Announcement of Twenty-One Million Two Hundred Thousand Dollars of IDA Credits to Malawi on February 5, 1968

• INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET. N.W .. WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 68/3 Subject: $21.2 million of IDA February 5, 1968 credits to Malawi The densely populated African republic of Malawi will receive financial assist- ance from the International Development Association (IDA) for two crop improvement projects and for the rebuilding of its most important road. The approval of three credits totaling $21.2 million for these projects was announced today by the Asso- ciation. Agriculture, from which most Malawians derive a living, principally through sub- sistence farming, offers the chief means of economic growth. The agricultural proj- ects are aimed mainly at increasing the production of maize, groundnuts and cotton . • The IDA credits will help finance integrated measures to increase productivity on close to 300,000 acres of crop land in the Central and Southern Regions: exten- sion services staffed by skilled personnel will be expanded, soil conservation methods introduced, access roads and water supplies built or improved, marketing and storage facilities provided, and farmers given access to credit to purchase seeds, fertilizers and simple equipment. Pilot schemes have already demonstrated the value of this integrated approach to increasing farm production in Malawi. The road project involves the reconstruction of the 180-mile stretch between Lilongwe in the center of the country's main farm area and Zomba, the capital, which fonns part of a north-south arterial route branching out to all parts of the country .. The credits to the Republic of Malawi will be for a tenn of 50 years. They • will be free of interest, but will carry a service charge of 3/4 of 1% to meet IDA's administrative costs. / more Agricultural Projects - 2 - One of the agricultural projects, for which a credit of $6 million is being made, is locatei near Lilongwe in the Central Reg:i.ou .. The 3oii, climate and pro- gressive attitude of farmers in the district make it ideally suited as the site of • the country's first major prcject for cr('.·"1 development~ The IDA project is part of a 13-yea:r scheme for the development of 50( J)OO ac~2..: intended to bring about a tenfold increase in the marketable surplus of naiz:! (the staple food) and a more than dou- bling of groundnut production. This will be achieved by a variety of cultivation in- provements, including the use of fertilizer. The credi~ will help to finance the first four-year phase, involving the int2grated development of 163,000 acres. The other credit, &'11ounting to $3e 7 million, Kii.'L assist similar development on 130,000 acres in the Shire Valley in the Southern Rcsio~, over a five-year period. ·~otton is the main crop here and the present low yields are ito be increased three- fold, mainly through improved cultivation practices of which the use of srrayers and insecticides are the most important. The growing of maize will be ex- randed somewhat to augment local food supplies. While the main emphasis in the project is on improved cultivation practices, there are other features which will also help to increase production. Land re- organization and registration included in the Lilongwe program, should enhance farmers; interest in improving and maintaining their land; training programs will provide the nucleus of Malawian agriculturalists and administrators; and the inte- brated approach to development can serve as a model for similar projects in other parts of the country. The total cost of the Lilongwe project i.s estimated at the equivalent of $7 mil- lion and the cost of the Shire Valley project, at $4a6 million. The IDA credits wi11 cover the foreign exchange requirements and part of the local currency costs. Con- ;~racts for construction of housing, the purchase of vehicles, equipment and farm in- • : 1uts will be awarded on the basis of international competitive bidding. The Agricultural Development Brauch, recently set up within the Department of Agriculture of the Ministry of Economic Affairs, will have over-all responsibility for the execution of the projects. The projects were prepared for the Malawi Government by specialists from the Food and Agriculture Organization of the United Nations (FAO) and the World Bank- sponsored Agricultural Development Service working under the Bank/FAQ Cooperative ·e:-ogram, with financial assistance from the United Nations Development Progrannne • .'oad Project economic Inadequate roads have hampered Malawi's/progress. Only about 300 miles of the o,200-mile network are paved. The primary system needs to be improved and lower- ~lass roads should be built throughout agricultural areas now served only by tracks .. Priority has been given to the Zomba-Lilongwe road as it forms the backbone of the whole system, and the existing earth road has become inadequate for the growing traffic. With the assistance of a $11.5 million IDA credit, it will be rebuilt to higher standards with two-lane bituminous surfacing. These improvements will reduce transport costs and stimulate development in the area served. An IDA credit of $490,000 granted in 1966 for the detailed engineering of the road will be refunded by the new credit; it will also cover the cost of consultants' services for supervision of construction and for a study of Malawi's road transport regulations and road-rail co-ordination. • The project is scheduled for completion by the end of 1970 at a total esti- mated cost equivalent to $13.7 million. - 0 -