Announcement of Bank and IDA Lend Eighteen Million Dollars for Agriculture in Cameroon on March 28, 1967

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET, NW WASHINGTON D.C.20433 TELEPHONE. EXECUTIVE 3-6360 Bank Press Release No. 67/15 Subject: Bank and IDA lend $18 million IDA Press Release No. 67/3 for agriculture in Cameroon March 28, 1967 The World Bank and its affiliate, the International Development Association (IDA), are providing the equivalent of $18 million for a large-scale plantation ~rogram in the Federal Republic of Cameroon. The program wi.11 be carried out by the Cameroons Development Corporation (CAMDEV),. The Bank has approved a loan of $7 million to CAMDEV, and IDA has approved a credit of $11 million to the Federal Government which will contribute the funds to CAMDEV for the program. The Com- mission of the European Economic Community (EEC) has also approved a loan of • $6.4 million for the program; the EEC loan will be made to the Federal Govern- ment which will relend the proceeds to CAMDEV. The Federal Republic of Cameroon, a federation of the States of East and West Cameroon, was established in October 1961. The economy is based almost entirely on agriculture: the majority of the population of 5.2 million is dependent on agriculture and exports of tropical products provide over three-fourths of foreign exchange receipts. The Cameroons Develo~nent Corporation is a statutory authority of the Govern- ment of Cameroon and is managed by the Commonwealth Development Corporation of the United Kingdom. CAMDEV operates plantations covering some 55j300 acres in West Cameroon, making it one of the largest tropical plantation enterprises in Africa. It provides nearly a third of West Cameroon's exports and employs about 12,000 people, or over a fifth of the labor force. The program now being under- It taken by CAMDEV will expand its plantations under oil palm, rubber, tea and pepper  - 2 - by 26,500 acres to a total of 81,800 acres. The largest expansion will be of oil palm, CAMDEV's most profitable crop. The EEC loan will be used specifically for the development of 10,800 acres of oil palm and the construction of a processing plant. The program will more than double CAMDEV's contribution to exports and provide work for a labor force for whom there are few other employment opportuni- •• ties other than subsistence agriculture. The program will include both new planting and replanting. It also includes work on existing innnature plantings to bring them into production, and the pro- vision of the necessary processing facilities and other equipment. Expenditures in the years 1967-71 will be made mainly for new plantings. Although these plantings will start coming into maturity between 1971 and 1974, substantial ex- penditures will be required on bringing later plantings to maturity and for the construction of factories for processing. It is expected that CAMDEV will need three new oil palm mills, nine more rubber prucessing units and two tea factories. CA¥illEV's financial requirements during 1967-74 are estimated at the equiva- lent of $31 million, of which capital expenditure, mainly on planting, amounts to $25 million and the balance consists of increases in working capital, interest and other charges on the Bank and EEC loans. An additional $4 million will be required after 1974 to provide processing equipment and to bring irrnnature areas into produc- tion. The total financial requirements of $35 million will be met by the $11 mil- lion IDA credit, the $7 million Bank loan, the $6.4 million EEC loan, and $10.6 mil- lion to be provided by CAMDEV from cash generated by operations. The $11 million IDA credit will be contributed by the Government to CAMDEV as equity capital. This, together with other measures, will provide a capital structure divided in roughly equal proportions between loan capital and equity capital that will enable CAM.DEV • to operate its plantation program on a sound financial basis. The World Bank loan of $7 million to the Cameroons Development Corporation will be for a term of 30 years, including an 8~-year grace period. Interest will be at the rate of 6i. per annum. The IDA credit of $11 million will be for a term of 50 years. Repayment of the principal will begin in July 1977, after a 10-year period of grace. Thereafter 1% of the principal will be repayable annually for 10 years and 3% will be repayable annually for the remaining 30 years. The ~redit will be free of interest, but a service charge of 3/4 of li. per annum on the amount withdrawn and outstanding will be made to meet IDA's administrative costs. Dis- bursements on the Bank loan will commence in 1971 after the IDA credit has been disbursed. The EEC loan will be for a term of 22 years, including 10 years of grace, and bear interest at 2%; the loan will be made to the Federal Government which will relend the proceeds to CAMDEV on the same terms. A consultant provided by the Food and Agriculture Organization of the United Nations (FAO), under the Bank/FAO Cooperative Program, assisted in the appraisal of the project. •