Tunisia - Northwest Rural Development - Phase I - Project

Document of lmE COP? The World Bank FOR OFFICIAL USE ONLY Report No. P-3044-TUN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF TUNISIA FOR A NORTHWEST RURAL DEVELOPMENT PROJECT April 30, 1981 | This document bas a restricted distibution and may be used by recipients only la the performace of their oOicial duties. Its contents may net otherwise be disdosed without World Bank authorisation.  REPUBLIC OF TUNISIA CURRENCY EQUIVALENTS Currency Unit - Tunisian Dinar (D) The exchange rate of the Tunisian Dinar is floating. The rate used in the President's and Staff Appraisal Reports, which approximates the current rate, is : US$1 = D 0.400 Dl = US$2.50 Dl million = US$2.5 million WEIGHTS AND MEASURES 1 meter (m) = 3.28 feet 1 kilometer (km) = 0.62 miles 1 sq. kilometer (km2) = 0.386 sq.mile - 100 ha. 1 hectare (ha) = 2.47 acres 1 kilogram (kg) = 2.2 pounds 1 metric ton (m ton) = 2,205 pounds FISCAL YEAR = CALENDAR YEAR ABBREVIATIONS AND ACRONYMS BNT Banque Nationale de Tunisie (National Bank of Tunisia) CNEA Centre National des Etudes Agricoles (National Center for Agricultural Studies) CRDA Commissariat Regional au Developpement Agricole (Regional Agricultural Development Commission) FAO/CP IBRD/FAO Cooperative Program INRAT Institut National de la Recherche Agronomique de Tunisie (National Agricultural Research Institute of Tunisia) PPAR Project Performance Audit Report  FOR OFFICIAL USE ONLY REPUBLIC OF TUNISIA NORTHWEST RURAL DEVELOPMENT PROJECT Loan and Project Summary Borrower: Republic of Tunisia Amount; US$24 million equivalent, in various currencies. Terms: The loan would be repayable over 20 years, including a 4-year grace period, with interest at 9.6 percent per annum. Relending Terms: The Borrower, through a Development Authority (Office) estab- lished to execute the project, would on-lend to small and medium farmers about Ub$2.2 million equivalent of the pro- ceeds of the loan using an account held by the Office in the National Bank of Tunisia (BNT). The interest rate for such subloans would be 6 percent and repaynent periods would vary in accordance with the type of investment, from 5 to 15 years with grace periods up to 8 years. Project Description; The proposed project would help finance a 5-year time slice of the Borrower's 15-year development program for the North- west region which aims to increase the incorne and improve the nutrition, health, and education of the population while reducing soil erosion and thereby arresting the decline in agricultural productivity. The program would also create employment possibilities, develop local energy resources, and reduce the sedimentation rate of the Sidi Salem reservoir. The project would concentrate on establishing the institu- tions which would implement the program, including the Office, and the extension, research, credit, and livestock development services. The project would also start up specific agricultural, soil conservation and forestry activi- ties, together with productive infrastructure works, and would include a foreign technical assistance component. Benefits and: The 15-year program would improve the planning of rural Risks: development activities and investment programs in the North- west and their implementation through better organization and decentralization of the Ministry of Agriculture's functions and decision-making process. In addition to improving the country's balance of trade by about $24 million per year (1980 prices) at full development, the income and consumption levels of about 20,400 farm families would be substantially increased. This would affect about 143,000 people of whom 40 percent presently live below the absolute poverty level. About 115,000 cumulative man-years of additional employment would be generated from program investments, agricultural This_document_has_a_restricted distribution and may be used by recipients only in the performance of their officiai duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - development and maintenance of program works. This employ- ment would benefit almost entirely landless farm labor and small farmers. The main risks involved in the program would be lower participation by the farmers than foreseen and the difficulty of implementing the institutional reforms proposed in the program such as that of the milk price system. Other risks involve possible financial or staff shortages, and the possibility that Government does not complete the program. However, in view of the high priority attached by Government to developing the Northwest, one of the poorest regions of the country, Government's commitment is high, and it is expected that the program, including the institutional reforms foreseen, will take place as envisaged. Estimated Costs: Project 15-year Program Local Foreign Total Total ------- (Us$ Million) ------ (U$ Million) Soil Conservation, Pastures 4.0 2.5 6.5 60 Forestry, Woodlots 5.5 1.8 7.3 41 Agricultural Research .3 .2 .5 2 Extension, Input Supply Services, bhort-term Credit (Incremental) 6.3 4.0 10.3 38 Livestock Development 1.2 1.3 2.5 24 Farm Equipment 1.6 1.7 3.3 28 Roads 3.4 2.3 5.7 14 Water Supply .5 .8 1.3 4 schools .5 .5 1.0 2 Technical Assistance - 3.5 3.5 4 Management, Planning, Monitoring, Evaluation, General Operation 4.7 1.0 5.7 14 Studies .2 .7 .9 1 Total Base Cost 28.2 20.3 48.5 232 /1 (Of which physical contingencies) (2.8) (2.0) (4.8) (23) Price Contingencies 7.6 5.4 13.0 /2 Grand Total 35.8 /3 25.7 61.5 /2 /1 Including $83 million of foreign exchange. 77 Price contingencies not calculated due to uncertainty of 15-year price projection. /3 Including $9.2 million of taxes and duties.  - iii - Financing Plan; Local Foreign Total (US Million)------ IBRD - 24.0 24.0 German Technical Assistance - 1.7 1.7 Government 31.5 - 31.5 Farmers' Contribution 4.3 - 4.3 TOTAL 35.8 25.7 61.5 Estimated FY82 FY83 FY84 FY85 FY86 FY87 Disbursements: -----------------U