corrective measures to bring the program back on track. No drawings were madeunder the arrangement. The second stand-by arrangement, for SDR 475 million and extendingfrom February 1989 to April 1990, was satisfactorily completed, but no drawings were madeunder the program. A third arrangement, for SDR 319 million, was approved in February 1991.Fiscal slippages and failure to sterilize the windfall during the Gulf crisis prevented thecompletion of the stand-by afrangement, which expired in April 1992. As with the earlierarrangements, no drawings were made. Discussions are underway on a fourth stand-byarrangement. In February 1992, the Fund Board declared Nigeria eligible for ESAF.

I. Aid Coordination

35. Since the Nigerian Government embarked on the SAP in 1986, the Bank has been thefocal point of aid coordination and cofinancing operations. Nigeria's IDA eligibility in 1988 andinformal donor meetings on the Government's performance under the SAP led to the formationof a Consultative Group (CG) in November 1989 which mobilized around $300 million inbalanceof-payments support. Subsequent discussions between bilateral donors and theGovernment on the composition of the public investment plan did not result in the expectedincrease in Nigeria's access to concessional resources, which, at less than $1 per capita, is thelowest in Sub-Saharan Africa. Rather, the combination of deteriorating economic management,unsatisfactory project implementation and Nigeria's spotty record of servicing its official debtprompted a number of donors to place parts of their assistance programs on hold until a viablemacro framework has been restored. The organization of sectoral donor meetings in Lagos,targeted for later this year, is intended to improve aid coordination in the social and infrastructuresectors. Bank projects continue to atwact significant amounts of cofinancing, including recentlyfor a telecommunication and an environmental management project. The Bank's aid coordinationefforts wfll also play an important role in facilitating a dialogue between the Government and

- 12-

official creditors on the case for supporting a continuation of the economic reform program witha conbination of concessional debt relief and new money.

J. Summa Assessment

36. Despite some periods of hesitation, the authorities have continued to pursue the twin goalsof economic adjustment and reform, and preparing for the return to civilian rule. Many of theimportant structural reforms initiated under the far-reaching adjustment program initiated in 1986are now being rewarded by a revival of economic growth. However, the pressures created bythe transition to civilian rule - coupled with the failure to effectively manage the short-livedwindfall from the Gulf crisis - exposed the fragility of mechanisms for maintaining fiscal andmonetary discipline, and underscored the need for stronger reforms in put!ic expendituremanagement. Institutional changes associated with the transition are currently challnging effortsto improve implementation of the Bank's portfolio, even as they hold out prospects for greaterresponsiveness to grass roots development priorities in the future.

37. In the immediate future, the administration must effect a complex politica transition,while trying to ensure that momentum on economic reform spans the transfez to a civiliangovernment. In addressing these challenges, both the departing and incoming adr'inistrations willbe constrained by the huge debt overhang and popular discontent with the bardships experiencedduring the past decade.

38. Economic and sector work is expected to play a major role in suipporting dialogue withoutgoing and incoming administrations, and engaging donors and Nigeran policy makers on thecontributions they can make in creating durable solutions to Nigeria's economic problems: donorson the need to help address the effects of Nigeria's large official debt overhang; and policymakers on the need for sustained reforms in economic management.

39. Given the continued uncertainties over the future direction of economic policy and theslippages in economic management, coupled with the size and slow rate of disbursement of theBank's current portfolio, the Bank's operational strategy for the near term is to contain newcommitments at relatively modest levels while giving greatest priority to implementation. Thelending program will concentrate on operations which would make a strong impact on povertyalleviation, human resource development and long-term sustainability, coupled with investmentswhich can support important sector policy reforms as they are implemented. A sustained flowof IDA resources is expected to play an important role in the first component of the program.

40. The Bank's support, and in particular a resumption of levels of lending commensuratewith Nigeria's development needs, will be dependent on evidence of a renewed commitment tostructural reform and sound macroeconomic policies, and improvements in implementation.Progress on economic management will be measured against evidence of adherence to soundfiscal and monetary policies; improved management of public expenditures; rationalization of thepublic investment program, with a redirection towards priority social and infrastructure needs(including access to clean water as supported by this credit); phasing out inefficient subsidies;maintenance of a market determined exchange rate; sustained reforms in the financial sector; andfurither progress in parastatal reforms.

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IL. THE PROPOSED CREDIT

41. Backemund. Provision of potable water in Nigeria is the responsibility of the states.Water supply utilities have been established in most of the 30 states, usually as separate entities,but sometimes as part of a multi-service public utilities board. Boards suffer from inadequateautonomy, are insufficiently commercialized, and have inadequate financing and limited capacityat the management, professional and technical levels, compounded by overstaffing at lower levels.It is estimated that about 60% of the urban population and 20% of the rural population could beprovided with safe water supply if existing facilities were operated at their designed capacity, butactual service is considerably less than this due to operational inadequacies. A number of stateshave recently made substantial investments in water supply, but the investments have not alwaysbeen well conceived, nor have the boards the capflcity to operate and maintain facilitiesadequately due to financial and management constraints. Water charges are generally too lowto cover all recurrent costs, let alone adequate maintenance or capital costs, and consequently thewater utilities rely heavily on recurrent subvention from state governments. The lack ofmaintenance is worsening operational and financial performance. About eight states haveindicated some degree of interest in assistance from the Bank in improving their water suppliesunder a multistate project. Katsina State (population 4.0 million, 70% rural) and Kaduna State(3.9 million, 60% rural) are the most advanced in preparing their projects, have agreed to thenecessary institutional changes, and will constitute the First Multistate Water Supply Project.

42. Mica Obiecdves. The project would aim to support economic growth by enhancinghealth and productivity of growing urban areas; it would promote equity, helping to alleviatepoverty by improving health standards of the lowest income households and the living conditionsof women; and sustainability would be ensured by institution building and financial selfsufficiency. The primary objectives of the project are to improve both the quantity and reliabilityof water supply to the more important towns and setdements in the two states to meet basic needsand as an essential step in promoting economic development; and to help in commercializing thewater boards. This would be achieved through rehabilitation of existing systems and selectiveexpansion of supply facilities to cover areas currently unserved. Technical assistance wouldimprove management, operation and maintenance practices, investment planning and manpowerdevelopment. Financial disciplines involving phased, practical tariff increases, and metering ofconsumers, would strengthen the financial conditions of the boards. Management of projectimplementation by the boards, with the guidance of consultants, would develop their confidenceand ability to implement future projects.

43. Proect Description. Physical components of the project include: (i) completion of primaryand secondary distribution systems in Katsina city to match production capacity ($13.8 millionor 10.8% of project cost); (ii) remedial work on the existing dam at Malumfashi ($5.3 millionor 4.1%); (iii) completion of a new system already commenced at Ikara ($9.9 million or 7.7%);(iv) new facilities to augment supply at the towns of Funtua and Daura to meet increased demand($42.7 million or 33.3%); (v) construction of new systems at Kwoi and Zonkwa ($45.4 millionor 35.5%); (vi) the provision of tools, equipment and water meters ($4.0 million or 3.1 %); and(vii) limited rehabilitation of rural water supplies in both states ($1.2 million or 0.9%). Technicalassistance ($5.9 million or 4.6%) would be provided for: (i) improvement of technical andfmancial management of the water boards including increased commercialization; (ii)computerization of accounts and stores procedures (iii) improvement of operational efficiency;(lv) dam inspection and maintenance; (v) preparation of water resource master plan; (vi)improvement of planning procedures; (vii) institutional reorganization of the rural water supplysector to reduce the financial burden it places on the water boards; (viii) preparation of drainageand sanitation strategies and plans to help minimize environmental impacts of wastewaterdisposal; (ix) carrying out a public relations program to improve the awareness of the

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communities of their benefits and obligations regarding public water supply, and how tomaximize their health benefit; (x) preparing future projects; and (xi) training. A summary ofesdmated project costs and the financing plan are given in Schedule A, procurement anddisbursement methods at Schedule B, a timetable of key processing events at Schedule C, and thestatus of Bank group operations in Nigeria at Schedule D. A map Is also attached. The StaffAppraisal Report No. 9872-UNI, dated April 20, 1992, is being distributed separately.

44. The full local cost of US$27.2 million equivalent would be financed by the stategovernments on a grant basis (Katsina US$14.5 million and Kaduna US$12.7 million). Thefinances of both states have been reviewed and these amounts are considered to be affordable.Each state will instruct the Federal Ministry of Finance and Economic Development to deductthese funds from its Federation Account, and deposit into a project account, according to anagreed schedule, as a condition of credit effectiveness in one state and a condition ofdisbursement in the other.

45. IDA would finance the full foreign cost of the project. The Federal Government wouldonlend US$51.5 million equivalent to Katsina and US$47.5 million equivalent to Kaduna StateGovernments for twenty years including five years of grace at the IBRD variable interest rate.The states would pass on those parts of the credit related to technical assistance and ural watersupply as equity (US$2.3 million equivalent for Katsina and US$2.4 million equivalent forKaduna) and onlend the remainder to the water boards with 6 years of grace and 25 yearsmaturity, to relate more closely to project implementation period and asset life respectively andat 15% interest. The State governments would bear the foreign exchange risk. The interest ratehas been set takdng into account the poor financial situation of the two water boards, and the needfor a realistic financial recovery program to be effected over the next six years (para. 47). TheFederal Government would retain US$2.0 million for preparation of future projects in oCierstates.

46. Ptoiect Imlemnentation. lhe project would be managed in each state by the State WaterBoard, assisted by consultants who would also be responsible for contract administration andconstruction supervision. Consultants would also be employed to provide technical assistance.The Federal Ministry of Water Resources would manage the small Federal component.

47. Pject Sustainability. Each state will undertake a program to improve efficiency andincrease cost recovery, including a water metering program and phased tariff increases, aimedat recovering full operation and maintenance costs within about four years, and full debt servicecosts in addition, within six years. This will require tariff increases in real terms of about twoand a half to three times, improved collection from its present level of about 80% to 90%,reduced unaccounted-for water from the present level of about 45% to about 25%, and othermeasures to improve efficiency. Target performance indicators have been agreed, and thesewould be reviewed annually with the boards and any necessary remedial measures would beimplemented. The burden of rural wLter supply will be removed from the water boards andresponsibility placed with the community where it can be most effective. Ihe public relationsprogram will help develop the responsibilities of the communities. A thorough mid term reviewof the project and its implementation would be undertaken at the end of 1994.

48. Lessons Learned from Previous Proiects. Many water authorities in Nigeria haveexperienced high costs relative to income, and this has been particularly severe during theeconomic dislocation of the past decade. A strategy to improve the financial condition of waterauthorities has been developed, involving reduced costs, improved investment efficiency andcapacity utilization, and increased income generation. The proposed project would meet theobjectives of the strategy by minimizing costs and improving sources of revenue. It would, in

- iS -

pardcular, improve the financial viability of sector institutions through revenue collection and costrecovery measures so that service can be maintained and expanded over the long term. Althoughthere has been in the past a reluctance by State Governments to increase tariffs sufficiently toensure proper operation and maintenance, both states have recently shown themselves to be morewilling to increase tariffs when adequate service is provided, and have substantially increasedtariffs over the period 1990 to 1992. Practical and politically acceptable tariff increases will bedesigned so that they relate closely to improvements in service to overcome objections that havearlsen when this has not been the case. Previous projects have also suffered from inadequatelocal counterpart resources and maintenance and unstable management. The counterpart fundingproblem has been addressed by arranging for deduction from the State's Federation Account(para. 44). Less difficulty is expected now with changes in water board management since thecounty situation is considerably more stable now than during previous projects, and themanagement skills of Nigerians are developing following the departure of many expatriatemanagers in the early 1980s; however, consultant assistance to the Boards will still be needed.There bas also been a reluctance with previous projects to commence technical assistancecomponents; with this project the most important technical assistance components related toimproving Board operations will be contracted prior to credit effectiveness.

49. Rationale for Bank nvolvemen. The project will form part of the Bank's program ofsupport for basic infrastructure, both as an essential element in the country's overall economicdevelopment and as a means of improving the health and productivity of the poor, with particularbenefits for women. The Bank now has considerable experience in water supply projects inNigeria. It has a comparative advantage in encouraging institutional development and long terms_stainity, and ensuring the appropriateness of investments. The Bank has assisted fourprevious water supply projects for individual cities in Nigeria (two ongoing), and the NationalWater Rehabilitation Project (NWRP), which will finance urgent rehabilitation of water worksin all states, was approved by the Board in 1991. The proposed project, which is expected tobe the first of a series of multistate projects, follows on from NWRP, in that it will financefu-ther rehabilitation, and also augmentation of supply capacity to meet demand, as well as focuson swengthening the management and financial disciplines in the state water boards.

5Q. Ation2g Age. IlThe following actions would be taken by at least one state prior tocredit effectiveness: (i) appointment by the water board of consultants for constructionsupervision and for operations improvements; (ii) signing of subsidiary loan agreements betweenthe Federal Government and the state and between the state and its water board; (iii) givinginstructions to the Federal Ministry of Finance and Economic Development to deduct projectcounterpart funds from its Federation Account in equal monthly installments and deposit themhito the state's project account; and (iv) depositing the initial installment into the project account.The above conditions of credit effectiveness would be treated as conditions of disbursement forthe second state. An additional condition of disbursement would require Kaduna State torestructure its state water board's capital and long-term liabilities by converting its loan to equityand other measures as transition is made to full cost recovery. Additional agreements reachedat negotiations include: (i) a program of tariff increases and efficiency measures to increase costrecovery and improve sustainability of the state water boards, as described in para. 47; (ii)participation by the state water joards in the NWRP to carry out the most immediaterehabilitation work, a leak detection and repair program and commencement of meteringprograms, and to use a model bidding document prepared under NWRP as a basis forinternational procurement; (iii) terms of reference for critical elements of the technical assistanceprogram and their use during project implementation; (iv) dated implementation program andmonitoring indicators and adherence to program during the project; (v) experienced people willcontinue to be employed to manage the project; (vi) an environmental mitigation plan andimplementation of the plan during the project (para. 51); (vii) reorganization of the rural water

- 16 -

supply sector in each state by December 31, 1994; (viii) timely submission of audited financWreports; and (ix) a mid-term review of the project by December 31, 1994, to review projectmanagement, progress against the dated implementation program and development of the statewater boards against monitoring indicators and to agree on any necessary corrective action.

51. Eny!ronmental ASDCcts. The project will improve well-being, health, and sanitaryconditions in the project area. Measures will be taken to minimize any impact resulting fromincreased quantities of waste water generated in the project towns, and to lead in the longer termto improvement in sanitation over the present situation. Environmental assessments have beencompleted for two new dams to be financed, and action will be taken under the project to mitigatedetrimental effects, particularly the resulting increase in habitat for mcsquitos and snails(biharzia), and to minimize effects on water quality of activities in their catchment areas (thisapplies also to the catchments of other dams utilized by the water boards). A satisfactory planhas been developed in consultation with those affected for the small amount of resettlement thatis required.

52. Program Objective Categories. About half of the beneficiaries of the project areconsidered to be at or below the poverty level, about 500,000 people. An estimated US$44million (34%) of project expenditure is directly related to the poor. The project also has aspectsof other objective categories, infrastructure and urban development (paras. 42 and 43), health(para. 53), public sector management (paras. 43 and 47), women in development (para. 53), andenviromnent (para. 51).

53. Benefits. About 1.0 million people will benefit directly from the project. Adequatepotable water supply, as would be provided under the project, is a necessary prerequisite toImprovement in public health and development of urban areas as centers of economic growth.Industrial development in several of the towns included in the project has been constrained by thelack of water supply, and the living conditions, particularly of the poor, have become, in manycases, intolerable. The project will help to create appropriate conditions for growth; it willimprove the living conditions of the poor; and it will reduce the time spent by women in watercollection by providing water in or close to their homes (about 57% of beneficiaries wouldreceive water from house connections). The economic rate of return for the project is 9.8%.The project will build the two State Water Boards into sustainable organizations, remove thefinancial burden they place on the state governments, and devolve decision making regardingrural water supply to the community level where it can be most effective.

54. Risks. Risks include the possibility that counterpart funds will not become available asneeded, and that the states will hesitate to increase tariffs sufficiently to finance the long termoperation and maintenance needs of the Boards. These will be addressed by the condition thatcounterpart funds be deductible at source, and by designing the program of tariff increases toallow for previous objections which have arisen (para. 48). Covenants concerning developmentof the fiscal autonomy of the two Water Boards will be strongly enforced. The required tariffincreases depend strongly on future sales volumes and collection rates but less so on expectedefficiency improvements. The two water boards, assisted by consultants for contractadministration and construction supervision, will manage the project. Ihe project is a majorundertaking and could tax the water boards' capacities. To this end, the Association will requirestaff of sufficient experience to continue to be employed by the water boards and will closelymonitor their performance.

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55. R. I am satisfied that the proposed credit would comply with the Articlesof Agreement of the Association and recommend that the Executive Directors approve it.

Lewis T. PrestonPresident

Attachments

Washington DCMay 5, 1992

-18-~ ~ ~ ANE

NIGERIA - ECONMIC INDICATORS

Mid-1990 Populaition CmitIs.) 117.5 aI A9IO 1990 Per Capita SE In USS: 260 bI

A. Shares of Grose Domesitic Product S. growth RastoeCK per' anvto)(from curren't price date) (fr15 constant price dalta)

196 1973 1980 1985 1989 199 1965-73 1973-80 198090 196 1990

Gross DOnmtesc Product m.p. 100.0 100.0 100.0 100.0 100.0 1000 .5 3. 1.1 60 S.?Net Indiret Taxes 8.5 2.4 3.4 1.8 1.8 2.0. .

Agriculture 50.2 34.3 26.5 ;9.9 38.8 35.5 2.8 *1.4 3.3 4.7 4.1industry 11.4 24.S 36.9 30.3 33.7 37.6 19.6 5.7 -1.2 7.7 6.4(of uihich Manufacturing) 5.0 3.9 7.8 7.4 . .. 15.0 17.2 -1.0Services 29.9 38.6 31.? 28.1 25.8 24.9 -0.3 7.8 2.7 7.4 5.1

Resource Satance -5.1 0.6 3.4 1.1 9.5 14.8 . . . . .exports of ONFI 10.9 15.9 23.2 23.1 31.9 39.5 10.9 6.8 1.1 10.5 9.3Imports of SIFS 16.0 15.4 19.7 22.0 22.5 24.6 11.0 17.1 -14.3 0.4 13.2

Total Expenditures 105.1 99.4 96.6 96.9 90.5 85.2 6.2 8.4 -4.8 3.5 6.3

Total Conswgpticn 89. ? 1.0 72.? 85.5 76.6 70.5 3.4 9.2 -3.4 1.4 5.5Private consumptfon 82.9 66.7 59.9 73.0 67.6 59.2 1.7 9.2 -3.3 2.2 3.2General Government 6.8 10.3 12.8 12.5 9.0 11.4 16.? 9.1 -3.6 -3.4 19.7

Gross Dometic Investment 15.4 22.4 23.9 13.5 13.9 14.6 15.2 6.6 -10.2 16.1 10.5Fixed Investment .. 22.8 24.0 13.2 13.5 14.8 .. 6.6 -11.1 14.6 15.0Charnge in Stocks .. -0.4 -0.2 0.2 0.4 -0.1 . . .

Gros Domtesc Saving 10.3 23.0 27.3 14..5 23.4 29.5 25.6 0.3 4.8 71.3 29.5Net Factor Income -3.8 -7.1 -4.1 -9.1 -8.7 -8.3.. .

Net Current Tranefors 0.0 .0.3 -0.4 -0.1 -0.1 0.0 . .

Gross Natioalt Saving 6.5 15.6 22.8 5.3 14.6 21.1 39.2 -0.53 151.3 57.4

in Sittions of 1987 uNara 1965 1973 1980 1988 1969 199

Gross Domestic Product 67 95 124 120 127 134 6.5 3.4 1.1 6.0 5.7capacity to lurort 10 32 110 28 38 49 16.9 13.5 -8.9 36.2 27.6Term of Trade AdJustment -9 -7 55 -4 3 10 . . .

Gross Domestic Income 58 89 179 116 130 144 7.3 6.9 -2.8 12.1 11.1Gross Natioalt Product 63 86 115 110 116 125 5.8 3.7 0.7 5.5 7.9Gross Natioalt Income 54 79 170 106 118 135 6.6 7.S -3.5 12.1 13.8

......... (1987 a 100) -------- ---- Inflation Rates(% p.a.).----C. Price Indices 1960 1985 1986 1968 1989 1990 1965-73 1973-80 1960.90 1989 1990

Consmer Prices CIPS 64) 37 86 91 138 208 224 7.1 19.0 19.6 50.5 7.5wholesle Prices (IFS 63) . . . .. . .

lmplicit GOP Deflator 41 65 66 11 i8 213 10.7 16.2 17.7 49.5 17.2iImpicift Expenditures Deft. 30 51 59 126 176 193 10.3 11.5 23.1 40.1 9.6

0. Other Indicsatrs: 1965-73 1973-60 1980-90 Notes:

Growth Rates(% p.m.): The national accounts data shown heroPopulation 2.5 2.5 3.3 reflect substantial revisions by theLabor Fores 2.9 3.2 2.7 Nigerian Federal Office of StatisticsGross Naitt. Income P.C. 4.0 5.0 -6.5 for the years 1981-89. These have beenPrivate Coraumption p.c. -0.8 6.6 *6.4 supplem.ted by IMF and World Sank

staff estimates where necessry. ThesImpot Elasticity:, numbers are subjct to chang: the Fog

Imports (G+NPS) / GDPCp) 1.7 5.0 -12.9 plans ta ooisu new estimates for1981-199 within the next year.

-agmnat Savings Rates:.Oro ssNtioalt Saving 41.7 39.9 18.5 a/ The 1991 Censu gives a populatioan Gross Domesi Saving 51.0 38.5 39.8 estimated at 88.5 million.

ICOR (period averages): -- 35.0 bI The GDP per capita figure Iscurrently unider review in light of

Share of Totat 1965 1973 1980 1989 1990 the recently released 1991Labor Forc in: ... .. .. .. .. CenSU pOpUlation estitmte.

Agriculture 72 70 68Industry 10 11 12Services 18 19 20 .

Total 100 100 100 .

-19 ANMXlt

NIGERIA - ECNMIC INDICATORS............ .............................

PAGE 2 OF 3.... ,,,_,............................................ ................................................

Volume Index Value at Current Prices (miltifm US&)

E. Morchandise Exports 1980 1985 1987 1988 1989 1990 190O .... 1985 1987 1988 1989 1990

Cccoa and Cocoa Products 70 65 100 147 64 73 606 310 388 341 157 166Rubber n 74 100 175 26? 171 26 23 1S 4S 69 41Othow. .. .. .. .. .. .. .. .. .. .. .. .

Manufactures 10 .R sEdual 19° 22 100 137 108 105 382 30 135 22? 175 209Total Exports FO 170 110 100 109 125 136 2S,ff6 12,566 7,532 7,053 9,814 13,827

F. Nerchtadise toports...............................

Food .. .. .. .. .. .. .. .. ..Fuel and Energy .. .. .. .. .Other Consumer Goods S52 171 100 111 105 137 6,459 2,025 1,540 1,835 1.701 2,440Other Intermediate Goods 254 277 100 109 77 63 4,388 3,941 2,1S4 2,519 1,74S 1,570Capital Goods 252 154 100 70 98 119 5,464 3,199 2,697 2.046 2,785 3,702Total Iqowrts CIF 318 186 100 93 92 104 16,312 9,165 6,392 6,394 6,230 7,697

G. Merchadwise Termn of Trade 1980 1985 1987 1988 1989 1990 Notes5

Mrefh. Exports Price Index 203 151 100 86 105 135 a/ All trade and balanme of paFumntsMarch. Irports Price Index 8o 77 100 108 106 116 deta are from IMF and World Bankerch. Teros of Trade 253 196 100 80 99 117 staff estimates which may vary from

official sources such as the IMfUSS mitlions (at current pri-es): Balance of Payments Yearbook.

...............................................

H. Balance of Payments /a/ 1980 1985 1987 1988 1989 1990 b/ 1989 includes transactions. .-... .... .. a. . . associated with the sale of oil

Exports of Goods & NFS 27,006 13,032 7,757 7,387 9,981 14,001 production equity.Merchandise (FOB) 25,956 12,566 7,532 7,053 9,814 13,827Non-Factor Services 1,050 466 225 334 167 174

Inoorts of Goods & UFS 17,648 10,070 6.689 7,052 7,019 8,740Nercandise (FOB) 14,753 8,279 5,774 5, 776 5,612 6,918

Mon-Factor Services 2,913 1,791 915 1,276 1,407 1,822

Resource Balance 9,358 2,962 1,068 335 2,962 5,261

net Factor Income (4,150) C2,509) (1,257) (2,034) (1,810) (2,104)(interest per ORS) 911 1,735 597 1,500 1,471 1,793

Net Current Transfers (409) (244) (4) (26) (10) 26(workers remittances) 13 10 3 2 10 10

Curr A/C 8al Before Off. Grants 4,799 209 (193) (1,725) 1,142 3,183Net Official Transfers £167) (16) (20) 89 128 47

Curr A/C Gal After Off. Grants 4,d32 193 (213) (1,636) 1,270 3,230

Lon-Term Capital Inflow 728 (765) 1,S22 763 3,478 3Direct Investment /bI (739) 345 613 359 2,458 496Net LT Loans (DR$ data) 1,467 (1,110) 909 404 1,020 (493)Other LT Inflow (Net) 0 0 0 0 0 0

Total other Item (net) (814) 1,268 (1,387) 542 (3,601) (1,108)Net Short Term Capftal /b/ 134 544 (48) 142 (1,760) (87)Capital Flows U.E.I. 0 0 0 0 0 0Errors and Omissions (948) 724 (1,339) 400 (1,841) (1,021)

Changes In Net Reserves (4,545) (696) 78 331 (1,147) (2,125)* Net Credit from the ItF .. ..

other Reserves Changes (4,545) (696) 78 331 (1,14?) (2,125)

As Share of GOP:Resource Balance 10.1 3.7 3.9 1.0 9.5 14.8Interest Payments 1.0 2.1 2.2 4.7 4.7 5.1Current Account Balance S.0 0.2 -0.a *5.1 4.1 9.1

Memorandun Itaes:Reserves exct. Gold (mil. USS) 10,235 1,667 1,165 651 1,766 3,864Reserves fnct. Gold (mft. USS) 10,640 1,892 1,498 933 2,041 4,129Official X-Rate (LCUs/UBS) 0.550 0.890 4.020 4.540 7.360 8.040Index Real Eff. X-R ase 1980 100 167 29 30 25 24GoDP (millions of current US$) 93,080 80,955 27,111 32,013 31,251 35,460...............................................................................................................................

-20- ANNEX I

NIGERIA - ECOM0IC INDICATORS.............................

PAGE 3 OF 3~~~~~~~~~~~~~~~~~~~.............. ............................ ^. .........Share of GDP (2) Hominat Growth RatesFederat Government Finance Ia/ 1980 1986 1987 1988 1969 1990 1960.86 1986 1988 1989 1990

Current Receipts 24 17 16 13 1T 20 1 3? 6 114 47Current Expenditures 10 11 16 16 14 16 a 104 40 33 45Current udget gatane 13 6 0 4 3 4 .. ..

Capital Receipts 0 0 0 0 0 0Capital Expenditures 14 9 9 7 8 8 *7 59 4 68 26Overall Defict .0 -3 -9 -11 -4 -4 .. .. .. .. ..

Officisl Capital Grants 0 0 0 0 0 0 .. ..External Borrowing (net) 1 -0 5 1 3 -1 .. ..Domestic Non-tank Borrowing 0 -1 2 i 0 1 .. .. 220 93Domestic ank Finaneing -0 4 2 6 1 5 .. 18 2S3 -73 516

Net Disbursements CUSS milltons) DObt Outstanding & Disbursed CUSS mitlions)J. External Capital Flows, Debt .......-..................................... ..................and Debt Burden Ratios /b/ 1980 198S 1967 18 199 1 1980 1985 1981 1988 1989 1990..... ....... __. _....................... . .... ..... .... ..... .... ..... .... ..... .... ..... .... ........ ..... .....

Pubtic & Publicly Guar. LT 1,122 (1.075) 958 411 935 (479) 4,284 13,139 28,697 29,321 31,661 33,709

OfficIal Creditors 76 (132) 340 10C0 496 (61) 1.00S 2,212 11t608 10,968 15,225 17.933Nultilateral 48 242 270 SS 393 294 S71 1,431 3,059 2,844 3,168 3.7T6of which ISRO 39 230 262 50 252 143 51T 1,357 2,939 2,728 2,907 3,284of which IDA 0 (1) (1) (1) (1) 6 38 35 32 31 30 36Silateral 28 (374) 70 45 103 (355) 434 781 8,549 8,124 12,057 14,206Private Creditors 1,046 (943) 618 311 440 (418) 3,279 10.927 17,089 18,352 16,436 15,77Suppliers (8) (277) 19 126 162 (9) 18 2.730 4.746 6,343 6,397 5,768Finafcial Markets 1.054 (666) S99 185 278 (409) 3,261 8,197 12,343 12,010 10,039 10,008

Private Mon-guranteed 388 (35) (48) (7) 8S (15) 1,097 1,416 552 537 406 391Total LT 1,S10 (1,110) 909 405 1,020 (494) 5,381 14,55S 29,249 29,858 32,067 34,100IMF Credit 0 0 0 0 0 0 0 0 0 0 0 0Net Short-Term Capital 29 (1.435) 2,210 2,398 1,374 (1,375) 3,553 4.995 1,645 1,682 701 1,968Total incl. IMF & Met ST 1,539 (2,545) 3,119 2,803 2,394 (1.869) 8,934 19,550 30,893 31,540 32,769 36,068

Bank and IDA Ratios 1980 1985 1987 1988 1989 1990 Notes:............. ... -- ... ... ... .... ........................................

Share of Total Long-Term DOD a/ Federat budget data are from IMF1. IBRO as X of Total 10 9 10 9 9 10 and lortd Sank staff estirntes.2. IDA as of Total I 0 0 0 0 03. I8RD+IDA as X of Totat 10 10 10 9 9 10 b/ AUl external debt data are from the

Seortd Bank Oebtor Reporting System.snare of LT Debt Service1. IBRO as X of Totat 9 3 33 20 21 162. IDA as X of Total 0 0 0 0 0 03. ISBD+IDA as X of Totat 9 3 33 20 21 16

DOD-to-Exports Ratios_ .... _ ...........

1. Long-Term Debt/Exports 20 111 373 400 316 2402. IMF Credit/Exports 0 0 0 0 0 03. Short-Term Debt/Exports 13 38 21 23 7 144. LT+INf+ST DOD/Exports 33 149 394 422 323 254

DOD-to-GDP Ratios.................

1. Long-Term Debt/GDP 6 18 108 93 103 962. IMF Crdift/GDP 0 0 0 0 0 03. Short-Term Debt/GDP 4 6 6 5 2 64. LT+IPF*ST D0D/GDP 10 24 114 99 105 102

Debt Service /Exports.....................

1. Public & Guranteed LT 2 31 13 28 19 212. Private Non-guranteed LT 1 1 2 2 0 03. Totat Long-Term Debt Service 3 32 1S 30 20 214. IMf Repurchases+Serv. Chgs. 0 0 0 0 0 0S. Interest only an ST Debt 1 3 1 1 0 06. Total (LT+INF+ST Int.) 4 36 15 30 20 21...............................................................................................................................

- 21 - Shdl

FEDERAL REPUBIC OF NIGERIA

FIRST MULTISTATE WATER SUIPPLY PROJECT

ESTIMATED COSTS AND FINANCING PLAN(US$ Million)

- *tlae project cost I Loa Foeig TOW*1 KATSINA STATE I

Katsina town project completion 2.1 8.6 10.7Funtua system 6.9 22.9 29.8Malumfashi dam reconstruction 1.0 2.8 3.8Daura system expansion 0.2 0.6 0.8Rural water supply rehabilitation 0.1 0.4 0.5Operationa equipmet 0.2 1.4 1.6lIstitutional strengthening 0.3 1.7 2.0Construction supervision 0.9 2.9 3.8Base cost (March 1992) 11.7 41.3 53.0Physical contingencies 1.1 4.1 5.2Price contingencies 1.7 6.1 7.8

Total Katsina State 14.5 51.5 66.0

KADUNA STATEZonkwa project 3.5 12.9 16.4Kwoi project 3.6 13.6 17.2Ikara project completion 1.5 6.3 7.8Rural water supply rehabilitation 0.1 0.4 0.5Operational equipment 0.2 1.5 1.7Insfttional strengthening 0.3 1.7 2.0Construction supervision 1.1 2.5 3.6

Base cost (March 1992) 10.3 38.9 49.2

Physical contingencies 1.0 3.6 4.6Price contingencies 1.4 5.0 6.4

* Total Kaduna State 12.7 47.5 60.2

Project preparation 0.0 2.0 2.0

TOTAL PROJECT COST 27.2I& 1 2.

IDA 0.0 101.0 101.0Katsina State 14.5 0.0 14.5Kaduna State 12.7 0.0 12.7

Total fincing 12 82

La Of this amount, an estimated US$7.0 million equivalent is for duties and taxes.

-22 - Sch2dh a

FEDERAL REPUBIJC OF NIGERIA

FIRSI MULTISATE WATER SUPPLY PROJECT

PROCUREMENT MEIHOD AND DISBURSEMENTS

A. Summary of Proposed Procumment Amnomets(US$ millions eguivalet"

La Lo =ER TOTAL

1. Wors contracts for rehabIliation and 107.1 1.7 0.0 108.8augmentat_on of existing and new systems. (83.4) (1.5) - (84.9)

2. Supply of goods (operational equipment and 1.7 1.0 1.0 3.7water mets). (1.6) (0.9) (0-9) (3.4)

3. Services for trining and T.k. (including 0.0 0.0 1S.7 15.7constution supervision) - .- Z- LIZ21 (lZ,7

Total 108.8 2.7 16.7 128.2

Note: Fpures in paentheses are the rpectve amounts, to be financod by IDA. Oter covers peoureeat ofgoods by inteonational shopping and consultancy services in accordance with guidelnes.

B. Allocation and Disbursement of IDA CreditAmoMu % to be Disbursed

CLJSS miltion) ftmM IDA Creit

1. Civil work and supply and insalation ofmechanical and electical equipment.(a) Kataina stat 39.0 75% of total(b) Kaduna stat 35.6 expenditures

2. Supply of operional equipment andwater metes.(a) Kaa state 2.2 100% of foreign(b) Kaduna state 2.2 expenditurem and 70% of

local expeDdituros3. Taining, tchnical assistance and

conshtreon supevision.(a) Katsina st.0 100% of fi(b) Kaduna state 5.0 apeditues

4. Project preparation FMWR) 2.0 100%

S. Unaloated(a) Katsina state 5.3(b) Kaduna state 4!

Total 101.

llstitnut IDA Disbgrsemntsu(US$ ndllio)

IDA Fiscal Year 124 199S 1996 M -S1

Annal S.41a 10.3 23.7 29.7 19.7 7.8 4.0 0.4Cumulative 5.4 15.7 39.4 69.1 88.8 96.6 100.6 101.0

Includes inihdal deposits totaling US$3.2 ilion to special accounrb.

-23 - Schedule:

FEDERAL REPUBLIC OF NIGERIA

FIRST MULTISTATE WATER SUPPLY PROJECT

TAMETABLE OF KEY PROJECT PROCESSING EVENTS

(a) Time taken to prepare the project: Two years

@) Prepared by: SWBs with IDA assistance L

(c) First IDA mission: May 1990

(d) Appraisal mission departure: May 1991

(e) Negotiations: November 1991

(t) Planned date of efectiveness: July 1992

(g) Relevant PCRs: Kaduna Water Supply Project; PCR No. 8961

JA David Henley (Senior Sanitary Engineer) Task Manager, William Roach (Senior FinancialAnalyst), and James Wright, Division Chief, Infrastructure Division, West AfricaDepartment.

- 24 - Schedule DPage 1 of 2

THK STATUS OF BANiC GROUP OEATIONS 2n NIGERIA

A. STATEMENT OF BANIC LOANS AND MA CRUM(Aof Matk 31, 19)

AA* i, USS

Nun" TOW Domea Bank :.MA Undu1rs

Fory-alan and two craft hly diabunud 2627.9 39.9Of whic SAL. nd Psopm Lacsas a

3011-n 89 NISei Trude & vetvatma PoIL (S00.0)

2299-UNt 83 NM3 dumal Dewt (N DD M 120.0 1.42376-UN 84 NBCt SGWV/Mwdu Seals J7nw t 41.0 17.52390-U 84 NNC G(h Tenical Amlamne 13.1 9.62436-U! t 4 Nigei8 laaaa Ap bt De" d1sa) 122.0 48.32480-U 85 Nigeri Tecnia Aim. 13.0 8.42503-UN! t5 N*a Sokm Hef l 34.0 20.5252S-II as NIri Dome stub v'aS 72.0 32.02607-UN 8U NigerIa Urbu Ded _ am 53.0 25.32618-N 86 NIea qdusy Tek Ajaaan 5.0 2.62620-UN! 86 N*fti us Saud Wa. & Srm 72.0 12.02733-UNI N Muli-Sti Apt. Do I 162.0 62.22734UN! S6 N Tawpar 20.9 12.727 87 N r L 81.0 44.52741-UN 87 Nei ot Dome Adc De 25.0 13.3

* 275-N t 7 N Tde o E D 40 0.52760-UN 87 NI Fo ary 71.0 37.12925-Y s N l * DeT F 695 59.92926-UMN 8 NI Tocl. 23.3 2.9293-Utt a Hihway Sor . 250.0 208.3295-UN 89 N i sS Wow Sppy 173.2 167.22988-* UN 9 N 4d MltS Ap vt D t 85.2 61.9299-N t9 NPV Small Med eim. Dov 270.0 243.63034-N! 89 N {ra Io Had& & PF _ula 27.6 26.11035-UN (Ca) 19 N ThUd Mul-St. Aga Dewt 0.0 100.9 72.63104-UNI 89 N AReh60 RAW ¶d 27.7 24.731 1-UN! 89 A Powe Syma Mam 70.0 58.53125-N 90 N Eau" Dnga, 68.1 62.03126-UN 90 Nida Tes Cip 106.0 104.53183-UNt 90 Nd N Quaau 14.0 13.62139UN (C) 90 N Fdra Unitet Dw 0.0 120.0 120.9323sutn 90 NtL T _ 225.0 214.1323bVN I 90 Nlga Oyo Stem Utboa 50.0 50.021911-UN! (C 91 Ngiak PdImy EdFaa 0.0 120.0 123.72238-UN! l 91 NIgeia Nal PoPA&dm 0.0 78.5 74.02261-UN! Cl)' 91 NierA NSiAcla Iatek b> 0.0 7t.0 79.93317-UNt 91 NNPC Oso Co 218.0 66.43322-U 91 Ni Wiser Reab b> 256.0 256.03326-UN 91 Ni lh e Sym Fund 70.0 70.03451-UN 92 NIgia Na#bma Fam Dev b3 67.5 67.5

TOTAL 65 . W-of which Waa been repaid 1251.1 1~I

TSl now h1 dbyl 8 & DA 4W.9Amount sold 16.8oftwb ba bess repaid 16.8

Tout uadlabufad 1I. 4 Z

W, AppoVWedr or aftr FY8Ob3 Not yet dbevev.* SAL. SECAL at ProSra Loon

-25- Scedule DPage 2 of 2

. STAQMOF OEC 2WSTNT

1nvemt FisIITdT ~~~~~~~~~(so ao3 . , __

Numb" e ObIJ@ uatiaam (Awmai la US$ .ini.1 )

70 UNI 196 Awa T e3Ia Ltd. To=g M4g. 5.9 0.7 7.6121 UNt 1967

it"42140 UltI 1992

482 UI 198O NtieA Tex2b MUll. T.2 22.8 0.7 23.5962 U! 1967 Ltd.

so Utt 19U1 ja Hotel Toudsa 120 1.5 13.5"20 1NI 1985990 UNt 1911

724 UNM 1985 Tie Dewy Do-o& BwIm 7.3 7.31222 UNt 1990

1000 UM 1918 Dualop N4wis Motr V a n 12a5 12.5

1225 U! 1 A990 o Nigeia VegSrabi 00 4.S 4.52137 U! 1"9t NAMBL Mouyap Matd 10.0 10.02139 UN 199 bil Nigak Pe_OmU 170.0 170.02430 UM 1991 VICODA M _bamuftg 0.1 0.12S82 UN 1991 Stukbdumlm M mdag 0.3 0.32136 UM 1991 Ape-Tab Sv Food ?m.snag 1.0 1.02513 UN 1992 Vjaca Ste M -mfadag 0.8 0.8

ToWi grmoo_.l 2dLu LItZu

Low m .ado. Pmdmu uchigeedjumaste. ewpeY NW a" 13S.6 0.9 136.5

Tod oommkaem now bdd by IC 112.6 2.0 114.6

Todi adiabUrA 53.8 0.1 53.9

MAP SECTION

.

. ,<D0E-. ~~~~~~~NJ G E R

't *7S¢Y % Katsi nrdamu Mc s13

NIGERIAFIRST MULTISTATE

WATER SUPPLY PROJECTPROJECT TOWNS AND :

OTHER SERVICED TOWNS

*Ika-a PROJECT TOWNS

OTHER SERVICED TOWNS

MA)OR ROADS 9{ t bINI

RAILROADS

*- F-RVERS

* STATE CAPITALS

STATE BOUNDAIUES

_. NEi2NATIONAL BO(iNDARiES lb i |2/)> Kan /~/

9 / > f S s~~~~~~ TA T E

SOKOTO S TATE

. -BAIUCHI

T t//2|o~~~~~ \ m r J 9 < f r _ T A~~~~~STTE

I' ~~~~~~~~~~3S / ~ ~ ~ ~ ~ ~ ~ ~

/ S5TATE R |

$ato rm s I s

,W iI1 . (XXPlATEAU

,( * 1 ~'t ' .; odAodAU' STAT.'

v °Nt-rXmo >(m _ ,>>-_-- 'CAMEROON ' FEDERAL /\ -Y. | . { . ~~~~~~~~~~~~CAPITAL ,/tlo W&

~~~DELT TERR St iR