Announcement of Zambia Receives Eleven Million Dollars World Bank Loan for Agricultural Development in Eastern Province on May 22, 1981

FOR IMMEDIATE RELEASE . • world Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 81/102 May 22, 1981 ZAMBIA RECEIVES $11 MiLLION WORLD BANK LOAN FOR AGRICUlfURAL DEVELOPMENT IN EASTERN PROVINCE The World Bank announced today the approval of a loan of $11 million to Zambia for an agricultural development project in the Eastern Province. The project aims, over a five and a half-year period, to increase agri- cultural production and to raise the income levels and living standards of smal 1-scale farmers. It wi 11 provide improved research, extension, credit and input delivery services, finance improvements and expansion in processing and storage facilities, and help to eradicate the tsetse fly from an area of the province which remains infested. Technical assistance will be provided to strengthen the Eastern Cooperative • Union and to help establish the Zambia Agricultural Development Bank through which credit will be channelled to smallholders. The planning and monitoring activities of the office of the Provincial Permanent Secretary for the Eastern Province will be strengthened and a program of project evaluation wi 11 be supported. Among the services which will be improved are: research and extension, input delivery and storage, and credit. The extension service will be reorgan- ized into a "training and visit" system based on similar successful programs in other developing countries. Additional staff, housing, vehicles, and equip- ment will be provided. As a result of this project, about 26,000 farm families in the Eastern Province, or about a quarter of the traditional smallholder households, are expected to adopt improved cultivation practices for maize, cotton, sunflower, and groundnuts. Their incomes are expected to increase by up to 118%. Annual production is expected to increase by 16,500 tons of maize, 4,000 tons of cotton, 2,300 tons of sunflower, and 1,500 tons of groundnuts. At full development, foreign exchange savings of about $6.9 million is expected to be generated. The demonstration effect of strengthened institutions responsible for credit, research, and extension services in the Eastern Province is likely to benefit other agri- cultural regions in the country. The World Bank loan to Zambia is for 20 years, including 5 years of grace, with 9.6% interest per year. The International Fund for Agricultural Development is providing an $11 million Joan for this project and the Government of Zambia • is contributing $6.1 mi 11 ion . NOTE: Money figures are expressed in U.S. dollar equivalents.  -2- Zambia Agricultural Development Bank in agricultural development banking, program and. personnel development and training, and agricultural credit. A Senior Planning Of- ficer and a Senior Finance Offi~er will be recruited internationally to strengthen project administration. ECONOMIC RATE OF RETURN: 17% on crop production; 16% on tsetse control; 15% on inputs storage; and 12% on overall project investments. ESTIMATED COMPLETION DATE: 1987 -0- • • FORM NO. 1121 (5-76) T E C HN I CAL DA TA • PROJECT: COUNTRY: TOTAL COST: Eastern Province Agricultural Development Zambia $28.1 million BANK FINANCING: $11 million for 20 years, including 5 years of grace, and 9.6% interest per year OTHER FINANCING: International Fund for Agricultural Development, $11 mil- lion; Government of Zambia, $6. 1 million IMPLEMENTtNG ORGANIZATION: Provincial Permanent Secretary Eastern Province Ministry of Agriculture and Water Development P.O. Box RW 291 Lusaka Zambia Cable: MAWD, Lusaka, Zambia ' PROJECT DESCRIPTION: It aims to increase agricultural production and raise the incomes of small-scale farmers in the Eastern Province. It will include the provision of improved services: (a) Research: provision of additional staff, equipment, housing, transport, and operating funds for Zambia's agricultural re- • search program; (b) Extension: reorganization of the province's extension service into a "training and visit" system; additional staff and operating costs; vehicles and equip- ment; and staff housing and water supply; (c) Inputs: construction of storage facili- ties and financing of incremental inputs for smallholders; (d) Credit: funding of ad- ditional smallholder credit; (e) Technical Assistance: for the Zambia Agricultural Development Bank, the Eastern Co-operative Union, and for project implementation includ- ing monitoring and evaluation; (f) Processing: provision of mechanized groundnut shel- lers, construction of an insecticide packing plant, and additional storage and infra- structure at the Chipata cotton ginnery; and (g) Tsetse control: financing of a hand- spraying program to control tsetse flies in the Petauke District. PROCUREMENT: Contracts of $100,000 or more for the purchase of vehicles, machinery, and equipment ($2.5 million) will be awarded in accordance with World Bank guidelines on international competitive bidding. Vehicles, machinery, and equipment of less than $100,000 (up tc a total of $480,000) will be pur- chased under normal local procedures which are acceptable to the Bank. Domestic manufac- turers will be granted a preferential margin in bid evaluation. Civil works contracts ($2.6 million) .will be too small and scattered to attract international interest; pro- curement will be by contracts awarded after local competitive bidding in wh~ch foreign firms will be entitled to compete. The construction of shallow wells and rehabilitation of buildings, where this is not suitable for contractors, will be carried out by force account. Incremental requirements of fertilizer and pesticide would be bulked With over- all national requfrements and procured as at present, under normal government procedures acceptable to the Bank which include broad international tendering. • CONSULTANTS: A credit specialist will be recruited for the Eastern Coopera- tive Union, as will be five research staff, an extension/ management specialist, and a farm management specialist for extension services in the Eastern Province. Short-term consulting services will be needed in accounting, reporting, monitoring, and supervision. Arrangements have been made for technical assistance to the I • .•