Tanzania - Investment Bank Project

CIRCULATI Cto gt, goTO BE RETURNED TO REPORTS DESK IFILE OP DOCUMENT OF INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use Report No. P-1340-TA REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE UNITED REPUBLIC OF TANZANIA FOR A DEVELOPMENT FINANCE COMPANY PROJECT January 23, 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 It may not be published, quoted or cited without Bank Group authorization.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.  CURRENCY EQUIVALENTS USED IN THIS REPORT From independence in 1961 until March 1973, the exchange rate between the Tanzania Shilling and the US dollar was retained at $1 = TSh 7.143. This is the exchange rate used throughout the report. Since June 30, 1973, the Tanzania Shilling has been set at a central rate of $1 = TSh 6.9, and the country has availed itself of the margins of up to 2-1/4 percent. Tanzania Shs 1.0 = US$ 0.14 Tanzania Shs 1 million = US$ 140,000 US$ 1.00 = Tanzania Shs 7.14 MEASURES 1 mile = 1.6093 km 1 acre = 0.4047 hectares FISCAL YEAR July 1st - June 30th  REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMET' CREDIT TO THE UNITED REPUBLIC OF TANZANIA FOR A DEVELOPMENT FINANCE CC?4PANY 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$ 6.0 million on standard IDA terms to help finance a Development Finance Company Project. The proceeds of the credit would be relent to the Tanzania Investment Bank at 7-1/4 percent interest per year on the outstanding balance plus a 3/4 of 1 percent commitment charge on all amounts not yet withdrawn. PART I - THE ECONOMY 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 followed 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 Tanzania during September/October 1973; its report is expected to be issued about the middle of 1974. During 1974 we shall undertake a mission to study the industrial and mining sectors as well as a basic economic mission. 3. Tanzania celebrated its first decade of independence in December 1971. In the past 11 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 41 years, infant mortality declined from 250 to 160 per thousand live births, maternal mortality declined from 4.7 to 2.7 per thousand deliveries, and the primary school enrollment rate increased from about 28 to 37 percent of the relevant age group. While this sample of economic and social indicators shows that significant progress has been made, it also gives some idea of the magnitude and difficulty of the development task facing the country. For example, while GNP grew at 4.7 percent per annum in real tenms 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 annum. 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, TANU, is a well-organized mass party and is actively engaged at the grass roots in the promotion of popular in-  -2 - volvement in the national development effort, and within the party democratic principles are being strictly adthered to. In economic policy making, the long-term objective of social equality prevails over economic interests of minority groups; some 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 char- acterized by high marginal savings, relatively low returns on investment, and rapid institutional change. Marginal national savings were around 50 percent in 1970 and 1971 which represents an excellent savings performance. The growth of production, however, has been modest in most sectors, especially in agriculture. The combination of moderate production growth rates, virtually stagnating exports and a very ambitious investment program has led to severe pressure on resources. This pressure has been partly alleviated by steadily increasing external capital inflows and more recently by an improvement in the country's terms of trade. Owing to the favorable current world market prices for several of Tanzania's principal exports as well as growing contributions for local project costs by foreign donors, Tanzania's external reserves are presently at a level representing about three months' imports. 6. In terms of foreign aid disbursements, the People's Republic of China is presently Tanzania's principal donor, supplying about 75 percent of the net capital inflow in 1971. In terms of outstanding loans and credits, however, the Bank Group is the largest creditor to Tanzania followed by Sweden, Norway and the Soviet Union. Including a notional one-third share of the debt of the East African Community Corporations, the IBRD is presently carrying 9 percent of Tanzania's outstanding external debt and IDA 13 percent; the IBRD share is expected to rise to about 12 percent in the next five years, and the IDA share to 16 percent. 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 cormitted aid. For example, 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 was 9.7 percent in 1972 and is not expected to exceed 10 percent  -3- before the end of this decade. Although Tanzania's reserves are presently at an adequate level, in view of poor long-term market prospects of Tanzania's main export crops, it was agreed at the last meeting on Tanzania of the Consultative Group for East Africa held in january 1973 that it was important that aid terms be kept as con- cessional as possible so as not to overburden the balance of payments. 7. 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 Tansania 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 an expected decline in the rate of investment, Tanzania will still require a continued capital inflow in excess of the foreign exchange component of high priority projects if 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 diminishing as part of an effort to accelerate project pre- paration and implementation. 10. President Nyerere recently announced that following a review, the Government has decided to move the capital of Tanzania from Dar es Salaam to Dodoma. By moving the capital city to the center of the country and so closer to the bulk of the rural population, it is the expectation that the Government will become 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 co3ts involved are yet available but in view of the scarcity of investment resources in Tanzania, it is likely that the transfer of the capital will take much longer than planned; in addition, the number of Government offices moved may be fewer than is presently envisaged. 11. The administrative structure and many of the functions of Govern- ment were decentralized to the regions in July 1972. This was done to make the Government more responsive to the needs of rural develop- ment. It is still far too early to assess the success or otherwise of the decentralization of Government in Tanzania. As expected, problems of coordination between the center and the regions have occurred, and the tram fer of high-ranking officials from Dar es Salaam to the rural areas has had its inevitable, but one hopes only short- term, effect on the smooth functioning of Central Government. Some dislocation in project implementation 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 development programs are now being prepared in the regions and Bank Group finance is being sought for some of 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, reflecting the local availability of the required expertise. Ways in which the Bank 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 commercial property the construction cost of which was ove- 100,000 Tanzanian Shillings ($14,000). 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 actual acquisition itself or on the amrunt of compensation. These claims, including the foreign cases, have either been settled or are in the process of being settled in accordance with the provisions of the Act. The Government has recently expropriated about 50 large scale farms in the Moshi-Arusha area of northern Tanzania. The Government is presently making an assessment of the value of these properties and negotiations on compensation are expected to commence soon.  PART II - BANK GROUP IENDING TO TANZANIA 1.,. Tanzania joined the Bank, IDA and IFC in 1962. Beginning with an IDA credit for education in 1963, it has so far received 14 credits and three Bank loans amounting to $266.1 million. In addition, Tanzania has been a beneficiary of nine loans, totalling $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 as- sociation in the East African Community. The only IFn investments in Tanzania to date, totalling $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 Government. Annex II contains summary statements of Bank Loans, IDA Credits and IFC Investments in Tanzania and the East African Community Organizations as of October 31, 1973 and notes on the execution of ongoing projects. 14. Our lending program, reflecting the emphasis the Tanzanian Government 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 have 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 communications. 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 Livestock Project (Credit No. 382 TA) was approved early in April 1973. A recently approved project 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 underway. 15. Our Regional Mission in Eastern Africa was involved in the preparation of six of the above projects. Our capacity to provide such assistance has proved to be particularly valuable in a country where project preparation capacity is, and for some time will be, limited. Tanzania is developing an institutional structure, stressing greater regionalization and development of ujamaa 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 disbursement 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 iI the difficulties in executing projects are to be overcome. We are exploring with the Government how assistance of this kind can be strengthened and best fitted to Tanzania. Through participation in their projects we have supported Tanzania's new development institutions at an early stage. Our supervision of the projects has resulted in bringing to light, earlier than might have happened otherwise, that some of these institutions are facing significant difficulty in executing all the projects they have under- taken. Because of our involvement we have been able to help the Government in its consideration of how to overcome this problem whose solution is fundmnental to rapid development. 17. Projects outside the agricultural sector which are expected to be ready for consideration within the next six months or so include a highway maintenance project and an urban site-and-services project, both of which have recently been appraised. The latter project would, if approved, represent our first direct inrolvement in the urban sector. The proposed credit would be the Bank Group's first lending to Tanzania's industrial sector. PART III - THE INDUSTRIAL SECTOR 18. The manufacturing sector in Tanzania accounts for only 10 percent of GNP but is increasing in importance. Industrial output increased by 8 percent per year during 1968-1970, and will probably grow more rapidly in the future because of increased investments in the sector. Industrial investments increased from TSh 150 million (15 percent of total investments) in 1966 to TSh 314 million (18 per- cent of total investments) in 1970. 19. Following the Arusha Declaration in 1967, the Government national- ized many industrial enterprises. Most industrial capacity is now in the public sector, but the contribution of private finms remains sig- nificant, and although precise figures are not available, rough estimates attribute about one-third of industrial investment and output  -7- to the private sector. Government leaders have indicated that Tanzania plans to retain a flexible, pragmatic approach to private investment. The Government in l965 established the National Development Corporation (NDC) to promote and imolement public investment in industry, agricultural processing, and tourism. After the Arusha Declaration, nationalized industrial enterprises were regrouped in the National Development Corporation. Subsequently, in 1970 and 1971 the Government split several state corporations from NDC including those dealing with agricultural processing, tourism, and woodworking industries. These have been grouped into holding companies which manage existing enterprises and promote new projects through equity investments in their respective sectors. Lack of funds has increased the dependence of these corporations on budget allocations for invest- ment in new projects. Such budget allocations must be approved by the ministry concerned, then by the Ministry of Finance and the I/inistry of Development Planning and Economic Affairs, and ultimately by the Economic Committee of the Cabinet. 20. The state corporations also need technical and managerial manpower to appraise and manage projects, and most such enterprises depend significantly on expatriate personnel. To reduce this dependence the Government has strengthened efforts to train Tanzanians. A major com- ponent to this effort has been an accelerated program at the Institute for Finance Management to train managers. Many state corporations have had financial difficulties. In 1971, 15 of the 33 subsidiary and associated companies of the NDC incurred losses, and several others had only marginal profits. Many industries suffered disruptions in their markets or in receiving raw materials and spare parts through import difficulties often attributed to problems within the State Trading Corporation (STC). Recent decentralization and specialization of the STC may improve supplies. 21. The manufacturing sector is dominated by a few large firms. In 1971, more than two-thirds of the total assets of NDC's subsidiary and associated companies in this sector belonged to only seven firms: a fertilizer plant, two textile factories, a tire factory, a cement factory, a cigarette factory, and a brewery. In contrast to the smaller firms, the large ones are quite capital intensive and profitable. Manufacturing activity is concentrated along the northeastern sea- board (the Dar es Salaam and Tanga regions), in the north (near Arusha and Moshi), and on the shore of Lake Victoria, with Dar es Salaam being the most important center. Most of the obvious import substitute sectors have already been entered, and three-fifths of total consumer demand for manufactured goods is met by Tanzanian production, as com- pared with one-fifth at independence in 1961.  22. Although the Tanzanian Government's first priority is rural and agricultural development, the industrial and agricultural sectors are seen as being integrally related and increasing stress is being placed on industry, especially the processing of agricultural products. The Government is developing a more comprehensive industrial strategy. Given the general policy to stimulate public sector investments, encouragement to private investors is limited. There a-re, however, a number of incentives to industrial investment, including an allowance of 120 percent depreciation on investments, rebate of sales tax paid on exported goods, and refunds or remission of duties on imported goods. The East African Community's external tariff provides protection which may be supplemented by transfer taxes on imports from the Partner States, import licensing, and moratoria on licensing competitive production. 23. The prospects for growth in the industrial sector during the next five to ten years are strongest in the local processing of agricultural products for both export and domestic consumption. Substantial ad- ditional investment is envisaged for textile and garment industries, tanneries, a shoe factory (processing both leather and canvas), breweries, wood processing, rope and twine factories, fish processing, and cashew processing. An ambitious nationwide industrial extension service is being established with a view to assisting in the planning and management of small industries. A team of the Harvard Development Advisory Services is now studying industries in which Tanzania would have a comparative advantage; their work will be used in setting industrial priorities in the next five year plan. Some possibilities appear attractive in small scale industry and mineral extractions. We shall know more about these sectors after an industrial mission completes its work towards the end of FY 74. 24. Tanzania has several institutions providing finance for industry in addition to TIB, the recipient of the proposed credit. The Tanganyika Development Finance Company, Ltd. (TDFL) was established in 1962 and is owned in equal shares by the Government and British, German and Dutch aid agencies. It has a capital of TSh 40 million, provides loans and equity for projects in industry, agricultural processing and tourism, and has recently changed its policy of financing only private enterprise. TDFL is restricted to projects with total assets oV less than TSh 4 million, and its operations amount to about TSh 10 million per year. Industrial investments can also be financed by the East African Development Bank (EADB), created in 1967, which has a loan from the World Bank. EADB's charter excludes it from financing tourism, transportation and agricultural projects. Its operations in Tanzania have amounted to about TSh 15 million per year.  -9- PART IV - THE PROJECT 25. A Report entitled "Appraisal of the Tanzania Investment Bank" (No. 283-TA) is being circulated separately. A Credit and Project Summary is provided as Annex III. The purpose of the Credit is to assist TIB to finance specific development projects through loans and investments for productive enterprises in Tanzania. 26. The Tanzania Investment Bank was established in November 1970 to finance industrial, agricultural processing, tourism, and trans- portation projects in both the private and public sectors. TIB's opera- tions have increased rapidly, and TIB is now the major medi.um and long-term financing institution in the country. Capital Structure and Resources 27. TIB's authorized share capital is TSh 100 million of which TSh 50 million has been paid in. TIB's equity also includes accumulated reserves of some TSh 3 million. The Tanzanian Govern- ment owns 60 percent of the share capital directly, 30 percent through the National Bank of Commerce (NBC), the only commercial bank in the country, and 10 percent through the National Insurance Company, the only insurance company. NBC and NIC are entirely owned by the Government. TIB's Board is nominated by the Government and by the two minority shareholders. The present Board includes the Managing Director, who is also the Chairman, the Principal Secretaries of the Ministry of Finance, the Ministry of Development Planning and Economic Affairs, and the Ministry of Commerce and Industry, the Chairman of the National Bank of Commerce, and the General Manager of the National Insurance Company. 28. Foreign resources consist of TSh 49.5 million untied funds from Canada, Sweden, and the African Development Bank, TSh 87.5 million partly-tied funds from Canada, Denmark, and Finland, and TSh 313 million tied funds from Bulgaria, China, India, the Netherlands, and the Soviet Union. TIB's local borrowing consists exclusively of a loan from NBC to finance the medium and long-term loan portfolio which NBC transferred to TIB upon its inception. Management and Organization 29. TIB is managed by a full-time Managing Director and by a General Manager. Mr. G. Nbowe, the Managing Director, joined TIB in 1972 from the Treasury. Mr. C. Kahangi, General Manager, is a former Rxecutive Director of the World Bank. The General Manager and the department  heads for a loan committee which must approve loan and investment proposals before they are presented to the Board. TIB has a good staff at present; however, the contracts of two expatriate department heads will expire within the next half year, and it is important that TIB replace them with competent personnel. At the request of TIB, Sweden has agreed to replace the outgoing Director of Operations who is being financed under their technical assistance program. Operating Policies 30. TIB can make loans, provide guarantees, and invest in equity provided it does not take a controlling interest in a client. The Government's policy has been to accord state corporations the primary role of promoting and managing investments through equity financing while TIB is expected to provide an independent check on these investments through loan financing. TIB's activities consist of "ordinary" operations on which it carries the credit risk and "special" operations administered on behalf of the Government. All TIB financed projects must be economically sound, technically feasible, and if financed at TIB's own risk, financially viable. TIB has agreed that total commit- ment in any single project or enterprise shall not normally exceed 20 percent of its net worth. TIB can, at its own risk, provide no more than 75 percent of an enterprise's total long-term financing and will normally not provide more than 60 percent. The maximum term of a loan or guarantee is 15 years. Under the TIB Act as it stands, TIB can invest no more in equities than 10 percent of its net worth, but in order to increase its influence on the investment decisions of its borrowers, the Government and TIB intend to raise substantially the existing ceiling on equity investments. TIB is required to follow a prudent policy in debt acquisition and will not incur debt in excess of three times its net worth. TIB has agreed to apply a miniimum lending rate at 9 percent for its ordinary operations. 31. TIB's Act requires that TIB be audited by the Tanzania Audit Corporation (TAC), which is owned by the Government and has suffered fram inadequate staff strength. TAC can sub-contract audits and will be asked to do so for TIB if the 1973 audit does not meet normal Bank standards. TIB's standard loan agreement with its clients is satisfactory. TIB requires international tendering for all items above TSh 100,000 (about $14,000); international tendering is waived in a small number of cases if suitable goods and services are avail- able locally. Disbursement procedures are adequate.  Operations and Portfolio 32. As of June 30, 1973 TIB had approved 33 loans and five equity investments in 31 projects. Loan approvals amount to TSh 95 million, of which TSh 32 million is for local expenditure and TSh 63 million (67 percent) for imports. These have included loans for the processing of agricultural and other primary commodities, transporta- tion, manufacturing and tourism. Loan size has averaged about TSh 2.8 million and about 80 percent of total lending has been made to the public sector. As of June 30, 1973, TIB had committed TSh 50 million and disbursed TSh 19 million. Only three loans had reached the repayment stage, and none was in arrears. The five approved equity investments amounted to TSh 4.6 million, of which TIB had committed TSh 2.7 million and disbursed TSh 1.8 million. TIB's assets further include a medium and long-term loan portfolio which was transferred from NBC at TIBTs inception. The portfolio is entirely guaranteed by NBC. As of March 31, 1973, the portfolio's value was TSh 73 million. TIB's profits after taxes (about 40 percent of taxable income) amounted to 2.4 percent of net worth during FY 72 and 2.2 percent during FY 73. At June 30, 1973, accumulated reserves amounted to about TSh 3 million. Profits as a percentage of average net worth are projected to increase gradually to 5.1 percent after taxes (8.6 percent before taxes) in 1978. Total assets are forecast to grow at 30 percent per annum until FY 77 and at 15 percent per annum thereafter. The debt/equity ratio will remain between 2.0 and 2.6 throughout the 1973/78 period. TIB's debt service capacity will be adequate; interest and principal coverage wlll increase from 1.2 in 1974 to 3.2 in 1978. Projected Operations and Resources Requirements 33. TIB anticipates that loan approvals will amount to TSh 50 million during FY 74 and TSh 60 million per year thereafter. TIB expects that about 70 percent of its new loans will be for imports, and that it will finance 70 percent of the import component from untied credits. TIB's present untied funds will cover commitments only until June 1974 and additional funds totalling TSh 63 million (US$9 million) will be required to cover the import component of its commitments through June 1976. TIB expects to obtain TSh 21 million untied funds from bilateral sources. A $6 million (TSh 42 million) IDA credit is recommended to cover TIB's remaining foreign resource requirements until June 1976. Terms of Proposed Credit 34. The proposed IDA credit would be onlent to TIB through a subsidiary loan agreement on the normal terms and conditions for  - 12 - lines of credit to development finance companies. TIB would pay the Government 7-1/4 percent interest on the outstanding balance and a 3/4 of 1 percent commitment fee on amounts not withdrawn from the credit account. TIB would repay the Government within 15 years according to the composite of repayment schedules of its borrowers. TIB will pass on the foreign exchange risk to its sub-borrowers. The Association would require TIB to submit for prior approval each project using $100,000 or more of the proposed credit and TIB could not use more than $1 million in total without such prior approval. PART V - LEGAL INbTRUMENTS AND AUTHORITY 35. The draft Development Credit Agreement between the United Republic of Tanzania and the Association, and the draft Project Agreement between the Association and the Tanzania Investment Bank are being distributed to the Executive Directors separately. The draft Agreements conform to the normal pattern for development finance company projects financed under IDA credits. 36. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 37. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President Attachments Washington, D. C. January 23, 1974  AM~JEX 1 Page 1 of 3 Pages oCuNThY DIATA - -TANZANIA POPUILATIOlNDEST A-," LA~ ~ ~ ~ ~ ~ ~~~~1. million (mid-19731) 14 Per km 2 94~~~~,'Y!? k.~~~~~~~~ 147/k ft~~~~~~Pr on2of arable land SOiCIAL DIDICATORS Reference Countries Tahozania N2ra U.K. Ii P.ENl CAPlIT 11$ IAAZBASISIj IO..10 150 120 2,210 IIEt*,RAPlIU,j647185 ~WTT7hrate (par thousand) 25 I 2la 24501 Crude death rote (per thousand) 225 216o1654 19/ Irnrant mort.,lity rate (par thousand live births) 22 /a .65s. 50l51 Ltfe expoctoncy at birth (years) 13 / 13 1.9 37 72 O,ross reprodcuctio,n r.te / 3.2 3.3 3.3 1.3 Population aro,th, rat 2.2 2.7 3.3 2.5 . Popul.tio,, Frowth rate - urban . 7 6 lej 5 0.5 Ago structurs (percent) 11,2, 0-il, I, .'a, hL , 52 l,,-61. V'/a 53 51 53 03 65 And over 2 A. 3 2 2 13 lk,rendanncv ratio A4 0. ~ i1 1.2/h 1.2 0.8 rhnpopul.Itoc As perceont of total 46 I 9 /d.f 23 78 F.aui13 planning, N, of a.cceptors cumoulative (thous.) .. Nu. of users (% of married women) .. 2.2 EMP'WY1ENT Total abor force (thousands) 5,?80 5,066) Id h 24,050 25,240 Per-entage omployed in agrimulture ..91 go __ 'C 3 Parceutago unemployed . . 3. INcOME DISIRlAUTION Percent of national income received by highest 5% . Pe r cent of na tiJon. 1 ircomeO received by highest 20% ..... P,rcent of na t Io,a . c,,cme received by lowest 20%... Inroo-t of natic-:. 1ic-um receivad by lowest, .0% . UJli;TIIBIIT, I owned' i, %t ownoJ by ,eal l-,' of owners HEALTH AND NUTIPfNlul. 2,1 .o/d 2 086i/ Pol,ulation, I.r iorarstog parson . 2 , skI 7o U 3, (l;V 7T 2, 530 73 2 Population per haspital hod 530 Ic 780 7io7o 7d 1,910 7~ 105 /d Por capita colorio supply as % of requirements /5 t,5 Ik 69 91) 97 120 r` pi ndta protao I supply, totel (grams Per d.yJL6 If' 7k- 43 64 59 ii Jf whi,h, Animal and pulse 2)2 717 23 29 5o S Uenth rate3 1-I yearsa /7 -... 0.90 EDUCATION Aliasted /8 prima,ry schoolerolutaio. 3i 60 / 4 3/ Adi,usto,d 77 secondary school enrollment ratio 2 2 ii 563 7- Y.,ars of schooling provided, first and second level 13 13 13 14 121 Vocational o,,rol.lm.nt as % of soc. school enrollment 22 6 2 10 /I 5 / Adu,lt litecacy rate % . 30 /j 97 7d HOUSING Average No. of persons per room (urban) 11/ ... 0.6/n Pe rcent -' occupied units without piped water .20 /mt Access to electricity (As % of total populationi) .3 ..8 Percoant of ,'ural population coatnected to electricity .... CONSUMP'TION Radio receivers per ltlOO population 2 11 48 Id 23 321, /d Passenger cars per 10)0 population 2 '5 d 9 1.2 215 Electric power consumption (kwh p.c.) it, /b 29 7(TL.. 45 19 Id 14,291 /d Newsprint consumption p.c. kg. per year o0o7,, 0.i1 0.4 0.17 2I3 Notes, Pt gorma refejr either to -t'he latest periods or to account of enviroissetal temperature,-boY Veight, and the latest yeara. Lateat periods refer in principle to distribution by age end sex of national populations. the years 195-640 or 1966-70; the latest years in lpri-n- A Protein atandards (requirasente) for all countries as eatab- cipl. to 19603 and 1970. Only significantly different lished by, USDA Economic Research Service provide for a minimumc peritels or years ar footnoted separately. aliowaance of 60 grams of total protein per day, and 20 grams of /I The Per Capita (aNP estimates for years other than 1960 anima and pulse protein, of whiah 10 grams Should be animal As at market prices, calculated by the same conversion protein. Thease standards are somewhat l-Oer than thoase of 75 teahniqu as ASt.s 1972 World Bank Atlas. gr-ams of total protei-n and 23 grams of animal1 protein as an /2 Average number of Aaughtiers per woman or reproductive average for the world, proposed by FAO in the Third World Food Age. Survey.jde aeogetdta rd et ae fcide 13 PopulatIon growth rates are fbr the, d.eedes ending it, Li Some stdea aesgetdta rd et ae fcide 1960 and 1970. ages I through 1* may be used as a first approxImation index of /4Ratio of u,,der 15 and 1.5 and over Age brackets to Maln,,trition. thotse i,, Iabor fo,rce bracket of Sage 15 ihno,,gh 64. Lb. Percentage enrol-led of oorresponding population of school age PAl1 reference sie,ndarda reprea.. t physiological re- as defined for each country. cp,irements fc,or -rmal activity and health, takintg 0 -U',, 4 *'' i~~~~ ti IA',; ,rl~'5 1'I~; /f tCuer ?,OiX popatLatin-; Lp flatiu of lol ct,.', I" .cI 'a 0 05c t., Wtota l.-,,' rce; lb ott- aco in age bracket 15-59; /1 Ratio of I;,,'', odor I" aol I,'. ,- 'r age or.cbeta to, tlt,14e in T15-AI, ego i,racketi IA1 ti96 /k 197T'-63; /1 Date 'I [2 ,lai,'a ~/,n I4,t, ..,...I,: /c 19t.. orho,. ,,,Iu rural; AT 1958, ZancloDar only; / pbldn R2 Decemoer 4, 19,>  ANNEX 1 Page 2 of 3 pages ECONOMIC INDICATORS GROSS NATIONAL PRODUCT IN 1971 ANNUAL RATE OF GROWrH (%, constant prices) US$ Mln. % 1960 -65 1965 -70 1971 GNP at Market Prices 1,332 100.0 5.0 4.5 4.5 Gross Domestic Investment 370 27.5 14.3 27.5 Gross National Saving 286 21.5 5.7 10.8 Current Account Balance - 90 - 6.7 Exports of Goods, NFS 338 25.4 .. 7.4 6.4 Imports of Goods, NFS 433 32.5 .. 9.4 20.0 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1971 Value Added Labor Force-/ V. A. Per Worker US$ Mln. % MLm. us % Agriculture 521 39 5.3 91 98 43 Industry 159 12 0.1 2 1590 694 Services 651 49 0.3 3 2170 948 Unallocated I 0.1 4 Total/Average 1331 100.0 100.0 229 100.0 GOVERNMENT FINANCE General Government Central Government KLn. %ofGGDP Mln.) % of GDP 197 - 197 196 -7 1271/72 1971 1965- 70 Current Receipts (No information available but totals 1913 20 16 Current Expenditure for all items only slightly higher than 18214 19 16 Current Surplus for Central Government) 89 1 1 Capital Expenditures 1440 15 7 External Assistance (net) 839. 9 3 MONEY, MONEY, CREDIT and PRICES 1965 1969 1970 1971 1972 1973 (June) (Million Shs outstanding end periodT Money and Quasi Money .. 2194 2620 3174 3178 3180 Bank credit to Public Sector .. .. .. Bank Credit to Private Sector .. .. .. (Percentages or Index Numbers) Money and Quasi Money as % of GDP .. 26% 29% 33% 29% General Price Index (1963 - 100) .. 130 134 138 150 156 Annual percentage changes ins General Price Index .. 1.6 2.7 3.3 8.7 4.0 (6 months) Bank credit to Public Sector .. .. .. Bank credit to Private Sector .. .. .. NOTEt All conversions to dollars in this table are at the average exchange rate prevailing during the period covered. 1 Total labor force; unemployed are allocated to sector of their normal occupation. "Unallocated" consists mainly of unemployed workers seeking their first job. not available not applicable  ANNEX 1 Page 3 of 3 pages TRADE PAYMNTS AND CAPITAL FIOWS BAIANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 19169-71) 1969 1970 1971 US $ Min % (Millions US $) coffee 37 16 cotton 33 14 Exports of Goods, NFS 285 318 338 sisal 22 9 Imports of Goods, NFS 277 361 433 diamonds 26 1l Resource Gap (deficit 75-) + 8 - 4 -y5 cashew 17 7 Interest Payments (net) - 3 - 3 - 2 All other commodities 103 43 Workers' Remittances Total 237 100.0 Other Factor Payments (net) Net Transfers + 9 1 1 7 EXTERNAL DEBT, DECEMBER 31. 1972?J Balance on Current Account +14 -34 90 US $ Mln Direct Foreign Investment 3 - 1 1 Net MLT Borrowing 28 85 116 Public Debt, incl. guaranteed 371 Disbursements 34 93 142 Non-Guaranteed Private Debt Amortization 6 8 26 Total outstanding & Disbursed- Subtotal 31 4 Ji 117 1p2 Capital Grants .. .. .. DEBT SERVICE RATIO for 19 2 Other Capital (net) 18 9.7% Other items n.e.i - 20 -51 - .5 Increase in Reserves (+) + 3 - 15 - 5 Public Debt, incl. guaranteed 9.7% Non-Guaranteed Private Debt Gross Reserves (end year) 80 65 60 Total outstanding & Disbursed Y-/ Net Reserves (end year) 74 55 42 RATE OF EXCIANGE IBRD/IDA LENDING, October 1973 (Ml!lion US $): 2 Through March, 1973 IBRD IDA US $ 1.00 = Sh 7. 1__ TSh 1.00 = US $O.l1 Outstanding & Disbursed 32 h9 Undisbursed 10 58 Since July 1973 Outstanding incl. Undisbursed __47 IG7 us $ 1.00 - Sh 6.9 (central rate) TSh 1.oo Us $0.14 1/ Ratio of Debt Service to Exports of Goods and Non-Factor Services. / Excluding IBRD lending to East African Corirunity. 2 Including Tanzania's notional one-third share in the external debt of the East African Community. . not available . not applicable December 3, 1973   ANNEX II Page 1 of 6 A. STATEMENT OF BANK LOANS AND IDA CREDIT