A Ov r. M C. A-. X Report Ndo. 56a=UV "k "f f a urrcro I- rr'ar rimr~ Lrc iF;rrin 'U I I IC I L L.JIIJ II.. I .JO I Li .JE II ana ueveiopment rrospecLs ou Upper Volta july 7, *9jj -Western Africa leglona'lffc Not for Public Use International Bank for Reconstruction and Development intprnatirnni nlevPInncmnnt Asnrciation This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Transcript
A Ov r. M C. A-. X Report Ndo. 56a=UV "k "f
f a urrcro I- rr'ar rimr~ Lrc iF;rrin'U I I IC I L L.JIIJ II.. I .JO I Li .JE II
ana ueveiopment rrospecLs ouUpper Voltajuly 7, *9jj
-Western Africa leglona'lffc
Not for Public Use
International Bank for Reconstruction and Developmentintprnatirnni nlevPInncmnnt Asnrciation
This report was prepared for official use only by the Bank Group. It may notbe published, quoted or cited without Bank Group authorization. The Bank Group doesnot accept responsibility for the accuracy or completeness of the report.
SUMMARY AND CONCLUSIONS ........ ........................... i-viii
PART ONE - RECENT ECONOMIC DEVELOPMENTS
I. Overall View ......... ........................... 1
II. Main Sectoral Developments ..... ................. 5
A. Agriculture ........ ......................... 5B. TLivest-ock ........................................... 10 nC. Industry ......... ........................... 12D. Transportation ......................................... E. Education ......... .......................... 16
III. External Trade and Payments ..... ................ 18
A. Balance of Payments ...... ................... 18B. F gn Trade ....... ........................ C. Foreign Aid ........ ......................... 27u. E.xternLa'L Public Debt ..... ................... 28
IV. Public rinance ana Monetary Deveiopments .... .... z9
A. Public Finance ....... ....................... 29B. Monetary Developments ..... .................. 35
V. Labor Force, Wages and Prices ........ ........... 37
I. Short and Medium Term Financial Outlook ... ...... 41
A. Balance of Payments ......... .. .............. 41B. Public Finance ................. ............. 48
II. Government Development Plans ................. ... 51
A. The First Development Plan 1967-1970 ........ 51B. The Current Development Plan 1972-1976 ...... 52
III. Outline of a Long Term Strategy ........ .......... 55
A. A Strategy Based on Population Movements .... 56B. Agricultural Programs: Two General
Considerations ............................ 59C. Specific Programs for the Peripheral Zones ... 63D. Other Sectors ............................... 72
ANNEX __: Estimates of Emigration Requirements
STATISTICAL TABLES
This report is based principally on the findings of a missfon thatvisited Upper Volta in March-April 1974 and was composed of L. de Azcarate(Chief), Y. Park (Economist), U. Fontana (Agriculturalist, RMWA), A. Otten(Agricultural Economist, RMWA), H. Boumendil (irrigation Engineer, Consultant).Members of the mission visited Upper Volta again in April 1975 and the reportreflects discussions on the draft report held with the Government at that time.
A complementary working document to this report (Report No. UV-564)entitled Agricultural Annexes was issued on September 30, 1974 and consistsof:
Annex I : Irrigated AgricultureAnnex II : The Development of the Valleys of the VoltasAnnex III: The Matourkou Project
These Annexes are available on request.
Abbreviation List
ASNA Aagence poA1- In A +.it6 dela I navigaon a nrenn" e en Ar4iqBGE>O .. Bo.que .- 1-trl des Etat de l'1i- e 'e
BG mM Bre-a-a -nvtral dt- - outre-mer, Paris
GTiu~B - - - -t interEvatd'des sy>-qe-- -~ ~ ~ .'A S~ VA. -~ - - -,.LV JI4 I 6 UJt4. V A ~hLJA.Wkm"~u
CCCE CaisseCentrale de ~~~~-1- de
CFDT Cor.pagnie frar aise pour le -d'V ,--t de f 'extie
Eopear. Economic Comm-unit--
FAC Fonds d'aide et de coop-ration du Gouva-nemen £rangaisFnR~~~~~~~% Uod deU d,Vreloppement1 r-ural-1t,(t:1U -- ilq
± ±.'4~ £LJIUl. I W UU ~~VU LkjUj4J~LU11U 1-l-dLU~.
FI Fonrds europuen de duveloppement de la Comnnunaute europeenne
,"A;9k. Sier-vice due lhiiyurauiu-que agricole et ae i;equipemrent rural
U Direction de l"nydraulique et de 1'equipement rural
HJI SDervice de ithydrauli-que et ae liequipement r-ural
IRATk~ 'n Institut de recherche dtagronomie tropicale
Service des inventaires et des recherches hydrauliques de l1HER
O1 rculOffice r6gional de d6veloppoment
OVT'OiM Office pour la recherche scLentifique et technique outre-mer, Paris
PAi Prc-ramme aliimez-.t.ire mondial des Nations Unies
RANT Re'gie AbIdjan,-liger
S.4 (AVV) Sccietc diane'nagement des Voltas (devenue l'Autorit pour l'Am6ena-gement des Vall6es des Voltas)
SOGJTCHA Soci6te't grenobloise d'6tudes et de travaux d'hydraulique agricoae(actuellement absorbee par la maison mare SOGREAH)
SOIuT.AM La Socie't6 Miniere de Tambac
sSo-UlfIV Socie-te. sucriere de Haute-Volta
UMOA Union Monetaire Ouest-Africaine
UVOCAM Union voltarque des coop 6ratives agricoles de maraichaze
Page 1 of 3 pages
AREA POPULATcON _NSITY2?00 .6 , .ion (.ad=1°972)
57 Per kaRof arable land
SOCIAL INDICATORS
Reference CountriesOnna Unt. ___ _____________
a 1S701970 ifR P3R CAPITA BSt (ATLAS BASXS) /. 70 i 70 a 180 L 260 a
Oroas reproduction rate /2 3.2?cd 3.3d 3_3 2.9/4 3.0Population growth rate /I 1.9 2.1 f 2.1/f 1.9/ 2f 1 /rPopulation growth rate - urban .. 2a. 5. id i Age structure (porcent)
0-la 42 4 43 a9 aa 4215-62. 55 it r565 and over3.322
Ago depondency ratio & 0.8 0.9 1.0 1.0 0.9Economic dependency ratio /L 0.9 0.9 1.0 1.6 1.2Urban population as percent of total 5 /4z l. 10 &.& 29 /FaMily planning: No. of accaptorn cumulative (thaus.)
Percentage enployad in agricultore 92 /d 89 7 b 85 /4 73Percentage unemployed 3 /d .. 7
INCOME DISTRIBUTIONPercent of national income received by higheost 5%Percsnt of notional incone received by ighest 20%
Percent of national inco` e received by loweot 40%
MOSTRINIUTION OF LAND O*ERSHIPS ..z>t..wr.pvn v. v.n.n .. .. . ..%owned by mallent 10% of ownere
REALTR AND NUTRITIONPoPulotton pcr physician 6u , 92 7c,49i ' 17,210 11,92.Population per nursing person -.,fl0 / 1,230 3,860 4,320 2,l10Population per hospital bed 1,810 1,670 /v 1,380 /y 2,790 /v 730 /y
Per capit- -alorie supply ad- d of reqvdr--nt. 1c Re, Ao 2 92 89 97Per capita protein supply, total (grams per dayt/ 66 6669 75 6a
Of which, animal and pulse 22 /4 23 / aa u 28 /Death rate 1-4 yearn /7
EDUCATIONAdJusted /8 primary school enrolloent ratio 8 13 20 1S /e 44AdJusted secondary school anrollnont ratio 1 1 2 2 7T ars of e 3onling orovided, first and second level 13 179 2i 1 -Vocational enrollment as % of sac, school enrollment 21 15 40 5/e 12 /Adult literacy rote % 5 /°.0.a 10 /0..a I e 10
ROUSINOAesraga No. of persons per roes (urban)Percent of occupied unite without piped caterAccess to electricity (as % of total Population)Percent of tural poptlation concectod to eletricity
CONSUMPTIONRadio receivers per 1000 population 1 16 12 47 69Passenger cars per 1000 population 0.4 1 1 /Y 4 /c 11Electric poser consumption tkeh p.c.) 2 / 5 8 62 8aNewsprint consumption p.c. kg per year 1.3 0.08
Notes, Figures rfer either to the latest periods or to account of anviro-nental temperature, body weighte, ndthe latest years. Latest period. refer in principle to distribution by age and sex or national populations.the years 1956-60 or 1966-70; the latest years in prin- /6 Protein standards (requireamnts) for al1 conutries as eotab-ciple to 1960 and 1970. lished by USDA Econo.mic Rnsach Service provide for a minimum/1 The Per Capita GAP estionte is at osrket prices for allowance of 60 grams of total protein per day, snd 20 grand of
yoamr othor than 1960,calculated by the bame converson nimal and pulse protein, of which 10 grams should be animaltechnique ao the 1972 World Bank Atlas. protein, These standards are somewhat lower than those of 75
/4 Average number of daughters per women of reproductive grams of total protein and 23 grams of aninal protein as anageo average for the world, preposed by FAO in the Third World Food
a Fopulation growth retes ore for the decades ending in Survy.1960 and 1970. eL Sons studies have suggested that crude death rates of children
/4 Patio of population under 15 and 65 and over to popula- ages 1 through 4 may be used as a first approximation index ofion of ages 15-6a. for age dependeoncy ratio and to labor a lnutrition
force of ages 15-62. for economic dependency ratio. ta Perentatwe e,-c-s of -o.reopoxou-g p -pulalor uf school age/5 AO reference etandards represent physiological re- as defined for each country.
quircoents for nornel activity and health, taking
/a 1972; /b 1960-61; /4 1965-70; /d getiate; /e 1968; If 1960-72; Z/ 1960-71; /h 52 citieo; / Over10,000 population; a4 Cap-Vert region and the cities of Saint-Louis, Thies, Kaolock, Dicurbel and Ziguinchar; _ 1961;
A 15-59 year; Im _60 and over; /4 Ratio of population under 15 ond 65 end over to total labor force; / Ratio ofpopulation under 15 and 59 and over to total labor force; La 1971; UL 1959; /4 Si. urban communes and eightlocalities which can be considered an urban; La 1970-71; /t 1963; Lu Including midwives, assistant nurses andassistant midwives; /4 Government hospital astablishieots; /. 196h-66; /x 1965; /4 1969; /4 15 yeear endover; / Definition not available; ab ERployment in agriculture including livestock amounts to 96 percent of laborforce; iac In urban area, about 20 percent.
o Senegal has been selected a0 the objective country for Upper Volta since its GNP in about three times that of Upper Volta's;they both are in the sen geographical area, Sahelian region, share a sioil-r monetary system, and have the same economicgrowth rate in the period 1960-71, end the sa0e literacy ratio 5 - 10 percent an well.
F2 March 13, 1975
Page 2 of 3 pages
ECONOMIC INDICATORS
GROSS NATIONAL PRODUCT IN 1973/a ANNUAL RATE OF GROUW'r (b. constent Pri^es)
Current Receipts 12.2 12.2 11.8Current Expenditure 10.5 10.5 9.8
Current Surplus lI!
Capital Expenditures 1.3 1.3 1.2
External Assistance (net) 0.7 0.7 o.6
MONEY, CREDIT and PRICES 1965 1969 1970 1971 1972 1973 1974(Million CEAFFoutstanding end period-)
Money and Quasi Money 6.41 8.07 9.37 9.93 9.96 14.62 17.53Bank credit to Public Sector 0.13 -2.24 -3.84 -4.45 -5.14 -6.13 -9.27Bank Credit to Private Sector 4.03 5.69 5.63 6.11 7.31 9.16 15.38
(Percentages or Index Numbers)
Money and Quasi Money as % of GDP 7.6 10.8 10.8 10.1 14.6General Price Index (1963 = 100) 108.3 110.2 119.0 123 136.3
Annual percentage changes intGeneral Price Index 1.8 8.0 3.4 10.7Bank credit to Public Sector . -71.1 -15.9 -15.5 -19.3 -51.2
Bank credit to Private Sector -1.1 8.5 19.6 25.3 67.9
NOTE: All conversions to dollars in this table are at the average exchange rate prevailing during the period----- A.
/a Economic ata Sheet, IBRD
/b Total labor force; unemployed are allocated to sector of their normal occupation. "Unallocated" consists
mainly of unemployed workers seeking their first job.
/a Mission estimates.. not available
not applicable
Page 3 of 3 pages
TRADE PAD4BNTS AND CAPITAL FLOWS
BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1969-72))/b
1970 1972 1973 US $ Mln %(M1l147n?. Ts A)
Exports of Goods, NFS 32.0 43.3 52.3 Livestock and Livestock Products _.9. 43Imports of Goods, N.S -70.6 -116.8 -148.3 !I Live Animals 6.7 37Resource Gap (deficit = - -)0,5 -96.0 ?1 Meat 4i R 4 2
Interest Payments (net) 0.4 -i.6 -o.B Cotton 4.7 26Workers' Remittances 17.3 25.0 28.5 1) Seed 0.4 ?Other Factor Payments (net) . . . 2) Ginned 4.3 24Cther private Transfers (netLa 7.6 8.2 15.3 All other commodities 5.6 31Balance on Current Account -14.0 -E7.-9 -170 Total Ti.2- 100,0
Direct Foreign Investment 1.5 0.8 1 EXTERNAL DEBT, DECEMBER 31, 1973Net MLT Borrowing 1.0 2.7 > 17.4
Disbursements (2.2) us $ MinAmortization (1.2) (1.6)JSubtotal -11.5 -35.4 -35.6 Public Debt, incl. guaranteed 119.5
Capital Grants 22.3 32.8 54.8 Non-Guaranteed Private DebtOther Capital (net) 0.4 5.9 > -2.5 Total outstanding & DisbursedOther items n.e.i 2.7 -1.7Increase in Reserves (+) 13.8 1.6 16.7 DEBT SERVICE RATIO for 1973LC
M al ly penaions paid by France.@ Officially recorded exports only.
4 Ratio of Debt Service to Exports of Goods and Non-Factor Services/d Posterior to exchange adjustment and including Bougouriba Agricultural Project of US$8.0 million.
not available
not applicable
May 26, 1975
RIFPUBLI8 nF \> Seoirt)t-
t <U,PPER '"Li/ > 8o ._, \ C'~~~~~~~~~~~~~~~~CA 7T 7- L E iZ
-XA F R; GA g) ./ SEF P
14' ~ ~ ~ ~ ~ _- Dl A 6
- + > rV f N ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I GV R |
\ T00 ;/ s^s{ fj // X KD00050 . < 00 <
90o.; SORG ' U M t /"
[~~~~~~~~~~~o, ___ 3 ; , tNTD )
| $ _SuNX -l / 5 0 OUAG DOUG M < t.>6
(-->C < ;) / \F4S< enzo OS /
Kon ou 0 ,-~ U M C A T REUBI OF UPL-EVLAJ 14<?! j Bfor& \ l 6' ~~~aOss0 \_V . H - - - .P
10~~~~~~~~~~~ / i \ \ - 20-=itrsaelod J| 1
_00 _B06 UL 50RGHu/
10EBR C571 Det 2373R
REPUBI-IC OF IJPPE:R VOLTA \ tTom b.o°'~ -- - '_ROAD NE:TWAORK _._- v9}OYe~1-* | I RAILWAYS
9X < /(
* NATIONAL ROADSi/
-- - DISTRICT ROADS A, .J i d0< Gl g (
- OTHER R OADS , b
./ >>+ \_o ideye
+ \ / ~OUAHIGOUb H A;OGHO/
t .Djlbolso ;YA< { 4F :B1 OUSS /KANCHARI i
t K~~oundogu"Busiulou2_.oa. DI tGro9, ENKDOUGOUS ('
E~ ~ ~ ~ ~~~o I Ib _- A :I S; `D' T'e,b UAG\.~ ~ ~ ~ ~ ~~~i,kuol~ Kaan
I>R D
0t<; t> GL)
- i / 0 1 5i . nC SP KOMB SrIR I DA NGOR'
' Nidomglok L.ios d houkuy G ...-. n_ goK> .r.-d 96 .-d, le DOGOI Bu
u . , \ 1 P40(1 8 $ T i > r° 2 O 7 i t O t 5 t S \E R E N a b t C , L_ .E~~~~~~~~~~~~p Duo abM BYnq E 97.IBR 1
_ _- BE_ _ tj} _ _ _ t ___ _ I ___ SBD 11283
/z j /,_
REPUBLIC OF UPPER VOLTA - ;
DENSITY OF LAND OCCUPATION , -'.0AND
OCCURRENCE OF RIVER BLINDNESS
0, G H A N A . oX . , i ,
.o -M-
I- .0,
I r-2 d / /I V 0 R Y> C -A 5 _%
0 -< :' 001 \ , .0 000 00 0 ': : \
1; ; -- ' 0 ~~~ = t ' GH A NA T OG O i 9
V U -5 ; <- X A F R I G A g t <1~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I Hlgb ,90id0,0, Ol rioe, Ouindore,
. ~~I VO RY C OA ST '.' , 0'i
RlEPUBLIC OF IJPPER VOLTA _,-j
RZEGIIONAL DE\/ElC)PMENT OFFICES (ORD)I 0 ^.
\~~~~~~~~ ~~ ~ ~ ~~~~~~~~~~ 0 ,,1( 0 20 40 60 EO 100 ,'\ DORI
,_._ 6g _> r 2 ,> KOUDOUGOU w \8D~~~~~~~~~~~~~~~~~~~~ ~~ ~~UPIfLA X FADA-N'GOURNA \
BORO)NO r- S\o
HOUNDW /-iru - -
J~~~~~~~~~~~~B BOcD-Dl OU LAS SO
i ~~~~~~~~~~~~~~~~~~~~~~~~r 0 E Ui TO G O \
| BANFORA I \ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~REGiONAL Dl VELOPMENT NAEDEVEL,OPMENT OFINNC
\- _'-_1 < ' S?' ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~~~~I Ouagadou~go. u. V-.CWrA";U FACs 9 r . ~~~~~~~~~~~~~~~~~~ ~~~~~~~2 KoudougcFu SATEC FAC
j_. 91.8 /~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~V Noi C5§:-g DT FAC 1
^w \ } i7r ber=ndricr do on rha rna,¢ do rtrr . Koupel a .Ic~~~~~~ DT FA
I \ O R, Y C: O A S T > {8 libtu&nrrurndlrrz7abrrs <>~~~~~~~~~~~ Baf SCTES FE
SUMMARY AND CONCLUSIONS
1. The1 repore L±Lst LCv±eWU UeveloplUCnts over Lnth last six years,assesses the government's current plans, and projects financial developmentsfLor thle short andU redium-terml; it then outlines a long-term strategy withspecial reference to the rural sector and the problems of population dis-trLLUutLonUI.
I -: Recent Developments
General
2. The basic constraints to development that classify Upper Volta asone of the twenty-five "'least developed countries" -- among others, poorsoils, distance from the sea, and unbalanced population distribution --were compounded by a series of rainfall deficits between 1968 and 1973. Al-though the drought was less se-vere than in other Sahelian countries, it wasone more adverse factor that, together with the petroleum crisis and worldwideinflation, has probably made 1973 and 1974 two years of overall economic set-back, following four years of very slow growth: between 1968 and 1972, realGDP per head is estimated to have increased by a very modest 1 or 1-1/2 per-cent per year. In 1972, GNP per capita barely exceeded 70 dollars.
3. The structural characteristics of the economy have not changedmarkedly and they are typical of a situation of extreme under-development.Agriculture provides a living for over 90 percent of the population, butaccounts for less than 50 percent of GDP; practically all exports are agri-cultural products: exports, often the most dynamic factor in African econo-mies, are unusually low, varying between 7 and 9 percent of GDP; althoughgross investment remained under 10 percent until 1971, the resource gap wasa rather hefty 6-8 percent. However, a number of large industrial projects,which rely heavily on imports for equipments and materials, have been carriedout since 1972 and boosted investment to 16 percent of GDP. Accordingly, theresource gap almost doubled in 1972 and reached an unusually high level - 20percent of GDP - in 1973.
Main Sectors
4. Agriculture has naturally suffered most from the drought: produc-tion, relative to 1969/70, declined by 15 percent in 19i0/71, and 17 per-cent in 1972/73. The effects have been quite uneven, however. The mostserious losses occured in the northern and central regions where grainproduction (millet, sorghum) declined sharply necessitating exceptionalimports of 60,000 tons in 1972/73 and over 100,000 tons in 1973/74. Theseimports and other emergency aid were financed by the international community.Cattle losses in the north, which normally contains one half of the herd,reached 25-30 percent. In the south and the southwestern regions, thedrought affected mainly cotton production -- the main export after cattle --
whi4ch deciied to 27,000 tons (seed? nr 25 nprcent less than its peak level
of 1969/70; food supplies in these parts of the country remained satisfactory.
Rajnfalll i,n 1974 was -- rally adequate and fonde'rons renortedlv recovered
to normal levels.
5. Other notable sectoral developments are first, in Industry, the
development of three projects that will at full capacity andl u,ndpr reasonably
competitive conditions, fully meet domestic demand in their respective fields:edJi1b oil and s wit e reodein and e-naion of the GITTF mill in
Bobo-Dioulasso (CFAF 850 million), cotton textiles with the expansion of the
VOL TE AX I'L'L 'LL n Kouudougou CFr 1.5 bi lion), a n Ad sugar fo s ne w
a plantation and a refinery now under construction near Banfora (CFAF 6
bil.l-ion).
6. Tne recent years Lhave illustrated the difficulty Jftyn ton
novate in Education. Thus, between 1971 and 1973, the system of rural edu-
cation (Centres d'Enseigniemeuit Rural -- )j i.LLtrJodUUcd 196.8/69 has wit-
nessed a reduction in the number of both students (by 20 percent) and schools.
However, the Government is deter-ined to develop this system and has under-
taken corrective action to that effect, notably with support from an IDA
credit of $2.9 million approved irn June, 1973 . In public Health, a path-
breaking achievement was the start, in November 1974, of a vast operation to
eradicate riverblindness (onchocerciasis) from river basins in seven countries
of West Africa, among which Upper Volta is the most important in terms of area
and number of people concerned, as well as irn terms of potential econom--c
benefits. The first six years of the campaign will cost $54 million and are
being financed by seven countries and internat'onal Lorganizations under co-
ordination by the Bank.
Financial Developments
7. The country's financial position, both internal and external, has
remained prosperous by orthodox standards. indeed, it nas 'i,iprovedU over thle
past six years. This has resulted in a somewhat paradoxical situation (not
unlike that of neighboring Niger) where the country with the lowest per
capita income in the West African Monetary Union holds nearly 20 percent of
the Union's net foreign assets (June 1974), only second to that of the Ivory
Coast. At the end of 1974, external reserves were over $62 million represent-
ing 6 months of imports. Government net deposits with the banking system are
also quite large, representing over 17 percent of the Union's total.
8. Mainly as a result of rapid import growth, the trade deficit has
grown steadily since 1969; it was equivalent to 13 percent of GDP in 1972
and to 17 percent in 1973. The growth of reserves of about CFAF 12 billion
over the last seven years despite the "unfavorable" trade balance is chiefly
attributable to the increase in private transfers and public aid. The former
is principally composed of workers' remittances from the Ivory Coast (but data
do not permit yet to say how much of this is attributable to increased numbers
and how much to higher pay rates); the latter is essentially made up of grants
from EEC, France and other sources. Public capital, though still a much
smaller item, has increased also, notably as a result of IDA credits. Totalaid flows (not including exceptional food aid) are currently around CFAF 10-11billion per year ($40-50 million).
9. The situation of internal relative financial ease, in turn, is essen-tially the result of a policy of fiscal austerity pursued since the militarytake-over of 1966. The first aim of this policy was to redress a situationof continuous budget deficits and unpaid bills: this was achieved by 1969.Sinre then, imnrnved tax collection and strict exnenditure budgeting and con-trol have resulted in current surpluses of nearly CFAF 2.0 billion each yearsince 1969. Canital expenditures in the budget have steadily increased toreach an annual level roughly equivalent to the current surplus in the mostrecent years- Covernment cash balances in the form of denosits with thecentral bank exceeded CFAF 9.3 billion by the end of 1974, mainly as a resultof ovnurnll bdhiiaet- suirpuis- non budgetary rereints (espenriq l1v from the agri-cultural Price Stabilization Fund), and "equipment" budget grants from France(rf. nara= 64). Publir denos-its have thus heen a nower,rful compensatory factor
in attenuating the potentially inflationary effects of an almost three-foldinceasen 4in crae4t to-f the pr4ivate scator sitnco IQAR penrilallv in 1971 and
1974.
10. In February 1974, the prices of petroleum products nearly trebled,,* ja..an4.a-,l~,. , AhA4v d,, dr-,,1n.-4 ,- dc.14x-r,y nr.4n4 f- Ani TjnnnAr.,X7n1tfnat ex-refi,er ------ ir. A-,id,-.. an=_ blda -_ ivr pon-i Uppr VotaThough petroleum consumption is small, representing 6 percent of imports anda very few percent points of all inputs used in the economy, there is no othersource of modern energy now in use or readily available. The hydro-electricpoten 4.al is un.der sUAtuy especially ir. thle sout.hwest (G…oua - Batie regon)
There is little room, therefore, for reducing consumption in the near future..m.aports have been. growing by, pe -rcer - r a-nnum . 4,, int,1 ,,a since indpndnce
and were 80,000 tons in 1973.
11. Higher fuel prices combined with other rises, particularly in importpri4ces, have set- hAe econo,m,y on an infla t4 onannry path 4i sharp contrast withthe past, though on a scale that official statistics do not permit to measure.Price increases Aduritng the first 1-1lf of 1074 concerned notably railway rates
(17 percent), road transport (13 to 33 percent), gasoline (35 percent),local textile produc's (15 percent). A local wages wee raise A on
April i 1974 by 38 percent (for the minimum legal wages) and by 3 percent(for theM highestO1 levels.=/
II- Prospects and Strategies
r. £LaLlI.L UUL.UUookN
I Z. rroJections Uo *Llt ImaLI.I L 'n sca daInU Udadlance Ut o JdflpIULen coIIIpJUIneIILn
show that, under reasonable assumptions, there should be no financialbottleneck in the short ana medium-term. LTle "reasonable' and perhaps some-what optimistic assumptions are essentially: that no serious drought will
- iv -
recur during the present decade; that the economy will recover from the past
one, particularly cotton production (already significantly in 1974/75) and
livestock (with the herd being rebuilt over the next half dozen years); that
the current (Bank's) price forecasts for export products will hold approxi-
mately; and that the Government will follow a policy of expansion of current
development expenditures. If this is so, a moderate increase in the real
value of external aid (relative to the 1972 level), implying approximately
a doubling in nominal terms by 1980, or a total of about CFAF 120 billion
($475 million) over the 6 years 1975-80, should be adequate to meet the costs
of economic expansion at a rate consistent with the country's absorptive
capacity.
Current Development Planning
13. Experience with development planning, an exercise that has been per-
formed seriously since 1966, does show that development finance has not been
a serious constraint so far. Program execution has lagged behind financial
commitments, whether from abroad or local sources; rather, as previously
noted, the bottleneck has been the lack of operating funds. The three
plans, 1966-70 1971, and 1972-76, have been well conceived, well-oriented,
and fairly realistic policy documents. That even their moderately ambit-
ious objectives (real growth rates of GDP of 3.5 percent per annum for
1972-76) hnve not been fulfilled in the first two years, is partly attribut-
able to lags in project preparation, but also to adverse climatic conditions
and disruptions brought about by Dresent world economic conditions. The suc-
cess of the plan for the next two years is still more problematic.
Outline of a Strategy
14. The report argues in favor of adopting, as the appropriate time-
frame for a developm.ent strategy, a long-tprm nersnective (of 15-20 years)
within which five-year plans would be operational instruments. The reason
is that population issues are at the center of the long-run problem. Pro-
cesses related to population are slow and solutions commensurate with them
ta'ke many years to be implemented.
15 * The central theme is regional redistribution of the nopulation
away from the central-northern areas w;.ere 60 percent of total population
lives on one-third of the country's area. Densities there will soon be far
in excess of what the natural environment can sustain without further soil
deterioration and decreasing yields. Considerable financial and human
efforts applied to the development of the central region in the past have
failed to produce significant results. YHypothetical proJections suggest
thnat an outward migration of 20-25,000 people annually away from the Center
would be desirable.
16. There are favorable factors in support of a strategy of population
relocation. Overall population growth is 1.8--2 percent per annum, a
moderate rate by African standards. in the central region it is estimated
to be only 1.2 percent; emigration from this region has been going on for
a long time (its present rate is unknown, however); emigrants have consis-tently shown a high degree of dynamism and adaptability to new Jobs; andthere is good land available In the south, the southwest and the east (theperLphle ry"). Besides, emigration to tL hle coastaU L countries, mainly tIIe
Ivory Coast, will probably continue although neither this country's laborrequiLreiients, nor Lts Jutulre irmIi, ratio poUJClUci are kown et
1/e -vi-e bLit'gy, UL 'ouue, uues riUL involve compuisory populationmovements in any degree. It calls rather for a regional allocation ofresources in terms of types oi programs and projects aiong tne roliowinglines. First, the central plateau would be the privileged province of anexpanded, more flexible, Rural Development Fund; the RDF's objective wouldbe to provide, at all times, sufficient finance for small projects designedto improve both living and production conditions; wells, swamp irrigation,storage facilities 1/ etc. An essential condition for effectiveness here isstrengthening of the six ORDs concerned in terms of their capacity toidentify, prepare (with assistance from the center as needed), implement,and supervise these projects. 2/ The RDF would need to replenish its re-sources to $6-8 million aftet 1975.
18. Secondly, so-called rural integrated projects, of which theBougouriba Project is the main example, would be gradually developed tocover large sections of the southwestern and eastern regions. The ongoingWest Volta Cotton Project would be broadened into this type of operationafter 1975. By the late seventies, one million people in the southwest alonewould be involved in rural projects, with emphasis on both food crops andexport crops (cotton). The cost of this part of the program for the "periphery"over 10 years would be approximately $150 million (Qctober 1974 prices).
19. Thirdly, irrigation programs would begin to tap the country'spotential of some 140,000 hectares. In view of the high investment costsinvolved ($2-4,000/ha), the lack of irrigation tradition, the stilllimited capacity of government services in this area, and the availabilityof good resources for rainfed agriculture, the objective would not be todevelop the entire potential as rapidly as possible, but rather to designa minimum program to serve as a complementary source of assured food pro-duction (mainly rice). Sites for 4 or 5 projects of a few thousand hectareseach have been identified: thev could be implemented in the course of thenext decade. The experience to be gained in the coming years will be animportant element for the success of more ambitious programs to be launchedin the more distant future, as the comparative advantage of irrigated agri-culture becomes evident.
1/ In short, the type of projects being currently financed by the RDF orunder TDA's Drought Rplief Prorect.
2/ A recently enacted decree, very much in line with this recommendation,provides now the ORDs with a new internal organization which aims, atleast on paper, at strengthening their financial automony as well astheir authority in designing, implementing and supervising the projects(cf. para. 128).
- vi -
20. The fourth component of the strategy would be a program of popula-tion resettlement along the valleys of the Voltas, following the start ofthe onchocerciasis eradication campaign (see Para. 6). About 1.2 millionhectares will be freed from the disease, of which one-half could be re-settled without major difficulty at a rate of one farm familv for 14 hec-tares on average and a cost very roughly estimated at $80 million over20 years, not including specific productive projects whether in rainfedor irrigated agriculture. An essential condition of success is carefulplanning because of the complex hydrology of the basins and the socio-logical aspects of the resettlement. The Government has recently createda public corporation in charge of the valleys' development. 1/
21. Finally, the basic tationale of the proposed strategy specificallyapplies to livestock development: recognizing the limited carrying capacityof the Sahelian region (because of its meagre resources) and the Centralplateau (because also of population pressure), the objective would first beto limit the growth of the herd in those areas (possibly to its post-drought level) and to specialize them to a breeding function. Extensivestock-raising, with appropriate range management in the north, would then becomplemented by more intensive methods in the southwest. An example of suchmethods is offered by a project now under preparation by IDA. 2/ This proiectwould seek, in agreement with the local population, to allocate space in anarea of 200,000 hectares west of Bobo-Dioulasso, in a manner consistent withcrop development in zones adjacent to those where fattening of cattle wouldtake place. Fattening would be organized on the basis of voluntary "group"and "individual ranches". Complementary action would include strengtheningof the veterinary services, creation of livestock routes, and modernization ofBobo's slaughterhouse. The aim would be to increase local supplies of meatand. above all. the exDort of live animals to the Ivory Coast: exnort ofmeat on a large scale does not appear the best economic alternative at thisstage. This nro-iet would cost S12 million over 5 years and woul=d interestabout 20,000 farmers and pastoralists owning over 22,000 animals. Only ifthe natinnal livpetnrok ervirps reeeive monre adepnlutp Annrnn-intionn in the
current budget, could this type of operation be progressively extended tocover cignifirant seetionn of the cto-raisincg inilustry.
Non Agrlcultural Sectors
22. Th.e report reviews briefl, what appear to be the strategic issuesoutside agriculture. One is how to develop the education system in viewof its high cost (over 20 percent of gove-rment current expenditure) andrelative inefficiency. It argues that the first priority here should be toCorrect- ,treng
6LAc-e, TL t Wr ra Jl. 'eLO'}cat io'- sy It"" thiS CLaL.LC, *_L flt , n11
the first instance, full government support to the implementit5on of the TDAereAdit of $29 .i]1o -appovedA 4in june, 1973. Tn the field of social4 healthl
the campaign against riverblindness, representing an effort to be sustainedover thie next On years, clearly rank-s h-4Clg- amion g .overn,"enti prioritCes.
1/ Ir,iti aAA-----lly-# " -1 . Ades Vol1t-s", -b,cnt,tur.t1y "AitoriteI J tLL L a'L 'I - IA -- ~ I-A.L.
Pour l'Amenagement des Vallees des Voltas".
2/ This project was approved in May 1975.
- vii -
23. Transport and telecommunications have benefited from large invest-ments in the past and in both cases the main links, both internal and withneighboring countries, exist, or are being completed. In transport, priorityshould be given first to maintenance and feeder roads, and only secondly tonew trunk roads. The same considerations apply pari passu to telecommunications.
24. Industrial development is well underway and some lines of importsubstitution production based on local primary materials (oleaginous products,cotton, textile, sugar cane) will soon fully meet domestic demand. Importsubstitution based on imported.materials still offers scope for expansion.The government's incentive system is flexible and a new investment code iscurrently under study. However, more rigorous application of economic cri-teria and periodic review of projects that benefit from the "investment code"are necessarv, especiallv for firms in monopoly positions, a situation madefrequent by the limited domestic market.
25. The Tambao project has been under investigation for over 6 years.It would include a manganese mine and related transport facility (rail) withestimated investments of $20 and $60 million respectively. 1/ The outlookfor mananese nrfres annears better now than at anv time in the Dast. How-ever, the economic cost of transporting the ore by rail over 1,500 km wouldnrnbab1yl repnrpRnt between one-half and two-thirds of the f.o.b. price atAbidjan. It is therefore most important now to ascertain the position ofthe foreign nntential nrnmntern of the mine with respert to the commitmentsthey would be prepared to enter with the Government. These should be sucha_ to cover the full cost, of transport (includling of rourse. service of the
loans obtained for both the mine and the transport infrastructure) and ensureadequate not hbnefits tn the Voltaic economy The rail link bhtwepn Ouagadougouand Tambao (350 km) could be just;ified only on the basis of the sort of bulkcargo that the mine can offer and onlu marginwally as A general trannnnrtmeans to serve the Northern part of the country.
Overall Prospects
26. There are too many statistical gaps and uncertainties to makesystem.atic muanrtitative -roi-ftinnoa meaningoful epxrcisep at thiq stage=A minimum set of figures, up to 1980, is presented in the report for thebalance of payments (see para 12). Th.e missIon's best guesQtimates forother macroeconomic aggregates (not detailed in the report) are that (i)real GDP growth may be 2.5 percent per annum for 1972-76 vs. 3.9 in the Plan,rising to (ii) 4.2 percent per annum for 1976-80. Of more significance, andcertainly worth a ge -1 deal more Inve4stIgI on, are the qnuatl t 7atIvl
objectives that form the ultimate justification of the strategy suggested inI,h. ereporlt: aljlevinti4 po-
4pao press-
4ure 4.i-he Centrai plaeau;, 4,, that
way and with specific projects, increasing agricultural productivity in boththe~~~- "ceter _and_ -h4feiley' roii. ilaeswth, literally speak-
primarily cotton and livestock; giving the population a type of education
1/ At 1975 (cf. para. 172)
- viii -
adanted to their needs as rural peoDle: ridding the country from. at least.some of the most widespread, damaging diseases, primarily onchocerciasis;in short, estnhlishing a m-ore livable relationshin between the nonulation
and a naturally hostile environment.
PART OFNE RF-CENT En0NOMITC DEVELOPMENTS
I OVEP.ALL VTPIt
1. The basic economic report of the Bank 1/ identified a number ofconstraints: generally poor and hallo sie pt in the sth and south-
west, coupled with unfavorable climatic conditions, remoteness from overseasmarkets and suppliers, limIted domestic markets and marketing facilities,lack of water and, so far, of exploitable mineral resources, unbalancedpop-ulation dU istri bution a u e,igration of t.e youner people to neighboring
countries, prevalence of endemic diseases, and low level of education andteclhlniLcal kInow-tiow. uypper .V oL tLa hLVas bu.een cl.assif4 eA .by the Unit.ed Nations
as one of the 25 "least developed countries".
2. The economy is overwrhelmingly agriculture-oriented and higlhlyvuiLneral)e to weathner conrditiLons. s - seriLes of drought in recent years,
though less severe than in oU:.er Sahelian countries, called for an interna-
tionally organized supply of emergency food, caused a severe setback inagricultural productions, and contributed largely to the stagnation of the
economy. Tnere was apparently very littLe real economic growth over thepast six years -- perhaps 1 to 1/2 percent per annum, per head. GNP percapita was estimated in 1972 at about CFAF 18,00uu (7I), one of1 the IUWetLin the world (see Table 1). There are no national accounts for the morerecent years, but all indications point to stagnation or even recession ofthe economy whose basic characteristics have remained virtually unchanged.
3. In the rural sector, average product per capita is only abouthalf the national average and about 40 percent of this is "cash' income.Average urban income is estimated to be nominally about six times higherthan rural income 2/. TFhe rainfall deficit of the last 5-6 Years has re-sulted in further increasing regional income disparities within the -ruralsector. In the poorer and more densely populated nort.ern and central areas,agricultural output and income declined sharply and the losses of cattlethrough starvation and premature slaughter have been about 30 percent of the"Sahelian" herd which normally represents about one-fourth of the nationalherd. By contrast, farmers in the western and southwestern regions weremuch less severely affected and higher prices for both export crops (cot-ton) and food crops allowed them to maintain or increase their alreadymuch higher level of output and income. As a consequence, internal emigra-tion from the former to the latter regions, a clearly perceptible phenomenoneven before the drought, has been further stimulated.
1/ "The Economic Development of Upper Volta"; Report AW-19a, November 17,1970, in four volumes.
2/ Average annual income of urban wage earners was approximately $1,000 in1972. However, urban wage earners no-ma' I maintain. a Iarger number ofdependents including distant relatives unable to find jobs.
-2-
Table 1: EstLinated &DP, GNP, and GNP per capita in 19 &8 and 1970-72(current prices in billion of CFAF)
4 PIB = Production Interieure Brut without Government "production."/ CTrwlu tT4 "L..v.g-Ment 11 +>.er pri.ate ser.vices" and "Private
transfers."/3 Con,ser price index of ur-m,arried worker in Ouagadougou-
So-ur-ce: Cop.tes conro,iques de la Haute1Vola - 1968j rLight NationalAccounts" provided by "Direction du Plann,and mission estimates.
- 3 -
4. Both the productive structure of the economy and its use of re-sources exhibit typical features of extreme underdevelopment. The primarysector, despite a sharp decline in volume following the droughts, is stillpredominant and characterized by a very low level of productivity; with over90 percent of the population it accounts directly for only a little over45 percent of GDP in 1968 and 41 percent in 1972. Agricultural productionin 1967 constant prices dropped by almost 20 percent, from CFAF 16.2 billionin 1969 to CFAF 13.1 billion in 1973. Manufacturing and constructionslightly increased their share from 15 percent in 1968 to 18 percent in 1972.Their annual growth rate averaged 9 percent during 1968-72. Manufacturing.of which two-thirds consist yet of traditional activities, is closelyrelated to agriculture. The share of services rose slightly from 38 to 40percent during 1968-72, with government accounting for about 11 percent in1972.
S. The use of resources is characterized by an unusuallv high share ofconsumption in GDP: 98 percent in 1968 and 96 percent in 1972. Public con-sumotion alone ranged from 14 nercent of GDP In 1968 to 16 nercent in 1972but is still in line with that of other developing countries of similar econo-mir levPel fnnseniaentlv extremelv low lpvpl.q of dnmpstic savings nrevai1:1.8 percent in 1968 and 3.8 percent in 1972. Consumption and investment com-bined normally exreed GMD by a wide mnrgin. With a notbhle increase in theshare of investment in GDP from 10 percent in 1968 to 16 percent in 1972, theresQntrP gap ailmnot deuiblehd from rFAF A.1 billion in 19A to fGFAF 12.8 billionin 1972 or 13 percent of GDP; it is estimated to have reached an all timehigh of 20 percent of TP in 1973. On the other hand, a npeilinr feature ofthe Voltaic economy is the very large inflow of remittances by Voltaic migrants(especially in the Ivory Coast) anrd veteran.s' pension paid by France. Thesetwo sources combined doubled during the period 1968-72 and covered almostt-o-thirds of the resource gap. The remaining third was financed by foreignaid which increased slightly from 4 percent of GDP in 1968 to 5 percent in1972. Mainly as a result of import growth, the trade deficit increased by160 percent from CFAF 5 billion in 1968 to 13 billion in 1972 and 18 billionin 19072 Ena- ,-nAdr ^-nol" climaA4t c tios merchandise exportc
trary to most other countries in the region, are structurally very low andcnstitute~ n.- only a k factor of grot-h. It wouldseemA tha- since 1972 in-vestment has become a relatively more potent dynamic element (see Table 2);the growth in the rate of capital formation would seem to result from a few,large industrial projects whose implementation has continued in 1973 and 1974,arA 4i -1.1.al a short i 4-va phenomenoh.
- 4 -
Table 2: National Accounts: 1968 and 1972usesof Guross Domestic Product
1968 1972 /1
1. Gross Domestic Product 100.0 100.0
2. Consumption 98.2 96.2
2.1 Private (84.6) (79.3)
2.2 Public (13.6) (16.9)
3. Gross DomesticSavings (1 - 2) 1.8 3.8
4. Gross DomesticInvestment 9.5 16.6
4.1 Fixed CapitalFormation (8.5) (15.4)
4.2 Stock (1.0) ( 1.2)
5. Resource Gap(4 - 3) - (7 - 6) -7.7 -12.8
6. Exports & NFS /2 8.8 6.8
7. Imports & NFS /2 -16.5 -19.6
8. Net Factor Services /3 4.1 7.8
9. Net FinancingRequirements (5 + 8) 3.6 5.0
10. Gross NationalProduct (1 + 8) 104.1 107.8
/1 United Nations Economic Commission for Africa.
2 Exports adjusted + NFS (Services less investment income and otherprivate)-
Based on balance of payments statiAsties and are onlv an approximation:
they include "investment income", "other private services" and
"piae transfers".
orce: 1968; Comptes Economiquies de la Hate-Volta, 1968 and 1972; TJNECA
GDP estimates, 197h.
-5-
II MAIN SCTORPAL DEVTLOPM1TTTS
A. Agriculture
Recent Growth
6. Agriculture proper provides a living for nearly 90 percent of theIp---pulation e-nd accounts for about. 30 percent, of GIDIP andU 45 percent ofL totaLLexport earnings. About 2.2 million hectares or 8 percent of the total area,is at any given -tIme Cdevoted to crop cultivation and 80Ul percent of' agricul-tural output consists of grains. The most striking feature of agriculturalproduCtIron is the sharp regional cor,trast: in the center-r,orte regionagricultural production, consisting mainly of food crops such as sorghum,millet -an grunnus is boundAto subsistence 'e-ve' because of naoal"'.ut ~~La J L L.'II L UL L~. IL~ LCC U L UC 11uirVOraD.Le
natural factors (poor spil, irregular rainfall etc.), further aggravated by.. n 5^s jVU LJosJ&& Uss1W.L,L W.LLLLL LOU4.LL XLL UVK-LCAP.LVLdULUIn ana erosion ofsoil; by contrast, agricultu-al production is more diversified and orientedmostly to th,e mUarket in the western- and southwestern regions where popuiationdensity is much lower despite more favorable natural conditions (soil andrainfall), prtLLy Uecause of prevailing endemic diseases sucn as riverblindness.
7. The recent droughts have resulted in a severe setback in agricui-tural production: compared to 1969/70, agricultural production in constantprices oF 1967 has dropped by 1a percent in 1970/71 and 17 percent in 1972/73.The first consequence was an increased grain deficit of which, even undernormal climatic conditions, Upper Voita needs to import about 30,000 tonsannually. In order to alleviate the effects of the food shortage, the inter-national community shipped about 34,000 tons in 1971, about 40,000 tons in1972, and 60,000 tons in 1973. Requirements in 1974 are variedly estimatedat between 60,000 and 120,000 tons. Though inadequate to cover all needs,these donations have at least prevented famine.
8. The drought has also accentuated existing production and incomedisparities between regions as is apparent in a comparison of grain output ina "normal" (1970) and a "bad" (1971) year between the center-northern regions(average annual rainfall: 600-800 mm) and the western and southwestern regions(900-1050 mm). In addition, whereas average income per family in the west inthe period 1966-70 was about 2.5 times higher than in the Mossi plateau, it isestimated to have become 4 times higher in 1971-72. As a consequence, emigra-tion from the Mossi plateau both to the coastal countries (mainly the IvoryCoast) and to the western regions has increased. Although reliable statisticsdo not exist, 1/ numerous indications confirm this migratory trend.
1/ A survey on emigration was conducted by ORSTOM in 1973/74; a report tothe Government was expected in Spring 1975. No conclusions were avail-able at the time of the mission.
7-
Table 4: Regional Comparison of Grain Output,1970 and 1971
Total grain Total Decline kg of grains
output population in output available(000 tons) (000 inhab.) per capita
/a nRDs of O-uagadougou, Yatenga, Yya and ------ ougo
I ~ LORDs of Bobo, Blaack Volta, Bougourl.ba and Banfora
9. The basic food crops are millet, sorghum, and maize, of which only
a very small amount -- perhaps 15 percent is marketed. Millet and sorghum are
mostly grown in the northern, central, and eastern regions, while maize which
requires better agronomic conditions is important inr the west. Following a
peak of 750,000 tons in 1969, millet and sorghum production dropped continuous-
ly to reach only 522,000 tons in 1973, a decline of 20 percent. Maize produc-
tion declined by 16 percent, from 69,000 tons in 1969 to 58,000 tons in 1973.
Rice, sweet potatoes, groundnuts, sesame, and sheanuts proviLde supplementary
foodstuff in certain regions. However, some groundnuts, sesame, and sheanuts
are exported or sold to the local oil mill. In 1972, the share of these pro-
ducts in total exports was about 15 percent. Groundnut production decreased
from 78,000 tons in 1969 to 63,000 tons in 1973, while sesame production de-
clined by 60 percent, from 8,000 tons in 1969 to 5,000 tons in 1973. Rice
has become a basic foodstuff in some regions and for middle and higher 'Lncome
groups. Paddy is grown in small basins and bottomlands ("bas-fonds") generally
flooded during the season of irrigated iands. After a rapid development in
the early 60s, production of paddy stagnated at around 37-39,000 tons in
1968-70 and dropped to 31,000 tons in 1973. Tne irrigation project at K'ou,
- 8 -
near Bobo-Dioulasso, developed until recently with technical assistance fromthe Republic of China, 1/ produced about one-fourth of total paddy production
and its output was sold mainly to the rice mill SISAMiA, a semi-public enter-prise.
10. Cotton is the most important cash crop and by far the major agri-cultural export crop, accounting for about one-fifth of total exports inthe past three years. It is cultivated by a limited number of farmers,especially in the western and southwestern regions. Cotton production wasseverely affected by the droughts; it declined by 25 percent from 36,000tons (seed) in 1969/70 to 27,000 tons in 1973/74. The situation is, however,very different between project areas and other regions. The most importantproject areas are in the two ORDs of Bobo-Dioulasso and Dedougou, under theFAC-IDA West Black Volta Cotton Project. The project started in the cropyear 1969/70 on about 46,000 hectares or 40 percent of total cultivated area.In 1970/71, cotton production in this project area decreased by only 12 per-cent. In 1972/73, it increased despite the drought by 52 percent, while inother regions it remained at the low level of 1970/71. The better perform-ance under the FAC-IDA project is due to improvement in yields rather thanto increase in cultivated area; in 1972/73, yields per hectare, for example,were 670 kg in the project area against only 232 kg in other regions. In1974, the better climatic conditions resulted in a cotton production of about30,000 tons, despite a reduction in area cultivated (cf. para. 11).
Prices and Marketing
11. Producer prices remained almost unchanged between 1965/66 and1970/71 and increased considerably over the last three years as a result ofboth world market trends and local shortages due to the droughts: prices ofsorghum and maize increased by about 65 percent, those of groundnuts by 22percent, and cotton by 16 percent. In fact, as shown by these figures, thelocal shortages have been the more powerful influence and they have resultedin a relative shift of production factors away from cotton and into food crops.The Government therefore decided on 10 percent and 16 percent increases incotton producer price respectively for 1973/74 and for 1974/75. These in-creases, however, were not high enough to restore former cultivated surfaces,which have decreased continuously from 84,000 hectares in 1969/70 to only
61-800 hectares in 1974/75 - mainly as . result of persistent unfavorable
relative prices grain/cotton and higher costs of inputs - fertilizer andinsecticides - used in cotton production.
12. While marketing of agricultural products is largely left to thehiands of private merchiants, the Government intervenes in the price mechanismthrough the Price Stabilization Fund (Caisse de Stabilisation des Prix desProduits Agricoles) which fixes every year minimum producer prices and anunnpr and a lower limit of export prices paid to exporting firms. There are
no guaranteed farmgate prices, but free competition between merchants is
1/ Replaced in March 1974 by a mission from the People's Republic of China.
- 9 -
believed to allow these to settle not far from the minimum wholesale prices,once collection costs, transport costs and a reasonable profit margin havebeen taken into account. in the case of cotton, however, the CompagnieFrancaise pour le Developpement des Fibres Textiles (CFDT) has a countrywidemonopoly for assistance to farmers, collection, processing, and marketingunder an association agreement with the Government ('"Convention d'Associationet de Participation"" of 1970), while the internal price structure (bareme)(from farmgate to ex-factors) is fixed each year by the Government and effec-tively applied.
13. In the case of export crops (groundnuts, sesame, sheanuts, andcotton) the Price Stabilization Fund fixes a reference export price and pri-vate exporters have to repay to the Fund the difference between the effectiveand reference export prices if the former is higher than the latter and theyreceive a subsidy in the opposite case. Since 1968/69, the Fund has madefairly high profits as a result of increased export prices on world markets.Even in the drought years 1970 and 1972, all export crops yielded a surplusto the Fund: the net profit of the Fund in 1972 is estimated at CFAF 516million or twice as much as that of 1971. It is also expected that duringthe crop year 1973/74, net profits will be probably in excess of CFAF 1.5billion, mainly from cotton, and to a lesser extent from groundnuts.
14. An Office National des Cereales (OFNACER) was created in 1971.The Office is designed to prevent "excessive" fluctuations in the prices ofcereals on the domestic market through purchase, storage, and resale of grainsthroughout the year. It has benefited from USAID financing for storage faci-lities which now represent a capacity of about 16,000 tons and also for theimport of cereals of up to 30-40,000 tons a year. In 1973 and 1974, OFNACERoperated as a central agency for the distribution of relief food in the drought-stricken areas. So far, OFNACER's operations as a price stabilization agencyhave had little impact because of competition from private merchants, lack ofstaff and equipment, and the conditions of acute grain shortage created by thedrought.
The Problem of Population Pressure and Land
15. The drought has brought out more clearly than ever the basic pro-blem facing Upper Volta's rural sector: excessive population pressure inthe center, resulting from the uneven population distribution with respectto land resources. About 61 percent of the population, or 3.5 millionpeople, live on the Mossi plateau which has only 32 percent of the totalarea. Although the average population density on the plateau is 36 persquare km -- a high level by African standards--, many of the constituting13 districts ("cercles") with a population of 1.6 million have a densityof 40 or more. This is generally considered by agronomists to be the maxi-mum that the land on the plateau can support at subsistence food levels,with existing cultivation techniques, without over-exploitation of soilsand decreasing yields.
16. In addition, the Mossi plateau offers very mediocre natural condi-tions. First, average rainfall of 600-800 mm concentrates over a short
- 10 -
period -- three months from May to August -- which limits the choice of cropsin fast growing and drought resistant ones. Second, rainfall is more irre-gular than in areas where the average is higher; for example, whereas,normally, population living in the area of 600 mm rainfall or less is about270,000, in the recent drought years the number increased to 1.5 million,because the 600 mm isoyet moved southward. Third, with already cultivatedland covering about 1.3 million hectares or 61 percent of the country's cul-tivated area and 15 percent of the plateau's total area, finding additionalland of suitable quality appears extremely ditficult under the traditionalsystem of extensive cultivation. As a result of these factors, average pro-ductivity of land on the Mossi plateau is orly about one-fourth that of thewestern and southwestern regions. These conditions explain the mediocreresults of massive efforts, technical and financial, devoted to the agricul-tural development of the Mossi plateau in the past. It also explains thatthe bulk of the migrants, now probably exceeding half a million people per-manently abroad, comes from this region. Since those who leave are the youngerelements of the population, emigration, while alleviating population pressure,also results in a loss of productivity and dynamism among those left.
B. Livestock
17. Livestock is one of the country's natural assets and principalsource of exports. Its relative productivity is shown by the fact that about6 percent only of the labor force is engaged in this sector whereas it con-tributes 10-12 percent of GDP and between one-third and one-half of exportearnings. The drought has caused severe losses in the Sahelian region (Djiboand Dori) which normally contains about 600,000 heads of cattle. Losses-- deaths, premature slaughtering, forced sales -- in this region are estimatedat 25-30 percent for cattle and 20-25 percent for sheep and goats, represent-ing a capital value of about CFAF 2 billion. Losses outside the Sahelian zoneseem to have been much smaller.
18. Livestock's share in GDP has slightly decreased over the past fiveyears and export earnings from the livestock sector have also decreased con-siderably since 1968 except for a sudden and most probably, temporary upsurge-- in 1972. The sudden "boom" of 1972 seems to be attributable to the moreimportant transit of cattle from Mali (which has been more affected by thedrought) and to an attempt by herders to sell off their animals before theystarve.
Tabie 5- tivestock - itoduction and Export8, 1969-72(in CFAF billion)
1969 1970 1971 1972
1. Livestock share in GDP (x) ii.0 10.4 10.5 10.1
2. Livestock Exports 2.34 1.88 i.95 2.40
2.1 Live animals 2.00 1.60 1.60 2.10
2.2 Livest6ok pioducts 0.34 0.28 0.35 0.O6
of which: meat (0.22) (0.20) (0.26) (0.19)
3. Livestock share ifi exports (%) 44 37 42 48
Sources: "Situatioh Economiquie de l'Eievage en 1972"1, "Balance du commerce
exterieur"i and "Bulietin Mensuei d'Information Statistique et
Economique."
19. In the recent past, the development of live animal exports has
been hampered not only by supply shortages caused by the.droughts and by an
increasing domestic consumption, but also by marketing difficulties: the
sharp drop-in cattle exports to Ghana before 1972 seems to be attributable
to difficulties encountered in payment arrangement. Price controls imposed
by the Ivory Coast on impborts of meat from Upper Voita are also one of the
seisitive issues between the two Govetnmehts. The economic Community forLivestock a'nd Meat of the Entente countries 1/ was established in 1970 to
improve the marketing of livestock and meat among member countries, but up
to now it has Produced littie practical results.
20. the deveiopment of the livestock sector is hampered by a number of
obstacies: overstocking and consequently overgrazing in the Saheiian zone,
insufficieht watering capacity, iniadequate organization and management,
disease and unsatisfactbry veterinary control, and growing competition with
cron iand. This latter problem has become more acute and more apparent as
a result of the drought which has developed in some western regions where herds-
men from the north and their cattie have moved in search of food and water.
2i. Sb far, government's efforts in favor of the livestock sector have
been modest. Thus, the budget allocated to livestock services has remained
more or less at the same level in absolute terms since 1966, causing a steady
decrease in its already small share and, worse, a decrease even in its real
value. Also, investment in this sector has lagged considerably behind the
modest objectives of the Development Plans; the implementation ratio of
2. Ratio of LivestockBudget to TalBudet (%) 1.49 1.48 1.25 1.29 1.16 1.12 1.05
Source: "Situation Economique de l'Elevage en 1972." Direction du Plan.
C. Industry
22. Restricted domestic market, lack of domestic raw materials, insuffi-
cient cheap energy sources, high costs of transport due to landlocked position,
lack of technical know-how, limited management capacities, and scarcity of
domestic capital are some of the main obstacles to industrialization that Upper
Volta shares with other countries in the region. The Government promulgated
in 1970 an "investment code" which provides a graduated range of facilities
and tax benefits to foreign investors. A "new" investment code now under
study is designed to stimulate establishment and/or extension of small and
medium enterDrise run by nationals. Industrialization still remains based on
agricultural products and is oriented toward import substitution.
23. Industrial production has considerably increased in recent years.
Its annual growth is estimated at about 12 percent during the 1968-72 period,
while its share in GDP has grown from 15 percent in 1968 to 17 percent in
1972, with 12 percent for manufacturing 1/ and 5 percent for construction.
Indications are that the pace has been maintained in 1973 and in 1974 (cf.
Appendix Table 8.1)2
1/ Ir...udes handicraft nctivities which represent a little less than two-
thirds of total value in manufacturing sector (cf. Appendix Table 2.2).
- 13 -
24. The recent expansion of manufacturing output has come mainly from
new enterprises created since 1969. The most important ones are a cotton
textile plant at Koudougou (VOLTEX), a sugar plant at Banfora (SOSUHV) that
converts 4in^.rJed suganr intn riuhp Rtgar; a shoe factory (BATA), a small flour
mill (Grand Moulin Voltaique, GMV), a vegetable oil and soap factory (CITEC)== one of the oldest plants i n the countnry that has been considerably expanded
and fully modernized in 1973/74 at a cost of CFAF 850 million -- , a rice mill(STCAT TA nd -eA (BRPAUnT.TA) The drought- has raused some shortages
of primary materials, including water, of course, and erosion of purchasingpowe, of the rural population, nAd ansrnaequnient Qlnwdowrn in rertain industrial
activities, notably in the textile industry, but its impact has on the wholebeen relatively samall.
2,. Adit,LonaL plants act
future. They are an extension of the cotton textile plant VOLTEX I at
Koudougou, a second LrLc LIlJl at IWU, and a - --- The
second VOLTEX mill which is t- increase by 1979 production capacity to morethan 6.7 millitotn txtile per year, s d ned4 t-oA rela
impotts of certain cotton fabrics and to increase local value added in domestic
cotton products. Total inve-stments are estimateA at CF^A 1.5 billion, fi-
nanced by an increase in equity capital (CFAF 500 million), long-term borrow-
ing from KFW and CCCE (CFAF 700 million), and med um=term bank credits (CFAF
300 million). A second rice mill, built at Kou in 1973, started operationsin late 1974 with a capacity of some 12,000 tons (paddy) per year. This plantwas made necessary because of the increasing production of rice from theChinese-assisted project of the Kou (see para. 9)). The agro-industrial complexproject at Banfora contains three components: irrigated plantation of sugarcane, construction of a sugat refinery, anu enlargement of the existing sugarcube plant (SOSUHV). Total investment in the project is estimated at CFAF6 billion, financed by FED, FAC and CCCE. It is planned that full-scale pro=duction will begin in 1975/76 and will fully meet domestic demand (estimatedat 20,000 tons for 1975I76) and leave anotLer 5-6,000 tons for eAp TnL.
1974/75, 63,000 tons of sugar cane produced locally were transformed into
4,700 tons of refined sugar, and in 1975/76, 18,500 torts o refined sugar
are expected to be produced. Local sugar should be competitive with imported
sugar, but the government-controlled retail price is currently (February 1975)40 percent lower than the c.i.f. price in Abidjan (CFAF 250 per kilo inOuagadougou against CfrAF 350 in Abidjan). Maintaining this policy Lor thefuture could therefore imply subsidization on a scale (probably over CFAF1 billion) unacceptable for the budget. Some other industrial activities are
to begin operations in 1975 and 1976. They are: a brewery at Ouagadougouthat requires an investment ot CFAF 900 miiion (SOBOVRA); a grain miLl atBobo-Dioulasso (VOLTAICA); a tomato cannery that calls for investment ofCFAF 2 billion.
26. So far, industrialization appears to have proceeded without exces-
sive assistance from the Government, which is not to say that it has been awholly self-supporting process. Tax holidays under the investment code are
generous and financing conditions have been fairly soft, at least for major
projects such as the sugar mill and the textile mill. So far, however, the
Government has avoided direct subsidization of new firms and extreme protec-tiu1 mpi.Cirpq- Sp11;in nrices of local raw materials to industry do not
- 14 -
appear to be unduly low, relative to export prices, as is too often the case;
the textile mill, in particular, purchases local cotton at the world market
price less transport costs. Another encouraging factor is the presence of a
saall class of local entrepreneurs. Several of the recently establishedsmall and medium-size firms are witness to the dynamism of this group ofVoltaics.
27. Electric power in Upper Volta is produced and distributed through-
out the country by the "Societe Voltaique dfElectricite;; (VOLTELEC), whichhas the only thermal station in the country (apart from individually-owneddiesel generators). 1/ At the end of 1973, it had plants in Ouagadougou (in-stalled capacity 8,500 kw), Bobo-Dioulasso (4,040 kw), Ouahigouya (493 kw),
and Koudougou (2,800 kw). Total sales in 1972 amounted to about CFAF 865million or 7 percent of the value of total manufacturing output.
28. The impact of the new petroleum prices in Upper Volta is determinedby the following three factors:
i) petroleum imports are small but their price elasticity ofdemand seems very low;
ii) they are the only source of modern energy;
iii) the possibilities for alternative sources of energy appearvery limited in the near future, but surveys are under waythroughout the country, especially in the Black Voltavalley.
Upper Volta imports refined petroleum products only, which come practicallyall from the Abidjan refinery some thousand kilometers south of Voltaicconsuming centers. While the price of refined products increased 2.9 timesin Abidian, the price increased by a factor of 2 delivered at Ouagadougou,and by only 1.4 times at user's level. 2/ In addition, Upper Volta's petro-leum imDorts are small, representing about 6 percent of total imports before
the crisis and still represent only less than 3 percent of all inputs usedby the productive sectors and the Government. However, about 80 percent oftotal petroleum imports are used as intermediate goods and final consumptionby households accounts for only 20 percent; "leisure" or "tourism" probablyfor under 5 percent. Consequently, there seems to be very small room foreventual volume restrictions in the future and the presumption is that priceelasticity of demand will be low. So far there are no known prospects inUpner Volta for hvdro-electricity or for any other source of energy, includ-ing petroleum itself: however, reconnaissance of possible hydro-power sites
in the Volta valleys as part of their development following riverblindnesseradication is now planned by the Covernment.
1/ The CITEX generates its own electricity by combusting groundnut shells.
2/ Prices in February 1974, relative to average for period from mid-1972to Sepntmhpr 1973. They remain virtually unchanged as of April, 1975.
- 15 -
D. Transportation
29. Upper Volta suffers from high transportation costs because of long
dista-nes to the urban centers of the coast which constitute both its main
export markets and the necessaiy transit points for most of Its imports:
Ahidjan 4s at 1,150 km from buagadougou, Lome at 1.000 km. and Tema at
1,030 km. There are no navigable rivers. The bulk of international traffic
is carried by railroad v_a Abidian through the Regie Abidlan-Niger (RAN), a
company jointly owned by the Gbvernments of Ivory Coast and Upper Volta.Road transport viai Loe eivnon'V-)nd ThmaiAccra (Ghana) has remained secondary,
so far, bciause of high'i costs. However, the recent completion of the all-
pavied rA ,Yd f'rom O'agadougou to Tmo the npaving of the Lome route now under-
way, and increasing delays experienced by traffic on the rail line will noAoubt induc4 thr g,owath of -naalle road transnortation to and from the
coast. Road haulage has been extensively used to carrv exceptional food
imports in co-nnetion with the drought. Domest4. traffic is mostly by road
but despite the relativeiy good road network 1/; there are yet many areas
poorly conniected nd entirelycut off diuin the raniv season.
30. T.ansport accounts for only about 5 nercent of lT)P and no real
increase has bccuired iii recent years. 2/ The implemenitation ratio of invest-ri'Leos ir tLhse oedt6o w-.b-ity 43 r nof- pro-4cted targets d,,rinV' the FirstDev'elop'ment Plan (1967-70) whers, in the more recent years, indications
a*e tl g id t p -uJ Cs in_de. t1L Second .f1972-7f.) are being carried out at
a faster rate. A problein of increasing concern is the growing inefficiencyOk i
Telay- run.-.in, 4-,-6 weeks and months for delivery
01Llle Ld±± b.L 5tL:rIN1' * - ~ ~ . **..
of exported anid imported goods seem to have become the rule. For example,exporLs o' caLtLI by A-i'to A l-iuJan lhave ecreaseA substantially in recent
years as Voltaic exporters complain not only of frequent accidents and delays
bUt also of the pitlful conditions of animals on arrival et Abidjan.
31.* nigher petroleum. prices sInce February 1974 have brought aboutimportant ihncreases in transport costs; railroad rates were raised by anaverage oL i perceun i. LLa i'. c T of hiher rail rates is
of course, very different according to the relative importance of transport
costs in proUuct VdXUC. i; iLs hL161O StUI ghes .-where the cost of rail transport represents m6ie than 40 percent of the
c.i.f. price, anu at LLIe UL.IhL e,ALLCLIme i.. .L iery for li-vesto-ck,f
exampie, where it is only about 6 percent of the f.o.b. price. RAN tariffs
range between 6. Lo 14 PC L;toLIL. Lte eUI prices of most goods, with
an average of around 10 percent. Thus, the final cost increase in exported/
imported products is to be less than 2 percent as a resu:it of the 17 percent
1/ There is 1 km of road for 651 persons and for 30 km-: these are amongthe highest ratios in West Africa.
2/ This rather low ratio can be interpreted as an indication of the low
volume or exchange between ULierent parts of thLe country.
3/ Further increase of 7% between the end of 1974 and the beginning of 1975.
- 16 -
average increase; however, further tariff increases in the near future may
become necessary. In road transport, rates increased in February 1974,between 13 and 33 perrenti or between CFAF 17 or 20 per ton/km according tothe type of freight and road used. They are mainly due to gasoline priceincreases (+ 35 nprcent? and gas-oil increases (+ 46 percent) as well as
other items such as wages, because (official) rates had not changed since199r. Althoui-igh At sp".n likely that harsh comnetition on the main routes
will, as in the past, keep rates below the official levels, it can be feared
that isolated rural coim.m,unities will he the most affected by recent rate
increases.
E. Education
32. The general level of educati.on and training among the populationis vevy low and adult literay rat-iro iz etiTaqted hpb-etwPn 5 and l npercent.
According to the 1972-73 school statistical yearbook, total enrollment in
the country was, as of January 1, 1973, 131,068 students, excrliding therural education system: 117,561 in primary school, 10,468 and 1,626 insecondary and technical schools, repnectiuplv- and 1-394 in hiTher education
(1,145 abroad). Thus, the school enrollment ratio would be 8 and 2 percent
respectively for primary and secondary schooling. 1/ The arnoith rnte of thenumber of children attending primary school has decreased from 11 percentin 1963-64 to 2.5 percent in 1967-68 to increase aiaIn to 4 nprrent in
1972-73. However, these rates are higher than projected in the Development
Plans, wil-lereas, contrary to the governm_._fS,,,n&tr s rl_r-_ tif _ is__
losing its importance even in absolute terms: the num.ber of children inthis-t s--, AdecreaseA 'from n 3.nL in 1971 to only 24,.0. in 1973 and the
number of rural education centers also dropped from-789 in 1971 to 737 inIn\ ) ._7 0.. A urA' euAt-o --- c s :A1arA teA e4 A- wAs cniere th1fie mosA,t a-ro1 7 /i J . JUL-dl CUULdL±UII WLLI . Lt i L'. IL J.n 196 f,
priate and promising line in the Voltaic education system in view of thepredomI1 l.nan,e UL d of rural p iLal andd tIe -inade uac and lo f i
the "classical" system. It was designed to provide rural youth (13-15 agegroup) not onl'y tLlIe general educatlon but als^ practical tralnii. at the
least possible cost. After three years of schooling, graduates were expect-
et'U LU Ue Intega teUd inIo U £ ULdL l * a IUoC vLe Lver, Ltes tI 11-as encounter eC
multiple difficulties, of which the most serious are: (i) lack of operating
fi[iund; iiLL) lacjk UL IofL understandlin.¶ by LarCents oU ruraL educa LiOID UJe CLti vCS
(iii) impossibility for the young graduates to obtain land of their own andthus pu t th e r 1K. ed. 0l.WIA nto practice: and (iv) poor -ult of- I tlie instruc-
LF1U~~~~~i ISLIL L[leL[ !XILUWJ , dllU ~~~~~~~~~~~~~~~~~~~~~~iV) jJUUI L4tJl(.dlLLy UL Lile Jiifz: ~all k V) JUJl ALL ULL U
tion and curriculum. Thus, to prevent that rural education transform it-self into some parallel primary education, both t1le VolLaic JovernLitent andIDA agreed that the ori-inally sound concept of education for rural youthbe improved0 and reinf-orced and that corrective rleauures be tak'en. TIn supportof this actien, an IDA Credit ($2.95 Tnillion) was approved in 1073, inter-al.ia, to: (a) reconstruct and/or e(quip 12, Rural Lducation Aenters i(rece-.1 iy
changed into Young Farmers Training Centers); (b) to organize, equip and
1/ The "aditjsted rate of school attendance", however, is higher -See Social Indicators table.
- 17 -
staff 150 Youth Cooperative Grouns, as the pilot phase of a scheme to create
some 500 such groups; and (c) to provide related technical assistance for
proJlec implementation and evaluation,
33. Discouraged by difficulties in gettinq iobs and by the lower wage
rates prevailing in Upper Volta, compared to neighboring countries, a large
rLuLer of schLooL leavers, especially those from the rural education system,
tend to seek employment abroad, mainly in the Ivory Coast. It seems also
now that a large part of secondary school leavers fail to find remunerative
jobs in the cities. Thus, job offers registered in the Directorate of
Manpower in 1972 were only 1,410, while 40b demands were 7;255 or 5 times
more. To better adapt the supply of graduates from secondary schools to
the labor market demand, the IDA education project credit will also provide
science facilities for 21 secondary schools of Upper Volta. There is
apparently no prob'lem yet for higher edtication leavers. However, the re-
placement of existing foreign technical assistance seems unlikely to take
place within a relatively short period in view of the comparative lack of
experience of university graduates and their preference to emigrate abroad
in search of better earning possibilities.
34. Another central problem Lis how to meet the huge costs of the
education system. The Government and local authority education budgets in
1973 amount to CFAF 3.5 billion. The education budget (both current and
development) represents about 21 percent of total government expenditures
in 1973, which eloquently reflects the emmphasis and the expectations put
on the education sector by the Government in the economic development
process. On the other hand, the operatingr cost of a pupil-year in the
primary cycle is close to CFAF 10,000. This amount.corresponds to about
half the GDP per capita in 1972, and the teachers' annual salary in ptim_ary
school was estimated in 1968 to be about 30 times GDP per capita. Taking
into account the fact that only one out ol some 30 nuDnils per vear success-
fully completes primary school, 1/ this cost appears extremely high.- If
only because of the obvious bud,,getary constraint it is clear that new
avenues, such as the rural education system, need to be developed.
1/ For example, only 1,436 pupils out of 9,197 candidates succeeded in 1973
in the secondary school entrance examination or only 16 percent.
- 18 -
III. EXTERNAL TRADE AND PAYMENTS
A. Ralanre nf Pavments
35. The ba1aner nf nnvments in the rerpnt years has hben rharartPrizpdby a further increase of the trade deficit which has come to represent between8 and 17 percent of GDP, and a parallel, though slower i ln the volumeof private and public transfers from abroad. As in the previous period, theoverall balance has been in surplus over the six years 1968-1973. After havingreached a record level of CFAF 3.8 billion in 1970, the overall surplusAdminished s-har1- to- rF.A . b illionr in 1Q79 to riose again t CFrAP 3.9 b il-
lion in 1973. According to preliminary estimates, it amounts to CFAF 2.21.411 :n 4n 10 71.. Ar o mettiL- ff- a- 1- -Aoin 1 . , or a.
1A e
u L 'i X.J.tJ *.L li ? S. n.i a tet, LtJL.A-* x XLv-,- *.LaLavL.,tUJ&a.JL.a.J __ _ MMvL1&Lt.
to a comfortable 6 months of recorded imports (or 5 months of total estimatedrlmports) i198receCFF4bllon t(Q62 mJ11llonN or about. 6 monthls ofJAjL. L L j .L I .7 IJu A.~I LL U iiCA UJ "t L Y -t''. ~ . JLL/ *.A L U i LUL iA
recorded imports in 1974. Thus, Upper Volta shares with Niger the paradoxof h .olding the reserves, within the West A.rican Moneta. Union, aTlmo61ta
large as those of the Ivory Coast, while being otherwise their poorest members_ a re ri e ti _ _ _U - - - - - - -___4 -- I A, ff -1 @- a, --- A . - 2 ,. - 0_4 - -
- a L cI.± U L LULL UV L.11AUCOC C1L_ULJIULICO UA-J- A .La.L U*y U jiLU , LV -" lUL O .LUL5CUL
fiscal policies.
36. Transfers consist of two main components: Voltaic workers' remit-tances f'rom abroad, togeth'er with veterans' ppensiOnS from Frnc, -n-freg
aid grants. These two flows, of approximately equal size, increased by 15InI IC O_ I n'?') to .. AI InT I U.1-1 _ - IQ
percer.t per arinum UduriLng, 19819Q 72L andU amWountedu LU CFAt 23.2 biU.Ll'.LUnI LLL 173J,
corresponding to about 130 percent of the trade deficit of that year. VoltaicemiLgrant workers transferred CFAF 2.6 U.L±L.ULI i 1968O, CFkAr U.L4 Ub.L±LJIL nL1
1972, CFAF 6.8 billion in 1973, and apparently even more in 1974 followingwage increases in the Ivory Coast. 1/ Together withl veterans' penbsions of
around CFAF 2-3 billion per year, this flow of funds represented practicallythe same amount as merchandise exports over the period 1968-1973. Foreignraid grants increased also steadily from CFAF 5.2 billion in 1968 to CFAF 8.4billion in 1972. Tney increased again in 1973 to CFAF 12.9 billion as aresult of the massive inflow of emergency food aid and the increasing interestof foreign aid agencies in assisting Upper Volta's economic development effort.
37. Capital inflows, while significantly smaller than transfers, trebledfrom 1968 to 1970 and fell back in 1971 to the same level as 1969 at CFAF 0.4billion. They increased again to total CFAF 1.7 billion in 1972, and sharplyto CFAF 3.5 billion in 1973. IDA is the main source of public capital inflowsnow. Direct private investment has rather stagnated over the tour year 1968-1972, but should have increased in 1973 and 1974 in connection with the largeindustrial project mentioned earlier.
1/ The Ivory Coast, where most of the Voltaic emigrants are, being also amember of the Monetary Union- there are no restrictions whatever totransfers between the two countries.
Table 7: Summary of Balance of Payments, 1968-1973(in billion of CFAF)
/1 Inpludes, among others, foreign technical assistance as debit./2 Consists mainly of pensions paid by France./3 Includes food aid of 4.5 CFAF billion.
Source: Same as Appendix Table 3.1
- 20 -
B. Foreign Trade
38. Trade statistics are particularly deficient; a considerable partof exports is not recorded by Customs or recorded at conventional prices("mercuriales") for tax purposes, generally lower than actual prices. Thus,a significant discrepancy exists between official figures and those estimated,for example, by BCEAO for the computation of the balance of payments. Esti-mates may dliffer hv 3n-R80 nprcent from offie-ial figuiires for e'xnortq and by20-50 percent for imports; worse, these differences do not follow any dis-cr~nah1e trend:
Tnhle 8: Offiriqllv Reco-rded Anti Pst-Imnt-ei
Foreign Trade, 1968-1973(in rCF ri m1 li o")
a. E rorts 1968 1Q5Q 107A 1071 1079 1073
1. Recorded Exports 5,290 5,329 5,055 4,408 5,141 -
4. Annual Change (%) ( -) (+28.7) (-2.2) (+25.1) (+17.4) (+28.0)5. Ratio of (3) to t1) Ila 1241 -117 135 148 -.J LXO.L.LY A. J A. J/ I. \ II I 7 1If-t I I,IIJ IOU
Source: "Balance des paiements", BCEAO and "Bulletin Mensuel", Directionde 'la S;atatst'que.
Exports
39. Estimated exports stagnated at under CFAF 7 Dillion from 19608 to1971 and reached a high level of CFAF 9.2 billion in 1972, as a result, itwould seem, of more favorabie export prices in general and pernaps over-counting of cattle (see paras. 18 and 41).
40. On the basis of recorded as well as estimated exports, livestockremains the most important item, varying between one-third and one-half oftotal exports. The bulk of livestock exports is in the form of live animals,especially cattle because of the traditional trade practices and also theprice controls applied in the Ivory Coast or tariffs imposed by Ghana. Exportsof animals on the hoof present considerable advantages by avoiding the dif-ficult problem of conservation during the trips from Upper Volta to the coastalmarkets. An encouraging development of the recent years, to be credited largely
- 21 -
to the initiative of Voltaic farmers and traders, is the growth of exports ofsmall animals such as sheep, goats and above all poultry, the production ofwhich has expanded along the railway line which is the means of transport usedto export to the Ivory Coast. On the contrary, exports of processed livestock
products (meat, hides and skins) represent a modest 7 percent of total exports,fluctuatine between CFAF 300 and 350 million in the period 1968-72.
Table 9: Exports (officially recorded), 1967-1972(in percent of total value)
The table above shows clearly that: i) against the commonly accepted assump-
tion, the difference in value added 2/ is not significant (CFAF 5,366 for
exports of meat against CFAF 4,594 for exports of live cattle); ii) "foreign
exchange" earnings from exports of meat are lower from exports of live cattle.
1/ "Appraisal of a Livestock Development Project, Upper Volta"; Report No.
674a-UV. May 8, 1975
2/ The value added is defined as the sale price of cattle less transport
costs.
- 23 -
This observation would gain a particular importance in the case of exports
with non-member countries of the Monetary Union, for example, Ghana; iii) the
profit, the decisive factor in exporter's choice as to the form of exports,
ends up with a lesser amount in the case of exports of meat, because of higher
transnort costs and meat inspection fees. In addition, it should be noted that
the Government receives higher receipts in the form of taxes from exports of
live cattle.
42_ There are no volume or price indices of external trade. Estimatesof export quantities and prices of cattle and comparisons with official Customs
figures are nresented below (Table 10), from which it appears first, that
estimates are always above Customs figures (except for 1972), while a general
downward trend is nercpntihle in both cases and second, that price discrepan-
cies between the two sources are very considerable ranging between 30 and 90percert. It is very difficult under such conditions to interpret the evidence.
However, it seems most probable that the contribution of live animals to total
exports is much more important than is shown in official fiaures. The downward
trend until 1971 might reflect the aftermath of the losses suffered in 1968,
whereas the upsurge of 1972 m-v also; as indicated earlier. be the result of
the drought in Upper Volta and Mali, herders having had to sell more cattle in
the-fe-^ 10-i~ng it t-hi.ro_h atarvation an-d in order to obtain enough. cash to
buy the foodstuff at much higher prices.
Table 10: Tentative Estimates of Real Export Quantitiesand Prices of Cattle - 1968-1972
3.4 Official 1,589 1,147 860 787 1,0633.2 Estimated 2,102 1,755 1,600 1,736 2,3493.3 Ratio of (3.2) to (3.1) 132 153 186 220 221
Source: Data provided by Livestock Service, Upper Volta, "La productionanimale voltaique: perspectives de developpement" Tome II. SCETinternational. 1972. and "Balance Commerciale et Commerce Exterieur",Direction du Commerce, 1972.
-24-
43. Even in the case of cotton whose marketing is strongly organized,official (Customs) statistics are very unreliable. The following table wasreconstructed on the basis of various other sources, notably informationobtained through the ongoing West Volta Cotton project (IDA):
Table 11: Exports of Cotton, 1963-1973
Unit Official
Quantity Export Price /1 Export Value /1 Export Value Differences('000 MT) (fob CFAF/kg) (CFAF Million) (CFAF Million) (CFAF Million)
(1) (2) (3) (4) (5)(1)x(2) (3)-(4)
AnnualAverage
1963-66 1.3 - - - -
1967 5.7 135 770 842 -72
1968 6.3 140 882 914 -32
1969 11.5 125 1,438 1,484 -46
1970 12.4 135 1,674 1,297 +377
1971 7.5 160 1,200 843 +357
1972 9.7 170 1,649 1,021 +628
1973 9.1 310 2,821
/1 Estimated.
The raDid rise of cotton production and exports after a long period of rather
unsuccessful efforts culminated in 1970 following the record crop of 1969/70.The effects of the poor weather in the more recent years have to some extentbeen compensated by higher export prices, and the record value of 1973 is, ofcourse- only attributable to the price factor. Had not the plans for the growth
of produrtion been ruined by the lack of rain, the value of cotton exports in1973 would have been about double its actual level or as much as all other
exports combined. Ilowever, the fall in cotton production and exports was alsocauseld by a shift away from this product into food crops (cereals) in response
to changing relative prices. Had not this inovement occurred, cotton exportswould lhave been larger hut nrohahlv also the imports of cereals. Of course.
- 25 -
in-as-much as the latter might have been financed by exceptional external aid,the fall of cotton exports can be said to represent a net loss. On the other
hand, recourse to food assistance is clearly not a satisfactory solution.Sinre 1970 exports of cotton seeds have very much decreased because of highersales to the local oil mill (CITEC) which produces edible oils and soap for
the local market=
44, Aside from livestock and cotton which together account for about
70 percent of total exports, other items include agricultural products suchas sheanuts, groundnuts, sesame, fruits and vegetables. Sheanut exports varywith production which roughly follows a three-year cycle of ups and downsand cannot be affected by rain: Drice fluctuations also occur; sheanut
export earnings fell from CFAF 528 million in 1970 to CFAF 132 million in
1972 or by 75 percent because of a decrease in export Drices; the value of
sesame exports has declined moderately from CFAF 251 million in 1970 toCFAF 225 million in 1972; groundnut exports have increased highly in 1971
to fall again to the level of 1970 in 1972. Export performance of all theseagricultural products fluctuate considerably, reflecting the nredominance of
natural conditions and the fact that none of them is a properly organizedexport activity but that they repreent rather mnrginal disnosable surnltises
over and above traditional consumption. Also, the local industry absorbsa growing share of these surpluses.
45 . No com. plete trade figures are available for 1973. Recorded exportsfor the first three months of 1973 amounted to CFAF 1.2 billion, or a dropof 30 percent from the level of the corresponding period of 1972, wIth liveanimal exports declining by 60 percent. However, exports for the year as awhole totalled CFAF 10.3 billion or a 12 percenrt increase in value (but, mostprobably, some decline in volume) over 1972. For 1974, the central bank'spreliminary figures show CFAF 11.9 billion for exports or a 16 percent increaseover 1973. These are rather poor performances in view of substantial increasesin export prices dur'ng the last Lwo years. Poor cropS Aue to the *-ought are,
of course, responsible.
Imports
46. Estimated imports increased by 25 percent in 1971 after a slightdownfall in 1970 and reached a very high level of CFAF 22.2 billion in 1972.However, this last increase is mainly due to large increases in cattle onthe hoof coming from Wali and Niger to be re=exported to the Ivory Coastand Ghana. Moreover, "net" imports in 1972 are still equivalent to a high20 percen"t of GDP, or double the rate of exports.
47. On the basis of recorded imports, foodstuffs, including beveragesand tobacco, machines, vehicles and spare parts are the most important items
in that order. They accounted together for 41 percent of recorded importsin 1968 and 46 percent in 1972. Under normal climatic conditions, UpperVolta needs to import about 30,000 tons of cereals per annum, which accour,t
for 5 percent of recorded imports in 1972. Whlile chemical and petroleum
- 26 -
products have increased steadily by more than 13 percent annually since 1968,
manufactured goods have grown very moderately, with sharp decreases for
textile products, reflecting the effects of the import-substitution policy
which began in the late 1960s. Petroleum products alone amounted to CFAF
1.3 billion in 1972 (for 80,000 tons) accounting for about 6 percent of
estimated imports. It is expected that as a result of higher petroleum
prices, the oil bill will have more than doubled in 1974.
Table 12: Imports (officially recorded), 1967-72
(in percent of total value)
1967 1968 1969 1970 1971 1972
Foodstuffs, beverage and tobacco 25.8 20.8 19.4 19.5 20.0 22.7
Raw materials, minerals and oils 9.4 10.5 7.7 6.5 6.2 6.3
Petroleimn products 6.5 6.6 6.8 8.1 8.6 8.6
Chemical products 6.5 6.4 6.7 8.1 9.0 8.6
Machines. vehicles and spare parts 16.7 19.8 27.1 27.4 26.0 23.6
Manufactured goods 35.1 36.9 32.3 30.4 29.2 30.1
Textilpes (13.6) (15.3) (12.0) (7.8) (7.1) (7.8)
Others (21.5) (21.6) (20.3) (22.6) (22.1) (22.3)
Imports 100 100 100 100 100 100
Source: Same as Appendix Table 3.3.
48. Recorded imports in the first quarter of 1973 amounted to CFAF 4.0
billion or 11 percent above the cmrresponding period of 1972, an increasealmo~st entirely att-ributtable to higher prices. it would seem. Imports for
the year as a whole totalled CFAF.28.4 billion (including emergency food aid
of CFAF 4.5 billion), which, together with rather stagnating exports, resulted
in a huge trade deficit of CFAF 18.1 billion or a 39 percent increase over
1972. For 1974, the central bank's nreliminary figures show CFAF 35.7 billion
for imports and CFAF 23.8 billion for trade deficit, the latter representing
over 20 percent of GDP. This ever-deteriorating situation in trade balance
clearly reflects some structural characteristics that can be broadly identified
as a form of economic duali4s: there is on the one hand a rural sector almost
wholly traditional, except for a narrow segment of semi-modernized cotton pro-
duction; this sector is nonetheless the source of all exports however modest:
on the other hand, the modern or urban sector, including the Government, is by
far the.main source of demand for imports but generates very little or no
exports, and is only beginning to produce some import substitutes. Furthermore,the rura'l sector by "export4ng" emigrant workers enhances its, role as a source
of foreign exchange earning. There is little relationship between the two
sectors, each operating in an essentially autonomous way. The exception is
again the modernized part of the cotton economy that is both a major exporter,
uses imported inputs, and to some degree also generates some demand for mpo-rted
consumer goods.
- 27 -
Direction of Foreign Trade
49. The Ivory Coast remains the main export market for Upper Volta with
a share of 46 percent of total exports and more than . o-thirds of cattle
exports. France is the second largest outlet with a share of 19 percent
(cotton, oleaginous products). The EEC as a whole accounted for about 30
percent in 1972, after having reached 38 percent in 1971. Ghana's relative
importance dropped from 14 percent in 1967 to 6 percent in 1972, Which could
be explained by difficulties encountered in the working of payment agreements.
After an extraordinary jump in 1970 (16 percent) Japan 's share, consisting
exclusively of ginned cotton, sharply declined in 1972 to only 2 percent.
France continues to be by far the principal supplier of Upper Volta's imports,
with a share of 48 percent in 1972, followed by the Ivory Coast (17 percent)
and Mali (5 percent). Imports from Mali consist mainly of livestock on thLe
hoof, which is generally re-exported to the Ivory Coast and Ghana. Apparently
no significant change occured in the direction of the trade in 1973 and 1974.
C. Foreign Aid
50. Over the 12 years from 1960 to 1972 foreign aid disbursements
totalled about CFAF 91 billion ($360 million) or an annual average of
CFAF 7.6 billion ($30 million). There was a marked upward"trend in the
aid flow in the last three years recorded: CFAF 7.2 billion in 1970, CFAF
10.3 billion in 1972 and much more in 1973, if only because of foou and other
emergency aid. In fact, the value of exceptional food received in 1973 (in-
cluding 60,000 tons of grain) was valued at CFAF 4.5 billion ($19 million).
51. With a level of over $10 per head or 14 percent of average national
income, Upper Volta is among the largest beneficiaries of external aid. Be-
sides, about 90 percent of total aid disbursements were grants during the
period 1968-1972 and about 90 percent of the loans were on concessionary
terms.
Table 13: Foreign Aid and Loans, 1968-1972(in CFAF billion)
Total
1968 1969 1970 1971 1972 1968-1972
1. Total aid disbursed 7.39 6.86 7.38 10.43 14.55 46.59
2. Total loan disbursed 0.91 1.33 0.43 0.73 1.20 4.60
3. Total grants (%) 88 81 94 93 92 90
Source: Same as Appendix Table 3.5.
- 28 -
52. Capital aid constitutes the largest component, with a little under
60 Dercent of the total. After having declined temporarily in 1969 and 1970
in favor of technical assistance which accounted for about 20 percent through
1968-1972, investment aid rose slharply again to attain CFAF 7.1 billion in
1971 and 9.6 billion in 1972 or 68 percent and 64 percent respectively.
53. Bilateral aid (55 percent) has been the most important source, fol-
lowed by international organizations (42 percent) and private aid (only 3
percent). Among foreign governments, France still remains by far the most
important one, accounting for 47 percent of total aid during 1968-1972. The
United States, the Federal Republic of Germany and the Republic of China (until
1973) are other nrinpinal donors, while less important countries are Canada,
Israel, Italy, Great Britain. Taking over from the Republic of China, the
People's Republic nf Mhinna sent a technical assistance team for rice development
in March 1974, and had concluded in 1973 an agreement for a tied, soft, loan
of $44M.15 mlllIon- he excrt finnnria1 terms and other specifics are not known.
The first disbursement of $13.4 million was expected to be effected before the
end o-f 1974.
54. French aid ntotiale GFAF 24 billion ($100 million) for the five
years 1969-1973 (excluding food aid). It is quite diversified: about half
the total was capital aid for snecifir projects; one-fourth technical assist-
ance, and the remainder "equipment grants" to the government's budget. Capital
aid in 1972 w-as distriuted as fnllows: infrastrutture (45 percent), produc-
tion development i.e. agriculture (24 percent), general studies (16 percent),
and social equipment (15 percent). French techni al ssistance is by far the
most important one and is mainly in public administration and education.
55. As of February 1974, cumulative FED commitments amounted to CFAFnl.r 1.114 tint)-til-onN tn .,4A 1-.mc, h-c.r inn flOvpDnt- in, ayrnt form
L4 .5J ULLon ($100 million.L _ --- has been 100 percent in grant form
and mainly for capital projects. Higher priority was given during the first
FLD (1958-1963) to the development of agriculture (52 percer.t) and the onrial
sector (45 percent) for water supply, sewerage, public health and education;
under the second FED, econom'c infrastructure, chiefly road con.struction,
received more than half the total; in the third FED (1971-1976), more emphasis
is being put on some large agro-industrial projects such as the sugar plant at
Banfora.
56. IDA commitments of $30.7 million (as of February 1975) have been for
two Telecommunications Projects, a Cottorn Project (West Volta), a Rural
Development Fund, a Rural Education Project, a Drought Relief Credit and an
Integrated Agricultural Development Project (Bougouriba). The Bougouriba
Agricultural Project of $8.0 million was approved in May 1974.
D. External Public Debt
57. External public debt remains small, with a total, at the end of 1973,
of $119.5 million, of which $89 million is undisbursed. Annual disbursements
- 29 -
in 1968-1972 averaged about $3.5 million, and increased sharply to $11.5 mil-'Lior -in 10g73, -m 41 tyJo4 from loWns by ir.te rnational organ-izations,
58. D bt service payments increased steadily over the years t o r t 1vl
of near $3 million in 1973. The ratio of debt service to exports of goodsard services has fluctuated mainl'y as a result of variations in the denominatorwith a maximum of 7 percent in 1970; it was less than 6 percent in 1973 andis riot expected to varny WucL iin thLe near future.
IV. PUBLIC FINANCE AND MONETARY DEVELOPMENTS
A. Public Finance
Overall Treasury Position
59. Over the past six years the Treasury's liquidity position has remained
quite comfortable as a result of three factors: t'ne policy of budgetaryausterity undertaken since 1967 by the military regime in order to redress avirtual bankruptcy of the previous regime, the continuation of French budgetsubsidies and the increased liquidity of autonomous public institutions,especially of the Price Stabilization Fund for Agricultural Products. As aresult of the first two factors the overall budgetary deficit of CFAF 0.2billion of 1966 turned into a surplus of 0.9 billion by 1971. The overallsurplus, however, decreased in 1972 and 1973 because of stagnating currentrevenues attributable to the drought and a relatively rapid increase in bothcurrent and development expenditures, in sharp contrast with the precedingfive years. The surpluses thus generated first enabled the Treasury toliquidate the stock of unpaid bills by 1969 and then to gradually build upsubstantial deposits with the Central Bank. The latter amounted to onlyCFAF 630 million in 1967 and exceeded CFAF 9.3 billion at the end of 1974. 1/Cash transactions of the Treasury are summarized in Table 14.
60. The ratio of current revenue to GDP thus grew from 10 percent in1968 to 12 percent in 1970 to 12.5 percent in 1973. Its average annual growthrate was 10 percent for the period 1967-1970 and 6 percent during i970-1i973.There have been no major tax reforms since 1966; the main effort, and suc-cessfully so, has been in improving tax collection. The slowdown in the growthrate of revenue in the two years 1971 and 1972 is attributable chiefly to thestagnation in direct tax and import tax revenues, mainly on account of exemp-tions accorded to imports by foreign investors as a means of encouragingcapital inflows. Over the years, revenues from direct taxes have increasedless than total revenues, and their share in total revenue is only 17 percentin 1973 against 27 percent in 1967. Direct taxation broadly conceived is in
1/ See also para 65 and text-table 16.
- 30 -
fact a combination of very different items: poll taxes (on all adult personsand on cattle), income taxes on profits (flat rate with many exceptionspermitted under the investment code), progressive income tax of the usualtype (applicable to a few thousand persons in all), and taxes on agriculturalproducts, principally cotton, whose price is determined by world markets.Rates of poll taxes have not changed in the last 5 years (suspension of thesetaxes in some areas applies in 1974); profit and progressive income taxesrepresent only 11 percent of revenues; export taxes proper contribute also amodest 3 percent. Revenue accriuing to the Price Stabilization Fund asdetermined by the combination of government-fixed producer prices and worldprices is akin to an income tax and it is also affected by the volume of crops,of which cotton is by far the most important. It therefore varies widely andmay be negative. Thus, between 1966 and 1971 the Caisse paid out to exportersabout CFAF 267 million and received from them about CFAF 804 million, makingnet profits of more than CFAF 500 million. Revenue of the Caisse does notaccrue directly to the budget, but is a separate source of income to theTreasury as noted earlier.
61. Import levies have continued to be the most important single sourceof revenue with about 50 percent of the total. Import taxes are primarilydesigned for revenue rather than protection purposes. Particular tax ratesare seldom changed (the last general increase affected the statistical taxwhich was raised from 1 to 3 percent in 1973), but the value on which thetax applies is often determined by a special commiqsion 1/ and modified so asto result in changes of actual rates. The most common rates of the combinedtaxes (fiscal tax, customs duty and statistical tax) is around 25-30 percent.However, the average rate on all recorded imports in fact amounts to 38percent, with variations between.zero and over one hundred percent (cf.Appendix Table 5.5).
62. Consumption taxes and state tobacco monopoly have continuouslygenerated about 18 percent of total tax revenue. Among non-tax revenue, acategory of relatively diminishing importance, a sharp fall in income fromgovernment property compensated by the increasing profits of BCEAO is anoticeable development in recent years.
1/ The values "mereuriales" are fixed by a special eommission eomnoned ofrepresentatives from Customs, fiscal services, importers and exporters.
- 31 -
Table 14: Cash Transactions of the Treasury, 1967-1972(In CFAF billion)
9. Total Financing (6+7+8) 0.4 -0.1 -0.8 -0.7 -0.2 0
/1 Excludes payments of arrears./2 Excludes expenditures directly financed by foreign aid./3 Mainly French equipment subvention./4 Unclassified transactions of the Treasury and Customs Duty bills.
Source: Balance Generale des Comptes du Tresor; I!M report.
- 32 -
63. Whereas revenue has evolved essentially as a result of improved tax
collection and economic developments in general, current expenditure has been
much more directly affected, since 1967, by the government's policy of budget-
ary austerity. Thus, expenses were drastically cut down in 1967 and the 1966
level is reached again in 1969 only. Expenditure rose slightly more than
revenue during the three following years, but still at a very moderate rate of
6 percent per ann-um. Total current expenditures of CFAIF 10.6 billion, in
1973, represent about 11 percent of GDP. The original budget for 1974 shows
an increase of 8 percent in current exnenditures compared to 1973. which is
still modest in view of the acceleration in price rises and in view also of
the urgent need to aive Qovernment services, especially those in charge of
economic development, more adequate operating means. The structure of current
exnenditures by nature has not changed noticeably over the past seven years:
personnel expenditures still remain the most important element with 65 percent
of the total (1973), followed by material and maintenance expenditures (20 per-
cent), transfer payments (12 percent), and debt service with only 3 percent.The breakdown of current expenditures by function shows that expenditures on
economic services were the most severely affected by the restrictive policy;
they were reduced in absolute value by more than 25 percent in 1967, have
continued to fall both in absolute and relative terms, and have not yet re-
covered their level of 1966. The operating budget for agriculture and live-
stock services amounted to CFAF 545 million in 1973, that 's only 5 percent
of total current expenditures. Social expenditures represent about one-third
of the total; they rose very slightly from 1967 to 1969, and quite significantly
from 1971 to 1973. This is notably the case for education which increased by
23 percent between 1971 and 1972. Expenditures on general services suffered
much less than other categories during the austerity period and in fact haveincreased their share signifi ca ntly despite a slowdown in their growth during
the last two years; they still account for a little more than half of the
total. The major components are general services (25 percent) and defense
(13 percent). It should be noted, however, that the armed forces participate
somewhat in economic activities, e.g. in road building.
64. Capital expenditures in the budget -- not including any foreign-
financed projects -- almost doubled from CFAF 0.6 billion in 1967 or 8 percent
of total expenditure to CFAF 1.1 billion in 1970 or 11 percent, and fell back
slightly in 1971 and 1972 to reach again CFAF 1.3 billion in 1973 (10 percent).
About 45 percent of this amount went to if-rastructure, mainly to the Road
Fund, while the other 50 percent was allocated to 'Investments and Studies".
The latter includes the Voltaic contribution to both the cost of ORD develop-
ment programs and agricultural research activities financed mainl"y by externalsources. For example, in 1973, its total amount was CFAF 464 million, of
which 40 percent was attributed to the ORDs, 43 percent to other foreign-financed operations, and 17 percent to research institutes. Development
expenbitures mn th betudget represented a. average of 15 nercent of total
public investment between 1967 and 1972.
- JJ
Tabie i2: Gover,nmelt Bd2-et Revenue and Expendituare; 1967-1975(in CFAF billion)
French "equipment"Subsidy (i,45) (0.45) (O.h5) (0.50) (o.50) (0.50) ( 0.67)
1/ Excluding expenditure financed from foreign aid, mainly French equipment subsidy.
Source: Same as appendix tables 5.1 and 5.2.
- 34 -
65. Public deposits with the Central Bank have continuously increased
since 1968 to reach, by the end of 1974, an unusually high level of CFAF 9.3
billion or about three-fourths of the corresponding year's current revenue.
They are made up, as of October 31, 1974, as follows: CFAF 0.5 billion from
special accounts of the Treasury; CFAF 5.1 billion from deposits of public
enterprises (of which, CFAF 1.7 billion from the Caisse de Stabilisation and
1.6 from Caisse Nationale d'Epargne); CFAF 2.9 billion from budgetary surpluses
and the Treasury's own funds.
66. The policy of fiscal restraint pursued by the military Government
since early 1967 was first of all a remarkable and successful effort to check
the previous situation of uncontrolled spending and instill a much neededsense of financial and administrative discipline in the government services.By the same token, 't was designed also to redress the country's pos-tion
within the West African Monetary Union where its share of the external
reserves had beco.me negative. This was also achieved. The aim was not
deflationary in a macroeconomic sense in that it did not seek to reduceaggregate dem-nd (though some genuinely deflationarv effects were felt
sectionally, for example, by the construction industry) for the growingvolume of aid and other funds from abroad easily compensated for the reduced
level of government spending. However, the policy of budgetary austerity
because of its scope and persistence until this day has brought about some
undesirable consequences by hindering the overall development effort in three
ways: first, by excessively rationing the operating budgets of the govern-
ment economic services; second, by limiting public participation in the
financing of new development projects; third, by failing to provide the
necessary follow-up to development projects. Thus, while it is essentialfor a country like Upper Volta to carefully control current expenditures,it seems nevertheless necessary to relax the deflationary measures followed
so far. It does not make much sense for such a poor country to accumulatelarge resources, both internal and external (the latter being to a large
extent the consequence of the former), to the extent done so far.
67. Convinced of the urgent need of making economically (and not only
Cinanc4Oally) profitable _-_e of these huge public deposits, the Government
took a first step toward a more dynamic expenditure policy by creating, in
TD,ecember 1973, the Caisse Nationale des Depots et des Investissements. The
CNDI, endowed with an initial capital grant of CFAF 0.4 billion from the
Government, began oDerations on January 1. 1975. It receives deposits mainly
from public bodies and public enterprises such as Caisse Nationale d'Epargne,
Caisse de Stabilisation, Post Office accounts, most of which until recently
have made deposits with the Treasury. Its resources, by the end of September
1975, will amount to CFAF 4.0 billion. On the other hand, its principal bor-
rowers are to be public utilities and industries of national interest suchas railroads, electric power and textile industries. The CNDI had committed,
as of the end of April 1975, an amount of CFAF 2.5 billion to half a dozen
projects: these include public utilities, roads (through the Fonds Routier)and the development bank (BND). There remains, however, a question of howthe creation of the CNDI could result in a more efficient specialization ofnational financing organizations.
- 35 -
B - Monetary Developments
68. Upper Volta is a member of the franc area and of the West African
Monetary Union (Union Monetaire Ouest-Africaine, uMOA), together with five
other countries. 1/ The principles governing the operations of the Union as
well as the changes introduced recently to its structures and mechanisms are
described in other reports. 2/
69. As the modern monetized sector is still very small and almost
exclusively concentrated in the capital and in Bobo-Dioulasso, banking
facilities in Upper Volta are very limited, and the banking system consists
of the local agency of the BCEAO, a National Development Bank (BND), and two
commercial banks (BIV and BICA). 3/ The Treasury, the Post Office and
National Savings Bank (Caisse d'Epargne) also perform certain banking opera-
tions. The local agency of the French Caisse Centrale de Cooperation
Economique (CCCE) extends medium and long-term credit in Upper Volta and acts
as a disbursing agent for FAC and FED, but as a bank it operates mainly as
a second degree lender, especially to BND.
70. During the period 1968-73, money supply was characterized by
continued but irregular growth. The period of monetary expansion of 1968-70
(10 percent per annum) was chiefly attributable to the increase in foreign
assets which was more than enough to offset the deflationary effects of
growing government deposits and declining credits to the private sector.
In 1971 and 1972, a considerable slowdown in the increase of foreign assets
had a parallel effect on money supply. In 1973, money supply rose by an
extraordinary 38 percent. again mainly as a result of large inflows of foreign
funds, especially aid in connection with the drought, but also because of
tonsiderable increases in credit to the private sector. In 1974, money supply
tose again by 20 percent. Domestic credit increased by 100 percent over 1973
due mostly to new proiects, especially SOSUHV. It was, for the first time, a
more important factor than the increase in foreign assets in determining in-
creases in money supply (cf. Text Table 16). It is, however, too early to
say whether this new tendency in money supply is a long-lasting or just a
short-lived phenomenon. As a determinant of the price level, variations in
money supply are relatively unimportant as compared to other factors, namely
import nrices and the volume of food crops. "Excess" money supply, if any,
quickly spills over into additional imports.
1/ Dahomey, Ivory Coast, Niger, Senegal and Togo.
21 See Ecor.omic Renort; IBRD, No. 487-NIR.
3/ BIV = Banque Internationale des Voltas.BICA = Banque Internationale pour le Commerce, il'Industrie et
71. Credit to the private sector consists mainly of short-term loans to
commerce, import-financing and, to a lesser extent, manufacturing and con-
struction. Credit to agriculture appears almost nil (Appendix Table 6.5),
but this is simply due to the choice of December in the statistics. In fact,
agriculture receives almost as much as the commercial sector during the
cropping season- culminating in February-March each year. Medium and long-term
credit to the private sector increased more than 5 times from CFAF 0.8 billion
in 1968 to CFAF 4.2 billion in 1973' and about 90'percent of this type of credit
came from the National Development Bank. Manufacturing and construction,
especially small housing, 1/ together receive over 80 percent of total credit.
The unusually high increase in 1973' and in 1974 is explained by medium and
Tong-term credit extended;to the agro-industrial sugar plant at Banfora.
Agriculture receives generally a very small part of medium and long-termcredit.
72. As in other countries of the UMOA, credit availability is no real
problem for both commercial activities -- mainly exports and imports -- and
for c-'ital' nronects presenting "good" banking security, which inevitably
more often than not means projects backed, to some degree, by external
capital and enterprise. The smallness of credit to such an important sector
as agriculture is attributable to the lack of demand, not to credit restric-
tions. Agricultural credit assumes importance only where well structured
agricultural projects are implemented -- such as those where IDA participates.
V. LARBR FORCE,, WAGES AND' PRICES
73. The last population census was conducted between September 1960 and
April 1961' a.d one is schedul'ed to start at the end of 1975 (under UN-ECA
sponsorship)'. The most frequent estimates put demographic growth rates atbetween 1.8 and 2.1 percent per annum, relatively modest levels by African
standards. The labor force -- an elusive concept in a rural, traditional
economy = is estimated in the Develonment Pla n at 2,792,O0O in 1969, and
2,905,000 in 1971, representing 53 percent of total population. It is over-
whelmingly rural and composed alm as e.xl,usi,ly of self-employed and non-
paid family workers (99 percent).
74. Unemployment is, also very difficult to define and almost impossible
to evaluate iX a cou.try like Upper Volta where the non-paid family worker
dominates. However, there are indications that unemployment in any meaning-ful sense is already h1igh in the cities, representing perhaps as much as one-
fifth of the labor force. Also, the number of unemployed among school leavers
seems to grow every year.
1/ Private home construction in the cities and related demand for credit
is a surprisingly lively sector; private owners usually put up 40 percent
of the cost and BND finances the balance. In 1972 outlays in this
activity were close to CFAF 1.4 billion or two and a half times more
than anticipated in the Development Plan.
- 38 -
75. These difficulties and the better earning opportunities in the
neighboring countries stimulate Voltaic emigration, both temporarily and
permanently. Sociological factors such as the youngsters' desire to escapethe family's traditional authority also play a role. Official estimates for
1973 showed that there were about 543,000 Voltaic permanent emigrants living
abroad and 194,000 temporary emigrants. While these figures are generally
believed to be below reality, they would already account for about 28 percent
of the total Voltaic labor force as shown in the following table:
Table 17: Estimated Number of Voltaic Emigrants(in tho,--and)
Source: "Plan Quinquennal de Developpement Economique et Social", 1972-1976.
Such a high level of emigration helps to alleviate the national employment
problem, contributes massively to the balance of payments (cf. para. 36), and
accounts for a significant share of the rural population's money income. Its
negative side, as already noted, is that it drains the country of a youwng and
dynamic group of people. Whether the "marginal" emigrant contributes more
than its "marginal" product foregone is no doubt still the case though in a
measure impossible to apprehend without further investigation. It is not even
possible at this stage to say whether the role of emigration is more or less
important now than in the past.
76. Wage earners represent only a little over 1 percent of the total
labor force and are highly concentrated in the tertiary sector, especially in
government services. The latter accounts for about half of the total. Never-
theless$ wages represent a comparatively high proportion of value added in
the economy: CFAF 9.5 billion or 11 percent of GDP in 1971, a reflection
not so much of the fact that wage rates are in some sense "excessive", but
of the fact that rural incomes are extremely low. Intersectoral wage dif-
ferentials are small and, as a result of the austerity policy, wage rates in
the public sector are very close to the average wage rate of the country,
contrary to the experience of many developing countries. The legal minimum
wage rate remained unchanged between 1960 and 1969 and has subsequently
- 39 -
increased three times, in 1969, 1972 and 1974 by a total of 70 percent. 1/The minimum wage rate per hour at March 1974 was CFAF 36 tor agriculturalworkers (SMAG) 2/ and CFAF 47 for workers in other sectors (SMIG). 3/ However,the official agricultural wage rate is of little practical significance, andactual rates, for example, for inter-family hired workers in agriculture areCFAF 100-120 per day.
77. There is no GNP deflator nor a wholesale price index. There existonly two consumer price indexes), one for African and another for expatriatefamilies but they have only limited value because of an out-of-date systemof weighing and inadequate "basket" composition of goods. The African index,with 1958 as the base year, is related to the consumption pattern of anunmarried worker in Ouagadougou, while the European index, with 1964 as thebase year, is based on the "basket" of a "typical" European family.
78. The "African" index, after having increased by 11 percent in 1969,rose only slightly in 1970 and 1971 and even fell by 3 percent in 1972 torise again in 1973 by about 10 percent. However, these movements reflectvery imperfectly the strong upward pressure on prices resulting from poorcrops in recent years. In particular, the decline in food prices in 1972is hard t,o explain. Price movements of agricultural products estimated bythe "Direction du Plan" seem more realistic and show increases, in 1971 and1972, of 11 percent and 5 percent respectively. The 10 percent increase of1973 is attributable to the food crop deficit, but again it underestimatesactual movements. Though impossible to verify on the basis of officialstatistics aione, the movement of wages and prices since 1968 has most likelyleft unchanged, if not decreased, real purchasing power of wage earners.
12 European fanily in Ouagadougou: 1964 = 100 food 43.5weights. r--".t 10.0
,/- 1970= -
Source: "Fulletin Mensuel I'Information Statistique et Econo.nique", Direction de la
8tatistlnule et de ].a 1'1.canoprmphie, "indicateurs 6conomiaues" of T3CEAO.
- 41 -
PART TWO: DEVELOPMENT PROSPECTS
79. Development prospects are to a large extent determined by exoge-
nous factors such as weather conditions, world market prices and the amountof resources available from abroad -- principally migrantst remittances and
foreign aid. Financial developments, both internal and external, are parti-cularly sensitive to those factors. Projections of the balance of paymentsand the budget (Chapter I) are aimed at identifying possible bottlenecks to
growth in the financial sphere rather than at predicting particular develop-ments. They show that under a reasonable set of assumptions finance shouldnot be a serious obstacle to development. The government development plansare examined (Chapter II) and a broad strategy for the medium and long-termis then outlined (Chapter III). Such a strategy centers around the issueof the balance between population and agricultural resources, and the roleof other sectors is considered of a more peripheral nature and is summarilyexamined.
I - SHORT AND MEDIUM TERM FINANCIAL OUTLOOK
A. Balance of Pavments
80 As shown in Part one of this report, in recent years and even in1973 -- the worst drought year -- the external financial situation of Upper Voltahas rpma4ned satisfactorv with substantial overall balance of pavment sur-
pluses and a sizeable amount of foreign reserves. The problem for the futureis whether transfprs and ranital from abroad will continue to compensate forthe trade deficit, especially if the latter were to grow as it has in recentyears. The -ec-ent drouiht hnau brounght about an increase in foreign aid
that is not likely to be sustained, whereas the prospects for export growth,even asSiming no othpr serious droughts; are only moderately encouraging.
R1 Thp simmnru. pet nf fialnreq for 1Q74 and 1975; nrPRAnt-Pd helow (Table
19) is based on two assumptions, an "optimistic" and a "pessimistic" one,essentially differertiated, on the one h,nA 'Ku the npeed at which livestockexports are assumed to recover and, on the other hand, by the growth rates oftraansfers a.d capital nflows. The bamlar o paym.en.ts of 1Q72 the last one
available, is taken as reference. 1/
82. The drought will undoubtedly have an adverse impact on exportvolu.es for 1974. H.owever, Aespite the Aeclie in exportable production itis likely that export earnings in current prices will increase as a result
1/ At the time this Chapter was written (July, 1974).
Table 19 Balance of Payments, 1974 and 1975(CF,U, ' brT1 n, at current prices)
of higher prices on export markets. 1/ In the 1973-74 crop year on which 1974
exports depend, the production of cotton declined by about 10 percent compared
to that of 1971-72. The value of cotton exports, therefore, is assumed to
irncrease by 70 percent in current prices as a result of a near doubling of
prices between 1972 and 1974. The fate of livestock exports is much more
difficult to assess. Two factors of opposite nature are at play. Losses
of animals caused by the drought years 1972 and 1973 were estimated at about
20 percent for cattle and 15-20 percent for sheep and goats and further sales
now would therefore have an unfavorable effect on the herds' reconstitutionrate. However, herdsmen may be forced to sell their herds to obtain somecash or will sell hastily from fear of another drought and this is whathappened in 1972-73. It is assumed here, for lack of a better hypothesis,
that a decline of 20 percent in live animal exports, together with the ex-
pected price increase of 40 percent i/ will result in a slightly higherexport value than in 1972.
83. Imports are projected to increase by 70 percent between 1972 and1974, 3/ an 'annual growth rate twice that of the past three years (1970-72).
This projection in turn is based on the following assumptions:
(i) the oil bill will more than double on account of price increasesof refined 'products and transportation cos-ts from Abidjan toOuagadougou, from CFAF 1.3 billion in 1972 to CFAF 2.9 billion;
(ii) imports of other goods will increase by a modest 3.7 percent inyolume, in line with the trend of the 1964-72 period and by 37percent in prices as a result of international price movements.The expected increase in volume despite the adverse impact ofthe drought is based on the grounds that incomes of farmers inthe monetized sector of the economy have been relativelyunaffected, that import substitution will be very limited,and that capital and intermediate goods will weigh more asa result of increased aid;
(iii! finally, for 1974, relief food imports are expected to amountto a maximum of about 120,000 tons which represents approxi-matelv a value of CFAF 4.8 billion.
1/ Even as of April 1975, no complete trade figures are available yet. The
only thing known.is that the 1974 export earnings in current prices in-creased, as forecast here, by about 15 percent compared to 19u3.
2)/ AA noted earlier, there are no reliable statistics on Drices of livestock.The increase projected here, relative to price estimates for 1972, isbased on two assumptions playing in the same direction: an acceleration
(due to lower supplies) of the already observed upward trend in the WestAfricar. regio ond an influence of world market prices from which theregion has been relatively isolated in the past.
3/ The Central Banks' (preliminary figures show a 61 percent increase in1974 imports over 1972 (cf. Text Table 19)).
L~ /- 4 -t
84. Non-factor services (net) are expected to increase by 10 percentin line with the increasing external debt service payments, and, moreimportantly, with the growth of assistance whose cost is recorded as adebit in the service balance (matched by a corresponding entry as a creditunder public transfers).
85. Adverse factors -- drought, oil crisis and worldwide inflation --will bring about an increase in the current deficit of between CFAF 9 and 13billion each year in 1974 and 1975 (see Table 19) or 50 to 75 percent morethan the deficit of 1972.
86. As in the past, the current deficit will be offset by foreignsources, especially transfers in the form of wage remittances from abroadand grants. Assuming the number of Voltaic migrants abroad to be constant inthe short-run -- which seems reasonable in view of its already very highlevel -- wage remittances may increase by 15 percent from 1973 to 1974, inline with the rate of increase in minimum agricultural wages in the IvoryCoast. "Basic" aid (defined as aid which Upper Volta has received so farfrom traditional sources, i.e., mainly France and EEC) is assumed to atleast keep pace with international price increases and remain therefore atthe 1972 level in real terms. Import of relief fqod is expected to entaillittle or no foreign exchange costs to the country: its value in the importbill is therefore matched by an equal amount of "exceptional" aid.
87. The inflow of capital in the form of public borrowing, generallyon soft terms, direct investments and short-term loans, while remainingrelatively small -- equivalent to only about 10 percent of transfers -- isexpected to increase considerably in the next two years, probably on accountof IDA operations.
88. In conclusion, the overall balance of payments in 1974 and 1975may well be such as to more or less maintain the already high level offoreign reserves. In the unlikely, though not impossible, case where themain inflows of funds -- basic aid and workers' remittances -- would remainnominally the same as in 1972, a shortfall of CFAF 3.8 and 6.6 billion in1974 and 1975 respectively, relative to the "optimistic" projection, wouldresult. In that occurrence, however, external reserves at the end of 1975would still exceed CFAF 6 billion or about 2 months' worth of imports. Eventhis is a somewhat extreme situation because, with lower real levels ofaid and private transfers, imports would themselves be lower than projected,unless, for example, a comnensatory factor such as a much expanded budgetcame into play, which is unlikely. 1/
1/ The Central Bank's preliminary figures for the balance of payment of 1974now available indicate results close to the forecast presented above. Thecurrent deficit is estimated at around CFAF 23.0 billion; private transfersaround CFAF 11.3 billion; public aid around CFAF 16.0 billion; capital inflowaround CFAF 3.7 billion; accordingly, the overall balance resulted in asurplus of CFAF 2.2 billion against CFAF 1.5 billion estimated by the mission,raising once more the already high level of foreign reserves to CFAF 16.2billion, or 6 months' worth of imports.
- 45 -
Medium-Term ProAnocts 1976-80
89. The m21n 2uiimntions underlving the nroiection nf thp current-
balance over the five years 1976-80 are as follows:
a. Prices: the Bank's forecast prices for the long-term periodare used for as marny items as possible, both for exports andfor imports. 1/ This means that consideration is not given,-for. lack, of ,An,equate info-matio, to, so,me oaspects specifi to
regional price formation, for example, for live animals. It4s re~asona,le to 4assume n h.a,Wevera th-04t monre anrA M-i 4-hatb tmend
of beef prices in the region will rise in real terms as a resultoA' the projected grow4 ng iml.alance between supp'ly andu dem,and andLIL jJL U ~LLCU 6 _ L IU0.L0L LWu '_JJ..y dI ULOL
will follow more closely the trend of world prices for thisprouuct. etroLeur, produucts' priLces are base' on those of'crude oil and a projected increase of 7.5 percent per yearfor tra_iport costs f_rom A1bid'j an to O.uagad_ougou.
D. Volumes: three groups of exports have been examined: livestock,cotton, and "others." The first two represent about two-thirdsof total exports in 1972, the iast being made up almost exclusivelyof other agricultural products. The production of cattle isassumed to recover to pre-drought levels only at the end ofthe 70s. During the period 1976-80, the annual growth rateof the cattle export is estimated at 4 percent. Export oranimals other than cattle -- mainly sheep, goats and poultry --
are expected to increase, after having recovered the pre-dought level in 1976, by 5 percent per year throughout theperiod. The production ot cotton is expected to recoverto the level of 1972-73 in 1975, and increase afterwards by7 percent per year, i.e., double in 10 years, a projectionin line with past performance and with the cotton potentialrecognized both in the Plan and by independent experts,but one that does assume active implementation of appropriateprojects. Also, producer prices are expected to be determinedso as to give a real incentive to farmers to improve pro-ductivity. Imports are examined in only two categories:petroleum products -and "others." A quasi stagnation ofpetroleum imports for 1974 and 1975, followed by a moderateincrease of 6 percent in 1976 and 8 percent per year afterwards,is based on the assumption that (i) the impact of higherprices on demand will be negative first but that (ii) petroleumbeing the only source of modern energy and its use patternshowing a very small "compressible" component, imports duringthe period 1976-80 are assumed to increase at least as in thepast (1966-72), a period of slow growth of GDP. As to "other"
1/ See IBRD, Price Forecasts for Major Primary Commodities, Report No. 467,June 19, 1974.
- 46 -
LLLLjUL L WLLLL LULIP&. LZ)C 4 W.LUU L4Lk16tZ: ULJ PL UUUCL5, an-linuaILLdiL ..ports whi-ch' co-.C ie ab fpoucs nanaincrease of 3.7 percent is assumed as in the past (1964-72),a rather modest hypothesis in view of the expected lightacceleration in GDP growth, but one that takes into accountthe restraining elfect of higher imporL prices. It is assumedalso that there will be no Government-imposed restriction onimports. import substitution will also play a role, tnougn
a modest one. It is expected, in particular, that, with theextension of VOLTEX I, imports of textile products wiii decreasestill further.
c. Non-factor services, which comprise a variety of items,including technical assistance, relatively small investmentincome payments, and a small debt service, will continue tobe negative and increase by- 3 percent per year as in thepast.
90. The above assumptions would lead to an increase of the currentdeficit by an average annual rate of i0 percent over the period 1976-80and imply financing requirements of about CFAF 200 billion, or an annualaverage of CFAF 40 billion (cf. text Table 20). This amount, once deflatedby the international price index as forecasted by the Bank, would be equivalentto about CFAF 20 billion per annum at 1972 prices, i.e., a little higher orderof magnitude than the current net inflow (1972: CFAF 19 billion) of transfersand capital combined. The conclusion is that the projected current deficitdespite its sizeable magnitude in current terms should be manageable, providedforeign aid and emigrants' remittances at least keep up with internationalprices. The likelihood of these conditions is discussed in the followingparagraphs.
91. a. Private Transfers: Veterans' pensions from France are assumedto remain at their level of 1972, i.e. a decrease in real terms. A moreserious problem concerns wage remittances. The latter represents more thanone-third of the 1972 current deficit and has increased at an annual rateof 16 percent during the preceding five years. It is assumed that the totalnumber of Voltaic emigrants in neighboring countries will remain at the samehigh level of 1972, i.e. roughly estimated at about 700,000 persons. Wageremittances from them will then increase by 12 percent per annum, that isa slightly lower rate than in the past, but of the same order as the recentand proiected rate of increase of minimum agricultural wages in the IvoryCoast. The critical factor is therefore the Ivorian rate and pattern ofgrowth and, particularly, its ability to employ a large foreign labor forcedespite the high unemployment level in the cities (see Chapter III below).
b. Public Transfers (i.e. grants and technical assistance) areassumpd tn inrrease hv 7 nprcent per year and amnunt tn ahbnit CFAF 16 hillionon an annual average basis throughout the period. Thus, public_capital isnrniprtp to inrrcnre2se by 15 nperrent annua11v -mn,,nt-ino to a total of CFAF
36 billion over the period, or an annual rate more than three times that of
Table 20: Medium Term Outlook - Balance of PaymentsTGAF billion)
19C7. TI li,ne with past policies of both lenders and Government, it is not
projected that loans on harder terms will increase (except if an enclave
type operation such as the Tambao ro,iect materializes). The reasons for not
projecting significant increases in the real volume of aid are, first, that
in the present world context such an increase is problematic although Upper
Volta has always created a sympathetic attitude on the parts of donors;
secondly, anl more importantly. experience demonstrated that this countrv
could not efficiently absorb much larger aid inflows in a matter of a few
years only-.
92. The essential conclusion from this exercise in the future of the
balance of payments, as in the case of the short-run projection, is that thc
combination of the dominant exogenous factors -- price movements for exnorts
and imports as well as external inflows of funds -- may reasonably be expected
to maintain a positive overall balance of payments. In other words, the
external balance should not be a limiting factor in the process of economic
growth. A central condition for this however, is that inflation does not
erode the real value of external aid to Upper Volta. Otherwise, the ascending
movement of prices would hurt rather than benefit Upper Volta and the ex-
ternal deficit would lead to a drastic weakening of its position in the
Monetary Union and possibly open the prospects of a restrictive monetary
policy and thereby impede attempts to implement a more development-oriented
fiscal policy.
B. Public Finance
The Budget for 1974 and 1975
93. The original budget for 1974 was based on a projected "normal"
weather situation and continuation of a restrictive fiscal policy. hlowever,
the Government soon realized that the impact of the last drought would modify
the conditions of budgetary equilibrium.; consequentlv, foreign sources were
called upon to provide exceptional budgetary support. The outlook as could
be assessed in mid-1974 is as follows.
94. Current revenue will be a little less than originally projected as
a result of the net effect of a reduction in personal taxation, compensated
to some extent by higher receipts from indirect taxation, due to higher
prices. Receipts from personal income taxes will decrease by at least CFAF
1.0 billion or 8-9 percent of the original estimates, resulting directly
from the Government's decision, at the beginning of 1974, to free from tax
obligations (poll tax and cattle tax) regions most severely affected by the
drought. Despite reduced rural incomes, no reduction is anticipated in
receipts from consumption and Droduction taxes because of higher prices of
all commodities concerned. Receipts from export taxes 1 accruing to the
budget have been very small in the past and anticipated reductions in exports
1 ! Not including marketing profits from exports, mainly cotton, that
accrue to the Caisse de Stabilisation.
- 49 -
will not have significant impact on them. Finally, receipts from import taxes
which accounted for 47 percent of total revenue in 1973 are expected toinrrease nvy 10 Dercent over 1973. 1/
95. As in the nast; current appropriations have been strictly budgeted
for each government department. Estimates of operating expenditures onpersonnel and materials are in fact less than in 1973, but even a small
reduction will be difficult to achieve in the context of general inflation.It seems more realistic, in vipw of the much Ihighet cost of imported materials.
to expect operating expenditures to be, say, 10 percent higher than nowuAgeteA. Otber experditures are opnt-imiqtira11v nroierted to be almost thc
same as in the budget. Current balance will be zero and capital expendituresin the budget, if mainta4ned at t1heir 1973 level, wi11 therefore have to be
financed by foreign sources. Spending beyond that level would necessitatedrawing on TLreasury balces. The Govern.ment expects au FA-F 1=2 billion
of external funds, of which Prance will provide CFAF 0.7 million and othersources, especially ED and the Federal Pepublic of Germany, the remainder.
As in the past, the bulk of development expenditures will remain outside the
budget and be firanced directly by external sources.
1/ The average rate of taxation on imports is already fairly high, averaging37 percent on recorded imports (1968-72). The ratio is only 28 percenton total garim-red imnnrtA. The difference between the two is anindication of the incentive to escape customs duties (but there are otherPurely stfit si c,al rEs ons for teN.he . -screpani.y)
Table 21: Government Budget for 1974 and 1975(CFAF billion at current prices)
96. As the rainy season of 1974 was about "normal", it is unlikely thatthe Gve.m..ent will again suspen or duecrease personal and/or cattle taxes.Therefore, an increase of revenue in 1975 can be expected, particularly fromthe continued growth of import values and the increase in income taxes. Thus,the budget foresees an overall increase in revenue of 24 percent in currentterms oveer 19'3 (cf. Text Table 21).
97. As to expenditure, the Government may wish to further materializeits support to the developmental effort by increasing appropriations to thedevelopment servvices, mainly the departments of rural development and planningand public works as well as the regional development organizations (the ORDs).ThLs, as past experience amply demonstrates (see Chapter II), would go a longway towards increasing the country's absorptive capacity and, more generally,the Administration's ability to carry out projects. The services just men-tioned absorbed a bare CFAF 625 million in 1972, and are budgeted in 1975 forCFAF 990 million or an increase of 58 percent over 1972. This is a promisingindication of a more dynamic expenditure policy.
98. A current budget more or less balanced around CFAF 15.0 billion in1975, with the bulk of the increase going to the development-oriented sections
- 51 -
of the Government, is therefore assumed. There should be no liquidity problemin case of a shortfall in revenue because of (i) the possibility of attractingprogram aid from bilateral sources and possibly FED as in the past, and (ii)the availability of Treasury and public institutions' deposits with the bankingsystem of close to CFAF 9.3 million (December, 1974).
II - GOVERNMENT DEVELOPMENT PLANS
A. The First Development Plans 1967-1970 and 1971
99. Upper Volta's First Development Plan was launched in August 1967for a three-and-a-half year nerind. Tt cons4sted mainiv of a list of nublic
sector investment projects and was based on the projected annual growth rateof G-DP of 4 percent. Total outlays over the whole period were planned forCFAF 33.6 billion, including an "optional tranche" of CFAF 6.1 billion, orCFAF 9.6 billion per year, i.e. four times the average of the period 1960-66.The highest priority was accorded to economic infrastructure, especially roadconstruction with about 30 percent of total outlays (see Appendix Table 10.1),then cam,e rural dev,lopm,nt with 28 percent, followed by the "modern sector"(essent-ially industriess) W4it In percent, socilal infrastru.ture 81 perc-nt,
statistics, research and studies, 4 percent. Financing of the Plan was torely hleavilly on foreigr. sources, of whic rA and FED togeth-er wouldI contributeL~~.Ly L1~~~4V Ukl LUL~~~.L~~LL ~~I.JUA. , ~~LU W L LL El%t, ii A. LiJ L.~ L.LAL
about two-thirds. while domestic sources were to provide only 14 percent,W.4 8L percent LroU thLe governmUenLt LJudget.
100. Actual irvestLuent levels lagged considerably behind obJectives;
the overall investment implementation ratio 1/ was only 59 percent over theperiod, and sectoral performance ranged between 48 percent and 83 percent.The most serious shortfalls were registered in the rural sector and infra-structure, with 48 percent and 49' percent, respectLvely, of thle p'LannedU
expenditure realized. The achievement ratio was lowest for livestock (25percent), not because of financing difficulties -- about 85 percent Of plannedfinancing for this sector was committed -- but because of lack of qualifiedpersonnei, absence of a well-defined strategy, and insufficient preparationof projects, i.e. insufficient operating funds. By contrast, relatively highperformances were recorded in the modern sector (71 percent) on account of afew large projects in manufacturing, especially the textile plant in Koudougou,in the social sector (83 percent), and in statistics, research and studies(73 percent).
1/ This is defined as the ratio of actual expenditures to planned expendi-tures and does not, therefore, reflect the physical execution rythm ofinvestments. Two other ratios are also given in the "Bilan d'execution"of the Plan: one refers to the ratio of actual expenditures to financingobtained; another one refers to the ratio of financing obtained to fi-nancing planned. The latter ratio has been generally very close to 100,sometimes more than 100 as was the case in 1973 (123 percent).
- 52 -
101. Financing of the Plan, though heavily dependent on foreign sources,was not the principal bottleneck; in fact, the ratiosQ of co.mit- =nta to
planned levels of domestic and external financing were 87 percent and 67nercent respectively. niahisbursments on foraign funds, hower w re -onl,,
76 percent of commitments (or 67 percent of the Plan target). The lag betweencrommi tments an disbuzrsements of fore4 em funs wa vexplained,A to a ertai6;n
extent, by the complex procedures of foreign aid agencies but, much more so,byinef ficier..y in* - - J -car.ing out p ieLU aLiALJA..LLLLL.eCL.tLA.t
The major sources of foreign aid have been France (FAC and CCCE) and EEC (FED),It-&ichI- acco-u.ted fPor 255 and 31 percent, respecti4vely of aculnesr.etWLAJ~f~ ~ ~ L ~ ~~. V~ LY , IJ d,L t_Ud2. LII~ I.L~I
over the period.
102. The Interim Plan of 1971 was designed to permit completion ofprojects -ULdertakLen during the FiLrst LDeveULopmerIt Larl adLU allUow tlime for
preparation of the next Plan. Total investment realized under this Plan wasCFAF 7.4 bUillion or 87 percent of the target, while commitments with aboutCFAF 10 billion exceeded expectations; nearly half of the capital outlays wasfor infrastrucLural workrs.
B. The Current Development Plan 1972-1976
103. As the First Plan, tne new five-year Pian is aiso intended tobe primarily a set of sectoral projects. (While insistence on the projectcontent of the Plan is highly commendable, this does not mean that all oreven most of the projects in the Plan have been fully and finely prepared.On the other hand, an attempt is made, for the first time, to integrate pro-jects into a coherent nationwide framework.) The Plan's target is an annualgrowth rate of gross domestic production (i.e. GDP less government) of6.5 percent in current prices. This is projected on the basis of a lowcapital-output ratio of 2. Total investment required for its achievementis estimated at CFAF 63.2 billion, or an annual average of CFAF 12.6 billionwhich is 42 percent higher than in the First Plan. The growth target isexpected to bring about only a very slight improvement in real income percapita, in view of a 1.8 percent or 2 percent annual population increaseand the 3 percent annual increase in prices anticipated at the time of thePlan's preparation.
104. Greater emphasis than previously is given to the primary sectorwhich is expected to receive some 30 percent of total investment, a highproportion in view of the low capital intensity of the rural sector. Thefirst objective is to achieve self-sufficiency in food crops at satisfactorylevels of nutrition, and the second one is to increase production of exportcrops, especially cotton, but efforts to promote diversification in terms oftypes of products, degree of processing and export markets are also recommendedin the Plan. The most important project in the rural sector is settlementof the river valleys, as the natural follow-up to the eradication of river-blindness. The project is expected to ease the central problem of excessivepopulation pressure with respect to available land in the central regions.More emphasis is put on the development of the livestock sector which was
- 53 -
rathpr npelperte in the First Plan. The main obiectives here include thedevelopment of a more efficient trading system, improvement in the transportfacili4tie a-nd AevelopmenmAt of 1ivestcrk industries Eonnmic infrastructurereceives about one-fourth of total investment and is given a lower priorityrelative to previous program.s. The maiiQ en iTnnroempnft of the
feeder road system and of main road links with neighboring countries. Inthe econdary sector -prior4ty-- * t-- r- -- orbased on local raw materials. The main projects, both underway in 1974, areth e agro-industrial plant at Banfra (sugar mill) and extension of VOTTEX I(cotton textile mill). In the energy sector -- petroleum and electricity --.more e,..phasis 4s -Aven on4 a regular andt .. efiin ditrbt iorS. syste rathe
than to the production side (the Plan, of course, was prepared before theiternergy crisis")1.
1OJ. r FLnanLc1 ofJ.LLr, t hLe Pl7 an is characteriz.ed, as LLL LLn theLZU I Ldlan, Uy
massive reliance on foreign sources. These are expected to finance 79 per-cent of total needs. The rmajor Udonors should bUe FUED (20 percent), France(19 percent), and IBRD-IDA (12 percent).
106. The sectoral orientation of foreign aid would be very differentas shown in Table 22. French aid is the most diversified, wilth tne highestpercentage in the rural sector (44 percent), followed by economic infrast-ructure (20 percent) and the social sector (22 percent), especially educationand training. FED is expected to concentrate on economic infrastructure(48 percent), and the modern sector (13 percent). IDA assistance would goessentially to the rural sector (69 percent), while UNDP's emphasis wouldbe the social sector (42 percent).
107. Certainly, some aspects of the Plan are technically open to dis-cussion, for example, the use of a capital output-ratio as the determinantof growth as well as the rather low value attributed to this coefficient.On the whole, however, the 1972-76 Plan is a well-oriented policy dacument,moderately ambitious in view of the economic context at the time of itspreparation. It seems to represent, furthermore, a genuine concensus ofthe goals and directions of the various government agencies involved in thedevelopment process and reflects well the country's capacity to attractexternal aid as well as private capital. The effort it represents to couchthe government's program in terms of identifiable projects is praiseworthy.The Plan's organization effort to keep its implementation under constantreview is also worth noting, though there still are serious delays in statis-tical reporting of the execution of the various sub-programs.
- 54 -
Table 22: Structure of Foreign_Fimnance in the Second Plan, 1972-76(in percent)
108. For the first two years of the Plan, 1972 and 1973, the rate offinancrnpv onmmitments waS 21mnot 100 nprepnt of targets, whilp excutin
of projects reached about three-fourths of the objectives. Considerableshortfalls in execution were registered~ in administrative infrastructure
(only 24 percent), in the social sector (50 percent) and in the rural sector(53 perc-nt) -herea a orbetr - or-r,mnance was achieved in 4nfrasruc,ture
(119 percent) and in the modern sector (86 percent). It is apparent, onceagain, that fir.nncing is not the majnor obstacle i4r c-rry
4n- out the Plan
but that other factors, such as limited administrative capacity, inadequatelyprepar proj , lack of 14.t-A ---l--i p -onl, anA considerable delays inobtaining equipment and materials from overseas because of both suppliers'ar,d transportL probliem's, IL-ave been the m.ain reasons fLor llthe de'lays. How--rthe ratio of three-fourths just mentioned should be considered a relativelygooUu pe rLori-iance, conUider ing LthL dLaL eauy lin 1 7 1L LleU GV10 LIernIent 'la LU
cope with the urgent problems posed by the drought. Though no results for1974 are known yet, wide UdLlfereces uetweer objectives and realizaLions as
a result of the drought, the petroleum crisis, and worldwide inflation shouldnot come as a surprise. The impact of thfese Lactors will nlo Uoubt be fullytaken into consideration in the next Plan whose preparation should startactively in late 1975.
- 55 -
iiI - OULLINE OF A LON, tERM STRATEGY
109. The long-run development prospects essentially revolve aroundpopulation issues. Since popuiation involves siow moving processes, thedanger is that five-year plans, important as they may be as operationalinstruments, overlook the fundamental problem. It would therefore bejudicious to design such medium-term programs within a longer, broaderframework with a twenty-year or so time horizon.
110. The following sections outline the sort of development strategythat appears most consistent with situations of rapid population growth andpopulation maldistribution, as both occur in Upper Volta. The emphasis isheavily on the agricultural sector where both the main problems and theirsolutions lie.
111. With its modest resource endowment and the many well known con-straints in the way, the range of possible development paths and associatedpolicies is necessarily limited. It is best perhaps to start by recognizingthat there are two scenarios for the future that are either impossible or soundesirable that they should, at all costs, be avoided. At the one extremeis the "classical" model 1/ of development whereby the agricultural sectorconstitutes the main growth force by (i) supplying food to the population atlarge, (ii) providing foreign exchange, capital (savings) and labor to thenon-agricultural sectors, and (iii) presenting a market for their products.While Voltaic agriculture indeed performs all of these roles in some degree,the model breaks down for the following reasons.
112. First, agriculture does not provide a stable, reliable source offood supply; not only do food imports normally represent 20 percent or so oftotal imports, but also vulnerability to weather conditions leads to seriousperiodic deficits in basic foodstuff. Secondly, although virtually allmerchandise exports are agricultural, the foreign exchange thus obtained isvery limited; as noted in Part one, agricultural exports represent an unusuallylow proportion of GDP and are extremely small relative to imports. Thirdly,though the evidence is that the rural sector provides more revenue to theGovernment than it gets back from it in the form of expenditure going to itsown development, overall' the financing of national development dependsessentially upon foreign capital. Finally and above all, the amount of laborthat is released by the rural sector neither results, as the "classical" modelimplies, from increased productivity in agriculture, nor does it occur inresponse to labor requirements of the other sectors in the economy. Surpluslabor, on the contrary, exists because agricultural productivity is too lowto provide even barely adequate incomes, and this surplus labor does not findemployment in other sectors but abroad.
1/ "Classical" because it does correspond to historical experience in mostdeveloped countries.
- 56 -
113. A well conceived developent strategy wi,11 of course, seek to
change the situation just described. It will aim particularly at achieving
a sustained increase in food production and agricultural exports. however,
it is not reasonable to expect the non-agricultural sectors, especially the
secondary sector, to productively absorb over the long period more than a
few thousand additional people each year. There would be no point therefore
in looking to agriculture as a "reservoir" of labor for the rest of the
economy.
114. On the other hand, continuation of presently observed trends is
another impossible, or rather undesirable, scenario: the growth of material
production is too slow and erratic; natural resources in the central and
northern regions are being over-exploited because of excessive population
pressure; livestock development in those areas, whether transhumant or seden-
tary, is constrained for the same reasons; emigration out of the region to
the south and southwest in a completely unorganized way results in suboptimal
occupation of soils, and in conflicts with previously settled population;
emigration to coastal countries may soon find increasing obstacles in the
recipient countries as more -.d more immigrarts seem to go to the coastal
cities where unemployment is already a problem; the progress of education,
especially the traditional primary system, apart from producing inadequately
trained people, will soon be blocked by financial constraints.
A. A Strategy Based on Population Movements
115. A strategy based on population movements would take advantage of a
number of favorable factors. First, as already mentioned, the overall popu-
lation growth rate is fairly low--2 percent per annum--in fact apparently the
lowest among Sahelian countries, and the growth rate in the Mossi plateau,
where densities are highest, is still lower (estimated at 1.2 percent per
annum). 1! Second, Upper Volta is lucky in possessing, within its territory,
areas of potentially high economic value that are still relatively under-
populated or practically empty. Thus the twin objectives of inducing higher
rates of production growth and a better distribution of the population could
be solved simultaneously. This, in very broad terms, would occur, because,
with more area per head, productivity in the center will increase and because,
by definition; nroductivity of those people moving from the center into the
1/ However, it would seem that this is so because of particularly high
mortality rates rather than as a result of lower fertility. There is
little doubt that both lower mortality rates and lower fertility rates
would be desirable, which does not imply tnat the Government, for a
variety of reasons, would favor active population programis. It is
interesting to note in this respect, however, that in response to a
recent enquiry on population problems by the UN, the authorities stated
their position as follows: the size of the population is found accept-
able, its rate of growth is found excessive; and family planning acti-
vities are accepted though neither directly sponsored nor supported by
the Government.
more favorable peripheral areas will be higher also. Third, as noted earlier,outward migration from the plateau has been taking piace ror a iong time;there is no question of having to forcefully "displace" people; the questionis rather whether emigration out of the piateau wii be adequate in size, pace,and direction. An active policy on the part of the Government is most probablyrequired. The main components of such a policy are sketched ou.t in the follow-ing paragraphs after a quantitative assessment of the problem.
116. In the absence of sufficient data on soils quality, degradation andrecovery rates, it is very difficult to determine what is the maximum oroptimum degree of land occupancy. However, a generally accepted yardstickis that a density of 40 inhabitants per square kilometer is certainly a levelthat should not be exceeded under conditions prevailing in the central andnorthern regions. Upon this basis, emigration requirements have been estimatedfor five ORDs of the central plateau under various assumptions (see Appendix).One is that excess population in those ORDs where density exceeds 40/sq kmwill move first to other ORDs in the region where density is less; anotherhypothesis is that excess population from any given ORD reaching the acceptablemaximum moves out of the region. Another one still provides for a combinationof internal and outward movements--which is in fact what has been happeningand happens now. There is both a slow migratory movement, generally towardsthe western, southern and eastern borders of the central region, and departuresto.either the other regions in the country, especially the southwest, or tothe coastal countries.
117. Quantification of these different assumptions (see Annex I) leads to
the following conclusions: 1/
(i) if the aim was to stabilize population in the center (whereaverage density was already 36/sq km in 1972), about 38,000people would have to emigrate each year;
(ii) if outward emigration was 15,000 people each year and therewere no internal movements, in year 1990 there would have beenan excess population of 125,000 in the center; besides, someORDs (Yatenga in-particular) would be heavily 'overpopulated;
(iii) if in addition to the outward movement of 15,000 per annum,10,000 more persons were to move from the more to the lessdensely populated ORDs in the center, the excess populationin 1990 would, of course, still be the same but internal..distribution would be more even (no ORD would exceed 43 sq/km);
G Given the inadequate statistical basis, and the faet that sorte refinel..entsof the assumptions made have been overlooked (for example: the natural
growth rate in the plateau is supposed to be constant whereas it iscertainly affected by the rate of emigration) the quantitative findingscan only be indicative.
- 58 -
(iv) it would take an annual migration out of the central regionof nearly 25,000 people to maintain density there under 41 sq/kmuntil 1990;
(v) finally, in all above cases the central region would be"saturated" by 1990, with average density of 41 sq/km (andalso in each ORD assuming appropriate internal movements inthe meantime) and about 40,000 persons would have to leave iteach year to maintain density at that level.
118. The practical lesson is that, under admittedly crude but reasonableconditions, the policy problem appears serious but of manageable dimensions.The slow, gradual population movements that take place within the centralregion do not require special action on the part of the Government except, ofcourse, its continuous effort to adapt the project selection and implementation,especially those under the Rural Development Fund (see following Chapter), topopulation needs; for example, new water facilities may be required where newvillages have developed. Also, as in the past, emigration abroad will continue.However, not only its current rate is not known but also a major unknown, at
this stage, is the Ivory Coast's capacity and willingness to accept newmigrants. Indications are that in this country, workers in both the forest
and savanna areas will be in increasingly short supply over the decade of the
70s 1/ but that urban unemployment may take large proportions. It is there-fore very much a question of whether the Ivorian authorities will be willingto and capable of transferring excess labor from the cities into the ruralareas, especially those where new developments are taking place (southwest).Thus, while the policy choices in Upper Volta are restricted by the Ivorianposition, there is still a fair degree of freedom in the sense that emigrationto the coast is unlikely to come to an abrupt end; besides, new opportunitiesfor Voltaic labor may open up in other countries: for example, the Governmentsof Upper Volta and Gabon (where manpower is in short supply) are currentlynegotiating this question. Ghana, where immigrant labor used to be important,might again become a country of immigration. Therefore, not all the excess
population from the center need be relocated within the national boundaries.In any case the relocation of internal migrants should not be a major problem.As an illustration, if half of the 25,000 emigrants indicated under assumption
(iv) above were to move to other parts of the country, this would mean a totalof nearly 190,000 people over the period 1975-90. This in turn would mean
that by year 1990, population in the areas of immigration would be about 6percent larger than would result from natural growth alone. An inflow ofmigrants of that magnitude, therefore, is not such as to significantly alterthe nature of the develoDment Droblem. It is rather a matter of orderly
absorbing immigrants into new areas, as often as possible in the realm ofnew agricultural nroiects.
1/ Ivory Coast: Special Report on Employment, IBRD, No 279a-IVC,July 31, 1974, Volume 1, p. 15.
- 59 -
0. Agricultural Programs; Cwo General 'onsideratLois
119. Two remarks concerning the time dimension and the scope of agrLcul-tural programs are worth noting here. Certainly one of the planners' pre-occupations for tne long-term will De to determine the time schedule ofdevelopment operations related to expected and/or desired population movements.On the one hand, premature investments that would be underutilized for lackof people are a potential source of serious waste; on the other hand, over-response by Voltaic farmers, known to be very alert to new opportunities, maycreate gluts and result in difficult problems especially as regards selectionof beneficiaries of new projects. A time-span of some 20 years is chosenhere for the sake of reasoning, but no attempt is otherwise made to work outprecisely timed programs.
120. There are not in the Voltaic economic structure separate agricul-tural sectors, one of "commercial" and one of "subsistence" agriculture. Alldevelopment projects, in varying degree, cover both "cash" crops and "food"crops. There is not in fact a single crop that is a pure export crop: asmall but increasing proportion of cotton is used by the local industry andtextile handicrafts have always been active; oleaginous products are soldboth for export and for local processing (groundnuts, sheanuts, sesame, cottonseeds); staple foods all have some local market: millet, sorghum, rice, roots(yams, manioc), and vegetables. Sugarcane now being developed for the sugarmill near Banfora, is perhaps the only to be grown on an industrial basis(i.e., in large estates that will eventually cover 4,000 ha or so), but evenin this case plantation workers will not be pure wage laborers; rather theyand members of their families will also maintain their own farms, possiblywith some irrigated plots.
121. The implication of the foregoing remark is, in short, that thefocus of all agricultural projects should be the farm unit rather than oneparticular product. It is the impact of the project on the farmers' mix ofinputs (principally labor time) and outputs (especially the balance between"cash" and "food" crops) that matters. Provision of extension services, newtechniques, material inputs, as well as pricing and credit policies havetherefore to represent a meaningful whole to the farmer and be internallyconsistent: for example, as recent experience demonstrates, the effects ofa well thought out package of inputs for cotton production can easily be de-feated by inadequate prices for the product; in this case, not because of an ini-appropriate input/output price relationships, but because of the unattractiveprice relationship between cotton and food crops. 1/
1/ It would seem that the ratio of producer prices between cotton andmillet/sorghum tnat rarmers find "adequate! i.e. one under whichthey find cotton worth their time, is 2.5:1 or 2:1. In 1973 it was1.1:1.
- 60 -
AgriculLural Programs: Ty-es of Projects
122. In its broadest terms the objective of an aricultural strategy will
be first to permit, support, and, as needed, organize inter-regional population
movements, anid secondly to increase agricultural productivity in bnth the
emigration and immigration areas. Since, on the otler hand, resource limitations
wiii not permit developrment actlons on the same scale everywhere, the central
theme of the strategy proposed would be to undertake:
(a) "Extensive" operations in the areas of the central plateau, 1/
consisting chiefly in the pLovisiOn of social infrastructure --
mainly water supply for human consumption -- and low cost, smalli
scattered improvements to production conditions;
(b) "Intensive" projects in the other areas aiming chiefly at
increasing production, both for the home and export market and
at raising incomes of both local and immigrant population.
The Basis for Progress in the Central Plateau
123. Over the past 15 years, vast amounts of money and human efforts
have been poured into the Mossi plateau without tangible results. It is to
be feared that returning to such large-scale operations (e.g. the soil
restoration and protection project in the Ouahigouya region) will not prove
more productive than in the past and, at the same time, will raise unfounded
expectations among the population and discourage the desired flow of emigration.
The suggestion here is, on the contrary, to permit emigration and thereby
restore the environment necessary for traditional agriculture to be effective.
The essential condition for this is an increase in land availability per head
so as to permit adequate fallowing and also have enough space for both land
cultivation and pastures. However, extensive agriculture that will permit
maintaining yields and avoid solid degradation will merely prevent further
degradation of living standards.
124. Specific action is needed to improve these as much as can be. This
objective can be achieved by developing infrastructural and other equipment,
that is of direct interest to the village population and by improving produc-
tion conditions. The most important factor in this context is water supply;
others are storage facilities, wheel carts, simple plows (such as those manu-
factured on an experimental scale in Bobo-Dioulasso under a UNDP-ILO project),
and small swamp rice works ("amenagements de bas-fonds"). These facilities,
of course. would come in addition to the usual social infrastructures such as
schools (for rural education) and dispensaries.
1/ These terms for "the center" or the "Mossi plateau" are used here as short
cuts to mean the ORDs of Ouagadougou, Koudougou (excluding the cercle of
Leo). Yatenga, Kaya, Koupela.
125. Though much of the above is being done already, a serious scalingup of operatio is nLeded. For L- UU e t'L effor 'it to zi sts tw thn
are required--sufficient financing and adequate organization in the field.To fulfill thL-e flirst condUition (Uan'd contriLbLute to the second) a r,,Iuch expanded,more flexible Rural Development Fund would be an effective instrument. Theexisting RDF will need additionaL l finance ('thLough'I funds appear adequate Lorthe next two years or so at the current rate of operations), the aim beingthat the operations in the Fund's province snouju never DC CULLallt!U Decaube
of lack of funds. It is very difficult to suggest figures because it is reallythe amount of identified needs that will determine financial requirementsrather than the other way around. On the other hand, it is certain that theamounts involved will remain relatively modest. As an approximation, atrebling of the Fund's resources, to $6 million, at the time of its replenisin--ment is certainly both a desirable (especially in view of anticipated priceincreases) and feasible objective.
126. The Fund should be an ideal instrument for the Government to channelmore resources into agricultural development. A system of cost sharing betweenthe Government and whatever external source of finance is the partner (forexample, IDA as in the first fund) that would take account of the TreasuryT svarying capacity to participate, could be devised. Though the Government'sparticipation has been practically nil so far, it should be noted that theFund's operations have, as needed, benefitted from short-term Treasuryadvances in significant amounts already.
127. In the spirit of the overall strategy proposed it would be logicalfor the Fund to concentrate on the needs of the central plateau, rather thantry to respond to requests from all over the country. The reasons foradvocating this are that other regions will benefit from specific projectsand that a relative specialization would lead to more efficient use of scarcestaff and technical resources.
128. Regarding the field organization, the need for a determined effort
to strengthen the ORDs as development institutions has been felt for some-time. In fact, this theme is about as old as the institutions themselves.The point had been reached, however, where the usefulness of ORDs, with theirblatantly insufficient staff, limited freedom in decision-making, and symbolicfinancial autonomy, could be seriously questioned. Staffing is, to some ex-tent, in the short and medium-run, a matter of technical assistance, but -- asdemonstrated by experience --no amount of foreign help will replace Voltaiccadres themselves (meaning agricultural engineers, technicians, topographers,extension workers, accountants) in this task. Foreign technicians in theORDs should rather be in specialist positions (say irrigation rice technician)to advise on technical questions than in managerial positions. More localtalents should be directed toward the ORDs. Administrative officers (especial-ly "commandants de cercle") should give fuller support to ORDs' activities.The ORDs' financial autonomy, based on revenue from marketing activities,appears an unattainable objective: ORDs are not properly equipped to bemerchants -- and there are plenty of these -- and government nricing Dolicies for
- 62 -
foodcrops are a nuisance more than anything else, because they are unrealis-
tic in trying to ignore market conditions especially in times of scarcity.
At the same time, local taxes do not benefit ORDs but instead the 'collectivites
locales", whose expenditures, in turn, do not seem to relate much or at all to
the ORDs' developmental activities.
129. A reform of ORDs will necessitate, at least in the initial stages,
funding from the Government on a much greater scale; the RDF should be allowed
to cover current (though not recurrent) expenses for ORDs such as those of
temnorarv technical assistance (e.g. a team of topographers for a number of
weeks or months). Reform will take years; mistakes, wastage will occur in
the nrocess but these will be less costly than lack of action. In their
efforts to revive the declining rural economy of the central plateau, the
Government as well as the aid agencies that may be involved shiould have in
mind a model that could be appropriately named "development from below with
unlimited finance "
130. Reform of the ORDs is necessary in all regions. But the case is
stronger for the ORDs of the central plateau, destined to concentrate on a
large number of small nroterts locally identified. locally designed, and
locally managed with financing from the RDF whereas it is relatively less
importart in the rest of the country where much larger proiects, with their
own organizational structures, naturally come to reinforce or, in fact,
rep1ace the existing ORDs' organization. The reform of the ORDs should
include a managers training program for agricultural and rural projects.
The adequacy of such a managers training nrnoram wtould be studied through
the IDA Education Project Credit.
131. Finally, a strengthening of development structures should include
a strengthening of the Government central services in charge of rural
development in their role as a planning, supervising, and policy making insti-
tution. This would amount to creating a single directorate for rural develop-
ment with commanding powers over the various technical corps -- agriculture,
livestock, rural and hydrau1ic equipm.en.. This reform, which had been debated
for years, was the subject of a recent decision. By a decree of November 28,
1974, a Coordinating Committee for Rural Development was set up. The Committee
is to be in charge of conceiving and working out the national policy of rural
development as well as adopting and coordinating annual programs of ORDs. The
collegiate character of the Committee is designed to ensure the largest par-
ticipation possible of all levels of th1e Goverrunment. At the same time, a
Permanent Secretariat will assist the Committee in its day-to--day operations.
- 63 -
C.Specific Programs for the Per4pheral Zones 1/
2. T hLLe peripheral zones, Ln fact -bu h of te . a
where natural conditions are much more favorable and average population
density is half that oL the center, offer the best opportunity for relatively
fast agricultural development, partly on the basis of on-going operations
wnen and if properly expandeu, partly as a result of new developments. Staple
cereals -- millet and sorghum -- and rice, maize, tubers -- especially manioc --
cotton, groundnuts, sesame, sugarcane, vegetables are the main products now
grown and with considerable potential for growth. For example, from a purely
agronomic point or view, Upper Voita's potential for seed cotton is reasonably
estimated at about 120,000 tons, or four times the maximum reached in the
recent past; 80 percent of the potentiai is in the west and southwest.
133. In order to materialize the-potential and give productive employ-ment to immigrants, three sorts of projects will need to be implementedand/or expanded:
- integrated rural development projects,
- irrigation projects,
- settlement projects.
In fact, these designations call attention to one central feature in eachcategory, but they also may overlap with each other. Livestock, a parti-cularly difficult area, is sometimes part of a project where 'mixed farming'is one of the themes, but more often is the subject of specific operations.
134. Integrated Rural Development Projects. This is a general, rathervague, designation to mean multi-purpose projects with a strong geographicalconcentration. A good example is the Bougouriba Agricultural Development
Project recently approved by IDA. The Bougouriba ORD (Diebougou), in thesouthwest, contains about 350,000 people or 7 percent of the total population,including a growing number of Mossi immigrants, on 6 percent of the total area.Natural conditions are favorable, with annual rainfall above 1,000 mm,generally fertile soils, and relatively good ground water supplies. Theprolect will be carried out over a four-year period and concentrated firston the development of the areas presently free of riverblindness.! i.e. outsidethe Black Volta basin. The project is designed to expand food crops and cottonproduction, and integrate crop cultivation with livestock raising where possible.It is a comprehensive operation including not only crop development with theusual input package (seeds, pesticides, fertilizers, credit and extension ser-vices), but also well construction, intensive staff training and appliedagricultural research. The total cost of this operation over 4 years ishigh: 2/ CFAF 2.2 billion ($9 million), excluding taxes, or an average expen-
1/ "Peripheral zones," or "regions of immigration," or synonimous forms,are used here to mean the south and southwest regions comprising theORDs of Diebougou (Black Volta), Bobo Dioulasso, Banfora, and also,in the East Fada N'Gourma where so specified.
2/ However, projects of this type cost still more on average: see paperon rural development policies, IBRD.
- 64 -
diture of CFAF 12,800 per farim, 1' peei -ear, represent4ing between 20 percent
and 50 percent of pre--project farmii incomes.
135. The West Volta Cotton Project (also with IDA financing, approved
in December 1970) is another example of a wide embracing project, in terms
of area and population: it involves almost the same number of farms as the
Bougouriba project and its cost is similar. In this case, however the en-
phasis was decisively on cotton production. This product-oriented approach,
which follows many years of effort by both the Government and French assistance
(CFDT). has proved efficient as long as climatic conditlons have permitted
farmers to obtain a satisfactory output of food crops. Food crops benefit onlv
indirectly from the project (for example, through the after-effects of fertil-
izers used for cotton), and, in times of drought, they become the farmers'
first priority, at the expense of cotton, not only because the farmers then
want to maintain their subsistence supplies, but also because shifts in rela-
tive prices make it much more profitable to sell cereals than cotton.
136. As noted earlier, tLe success of agricultural projects very much
depends on their paying attention to farmers' entire spectrum of activities.
For that reason the strategy would call for an expansion of the West Volta
Project into a more truly integrated rural project. With this, and when the
time comes, in the late 70s, for the Bougouriba project to be extended, a
vast area in the southwest that will include probably well over one million
people (950,000 excluding immigration) by the end of the next decade, will
be under an active development program. Not only should this program ensure
the desired growth of staple crops for the region, but it should also make
the region the main supplier of both cereals for a national grain reserve
policy and cotton exports, it will also provide a growing share of exportable
livestock.
137. Rural development projects of the type described above present two
potential weaknesses -- none of which can be effectively avoided at this time.
One is that production under these operations is subject to the weather
vavariep practically to the same extent as traditional agriculture, and
although the risk of severe drought in the southwestern region is minimal,
fluctuations in rainfall do occur and directly affect results. The other
is that despite the introduction of "modern" inputs, the traditional method
of extensive, shifting, oultivation remains basically unchanged. This method
is well adapted to conditions of unlimited land availability and it does not
raise serious problems in the "neriphpral" areas of Upper Volta yet, but it
will ultimately become impracticable if population continues to grow. UNDP/FAO
has therefore launched 4n 1l68, in the vicinity of Bobo-Dioulasso, an experi-
mental project to sedentarize" cultivation, using draft animals and fertil-
izers and applying crop rotation -- the so-called Matourkou project. 2/ This
experiment and the lessons to be drawn from it at this stage are described
1/ With an average of 8 people.
2/ Normally the project includes also assistance to the Matourkou agricul-
tural training school.
- 65 -
in another document 1/ from which the following concluding comments are
excerpted: "an important lesson to be learned fron the project's experience
is the fact that through adequate extension and by winning the village's
confidence, it is possible to increase production per u;1it of area, thereby
intensifying agricultural output and economizing available land resources.
If the next few project years would also prove that it is possible to maintain
soil fertility over a longer period, then a project of this type would appear
to be particularly suited for the more densely populated areas such as the
Mossi plateau, where shortage of good soil is becoming acute. Even at this
stage, farmers on the Mossi plateau might become more easily convinced of
the need for a proper crop rotation and cultivation of fallow land with
fodder crops in order to maintain soil fertility, than has been the case
under the Matourkou project. It would seem appropriate to start a preliminary
analysis on the location of areas on1 the Mossi plateau whiere such extension
projects could be undertaken."
138. Thc pace at which "integrated*' or similar projects could or should
be developed will depend on the success of ongoing ones and on availability
of financial resources. But the main problem is one of effective follow-up
after the initial 'development" period of 4-5 years. In this respect, it
should not be considered as an indication of failure that "repeaters" are
needed to achieve tangible progress on such a wide front as these projects
imply. Perhaps it can be recalled here that the "take-off" of cotton produc-
tion in Upper Volta, in the mid-sixties, occurred after some fifteen years of
sustained efforts during which, in appearance, little progress had been made.
139. Obvious candidates for new integrated projects are the ORDs of
Banfora (southwest, 180,000 inhabitants) and Fada N'Gourma (east, 290,000
inhabitants). While FED is already participating in financing (still limited)
operations in the former, USAID has recently expressed interest in the latter,
and is currentlv discussing with the Government the modus operandi of an
intervention. Based on the figures previously mentioned, the cost of a
program covering the five ORDs 2/ of the southwestern and eastern regions,
assuming 80 percent of the rural population is concerned, would mean over
the next 10 years a cost of (at 1974 prices) approximately CFAF 35 billion
($150 million) of which a mere 15 percent is already committed, principally
from !DA. Honefullv. as individual projects develop, a growing share of the
financing would be self-generated. However, the bulk of the financial effort
over the cominp years will have to come from abroad: of course, the greater
part of the expenses involved are of a current nature rather than capital
fornmation and these should also be financed by aid agencies.
140. Irrigation Prnorams. The severe rainfall deficiencies of the
recent years have rekindled the Government's as well as foreign interest in
the problems of irrigated agriculture. A serious effort to obtain an idea
of the country's irrigation potential and to identify and prepare irrigation
1/ See Agricultural Annexes to the present report (Annex III, the Matourkou
2/ Black Volta, Bobo-Dioulasso, Bougouriba, Banfora, Fada N'Gourma.
- 66 -
projects has recently been undertaken. 1/ As the country's irrigation poten-tial, on the basis of data presently available, appears to be relatively
important (about 140,000 ha), less than 1 percent of which is currentlyirrigated, it is clear that in agronomic terms, no serious constraints to arapid expansion exist. However, in order to define a proper irrigationpolicy, as part of a broader policy of water resources use, other factorsmust be taken into account, the most important of which are the following:
(a) alternative development possibilities do exist and, in most cases,
their capital cost is considerably less than for irrigation,especially in the peripheral areas which have relatively highrainfall (and are also those where the best irrigation oppor-tunities exist). Also, the progress of the eradication of
riverblindness (see following chapter) will open up new areasof high potential fertility-without irrigation. Thus, it wouldrost CFAF 4-600;000 ($1,700-2.400) to resettle a family on8 hectares of arable land under rainfed agriculture, againstCFAF 0.5 to 1.0 million ($2,000 to $4,000) for one hectare of
irrigated land, which is the minimum area that a family wouldneed to exnloit if it devoted itself entirelv to irrigated
agriculture;
(b) it should be considered that for some time to come the countrywi11 have limited internal marker nossibi]ities for the productsthat could best be developed under irrigation and that itsdistance fro-m- -f oreign mrke tS, e_ve_n t'he coa,_s t_al_ eouln t-ries whe- re
the demand for rice is growing rapidly, makes its produce hardlycompetitiv (for, ex ple wth~t rice~ impovrted fromn Asia) except,
maybe, in the case of high value crops -- fruits and vegetables--exported to Europe by airfreight in the winter season; however,
current price forecasts for Asian rice do improve the competi-tiveness of Wlestf AFr4- rc especi in - the lnteriorcountries where access costs are high;
(c) the shortage of expertise and trained personnel as well as theldack. of xptLeLnLLc L Lr £ .L6CI agric uLL. Ur, bhu. LL within tLh
Government and among the farming population, will severely'limit th-e pace ofL Udeve'lopment andI tih proLUgres o'L productionfrom irrigated fields at least during the first 10 or 15 years.The government agency in charge of irrigation developmenit,the Department of Water and Rural Infrastructure (HER), 2/has a staff of 41 for tne entire country, among -which 15 areirrigation engineers (of whom 7 are expatriates).
141. It is therefore advisable to define future irrigation policy in
terms of minimum desirable objectives to be attained, rather than as a iarge
1/ See Agricultural Annexes (Annex I: irrigated Agricuiture, £BRD workingdocument No. 560-UV, September 30, 1974), for a full description of the
potentials.
2/ Dnire-timn de ltirnii1i ei- de t 'EuFinnpmPnt Rural.
- 67 -
scale alternative to rafed- agriculture. There is no reason at thlis timeto seek to exploit the full irrigation potential as fast as possible. the aim,
rather, should be to Lma'ke irrigated agriculture play the role of an insurancp
against the fluctuations of rainfed food production notably in case of severe
droughts as have happened in the recent past. The country's grain deficit
of about 60,000 tons in "normal" years has reportedly reached some 350,000
tons in 1973 (and this is probably a high rmaximum) Assuming that only
one-half of the lands to be irrigated would produce two harvests of grains
annually with a yield of 4 tons per hectare per harvest, the other half being
developed under supplementary irrigation with only one harvest per year at
4 tons per hectare, and further assuming that at least 120,000 tons per year
(the quantity of food aid imports required for 1973/74) would have to be
secured by irrigation, then, the development of 20,000 hectares would be
enough to meet the deficit. This area would only be one-seventh of the
physical potential, a relation that should permit systematic choice of the
best locations for irrigated projects. However, in order to develop an area
of 20,000 hectares in, say, 10-12 years time, a considerable expansion in
development, maintenance, and supervisory personnel would be needed, as the
average increase in irrigated land is currently only 400 hectares per annum,
most of which is in the form of very simple irrigation (improvement of swamp
rice cultivation).
142. The irrigation potential to which the foregoing considerations apply
includes the following, quite different, components:
(i) Black Volta basin : 55,000 hectares
(ii) White and Red Volta basins : 47,000 hectares
(iii) Comoe basin : 15,000 hectares
(iv) Plains in Southwest : 13,000 hectares
(v) Small dams : 10000 hectares
Total 140,000 hectares
To the above can be added swamp land areas which can roughly be estimated to
represent a total of 30,000 hectares made up of very many scattered plots
throughout the country. These, as well as most of the irrigation around the
existing 240 or so "small dams" that were built with FED and FAC financing in
the sixties (category (v)), could best fall in the province of RDF operations,
since they would consist of small projects of a few hectares each. Such oper-
ations will be especially useful in the Mossi plateau where they would permit
intensive use of scarce land and complement traditional productions of millet
and sorRhum with rice, a highly appreciated commodity.
143. The other components -- (i) through (iv) -- form the potential for
specific projects in the peripheral zones as part of the overall strategy
proposed here. However, irrigation in the Volta basins (items (i) and (ii))
would be part of the third component of the strategy, consisting of settlement
projects following the riverblindness eradication campaign.
because of the complex interrelations within each river basin and between
- 68 -
river basins. The largest project underway is for sugarcane, near Banfora,
with water from the Yannon, a tributary of the Comoe river, for a first tranche
of 2.250 hectares; the second tranche of 1,80(0 hectares will necessitate a
storage dam on the Comoe; consequently, a master plan for use of the water
resources of the basin is being prepared by consulting engineers with FAC
financing. In addition to sugarcane, the plan should give room for small
rice-growing schemes to be gradually developed by the farmers working in
sugarcane and their families.
145. Among the southwest plains that seem good candidates for medium
term (5-8 years) irrigation development are Kamadena (5,000 ha) a pre-
feasibility study of which is to be started with financing by IDA through
the RDF. Another one is the Niena-Dionkele flood plain where a complex oper-
ation with irrigation (2,000 ha), improved rainfed agriculture, fislhing,
livestock, has been identified by this mission. About 18 months would be
required for a feasibility study and the estimated cost of the project is
$10-12 million.
146. The peculiar conditions in the Sourou plain, a dry valley flooded
a few months each year by the waters from the Black Volta, has been under
study for many years and an experimental irrigated scheme exists at Lanfiera.
It would seem that a first project of 3,000 hectares would be feasible in the
near future at an estimated cost of $10 million, as the first step of a long-
term development of 20,000 hectares. An example of the need for planning is
the case of the Banzo plain, in the Black Volta basin, that was previously
selected as offering good conditions for an irrigation project, however, it
appears now that the plain would be permanently flooded if and when a dam is
built on the Volta prima facie. the best site for the construction of such
a dam if otherwise justified.
147. Settlement Projects and Development of the Volta Valleys. The.
third comnponent of the program for the periphery will consist of the develop-
ment of the main river valleys, i.e. the basins of the three Voltas. A
settlement ex-eriment has already started on the White Volta: the Red Volta
offers minimal opportunities while the Black Volta has, by far, the greatest
potential. TLare scale operations rest unnn the effective eradication -- or
at least control -- of the black fly (simulium damnosium) that causes river-
blindness (onchocerciasis). A, internationnallv supported camnaign to that
effect was started in November 1974 and though it is essential that a
"maintenance" effort be continued over the next 20 vears. the va11evs could
be occupied by people only months after the first treatment. The cost of
the campaign is estimated at $54 million for the first six years (and over
$100 million for the longer term operation).
148. The area to be freed from the disease, in Upper Volta, 1/ is esti-
mated approximately as follows:
1/ The riverblindness campaign covers seven countries among which IJpper
Volta is the most important in terms of area and population concerned.
- 69 -
Black Volta complex: 600,000 hectaresRed Volta 250,000 hectaresWhite Volta 750,000 hectares
Total 1.600,000 hectares
Both settlement projects based on rainfed agriculture and irrigation projectsare contemplated. One of the imrportant aspects of the planning is preciselythe determination of a proper balance between the two sorts of development.The overall planning of the Voltas development has been entrusted to a newlycreated (April 1974) government institution, the "Societe Nationale pourl'Amenagement des Vallees des Voltas." 1/ The Societe's practical means forperforming its task is not known at this time; it would seem that various aidagencies are ready to provide teclnical and financial assistance. The workalready done by a French-financed team in the White Volta comprising theexperimentr1 resettlement srheme mentioned earlier; various reconnaissancestudies, and a pre-feasibility study of a dam on the White Volta (at Bagre),can all be vipwdp- no doubt, as nart of the progranmming that shotnld lead toa formal miaster plan and then to particular projects for the orderly settle-ment of the valleys over the next ten or twenty year.Q Tn the immediatefuture, special attention should be given to the Black Volta basin, the most
proisngbut also the mos ,ct-ompnlex Qsetion of the program.
149. Based on the preliminary studies made so far or now underw7ay, itwould seem that a total of about 600,000 hectares would be suitable forresettle..ent purposes, while the rest would present problems of access4ib14yllit
or is agriculturally unsuitable, or would be left as forest land and/ornatlura'l pastures. -'u.,ngaso that an area of 14 heclares is needled perL.a UA.at. L. t C . LoOuLL... Li-, ".oL ULUa L. CJ tC i I ~ 11CC ~ O t LCU U A
family of 8-10 people (including villages, access roads. wells, etc.), atoa' oovr 4000 C.amls rorpeople1: coul I.le areset'l- on v1LU LCL l U t U V CL LtU , 'J/\J L L tLi. JI IUU-lJ X\JLJ jCUp XC L.UL L U UC L LU U .Lil
the basis of rainfed farming only. Using the irrigation potential indicatedearlier 'or the various babins, or so-r. 120,000 I-ctares, woul of course
very much increase their "absorptive capacity" in terms of number of settlers.;how--r in view of the considerations presented before a-roo irri-at-ion,1LIWUW VC L . iLL V .LCW LA L i FOLC . U.tLO A COL LU LJCA.QLJLC a A. UtU
there is certainly no point at this stage, in viewing the development of theva'L'Leys as be-ing pr'L -- 41. -_ 4 -- - --- -- ; - -J - - K;1 v:v -L S< gl -:l t)u
V ~.iCy~d~ U±LL~pi. LLICALL-LJy CIL& LL .LJ 1. t L_1.ULL PIJ. r,L dALI * 1LXdALIL itt L .J .Lt- L_.L UI I ~ lL)UJ.U
be a small part of the program in terms of area covered during at least thecoming decade thlougll an important one as an expeLience to serve for largerscale developments in the more distant future.
150. It is particularly difficult to say what the rate and form of thesettlement prograr will be. Let alone to preuict its eLiects. nowever. thle
very limited experience that exists and tentative calculations, based prin-cipally on the parameters of tnat experience, snow tnat under conservativeassumptions the economics of such a program would show satisfactory returnson the resources used (including the cost of the eradication campaign itself).The results will be sensitive to many factors, particularly the rate of farmers'inflow into the valleys, yields of the main crops to be developed (sorghum.groundnuts, cotton), and their prices. Of these, the main policy variable
1/ Subsequently 'Autorite pour l'Amenagement des Vallees des Voltas".
- 70 -
is probably the rate of settlement which will itself be determined by the
rate of investment in basic facilities, including access tracks, wells,
social infrastructure (village site, dispensary), and food supplies for the
first year. With preliminary estimate of the cost of eradication and settle-
ment of new families (without provision for the cost of specific agricultural
programs) for the entire riverblindness area (seven countries) at about $165
million over 20 years, the economic rate of return would be near 15 percent.
Since Unner Volta represents about half the area usable for settlement, the
program for this country would imply expenditure of some $80 million, of wilich
40 percent or so for the settlement component proper; the cost of specific
agricultural projects -- simple extension to sophisticated irrigation -- would
be additional, but of course with these proiects, benefits in the form of
additional production would also increase.
Livestock Development
151. The general considerations on which the proposed strategy for rural
development are based do apply to the livestock sector: a general increase
in productivity implies a redistribution of activities from the Sahelian and
central regions towards the perinhery, especially the southwest. Naturally,
there are some aspects in this general orientation that are specific to this
sector and, irn fact, make its develonment a particularly difficult undertaking.
152. Detailed analysis of the nroblems as well as the policies and
projects recommended were presented in a previous Bank report 1/ and are still
generally valid. The following comments are therefore limited to the most
essential aspects.
153. Linked with the choice of a sectoral strategy is the question,
lirst, O'L what are reasonable quantitative objectives_ There is general
agreement that the productivity of the herd, especially cattle, must and can
be increased in teru-ms of off-take (now 10-11 percent), average weight of
animals, production of milk, hides and skins, etc. However, the recent
drought has called attention again to tle question of the ontimum size of the
herd, that is the country's carrying capacity for animals. Definitive expert
opinion on this issue is lacking at the momLent; there would seem to be agree-
ment on the following points, however: (i) under present conditions a herd
of 2.5 million cattle and 4 million small ruminants (pre-drought estimates)
is a maximum: (ii) animal density in the Sahel and northern part of the Mossi
plateau (cercies of Djibo, Dori, Gorom-Gorom, Ouahigouya and Kaya) is too
high and causes systematic overgrazing; (iii) better use of land in the
southwest and opening up of new areas following the era(1iLation of onchocerciasis
would, under certain conditions, permit to increase the national herd to perhaps
3 million head of cattle or a little more; (iv) the increase in the number of
browsers (goats) is not desirable.
1/ The Economic Development of Upper Volta (in 4 volumes), report No. AW-19a,
desired degree of specialization of each re-ion and the projects for its im-plementation. The drought, as 1ndicated ear'lier, has reuucedU tLe nuiUUber ocattle in the north by 25-30 percent from their previous level of around onemillion, so that the present level is probably more in line with that area'ssustainable capacity. Furthermore, as suggested in the report mentionedabove, the northern region that would be eventually macde iato a separaue"Sahel-ORD" should be used more intensively as a breeding area, to becomethe reservoir of female animals whose progeny would be used for variouspurposes (meat, milk, breeding, traction) in other regions. This wouldcall, particularly, for a development ot the water supplies in the regionwith proper range management so as to preserve a balance between herds andgrazing capacity; as many animals as possible over two years would be trans-ferred to the southwest for fattening.
155. In the sort of regional specialization just outlined, the mostdifficult part will be designing adequate projects in the southwest. Th-iisinvolves, among other things, delicate problems of land allocation betweencultivated areas and livestock areas and, what is perhaps even more difficult,designing operations of mixed farming, a form of activity that is practicallyunknown among the rural population despite the fact that a large fraction ofthe herd in the central and southern parts of the country is owned by seden-tary farmers. The Matourkou project mentioned before (para 137) is, interalia, an attempt in that direction. Another project currently under prepara-tion for IDA financing in an area West of Bobo-Dioulasso would seck to achievea combination of improved farming and livestock developmnent side by side ratherthan systematic mixed farming. In this case, the livestock component wouldconsist of "individual" and "groupe ranches" on specifically designed areas,the selection of which would have been agreed upon by the sedentary farmersin the region. Cattle from the project would be sold directly for export orslaughtering.
156. In the southwest, irrigated forage crop and industrial by-productscould be used to achieve rapid fattening (feedlots). Projccts to that effectnear Banfora (to use products from the sugar mill and grain mills), andBobo-Dioulasso (to use by-products from the abattoirs, cotton ginneries andbrewery) have been under consideration for some time, but no decision yetappears to have been made.
157. It should be repeated here that no coherent and effective livestockpolicy can be imagined without a serious strengthening of the Livestock Ser-vice (Service de l'Elevage). As was said in a preparation report for theproject mentioned in para 155 above: "as a result of its inadequate opera-tion budget the Livestock Service is unable to take effective steps to protectanimal health and it has not yet intervened in the production field." Withresnprt to hpelt-h thpe situation has, if anvthing, deteriorated over the
years. This is particularly true as regards rinderpest, for lack of follow-upon the FED and cl1ATnh-ffinan,rp,i campaign of 1q64-69 but arnliesr also to nleiirn-
pneumonia, pasteurellosis and the anthraxes. As regards production develop-mernt, it can ep notod thatt t-h liQt nf t-he nm.in nrojc'ts recomnpnded in thp
- 7 2 -
Bank's report mentioned earlier for 1071-0 amiounted to nearly CFA.F In bll4ion14(at 1970 prices) and that the IDA project (referred to in para 155) alone isesti4ated to cost .FAF 3 3billion for a 4-ycar peri'od: a vernL,ent depart-ment that operates on an annual budget of less than CFAF 20 million cannot beexp.ecte d t1o contri"but-e much, to t1he preparation, --lleetanandsprision of suclh large development programs (which explains perhaps why livestockaccounts fUor only rFAF I.8 14il4ion, or less than 4 percent, in t11ie 197 2-7I6
Plan); a three or fourfold increase in the operating budget of the LivestockSerLViLL,e woUU tle a firist s-Lep in the rihLt direction.
I OtA,h._r Sec t o r
158. In this oL t LItie of a Ud-v-lopri ent strategy where agriculture andpopulation related problems are, in all respects, the dominant components,thie analysis of the role o1 otner sectors itl thlis report can only be sketchy.It will be limited to a few considerations relatinp, to the Social Sectors,JTransport, industry and ',ining.
Social Sectors
159. In Eiducation, as in most other African countries, Upper Volta isconfrontedl with two basic difficulties: the financial impossibility of devel-oping the existing system and the system's inadaptation to national needs.Upper Vol]ta has taken an important step six years ago toward solving thesecondi problern by instituting the rural education program. There is nodoubt that the highest priority should be attached now to improving thissystem. to prevent it frol deviating from its essential objectives anddegenerating into some form of traditional primary education. These dangersas well as other technical difficulties have been identitied and correctivemeasures are being taken; in support of this action an IDA credit ($2.9million, approved in 1973) is now being irnplemented.
160. The terms of the financial problem can be stated in quite simplearithmetical terms: school rate attendance is 13 percent; school age popu-lation increases by 2 percent (or more) per year; the share of governmentcurrent expenditture for education is 20 percent. Thus, assuming, probablyoptimistically, a growth of current revenue (in real terms) of 5 percentper year. if, for example, the objective was to achieve a school enrollmentratio of 80 percent in 20 years, then nearly two-thirds of government re-veiiue would have to be allocated to education by the end of the period.Conversely, if the objective was to maintain the share of education in the1)udget then, after 20 years, other things being equal, only 25 percent ofthe school age population would be enrolled.
161. Thlere is no single policy action that could conceivably remove thefinancial bottleneck and it is difficult to imagine a combination of actionsthat would . However. some progress could le achiieved through (i) the devel-oprment of the less costly rural education system at the expense of a slowergrowth of the prinnry system, (ii) cost reduction measures, such as a reduc-tion in the repeaters' rate, (iii) introduction of informal education, espe-cially functional literacy programs, within rural development projects.
- 7 3 -
Other measures are conceivable such as the regionalization (between countries)
of technical and higher education institutions, but it is as well to recognize
that nationalistic attitudes in this area have so far made such attempts half
successes at best and a plain failure in the case of universities.
162. In the field of social l'ealth, the onchocerciasis control program
stands out as a maior, Dath-breaking, operation not only because of its
multi-national character, its cost, and its coverage (over 400,000 people in
Upner Volta are nresentlv affected), buit also becauise of its direct reJation
to the pronosed overall develonment strategy. The mission was not enuipnP9
to investigate other aspects of health policies.
Transnort and rnmn'unications
163. The main transnprt system is reasonably well developed. Completion
of the paving of the road from Koupela to the Togolese border in 1975 will
open the third maJor link to the coast. in addition to thle existing railroad
Ouagadougou-Abidjan and its parallel road, and the Ouagadougou-Tema all-paved
road. Other major works on the road network do not appear to deserve high
Drioritv now: this does not mean that upgrading of some trunk road wJould
not be useful, but rather that fu,nds for su_ch nroiects should absolutely not
deprive the rural sector from needed financing. The main priorities in
transport now should be to increase the rond maintenance capability of
the Public Works Department and to develop feeder roads in connection with
ap,riculturall pro-;ects.
1b4. The teleco,municat4 ons nettork has been consider-ablv irnroved in
the recent years, notably with IDA assistance. 1/ It is, of course. still
limited in coverage but at least it is operative be tveen urhan centers and
the Office des Postes et Telecommunications is a profitable, efficiently
ruin, institution. tle mission was not equl ped to examine the Office'sdevelopment program. Hlowever, the now well established relationshin between
the Office and the Bank Group permits a continuous and fruittful. exchange of
views.
Power
165. There is little that can be done in the short-run in order to
mitigate the effect of the doubling in the prIces of petroletum products. A
to the longer term, one project for hydro-electricity previously idlentified
on the Comae river (near Banfora) has now become unfeasible because of the
irrigated sugarcane plantation now underway in that area. Other sites may
exist and surveys are under way throughout the counttry, especially on the Black
Volta. Another possibility, currently under preliminary investigation by
a UN team, would be a transmission line from Ghana in connection with a drnM
in the north, on the River Mul; however, the feasibility of the dam itself
is stil.i unproven, and there is the liil.L cultv involved in an inter.ational
1/ Two proiects have been approved: $0.8 million in 1969 and $4.5 million
in 1973.
- 74 -
arrangement though, in this respect, the riverblindiiess operation is an
encouraging indication of the prospects for future cooperation between Upper
Volta and Ghana. Though the Government will continue to pay a high priority
to finding notential sites suitable for hydro-electricity, the country's
dependence upon imported petroleum products will probably remain, at least
for the near future, as strong as in the past (see balance of payments proiec-
tions, para 87).
Industrial Development
166. To the recent investments in industrial projects worth close to
CFAF 4 billion (1973-74), will be addpd by the end of 1975 another CFAF 5-6
billion on the basis of projects now underway or practically certain to be
undertaken in the near future. As in the past, however, a few large projects
weigh disporportionately; thus, the completion of the sugar project (inclu-
d4ing plantations) wi ll repr-e sent about half of the total and the exnansion
of the textile mill (VOLTEX), another fourth of the near-term investments.As noted earl-4i, thee- 4i, nonetheless. a rather rema,rkable flow of indus-
trial undertakings for a country of Upper Volta's size, though, of course,
the industrial sector is and will remair, .. 1ll in ter.m.s of its contri-bu1tion
to GDP.
167. With the exception of that particular aspect of industrialization
consisting of' th'e first stage processing of agricultur-al products (typilc-allyrcotton ginning), all lines of industry come against a number of well known
obstacles, principally the limrited size of the market and the high cost ofimported inputs (including technical and managerial skills), none of which
can be corrected by sLimple Government action. On the other hand, there are
some favorable factors: abundant labor with a real capacity to learn indus-
trial skills, 1/ government policies favorable to both local an-d foreig8n capital
and entrepreneurship. 2/ comparatively easy internal transport, little or no
exchange controls.
168. Import substitution has been the main line of de-velopment so far
and it no doubt still offers ample scope for expansion. A_prjiori, the most
valuable projects would be those based on local raw materials. However, the
three most important industrial operations in the country already exploit
much of the resource base (excepting minerals): CITEC for oleaginous products
(groundnuts, sheanuts, cotton seeds), VOLTEX for cotton, and SOSUH%' for
sugarcane. Another major local resource is livestock; but animal industries
would have to be massively export-oriented and it is not at all evident that
1/ It is generally the case that industrial firms (in Upper Volta and other
countries in the region) employ between 50 percent and 100 percent more
labor than they would in an industrial country; it is true also that money
wage rates are more than proportionately lower. On the other hand, skilled
labor (general manager, engineers, accountants, etc.) is predominantly
expatriate and its cost can be two to three times higher than in Europe.
It is difficult, in the absence of serious statistical enquirv, to be
conclusive about real labor costs in a country such as this.
2/I A i investment code now under study summarizes these government policies
(rf. nara. 22).
- 75 -
processing should be in the exporting rather than in the importing coun-
tries. Processing of imported materials -- metals, plastics, paper products,
etc. -- offer relatively more promising prospects. The newly created Communaute
Economique de l'Afrique de l'Ouest (CEAO) should open the way to a degree of
country specialization within the region concerned 1/ but it is too early to
determine the lines of production from which Upper Volta might benefit most. 2/
169. Whatever the directions of future industrial development -- and there
is none that is self-evident -- the role of the Government as in the past will
be an important one, although industry will presumably remain predominantly
private. The difficulty of this role is in providing sufficient incentives
to attract private capital, without nullifying the projects' potential bene-
fits to the country. This, in the end, means that in selecting industrial
projects benefitting from one of the regimes of the Investment Code, economic
cost/benefit, and not only financial-or social ("employment effect") criteria
should be applied more thoroughly and systematically than is now the case.
It implies also that the position of on-going projects be reviewed from time
to time and the tax holiday systems and other benefits applied to them
revised as needed. This is especially important in the case of firms that
have a lezal or de facto monopoly in their fields, a situation that is, by
the nature of things, bound to be frequent as the case of the three largest
firms already illustrated.
Mining - The Tambao Proiect
170e The proiect for the exploitation of manganese at Tambao in the
north, near the Malian border, dictates the future of mining development in
Upper Volta. The nroject has been described in its essential features in
previous economic reports 3/ and-identified in a number of studies, mostly fi-
nanced biy lThDP, since 19687 Its main favorable aspects are the high ore con-
tent (53 percent), its good quality, and easiness of exploitation (open-cut
mining); its disadvantages are the smallness of the deposit (12 million tons
fully identified, possibly more), and above all its distance to the nearest
port (Abidanu) -- nver 1,500 km, imolying extension of the Abidjan-Ouagadougou
railway by another 350 km. The Government attaches a high priority to the
implementation of the project. The recent sharp rises in manganese prices
and the great interest shown by foreign mining companies, especially American
and Japanese, have enhanced novernm-ent's hopes of carrying out this project;
several bilateral and international aid agencies, including the Bank, have
been approached by the Government for the finaneine of the rail link.
/1 Organisoces R6gionaux de D6veloppe.nent Z2 Without urban population / E xcInding T.do district /4 in inter-ORD migration; out out.ward migration
STn AmTCmTr'AT ADDPETDTY
Table
iEstimated Population auid Labor Force, 1960, 1965, 190W , 719
1.2 Rural Population, Area and Population Density, 1972
1.3 Population by Sex and Age, 19711.4 Population and Density by District, 1972
2.1 National Accounts: Industrial Origins, 1968 and 1970-1972(CFAF billion and percent)
2.2 National Accounts: Modern and Traditional Sectors' Share in GDP, 1968and 1970-1972
2.3 National Accounts: Composition of Gross Investment, 19682.4 National Accounts: Household Income and Expenditure, 1968
3.1 Balance of Payments, 1968-19733.2 Exports, 1967-19723.3 Imports, 1967-19723.4 Direction of Recorded Trade, 1967-19723.5 Inflow of Foreign Aid, 1960-1972 (in 'FAF billion)3.6 Inflow of Official Development Assistance for 106'-7` (in US*r$ Millions)3.7 Comparison of Live Cattle and Meat E=-orts (fron. P.o-D½'i>sso 'o
Abidjan) - 1974
hA External Public Debt. 1968-19734.2 External Public Debt Outstanding as of December 31, 1973)113 Externa1 Puihlih Debt Outstanding in two selected years, 1970 and 197,lh.4 Changes in External Public Debt Outstanding (1968-1993)
5.1 Government Budget Revenue, 1966-19735=2 Glovernment BudRst Exnenditure. 1966-1973 (bv function)5.3 Government Budget Expenditure, 1966-1973 (by nature)5 .l Local Authorities' Finances, 1966-1972
5.5 Taxes on Imports5.6 Pric-e 5R*rir-tiirre of Imnorted Goods. 1968
6. M nqet"y-_u- ey 1QA8-19734
6.2 Summary Accounts of the Central Bank, 1968-19736.3 Origin of Credt+ +o the P trivt qScto+r, 19Q6A8-Q73
6. Sectoral Distribution of Credit to the Private Sector, 1968-1973
6.5 -Sectoral Distribution of Credit to the Private Sector, 1968-1973
6.6 Medium and Long Term Credit Outstanding by the National DevelopmentB&ar. , 1968=1973
7.1 Agr4icultural Prolucton, 196'7-1973
7.2 -ctton Area, Product.on ariv wields, l9&J-7L
-2-
Table
7.3 Cereal Donations R.eceived by, OFNA.CE-, l"1-737.h Production and Export of Cotton, 1966/1967-1977/19787.5 Price Structure of Cotton Lint, 1971/1972 and 1972/19737.6 Association en Participation: Cotton Lint Income Statement, 1970/71-72/737.7 Accounts of "Caisse de Stabilisation des Prix des Produits Agricoles"
8.1 Industrial Production, 1968-19738.2 Power Production, 1965-19738.3 Electric Power Consumption Pattern in 19728.4 First to Indu.ptrial Enterprises, 19738.5 Participation of the Gouvernrnent in Large Enterprises (as of Jan. 31, '75)9.1 Labor Force, Wage Earners and Wages, 1968 and 1971
10.1 Development Plans and Investment, 1967-197610.2 Development Plans: Implementation Ratios of Investment and Financing,
1967-197210.3 Financing Structure of Development Plans, 1971 and 1972-1976
Table 1.1: ESTIMATED / POPULATION AND LABOR FORCE,(in Vhousa.ds)
1960 1965 1970 1973
lo Theoretical population 4,372 4,807 5,308 5,652
2. New definitive emigrants 0 50 104 139of corresponding years
3. Resident population (1-2) 4,372 4,757 5,204 5,516
S ORs (- H- (-H- - (4665) (- (376) ()(-Reserve position in the F'und - (31) H- (104) H- (-H- (312) (- -Foreign exchiange -) (9 06) H- (683) (- (3,371) (- (196) (-()
F7. Net Errors and Omissions -,487. 140 - 5 34 - 168 - 215 200 -
Sources: Data provided by the BCEAO,' INTF and staff adjustments.
:L/ Exports, f.o.b., imports, c.i.f.9/Changes in net claims o)f nonr-eserve nature on other memibers ol the lest Afirican Monetary Union; Upper Volta's accumulated clai,ns were liquidated i-n 1970.5/ Includes food aid of 4.5 billion CFA francs.
Table 3,2: EXPORTS (OFFICIALLY RECORDKD), :1967-1972(Value in CFAF nnil:Lion and quantity in thousand metric tons)
payment-----payisents ----------- payment … ------l'isbursenent Capital Interest Total Olutstanding Disbursement Capital Interest Total Outstanding, Disbursement Capital Interest Total OutstandiLng
(1) (2) (3) (4) end of year (1) (2) (3) (4) end of year (1) (2) (3) (4) end of yetar1. Loans Erom governmenats 3.1155 999 322 1,321 18.134 -4.608 1.247 308 1.555 20.039 1.482. 1.314 303 1 6517 20.205
Disbursement Capital Interest Total Outstanding Disbuirsement Capital Initerest Total. Outstanding Disbursement Catpital Interest Toltal Outstanding(1) (2) (35) (4) end of year (1) (2) (3) (4) end of year (1) (2) (3) (4) end of year
/1 Total debt, including undisbursed cut.star.aing../2 Beginning of period.
Source: IBRD, External Debt Section, Economic and Social Data Division.
Table 4.4: CHANGES IN EXTEMAL PUBLIC DEST, 1968--1993 A(i. thouLsand of US dollars)
Debt outs t andi n& _ __ _ Transactions durin eriodIncludini_ Serviceaa ments CancellttionsYear Disbursed only undisbursed Commitments Disbursements Principal Int:erest Total Adjustments(beginrning of period)
Sources: IMF and data, provided by the Upper Volta authorities.
4 The cattle tax has been suspended for 1973; the EDF has provided a compensating grarnt of CFAF 80 milllion.4 The major incidence of these taxes is in fact on imported produicts, hence total revenue in this category should not: be used as aLn indicator of the degree of industrial
devel]opment in Upper Volta.4/ Up to) 1970 these taxes consisted exclusively of the standard inmport tax, whiLch was then amal garated with fiscal duties. From 1970 they consist of the special tax which
has replaced certalin import taxes previously incltuded in fiscal duties. From 1973 the special tax has been consolidated with the fiscal dulies.
4 Receipts from the tax on imported products were recorded in thU budget accoimts aggregated with the ttLrnover tax; io maintaLin comparability over time, they are shown
here separately. In 1972 the 'tax on imported proCucts was consolidated with Lhe fiscal dluties.5/ lncluides revenue from the statistical tax on exports.
From 1973 the export tax has been cornsolidated with the export duty.
Table 5.2: GOVERNMENT BUDGET EXPENDITURE (by function), 1966-1973
(in million of CFAF)
1966 1967 1.968 1969 1970 1971 1972 1973
A. Current expendituare (by function) _7,526 7,008 8 288 B,056 8,616 9,156 9,711 10,537
General Services. 3,763 3,466 3,696 4,198 4,524 4,780 4,981 5,358
L/ Including family allowances and pensions./ 2 Including unclassified expenditure.L3 Excluding expenditure financed from the French equipmient subvention.
