Tanzania - Forest Resources Management Project

Documt of The World Bank FOR OFFICIAL USE ONLY MICROFICHE COPY Report No. P- 5641-TA Type: (PM) ReportN. P-5641-TA COTLEAR, D/ X35083 / J11140/ AF6AG MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE IATERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 13. 2 MILLION (USD 18.3 MILLION EQUIVALENT) TO THE UNITED REPUBLIC OF TANZANIA FOR A FOREST RESOURCES MANAGEMENT PROJECT DECEMBER 23, 1991 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. CLIRENY EOUVALN Currency Unit = Tanzanian Shilling (Tsh) USD1.0 = Tsh 200 (at time of appraisal) USD1.0 = Tsh 230 (September 1991) FISCAL YEAR July 1 to June 30 MEASURES Metric System ACRONYMS ERR Economic Rate of Return NORAD Norwegian Agency for Development Cooperation TFAP Tropical Forestry Action Plan FOR OFFICIAL USE ONLY UNITED REPUBLIC OF TANZANIA FOREST RESOURCES MANAGEMENT PROJEC CREDIT AND PROJECT SUMMARY Government of the United Republic of Tanzania Beneiaries: Ministry of Tourism, Natural Resources and the Environment; Ministry of Land, Rousing and Urban Development; and smallholders. ADIGHat: SDR 13.2 million (USD18.3 million equivalent) ITuCM: Standard, with 40 years maturity Financine Plan: IDA USD18.3 million Other financiers 0.7 million Government 1.9 million TOTAL USD20.9 million Rat of Retun: No rate of return has been calculated for the project as a whole since it supports primarily institutional strengthening and these benefits are difficult to quantify. The subcomponent for afforestation has an ERR of 12%. Staff Anraisal Repr: 9964-TA IBRD Nos. 22789 & 22790 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. MEMORANDM AND RECOMNDWATIN OF THE PRESIEN OF THE INERATIONA DEVE9LOPn T ASSOCIATIO TO TH EXECUTIV DIRECfORS ON A POE CREDIT TO THE UNITE RB LIC OF TANZANI FOR A FOREST REOURCE MANAGEMENT PROJEC 1. I submit for your approval the following report and recommendation on a proposed development credit to the United Republic of Tanzania for SDR 13.2 million, the equivalent of USD18.3 million, on standard IDA terms with a maturity of 40 years, to help flonce a project for forest resources management. 2. The Project aims to improve the management of forests and woodlands in Tanzania by strengthening the capacity of the institutions in charge of developing and implementing forest and land policy and increasing the participation of the private sector and local populations in the management of natural resources. While preparation of the Project preceded the 1991 World Bank Forest Policy Paper, the Project is consistent with its recommendations, inter al. to develop zoning and regulations on the basis of natural resource surveys in forested areas, improve private sector incentives by increasing royalty fees to reflect the real value of trees, formalize customary land rights for forest dwellers, and strengthen forestry institutions to enhance their ability to protect designated forest areas. 3. Subsector acrond. Roughly half the area of Tanzania, about 44 million ha, is covered by forests and woodlands. Of this area, about 1.5 million ha are closed forests and mangroves, and about 43 million ha are open woodlands. Forest reserves (which include woodlands) cover 13 million ha. Plantations occupy about 0.15 million ha. Tanzania's forests are vital to the country's economic development. The subsector generates about 10% of the country's registered exports and some 730,000 person-years of employment. Tanzania's forests provide for all the country's timber requirements, over 90% of its energy needs, and supply a range of products including honey, beeswax, tanning extract and fruits many of which are exported. Forests also play an important role in protecting soil from erosion and conserving water and biodiversity. Official statistics indicate that the contribution of forests to GDP is equivalent to 1%, but when forest products that are normally not traded, such as woodfuel and tourism earnings attributable to forests, are counted, the contribution is about fifteen times higher. 4. The most important constraint to the sustained and rational utilization of forest resources in Tanzania is inadequate management. Management weaknesses result from: (i) lack of clarity in the policies ad legislation which guide activities in the subsector; (ii) institutional weaknesses in the organizations in charge of designing, implementing and enforcing these policies; (iii) lack of reliable resource information to establish priorities and guide investment and the development of new policies; (iv) lack of funds (from own-income sources and from central government) to finance needed activities; and (v) excessive emphasis on direct controls and insufficient use of market-based and property rights incentives to encourage the participation of the local population in forest management. Management problems contribute to excessive clearance of forests for agriculture and fuelwood extraction in certain pockets of the country. The rate of deforestation is not known with any degree of certainty, but it is estimated to be in the range of 300,000 - 400,000 ha per year. 5. Policies and legislation for forest and land management lack coherence and are often contradictory. Evidence from Tanzania and elsewhere in Africa shows that devolving -2- greater control over natural resources to the village level can have a positive impact on the environment, equity and development. Preparation for this Project has helped to stimulate and focus debate on ways to give villages greater security of tenure and greater incentives to manage the forest resources they presently utilize. A policy to demarcate and title village lands has been in effect since 1987, but its implementation has been slow and ineffective. 6. gnmen Stratey. In view of these limitations to tLe development of the forestry subsector, the Tanzania Tropical Forestry Action Plan (T&FA" was developed following a thorough review of the forestry subsector and related lana issues by the Government of Tanzania with supporn from some 20 donors in 1988 and 1989. It identifies many crucial technical and policy issues in forestry and indicates the options available for sustained development in the subsector. Its main recommendations incrade, Jntalia. that: information on natural resource use be collected and permanently meaitored; institutions in charge of natural resources be strengthened; emphasis in forest policy be shifted from state control to greater local participation in woodland and forest management; extension and training be improved; and market incentives be provided in order to expand tree planting by individuals and groups. The TFAP has become a mechanism for investment planning and donor coordination in the forestry subsector. This Project has been designed to facilitate implementation of the TFAP. 7. Rationale for IDA Involvement. In Tanzania and in other Sub-Saharan African countries, IDA has acquired considerable experience in the forestry subsector. Both the Tanzania 'FAP and the World Bank's Forest Policy Paper have built on lessons learned and shown the need for a broad approach to forestry that addresses policy and institutional issues and provides incentives for the participation of the private sector and local populations in the management of forest resources. IDA's involvement will be aimed at structural change in the forestry subsecror, consistent with sector-wide agricultural strategies agreed between Government and IDA. In Tanzania, IDA has been a major actor in assisting Government to reshape the agriculture sector through the Tanzania Agricultural Adjustment Program (TANAA). IDA has also provided leadership in developing together with government integrated sector strategies such as the integrated roads strategy in Tanzania's transport sector. IDA's involvement in the implementation of this Project will ensure institution building, including technical assistance and training to strengthen technical management and Government's capacity in policy planning and program development. Other donors are relying on this IDA initiative for the success of their own future assistance to activities in the subsector. 8. Pt Oec9 s. The broad objective of the proposed Project is to support the implementation of TPAP by strengthening the capacity of the institutions in charge of developing and implementing Abrest and land policies and by increasing the participation of the private sector and local populations in the management of natural resources in Tanzania. The Project has three specific objectives: (i) to strengthen institutions in charge of the development of forest policies and forest and natural resources information; (ii) to support the development of rural land policies, strengthen crucial governmental and nongovernmental organizations in charge of the implementation of these policies, and support the Implementation and monitoring of Government's policy of village demarcation and titing; and (lii) to strengthen regional and district forestry institutions in the Mwanza and Tabora regions. 9. Pt Drt . The Project includes investments over a six-year period to: (a) Strengthen Natural Resources Monitoring and Forest folies (US$ 5.0 millon): This -3- component will support collection of national natural resource information and development of a natural resource information system; development and implementation of improved practices for royalty collection and for afforestation based on private sector nurseries and active participation from local people; and preparation of an action plan for the long-term financing of the forestry subsector; (b) Strengthen Land Policies and Institutions (US$ 6.8 million). This component will support the development of land policies and Government's ongoing program of village demarcation, titling, and registration; (c) Strengthen Regional and District Forest Services In Mwana and Tabora (US$ 9.2 million). This component will support the development of regional forest management plans and associated forest service reorganization and training. In Mwanza, where most of the forest cover has been lost, the main activities that will be supported relate to extension for reforestation, using techniques which have been piloted successfully by a nongovernmental organization in the region. In Tabora, where most of the land is wooded, activities will focus on forest reserve management and village woodland management, irrtolving the active participation of the local population, and applied research. 10. Protect Sustainability. The development of policies, information resources, and institutional capacity in the agencies in charge of natural resource management is geared to ensuring the long-term sustainability of forest resources. The study of long-term financing for forestry will establish the recurrent cost implications of all ongoing projects in the subsector and will help Government develop a long-term financial plan to ensure the financial sustainability of subsectoral activities. The technical assistance to be employed by the Project will have precisely defined tasks and will be primarily of a short-term nature. 11. Lesonsa d. One of the lessons learned from previous assistance to Tanzania's forestry subsector is that village plantations established and maintained by communal labor may not be successful. The proposed Project emphasizes planting by individuals, households, and schools. The Project also incorporates lessons identified by OED's 1991 report, EQrUsy f pment: A Review of Bank Experience (Report No. 9524) by: (i) emphasizing subsectoral policy development and implementation; (ii) utilizing only existing institutions for project implementation and creating a Project Coordination Committee to consolidate the activities under the several agencies participating in project implementation; and (i) directly addressing land tenure, land use, pricing of forest products and seedlings, and recurrent cost issues. In accordance with key lessons identified in OED's 1990 report, Free-StandingarbchiAl Assistance for Institutional Developmen in Sub-Saharan Afrc (Report No. 8573), the Project will: (i) provide technical assistance only for clearly identified tasks, based on a thorough analysis of subsectoral institutional development issues and detailed discussions with Government and other donors; and (i) include detailed terms of reference, with concrete objectives and targets that have been agreed with Government. 12. Agments on Acin: Since the Project was appraised, Government has addressed several crucial issues that constituted conditions for negotiations. It has: (i) made effective a substantial Increase in forest royalty fees; (ii) made effective a new policy of charging for seedlings produced in government nurseries; (iii) appointed a national coordinator for village demarcation and a coordinator for village titling activities; (iv) identified a senior full-time Project Coordinator; and (v) established a Project Coordination Committee. Among the time-bound assurances made by Government at negotiations are that Government will: annually review royalty fees and adjust them by at least the rate of inflation for the previous year; implement recommendations for the establishment of a forest revenue reporting system; make recommendations as to the need for and feasibility of making effective -4- the charging of woodfuel fees for tobacco production; complete its activities for the identification of best practices in forestry; complei, an assessment of the long-term financing needs of the forestry subsector and thereafter ensure that adequate provision is made in its budgets for the financing of forestry subsector activities; complete the demarcation of an agreed number of villages per year; and complete an extension program for Mwanza and a regional forest resource plan for Tabora. The following are to be conditions of effectiveness: (1) The Forestry and Beekee'ag Division seconds one graduate forester each to Mwanza and Taboti; and (ii) The Ministry of Lands, Housing and Urban Development appoints a full-time Deputy Project Coordinator. 13. Impat o nvirnmeni. The Project is expected to have a beneficial impact on the environment. Virtually all Project components are designed to promote sound resource management. An environmental assessment of the proposed Project focusing on the Tabora and Mwanza regional components, carried out in June 1990, concluded that the Project will have no significant adverse impact on the environment. 14. Poverty Alleviation and Other Proaram Obectives. In assisting in the development o; policy, the Project will take into account the basic food and energy needs of the poor. In its forest management activities in Mwanza and Tabora, the Project will attempt to reconcile the needs of the poor who benefit from fuelwood, beekeeping, grazing, and gathering of foodstuffs and medicine with the uses and needs of the non-poor such as saw- millers and commercial charcoal producers. The Project is designed to help villages manage their forests in ways that benefit the community as a whole. The Project will assist D12281 s r developMet by providing extension and training in the cultivation of seedlings to private nurseries. Village demarcation supported by the Project is expected to strengthen property rights over individually planted trees and communally owned village woodlands. Village demarcation should encourage the use of negotiated contractual agreements to govern access to forest resources. Wmen will benefit under the Mwanza and Tabora components of the Project through increased training in the management and use of forest resources, including tree planting, nutritional aspects of forest products, the development of forest- related income generating activities, and increased involvement in decision-making aspects of village woodland management. The land policy studies will examine the role of women and recommend ways to alleviate the constraints to their efficient use and management of land. 15. ngefits. The Project will strengthen the policy, information and institutional base for managing Tanzania's forest and land resources in an economically, socially and ecologically sound manner. The Project will generate quantifiable benefits fiom three sources: (i) improved management of some 450,000 ha of forests on a pilot basis; estimates based exclusively on the reduction of the incidence of forest fires in the Project area suggest an economic rate of return (ERR) for this activity of about 13%; (ii) more effective and intensive forestry extension services in two regions will allow an increased production of privately grown firewood and poles with an estimated ERR of 12%; and (iii) an Improved revenue collection system will yield revenue increases in the range of 50-150%. The Project also will generate non-quantifiable benefits from three main sources: (i) the new natural resource information and monitoring system will enable Government to prioritize investments based on a better knowledge of alternative interventions; (l) the development and implementation of forest policies will increase the participation of local people In the management of forest resources, encourage the planting of trees, and provide incentives for appropriate uses of the forest resource; and (ii) the preparation of national land policies and improved village demarcation will improve security of land tenure, provide incentives for -5- village management of natural resources, and contain incipient tendencies towards inequality and landlessness. 16. Rlai& The primary risks to the Project are delays in the formulation and implementation of policies and delays in the strengthening of the forest services. Government already has indicated its commitment to minimize these risks by requiring enforcement of higher forest fees, introducing prices fi fedlings, and appointing a national village demarcation program coordinator and a national coordinator for village titling. Given the uncertainties concerning the demand among villagers for forestry extension and the demarcation and titling of villages in Mwanza and Tabora, the Project will take a phased pilot approach, initiating forestry extension activities on a small scale and expanding them gradually once experience has been gained. This modest intervention is justified, despite the existing uncertainties, by the high environmental costs that will arise if no intervention were attempted to promote afforestation in the already deforested region of Mwanza and to limit uncontrolled deforestation in Tabora. 17. Reommendation. I am satisfied that the proposed Credit complies with the Articles of Agreement of the Association and recommend that the Executive Directors approve it. Lewis T. Preston President Attahments Washington, D.C. December 23, 1991 Schedue A 1. Estimated Costs and Financing Plan Proiect CosM 1w -USD Million- PEw Cm nents Foreign Local Total % of Total Strengthening Natural Resources Monitoring 3.1 1.2 4.3 24 and Forest Policies Strengthening Land Policies and Institutions 3.5 2.3 5.8 33 Strengthening Regional and District Forest 5.6 2.2 7.8 43 Services in Mwanza and Tabora Regions Total Ba Co 12.2 5.7 17.9 100 Physical Contingencies 0.3 0.2 0.4 2 Price Contingencies 1.7 0.9 2.6 14 Total Project Costs 14.2 6.8 20.9 116 jl Excludes duties and taxes. Financing Plan -USD Million- Foreign Local Total IDA 13.5 4.8 18.3 OTHER FINANCIERS' 0.7 0-01 0.7 GOVERNMENT OF TANZANIA 0.0 1.9 1.9 TOTAL 14.2 6.7 20.9 11 NORAD is at an advanced stage of preparation of its support for a Natural Resources Information Center. Tabl 4: PROCURMNT AND DISBURSMENTS (USD Millions) Project Element ICB LCB OTHER N.A. CO- TOTAL FINANCIER COST PROCEDURE Civil Works 1.16 0.07 1.22 (0.94) (0.07) (1.00) Vehicles 1.43 0.08 0.08 1.59 (1.43) (0.08) (0.08) (1.59) Equipment & Materials 2.97 0.26 0.20 0.41 3.84 (2.97) (0.26) (0.20) (3.43) Technical Assistance 8.25 0.17 8.42 (8.25) (8.25) Training & Workshops 1.62 0.12 1.75 (1.62) (1.62) Incremental Operating Costs 4.12 0.01 4.13 (2.44) (2.44) TOTAL 5.55 0.41 10.15 4.12 0.71 20.93 (5.33) (0.41) (10.15) (2.44) (18.33) g: Numbers in parentheses represent IDA financing. Allocation and Disbursement of IDA Credit MTNRE MlUbIJl ]Q Million Disbursement Million Disbursement Percentage Percentage Million (a) CIvd Works 0.8 100 of foreign, - - 0.8 75 of local (b) Vehicles, Equipment 2.5 100 of foreign 2.0 100 of foreign 4.5 90 of iocal 90 of local (c) Tochnical Assistance 5.2 100 1.4 100 6.6 (d) Training Studies 0.8 100 0.4 100 1.2 (e) Operating Cost 1.3 100 1.0 100 2.3 (1) Reandug of PPF 0.7 (g) Unallocated 2.2 Total 18.3 Esdatd IDA -Diabomemtschdl -USD millions- IDA FY 92 93 94 95 96 97 Annual 4.2 4.9 2.7 3.0 1.9 1.6 Cumulative 4.2 9.1 11.8 14.8 16.7 18.3 Schedule C United Republic of Tanzania Forest ResoucesManagemen ProJec Timetabl of Key PEctw Rocssng Activities (a) Project Preparation Time: 2 years (b) Project prepared by: Government with assistance from FAO/CP and IDA (c) First IDA Mission: March 1990 (d) Appraisal Mission Departure: September 1990 (e) Date of Negotiations: December 9-13, 1991 (f) Planned Date of Effectiveness: May 31, 1992 (g) List of Revelant PCRs and PPARs: Sao Hill Forestry I (PPAR #4548) Sao Hill Forestry, Phase II (in process) Schedule D Page 1 of 2 liii tIe: 10/04/91 at 13.19...7 tt Of u* ro.. 0Sre. .w in TANZIA PF *2 suumery Sestenant 0f i.own and 104 Credits <Löf data en o 8/30/91 MIS data s of 10/0/91) Inu r UsP mitit fon (tos tntelations) Lown e ~i*cot Urdis- Ct-sing Crodit ko. Yr norrPrpo an A toa u Date ....... .... ..... .... .... ......... 60 Creditss o 814.27 C191ITM 19m TANIA GuAI ST AE & MILL 43.00 9.42 12/31/91(0) CIG5-TAM 1im TA2MIA UCATION VII 25.00 1.05 12/31/9001) C12290-TM 198 TANZIA FSTRY II 12.00 3.35 12/31/900R) C137C0.TAN 195 TAN IA 9FII FLHPPA*t 18.00 .24 12/31/1(m CI^YOTAM 1986 TA~2IA POM IV 35.00 .77 12/31/91(4) C1530-TA 1m TZIA TS RTm. 27.00 2.31 0/3092O m C4O.TAM im TANAIA PETfi .ECTu.T.A 8.00 3.57 10/31/91(R) C14P0-TAM 19 T~NAIA 904R EMU ./~0RGT 40.00 1.76 12/31/91() C~UM-TAR 196 T2IA R~A s RE~B. 50.00 23.21 06/30/92 C18100-TA 1967 TZIA TELEC.II 23.00 3.75 06/30/92(R) CIM8I0-TAN 19 T~2AIA AM.EMMP s RtH. 1 30.00 25.02 06/30/% C19690.TAMS 199 TAZMIA IN.TRM Å0JUS.CR. 135.00 33.40 12/31/91CA) C19700-TAN 19 TAN2IA NATL.A.A LIV.Rgs, 8.39 6.88 03/31/97 C19940.TAN 1989 TZANiA AOIC. EWT. 18.40 13.0& 03/31/97 C20500-TAN 19 TAusMIA rmE CRs 25.10 21.67 06/30/9 C2090.Ta 190 TANZMIA POTs 1lNIITION 37.00 36.90 06/30/97 C20M-TA 1990 TANZ~IA NALTH & MIJTRITIM 47.60 44.41 06/30/% C21160-TAN(S 1990 TANZMIA MoIC. ADJus~WNT 200.00 104.62 06/30/92 C21379.TAM 1990 TAlZAIA E MU PANMN RO A 36.30 37.20 12/31/% C21490-TA 1990 TANDIA 1 1 1 180.40 175.10 06/30/98 C2020-TAN 1991 TANZMIA P T~ EMB 44.00 44.89 12/31/97 C^2670TM 1991 TAlNZAIA RAIuTin MEKTuCItI 76.00 74.73 12/31/99 C22910-TM 1992 TAUKMIA U8a EC§M 00. 11.20 11.46 12/31/93 TOTAL rusr Crodits a 25 1,132.30 678.76 19 7 u<s) closed 313.06 Att ~1osd for TANZAIA TOTAL rter Lomns u 0 TOTAL 313.06 1,946.57 of Mlh repeld IM.96 42.18 TOTAL held by ed 1 IA 15.11 1,904.39 Am~ sold .09 of hafth resid .09 TOTAL adliud 678.81 Nots: #uNt yft 9ff~t1¥.6 Met vet f1i e mTota Apr~d, f~amtme, ad ttanedfr botane rqresen hactive ad imstivt Loan and Credits. (<) iasIts foramtty revlad Ctlsirw et. (<) indlcates SL/MCL LeMs and Credits. Ifte Net A0p and n* ~ems ae h~stefst ¥4us, all othtrs are us et vetiu. Tho einfr, tffletv*, and Ctsiun detes ae bsed I~ the Ln D~rtm offical da and are mot tek frs th Task aut fl (*. Schedule" Page 2 of 2 IFC STATEMENT OP INVESTMENTS TANZANIA (as of August 31, 1991) Original Commitment Hold by IFC (inl undisbursed) (USD Million) Project Sector IFC Part'n Loan Equity Total Amboni Limited Agribusiness 4.38 0.99 2.38 2.38 Highland Soap & Allied General Mfg. 1.74 0.33 0.33 Prod. Ltd. Mufindi Tea Co. Ltd. PoodlAgribusiness 2.80 2.80 2.80 Tanganyika Sisal Agribusiness 2.00 2.00 2.00 Spinning Company Zanzibar Limited* Tourism 2.80 1.20 0.20 1.40 *Approved. Not yet committed. ,g，一，勵h•■．『，凡《‘、」r•＇＇閑L、，州．網’開■，•－→口陶輪國、h，■，L,_I,U，工他，I }BRD 22789 上， 꽈 lㅆl