Tanzania - Lake Victoria Environment Management Project - Supplemental Credit

Documentof The WorldBank FOR OFFICIAL USE ONLY ReportNo. 29925-TZ SUPPLEMENTALCREDIT DOCUMENT INTERNATIONAL DEVELOPMENTASSOCIATION PROPOSEDSUPPLEMENTALCREDIT INTHEAMOUNT OFSDR2.4MILLION (US$3.5 MILLIONEQUIVALENT) TO THE UNITED REPUBLIC OF TANZANIA FORTHE LAKE VICTORIA ENVIRONMENTAL MANAGEMENT PROJECT September 17,2004 ESSDOperationsfor EasternAfrica CountryDepartment4 Africa Region This document has a restricteddistributionand may be usedby recipients only inthe performance of their officialduties. Its contents may not otherwise be disclosedwithout World Bank authorization.  CURRENCY EQUIVALENT Currency Unit = Tanzanian Shilling (Tsh) US$l=1075Tsh (as of September 4,2004) WEIGHTSAND MEASURES Metric System FISCALYEAR July 1-June 30 ABBREVIATIONSAND ACRONYMS BMU BeachManagementUnit CAS CountryAssistance Strategy GOT The UnitedGovernmentof Tanzania IDA InternationalDevelopmentAssociation GEF GlobalEnvironmentFacility EU EuropeanUnion LVEMP Lake Victoria EnvironmentalManagementProject EAC EastAfricanCommunity TAFIRI TanzaniaFisheriesResearchInstitute Vice President: Callisto Madavo Country Director: Judy O'Connor Sector Manager: KarenBrooks Task Team Leader: ErnstLutz  FOROFFICIAL USEONLY THE UNITEDREPUBLICOF TANZANIA SUPPLEMENTALCREDIT FOR THE LAKEVICTORIA ENVIRONMENTALMANAGEMENTPROJECT CREDIT AND PROJECTSUMMARY Borrower: The UnitedRepublic of Tanzania ImplementingAgencies: Office ofthe Vice President(Environment and Poverty Eradication) Beneficiaries: The MinistryofAgriculture andFoodSecurity; The Ministry of NaturalResourcesandTourism; The Ministry ofWater and LivestockDevelopment; President's Office-Regional AdministrationandLocalGovernment; The University of Dar es Salaam, The NationalEnvironmentalManagement Council; and The TanzaniaFisheriesResearchInstitute CreditAmount: SDR 2.4 million(US$3.5 million equivalent) Terms: StandardIDA terms, with 40 years maturity FinancingPlan: IDA: US$3.5 million Government: US$O. 1 million EconomicRateofReturn: Not applicable PovertyCategory: Not applicable ProjectIDNumbers: P046837P090680 Map: IBRD 27780R There is no Project AppraisalDocument.This memorandumis basedonthe findingso fthe supervision missiono fthe ongoingoperation, April,19-26,2004, and discussions on a work planfor the extension periodconductedduringsubsequent weeks. The Banksupervision team includedMessrs. ErnstLutz, Senior Economist (TeamLeader); Mary Bitekerezo(Senior Social Development Specialist; Co-Team Leader); Ladisy Chengula(RuralDevelopment Specialist), Mercy Sabai(Senior FinancialManagement Specialist), PascalTegwa (Senior ProcurementSpecialist), andRobertHecky (Consultant).Negotiations by exchange of facsimiles were heldduringthe periodof September 1-3, 2004. This documenthas a restricteddistributionand may be used by recipientsonly inthe performance of their official duties. I t s contentsmay not otherwisebe disclosedwithout World Bank authorization.   SUPPLEMENTAL CREDIT DOCUMENT INTERNATIONAL DEVELOPMENTASSOCIATION PROPOSEDSUPPLEMENTAL CREDIT TO THE UNITEDREPUBLIC OF TANZANIA FOR THE LAKEVICTORIA ENVIRONMENTALMANAGEMENTPROJECT 1. The followingreport proposesa supplemental creditto the UnitedRepublicof Tanzania, for SDR2.4 million (US$3.5 millionequivalent). The proposedcreditwill be on standardIDA terms, with a maturityof40 years. It will supplementthe ongoingLakeVictoria EnvironmentalManagementProject (CreditNumbers 2908-0 and2908-1,and GEF Grant Number23817). The originalDevelopment CreditAgreement for SDR 7.0 million (USD9.3 million equivalent), was signedonJuly 30, 1996, andbecameeffectiveon March5, 1997, of which approximatelyUSD9.1millionhave beendisbursedto date. Supplementalfundinginthe amount of SDR 4.0 million(USD 5.0 million equivalent) was approvedon December 13, 2001, o f which approximatelyUSD 4.7 million (94 percent) has beendisbursedto date.The GEF Grant inthe amount of SDR 7.2 million(USD 10.3million) is fully disbursed. 2. The additionalfinance is considerednecessarybecauseof unforeseencost overruns associatedwith Projectexecutionwhich were beyondthe borrower's control, giventhat the Lake VictoriaEnvironmentalManagementProject(LVEMP) is a regional project. Inparticular, significant delayshave beenexperiencedwith project implementationinUgandaand inKenya over the course ofthe last two years. Duringthat periodTanzaniacontinuedto implement project activities ina fully satisfactory manner andper its work plans. It financedthem largelywith its first Supplemental. Due to the unanticipateddelays inthe Partner countries, Tanzania is now facinga cost overrun, and ifthe Government o fthe UnitedRepublicofTanzania(GOT) is to continue implementationalongside UgandaandKenya, additionalresourceswill be required. The GOT hastherefore requestedsupplementalfundingfrom IDA inthe amount ofUS$3.5 million. This would finance LVEMP work betweennow andDecember31,2005. Note that the closingdate for LVEMP inUgandahasbeenextendedto December 31,2005, andthat the GEF Grant inKenyahas beenextendedfrom December 312004 to December31,2005. Ifthe requestedsupplementalfunding is grantedandthe closingdate is also concurrently extendedas requestedto December 31,2005, the three Partner countries couldconclude Phase 1ofthe project inunison. 3. The projectis beingcarriedout under aJoint ProjectAgreement, dated September 10, 1996, involvingKenya, Tanzania, andUganda.Lake Victoria is the secondlargest freshwater lake inthe world. The countries' respectiveshares inthe Lake surface are as follows: Tanzania: 49 percent; Uganda45 percent; andKenya6 percent. The Lake also holdsthe world's largest freshwater fishery, mainly basedonthe introducedNile perchandTilapia. Catchesamountedto around 500,000 tons annually duringthe late 1980sand 1990s,andthey therefore contribute enormouslyto the localhationaleconomies includingexports ofthe Partner States. Kenyahas an estimated33,000 fishers, Ugandaan estimated35,000, andTanzania about 56,000 fishers. Consideringbackwardandforward linkages includingprocessingand export is it likely that over one millionpeople benefitdirectly fromthis subsector alone. 2  4. The developmentobjectivesunderthe LVEMP-- remainunchanged. They are to: (a) maximizethe sustainable benefitsto ripariancommunitiesfromusingresources within the basinto generate food, employment and income, supply safe water, and sustain a disease-freeenvironment; and (b) conservebiodiversityandgenetic resources for the benefitof the riparian countries inparticularandthe globalcommunity ingeneral. 5. The StaffAppraisalReportalso statesthat the projectis the first phase of a longer termprogram with the broadobjectives as statedabove. It further statesthat the first phasewill: (a) providethe necessary informationto improve managemento fthe lake ecosystem; (b) establish mechanisms for cooperative managementby the three countries; and(c) identifyand demonstrate practical,self-sustainingremedies, while simultaneouslybuildingcapacity for ecosystemmanagement. These objectives also remain, andthe additionalfinance requested wouldhelpachievingthem. I. CountryContextandSectoralBackground 6. Country Context. Tanzania is one of the poorest countries o fthe world. Per capita income is estimatedat about $280 per year. Coveringan area of 945,000 square kilometers(i.e. larger than KenyaandUgandacombined), it has a populationof about 35 million, growingat about 3 percentayear. The economy is heavilydependent on agriculture (primarily coffee, cotton, tea, cashewnuts, sisal, maize, rice, wheat, cassava, tobacco, and fish), which accounts for about 45 percento f GDP, provides 80 percentof exports, and is by far the largestemployer. From2000 to 2004, agriculturalgrowthhas beenwithin a range of 3.5 to 5.5 percent annually. Industryaccounts for some 15percento f GDP and is mainly limitedto processingagricultural products andlight consumer goods. The miningsector has goodpotentialand is beingdeveloped inpartwith ForeignDirectInvestmentsuchas from SouthAfrica. 7. A Country Assistance Strategy (CAS) for Tanzaniawas approvedby the Bank's Boardon June 15,2000. A new assistance strategy is inthe processof beingpreparedjointly with other donors and inline with Government's new PRSP. Basedon the analysis inthe last CountryEconomicMemorandumfor Tanzania, Tanzaniaat the Turn of the Century: From Reforms to SustainedGrowth and Poverty Reduction, a consensusexists on the key constraints limitinggrowthandthe expansionandefficiency of Tanzania's privatesector. The policy prioritiesto addressthese constraints are improvingeconomic governance, providinga conducive business environment, andsupportingprivatization. 8. Inthe areaof economic governancethe focus is to sustainmacroeconomic stability, improvepublic services deliverythroughimprovedmanagementofthe budget, and lower businesscosts andrisks associatedwith corruptionandexcessive bureaucracy. Regardingthe businessenvironmentthe maintarget is to removepolicy-relatedand institutionalimpedimentsto privateinvestment and efficientbusinessoperations.Inthe area ofprivatizationandregulation, there is a needto complete the privatizationof Tanzania's commercial, agricultural,and industrial public enterprises (PES),as well as all that of major infrastructurePES.The LVEMP complements these thrusts by promotingsustainable rural developmentto improvethe livelihood of the majority ofthe poor who live inruralareas adjacentto the Lake or in its watershed, which is one of the four focal areas of Banksupport to the GOT identifiedinthe CAS; it of course also supports sustainable managementof the Lakebasinand its naturalresources. 3  9. Sustainable Rural Development as Promoted through the LVEMP. Most o f the rural poor rely on subsistence use o f natural resources by farming on land or by fishing inLake Victoria or by usingwetlands, forest reserves, and satellite lakes o f the Lake. The LVEMP has been designed to support sustainable management o f fisheries (benefiting the estimated 56,000 fishers and their families), increase productivity on land (while reducing environmental impacts), and do researchto gather information for improved resource management in Tanzania and the two Partner countries Kenya and Uganda. The fishery has not only benefited the poor by providing incomes to fishermen and animal proteinto the local population, but it has also been a significant earner o f foreign exchange. 11. The Lake Victoria EnvironmentalManagement Project (LVEMP) 10. The environmental quality o f the Lake has declined duringthe past several decades. At the same time fish output increased and remained high, possibly implyingoverfishing and the risko fa later decline. Duringthe 1990s water hyacinth invadedthe lake, which reducedthe efficiency o f operation of the OwenFalls hydroelectric plant and blocked access to ports, fish landings, and watering points. 11. To address these problems, the three riparian countries around Lake Victoria (Kenya, Uganda, and Tanzania) initiated regional cooperation in 1994through a Tripartite Agreement to work together to solve the environmental problems o f the Lake and its Basin. This ledto ajoint request by the three governments in 1996 for funding assistance from the GEF and IDA.The resultwas the preparation and implementationo f the LVEMP. 12. InTanzania, the LVEMPis executedby aNational Secretariat reportingto the Office o f the Vice President, Environment and Poverty Eradication, which is in charge o fthe environment and poverty eradication portfolios. The Tanzanian National Secretariat also serves as the Regional Secretariat for purposes o f coordinationamongthe countries. The Secretariat works through various implementingagencies that carry out most o f the work. 13. The Project consists o ften components, including fisheries management, fisheries research, wetlands management, soil conservation, catchment afforestation, water quality and ecosystem management, water hyacinth control, industrial and municipal waste management, university capacity building, and microprojects with local communities. There is also a significant effort to develop both institutional and staff skills. Natural resource management laws and regulations have been strengthened and harmonizedbetween the riparian countries. Human capacity has been built: Over 34 staff have been supported by the project to undertake MSc and PhD degree programs and 140 staff attended short courses that focused on natural resource management researchwithin the Lake Victoria Basin. 14. Inparticular, the following has beenachieved inTanzania: 0 InFisheries Management, a co-management system has been introducedinto the Lake Victoria fishing communities by creating Beach Management Units(BMUs). The Fisheries Act o f 1970has beenreviewedand a new one issued, which incorporates and legitimizes the BMUs.A fisheries licensing database to help monitor and regulate fishing effort has beendeveloped, and an extensive monitoring, control, and surveillance programme has been put inplace. Fishingcommunities in collaboration with LVEMP and TAFIRI staff, have identified 141new fish breeding areas and 53 fish landingsites. A public awareness campaign involvingradio and TV programmes as well as seminardworkshopshas helped communities better to 4  understand the issues and to reduce illegal fishing activities. Harmonization o f fisheries legislations inthe three Partner States has been submitted to the East African Community for a decision. A FishLevy Trust Study was completed in2002. The study recommends giving some percentage o f the fish royalties to BMUsand Local Authorities to enable them to better manage the fishery inthe Lake Victoria Basin. Information on fish once feared disappeared has been collected and documented. Studies show that Lake Victoria Fisheries contribution to the national economy was 1.8% o f GDP in 1998 and that the value o fNile Perch export to total exports was 12.7% in 1998. Also, it has been shown that local fish are an important source o f nutrition for the local population. 0 The Project has collected data to derive a more accurate water balance o f Lake Victoria. The data show that the inflows and outflows are dominated by the rainand evaporation respectively. The sum o f inflows from rain is 82% and from rivers 18%. Outflows from evaporation are 76% and the outflow through the Nile is 24%. 0 Onnon-point pollution loading studies indicate that the Kagera subcatchment contributes the highesttotal Phosphorus and total Nitrogen loads to the lake which flow from urban waterways tendto be polluted with domestic and industrial wastes. 0 An industrial directory has been prepared for non-point source pollution loading. An assessment o f the treatment efficiency reveals that most industrieshave no treatment systems, and the few that have them are inefficient and produce effluents that do not comply with national effluent standards. 0 Studies on Eutrophication carried out show that in-shore areas are more affected by eutrophication than the offshore areas due to highnutrient inputs from land based sources. Inthe offshore water, transparency remains high, but some oxygen deficits occur. Inthe near-shore areas water transparency can be very low with strong oxygen deficits inthe hot spot areas. 0 The contribution o fthe sedimentation process to the eutrophication o f the lake is more significant innear shore areas than in open waters. The average sedimentation rate inthe lake is generally low, about lmdyear, showing that the lake is inno danger o f being filled with sediment inthe near future. 0 Using integrated manual and biocontrol agents the project was able to reduce the amount o f water hyacinth inLake Victoria by between 80% and 90%. Water hyacinth quarantine regulations have been prepared and approved by the National Assembly and are operational. 0 A National and a Regional Water Hyacinth Surveillance Systems have beenprepared and operationalized. 0 The LVEMP has involved Rwanda inthe control of water hyacinth to a some extent. 0 Data has been collected and research conducted on the buffering capacity o f wetlands has been collected. The report shows the importance o f usingwetlands to sieve effluents. From the study, a Duflow Model has been developed. 5  A cost-benefit analysis o fthe Lake Victoria Basin wetlands has been done. Training o f farmers on soil and water conservation and other appropriate land management practices has enabledthem to increase crop production. Some have increasedyield o f maize from 500 to as much as 1000kglha and o f paddy from 450 to 1350 kg/ha, while at the same time reducing erosionhedimentation. Communities in 64 villages inMwanza and Mara Regions have been mobilized to conserve 36 forests by preparingmanagement plans. A total o f 8.5 milliontree seedlings have been planted with an average survival rate o f 85 percent. The LVEMP has supported 26 people to obtain Masters Degrees, 8 to obtain PhDs, and to obtain Diplomas, while 140 have attended short courses. Many villagers have attended sensitization meetingsand workshops. A total o f 82 demand-driven microprojects have beenimplementedin 15 districts in Mwanza, Kagera and Mara Regions. 111. Descriptionof the ProposedSupplementalCredit 15. The proposed Credit would contribute towards achieving the above objectives and support activities that are o f direct and indirect relevance for thejoint resources o f Lake Victoria and its watershed. Specifically, the agreed work program includes the following items: (a) Fisheries Research: Rapid assessment o f satellite lakes, monitoring and mapping o f main lake, information dissemination, publishingo ftwo regional books (on fisheries and biodiversity), and updating the fisheries data base; (b) FisheriesManagement: Reduce illegal fishing practices, disseminate aquaculture technology to farmers, data processing and analysis o f lake-wide frame survey, reduce post-harvest losses, harmonize fish inspection, work towards and complete a quality assurance and certification agreement among Partner countries, and operationalize the Fisheries Development Fund; (c) Water Hyacinth control: Continued rearing and release o f weevils, preparing ajoint plan with Kenya and Uganda for technical assistance to Rwanda and Burundi(with the expectation that a reductiono f hyacinth infestations inthe upstream countries would reduce the inflow o f the weed via the Kagera river), research on weevil performance inrivers, continuedresearch and information dissemination; (d) Water Quality and Ecosystem Management: Translate research findings into management actions, continue water quality monitoring; (e) Wetlands Management: Continue with the rehabilitation o f degraded wetlands, support socio-economic conservation activities, disseminate research findings, develop management plans; 6  ( f ) Intergrated Soil and Water Conservation: Update data base on agrochemicals, train extension staff, disseminate information, continue on-farm demonstration o f various effective technologies, conduct farmer study tours, and support women's groups to adopt more efficient wood burningstoves; (g) Catchment Afforestation: Complete activities inand around Maganavillage forest, manage two additional forest reserves, raise and plant an additional 1,000,000 trees in central and community-based nurseries, train farmers to develop local seed sources; (h) Support to Riparian Universities: procurement oftextbooks, chemicals and office supplies; training incl. field trips, rehabilitationo f aquatic science laboratory and establishment o f field station inMwanza; (i)Microprojects:Completionoffourprojects, makingfulluseofcreatedassetsin some underutilized ones, build local capacity, and orient existingmicro projects toward conservation o f Lake Victoria (through tree planting, soil conservation, and energy saving stoves); (i) Community Participation: Publishstrategy, createfurther awareness andcapacity; and (k) NationalRegional Secretariat: Organize andparticipate inProjectImplementation Committee Meetings with its Partners, attend regional workshops, harmonize regional work and inparticular legislation, support Regional Policy Steering Committee meetings for Lake Victoria, develop data bases, disseminate information, assist all components with procurement. 16. The GOT as well as the Governments o fKenya and Uganda have reconfirmed their long term commitment to managingthe fisheries resources sustainably and to resolving environmental and social issues inthe Lake Basin, and they have requested additional IDA/GEF assistance with a follow-on project. PHRD grant resources are beingused for the preparation of LVEMP2, and a GEF Medium-Size (grant-funded) Project is supportingthe preparation o f a transboundary diagnostic analysis and a corresponding strategic action plan, involving also Rwanda and Burundi. IV. Rationalefor a Supplemental Credit 17. The proposed Supplemental Credit meets the requirements o f OP13.20 on supplemental financing as follows: 18. Cost OverrunDue to Exceptional CircumstancesBevond the Borrower`s Control. The additionalfinance was found to be necessary because o f unforeseen cost overruns associated with Project execution which were beyondthe borrower's control. Inparticular, significant delays have been experienced with project implementation inUgandaand inKenya duringthe last year. 19. InKenya, the IDA portion closed inDecember 2002, while the GEFportion was extended. Also, to enhance efficiency in project implementation, the project was moved from the Ministryo fEnvironment to the KenyaAgricultural ResearchInstitute. The latter has a good track record, and indeed it has shown duringthe last several months that it can manage the project well. Butthe transfer from the Ministryto KARI duringthe first half of 2003 took longer than 7  expected, whichis why the project there almost came to a standstill. A supervision mission in April 2004 confirmedthat all componentsare now again movingforward with project implementation as planned. 20. InUgandathere was a longdelay inthe approval of its Supplemental IDA Credit by the Parliament. Because ofthis delay there was also a significant slowdown in2003 of project activities that depend on IDA funding. Parliamentary approval was obtained inNovember 2003, and the Supplemental became effective on December 17,2003. Work has picked up since then and was assessedto be satisfactory again by a mission inApril 2004. 21. Both Uganda and Kenya expect satisfactory project performance from now on, and they are both keen to see Tanzania succeedingetting additional finance to carry out its part inthe joint work. Therefore, due to the unanticipated delays inthe Partner countries, Tanzania is facing a situation of cost overrun, since certain activities, such as monitoring water quality, water hyacinth control, fisheries managementand enforcement, or working toward an agreement on a regional fish quality standard, can either not be undertaken by only two of the three Partner countries, or cannot be considered complete untilall parties have taken the agreedupon actions. An absence of planned actions inThe Republic of Tanzania would result ina "drag" on the other two countries ifthey were not undertaken or would hinderboth Tanzania and/or its two partner countries from achievingprogress, giventhat they all contribute to improved management o f a jointly-owned resource. GOT is willing to borrow the additional supplemental funds, and Kenya and Uganda are keento see Tanzania succeed inits request to IDA. The cost for the Government o f the UnitedRepublicof Tanzania to continue to do its part ina synchronized manner with its Partner States, is US$3.5 million. 22. TheLoan is beinaImplemented in Comuliance with Covenants. The LVEMP is beingimplementedin compliance with all covenants set forth inthe Project's Development Credit and GEF Grant Agreements. 23. It is Impossible to Reduce the Sco-ueof the Project to Fit theAvailable Resources. It is impossible to reduce the scope of the LVEMP to fit the available resources (about US$0.2 million, when annual disbursements have historically beenabout US$4 million) without significantly impairingthe project's economic viability or capacity to achieve its objectives, becauseall activities are regionally relevant. 24. TheBorrower is Unable to Finance the Additional Costs and to ObtainAdditional Funds from Other Lenders on Reasonable Terms or in Reasonable Time. The GOT continues to operate under macroeconomic constraints, and local finance is limited. The only other possible source of finance would be from bilateral donors. All of those participating inthe Partnership Consultative Committee for Lake Victoria were contacted but were unable to provide the additional funds. 25. The TimeAvailable is too Short to Process a Further Freestanding Bank Loan. The total time to process a freestanding Bank Loan to continue LVEMP activities would take significantly longer to prepare and be made "effective" than would a Supplemental Credit for the existing Project. Speedis of the essence, since funds are runningout, while both Ugandaand Kenya have sufficient funding for operations up untilthe end of 2005. 26. TheBorrower is Committed to the Project, and the Imulementing Agencies have Demonstrated Competence in Carwing it out. Government is committed to the Project, and implementingagencieshave shown capacity to implementthe project fully satisfactorily. 8  V. Benefitsof the Supplemental Credit 27. To manage Lake Victoria, non-performance or hinderedperformance by one country is a "drag" or cost on the two other countries and theirjointly-owned resource. With the re uested supplemental funding, such costs would be avoided. Note that the main economic benefits o f the 9 overall LVEMP derive from avoiding the losses that can be anticipated if effective action i s not taken. The benefits from the supplemental would be a portion o f the estimated benefits for the overall project. 28. The proposed Supplemental Credit would help ensure realization o f the expected benefits of promoting sustainable use o f the natural resources o f the Lake and its catchment. Successful implementationo f the Project is expected to: 0 Help avoid a decline in the overall fishery as a result o f overfishing and (to a lesser extent) deterioration o f Lake water quality; 0 Maintain the water hyacinth infestation at a non-nuisance level o f around 20 percent o fthe original coverage (with the exception o f some nutrient-rich hotspots); at that level no or only small amounts needto be removed at Owen dam (to avoid impairingthe electricity generation) and lake transport is not hinderedsignificantly; 0 Increase productivity on the land while reducingnutrientloss through erosion; this is achievedthrough integrated landand water management as well as agroforestry and/or afforestation; 0 Complete microprojectsthat support communities around the Lake and in its watershed; 0 Limit degradation o fthe wetlands so that they can continue to fulfill their function o f buffering effluents; and 0 Limit loss reductions inspecific fishpopulations and restore uniquefish fauna and other important terrestrial and aquatic biodiversity. VI. Activities to be Financed 29. As referredto inparagraph 15 above, and as specified inmuchmore detailed inthe agreed work plan with the Borrower, the Supplemental Credit will mainly finance work on fisheries management and research, water hyacinth control, water quality and ecosystem data collection and management, wetland management, integrated soil and water conservation, catchment afforestation, human resource development, community drivenmicroprojects, and nationalhegionalproject management. Many o fthese need coordinatiodcollaboration o fthe three countries. 'A conservative estimateofthe main quantifiable benefits of undertakingthe Project, and costs should the Project not be undertaken,were done at Appraisal ofthe LVEMP. These include direct positive effect on sustainablefisheries exploitation, and the costs ofthe water hyacinth infestation assumingno action, and hrther deterioration ofwater quality. The benefitsto the fishery accruingthrough proper management were estimatedto be $600 million at a discount rate of 12%of present value of the revenue stream for total exports. The costs ofnot managingthe water hyacinth infestation o fthe Lake were estimatedto be US$6- 10 milliodyear, while likely costs attributable to costs associated with additional treatment of domestic water supply alone from the Lake in general at a minimum of US$3.5 million/year. It was felt that these estimates of cost and benefit would fullyjustify, alone, the LVEMP cost ofUS$25 million inTanzania. 9  30. The following procurement o f civil works, goods, and consultancies/training are needed, including: Civilworks: Constructiono f one weevil rearingunit (facility) at Rubafu; Museum construction (for fisheries education and information dissemination); Bukoba Water Quality Laboratory rehabilitation; and Constructiono f Dar es Salaam University Marine Biology Laboratory in Mwanza. Goods and equipments: Replacement o f old office equipment including laptops and computers; and Laboratory equipment. Consultanciesand training: Various local consultancies for biodiversity, water quality, database management support; Ongoing university degree courses or short courses; Workshops; Short courses and study tours; Printingand disseminating information on stakeholders; and Regional Policy Steering Committee (RPSC) meetings. VII. ImplementationArrangements 31. The proposed Supplemental Credit does not require additional implementation capacity beyond what is already inplace. The LVEMP project is executed by the Regionamational Secretariat reportingto the Office o f the Vice President, Environment and Poverty Eradication, which is incharge o f environment and poverty eradication portfolios. The Secretariat has performed satisfactorily and will oversee the execution o fthe Supplemental Credit. The Supplemental Credit will be subject to the same monitoring and reporting requirements o f the project. N o changes are needed inthe Project Implementation Manual. 32. Extension of the existing Credit: As part o f this request for a supplemental credit, a concomitant extension o f the closing date from November 30,2004 to December 31,2005 was requestedby Government and is hereby recommended. VIII. Project Cost and Financing 33. The total project cost, net oftaxes and duties, is estimated at US$3.6 million equivalent, o f which an IDA Supplemental Credit o fUS$3.5 million equivalent is proposed. The Government contribution is estimated at US$lOO,OOO equivalent, representing about 3% o fthe total project cost. The breakdown o f the project's costs and its financing plan and disbursement schedule are shown inAnnex 1. Management o f the Supplemental Credit will be through the existingNational Project Secretariat for the LVEMP. 34. The Borrower shall, for the purposes o fmaking available its counterpart contribution for the financing o fthe Project: (a) Open, and thereafter maintain untilthe completion o fthe Project, a Project Account in a Commercial Bank on terms and conditions satisfactory to the Association; (b) Deposit into the Project Account an initial contribution o f US$20,000; 10  Thereafter replenishthe said account upto the initial amount o fUS$20,000 at the endof each Project Quarter untilthe completionofthe Project, or whenever its balanceshall be less thanUS$5,000; and Ensurethat amountsdeposited intothe ProjectAccount shall be usedexclusively to makepaymentsto meet expendituresmade or to be made inrespect ofthe reasonablecost of goods, works and services for the Project inadditionto those financed fromthe proceedsofthe Credit. IX. ProcurementAccounting, FinancialReportingand AuditingArrangements 35. The Creditwill follow the procurement anddisbursement procedures applied under the original Credit. Priorreviewthresholds for IDA/GEFPriorReviewas definedinthe original ProjectCreditAgreement will remaininplace.The civil works will be awardedonthe basis of NationalCompetitiveBidding(NCB). The SupplementalCreditwill be executedandclosedby December 31,2005. 36. The LVEMPNationalSecretariathas establishedan acceptableaccounting and reportingsystem for the Project, whichwill continue for the SupplementalCredit, includingthe SpecialAccount andthe statementso f expenditures. Continuedcompliance is beingclosely monitoredby AccreditedFinancialStaffofIDA inthe TanzaniaCountry Office. 37. Independentauditors acceptableto IDA will auditthe use of all funds available under the Supplemental Credit, includingthe SpecialAccount andthe statements of expenditures. Audit reports will be submittedto IDA no later than six months after the endo fthe fiscal year. The format andthe frequency of periodicreportingwill be maintainedas definedinthe project implementationmanual. An ImplementationCompletionReport (ICR) will be preparedwithin six months after Creditclosingfor Tanzaniaas well as its PartnercountriesKenyaandUganda. X. Environmentaland SocialAspects 38. As part o fpreparationanddesignofthe Projectin 1995-1996,an Environmental Analysis (EA) was conducted, the conclusion o fwhichwas that the LVEMPwas an environmentallypositiveactivityandwas not expectedto generateany significantadverse environmentalimpacts. A few projectactivitiescouldcause adverse effects, which are readily manageable. For example, large-scalecontrolo fwater hyacinthinTanzanianwaters has been limitedto biologicalandmanualcontrolmethods, whichhave proveneffective and environmentallybenign. An ISDS has beencompleted, reviewedand clearedby ASPEN for the proposedSupplementalCredit. The originalEA category "B" has beenmaintained, andthe proposedCredithas beenassigneda safeguardclassificationof "S2 -One or more safeguard ' policiesare triggered, buteffects are limitedintheir impact and are technically and institutionally manageable". The originalEA remainsrelevant andapplicable andhas beenre-disclosed. XI. Sustainability 39. The Governmenthas inthe past few years supportedfisheries management(and thereby helpedto reducethe risks of overfishing), andwatershedmanagementinvarious forms, andruraldevelopment. It also has made useofthe informationgeneratedby the LVEMP. The Project's ability to control water hyacinthinfestations,respondquicklyto the requirementsofthe EUto improve the quality and certificationprocessof fish exports to the Community, andto providescientificallysupportable recommendationsto GOT queries regardingmanagemento fthe Lakehas establisheda strongbaseuponwhichto proceedwith additionalinvestments. Tanzania 11  i s one of three countries (Kenya andUgandabeingthe other two) that haveparticipatedinthe re- establishment o fthe EastAfrican Community. The East AfricanCommunity has created, as one o f its major permanentorgans, the RegionalPolicyand SteeringCommittee, consisting o f three PermanentSecretaries from each ofthe three countries. Ithasfurther createda Ministerial-level Committee for the LakeVictoria and signeda Protocol(November 2003) under which aLake VictoriaBasinCommissionwill be established. XII. ProjectRisks 40. No significantrisks are foreseen. The Governmentis committedto the projectand the integratedapproachmanagingthe water and landresources andto addressingenvironmental and social problems inthe Lake Basin. XIII. EffectivenessConditions andAgreements 41. No additionalactions are requiredexcept for the submission of a satisfactory legal opiniononthe Agreement Amendingthe DevelopmentCreditAgreement as a conditionof effectiveness. 12   ANNEX 1 Page 1of 4 THE REPUBLICOF TANZANIA SUPPLEMENTALLAKEVICTORIA ENVIRONMENTAL MANAGEMENT PROJECT ESTIMATED ADDITIONAL PROJECTCOSTS AND FINANCINGPLAN (in US$ million) COMPONENTS LOCAL FOREIGN TOTAL 1. Fisheries Management 0.28 0.05 0.33 2. Fisheries Research 0.22 0.05 0.27 3. Water HyacinthControl 0.21 0.05 0.26 4. Water Quality/Ecosystem Mgt 0.48 0.29 0.77 5. WetlandManagement 0.19 0.05 0.24 6. IntegratedSoil and Water 0.12 0.05 0.17 Conservation I 7. Catchment Afforestation I 0.22 I 0.01 I 0.23 I 8. HumanResource 0.14 0.05 0.19 Development 9. Microprojects 0.20 0.01 0.21 10. CommunityParticipation 0.03 0.01 0.04 11. Nationaland regional 0.69 0.10 0.79 coordination PhysicalContingencies 0.04 0.01 0.05 Price contingencies 0.03 0.02 0.05 Total Project Costs 2.85 0.75 3.60 I COMPONENTS I LOCAL I FOREIGN I TOTAL I Government o fTanzania 0.10 0.00 0.10 IDA 2.75 0.75 3.50 Total Project Costs 2.85 0.75 3.60  ANNEX 1 Pape 2 of 4 THEUNITEDREPUBLICOF TANZANIA SUPPLEMENTALLAKEVICTORIA ENVIRONMENTALMANAGEMENTPROJECT SUMMARY OF PROPOSEDPROCUREMENT ARRANGEMENTS (US$ million) ProjectElement ProcurementMethod TOTAL ICB I NCB IOTHER 1. Civil Works 0.22 0.22 GOT 0.01 0.01 IDA 0.21 0.21 2. Equip & vehicles GOT IDA 0.14 0.08 0.22 I I I 3. Training 0.57 0.57 GOT IDA 0.57 0.57 4. Consultants 0.51 0.51 GOT IDA 0.51 0.5 1 5. Microprojects 0.21 0.21 GOT IDA 0.21 I 0.21 6. OperatingCosts 1.87 1.87 GOT 0.09 IDA 1.78 I I I TOTAL 0.37 3.24 3.61 IDA 0.35 3.15 3.50 Procurementthresholds establishedfor the LVEMP will be maintainedfor the Supplemental  ANNEX 1 Pape 3 of 4 ALLOCATION AND DISBURSEMENT OF IDA SUPPLEMENTAL CREDIT (US$Million) Category Amount Percentage Financed 1. Civil Works 0.21 100% of foreign expenditures and 95% of local expenditures 2. Goods 0.22 100% of foreign expenditures and 95% of local expenditures 3. Consultancy & Training 1.os 100% 4. Goods Works & Services 0.21 95% for Microprojects 5. OperatingCosts 1.78 95% (maintaining existing definition o f operating costs inrespectto Project secretariat) TOTAL 3.50 FY05 FY06 Total 2.50 1.o Cumulative 2.50 3.5  ANNEX 1 PaPe4 of 4 THE UNITEDREPUBLIC OF TANZANIA SUPPLEMENTALLAKEVICTORIA ENVIRONMENTAL MANAGEMENT PROJECT TIMETABLE OF KEY PROJECTPROCESSINGEVENTS (a) Time taken to prepare: Four months (b) Preparedby: Government with IDA assistance (c) AppraisalNegotiations: April-August 2004 (d) PlannedDate o f Effectiveness: November 2004 (e) Completiono f works: July 2005 ( f ) ClosingDate: December 31,2005  MAP SECTION