Announcement of 8.2 Million Dollars IDA Credit for a Second Agricultural Credit to Senegal on June 21, 1973

f \'El.01, 1 • INTERNATIONAL DEVELOPMENT ASSOCIATION {~) 1818 H STREET. NW, WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 73/52 Subject: $8.2 million IDA credit for a June 21, 1973 second agricultural credit to Senegal The International Development Association (IDA), an affiliate of the World Bank Group, for the second time has approved an $8.2 million credit to help increase the agricultural credit facilities in the Republic of Senegal. Agriculture plays a central role in Senegal's economy; it employs over 70% of the total labor force and contributes about one-third of g:z-oss domestic product. The agricultural sector is primarily dependent on two products -- millet as a food crop; and the major cash crop, groundnuts, which produces about 60% of value added by thf sector. Agricultural development in the central groundnut basin is severely restr~cted by ecological conditions and human problems. Rainfall is lowJ fluctuates widely and is limited to three or four months of the year. Since 1967 this difficult situation has been compounded by three droughts which have reduced the groundnut and other harvests, causing a reduction in rural incomes. Overpopulation in this region, where most of the population is centered, prescribes farms that are uneconomic in size, while over-workin the land has further impoverished soils. The potential for cultivation of rice, cotton • and fruit is greater in the sparsely populated south and southeast, but development is hampered by lack of feeder roads and other infrastructure. Moreover, the agricultural credit and marketing facilities and extension services are not sufficient to fulfill the needs of the rural sector. The Government strategy for agricultural development is directed at increasing productivity, diversifying agricultural production and opening new areas to cultivation. An IDA credit of $6.0 million and a Bank loan of $3.5 million approved in Februar-.r 1969 were aiming at financing farm implements and strengthening the agencies responsible for agricultural credit, marketing and extension services during 1968-72. A sharp fall in groundnut output due to low prices and poor weather conditions caused a drop in demand for credit and led to cancellation of the Bank loan. However, the essential component under the first project, the distribution of animal-drawn equipment on credit, has bene- fited the farmers even under adverse weather conditions. The purpose of this second agricultural credit is to follow up the first project and extend beyond the groundnut basin. It is aimed at financing the needs for medium- term credit requirements of the Agricultural Credit Productivlty Program over three years (1973/74 through 1975/76). The total project cost is $11.5 million. Of the $8.2 million Il)A credit, the Goverrunent will re-lend $6.3 million to the National Development Bank (BNDS) at an interest rate of 5.5%. BNDS will add $3.1 million from its own resources and make sub-loans to farmers. • As for the first project the National Development Bank (BNDS), the Agricultural Development Agency (SODEVA) and the National Office for Crops & Development Assistance (ONCAD) are responsible for the execution of the project which is expected to be completed in December 1976. Procurement of carts and equipment for project organizations will be through international competitive bidding. The purchase of farm implements will be negotiated directly with a local manufacturer.  • June. 21, 1973 TECHNICAL DATA PROJECT: Second agricultural credit COUNTRY: Republic of Senegal TOTAL COST: $11. 5 million IDA FINANCING: $8.2 million, 50 years, 10 years of grace, interest free except for 3/4 of 1% service charge to cover IDA's administrative • expenses. OTHER FINANCING: lianque Nationale de Developpement du Senegal (BNDS); Government. IMPLEMENTING ORGANIZATIONS: National Development Bank of Senegal; Agri- cultural· Development Agency; National Office for Crops and Development Assistance, Uakar, Senegal. PROJECT lJESCRIPTION: Hedium-term credit for animal-drawn implements, carts and draft animals; transportation, office equipment; building and teaching equipment; technical assistance; studies to provide information on seed storage, on fertilizer response at the field level, and on the feasibility of expanding an ongoing production improvement scheme. PROCUREMJ::NT: All Roods and services will be procured through international competitive bidding except the farm implementswhich will be contracted for locally. CONSULTANTS: To be selected ~STIMAT~u COMPL~TION DATE: December 1976 0 - •