Tanzania - Tourism Rehabilitation Project

Document of FILE COPY The World Bank 7 FOR OFFICIAL USE ONLY Report No. 2138-TA STAFF APPRAISAL REPORT TANZANIA TOURISM REHABILITATION PROJECT November 20, 1978 Tourism Projects Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  TANZANIA TOURISM REHABILITATION PROJECT CURRENCY EQUIVALENTS Currency Unit = Shilling (TSh) US$1 = TSh 8 TSh 1 = US$0.125 TSh 1 million = US$125,000 MEASURES 1 meter (m) 2 = 3.28 feet 1 square meter (m ) = 10.76 square feet 1 kilometer (km) 2 = 0.62 miles 1 square kilometer (km ) = 0.39 square miles 1 hectare (ha) = 2.47 acres GLOSSARY OF ABBREVIATIONS HTTI - Hotel and Tourism Training Institute MNR&T - Ministry of Natural Resources and Tourism NCA - Ngorongoro Conservation Authority SSLL - Serengeti Safari Lodges Ltd. STS - State Travel Service TAFICO - Tanzania Fisheries Corporation TANAPA - Tanzania National Parks TDFL - Tanganyika Development Finance Ltd. TIB - Tanzania Investment Bank TTC - Tanzania Tourist Corporation TWC - Tanzania Wildlife Corporation TWICO - Tanzania Wood Industries Corporation FISCAL YEAR Government: July 1 - June 30 TTC: January 1 - December 31  FOR OFFICIAL USE ONLY TANZANIA STAFF APPRAISAL REPORT TOURISM REHABILITATION PROJECT Page Number I. The Tourism Sector 1 A. Tourism Assets 1 B. Government and Public Attitudes Toward Tourism 1 C. The Hotel Industry 2 D. Visitor Trends 3 E. Infrastructure 4 F. Training 5 G. Contribution of Tourism to the Economy 5 H. Social Aspects of Tourism Development 6 II. Executing/Borrowing Agencies 6 A. The Ministry of Natural Resources and Tourism (MNR&T) 6 B. Tanzania National Parks (TANAPA) and Ngorongoro Conservation Authority (NCA) 8 C. The Tanzania Tourist Corporation (TTC) 10 D. Ministry of Works 12 III. The Project 13 A. Project Objectives and Content 13 B. Project Components 14 IV. Project Cost, Financial Plan Implementation, Procurement and Disbursement 19 A. Cost Estimates 19 B. Financial Plan 21 C. Project Implementation 22 V. Demand and Market Prospects 26 A. Tanzania's Tourism Potential 26 B. Visitor Forecast by Region 27 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disciosed without World Bank authorization.  (ii) Page Number VI. Financial Analysis 31 A. TTC Corporate Structure 31 B. TTC Financial Management 31 C. Current TTC Financial Condition 33 D. TTC Financial Prospects 36 VII. Economic Justification 38 VIII. Agreements Reached During Negol'aLionis 44 ANNEXES I. Tables 47 II. Hotel and Tourism Training Institute 68 Appendix I - Sources of Candidates and Qualifications Required 76 Appendix II - Profiles of Technical Assistance Experts 77 Charts 1 - 6 81-86 III. Principal Assumptions Used in the Financial and Economic Analysis 87 IV. Related Documents and Data Available in the Project File 94 Map IBRD 13689 The appraisal mission consisted of Messrs. A. Mates, L. Vera, I. Christie, P. Murgatroyd, T. Persaud, P. Kontopirghos (consultant) and Ms. J. de Regt, who visited Tanzania in March and May 1978.  TANZANIA TOURISM REHABILITATION PROJECT I. THE TOURISM SECTOR A. Tourism Assets 1.01 Tanzania's impressive tourist attractions combine spectacular scenery, wildlife, and beaches with historical and archaeological sites. The wildlife resources are among the finest in the world and include the Serengeti Plains, Ngorongoro Crater, and Lake Manyara in the north and the relatively undeveloped Selous Game Reserve in the south. These game reserves, together with the attraction of Africa's highest mountain, Kilimanjaro, have long been part of an established East African tourist circuit. Additional attractions include the sandy beaches north of Dar es Salaam, the exotic "spice island" of Zanzibar, and excellent deep sea fishing at Mafia Island. Along the Indian Ocean coast are the remains of ancient settlements, and Olduvai Gorge, in the interior Rift Valley, is the site of discoveries of the traces of earliest man. To the visiting tourist, Tanzania also offers interesting arts and crafts, most notably the Makonde sculptures and carvings done in ebony. B. Government and Public Attitudes Toward Tourism 1.02 Prior to 1970, the Government invested heavily in tourist faci- lities mainly through its National Development Corporation. The peak in state hotel construction was reached in 1969/70; by that year tourism accounted for 5% of total parastatal organization assets. 1.03 In 1970, the national daily newspaper published a public debate on the compatibility of tourism and socialist development in Tanzania. This debate was started by the Party Youth League at the University in response to (a) a request from the President to critically examine all aspects of socialist development, (b) intensive construction of notels then taking place, and (c) the start of a consultants' study and master- plan for further tourism development in Tanzania. The debate focused on the apparent contradiction between socialism and tourism; although the Government did not participate directly in this debate, the impression was created, especially among private entrepreneurs, that the Government was not supporting the sector. 1.04 In 1973, following the public debate and the presentation of a consultants' study, the Economic Committee of the Cabinet decided to  -2- avoid major expansion in tourist facilities and to concentrate instead on consolidation of existing investments. The Economic Committee also decided to prohibit private investments inside the national parks and, even though investment in other areas was not forbidden, the private sector became extremely cautious and refrained from further investment. 1.05 With the economic crisis of 1974, operating conditions of both state and private sector hotels worsened. Scarcity of foreign exchange and the low priority given to tourism meant that practically no foreign exchange was made available to hotels. Consequently, hotels were unable to purchase maintenance materials, spare parts, and necessary replacements. At the same time, there were shortages of essential domestic goods, such as meat and oil. 1.06 In 1975, the attitudes of the Government and the Party and their constituencies changed gradually as more information became available on the contribution of tourism to foreign exchange earnings and employment and as the Government became confident that, through proper education of the population, the feared adverse impact of tourism on political and social values could be avoided. The Party and hotel managements also started a campaign to educate workers on the proper value of tourism. In late 1975, the Government sought advice from the Association on how to maximize benefits from the existing tourism assets. 1.07 In 1976 and 1977, the Government relaxed its restrictions on foreign exchange. Specifically, it allocated foreign exchange to the Tanzania Tourist Corporation (TTC) to replace its fleet of tour vehicles, and more funds were made available for promoting Tanzania's tourist attrac- tions. Hotels were allocated foreign exchange to purchase goods from abroad, and maintenance expenditures at state hotels were increased. In recent discussions with the Association, the Government has emphasized that it would provide adequate foreign exchange for the tourism industry. 1.08 In a reversal of previous policy, the Government is now urging the private sector to invest in tourism. At the end of 1977, the Minister of Natural Resources and Tourism, on behalf of the Government, invited all private investors, national and foreign, to invest in tourism. He stated that the Government had no intention of nationalizing this sector and that all foreign investors were protected under the Foreign Investment Protection Act of 1963, which guarantees foreign investments against expropriation. The Association of Hoteliers was revived in early 1978, and discussions on the needs of the private sector were initiated between Government and private hotel operators. C. The Hotel Industry 1.09 Total hotel capacity in Tanzania is about 3,600 rooms and 6,900 beds (Annex I, Table 1). Of these, about 2,300 rooms and 4,500 beds are considered to be of international standard. They are located in Dar es Salaam (25%); along the coast (21%); in the northern wildlife area (26%); in Arusha/Moshi, which serve as access to the northern wildlife area (10%);  -3- in Zanzibar (7%); and in other areas (11%). The main expansion in hotel capacity took place in the late 1960s, peaking in 1970 when capacity increased by 1,700 Deds. After 1970, capacity increased by only 3% annually, reflecting the uncertainties regarding the future of the sector in Tanzania. 1.10 Hotels in Tanzania are owned by both Government agencies and private entrepreneurs, some of whom are foreigners. At the end of 1977, the Tanzania Tourist Corporation (TTC), a parastatal organization, con- trolled about 2,300 beds or over 45% of international standard hotel capacity in Tanzania. In addition, TTC has minority shareholdings in two other international hotels that account for an additional 10% of accommo- dation capacity. Of private sector hotel accommodations, about two-thirds are owned by Tanzanians. 1.11 The cost of hotel construction in Tanzania varies according to category, size and location. Construction costs have increased by 10% annually since 1975. It is estimated that, in 1978 prices, investment cost per room for new hotels in Tanzania ranges from over US$40,000 for a four- star city hotel to US$25,000 for wildlife lodges. These costs are roughly in line with construction costs experienced in neighboring countries. 1.12 Financing for investments in tourist facilities is available from the Tanzania Investment Bank (TIB), Tanganyika Development Finance Ltd. (TDFL), and from the National Bank of Commerce. While the first two institutions are involved in loans as well as equity participation, the third finances only working capital. Financing by these institutions is available to both Government and private entities. TDFL, since its inception in 1962, has committed about 10% of its protfolio to hotel pro- jects, including a substantial equity position in two hotels. The TIB also lent close to 10% to tourism and hotel development but made little investment in the form of equity capital. D. Visitor Trends 1.13 In 1974, of all foreign visitors to Tanzania, 73% were tourists on holiday, 18% were on business, and 9% were unclassified (Annex I, Table 2). This distribution is similar to that available for 1969 (75% and 25%). Although about 90% of those on business arrived by air, as many as 40% of the holiday visitors arrived by land; this reflects the importance of the road circuit that routed tourists from Nairobi through Tanzania's major game parks (located just over the Kenya/Tanzania border) and back to Nairobi. 1.14 Tourist flows rose rapidly in the 1960s and early 1970s as Tanzania changed from a discovery area to an important tourist destination. Increased popularity of safari tours in Africa as well as construction in Tanzania of additional hotels of international standard helped sustain this increase. Visitor arrivals show an increase from about 62,000 in 1969 to about 140,000 in 1974, the last year for which arrival data are available. However, this growth rate is overstated since the definition  -4- of a visitor was expanded during the period to include Kenyan and Ugandan residents. A better measure of visitor traffic is provided by the number of bednights in registered hotels. These show an increase from about 295,000 in 1969 to 560,000 in 1976 or about 10% annually despite a marked slowdown in the latter part of the period (Annex I, Table 3). Partial figures for 1977 indicate a sharp reduction in tourism traffic due to the closure of the border with Kenya and the cessation of operations of East African Airways in early 1977. During the first nine months of 1977, visits to the northern national parks showed a 70% decrease from 1976 (Annex I, Table 4); visitor bendights and occupancy levels in northern wildlife lodges in 1977 showed a similar decline (Annex I, Tables 5 and 6). 1.15 Large tour operators in Europe and North America (the major tourist-generating markets) were reluctant after 1972 to offer tours to Tanzania. They could not be certain of the quality and reliability of services provided and, in some cases, were liable to compensate disenchanted visitors. This is reflected in the visitor statistics: Between 1972 and 1976, overall European and American visitor bednights decreased by 2% and 5% respectively per annum (Annex I, Table 3). As of 1976, Europeans accounted for 40% and Americans for 20% of visitor bednights, down from 50% and 28% respectively in 1972. Average length of stay in Tanzania declined from 4 days in 1972 to 3.5 days in 1974 reflecting the reduced number of tours to Tanzania and the increased preference for short trips by land from Kenya. E. Infrastructure Airports 1.16 Tanzania is served by two international airports: Kilimanjaro and Dar es Salaam. Kilimanjaro Airport was completed in 1971 at a cost of TSh 102 million (about US$14 million). The airport, which was financed by Italian aid, is capable of accommodating Boeing 747s. At present, only four international carriers land at Kilimanjaro, and the airport is under- utilized. Alternatively, at Dar es Salaam Airport, from 1966 to 1976, passenger traffic grew by 10%, freight by 8%, and aircraft movements by 7% annually. 1.17 Dar es Salaam Airport is the main international port of entry and the hub of the domestic air transport system. It is served by 18 scheduled and 20 nonscheduled carriers. The airport currently handles about 1,200 passengers per day, but its facilities are inadequate. Pro- cessing of arriving passengers is extremely slow, the luggage handling system is inefficient, and the departure lounge is too small to handle demand at peak hours. Roads 1.18 The main access to Tanzania's national parks is by road. Although the roads within the national parks are adequately maintained and passable throughout the year, some of the roads leading to the parks, especially  -5- to the popular northern wildlife area, are poorly maintained. During the rainy season they are frequently flooded and can be used only by four- wheel drive vehicles. F. Training 1.19 In the 1960s and early 1970s, training of hotel staff was mostly carried out on the job, with one exception: A hotel management company established a small school in one of its hotels for basic-level training. In 1972, TTC took over this school and, with Dutch technical assistance, continued to offer basic courses. In July 1977, the responsibility for manpower development in the tourism sector (and therefore for the hotel training school) was transferred to the Ministry of Natural Resources and Tourism (MNR&T). 1.20 The present hotel training school is located in central Dar es Salaam on the premises of an old hotel, which is a historical landmark whose structure cannot be altered. The school offers basic three-month courses for five hotel occupations. Since the technical assistance team has recently left, only few qualified instructors remain. Furthermore, hoteliers feel that the curriculum does not reflect the training needs of the sector. G. Contribution of Tourism to the Economy 1.21 According to figures published by the Bank of Tanzania, foreign exchange earnings from tourism rose from TSh 80 million (US$11 million)* in 1969 to TSh 119 million (US$16 million)* in 1972. By 1976, foreign exchange earnings from tourism had fallen to TSh 88 million (US$11 million). Al- though the figures are incomplete and tend to underestimate foreign ex- change receipts, they do indicate general trends and orders of magnitude. 1.22 Although Tanzania's foreign exchange earnings from tourism have been relatively small, there is potential for substantial growth. Kenya, whose tourism attractions are similar to those of Tanzania, earned over US$100 million from tourism in 1976. Furthermore, Kenya's tourism earnings as a share of GNP were about 3%, and, as a share of exports of goods and services, about 9%. For the same year, Tanzania's earnings from tourism only amounted to 0.4% of GNP and 2% of exports of goods and services. 1.23 Employment in hotels and restaurants is estimated at 4,500 in 1977. The average ratio of employees per bed is about 0.7, which is similar to that for neighboring countries. About 40% of the employees are unskilled, 45% can be considered semiskilled, and about 15% are in managerial and supervisory positions. Eight percent of the hotel employees are women, who work mostly in housekeeping, administration and accounting. Direct employment in tourist activities other than hotels (airlines, national parks, travel agencies, tour operators, handicrafts) is estimated at an additional 4,500; this brings total direct employment generated by tourism to 9,000. * At the then prevailing exchange rates.  -6- 1.24 Semiskilled workers in TTC hotels earn TSh 5,000 to 6,000 (US$625-750) per year, whereas the legal minimum wage is TSh 4,200 (US$525) per year. Supervisors earn from TSh 10,000 (US$1,250) per year upwards. H. Social Aspects of Tourism Development 1.25 As noted in para. 1.03, in the early 1970s, the Tanzanians generally viewed tourism development and its impact on the local population unfavorably. Tourism was considered one of the many influences that could interfere with the process of seeking and formulating a national identity. This conflict has been largely overcome. The Tanzanians have now built a national identity, which is constantly reinforced through the formal and the Party's nonformal education systems. 1.26 Tanzania's principal tourist attractions, the game parks and beaches, are relatively isolated, and the beach hotels are also a fair distance from Dar es Salaam. Therefore, contact between tourists and the local population is limited. However, the Government is attempting to bring tourists into closer contact with all aspects of Tanzanian culture; for example, a resolution was recently passed that the National Dancing Troupe and other artists will perform only in the midst of Tanzanian life, i.e., in villages and towns, rather than in hotels. 1.27 Tourists come into contact with traders and producers of handi- crafts, especially Makonde wood sculptors and ivory carvers. Makonde art forms, once restricted to rigid religious tribal rites, are now produced freely, and modern forms have emerged. Tourism and export demands have generated a certain amount of mass production, but most artists will still make truly creative pieces. Lately a new carving style expressing the spirit of "Ujamaa" has appeared--these carvings depict a system of inter- dependent people. All sales and export licensing for both wood and ivory carvings are controlled by the Government. II. EXECUTING/BORROWING AGENCIES A. The Ministry of Natural Resources and Tourism (MNR&T) 2.01 The Ministry of Natural Resources and Tourism (Chart I) is responsible for policies affecting development of wildlife resources through its Wildlife Division and for formulation of tourism policies, hotel classifications, and supervision of the hotel training school through its Tourism Division. 2.02 The Wildlife Division is directly responsible for wildlife management outside the national parks (national parks are managed by Tanzania National Parks as described in para. 2.06). The Division is responsible for licensing and setting hunting quotas, for controlling and limiting wildlife cropping and for anti-poaching efforts outside the national parks. It is also in charge of construction and maintenance  MINISTRY OF NATURAL RESOURCES AND TOURISM ORGANIZATION STRUCTURE MINISTER PRINCIPAL SECRETARY PLANNING AUDITOR UNIT DIRECTOR MANPOWER DEVELOPMENT FINANCE AND ADMINISTRATION > a DIRECTOR TOURISM --------I WILDLIFE r-,TWC FORESTRY FISHERIES DIVISION . | j DIVISION ------- l__DIVISION ------ DIVISION ------- ...... i------ TTC ______----4TWICO g ---iTAFICO, TT , -,TANAPA ________ ________ DIRECTOR ------- DIRECTOR I------- DIRECTOR DIRECTOR ' jNCA HOTEL _TRAINING SCHOOL  -8- of infrastructure in game reserves, for training of guides, and for some wildlife research. 2.03 The Tanzania Wildlife Corporation (TWC), a parastatal organi- zation, is engaged in cropping and animal capture, has a monopoly on trophy mounting, and manufactures a range of wildlife products. 2.04 The Government of Tanzania has recognized the importance of conserving its vast wildlife resources and of utilizing these resources rationally; these policies were summarized in the Wildlife Conservation Act of 1974. Tanzania's national parks, game reserves and game controlled areas (25% of the country) are among the best managed in East Africa. Animal inventories, research, and monitoring programs, are carried out continuously and form the basis for game cropping. Due to recent in- creases in animal population, hunting safaris have been allowed since mid-1978 under special licenses and strict control. Sustained yield management allows the country, through the commercial operations of the Tanzania Wildlife Corporation, to earn from sales of hides, skins and trophies. The Government attitude towards safeguarding the wildlife resources is firm; it maintains substantial anti-poaching forces and imposes stiff penalties on convicted poachers. 2.05 The Tourism Division within the MNR&T (Chart II) is responsible for sectoral planning, manpower training and development, and classifi- cation and licensing of hotel and travel agencies. In general, the Division's staff is not sufficient to meet these responsibilities fully. The Division is now in the process of developing a tourism law that will regulate the classification, licensing, and staffing of tourist facilities and has requested bilateral technical assistance for the formulation of this law and for the development of a hotel inspection system. The Division is also, through its training section, monitoring the studies program and operation of the hotel training school. To improve the manpower training expertise within the Division, technical assistance to the Ministry would be provided under the proposed project. B. Tanzania National Parks (TANAPA) and Ngorongoro Conservation Authority (NCA) 2.06 Tanzania National Parks (TANAPA) a parastatal organization, manages the national parks (over 35,000 km ) and is responsible for infrastructure, collection of entry and vehicle fees, anti-poaching efforts, administration of campsites, and development of existing and proposed parks. It is also responsible for the Serengeti Research Institute, which carries out research on wild animals and domestic stock.  MINISTRY OF NATURAL RESOURCES AND TOURISM ORGANIZATION CHART OF THE TOURISM DIVISION TOURISM DIVISION DIRECTOR TOURISM SECTORAL H SERVICES PLANNING SECTION SECTION HOTEL PUBLIC RELATIONS FINANCE & TRAVEL AGENCY HOTEL . PLANNING R & T MANPOWER _ - RAINING ADMINISTRATION LICENSING CLASSIFICATION TRAINING SCHOOL LICENSING  -10- 2.07 The Ngorongoro Conservation Authority (NCA) manages an area of about 8,000 km2, including the Ngorongoro crater itself, and the site of the discoveries at Olduvai Gorge. It is responsible for infra- structure, entry and vehicle fees and anti-poaching efforts within the area. NCA attempts to obtain optimal economic returns through multiple land use. This involves some 12,000 Masai pastoralists in the area, whose herds coexist with the wildlife. C. The Tanzania Tourist Corporation (TTC) 2.08 The Tanzania Tourist Corporation came-into being on April 11, 1969, under the Public Corporation Act (para. 6.01). The Corporation was charged with state investment in tourism super- structure, management and control thereof, and promotion of the tourist industry. The Corporation is owned by the Government and is Tanzania's principal and active instrument of tourism develop- ment. TTC is intended to function as a profit-making organization. 2.09 By the end of 1977, TTC owned 13 hotels totaling about 1,200 rooms (2,300 beds), roughly 45% of total hotel capacity of international standard in Tanzania. TTC also has minority share- holdings in two additional hotel companies, which account for a further 10% of overall capacity. In addition to hotels, TTC controls and operates: (a) State Travel Service (STS), a travel agency and tour operator; and (b) Tanzania Duty Free Shops Ltd. TTC also runs four overseas offices in Frankfurt, London, Milan and New York and is responsible for conducting the overall promotion campaign for Tanzania's tourism industry. Total TTC staff is about 2,400. 2.10 The Corporation's governing authority is vested in a ten-member Board of Directors. The Board is convened at least every six months and decides on organizational changes, budget and development projects, and recruitment of top level personnel. The Chairman of the Board is nominated by the President for a period of five years and can be renominated. The other Board members are nominated by the Minister of MNR&T. Among the current Board members are the Principal Secretary of the Ministry of Foreign Affairs and the Principal Secretary of MNR&T.  -11- CHART III TALZAIA TOMIRST CORPORATION ORGANIZATION CHART I BQZRD OP ELPMEN | GE l~~ANGE MANPOWER D1EV. & DIRECTOR OP OEL TM MARERTING AIEdINISTRATION DIECTOR DIRETOR M R STAFF 11V. HEAD OFFICE NORER HOES SOUTHERN HOTITELS IPROMOTION & OFF_CERTACCOUNTANT PUBLICITY MANAGER AIMINISTRATION GROPACOT. LAXR MEARk DIE SADOFFICER NORTH SEPROI | OFFICER l : NORTS l 8 g 1 BOTES | | }NS OPFICM AGERA| GRO_ P ACCT. I-I 8GOR08GORO I Nq CA R TI SOUTH W D. LODGE R=AAGER TOURIST REPRESENTATIVES |CONilROLL[ER | T 11 LODGE BRACEEHOTEL INSIIEUJCE lgDB S ~ MANGER NE IM  -12- 2.11 The Corporation's chief executive is the General Manager, who is appointed by the President. According to the new organization approved in February 1978 (Chart III), there are four directors reporting to the General Manager: marketing, finance, administration, and hotel and tourist services. Although the quality of TTC management and staff is generally adequate, there are various units within TTC that urgently need strengthening. These involve the areas of marketing, structural and mechanical engineering, purchasing and distribution, and reservations and communications. The project provides funds for technical assistance and training in these areas. 2.12 Since 1970, every public enterprise employing over ten workers has been required to establish a form of worker parti- cipation in management through a Workers' Council. All TTC hotels have Workers' Councils, which are chaired by the hotel manager and include heads of all departments, the Party and labor union repre- sentatives, members of the Workers' Committee, and representatives selected in proportion to the number of workers in each department. The Councils discuss wage and income policies as announced by Government, productivity planning (e.g., setting targets for each department), and other matters pertaining to organization, workers' welfare, and education. D. Ministry of Works 2.13 The Roads and Aerodromes Division of the Ministry of Works is responsible for the planning, design and construction of airports, including passenger terminal buildings. The Division is also responsible for maintenance of airport installations and buildings through its Airport Services Section. 2.14 The Building Division of the Ministry of Works is in charge of the construction of Government buildings. In carrying out this responsibility, the Division (a) advises the client agency about hiring consultants or directly employs consultants when necessary; (b) ensures that the bulk of building work is standardized; (c) prepares cost estimates; and (d) invites tenders and negotiates contracts on behalf of the Government and parastatal agencies.  -1 3- III. THE PROJECT A. Project Objectives and Content 3.01 A variety of factors contributed to the relative decline in the performance of the tourism sector in Tanzania after 1972. Most important was the generally unfavorable attitude toward tourism prevailing in Tanzania in the early 1970s, which led to frequent misunderstandings between Tanzanians and tourists. The period was also marked by frequent discussions in the press and within the Government as to whether social values promoted by the Government and the services required by tourism were compatible. This led to a marked deterioration in the quality of service. A second major problem was the strict control of foreign exchange and reluctance of the Government to provide foreign exchange funds for purchase of even the most basic hotel supply items, such as cutlery, linens and blankets. Major hotel appliances and fixtures deteriorated rapidly, and spare parts or replacements were not readily available (para. 1.05). Imported food items such as sugar and butter were scarce, and luxury items such as imported liquors were virtually unavailable. In addition, there were a number of problems relating to lack of adquate hotel training. Finally, the recent closure of the border with Kenya left a gap in marketing tours to Tanzania since it was the Kenyan tour operators who traditionally brought most tourists to northern Tanzania. 3.02 The proposed project is designed to assist the Government in reversing the deterioration in tourist facilities and services since the early 1970s, which has resulted in a decline of tourism to Tanzania. Specifically, hotels would be rehabilitated, adequate hotel training provided, transportation infrastructure improved, and promotion of Tanzania's tourist attractions intensified. With the improvements to be brought about by the project, tourist traffic is expected to increase substantially and allow adequate use of existing hotels and lodges whose capacity, with the exception of those in the Dar es Salaam area, is sufficient to handle the increased traffic through 1985. The project would consist of the following components: ( i) urgent and essential works and equipment required to bring seven hotels and five lodges, controlled and operated by the TTC, up to an acceptable operating standard; ( ii) technical assistance to the TTC in the fields of hotel maintenance, marketing, hotel supplies, hotel communications, and project coordination; (iii) the preparation of promotional material and marketing campaigns aimed at the tourist travel trade; ( iv) the construction, furnishing and equipping, and technical assistance for a Hotel and Tourism  -14- Training Institute (HTTI) to be located in Dar es Salaam; ( v) improvements to the terminal building of the Dar es Salaam Airport to provide more adequate facilities for international arrivals and departures; and ( vi) equipment for the anti-poaching units of TANAPA and NCA. B. Project Components Hotel Rehabilitation 3.03 The following 12 hotels and lodges, operated and owned by the TTC, will be rehabilitated under the project: ( i) Kilimanjaro Hotel, Dar es Salaam (196 rooms/392 beds); ( ii) New Africa Hotel, Dar es Salaam (101/159); (iii) Kunduchi Beach Hotel, 18 km north of Dar es Salaam (100/200); ( iv) Mafia Island Lodge, Mafia Island (30/60); ( v) Mikumi Wildlife Lodge, Mikumi National Park (48/96); ( vi) Lake Manyara Hotel, overlooking Lake Manyara (101/202); (vii) Ngorongoro Wildlife Lodge, Ngorongoro Conservation Area (78/156); (viii) Seronera Wildlife Lodge, Serengeti National Park (76/152); ( ix) Lobo Wildlife Lodge, Serengeti National Park (75/150); ( x) New Mwanza Hotel, Mwanza, Lake Victoria (57/112); ( xi) New Safari Hotel, Arusha (60/113); and (xii) Moshi Hotel, Moshi (67/108). 3.04 The 12 hotels and lodges have different degrees of obsolescence: Two of them (New Safari and Moshi) are about 25 years old; the Kilimanjaro, Lake Manyara, and Ngorongoro were built in the 1960s; and the remaining seven started operations between 1970 and 1973. Because of poor maintenance, failure to carry out essential repairs, and lack of spare parts or technical ability to keep major equipment in working condition, these hotels and lodges are no longer offering the quality of accommodation and service they were intended to.  -15- 3.05 The hotels' buildings and technical plants require immediate major remedial expenditure. Roofs in some lodges need extensive surface retreatment; in others, the high degree of alkalinity in the water has already destroyed treatment plants and corroded piping and equipment. In some hotels and lodges, the sewerage system has to be replaced. Technical equipment in most hotels and lodges has deteriorated and requires extensive overhaul and replacement of parts. Deteriorating bathroom fittings and sanitary ware also need replacement. In most hotels and lodges, the quantity and quality of the linen, cleaning equipment, crockery, cutlery, glassware, and kitchen utensils are inadequate. Most of these hotels are on the verge of a breakdown in operations and would have to be closed if a major rehabilitation is not carried out. 3.06 The major component of the proposed project is designed to rehabilitate the structure of such hotels and lodges, repair damaged furniture and equipment, replace the technical plant, provide necessary spare parts, and improve the condition of staff quarters. At the same time, this project component is intended to provide training to maintenance staff and to establish facilities for major repairs and for storage of parts in both Dar es Salaam and Arusha. 3.07 Specifically, the hotel rehabilitation component would provide for (a) external works, comprising site development and roof improvement; (b) improvement of plumbing installations, repair or replacement of electrical generators and installations, overhaul of air-conditioning and heating systems, improvement of boiler plants, overhaul of water and sewage treatment plants, and repair or replacement of equipment in kitchens, laundry and service areas; (c) improvement or replacement of internal finishes, furniture, and fittings in public areas and guest rooms; (d) staff housing; and (e) vehicles essential for the operation of hotels and lodges. Technical Assistance to TTC 3.08 Fifteen man-years of internationally recruited specialists' services would be provided to TTC under the project, including: ( i) one specialist in hotel engineering for three years; ( ii) one specialist to help administer and coordinate the hotel rehabilitation for three years; (iii) two specialists in hotel mechanical installations and equipment, each for two years; ( iv) one specialist in tourism marketing for two years; ( v) one specialist in hotel communication and reservation systems for one year; and ( vi) one specialist in organization of hotel supplies and distribution system for two years.  -16- 3.09 The first four specialists would be directly involved in the execution of the hotel rehabilitation program and, at the same time, would be responsible for the training of local professional staff within the Engineering Department. The remaining specialists would assist TTC in the reorganization and strengthening of its respective departments. All technical assistance appointments should be made in consultation with IDA and assurances to this effect were obtained during negotiations. Marketing Expenditures 3.10 Because of a lack of marketing expenditures since the early 1970s, substantial amounts are needed over the project period to provide the Marketing Department of TTC with adequate supplies of promotional materials as well as funds for campaigns aimed at the tourist travel trade. Financing for marketing would be included in the project because funds required to start up the marketing campaign are much larger than those required on a regular basis and because extensive marketing efforts are essential to the success of the project. Included in the promotional materials would be brochures and booklets, stickers, posters, maps and postcards, as well as slides and film to be used in presentations to tour operators. Additional funds would be made available for newsletters, advertisements in various publications, and overseas visits. Hotel and Tourism Training Institute (HTTI) 3.11 The existing school provides short, basic-level, three-month courses for five hotel occupations (waiters, barmen, receptionists, house- keepers, and cooks). The teaching staff of the school consists of eight local instructors, most of them part-time. The school is housed in an old and inadequate structure in downtown Dar es Salaam, with a maximum capacity of 64 trainees per term (para. 1.20). The building cannot accommodate the required instructional facilities for a modern school, and the site itself (0.4 ha) is too small for any extension of the building. No facilities are available for practical training. 3.12 The proposed HTTI would be designed to reproduce as closely as possible the working environment found in hotels and other tourism-related facilities so that trainees could receive theoretical training in the academic facilities and practical experience in the attached hotel. An acceptable site for the HTTI should be determined in consultation with IDA, and agreement to this effect was reached during negotiations. Courses for 134 full-time students would be staggered to permit efficient use of facilities, and the duration of courses would vary; full-time courses would last up to one year, while refresher courses would last four weeks. Full-time courses would be offered in the five main hotel specialties (front office, restaurant, kitchen, housekeeping, and hotel maintenance) and in two tourism specialties (tour guides, information officers). The courses would be offered at basic, medium and higher levels (Annex II). 3.13 The academic facilities of the proposed Institute would include  -17- general purpose classrooms, a language laboratory, workshops and demon- stration rooms, a library, and administrative offices. A practice hotel would be built with 30 bedrooms, the minimum suitable size for training purposes. The hotel would have a food and beverage department, including a bar, a restaurant, and a kitchen specially designed and equipped for student training. The practice hotel would be open to the public and would function commerically with all the departments and services generally found in three-star hotels. The Institute and the hotel would share the kitchen and also the laundry and central stores. Student housing would be in the form of dormitories for 80 trainees. Technical Assistance for the HTTI 3.14 A technical assistance component is essential for the success of the HTTI. The component would provide funds for expatriate teachers, scholarships for teacher training, and a senior advisor on hotel training. In total, this component would provide for 18 man-years of internationally recruited specialists' services and 20 man-years of fellowships. The specialists would arrive in Tanzania three to six months before the open- ing of the Institute and stay for periods of up to 30 months. 3.15 Eleven Tanzanians would be trained to replace the technical assistance team as a core of technical expertise. Candidates would be sent abroad for a one- to three-year program of technical and teacher training. To ensure that teacher training is completed in time, the first candidates should take up their studies abroad during the 1979/80 school year. Terminal Building, Dar es Salaam International Airport 3.16 The proposed project would also provide funds for improvements in the handling of international passengers at the Dar es Salaam Airport, and would include civil works, furniture and equipment. This component is intended to constitute a stopgap solution to alleviate the present problems in the arrivals and departures of passengers, which will multiply as tourist and general traffic increase in the next ten years. Beyond that, the Tanzanian Government intends to build new airport facilities. 3.17 The airport at Dar es Salaam is the principal international air- port for Tanzania and the hub of the domestic air route network. For the foreseeable future, it will continue to be the principal airport and will handle increasingly large numbers of international arrivals and departures. The airport, opened in 1955, is located some 10 km southwest of Dar es Salaam and was designed to serve only small aircraft. In 1967, its main runway was extended to the present length of 2,380 m. The terminal building was remodeled in 1970, 1972 and 1973 to provide additional capacity in the arrival and departure areas. With the increased air traffic and the introduction of larger aircraft, the terminal facilities have become inadequate. The main problem is the lack of adequate space both for passengers and for other services contained in the terminal building and the excessive time required to process passengers.  -18- 3.18 The proposed component would provide funds for the construction of a new international passenger processing unit adjacent to the existing terminal building. This would be a single-story, light structure, that could easily find alternative use should a new terminal building be con- structed at some time in the future. The component would also include the installation of luggage conveyors and equipment for moving luggage to and from the aircraft. Anti-Poaching Equipment 3.19 Until recently, poaching did not pose a serious threat to Tanzania's wildlife resources. However in the past two years there has been increasing incidence of well-armed poachers which, in the long run, could threaten certain wildlife species and also the associated tourism industry. The Government has responded to this emerging threat by strengthening its anti- poaching activities. To support these activities, the project will provide necessary vehicles and_equipment for the anti-poaching units of TANAPA and NCA. To assist in monitoring the effectiveness of this anti-poaching component, assurances have been obtained that a report dealing with the wildlife situation in Tanzania and the results of anti-poaching activities shall be furnished annually to the Association. Furthermore, assurances were received that any major changes in policies affecting wildlife preservation, relating to organization and staffing of anti-poaching units, licensing of hunting and dealing in and exporting of trophies, shall be submitted to the Association in sufficient time to enable it to comment on them. Makuyuni-Serengeti Road 3.20 The access from Arusha to the northern wildlife lodges at Lake Manyara, Ngorongoro, Seronera, and Lobo leaves the main Arusha-Dodoma trunk road at the village of Makuyuni, 84 km west of Arusha. The trunk road between Arusha and Makuyuni is paved, reasonably well-maintained, and adequate for projected volumes of traffic. The 160 km access route beyond Makuyuni to Lake Manyara National Park, Ngorongoro Conservation Area, and Serengeti National Park is an over-trafficked earth road that is liable to flood at river crossings, because of a lack of longitudinal drainage and is particularly rough in the escarpments, difficult to maintain, and unpassable in the rainy season. 3.21 Improvement of this road was initially proposed as a component of the project, but it was later decided to include it as a component of the Fifth Highway Project appraised in April 1978. Project components under the Fifth Highway Project would include equipment, spare parts, materials, and technical assistance. The equipment and materials would be assigned to and used by a special rehabilitation unit that would be engaged in maintenance of the road and would guarantee safe all-weather access to the parks and lodges. Minor improvements would include realignments, re- grading, gravel pavement, longitudinal drainage, and culverts. Assurances were obtained during negotiations that the Government will upgrade the road to an all-weather standard and maintain it in accordance with sound engineering standards.  -19- IV. PROJECT COST, FINANCIAL PLAN, IMPLEMENTATION PROCUREMENT AND DISBURSEMENT A. Cost Estimates 4.01 The total cost of the project is estimated at US$19.5 million equivalent, including US$1.2 million equivalent of taxes and duties. The estimated costs and foreign exchange components of the various categories of expenditures are given in Annex I, Table 7 and are summarized as follows: Table 1. Estimated Cost Per Project Component % of Total % TSh (millions) US$ (millions) Base Foreign Component Local Foreign Total Local Foreign Total Cost Exchange A. Rehabilitation of TTC hotels and lodges 18.9 48.8 67.7 2.35 6.11 8.46 57.9 72 B. TTC marketing expen- ditures 1.4 4.4 5.8 0.19 0.54 0.73 5.0 74 C. HTTI 5.7 9.7 15.4 0.71 1.22 1.93 13.2 63 D. Dar es Salaam Air- port Terminal 3.3 7.3 10.6 0.41 0.92 1.33 9.1 69 E. Technical assistance to TTC 0.5 4.9 5.4 0.07 0.61 0.68 4.6 90 to HTTI 0.8 7.3 8.1 0.10 0.91 1.01 6.9 90 F. Anti-poaching equipment 0.6 3.2 3.8 0.07 0.40 0.47 3.3 85 Total Base Cost 31.2 85.6 116.8 3.90 10.71 14.61 100.0 73 Contingencies Physical increase (8%) 2.6 6.3 8.9 0.32 0.79 1.11 71 Price increase (26%) 10.2 20.1 30.3 1.28 2.50 3.78 66 Subtotal _12.8 _26.4 _39.2 _1.60 3.29 4.89 67 Total Project Cost (including taxes and duties) 44.0 112.0 156.0 5.50 14.00 19.50 72  -20- Table 2. Estimated Cost by Category of Expenditure TSh (millions) US$ (millions) of Total Category Local Foreign Total Local Foreign Total Base Cost 1. Civil Works a. Hotel rehabilitation 8.2 15.8 24.0 1.04 1.96 3.00 20.5 b. HTTI 4.0 7.0 11.0 0.50 0.88 1.38 9.5 c. Airport terminal 2.5 4.5 7.0 n.in 0.57 0.87 6.0 Subtotal (1) _14.7 _27.3 42.0 _1.84 3.41 5.25 _36.0 2. Furniture & fixtures 2.4 7.2 9.6 0.30 0.90 1.20 8.2 3. Equipment 5.5 31.5 37.0 0.68 3.95 4.63 31.7 4. Professional services 5.8 3.1 8.9 0.72 0.39 1.11 7.6 Subtotal (1-4) 28.4 69.1 97.5 _3.54 _8.65 12.19 83.5 5. Technical assistance 1.3 12.2 13.5 0.17 1.52 1.69 11.5 6. Marketing expenditures 1.5 4.3 5.8 0.19 0.54 0.73 5.0 Total Base Cost (1-6) 31.2 85.6 116.8 3.90 10.71 14.61 100.0 7. Contingencies Physical Increase (8%) 2.6 6.3 8.9 0.32 0.79 1.11 Price Increase (26%) 10.2 20.1 30.3 1.28 2.50 3.78 Subtotal (7) _12.8 26.4 39.2 1.60 3.29 4.99 Total Project Cost (including taxes and duties) 44.0 112.0 156.0 5.50 14.00 19.50 4.02 Cost estimates for civil works, furniture, and equipment for the hotel rehabilitation, HTTI, and the airport terminal are based on preliminary architectural and engineering studies carried out by Coopers and Lybrand Associates in association with Norman and Dawbarn and are updated to October 1978 prices. The estimates of costs for civil works are based on economical building standards, and maximum use of local materials and building technology has been emphasized. The average rehabilitation cost per room of TTC hotels and lodges is US$8,500 without contingencies, and US$11,000 including con- tingencies. The unit construction cost for HTTI is about US$300/m , and the gross area per student (5.4m2) reflects the austerity of the proposed facilities. Internationally recruited specialists for the technical assistance to both TTC and ETTI are estimated to require 33 man-years at an average cost of US$45,000 per man-year. Consultants required for the design of the hotel rehabilitation, the HTTI, and the airport terminal are estimated at 37 man-years at an average cost of US$30,000 equivalent per man-year.  -21- Duties and Taxes 4.03 Project costs include customs duties and taxes for imported items and have been estimated at US$0.7 million equivalent. Most of the building materials to be used in the construction work and some furniture and equipment are expected to be acquired in the local market and would accordingly be subject to taxes, estimated at US$0.5 million equivalent. In accordance with the normal practice of the Government of Tanzania in IDA projects, the remuneration of the technical assistance specialists would be exempted from taxes. Contingency Allowances 4.04 For physical increases, 10% has been added to the base cost of civil works, furniture and equipment (Annex I, Table 8). Estimated price increases are based on annual rates of price escalation over base costs of March 1978 in accordance with the implementation schedule (Annex I, Table 9). Total contingencies represent 34% of the estimated base cost. Foreign Exchange Component 4.05 The foreign exchange component has been calculated as follows: (a) civil works, 63%; (b) internal finishes, furniture and fixtures, 75%; (c) equipment and vehicles, 83%; (d) professional services, 35%; (e) technical assistance and fellowships, 90%; and (f) marketing expenditures, 74%. The foreign exchange component for civil works is high reflecting, inter alia, the high transportation and fuel costs in Tanzania. Including contingencies, the foreign exchange component is estimated at US$14 million equivalent, or 72% of total project cost. B. Financial Plan 4.06 The financial plan (Table 3) provides for an IDA Credit of US$14 million equivalent (76.5% of total project cost net of taxes and customs duties). The Government contribution would be US$4.3 million equivalent (excluding taxes and duties) spread over a period of four years with a maximum contribution of about US$1.5 million equivalent in any one year. The Government attaches high priority to the project, and provision of the capital counterpart funds is within its capability.  -22- Table 3. Financial Plan (US$ millions) Government Category of Tanzania Credit Total Civil works 1.44 3.41 4.85 Furniture and fixtures 0.24 0.90 1.14 Equipment and vehicles 0.54 3.93 4.47 Professional services 0.56 0.44 1.00 Technical assistance 0.20 1.49 1.69 Marketing Expenditures 0.06 0.54 0.60 Contingencies 1.26 3.29 4.55 Subtotal 4.30 14.00 18.30 Taxes and duties 1.20 -- 1.20 Total 5.50 14.00 19.50 C. Project Implementation General 4.07 Overall project coordination would be vested in the office of the Principal Secretary of MNR&T. The project would be implemented in about four years from Credit effectiveness (Annex I, Table 9) with a proposed closing date of June 30, 1983. The expected completion date is December 1982. Hotel Rehabilitation 4.08 The hotel rehabilitation component would be executed by contractors under the supervision of TTC personnel. The extent of the works involved would put an excessive strain on existing TTC manpower. If the works are to be carried out effectively and within the budget constraints, they must be carefully programmed and supervised by a reinforced Engineering Depart- ment within TTC. Therefore, a coordinator within the Engineering Depart- ment to overview the hotel rehabilitation program would be nominated by TTC by April 30, 1979, and assurances to this effect were obtained during negotiations. This coordinator would be assisted by a newly nominated procurement officer and five construction supervisors. 4.09 An essential aspect of project implementation is proper mainte- nance of the rehabilitated facilities. Past deficiencies of maintenance  -23- should not recur, and the improved facilities should not be allowed to deteriorate. Assurances were obtained during negotiations that TTC will, by December 31, 1981, have reached and thereafter maintain, an annual level of repair and maintenance expenditure equivalent to 6% of hotel sales or 2% of the current value of its fixed assets, which- ever is higher. Hotel and Tourism Training Institute 4.10 The design and construction of the HTTI will be performed by architects and contractors under the supervision of the Ministry of Works, Building Division. 4.11 Operations of the HTTI are described in detail in Annex II. Six experts in hotel training and tourism, one of whom would be designated as head of courses, would be recruited and financed by the project. The functions of these experts would be to prepare syllabi and teach at the HTTI for its first two to three years of operation. All technical assistance appointments should be made in consultation with IDA and the head teacher should be nominated by end-1979; assurances to this effect were obtained during negotiations. Eleven Tanzanians would be trained overseas to take over from the technical assistance team during the third year of HTTI operations. 4.12 The HTTI would function autonomously within prescribed budgetary limits. Agreement was reached during negotiations that the Government would study and inform IDA by end-1980 of the method of financing HTTI operations (hotel levy, tuitions, and Government subsidies). During negotiations, assurances were received that an accounting system acceptable to IDA would be installed in the ETTI, six months prior to its expected opening. During negotiations, assurances were also obtained that annual audited financial statements for the HTTI would be furnished to IDA within six months of the end of each fiscal year. 4.13 The Division of Tourism in the MNR&T is at present inadequately staffed to supervise operation of the HTTI. Funds have been included in the project to provide a senior advisor to strengthen the Division. The functions of the advisor would be to assist in planning the HTTI operations and to advise on training policy (eventually to be codified in a training law), including validation of diplomas and student and teacher regulations. The appointment would be for three years. Terminal Building, Dar es Salaam Airport 4.14 The design and construction of the terminal building would be performed by consultants and contractors under the supervision of the Roads and Aerodromes Division of the Ministry of Works. Once completed, operation and maintenance of this facility would be entrusted to the Airport Services Section of the Ministry of Works.  -24- Anti-poaching 4.15 Implementation of the anti-poaching component will be entrusted to TANAPA and NCA which will use the equipment to support and strengthen their existing anti-poaching units. Financial Arrangements 4.16 IDA would finance the foreign exchange component of the project and the Government would finance local costs. IDA funds would be channeled through the Ministry of Finance to (a) the TTC for the hotel rehabilitation, marketing, and technical assistance component; (b) the MNR&T for the Hotel and Tourism Training Institute; (c) the Ministry of Works for the airport passenger terminal building; and (d) TANAPA and NCA for the anti-poaching component. Funds for hotel rehabilitation would be passed on by the Ministry of Finance to the TTC on commercial terms. The loan to TTC will be for sixteen years at 10% interest with four years of grace for both principal and interest. These terms are consistent with prevailing loan terms in Tanzania. Average inflation rate for Tanzania in the 1975-77 period was 13% as measured by the consumer price index. Inflation rate forecast for 1978-80 is 7.5%. Agreement on the terms on which funds would be passed to the executing agencies was reached during negotiations. Design and Construction Standards 4.17 Consultants would be responsible for the design, construction standards and tender documents for the hotels and lodges to be rehabilitated, the Hotel and Tourism Training Institute, and the terminal building at Dar es Salaam Airport. They would also prepare lists of furniture, fixtures and equipment, and maintenance manuals. Preliminary and final drawings and drafts of the above documents would be prepared in consultation with the Association. The Building Industry 4.18 Construction companies, most of which are based in Dar es Salaam and Arusha, are registered with the Central Tender Board. Small companies (Class 4) are qualified to undertake contracts up to TSh 5 million (US$0.6 million) in value. Medium-sized companies (Classes 3 and 2) are qualified to undertake work up to TSh 10 million (US$1.2 million) and TSh 25 million (US$3.1 million), respectively. Class 1 companies--four to five in total-- are owned principally by joint ventures of local and expatriate contractors; they are qualified to undertake work for unlimited amounts. ynit construction costs for buildings by private cont5actors are about US$280/m for light and simple structures, and US$400/m for more complicated structures. These prices are relatively high in comparison with those in neighboring countries. It is expected that most of the rehabilitation works of hotels and lodges, improvement works of the airport terminal, and construction works of the HTTI would be accomplished by large- and medium-sized companies on the basis of international competitive bidding. 4.19 For purposes of bidding, civil works and redecoration, hotels and lodges would be grouped together. The three main packages would include  -25- (a) the northern circuit hotels and lodges (Lobo, Seronera, and New Mwanza; Ngorongoro and Manyara; New Safari and Moshi); (b) the hotels in the Dar es Salaam area (Kilimanjaro, New Africa and Kunduchi Beach); and (c) the lodges in Mikumi and Mafia. Procurement 4.20 All contracts for civil works, furniture, fixtures, equipment, and vehicles would be awarded on the basis of international competitive bidding in accordance with the Bank's guidelines for procurement, except for: ( i) civil works contracts costing less than US$250,000 equivalent each (up to US$2.4 million in total); ( ii) furniture, fixtures, and equipment contracts costing less than US$100,000 equivalent each (up to US$1.5 million in total); and (iii) spare parts for equipment already installed in hotels and lodges (up to US$0.3 million in total). Contracts for items (i) and (ii) would be awarded on the basis of competi- tive bidding, advertised locally and in accordance with local procurement procedures satisfactory to the Association. Spare parts would be purchased directly from manufacturers or distributors. In evaluating civil works bids, domestic contractors would be allowed a 7.5% preference. Domestic manufacturers of furniture, fixtures, and equipment would be granted a preferential margin in bid evaluation equal to the prevailing tariff, or 15% of the c.i.f. cost of imports, whichever is lower. Disbursement 4.21 Disbursement would be based on: ( i) 65% of total expenditures for civil works; ( ii) 100% of foreign expenditures for imported furniture, fixtures, equipment, and vehicles; 75% of local expenditures of such Imported items when procured locally; 100% of ex-factory cost of such items when manufactured locally; and (iii) 100% of foreign expenditures and 50% of local expenditures for professional services, technical assistance, fellowships and marketing expenses. 4.22 Disbursements will be fully documented. In order not to delay implementation of the project, it is proposed that a part of the equipment for the hotel rehabilitation component procured after October 1, 1978, and not exceeding US$400,000 equivalent, be financed retroactively. A schedule showing the estimated rate of disbursement is given in Annex I, Table 10.  -26- V. DEMAND AND MARKET PROSPECTS A. Tanzania's Tourism Potential 5.01 Tanzania's tourist attractions appeal to the wildlife-oriented market--primarily North Americans, Europeans, Japanese, and Australians-- and to the beach-oriented market--primarily Europeans. Tanzania offers probably one of the finest con5entrations of wildlife in the world. Its national parks cover 35,000 km in which wildlife is protected and no human habitation is permitted. Among the na ional parks, the largest is the Serengeti with a total area of 15,000 km on which an estimated one million animals live. The Serengeti is mainly known for the large number of lions and for the seasonal animal migrations to the north in search of water. Another major attraction is Lake Manyara National Park, which is noted for its tree-climbing lions, herds of buffalo, and large troops of 2 baboons. The unique Ngorongoro Conservation Area is spread over 8,000 km of countryside, in which the wildlife is protected but where the Masai tribe also lives and hirds its cattle. Within this area is the famous Ngorongoro Crater, a 250 km floor of a caldera or a collapsed volcano, which is abundant with zebras, gazelles, and wildebeests. Other major wildlife attractions in Tanzania include (a) Mikumi National Park,2about a three- hour drive from Dar es Salaam and (b) the vast, 40,000 km Selous Game Reserve in the south, with its large herds of elephants. 5.02 Although worldwide competition for beach-oriented winter tourists is fierce, Tanzania enjoys three major advantages (a) its beaches are not overdeveloped; (b) hotel prices are somewhat below those of neighboring countries and substantially below those of Caribbean destinations; and (c) tourists can combine beach vacations with excursions to wildlife areas. Although rather distant from the North American market, Tanzania is about the same flying time from Eruope (9-10 hours) as some of the popular Caribbean destinations. 5.03 Recognizing the prospects for increased worldwide tourism and the potential of Tanzania's tourist attractions (to which the rapid growth in tourism in the 1960s and early 1970s bear witness), the Government has recently begun to promote tourism actively. This encouragement and support from the Government included: ( i) establishment of overseas tourist offices in Frankfurt, London, Milan and New York; ( ii) renewal of TTC's tourist vehicle fleet at a cost of about US$2 million and intensive train- ing of tourist guides at the Serengeti Wildlife Institute; (iii) establishment of Air Tanzania Corporation to substitute for the cessation of operations of East African Airways;  -27- ( iv) agreement with an increased number of international carriers to offer a stop at Kilimanjaro Airport, serving the northern wildlife area; ( v) availability of foreign exchange to hotel operators for importing certain hotel supplies and equipment; ( vi) arrangement for the use of major credit cards in Tanzania; and (vii) government statements in the press encouraging tourism and informing the public of the value of tourism to the economy as well as welcoming investment in tourist facilities by the private sector. 5.04 The proposed project will contribute significantly to the recovery and growth of Tanzania tourism since it will ensure improved tourist facilities and services, proper training, improved visitor handling facilities at Dar es Salaam Airport, and increased level of promotion of Tanzania's tourist attractions. Improved road connections to the northern wildlife lodges (through the Road Maintenance Project) will also contribute to this end. B. Visitor Forecast by Region The Northern Wildlife Area 5.05 Tourist flows to Tanzania's northern wildlife area grew by about 25% p.a. between 1969 and 1972; however, tourist traffic actually declined by 2% annually between 1972 and 1976, reflecting the deterioration in tourism facilities and services. In 1977, as a result of the border closure with Kenya (where most tourists spent a good part of their holi- days before arriving in Tanzania) and the cessation of operations of East African Airways, which provided most international links to Tanzania, tourism suffered a further major setback with attendance at the national parks down about 70% from the 1976 level. Since alternative transport means to Tanzania have now been established and with the expected improve- ments in Tanzania's tourist facilities, services, and marketing, it is estimated that Tanzania will begin to slowly recapture its share of the East Africa safari market, which declined from 40% in 1976 to about 15% in 1977. With the overall safari market increasing at 8% annually and Tanzania's market share improving gradually from the depressed 1977 level, plus an expected extension of tourist stays in the northern wildlife area (3 days in 1985 vs. 2.3 days in 1976), total visitor bednights in 1985 are expected to reach 224,oo0. This would represent a substantial growth @(ver 20% p.a.) over the low 1977 level but only 2.5% annual growth over the 1976 tourist flows (prior to the border closure).  -28- Arusha 5.06 The city of Arusha, in northern Tanzania, serves as an arrival/ departure point for tourists visiting the northern wildlife areas and served as an administrative center for the East African Community. Visitor bednights in Arusha grew at an average 5% per annum from 1969 to 1976. Based on the expected change of tourist arrivals by air to Arusha's Kilimanjaro Airport rather than by land from Kenya, it is estimated that the average tourist will spend about two days in the area (up from one day in 1976) because of departure/arrival schedules, and visits to the Arusha and Kilimanjaro National Parks. Dar es Salaam 5.07 Hotel bednights in Dar es Salaam are mainly dominated by business traffic; these visitors stay in Dar es Salaam mostly in conjunction with arrival and departure from Tanzania. Visitor bednights at Dar es Salaam are expected to grow at 7% p.a. in line with recent growth trends. 5.08 Hotel capacity in Dar es Salaam is inadequate to handle the expected future increase in demand. At present, international standard hotels are already operating at about 95% room occupancy and 70% bed occupancy, and an additional 100 rooms annually will be required in the future. Since only one hotel extension in Dar es Salaam is now underway, a shortage of hotel accommodation is likely to occur as early as 1980 if no further hotel expansion materializes. Although in the short-term this room shortage can be relieved by a spillover from city to beach hotels, it is clear that construction of additional hotel capacity in I)ar es Salaam is of a high sectoral priority. Dar es Salaam Beach 5.09 At Dar es Salaam beach hotels, the number of visitor bednights increased from 4,000 in 1969 to over 80,000 in 1972 due to the opening of several new beach hotels. However, beach tourism declined thereafter; total foreign bednights in 1976 were about half those of 1972. With the expected growth of tourist arrivals, and an estimated 20% of the tourists to the northern wildlife area being attracted to Dar es Salaam beaches (through combined safari/beach package tours--average beach stay four days), the growth rate of beach tourism is likely to reach 10% annually. Zanzibar 5.10 The island of Zanzibar is another potential stimulant to tourist flows in Tanzania. This exotic island was practically closed to tourists until 1973. The island, which is only a 20-minute flight from Dar es Salaam, can provide an attractive component in a tour package including the northern national parks. In addition, the expected purchase of a  -29- passenger boat by the National Transport Corporation to provide a sea link between Dar es Salaam and Zanzibar will relieve the congestion on existing flights, which is currently the major bottleneck to increased tourism to Zanzibar. Summary 5.11 Table 4 summarizes the demand and supply of hotel accommodations by major area in Tanzania. According to the forecast, the existing hotel capacity will be sufficient, if properly utilized, to cater to the increased demand level through 1985 in all but the Dar es Salaam area where about 100 additional hotel rooms will be required annually between now and 1985. Table 4. Demand and Supply of Hotel Accommodation in Tanzania Excess Bed- Additional 1985 Available Bed- night Demand Rooms Re- Projected nights at 60% Over Existing quired by Area Bednights Bed Occupancy* Supply 1985 ('000) ('000) ('000) Dar es Salaam 1,017 571 446 760 Beach Hotels 200 204 -- -- Northern Wildlife 224 257 -- -- Arusha/Moshi 237 281 -- -- Zanzibar 53 69 -- -- * Except for 70% in Dar es Salaam. The table shows the low use of available hotel capacity and therefore demonstrates the high sectoral priority of increasing visitor flows to Tanzania to maximize use of existing hotel capacity and tourist facilities. 5.12 Based on the projected increase in bednights by region (paras. 5.05-5.10 and Annex I, Table 5) and the existing capacity constraints and seasonality patterns within individual hotels, a summary of actual and projected bed occupancy figures forecast for TTC hotels is given in Table 5 and in Annex I, Table 6.  -30- Table 5. Actual and Projected Bed Occupancy Rates of TTC Hotels Hotels 1976 1980 1985 Dar es Salaam Kilimanjaro 53* 57 57 New Africa 89 90 90 Dar es Salaam Beach Kunduchi 43 50 70 Northern Wildlife Lake Manyara 56 30 73 Ngorongoro 53 29 69 Seronera 34 19 44 Lobo 36 20 47 Arusha/Moshi Mt. Meru N/A 21 54 New Safari 61 32 60 New Moshi 37 29 39 Others New Mwanza 45 52 70 Mikumi Wildlife 35 33 46 Mafia Island 20 20 50 * Room occupancy rate is 91%. Effect of Border Closure 5.13 The above traffic forecast is based on the assumption that the land border between Kenya and Tanzania will remain closed to tourist traffic. However, should the border reopen, most tourists are expected to spend most of their tour in the established destinations of Kenya and to treat Tanzania as a complement of their tour. Specifically, if the border reopens, the following impact is expected: ( i) the number of tourists to the northern wildlife area will rebound strongly within a short period of time because of extensive marketing by Kenyan tour operators, but the average length of tourist stay is likely to be somewhat shorter; ( ii) there will be fewer tourists combining a tour of the northern national parks with a Dar es Salaam beach vacation since they could stay at Mombasa beaches in Kenya, which are closer; and (iii) tourists will, on the average, spend less time at Arusha since most of them will travel by land from Kenya directly to the national parks.  -31- In summary, the reopening of the border is expected to increase tourist flows to the northern wildlife area in the short-term but to reduce visitor bednights in Tanzania as a whole in the long-term. With an open border, tourist bednights by 1985 will be 8% below forecast, with a corresponding reduction in occupancy rates at TTC hotels. VI. FINANCIAL ANALYSIS A. TTC Corporate Structure 6.01 At its inception in 1969, TTC took over ten tourism-related companies from the National Development Corporation including the Kilimanjaro, New Africa, Lake Manyara, Ngorongoro, Lobo, Bahari Beach, and Furaya ya Visiwani group hotels. The Mafia Island, Kunduchi Beach and Mikumi Lodges were built and, in 1970, merged with the New Africa Hotel into a new corporation, Coastal Hotels, Ltd. Seronera Lodge was built and, together with the Lake Manyara Hotel, merged into the existing Serengeti Safari Lodges, Ltd. Controlling interests were purchased in the privately owned New Safari, Mwanza, and Moshi Hotels, and Mount Meru Hotels, Ltd. was formed in 1973 for the construction of that hotel (Annex I, Table 11). 6.02 Between 1973 and 1977, in response to Government guidelines, TTC did not initiate new projects or change its capital structure in which the parent company, TTC, acts as a holding company but does not have extensive direct operations. Policies since 1977 have changed, however, as evidenced by the recent expansion of the New Safari Hotel and initiation of construction of a large extension to the New Africa Hotel. TTC now plans to rationalize its somewhat unwieldy corporate structure and, as initial steps, has asked for Government approval to merge Kilimanjaro Hotels Ltd. into the parent company and to merge Tanzania Tours Ltd., State Travel Services, and Tanzania Duty Free Shops Ltd. into one company to be headquartered in Arusha. TTC is also attempting to purchase outside shareholdings in the Mwanza and New Safari Hotel companies and in Tanzania Tours Ltd. B. TTC Financial Management 6.03 The TTC accounting organization performs reasonably well in internal accounting and control. It performs an independent internal audit function and has accounting personnel at individual hotels reporting functionally and administratively to the chief accountant through group accountants rather than to their respective chief operating officers. This type of control is particularly important because of TTC's relatively decentralized, geographically disparate nature and some incidence of prob- lems with the handling of funds in subsidiary companies.  -32- 6.04 The quality of accounting procedures and controls has improved significantly in the last three years. A uniform system of hotel account- ing has been implemented and is being followed as appropriate by all subsidiaries in annual budgeting and monthly account reporting. With a few exceptions, accounting statements are submitted to headquarters con- sistently within 30 days of the end of each month and are of reasonable quality. Written standard operating procedures are being implemented for accounting organization and functions, internal audit, central purchasing, budgetary control, and food and beverage inventory control. Audits are conducted annually for all TTC corporations by the Tanzania Audit Corporation, and recent audits contain progressively fewer comments to management on inadequacies. Principal remaining weaknesses are unrecon- ciled intercompany loan accounts, the carrying of investments in subsidiaries on a cost rather than an equity basis, and the absence of consolidated balance sheets and income statements that would provide a more compre- hensive picture of TTC's financial condition and performance than the present unconsolidated financial statements. 6.05 Qualifications of the present Chief Accountant and Chief Internal Auditor, both supplied under German bilateral technical assistance, are satisfactory. However, there are only three additional qualified accountants to cover the accounting requirements of TTC and subsidiaries. Six account- ants are currently enrolled in a three-year course at the Institute of Finance and Management, and most of them are scheduled to return to TTC in mid-1979. 6.06 Project accounts should be maintained within the present Accounting Department and audited separately until the project completion date, when they would be consolidated into the appropriate corporate accounts. Assurances to this effect were obtained during negotiations. Consolidated quarterly internal income statements showing individual hotel performance should be submitted as part of project quarterly reports. Assurances were received during negotiations that financial statements for each subsidiary and consolidated financial statements for TTC and subsidiaries audited by the Tanzania Audit Corporation or by other independent auditors acceptable to IDA will be submitted to IDA within sixmonths of the end of each fiscal year. 6.07 Present TTC insurance coverage, based primarily on initial investment cost and, in some cases, on book value, is inadequate and exposes TTC to possible large losses in the event of extensive damage to one or more hotels. Assurances were obtained during negotiations that TTC will reappraise all principal fixed assets in current values, will raise insurance coverage to cover current values by September 30, 1979, and will adjust coverage periodically thereafter with changes in current values.  -33- C. Current TTC Financial Condition 6.08 The TTC parent company audited income statements and balance sheets for the 1970-76 period (Annex I, Tables 12 and 13) depict a somewhat inconsistent and unprofitable financial history. Although these statements are not directly indicative of overall performance (because the effect of operations of subsidiaries has not been included except for ad hoc writeoffs of large cumulative losses), they show that, during the period, about TSh 13 million or 53% of headquarters revenue came from Government subventions to supplement income and that most remaining income resulted from intercompany charges to subsidiaries for management, marketing, and interest expense. During 1971-76, losses including prior year adjustments totaled about TSh 44 million. During the same period, the value of capital and retained earnings accounts increased by TSh 22 million, reflecting an infusion of new capital investment of about TSh 66 million, most of it from Government. 6.09 Consolidated income statements (Table 6) show TTC and its subsidiaries on an overall basis operating close to the breakeven point during 1974-76. Losses increased sharply to about TSh 13.2 million and an estimated TSh 13.3 million in 1977 and 1978, respectively, in the wake of the Kenyan border closure and the consequent sharp reduction in hotel occupancy rates in the northern wildlife area. These 1977/78 losses approximately equal depreciation and amortization expenses and largely eliminate cash flow from operations as a source for debt principal repayments and capital expenditure requirements. 6.10 The current TTC financial position is presented in the pro forma 1977 consolidated balance sheet, Table 7. TTC has a long term debt-to-equity ratio of 47/53 largely because of sizable Government infusions of funds (including about TSh 42.5 million in 1977). The current position, however, is weak with net working capital of about TSh 30 million, a current ratio of about 0.6 to 1, accounts payable and accruals representing about 128 days expenditures and debt service coverage of only 2.2. Liquidity is temporarily further strained by collection problems on receivables due from Kenyan tour operators. Most recent Government funding has been earmarked for capital expenditure and has done little to alleviate the liquidity problem. 6.11 As of December 31, 1977, TTC, reflecting its difficult liquidity situation,was overdue on TSh 15.3 million in principal payments and TSh 9.5 million in interest charges involving six loans. In particular, Serengeti Safari Lodges Ltd. (SSLL), a TTC 100%-owned subsidiary, which has been acutely affected by the closure of the border, owes TSh 19.5 million of the overdue loans and interest charges. Assurances were received during negotiations that the Government will provide SSLL with additional equity funds equal to due and overdue principal and interest on these loans so that the capital structure of SSLL can be placed on a viable basis. Projections in this report assume that this recommendation will be followed (Annex III). Projected SSLL sources and uses of funds, even if both the overdue loans and project capital  Table 6. Tanzania Tourist Corporation and Subsidiaries Consolidated Income Statements 1974-83 Pro Forma (Current TSh '000) Revenue 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 Room 29,750 32,580 39,300 31,110 35,800 43,810 59,790 79,940 100,650 119,480 Food & Beverage 28,200 35,270 43,780 48,990 52,900 62,690 80,320 101,840 123,060 147,170 Other 17,520 17,150 20,860 19,660 21,940 31,060 43,100 54,820 64,160 79,960 Total Revenue 75,470 85,000 103,940 99,760 110,640 137,560 183,210 236,600 287,870 346,610 Cost of Sales Room - - 6,240 5,940 6,740 7,970 10,150 12,780 15,310 18,120 Food & Beverage 15,620 21,690 32,530 39,710 41,560 48,510 60,930 76,030 90,210 106,710 Other 9,560 10,080 13,010 10,770 8,480 11,000 15,380 20,240 25,630 32,190 Total Cost of Sales 25,180 31,770 51,780 56,420 56,780 67,480 86,460 109,050 131,150 157,020 Gross Operating Income 50,290 53,230 52,160 43,340 53.860 70,080 96,750 127,850 156,720 189,590O Undistributed Expense General & Administration 34,690 38,490 30,090 27,620 35,140 44,160 51,400 58,150 60,170 67,120 Repair & Maintenance 2,300 2,960 4,170 4,740 5,560 9,450 11,240 14,020 16,410 19,020 Heat, Light & Power 4,300 4,600 5,350 5,840 6,090 7,170 9,090 11,490 13,740 16,100 Total Undistributed Expense 41,290 46,050 39,610 38,200 46,790 60,780 71,730 83,660 90,320 102,240 House Profit (Loss) 9,000 7,180 12,550 5,140 7,070 9,300 25,020 43,890 66,400 87,350 Interest 2,000 2,750 3,250 3,810 4,050 3,230 5,040 7,900 5,700 11,000 Depreciation 6,820 7,900 7,460 12,120 16,760 18,190 20,450 23,710 27,760 33,030 Minority Share of Income (1,030) (880) (220) 270 1,170 1,210 Profit before Income Tax 180 (3,470) 1,840 (10,790) (12,710) (11,240) (250) 12,010 31,770 42,110 Income Tax 950 1,350 1,400 2,400 560 170 510 3,600 8,370 20,360 Profit (Loss) (770) (4,820) 440 (13;190) (13,270) (11,410) (760) 8,410 23,400 21,750 (Note: TTC changed its accounting system to a departmental costing system in 1976-77 so projectedand historical income statements cannot be directly compared.)  Table 7. Tanzania Tourist Corporation and Subsidiaries Consolidated Balance Sheets 1977-83 Pro Forma (Current TSh '000) Current Assets 1977 1/ 1978 1979 1980 1981 1982 1983 Cash 9,670 8,630 10,690 13,180 16,060 18,450 26,680 Inventory 12,270 11,870 12,440 14,170 16,180 18,040 21,360 Receivables & Other 32,490 28,800 28,640 30,120 38,890 47,320 56,980 Total Current Assets 54,430 49,300 51,770 57,470 71,130 83,810 105,000 Fixed Assets, Net 162,450 166,350 196,840 225,320 251,640 250,430 242,680 Other Long-term Assets 7,590 6,870 8,800 12,650 15,510 20,960 17,070 Total Assets 224,470 222,500 257,410 295,440 338,280 355,200 364,750 Current Liabilities X Creditors and Accruals 42,630 28,800 28,640 30,120 38,890 47,320 56,980 Bank Overdrafts 5,800 8,160 16,260 36,550 35,660 11,340 -- Current Portion Long-term Loans 35,770 8,030 10,310 12,550 11,910 11,730 10,870 Total Current Liabilities 84,200 44,990 ;5,210 79,220 86,460 70,390 67,850 Long-term loans 47,590 53,410 76,920 85,550 103,900 108,970 98,100 Total Liabilities 131,790 98,400 132,130 164,770 190,360 179,360 165,950 Minority Interests 6,940 4,410 3,530 3,310 3,580 4,750 5,960 Capital 145,280 192,520 205,970 212,340 220,910 224,260 224,260 Retained Earnings (59,540) (72,810) (84,220) (84,980) (76,570) (53,170) (31,420) Net Worth 85,740 119,710 121,750 127,360 144,340 171,090 192,840 Total Liabilities and Net Worth 224,470 222,520 257,410 295,440 338,280 355,200 364,750 Net Working Capital (29,770) 4,310 (3,440) (21,750) (15,330) 13,420 37,150 1/ This balance sheet is subject to possible adjustment in creditors and accruals and retained earnings as TTC has not traditionally prepared such balance sheets and has not reconciled intercompany loan accounts, some of them substantial.  -36- expenditures are provided as equity for SSLL, show negative working capital throughout the 1978-83 period and a need to resort to additional intercompany or short-term borrowings to service all operations and debts adequately (Annex I, Table 14). D. TTC Financial Prospects 6.12 Pro forma TTC consolidated income statements for the period 1974-83, adjusted for project impact, are shown in Table 6. After experiencing large losses in 1977/78 and a somewhat smaller expected TSh 11.4 million loss in 1979, TTC is expected to operate at approximately its breakeven point in 1980 and to achieve increasingly higher profit levels thereafter as occupancy rates and tariffs increase. From the 1979 loss, net profits by 1983 are expected to rise to about TSh 22 million, representing 6.3% of total sales (Annex I, Table 15), 11.6% on equity, and 6% on book value of total assets employed (profits before tax are 12% on assets employed). Because of increases in volume and efficiency, gross operating income is expected to rise from 49% to 55% of sales between 1978 and 1983. Because of the high fixed component of overhead items, house profit (GOP) would rise much faster, from 6% to 25% of sales during the same period. 6.13 Pro forma TTC consolidated balance sheets and sources and uses of funds statements adjusted for project impact are shown in Tables 7 and 8. Net working capital would rise by TSh 34 million to a positive TSh 4 million, and net worth increases by about TSh 34 million during 1978 because the projected loss is more than offset by an expected Govern- ment infusion of TSh 46 million, consisting of (a) TSh 11 million in equity for the New Africa Hotel extension, (b) TSh 7.5 million in other capital budget items, (c) TSh 8 million in subventions (of which TSh 6 million is undisbursed from the 1977/78 Government budget), and (d) TSh 19.5 million for repayment of due and overdue principal and interest on the loans to Serengeti Safari Lodges Ltd. In 1979 and 1980, TTC uses of working capital would exceed sources by about TSh 26 million, resulting in a slowly deteriorating working capital position, which would have to be funded by overdrafts or short-term borrowing. TTC, because of its improved earning prospects, should be able to obtain and service these short-term borrowings. o.14 According to the financial projections, TTC continues to 'ace a very tight liquidity position until 1982. Therefore, during negotiations TTC agreed not to undertake, unless the Government agrees to fund, new capital expenditures in excess of TSh 2 million per fiscal year, to the extent not funded through new long-term borrowing, as long as TTC's consolidated current ratio after such expenditures is below 1.1 to 1.  Table 8. Tanzania Tourist Corporation and Subsidiaries Consolidated Sources and Uses of Funds Statements, 1978-83 Pro Forma (Current TSh '000s) 1978 1979 1980 1981 1982 1983 Beginning Working Capital (29,770) 4,310 (3,440) (21,750) (15,330) 13,420 Sources of Funds New Borrowings 13,860 33,810 21,180 30,260 16,800 -- Government Contributions 47,240 13,450 6,370 8,570 3,350 -- Net Income (13,270) (11,410) (760) 8,410 23,400 21,750 Depreciation, Amortization and Minority Interests 15,730 17,310 20,230 23,980 28,930 34,240 Total Sources 63,560 53,160 47,020 71,220 72,480 55,990 Uses of Funds Capital Expenditures 19,020 47,040 46,490 47,810 24,650 20,680 Increase in Other Long-term Assets & Other 2,430 3,560 6,290 5,080 7,350 710 Reduction in long-term Debt 8,030 10,310 12,550 11,910 11,730 10,870 Total Uses 29,480 60,910 65,330 64,800 43,730 32,260 Net Change in Working Capital 34,080 (7,750) (18,310) 6,420 28,750 23,730 Ending Working Capital Balance 4,310 (3,440) (21,750) (15,330) 13,420 37,150  -38- 6.15 The project should achieve a significant strengthening of TTC's financial position as follows: ( i) TTC would by 1982 be able to internally generate sufficient funds to cover all debt service and operating requirements including normal capital replacement; ( ii) TTC's liquidity and debt service capability would considerably improve by 1983 to include a corrsolidated current ratio of 1.5 to 1 and debt service coverage of 3.9, assuming no new capital expansion projects or long- term borrowings other than those already initiated; and (iii) in 1983, TTC would show a net income of about TSh 22 million, which represents a-return of 11.6% on equity and 6% on book value of total assets employed, compared with a return of negative 14.2% on equity and a negative 5.9% on total assets in 1977. TTC would become a solid financial vehicle for implementing future Govern- ment projects designed to further Tanzania's tourism sector objectives. VII. ECONOMIC JUSTIFICATION 7.01 For the economic analysis, the project is defined to include reha- bilitation of 12 TTC hotels and lodges, technical assistance to the TTC, an improved marketing system, a Hotel and Tourism Training Institute and improvements of the Dar es Salaam Airport terminal. Improvements to a road in the northern wildlife area is part of another Bank-financed project, but for the economic analysis, improvement and maintenance costs that are attributable to the portion (about 50%) of the road that is used mainly by visitors to the northern wildlife area will be counted as part of this pro- ject. This is done because the road is the main access to the wildlife lodges and its rehabilitation Twould remove one obstacle to higher hotel occupancy rates. Since most benefits from anti-poaching activities cannot be quantified, this component was not included in the rate of return calculation. A summary of the assumptions used in the economic analysis is given in Annex III. Occupancy Rates 7.02 Without the project the present hotels would continue to deteriorate because of inadequate maintenance and replacement of equipment, and some hotels and lodges would be forced to close down as a result of equipment failure and/or as their occupancy rates reach uneconomical levels.  -39- Hotels catering to holiday visitors would be more adversely affected than those used mainly by business visitors. However, for the without project case, it is conservatively assumed that occupancy rates of some hotels would only moderately decline and of others will hold steady at present levels. With the project, hotel occupancy rates are projected to grow with the increase in demand for hotel accommodation as described in paras. 5.05-5.12 and in Annex I, Table 6. 7.03 Apart from four hotels, the hotels in this project cater to few Tanzanians. In the case of Moshi, New Safari, New Mwanza and Mikumi, the local guests are predominantly businessmen. All hotels usually have some local leisure guests, but these generally do not exceed 2 to 3% of the total. Based on market projections (paras. 5.11-5.12 and Annex I, Table 5), the share of local guests in these hotels will not change significantly. Benefits 7.04 The main source of project benefits is increased visitor traffic to Tanzania resulting in higher hotel occupancies and therefore greater total expenditures by holiday and business visitors. Local leisure guests are not counted as a source of benefits, although their expenditures exceed the economic costs. This conservative approach is used because it can be argued that at least some of the leisure expenditures are merely diverted from expenditures elsewhere in the economy. Expenditures of local business guests are included in the project's benefits. 7.05 No spending that occurs outside the hotels is taken into account. Although this adds another conservative bias to the analysis, since foreign visitors spend substantial amounts on transportation, park fees, and curios, this spending is excluded because the costs involved in providing such services as park tours and transportation cannot be readily and accurately measured from available data. Tentative evidence indicates, however, that if these costs and benefits were calculated on a marginal basis, the returns would be attractive. 7.06 A second source of project benefits is expected to arise from increases in room rates, averaging 10% in wildlife and beach hotels and 15% in city hotels. These increases are justified because (a) the hotels will be renovated and will offer much improved services, and (b) prices are higher at competing destinations offering similar services (e.g., Kenya). During negotiations, agreement was reached that the TTC would prepare and submit to IDA by end-1979 a study examining the feasibility and magni- tude of real rate increases at its hotels and lodges, and recommending policies and procedures for TTC tariff rate decisions. 7.07 After completion of the international passenger terminal building in Dar es Salaam Airport, it is expected that about 250 departing and 100 arriving passengers compared to 100 and 40 respectively at present, could be processed at the same time and that delays would be greatly reduced.  -40- The beneficiaries of the airport rehabilitation works include (a) tourists and local travelers who would require less processing time at the airport; (b) airlines, which would have reduced aircraft turnaround time; and (c) the tourist industry as a whole, which would gain from additional tourists. The terminal building will have a life of 20 years but, since a new airport project is contemplated in the distant future, the analysis conservatively takes into account only ten years of operations. It is assumed that each tourist is taxed the full time-saving gains obtained (Annex III). Costs 7.08 Costs associated with generation of the above benefits relate to project investment, replacement of investment, production of goods and services related to the incremental guests and repair and maintenance. Without the project, expenditures for repair and maintenance are estimated to be 2 to 3% of replacement costs; with the project, they are set at the same level or at 6% of hotel sales whichever is higher. Without the pro- ject, operating costs as a percentage of sales are expected to be at their 1977 levels; with the project, as the occupancy levels of the various facilities expand, the ratio of operating costs to sales will decline, reflecting the fixed cost component in total operations (Annex I, Table 16). The cost and benefit streams in 1978 prices are presented in Table 9 and in Annex I, Table 17. Adjustment for foreign exchange shadow prices has been made. Benefits to Non-Project Hotels 7.09 The Mt. Meru Hotel in Arusha (192 rooms and 384 beds), owned by the TTC, started operations in 1977. The hotel does not require any investment under this project, but its occupancy rates depend on the number of tourists arriving in Arusha en route to the northern wildlife area, which would be affected by the implementation of the proposed pro- ject. Incremental occupancy and net incremental revenue from foreign guests of the Mt. Meru Hotel were calculated in Annex I, Table 17, and are included in the project benefits. Economic Rate of Return 7.10 Economic rates of return were first calculated for each hotel based on the net incremental benefit streams with a 20-year life. The lowest returns among the individual hotels are observed for Mikumi Wildlife Lodge (10%), Mafia Island Lodge (11%), and New Moshi Hotel (11%); the highest return is observed for the four northern wildlife lodges combined (Lake Manyara, Ngorongoro, Seronera and Lobo)--32%. The rate of return for the hotels as a whole is 22%. 7.11 As a second step, additional costs and benefits were added to those of hotels to compute the economic rate of return on the project. The added benefits include the incremental revenues to the Mt. Meru Hotel and the benefits to the airport users. The external costs include:  Table 9. Project Economic Benefit and Cost Streams (all foreign exchange components shadow priced at US$1=12 shillings; figures in 1978 prices '000 Sh) INCREMENTAL REVENUES INCREMIENTAL COSTS From incremental guests 1/ Technical Airport From room rate Benefit to Botel Hotel Road investment Ilotel training assistance & All Proj. Hotels Mt. Meru increases airport users investment 2/ R & M and maintenance school marketing Investment 0 & M 1979 0 0 1558 42049 5240 3483 3350 5273 - - 1980 453 0 2181 32418 5386 3483 3350 5273 4200 _ 1981 2609 0 4930 - 18108 5654 838 3350 5273 10000 281 1982 9671 2591 7774 1944 8825 6123 838 - - - 281 1983 17291 5492 7676 2076 - 6603 838 - - - 281 1984 27160 9023 7568 2220 - 6603 838 - - - 281 1985 34439 11377 7461 2376 - 6603 838 - - - 281 j, 1986 38447 14515 7354 2544 5256 6603 838 - - - 281 1987 42024 17654 7258 2724 5256 6603 838 - - - 281 1988 44749 17654 7162 2916 - 6603 838 - - - 281 1989 46097 17654 7067 3120 - 6603 838 - - - 281 1990 47447 17654 6972 3336 - 6603 838 - - - 281 1991 48675 17654 6879 3580 28268 6603 838 - - - 281 1992 49924 17654 6782 - 28268 6603 838 - -- 1993 51072 17654 6688 - - 6603 838 - - - - 1994 52184 17654 6594 - 6603 838 - - - - 1995 53392 17654 6499 - - 6603 838 - - - - 1996 54372 17654 6406 - 5256 6603 838 - - - - 1997 54372 17654 6406 - 5256 6603 838 - - - - 1998 54372 17654 6406 - - 6603 838 - - - - 1999 54372 17654 6406 - 6603 838 - - - - 2000 54372 17654 6406 - - 6603 838 - - - - 2001 54372 17654 6406 - (20962) 6603 838 - - _ _ 1/ These receipts are net of cost of producing the goods and services. 2/ includes replacement costs.  -42- ( i) the costs (investment and maintenance) of the tourist road to the northern wildlife area lodges; ( ii) 45% of the cost of marketing and 45% of the cost of the HTTI, in line with the TTC's share in total hotel capacity in Tanzania (the other 55% of these costs and associated benefits accrue to other hotels); (iii) the costs of technical assistance to TTC and of marketing; and ( iv) the cost of the airport terminal building. After inclusion of these costs and benefits, the rate of return on the project as a whole is 21% (best estimate). 7.12 The sensitivity test which follows shows how various assumptions are expected to affect the economic rate of return (ERR) on the project: Assumption ERR (%) (a) Investment costs (%): +10 20 -10 23 (b) Benefits (%): +10 24 -10 20 (c) Investment costs (%) +10 18 and Benefits (%): -10 (d) Benefits delayed (yrs): 1 18 2 16 3 14 (e) Open border with Kenya: 20 Project Beneficiaries 7.13 Direct beneficiaries of this project include (a) the Government; (b) employees in hotel and other tourist services; (c) owners of other hotels catering to tourists; and (d) producers of curios and handicrafts. 7.14 The Government will benefit in several ways from this project. In the 1977 calendar year, it spent about TSh 10 million in subsidies used to finance TTC's operations. However, it is estimated that, by 1983, Govern- ment taxes on TTC profits would amount to TSh 20 million and after-tax profits of TTC would amount to TSh 22 million. Sales taxes on hotel room and full board rates, directly attributable to this project, will add an incremental TSh 3 million to Government revenues and incremental entry fees to parks and wildlife areas will also add a similar amount.  -43- 7.15 Although the basic thrust of the project is to maximize use and foreign exchange earnings from existing facilities, the project also has employment benefits. The project is expected to require 600 con- struction jobs throughout the construction period. About 450 jobs will be created or saved in TTC hotels as a result of the project. A similar number of jobs will be added in directly related areas such as shops, travel agencies, parks,transportation services and handicrafts. The cost per direct job created or saved by the hotel rehabilitation is about US$12,000. 7.16 Although TTC will incur the cost of marketing and promoting Tanzania's tourist attractions, the benefits from these activities will also be enjoyed by other hotel owners through increased occupancy rates and earnings. Producers of curios and handicrafts will also benefit from the project. By 1987, tourist expenditures on curios and handicrafts are expected to reach about TSh 16 million compared to about TSh 8 million in 1976. 7.17 In Tanzania, almost all of the foodstuff and beverages consumed in the hotels are produced locally. With increased tourist activities, the demand for food and beverage would rise significantly, generating extra income and employment in the agricultural and food processing sectors. Balance of Payment Effects 7.18 The direct and indirect foreign exchange effects have been implicitly included in the economic rate of return. Foreign exchange in- flows will come from tourist expenditures within the country. Outflows will arise from replacement of investments, repair and maintenance costs, operating costs and credit repayments. The expected flows of foreign exchange over the life of the project are given in Table 10. As the figures demonstrate, Tanzania would retain an average of about 72% of the gross foreign exchange receipts it earns from the project. Table 10. Foreign Exchange Inflows and Outflows Arising from the Project (US$ ' 000)1/ Net Foreign Exchange Foreign Foreign Receipts as a Exchange Exchange in Foreign Net Percentage Tourist in Replacement Exchange Foreign of Tourist Incremental Operating & Repair & Debt Exchange Incremental Year Expenditures Costs Maintenance Service Receipts Expenditures 1985 4,180 500 550 100 3,030 72 1990 6,110 730 550 450 4,380 72 1/ In 1978 prices.  -44- Project Risks 7.19 The success of the project depends to a large extent on per- suading European and North American tour operators (who by and large have avoided Tanzania since 1972) to schedule package tours to Tanzania. This will be determined by the ccurntry's ability to provide adequate facilities and service, adequate air access and internal air services, good marketing management, sufficient funds for promotion, and the willingness of the public to welcome tourists. Marketing is particularly important since the closure of the land border with Kenya means that Tanzania cannot rely on the efficient Kenyan tour operators, w ho traditionally brought most tourists to the northern wildlife area. Although the project provides all the ingredients necessary to ensure success of the marketing campaign, the forecast of tourist flows to Tanzania contains a substantial element of risk. 7.20 The Tanzania Tourist Corporation requires immediate strengthening in the areas of marketing, engineering, supplies and distribution, and communications and reservations; the project provides technical assistance in all these areas. However, the ability of TTC to use this assistance effectively and to train its own staff will determine the degree to which TTC will be able to adequately conduct its operations beyond the project period. VIII. AGREEMENTS REACHED DURING NEGOTIATIONS 8.01 Agreements were reached between the Government and IDA during negotiations on the following: ( i) an acceptable site in Dar es Salaam for the H-TTI will be determined in consultation with IDA (para. 3.12); ( ii) the Government shall continue to pursue policies consistent with the preservation of wildlife resources. Any maior proposed changes in policies affecting wildlife pre- servation, relating to organization and staffing of anti-poaching units, licensing of hunting, dealing in and exporting of trophies shall be submitted to the Association in sufficient time to enable it to comment on them. A report dealing with the wildlife situation in Tanzania and the results of anti-poaching activities shall also be furnished annually to the Association (para. 3.19);  -45- (iii) the Government shall upgrade the Makuyuni- Serengeti road to an all-weather standard and maintain it in accordance with sound engineering standards (para. 3.21); ( iv) the head teacher for the ETTI will be nominated by end-1979 (para. 4.11); ( v) all HTTI technical assistance appointments will be made in consultation with IDA (para. 4.11); ( vi) the Government will study and inform IDA by the end of 1980 of the method of financing HTTI operations (para. 4.12); (vii) an accounting system acceptable to IDA will be installed in the HTTI six months prior to its expected opening, and annual audited financial statements for the HTTI will be furnished to IDA within six months of the end of each fiscal year (para. 4.12); (viii) the terms on which the Government will pass on the funds to the executing agencies (para. 4.16); ( ix) the Government will provide Serengeti Safari Lodges Ltd. with additional equity funds equal to due and overdue principal and interest on overdue loans (para. 6.11); and ( x) the Government will fund TTC new capital expenditure in excess of TSh 2 million per fiscal year to the extent not funded through new long-term borrowing elsewhere unless TTC's consolidated current ratio after such expenditure exceeds 1.1 to 1 (para. 6.14). 8.02 The following agreements were reached with TTC during negotiations: ( i) all technical assistance appointments will be made in consultation with IDA (para. 3.09); ( ii) TTC will nominate, by April 30, 1979 a coordinator to overview the hotel rehabi- litation program (para. 4.08);  -46- (iii) TTC will, by December 31, 1981, have reached and thereafter maintain an annual level of repair and maintenance expenditure equivalent to at least 6% of total hotel sales or 2% of the current value of its principal fixed assets, whichever is higher (para. 4.09); ( iv) financial statements for each subsidiary and consolidated financial statements for TTC and subsidiaries audited by the Tanzania Audit Corporation or by other independent auditors acceptable to IDA, will be submitted to IDA within six months of the end of each fiscal year (para. 6.06); ( v) TTC will reappraise all principal fixed assets in current values and raise insurance coverage to cover current value by September 30, 1979 and will adjust coverage periodically thereafter with changes in current values (para. 6.07); ( vi) TTC will not undertake new capital expenditures in excess of TSh 2 million per fiscal year to the extent not funded through Government funding or long-term borrowing as long as its consolidated current ratio after such expenditures is below 1.1 to 1 (para. 6.14); and (vii) TTC will prepare and submit to IDA, by December 31, 1979, a study examining the feasibility and magnitude of real rate increases at its hotels and lodges and recommending policies and procedures for TTC tariff rate decisions (para. 7.06).  ANNEX I -47- Table 1 TANZANIA: TOURISM REHABILITATION PROJECT HOTELS, ROOMS AND BEDS BY REGION Region 1969 1970 1971 1972 1973 1974 1975 1976 Dar es Salaam: Hotels 21 30 30 31 31 29 30 30 Rooms 731 1295 1282 1361 1360 1332 1380 1373 Beds 1381 2448 2398 2579 2586 2577 2660 2755 Arusha Moshi: Hotels 13 16 17 18 17 19 19 19 Rooms 409 468 475 475 480 505 512 499 Beds 689 809 815 787 826 863 872 851 Northern Wildlife Area: Hotels 7 10 10 9 9 10 10 10 Rooms 270 492 527 540 507 558 581 611 Beds 545 993 1040 1094 1028 1135 1062 1239 Zanzibar: Hotels 2 2 2 2 2 4 4 3 Rooms 37 37 37 37 37 110 166 160 Beds 80 80 80 76 76 232 340 314 Other Areas: Hotels 39 42 44 44 46 47 48 53 Rooms 545 587 648 632 677 697 676 745 Beds 1008 1115 1135 1179 1258 1266 1240 1345 Total: Hotels 82 100 103 104 105 109 111 115 Rooms 1992 2879 2969 3045 3061 3202 3315 3388* Beds 3703 5445 5468 5715 5774 6073 6174 6504* * The Mt. Meru Hotel completed in 1977, brings present hotel capacity to about 3,600 rooms and 6,900 beds. Source: Central Bureau of Statistics.  TANZANIA: TOURISM REHABILITATION PROJECT FOREIGN VISITOR ARRIVALS BY MODE OF TRAVEL, 1/ AREA OF RESIDENCE AND PURPOSE OF VISIT- Year and Area Immigrants Visitors on Holiday Visitors on Business Not of Residence Air Road Other Air Road Other Air Road Other Stated Total 1971 Africa 87 34 171 8,520 16,1/9 1,982 8,067 2,758 1,700 3,283 42,781 America 30 13 55 6,069 12,346 315 964 87 23 648 20,550 Asia 26 6 35 1,347 1,333 265 1,007 37 75 629 4,160 Europe 127 46 190 12,532 13,242 835 4,013 293 81 1,785 33,144 Oceania 2 8 45 365 558 28 98 11 1 99 1,215 N/S 2/ 152 13 181 323 310 78 90 24 14 210 1,395 Total 424 12 0 677 29,156 43,968 3,503 14,239 3,21 ,846,5 10:3,~5 1973 Africa 87 71 325 6,764 19,850 1,669 7,823 2,398 642 3,810 43,439 America 38 28 41 4,686 16,154 267 819 166 15 544 22,758 Asia 215 2 27 1,117 2,015 357 1,081 89 130 2,365 7,398 Europe 292 109 289 11,425 20,637 494 3,667 454 80 2,743 40,190 Oceania 16 -- 88 277 856 59 50 7 -- 124 1,477 N/S 94 22 241 355 552 103 163 22 27 1,219 2,798 Total 742 232 1,011 24,624 60,064 2,949 13,603 3,136 894 10,805 118,060 1974 Africa 131 68 124 9,853 17,120 17,885 13,050 2,673 217 4,128 65,249 America 54 26 11 6,962 15,962 223 1,497 199 25 679 25,638 Asia 179 -- 6 1,907 1,950 222 1,929 98 81 2,533 8,905 Europe 212 10 106 15,132 18,490 456 6,315 441 134 3,404 44,700 Oceania 20 13 96 528 1,108 25 143 21 7 181 2,142 N/S 10 13 92 339 242 16 132 15 32 878 1,769 Total 606 130 435 34,721 54,872 18,827 23,066 3,447 496 11,803 148,403 Source: Statistics Department of TTC using data from Central Bureau of Statistics. 1/ Excluding Transit Visitors 2/ N/S-not stated  ANNEX I Table 3 -49- TANZANIA: TOURISM REHABILITATION PROJECT HOTEL STATISTICS SUMMARY 1971-76 (in '000) 1971 1972 1973 1974 1975 1976 Roomnights available 1083.3 1075.6 1016.7 1120.3 1168.1 1203.9 Roomnights occupied NA 531.9 559.6 643.0 672.5 680.0 Room occupancy rate NA 49.5 55.0 57.4 57.6 57.6 Bednights available 1995.8 2011.8 1862.1 2138.8 2220.5 2302.1 Bednights occupied 743.0 786.0 788.4 925.7 993.0 997.9 Bed occupancy rate 37.2 39.1 42.3 43.3 44.7 43.8 Bednights occupied: Tanzanian 256.3 297.2 328.4 438.0 467.1 436.1 % of Total 34.5 37.8 41.7 47.3 47.0 43.7 Visitors 486.7 488.8 465.0 487.7 525.9 561.9 % of Total 65.5 62.6 58.3 52.7 53.0 56.3 of which: Kenyan/Ugandan 37.9 38.3 37.8 42.3 44.6 44.3 % of visitors 7.8 7.8 8.1 8.7 8.5 8.8 other Africans 30.5 30.3 33.7 43.3 48.2 52.0 % of visitors 6.3 6.2 7.2 8.9 9.2 9.1 Europeans 252.6 243.2 223.1 205.8 208.1 226.7 % of visitors 51.9 49,8 48.0 42.2 39.6 40.2 Americans 118.9 137.4 130.9 128.5 107.3 111.6 % of visitors 24.4 28.1 28.2 26.3 20.4 19.5 Asians & Australians 46.8 39.6 39.5 67.8 117.7 127,4 % of visitors 9.6 8.1 8.5 13.9 22.3 22.4 Sources: Tanzania Tourist Corporation, Bureau of Statistics  TANZANIA: TOURISM REHABILITATION PROJECT TOTAL NUMBER OF VISITS TO THE NATIONAL PARKS 1974 1975 1976 1976 1977 (Jan-Sept) Paid Un-Paid Paid Un-Paid Paid Un-Paid Jan-Sept Paid Un-Paid Visits Visits Total Visits Visits Total Visits Visits Total Total Visits Visits Total Serengeti 83,954 1,888 85,842 93,868 1,170 95,038 110,687 702 111,389 82,862 27,270 492 27,762 Lake Manyara 57,556 215 57,771 60,649 363 61,012 64,952 454 65,406 48,537 15,448 171 15,619 Arusha 13,146 688 13,834 13,327 1,148 14,475 16,110 1,836 17,946 12,948 5,974 540 6,514 Ngorongoro 70,420 853 71,273 72,524 773 73,297 55,799 339 56,138 42,100 5,556 493 6,049 Mikumi 9,530 4,880 14,410 13,508 3,670 17,178 11,208 3,455 14,663 12,116 7,891 148 8,039 Ruaha 891 717 1,608 949 926 1,875 1,386 1,190 2,576 2,014 461 30 491 Tarangire 8,471 8,471 10,285 379 10,664 12,049 781 12,830 9,212 2,413 60 2,473 u Kilimanjaro - - - - - NOT OPERATIONAL AS A NATIONAL PARK - - - - - - - - - - - - - - - 1,646 301 1,947 Total 243,968 9,241 253,209 265,110 8,429 273,539 272,191 8,757 280,948 209,789 66,659 2,235 68,894 Source: Bureau of Statistics I> H  TANZANIA: TOBRISM aBBhILITAIION PROJECT ACTUAL BRDNIGhTS BY REGION FOR 1976. RSTIMATED FOR 1977 AND PROJBCTIONS FOR 1978-1990 Oar en Oalae B_Dar Os almauD M Beach Bonth-en Wildlife Are- _ Arha/lMshi Z-aib-ar Other Areas Grand Totgl Add'l Base BNA Foreign Leral Toal ForeiBg Teor-it Lecal Tetal NBober Average Foreig= Locd - Total Aver-ae Forrigo Local Total Foreign Lecal Total Fereige Local Total Fereig Lacal Total Bed- Bed- BRd- Bed- Bed- Bed- Bed- of Leogth Bed- Bed- Bed- To-rieta Length Bed- Bed- Bed- Bed_ Bad- Bed- Bad- Bed- Bed- Bad- Bed- Bed- Soar _nightt ighte eighte eihtes iht nihthn eights Xorieta of 8ta qiehtia oighte niehe to NA of St.c niRhte niahte oiahta night- niehtsniRhte Bights nights ihts fit. aihts nightg 1976 207.0 244.6 531.6 43.2 -_ 51.2 94.4 67.0* 2.40 161.3 10.2 171.5 67.0 1.0 68.8 73.3 142.1 10.6 8.2 26.8 18.6 139.2 157.8 597.5 526.7 1124.2 1977 307.1 264.2 571.3 30.0 -- 55.3 05.3 15.0 2.4 36.0 11.2 47.2 15.0 1.0 15.0 s6.n 01.0 18.6 8.9 27.5 16.0 144.8 160.8 422.7 540.4 963.1 1978 328.6 285.3 613.9 32.4 -- 59.7 92.1 15.0 2.4 36.0 12.3 48.3 15.0 1.1 16.5 60.5 77.0 18.6 9.6 28.2 17.0 150.6 167.6 449.1 578.0 1027.1 1979 351.6 308.1 659.7 35.0 _ 64.5 99.5 22.0 2.5 55.0 13.6 68.6 22.0 1.2 26.4 65.3 91.7 20.5 10.3 30.8 18.0 156.6 174.6 506.5 618.4 1124.9 1980 376.2 332.8 709.0 37.8 -_ 69.7 107.5 50.2 2.6 78.5 14.9 93.4 30.2 1.3 39.3 70.5 109.8 22.5 11.2 33.7 19.0 162.8 181.8 573.3 661.9 1235.2 1981 402.5 359.4 761.9 40.8 __ 75.2 116.0 35.9 2.7 96.9 16.4 113.3 35.9 1.4 50.3 76.2 126.5 24.8 12.0 36.8 20.4 169.4 189,8 635.7 708.6 1344.3 1902 430.7 308.1 010.0 44.1 16.9 01.2 142.2 42.3 2.8 118.4 18.1 136.5 42.3 1.6 67.7 82.3 150.0 27.2 13.0 40.2 21.9 176.1 198.0 726.9 758.8 1405.7 1983 460.9 419.2 880.1 47.6 23.8 87.7 159.1 49.5 2.9 143.6 19.9 163.5 49.5 1.8 89.1 00.9 178.0 30.0 14.1 44.1 23.4 183.2 206.6 818.4 813.0 1631.4 1904 493.1 452.7 945B 51.4 32.3 94.8 178.5 57.6 3.0 172.8 21.9 194.7 57.6 2.0 115.2 96.0 211.2 33.0 15.2 48.2 24.9 190.5 215.4 922.7 871.1 1793.8 1985 527.6 489.0 1016.6 55.5 42.6 102.3 200.4 66.6 3.0 199.8 24.1 223.9 66.6 2.0 133.2 103.7 236.9 36.2 16.4 52.6 26.4 198.1 224.5 .1021.3 933.6 1954.9 1986 564.6 528.1 1092.7 60.0 55.3 110.5 225.8 76.8 3.0 230.4 26.5 256.9 76.8 2.0 153.6 111.9 265.5 39.9 17.7 57.6 27.9 206.1 234.0 1131.7 1000.8 2132.5 1907 604.1 570.3 1174.4 64.8 70.5 119.4 254.7 88.1 3.0 264.3 29.1 293.4 88.1 2.0 176.2 120.9 297.1 43.9 19.1 63.0 29.4 214.3 243.7 1253.2 1073.1 2326.3 3.e 1900 646.4 415.9 1262.3 69.9 88.6 120.9 207.4 100.7 3.0 302.1 32.0 334.1 100.7 2.0 201.4 130.6 332.0 48.2 20.6 68.8 30.9 222.9 253.8 1387.5 I110.9 2538.4 1989 691.6 665.2 1356.8 75.5 110.2 139.2 324.9 114.8 3.0 339.8 35.2 375.0 114.8 2.0 229.6 141.0 370.6 53.1 22.3 75.4 32.4 231.8 264.2 1532.2 1234.7 2706.9 6' 1990 740.0 718.4 1458.4 81.6 135.6 150.4 367.6 114.8 3.0 339.8 35.2 375.0 114.8 2.0 229.6 152.3 381.9 58.4 24.1 82.5 33.9 241.0 274.9 1618.9 1321.4 2940.3 o - 0 E.tiFated  *52- ANN6 7 T7ble 6 $3116804030 856 AFRICA 04injCNW - 82850C 7roJecteC bed RetaIne b.detts Pdee Ct bed Retained bedctgbt. YPeJ qeed bed Reltaied bedolobee ProJacted bed AettLnffd beeCrIght. Projete bed etatlneC bednlgbce A3cO5SAA7 (7) dd.ltoepeSeA P n ct.p.ncy 57) Aceto project cocqpncsyj(7J doetco pro$et oatcaoy 72 doe cjl toPO -o10ccncy (t) duA eo pro8cA -lob cIshoot v__ _ __ _ _ _ eAc ed bth o _ _ __ _ __ _ elth .,Icbct __ _ _ __ _ _ __ ve elehoce _ _ _ _ __ etch debt e __ _ __ _ __ _ 3$,. 53 05 S 89 R9 0 43 43 0 20 20 0 35 35 0 330 $0 59 0 R7 07 0 48 48 0 17 17 3 30 3938 57 53 0 90 8390 10 50 0 20 20 0 0 1869 S7 57 0 30 9$ 0 50 50 0 20 20 0 32 32 0 ;780 57 57 0 90 90 0 50 .50