Announcement of Fifteen Million Three Hundred Thousand Dollars Credit for Irrigation and Rural Development in the Malagasy Republic on July 3, 1972

~TERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET, N.W .. WASHINGTON 0. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 72/44 Subject: $15.3 million credit for July 3, 1972 irrigation and rural development in the Malagasy Republic The International Development Association (IDA), an affiliate of the World Bank~ has approved a credit equivalent to $15. 3 million to help finance an irrigation and rural development project in the Malagasy Republic. The project, which represents the first phase of the Government's development plan for the Morondava region in the west of the island, makes provision for relending of about $6.6 million of the proceeds of the credit to the Societe pour le Developpement Economique de la Region de Morondava (SODEMO) which has been established specifically for economic development in the project area. • The M:>rondava scheme which covers an area of about 23,000 acres is based on feasibility studies financed by the United Nations Development Programne. will provide a number of features including irrigation C..'1~ settlement for about 2,100 participating families, in addition to the 1,200 associated services, It already in the area, the development of state farms, the construction of roads and villages, the establishment of a new research stat:ton and the implementation of a health program. Government plans for regional development in the area will benefit from the experience gained during the progress of an on-going irrigation project for the Lake Alaotra area to which IDA contributed $5 .0 million in 1970, to help diversification and expansion of agricultural production. Another agricultural project, for livestock development, was assisted in 1969 with a World Bank loan of $2.8 million. Total World Bank Group assistance for agricultural development with the present credit is n()f.11 over $23 million. Agriculture provides the livelihood for more than four-fifths of Malagasy's population and therefore takes high priority in the Government's development strategy. Although 80% of the population is rural, only about 5% of the total • area is cultivated. The .Bank Group's program of assistance also recognizes the need for more agricultural development, and its potential for general economic growth. Most of the country's export earnings have been from agricultural /more IDA. P,1,. No. 72/44 -- !falagasy Republic -- irrigation and rural dewlopment • - 2 - products, including coffee, vanilla, high quality rice and sugar. The present Bank Group project specifically includes~ construction of a diversion dam at Dabara on the Morond.eva River; rehabilitation of about 40 miles of main canals; a gravity irrigation and drainage system on 16,300 acres; a sprinkler irrigation system on 6,670 acres; on-farm development; improvement an< constru~tion of about 55 ffiifos of roads; construction of project buildings and 10 new villa6es, and expar~sion of 10 existing ones. The project also includes the selection of 2,100 families, and their settlement in the project area, purchase of farm machinery, and related equipment for operation and maintenance of ::.rz-:1.gat:J.~n works, the establishment of a researc!l station and the implementa- tion a£ a health program to combat endemic diseases. Feasibility studies for a second phase irrigation project in the region are also planned. The settlement and health aspects of the project are significant features of a settlement policy that will help to relieve densely populated areas of the east coast and the high plateaus, but farm families already in the area will have priority in the allocations of irrigated land. Schistosomiasis (bilharzia) is endemic in the region, affecting about 20% of the inhabitants. precautions are taken against it. The large increase in the area's population would increase the dangers of infection unless For this reason the pxoject includes a $1.0 million health program, including educational hygiene campaigns, a clinic, • dispensaries, increased capacity of the existing hospital and epidemiological studies to control schistosomiasis in the area. SODEMO will be largely responsible for implementation of the project, but the main irrigation and road works will be carried out by contractors l.Ulder the direction of the Ministry of Agriculture's Service du Genie Rural, which is an agency responsible for civil works related to agriculture. 11ie total cost of the project is estimated at $27.0 million including the foreign exchange component of about 57% which is being financed.by IDA. I.Deal cost component will be financed by the Malagasy National Development Bank, which is expected to provide loans to SODEHO of about $3.3 million, and also from pri- vate participations in SODEMO's equity amounting to about $400,000. Government participation, including grants and loans, and an equity contribution of $800,000, amounts to $8.0 million. The borrower is the Malagasy Republic and the IDA credit is for a period of • 50 years,including a 10-year grace period. It will be free of interest but carries a service charge of 3/4 of 1% per annum to meet IDA's administrative expenses. - 0 - • INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET, N.W., WASHINGTON 0. C. 20433 TELEPHONE: EXECUTIVE 3-6360 July 3, 1972 TECHNICAL DATA PROJECT: Morondava irrigation and rural development . COUNTRY: Malagasy Republic $27. 0 million IDA FINAJ.~CING: $15.3 million, 50 yeare, 10 years of grace, interest free except for 3/4 of 1% service charge to meet'IDA's administrative expenses. OTHER FINANCING: Government contribution (equity, grants, loans) $8.0 million; National Development Bank loans $3. 3 million; other equity $400,000. • IMPLEMENTING ORGANIZATON: The main irrigation tnd road works will be carried out by contractors under the direction of the Ministry of Agriculture, '1'8"8:Dartve. Malqasy Re.p111tlic. Other parts of the project to be implemented by Societe pour le Developpe- ment Econom:lque de la Region de Morondava (SODEMO). Pl\OJECT DESCRIPTION: The project will be the first phase of the Government's development plan for the Morondava region and will include construction of an irrigation system, establishment of three agricultural units totaling 23,000 acres, settlement of about 2,100 families, in addition to the 1,200 families already in th.e area, to participate in these uni ts, and the provision of health services. PROCUREMENT: Contracts for civil works and equipment would be awarded after international competitive bidding, except for minor contracts for construction of settlement and health control facilities and other small works. Local manti_~acturers would receive a preference of 15% or the import duties whichever is less. CONSULTANTS: Consultants would be engaged to assist in the design and sup,er- vision of construction of project works, the settlement of farmers, the training of project personnel, and the preparation of the feasibility &tudies. • ESTIMATED .. COMPLETIOO DATE; 19 79 • - 0 - • INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET, N.W., WASHINGTON 0. C. 20433 TELEPHONE: EXECUTIVE 3-6360 July 3, 1972 TECHNICAL DATA PROJECT: Morondava irrigation and rural development . COUNTRY: Malagasy Republic $27. 0 million IDA FINAJ.~CING: $15.3 million, 50 yeare, 10 years of grace, interest free except for 3/4 of 1% service charge to meet'IDA's administrative expenses. OTHER FINANCING: Government contribution (equity, grants, loans) $8.0 million; National Development Bank loans $3. 3 million; other equity $400,000. • IMPLEMENTING ORGANIZATON: The main irrigation tnd road works will be carried out by contractors under the direction of the Ministry of Agriculture, '1'8"8:Dartve. Malqasy Re.p111tlic. Other parts of the project to be implemented by Societe pour le Developpe- ment Econom:lque de la Region de Morondava (SODEMO). Pl\OJECT DESCRIPTION: The project will be the first phase of the Government's development plan for the Morondava region and will include construction of an irrigation system, establishment of three agricultural units totaling 23,000 acres, settlement of about 2,100 families, in addition to the 1,200 families already in th.e area, to participate in these uni ts, and the provision of health services. PROCUREMENT: Contracts for civil works and equipment would be awarded after international competitive bidding, except for minor contracts for construction of settlement and health control facilities and other small works. Local manti_~acturers would receive a preference of 15% or the import duties whichever is less. CONSULTANTS: Consultants would be engaged to assist in the design and sup,er- vision of construction of project works, the settlement of farmers, the training of project personnel, and the preparation of the feasibility &tudies. • ESTIMATED .. COMPLETIOO DATE; 19 79 • - 0 -