Announcement of 5.6 Million Dollars Credit to Lesotho for the Thaba Bosiu Rural Development Project on February 26, 1973

• INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET, N.W., WASHINGTON D. C. 2.0433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 73/8 Subject: $5.6 million credit to Lesotho February 26, 1973 for the Thaba Bosiu Rural Development Project The International Development Association (IDA), an affiliate of the World Bank, has approved a credit equivalent to $5.6 million for the Kingdom of Lesotho to help finance the Thaba Bosiu Rural Development Project. The main object of the project, which is the Bank Group's first in Lesotho since independence in 1966, is to raise the standard of living of about 12,000 smallholder families through increased agricultural productton. The agriculture sector in Lesotho, a small mountainous nation surrounded by South Africa, is presently dominated by subsistence agriculture which accounts for about half of the country's gross domestic product. Acute soil • erosion, traditional farming and grazing patterns and lack of trained manpower have retarded development of the country's agricultural potential. Lesotho adopted its first development plan which has assigned the highest priority to increasing agricultural productivity. In 1971, The Thaba Bosiu Project, which was prepared by the government with the assistance of the Bank's Permanent Mission in East Africa, and the Food and Agriculture Organization, is designed to increase smallholder production of maize, sorghum, wheat and beans by introducing improved farming methods and by arresting soil erosion: Integrated crop and livestock farming on a rotational basis will be started as a pilot scheme over 5,000 acres of the 60,000 acres to be cultivated and the ultimate goal of the project is to introduce this new method over the entire area. The project includes the following main components: farm inputs on short-term credit in kind, for example improved seed, fertilizers and farming equipment and vehicles; marketing services, including staff, equipment, vehicles, and markets as tocal distribution points; soil conservation, includ- ing diversion terraces, drainage structures, protective fencing and grass and • tree planting; roads, with about 56 miles of all-weather gravelled main roads, /more IDA P.R. No. 73/8 -- Lesotho -- rural development - 2 - and also subsidiary and farm a(~cess roads; proj ec.t achninistration, including • staff buildings for the project-implementing authority. The project also provides for training, extension services and research to promote th~ introduction of improved farming methods. The project will be carried out hy the Thaba Rural Development Authority (The Aut_hority) which has been creat€d by the Government and is composed of senior civil servants. A project manager, assisted by a financial controller and division heads for land planning and soil conservation, market and credit and extension services, will be responsible for day-to-day management and execution of the project. A project liaison connnittee is also being established to involve participating farmers and to serve as a forum for farmers' views and problems. The Authority is also responsible for the initial provision of the credit and marketing for the project. • The total cost of the project is estimated at $9.8 million including . $5.4 million in foreign and $4.4 million in local costs. IDA is providing $5.6 million and USAID is providing $2.8 million as a grant for the soil conservation aspects of the project. The remaining funds are being provided by the govemment t local banks and participating farmers. The IDA credit and the USAID grant will be made available to government who will pass them on to The Authority as a grant. The borrower is the Kingdom of Lesotho 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% seivice charge to co?er IDA's achninistrative expenses. - 0 - • •. • TEOINICAL DATA February 26, 1973 PROJECT: Thaba Sosiu Rural Development COUNTRY: Kingdom of Lesotho TOTAL OOST: $9. 8 million. IDA FINANCING: $5.6 million credit, 50 years, including 10 years of grace, interest-free except for 3/4 of 1% service charge to cover IDA's administrative expenses. OTHER FINANCING: USAID is contributing $2. 8 million by way of a parallel grant to finance the soil conservation component of the project. IMPLEMENTING ORGANIZATION: The project will be carried out by the Thaba Bosiu Rural Development Authority, (The. Authority), Ministry of Agriculture, Maseru, Lesotho, created by the Lesotho Government. The project manager, assisted by a financia'i controller and division • heads ror land planning and soil conservation, market and credit and extension services, will be reponnsible for day-to-day management and execution of the project. PROJECT DESCRIPTION: Over a six-year period the project will provide for 12,000 peasant fanners on 60,000 acres, the following on-farm inputs, being credit in kind including improved seed, fertilizers, spraying and cultivation services, dairy cattle and oxen, tractors and other farm machinery; training, eJttension and research services; credit and market- ing services including markets to serve as focal points for distribution; soil conservation; ro~ds; project adr.iinistraticn; and staff, buildings, equipment and vehicles needed to carry out the above activities. PROCUREMENT: Vehicles, tractors, farm equipment and fertilizer totaling $900,000 will be procured by international competitive bidding. C' .a- tracts for roads and buildings will be subject to government local tender procedures which require competitive bidding. Equipment for soil conservation to be financed by the USAID will be subject to USAID procurement procedures. CX)NSULTANTS: An agricultural economist and a rural sociologist furnished by USAID will be attached to a project evaluation tn1it which will monitor the progress of the project and collect and evaluate data for the pre- paration of future rural development projects in other areas. • ESTJMATED COMPLETION DATE: 1980 - 0 -