Tanzania - Grain Storage and Milling Project

Document of The World Bank FOR OMCLAL USE ONLY Report No. 11667 PROJECT COMPLETION REPORT TANZANIA GRAIN STORAGE AND MILLING PROJECT (CREDIT 1015-TA) FEBRUARY 18, 1993 Agriculture Operations Division South Africa Department Africa Regional Office 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.  ABBREVIATIONS CP FAO/World Bank Cooperative PRogramme CR IDA Credit CW Civil Works Constractor DM German Mark DSM Dar-es-Salaam GOT Government of Tanzania L Pound Sterling LGB Larger Grain Borer (a maize storage pest of American origin) MALDC Ministry of Agriculture, Livestock Development and Cooperatives MDB Marketing Development Bureau MM Contractor for Supplying NMC's Milling Machinery NMC National Milling Corporation PCR Project Completion Report PPD Plant Protection Division in MALDC PPF Project Preparation Facility PPMB Porject Preparation and Marketing Bureau SAR Staff Appraisal Report SW Contractor Supervising Civil Works and Machinery Installation TA Technical Assistance  FOR OFMCIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-General Operations Evaluation February 18, 1993 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Tanzania Grain Storaae and Millina Proiect (Credit 1015-TA) Attached is a copy of the report entitled "Project Completion Report on Tanzania Grain Storage and Milling Project (Credit 1015-TA)" prepared by the Africa Regional Office, with Part II contributed by the Borrower. The project failed to enhance the financial and technical efficiency of the Tanzanian grain marketing system through support to the National Milling Corporation (NMC). The NMC component was delayed and restructured four years after approval but this did not trigger the reforms needed to allow NMC facilities to operate profitably. While implementation of two institutional components to strengthen the agricultural policy mechanism and a pest control program were initially successful, they were not sustainable. Accordingly, the project is rated as unsatisfactory, its sustainability as unlikely and its institutional impact as partial. The PCR provides an accurate account of project implementation but understates the importance of the financial objectives--the acid test of NMC restructuring. There existed basic policy differences between the Borrower and IDA, which were not clearly reflected in the appraisal report and explain why the NMC component was considerably delayed and ultimately failed. The project may be audited in conjunction with the ongoing Agricultural Adjustment Project when the latter is completed. Attachment 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 authorizatlon.   FOR OFFICIAL USE ONLY TANZANIA GRAIN STORAGE AND MILLING PROJECT (CREDIT 1015-TA) PROJECT COMPLETION REPORT TABLE OF CONTENTS Page PREFACE ............................................................. i EVALUATION SUMMARY .................................................. ii-iv PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE ..................... 1. Project Identity ....................................... 1 2. Background ............................................. 3. Grain Marketing Policies ............................ 1 3. Project Objectives and Description ..................... 2 Objectives and Strategy ............................. 2 Project Description ................................. 3 4. Project Design and Organization ........................ 3 5. Project Implementation ................................. 4 6. Project Results ........................................ 5 7. Project Sustainability ...........................,.,.h 8. Bank Performance ........................................ 6 9. Borrower Performance ................................... 7 10. Project Relationships .................................. 8 11. Consulting Services .................................... 8 12. Project Documentation and Data ......................... 9 PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE ................ 10 PART III: STATISTICAL INFORMATION .................................. 14 Related Bank Loans/Credits ............................. 14 Project Timetable ...................................... 15 Loan/Credit Disbursements .............................. 16 Project Implementation ................................. 17 Project Costs and Financing ............................ 18 Project Results ........................................ 20 Status of Covenants .................................... 21 Use of Bank Resources ......................,,,,,. 23 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.   - i - TANZANIA GRAIN STORAGE AND MILLING PROJECT (CREDIT 1015-TA) PROJECT COMPLETION REPORT PREFACE This is the Project Completion Report (PCR) of the Grain Storage and Milling Project in Tanzania for which Credit 1015-TA for US$43.0 million equivalent was approved on 6 May 1980 and the Agreement signed on 15 May 1981. The Project became effective on 15 July 1981 for only two of the three components, i.e., assistance to the Marketing Development Bureau (MDB) and the Project Preparation and Monitoring Bureau (PPMB), which together accounted for only 13% of the total. The remainder covered strengthening of a parastatal, the National Milling Corporation (NMC), and only became effective on 31 October 1985 in an amended form after the entire project was redesigned in 1984/85 by an IDA/Government Task Force. The redesigned project no longer included financing of MDB and PPMB (disbursement for these components had been completed by the end of 1984, after which assistance to these two agencies was funded under the Fourth Technical Assistance Credit CR 2116-TA). Instead, it included (besides the support to NMC) a program to control on-farm storage losses of maize due to the Larger Grain Borer (LGB), a maize storage pest of American origin, and financing of the importation small-scale mills to be used by the private sector. The redesigned credit amounted to US$ 37 million. This PCR was prepared by the FAO/World Bank Cooperative Programme (CP) AF6AG and is based inter-alia on the appraisal and reappraisal reports; the Credit and Project Agreements; supervision reports; correspondence between the Bank and the Borrower; internal Bank memoranda; and data gathered through interviews by the CP mission which visited Tanzania in May 1992. The following documents were also used: (a) recent reports on cereals marketing in Tanzania by the Marketing Development Bureau (1991), by John Gray (report on a supervision visit under the Tanzania Agricultural Adjustment Programme, 1991), and by the Natural Resources Institute - UK (Coulter and Golob, 1991, Liberalisation of Cereals Marketing in Sub-Saharan Africa: Implementation Issues, Report No. 2: Tanzania - a Case Study); (b) National Milling Corporation Restructuring Study, Draft Final Report, 1991. (Price Waterhouse Africa and Tanna Somaiya & Co.); (c) various reports on LGB; (d) the OED on World Bank - Tanzania Relations, 1961 - 1981, January 16, 1990. The PCR includes comments from the Government.   - ii - TANZANIA GRAIN STORAGE AND MILLING PROJECT (CREDIT 1015-TA) PROJECT COMPLETION REPORT EVALUATION SUMMARY Objective 1.1 The project aimed to enhance the efficiency of the Tanzanian grain marketing system. The strategy to obtain this objective changed between the original design (1980), where this was to be done by simply improving the operation of the public monopoly (NMC), and the redesign (1985), where, in addition, some private sector involvement was sought. Implementation Experience 1.2 The total amount of the loan was US$43 million, of which NMC was to receive approximately 54%, and the remainder was to be spent on four separate components, as follows: in the original design, support for two units (the MDB and PPMB) in the Planning Division of MALDC; and in the redesigned project, support for a campaign to contain and control the spread of the LGB, and provision of foreign exchange for the importation of small-scale mills for use by the private sector. 1.3 The NMC component (paras 5.5 - 5.8) did not become effective until 1985, having been delayed for two reasons: (a) because the Government could not make up its mind whether to decentralize NMC, which was opposed by the Bank, and (b) because of Bank insistence (in the redesign) on involving the private sector, about which the Government had misgivings. Implementation of the NMC component was satisfactory in terms of disbursements (although delayed) but weak in complying with critical conditions which would allow NMC to operate profitably. Due to this and to operations beyond the project's scope, NMC's financial situation deteriorated to the point where, in 1990, the National Bank of Commerce denied it access to further overdrafts, and the Government terminated its erstwhile role in grain marketing and decided to restructure NMC technically and financially, as a milling enterprise only (under the Tanzania Agricultural Adjustment Programme, Cr. 2116-TA - Tanzania). Another area of concern regarding this component is that the Government has still not paid its portion to the contractors. This has occurred within the context of a shortage of funds which the Government faces. In addition, two unresolved contractual issues are still pending (paras 11.2 - 11.3). 1.4 Implementation of the other components was generally smooth and unhindered by major obstacles. The MDB and PPMB portions (para 5.2) were funded between 1981 and 1984, after which IDA funding was continued under another project. The main problems hampering both entities have been low morale of staff, due to low pay and limited scope for promotion, poor and cramped office facilities (MDB) and remote office location (PPMB).  - iii - 1.5 The LGB component has been largely effective, supporting a program to which the Government is itself (paras 5.3 - 5.4) heavily committed. However, its impact has been constrained by lack of spare parts for vehicles and motorcycles, frequent unavailability of insecticide, and difficulties in integrating post-harvest control into other important MALDC projects. By taking over the distribution of insecticides from the cooperative unions, MALDC has improved on this service, but ensuing hidden subsidies may inhibit private sector involvement. 1.6 The closing date for the redesigned project was extended three times. The project will be closed on June 30, 1992. Results 1.7 The economic impact of the project through its support to NMC (paras 6.1 - 6.2), cannot be estimated because the form of NMC and its cost structure in the post-restructuring phase are as yet unknown. However, the Bank used the process of project redesign as an effective vehicle for policy dialogue with the Government, which has had the important effect of encouraging the Government to allow some private sector involvement in grain marketing. Nevertheless, it might be queried whether the redesigned project was the most appropriate means to achieve this. 1.8 Support to MDB and PPMB (para 6.3) helped Tanzania to develop its policy formation capabilities, and to better plan and implement reforms under liberalization (Their services have remained in heavy demand). The small-scale mills component greatly reduced female drudgery and stimulated private sector development at a critical time. The overall impact of the LGB Programme since 1983 (para 6.6) was highly positive, according to a 1987 survey, but no impact study has been undertaken since. Sustainability 1.9 Sustainability of NMC will not only depend on its successful restructuring under TANAA and subsequent managerial competence, but even more on the absence of political interference (for which past performance does not bode well) (para 7.1). Sustainability for MDB and PPMB is a more important issue, and should be the object of decisive action by GOT and the Bank, through a formal commitment to long-term support. Findings and Lessons Learned 1.10 The Bank's strength was its use of the project in policy dialogue to promote policy reform, including support for key institutions involved in the policy-forming process; its main shortcoming was the decision to back NMC from the outset. Here the Bank did not take sufficient account of the overwhelming political constraints under which NMC operated, and would continue to operate, whatever conditions were formally agreed (para 8.1). The lesson here is to thoroughly appraise institutions within the political, administrative and policy environment in which they work before seeking to strengthen them. 1.11 On the other hand, the Bank knew that there was a high risk of failure with the NMC component of the project, but nonetheless pursued it as a vehicle for achieving a possible breakthrough in policy dialogue. In this context, this component should be considered successful - provided that there  - iv - was no alternative, less expensive and less cumbersome route to achieve this. A lesson that the Bank must learn from this is not to continue pursuing a course it initiated some time ago, without exploring new and more meaningful methods to achieve the same objective (paras 8.1 - 8.2). 1.12 The Borrower's strength was in the administration of the non-NMC components (para 9.1), while its principal weakness was its failure to fully and genuinely commit itself to the NMC component as outlined in the project documents, and to stop management and financial interference in NMC affairs. This was demonstrated by indecisiveness, lack of regard for conditions agreed to, and excessive intervention into the operational affairs of the Corporation. The lesson to be learned by the Borrower should therefore be not to commit itself to projects where it is not entirely in accord with their concept nor with the Bank's conditions (paras 9.2 - 9.3).   - 1 - TANZANIA GRAIN STORAGE AND MILLING PROJECT (CREDIT 1015-TA) PROJECT COMPLETION REPORT PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE 1. Project Identity Project Name Grain Storage and Milling Project Credit No. 1015-TA RVP Unit Africa Country Tanzania Sector Agriculture Sub-sector Marketing 2. Background Grain Marketing Policies 2.1 After the Arusha Declaration in 1968, the Government of Tanzania's (GOT) basic objective towards the agricultural sector was to develop an egalitarian agricultural community, based on policies of socialism and self-reliance. In the same year and in support of this objective, the Government formed the National Milling Corporation (NMC) by nationalizing the private milling companies. NMC was originally mandated to meet consumer demand for cereal flours and meals only, but in the early to mid- 1970s, it became the country's sole authorized marketing channel for food grains. It was made responsible for procurement, transport, storage and distribution of all food grains and staples offered for sale by farmers and the other parastatals, and for management of the national strategic grain reserve. Farm-gate as well as consumer prices for grains and processed cereals were fixed by the Government. Private trade was banned in 1968, although in practice it never entirely disappeared. 2.2 NMC was ill-equipped in terms of its managerial, technical, organisational and financial capabilities to deal with this mandate and its physical infrastructure. Moreover, its former commercial  -2 - character which continued just after nationalization, was lost and substituted by a strong socially-oriented approach, while it was subject to political influence at every level of decision-making. Frequent reorganization and a plethora of Government directives transformed NMC from a profitable milling company into a major loss-making venture, with financial losses of TSh. 1.3 billion to mid-1991, and storage losses claimed in the Bank's appraisal at 25% to 35% for storage in godowns. 2.3 The government wished to pursue its single-channel grain marketing policy in spite of NMC's difficulties and requested the World Bank to support its efforts. Within this context, the Bank appraised and approved the project and thus went along with the concept, although it was not in line with the Bank's thinking. The concept suited the Government's policy, which at that time was considered a prevailing criterion for the World Bank. 2.4 Nevertheless, the project did not really become effective due to Government's intended indecisiveness on the pending issue of restructuring NMC. The Bank made abandonment of the restructuring plan a condition of loan effectiveness. By the time the GOT eventually decided not to restructure NMC, but instead to reintroduce cooperative unions for procuring on NMC's behalf, the Bank had undergone a major philosophical change. It did not go along with the Government's approach as before, but instead chose to actively promote the liberalization process. It also insisted on a less stringent monopolistic approach and demanded a role, albeit minor, for the private sector. This was eventually accepted, and the project was redesigned within a framework of compromise between the Government and Bank policies. The project gave the Bank "a foot in the door" through which it was able to pursue a policy dialogue with the Government and thereby promote the cause of liberalisation. This may have opened up Government's attitude and made it more receptive for structural adjustment, which eventually matured under TANAA. 3. Project Objectives and Description Objectives and Strategy 3.1 The project's objective was throughout to enhance the efficiency of the food grain marketing system. In the original design, this was to be achieved through two intermediate objectives. These objectives were: (a) a short-term objective - to improve NMC's low efficiency by rehabilitation of stores and mills, and creation of additional capacity at critical locations; (b) a longer-term objective - to get NMC to function efficiently and economically without subsidies. This would be achieved mainly through training and technical assistance (institution-building), leading to correction of NMC's financial position and to clarification to Government of the costs of policies affecting the food sector. This would result in better policy-making, particularly in respect of pricing policies, supporting NMC's long-term development. 3.2 The redesigned project objectives were similar to those of the original project with regard to the improvement of NMC, but it also sought to enhance food marketing efficiency through specific measures directed at involving private traders. Moreover, project approval was made conditional upon GOT steps towards liberalisation of grain marketing, specifically the free issuing of permits for the transport of grain (each licensed trader was authorised to move, but not to store, up to 500 kg at a time). During that current season (1985/86), permits were issued for the movement of at least 10,000 tons.  -3- Project Description 3.3 The original project (1980) would improve NMC's operations through: rehabilitation of storage facilities; new storage facilities; tarpaulins and sheets for open storage; pilot programs for controlled open storage and dryers; maize mill construction, rehabilitation of mills, a central laboratory; transport; and training and technical assistance. It would also provide support to two units within the Planning Division of the MALDC, the Marketing Development Bureau (MDB) and the Project Planning and Monitoring Bureau (PPMB). With FAO contracted as manager of this component, these two units were to assist in marketing policy studies and financial monitoring of the project. 3.4 The redesigned project (1985) mainly reflected the Bank's insistence on an increased role for the private sector in competition with NMC. The redesign was to provide for rehabilitation of stores and mills; installation of new mills; technical assistance and training (mainly in accounting, grain quality and storage, construction, milling and maintenance); quality and pest control; rehabilitation of contract mills; provision of foreign exchange for the importation of small-scale maize and rice mills; and support for the containment and control of LGB. 3.5 With the exception of the Small-Scale Mills and the LGB components, the project was to be carried out by NMC, while disbursement monitoring was to be done by PPMB, with NMC's Planning Division monitoring NMC's specific components. The Bank of Tanzania and PPMB were to carry out jointly the Small-Scale Mills component, and the Plant Protection Division (PPD) in MALDC was to be responsible for the LGB component, the execution of which was to be contracted out to FAO for a two-year period after which PPD was to take over the operation. 3.6 Project costs of both the original and redesigned project are detailed in Part III, Table 5A. 4. Project Design and Organization 4.1 As mentioned above, the original design fitted well with GOT's policy at the time. However, its critical flaw was to expect the institution-building activities to eventually lead the Government to accept policy changes in which it did not believe (see para 3. lb). In the light of Government attitudes and political realities, such an expectation was unrealistic. 4.2 Additionally, due to the Bank's acceptance of the single-channel marketing system, no apparent consideration was given to other options for achieving a more efficient marketing system, particularly liberalization. Could not NMC's enormous storage losses have been reduced by greater reliance on on-farm and private sector storage, within a liberalised trading framework? Failure to consider such options is puzzling, given that in 1979, the Bank had stressed the need for "the elimination of inefficiency resulting from the centrally planned and public sector-led approach involving a plethora of parastatal organisations - -" (Tanzania; World Bank-Tanzania Relations, 1961-1987, Jan. 16, 1990). 4.3 At redesign (1984/1985), the concept of assisting NMC was still not convincing. On the one hand, GOT had shown more flexibility on policy matters than before, as was demonstrated by its acceptance of a role, albeit minor, for the private sector in grain marketing as reflected in the project. It also agreed to concentrate its procurement in the main production areas. It had also mandated the end of subsidies to parastatals (but did not comply in NMC's case). On the other hand, Government was in the process of reinstating the cooperatives (abolished in 1976), which was a concept similar to the NMC decentralization plan which the Bank had not accepted in the first place.  4.4 The other aspects of project design were support to Tanzania's policy-forming capability, through funding of MDB and PPMB, the encouragement of small-scale private milling, and the LGB component. All these aspects were justified in terms of the overall project objective. The two bureaus had to be financed by a World Bank agricultural project, and Cr. 1015 was the only one available at the time. The LGB component was financed because this pest could have had detrimental consequences for maize in Tanzania and the region. 5. Project Implementation 5.1 For implementation, the project was divided into the NMC and the non-NMC components (MDB, PPMB, Small-Scale Milling and LGB). 5.2 Implementation of the non-NMC components was relatively smooth and unhindered by major obstacles. The Credit portion for MDB and PPMB became effective three months after the signing date, when their funding was taken over from the previous World Bank Maize project under (Cr. 606- TA), and was continued up to December 1984, when they were then absorbed under another World Bank project (Fourth Technical Assistance Project, Cr. 1524-TA). The major problems which have been hampering both bureaus have been low morale (due to low pay and limited scope for promotion), poor and cramped office facilities (MDB), and remote office location (PPMB). 5.3 While implementation of the small mills component presented no major issues, the LGB component seems to have been only partially effective. The Bank started to assist the on-going LGB containment and control program after Phase I was completed (in 1987) by funding, providing chemicals and insecticides, spraying equipment, vehicles and bicycles, and Technical Assistance (the total Bank amount disbursed is US$ 3.5 million). The Government places a high priority on LGB containment and in 1986 enacted legislation to limit its spread. Some 60% of PPD are staff reported to have been directly involved and 50% of the annual budget has been used for this program. 5.4 Four problems have been noted in the LGB component. First, lack of spare parts for motorcycles and vehicles have often left MALDC personnel and extension workers grounded, especially at district level and below. Second, the frequent unavailability of insecticides at village level proved a major problem between 1987 and 1990, due to unwise reliance on the cooperative unions for the purpose of distribution. Third, while this problem has now been largely resolved by MALDC, assuming the distribution role, no provision has been made for private sector involvement. MALDC is able to sell to farmers at low prices due to a number of hidden subsidies, which are likely to inhibit the private sector's ability to compete. PPD claims that the private trade is too underdeveloped to achieve widespread distribution, but there is a danger that present policies will simply perpetuate that situation. Fourth, it has proved difficult to integrate post-harvest control into other major agricultural development projects, which themselves compete for the same staff resources at MALDC. 5.5 In contrast to the non-NMC component, implementation of the NMC component was affected by more significant problems. First, the original project could not become effective since Government could not make up its mind on the decentralisation issue which hung over NMC even before signing (see para 2.4). Finally in 1982, the Government decided that it would not decentralize NMC, but would instead reinstate the previously abolished cooperatives to fulfill the main procurement function of NMC, as part of a single-channel marketing system. In light of liberalization policies which were then being promoted by the Bank in Africa, the Bank changed its stance and made acceptance conditional upon the Government taking first steps towards liberalization. Negotiation on this issue took some time and the redesigned project was signed and became effective on the same date October, 31 1985.  - 5 - 5.6 Apart from procurement problems and ensuing delays in the construction aspect, implementation of the redesigned project went relatively well in terms of disbursements, once this part became operational (see Part III, Table 3). The conditions and covenants of the agreement were not properly complied with and several issues are still pending. These issues involve Government not coming up with funds to refinance NMC's losses due to Government policies, NMC not being allowed by Government to close its branches in the non-surplus areas, etc. (see Part III, Table 7). 5.7 With regard to NMC itself, the project was a failure. This was largely due to Government's continual interference and dubious investments by NMC management (notably the creation of a retail distribution system in Dar-es-Salaam and purchase of additional rice mills). By 1990, NMC had outstanding debts of TSh 15.4 billion to the National Bank of Commerce, which in July denied NMC access to further overdrafts. At about the same time, the Government terminated NMC's role in grain marketing and restricted its activities to milling. It is now to be technically and financially restructured under the Agricultural Adjustment Credit (Cr. 2116-TA). 5.8 Another area of concern with the NMC component is the fact that the Government still has not paid the local contribution to the three contractors. It is understood that the Government has made provision in its budget for the necessary funds (TSh 83 million) to fulfil this obligation. However, the civil works carried out by the contractor had many defects which have recently been rectified without additional charge. It would also appear that the supervisory contractor for the contracted works has not been up to standard (see para 11.4). 5.9 Finally, the closing date for the redesigned project was extended three times. The project was eventually closed on June 30, 1992 (see Part III, Table 2). It should also be mentioned that the executing agencies' fulfillment of their accounting and auditing obligations was far below par. 6. Project Results 6.1 Once cannot assess the economic impact of the project through its support to NMC, because the form of NMC and its cost structure in the post-restructuring phase are as yet unknown and cannot be estimated. The only observation that can be made is that the project's investments for NMC's rehabilitation are likely to generate a favorable return, since without them much of NMC's infrastructure would have become unusable. 6.2 The project has also had a favorable impact by encouraging official recognition of the private sector's role. This is highly significant in view of Tanzania's grain market liberalization since that time, and the major improvement of grain marketing which has resulted. Moreover, the cost of supporting NMC was high, increasing Tanzania's indebtedness by approximately $ 24 million, not to speak of the cost in Bank and GOT staff time. 6.3 Project support to MDB and PPMB in the years 1981 through 1984, had a substantial impact, as it allowed Tanzania to continue developing its policy formation capabilities. The services of these units have remained in heavy demand both with GOT and with donors, and have made it possible for GOT to better plan and implement its reforms under liberalization. Separate PCRs for the FAO technical assistance projects through which FAO managed this component are now being prepared by GOT and FAO. 6.4 According to PPMB staff and other sources, the small mills have fulfilled their objective and have had a positive impact on milling technology in Tanzania, particularly in rural areas, although  - 6 - the number imported has been less than estimated in the redesigned project. This reduced female drudgery and stimulated private sector development. 6.5 As regards the LGB Programme, it has been widely observed that farmers have changed their practices (shelling their maize and using appropriate insecticide) as a result of extension messages, and this is supported by an extensive survey undertaken in Western Tanzania in 1987, showing an adoption rate of around 60%. However, this reflected the situation at the end of Phase 1, before the World Bank got involved. A study by Coulter and Golob (see Preface) indicated that in the Southern Highlands, diffusion of available knowledge on improved storage practices is still very patchy. While this program has benefitted from some positive leadership, an underlying problem appears to be insufficient presence of PPD on the ground to support and motivate extension staff, including resources to assist with repairs of motorcycles, etc. 6.6 The impact on human resource development in NMC did not reach expectations, except in the area of milling. The state of the accounts leaves much to be desired, notwithstanding the four experts provided under the project. (For example, reliable cost data are unavailable for individual mills.) The project has had a positive impact on human resource development in the other project components, but this is diminished by problems of motivation and retention of staff, particularly with MDB and PPMB (see para 7.2). 7. Project Sustainability 7.1 Sustainability of NMC is difficult to discuss because the organization as originally appraised no longer exists. Nonetheless, the buildings and plant funded under the project will be operated by a restructured NMC, with a view to eventual privatization. Sustainability will depend upon the successful restructuring of NMC and the competence of its new management, but even more on the absence of political interference, in which regard the slowness in closing down unprofitable branches and selling off unneeded warehouses is foreboding. 7.2 Sustainability is a serious problem facing MDB and PPMB, and is essential in view of the strategic value. Their prospects for survival without donor support, which they have received for the past 21 and 13 years, respectively, are low. Staff morale has been adversely affected, by the low salaries (basic remuneration being one-sixth or less than that of the private sector) and the poor working environment. Although certain arrangements have been made to counteract this problem (bus services, opportunities for training and consultancies, flexible time-keeping etc.), they are still second best. They absorb an inordinate amount of management time, and engender an opportunistic outlook among staff, whose best efforts are often devoted to securing overseas training and outside consultancies. 8. Bank Performance 8.1 The main strength of the Bank's performance was the use of the redesigned project to promote policy reform, including support for key institutions involved in the policy-forming process. The main weakness is that project preparation took insufficient account of the political framework within which NMC had to function, in view of which the project could be expected to fail. The Bank knew that this would be a high risk and controversial project, but held this to be acceptable in view of the possible breakthrough in policy formation. 8.2 However, there is another more efficient approach to obtaining policy reform, i.e., through structural adjustment programs. It is interesting to observe that a structural adjustment program was  -7 - being prepared in 1985 while the Bank was still arguing with GOT over the project. It is not clear why the Bank did not cancel the project, since it might have obtained equivalent concessions regarding liberalization through the structural adjustment approach. Indeed, it subsequently did this and NMC is now being restructured under a structural adjustment credit. A lesson the Bank must learn from this is not to blindly insist on conveying a message to Government using an old vehicle, while a more modern one was already being developed. Another lesson is to take greater account of the political framework within which the project is to be implemented and not just assume that Government will comply with conditions put forward by the Bank, but which are not in line with GOT's political convictions (even if GOT is prepared to sign agreements to this effect). 8.3 A further lesson for the Bank regarding NMC concerns the danger of attempting to strengthen institutions which are inherently weak and which function in an unsupportive policy environment. 8.4 Lessons learned from the experience of the non-NMC component concern the future of the MDB and PPMB, which fulfill a vital role in Government policy formation. Now that these two bureaux have been operating for at least seven years after the project ceased funding them, a more calibrated assessment can be made of the Bank's approach to them. The present approach presupposes that, with limited and temporary assistance from donors, these institutions will within a few years become self-sustaining, but given the problems outlined in para 7.2, this is untenable. It would appear that the Bank has only one course of action, and that is to ensure long-term support, probably for decades, until Tanzania's civil service has been thoroughly overhauled and the country can afford remunerative salaries. The Bank's support should be whole-hearted, with the provision of salary top-ups and vehicles and equipment and funds for expenses as needed, but it should at the same time be conditional upon professional standards and work discipline. This could possibly be arranged with the help of UNDP or bilateral funding arrangements. The Bank should learn from this exercise that support for entities that play a key role in Government policy-making should be sustained on a long-term basis, and not be restricted by an inflexible approach. On the contrary, the Bank should be highly facilitative. 8.5 Finally, although supervision was initially dominated by agricultural economists, its mix improved notably from 1987 onwards. In general, performance was satisfactory, as shown by the correct highlighting of important issues. However, it should be noted (Part III, Table 8) that during the 1986/89 period (three years), there were only three supervision missions. But this was largely due to contract disputes after the contractors had been selected. These disputes between NMC and contractors delayed the actual construction for about three years, hence, the three extensions (para 5.9). 9. Borrower Performance 9.1 Strengths on the part of the Borrower's performance concerned mainly the non-NMC components of the project. With the exception of the Borrower's indecisiveness in the construction of the office building for MDB and PPMB (which was never sent), management of these components was relatively decisive, smooth and led to successful results. 9.2 The Borrower's principal weaknesses concerned the activities of NMC; in fact, these have led to NMC's demise. Firstly, the Borrower was indecisiveness on pending issues, such as whether NMC was going to be decentralised or not. Secondly, the Borrower disregarded prior commitments such as the abolition of branches in production-deficit regions, its commitment to finance the non-commercial activities of NMC, etc. Thirdly, the Borrower continually intervened in NMC's operations, e.g., the decision in 1986 to impose consumer prices not fully covering marketing costs. Fourthly, the Borrower's  - 8 - project accounts were not kept as they should have been, and at the end of the project an auditing firm had to be brought in. Fifthly, there were serious deficiencies in NMC's recruitment and use of technical assistance (see para 11.1). 9.3 All the above demonstrates that the Borrower was not genuinely committed to the project. Indeed, the principal lesson for the Borrower is not to commit itself when it is not convinced of the project concept or not in accord with the conditions put forth by the Bank. 10. Project Relationships 10.1 With the exception of the NMC component, the relationship between Bank and Borrower was satisfactory. FAO, which was sub-contracted to promote technical assistance under the project, enjoyed good relationships with both parties. Regarding NMC, the Bank-Borrower relationship was poor, mainly due to an underlying divergence in development philosophy. From 1983, the Bank consistently pursued its liberalisation philosophy while the Borrower continued hankering after central planning. Due to the Bank's pressure the Borrower complied but its actions were consistently equivocal. 11. Consulting Services 11.1 Technical Assistance Personnel. Technical Assistance personnel were recruited under the NMC as well as under the MDB, PPMB and LGB components. For the latter three recruitment and supervision were arranged through FAO and the performance was considered satisfactory, although there were some delays in recruitment due to bureaucratic procedures. Recruitment of technical assistance personnel arranged through NMC was less satisfactory. The storage management specialist was never recruited although advice and training on this subject was essential at the time. With some exceptions most personnel left before their time expired. The cost accountant was reported as being too old and little could be learned from him, while the consultant in the position of Financial Director was asked to leave, due to irregularities. With some exceptions the performance of most technical assistance personnel was not up to standard, but this was largely due to frustration on the job created by NMC's management rather than incompetence. 11.2 Contractors. Two contractors were involved in the project, one dealing with the civil works (CW), and the other with milling machinery (MM). An engineering consulting firm was retained for supervision of the works and machinery (SW). The MM contractor was the most satisfactory. Its supplies were delayed, but this was mostly due to Government rules, regulations and interference. Due to this the contractor has demanded an excess payment of almost DM 500,000; this matter is still pending. 11.3 There were some initial problems with the interpretation of the price readjustment formula which had to be applied to contracted base-rates if the indexed cost of labour, constructional plant, materials and other work inputs would rise or fall. The contractor proposed a formula which included local inputs amounting to 44.5% while, according to the contract local inputs were only 15%. After a long dispute the contractor agreed to revise the formula, and made it consistent with the contract. Moreover, the contractor was required to rectify its work after a long dispute with NMC (to verify the controversial works, the Bank recruited a special consultant, whose report is on file). Finally, several of the original contracted activities were not included in the works, since, due to alleged price increases, insufficient funds were said to be available. This now appears doubtful due to the application of the erroneous readjustment formula (see above). Items deleted were cable flashing, rodent screens, flooring,  -9 - some work on loading-bay roofs, repairs to cracks in silos etc. Apart from this, the work carried out by the CW contractor appears to have been well done. 11.4 The least satisfactory work appears to have been performed by the SW engineering consultant firm. Firstly, he should have checked whether the correct price adjustment formula was applied in the final accounts. Secondly he single handedly decided to delete certain works from the CW contract and only indicated this to NMC after NMC queried the omissions. It would have been more appropriate to have consulted NMC beforehand (although admittedly it should also be recognized that if the consultant had done so, the completion of the works might have been delayed even longer due to NMC's indecisive management evident through the project). Thirdly, the firm should have detected the flaws in CW's works which were discovered by NMC's technical division. Fourthly, the contractor instructed the CW contractor to remove an old and hazardous intake pit cover at a silo in Iringa, and never instructed the same constructor to replace it, due to alleged shortage of funds. Therefore, the silo is unusable for the time being. Finally, the contract for rehabilitation of a silo in Arusha was drawn up without provision for eliminating a drainage problem causing seepage at the base. (This will now be rectified with funding from DANIDA). 12. Project Documentation and Data 12.1 The legal documents of the project were succinct. In particular, the conditions and covenants that had to be complied with by Government were unambiguously stipulated. It is therefore regrettable to observe that this was of little avail, since they were not enforced. 12.2 The original SAR and redesigned project document provided a useful framework for the non-NMC components but was of little use for the NMC component. Firstly the original SAR had little bearing on NMC's redesigned project activities. The re-appraisal report, dated 17 July, 1985, describing the redesigned project, stated that the Economic Rate of Return for the grain milling and storage component would be over 100%, but no calculations could be found to support this estimate. No further financial and economic impact information was conveyed. 12.3 Some data relevant to the preparation of the PCR were not readily available, since the project has not yet been closed. Particularly the statistical data (i.e. Tables 3, 5 and 8), under Part III of the PCR, could not be finalised and will need updating after 30 June, 1992. These tables have been submitted according to the latest data available. But this will undoubtedly change.  - 10 - PART II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE 1. Project Design and Organization Original Project 1.1 Part I and III clearly highlight the project objectives and components. The designed implementation strategy, however, underestimated the problems and crisis the Tanzania economy was facing in the early 1980's. It was impossible for the set strategy to effect changes in policies the Tanzania economy then needed. Part I and III is right to point out that" .its flaw was to expect the institutional building activities to eventually lead the Government to accept policy changes . " This could not happen not because the Government did not believe in them, but because changes being pushed through NMC support were incomprehensive and could not by themselves help to solve the marketing and economic problems facing Tanzania. Due disregard of the economic and political realities, policy changes through NMC support was grossly unrealistic. The project formulation failed to consider problems which influenced the Tanzania economic performance and therefore did not include options for improving marketing efficiency and effectiveness. 1.2 Moreover, the NMC role in procurement, transport, storage and distribution of all food grains and staples required an efficient management institution, of which NMC was not. NMC required enormous help to strengthen its management, but this was not treated in the formulation of the project. The World Bank priority was set on using NMC to influence the Government to make marketing policy changes and this insistence caused delay in declaring credit effectiveness and therefore postponed project implementation. 1.3 The support to MDB and PPMB facilitated marketing policy reform, project preparation, financial monitoring of parastatal and projects which timely dealt with the magnitude of the problems being faced in the marketing field, the indebted, ailing parastatals and poorly implemented projects in the public sector. Redesigned Project 1.4 While the objectives of the redesigned project remained similar to the original project, the Bank philosophy changed to that of using NMC support to influence market liberalisation in Tanzania. At the time of project formulation the Government had already started liberalising the marketing system (e.g. re-introduction of the Cooperatives in 1984), therefore the covenants in the Credit Agreement were irrelevant. The Banks insistence on increased role by the private sector was accepted by the Government. 1.5 It is important to point out that in 1985 the Bank continued to use NMC as a lever for policy reform while the Economic Recovery Programme was being prepared. The Bank should have shifted emphasis to structural changes in NMC in view of the agreed structural changes in the economy and therefore redesigned the project accordingly. However, this opportunity was missed. The support for LGB, Small Scale Mill, MDB and PPMB is highly appreciated in view of the need to control LGB which was detrimental to maize and strengthening the Ministry of Agriculture in its policy formulation, planning and monitoring capabilities.  2. Project Performance 2.1 The implementation of MDB and PPMB components was smooth, and the two institutions have performed well in facilitating effective planning, monitoring, policy and decision-making in the Ministry of Agriculture. Ihe project enabled the two Bureaux to operate optimally and supported training of local staff to provide a sound base for sustainability of project output. However, lack of incentives to local staff and the perceived inability of Government to support the level of operating costs requirements which will ensure a continued effective operation cast doubt on long term viability of MDB/PPMB. 2.2 The implementation of the Small-scale grain processing component has been satisfactory but the price of the equipment imported (mills, hullers, oil-processors) has become an important factor in determining demand and therefore rate of disposal. Due to frequent devaluation of the Tsh. and delayed implementation due to cash-cover conditionalities to the importers coupled by lack of credit facilities has rendered the equipment very expensive and therefore disposal very slow. 2.3 The effectiveness of the original project was delayed for about three years because the Bank and the Tanzania Government could not agree on the scope of NMC operations and decentralisation plans. The redesigned project became efective in October 1985 and since then, the agreed covenants have been erratically complied with, the civil works were delayed and unsatisfactorily supervised. The civil works' contractor should not be paid the so-called "increased cost" due to price readjustment as he acted contrary to the agreement with the World Bank and there is no firm basis to pay extra funds as per his claim. The machinery component, despite delayed in implementation, has been satisfactorily carried out. The impact of the project to NMC's performance is difficult to assess at this early stage as NMC has been changing its form and scope since project inception, and a survey is not yet carried out to gauge the utilisation of the storage and milling facilities, the costs of their operation and the effectiveness of retained trained staff. The impact of the project on grain market liberalisation which the Bank was pushing may be difficult to assess because of the masking effect the overall market liberalisation move by Government in 1985. The project, however quickened the recognition of the role of the private sector. 2.4 The impact information on LGB and proper use of pesticides can be established after extensive surveys. Also the impact of Small-scale mills and oil-proressing equipment is best obtained through a survey in the areas which benefited from the credit. 2.5 The impact of the project through MDB and PPMB on Government policy formulation and implementation has been far-reaching. The Bureaux have made significant contributions to facilitate Tanzania Government efforts to plan and implement reforms in a liberalised market and increased role of the private sector, and have been a major force behind several agricultural marketing and parastatal reforms. The outputs of the Bureaux has continued to be highly demanded by both the Government and donor community. 3. Project Sustainability The sustainability of project outputs depends on: i. The successful restructuring of NMC. Successful restructuring in turn depends on efficiency of its management, without which the buildings and plants made possible by the project will be underutilised, and, at worst, will deteriorate and be difficult to rehabilitate. NMC has to  - 12 - be operated along sound commnercial principles without which the investment may not be justified. ii. The continued external support to MDB and PPMB is essential. The cost of operating these institutions at their present level of their efficiency is high and there is no way, in short term, the government can be able to finance all such costs. Therefore, without donor support, the sustainability of MDB and PPMB, and so is their output, is questionable. The Tanzania government and the World Bank should come to agreement on long term support of MDB and PPMB. The issues of market liberalisation, parastatal commercialisation/privatisation and handling of the enormous resulting issues of reforms still require continued efficient operation of the Bureaux. iii. The sustainability of LGB outputs demands also support for addi.ional plant protection extension working gear, support to decentralise the plant protection services to farmer level and improved motivation for the extension personnel. 4. Institutional Performance The Bank Performance 4.1 The World Bank was fully involved in the preparation and appraisal of the original and the redesigned project. The Bank continued to supervise the implementation of the project. The design of NMC components seems to have disregarded the need to change the total economic and marketing environment within which NMC operated. However, the use of the project for a "cover" helped to quicken the recognition of the role of private sector. Nevertheless, the continued use of the project for policy reform after 1985 was unnecessary as structural adjustment programme was being prepared. 4.2 The Bank's persistent help to MDB and PPMB was a positive move as the two institutions have been facilitating government's role of policy formulation/implementation. 4.3 The relationship between the Bank and the Tanzania Government was sound in the redesigned project. In the original project, there were some differences between them in respect to role and structure of NMC and on policy matters. However, the differences were resolved in redesigned project in the framework of Tanzania government's effort to liberalise the economy through the Economic Recovery Programme and the Agricultural Rehabilitation Project (TANAA I). Borrower Performance 4.4 The borrower's performance was satisfactory in respect to MDB, PPMB, Small Mills and LGB. However, NMC delayed to comply with various covenants and the government delayed to comply with the Bank's conditions on NMC until such point when all problems facing the economy and agriucltural marketing were treated (1985) in the framework of Economic Recovery Programme. The Contractors and the Supervision Engineer 4.5 The performance of the civil contractor was unsatisfactory while the supervision engineer dismally and poorly performed his duties. The supervising engineer's negligence was detrimental to the quality of construction works and he may have caused unnecessary payments to the contractor. The Milling Machinery contractor performed satisfactorily.  - 13 - The Lessons Learnt 5.1 The implementation experience with the original and redesigned Grain Storage and Milling project reflects on how inadequate project identification can be costly and lead to unsatisfactory project implementation. The Bank and the Tanzania Government should have reviewed and taken account of the total economic and agricultural marketing situation in the country to design a project or policy support programme to improve the grain marketing situation in the country. 5.2 The design and implementation experience of the project(s) also reflects the need for flexibility in project design. A developing country like Tanzania has many constraints to project implementation which need to be taken into account (policy-wise or funding as a part of project) to make project implementation successful. It was unnecessary for the Bank to consistently want to use the project for policy changes when it was discussing these policy issues under Economic Recovery Programme. Equally important it was not recommendable for the Borrower to accept the project as it were when its conditions were not easy to implement given the economic and political requirements which the Bank's conditions were not fully taken into account. In whichever case, if things will not work, it is better to accept it and save resources which can be used elsewhere or to encourage the flexibility where it is required. 5.3 The experience with the contractors with the project is an indication of how the contractor can collude and become unscrupulous and lead to a loss of funds for poor developing countries. the act of civil works contractor was stepping beyond the provisions of contract agreements and so was the behaviour of the supervision engineer. Projects should have strong M&E sections to keep project management alert to deal with implementation problems as they arise. 5.4 An important lesson is also how organisational and institutional factors become indispensable to ensure satisfactory management of projects - the lack of efficient institutions can jeopardise the success of a project. it seems NMC was ill equipped organisationally and managerially to act quickly to project implementation issues to ensure the successful implementation of NMC components. Adequacy and Accuracy of the Factual Information Contained in Part III 6.1 We confirm that the factual information in part III of the project completion report is adequate and accurate.  - 14 - PART III: STATISTICAL INFORMATION Table 1. ReLated Bank Loans/Credits Loan/Credlt TMlt Purpose ApprovWl Status Comments Date - Agriculture Adjustment Support liberalisation of 1990 Second tranche Disbursement delay Program agricultural marketing released April was caused by (2116-TA) 1992, which was Government's delayed by one inabiity to comply year. with the tranche condition in the time span given; his admittedly was quite short for the many actions asked for.  - 15 - Table 2. Project Tlmetable Item Date Planned Date Revised Actual Date - Identification 1977 - Preparation/Pre-Apprsal April 1978 1978 - Appraisal Mission Jan./Feb. 1979 Jan./Feb. 1979 - Loan/Credit Negotiations - February 1980 - Board Approval 5 June 1980 - Loan/Credit Signature 15 April 1981 - Loan/Credit Effectiveness - 15 July 1981" Loan/Credit Closing 30 June 1987 31 Dccember 198I2I - Loan/Credit Completion 31 December 1987 30 June 19852L - Loan/Credit (Redesigned Jan./Feb. 1984 7-10 August 1984 Project) Negotiations - Loan/Credit (Redesigned 13 March 1984 1 August 1985 Project) Board Submission31 - Loan/Credit (Redesigned 28 October 1985 28 October 1985 Project) Signature Loan/Credit (Redesigned - 31 October 1985 Project) Effectiveness - Loan/Credit (Redesigned 30 June 1989 31 December 199Ot/ 30 June 1992 Project) Closing 31 December 199i1 30 June 199P' Loan/Credit (Redesigned 31 December 1989 30 June 1991gL 31 December 1992 Project) Completion 30 June 1992L 31 December 1992* 1/ The project became effectiv only for Section K of the Agreement: Funding for PPMB and MDB. 2/ The aczual dosing/completion dates here concern the PPMB and MDB components only. 3/ Since the amended loan amount did not exceed the original credit amount only Board Submission *on a no objection basis was required. 4/ Eighteen months extension required due to protracted tendering procedures and compLication caused by a complaint of a bidder. S/ One yr extension required due to problems on finalising the contractor agreements 6/ Fuul six months extension to cover commitment of up to USS 4,554,000 for TA and stockmanagenent of NMC and to complete import formalities for LGB and the small-scale milling components  - 16 - Table 3. Loan/Credit Disbursements Cumulative Estimated and Actual Disbursements ........... * (USS million) ......................... IBRD/IDA FLscal Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 Appraisal Estimate 0.5 4.7 17.0 29.9 38.8 42.5 43 Re-Appraisal FEtimate - - 1.6 3.7 6.4 6.8 17.1 30.6 40.0 43.0 43fJ0' 43.01L Actual 0.7 2.4 3.7 6.0 6.0 6.0 8.3 11.1 15.1 24.6 35.1/ Actua as % of Appraisal 0 15 14 12 15 Estimate Actual as % of Estimate of - - - - 88 35 27 28 35 57 82 Re-Appraisal Date of Fnal Disbursemeut 1/ Asumed US$43 S mi aftwernt oau 2/ At December 31, 199L  - 17 - Table 4. Project Impleimentatlon Indkatos Re-Designed Amendment of Act Estimate Re-Designed Estmte Grain Mills Rehabilitation 41/ 211 New 2p 2p Rehabilitation of godowns and sites 11 sites7 No change 9 sitesI Rehabilitation of contract milk US$250,000 Not implemented nd for spares and funds tranferred to replacements small-scale grain milling Prefabricated house NMC staff 6 0 Small-scale grain milling: Hammer-mills 1,200 86 'Hullers 600 Dual-purpose amm-er-mills/debullers -1/ Rice dehuliers 7-P/ LGB component 500,000 farmes na.ia to be contcted Maize miD ia Arush wheat mill in Kurasini, rice mil in DSM (plots) and in Shinyanga 2/ Maize mi in A a ndin and in DSM (plot 10) rice mii i DSM (plos) and in Shinyanga. 3 Maize mill in Arusha and i lringa 4/ Maize mill (cap. 240 m. tons) at Chag`Ombe and replacement of Iring milL 5/ Maize mill (cap. 120 m. tons) at ChngOmbe (plot 33) and wheat mill (cap. 120 m. tons) at Kurasni 6/ Same as footnote S. 7/ Onc hundred and susy-six thusand m. tons. It appears that 160 m. tons of storage capacity have been indeed completed, but this should be verifid in view of the cancellati of some items of the storage civil works (Part 1, pa ra_). 9/ Included purchas of motor 10/ n.a - Not avaible.  Table S. Project Costs a*d Fimauclog (Page I) A. Project Costs (USS million) ..... Appraisal EstimaleV . ... .R .Resed Esfluale-L ...... .. PCR ExtimW . Local Foreig | Total Local Foretig Total Local Foregl Tol Nallosal Mulling Corporation Mill Repair and Replacement 1.1 3.9 5.7 - 6.3 6.3 0.5 9.9 10.4 Godown Repair and Replacement n.a.v n.s. 25.3 - 12.0 12.0 0.9 4.9 5.8 Quality and Pest Control n.a. n.s. 3.7 0.2 1.7 1.9 n.a. n.a. n.a. Accounting Starr n.a. n.A. 1.2 0.9 1.7 2.6 n.a. n.a. n.a. Vehicles 0.5 3.0 3.5 - - 0.0 - 0.4 0.4 Sub-total (NMC) 16.2 23.3 39.5 1.1 21.7 22.7 Other Gral Processlug Contract Mill Rehabilitation - - - - 0.3 0.3 - - Small-Scale Grain Processing - - - 2.7 4.9 7.6 n.a. 3.4 n.a. c.. Sub-total (Other Gram Procetssing) - - - 2.7 5.2 7.9 n.a. 3.4 n.a. MALDC Larger Grain Borer - - - 1.7 3.8 5.5 n.a. 3.5 n.a. MDB/PPMB 0.6 5.4 6.0 1.0 5.7 6.7 n.a. 6.2 n.a. Sub-lotal (MALDC) 0.6 5.4 6.0 2.7 9.5 12.2 n.m. 9.7 n.a. Already Spent under PPF - - - - 0.6 0.6 - 0.6 0.6 Total Baselloe Cost 16.8 23.7 45.5 6.5 36.9 43.4 n.m. n.a. n.a. Physical Contingencies 1.0 1.2 2.2 0.5 1.8 2.3 Price Contingencies 4.6 6.1 10.7 0.8 3.5 4.3 TOTAL 22.3 36.1 58.4 7.8 42.2 50.0 n.a. n.a. n.m. 'I Sourcwo Pig 'maRPpoI. I Ih4 1W5. Va.nx due to Ign*g. 2/ n.& N- Ivdb  - 19 - Tabk 5. Project Costa and Flnandng (Page 2) B. ProJect Financing (USSOOO) Source . 1 an .. d. Revid . . PCR Etimate IMA 43,000 43,000 4Z289I Government 14,423 4,100 na. 21 Private Industry 3t2,900 100 (Smal-Scale Milg) TOTAL 57,423 50,000 L I/ Of whik USSM.97 dbd; US$3.80 commie; ad US$2.52 sti to be verified due to p da 2/ Due to sill changing esiate of Government side and lack of knowledge on the espenditure yer no estmate could be made at the time of the misson's visit. (n. - Not available) 3/ The SmallScale Mills component not included in original SAR. 4/ Mision's estimate: 25% of total imported Minimum cas cover was actually 20%; ome paid more. So far TSh 200 milliondeposited in Natioal Bank of Commerce (By 19 August 1991 a total of US$ 1 .3 million bad been deposited) - See Table 7. Covenants under DCA 302 5/ Not possible to determine this figure, see footnote 2.  - 20 - Table 6. Project Results A. Direct Benefits B. Economic Impact C. Financall Impact The three above categories under project results could not be estimated since NMC as originally conceived-to longer exists, and overall costs and revenues would be difficult to estimate without any clearer knowledge of the new NMC structure, management and costing. D. Studies Name of Study | Purpose Deflned at Status lImped I Appralsal I. I Cost cteria study. Identify sources of Not carried out. n.aY inefficiencies in NMC. Price policy reviews Advise Government on Carried out annually. 1. Contributed to ending maize for grainL grain piceL meal subsidy in 1984 and other significat polic changes 2. Helped initiat discussions on liberalization with GOT. 3. Started monitoring of informal market prices, raisg official awarenes of the samc ITe above price reviews were provided for in the originl appraisal in 1980, and were carried out by MDB. The MDB also carried out the following additional studies: - Study of the grain marketing stem in India (with a view to funding ways of eliminating subsidies in Tanzania) - Price policy review for cash crops - Input intensity study, to advise an allocation of foreign exchange. - Production costs od mao agicutural commodities in Tanzania. - A saudy of the pros ad cm of devaluation vis A vis agriculture in Tanzania. The PPMB carried out a number of studies not concerned with grain marketing under its Project Prepation Division. na. - Not available.  - 21 Table 7. Status of Coveants (Pag 1) Covenant Required Acion Responsibility Status Comments DCA 3.02 Opening of such account at BOT/Treasury/PPMB. Not complied with. Agreed with World BOT for cash cover deposits. (See comments). Bank to deposit cash covers in training input support account in National Bank of Commerce instead. PA 2.06 Rehabilitation Programme to Construction Engineer Complied with but Problems between be ready 313.86. (TA) NMC. overdue. NMC Management and Contractor. PA 2.07 Designs for new storage to be Construction Engineer Complied with but Problems between ready 313.86. (TA) NMC. overdue. NMC Management and Contractor. PA 2.08 Rehabilition Programme to Senior Milling Complied with but Problems between be ready 313.86. Engineer NMC. overdue. NMC Management and Contracor. PA 2.09 Training Programme to be Training Expert NMC. Complied with but Problems between ready 3L3.86. overdue. NMC Management _______ _______________________ _________________ ___________ and Contracor. PA 2.10 Close the MilL General Manager Complied with but Problems between NMC. overdue. NMC Mangmcent ______ _____________ _and Contrador. PA 2.11 Collect data and complete Director of Fmance Complied with but Problems between study by 31.12.85. NMC. overdue. NMC Managment and Contractor. PA 3.04 Training Expert Senior Milling General Manager Complied witb but Problems between Engineer, Construcion NMC. overdue. NMC Mnagement Engineer all to be rcruiled by and Contractor. 31.12.S5; Storage Expert, Maintenance Engineer and 14 accounting personnel all recrulted by 313.86. PA 3.05 Prepar Progamme for IDA Milling Engineer and Compled with but Problems between review and subequent Storage Expert NMC. overdue. NMC Management execution by 309.86. and Contractor. PA 4.02 Regular Audting Director of Fnance Not fully compled Auditing firm was NMC. with asked to put accounts in order 1992. PA 5.01 Short-term debt not to exceed TSh 400 m plus twice farm Ninm gate value of current season stocks1  - 22 - Table 7. Status of Covnants (Pap 2) Covenant Required Action Responsibility Status Comments PA 5.02 Prepare proposal and submit General Manger/ Complied with. Served little purpose. to IDA by 31.12.85. Director of Fmance NMC. PA 5.03 Prepare Plan and submit to Director of Funance/ Complied with. IDA 1.4.86. Procurement Manger NMC. PA 5.04 Conduct survey to be Storage Expert NMC. Complied with but completed by 30.6.87 followed overduc. by follow-up action proposal to IDA. PA 5.05 Devise and implement Storage Expert (TA) Not complied with. Storag Expert was monitoring programme for NMC. never recruited. losses due to insect damage over 3 year period. DCA 3.03 Preparation of Monitoring and PPMB. Complied wit evaluation programme by 31.12.85. DCA 3.06 L PCR for PPMB/MDB PPMB, MBD and Not complied with PCRs are now being (c) 2. PCR for Small-Scale Mils LGB Manager. prepared. Project and 3. PCR for LGB when these components end DCA 3.07 Accounts of debts/magnces PPMB, MDB Coom. Complied with for Agreed with World (b) implmenting pars D&H to of Agriculture. LOB. Bank that thi be audited each year from coat ot relevat 1983/84. to small-scale mil comp"oenL DCA 3.09 1. Notification of Contract PPMB. Not relevant: see Contract mmer Millers. comments component canceDed 2. Receipt/review of import and fun US$250,0 licencea wu transfaerdio6 3. Monitor dtriution/u small-scale mils compoentL DCA 3.10 Maintenmee of Regtr of Director of Funance Complied with but no Permits are no lne Permits. NMC, longer relevant: see required. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ com m ents. DCA 4.04 Prepare Proposl induding General Manager Complied with FAO has ssted costing5 NMC, PS MALDC. MALDC to prpa - and costine Donor kdentiedA  Table 2. Use of BSak Resources (Page 1) A. Staff Impels B. Misnlons Lj . of Project Cycle Period bm Field Speclalizao e Performance _ (weeks) Represeuted" Rallng __ Through Appraisa3: Appraisal WB 1/79 5 3 n.m. - - Preparation WB 7/8O 5 na.'4 F, AEx3, AO Progress review WB l/tl 1 3 AE - - Supervision I WB 9/tI I I AE 3 0 Supervision 2 WB 1/82 1 1- F 3 p Supervision 3 (MDB + PPMB only) WB 10/82 1 1 AE I (MDB) 2 (PPMB) M, 0 Supervision 4 WB 12/82 I n.m. F 3 P Supervision S (MDB + PPMB) WB 3/83 1 1 AE I (MDB) - 2 (PPMB) M, O Supervision 6 (MDB + PPMB) WB 7/83 1 1 AE I (MDB) 2 (PPMB) M, 0 Re-design WB 9/83 5 n.a. AEx3, ME, E Supervision 7 (MDB + PPMB) WB 7/84 1 1 AE I (MDB) I (PPMB) M, 0 Supervision I WB 9/U4 I na. AE 3 P. M V AE. A* _blEEoorAwstME I b gEcanit E - Econand F - FbwhlA 'mt A. AwIwIha.tPS . Pvmaurnu 9cpl; CE . Ch Enghne Ao . a' Unsp_dd lt ThFn md nd h p d o1w d_w wIw e pr*ewas m0tdf Iduakl 4' nAL. -Nd _b-.  Table B. Use of Bask Resources (Page 2) Stage of Project Cycle ISent by Mooch/Year INo. of Persoms1 Period In Field Speciliallzto IPerformance ITypes of I I I | (weeks) I Represested' Rating ProbMes Supervision 9 (MDB + "PMB) WB 6/85 I 2 AE I (MDB) M 2 (PPMB) M. O Supervision 10 WB 9/85 I n.a. AE 2 na. Supervision II WB 9/85 I n.a. A 2 n.a. Supervision 12 WB 3/86 I n.a. A 2 n.a. Supervision 13 WB 10/87 4 It AE, A, F, ME 2 n.a. Supervision 14 WB 2/89 2 n.a. F, PS 2 n.a. Supervision I5 WB 4/90 3 1 AE, F, CE 2 n.a. Supervision 16 WB 12/90 1 2 AE 2 n.a. Supervision 17 WB 7/91 2 2 AE, F 2 n.a. Supervision 1t wB 11/91 3 - AE, A, CE 2 n.a.