Zambia - Industrial Forestry (Phase III) Project

DocumenE of The World Bank FOR OmCIAL USE ONLLY Rleprt ;o. P-3633-ZA REPORT AND RECODEEXDATION OF THE PRESIDENT OF THE _rINRAITONAL DEVELOPHENT ASSOCIATION TO TEE EXECUTIVE DIRECTORS ON A PROPOSED REDIT OF SDR 21.5 MIION TO THE REPUBLIC OF ZAMRIA FOR THE I1IDUSTRIA FOREST PROJECT- PA III December 19, 1983 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without '.orld Bank authorization.  CURRECY EQUrVALETS Currency Unit Zambian Kwadz. (K) US$1.00 K 1.40 US$0.71 - K 1.00 The US Dollar/Kwacha Rate expressed above ws the rate prevaiJlig in July 1983). ABREVTIONS FD - Forest Depart-mt FIIDA - Finnish Development Agency GZ - Government of tbe Reptblic of Zambia INDc - Industrial Development Corporation IPD - Industrial Plantations Division KIT Kafubu Industrial and 7iUber Enterprise ZAFFIOO - Zambia Forestry and Forest Industries Corporation, Limited ZINQ) - Zambia Industrial and Mining Corporation, Limited ZSBS - Zambia Steel and Building Supplies, Limited FISCAL YEAR GRZ - January 1 to December 31 ZAEPICO - April 1 to March 31  FOR OMCIAL USE ONLY REPUBLIC OF ZAMBIA INDUSTRIAL FORESTRY PROJECT - PHASE III CREDIT AND PROJECT SUMMARY Borrower: Republic of Zambia. Beneficiary: Zambia Forestry and Forest Industries Corporation, Limited (ZAFFICO). Amount: SDR 21.5 million (US$22.4 million equivalent). Terms: Standard. Relending Terms: SDR 11.9 million (US$12.4 million equivalent) would be onlent to ZAFFICO for 15 years, including three years of grace, with a fixed interest rate not lover than the Bank rate at the time of credit approval plus 10 percent; SDR 9.6 million (US$10 million equivalent) would be passed to ZAFFICO as equity capital. Project -Description: The project aims to increase production of sawntimber and roundwoods from exotic tree species by improving utilization of existing investments in plantations, and handling and processing facilities. Specifically, the project would: (a) improve maintenance of ZAFFICO's existing plantations; (b) improve log transport and handling facilities; (cc rehabilitate sawnmilling equipment; (d) improve workshop facilities; (e) provide staff training; and (f) provide technical assistance to strengthen ZAFFICO's management and technical operations. Benefits and Risks: The program would result in incremental production of 20,000 cu a of sawntimber and 11,000 cu a of transmission poles and agricultural posts. In addition, the project would help strengthen ZAFMICO into a viable commercial institution. It would also help arrest the depletion of Zambia's natural forests. The achievement of the production targets vould depend critically en effective management of logging, transportation and sawamilling operations. The proposed strengthening of these operations through technical assistance and staff training should minimize the risk that the targets would not be achieved. thei documiat hau a res.tted dcesbution and mo y be used by recpients only in the ahrformanct of their officia duties Its contents may noit otherwise be disclosed without World Bank authorization.  Es'imated Cost Local Foreign Total -USS 00