Announcement of Ten Million Eight Hundred Thousand Dollars Credit for a Smallholder Tea Development Project in Tanzania on March 1, 1972

• INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET, N.W .. WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 72/15 Subject: $10.8 million credit for a March 1, 1972 smallholder tea development project in Tanzania The International Developnent Association, an affiliate of the World Bank, has extended a credit equivalent to $10-8 million to the Government of Tanzania to help finance a $16.5 million smallholder tea development project. Norway and the International Coffee Organization (through its Coffee Diversification Fund) are also expected to provide funds for the project. The Tanzanian Government's development policy gives particular emphasis to improvements in the standard of living of the rural population. Tanzania derives its main exports from agriculture, on which about 90% of the popula- tion ~re dependent for their livelihood. • Under its Second Five-Year Development Plan (1969-74) the Government has em.barked on a successful program to promote tea growing by smallholders. The present project will enable this ongoing program to be continued and sub- stantially expanded. The project provides for the planting of tea by 14,000 smallholders on 20,500 acres in the four areas of Bukoba, Rungwe~ Lupembe and West Usambara, construction of about 185 miles of all-weather tea roads, and the construction or expansion of five leaf-processing factories. The project also provides for extension and leaf collection services, establishment of tea nurseries, training of local personnel and technical assistance. The project will be mainly carried out by the Tanzania Tea Author! ty (TTA), which is responsible for all aspects of smallholder tea development in Tanzania. Project flnlds for loans to growers through their cooperatives for on-farm development and funds for the purchase of equipment and facilities by TTA will be channelled through the Tanzania Rural Development Bank. The IDA credit of $1008 million will cover about 65% of the total cost of • the project, including $4.8 million of the estimated foreign exchange com- ponent of $6.4 million, and $6 million of local expenditures. The credit is for 50 years including a 10-year grace period. It is interest free, but there is a 3/4 of 1% service charge to meet IDA's administrative expenses. - n -  March 1, 1972 • TECHNICAL DATA PROJECT: Smallholder Tea Development COUNTRY: United Republic of Tanzania TCYrAL COST: $16 •5 mil lion IDA FINANCING: $10.8 million, 50 years, 10 ·years of grace, no interest, but a service charge of 3/4 of 1% OTHER FINANCING: Norway and the Inter.:iational Coffee Organization (through its Coffee Diversification Fund) are also expected to provide ftmds for the project. IMPLEMENTING ORGANIZATION: The Tanzania Tea Author1ty (TTA), Dar es Salaam, Tanzania, which has responsibility for all aspects of smallholder tea development in Tanzania, will be the principal executing agency. The • Tanzania Rural Development Bank (TRDB) will be the channel for loans to TTA and tea cooperatives. PROJEcr DESCRIPTION: The planting of 20,500 acres of tea during 1972 through 1974 by about 14,000 smallholders in four areas; the construction of all- weather tea roads; the construction, expansion and equipping of five tea factories; the provision of extension and leaf collection services; the establishment of tea nurseries for production of planting material; and the provision of technical assistance. PROCUREMENT: International competitive bidding for factory construction and equipment, fertilizers, vehicles, and road construction equipment. Road construction to be carried out by departmental forces. Contracts for staff houses, nursery development, planting materials and office equip- ment to be awarded locally according to procedures acceptable to the Association. CONSULTANTS: The terms of the project provide for recruitment of experienced managers and technical guidance for factories; a chief marketing officer and a planning economist will also be required. ESTIMATED COMPLETION DATE: 1976 - 0 - •