Announcement of Eleven Million Five Hundred Thousand US Dollars Loan to Zambia for Family Farm Project on January 19, 1973

!l ' INTERNATIONAL -BANK FOR · - ~EcoNSTRucT10N AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON 0. C. 20433 TELEPHONE: EXECUTIVE 3-6360 ...---~ _:, Bank Press Release Noe 73/5 Subject: $lL5 millim( loan to Zambia January 19, 1973 for family farm project The Board of Directors of the World Bank has approved a loan equivalent to $11. 5 million to. help ffnance the developmen,t of family farming in a number of areas of Zambia~ The project is designed to assist small farmers who now produce little 'more than their subsistence requirements to enlarge their output of marketable c;op~ and so,. t~ increase t,he1r family incomes. 1 In the five-year project period,some 5,400 farm families would be settled on Govemmen. t-owned land and they' togethi?r with some ~00 £ arm families. now living in the project area~:- would receive eJd:ension se~\ices, and credit for seed, fertilizers,, farm •tools and farm buildings. In addition, farm to market roads would be built, domestic water supplies developed and schools and health centers would be • established in the several project treas • Each farm family would operate a tract of 29 ab,res of arc~Lle land plus some additional woodland. It is planned that by the end of the five-y~ar project period each farmer would be cultivating, in addition to an area in sub- sistence crops, 2 1/2 acres of maize and 2 1/2 acres of tobacco. These two, under the prevailing conditions of soil and cJimate, will yield higher net returns than ,any other cash crops which can be grown" in the project areas. It is estimated that after the fifth year net farm family income will rise to almost $600 per year as compared with present farm family cash incomes of less than $50 per year. Tobacco is a traditional crop in Zambia and has been efficiently produced and marketed, almost entirely by expatriate coIIlllercial fanners, since prior to World War I. Production reached its peak of approximately 24 million pounds in 1964 but has declined to about half that in the last several years. The decline resulted from the departure of a considerable number of expatriate commercial growers. The smallholder pr9d~ction lf expected fran farms to 'be developed .. ''under this project will essentially restore Zambian output to its earlier peak level • by. the end of the 1970s, with only as,modest increase thereafter. Export of this o·utput will help to relieve Zambia of its present extreme· dependence on a single export'· conmodity, copper. 0  ... ;~. (: '~.::c,, Sank P.R. No. 73/5 -- Zambia -- family farming - 2 :- ,, The project will serve two of the major policy objectives:. of the ',1 Government of Zambia. It will increase productive employment, output and income in rural areas and reduce ,,the. gap between urban and rural living levels. It will, at full development, provide improved incomes for al~ost 9,000 farm families and g.ive full-time employment to some 30,000 person~. It will a; the ·same time modest~y add to and diversify Zambia's exports. The. TobaccotBoard of Zambia (TBZ){ a s~tutory body, has planned the present\ project an\~ will also be cha-rged with\~. its execution. This will include .·~ provision of qualified st~f for management~· includfng agricult~ral extension ,.:- rj -..';.":--. \( services, farm credit ~~e,,rations, and marl~eting. , , '<~~.,~""" Tot.al cost of the project, which is to 'be complet;ed by the end of 1978, is about $].5.3 millign~· About $2.• 4 million· of ~this will- be for credit to farmers, $4.6 million for construction and equipment, $5 .• 8 million for project. management and administration, (3nd about $2 .5 million is i:to cover physical anG •• \\ price contingencies. The World Bank loan will cover 75% of the project cost including the entire foreign exchange component. The Bank loan is being made to the Republic of,,Zambia for a period of 20 years including a five-year grace period, at 7~% int~rest per ennum. Previous World Bank lending to Zambia totals $16 7 million), including three loans for agricultural development totaling $13 million. No IDA c~edits have been made to Zambia. Six Japanese financial institutions are participating~in the Bank loan for a total amount of approximately $765,000. They are: The Mitsubishi Trust & Banking Corporation, Toky-o; The Sanwa Bank, Limited, New York Agen,cy; The Takai Bank, Limited, Nagoya; The Taiyo Bank, Limited, Tokyo; The Saitama Bank, Limited, Saitama Prefecture; and The Toyo Trust & Banking Co., Ltd., l'okyo. - 0 - •  0 • •' Q •• January 19, 19~3 TECHNICAL DATA PROJECT: 0 Integratec;l family farming /) COUNTRY: Republic" of Zambia TMAL cos;T: !/ ' $15'. 3 million BANK FINANCIN'G: $11.5 million, 20 years including "5-year grac~ pe,riod,, at 7Ja intere~t per m)Ilum. OTHER FINANCING: Government of Z'ambia, $3.8 million. ;:';1 I' ·, IMPLEMENTING ORGANIZATION: 'l:'he 'lobacco Board of Zambia (T~Z), Lusaka, Zambia." • PROJECT DESCRIPTICfi: The project will provide·assistance for 900 existi,ng \ ,· ~.nd 5,400 new smallholder farmers to grow about 15,000 acres of maize \\ and 12,500 acres of tobacco by development of 2~-acre family farms and comnwtity infrastructure, establishment of tree nurseries for curing fuel and conservation purposes, provision of cred6t (seasonal and medium-term) and technical services for project management and extension. PROCUREMENT: Orders exceeding $30,000 will be by intemational competitive bidding; local suppliers of fertilizer will have a preference margin not exceeding u . 15% of c.i.f. price. Buildings, roads, construction works and water supply will be undertaken by TBZ force account. CONSULTANTS: The TBZ will provide technical "services for management and extension. ESTIMATED COMPLETICfi DATE: 1978. \\. - 0 -