Announcement of Six Million Six Hundred Thousand Dollars Credit for a Rural Development Project in Malawi on January 20, 1972

• INTERNATIONAL DEVELOPl\ffiNT ASSOCIATION 1818 H STREET. N.W .. WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 72/5 St~ject: $6.6 million credit for a rural January 20, 1972 development project in Malawi A coq,rehensive rural development project, designed to help improve living standards for some 4,600 peasant farmers in northern Malawi, was approved today by the International Development Association. The project, a five year effort costing $7.8 million to which IDA will ~ontribute $6.6 mi.llion, is the first phase of a longer range development µrogram in the Karonga area of Malawi, a land-locked nation in the southeast corner of Africa. The program's main objective is to help people of the region grow more and better crops and substantially raise their cash income above • the present subsistence level. comparatively fertile. The region which abuts Lake Malawi, is But it lacks good communications and is cut off from the rest of the country by a high mountain r·.mge and, moreover, the general health in the proje_ct area is poor. The project is designed to surmot.mt these obstacles and to help farmers increase their output of food and cash crops through construction of irrigation and drainage works for rice schemes, improved cultivation,of maize, cotton and gromdnuts, livestock development, seasonal and medium term credit to farmers, crop studies, a feasibility study for a potential second-phase, rehabilitation f>f the freight services on Lake Malawi and the improvement of health services. Providing services of this nature -- all interconnected and integrated under a single project -- has come to be regarded by the World Bank Group as o crucial strategy in attacking the problems of rural poverty that abound in many parts of Africa. Three previous credits totaling $17 million have been approved for other parts of Malawi two in the central region of Lilongwe, one in' the scuthern Shire valley. The first Lilongwe project served as the prototype, providing on an integrated regional basis, land development and • teorganization, farmers' marketing facilities, staff training and other services. /mre IDA l'. R. No. 72/5 - Malawi -- rural development - 2 - The Karonga project largely builds on the success of Lilongwe. designed to increase agricultural productivity. But, in addition, it contains the rather musual feature of a health scheme which is Rural health outposts will • be constructed and operated and rural hospitals will be improved and measures taken for the control of bilharzia, a seriously debilitating disease trans- mitted through water snails. The agricultural component of the project involves about 15,300 acres and of the 4,600 farmers who will benefit about 2,800 will be settled on the hrlgated and rainfed rice schemes and about 1, 800 are already farming in the area and. their production of cotton, maize and groundnuts will be increased by the project. Plans for the promotion of livestock development, which will benefit many small cattle owners, include the provision of four cattle markets~ 22 dipping tanks, a new holding ground and improvements to stock routes. Investments in new port works in Karonga district and at a southern terminal, together with a new self-propelled barge, to be financed under the project, • will facilitate transportation. The Ministry of Agriculture and Natural Resources will establish a proj~ct implementation unit in the Karonga district. It will be headed by a project manager responsibie for implementation of the agriculture and health com- ponents. Malawi Railways Limited, a GovertUilent-owned body, will be in charge of the Lake Service rehabilitation. The total cost of the project is about $7.8 million. The IDA credit of $6. 6 million will finance the foreign exchange component and a part of local cost, the remainder being met by the Government and project participants. The borrower is the Government of Malawi and the IDA credit is for 50 years including a 10-year grace period. It is interest free except for a 3/4 of 1% service charge to meet IDA's administrative expenses. - 0 - • t January 20, 1972 TECHNICAL DATA PROJECE: Rural development COUNTRY·: The Republic of Malawi TCJrAL COST: $7.8 million IDA FINAl~CING: $6.6 million, 50 years, 10 years of grace, no interest, but 3/4 of 1% service charge. OTHER FINANCING: The Government will meet local costs of $1,200,000. The project participants will contribute $400,000 to Govemment revenue by way of scheme service charges and livestock dipping and grazing fees. IMPLEMENTING ORGANIZATION: A Project Unit within the Ministry of Agriculture and Natural Resources (MANR) will be responsible for the agricultural and health components, and the Ministry of Transport and CoDBnunications • for the transportation component. A ICaronga Rural De::. elopment Project Liaison Committee -- including a senior official from MANR (Chairman) - is being established. MANR will have responsibility for policy decisions on management, staffing, procurement and administrative matters. Cables: MINAGRI (or) FINSEC, Zomba. PROJECT DESCRIPTION: Construction of irrigation works and flood control structures for rice schemes, improved cultivation of maize, cotton and groundnuts, livestock development, provision of farmers' inputs on credit, further studies on crops and hydrology, feasibility study for a possible second ·phase, rehabilitation of the freight services on Lake Malawi, and improvements to health facilities. PROCUREMENT: Project will require vehicles, machinery, a barge, and equipment for irrigation works, earth moving, cargo handling, workshops and offices, surveying. Services will comprise extension, training, project organiza- tion, specialist technical services. Goods and services of about $2. 7 million to be procured by international competitive private bidding. Items costing less than $25,000 in any year will be subject to local tender. Other items, too small and too widely scattered to attract international interest (totaling about $1.2 million) will be subject to local tender. OONStn.TANTS: The Government will receive assistance in carrying out hydrology studies and preparation of a feasibility study of a possible second-phase • - project • ESTIMATED CCMPLETION DATE: The rroject will be car?'ied out over period 1972-77.