Morocco - National Agricultural Credit Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 7453-MOR STAFF APPRAISAL REPORT KINGDOM OF MOROCCO NATIONAL AGRICULTURAL CREDIT PROJECT MAY 241, i989 Europe, Middle East and North Africa Region Maghreb Department Agriculture Operations Division 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 World Bank authorization.  - i - CURRENCY EQUIVALEN^' Currency Unit = Dirham (DH) US$ 1.00 = DH 8.00 DH 1.00 = US$ 0.125 (as of January, 1989) FISCAL YEAR January 1 to December 31 GLOSSARY OF ABBREVIATIONS ADB : African Development Bank ASAL : Agricultural Sector Adjustment Loan BAM : Bank Al-Maghrib (Central Bank of Morocco) BNDE Banque Nationale de Developpement Economique (Industrial Development Bank) CIH : Cr6dit Immobilier et Hotelier (Housing and Tourism Bank) CLCA : Caisse Locale de Credit Agricole CNCA : Caisse Nationale de Credit Agricole (National Agricultural Credit Bank) CRCA : Caisse R6gionale de Credit Agricole EEC : European Economic Community EIB : European Investment Bank FADES : Arab Fund for Economic and Social Development FDA : Fonds de Developpement Agricole FI Fiscal Income IRCA Inspection R6gionale de Credit Agricole ITPA Industrial and Trade Policy Adjustment KfW : Kreditanstalt fur Wiederaufbau of the Federal Republic of Germany MARA : Ministry of Agriculture and Agrarian Reform MF : Ministry of Finance MTASAP : Medium-Term Agricultural Sector Adjustment Program OECF : Overseas Economic Cooperation Fund of Japan ORMVA : Office R6gional de Mise en Valeur Agricole (Regional Development Agency) USAID : United States Agency for International Development  FOR OFFICIAL USE ONLY - ii - STIAFF AlI'RALSAI. REPORI KINGD)OM OF MORO(GO NATIONAL AGRICULTURAL CRED)IT PROJECT Loani and Project Summary Borrower: Caisse Nationale de Credit Agricole (CNCA) Guarantor: Kingdom of Morocco Amount: US$190.0 million Equivalent LendingTerms: 20 years, including five years of grace, at the Bank's standard variable ir.terest rate. Project The proposed Project would assist Morocco in meeting national Des ription: objectives set by the Government and CNCA for agricultural credit for 1989-93 which are to: (a) increase the impact of credit on agricultural development, production, and food security; (b) favor private investment in high return projects with emphasis on export production; (c) diversify CN(A clientele and activities; (d) increase domestic resource mobilization and provide a full range of competitive banking services and products to the farmer community and to nonfarm clients (notably women) and enterprises; and (e) strengthen CNCA's institutional and financial performance. Consistent with the Government's adjustment program supported by the Bank through the recent Agricultural Sector Adjustment Loan (ASAL II) (Loan 2885-MOR), the Project w3uld, besides, help achieve a key transition in CNCA's institutional development by supporting CNCA' conversion to a full-service bank with increased managerial autc.aomy, while maintaining its comparative advantage to serve agriculture and to reach small-farmers in rainfed and poverty-related areas; improving CNCA's appraisal procedures (including environmental impact); and developing skills needed to manage the changed organization. Specifically the Project would fund over a four-year implementation period: (a) medium- and long-term credit to private farmers and investors in the agricultural sector to finance a wide range of investments including irrigation, farm equipment, tree crop and livestock development, storage facilities, land improvement, greenhouses, agro-processing plants, coastal fisheries, rural housing, fo.restry and environmental protection, rural non-farm investments, and working capital for private agro-processing exporters; and (b) project-related training, consulting services for the strengthening of CNCA management and planning, and construction or rehabilitation of a new tranche (1989-1993) of CNCA's branch network and offices. Since the Government of Morocco reemphasized, in 1987, the role of CNCA in the development of the country's rural sector and the need to transform CNCA into a full-service bank so as to improve its long-term viability, CNCA now has the highest political support for its reforms. Thus, the risk of a slower pace than expected in the execution of the proposed improvements is considered reduced. On the basis of past and current experience, IBRD funds are not expected to be at more than normal risk, since CNCA overall operating results are positive and should stay that way, in view of its prudent lending policies, rigorous collection methods and adequate provisions. 3A49Esc 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 World Bank authorization.  - iii - Estimated Cost: Local Foreign Total -- US$ million------ CNCA Credit Operations 1,027 495 1,522 (Medium- and long-term) Institutional Development 3 7 10 (Training, consultanits, construction, equipment) TotalProjiet Cost 1,030 /a 502 1,532 /a Proposed Financing Plan IBRD - 190 190 ADB - 70 70 EIB - 60 60 KfW - 38 38 OECF - 100 100 FADES - 30 30 CNCA 582 14 596 Sub-borrowers 448 - 448 TOTAL 1,030 502 1,532 Estimated Disbursements: Bank FY 1990 1991 1992 1993