Madagascar - Second Mangoro Forestry Project

Document of The World Bank FILE GOPY FOR OFFICIAL USE ONLY Report No. P-3073-MAG REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE DEMOCRATIC REPUBLIC OF MADAGASCAR FOR A SECOND MANGORO FORESTRY PROJECT May 22, 1981 This document has a restricted distribution and may be used by recipients only in the perfonnce of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. l  CURRENCY EQUIVALENTS Calendar 1980 January 1981 Unit Malagasy Franc (FMG) Malagasy Franc (FMG) US$1.00 = FMG 212.72 = FMG 209.98 FMG 1,000 = US$4.70 = US$4.76 FMG 1,000,000 - US$4,701 = US$4,762 (The cost estimates are based on US$1 = FMG 200) ABBREVIATIONS FANALAMANGA - Mangoro Forest Company (Project Entity) FOFIFA/CENRADERU - Center for Agricultural Research and Rural Development MDRRA - Ministry of Rural Development and Agrarian Reform FISCAL YEAR Government January 1 - December 31 FANALAMANGA July 1 - June 30  FOR OFFICIAL USE ONLY MADAGASCAR SECOND MANGORO FORESTRY PROJECT Credit and Project Summary Borrower: Democratic Republic of Madagascar Beneficiaries: Ministry of Rural Development and Agrarian Reform (MDRRA) and Mangoro Forest Company (FANALAMANGA) Amount: SDR 16.3 million (US$20.0 million equivalent) Terms: Standard Relending Funds transferred to FANALAMANCA by Government will be Terms: converted to equity. Project (i) Objective: The project would continue assistance to Description development by the government of a silvo-industrial complex in the Mangoro Valley. (ii) Main Project Components: The project components are: (a) Establishment of about 18,000 ha of pine and 500 ha of eucalyptus plantations, their maintenance and protection; (b) Maintenance and protection of the existing plan- tations (about 70,000 ha); and the maintenance of roads, buildings and infrastructure in the Project area; (c) The construction and maintenance of roads and buildings; (d) Pasture improvement; (e) Research and training; and (f) Studies for industrial development planning, and preparation of projects in the forestry and agriculture sector. (iii) Benefits: The project would assist the Government in developing a silvo-industrial program, expected to provide for the production of a mix of wood products of various sorts, such as woodpulp, sawnwood and wood chips. The proposed three-year plantation project would provide employment to 1,600 workers employed by FANALAMANGA, which is expected to increase after Project completion to about 5,000 as a result of logging and industrial operations. Unquantifiable benefits include the consolidation of the institution-building achieve- ments of the first forestry project, pasture improvement and benefits accruing to farmers in adjacent areas who sell their produce to Project workers. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without IFC authorization.  - ii - (iv) Risks: Given the success of the first project there are no unusual physical or managerial risks in the continua- tion of the afforestation program. The exploitation of the forests will require investments which Madagascar, depending on the option chosen, may have difficulty obtaining, thus delaying the industrial development. However, such a delay would affect only marginally the future return on the investment. Estimated Costs: Local Foreign Total