Uganda - Agricultural Rehabilitation Project

Document of e The World Bank h iU w FOR OFFICIAL USE ONLY i '' AtL CO' Y Report No. P-3455-UG REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN AN AMOUNT EQUIVALENT TO US$70 MILLION TO THE REPUBLIC OF UGANDA FOR AN AGRICULTURAL REHABILITATION PROJECT February 1, 1983 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit Uganda Shilling (USh) US$ 1.00 = USh 100.0 (First Window) US$ 1.00 = USh 250.0 (Second Window) USh 1.00 = US$ 0.01 (First Window) USh 1.00 = US$ 0.004 (Second Window) On August 23, 1982, the Government introduced a dual exchange rate coupled with a 5% devaluation of the official (First Window) exchange rate. The exchange rate in the Second Window is market determined through weekly auction and subject to fluctuations; it has steadily fallen from USh300 to the Dollar in August 1982 to USh250 to the Dollar in mid-November 1982. Conversions in the Staff Appraisal and President's Report have been made at the First Window rate, which is applicable to all external assistance projects. FISCAL YEAR Government of Uganda : July 1 - June 30 Uganda Commercial Bank: October 1 - September 30 ABBREVIATIONS AND ACRONYMS APC = Agricultural Policy Committee AS = Agricultural Secretariat CMB = Coffee Marketing Board CTB = Central Tender Board GDP = Gross Domestic Product LMB = Lint Marketing Board NTC = National Tobacco Corporation UCB = Uganda Commercial Bank UDB = Uganda Development Bank UTGC = Uganda Tea Growers' Corporation  FOR OFFICIAL USE ONLY UGANDA AGRICULTURAL REHABILITATION PROJECT CREDIT AND PROJECT SUMMARY Borrower: Republic of Uganda Beneficiaries: Uganda Commercial Bank (UCB) and Bank of Uganda Amount: SDR 63.5 million (US$70 million equivalent) Terms: Standard Relending (a) Government to UCB: up to 15 years, including 5 years Terms: of grace, at 6.5% annual interest; maturities eventually to match the aggregate of sub-loan maturities; and (b) UCB to sub-borrowers: up to 10 years, including grace periods of up to 3 years, at not less than 14% annual interest. The Government would carry the exchange risk against a charge of 1% per annum to be paid by the sub-borrowers. Commitment Fee: Standard Project The Project's objective of increasing foreign exchange Description: earnings from agricultural exports would be achieved through: (a) rehabilitation, financed through a line of credit to the Uganda Commercial Bank (UCB), of: about 20 coffee factories; 12 cotton ginneries; smallholder tea leaf collection facilities for the Uganda Tea Growers' Corporation (UTGC); tobacco curing barns; and processing facilities of non-traditional exports; (b) provision of imports, in line with the Government's Recovery Program 1982-84, required to sustain and increase the production of agricultural exports and livestock; (c) strengthening of the Government's pricing and resource allocation mechanisms by establishing and staffing an Agricultural Secretariat; and (d) improving marketing for coffee, cotton, and non- traditional export crops, including livestock, through detailed studies of their institutional framework and policy prerequisites. Risks: The main risk facing the project is the unstable security situation in Uganda. However, security has already improved considerably during the last year and is expected to improve further, especially as the economy recovers. The second risk is the possibility of delays in delivery of This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - It - project items and implementation of the project. The proposed implementation procedures, organization and management structure of the project are, however, designed to minimize the risk. The use of professional engineering surveyors and rehabilitation contractors within UCB are specifically important. Estimated Local Foreign Total Costs: -----(US$ million)