/J fl / INTER.NAT.IONAL ·BANK FOR • RECONSTRUCTION AND DEVELO.PMENT 1818 H STREET, N.W., WASHINGTON 0. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 72/46 Subject: $8.0 million loan to tie East June 29 , 19 72 African Development Bank The World Bank has approved a loan equivalent to $8.0 million for the East African Development Bank (EADB) to help finance industrial projects in the East African Community, constituted by Kenya, Tanzania and Uganda. The EADB was established under the Treaty for East African Cooperation in 1967 and commenced operations in 1968. The three Community Partner States own 94% of its shares. EADB's main objective is to promote balanced industrial development among the Partner States. Its Board of Directors is appointed by the Partner States, and its Director General appointed by the Community • Authority, which consists of the three Heads of State. Up to the end ~f 1971, the EADB had assisted 24-industrial projects in the Community with loans, equity investments and ,11arantees totaling the equivalent of $17.2 million. The World Bank's loan to EADB which will be jointly and severally guaranteed by the Government· of Kenya, Tanzania and Uganda will help finance the import requirements of industrial projects for which the EAL~J provides financial assistance. East Africa is in the initial stages of industrialization, with manufac• t~ring accounting for about 10% of the gross national product of clle three Partner States. The processing of agricultural products accounts· for about half of industrial output, and other consumer goods for most of the remainder. The potential for future industrial growth in East Africa is considerable, • both for the expanding domestic market and,.for exports. The Comnunity is currently studying the feas.ibility of establishing several multi-national industriea to serve the whole region. /more • Bank P.R.. No. 72 / 46 -- East A1'""ri can Development Bank -- The World Bank has previously made loans to other East African Comuunity organizations to help finance investments in railways, harbors and telecom- munications. In addition, over 40 loans and credits to the Partner Sta;:~,s. ··have been provided for projects in agriculture, forestry, education, power, trans- portation and water supply. The International Finar1ce Corporation (IFC) cur- rer,tly has three investments in Kenya and one in Ugai~da. The borrower is the. East African Development Bank (EADB). The loan will carry an interest rate of 7~% per annun and will be repaid substantially in conformity with the amort.ization schedules of EADB 's sub-loans. Re.lending terms to EADB' s borrowers will be at 8%-9%, plus an evaluation fee of 1% of in- vestment. • The amortization period will be dependent on the particular project, but not in excess of 15 years. - 0 - •