Document of EL % t-; I j The World Bank FOR OFFICIAL USE ONLY Report No. P-3423-TA REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT IN AN AMOUNT EQUIVALENT TO US$22.5 MILLION TO THE UNITED REPUBLIC OF TANZANIA FOR A DAR ES SALAAM SEWERAGE AND SANITATION PROJECT November 29, 1982 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. CURRENCY EQUIVALENTS Currency Unit = Tanzania Shilling (TSh) TSh 1.00 = US$0.11 US$1.00 = TSh 9.40 US$1.00 = SDR 0.91 (As the Tanzania Shilling is officially valued in relation to a basket of the currencies of Tanzania's trading partners, the USDollar/Tanzania Shilling exchange rate is subject to change. Conversions in this report were made at US$1.00 to TSh 9.40 which was the level set in the most recent exchange rate adjustment in March 1982. The USDollar/SDR exchange rate used in this report is that of July 31, 1982.) ABBREVIATIONS AND ACRONYMS ARDHI - Ministry of Lands, Housing and Urban Development DCC - Dar es Salaam City Council DCS - Dar es Salaam Water Corporation Sole DSSD - Dar es Salaam Sewerage and Sanitation Department MWE - Ministry of Water and Energy NUWA - National Urban Water Authority PMO - Prime Minister's Office TANESCO - Tanzania Electric Supply Company, Limited FISCAL YEAR Government - July 1 to June 30 - i - FOR OFFICIAL USE ONLY DAR ES SALAAM SEWERAGE AND SANITATION PROJECT Credit and Project Summary Borrower: United Republic of Tanzania . Amount: SDR 20.6 million (US$22.5 million equivalent) Terms: Standard Relending Terms; US$12.8 million would be onlent to DCC under a Transfer Agreement for 25 years including 5 years of grace at an interest rate of 11% p.a. Project Description: The project would be the first phase of a long-range program to rehabilitate the existing sewerage system and to develop basic sanitation services in Dar es Salaam. It would focus on low-cost, on-plot sanitation and the development of the services, institutions, and management practices required for improved sewerage and sanitation. The project would finance construction of pit latrines and replacement or conversion of existing on-plot sanitation units; improvement of the Dar es Salaam City Countil (DCC) pit emptying service; establishment and development of a Sewerage and Sanitation Department (DSSD) in DCC; provision of offices, workshops, equipment and spare parts; and technical assistance and training both for DSSD and the National Urban Water Authority. Benefits: The project would improve sewerage and sanitation services in Dar es Salaam and strengthen urban water supply services throughout the country. Risks: The major project risk is that DSSD may not develop promptly enough as an efficient organization capable of collecting adequate charges for sewerage and sanitation services. The project has been designed to minimize this risk by including considerable training and technical assistance. Future projects would attempt to maintain the momentum of institutional development in the sector. This document has a restricted distribution and may be used by recipients only in the performance of their offMcial duties. Its contents may not otherwise be disclosed without World Bank authorization. Estimated Local Foreign Total Project Costs:1 US$ million…------- Sewerage Rehabilitation 7.3 6.5 13.8 Low-Cost Sanitation 3.8 3.2 7.0 Technical Assistance 0.7 1.2 1.9 for NUWA and TANESCO Sub-total 11.8 10.9 22.7 Contingencies: Physical 1.0 0.9 1.9 Price 3.1 1.4 4.5 Total 15.9 13.2 29.1 Financing Plan: Local Foreign Total % ---------US$ million-- --- IDA 9.3 13.2 22.5 76% Government 6.6 - 6.6 24% Estimated Disbursements IDA Fiscal Year 1983 1984 1985 1986 1987 1988 ---------------- US$ million…--------- Annual 1.7 4.9 6.4 5.3 3.3 0.9 Cumulative 1.7 6.6 13.0 18.3 21.6 22.5 Rate of Return: The internal rate of return of the sewerage rehabilitation component would be about 7%, and that of the low cost sanitation component, about 6%. The economic rates of return would be significantly higher, as a result of major public health benefits from the project which are difficult to quantify. Staff Appraisal Report: Report No. 3678-TA, dated November 29, 1982. Map IBRD Map No. 16132 1Taxes and duties, included in project costs, are equivalent to US$3.4 million. INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE UNITED REPUBLIC OF TANZANIA FOR A DAK ES SALAAM SEWERAGE AND SANITATION PROJECT 1. I submic the following report and recommendation on a proposed credit to the United Republic of Tanzania of SDR 20.6 million (US$22.5 million) equivalent on standard terms to help finance a Dar es Salaam Sewerage and Sanitation Project. A portion of the credit (US$12.8 million) would be on-lent to the Dar es Salaam City Council for twenty-five years, ILLcluding i,ve , D 2 grace, at an annual interest rate of 11%. PART I - THE ECONOMY1 2. The last economic memorandum on Tanzania (Report No. 3086-TA) was distributed to the Executive Directors on January 23, 1981. A revised memorandum, based on the work of two economic missions which visited Tanzania in July and September 1982, will be issued in the first half of 1983. Background 3. At Independence in 1961, Tanzania (then Tanganyika) was one of the poorest countries in the world. Almost solely dependent on subsistence agriculture and a few estate crops, the country had a very modest indus- trial base (less than 5% of GDP), and a very small number of educated and trained personnel. For the first six years after Independence, the Govern- ment's development objectives resembled those of many other less developed countries, stressing growth in per capita income and national self-suffi- ciency in skilled manpower, based on market forces and capital intensive agricultural projects. This approach had a number of drawbacks, such as high investment costs in the agricultural sector, and led in the Govern- ment's view to unacceptable economic and social conditions, such as widen- ing income differentials and unequal opportunities for advancement in the rural areas. In response to this situation, the national development strategy was reassessed in 1967. The new priorities, enunciated in the Arusha Declaration and related policy statements, were directed towards establishing a socialist society, with greater emphasis on broad-based rural development, self-reliance in development efforts, and the intro- duction of mass education. To accomplish these ends, the State, with 1This section is substantially the same as that in the President's Report on the Sao Hill Forestry Project - Phase II, dated March 24, 1982. -2- guidance from the Party2, was expected to play the leading role, especially in the reform and creation of appropriate institutions. This led in the late 1960s to the nationalization of large-scale industry, commerce and finance, the creation of numerous parastatal bodies, the formation of ujamaa (cooperative) villages, the decentralization of government (1972), and the mass campaign of villagization (1974-76). 4. Despite some disruption arising from these major institutional changes during the period, Tanzania managed to show improvements both in social welfare and in macroeconomic performance. Primary school enroll- ments increased by more than 50%, life expectancy rose by almost 5 years, and access to safe water increased in both the rural and urban areas. GDP grew by 4.4% per annum from 1966 to 1973, investment averaged 24% of GDP from 1970 to 1973, and domestic resource mobilization improved with recur- rent revenues rising from 15% of GDP in 1967/68 to 19% in the mid 1970s. However, the productive sectors grew slowly and the rate of return on new investments (which was centered on the industry and transport sectors) was poor. Perhaps the principal disappointment was in agriculture, the domi- nant sector in the economy, which grew by only 2.3% per annum from 1966 to 1973. This growth was also uneven among regions and precluded any narrow- ing of rural-urban income differentials. Tanzania made rapid progress towards localizing key posts in the economy, but large gaps in manpower requirements remained. Dependence on foreign aid to finance both domestic investment and the widening balance of payments gap also increased. By 1973, the issues which were to be so important for Tanzania throughout the 1970s were becoming clear: How quickly could a country with limited trained personnel develop a strong and efficient centrally administered economy? The Government's emphasis on equity was often at the expense of efficiency and incentives; how long could the country afford these costs? What could be done to improve the growth rate of the monetized, productive sectors? 5. The oil price increases and world recession of 1973-74 coincided with two years of below average rainfall in Tanzania. Agricultural produc- tion also was affected by disruptive changes in the rural areas at this time (decentralization and villagization), and there was a serious short- fall in foodgrain production. The Government was forced into the world market, making large purchases of foodgrains for cash. Export crop production also fell during this period and the barter terms of trade dropped by about one-third during these two years. As a result, the current account deficit rose from US$118 million in 1973 to around US$340 million in both 1974 and 1975. Domestically, the recurrent budget fell into deficit and Government bank borrowing rose from TSh.416 million in 1973/74 to TSh.1061 million in 1975/76. 6. The Government prepared a program to deal with at least the short-term effects of the crisis and was able to receive some assistance from the IMF and a program loan from the Bank. Under this program, import 2The single mainland political party at the time was TANU, but in February 1977, it merged with Zanzibar's Afro-Shirazi Party to form the Revolutionary Party, or Chama Cha Mapinduzi (CCM). -3- levels were tightly restricted, wages were frozen, government development expenditures3 were redirected towards the productive sectors, and the Tanzanian shilling was devalued by 10% against the SDR. Producer prices for food crops were substantially increased and at the same time, the National Milling Corporation (NMC) was instructed to purchase a number of drought-resistant crops such as cassava, sorghum, and pigeon peas in addi- tion to the usual foodgrains like maize. While these steps were taken to increase food production, they also discouraged the production of export crops, weakened the financial position of NMC and required the banking system to extend large amounts of credit to NMC. Aside from the devalua- tion, little scope was given to market forces and Tanzania made no basic changes in its system of administered prices and government controls. The basic weaknesses of the economy persisted: declining export volumes, limited trained manpower, disappointing growth in the monetized and productive sectors, and poor maintenance of existing capital stock and infrastructure, especially in agriculture and transport. 7. Nonetheless, the Government program, boosted greatly by the coffee boom of 1977, additional foreign assistance and reasonable weather for agriculture, was able to keep the economy in balance until 1978. During 1978, the overly stringent import controls were relaxed at the same time as the terms of trade began to deteriorate again. The balance of payments went into deficit and foreign reserves were drawn down. Then, in October 1978, the country was invaded by forces from Uganda. The resulting war, the oil price increases of 1979 and flooding and drought in different parts of Tanzania led to a worsening balance of payments deficit and the Government built up major arrears on its import payments for the first time since Independence. The domestic budget fell heavily into deficit as expenditures (led by defense) rose by 50% from 1977/78 to 1978/79 and revenues improved by only 10%. As a result, Government borrowing from the banking system increased from TSh. 600 million in 1977/78 to more than TSh. 3,000 million in 1978/79. Such borrowing was the major factor in money supply growth, which exceeded 53% in this period. 8. According to the official National Accounts statistics, GDP in constant prices has risen by 4.7% per annum since 1966, and by a slightly higher rate of 5.1% per annum over the past six years. However, this latter trend assumes an 8.6% per annum increase in subsistence agriculture, which seems somewhat overstated in the light of Bank Group project experience and the known marketed surpluses of food. Assuming a more realistic growth rate of 4.0% per annum for subsistence agriculture, overall GDP growth since 1973 would also be reduced to 4.0% per annum. With population growing by around 3.3% per annum, this implies an increase in per capita GDP of only 0.7% per annum. There also has been a change in the structure of the economy over the past six years, away from the productive monetary sector and towards subsistence and service activities. Excluding public administration, commercial services and trade, the monetary sector has grown by only 2.3% per annum over the past six years, 3Government development expenditures account for about two-thirds of public sector investment, which in turn accounts for 50-60% of total investment. -4- well below the population growth rate. This change in the structure of the economy has been a major factor hampering the Government's efforts to mobilize domestic resources. 9. Although Tanzania has sustained a high investment ratio, this has not been matched by a similar success in the mobilization of domestic savings or in the return on investments. Up to the mid-1970s, foreign savings had financed 20%-40% of domestic investment. However, the depend- ence on foreign savings rose sharply to more than 60% of domestic invest- ment during the crisis years of 1974-75 and again from 1978. The major shortfalls in domestic savings have occurred in the Government sector, where they have actually been negative in some years since 1975. The low return on investments is reflected in the incremental capital-output ratio for the monetary sector, which was around 4.5 at the start of the decade and rose to between 6 and 7 by 1980. 10. Agriculture remains the most important sector in Tanzania, accounting for 90% of total employment, 50% of GDP and 80% of exports. The long-term trend growth rate of agricultural production has hardly kept pace with population growth and apparently has fallen in more recent years as the initial expansion of export crop production (through the mid-1960s) has been reversed. This poor performance cannot be adequately explained by the limitations of the natural environment. Although the importance of rural development has continuously been highlighted in Government statements, including the Arusha Declaration and successive plans, this has not always been reflected in the allocation of resources to the agricultural sector or in policy formulation and implementation. The general direction of the Government's post-Arusha agriculture strategy has also tended to emphasize the transformation of the institutional structure of rural development (through the formation of villages and increasing public involvement in the sector) over measures designed to improve agricultural production direct- ly. Many of these institutional changes were introduced too rapidly, with- out careful planning or sufficient recognition that by themselves they could not compensate for inadequate incentives and shortages of skilled manpower and managers. More recently there has been a greater awareness of the role of incentives, and recent price adjustments attest to the Govern- ment's willingness to use them to influence the pattern of agricultural production. The trend towards greater public involvement in agriculture has also continued and with the resultant proliferation of parastatals and increasingly complex structure of administration, the available manpower has been stretched even more thinly. This has resulted in weakened capaci- ty for policy planning and implementation, especially in the areas of research and extension, and deficient distribution of fertilizers and other on-farm supplies and equipment. Another factor underlying the poor performance of agriculture has been the deterioration of transport services. Road, rail and water services have declined owing to a lack of spare parts, poor maintenance and inadequate planning and management. The Current Balance of Payments Crisis and Medium Term Prospects 11. The slow growth in agricultural production, transport bottlenecks and external shocks described above have all contributed to the severe deterioration in the balance of payments over the past three years. Export volumes have fallen to a level one-third below the peaks of the mid-1960s -5- and early 1970s. Furthermore, the terms of trade have declined by 27% since the coffee boom of 1977, due to a sharp increase in import costs, especially for petroleum, at a time when the overall level of export prices has been rising very slowly. Owing to these adverse developments, the purchasing power of Tanzania's exports in 1980 was one-third lower than in 1977 and only one-half of the 1966 level. Part of this shortfall has been offset by additional external resources, including a sharp increase in commodity and program aid to more than US$200 million in 1980, as well as by drawings under the IMF standby program concluded in September 1980. But Tanzania has also had to utilize large amounts of exceptional financing, including suppliers' credits and an increase in import payment arrears. Despite this, the volume of imports has had to be severely curtailed, and in 1981, was still no higher than in the mid-1970s. 12. Given the recent negative developments on coffee prices and oil supplies, as well as the limited scope for further exceptional financing, there is little immediate prospect for an improvement in the balance of payments. This continuing balance of payments constraint is inevitably having a debilitating effect on the economy, with lower imports reducing production and maintenance of existing assets, resulting in further falls in exports and available foreign exchange. This vicious circle will be difficult to break, unless there is a substantial injection of foreign exchange and major changes in domestic policies designed to improve producer incentives, parastatal operations, import allocations, the promotion of non-traditional exports, and overall government planning and budgeting. In March/April 1981, the Government introduced a number of significant measures--such as higher producer prices for coffee, sisal and tobacco and the establishment of a Special Agricultural Account at the Bank of Tanzania to ensure that a substantial proportion of foreign exchange earnings are returned to the agricultural sector. This Export Rehabilitation Program was supported by a US$50 million credit from IDA (Cr. No. 1133-TA). 13. During negotiations of the Export Rehabilitation Credit in March 1981, agreement was also reached on a Memorandum of Understanding on Follow-Up Measures. These included more restraint and selectiveness in the public investment program, more emphasis in the recurrent budget on the operations and maintenance needs of the economy, improved foreign exchange budgeting, a re-examination of the roles (particularly purchasing mandates) of the State-owned crop authorities, the introduction of more payment-by- results schemes in industry and a review of subsidy and cost recovery arrangements in the public sector. The Government also agreed that an independent Advisory Group would be established to assist the Government in preparing a comprehensive program of economic rehabilitation and recovery. 14. The Advisory Group began work in November 1981 and completed its Report in April 1982. The Government adopted a large number of its recommendations and incorporated these in a Structural Adjustment Program which was issued in July 1982. This Program includes a series of important initiatives and proposals, many of which have still to be further refined and implemented. The development budget for 1982/83 has been substantially cut back for the second year in a row to release resources for the operations and maintenance needs of the economy. Difficult decisions have been taken in the light of limitations on available foreign exchange and physical resources. Factories operating at low capacities -6- have been shut down. The price control system has been reviewed and food marketing arrangements are to be reorganized. The Government has begun to allocate additional inputs to agriculture through the Special Agricultural Account established under the Export Rehabilitation Program. Special steps are being taken to control Government recurrent spending and to reduce parastatal losses. The functions of key agricultural agencies are being reduced and will be taken over by other bodies, such as cooperatives. All of these measures will serve to trim overall burdens on the public sector and give further encouragement to smallholder production. 15. However, while the key issues of economic recovery have all been raised in the Government's Structural Adjustment Program, important decisions remain to be taken on matters such as the exchange rate and agricultural prices. Furthermore, the Government has yet to complete the preparation of specific action programs in key sectors (e.g. transport) which would have a measurable impact on production. In the most important economic sector - agriculture - the Government program contains a statement of objectives rather than an explanation of how financial incentives and basic services at the farm level will be improved during the next three years. A Presidential Commission is preparing a detailed set of recommendations in this area, which should be ready by January 1983. The program also does not estimate adequately the resource requirements of a medium term adjustment program and indicate precisely how domestic and foreign exchange budgets will be administered to support the program. 16. An economic mission visited Tanzania to have detailed discussions of the Government program in September/October 1982. The recommendations of the Government's Agricultural Commission, and sector reports recently prepared by Bank staff - on agriculture and transport - will also be discussed with senior Government officials during the next two months. These discussions should add further substance to general adjustments already included in the Government program. 17. Discussions with the IMF on a possible Standby Arrangement are continuing. Tanzania has had no access to Fund facilities since December 1980, when the Government failed to meet performance targets under a previous Standby. Following three rounds of discussions in May, June and August 1982, the Government invited a Fund mission to visit Dar es Salaam for three weeks in October 1982. No agreement was reached during this mission, particularly on the appropriate magnitude of an exchange rate adjustment, and discussions were adjourned for an indefinite period. 18. Even with a much improved export performance, Tanzania will continue to face a very difficult balance of payments situation, especially over the next two to three years. To sustain an increase in per capita GDP will require increasing amounts of aid in real terms and a careful review of import requirements, especially those for low-priority projects with long gestation periods and high foreign exchange costs. Otherwise the prospects would be for generally stagnant economic activity over the 1980s as a whole, with a substantial decline in per capita incomes. To avoid this, there will need to be continued emphasis on export performance and a concerted effort to improve the level of capacity utilization and effi- ciency in the economy. Furthermore, this must be done without jeopardizing vital food production. - 7 - 19. Although it may be possible to finance a small portion of the current account gap through commercial borrowings, the scope for this is clearly limited; in addition to the difficulties of raising commercial credit during a period of balance of payments problems, Tanzania simply cannot afford the heavy burden of debt service payments. Therefore, the bulk of the financing requirements will have to be met by additional foreign assistance. Possible sources for this include further drawings from the IMF (which could add US$100 million per annum), deferred payment arrangements and other concessional financing from oil-supplying countries, additional new commitments from traditional bilateral and multilateral sources, and a continued movement towards non-project assistance. External Debt 20. Owing to the very concessional terms on which past aid has been given to Tanzania and the Government's previous reluctance to use higher cost commercial loans and suppliers' credits, the country's overall debt service ratio has historically been less than 10%. However, the debt service burden is expected to increase as past loans fall due for repayment and new borrowings, including some on commercial terms, are required to meet the widening balance of payments gap. Such borrowings, together with very poor export prospects, could raise the debt service ratio to 15%-20% during the 1980s. In 1981, it is estimated that the Bank held 14% of Tanzania's external debt outstanding and disbursed (for the Bank Group, it was 33%) and the Bank Group received 21% of Tanzania's debt service. Including Tanzania's share of obligations under East Africa Community loans, the Bank's exposure was 17% (and the Bank Group share, 36%). This level of Bank exposure reflects in part the impact of recent debt write-offs, totalling US$277 million in 1978 and 1979. We are projecting the Bank Group's share in debt service to fall over the coming decade owing to the reduced IBRD component in the lending program and the continued need for Tanzania to borrow funds on less concessional terms from other sources. PART II - BANK GROUP OPERATIONS IN TANZANIA4 21. Tanzania joined the Bank, IDA and IFC in 1962. Beginning with an IDA credit for education in 1963, 53 IDA credits and 19 Bank loans, two of these on Third Window terms, amounting to US$1024.3 million have so far been approved for Tanzania. In addition, Tanzania has been a beneficiary of 10 loans totalling US$244.8 million which were extended for the development of the common services and development bank operated regionally by Tanzania, Kenya and Uganda through their association in the East African Community. IFC investments in Tanzania, totalling US$4.7 million, were made to the Kilombero Sugar Company in 1960 and 1964. This Company encountered financial difficulties and in 1969, IFC and other investors sold their interest in the Company to the Government. A new IFC 4This section is substantially the same as that in the President's Report on the Sao Hill Forestry project - Phase II, dated March 24, 1982. - 8 - investment of US$1.7 million in soap manufacturing in Mbeya was approved by the Executive Directors on June 8, 1978 and an investment of US$1.5 million in metal product manufacturing was approved in May, 1979. Annex II contains summary statements of Bank loans, IDA credits and IFC investments to Tanzania and the East African Community organizations and notes on the execution of ongoing projects. 22. Bank Group lending in Tanzania has been centered on: (i) agriculture; (ii) transport and communications; (iii) industry; and (iv) education and manpower development. As agriculture and related activities constitute the largest single sector in the economy, it has received 30% of the Bank Group's direct lending to Tanzania. The lending program in agriculture has featured three main types of projects: (a) regional rural development projects focusing on production and the development of regional infrastructure, (b) projects centered on specific crops (such as maize, tea, tobacco and pyrethrum) and (c) projects designed to improve general support services (e.g. rural credit, grain storage). However in view of past underfinancing of capital maintenance and replacement in the sector, new Bank Group lending will focus on rehabilitation and use of existing agricultural production and processing capacity, rather than on expansion of such capacity. 23. Alongside agriculture, there has been a major focus in Bank Group work on transport and communications. Transportation difficulties are critical constraints to development in Tanzania. Indeed, the Government's inability to ensure the timely availability of inputs or the regular collection of crops has been a major bottleneck to increased production in the agriculture sector. Furthermore, during the seventies, transport investments were primarily concentrated around the Tanzania-Zambia Corridor and since 1977, no systematic investment program has been prepared for the subsectors which were overseen by EAC Corporations. The major objectives of proposed Bank Group activities are to develop a more balanced investment program in transport and communications and to strengthen the ministries and newly established national corporations responsible for railways, ports, and telecommunications. In industry, future lending is expected to provide modest support to well developed financial intermediaries like the Tanzanian Investment Bank (TIB) which are consolidating their portfolios and stressing capacity utilization and export promotion. Shortages in skilled manpower are also a worsening bottleneck to development. Bank Group involvement in education is expected to emphasize specialized training and the development of the secondary school system. 24. In addition to financing specific projects, the Bank Group has on three occasions provided non-project assistance in support of the Government's efforts to deal with its balance of -payments difficulties. The first such Credit was made in 1974, the second in 1977, and the most recent, an Export Rehabilitation Program Credit (No. 1133-TA), in April 1981. 25. Project implementation in Tanzania has been adversely affected during the last four years by the disruptions of the Uganda War and the country's extreme foreign exchange difficulties, which have resulted in shortages of fuel and building materials, even when budgetary allocations for purchasing them have been adequate. External financing agencies have - 9 - been increasing the share of direct and indirect foreign exchange costs covered by project budgets; however, it is impossible to cushion projects completely, particularly in remote areas, from the ramifications of the economic crisis. Despite implementation difficulties, disbursements have remained remarkably steady; Bank Group disbursements grew from US$58 million in FY78 to US$81 million in FY81 and reached US$114 million in FY82. A comparison with other portfolios in the Eastern Africa Region indicates that Tanzanian disbursements have been slightly below average for the Region, ranging as a proportion of outstanding commitments at the start of the financial year, from 18.9% in 1976 to 15.7% in 1980 (compared with 20.6% and 16.5% in the same years for the Region as a whole). 26. Supervision missions have been concerned with adapting project implementation to difficult factors facing the country or individual sectors, which were not anticipated or have proved worse than expected at appraisal. A major Country Implementation Review was held in Dar es Salaam in October 1982 during which Government officials and Bank staff agreed to recommend the restructuring or discontinuation of several projects which have faced persistent implementation problems. At the same time it was agreed that the Project Implementation Monitoring Unit at the Ministry of Planning and Economic Affairs would be strengthened as a focal point for further consolidation and improvements in the Bank Group program. Intensive supervision, and in the case of the Mufindi Pulp and Paper Project, timely assistance from co-financiers have already had some remedial results. Even in the agricultural sector, where constraints on implementation have been most severe, there have been important improvements in some projects, e.g. Dairy Development. However, considerable work remains to be done during the next six months in improving project implementation and disbursements. The next Country Implementation Review will be held in April 1983. East African Community (EAC) 27. Developments affecting the East African Community (EAC) were outlined to the Executive Directors in a memorandum, dated December 29, 1977, (R77-312) and in a statement made on May 6, 1980 (Sec M80-364). One of the positive results of the ongoing mediation effort has been the Partner States' decision, taken upon the mediator's recommendation, that the East Africa Development Bank (EADB) -- one of the former Community's institutions -- should continue, and a revised charter to this effect has been enacted. The three Governments commented on the mediator's proposals for the three Partner States during their meeting in Nairobi in July 1981, and decided to commence negotiations based on the mediator's proposals. The negotiations started in December 1981 in Arusha and continued in April 1982 in Jinja and September 1982 in Nairobi. The discussions have passed the fact finding stage and are now focussing on details of a division formula for assets and debts. While it is generally accepted that both location of assets and the principle of equal rights of all former EAC partners should be taken into account, the weight to be given to these principles from case to case remains the major issue in the continuing negotiations. - 10 - PART III - THE WATER SUPPLY, SEWERAGE AND SANITATION SECTOR Resources and Institutions 28. Tanzania is a generally dry country with limited surface and ground water resources. Three major river basins drain into the Indian Ocean, Lake Tanganyika and Lake Victoria. The driest regions are in the center, and in the Rift Valley on the western edge of the country. The central plateau receives less than 1 meter (m) of annual rainfall but areas around Mount Kilimanjaro and north of Lake Nyasa receive more than 1.5 m. 29. The Ministry of Water and Energy (MWE) has responsibility for management and development of all water resources. However, regional development plans are reviewed jointly by the Prime Minister's Office (PMO) and MWE. The water supply system in Dar es Salaam is the responsibility of the Dar es Salaam Water Corporation Sole (DSC) which reports to both PMO and MWE. A National Urban Water Authority (NUWA) was established in April 1981 to take over and operate major urban water systems in the country, as an autonomous and financially self-sustaining entity. NUWA is currently being staffed to administer Dar es Salaam as its first operating unit in 1982/83, and would receive technical assistance under the project (see paragraph 46 below). 30. At the last census in 1978, Tanzania's urban population was about 2 million; of these about 85% had access to piped water. About 1 in 5 urban residents had individual house connections while the rest depended on public standpipes. During recent years, owing to insufficient public funds, the expansion of urban water systems has fallen behind the growth of demand; in addition, operation and maintenance standards have suffered. Sewerage and Sanitation 31. Sewerage and sanitation in the urban areas are the responsibility of the Ministry of Lands, Housing and Urban Development (ARDHI). While towns are responsible for operating and maintaining capital facilities, ARDHI prepares or approves plans for new investment and supervises project implementation. ARDHI assumed this responsibility from MWE, by Presidential Order, following the 1977 cholera epidemic which dramatized the sewerage problem in Dar es Salaam. Only six towns have partial access to waterborne sewerage -- Arusha, Dar es Salaam, Moshi, Mwanza, Tabora and Tanga; the population served is about 200,000. The remainder of the urban population uses septic tanks and pit latrines. As in the case of general water facilities, sewerage and sanitation operations and pit latrine emptying services have declined during the 1970s, particularly during the period 1974-1978 when town councils were abolished. In future, the Government hopes to emphasize upgrading of low-cost, on-plot sanitation facilities to satisfactory hygienic levels, both in urban and rural areas. It also intends to improve waterborne sewerage services for the remainder of the population, where practical. 32. Three factors constrain current efforts to improve sewerage and sanitation services in Tanzania. First, the structure of existing organizations both in ARDHI and town councils are inadequate for - 11 - implementing projects or operating completed systems. Second, there is a lack of qualified staff. While about 300 administrators and technicians could be usefully employed in Dar es Salaam alone by the year 1990, there are very few graduate sanitary engineers in Tanzania and ARDHI's training institute has only 25 entrants per year. Third, even with low-cost methods of sewerage and sanitation, the financial implications of national improvements are very large. The search for less costly but equally efficient sanitation methods must be continued. Sewerage and Sanitation Facilities in Dar es Salaam 33. The population of Dar es Salaam has increased from about 69,000 in 1948 to about 782,000 in 1978 at an average rate of 8.5% per annum. At least 60% of the population lives in unplanned housing areas, which occupy about 40% of all residential land. By 1999, the city is expected to have 2.4 million residents. The city's water is treated and piped from three major river sources. Accurate figures on water distribution do not exist as metering of both water production and water use is inadequate; however, existing water sources are considered adequate for Dar es Salaam until 1987 or 1988 without additional river regulation. There are frequent interruptions of service, however, and in some areas water is supplied only intermittently. These service interruptions are caused by inadequate mains (especially in the city center), faulty interconnections between pressure zones, equipment breakdowns due to poor maintenance and the lack of proper organization and staff. 34. The sanitation requirements of about 90% of Dar es Salaam residents are met with on-plot facilities, namely pit latrines and septic tank systems. The rest of the city is served by a waterborne sewerage system introduced in 1948. The city center system discharges through an ocean outfall just north of the harbour entrance; nine other isolated systems exist in outlying areas, using waste stabilization ponds and discharging into local watercourses. 35. The condition of the existing sewerage system is extremely bad. The ocean outfall is broken near the shore and only one of the nine waste stabilization ponds is operating with some degree of effectiveness. Of the 17 existing pumping stations, only one can be operated. A number of major sewers are blocked completely. Septic conditions, causing serious corrosion of sewers and dangerous concentrations of gases, can be observed at several locations. Existing conditions cause a surcharge of sewers and overflows to storm drains, streams, the harbour and beaches. The result is serious pollution and a major risk to health. Design of on-plot sanitation * structures often is not satisfactory and emptying of pits and disposal of contents are poorly done, causing serious pollution problems. 36. The basic cause of the existing sewerage and sanitation situation is poor operation and an almost complete lack of maintenance, particularly since 1974, when the City Council was abolished. Deficiencies in the original designs of some facilities may also be a contributing factor. Engineering studies suggest that parts of the present sewerage system would have sufficient capacity for expanded service if they were restored to a reasonable condition. The answer to the city's problems in this sector i-es in improving the institutional base of sewerage services and increasing revenues from their beneficiaries. - 12 - Previous Bank Group Experience in Water Supply, Sewerage and Sanitation 37. A Bank loan of $15.0 million (Loan 1354-TA) was approved in 1977 for the expansion of water supplies in Morogoro. This project includes construction of an earth dam across the Ngerengere River near Morogoro with tower intake, culvert and spillway; production facilities including transmission pipelines, treatment and pumping stations, storage reservoirs and reticulation extensions in Morogoro; management advisory services in the Ministry of Water and Energy and a contribution to MWE's training program for the water supply sector. Implementation of this project is about 2 years behind schedule because of poor performance by the main civil works contractor for the dam. The contractor has recently been replaced, and the project is now expected to be completed by June 1984. A supplementary IDA credit of US$4 million for this project was approvedon June 24, 1982. (IDA/R82-81). 38. In addition to the Morogoro Water Supply Project, five IDA financed projects in the rural development and urban sectors have contained water supply and sanitation components. These are: the First and Second National Sites and Services Projects (Credits 495-TA and 732-TA); the Tabora Rural Development Project (Credit 703-TA); the Kigoma Rural Development Project (Credit 508-TA); and the Mwanza/Shinyanga Rural Development Project (Credit 803-TA). No major implementation problems have been experienced with these components, except in Mwanza/Shinyanga, where it has been difficult to identify villages willing to make financial contributions to shallow well construction, owing to the availability of similar facilities on grant terms from bilateral donors. PART IV - THE PROJECT 39. The proposed project was prepared by the Government with assistance from IDA and was appraised in June/July 1981. Two Project Preparation Facility Advances amounting to a total of US$1.0 million were approved in July 1979 and May 1980 for the preparation of a master plan, feasibility studies, preliminary designs and for other technical assistance. A Staff Appraisal Report entitled: "Dar es Salaam Sewerage and Sanitation Project" is being circulated to the Executive Directors separately. Negotiations were held in Washington from August 2 to August 11, 1982 and the Tanzanian Delegation was led by Mr. Joshua Minja, Principal Secretary at the Ministry of Lands, Housing and Urban Development. A Credit and Project Summary is at the beginning of this Report and a Supplementary Data Sheet is attached as Annex III. Objective and Description of the Project 40. The project would be a modest first stage in a long range program to develop basic sanitation in Dar es Salaam to meet acceptable standards of public health and adequate levels of efficiency. In addition to rehabilitation of the defunct existing sewerage system, the project would focus primarily on low-cost on-plot sanitation facilities which will serve the majority of the population for many years and on the development of the - 13 - services, institutions, management and financial practices required for sewerage and sanitation facilities to be properly planned, constructed, operated and maintained in the future. More specifically, the project would substantially improve the pit emptying service for about 70,000 existing low-cost sanitation units. The project would promote public acceptance and adoption of better standards of low-cost sanitation and hygienic practices and provide improved latrines for about 40,000 people. Sewer services to about 6,000 properties would be restored and such services would be provided to about 600 additional properties which have access, but are not connected, to the existing sewerage system. Management services would be engaged to initiate proper operation and maintenance of the sewerage and sanitation services, to install satisfactory financial management and cost recovery systems and to train counterpart staff to perform such functions permanently. The project would have the following components: (a) rehabilitation and improvement of existing sewerage facilities; (b) construction of pit latrines and replacement or conversion of inadequate existing on-plot sanitation units; (c) improvement of DCC's pit emptying service; (d) establishment and development of a Sewerage and Sanitation Department (DSSD) in DCC; (e) provision of offices, workshops, equipment and spare parts required for the management and maintenance of sewerage facilities and sanitation services; (f) training for professional and technical staff; (g) technical assistance to ARDHI, DCC, NUWA and TANESCO; and (h) provision of consulting engineering services for detailed design and supervision of project construction, for additional studies of sanitation-related problems, and for preparation of a Stage II project. Detailed Features 41. Sewerage Rehabilitation and Improvement. Sewerage rehabilitation would be one of the major components of the project. The existing ocean outfall and stabilization ponds would be rehabilitated. Once the existing system has been returned to full physical operation, the quality of the receiving waters would be monitored continuously as the basis for changing operating procedures and for future design (Section 3.04 of the draft Development Credit Agreement). About 130 km of sewers and pumping mains would be cleared, inspected, and repaired. The 17 pumping stations would be rehabilitated and their mechanical and electrical equipment replaced. Nine waste stabilization ponds with a total area of about 27 ha would be repaired and improved. In addition, about 600 new sewer service connections would be constructed. While there is no provision in the - 14 - project for extensions to the existing sewerage system, it is expected that some new sewerage facilities would be required in Stage II. The project includes consulting services for detailed design of these Stage II facilities (paragraph 45). 42. The rehabilitation and construction work would be designed and supervised by a firm of consulting engineers under contract with ARDHI. A contract for such work was signed in December 1981 with Howard Humphreys and Partners (United Kingdom), and work commenced in January 1982. New office buildings for DSSD, its Mechanical and Electrical Division, and improvements to three existing depots would be designed and supervised by locally-based consulting firms under contract with ARDHI. Land would be acquired for the new DSSD buildings, dumping points for pit emptying vehicles and expansion of the three sewerage depots. Such land acquisition would be completed before tenders were invited for the works, but in any case not later than June 30, 1983 (Section 3.09 of the draft Development Credit Agreement). 43. Low-Cost Sanitation. The project would also focus on low-cost sanitation. Present waste disposal systems and hygienic practices contribute heavily to the high mortality and morbidity levels in the city. Installation and improvement of on-plot sanitation units would reflect the results of extensive experiments with upgraded low cost sanitation methods in the city. More than 100 demonstration units have been constructed and numerous surveys, health education trials and workshops have been under- taken during the last three years under the auspices of a UNDP-financed low cost sanitation project (GLO/78/006) for which the Bank Group is the executing agency. Further changes in design of the sanitation units are expected to occur during project implementation, particularly with a view to reducing costs. About 3,600 pit latrines at residences and about 100 at schools would be constructed. 44. The proposed project would include substantial improvement in DCC's pit emptying services which are presently unreliable. Additional discharge points would be established for pit emptying vehicles; there would be improvement in vehicle control and emptying procedures; and the number and maintenance of vehicles would be enhanced. 45. Technical Assistance and Training. The project would provide consulting engineering services, mainly for detailed design and supervision of construction. It would also include the engagement of long term personnel by ARDHI and DCC to fill key management and operating positions at DSSD and to assist with the training of local staff. The Ministry staff would include a Project Manager and Low Cost Sanitation Engineer, who would have overall supervisory responsibility for the project (see paragraph 47) and a social scientist, who would advise on the most effective means of disseminating improved sanitation practices. The full complement of DSSD's senior staff would be recruited internationally and include a General Manager; Finance Manager; Sewerage Manager; Low Cost Sanitation Manager; Transportation/Equipment Supervisor; Mechanical/Electrical Engineer; Health Education Specialist; and Training Officer. An accounting consultant and systems analyst would also be provided to the Tanzania Electric Supply Company, Limited (TANESCO), to allow it to adapt its billing, collecting - 15 - and accounting procedures to accommodate the requirements of Dar es Salaam's water supply, sewerage and sanitation operations. An additional commercial training officer would be provided to TANESCO to assist with training of DCC accountants. The selection, qualifications, experience and terms and conditions of employment of specialists and consultants under the project would be satisfactory to the Association (Section 3.02 of the draft Development Credit Agreement). The project woul( finance training for five civil engineers, two mechanical/electrical engineers, as well as three health specialists, eleven accountants and forty various technicians. Counterpart staff at DSSD would receive about thirty months of working experience with agencies responsible for sewerage and sanitation outside Tanzania and a total of about six months of short courses inside and outside Tanzania. 46. Support for NUWA. Assistance to NUWA would involve the engagement of a management consulting firm to select necessary personnel, help introduce new management systems and initiate senior staff training. Five senior officers would report directly to NUWA's Director General: Directors of Operations; Program Planning and Implementation; Finance; Manpower, Personnel and Training; and the Secretary. Such staff would make recommendations to NUWA's Board on physical and financial objectives for urban water supplies, tariff policies, capital development and operations and maintenance - first in Dar es Salaam, but eventually throughout the country. As the institution grows, it is possible that NUWA will also be asked to coordinate the development of sewerage and sanitation services outside the capital. Organization and Implementation 47. The project would be implemented and managed by ARDHI and DCC. A Project Management Committee, chaired by ARDHI's Director of Sewerage and Drainage, and including key staff from DCC would deal with policy matters. In addition, a Project Implementation Unit, headed by a Project Manager, is being established in the Sewerage and Drainage Division of ARDHI with responsibility for procurement, administration and supervision of contractors and consulting services, project accounts and other project matters. The Project Implementation Unit would include ARDHI's engineer for low-cost sanitation. The Project Implementation Unit would have the following key staff, most of whom are already in place: the Project Manager, two engineers, an accountant, a technician, and office support personnel. 48. During project implementation, DCC would create and develop a Dar es Salaam Sewerage and Sanitation Department (DSSD); provide advice through the Project Management Committee; decide on the location of new low-cost sanitation units; provide counselling services in public health; and promote low-cost sanitation programs. Establishment of DSSD was approved in May 1982 by the City Council, the Prime Minister's Office, and the Treasury. Appointment of key officers of DSSD would be a condition of credit effectiveness (Section 6.01(b) of the Development Credit Agreement). During the early years, DSSD would operate as a semi-autonomous department of DCC responsible for financing its own operations. To enable it to do so with a minimum of difficulty, DSSD would - 16 - adopt a management information system and billing and collection arrangements similar to those already operating at TANESCO. TANESCO is one of the best managed and financially most sound institutions in Tanzania, and it has recently acquired a new computer with sufficient capacity to handle DSSD's, as well as NUWA's, data processing needs. DCC would train a sufficient number of its staff in TANESCO's methods and procedures to allow the introduction of a similar management information system for its sewerage and sanitation services not later than June 30, 1984 (Section 2.02 of the draft Project Agreement). A survey of service connections for sewerage, water supply and electricity would also be completed by December 31, 1983 to facilitate monthly billing for all three services on a similar but separate basis (Section 3.05 of the draft Development Credit Agreement). TANESCO would be paid by NUWA and DSSD for the cost of any training received, as well as monthly fees based on the number of computer transactions handled. The replication of an already smoothly operating billing and collection system, combined with the substantial provision for start-up technical assistance, should prove invaluable in facilitating DSSD's initial operations. 49. The technical assistance component for NUWA would be administered by the Ministry of Water and Energy. Project Cost and Financing 50. The total project cost at July 1982 prices is estimated at about US$29.1 million,including foreign exchange costs equivalent to about US$13.2 million, or 46% of total project costs. The approximate project budget is provided in the Project and Credit Summary at the front of this Report. Price contingencies on foreign costs have been set at 8.0% in 1983, 8.0% in 1984, 7.5% in 1985 and 7.0% in 1986. Price contingencies on local costs for the same periods have been established at 15.0%, 16.0% 13.0% and 12.0% respectively. Full costs of technical assistance (including salary, subsistence and international travel) are estimated at US$7,000 per man-month; 368 man-months would be required. Full costs of internationally provided consulting services would be US$7,350 per man month; 83 man-months would be required. The proposed IDA credit of US$22.5 million would finance 100% of the foreign costs, (US$13.2 million) and 58% of the local costs (US$9.3 million), or 76% of the total costs, of the project. The Government would provide the remaining US$6.6 million in local costs. Local costs include duties on direct imports and taxes on consulting services which are estimated at about US$3.4 million, or 12% of total project costs. Procurement and Disbursement 51. Contracts for rehabilitation of sewerage structures and con- struction of DSSD's headquarters building, estimated at about US$9.0 million including contingencies, would be let through international compe- titive bidding (ICB), in accordance with the Association's guidelines. Eligible domestic bidders would be given a preference of 7.5% in connection with such awards. The remaining portion of construction for the project (about US$6.0 million, including contingencies) would consist of minor works and buildings, for which individual contracts would amount to less than US$1.0 million. These are not likely to attract foreign bidders and - 17 - would be let through local competitive bidding procedures which are acceptable to the Association. Procurement of equipment and vehicles (US$3.6 million, including contingencies) would be grouped in appropriate bidding packages and undertaken through ICB. Qualifying domestic manufacturers would be given a 15% preference, or one equivalent to the duty on such items, whichever is lower. Miscellaneous items of equipment and furniture, in amounts less than US$50,000 and totalling US$0.5 million would be procured through local competitive bidding procedures. All contracts for work over US$0.7 million and goods over US$150,000 would be subject to prior review of procurement documents by the Association. Any initial bidding package would also be subject to such review; the remaining orders would be subject to selective review by the Association after award of contract. 52. The credit would be disbursed over six years against: (a) 100% of foreign expenditures and 50% of local expenditures on equipment, furnishings and vehicles (except for the NUWA component of the project); (b) 100% of foreign expenditures and 80% of local expenditures for civil works; (c) 100% of foreign expenditures and 80% of local expenditures for consultants' services, technical assistance and training (except for NUWA); (d) 100% of foreign expenditures and 80% of local expenditures for technical assistance and equipment for NUWA; and (e) 100% of the cost of refunding the PPF advance. Expenditures incurred after December 31, 1981 up to an amount of US$0.5 million for the early stages of the consulting engineering contract for sewerage rehabilitation would be financed retroactively under the credit (Schedule 1, Paragraph 4 of the draft Development Credit Agreement). These expenditures are necessary to maintain the momentum of project preparation. Cost Recovery and Other Financial Provisions 53. The proposed project would attempt to re-establish sewerage and sanitation services in Dar es Salaam on a sound financial footing. Current sewerage charges are well below the level necessary to cover existing operating expenses of the system, let alone permit proper maintenance and selective expansion of such facilities. Because they are highly capital intensive and benefit a relatively small proportion of the population, sewerage services by the end of the project would be provided on the basis of full cost recovery. The system of establishing charges would be revised. These are currently based on estimates of water consumption, which are unreliable, as only 25% of industrial and domestic water consumers have fully operating water meters. As charges have not been adjusted for some time, and it would not be reasonable to increase these sharply until services are substantially improved, sewerage tariffs would be raised over a period of two years (FY84 abd FY85), to a level sufficient to cover costs. As a basis for the final adjustment of charges, the Government would complete a tariff study and furnish it to the Association for its review by June 30, 1984. Proposals for a new tariff structure for sewerage services would be prepared by December 31, 1984, and implemented promptly thereafter, taking into account the Association's comments on the proposals (Section 3.06 of the draft Development Credit Agreement). Beginning in FY85, the level of sewerage charges would be reviewed annually, and adjusted as necessary to cover all of DSSD's expenses on its sewerage operations, as well as generate sufficient cash to meet 20% of - 18 - DSSD's capital requirements (Section 4.04(a) of the draft Project Agreement). Pit latrine emptying charges would also be raised by June 30, 1983 so as to meet all operating costs, including interest and an adequate provision for the depreciation of fixed assets, as well as debt repayments to the extent that these exceeded the provision for depreciation (Section 4.03(a) of the draft Project Agreement). Payments for pit latrine emptying services would be made in advance (Section 4.03(b) of the draft Project Agreement). 54. DSSD would also be required to meet other financial targets. Late receipts for sewerage services would not be allowed to accumulate for more than ninety days (Section 4.05 of the draft Project Agreement) and DCC would not incur further debt on behalf of DSSD for purposes other than the project, unless net revenue for the preceding fiscal year were at least 1.5 times DCC's debt service requirements (Section 4.06 of the draft Project Agreement). 55. To permit recovery of installation costs for improved pit latrines, DCC would introduce arrangements satisfactory to the Association which would allow individual householders to borrow funds to finance the construction or upgrading of such facilities on their premises (Section 2.03 of the draft Project Agreement). Accounts, Auditing and Reporting 56. A Project Implementation Unit (PIU) under the Sewerage and Drainage Division of ARHDI and headed by a Project Manager would have responsibility for project accounts. To monitor the implementation of the project and the operational development of DSSD, DCC would submit quarterly reports to the Association summarizing physical progress, showing actual project expenditures and forecasting future expenditures based on revised cost estimates up to completion of the project. The numbers of employees by categories showing progress of recruitment and training, compared with the operational staffing plan for DSSD, would also be included in such reports. Annual reports on operation would include the number of sewerage connections compared with the previous year; the number of pit emptying loads transported compared with targets; income statements, funds flow statements and balance sheets for each of the Piped Sewerage and Low Cost Sanitation units of DSSD; number of days' billings outstanding compared to agreed targets; and details of major plant and equipment acquired during the year. DCC would maintain separate financial accounts on DSSD's operations and furnish audited versions of these each year to the Association (Sections 4.01 and 4.02 of the draft Project Agreement). Benefits and Risks 57. The most significant benefit resulting from the project would be the substantial reduction in health hazards arising from poor sanitation and malfunctioning of the existing sewerage system and pit emptying practices. Another major project benefit would be the development of an institution capable of adequately operating, maintaining and eventually expanding the city's sewerage and sanitation facilities. The institution is expected to be the core of a future Tanzanian national institution for sewerage and sanitation services. About 100,000 people would benefit directly from the project (60,000 people with an improved sewerage service, - 19 - and about 40,000 people with new or reconstructed pit latrines) and the entire population would benefit indirectly through improved pit emptying services and the reduction of pollution and health hazards. 58. One major project risk is the possible failure of DSSD to develop as an efficiently operating organization to main :ain the rehabilitated sewerage system and expand the low-cost sanitatiin program. Another risk is that collections for sewer and sanitation servrices might not reach satisfactory levels. The project has been designed to minimize these risks by including substantial provision for training and technical assistance. In addition, future projects in the sector would attempt to follow through on the institutional development achieved during this first phase. PART V - LEGAL INSTRUMENT AND AUTHORITY 59. The draft Development Credit Agreement between the United Republic of Tanzania and the Association, the draft Project Agreement between the Association and the Dar es Salaam City Council, and the Recommendation of the Committee provided for in Article V, Section l(d) of the Articles of Agreement of the Association are being distributed to the Executive Directors separately. Special conditions of the Credit are listed in Section III of Annex III. 60. Conditions of effectiveness of the proposed Credit would include (a) execution of a Transfer Agreement between the Borrower and the Dar es Salaam City Council (DCC) and (b) appointment of key staff at the DCC's new Department of Sewerage and Sanitation Services (DSSD) (Section 6.01 of the draft Development Credit Agreement). 61. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 62. I recommend that the Executive directors approve the proposed Credit. A. W. Clausen President By Ernest Stern Attachment November 29, 1982 Washington, D.C. ANNEX I - 20- Page 1 of 6 Page 1 TABLE 3A TANZANIA - SOCIAL INDICATORS DATA SHEET TANZANIA REFERENCE GROUPS (WEIGHTED AltAGES AREA (THOUSAND SQ. KM.) - HOST RECENT ESTIMATE TOTAL 945.1 HOST RECENT LDW INCOME MIDDLE INCOQE ACRICULTURAL 401.4 1960 /b 1970 /b ESTIMATE /b AFRICA SOUTH OF SAHARA AFRICA SOUTH OF SAHARA GNP PER CAPITA (USS) 70.0 130.0 280.OLI 250.8 1053.2 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 41.1 63.0 50.5 66.5 610.1 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (THOUSANDS) 10201.0 13300.0 18650.0 URBAN POPULATION (PERCENT OF TOTAL) 4.8 6.9 11.8 17.8 28.3 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 36.2 STATIONARY POPULATION (MILLIONS) 110.5 YEAR STATIONARY POPULATION IS REACHED 2100 POPULATION DENSITY PER SQ. KM. 10.8 14.1 19.1 27.7 54.7 PER SQ. KM. AGRICULTURAL LAND 26.6 33.4 44.9 86.7 129.9 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 42.7 44.4 46.0 44.8 46.0 15-64 YRS. 54.3 52.5 50.9 52.3 51.1 65 YRS. AND ABOVE 3.0 3.1 3.0 2.9 2.8 POPULATION GROWTH RATE (PERCENT) TOTAL 2.2 2.7 3.4 2.7 2.8 URBAN 5.0 6.3 8.7 6.2 5.2 CRUDE BIRTH RATE (PER THOUSAND) 46.6 46.8 46.3 47.3 47.2 CRUDE DEATH RATE (PER THOUSAND) 22.4 18.6 15.1 19.5 15.7 GROSS REPRODUCTION RATE 3.0 3.1 3.2 3.2 3.2 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. .. 93.6/c USERS (PERCENT OF MARRIED WOMEN) .. .. FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 95.0 104.0 89.0 88.7 90.7 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 90.0 91.0 86.5/d 90.2 93.9 PROTEINS (GRAMS PER DAY) 46.3 48.8 47.67d 53.1 54.8 OF WHICH ANIMAL AND PULSE 17.8 21.2 20.5/d 18.4 17.0 CHILD (AGES 1-4) MORTALITY RATE 33.1 25.6 19.4 26.7 23.9 HEALtH LIFE EXPECTANCY AT BIRTH (YEARS) 41.7 46.7 51.6 45.6 51.0 INFANT MORTALITY RATE (PER THOUSAND) 151.5 125.3 102.9 129.9 118.5 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 13.0 39.0/e 23.9 URBAN .. 61.0 88. 07o 54.9 RURAL .. 9.0 36.07e 18.5 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. .. 17.0/e 25.8 URBAN .. .. 88.07: 63.1 RURAL .. .. 14.07 20.2 POPULATION PER PHYSICIAN 18216.1 22240.8 17553.1/d 32097.3 14185.2 POPULATION PER NURSING PERSON 11886.9/f.R 7162.1 2387.57a 3264.6 2213.2 POPULATION PER HOSPITAL BED TOTAL 595.5/ 717.8 499.8/d 1225.0 1036.4 URBAN 55.37j 58.6 81.37d 249.5 430.8 RURAL 1532.9/ .. 1191.171 1712.1 3678.6 ADMISSIONS PER HOSPITAL BED .. .. HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL *- 4.4/i URBAN 3.1/h 3.27i RURAL *. 4.571 5.3 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL .. .. URBAN 1.8/h .. RURAL .. .. ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. .. URBAN . . RURAL * ** ANNEX I - 21 - Page 2 of 6 Page 2 TABLE 3A TANZA1!X-1-CIAL INDICATORS DATA SHEET TANZANIA REFERENCE CROUPS (WEIGHTED AVE^AGES - MOST RECENT ESTIMATE)= MOST RECENT LOW INCOME MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b AFRICA SOUTH OF SAHARA AFRICA SOUTH OF SAHARA EDUCATION ADJUSSD ENROLLMENT RATIOS PRIMARY! TOTAL 25.0 39.0 104.0 63.2 83.3 MALE 33.0 47.0 113.0 72.7 96.1 FEMALE 18.0 31.0 94.0 50.3 80.4 SECONDARY: TOTAL 2.0 3.0 4.0 10.2 15.3 MALE 2.0 4.0 5.0 13.2 19.4 FEMALE 1.0 2.0 2.0 6.6 11.3 VOCATIONAL ENROL. (% OF SECONDARY) 22.6 .. 1.6 7.9 4.7 PUPIL-TEACHER RATIO PRIMARY 45.3 45.9 41.4 47.4 38.6 SECONDARY 19.6 18.4 19.0 26.2 23.4 ADULT LITERACY RATE (PERCENT) 9.5/g 28.1/i 66.0/c 34.0 35.6 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 2.4 2.5 2.6/d 3.0 31.9 RADIO RECEIVERS PER THOUSAND POPULATION 2.0 11.3 27.7 34.8 71.8 TV RECEIVERS PER THOUSAND POPULATION .. 0.3 0.3 1.7 17.9 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 2.5 .. 10.1 2.9 19.1 CINEMA ANNUAL ATTENDANCE PER CAPITA 0.5 .. 0.2/d 1.1 0.6 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 4734.7 5841.7 7660.5 FEMALE (PERCENT) 37.2 36.7 36.0 34.1 36.5 AGRICULTURE (PERCENT) 89.0 86.0 83.0 78.4 56.5 INDUSTRY (PERCENT) 4.0 5.0 6.0 9.2 17.7 PARTICIPATION RATE (PERCENT) TOTAL 46.4 43.9 41.1 41.4 37.0 MALE 59.1 56.3 53.1 53.9 46.9 FEMALE 34.0 31.8 29.2 29.1 27.2 ECONOMIC DEPENDENCY RATIO 1.0 1.1 1.2 1.2 1.3 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS .. 24.7 HIGHEST 20 PERCENT OF HOUSEHOLDS .. 50.4 LOWEST 20 PERCENT OF HOUSEHOLDS .. 5.8 LOWEST 40 PERCENT OF HOUSEHOLDS .. 16.0 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 147.0 134.3 507.0 RURAL .. .. 109.0 82.9 200.6 ESTIMATED RELATIVE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. . 125.0 96.4 523.9 RURAL .. .. 74.0 60.4 203.6 ESTIMATED POPULATION BELOW ABSOLUTE -* POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 10.0 39.3 RURAL .. .. 60.0 69.0 Not available Ndt applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Eatirnate, between 1978 and 1980. /c 1976; /d 1977; /e 1975; /f Registered, not all practicing in the country; /g 1962; /h 1958; /i 19677 /. for Mainland Tanzania only. May, 1982 - 22--- ANTNEX I Page 3 of 6 ni aw seit axcaga Eonsa: Aie thelb dana oa d.- free s m-lly 1apd the sat a.tb-itaiv d asIiabla, in bd4 aloe be actd that they a,y ant ho in-r einatlly nrbabateoc of lba loch of stnhadwde.d dsfininiooaaa coacpta ad by diffe-o onoatia in nol1-iorto the data. Th. data art, thMala. cefo1 to dasriba order, of sgtt ., l...at traM.. anad c-Jctr.,cran ao di ffreocas hangou oounrte.. The rtrcngroupo aro (I) cth ...coutry group of the onbinot cotty and (2) a coun try group viih o.sha' high.r allragotocoa thou the country group of tho otj.hjt country (accept for "'High Incom Oil t"rtar:" group o.ane. "Middle taco North Afric.aacd Oiddle talti chos.- bocause of acrog-r eocic-citvraiafftuiionf. I the rfora,aa anou deco cba avr .a nra popooccu sigh. ta aiteci sn fur snob Indicator and aba unly aban eaJority of tha L.onisi A groap has data for chat indicator. Si..c tba -uvrag of ino gle atche Indica..r dapndo on the avalihbility of data adic con tifura. cauino ao ho anercised It relating -vergaa of u- indicatr cc -tha., Thaaave-.g. ure only noufu1 ii. copriog tha valu of nnindicator on a tIf aeca the co..otry cnd rofaranca.groopa. AUREA (cho-aced soho..) PouainearH ..oaritalDn - total, ur an,tAmn opltc cni Total - Total a-faco ama c-Wrining laud area ead inlad fir;1979 dotc. urban, and papal) diridad by chir- raspaciv n rof hospical bada cartoulloral - tatisca of agricultural an- uaod c -raily or partnetly aelebatopbi an pivtegenrl andIapeotuliod hoapital and ra- f or cropa. pesu-.- aaIkt and hinchon gardena or to lie faille; 1979 date. hbitacio catara.Hapicais -o. atablnahstta par=oucy s-f fad by at bea one pbyakici. ta-blilabanc providiag Prnialy inato- RTP P CITA (tSll.- GNP Per capit a fitn Iicrru eahtpi .ca1- dal cae r an Locladed. ga-l hoepitlel. h.--r -inida health cltdby e t covarico mtbod ae acI,d Bc Aca(9840bai) 1960, and sdical c..tera.ant pop=aeocy.e-ffnd bya byicia (but byA 1970. and L99O dae eicaL aca.taneot. noac,adia, tn.) hbh tfar t-p "on Cc - Action and pronide a liltnd rouga if sdical facities For stanC- taNEW! CCISUltftTIo PRP CAPITA - acoalcoecptotof cucibnarg (coal tinal purp..o urban hoopitala intlude VW.R pricipaI/goanpl heapitola. ondrligaitarcol,.ccrloandtbylr-.ncorogeta liec- anrru-auai.ou hrrua pbcrnnleedaedica1nedaator-ity tIcIy) I iogoco ca qivaleon Pep rapnta; L960, 1970. and 1979 cotr.Iaiaicd aPint aeincluded nlouder cotal. data. Adiai= pop H tapial ted - Total n Ia of'Adalatina to or dinobarges fins bo-pinais divided by cho tutoar of hods. PPOLUATION ANit VITAL STATISTICS TtiPpatn,Kid-Tea (thousade) - Au of July 1; 1960. 1970. etA 1990 HanUSING daa Averag lin of gn Ihod (ee pe oc td) ct l,uban. and ropai- Urban Ponitiot(prcn ofttl R atio of urban to total population; A banahold coaita f a grnp o niial i hare livingquetr differen deflicoan of urbec arc my affect ceaParebility of data and thoir -L. s.i.. A bcarder or lodger soy or sy ttbe icclcdnd in _cogcounatpiae; 1961. 1970 . aed 1980 date, the hb..nobold for a.teiet il pnrf..... Pop..lacien Projacti..e Avrs eutr of ...rPa pr ....a-tocel, ra. nod Irua -aneree nc Populat1ion it year 2000) - Currant population projaction are oedo I barIf -opon.per ... Iv all urbe, and rura occpid coned aa coral. pouatio by Ze. nod see and their soriaicyan fartIiily.ratee., deolli.ga, repectively. .alngoclade ne-orooo crtcurc ned Projection paroaItre for aorcliry r -e ceriL- of tbree evl aes" - corcpiod Pane. eg life .e....cte..cy ahirthI_ ..c.n tI b -conty'. aPer r-ptin incus Arcen to tEc-tric itr(pie of d7niline)s2 otl urb,ancorua- ivianPeia lifa- anpecacy aiblo t77.5 yar-Thpre-CoevIoa .-danlva th lcniiyinhm -uriara asP ..t, ounrn u fertility race 5)00 hove three feela. -acd.eg dclian itof 1oca, uban, and rura donllitgtr-pocttv-ly. fert ility according to bI flevl and poat molly pl.ianlo porforonc.. Bach -accry Ie ihen aooigtd ca of the. ao u -ioe ctlniota of anriaity EDUCATIIO and fertil tty iretA fop rojciepurpoaea. ndjuoted tnrol1n ortR., Stationary nonulontun - loccaionar pop.latlio chore ia troha:itr friary srlol - cte),l -lie and tr-le - iroa. total a oad flam the bieth raeIn. qo toho death rate, end elan the.g ucr t e-oliten of all agea at the peitary leveI on prceeca,es of repertive _ian cotat.nto.. ThnI chievd only after frtilicy r...a decIlne no pr~Iny nobool-aga populali...e; -erIIy c icudet childree aged i-li the icstlvlo ntea erdcinrt,ot each gIIonIatretic year. hoc adjuated for differan ilegt h. of Pr iary educacic; for of as alrniol oc l y. Tepredationr h..uatle.i.h nacoutriaoitb ceiversal eduralino erloeify ouced 100 Percen eacistad on the basis of the proTjactd thro iaiao hepplio. aic. aes pupiie arebato or aoeibh offUicia rhon1 Age. .in he 70cr 2000, and iho race of d-clive of fertility rate to riploce- S-eodary apoo ttl,aeIe fesl - optd 0ooescndr set lanai. e~~~~~~~~~~~~~duc.aiiorequi-eaet Ieet. ton f.Iearo of approve prisr intucin Year eo io ,e poultin ia porebd - The year oh- Iatnienary populaciot previdoo go..ara.1 n-eina or teacher ItraInIngI ocucv o ppl ian pill bereachod. ....aily of 12 to 17 yera of oge; correaped..ce co-o. ore g.eerally Pe Mq a id-year puuIacice Par equare ktlooutr (100 bactria.) ofOrtcn noit Prrof f eooar) - O ictoe1 i-is-iu lon coccI are; 1960 -1970 cod 1979 do.trueicecl.iduara.e te pSorot thich operace indepod- Par enI. . egriouiuo land - Coarcid as above for griculitral land petly or no dep-ri-tn of aecoedary eittn. oil .y; 190 N1970ad, 199 dace. fupl-nabr rtio- yiery. nod I c.oidery -!Tel atdeeco onro11ad iv PoultonAc tucre (P,rra.) -Children 10-14 yeara), ooking-nge (15- priar en1-reor evl divded hy -utra of teachers In the yacra). ad retired(iS faead coop) - percen.itgee of old-yoer pep.. copeapdieg ovel.. Lacc;16,1970,..ad 1990 daia. odul Illt...acv race (preiI-Literate adufle fable in rood and trite) .,aio ivtiBtIieonc -cca evul grovh reipt ot total old- Ia apercentge of lot.ladul popuIlailu aged 15 yeare and over. year populaien for 19I0,1W-O o 970-80. P G-etc i i Blanetecec)-uban- Ace-o gr001 rceI of -rbot popu- CO9SIOPCInlo lanto.. for134. 907,an 901 PaqaenaeU Cars (pe thaod pepaet ..) . feg.r -rer -oprioe -co Crdo Oligh Bate (per the Id) - Aunuol Ioe bpi ha pop thnnd of eid-yo a.eeiv enthyea-peae;00ludeeohlea. heerre. end PoPultin 100.190, ced 1980 dote, alllioryveiet C-udo leadtac (0ev rhou....d) - oc-io deathe par Ihu.....dof old-year Radloeclue (per Ihvuaed populatnoe) - All cypeo of raceiver for radio popolaicon; AG. 0970, ad 1900 doce-broodrenpar geerol publlr per 'ho...e.d ofI ruaion; etc1oeeu- ir6. Bprduc "o Pc-'veag ec rofduhtrcnne nhbo iltaadleer i onitoez t or then rgiotractoe of radio her nepoel reproutv eod d i si peIr.e....ee .ga-o- pcfic fey- nt -aslio efoci da too recn pr toy not ho -opr..hbe niece tin Par;uuly fiv-year average. eedi.g le 1960, 1970, aed 1980. 1 a:rucitaoibd lrnia FooilyvPlcaiea-AreconA oou (l)h -ueda) - Acoonluoaberof arcprora Oeevea(e choeodronP' io)TVrrvi-ra for broadcoet to of birth-cotrol de~ica cee upicen of -aicnal feily PIl...log Progran. getreipuhic per chnu d populetive; -vldea ueli .c..ed TO I-civer faalvlaIIooUt-ai aroran4ufsrridnoo- ococg ofanpried II -oor-oooodi foar oeegtriof TV aeiooa . I.eff-ci. `=si of chiId-herin a`ge 15-44 yearo) thu coa tirthc.-ruu1 de-i-et I. -PaprCrueio( i houeaod1 rrlot) - Sh-t Ih averge rIpI- all pr-nd 00-n Iv .:ago. troop. culeIrci o "aiy roar iJrreeoc novepoper", defIned coo.peri;odical pubIli-atio devoird pri_ariy 00 reoding gero oats. It I lcc...idered FOOD dlgD NUTRfITION to be "doily"irfoit oppoore, at leo..t four oiIeenh lndto of food P-odu-iot Par Conic (1969-71-100) loden of per capita cinul Cioee Anul tedar prCpico per Year -Bated or the tuther of pr-d-cion of all food cndte.Produ-iloenclodaoea.d and feed and tirinto .Id during the year, i-rludiga doieei..ooa driv-loiaanio Is oncaede ya basin. C-sditiencoe prisro ge "S'an auerce n anbi'L.un_c ianiead of tugar) "hIch are diblerad cnatelioo(n coffeeand- teear acludtd) . arogt p utiio of each conryI booed on LABRO aOCE tic Al avrg prdurr price anihi; 196145. 19)0,..ad 1900 data. Total Labor Perc- (thonacodo) - Uf...notIrly -ccine poroot. i-oludiot Per rapice eupplyofclra frc.. o requlrs_ce - Coap-id fran Ava fr-e aId -anployd boo e- idinih -oeivol etdooto. aIr avargy equ-l-aa of net food eupllo va-ilable in coo-y Per -a icer rt.pplto ofIaloe.Ofntio i ato onre r Par day. Available aspplit.~oaupriee d-sici produoici, tprels tcoapanable; 1960. 1070 ced 1990 data. eoprc.- ad hagr i nich atecoplio maclde cobolifeed..nerda. Feoe1e (per-ee) - Feselabor forc -a porce-ieg of total labor force quntincle uaed in oud prucetieg. eodlouaaaIt diributon tqire Agriculture (prcrani -Lho b reI. faroing I..f.rIlly, hooting aid -ute teee pollute.d by FAM booedniphyailolgi-ol oand foe norai noil- flabhig ae percentage of tocal lab.r furry 1960, 1970 and 19Sf data. -yi cod healih -oanideriogooccaoaicancir.body acgta gnldoocc (,.orc..ci) U-Lao forc Ivnilg ro1 crur .cc ...f.cig and te dint.rihucion of pp aio.an allying 10 per-oi foreaatei and electricity. eter cod gao at percn- eo oallbrfre ho.ee:eId level;19615. 1970 and 197) deco. 1160. 1970 and 1980 deco. Perer -pcc .upply of -rocin (greas per day) -Pro_tin .o..enI of Pep capita Prl roIon(eret ne,ae n feanl - Prclo ipetiun or net ppy o fod pr dY. atIop f foud io defiand an abov.Re- actiiyItaaecaud0 oe,cl,cd fo.-le labor forrca qunresni icr allconcioc ' Nocthlnt.d by USA provide foi aedsso roecafllctageDA ofttl tale end fe-1a p tuoion of all.,. ngeropclively; alloteac. of 60 graz of coial procetII per day ard 20 gram of aniocl cod 1960. 1970 . and 1980 daio. Thos ape hate.d on ILO's pariicipaiiorlatee pule pronIp.J of thich 10 grsnudheolepotIn. Ths ood- IoeI gesae-anoircreof rho ppulaili,, and 1000 hoae ir-d. A rdo are 1-ou chen chone of 75 grc f ctal proiri ai 27 greo of fanetccear reaPonleooe aniealProauaaavrgefori,he, -r7d,.propoed byyPAOIIetheybird Ec-innlclp..deryrRatio- Ratioof p.p.lari- -uderl 5 .d 65ntd ver nol Pn ute;191h . 190cd 1577 dta. to the total labor force Perreli potineupl fne euou ndplt ProivJt aupply of food de- rived tisr., cl an:2dypube i .!grac per day; 19615. 1970 cud 1977 data. INCOMi DInTPItooTIo Cholgd (noes1b Basb "'f fear ch,eodl - ActoLl deatho per iho..e.id in Perrc.I.ge of Privoc le-o (both II c... hetd kind) - BRolined by rich.ni aggop- ern.toIrhlldrei lthiouge groupr.forn-tde-elpiogCouv- Ip-rrotriheilper.....pooreeo 1 Up-rcanioidyP.....t 4. percoii -cea dale donne- fro life mableo; 1960. 197 and 1900 deco, oP f.o. ols H10AL1 fPYnn TOARIT iGOUF 0 Life unccY a 1m ver) -lAerge outer of yeara of lito rosining The follonlog eoaneare very _ppropi.eoo seue of I tery bno at birth; 160, 197 and 900daca. oad oheld ha itiaPrepd I0h ctidrebIe catilon. ol Infnt araliv aitloP thoucd) - nnal deecha ofI lefci coder .e. year feiteAbniePecy osLai(0)pprie)-rbnedrul- Actee no late Wlacer (.earer. of ....rolatic) -tital,= ura. ad rural - Na- nutointmadly, cdequei diot pica ... oetie1 non-fond roqoire-ot ia act bar of ,Peopl (ncl.uban, and rural) eitbeaatbl an ..... to ante eftordobla. eater . sPply fIcIndeired urfaceaner or unreiedhuionc -inatooed fotoatd Balotv foernv laos L.avel (017 Per caniee) -urbv end pupal1 pacer .-hb 00 heIfro prtece: oaoa,enea d Z_n.Iy ole s anlreaiv evry o I ove in ca-third cf average per ..plia pere-outg.n of cheio -eperive populatlove. I an urb area public' peronai macem of tho reuntry. Urb-e level Ia darived frna the rura fncoatoi or at andpot locted ant tPe thee 20 outer fr j a enn any be level tub Jadjusl for higher rooi of ivot Io urbanaras conidor.d as being mihii raena. ble -ccee. of that hna truplaIr... Rteleated I PueioBb Aslt Ioet ao tnl(ecn) - urban rooaenablo cony. ecald 1y chac cho hoaneetfe or abersa of tha ho-s-o-hold and -orl1 Percen of pepu1otien Cuohee end rn-1)obar bsle do cot hoot cc epod a dieroret- -ni par faday in tocc..g the, baPeep 8 caby' eater needs. Outer of paeople te,ab. nod rua) sevd by entot dipooaI' pe.c..tagac of thetr rou aactv popslati-a Z.-forac dipecol -aY include lb. =ollethc ed dicoenal nib Iet iga u trni,e o anga tt cad eeeatr by eatap-b.ra ayeIo op the -o of pit privi and ai- Poennnia an muscian- PpulactL divided by o, .e ofpractining phyoi- toacel and SanI Dat nvinicso ooe qaclified fre a fdiral othool on aci-onlp los. tro Ial Aoalyiai ead Projoutieon Bapapts-t Pecoothe eo beten orost -Pepinta Idiveded hramn. of peetnietag Map 1962 si ad foslo g .deMs -cns anite nee. Pract.Ical : ane a~d - 23 - ANNEX I Population 17.5 million (mid-1979) Page 4 of 6 GNP Per Capita: US$270 (1979) TANZANIA - ECONOMIC INDICATORSb/ Amount (million us$ at Annual Growth Rates (7%/)_ Indicator current prices) Actual Projected 1979 1976 1977 1978 1979 1980-/ 1981 1982 1983 1984 1985 NATIONAL ACCOUNTS Gross domestic productd/ el 4,564.3 6.7 4.7 5.4 3.9 -1.5 3.7 3.6 3.6 3.6 3.6 Agriculture- e2,210.2 9.8 7.5 7.4 8.0 -6.1 4.2 3.6 3.6 3.6 3.6 Industry 549.0 0.9 3.1 -2.2 3.1 - 3.0 4.0 4.0 4.0 4.0 Services 1,374.8 3.4 5.5 6.5 3.4 4.0 3.4 3.4 3.4 3.4 3.4 Consumption 4,115.8 1.6 12.3 14.6 -3.4 1.7 4.6 1.9 3.2 3.1 3.2 Gross investment 958.6 11.5 2.1 3.8 10.9 -6.2 3.6 3.6 3.6 3.6 3.6 Exports of GNFS 647.9 16.8 -22.8 -2.4 -2.8 -9.6 1.7 7.9 5.2 5.2 5.3 Imports of GNFS 1,158.0 0.5 4.4 34.9 -19.2 1.3 -2.9 -1.9 2.9 2.6 3.0 Gross national savings 468.0 64.5 -6.8 -58.0 99.4 -16.9 -23.9 19,0 8.8 9.7 8.8 PRICES GDP deflator (1978 = 100) 77.2 92.4 100.9 108.5 124.8 140.4 154.4 168.3 181.8 194.5 Exchange rate (T.Sh. per US$) 8.4 8.3 7.7 8.3 8.2 8.2 8.2 8.2 8.2 8.2 Share of GDP at Market Priqes (7.) Average Annual Increase (%) (acurent prices)c (at constant 1978 prices) 1970 1975 1980 1985 1990 1970-75 1975-80 1980-85 1985-90 Gross domestic productel 100.0 103.0 100.3 100.0 100.0 4.9 4.1 3.6 3.6 Agriculture-e/ 36.9 36.9 47.5 47.8 47.9 2.1 5.8 3.7 3.6 Industry 15.5 14.5 11.9 12.0 12.3 3.7 0.7 3.9 4.0 Services 37.2 37.8 31.1 30.8 30.6 6.S 4.6 3.4 3.4 Consumption 81.9 91.7 90.3 88.2 86.4 5.9 6.0 3.1 3.1 Gross investment 22.5 21.1 20.0 18.0 18.0 0.2 4.6 2.1 3.6 Exports SNFS -24.0 -18.2 -12.1 -13.9 -15.2 -5.3 -6.2 5.3 5.4 Imports GNFS 28.4 31.0 22.5 20.2 19.7 -3.8 4.2 1.1 3.0 Gross national savings 18.3 7.8 9.9i 11.6 13.5 -2.4 -3.6 5.7 7.0 As % of GDP PUBLIC FINANCg 1970 1975 1979 Curreiit -e,re-ue3 17.5 20.2 13.5 Current expenditures 16.2 20.2 23.9 Surplus (+) or deficit (-) 1.3 - -5.4 Capital expenditure 8.3 11.6 12.7 Foreign financLng 2.0 5.4 6.7 1970-75 1975-80 1980-85 1985-90 OTHER INDICATORS GNP growth rate (,) 4.7 4.2 3.6 3.6 GNP per capita growth rate (%) 1.3 0.8 0.2 0.2 ICOR 5.0 5.5 5.1 5.1 Marginal savings rate -0.1 -0.1 0.1 0.2 Import elasticity -0.8 1.0 0.3 0.8 a/ Estimate b/ Apart from trade projectiors, which include small but offsetting amounts of Zanzibar trade, all data in this table are for Mainland Tanzania only. c/ Projected years at constant prices. d/ At market prices; components are expressed at factor cost and will not add due to exclusion of net indirect taxes and subsidies. e/ Historical trend from 1973 to 1979 is based on official estimates, which include subsistence production growth rate of 8.6% per annum. We estimate that a more realistic growth rate for subsistence production over this period would be nearer 4% per annum, reducing agricultural growth to 3.4% per annum and GDP growth to 3.6% per annum. - 24 - ANNEX I Population 17.5 million (mid-1979) ?age 5 of 6 GNP Per Capita: US$270 (1979) TANZANIA - EXTERNAL TRADE-' Amount Annual Growth Rates (7) Indicator (million US$ at (at constant 1978 prices) current prices) Actual a/ Projected ________________ 1979 1976 1977 1978 1979 1980- 1981 1982 1983 1984 1985 EXTERNAL TRADE Merchandise exports 543.6 7.8 .-9.4 -6.5 6.1 -7.8 2.1 8.5 5.3 5.3 5.3 Major primary products 339.5 9.5 -20.1 -9.7 -0.1 -4.8 3.0 8.8 4.1 4.1 4.1 Others 204.1 3.3 -18.1 2.7 21.5 -14.0 - 8.0 8.0 8.0 8.0 Merchandise imports 1,099.6 -16.4 7.7 36.8 -18.8 1.0 -3.4 -1.5 2.8 2.8 2.9 Foodgrains 19.3 -65.2 23.3 -14.7 -42.4 334.0 -3.0 -47.5 - - - Petroleum 171.7 11.0 -11.5 12.8 -8.9 2.1 -7.9 5.0 3.1 3.3 3.4 Machinery and equipment 515.0 -15.2 25.1 55.1 -10.0 -7.6 -5.4 2.9 2.9 2.9 2.9 Others 393.6 -13.9 0.7 33.9 -28.9 -7.6 0.7 3.0 3.0 3.0 3.0 PRICES Export price index 77.4 106.9 100.0 106.9 122.1 116.6 123.8 136.2 149.4 163.4 Import price index 81.1 89.5 100.0 118.2 138.2 155.7 173.3 188.5 204.4 220.9 Terms of trade index 95.4 119.4 100.0 90.4 88.3 74.9 71.4 72.2 73.1 74.0 Composition of Merchandise Trade (7.) Average Annual Increase(%) (at currenf prices) (at constant 1978 prices) 1970 1975 1980 1985 1990 1970-75 1975-80 1980-85 1985-90 Exports 100.0 100.0 100.0 100.0 100.0 -4.5 -5.2 5.6 5.5 Major primary products 59.2 66.3 69.2 67.6 63.5 0.2 -6.9 5.0 4.1 Others 40.8 33.7 30.8 32.4 36.5 -12.9 -1.0 6.8 8.0 Imports 100.0 100.0 100.0 100.0 100.0 1.8 2.6 0.9 3.0 Foodgrains 2.5 15.3 9.2 4.5 3.9 44.8 -5.8 -14.1 - Petroleum 8.5 11.9 12.7 13.1 13.7 4.8 - 2.0 3.9 Machinery and equipment 35.2 30.8 41.2 38.8 36.9 0.7 11.1 1.7 2.9 Others 53.8 42.0 36.9 43.6 45.5 -1.7 -3.3 2.7 3.1 Share of Trade with Share of Trade with Share of Trade with Industrial Countries (%) Developing Countries (e/) Capital Surplus Oil Exporters (X) 1970 1975 1978 1970 1975 1978 1970 1975 1978 DIRECTIDN OF TRADE Exports 54.0 48.2 68.0 40.0 43.3 23.2 0.6 0.4 0.7 Imports 57.9 59.7 74.2 27.3 25.1 17.9 1.2 3.2 0.8 a/ Estimate S/ Data are for all Tanzania (Maialand and Zanzibar) Population : 17.5 million (mid-1979) AITNEX I GNP Per Capita: US$ 270 million (1979) - 25 - 'EXof 6 TANZANIA - BALANCE OF PAYMENTS, EXTERNAL CA?ITAL AND DEBT (million US$ at current prices) Actual.! Prolerted Indicator 1970 1976 1977 1979 1979 198G 1981 1982 1983 1984 1985 1990 BALANCE OF PAYMENTS Export of goods and seroices 350.4 647.2 669.6 631.2 705.6 740.6 741.8 851.1 979.2 1,123.7 1,286.1 2,289.9 of which: Merchandise f.o.b. 259.3 492.4 547.7 479.2 543.5 572.7 558.2 643.2 744.8 860.4 991.8 1,796.3 Imports of goods and seroices 377.9 729.6 853.4 1,271.1 1,224.3 1,452.7 1,596.5 1,756.3 1,964.2 2,182.8 2,423.7 3,900-7 of which: %e.bchandise c.i.f. 318.4 630.5 750.3 1,146.5 1,099.6 1,299.1 1,412.9 1,549.1 1,732.6 1,932.3 2,149.2 3,488.1 Net transfero- 5.6 -16.4 11.9 19.2 28.1 20.0 21.6 23.3 25.2 27,2 29.4 43.2 Current account balance -21.9 -98.8 -171.9 -620.7 -490.6 -692.1 -833.1 -881.9 -959.7 -1,031.9 -1.108.2 -1,567.6 Official grant receipts 6.2 119.0 135.0 214.1 321.4 380.9 410.4 443.2 478.7 517.0 558.3 820.4 M & LT loamy (net) 38.1 97.1 162.3 151.1 255.8 329.3 392.7 408.7 451.0 484.9 569.8 772.2 Official1 41.2 107.1 168.0 158.1 162.4 196.1 341.9 377.5 439.8 476.6 577.9 775.9 Privstc -3.1 -10.0 -5.7 -7.0 93.4 133.1 50.9 31.2 11.3 8.3 -8.1 -3.6 Other capital -29.8 -67.7 10.5 -14.6 -4.7 2.9 50.0 53.0 50.0 - -36.0 Change in reserves (--increase) 7.4 -49.6 -135.9 270.1 -81.9 -20.0 -20.0 -20.0 -20.0 -20.0 -20.0 -25.0 International reserves 107.5 164.4 300.3 30.2 112.1 132.1 152.1 172.1 192.1 212.1 232.1 357.1 Resernes as months imports 3.4 2?7 4.2 0.3 1.1 1.1 1.1 1.2 1.2 1.2 1.2 1.1 EXTERNAL CAPITAL AND DEBT Sross disbursements 60.5 238.2 326.3 382.5 596.9 763.8 Official grants 6.2 119.0 135.0 214.1 321.4 380.0 Conceyyional loans 40.4 9316 149.5 112.6 103.8 179.7 DAC- 23.1 5810 73.7 64.1 33.2 33.1 O?EC - 1.0 6.5 1.2 1.2 35.5 IDA 9.4 29.0 39.3 24.4 39.0 49.4 Other 10.9 5.6', 30.0 22.0 30.4 61.6 Non-concessional loans 13.9 25.6 41.8 63.4 171.7 204.1 Official enport credits - 7.2 - 21.7 32.1 6.8 IBRD 4.8 17.1 30.4 31.3 36.6 31.8 Other multilateral - - 3.1 7.6 5.3 14.4 Private 9.1 1.2 8.3 2.8 97.7 151.0 EIternal Debt Debt outstanding and dishbrsed 322.7 1,026.3 1,218.6 1,260.1 1,422.0 1,751.3 Official 193.4 965.7 1,158.5 1,201.4 1,266.6 1,462.7 Private 129.3 60.6 60.1 58.7 155.4 288.5 Undisbursed debt 408.4 536.6 560.4 617.5 699.6 679.7 Debt service Total seroice paymnents -26.3 -41.7 -51.2 -49.6 49.7 -98.2 rnterest -10.1 -19.5 -22.3 -24.7 -30.0 -43.7 Pay.ests an 7- asport 7.5 6.4 7.6 7.9 7.1 13.3 Average interest rate on sea loans-7) 1.6 2.6 3.1 2.6 5.5 4.5 Official 1.5 2.3 3.1 2.6 4.0 Private 7.0 8.3 9.3 .. 8.5 Average maturity of new loans (years) 38.8 38.0 34.7 35.4 21.1 27.3 Official 39.7 39.9 34.7 35.4 27.0 Private 7.2 5.0 14.8 .. 9.7 As *. of Debt Outstanding at End of Nost Recent Year (1979) Maturity structure of debt outstanding Maturities due within 5 years 28.4 Maturities due within 10 years 62.7 Interest structure of debt outstanding Interest due within first year 3.0 a! Estimate b/ Excludes official grant receipts. c/ Includes financing of projected gap on IDA terms. e - 26 - ANNEX II Page 1 of 16 THE STATUS OF BANK GROUP OPERATIONS IN TANZANIA A. STATEMENT OF BANK LOANS AND IDA CREDITS TO TANZANIA AS OF SEPTEMBER 30, 1982 (US$ million) Amount less cancellation No. Year Borrower Purpose Bank' TW IDA' Undisbursed Eight loans, one Third Window loan, and nineteen credits fully disbursed. 121.24 29.99 174.74 454-TA 1974 Tanzania Cotton 17.50 1.66 507-TA 1974 Tanzania Highway Maintenance 10.20 1.53 508-TA 1974 Tanzania Rural Development (Kigoma) 10.00 -- 580-TA 1975 Tanzania Dairy 10.00 4.46 1128-TA 1975 Tanzania Mwanza Textile 15.00 0.53 601-TA 1976 Tanzania Technical Assistance 6.00 0.86 606-TA 1976 Tanzania National Maize Program 18.00 5.19 607-TA 1976 Tanzania Fifth Education 11.00 4.71 1307-TA 1976 Tanzania Forestry 7.00 0.75 652-TA 1976 Tanzania Fisheries 9.00 5.57 658-TA 1976 Tanzania Tobacco Processing 8.00 0.91 1354-TA 1977 Tanzania Urban Water Supply 15.00 2.61 1385T-TA 1977 Tanzania Morogoro Industrial Complex 11.50 1.17 1386-TA 1977 Tanzania Morogoro Industrial Complex 11.50 0.74 703-TA 1977 Tanzania Rural Development (Tabora) 7.20 4.30 732-TA 1977 Tanzania Second Sites and Services 12.00 6.83 743-TA 1977 Tanzania Trucking 15.00 4.57 1498-TA 1977 TIB Tanzania Investment Bank 15.00 1.56 801-TA 1978 Tanzania Second Cashewnut 27.50 6.95 802-TA 1978 Tanzania Tobacco Handling 14.00 10.27 803-TA 1978 Tanzania Rural Dev. (Mwanza/Shinyanga) 12.00 6.00 1607-TA 1978 Tanzania Morogoro Textile 25.00 24.50 833-TA 1978 Tanzania Morogoro Textile 20.00 9.45 860-TA 1979 Tanzania Tourism Rehabilitation 14.00 10.75 861-TA 1979 Tanzania Sixth Education 12.00 11.12 875-TA 1979 Tanzania Mufindi Pulp and Paper 30.00 3.13 1650-TA 1979 Tanzania Mufindi Pulp and Paper 30.00 29.26 876-TA 1979 Tanzania Fifth Highway 20.50 17.85 1745-TA 1979 TDFL Tanganyika Dev. Fin. Co., Ltd 11.00 3.49 1750-TA 1979 TIB Tanzania Investment Bank 25.00 14.97 S-24-TA 1979 Tanzania Dar es Salaam Port Engineering 2.50 0.42 987-TA 1980 Tanzania Tanzania Rural Dev. Bank 10.00 9.92 1007-TA 1980 Tanzania Pyrethrum 10.00 8.05 1015-TA 1980 Tanzania Grain Storage & Milling 43.00 41.39 1037-TA 1980 Tanzania Smallholder Tea 14.00 12.92 1056-TA 1981 Tanzania Seventh Education 25.00 24.63 1060-TA 1981 Tanzania Technical Assistance I12/ 11.00 8.21 1070-TA 1981 Tanzania Coconut Pilot2/ 6.60 5.14 1133-TA 1981 Tanzania Export RehablTitation Program2/ 47.10 6.87 1173-TA 1982 Tanzania Telecommunications I2/3/ 25.30 25.30 1199-TA 1982 Tanzania Songo-Songo Petroleum TI2! 20.30 8.47 1206-TA 1982 Tanzania Technical Assistance III7/3/ 12.00 10.60 1229-TA 1982 Tanzania Sao Hill Forestry-Phase II7/3/ 12.00 12.00 1271-TA 1982 Tanzania Urban Water Supply (SupplJ2-3/ 4.00 4.00 Total 275.74 41.49 701.44 of which has been repaid 23.15 - 10.03 Total now outstanding 252.59 41.49 691.41 Amount sold .09 of which has been repaid .09 Total now held by Bank and IDA1 252.59 41.49 691.41 Total undisbursed 78.41 1.17 294.03 373.61 1/ Net of exchange adjustments. 7Z/ Sixth replenishment; approximate US$ equivalent of SDR's. SI Not yet effective. - 27 - ANNEX II Page 2 of 16 B. SUMMARY STATEMENT OF BANK LOANS FOR COMMON SERVICES GUARANTEED BY KENYA, TANZANIA AND UGANDA AS OF SEPTEMBER 30, 1982 (US$ million) Loan Amount (less cancellations) No. Year Borrower Purpose Bank' Undisbursed Seven loans fully disbursed 135.80 638-EA 1969 EAHC Harbours 35.00 0.52 865-EA 1972 EAHC Harbours 26.50 0.35 914-EA 1973 EAPTC Telecommunications 32.50 0.28 1204-EA 1976 EADB Development Finance 15.00 1.30 Total 244.80 2.45 of which has been repaid 78.19 Total now outstanding 166.61 Amount sold 24.36 of which has been repaid 24.36 0.00 Total now held by Bank 166.61 Total undisbursed 2.45 2.45 lNet of exchange adjustments. ANNEX II - 28 - Page 3 of 16 C. PROJECTS IN EXECUTION (As of September 30, 1982) There are currently 42 projects under execution in Tanzania. AGRICULTURE SECTOR Credit No. 454-TA - Geita Cotton Project: US$17.5 million Credit of January 17, 1974; Date of Effectiveness - April 5, 1974; Closing Date - December 31, 1982 Project is nearing completion. Project production is close to the targets, however, there are uncertainties about cotton yields due to apparent overestimation of cultivated areas. The aerial survey; evaluation of spraying trials, including recommendations for more effective spray regimes; data collection for a farm management study; and general evaluation of the project, have been completed. Considerable progress has also been achieved in training village level extension staff, and rehabilitation or new construction of some 400 km of roads. Credit No. 508-TA - Kigoma Rural Development Project: US$10.0 million Credit of August 21, 1974; Date of Effectiveness - November 20, 1974; Closing Date - December 31, 1983 The project has shown significant improvement in procurement, and maintained a satisfactory execution of physical infrastructure work. Increased coordination between the various project related agencies and parastatals at regional level has improved project management. Staff turn- over has decreased and key staff are largely in place. The coffee rehabilitation and expansion program is proceeding well and there has been further increase in the production of beans and cotton. However, official maize production figures have dropped, due mainly to increased importance of parallel markets as well as increased movement into other more remunerative crops such as beans, pigeon peas, etc. Because fertilizer trials on soil failed to produce conclusive results, emphasis is now being shifted to cultivation methods, spacing, seed varieties, etc., from which useful results could be expected in the short term. 'These notes are designed to inform the Executive Directors regarding the progress of projects in execution and in particular to report any problems which are being encountered and the action being taken to remedy them. They should be read in this context, and with the understanding that they do not purport to present a balanced evaluation of strengths and weak- nesses in project execution. ANNEX II - 29 - Page 4of 16 Credit No. 652-TA - Fisheries Development Project: US$9.0 million Credit of July 12, 1976; Date of Effectiveness - October 12, 1976; Closing Date - December 31, 1981 The Project has faced major implementation difficulties, including a delay in the procurement of boats for the Kigoma Commercial Center, a major shortfall in the purchase of boats for the coastal centers and a postponement of procurement of lake transport facilities (pending adequate fish catches on Lake Tanganyika). There have also been some problems affecting the quality of wooden boats constructed under the project and recently delivered to the coastal center. After considerable discussion of a possible extension to the project, it was recently decided that project activities should be terminated. Credit No. 606-TA - National Maize Project: US$18.0 million Credit of Janury 29, 1976; Date of Effectiveness - May 28, 1976; Closing Date - December 31, 1982 The project was redesigned in order to intensify project activities during a three-year extension period from July 1979 to June 1982; however, this redesign has had little impact on the production of food crops because of drought conditions. Inadequate research, extension and prices have also discouraged proper crop husbandry. Construction of staff houses and village stores is delayed due to shortage of building materials. The next supervision mission for this project (scheduled for December 1982) will assess the impact of any significant developments which may have occurred in the National Maize Program. If good prosDects exist for effectively achieving project objectives and disbursing a substantial amount of the remaining funds, the project's closing date may be postponed by twelve months. Credit No. 580-TA - Dairy Development Project: US$10.0 million Credit of August 15, 1975; Date of Effectiveness - November 13, 1975; Closing Date - March 31, 1983 The project has continued to show overall improvement in its implementation. Milk production, technical parameters and budgeting control have improved, and production cost has been reduced. The large price increase in July 1980 was responsible in great part for the improved financial position of the dairies. The closing date has been postponed to March 31, 1983 to permit the project to reach its targetted objectives. Loan No. 1307-TA - Sao Hill Forestry Project (Phase I): US$7.0 million Loan of July 12, 1976; Date of Effectiveness - October 12, 1976; Closing Date - June 30, 1982 This first phase project has been completed. While the Closing Date was not formally postponed, disbursement of committed amounts were to continue until September 30, 1982. ANNEX II - 30 - Page 5 of 16 Credit No. 658-TA - Tobacco Processing Project: US$8.0 million Credit of September 16, 1976; Date of Effectiveness - February 15, 1977; Closing Date - December 31, 1981 The Closing Date of this Credit was December 31, 1981. However, the credit account was kept open to allow the project authorities to submit belated withdrawal applications for two eligible expenditures - security lighting and firefighting equipment. Credit No. 703-TA and Credit No. 703-5-TA - Tabora Rural Development Project: US$12.0 million Credit2 of May 11, 1977; Date of Effectiveness - November 11, 1977; Closing Date - June 30, 1983 Overall project implementation has improved with the easing of cement shortages and the improved arrangement for diesel fuel supply. Specifically, the agriculture, land use, and roads components are making satisfactory progress and the water resource development has improved. With close supervision, disbursement of credit funds has also improved. The Government has submitted proposals for restructuring and extending the project beyond the current Closing Date. These proposals are being reviewed and were to be discussed during a supervision mission in October 1982. Credit No. 801-TA - Second Cashewnut Development Project; US$27.5 million Credit of June 14, 1978; Date of Effectiveness - October 2, 1978; Closing Date - December 31, 1984 Project implementation is progressing satisfactorily. Factory construction is ahead of schedule despite a shortage of cement. However, the appointment of key staff and the maintenance of up-to-date accounts at existing cashewnut factories continue to pose difficulties. As with the First Project, the prospects for operation of the new facilities at full capacity are rather poor. Credit No. 802-TA - Tobacco Handling Project: US$14.0 million Credit of June 14, 1978; Date of Effectiveness - January 5, 1979, Closing Date - April 30, 1983 The project has faced major difficulties. Despite the low volume of tobacco handled, TAT's administrative costs remain very high. Tobacco losses during handling remain significant and TAT's ability to organize and follow through on corrective measures has been limited. It has hence been agreed that the project should be scaled down and terminated on schedule on April 30, 1983. Details of which components of the project will be continued are being finalized between the Government, TAT and the Association. 2Credit No. 703-5-TA (US$4.8 million) is financed under the special CTfDA arrangements; Credit no. 703-TA is an IDA Credit of US$7.2 million. ANNEX II - 31 - Page 6 of 16 Credit No. 803-TA - Mwanza/Shinyanga Rural Development Project: US$12.0 million Credit of June 14, 1978; Date of Effectiveness - March 5, 1979; Closing Date - December 31, 1984 Although some infrastructure components are proceeding satisfactorily, and housing and vehicles have been provided, the project's productive components are not making significant progress. This was due not only to problems of project implementation but also to general factors affecting the entire agricultural sector such as the pricing of agricultural produce and inputs, marketing problems, input supply constraints, and deficiencies of agricultural services (e.g. research, extension and credit). The Government has agreed that the project requires re-design and has submitted proposals along these lines. A joint Government/Bank/IFAD mission will visit Tanzania in December 1982 to assess progress and make recommendations on the future of the project. Credit No. 987-TA - Tanzania Rural Development Bank (TRDB) Project: US$10.0 million credit of October 24, 1980; Effective- ness Date - May 18, 1981; Closing Date - December 31, 1983 Despite a delay in TRDB's internal reorganization and its management's preoccupation with financial problems, project implementation has started satisfactorily. Because of the high and rising level of arrears on loan repayment, TRDB's financial position is deteriorating. TRDB is taking various means to alleviate this problem. Credit No. 1007-TA - Pyrethrum Project: US$10.0 million Credit of October 24, 1980; Date of Effectiveness - April 20, 1981; Closing Date - December 31, 1985 The Tanganyika Pyrethrum Board's operating costs are proving much higher than expected at appraisal and it may not be possible to reduce them sufficiently in the course of the project to ensure economic production. The closure of the extraction plant at Mafinga will result in important transport savings for TPB; however, these will not be significant enough to improve prospects for the crop. Urgent steps are to be taken to reduce the operating costs of TPB and to improve the marketing of its products. Expenditures for certain new investments (e.g. headquarters building for TPB, staff housing and possibly some road improvement) are to be eliminated. Credit No. 1037-TA - Smallholder Tea Project: US$14.0 million Credit of August 20, 1980; Effectiveness Date - April 27, 1981; Closing Date - June 30, 1985 The project started slowly due to delays in appointing the General Manager and the Chief Engineer, but is now expected to gain momentum. Some start has been made in the tea nursery and fuelwood planting. The Ukalawa factory site has been selected but the construction of this facility may be delayed, pending a significant increase in tea production. Supplier bids for the factory machinery have been received and evaluated, and orders have been placed. ANNEX II -32 - Page 7 of 16 Credit No. 1070-TA - Coconut Pilot Project: US$6.8 million Credit of October 24, 1980; Date of Effectiveness - April 20, 1981; Closing Date - March 31, 1986 Implementation of the project is progressing well, largely due to the quality of staff in the field. However, the Mainland Govenment has decided to allocate only TSh 3 million of the TSh 9.5 million in local currency needed for the project in 1982/83. Management is hence attempting to resolve this problem. Credit No. 1015-TA - Grain Storage and Milling Project: US$43.0 million Credit of April 15, 1981; Date of Effectiveness - July 15, 1981; Closing Date - June 30, 1987 Because of the uncertainties regarding the organizational structure and future responsibilities of the National Milling Corporation (NMC), project implementation has been substantially delayed. Detailed proposals for the reorganization of cereals handling and distribution have been submitted to the Cabinet for its approval. The Bank will review these proposals and assess their implications for a modified Grain Storage project. A firm Cabinet decision on the organizational changes is expected before the end of November 1982. A Bank evaluation mission to reappraise and possibly restructure the project will be necessary. Credit No. 1229-TA - Sao Hill Forestry Project (Phase II): US$12.0 million Credit of May 19, 1982; Closing Date - December 31, 1987 This credit, which is a follow-up to the first phase project, is not yet effective. EDUCATION SECTOR Credit No. 607-TA - Fifth Education Project: US$11.0 million Credit of January 29, 1976; Date of Effectiveness - March 23, 1976; Closing Date - June 30, 1982 Overall project completion has reached 60%. Civil works and procurement of furniture and equipment are progressing well except for construction work at Mwenge, Ndanda and Kigonsera Secondary Schools. Workshop equipment has been distributed to sites but tenders for installation work have to be invited; contracts for supply of science equipment have been awarded. Progress in construction of VMT houses remains unsatisfactory. Because of the problems connected with the building market, the Closing Date of the project will not be extended. Credit 861-TA - Sixth Education Project - US$12.0 million Credit of January 22, 1979; Date of Effectiveness - June 25, 1979; Closing Date - June 30, 1985 Design work is near completion and physical project implementa- tion is gaining momentum. Tenders for civil works are under evaluation ANNEX II - 33 - Page 8 of 16 and some contracts have been awarded. Due to increases in construction costs, the extent of civil works to be financed under the project is expected to be below appraisal estimates. Progress towards meeting educational objectives has been reasonable, and related issues are being properly identified and addressed. Credit 1056-TA - Seventh Eduction Project: US$25.0 million Credit of September 26, 1980; Date of Effectiveness - December 29, 1980; Closing Date - December 30, 1986 The Project Implementation Unit (PIU) has started providing posi- tion briefs to respective Directorates of the Ministry of Education. In addition, briefs on primary education and support services have also been prepared. Nominations for fellowships for the National Examination Council and for Teacher Training Colleges are being processed but little progress has been achieved in recruiting technical assistance. Work for the Teacher Training Colleges in Zanzibar is ahead of schedule. Sites have been selected and a team from the PIU visited Zanzibar to carry out preliminary surveys. Staff houses are now available for use by the faculty of the Nkrumah College. TOURISM SECTOR Credit No. 860-TA - Tourism Rehabilitation Project: US$14.0 million Credit of January 22, 1979; Date of Effectiveness - August 24, 1979; Closing Date - June 30, 1983 Project implementation is progressing satisfactorily. Recruit- ment of project coordinator is being finalized and the consultants for the rehabilitation of project lodges and hotels, have been appointed. The con- struction site identified for the Hotel and Tourism Training Institute (HTTI) proved to be unsuitable because of size and shape, thereby delaying implementation of this component. An alternative site has been located. Improvements to the airport terminal were dropped because the Government was able to secure bilateral financing for a new passenger terminal building. Vehicles for anti-poaching activities have been received and allocated to TANAPA and the Ngorongoro Conservation Authority. Tenders for the supply of radio telephones and binoculars are being prepared. TRANSPORT SECTOR Credit No. 507-TA - Highway Maintenance Project: US$10.2 million Credit of August 21, 1974; Date of Effectiveness - November 20, 1974; Closing Date - December 31, 1982 After a slow start, project implementation improved and all equipment procured through ICB has been delivered. However, it became necessary to recast the project by amending its scope to address organiza- tional problems encountered in its implementation. The previous Closing Date of December 31, 1980 has been postponed to December 31, 1982 to allow adequate time for completion of the project. The technical assistance contract with the consulting firm "ORT" expired in November 1979. Three key advisors (Advisor to Senior Road Maintenance Engineer, Advisor to Maintenance Administrator, and Advisor to Plant and Procurement Engineer), currently employed under the Fifth Highway Project, are assisting the Government in project implementation. ANNEX II Page 9 of 16 Credit No. 743-TA - Trucking Industry Rehabilitation and Improvement Project: US$15 million Credit of November 3, 1977; Date of Effectiveness - April 3, 1978 Closing Date - June 30, 1983 Although implementation has been slow due to delays in creating Regional Transport Companies and in procuring trucks, some improvement has been recorded recently and the Government's contribution to the National Trucking Company for equity in the transport companies has been increased. Technical assistance has been extended since 1978; currently about 18 experts are assisting in the project implementation. All five regional trucking companies were created in early 1981 and a Board of Directors was appointed, with adequate management staff to support it. Credit No. 876-TA - Fifth Highway Project; US$20.0 million Credit of March 2, 1979; Date of Effectiveness - December 3, 1980; Closing Date - December 31, 1984 This is a follow-up to credit No. 507-TA in the maintenance of the national trunk road system. All three key advisers and six key local staff are now in post. However, technical assistance for the Morogoro Training School has yet to be recruited and an action program for recruitment and training of staff has yet to be prepared. All 120 students are receiving training in various engineering colleges overseas and are making good progress. Contracts for the supply of road maintenance equipment have recently been awarded. TELECOMMUNICATIONS SECTOR Credit No. 1173-TA - Telecommunications I Project; US$27.0 million Credit of March 4, 1982; Closing Date - June 30, 1986 This credit is not yet effective. However, physical implementation of the project is well underway. TPTC's financial position is also considered acceptable. PORTS SECTOR Credit No. S-24-TA - Dar es Salaam Port Engineering Project: US$2.5 million Credit of February 27, 1980; Date of Effectiveness - August 13, 1980; Closing Date - June 30, 1983 Project implementation is progressing well. The consultants have submitted a number of reports and drawings to the Tanzania Harbours Author- ity (THA) for their review and comment. The only major problem is one of coordination concerning the commissioning of the new oil jetty which re- quires that the pipe work link to the refinery and the existing network be completed and ready for use at the same time as the jetty. THA has been asked to decide on who will design and carry out the actual site work, as well as finance the foreign exchange costs. The original Closing Date of September 30, 1981 was postponed a second time in order to complete project work. ANNEX II 35 - Page 10 of 16 URBAN SECTOR Credit No. 732-TA - Second National Sites and Services Project: US$12.0 million Credit of Novemger 3, 1977; Date of Effective- ness - April 3, 1978; Closing Date - June 30, 1984 Progress on implementation is satisfactory for the residential components although overall implementation progress is slow. In order to accelerate progress on house consolidation under the first project, initiate cost recovery in squatter areas, and strengthen the Dar es Salaam City Council, the Government, THB, SIDO, Dar es Salaam City Council, and the Association have all agreed to reshape the project. The changes included: addition of management costs for the DCC consolidation unit and a collecton unit within the Treasury; strengthening of the DCC maintenance operations; deletion of the Nutrition Extension and MCH guidelines and the first site; and reduction of THB house loans. Funds for the consolidation and collection units have been provided through marginally trimming the demonstration houses, community facilities, THB/ARDHI promotion and training, and savings on the Finance Study and project preparation. The reshaping was finalized in July 1982 and recruitment for the new management unit is underway. WATER SUPPLY SECTOR Loan No. 1354-TA - Urban Water Supply Project: US$15.0 million Loan of Janury 5, 1977; Date of Effectiveness - March 2, 1977; Closing Date - December 31, 1984 The Borrower's performance under the project has generally been good. Water treatment and distribution facilities have been largely completed. Establishment of a National Urban Water Authority (NUWA) which is to own and operate major urban water supply systems in the country, was approved by the Parliament in April 1981. Implementation of the project has, however, been dominated by the poor performance of the main civil works contractor for the Mindu dam. After being given several opportunities to improve his performance, the contractor was dismissed in August 1981 and a new contract was awarded to the second lowest evaluated bidder at the time of the original contract award in December 1978. In view of the major delays and problems which have affected the completion of the dam, the project's foreign exchange cost increased by about US$11.0 million over the appraisal estimate. Completion of the project is to be financed by a supplementary credit from IDA (US$4 million) and a grant from CIDA (US$3.2 million). Credit No. 1271-TA - Urban Water Supply Project (Supplementary): US$4.0 million Credit; Closing Date - December 31, 1984 This project was approved by the Board on June 24, 1982 but has not yet been signed. ANNEX II - 36 - Page 11 of 16 ENERGY SECTOR Credit S-27-TA - Songo Songo Petroleum Exploration Project: US$30.0 million Credit of June 30, 1980; Date of Effectiveness - September 12, 1980; Closing Date - September 30, 1982 Drilling of the onshore well under the project has been abandoned because of various technical difficulties which were aggravated by manage- rial problems, particularly the absence of close and effective project control. Drilling of the offshore well is proceeding satisfactorily. Little progress has been made on the technical assistance component of the project, except for the TPDC management and fiscal study, where consultants are already in the field. Credit 1199-TA - Songo Songo Petroleum II: US$20.0 million Credit of January 13, 1982; Date of Effectiveness - February 23, 1982; Closing Date - December 31, 1983. This credit became effective on February 23, 1982. Drilling and testing of the second well, Well SS-8, is now virtually completed. The Association and the OPEC Fund have agreed to finance a third well for purposes of confirming the extent of the natural gas reservoir at Songo Songo. INDUSTRIAL SECTOR Loan No. 1498-TA - Tanzania Investment Bank: US$15.0 million Loan of December 28, 1977; Date of Effectiveness - April 3, 1978; Closing Date - June 30, 1983 This loan is now fully committed and disbursements are proceeding satisfactorily. Loan No. 1750-TA3 - Tanzania Investment Bank: US$25.0 million Loan of August 20, 1979; Date of Effectiveness - February 5, 1980; Closing Date - June 30, 1984 Commitments and disbursements are progressing better than estimated at appraisal. In the light of the difficult situation in Tanzania, particularly the severe foreign exchange shortage, TIB is revising its operational strategy to focus in the near-term on providing funds which would enable projects to replace, balance, or modernize their machinery and equipment, improve capacity utilization, promote exports, and otherwise assist improvement of balance of payments. TIB is also being encouraged to use a portion of the Bank's loan, on an exceptional basis, to meet part of the requirements for imported inputs of some of its high-priority projects which are likely to face very low capacity operation, or even closure, following meagre allocation of foreign exchange. 3In addition, a US$15.0 million EEC Special Action Credit in support of this project is being administered by IDA. ANNEX II -37 - Page 12 of 16 Loan No. 1128-TA - Mwanza Textile Project: US$15.0 million Loan of June 19, 1975; Date of Effectiveness - October 6, 1975; Closing Date - December 31, 1981 Project implementation performance has been acceptable and all technical installations are now operating satisfactorily. The National Textile Corporation (TEXCO), the holding company for state-owned textile mills, has agreed to institute an immediate action progam to improve the operating performance of existing mills. The project was technically completed in October 1978 with a savings of about US$1.7 million. In order to utilize this amount for rehabilitation of the existing facilities, which are essential parts of the project, and in order to finalize disbursements on the awarded contracts, the Closing Date was postponed by six months to December 31, 1981. The remaining balance under the loan will soon be cancelled. Credit No. 601-TA - Technical Assistance Project: US$6.0 million Credit of January 9, 1976; Date of Effectiveness - September 14, 1976; Closing Date - December 31, 1982 The project was designed to assist the Government in implementing its program of economic development through financing preinvestment and feasibility studies for projects in the productive sectors, special studies for improving efficiency and capacity utilization investments, and training for Tanzanians in project preparation, implementation, evaluation and related techniques. Although the credit was virtually completely committed, consultants' contracts for three sub-projects are still effective. The Closing Date was hence postponed by 6 months to December 31, 1982 to continue disbursements against these contracts. Loan No. 1385-T-TA/Loan No. 1386-TA - Morogoro Industrial Complex: US$11.5 million Loan on Third Window Terms and US$11.5 million Bank loan, both of April 6, 1977; Date of Effectiveness - July 6, 1977; Closing Date - December 31, 1982 Project implementation is proceeding satisfactorily in spite of some initial delays in the appointment of consultants and start-up of procurement. Because of some delays in the start-up of individual components of the Industrial Complex, the project was not completed in July 1982 as scheduled. Revised capital cost estimates are only slightly higher than those contained in the Appraisal Report. The next supervision mission for this project will review a possible postponement of the Closing Date. Credit No. 833-TA/Loan No. 1607-TA - Morogoro Textile Project: US$20.0 million Credit and US$25.0 million both of June 29, 1978; Date of Effectiveness - May 7, 1979; Closing Date - June 30, 1985 Project implementation is progressing satisfactorily in spite of some problems encountered with the awarding of the civil works contract. No further delay is anticipated in project completion. ANNEX II - 38 - Page 13 of 16 Credit No. 875-TA/Loan No. 1650-TA - Mufindi Pulp and Paper Project: US$30.0 million credit and US$30 million Loan, both of April 6, 1979; Date of Effectiveness - April 15, 1980; Closing Date - December 31, 1983 Overall project implementation, including arrangements for project management, has improved. Project completion is now expected by mid-1984. Project cost has been significantly reduced with savings in civil works, equipment and particularly in erection. The rebidding of the mechanical, electrical and instrumentation installation contract (MEI) has resulted in savings of about US$9 million. However, supplementary foreign funds will be required to finance the conversion of the mill's boilers to burn wood fuel (rather than coal) and to provide additional start-up technical assistance. Loan No. 1745-TA - Tanganyika Development Finance Company, Ltd. (TDFL) Project: US$11.0 million Loan of July 27, 1979; Date of Effectiveness - November 1, 1979; Closing Date - December 31, 1983 The loan is about 70% committed and disbursement is proceeding satisfactorily. Credit No. 1060-TA - Second Technical Assistance Project: US$11 millon Credit of October 24, 1980; Date of Effectiveness - February 10, 1981, Closing Date - June 30, 1985 This credit became effective on February 10, 1981 and TIB has requested IDA's assistance in recruiting an agricultural economist and a chemical engineer for the Technical Assistance Unit. Processing of study applications is proceeding smoothly; the general training component is also being implemented satisfactorily. Credit No. 1206-TA - Third Technical Assistance Project: US$12.0 million equivalent Credit of March 4, 1982; Closing Date - June 30, 1987 This credit became effective on April 1, 1982. EXPORT REHABILITATION PROGRAM Credit No. 1133-TA - Export Rehabilitation Program: US$50.0 million Credit of April 24, 1981; Date of Effectiveness - May 12, 1981; Closing Date - March 31, 1983 This credit is almost completely disbursed. The new institutional arrangements for import allocation are working well. A draft policy statement for both agricultural research and extension has been prepared and is being incorporated within an overall agricultural policy document. The target for the Government's own contribution to the foreign exchange requirements of agriculture was actually exceeded during the period April 1-June 30, 1981. However, more recent allocations to the sector have fallen short of agreed levels. ANNEX II -39- Page 14 of 16 EAST AFRICAN COMMUNITY There are currently four projects in execution in the East African Community.4 Loan No. 638-EA - Second Harbours Project: US$35.0 million Loan of August 25, 1969; Date of Effectiveness - December 16, 1973; Closing Date - December 31, 1977 Loan No. 865-EA - Third Harbours Project: US$26.5 million Loan of December 18, 1972; Date of Effectiveness - April 16, 1973; Closing Date - June 30, 1978 The Second Harbours project included financing for five general cargo berths and a single bay tanker terminal for the Port of Dar es Salaam; two general cargo berths and a bulk cement wharf for Mombasa; tugs, lighters, cargo handling equipment, offices, housing and general improve- ments for both ports. The Third Harbours project included three new deep water berths, modernization of two berths and a lighterage quay, a training school building and central repair area for Dar es Salaam; modernization of several berths and a lighterage quay, construction of a tug berth, cold storage facilities and a training building in Mombasa and improvement of a lighterage quay in Tanga. Construction of all major project elements has been completed and a joint project completion report was issued in January 1979. Because of shortage of funds under both loans, the following minor project elements have not been submitted for Bank financing: the second phase of modernization of the lighterage quay and a training school for Dar es Salaam, modernization of the lighterage quay and a training school for Mombasa. Locally financed contracts have been awarded for these project elements with the exception of the modernization of the lighterage quay in Mombasa. General cargo throughput has increased above appraisal forecasts for Dar es Salaam, and cargo handling productivity has improved with increasing throughput; however, port labor productivity has stagnated in Mombasa where general cargo throughput has declined considerably. Legis- lation to establish a Tanzania Harbours Authority and a Kenya Ports Author- ity has been enacted. Management of Ports in both countries is competent. Some US$34.50 million of Loan 638-EA and US$26.15 million of Loan 865-EA has already been disbursed. The agreed allocation of undisbursed funds of October 1, 1977 between the countries concerned is given below: 4Since October 1, 1977, the East African Community loans (excluding the East African Development Bank) have been disbursed on the basis of separate national guarantees. The agreed allocation of undisbursed balances for each loan, as proposed in a report to the Executive Directors dated December 29, 1977 (R77-312) and approved on January 12, 1978, is given in this Annex. The Closing Date for loans 638-EA, and 865-EA have passed. However, since the amount allocated to and guaranteed by each Partner State is clearly identified under the terms of the Agreement signed on January 25, 1978 as proposed in the above report (R77-312), we are continuing disbursements. ANNEX II -40- Page 15 of 16 For Loan No. 638-EA (US$ million) Kenya 0.7 Tanzania 0.6 Total 1.3 For Loan No. 865-EA Kenya 1.7 Tanzania 0.3 Total 2.0 Loan No. 914-EA - Third Telecommunications Project: US$32.5 million Loan of June 22, 1973; Date of Effectiveness - September 19, 1973; Closing Date - December 31, 1979 The project included provision for procurement of local telephone exchange equipment, cables and subscriber apparatus, microwave and UHF/VHF systems and multiplex equipment, interurban cables and wires, automatic switching and signalling equipment, telegraph, telex and data equipment, and training. All project items except the microwave radio system have been completed; this system is likely to be completed by mid-1980. The slippage of the project's completion was due to initial delays in procure- ment caused by staffing and other problems associated with the relocation of headquarters. About US$32.20 million of the loan had been disbursed to date. The agreed allocation of undisbursed funds as at October 1, 1977 among the countries concerned is as follows: US$ million Kenya 2.4 Tanzania 3.5 Uganda 0.1 Total 6.0 Loan No. 1204-EA - East African Development Bank: US$15.0 million Loan of March 1, 1976; Date of Effectiveness - June 7, 1976; Closing Date - June 30, 1983 The environment within the Community has continued to have a negative impact on EADB operations. Level of operations both for appraisal and supervision has been depressed, but there has been some improvement in the state of the portfolio with the arrears affected portfolio falling from 50% as of June 30, 1977 to 43% as of June 30, 1979. Some US$13.65 million of the loan has been disbursed to date. ANNEX II - 41 - Page 16 of 16 D. STATEMENT OF IFC INVESTMENT IN TANZANIA AS OF SEPTEMBER 30, 1982 Fiscal Amount in US$ Million Year Obligor Type of Business Loan Equity Total 1960 & Kilombero Sugar Food Processing 3.96 0.70 4.66 1964 Company 1978 Highland Soap and Soap Manufacture 1.38 0.36 1.74 Allied Products Limited 1979 Metal Products Household Utensils 1.33 0.18 1.51 Limited Total gross commitments 6.67 1.24 7.91 Less cancellations, terminations, repayments and sales 4.17 0.69 4.86 Total commitments now held by IFC 2.50 0.55 3.05 Total undisbursed 0.06 _ 0.06 ANNEX III - 42 - Page 1 of 2 TANZANIA DAR ES SALAAM SEWERAGE AND SANITATION PROJECT Supplementary Project Data Sheet I. Timetable of Key Events (a) First presentation to the Association: July 1978 (b) Appraisal mission : June/July 1981 (c) Completion of negotiations : August 1982 (d) Estimated date of effectiveness : March 1983 II. Special Association Implementation Actions The Association has approved two PPF advances totalling US$1.0 million for the preparation of a master plan, feasibility studies and preliminary designs for sewerage rehabilitation and for other technical assistance. This advance would be refinanced under the credit. III. Special Conditions (a) Appointment of key officers of DSSD would be a condition of credit effectiveness (paragraph 48); (b) Not later than June 30, 1984, DSSD would introduce a management information system and billing and collection arrangements similar to those already operating at TANESCO (paragraph 48); (c) A survey of service connections for sewerage, water supply and electricity would be completed by December 31, 1983 to facilitate monthly billing for all three services (paragraph 48); (d) The Government would complete a sewerage tariff study, for review by the Association, before June 30, 1984. Proposals for a new tariff structure for sewerage services would be proposed no later than December 31, 1984 and implemented promptly thereafter (paragraph 53); Annex III - 43 Page 2 of 2 (e) Beginning in FY85, the level of sewerage tariffs would be reviewed annually, and adjusted as necessary, to cover all of DSSD's expenses on its sewerage operations, as well as generate sufficient cash to meet 20% of DSSD's capital requirements (paragraph 53); (f) Beginning in FY84, charges for pit latrine emptying services would be sufficient to cover operating costs, including an adequate provision for the depreciation of fixed assets and debt service charges to the extent that these exceeded the provision for depreciation (paragraph 53). IBRD 16132 TANZAN IA -MER 1t DAR ES: SALAAM SEWERAGE AND SANITATION PROJECT & ,\ 9 § \ 0 i : D : j!iiii:,.iii Exlottng Sewe,ed Areros / 8 _ EOrOsN Oxidofin P-od. 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