Tanzania - Tanganyka Development Finance Company Limited (TDFL) Project

Document of The World Bank FOR OFFICIAL USE ONLY F COPY Report No. P-2600-TA REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE TANGANYIKA DEVELOPMENT FINANCE COMPANY, LIMITED WITH THE GUARANTEE OF THE UNITED REPUBLIC OF TANZANIA June 8, 1979 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit Tanzania Shilling (TSh) US$1.00 TSh 8.30 TSh 1.0 = US$0.12 (As the Tanzania Shilling is officially valued in relation to a basket of currencies, the US Dollar/Tanzania Shilling exchange rate is subject to change. Conversions in this report were made at US$1.00 to TSh 8.30 which is close to the recent average exchange rate.) ABBREVIATIONS AND ACRONYMS BIS = Basic Industrial Strategy CDC = Commonwealth Development Corporation DEG = Deutsche Gesellschaft fuer Wirtschaftliche Zusammenarbeit EADB East African Development Bank EIB = European Investment Bank FMO = Nederlandse Financierings - Maatschappij Voor Ontwikkelingslanden N.V. KfW = Kreditanstalt fur Wiederaufbau SIDO = Small Industries Development Organization SSI = Small Scale Industries TDFL = Tanganyika Development Finance Company, Ltd. TIB = Tanzania Investment Bank TRDB = Tanzania Rural Development Bank FISCAL YEAR Government: July 1 - June 30 TDFL : January 1 - December 31  FOR OFFICIAL USE ONLY TANZANIA TANGANYIKA. DEVELOPMENT FTIANCE COMPANY, LTD. LOAN AND PROJECT SUMMARY BORROWER: Tanganyika Development Finance Company, Ltd. (TDFL) GUARANTOR: United Republic of Tanzania AMOUNT: US$11.0 million equivalent TERMS: Repayable substantially in conformity with the aggregate amortization schedule for sub-loans and investments for which withdrawals from the loan account are approved or authorized. Interest rate would be 7.9Z per annum. RELENDING TERMS: TDFL would relend the proceeds of the loan at its standard interest rate, presently 11% per annum. The maximum maturity of sub-loans will be 15 years including adequate grace periods. The exchange risk would be assumed fully by sub-borrowers. PROJECT DESCRIPTION: The proposed project would provide a line of credit to TDFL to finance its projected lending to medium scale industrial enterprises and related services, agro-processing and tourism development projects through December 1981. The project aims to further improve and enhance the role of financial inter- mediaries in resource allocation in Tanzania, and to con- tribute to the foreign exchange resources available for medium size investment in the sectors involved. FINAL DATE OF PROJECT SUBMISS3IONS: December 31, 1981 FREE LIMIT: US$250,000 equivalent for individual sub-loans; US$3.5 million equivalent aggregate limit DEBT COVENANTS: Maximum debt/equity ratio of 3:1. RISKS: There are no major institutional risks associated with this project as TDFL is a fairly well established financing institution. However the industrial sector, the primary beneficiary of TDFL financing, faces a number of serious operating problems which could affect TDFL's ability to expand as projected in this report. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  PROJECTED TDFL PERFORMANCE: Year ending December 31 1979 1980 1981 1982 1983 --------(TSh millions)---