Announcement of Tanzania Receives Twenty-Three Million Dollars World Bank Loans for Industrial Development on April 7, 1977

.World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. • Telephone: (202) 393-6360 BANK NEWS RELEASE NO. 77/81 APRIL 7, 1977 TANZANIA RECEIVES $23 MILLION WORLD BANK LOANS FOR INDUSTRIAL DEVELOPMENT The World Bank today announced two loans worth $23 million to help Tanzania set up an industrial complex where its domestic raw materials will be processed. The loans will finance the establishment of an industrial estate and the construction of a shoe factory and a leather goods factory at Morogoro, some 180 kilometers west of Tanzania's major port, Dar-es-Salaam. The estate and the factories are part of an industrial complex that will also include a ~ tannery and a canvas mili, which are being built with the assistance of the Bu1gaiian Government and the European Economic Community respectively. The objective of the industrial complex, when completed, is to use locally available materials like hides, skins, and cotton, which are presently exported raw, to manufacture products -- shoes, handbags, and cloth, etc., -- of internationally competitive quality for the export market. This will not only increase domestic employment but generate much-needed foreign exchange earnings. About 3,000 new jobs are expected to be created in the entire complex. The two loans are each for $11.5 million. One is granted on World Bank terms of 20 years, including 4-1/2 years of grace at 8.5 percent per annum; while the other is on so-called "Third Window" terms, namely 25 years, including 7 years of grace, and carrying interest at 4.5 percent per annum. An additional 4 percent will be paid to the Bank by the Interest Subsidy Fund, rep- • resenting the difference between the Bank's current interest rate and the charge to Tanzania. NOTE: Money figures are expressed in U.S. dollar equivalents. FORM NO. 1121 (5-76) T ECHN I CAL DAT A PROJECT: COUNTRY: Morogoro Industrial Complex United Republic of Tanzania • TOTAL COST: $36.2 mi 11 ion BANK FI NANC i NG : $11.5 million for 20 years, including 4-1/2 years of grace at 8.5 percent per annum. $11.5 million on Third Window Terms. OTHER FINANCING: National Development Corporation: $13.2 million IMPLEMENTING ORGANIZATION: National Development Corporation (NDC), P.O. Box 2669, Dar-es-Salaam, Tanzania PROJECT DESCRIPTION: The establishment of an Industrial Complex at Morogoro including (i) the first phase (65 hectares) of an industrial estate including necessary infrastructure and facilities for small and medium scale industries; (ii) a shoe factory to produce 2 million pairs of leather shoes and 2 million pairs of canvas shoes per year; and (iii) a leather goods factory to fabricate ~ handbags, suitcases, jackets, and various minor items. PROCUREMENT: International competitive bidding for equipment and materials in accordance with the Bank's guidelines except contracts for small items costing less than $100,000 which could be let following receipt of a reasonable number of quotations from qualified suppliers. Local manufacturers will be allowed a prefer- ence of 15 percent or the existing rate of duty, whichever is lower. Civil works contracts in excess of $100,000 will be let following international competitive bidding in accordance with the Bank's guidelines. Local contractors will be granted preference of 7-1/2 percent. Civil works contracts of less than $100,000 will be let following local competitive bidding in accordance with the Borrower's ordinary procedures. CONSULTANTS: Project includes about 60 manyears of consultancy and technical services expected to cost about $3.6 million (including con- tingencies) or $60,000 per manyear. Consultancy services will be utilized for design, pro- curement, construction, training of personnel, operation and marketing of the output of the shoe factory. Technical assistance will aiso be provided for the management of the indus- trial estate and leather goods factory and marketing of its output. Consultancy services will also be utilized to examine the liquid waste disposal system for the industrial estate. A contract for the provision of consulting services for the shoe factory design, procurement and construction, training and start up has been signed between NOC and ltalmachine. A con- tract with the same firm for management and marketing of the output of the shoe factory is • expected to be concluded. ECONOMIC RATE OF RETURN: 26.4 percent ESTIMATED COMPLETION DATE: 1981