Tanzania - National Sites and Services Project

FILE CJ P CIRCULATtNG COPY TO BE RETURNED TO REPORTS DESR DOCUMENT OF INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use Report No. P-1388-TA REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE UNITED REPUBLIC OF TANZANIA FOR A NATIONAL SITES AND SERVICES PROJECT May 14, 1974 This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.  GCURRECY BQUIVAIf1 Currency Unit: Tanzanian Shillings (TSh) 1 Tanzanian Shilling (TShl.O) = US$0.14 1 U.S. Dollar (Us$1.00) - TSh7.14 WEIGHTS AND lUURSIES 1 meter (m) = 3.29 feet (ft) 1 square meter (m2) - 10.76 square feet (sq ft) 1 kilometer (km) = 0.62 miles (mi) 1 hectare (ha) = 2.47 acres 1 liter (1) = 0.246 US gallons (gal) ABEREVIATIONS/ACRONYM Ardhi - Ministry of Lands, Housing and Urban Development COWIconsult - Danish consortium of consulting engineers NBC - National Housing Corporation RIDO - Regional Land Development Office THB - Tanzanian Housing Bank NHBRU - National Housing and Building Research Unit GOVERNMENT OF TANZANIA FISCAL TEAR July 1 to June 30  REPORT AID R1CONMDATION OF THE PRESIIT TO THE EIUTrIVE DIRECTRS ON A PROPOSED DEVEIDPKEN CREDIT TO THE UNITED REPUBLIC OF TAIZANIA FOR A NATIONAL SITES AID SEICES PROJECT 1. I submit the following report and recommendation on a proposed development credit to the United Republic of Tanzania for the equivalent of US$8.5 million on standard IDA terms to help finance a National Sites and Services Project. Some $2.0 million of the credit would be relent to the Tanzanian Housing Bank (THB) for 25 years, including a five- year grace period, with interest at three percent per annum. THEB would onlend these funds to cooperative housing societies and individuals as house construction loans at six percent per annum for up to 20 years with a one-year grace period. PART I - THE ECONOMIS General 2. The last full Economic Report on Tanzania (AE-26) was distributed to the Executive Directors on May 22 and June 22, 1972. This was fol- lowed by an Economic Updating Report (30-TA) which was distributed on December 11, 1972 and which was especially prepared for the East African Consultative Group meeting on Tanzania of January 1973. An agriculture rural development sector mission visited Tansania during September/ October 1973; its report is expected to be issued about the middle of 1974. Daring 1974 we shall vndertake a missidon to study the industrial and mining sectors. 3. Tanzania celebrated ita first decade of independence in December 1971. In the past 31 years gross national product increased in real terms by some 65 percent to the present level of about $1.5 billion. During the same period, life expectancy at birth increased from 35 to 413 years, infant mortality declined from 250 to 160 per thousand live births, maternal mortality declined from 4.7 to 2.7 per thousand de- liveries, and the primary school enrollment rate increased from about 28 to 37 percent of the relevant age group. While this sauple of economic and social indicators shows that significant progress has been made, it also gives some idea of the magnitude and difficulty of the develop- ment task facing the country. For example, while GNP grew at 4.7 percent per annum in real terms during these years, these gains were to a large extent offset by the growth of population, with the result that per capita income increased at only 2.4 percent per anum. Tanzania is one of the 25 least developed countries. 4. Tanzania has a one-party system which is embodied in the con- stitution. The party, the Tanganyika Africa National Union (TANU), is a well organized mass party and is actively engaged at the grass roots in the promotion of popular involvement In the national development effort, and within the party democratic principles are belng strictly  - 2 - adhered to. in econoiic policy making, the long-termn objective of social equality prevails over econonic interests of miinority groups; scme progress towards reducing inequality of income distribution within the category of employed workers has been made, but large gaps continue to exist between urban and rural standards of living. Economic Performance and Resource Mobilization 5, Tanzania's economic performance in recent years has been characterized by high marginal savings, relatively low returns on investment, and rapid institutional change. The growth of production, however, has been modest in most sectors, especially in agriculture. The cornbination of moderate production growth rates and a very ambitious in'xest.rent progra-n has led to severe pressure on resources. This pressure has heen partly alleviated by steadily increasing external capital inflows and, until recently, by an improvement in the country's terms of trade. Although favorable current world market prices for several of Tanzania's princlpal exports and the growing contribution for local project costs by foreimn donors, have helpe(d to build up external reserves equivalent to about three months' imports, the recent rise in oil prices has drastically changed the situation. It is estimated that the foreign exchange cost of the oil price increase is in the region of $58 mnillion per year. This comfpares with a net resource transfer from the World Bank Group of about $15 raillion per annun and a total net capital inflow of around $60 miilicn per annum. The scope for cutting back on domestic oil consumption without reducing production is extremely limited. Tne combined effect of the oil price rise, the expected large food import requirements, partially due to the drought in the north of the country, for the current year and other relative price changes is expected to cause a US$.30 - US$40 million dron in reserves during 19i4. Although the problem ap,pears tolerable for the next year or two, special measures will have to be taken to rectify the situation during this period. A task force jointly manned by the Govern- nent and the Ban3k is currently assessing the short, medium and long-run effects of the oil price increases with a view to fornulating policy recommurendations. Possible alternati-ves include the development of domnestic energv resources, including coal and hydroelectric power, and placing a further emphasis on industries which produce exports or substitute for imports. 6. In terms of foreign aid disburselments, the People's Republic of China was Tanzania's principal donor, until the recent completion of the Tanzanian portion of the Tan-Zam railway. In terms of outstanding loans and credits, however, the Bank Group is the largest creditor to Tanzania followed Dy Sweden, norway and the Soviet Thicn. Includin- a notional one-third share of the debt of the East African Community Coriporations, the IBRD is presently carrying 14 percent of Tanzania's outstanding ex-ternal debt and IDA 16 percent; the IBRD share is expected  -3- to rise to about 20 percent in the next five years, and the IDA share to remain about the same. The share of debt service payments to the Bank is at present about 10 percent of total debt service payments; the correspond- ing share for IDA is about 2 percent. These two figures are projected to rise to about 20 percent and 3 percent, respectively, by 1980. Most capital aid to Tanzania is made available on very favorable financial terms, although about 50 percent of the total is tied to procurement in the donor country. Supplier credits have been kept to the minimum. In addition to seeking as favorable a blend as possible and the minimum of tying, the Government has attempted to secure donors' agreement to simplify the procedures associated with the use of committed aid. For exmaple, Swedish assistance is now given within the terms of a frame agreement, which allows the Government to set its own priorities in the use of SIDA funds and allows considerable flexibility in the switching of such finance between the various projects and programs. The overall debt service ratio has declined in recent years owing to buoyant export ear- ings; it is currently about 5 to 6 percent and is expected to remain below 10 percent at least until 1985. In view of this low debt service ratio, there is scope for a modest amount of lending to Tanzania on conventional terms, particularly if such lending is for export prolnoting or import substituting activities. Tanzania's high rate of investment during the last five years has not been reflected in high growth in production -- at least not as yet -- partly because there was a heavy bias towards social and economic infrastructure with long gestation periods. A substantial proportion of total investment has been undertaken to provide a viable alternative outlet to the sea to neighboring landlocked Zambia after Southern Rhodesia's Unilateral Declaration of Independence of 1965. Economic and political ties between Zambia and Tanzania are growing stronger every year. As a consequence of the lower than expected growth rate, the Government has decided to shift its investment emphasis to more productive quick yielding investments, particularly those which generate increased export earnings. The effects of these new policies can already be seen in the rural sector and in the Bank Group's own lending program. 8. The budgetary position which has been adversely affected by sluggish economic growth in recent years coupled with high levels of development and recurrent expenditure, remains extremely tight. The Government does not have many remaining possibilities to increase revenues. In view of the already high marginal savings rate, the scope for additional taxation is very limited. Even with a decline in the rate of investment, with the escalation of fuel prices, Tanzania will still require a continued capital inflow in excess of the foreign exchange component of high priority projects it it is to achieve its development targets; financing of local expenditures will therefore be justified. 9. Financial discipline in the regions, Central Government Ministries, and many state corporations remains a problem, probably because scarce accounting and auditing skills are now even more thinly spread. There is a general serious shortage of many professional skills. The  situation has been aggravated by the departure of many Asians and the Government's reluctance to recruit abroad. However, this reluctance is now dimi-nishing as part oi an effort to accelerate project pre- paration and implementation. 'O. President Tlyerere recently announced that following a reviewz, ihe C-overnment has decided to move the capital of' Tanzania from Dar es Salaam to Dodoma. By moving the capital city to the center or the country and so closer to the bulk of the rural population, it is the exDectation that the Government wrill becoimie more responsive to the needs of the rural sector. The Government presently plans to make the move over a ten year period. No accurate estimates of the total costs involved are yet available but in view of the scarcity oi investment resources in Tanzania, it is likely that the transfer of the capital will take much longer than planned; in addition, the nuiber of Governiment orT'ices moved may be fewer than is presently envisaged. 11. The administrative structure and many of the functions of Government were decentralized to the regions in July 1972. This was done to make the Government more responsive to the needs of rural development. It is still far too early to assess the success or otlherwise of this decentralization. As expected, problems of coordination between the center and the regions have occurred, and the transfer of high ranking officials from Dar es Salaam to the ru3-al areas has had its inevitable, but one hopes only short-term, eff'ect on the smooth functioning of Central Govermment. Some dis- location in project irmlementation has also been experienced. In some regions the new Government structure is already showing its potential to be more responsive and relevant to the needs of the rural sector. Several rural develonment programs are now being prepared in the regions and Bank Group) finance is being sought for some ol them. It has become apparent that the severe shortage of regional technical expertise will inhibit the ability of' the new decentralized authorities to plan and execute rural projects; progress in regional development will, therefore, inevitably be patchy, re- flcting the local availability of the required expertise. WJays in whrich the Bain Group and other donors might assist in alleviating these constraints are currently being explored with the Government. Expropriations 12. In April 1971 legislation (The Acquisition of Buildings Act) was enacted empowering the President on behalf of the state to acquire any rental or commerial property the constriuction cost of which was over 100,000 Tanzanian Shillings ($lh,000). About 3,000 properties were acquired under the Act. About 560 claims, including less than 10 percent on behalf of foreign owners, were lodged in respect of the  - 5 - actual acquisition itselr or on the amount of compensation. These claims, including the foreign cases, have either been settled or are in the process of being settled in accordance with the provision of the Act. The Government has recently expropriated about 50 large- scale farms in the Moshi-Arusha area of northern Tanzania. The Govern- ment is presently making an assessment of the value of these properties and negotiations on compensation are expected to commence soon. PART II - BANK GROUP OPERATIONS IN TANZANIA 13. Tanzania joined the Bank, IDA and IFC in 1962. Beginning with an IDA credit for education in 1963, it has so far received 15 credits and three Bank loans amounting to $172.1 million. In addition, Tanzania has been a beneficiary of nine loans, totaling $229.8 million which have been extended for the development of common services operated on a regional basis by Tanzania, Kenya and Uganda through their association with the East African Conmunity. The only IFC investments in Tanzania to date, totaling $4.4 million, were made in the Kilombero Sugar Company in 1960 and 1964. In 1969, IFC and other investors sold their interest in the Company to the Goverment. Annex II contains summary statements of Bank loans and IDA credits in Tanzania and the East African Com- munity Organizations as of March 31, 1974 and notes on tne execution of ongoing projects. 14. Our lendirg program, reflecting the emphasis the Tanzanian Govern- ment attaches to agricultural development is increasingly focusing on directly productive activities in the rural sector. Up to the end of FY72, 10 out of 14 loans and credits had been made for infrastructure. All but one of the loans to the East African Community Organizations, of which Tanzania is a beneficiary and co-guarantor, had been extended for improvements in transportation and comunications. However, the approval by the Executive Directors Of the Flue-Cured Tobacco Project (Credit No. 217 TA) in October 1970 opened a new phase in our lending for such directly productive activities. The Smallholder Tea Development Project (Credit No. 287 TA) was approved in March 1972. A Second Live- stock Project (Credit No. 382 TA) was approved early in April 1973. The Geita Cotton Project (Credit No. 454 TA) approved in January 1974 constitutes the beginning of a major effort to expand cotton production. A project to expand cashew nut production and processing and a proposed rural development project were appraised in October 1973. A sugar project was also appraised in December 1973. Preparations of a proposed dairy project and a second rural development project are under way. 15. Our Regional Mission in Eastern Africa was involved in the prepa- ration of six of the above projects. Our capacity to provide such as- sistance has proved to be particularly valuable in a country where project preparation capacity is, and for ane time will be, limited. Tanzania  is developing an institutional structure, stressing greater regionaliza- tion and development of ujamz.a villages, designed to promote and respond to development initiatives. These institutions are still in their formative stages, and related organizational and staffing difficulties have sometimes resulted in the project delays referred to in Annex II. In recent months Bank Group staff have held intensive discussions with the Government on ways in which these implementation bottlenecks can be alleviated. As part of' this exercise, a procurement and disburse- ment workshop was organized in Dar es Salaam in late August 1973 for the relevant Tanzanian staff engaged on Bank Group projects. In addition, the Government has recently instituted a high level monthly review for all externally aided projects. As a result of these efforts, it is expected that project implementation should now improve. 16. Tanzania's education and training programs are expected to solve the manpower problem in the longer run, but meanwhile there will continue to be a need for technical assistance in planning and implementation if the difficulties in executing projects are to be overcome. We are exploring with the Government how assistance of this kind can be strength- ened and best fitted to Tanzania. Through participation in their projects we have supported Tanzania's new development institutions at an early stage. Our supervision ol the projects has resulted in bringing to light, earlier than might have happened otherwise, that some of these institutions are facing significant diff'iculty in executing all the projects they have undertaken. Because of our involvement we have been able to help the Government in its consideration of how to overcome this problem whose solution is fundamental to rapid development. 17. The proposed urban sites and services project would be the Bank Group's first lending to Tanzania for urban development. The Credit for the Tanzania Investment Bank (Credit No. 460 TA) approved in Feb- ruary 1974 was the Bank Group's first lending in the industrial sector in Tanzania. A proposed pro5ect for textile development is presently under preparation. Other projects outside the agricultural sector which are expected to be ready for consideration in the near future include a proposed highway maintenance project and a proposed supplementary loan to complete the Kidatu Hydroelectric Project (Loan No. 715 TA). Although no projects are planned in the near future for the common services organizations of the East African Community, the Bank, through its super- vision missions of ongoing operations, is discussing further assistance for telecommunications, industry and port development. Additional loans to the East African Railways Corporation, however, will have to await resolution of the financial and operational problems being en- countered by that Corporation. The main operational problems consist ol an inadequate tariff structure, inefficient use of rolling stock, and differences between the Partner States about how the railways should be managed. The Partner States are very much alive to these problems and have arranged to engage consultants to recommend solutions.  - 7 - PART III - HOUSING AND URBAN DEVEIOPMENT IN TANZANIA General Background 18. Tanzania has a population oI about 14 million with an urban pop- ulation of 900,000 or about 6.5 percent of the total. The population growth rate in the urban areas is more than two-and-a-half times the national rate of about 2.5 percent per annum. Nearly three-quarters of the urban increase is the result of ru.ral urban migration. The Government's national development strategy emphasizes increased agricul- tural production and the improvement of rural services and amenities, with the hope that this migration will be checked. Tanzania's urban policy seeks to promote new urban growth centers outside Dar es Salaam, which currently has 55 percent of the total urban population, by its emphasis on regional development and its policy to locate industry in 10 urban growth centers outside Dar es Salaam. So far, the Government has not been very successful in implementing this policy, due in part to the lead time required to reverse trends based on economic and historical forces. 19. While the ten regional centers grew at an average annual rate of 6.5 percent during 1957-67, Dar es Salaam grew at a rate of 8 percent, reaching 11 percent between 1965-67. If these growth rates continue, Tanzania's urban population will double every 11 years and Dar as Salaam will double every 9 years, reaching one million people by 1983. Urban growth, particularly in Dar as Salaam, has far out-paced the construction of low-cost housing and related infrastructure. As a result, squatter settlements with little or no basic infrastructure and community facilities are mushrooming. In 1969 over 40 percent of the housing containing an estimated 65 percent of Dar es Salaam's population was located in squatter areas. Upcountry centers have similar problems. Mwanaa, Tanzania's third largest town (estimated population 55,800) is growing at an average annual rate of 6 percent. Located on Lake Victoria, it is the major regional manufacturing and trade center, as well as a principal port and rail terminus. Due to a shortage of inexpensive housing and surveyed plots, squatting has proliferated. Mbeya, strategically located on the Tan-Zam Highway and Railway, has grown in recent years at an average annual rate of 7 percent to its current level of 21,000. As in Mwanza, most of the population has been forced to provide its own shelter in poorly serviced squatter areas. 20. A direct result of these high rates of urbanization has been the creation of a severe nationwide housing shortage. The Second Five-Year Plan estimates that 20,000 units p.a.(including 13,700 low-cost units) in urban areas are required throughout the country. The country-wide waiting list for National Housing Corporation units is over 24,000, nearly 19,000 of which are for houses in Dar es Salaam. Another waiting list for surveyed plots in Dar es Salaam, dating back to 1967, consists of about 18,000 applications. There is probably some overlap between tkhs8 lists and some applicants undoubtedly have died, returned to the rural areas, or are no longer interested or able to secure a plot. Never- theless, these lists indicate a substantial unfulfilled dmand.  - 8 - National Sites and Services Program 21. Recognizing that its current housing programs were not meeting the needs of the low-income segments of the urban population, the Government adopted a new housing strategy based on the sites and services approach. This approach, an extension of the ujamnaa movement to the urban areas, is seen as the key to the provision of low-cost housing and as a solution to the squatter problem. In 1973, the Itinistry of Lands, Housing and Urban Development (known by its Swahili abbreviation of Ardhi), prepared a four-vear sites and services program for ten regional centers to provide 12,500 plots an1nually with basic infrastructure and communitv facilities. The proposed project is the first step in the implementation of the GovernmentAs program, with project sites in Dar es Salaam and the two regional centers of Mwanza and mbeya. 22. Hecognizing the importance of self-help contribution to alleviate the housing shortage, squatter settlements will be upgraded where spontaneously organized. efforts have resulted in well-constructed housing and viable neighborhoods. This is an important departure from previous policies of squatter demolition and resettlement which the Government found too costly and socially disruptive. Under the proposed project three such settlements will be upgraded. Basic infrastructure and community facilities will be provided and sturdy housing will be con- served and improved, resulting in a significant cost saving. An addi- tional benefit will be the preservation of viable communities which ofter. serve to integrate the rural migrant into the urban community. Tanzania Housing Bank 23. To meet the credit requirements of low-income households for con- struction loans, the Tanzania Housing Bank (THB) was established in 1973 replacing the Permanent Housing Finance Company of Tanzania (PHFCT), a cormmercial institution ;jointly owned by the Goverinent and the Common- we,alth Development Corporation (U.K.). The main purpose of 'nB is to mobilize domestic savings and foreign funds for financing low-income housing for individuals and cooperative groups. THB provides technical and financial assistance lor sites and services projects, ujamaa villages, and other owner--occupied housing schemes. Mbreover, it promotes the use of local building materials, encourages the construction of housing types best suited to local conditions, and fosters the minimizing of building costs. 2L4. THB- is a corpora.te body wi- more than 50 percent of its share capital owned by the Government. It is governed by a Board of Directors, consisting of 8 to 12 members appointed by the .nister of Finance with the Chairman appointed by the President. One of the Directors is the Principal Secretary of Ardhi, thus ensuring coordination of po';icy and programs between Ardhi and THB. THB is currently receiving techni.cal. assistance from SIDA ancl NORAD and has inherited well-trained and qualified adminvistrative and operational staff from PHFCT. Additional staff are being recruited and trained, placing THB in a sound position to undertake it's enlarged objectives.  25. THB offers two major types of loans: (i) housing loans at 6 percent per annum interest for up to 20 years to meet needs of low- income groups and (ii) loans at 9 percent per annum interest for up to 10-20 years for individuals or institutional borrowers who wish to invest in expensive housing or commercial buildings. Loans are provided for the construction of low-income housing by participants in sites and services projects throughout the country. Lending procedures, particularly suited for individuals and cooperative groups in such projects, have been prepared. All loan applications must be accompanied by a long-term Right-of-Occupancy, issued by the regional administrations, and all loans must be secured by a first mortgage. THB must satisfy itself that the borrower has the ability to make repayments without undue hardship, and that adequate provisions for the enforcement of the repayment exist. In addition, THB ensures that the proceeds oX any loan are used solely for the purpose for which it was granted. PART IV - THE PROJECT General 26. An appraisal report entitled "Tanzania - National Sites and Services Project" dated May 14, 1974, is being circulated separately. A Credit and Project Summary is provided as Annex III to this report. 27. A mission from the Transportation and Urban Projects Department identified the project in February 1973, and it was appraised in the field in August/September 1973. Negotiations for the proposed credit were held in Washington, D. C. in April 1974. The Tanzania delegation was headed by Mr. B. A. Sikilo, Principal Secretary, Ardhi. Objectives 28. The proposed project is an initial step in implementing the Govern- ment't nation-wide low-cost housing program, with project sites in Dar es Salaam and the two regional centers of Aaansa and Mbeya. Although it will not satisfy the total demand for serviced and improved plots, the funds, technical assistance and training support provided under the project will enable the Government to strengthen its institutional capacity to plan and implement an expanded program in the future. The provision of surveoyed plots, basic infrastructure, commnmity facilities, and access to credit for construction will pormit low-income households in planned areas and squatter settloments to constract houses and improve their living conditions on a elf-help basis and at acceptable per plot costs.  - 10 - Project Description 29. The proposed project will be executed over a three-year period (1974-77) and will consist of the following: (i) Mew Sites: about 10,600 newly serviced plots located as follows: 7,450 plots on three site8 in Dar es Salaam (Sinza, Kijitonyama and Mikocheni); about 2,300 plots in Mwanza (Nyakato), and about 870 new plots in Plbeya (Mwanjelwa). (ii) Squatter InMrovements: improvements to basic infrastructure facilities and additional services in two existing squatter settleaments of Dar as Salaam (Manzese A and B) and the Hwanjelwa settlement in Mbeya. These improvements will affect about 8,800 dwellings. (iii) Community Facilities and Ecguipaent: ccnstruction of eleven community education centers, one health center, seven dipensaries and eleven markets on the seven project sites. Purchase of coss pit eaptiers and refuse collection trucks and equipment. (iv) Construction Loans: assistance to THB in financing construction and house improvement loans for low inc ce households on the project sites. Loans will be extended by THB for purchase of cement, galvanied iron roofing and other building materials. (v) Training and Monitoring: a training program for technical staff of Ardhi and expansion of the physical facilities for the town planning program of the Ardhi Institute (a training school of the Ministry), as well as monitoring of the project by the Economic Research Bureau of the University oZ Dar es Salaam. (vi) Nutrition: a pilot project to improve the nutritional awareness of households in the sites and services areas, and (v) Consultants' Services: consultants for the design and detailed engineering of basic infrastructure and community, facilities, preparation of a follow-up site and services project and overaUl project sapervision. Project Sites 30. The seven proposed sites were selected after a careful evaluation in accordance with three basic criteria: (i) availability of land, suitably sized and situated which could be developed economically for low-income housing; (ii) suitable Boil and ground water conditions to enable natural drainage of the area and (iii) location relative to job opportunitiss, transportation facilities, and off-site infrastructure  such as access roads, water, power and sewerage mains. For squatter settlement areas, an additional selection criterion was the existence of well-constructed housing and viable neighborhoods. 31. In Dar es Salaam, the five oites selected are located on the principal roads to the city center and are near the rapidly developing Ubungo indastrial area. With the completion of the port access road in 1977, the sites will also be within a short commuting distance of the existing major industrial area along Pugu road. In Mwanza, the site is located on the principal east-west route served by the public transport system and near the Nyakato industrial area. In Mbeya, the site is adjacent to the city center and in close proximity to the Tan- Zam highway and railway. Project Costs 32. Total project costs are estimated at $16.7 million, including land acquisition costs of about $634,000 which will be borne in full by the Government. The foreign exchange component of $3.9 million (23 percent of total cost) is rolatively small due to the labor intensive- ness of the project and the econoy of design standards. The proposed IDA credit of $8.5 million would finance the total estimated foreign exchange component as well as $4.6 million equivalent of local cost, and would amount to about 50 percent of the total project cost. IDA will finance 65 percent of the costs of the infrastructure, ccmmunity facilities, and the expansion of the Ardhi Institute, 75 percent of consultant services, the full cost of equipment, and $2.0 million for the construction loan funds for the THB. The breakdown of project cost is given in Annex III. Project Standards (a) Individual Plots 33. The basic design unit is the ten-house cell for both new and squatter improvement areas. The plot layouts and preliminary engineering on four sites, i.e. two new (Sinsa and Kijitonyama) and two squatter settlements (Manzese A and B), give a typical plot size of 288 m2. This is lage in comparison to previous Bank/IDA financed projects (Senegal 150 m , Nicaragua nO m2 and Jamaica 94 m2), but is appropriate in the Tanzanian context given the need to accommodate a traditional Swahili house, the most prevalent type of low-cost house, which in constructed of local materials and consists of four-six rooms separated by a corridor. Such houses often lodge several families with provision for an outdoor cooking area, a garden (shamba), and a pit latrine or aqua privy (septic tank). Under present Government procedures a long-term Right-af-Occupancy  - 12 - is required to undertake permanent construction and on the issuance of this right the national building codes apply. These codes were framed for high-income group housing and require a minimum investment of about TSh 15,000 in the construction of a house. In the project area, however, an improved Swahili house of cament, clay block walls, concrete floor and galvanized iron roof is estimated to cost TSh 7,000 for a four-room and TSh 9,000 for a six-room house. The Government has, there- fore, agreed in Section 3.06(ii) of the Devel-opment Credit Agreement to waive application of the building codes for low-income housing in the project areas. In their stead, Government has under consideration the preparation of house designs and building standards which will be used on an interim basis for project housing. The Government has further agreed in Section 3.06 (iii)of the Development Credit Agreement to revise the building codes and, after review by the Association, to incorporate the new standards into a revised code by December 31, 1976. (b) Infrastructure and Community Facilities 3L4. The design standard