Tanzania - Second Technical Assistance Project

Document of The World Bank FILE COPY FOR OMCIAL USE ONLY Rewpt No. P-2866-TA REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION ON A PROPOSED CREDIT TO THE UNITED REPUBLIC OF TANZANIA FOR A SECOND TECHNICAL ASSISTANCE PROJECT July 17, 1980 This document has a restlited distribution and may be used by recipients only in the perfornce of their official die. Its contents may not oterwise be disclosed witht World Bank authierzation.  CURRENCY EQUIVALENTS Currency Unit = Tanzania Shilling (TSh) TSh 1.0 - US$0.1205 US$1.00 = TSh 8.30 US$1.00 = SDR 0.762576 (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$1.00 to TSh 8.30 which is close to the 1979 average exchange rate. The US$/SDR exchange rate used in this report is that of May 31, 1980). ABBREVATIONS AND ACRONYMS FAO - Food and Agriculture Organization of the United Nations. TAC - Tanzania Audit Corporation TAU - Technical Assistance Unit TIB - Tanzania Investment Banik UNIDO - United Nations Industrial Development Organization FISCAL YEAR Government: July 1 - June 30 TIB : July 1 - June 30  FOR OFFICIAL USE ONLY TANZANIA SECOND TECHNICAL ASSISTANCE PROJECT CREDIT AND PROJECT SUMMARY Borrower: 'United Republic of Tanzania Beneficiary: Tanzania Investment Bank Amount: SDR 8.4 million (US$11 million) equivalent Terms: Standard Relending Terms: The proceeds of the credit would be provided to the Tanzania Investment Bank as a grant. Project The proposed credit would increase the Government of Description: Tanzania's capacity to prepare and implement development projects through the provision of consulting services and training in support of preinvestment activities, capacity utilization, export promotion, auditing and other such studies or work. The project would be implemented by the Tanzania Investment Bank, which would acquire additional professional staff and a limited amount of vehicles and equipment for this purpose under the credit. There is a risk that some studies to be financed under the project will prove unproductive; however, this risk will be minimized through experience gained at TIB under the First Technical Assistance Project. Estimated Cost: (US$ Million) Local Foreign Total I/ Consulting Services 2.0 7.5 9.5 Training 0.4 2.0 2.4 Project Unit (including professional staff, vehicles and equipment) 0.6 0.7 1.3 Unallocated - 0. 0.8 TOTAL 3.0 11.0 14.0 Firancing Plan: (US$ Million) Local Foreign Total IDA Credit - 11.0 11.0 Government of Tanzania 3.0 - 3.0 and its agencies 1/ Except for US$100,000 assigned to vehicles and equipment, the project would be exempted from identifiable taxes and duties. This document has a restricted distribution and may be used by recipients only in the performance of their oMcial duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - Estimated Disbursements: (US$ Million) IDA Fiscal Year 1981 1982 1983 1984 1985 Annual .4 1.0 3.2 3.7 2.7 Cumulative .4 1.4 4.6 8.3 11.0 Appraisal Report: No separate Staff Appraisal Report has been prepared for this project.  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMM(ENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE UNITED REPUBLIC OF TANZANIA FOR A SECOND TECHNICAL ASSISTANCE PROJECT 1. I submit the following report and recommendation on a proposed development credit to the United Republic of Tanzania for the equivalent of SDR 8.4 million ( US$11 million) on standard IDA terms to help finance preinvestment, capacity utilization and export promotion studies, project preparation and implementation work and training for Tanzanian nationals in related fields. The proceeds of the Credit would be made available to the Tanzania Investment Bank as a grant, but the costs of studies leading to productive investments would be recovered from the Bank's client agencies. PART I - THE ECONOMY I/ 2. A Basic Economic Mission visited Tanzania in August 1976 and the Basic Economic Report was distributed in December 1977 (Report No. 1616-TA). A new-Country Economic Memorandum is expected to be issued later this year. A summary of social and economic data is in Annex I. Profile of the Economy 3. Tanzania is one of the 30 least developed countries in the world with a per capita income in 1978 of US$230. The economy is still heavily dependent on agriculture: 90% of the labor force is engaged in agriculture and approximately 50% of GDP and about 70% of total exports are derived from agricultural production. The industrial sector is still small, producing about 10% of GD", approximately the same percentage as 11 years ago. The 2,ertvi.cs_ oc_cor ,:oduces about 40% of GDP. Overall population density is -Low, though a few areas are considered overpopulated. Population growth is estimated at 3.0% per annum with both fertility and mortality at relatively 'iigh levels. 4. Since the Arusha Declaration in 1967 Tanzania has pursued a socialist development strategy. Banking, insurance, and most large-scale enterprises in manufacturing, plantation agriculture, transportation, and wholesale trade ar, under state control. There is extensive state intervention in economic activity, including import licensing, foreign exchange controls, price control, the reservation of some activities to the state or cooperative sector, and detailed Government investment planning. The second major feature of I/ This 3ection is essentially the same as that of the President's Report on the Songo Songo Petroleum Exploration project dated May 21, 1980.  Tanzania's development strategy is its strong emphasis on rural development and social programs to benefit the poor and reduce inequalities in income distribution. This is reflected in ambitious Government programs for the provision of rural water supplies, health services and universal primary education. Long Term Economic Trends 5. In the decade 1968-78 real GDP at factor cost grew at an annual average rate of 4.8%, or about 1.8% per annum per capita. While economic growth was severely disrupted by the economic crisis following the failure of rains and large increases in import prices in 1973 and 1974, the economy recovered with annual growth of 5 to 6% for 1976 through 1978. During the seventies the service sector was the fastest growing sector - 6.3% per year. 6. The Government has a good record of domestic resource mobilization. Between 1967-68 and 1977-78 the share of recurrent revenues rose from 15.1% to 19.3% of GDP. However, most of this increase occurred before 1975-1976; in 1974/75 revenue peaked at 22% of GDP. The increase was achieved through a combination of highly progressive direct taxes and proportional or moderately progressive indirect taxes. Except during the economic crisis in 1974-75, the rate of national savings has also been high; gross national savings fluctuated at around 16-17% of GNP from the mid-1960s through 1973, fell to half that level during the crisis years and recovered to the pre-crisis level in 1976 and 1977. These are high levels of savings for a country at Tanzania's income level. 7. Some progress has also been made in achieving the Government's objective of more equitable income distribution. Between 1969 and 1975 the average urban rural gap remained approximately constant, halting the trend towards an increasing gap in the early 1960s. Moreover, it is likely that this gap has been slightly reduced since 1976 due to continued recovery of agricultural production and higher producer prices. However, regional income differentials in rural areas have tended to widen slightly. Within the formal urban sector there has been a dramatic narrowing of the post-tax income differential between the highest-paid government officials and minimum wage earners, from 50 to 1 in 1961 to 8 to 1 in 1975. However, a large informal sector has emerged comprising large numbers of unemployed and underemployed workers with earnings significantly below the official urban minimum wage. The policies of wage restraint and higher producer prices pursued since 1975 should have a beneficial impact on almost all dimensions of income distribu- tion, and the basic needs oriented programs in rural water, health and primary education (para. 4 above) are resulting in a significant redirection in public expenditures toward the rural poor. 8. Despite this impressive overall record of development, some pro- blems have begun to manifest themselves in recent years. Exports have failed to keep pace with the growth of the rest of the economy; the overall export index is down almost one-third since 1966. This poor performance in exports is due to the poor growth rate of agricultural cash crops. While agricul- tural output has increased impressively in recent years (10.9% in 1976 and  - 3 - 8.2% in 1977), most of this growth has been in the hard-to-measure subsistence sector; the monetary sector has lagged well behind. This failure of export growth has led to increasing dependency on foreign loans and grants to pay for imports. 9. A second increasingly serious problem is the deceleration of the growth of domestic revenues. While still at a high ratio to GDP compared to most other developing countries, government revenues have been growing more slowly than GDP in recent years. At the same time recurrent expenditures have been higher than budgeted. As a result, public sector savings have been well below expectations and the Government has had to rely more upon borrowing (both foreign and local) and external aid for financing development than was planned. Recent Economic Developments 10. During 1975-77 the Government adhered to the program agreed to at the time of the Program Loan (No. 1063-TA) in late 1974. This program included redirecting investment to the directly productive sectors of industry and agriculture, higher agricultural producer prices, constraints on wages and salaries, price and tax increases to restrain consumption and tight control of imports. These policies, aided by the boom in coffee prices, succeeded in keeping government spending under control with low levels of borrowing from the banking system and led to a balance of payments surplus of almost US$150 million in 1977. Food production increased and government stocks of most foodgrains reached record levels. In 1978 the Government was able to ease import restrictions and begin to import the spares and raw materials needed by all the major sectors in the economy. 11. Unfortunately, the price of coffee, Tanzania's major export, began to fall at the same time that imports were liberalized. Also, in October, 1978 war broke out with Uganda and the resulting imports of military equipment and mobilization of resources required for the war effort put an increasing strain on the balance of payments and the domestic budget. Consequently, the current account showed a deficit of more than US$450 million in 1978 and the overall balance of payments was almost US$300 million in deficit. The Govern- ment's foreign reserves were rapidly drawn down and the country was forced to delay payment of about US$60 million in import bills. 12. The situation deteriorated further in 1979. The overall balance of payments for 1979 is expected to be almost US$200 million in deficit, and arrears on import payment were estimated at about US$200 million by the end of the year. At the same time the domestic budget deficit has increased substantially. A recurrent budget deficit of almost TSh 1 billion (US$120 million), was estimated for FY1978/79 and government borrowing from the banking system is estimated at TSh 3 billion (US$360 million), a major component in the increase in the money supply of about 35%. In an effort to deal with the increasing balance of payments deficit, import licenses were reduced by almost 40% in real terms from the 1978 level and the Government  - 4- announced a 10% devaluation in January of 1979. In addition the FY1979/80 budget called for a reduction in the level of recurrent expenditure and borrowing from the banking system of TSh 1.67 billion; however, through the first quarter of this fiscal year borrowing was already TSh 1.4 billion as spending agencies, due to lack of budgetary discipline, were able to exceed their budgetary allocations. In early 1979 the Government arranged for almost US$75 million in funds from the IMF from a First Credit Tranche, the Trust Fund and the Export Compensatory Fund, but negotiations for further assistance from the DMF have so far been unsuccessful. To deal with the increasing economic problems as well as provide a framework for IMF assistance, the Government urgently needs to develop a comprehensive program to overcome the emerging crisis, as it did in 1974; the Bank has offered to help the Government in developing such a program. 13. Tanzania continues to attract large amounts of foreign assistance on -concessional terms. Because of the very concessional terms on which aid has been given to Tanzania and the Government's reluctance in the past to use higher cost commercial loans and supplier's credits, the overall debt service ratio has historically been less than 10%. However, the recent balance of payments crisis has forced the Government to utilize commercial loans and suppliers credits and as a result the debt service ratio is estimated at 12% in 1979 and projected at 15% in 1980. We expect it will remain in the range of 15-20% throughout the 1980's. In 1978 the Bank held 12% of Tanzania's external debt (for the Bank Group, it was 28%) and received 37% of Tanzania's debt service (40% for the Bank Group). We are projecting this debt service share to fall to about 21% in 1980 and to remain around 25% for the coming decade. 14. Tanzania's development program will require resources in excess of domestic savings and external capital made available to finance the foreign exchange costs of projects. Given the Government's efforts to mobilize domestic resources and in view of our support for its increased emphasis on local cost intensive rural investments, the Bank Group will continue to finance a high proportion of total costs including, in appropriate cases, a portion of local costs. East African Community (EAC) 15. The recent developments in the East African Community were outlined in a report to the Executive Directors dated December 19, 1977 (R77-312). Dr. Victor Umbricht, the independent mediator appointed by the Partner States, has visited East Africa on numerous occasions and has now prepared reports on the results of his fact-finding work on the EAC Corporations and the General Services, and the methodology adopted in appraising the assets and liabilities. In late March 1980, the mediator presented to the three Governments his proposals for the allocation of these assets and liabilities, for their consideration. The next step would be the start of negotiations among the three Governments based on the mediator's proposals. According to his terms of reference, the mediator would be available to assist in  -5- arriving at a definitive settlement. The mediatorts report and recommendations on the future structure of the East African Development Bank kEADB) have been accepted by the Partner States. The revised EADB Charter along with the Treaty amending and re-enacting the new Charter have been submitted to the three Governments for signature as soon as they are constitutionally ready; this is expected shortly. 16. The de facto breakup of the Community has had some impact on Tanzania's budget as new national entities take over the services formerly provided by the EAC Corporations. A major development related to the EAC difficulties was the closure of the border with Kenya. Kenya was a major trading partner of Tanzania and considerable adjustments have had to be made in locating new suppliers for some items and developing alternative outlets for some manufactured goods and agricultural products. PART II - BANK GROUP OPERATIONS IN TANZANIA 17. Tanzania joined the Bank, IDA and IFC in 1962. Beginning with an IDA credit for education in 1962, 44 IDA credits and 19 Bank loans, of which two on Third Window terms, amounting to US$856.5 million have so far been approved for Tanzania. In addition, Tanzania has been a beneficiary of 10 loans totalling US$244.8 million which have been extended for the development of the common services and development bank operated regionally by Tanzania, Kenya and Uganda through their association in the East African Community. IFC investments in Tanzania, totalling US$4.7 million, were made to the Kilombero Sugar Company in 1960 and 1964. This Company encountered financial difficulties and in 1969, IFC and other investors sold their interest in the Company to the Government. A new IFC investment of US$1.7 million in soap manufacturing in Mbeya was approved by the Executive Directors on June 8, 1978 and an investment of US$1.5 million in metal product manufacturing was approved on May 10, 1979. Annex II contains summary statements of Bank loans, IDA credits and IFC investments to Tanzania and the East African Community organizations and notes on the execution of ongoing projects. 18. To support Tanzania-s overall development strategy Bank Group lending operations have assisted a wide spectrum of activities. Nearly every sector in which the Bank Group has operational capacity has received some attention. While this broad involvement in Tanzania's development efforts will be continued, future work is expected to concentrate on three general areas: (i) agriculture; (ii) transport and communications; and (iii) education. As agriculture and related activities constitute the largest single sector in the economy, it has received 30% of the Bank Group's direct lending to Tanzania. The lending program in agriculture features two main types of projects. A series of regional rural development projects are focusing on production but also supporting the development of the regional infrastructure needed to remove production constraints. The Kigoma Project (Credit No. 508-TA) was the first of these, and similar projects have recently been approved for Tabora (Credit No. 703-TA) and Mwanza/Shinyanga (Credit No. 803-TA) regions. Other  - 6 - projects in agriculture are the responsibility of the Ministry of Agriculture, either directly or under one of its parastatals, and are intended to improve the provision of support services for the sector. An example of this is the recently-approved Tanzania Rural Development Bank Project (Credit No. 987-TA). 19. Alongside agriculture, there has been a major focus in Bank Group work on transport and communications and education. Transportation diffi- culties are continuously cited as critical constraints to development in Tanzania. Indeed, the Government's inability to ensure the timely avail- ability of inputs or the regular collection of crops has been a major bottle- neck to increased production in the agriculture sector. Furthermore, during the seventies transport investments were primarily concentrated around the Tanzania-Zambia Corridor and since 1977 no systematic investment program has been prepared for the subsectors which were overseen by EAC Corporations. The major objectives of proposed Bank Group activities are therefore to develop a more balanced investment program in transport and communications and to provide institution-building assistance to the ministries and newly estab- lished national corporations responsible for railways, ports and telecommuni- cations. Shortages in skilled manpower are also a worsening bottleneck to development. Bank Group involvement in education has supported both spe- cialized training and the development of the secondary education sector to assist the Government in meeting its manpower needs. 20. Projects which have been recently approved or appraised reflect the above outlined priorities. Those approved include a Sixth Education Project (Credit No. 861-TA) and a Fifth Highway Project (Credit No. 876-TA), a Dar es Salaam Port Engineering Project (Credit No. S-24-TA), a line of credit to the Tanzania Rural Development Bank (Credit No. 987-TA), a Pyrethrum Project (Credit No. 1007-TA), a Foodgrain Storage and Milling Project (Credit No. 1015-TA), and a Tea Processing Project (Credit No. 1037-TA). Projects which have been appraised include a Seventh Education Project, a Coconut Pilot Project and a rural development project in Mara region. A small scale industries project, a telecommunications project and an urban project are also under preparation. 21. Although the comparatively high undisbursed proportion of loans and credits, detailed in Annex II, is largely a result of the recent approval of many of these projects, it also reflects the fact that overall project implementation has been slower than was projected. It is clear in retrospect that both the Bank Group and Tanzania have been optimistic regarding Tanzania's absorptive capacity. The causes of the difficulties in implementation are varied. Some stem from the scarcity of suitably trained and experienced manpower, which has triggered the Bank Group's expanded efforts in education and training over the past five years. Other implementation problems reflect the difficulty of identifying agronomic input packages appropriate to the needs of smallholder farmers or result from the strains associated with attempting a "frontal attack" on poverty. These problems have been compounded by frequent and drastic administrative changes, which -- though potentially the source of long-term benefits -- have certainly disrupted orderly execution  of projects and made parts of earlier project concepts obsolete. In addition, the Uganda war (para. 11) has had some impact on project implementation. In the early stages of the war, there was some diversion of equipment and man- power; however these problems have largely been solved. The more serious problem over the medium term is the financial implications of the war. If general economic problems resulting from the war are not resolved, the avail- ability of adequate local funds could become a major constraint to implementa- tion. In general, difficulties have been most severe in agriculture, parti- cularly in the smallholder rural sector. As our lending program has been increasingly concentrated on this sector, these problems have become corre- spondingly more apparent and severe. By contrast, the "modern" sector projects have tended to fare better: the Tanzania Investment Bank, Mwanza Textile and Morogoro Industrial Estate Projects, for example, are proceeding well. 22. As the Bank Group's lending program has expanded, increasing attention has been given to measures designed to improve project implementa- tion. A course was conducted in Dar es Salaam in 1973 and again in 1978 on Bank Group procurement with the relevant Government officials. A special project implementation unit was set up in the Ministry of Agriculture and 11 Agricultural Development Services staff have been assigned to Bank Group financed projects in agriculture and rural development. The need to establish a close and continuous working level dialogue between responsible Tanzanian officials and Bank Group staff on implementation problems was one of the prime reasons for the expansion of the Resident Mission to two professionals in October 1976. In February 1977 a regular Government/Bank Group review of project implementation was established. Discussions on Bank Group financed projects chaired by the Ministry of Finance (MOF) and attended by Bank Group staff and officials from implementing agencies deal in detail with individual problem projects and problems which are affecting project implementation across a number of sectors. As a result of these efforts, there has been some improvement in project implementation. Actions agreed to during the reviews have been completed relatively quickly and coordination and communication between the MOF and the various ministries and agencies responsible for project implementation have also improved. 23. The Government has become increasingly conscious of the importance of effective implementation. In addition to supporting the project imple- mentation review system, MOF has set up a unit to oversee project performance. Furthermore, there have been more consistent responses to Bank suggestions and a willingness to openly discuss project problems raised by Bank staff. As a consequence, the disbursement records of Bank Group financed projects have improved somewhat over the last two years, and a recent analysis indicated that the Tanzanian disbursement performance is about equal to the Bank-wide average. While there is still a potential for further significant improve- ments, the Government is implementing its investment program, including Bank Group and other foreign aided projects, more effectively than in the past.  -8- PART III - THE CONTINUED NEED FOR TECHNICAL ASSISTANCE 22. Much of the rationale for IDA's First Technical Assistance Credit to Tanzania 1/ remains valid. The country's scarce human resources continue to be spread very thinly across a wide spectrum of development activities. The shortage of people trained to formulate and supervise the implementation of productive projects, particularly in the highly specialized areas of industry, mining and energy development, is still acute. Where Tanzanian personnel are available in such critical disciplines, they have usually had insufficient practical experience since completing their studies and require sustained exposure to long-standing professionals in their own fields. The reorientation of the Government-s development priorities from infrastructure and social services to directly productive activities has stretched this already limited human establishment even further, and it has been slow to expand in key areas. (The first graduating class in engineering at the University of Dar es Salaam in 1977 comprised only 27 people.) 23. Tanzania continues to benefit from a high level of externally- financed technical assistance, both in the form of specialists serving on long-term assignments in the public sector and studies undertaken by individual consultants or consulting firms, based largely in the industrialized countries. In 1979, at least US$70 million of a total US$500 million in external assistance was received in the form of technical cooperation personnel, studies, research and training awards. 2/ Since 1975, bilateral donors have financed water resource surveys and the preparation of rural development projects in most of the country-s twenty mainland regions, the preparation of a Power Sector Study outlining national options in the electrical energy field up to the year 2000, and a study of possible uses of the important Rufiji River Basin. Most of these studies have been large enough to be treated as projects unto themselves by various financing agencies, and hence have been the subjects of special attention and effort. However, not all studies have resulted in the preparation of specific investments or in concrete proposals for the more efficient use of existing capital facilities. Furthermore, where investments have been undertaken, they have often been tied to the technology and industrial capacities of the country which financed the study. Some requirements for studies are too small to be of interest to bilateral assistance agencies, as the processing of requests for such studies is likely to delay the preparation of larger development undertakings. The lead time required for submitting and obtaining approval for such studies can also be daunting. Sweden and the Netherlands have introduced lines of credit for 1/ See Report No. P-1692a-TA, dated November 12, 1975. 2/ These are preliminary estimates based on the findings of an economic mission to Tanzania in March 1980, and they include a small amount of support equipment (e.g. teaching aids for instructors). As so- called financial assistance budgets often include provision for project personnel and studies, total technical assistance was probably even higher.  - 9 - general consulting services, which have been flexibly administered and well- used, but such an approach to technical assistance is more often the exception than the rule. Bilateral resources also tend to be devoted to resolving questions arising in current development programs rather than assigned to purposes lying beyond the donor's immediate sectors of concentration. 24. Much of available bilateral and UNDP assistance is also being used for broad based institutional support rather than for the preparation of new investments and studies designed to improve productivity or to identify new opportunities for export earnings. Even in the directly productive sectors of agriculture and industry, a large proportion of outside assistance is still devoted to supporting day-to-day management, rather than to the systematic assessment of institutions and facilities in those sectors. With the subject of capacity utilization likely to become more pressing during the next few years because of chronic underproduction in the industrial sector and a growing desire to ensure maximum returns from the existing capital facilities in the country, Tanzania will require continued access to discretionary resources in economic planning and management. 25. To a large but perhaps diminishing extent, such resources will continue to be sought from abroad. There is only a small number of consulting firms operating in Tanzania, many of which are foreign-owned and fully- occupied. Some parastatal organizations have entered the consulting field or expanded their operations since the First Credit was approved, but most of these are still fledgling or to some degree already overburdened. The Tanzania Industrial Studies and Consulting Organization (TISCO) was established in 1976 and has been awarded some work under the existing Credit. The National Institute for Productivity (NIP) is very active in providing advice to Govern- ment Ministries and public sector enterprises on the streamlining of their operations, but it has so far not been able to form a permanent corps of specialists equipped to mount elaborate engineering and economic studies. The National Estates and Designing Company (NEDCO) has expressed interest in offering consulting services outside its traditional sphere of activities (architecture and engineering design) but its capacities for preparing pre- investment or project preparation studies are essentially untested. The Institute of Finance Management (IFM) in Dar es Salaam had intended to under- take general consulting assignments, in addition to its main work of training Tanzanians in accountancy, banking, insurance and taxation; however, it has had to drop such plans for want of appropriate expatriate staff. As a result, foreign-based firms can be expected to provide a large portion of the consult- ing services to be financed under the proposed credit; nonetheless, efforts will continue to be made to use local firms to the greatest extent possible. PART IV - THE PROJECT 26. Project Background: The proposed credit would be IDA's second line of credit for technical assistance purposes to Tanzania. The first credit for US$6.0 million was approved in 1975 to finance (a) feasibility and  - 10 - other preinvestment studies for projects in the productive sectors; (b) special studies for improving efficiency and capacity utilization under existing investments; and (c) training of Tanzanians in project preparation, implementation, evaluation and related techniques. The Tanzanir- Investment Bank (TIB) assumed responsibility for implementing this project. 27. As of April 15, 1980 TIB had committed US$4.74 million (net of cancellations) under the credit for twenty-five feasibility and project preparation studies, eight efficiency and capacity utilization studies, four local training courses and twenty-six overseas scholarships. As a large number of studies are still underway, it is still too early to evaluate the first credit fully. However, five of the six completed feasibility and project preparation studies have already led or are likely to lead to pro- ductive investments in key industries: tea processing, irrigated rice produc- tion, petroleum refining, pulp and paper and tourism. Efficiency-improvement studies have also assisted TIB and its client firms in analyzing management and technical problems and defining measures for overcoming them. One study alone produced recommendations for rationalizing the operations of six major textile mills in in the country, with already perceptible effects in recent production. TIB has also been able to study inventory management among key parastatals and to complete the first phase of a productivity improvement program for major industrial enterprises. 28. The training component of the first credit was also well-used. Its most effective application was in organizing two project preparation and evaluation courses in Arusha in collaboration with the East African Management Institute and EDI, and in holding two seminars in Dar es Salaam in project implementation for public sector managers. 29. TIB currently has a pipeline of about forty possible studies, which are in various stages of processing. As a result, TIB expects to have fully committed the first credit by December 31, 1980. TIB, the Government and client parastatals all agree that the first credit has been useful in helping Tanzania identify, formulate and evaluate projects as well as to build up its project appraisal and implementation capabilities. Project Description 30. The project was prepared by the Government with the assistance of Bank Group staff and was appraised in November 1979. Negotiations were held in Washington in June 1980; the Tanzanian Delegation was headed by Mr. G. Mbowe, Chairman and Managing Director of the Tanzania Investment Bank. A Credit and Project Summary is at the front of this Report, and Annex III contains supplemental project data. 31. The project would involve an IDA Credit of SDR 8.4 million (US$11 million) equivalent over a 4-year period and would finance the following: (a) about seventy-five man-years of consultancy services to prepare preinvestment, capacity utilization, and export  - 11 - marketing studies, as well as detailed engineering work for high priority projects in the industrial, agricultural, energy and other sectors of the economy; project preparation and implementation services; and some sectoral studies; (b) training for Tanzanians in project preparation, implementation and evaluation and in accounting and auditing; (c) six man-years of specialized staff and US$100,000 equivalent in vehicles and equipment for the Technical Assistance Unit of TIB; and (d) US$0.8 million equivalent in unallocated funds. 32. Consultancy Services and Studies: As under the first credit the studies are expected to cover most productive sectors of the economy. While perhaps the most pressing needs remain in the production of consumer goods, such as clothing, cooking oil, sugar, salt, etc., other intermediate industries such as tanning, wood processing, cement, electrical products, plastics and chemicals will also be supported under this project. The expansion of the mining sector will require heavy reliance on technical assistance, as will the energy exploration and development field. Other sectors which will benefit from this credit include agriculture and food production, tourism, communications, power generation and transmission and energy conservation. While a substantial portion of the funds would be used to prepare new invest- ments, studies aimed at maximizing the use of existing productive capacity would be given a high priority. TIB also hopes to identify products and sectors with significant export potential, as well as to help develop new foreign markets for Tanzanian goods and services. 33. Training. Owing to the success and cost-effectiveness of locally organized training courses financed under the first credit it is expected that a major portion of the training component would be used to finance similar courses. They will train suitably qualified Tanzanian candidates in project design, evaluation and implementation, mainly in the industrial and agro- industrial sectors. It is also expected that about half of this component will be used to help upgrade the accounting and auditing capabilities of the Tanzania Audit Corporation, which has been hoping to recruit experts to prepare training manuals and to equip some of its staff for financial consultancy through accelerated training programs abroad. As under the first credit, some fellowships for short overseas courses would also be available in specialized fields. Detailed proposals for training under the project are to be submitted to the Association by October 31, 1980. Project Organization 34. The Tanzania Investment Bank (TIB), with which the Bank Group has been involved since 1974, would assume overall responsibility for supervising and implementing the project, as was the case with the First Technical Assis- tance Credit. TIB has so far received one IDA credit, three Bank loans and an  - 12 - EEC Special Action Credit (administered by IDA) for a total of US$76 million. Progress on all these operations has been satisfactory and TIB has rapidly developed into a well organized and effective financial intermediary. As a result, it has earned considerable respect within Tanzania and with bilateral and multilateral agencies for its effectiveness in assisting Tanzania's industrial development and for its independent and capable management. 35. TIB is wholly owned by the Tanzanian Government. Within the banking and financial system in Tanzania, TIB's main role has been to provide term financing to the directly productive sectors of the economy. TIB's Board is headed by the Chairman and Managing Director, who is appointed by the President, and has seven other members, among whom are the Personal Assistant to the President (Economic Affairs), the Director of Planning at the Ministry of Industries, the Director of Domestic Banking at the National Bank of Commerce, a business consultant representing the private sector and a repre- sentative of the national workers' organization (JUWATA). TIB's Board is actively involved in TIB's operations and has the sole power of approving loans and equity investments. A General Manager assists the Managing Director in overseeing TIB, whose organization consists of four departments: Operations, Planning and Development, Finance, and Secretary's and Administration. Tanzanians head all these departments. 36. Direct responsibility for implementation of the credit would remain with the Technical Assistance Unit (TAU) in TIR's Planning and Development Depart- ment. This unit has gained considerable experience in administering the first line of credit without outside technical assistance since 1978. (At that time the contract of the consultants who had been in charge of the TAU since its inception, was allowed to lapse.) In addition to the services of the Director of the Department, the TAU includes two local professionals (a food technologist and an economist) and an expatriate engineer, and draws on the services of other TIB personnel, including two chemical engineers, two agriculturalists and two economists. The TAU obtains legal services from the Tanzania Legal Corporation. 37. With the recent increase in the number, scope and diversity of studies, and the involvement of the TAU in organizing training, the TAU's administrative capacity is now under pressure. As a result, the Unit has not been able to devote as much time as it would like to generating project and study proposals from client parastatals, or to following up on the recommendations of completed studies. As a result, TIB intends to strengthen the professional staff at the Unit's disposal by recruiting four additional permanent staff: two industrial engineers and two agricultural economists. TIB has already secured bilateral financing and begun recruitment for two of these positions and it proposes to finance the two other specialists from the proposed credit during the next twelve months. 38. TIB has relied on its own in-house capabilities and limited assis- tance from Bank Group and bilateral donors to identify and recruit consultants for studies. While this system has worked satisfactorily so far, it needs to be strengthened in view of the anticipated increase in demand for studies in  - 13 - some specialized fields. As a result, TIB has decided to collaborate closely with the Tanzania Industrial Studies and Consulting Organization (TISCO) in identifying future consultants as well as to further supplement its own index of firms and individuals through stepped-up exchanges of information with potential commissioning agencies and the appropriate technical divisions of UNIDO and FAO. 39. Because of the urgent need for Tanzania to increase capacity utiliza- tion in its industrial and agricultural sectors and to develop a more export- oriented industrial sector, TIB intends to promote more efficiency improvement and export promotion studies under the new IDA credit. 40. Procedures for Approval of Studies. Applications for project studies would be submitted by the parastatals and Government ministries to TIB. The TAU would review each proposal and submit it, along with the Unit's recommen- dations, to TIB's Loans Committee for consideration. (The Loans Committee is presided over by the Managing Director and comprises the General Manager and the heads of TIB's departments.) In conducting its review the TAU would assure itself that suitable and timely finance could not be secured from other multi- lateral and bilateral agencies, including UNDP, for the studies. Furthermore, for relatively large projects, TIB would suggest to the sponsoring parastatal that an initial prefeasibility study be undertaken prior to funding a full- scale feasibility study. In support of studies on large-scale undertakings, the TAU would include in its written submission to the Loans Committee some evidence of the likelihood that the project would be implemented, if viable. To ensure coordination in project identification and preparation, TIB would seek the opinions of the planning sections of interested Ministries on the relative priority of a prospective study and ensure its consistency with long term strategy in the sector. In view of TIB's satisfactory handling of pre- vious consulting services, the maximum value of study proposals and contracts which it could approve under the Credit without prior IDA agreement would be raised from US$50,000 to US$100,000 per proposal. However, aggregate approvals of this kind (including training sub-projects) are not to exceed US$4 million equivalent (Section 2.09(b) of the draft Project Agreement). In respect of training for the Tanzania Audit Corporation, no disbursements would be made from the Credit until a revised training program had been submitted to, and approved by, the Association (paragraph 4(c) of Schedule 1 of the draft Development Credit Agreement). 41. Channeling of Funds. The proceeds of the credit would be channelled as a grant by the Government to TIB under a subsidiary agreement whose terms and conditions would be acceptable to the Association (Section 3.01(b) of the draft Development Credit Agreement). Funds for studies would be passed on as grants by TIB to the individual parastatals and Government agencies, who would actually commission the studies and employ the consultants. It is expected that if bankable projects emerged, TIB would convert these grants into loans, where possible. TIB would have the discretion to charge a fee for the capacity utilization and export marketing studies.  - 14 - Project Costs and Financing 42. The total project cost would be US$14.0 million equivalent, 1/ and would include US$11.0 million or nearly 80% in foreign exchange costs. The approximate project budget is provided in the Project and Credit %ammary at the front of this Report. The proposed credit would finance US$11 million or 80% of total project costs; the Government, commissioning agencies and TIB would contribute the remaining US$3 million or 20% of total project costs. Part of this local contribution is expected to be in kind (e.g., counterpart staff, office space and secretarial services), and would ensure the full commitment of the commissioning agencies to the studies supported under the project. The estimated average cost per man-month for consulting services and professional staff for TIB (including salary, international travel and subsis- tence) would be US$8,000. Procurement and Disbursement 43. In the case of any consultants- contract expected to cost more than US$100,000 equivalent, the short list of consultants and their proposed terms of reference would be subject to prior approval by the Association (Paragraph 4 of Schedule 1 of the draft Project Agreement). TIB has standardized a format for consultancy contracts, in consultation with the Association, but in cases where major deviations from the standard text were contemplated, even contracts expected to cost less than US$100,000 would be subject to IDA approval. Contracts for vehicles and equipment (expected to cost less than US$100,000 for the entire project) are not likely to attract international interest and would be arranged in accordance with the Government's own competitive bidding procedures which are satisfactory to the Association. 44. The credit would be disbursed against 100% of the foreign exchange costs and 80% of the local costs of consultancy contracts (including contracts with professional staff for TIB), vehicles and equipment, and training. Project Justification and Risk 45. Technical services financed under the credit would provide special- ized skills and assistance in identifying, planning and implementing projects in areas where Tanzania has little or no expertise. Special studies designed to improve the utilization of existing production facilities could result in significant increases in output, while the export marketing studies could result in identifying potential export products and markets in the short term and developing a more export oriented industrial sector in the longer term. The training to be provided under the credit should help to upgrade general project identification, evaluation and implementation skills in Tanzania, as well as increase the country's level of technical expertise in selected areas such as accounting and auditing. 1/ Except for US$100,000 for vehicles and equipment, the project would be exempted from identifiable taxes and duties.  - 15 - 46. However, the project is not without risks. The rate of commitment of the credit could be slow; some inappropriate sub-projects could be selected, while others could be poorly executed; and viable investments emerging from the studies could go unfinanced. These risks will be minimized, however, by the expertise acquired by TIB during the successful administration of the First Technical Assistance Credit, and by the increasing awareness among parastatals and Government Ministries of the potential benefits of proper monitoring and follow-up of studies. Furthermore, in order to oversee imple- mentation, all studies expected to cost over US$100,000 would be subject to approval by the Association. PART V - LEGAL INSTRUMENTS AND AUTHORITY 47. The draft Development Credit Agreement between the United Republic of Tanzania and the Association, the draft Project Agreement between the Association and the Tanzania Investment Bank and the Recommendation of the Committee provided for in Article V, Section 1 (d) of the Articles of Agree- ment are being distributed to the Executive Directors separately. 48. Special features of the draft Development Credit Agreement and draft Project Agreement are listed in Section III of Annex III of this Report. An additional condition of credit effectiveness would be that a subsidiary agreement between the Government and TIB, acceptable to the Association, had been executed (Section 5.01(b) of the draft Development Credit Agreement). 49. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 50. I recommend that the Executive Directors approve the proposed Credit. Robert S. McNamara President Attachments Washington, D.C. July 17, 1980  -16 - ANNEX I Page 1 of 6 TABLE 3A TANZANIA - SOCIAL INDICATORS DATA SHEET TANZANIA REFERENCE GROUPS (WEIGITED AV5AGES LAND ARE. (THOUSAND SQ. KM-) - MDST RECENT ESTIHATE)- TOTAL 945.1 AGRICUITURAL 498.0 MOST RECENT LOW INCOME MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b AFRICA SOUTH OF SAHARA AFRICA SOUTH OF SAHARA GNP PER CAPITA (US$) 70.0 120.0 230.0 228.9 726.2 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 41.0 62.0 65.0 80.0 699.4 POPULATION AND VITAL STATISTICS POPULA'ION, MID-YEAR (MILLIONS) 10.2 13.3 16.9 URBAN IVPULATION (PERCENT OF TOTAL) 4.8 6.9 10.8 17.3 28.9 POPULA1'ION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 32.0 STATIONARY POPULATION (MILLIONS) 92.0 YEAR STATIONARY POPULATION IS REACHED 2145 POPULATION DENSITY PER SQ. FM. 11.0 14.0 18.0 27.4 61.7 PER SQ. EM. AGRICULTURAL LAND 21.0 26.0 34.0 82.6 126.0 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 42.7 44.4 45.7 44.9 45.5 15-64 YRS. 54.3 52.5 51.2 52.2 51.6 65 YRS. AND ABOVE 3.0 3.1 3.1 2.8 2.8 POPULATION GROWTH RATE (PERCENT) TOTAL 2.2 2.7 3.0 2.7 2.7 URBAN' 5.0 6.3 8.9 6.8 4.9 CRUDE BIRTH RATE (PER THOUSAND) 47.0 47.0 48.0 47.4 46.8 CRUDE DEATH RATE (PER THOUSAND) 22.0 19.0 16.0 19.6 16.4 GROSS REPRODUCTION BATE .. 3.2 3.2 3.2 3.2 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. .. 93.6 USERS (PERCENT OF MARRIED WOMEN) .. .. FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 95.0 104.0 91.0 91.8 94.0 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 85.0 91.0 89.0 90.2 92. 7 PROTEINS (GRAMS PER DAY) 44.0 49.0 49.0 53.0 53.0 OF WHICH ANIMAL AND PULSE 17.0 21.0 21.0 18.4 15.6 CHILD (AGES 1-4) MORTALITY RATE 32.0 25.0 20.0 27.7 21.3 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 42.0 47.0 51.0 45.3 50.1 INFANT MORTALITY BATE (PER THOUSAND) .. 155.0/c . ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAI .. 13.0 39.0 23.2 31.0 URBAN .. 61.0 88.0 58.0 66.8 RURAI .. 9.0 36.0 16.8 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPbLATION) TOTAI .. .. 17.0 28.9 URBAN .. .. 88.0 67.0 RURAI .. .. 14.0 POPULATION PER PHYSICIAN 21020.0/d 24770.0 15450.0 30910.4 14508.2 POPULA9ION PER NURSING PERSON 10440.0/d.e 3830.0 2760.0 5793.2 3279.5 POPULATION PER HOSPITAL BED TOTAI 570.0/d .. 440.0 1198.9 1141.5 URBAN .. .. RURAL .. .. ADMISSIONS PER HOSPITAL BED .. .. HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAI .. 4.4/c URBAN .. 3.2/ RURAI 4.'SI 5.3 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL . . .. . - URBAN .. .. RURAL .. .. ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. .. URBAN .. .. RURAL .. ..  - 17 - ANNX I TABLE 3A Page 2 of 6 TANZANIA - SOCIAL INDICATORS DATA SHEET TANZANIA REFERENCE GROUPS (WEIGHTED AVERAGES - MOST RECENT ESTI ETE MOST RECENT LOW INCOME MIDDLE INCOME 1960 /b 1970 Lb ESTIMATE /b AFRICA SOUTH OF SAHARA AFRICA SOUTH OF SAHARA EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 25.0 38.0 70.0 57.7 61.7 MALE 33.0 46.0 79.0 74.2 69.2 FEIALE 18.0 30.0 60.0 54.1 51.4 SECONDARY: TOTAL 2.0 3.0 3.0 10.0 20.6 MALE 2.0 4.0 5.0 13.7 29.2 FEMALE 1.0 2.0 2.0 7.1 14.7 VOCATIONAL ENROL. (D OF SECONDARY) 23.0 .. .. 6.8 7.0 PUPIL-TEACHER RATIO PRIMARY 45.0 46.0 50.0 45.0 36.6 SECONDARY 20.0 19.0 20.0 25.2 24.3 ADULT LITERACY RATE (PERCENT) 9.5jd 28.1/c 66.0 25.5 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 3.0 2.5 2.7 3.6 38.8 RADIO RECEIVERS PER THOUSAND POPULATION 2.0 11.0 19.0 31.5 83.5 TV RECEIVERS PER THOUSAND POPULATION *- 0.3 *- 1.8 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER ThOUSAND POPULATION 3.0 5.0 4.5 4.6 24.2 CINEhA ANNUAL ATTENDANCE PER CAPITA 0.5 .. 0.2 .. 0.7 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 4734.5 5841.7 7035.0 FEMALE (PERCENT) 37.1 36.6 34.0 33.5 38.1 AGRICULTURE (PERCENT) 89.3 86.0 83.0 80.7 54.3 INDUSTRY (PERCENT) 3.8 5.0 6.0 8.1 17.8 PARTICIPATION RATE (PERCENT) TOTAL 44.7 43.5 42.2 42.2 38.8 MALE 56.9 55.7 54.3 55.1 48.4 FEMALE 32.8 31.5 30.3 29.5 29.4 ECONOMIC DEPENDENCY RATIO 1.0 1.1 1.2 1.2 1.3 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS .. 33.5 HIGHEST 20 PERCENT OF HOUSEHOLDS .. 63.3 LUWEST 20 PERCENT OF HOUSEHOLDS .. 2.3 LOWEST 40 PERCENT OF HOUSEHOLDS .. 7.8 POVERTY TARGET CROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 147.0 138.2 RURAL .. .. 109.0 86.1 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 125.0 107.0 RURAL .. .. 74.0 65.0 ESTIMATED PUPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 10.0 RURAL .. .. 60.0 66.9 Not available Not applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1974 and 1978. Ic 1967; /d 1962; /e Registered, not all practicing in the country. April, 1980  - 18- ANNEX I Page 3 of 6 DEFINITIONS OF SOCIAL INDICATORS Notes: Altho-gh the data are doomDoom noro enral judged the moot autherittive and relisbim, it should sleo be noted that they nay not be inter- nainll opaal heoius a the lakofsadardisd deietti-e and -on-pte aced bY differeot oareeioletngthe data. The data one-,no- theists,.. usful to deoie rdero Of eaaOitode, indi-tnetrnndm,..ad oh-nt.ti-ln nertein stjor d iffeen..a ht..eeO..n.etes.. The referen ..tgrutn re(I the same ooetYry grony o"fithe aujet eatry end (2) eean..try greup with mosewbat higee aveag ioon thee the natry geoup ofteslen onr (enp oe"aia Oupo Ol aotes grou where "Middle nom North Aftrin and Middle teen" is ohesen b..aaae ef etenbger senio-naltral afftntina) . In the referenoe groop data the . avragesare pouaInasetdaiebet en o abidotredsonol hea leas t half Of theIInrs i ru aadt o hatidi_etoe. .an the noeag f noon trie a-n the tedioators dependa on the analbilityo dat an.d it non unifor,o tnsethaenedi relag avereg- of one tedon ert toaP te These s -res r only _efal no o...y.riogthe -at- ofon ldinater an aties among the nonotry and refarenne groPs. LAND AREA (thouseod sq.ke.) 'elto eo yn ta-ryaoanAneAbvsernpating n- Total - Total erfana area nonpiniag laad ure:ad in1lalnd ognern. a toLav qutfo o edolnho tunuriylyl AuTnutrl-Oest fernlua reae.eprnl rpreetly yeuaioo - e q urinaPerfe P11iopulaton d divde by uebr. of yroiniepe fnr orys, pstueeo sarhe and hinhn gardeno or no lie follow; 1977 dan.t elsan ftsal gIduatenu.reoI, PortInaInrses adaaliv nroeI. GNP PER CA-PITA (US$) - GNP P- ..pi,.PoplatIon eri-to Ital tdkettotl,..rha.-a rual - lPoa ianioe(total 0fl FEd b CAIIIA (alol - tihfdpe Papit oa t ..ke Ati narn 9na e78e pr.ine196, nalrvhn, andicral) dinidad by theim .. rep-tifs..n.shr Of honpital hede n1late byIn onrin ehdo od 1Oah7tls 1d6-8 bni);191, avilable In publin aad private general and npeoialierd hospital Indr- 1910, and 1978 dane. ba~hbilitationenes fePtnaunetabliamente Permanetly staffed byatleat one pbyeiien. faI IbIaheIapodn plnplyoutia ENlPIT CONSUOMPTIONf PElt CAPITA - An...al .nuouptino of nomee-ia1 energy fo-l taeaent inoldd Piral boeitt. oh nr,Ild beapleban sdya end lignint, psaroleom, neaaral gao andydro- na...ear sod geotherma9l dn- rentr no -era tly staffed byia phyatinis fbo by a ,dfo ssstnt trOint) in hllogrem of no.. qalvlen Pee napia.; 1960, 1970, and 198 nterso.ieie i. tbtbpffr i-a etaondno n end deta. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~Ilimted esnee of sedinl1 fen1ittien. Par enetietina1 parpemee nrba bhapi- POPOULAION ANO VITAL STATISTICSOI _ d H l.i. .r1- .il.dh.i. Idrr T-El Population nod-veer (milliona) - As of July 1; 1960, 1970. and 1978 hidaaitene Jpee Heota ned. h-pitoEl numbe ofi- adoii- tourt durharees. date, ,t iron beaPitola divided by the ..mh. of bde UOrhan' Pouato ("I on ofttl)-Pto bfu n totoa papulatine;OfbI difonidefnnoeo_ubnaessy effete _Parobility Of data HOUSING aengnunls 19ff, 1970, and 1978 dan.tAeerOe fOoeed .rosorbaeed.-ttl ra,adrrl Population PrAof..an.tfiona ( .. b.,In nr1 00 - C-P.- P.Pnl.ti.n - b ... d A lease hold tnoniots of aNgru of dindIiduals who ahar living qoertsra Porlaio i yar200 Crrntpoultin roeoios rebaedon190 Ind hI mana -s A beerde,,r or lode o or osy not be ioloIdadi Projennton parasnera for sorteliy rasnpieofbtnlannu-- Average n,mbr Of PIernone per room- tonl. ra,tn.ua Ieaewn lovel and emal lif upnnen d ni`blen art 77..yarh hepar- helig 1 repe:fnely nwtitnnutnnprannPnvotrI n seet o foiln rasds aetra seoa ao dentliny iednnnpitd rte i lirhooro Pryte ocy asiguod oar of. ibng nine POntmrynatPuo oft mortly Cunninldelig ihaeoron olvng qI artveprne g and fentiltay trends for proirraine purposen. o Th p.rO b.rf tonal, arba, aod ' ruraldel-b.iee In reaprie.1 ..id'-t lialonar fooouitioe-IoaP-ainn-y populationter a 0grwhlt ma _arane.Tis In ilchinved, Inod plar fertiliy rute.. deJ. O Adotdftlenfto terpanethlve o an har -epouniuo ..i.t rate ohe e .. getrati A... Priar soboo "i total, male en fsme.lleIro- total, mal and female- Ind oh erlol- n tert o lnto etlity rantIno replare-Pyears- hat adusedfu Idff ren egihy of primary P dnIioe forrt Tsa sttioaryroplaion Iarehd- h ereenouirr pIpulatontiine ths papia are egewtoheio- the lin ffinPi_l ehnlas thie brhas It bee roabe.l Psoohdud-thbo-t-etota,dmale ndtfenae - Comuted.us...o; eCondar to.n . orinP . ..d.. .. d.talard.usalyof 11 ir.1teri fag;ore od neruss r eeal Perso,ha.agroulura ledf Th'one asi abov fry agrtnultaea lan ennudndd, -orl ttorAg Onruhobnuoe o ( threPO) - Chl-dre 0l yeas) colig-g (11l legodetehnia t iutriol PP-rr oner ergrm whil oper-a tdpe-t lar; 290,090, and 1978 l 1dli.O ftlty.. dae.Pooltanerrai -orsay_ad ePIdr -Oof uetnerildi ouaion rohRae(rra)-onl-Anagotbreaottlod- Primary adsneaylvl tin ynmesp eneai h lanionn fur 1950-60, 1960-TO,h aadI 1970-n78.1' - -.d 10 pl-n It i- --h.d - Th. y- h.O t.,i ..s.penennas oftotaladul popuatio age 10bI'ti yehe1 enSoe. populealen; 1960, 1970, and 1978 data. _C_10ntl7Indf8PT-Illpf!d . b-; .P.d.r Pnpulairn 190,190 uody 197f.l.i. pnta oar sea..-r . ting lees. Itha eIgh.t parsons; O ppenuea dam planoe y ieare -tiand betnrml reod.i.yra.I hepren reo g-pn nfr ai Ieelnyr (per2 thousand. O goelatr P- Al typao It 0g ...er fr. rld nltoyaa; eal finnd-p ear pertgd enIn in- 1961 1970,tt and 1977. ro d det,ngnrlpbi e huan fppltO;snoe ni Pamly PlVoo_a-llrs.(Ren11_.ftearedrcumn) -fern..tge ofmarrid noanrietIbolishditttisi.g Ponen of..AR Stil-hearia g (11-94. Chnlrs)ol u0ee yhiril-noanr d...ne toI R inrs(rtoan orialete)-T PRe nr fo ~hroadpneai todp all marrie cnde io ir. n age.r.Id-r .P. . troop. generel.n- i .d pobhlinper tiodsat ppathon euldsalnardT eevr 1.ti.n; 1960, 1970, Ind 1978 d.tewnare Cirulslenfee nbu Iad oeeinon); -T.tne thedavrge nirrula-i nainl v e prdnr prim60 196nhaD; I9n-d 17, n 1 97M_dis, nd moile ndit. PPer arta2 ,,,oih of1 (paon... (ternetbo-A.lg.t . of rebareenn) pCopued ro Ineergy equivalent _ of9net7fendIsuppliesPyevaileple-in -Litntry.per(na. pine.LAt.RdP-it. pet a.Ai ial sple nsnn dnai roaio, mot ls oelLbrPonp tosad)-rn.m..l rie esn, nldo qadaBirth Rin used in ....nd preteni.g AI Iowan binth distrie.u.. nd nqf ird- Dfiiton i various tnuot ie d aI e notp nonperab; 19hy , 1970 and noonsroteh, 960 teared Ind PA97hewd onpCsONgSUMPTdIornrmlOni-N90daa vrd.DIny .(.rt ...d AdhlinaidrgevrAne.nd.thal P eprtha.... body wight,y ge Poar (Cernet -Prt Female lao fnrns on. perenng- efona lu.. fote and sea distrihatio of popultion an loig10pretfr sn n Aritla (perineor( -h. ishn form ie farming od ey unig n household 1ea;16-5,07,ad197dt.f60n nprenaeo oallbrfre; 1960.1970 and 1978 danad ten. nupply nffo e ay. Net suppl of dOnodtin deIe aaan1 s andrl -nti :iy a n e spretg fttllbrfre 90 vutreenuto for all r ...ntngen eaaltdiby OiA provid foe0 nioou 1971 nod 1970 data... i alownn of 0 ram o tota hroel .proda adi 0 n...f nia and"P Rndinipanrio-n Rate ther.e.a. d top.tal, ml.edCsiP teiuo puine onvei, of d 1 10 rams hould e onial yrtrtn. b onestand ard ar bee o tos of 75 h grum . of) toa protei and 0l ofre y.e...yeae rnnrtda tonal male an fsae abr nona ,: inrid Pond OrIo; 91-1 197 ad 1977 data. p-lyP-i. rgr-.1960 1970, and1975 dte,ihes are in LI' h. yrn,inipaniurenneflenid Chl _ags1h)ri attlae yrrhuad - annalidnd-aper tousad In TV the. total labso fth ne,,, ,,,i, V ir . r. age group 1-h yoare, no rhiodreng... in iblilopagehg...ap; for, soan developing noun- r FOODlAN daTRTa eIveOvN lf e;16.170ad17 aa I8COO DOTIIT diOhS!i,t. f V.t._ t lif tnenaocanOlth yern -neagnohe ofprm f ifreta1i969peneidribet1 patrnennponrsn0p nrtod,ndJ.Ipntie di 00 peten P1Idt11 OfI~ ..dPrd.ti. ..In.. ..dIndf.. In li.ti. d t.dpriPil t.rof rbe-eseP..oiddtaI Infat..MOntAiim r hie perI thuad)bl- Annual..i deetb ioftotat under ownf. yea . -.lAt.d..P CPtr Y-o-oon..TAROnI CR0b170 of ag pr. -1ouaad liv bgg othe pEs111I~111,lllyi ntisake Abslaa Poery nrm Len. IS Dr apne r--ubnad ua Atones to late bner ( rros of _ooaieht ; - tonl,7uha, ad rural. - bouepnea.os eeli htimmeiolblwabri Iia tune noh a thn fom ratnte heehots,epnogs en saitay alls as feniare Reanie Pveri lone Leel RI-RerCa ite-d nde an rualt do.no htetl in sed an fodtproyott.ionn pn f h dyi fnrinbing the ~ i isimaedPerlai . -ro nAsltei. Itnrt tatem Level freopen19 -arInd P--d by FAU b... d I. ph adIine - erentofpoplaianfobeIandrual)wh_ar "bsout por" rura -, numbrrbt pe.Ople (totl, rise, and roru p..served fhyItoren diyoalinpeoetaeno their61 r1970 lo Ind pulonloon.fi foorIetpId..it. Enfnt- nieb, andr. 19nial late ilvi9vion pocal natrld horlet aiddbnnIa,titr t:il.ftdol f pereant intnnnmty(Ir L rf.rio fialyisg and Pr-jtiors o lep risn "t d P.r d.y. M.t npply of f d ..e I b.- R.- f.r..; 960,Ipil, 198 ofhumarrprrtaanOff ne-na tobyaaerhnrneynUI vAp.1. foriheaseof-tiiy -o ndg...p-tg~o .t1I ti prir odnriu 'TnttaIn2lSanuooia 17 - 178d..  TANEAN 1A Page 4 of 6 Sc8tc Oeuais0p0 t Data Sheet 1972 1973 194Actual 1eo976na 17 1_ _Projected 19iO72 ;A Tilt 3$ss itts Sacs. of 1972 193 97 19)5 1976 1977 17979 1979 1980 1985 1990 ____ 17 9-GDP A. NATIONAL ACCOUNTS (Millon 00 S at 1977 Prices) 1. GDP 2773.9 2662.2 3004.7 3119.4 3364.1 3542.4 3734.1 3890.2 4069.7 5105.8 6502.3 5 0 4 7 4.9 100.0 2. Gates fre= Te-s of Trade (TT) -161.0 -207.5 -348.9 -345.7 -69.9 -116.1 -135.2 -174 5 -223.4 -251.8 -27. 4 -3.3 3. Groos Destic [scene 2612.9 2454.7 2655.8 2773.7 3294.2 3426.3 3598.9 3715.6 3846.2 4854.1 6223.9 5.6 4.4 5.1 96.7 4. Imports 1084.7 1010.8 895.4 839.4 751.0 802.4 1063.9 904.8 924.7 1102.8 1330.4 -5.9 4.1 3.8 22.7 5. Osparta - Voles 1054.7 1004.5 741.3 734.5 824.5 686.3 674.7 700.8 746.4 907.0 1164.7 -8.2 3.5 5.1 19.4 6. Exports- T adjusted 893.7 803.3 546.5 493.7 681.1 884.3 539.5 526.3 522.9 655.2 886.3 -5.2 -0.6 6.2 19.4 7. lesorco Cap - TT adjusted 191.0 207.5 348.9 345.7 69.9 116.1 524.4 378.5 401.8 447.6 444.2 . . . 3.3 8. Total C.ns.wptin 2163.0 1986.3 240 .1 2555.0 2654.9 2986.6 3404.5 3421.1 3540.6 4371.5 544b.3 6.6 4.9 4.5 84.3 9. Ievesc,sent 640.9 692.2 755.7 669.3 635.7 671.9 718.9 673.1 707.4 930.0 1319.8 1.0 4.2 5.6 19.0 10. Natienal SavIngs 430.4 464.5 304.1 314.2 476.4 537.1 325.0 412.0 416.6 617.9 951.7 1.1 1.9 9.0 15.2 11. Oanestle Savings 449.9 468.4 252.7 218.7 639.3 439.7 194.4 294.6 305.6 482.5 775.6 -0.4 1.2 10.0 12.4 12. GDP at current US $ 1564.1 1866.2 2239.1 2564.4 2761.4 3542.4 4335. 4686.5 5393.1 9941.7 16603.0 17.8 13.8 13.3 B. SECTOR OUTTUT (Sh-rs of GDP at 1977 Price-l- 1. ladustry 16.3 17.5 16.0 15.1 14.4 13.8 13.0 12.7 12.3 12.3 13.2 1.3 3.1 6.4 2. Agrioulture 51.1 54 0 46.8 49.6 50.4 51.0 50.8 50.4 50.1 48.3 47.1 4.7 3.8 4.4 3. S-rvlce. 32.7 28.5 37.2 j6.4 . 35.3 35.2 36.2 36.8 37.6 39.3 39.6 6.3 6.0 5.1 C. PRICES 1. Ripen Price Index 36.4 43.3 64.2 63.6 76.7 100.0 91.0 95.9 102.5 142.2 190.8 22.4 4.5 6.0 2. Impact Price Index 43.0 54.1 87.1 94.6 92.8 100.U 113.8 127.7 146.3 196.8 250.7 18.4 8.8 5.0 3. Tenfs of frde 84.7 80.0 73.7 67.2 82.7 100.0 80.0 75.1 70.1 72.2 76.1 4. 01Df Deflator (US 5) 56.4 70.1 74.5 82.2 82.1 100.0 116.1 120.5 132.5 194.7 286.1 12.1 8.7 8.7 5. Average sexhange Rate (TSh/US3) 7.143 7.021 7.143 7.414 8.379 8.274 7.689 D. SELECTED INDICATORS 1972-77 1978-85 1985-90 1. ICOR 4.40 3.91 3.72 2. Import El.s icity -0.22 0.11 0.77 3. Average Doe-tic Savings Rate 17.2 7.3 11.4 4. Average Nntion-l Savi. Sl Rats 19.0 10.9 13.8 5. Marginal Nstieal SuringN Rate -.24 0.27 0.25 6. Inport/GDP 29.8 23.2 20.9 7. Inveat-ent/GDP 2.40 18.9 19.4 8. R.seuree Gap/GDY 7.8 9.4 8.0 - PU/LPrrv Prey. E. PUBLIC FINANCE- Actul, Actoul Est. (Million OS.tllngs) 1965/66 1972/73 1973/74 1974/75 1975/76 1976/77 1977/70 1978/79 1. Current Revenue 716 2357 3023 3946 3919 5250 6082 6702 1.1 Tas -e.eno. 602 1927 2510 3161 3302 4644 5317 5721 2. Cvrreot Expenditure 707 2223 2785 3961 3716 5022 5847 7670 3. Government S-aings 9 134 238 .15 203 228 235 -969 4. Forsign GOnsts 62 214 377 469 626 709 1250 5. Surplus Av-ilable for Fin-neiog Develeasent Espe-ditre 196 452 362 672 894 944 281 6. Develop-ent Expenditure 238 956 1642 2225 2253 2763 3585 5057 7. Ov-rall Deficit - -760 -1190 -1863 -1581 -1869 -2641 -4776 8. Fitn.cing of the Deficit EXter-nI Le ns 83 456 467 661 564 777 660 1200 Dens-ttc Berrosings; Basking S'stn- .. 269 521 834 570 . 464 3195 Other .. 25 202 368 447 .. 1517 581 17 IS 1966 prices and 1977 Itdex bass year. EAlDA 2/ CGetrul Gareenment. JIou.ry 3, 1980  Annex I TANZANIA Page 5 of 6 Balance of Payments and External Assistance (Million 'OS) A,tua1. Preliminary Projection 1972 1973 1974 1975 1976 1977 1978 1979 1980 1985 1990 A. Summary of Balance of Payments 1. Exports (incl. NFS) 384.3 434.6 476.0 467.0 632.1 686.3 613.9 672.0 765.2 1289.4 2222.0 2. Imports (incl. NFS) 466.1 546.8 779.8 793.8 697.1 802.4 1210.7 1155.3 1353.2 2170.2 3335.5 3. Resource Balance -81.1 -112.2 -303.8 -326.8 -65.0 -116.1 -596.8 -483.3 -588.0 -880.8 -1113.6 4. Net Factor Service Income -5.9 7.4 -5.2 -7.3 21.5 -18.7 -24.6 -47.5 -66.5 -137.0 -266.8 1. Net Interest Payments of which: 3.2 11.2 8.9 -3.1 -17.9 -16.4 -15.8 -37.8 -55.9 -119.8 -239.2 (Interest on Public M & LT Loans) (-11.1 (-12.5) (-13.6) (-16.2) (-19.5) (-22.1) (-24.7) (-27.8) (-35.0) (-121.8) (-250.2) 2. Direct Investment Income 3. Workers Remittance (Net) ) -9.1 -18.6 -14.1 -4.2 -3.6 -2.3 -8.8 -9.7 -10.6 -17.1 -27.6 4. Other Factor Service Income (Net) 5. Current Transfers (Net) --4.2 5.0 45.2 92.9 55.4 116.1 175.0 195.0 218.4 384.9 678.3 6. Balance on Current Account -91.9 -114.6 -263.8 -241.2 -31.1 -18.7 -446.4 -335.8 -436.1 -632.8 -702.0 7. Private Direct Investment 0.0 0.0 0.0 0.0 0.0 5.0 5.4 5.7 6.1 8.6 12.0 8. Capital Grants 14.0 18.6 6.5 34.9 2.9 13.9 0.0 0.0 0.0 0.0 0.0 Public M & LT Loans 9. Disbursements 1/ 109.5 113.6 161.3 249.5 122.4 177.8 173.2 210.5 10. Amortization 17 -34.2 -23.7 18.8 -18.0 -21.9 -26.4 -26.8 -54.8 11. Net Disbursements 1/ 75.3 89.9 142.5 231.5 100.5 151.4 146.4 155.8 12. Use of IMF Resources 0.0 0.0 60.3 25.2 23.7 8.8 17.0 30.0 13. Short-term Capital Transactions 7.2 -17.9 7.5 -5.1 -38.3 35.1 60.0 120.0 14. Capital Transactions, n.e.i. 54.8 49.0 -47.4 -30.1 -10.8 -26.0 0.0 0.0 15. Change in Reserves (- = increase) -59.4 -25.0 94.4 -15.2 -46.9 -169.5 229.0 24.3 B. Grants and Loans Commitment 1. Official Grants 2/ 9.8 23.6 51.1 127.8 119.0 130.0 200.0 216.0 2. Public M & LT Loans 65.4 107.1 260.4 151.8 194.1 197.3 225.3 269.9 2.1 IBRD - - 65.0 30.0 37.0 53.0 25.0 66.0 2.2 IDA 10.8 22.6 61.2 10.0 52.0 49.2 73.5 63.0 2.3 Other Multilateral 3.3 1.8 7.1 18.0 10.8 33.5 27.6 18.2 2.4 Goverments, of which: 47.1 82.8 127.1 93.7 82.7 61.3 98.3 30.0 Centrally planned economies 4.9 3.0 76.5 5.4 - - 2.6 - 2.5 Suppliers - - - - - - - 80.0 2.6 Financial Institutions 4.2 - - - 11.7 0.3 - 10.0 2.7 Bonds 2.8 Public Loans, n.e.i. 3/ - - - - - - - 2.8 3. Other M & LT Loans (where available) 26.4 18.6 5.6 2.9 6.0 - - C. Memorandum Items 1. Grant Element of Total Commitments 49.2 83.4 63.1 56.4 66.6 56.8 45.5 32.8 Average Interest 3.6 0.6 2.3 3.0 2.2 3.2 4.5 5.4 3. Average Maturity (Years) 28.1 47.8 32.2 31.9 38.8 35.1 32.8 25.5 1/ Includes financing of projected balance of payments deficit (1979-1990) on blend Bank/IDA terms. 2/ Excludes technical assistance grants. EAlDA 3/ Represents commitments to cover projected balance of payments deficit. January 2, 1980  Annex I TANZANIA Page 6 of 6 DebtI and Creditworthiness Actual 1972 1973 1974 1975 1976 1977 1978 A. Medium and Long-Term Debt (Disbursed only) (US $ Million) 1. Total Debt Outstanding (DOD: End of Period) 441.7 557.1 728.3 917.1 1029.2 1123.4 1213.1 2. Including Undisbursed 835.5 987.3 1280.5 1359.0 1555.9 1649.3 1806.4 3. Public Debt Service 43.3 39.3 32.4 34.1 41.6 48.4 49.6 3.1 Interest 11.1 12.3 13.6 16.2 19.5 22.1 24.7 4. Other M & LT Debt Service .. .. .. .. B. Debt Burden 1. Debt Service Ratio 11.3 9.3 6.8 7.3 6.6 7.1 7.8 2. Debt Service/GDP 2.8 2.1 1.4 1.3 1.5 1.4 1.1 3. Public Debt Service/Government Revenue 14.7 10.3 6.6 6.4 7.6 7.0 5.8 C. Terms 1. interest on Total DOD/Total DOD 2.5 2.2 1.9 1.8 1.9 2.0 2.0 2. Total Debt Service/Total DOD 9.8 7.1 4.4 3.7 4.0 4.3 4.1 D. Dependency Ratios for M & LT Debt 1. Gross Disbursements/Imports (incl. NFS) 23.5 20.8 20.7 31.4 17.6 22.2 14.5 2. Not Transfer/Imports (incl. NFS) 16.2 . 1 29.2 1 3. Net Trans{er/Gross Disbursements 68.8 7. HA 92.8 82. 85 25 E. Exposure 1. IBRD Disbursements/Gross Total Disbursements 16.9 19.1 10.4 21.0 14.0 17.2 17.8 2. Bank Group Disbursements/Gross Total Disbursements 19.4 21.8 14.0 28.2 37.2 37.8 31.6 3. IBRD DOD/Total DOD 12.2 13.4 12.4 15.4 15.1 16.3 17.3 4. Bank Group DOD/Total DOD 23.1 23.8 21.1 24.2 25.7 29.3 31.3 5. IBRD Debt Service/Total Debt Service 10.2 15.3 20.4 26.4 34.1 33.1 40.5 6. Bank Group Debt Service/Total Debt Service 11.1 16.3 22.5 28.4 36.5 35.5 43.5 Outstanding December 31.I1178 Amount Percent (US $ Million) F. External Debt (Disbursed Only) 1. IBRD 209.9 17.3 2. Bank Group 379.2 31.3 3. Other Multilateral 61.2 5.0 4. Governments 714.1 58:9 of which Centrally Planned Economies 317.3 26.2 5. Suppliers 16.5 1.4 6. Financial Institutions 18.8 1.5 7. Bonds 20.3 1.7 8. Public Debt, n.e.i. 1/ 3.1 6.3 9. Total Public M & LT Debt- 1/ 1213.1 100.0 10. Total Public Debt (iml. undisbursed)- 1806.4 148.9 G. Debt Profile 1. Total Debt Service 1979-83/Total DOD Znd of 1978 60.5% 1/ Includes Tanzania's notional share of 40I of EAC debt. EAIDA 2/ Represents DOD on loans to cover projected balance of payments deficit. January 2, 1980  - 22 - ANNEX II Page 1 of 17 THE STATUS OF BANK GROUP OPERATIONS IN TANZANIA A. STATEMENT OF BANK LOANS AND IDA CREDITS TO TANZANIA AS OF MAY 31, 1980 (US$ million) Amount leRe zancellation No. Year Borrower Purpose Bank 1/ TW IDA 1/ Undisbursed Five loans and thirteen credits fully disbursed 77.2 91.2 287-TA 1972 Tanzania Smallholder Tea 10.8 1.0 371-TA 1973 Tanzania Fourth Education 10.3 1.6 382-TA 2/ 1973 Tanzania Livestock 18.5 1.8 454-TA 1974 Tanzania Cotton 17.5 8.3 460-TA 1974 Tanzania Tanzania Investment Bank 6.0 0.1 1014-TA 1974 Tanzania Cashewnut 21.0 1.7 495-TA 1974 Tanzania Sites and Services 8.5 1.8 507-TA 1974 Tanzania Highway Maintenance 10.2 2.4 508-TA 1974 Tanzania Rural Development 10.0 4.8 1041-TA 1974 Tanzania Sugar 9.0 0.9 580-TA 1975 Tanzania Dairy 10.0 5.8 1128-TA 1975 Tanzania Textile 15.0 2.1 1172-TA 1975 TIB Tanzania Investment Bank 15.0 1.5 601-TA 1976 Tanzania Technical Assistance 6.0 2.4 606-TA 1976 Tanzania National Maize Program 18.0 11.0 607-TA 1976 Tanzania Fifth Education 11.0 6.4 1306T-TA 1976 Tanzania Power 30.0 7.8 1307-TA 1976 Tanzania Forestry 7.0 3.6 652-TA 1976 Tanzania Fisheries 9.0 7.7 658-TA 1976 Tanzania Tobacco Processing 8.0 1.3 1354-TA 1977 Tanzania Urban Water Supply 15.0 9.4 1385T-TA 1977 Tanzania Morogoro Industrial Complex 11.5 3.6 1386-TA 1977 Tanzania Morogoro Industrial Complex 11.5 3.3 703-TA 3/ 1977 Tanzania Rural Development (Tabora) 7.2 5.6 732-TA 1977 Tanzania Second Sites and Services 12.0 11.3 743-TA 1977 Tanzania Trucking 15.0 10.7 1498-TA 1977 TIB Tanzania Investment Bank 15.0 5.4 801-TA 1978 Tanzania Second Cashewnut 27.5 10.4 802-TA 1978 Tanzania Tobacco Handling 14.0 13.7 803-TA 1978 Tanzania Rural Dev. (Mwanza/Shinyanga) 12.0 10.9 1607-TA 1978 Tanzania Morogoro Textile 25.0 24.9 833-TA 1978 Tanzania Morogoro Textile 20.0 18.5 860-TA 1979 Tanzania Tourism Rehabilitation 14.0 14.0 861-TA 1979 Tanzania Sixth Education 12.0 12.0 875-TA 4/ 1979 Tanzania Mufindi Pulp and Paper 30.0 28.7 1650-TA 4/ 1979 Tanzania Mufindi Pulp and Paper 30.0 30.0 876-TA 4/ 1979 Tanzania Fifth Highway 20.5 20.5 1745-TA 1979 TDFL Tanganyika Development Finance Co., Ltd. 11.05 10.3 1750-TA 1979 TIB Tanzania Investment Bank 25.0-/ 24.6 S-24-TA 4/ 1979 Tanzania Dar es Salaam Port Engineering 2.5 2.5 987-TA 1980 Tanzania Tanzania Rural Development Bank 10,0 10.0 1007--TA 1980 Tanzania Pyrethrum 10.0 10.0 1015-TA 1980 Tanzania Grain Storage and Milling 43.0 43.0 Total 276.7 41.5 494.3 407.3 of which has been repaid 9.8 - 7.9 Total now outstanding 266.9 41.5 486.4 Amount sold 0.1 of which has been repaid 0.1 Total now held by Bank and IDA 1/ 266.9 41.5 486.4 Total undisbursed 117.7 11.4 278.2 407.3 1/ Net of exchange adjustments. 2/ Includes Norwegian participation of $6.2 million of which $5.6 million has been disbursed. 3/ Amount excludes Canadian participation of $4.8 million. 4/ Not yet effective 5/ Excludes $15.0 million EEC Special Action Credit being administered by IDA.  - 23 - ANNEX II Page 2 of 17 B. SUMMARY STATEMENT OF BANK LOANS FOR COMMON SERVICES GUARANTEED BY KENYA, TANZANIA AND UGANDA AS OF MAY 31, 1980 (US$ million) Loan Amount (less cancellations) No. Year Borrower Purpose Bank 1/ Undisbursed Five loans fully disbursed 93.4 638-EA 1969 EAHC Harbours 35.0 0.5 674-EA 1970 EARC Railways 42.4 0.1 865-EA 1972 EAHC Harbours 26.5 0.9 914-EA 1973 EAPTC Telecommunications 32.5 O09 1204-EA 1976 EADB Development Finance 15.0 5.4 Total 244.8 7.8 of which has been repaid 56.4 Total now outstanding 188.4 Amount sold 24.4 of which has been repaid 24.4 0.0 Total now held by Bank 1/ 188.4 Total undisbursed 7.8 7.8 1/ Net of exchange adjustments.  - 24 - ANNEX II Page 3 of 17 C. PROJECTS IN EXECUTION 1/ (AS OF MAY 31, 1980) There are currently 37 projects under execution in Tanzania. AGRICULTURAL SECTOR Credit No. 287-TA - Smallholder Tea Project: US$10.8 million Credit of March 3, 1972; Date of Effectiveness - July 26, 1972; Closing Date - December 31, 1980 After initial serious management problems, the Tanzania Tea Authority (TTA) has finally reached a satisfactory level of senior staffing and this has had a clear impact on the working of TTA and resulted in improved control over field activities. Factory engineers have been appointed for all factories. Because of weak extension and poor farm practices in the past, about 1,600 ha of the 9,671 ha planted since 1971 must be infilled or rehabil- itated, and yields have been lower than anticipated. In line with the 1976 survey of the tea industry, additional planting has been carried out and effective rehabilitation and infilling has been achieved except in the Bukoba area. Recommendations of the survey regarding crop yields, husbandry tech- niques, field organization, TTA structure and extension activities are also being implemented. Furthermore, market trends in tea have taken a favorable turn. In general, progress on the project is improving. The closing date has been postponed to allow sufficient time for completion of the Mwakaleli factory. Credit No. 382-TA - Second Livestock Development Project: US$18.5 million Credit of May 23, 1973; Date of Effectiveness - September 28, 1973; Closing Date - December 31, 1980 This project was the subject of an in-depth review in November 1976 and again in January 1979. Although progress has been made in alleviating the financial problems of the meat processing parastatal (TPL), in correcting some of the deficiencies in the livestock marketing parastatal (TLMC), and in adopting some of the decentralized management recommendations in the ranching parastatal (NARCO), TPL will still need to improve its overall efficiency, and NARCO its unsatisfactory financial situation. In the meat processing component, the settlement of a dispute between the Livestock Development Authority (LIDA) 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution and in particular to report any problems which are being encountered and the action being taken to remedy them. They should be read in this sense, and with the under- standing that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution.  - 25 - ANNEX II Page 4 of 17 and the contractor should permit the completion of three meat plants in Kawe, Shinyanga and Mbeya by the end of 1980. There is little change in other project components, where major difficulties remain to be resolved. The Credit should be fully disbursed by the new Closing Date, December 31, 1980. Credit No. 454-TA - Geita Cotton Project: US$17.5 million Credit of January 17, 1974; Date of Effectiveness - April 5, 1974; Closing Date - December 31, 1982 The project continued to show good progress since the appointment in October 1977 of a new Project Manager. However, in view of the failure of the crop technical packages to give economic responses, the project must now be considered to be an infrastructure and adaptive research project rather than an agricultural production project. A major objective is now to develop a more soundly based and productive agricultural strategy. The most signifi- cant progress has been in the trial program with about 50 well distributed and supervised trial sites and improved credit recovery. Recruitment of staff has been more vigorously pursued since the Project Implementation Reviews began. Project problems remaining are the lack of senior staff, the shortage of extension staff, delay in deliveries of some equipment and financing of road construction. The project will continue to be kept under close review. Loan No. 1014-TA - Cashewnut Development Project: US$21.0 million Loan of June 24, 1974; Date of Effectiveness - September 26, 1974; Closing Date - December 31, 1981 Construction of the five factories and ancillary facilities is pro- ceeding well in accordance with the revised completion schedule. Processing plant and machinery has been delivered to two factories, and is under shipment for the remaining three. However, the project continues to face problems arising from a sharp decline in the marketed production of raw nuts. The producer price has been recently increased and the Cashewnut Authority (CATA) is considering the introduction of additional incentive and tree-planting schemes for farmers, but these measures are not likely to have a significant impact for several years. As a result, the completed cashewnut factories are expected to operate well below capacity through 1980/81. Credit No. 508-TA - Kigoma Rural Development Project: US$10.0 million Credit of August 21, 1974; Date of Effectiveness - November 20, 1974; Closing Date - December 31, 1980 Despite senior staff changes in the Region and continuing procure- ment constraints, construction of agricultural and other training facilities, as well as water supply and feeder roads, is proceeding satisfactorily. The coffee rehabilitation and expansion program, and the land-use surveying and mapping, are also making reasonable progress. While the keeping of crop records is not yet regular or systematic, there has been a substantial increase  - 26 - ANNEX II Page 5 of 17 in maize, bean and cotton production in the Project area. However, the village fertilizer trials have yet to produce conclusive results, and recommendations for recasting the trials are under review. The Project is not likely to be completed before June 30, 1982. Credit No. 513-TA and Loan No. 1041-TA - Kilombero Sugar Development Project: US$9.0 million Credit and US$9.0 million Loan of September 27, 1974; Date of Effectiveness - February 14, 1975; Closing Date - December 31. 1980 Project work is virtually completed except for purchase of some vehicles and completion of the sugar survey and the training program. In view of this, the closing date has been postponed by 12 months. Kilombero Sugar Company's (KSC) land development on behalf of outgrowers continues and is expected to exceed appraisal estimates due to lower than expected cane yields. A new management advisory agreement for a further two years with emphasis on agriculture will be financed by the Netherlands. Phase III of the Sugar Study has been started and should be completed shortly. With regard to the Sugar Development Corporation's request to Treasury to consider KSC's proposals as to its debt-equity ratio, the Treasury has decided to provide KSC TSh. 100 million as equity and TSh. 100 million as loan from Dutch/Danish sources. The loan will be at an interest rate of 7% p.a. with 30 years repayment including 5 years of grace. The Subsidiary Loan Agreement is under preparation and is expected to be signed by the Treasury shortly. Credit No. 652-TA - Fisheries Development Project: US$9.0 million Credit of July 12, 1976; Date of Effectiveness - October 12, 1976; Closing Date - December 31, 1981 The Project continues to progress on all fronts at a very slow pace. There has been a delay in the procurement of boats for the Kigoma Commercial Center, a major shortfall in the purchase of boats for the coastal centers and a postponement of procurement of lake transport facilities (pending adequate fish catches on Lake Tanganyika). However, engines for the coastal vessels have been received and are being assembled for installation and the first fully equipped boat should be operational by June 1980. Loans to five villages have already been approved by TRDB under the Ujamaa Village Program. Nego- tiations are also in progress with the Crown Agents of the U.K. for the pro- vision of technical assistance staff. Credit No. 606-TA - National Maize Project: US$18.0 million Credit of January 29, 1976; Date of Effectiveness - May 28, 1976; Closing Date - December 31, 1982 Although the project has made some satisfactory progress with regard to village participation, delivery of inputs and concentration of high poten- tial maize regions, it is beset by a number of problems which must be overcome if the project is to achieve its primary objective. Following a midterm  - 27 - ANNEX II Page 6 of 17 review of the project, the Government submitted in September 1978 draft pro- posal for a three year Intensification Phase in six regions where potential for increasing production exists, extending the project period from July 1979 to June 1982. The project has therefore been redesigned in order to intensify the project activities during the remaining period. The redesign of the project has been agreed upon by the Government, BADEA (the co-financier) and the Association. Credit No. 580-TA - Dairy Development Project: US$10.0 million Credit of August 15, 1975; Date of Effectiveness - November 13, 1975; Closing Date - April 30, 1981 There was some improvement in project implementation during 1979 as a result of stricter budget and cost control by the Livestock Development Authority (LIDA) and the Dairy Farming Company (DAFCO). Farm management is also improving and production costs per litre of milk are somewhat lower than in 1978. However, the financial prospects for the parastatal farms remain poor and Ujamaa village development is negligible. The Government is consider- ing alternative approaches to re-capitalization of the dairy farms and has also requested a reallocation of credit funds from Ujamaa village production to smallholder dairying. The project will continue to be kept under close review. Loan No. 1307-TA - Sao Hill Forestry Project: US$7.0 million Loan of July 12, 1976; Date of Effectiveness - October 12, 1976; Closing Date - June 30. 1982 After a slow start and serious management problems during the first year, project implementation has improved considerably and is now ahead of schedule. Plantation targets have been exceeded in spite of labor shortages, a lack of equipment and a prolonged drought during the last planting season. All key staff have been appointed and there are no serious procurement or disbursement problems. Credit No. 658-TA - Tobacco Processing Project: US$8.0 million Credit of September 16, 1976; Date of Effectiveness - February 15, 1977; Closing Date - December 31, 1981 Improvements to the existing line were completed except for instal- lation of the main circuit breaker equipment. Building work at Morogoro is proceeding satisfactorily. TAT/TTPC are preparing a properly coordinated building program to cover the balance of the project, and proposals are awaited from the Treasury rationalizing the financial and functional responsi- bilities of these entities. TAT's financial position is critical due to high bank overdrafts. The Treasury has agreed to reimburse TAT TSh. 29 million representing the local contribution it has spent on the project. In addition, TAT has also claimed TSh. 13 million from the Treasury to meet the cost incurred by them during 1977-78. TTPC's accounts for 1976/77 have been audited and the report is expected shortly.  - 28 - ANNEX II Page 7 of 17 Credit No. 703-TA and Credit No. 703-TA-5 - Tabora Rural Development Project: US$12.0 million Credits 1/ of May 11, 1977- Date of Effectiveness - November 11, 1977; Closing Date - June 30, 1983 Project implementation has slowed down considerably as a result of severe and continuing shortages of construction materials and diesel fuel. These shortages have affected all conponents, except land-use planning which is proceeding satisfactorily. The roads and water supply programs have been the worst affected and are also suffering from shortages of technical staff. The agricultural trials and production program, too, appears to have been disrupted by the recent drought. Project management is attempting to resolve the materials shortages by increasing the use of local substitutes. However, overall progress in institution-building is likely to remain slow. Credit No. 801-TA - Second Cashewnut Development Project; US$27.5 million Credit of June 14, 1978; Date of Effectiveness - October 2, 1978; Closing Date - December 31, 1984 Project implementation is progressing satisfactorily. Factory con- struction is ahead of schedule despite a shortage of cement. However, the appointment of key staff and the maintenance of up-to-date accounts at exist- ing cashewnut factories continue to pose difficulties. As with the First Project, the prospects for operation of the new facilities at full capacity are rather poor. Credit No. 802-TA - Tobacco Handling Project: US$14.0 million Credit of June 14, 1978; Date of Effectiveness - January 5, 1979; Closing Date - April 30, 1983 The project has made a slow start. Procurement of vehicles and equipment is also lagging. However, progress on recruitment of technical assistance has been good. The Building Engineer, Financial Systems Develop- ment Assistant and Transport Officer are all in post. Three suitable can- didates have been identified for the five posts of Regional Accountant and advertisement of the other two have been done. Credit No. 803-TA - Rural Development Project (Mwanza/ Shinyanga): US$12.0 million Credit of June 14, 1978; Date of Effectiveness - March 5, 1979; Closing Date - December 31, 1984 While some of the senior support staff have been recruited, most key posts remain to be filled, and although good progress has been made in the livestock, water resource and forestry components, the expected implementation of an experimental program of agricultural extension has not been initiated. 1/ Credit No. 703-TA-5 (US$4.8 million) is financed under the special CIDA arrangement; Credit No. 703-TA is an IDA Credit of US$7.2 million.  - 29 - ANNEX II Page 8 of 17 Future supervision missions will pay particular attention to progress made by the agricultural extension staff towards improving the extension system. The effects of the Uganda war are still being felt in the project's area causing problems for the supplies situation. EDUCATION SECTOR Credit No. 371-TA - Fourth Education Project: US$10.3 million Credit of April 13, 1973; Date of Effectiveness - July 2, 1973; Closing Date - December 31, 1980 All facilities have been completed with the exception of three Community Education Centers. The project is expected to be completed by the revised Closing Date of December 31, 1980. All completed facilities are in operation with the exception of the Bagamoyo College of National Education which will be used for the in-service training of primary school science teachers. Credit No. 607-TA - Fifth Education Project: US$11.0 million Credit of January 29, 1976; Date of Effectiveness - March 23, 1976; Closing Date - June 30, 1982 Progress in physical implementation is satisfactory. The Village Management Technicians training program is on schedule and will meet the target of 1500 trained technicians in July 1980. The primary education sub- sector review and the secondary education facilities survey are in progress. Preparation of diversified curricula for general secondary education and staffing plans for the project secondary schools are also in preparation. There are reasonable prospects that the project will be completed by its Closing Date. Credit 861-TA - Sixth Education Project - US$12.0 million Credit of January 22, 1979; Date of Effectiveness - June 25, 1979; Closing Date - June 30, 1985 This credit became effective on June 25, 1979. The Ministry of Labor has appointed a representative to the Project Unit and is working with the Ministry of Education on a plan for coordinating project implementation. TOURISM SECTOR Credit No. 860-TA - Tourism Rehabilitation Project US$14.0 million Credit of January 22, 1979; Date of Effectiveness - August 24, 1979; Closing Date - June 30, 1983 This credit became effective on August 24, 1979. Project implemen- tation is progressing satisfactorily. Recruitment of project coordinator is being finalized and the consultants for the rehabilitation of project lodges and hotels, have been appointed.  - 30 - ANNEX II Page 9 of 17 TRANSPORTATION SECTOR Credit No. 507-TA - Highway Maintenance Project: US$1U.2 million Credit of August 21, 1974; Date of Effectiveness - November 20, 1974; Closing Date - December 31, 1980 After a 81ow start, project implementation improved and all equip- ment procured through ICB has been delivered. However, rehabilitation, regravelling and routine maintenance activities have been seriously affected by the war in Uganda and by the termination of some expatriate technical assistance. However, it is necessary to recast the project by amending its scope to address the problems which have been encountered in its implementa- tion; these changes will bring the project in line with the Fifth Highway Project. The Closing Date has been postponed to December 31, 1980 to allow for completion of the project and the disbursement. The technical assistance contract with the consulting firm "ORT" expired in November 1979, and the Government is now recruiting individual experts to complete the project. Credit No. 743-TA - Trucking Industry Rehabilitation and Improvement Project: US$15 million Credit of November 3, 1977; Date of Effectiveness - April 3, 1978; Closing Date - June 30, 1983 Implementation planning is progressing well. Initial progress in the recruitment of technical assistance has been good, with 24 people in post or approved out of a total of 29. The project is experiencing some problem with equity contribution for the proposed project transport companies. The Treasury proposed to provide the balance of the equity contribution for 1979/80. The National Transport Coordination (NTC) has submitted a report to the Treasury regarding the availability and distribution of vehicle spare parts in recent years. NTC has also commissioned a study of the role and objective of the National Institute of Transport. The design of the transport data collection system is progressing well. Credit No. 876-TA - Fifth Highway Project; US$20.5 million Credit of March 2, 1979; Closing Date - December 31, 1984 This Credit is not yet effective. It is a continuation of the Highway Maintenance Project (Credit No. 507-TA) aimed at maintaining the national trunk road system and will draw upon experience gained during the previous project. PORTS SECTOR Credit No. S-24-TA - Dar es Salaam Ports Engineering Project: US$2.5 million Credit of February 27, 1980; Closing Date - June 30, 1980 This Credit is not yet effective.  - 31 - ANNEX II Page 10 of 17 URBAN SECTOR Credit No. 495-TA - National Sites and Services Project; US$8.5 million Credit of July 12, 1974; Date of Effectiveness - October 3, 1974; Closing Date - December 31, 1980 Infrastructure construction has been completed satisfactorily on all project sites. Construction of health facilities in Dar es Salaam is completed and ready of occupation. Education facilities for the Dar es Salaam sites have been completed; the rest of the community facilities in the project are nearing completion. Progress on the lending program administered by the Tanzania Housing Bank is slow although satisfactory progress is being made in the implementation of the action program to improve it. Total project cost is estimated (at current exchange rates) at US$15.9 million, compared to the appraisal estimate of US$16.7 million. The closing date has been postponed by six months to allow for completion of the remaining construction activities. Credit No. 732-TA - Second National Sites and Services Project: US$12.0 million Credit of November 3, 1977; Date of Effectiveness - April 3, 1978; Closing Date - June 30, 1982 Progress on implementation is satisfactory for the residential com- ponents although overall implementation progress is slow. Preparation of the small scale industry component is also making satisfactory progress. All project staff have now been appointed. The Consultants' report on the Land Rent and Service Charge Study was approved by the Government in January 1978 and a pilot test of the new Urban Charge System for cost recovery proposed in the study was carried out in Morogoro. However, progress in the implementa- tion of this system in other areas is slow. Disbursements are substantially behind appraisal estimates. These issues will be reviewed during the next supervision mission. WATER SUPPLY SECTOR Loan No. 1354-TA - Urban Water Supply Project: US$15.0 million Loan of January 5, 1977; Date of Effectiveness - March 2, 1977; Closing Date - June 30, 1981 Of the five main contracts for water supply works in Morogoro, con- tract for exploratory drilling at Mindu Dam site is completed, two contracts for plant (pumping and treatment) are in the stage of final inspection of goods prior to shipment to Tanzania, and two construction contracts were awarded in December 1978 and March 1979. Completion of the water works expansion is expected in February 1981, 21 months behind schedule, but a pilot operation is scheduled to commence in November 1980. Project cost is now estimated at US$27.6 million, 43% over the appraisal estimate of US$19.2 million. In December 1978, the Government approved an increase in its contri- bution to the project to cover the financing gap. Some progress has been made  - 32 - ANNEX II Page 11 of 17 towards creation of a parastatal national urban water supply authority and increase in tariff to maintain their levels in real terms at the level exist- ing in July 1976. Progress in project implementation and the expected large increase in project costs will have to be closely monitored. POWER SECTOR Loan No. 1306-T-TA - Kidatu Hydroelectric Project Phase II; US$30 million Loan on Third Window Terms of August 12, 1976; Date of Effectiveness - March 1, 1977; Closing Date - December 31, 1981 The project is financed by IBRD, SIDA and KfW. All contracts have been awarded. Project construction is on schedule at all sites. TANESCO has obtained approval on its tariff increase. Current estimated project cost is US$97.8 million compared to appraisal estimate of US$89 million, a cost over- run of 28%. This is mainly due to underestimation of the project costs by the engineering consultants. KfW has already increased its contribution to the project and SIDA has indicated that it would be prepared to increase its allocation to cover its proportionate share of the cost overruns. Plans to make any additional contribution by the Bank to bridge the gap is being reviewed. An EEC Special Action Credit (No. 55-7A) in the amount of US$7.0 million, to be administered by IDA, has been allocated to this project. INDUSTRIAL SECTOR Credit No. 460-TA - Tanzania Investment Bank Project: US$6.0 million Credit of February 13, 1974; Date of Effective- ness - April 18, 1974; Closing Date - June 30, 1980 This Credit has been fully committed. Because of a reallocation of funds from a subproject previously approved to a new one still under implementation, the credit is still not fully disbursed and the closing date has been postponed to June 30, 1980. Loan No. 1171-TA - Tanzania Investment Bank: US$15.0 million Loan of November 12, 1975; Date of Effectiveness - February 20, 1976; Closing Date - December 31, 1980 This loan is fully committed and disbursements are proceeding satisfactorily. Loan No. 1498-TA - Tanzania Investment Bank: US$15.0 million Loan of December 28, 1977; Date of Effectiveness - April 3, 1978; Closing Date - June 30, 1983 This loan is now fully committed and disbursements are proceeding satisfactorily.  - 33 - ANNEX II Page 12 of 17 Loan No. 1750-TA 1/ - Tanzania Investment Bank: US$25.0 million Loan of August 20, 1979; Date of Effectiveness - February 5, 1980; Closing Date - June 30, 1984 This loan became effective on February 5, 1980. Loan No. 1128-TA - Mwanza Textile Project: US$15.0 million Loan of June 19, 1975; Date of Effectiveness - October 6, 1975; Closing Date - July 1, 1980 The project provides for expansion of an existing textile mill and is designed to increase annual fabric production capacity by 20 million linear meters. Project implementation performance has been acceptable and all tech- nical installations are now operating satisfactorily. The National Textile Corporation (TEXCO), the holding company for state-owned textile mills, has agreed to institute an immediate action program to improve the operating performance of existing mills. The project was technically completed in October 1978 with a savings of about US$1.7 million. In order to utilize this amount for rehabilitation of the existing facilities, which are essential parts of the project, the Closing Date was postponed by one year to July 1, 1980. Credit No. 601-TA - Technical Assistance Project: US$6.0 million Credit of January 9, 1976; Date of Effectiveness - September 14, 1976; Closing Date - June 30, 1980 Total commitments as of March 31, 1980 were US$4.74 million (net of cancellations) for consultancy services, training and project unit services. The procedures for processing proposals have been streamlined and are working well. The credit will be fully committed by December 1980. The Government has requested a postponement of the Closing Date to June 30, 1981. Loan No. 1385-T-TA/Loan No. 1386-TA - Morogoro Industrial Complex: US$11.5 million Loan on Third Window Terms and US$11.5 million Bank loan, both of April 6, 1977; Date of Effectiveness - July 6, 1977; Closing Date - December 31, 1982 Project implementation is proceeding satisfactorily in spite of some initial delays in the appointment of consultants and start-up of pro- curement. Although there will be some delays in the start-up of individual components of the Industrial Complex, completion of the project is still scheduled for July 1982. Revised capital cost estimates are only slightly higher than those contained in the Appraisal Report. 1/ In addition, a US$15.0 million EEC Special Action Credit in support of this project is being administered by IDA.  - 34 - ANNEX II Page 13 of 17 Credit No. 833-TA/Loan No. 1607-TA - Morogoro Textile Project: US$20.0 million Credit and US$25.0 million Loan of June 29, 1978; Date of Effectiveness - May 7, 1979; Closing Date - June 30, 1985 This loan and this credit became effective on May 7, 1979. Prep- aration of tender documents are progressing satisfactorily and no delay in project completion is anticipated. Credit No. 875-TA/Loan No. 1650-TA - Mufindi Pulp and Paper Project: US$30.0 million Credit and US$30.0 million Loan of April 6, 1979; Closing Date - December 31, 1983 This loan and this credit became effective on April 15, 1980. Loan No. 1745-TA - Tanganyika Development Finance Company, Ltd. (TDFL) Project: US$11.0 million Loan of July 27, 1979; Date of Effectiveness - November 1, 1979; Closing Date - December 31, 1983 This loan became effective on November 1, 1979. About 70% of the loan amount has been committed. EAST AFRICAN COMMUNITY There are currently five projects in execution in the East African Community. 1/ Loan No. 638-EA - Second Harbours Project: US$35.0 million Loan of August 25, 1969; Date of Effectiveness - December 16, 1969; Closing Date - December 31, 1977 Loan No. 865-EA - Third Harbours Project: US$26.5 million Loan of December 18, 1972; Date of Effectiveness - April 16, 1973; Closing Date - June 30, 1978 The Second Harbours project included financing for five general cargo berths and a single bay tanker terminal for the Port of Dar es Salaam; two general cargo berths and a bulk cement wharf for Mombasa; tugs, lighters, 1/ Since October 1, 1977, the East African Community loans (excluding the East African Development Bank) have been disbursed on the basis of separate national guarantees. The agreed allocation of undisbursed balances for each loan, as proposed in a report to the Executive Direc- tors dated December 29, 1977 (R77-312) and approved on January 12, 1978, is given in this Annex. The closing date for Loans 638-EA, 674-EA and 865-EA have passed. However, since the amount allocated to and guaran- teed by each Partner State is clearly identified under the terms of the Agreement signed on January 25, 1978 as proposed in the above report (R77-312), we are continuing disbursements.  - 35 - ANNEX II Page 14 of 17 cargo handling equipment, offices, housing and general improvements for both ports. The Third Harbours project included three new deep water berths, modernization of two berths and a lighterage quay, a training school build- ing and central repair area for Dar es Salaam; modernization of several berths and a lighterage quay, construction of a tug berth, cold storage facilities and a training building in Mombasa and improvement of a lighterage quay in Tanga. Construction of all major project elements has been completed and a joint project completion report was issued in January 1979. Because of shortage of funds under both loans, the following minor project elements have not been submitted for Bank financing: the second phase of modernization of the lighterage quay and a training school for Dar es Salaam; modernization of the lighterage quay and a training school for Mombasa. Locally financed contracts have been awarded for these project elements with the exception of the modernization of the lighterage quay in Mombasa. General cargo throughput has increased above appraisal forecasts for Dar es Salaam, and cargo handling productivity has improved with increasing throughput; however, port labor productivity has stagnated in Mombasa where general cargo throughput has declined considerably. Legislation to establish a Tanzania Harbours Author- ity and a Kenya Ports Authority has been enacted. Management of Ports in both countries is competent. Some US$34.5 million of Loan 638-EA and US$25.6 million of Loan 865-EA has already been disbursed. The agreed allocation of undisbursed funds at October 1, 1977 between the countries concerned is given below: For Loan No. 638-EA (US$ million) Kenya 0.7 Tanzania 0.6 Total 1.3 For Loan No. 865-EA Kenya 1.7 Tanzania 0.3 Total 2.0 Loan No. 674-EA - Third Railways Project: US$42.4 million Loan of May 25, 1970; Date of Effectiveness - October 30, 1970; Closing Date - June 30. 1978 The original purpose of the project was to complete the Railways' 1969-1972 Development Program, including track improvement, procurement of rolling stock and other equipment, and to finance studies of the economic feasibility of certain railway lines and services. The physical execution  - 36 - ANNEX II Page 15 of 17 of the original project has been seriously delayed due to administrative and political problems within the Community. In November 1974, the Executive Directors approved a reallocation of the uncommitted balance of the Loan to be used for consultant services and emergency investments in track material. All three countries have now enacted legislation to establish their own Rail- ways Corporations. The agreed allocation of undisbursed funds at October 1, 1977 among the various countries concerned is given below: $ Million Kenya 2.0 Tanzania 3.8 Uganda 1.9 Total 7.7 On January 12, 1978, the Executive Director approved the utilization of US$1.2 million equivalent to finance the East African Mediation effort. This amount, in addition to US$0.5 million provided by UNDP for this purpose, is expected to cover the total estimated cost of the mediation service. Loan No. 914 EA - Third Telecommunications Project: US$32.5 million Loan of June 22, 1973; Date of Effectiveness - September 19, 1973; Closing Date - December 31, 1979 The project included provision for procurement of local telephone exchange equipment, cables and subscriber apparatus, microwave and UHF/VHF systems and multiplex equipment, interurban cables and wires, automatic switching and signalling equipment, telegraph, telex and data equipment, and training. All project items except the microwave radio system have been completed; this system is likely to be completed by mid-1980. The slippage of the project's completion was due to initial delays in procurement caused by staffing and other problems associated with the relocation of headquarters. About US$30.7 million of the loan had been disbursed to date. The agreed allocation of undisbursed funds as at October 1, 1977 among the countries concerned is as follows: $ Million Kenya 2.4 Tanzania 3.5 Uganda 0.1 Total 6.0  - 37 - ANNEX II Page 16 of 17 Loan No. 1204-EA - East African Development Bank: US$15.0 million Loan of March 1, 1976; Date of Effectiveness - June 7, 1976; Closing Date - March 31, 1980 The environment within the Community has continued to have a nega- tive impact on EADB operations. Level of operations both for appraisal and supervision has been depressed, but there has been some improvement in the state of the portfolio with the arrears affected portfolio falling from 50% as of June 30, 1977 to 43% as of June 30, 1979. Some US$9.1 million of the loan has been disbursed to date, and the uncommitted balance amounts to US$3.0 million.  - 38 - ANNEX II Page 17 of 17 D. STATEMENT OF IFC INVESTMENT IN TANZANIA AS OF MAY 31, 1980 Fiscal Year Obligor Type of Business Amount in US$ Million Loan Equity Total 1960 and 1964 Kilombero Sugar Company Food Processing 3.96 0.70 4.66 1978 Highland Soap and Soap Manufacture 1.38 0.36 1.74 Allied Products Limited 1979 Metal Products Limited Household Utensils 1.33 0.18 1.51 Total gross commitments 6.67 1.24 7.91 Less cancellations, terminations, repayments and sales 3.96 0.70 4.66 Total commitments now held by IFC 2.71 0.54 3.25 Total Undisbursed 2.71 0.54 3.25  - 39 - ANNEX III TANZANIA SECOND TECHNICAL ASSISTANCE CREDIT SUPPLEMENTARY PROJECT DATA SHEET Section I. Timetable of Key Events a) First presentation to the Association December 1978 and first Association mission b) Appraisal mission November 1979 c) Completion of negotiations June 1980 d) Planned date of effectiveness November 1980 Section II. Special Bank Implementation Actions None Section III. Special Conditions The Government and TIB will execute a Subsidiary Agreement acceptable to the Association (paragraph 41).