Announcement of Seventeen Million Fifty Thousand US Dollars Credit for a Cotton Development Project in Tanzania on January 10, 1974

• INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET. N.W .. WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 74/2 Subject: $17.5 million credit for January 10, 1974 a cotton development project in Tanzania. The International Development Association (IDA), an affiliate of the World Bank, has approved a credit of $17.5 million to help finance a cotton development project in the Geita district of Mwanza near the southern shores of Lake Victoria in Tanzania. About $5 million of the credit will be relent to the Tanzanian Rural Development Bank (TRDB) for onlending to cooperative societies, membership of • which includes the cooperative "ujamaa" villages, an important instrument in Tanzania's rural development program and now involving more than two million of the population. Agriculture and related activities constitute the largest sector of Tanzania's economy and agricultural export.s, including cotton, coffee and sisal, and account for 80 per cent of total exports. Most of Tanzania's population live in rural areas and about 90 per cent of the economically active people are engaged in agriculture. The Government with its second Five-Year Plan aims at improvement of incomes and living conditions through rural development. The plan projects an expansion in the output of cotton which is the country's most important crop in terms of growers. Tanzania's cotton development strategy, which is based on smallholder and ujamaa production, is geared to the use of improved varieties, the introduction • uf fertilizers and insecticides, the expansion of institutional credit and the strengthening of extension services. /more Note: Money figures are expressed in US dollar equivalents. IDA P.R. No. 74/2 Tanzania $17.5 miiiion credit -2- The present project constitutes a seven-year program of cotton and maize production expansion through the application of fertilizers, insecticides • and other inputs provided on credit to smallholders and ujamaa farmers. Maize forms an integral part of the cotton crop rotation and is therefore an essential part of encouraging farmers to participate in the project. The proposed program will ultimately involve the participation of some 29,000 farmers through 1981. The project will also provide tractors for ujamaa cooperatives and credit for tractor hire on certain conditions. Extension services will also be strengthened under the project and there is provision for storage, a road survey and construction, crop research, soil analysis and land planning. There will also be some support for a number of education and health facilities. Under the terms of the credit, • the Government will onlend the project funds for 25 years including a grace period of five years at an interest rate of 4 percent. TRDB will in turn onlend the funds, through the cooperative societies, for short and medium term credits to the participating ujamaas and farmers. TRDB loans will be at the rate of 8-1/2% per annum. The Government has established the Tanzania Cotton Authority (TCA) which has jurisdiction over all aspects of prodcution, processing, and marketing of cotton. TCA is responsible for coordinating the increase of cotton production and will be the primary project executing agency. Day-to-day activities will be delegated to the Project Unit to be established within TCA and located in Geita district. The total cost of the project is estimated at $23.8 million. The IDA credit of $17.5 million will finance the estimated exchange component of $14.0 million and about $3.5 million of local costs. The IDA credit is being made to the United Republic of Tanzania for a term of 50 years, including 10 years of grace. It will be interest-free but a service • charge of 3/4 of 1% will be charged to cover IDA's administrative expenses. , • TECHNICAL DATA PROJECT: Geita cotton project COUNTRY: United Republic of Tanzania TOTAL COST: $23.8 million equivalent IDA FINANCING: $17.5 million, 50 years, 10 years of grace, interest-face except for 3/4 of 1% service charge to cover IDA's administrative expenses. OTHER FINANCING: Tanzanian Government, $6.3 million including part of the costs of project investment and administration. IMPLEMENTING ORGANIZATION: The Tanzania Cotton Authority (TCA), Dar es Salaam, Tanzania. • PROJECT DESCRIPTION: The expansion of cotton and maize production in Geita district of Mwanza region by providing fertilizers and other inputs, tractors and maintenance facilities, storage, feeder road construction, a ginnery water supply and related technical services and training. Health and education facilities will also be provided. CONSULTANTS: Consultants will be engaged for the road survey. PROCUREMENT: International competitive bidding for fertilizers, tractors and associated equipment, insecticides, ULV pumps where contracts exceed $30,000. Local manufacturers would be allowed a preferential margin of 15%. International competitive bidding, or if agreed by the Association local competitive bidding or force account, for road construction. Local bidding or force account for construction of workshop, staff housing and other building. -0- •