Malawi - Entrepreneurship Development and Drought Recovery Program

Report No. PIC1844 Project Name Malawi-Entrepeneurship Development and Drought... Recovery Program Region Africa Sector Agriculture Project ID MW-PA-2396 Estimated Current Cost US$ 266 million Proposed IDA Financing SDR 27.6 million (US$40 million equivalent) Financing Plan N/A Date PID Prepared May 31, 1994 EA Classification N/A Appraisal Date June 1994 Board Date November 3, 1994 Background. Malawi is a small land-locked country with a total population of about 8 million (85 W rural). Malawi's agriculturally based economy is fragile and the resource base is narrow. Malawi is affected by severe drought for the second time in three years. The new Government -- in office since May 1994 following the first multiparty elections in three decades -- has asked the donor community for additional assistance during this emergency situation. The most immediate consequence of the drought is the need to import 445,000 MT of maize (comprising 200,000 MT for targeted free distribution to food deficit households in drought areas and 245,000 MT to be distributed through commercial channels) to achieve food security and stabilize commercial maize markets. The Government needs to provide adequate levels of commercial maize to help maintain consumer prices at affordable levels (i.e., at the target consumer price) so that free maize distribution is limited as a measure of last resort for the very poor. This policy is consistent with the new Government's strong commitment to poverty alleviation as the core of the development agenda. Effective and timely assistance by IDA and other donors -- during the current drought emergency -- will support macroeconomic stabilization and will allow the new Government to continue implementing its adjustment policies. Project Objectives and Description: The central objective of the supplemental financing credit is to reduce drought related food insecurity and help stabilize maize markets. This credit acts as a supplement to the original Entrepeneurship Development and Drought Recovery Program (EDDRP Credit # 2396-MAI). The original EDDRP was approved by the Executive Directors on June 23, 1992, and became effective on July 7, 1992. The EDDRP provides financing to: (i) prevent widespread food insecurity, and alleviate the impact of severe drought; and (ii) facilitate reforms to broaden economic participation and enable  a sustainable supply response consistent with medium-term balance of payments viability, growth, and poverty reduction. Environmental Issues: Considering that the supplement is designed, to provide financing towards reducing drought related food insecurity and help stabilize maize markets, environmental considerations have no direct relevance. Project Implementation: This credit will be disbursed against imports of maize. Task Manager: Mr. Hartwig Schafer Tel:202/473-4421 Back-up Contact: Ms. Dambisa Moyo Tel:202/473-4389 Contact Point: Public Information Center The World Bank 1818 H Street N.W. Washington D.C. 20433 Telephone No.: (202)458-5454 Fax No.: (202)522-1500 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. - 2 -