Announcement of Ten Million Dollars Loan for Agriculture in Morocco on November 3, 1965

INTERNATIONAL BANK FOI~ • RECONSTRUCTION AND DEVELOPl\1ENT 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 65/55 Subject: $10 million loan for agri- November 3, 1965 culture in Morocco The World Bank has approved a loan equivalent to $10 million to assist in financing an agricultural credit project in Morocco. The loan will be made to the Caisse Nationale de Credit Agricole to provide funds for the agency's medium and long-term lending program over the next three yf.-c:1rs. The objective of the program is to enable farmers to maintain and increase produ~tion on farms under mechanized intensive agriculture, and to facilitate the modernization and improvement of farms now operated by traditional methods. Fidelity-Philadelphia Trust Company and The First Pennsylvania Banking and • Trust Company, Philadelphia have agreed to participate in the loan, without the World Bank's guarantee, for a total amount of $150,000 repres.enting part of the first maturity which falls due on March 1, 1970. Agriculture produces about a third of Morocco's gross national product and half its exports, as well as providing employment for about 70% of the population. The country has good soils, substantial water resources and considerable knowledge of local conditions gained from the research and experience of the more advanced farmers. In addition there is a well-developed infrastructure, suc.h as roads, dams, irrigation networks and some storage, processing and marketing facilities. Modern agricultural methods, however, are not widespread. Most of the agricul- tural land is farmed on a subsistence level; only about 10%, or 3.7 million acres, is farmed by modern methods. The modern sector, which produces mainly cereals, fruits and vegetables, accounts for most of the country's agricultural exports and ~ for the growth in output. The further development of modern agriculture, essential to the country's economic growth, requires that sizable resources be made available to farmers, both for capital investment and for fertilizers, pesticides and improved seeds. The Caisse Nationale de Credit Agricole {CNCA), established in 1962, is now the only tf agency which provides substantial credit to farmers and agricultural development institutions, both for investment and for short-term production purposes. During the three year$, July 1965 - June 1968, CNCA intends to make medium and long-term loans in a total amount of $20 million, half of which will be provided by the World Bank loan announced today. The CNCA loans will be made both to individual farmers and cooperatives (who wf..11 be required to put up an additional $6 million of their own resources), and to the Central de Gestion des Exploitations Agricoles (CGEA), a government agency, which administers land formerly owned by foreign settlers and which, in due course, will he transferred to individual Moroccan farmers and co- operatives. In addition, CNCA will make extensive short-term credit available to farmers to be financed out of local resources. • Most of the loans to farmers and cooperatives will be for on-farm investments, including land improvements, farm buildings, agricultural machinery and implements, tree crops, and some investments in light processing and storage facilities. The iarms must be economically viable units, that '.ls, farms consistlng of more than 12\ acres of irrigated land, or 37 acres of rainfed land. The farms operated by CGEA are of great economic importance as they are among the most fertile and pro- ductive in Morocco. Their most urgent need is for agricultural machinery and equipment and the loans to CGEA will, therefore, be used to help finance such purchases. Procurement by farmers and cooperatives under their loans will be through normal trcade channels. A number of interna.t ional firms handling farm machinery and equipme~t are represented in Morocco. Equipment for CGEA farms is being pur- chased thru·~gh the official tE:nder sys~em which provid?s for international comp;:.::ti- tive bidding under which local as well as foreign suppliers can submit proposals. The World Bank loan will be for a term of 16 years and bear interest at the rate of 5\% per annum. Amortization will begin, in March 1970. guaranteed by the Kingdom of Morocco. The loan will be •