RESTRICTED Report No. AE-26 FLE copy This report is for official use only by the Bank Group and specifically authorized organizations or persons. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION THE ECONOMIC DEVELOPMENT AND PROSPECTS OF TANZANIA (in four volumes) VOLUME II ANNEX I: AGRICULTURE AND RURAL DEVELOPMENT ANNEX II: TOURISM ANNEX III: URBAN DEVELOPMENT AND HOUSING June 22. 1972 Eastern Africa Department CURRENCY EQUIVALENTS 1 Tanzanian Shilling = U.S.$0.14 1 U.S. Dbllar = Sh 7.14 This report is based on the findings of a mission which visited Tanzania during August/September 1971. The mission consisted of the following: Messrs. Lyle M. Hansen (lission Chief); Pieter Bottelier (general economics); John Cleave (agriculture); Andrew Hayman (tourism); Esref Erkmen (power); Raimundo Guarda (consultant on housing and urban development). ANNEX I AGRICULTURE AND RURAL DEVELOPMENT TABLE OF CONTENTS Page No. A. Background ........ ............................ 1 Agriculture in the Economy ..... ............. 1 The Second Five-Year Plan ..... .............. 1 B. Commodity Production and Prospects ............ 2 Cotton .......... .............................. 2 Scope for Production Increases .............. 4 A Cotton Compaign ........................... 7 Coffee .......... .............................. 9 Crop Prospects .............................. 10 Sisal ........... .............................. 11 The Future of Sisal ......................... 12 Cashew .......... .............................. 13 Increasing Returns to Cashew .... ............ 14 Tea . .......................................... 15 Expansion Prospects ..... .................... 16 Flue-Cured Tobacco ............................ 17 Development Plans ........................... 17 Other Tobacco ....... .......................... 18 Pyrethrum ............... ...................... 19 Oilseeds ......... ............................. 21 Copra and Copra Oil ...... ..................... 23 Wheat ........... .............................. 23 Maize ....................................................... 25 Sugar ............... .......................... 25 Rice ......... , .............. 26 Paddy Policies ........ ...................... 27 Beef Cattle ........ . , 28 Development Prospects ............ .. ......... 29 Dairying ...................... ................ 30 Dairy Projects ...... ........................ 30 Fisheries ..................................... 31 Forestry ...................... ................ 33 C. Summary of Export Growth Prospects ............ 34 D. Services, Programs and Policy Issues .......... 36 The Ujamaa Village Program ..... ............... 36 Progress in Ujamaa Development . ............. 36 TABLE OF CONTENTS (Cont'd) Page No Economic Impact ...... i. .................... 40 Mobilization and Services ................ . 41 Problems .............................. 42 State Farms ............. ...................... 43 The Present Position ........................ 43 Prospects .............. .. .. ............... .... 45 Tractor Mechanization ti......... a... t........... 46 Problems of Mechanization ................... 46 Mechanization in Tanzania ................ ... 48 Marketing, Cooperatives, and Prices ...... ..... 50 Problems in Marketing ................... .... 50 Current Action .............. ... .. . .......... .. 54 Regional and Rural Development ................ 55 Kigoma Region ......................... ...... 57 Irrigation ............ ......... 60................... 59 Progress in the Second Plan ...... o........ o. 59 Future Action ....... ................... . . 60 Research.. ........... . .. ...... .... 60 Census of Agriculture ......... o.............. 64 Organization, Services, and Production Programs 64 ANNEX I Page 1 A. Background 1. Agriculture in the Economy. Agriculture and related activities continue to make up the largest single sector in the Tanzanian economy. In 1970, 40 percent of GDP was derived from this sector, and rather over half of the value of the sector's output was derived from subsistence production. In 1970, agricultural exports 1/ accounted for 77.9 percent of national total. Coffee, cotton and sisal are the major foreign exchange earners. About 94 percent of the country's population of 13.2 million live in rural areas and 90 percent of the economically active people are engaged in the agricultural sector. Except for population, which is growing at about 2.7 percent p.a., these figures have not changed significantly in recent years. Land is gen- erally plentiful, but there is localized population pressure on Mt. Kilimanjaro, in the Usambara and the Southern Highlands, and in the Lake Victoria basin. 2. Most production is from smallholdings, cultivated by hand using family labor. Large scale agriculture is represented by estates, engaged in sisal, coffee, tea and coconut production; and State Farms, mainly in wheat, rice and livestock. Estate production has diminished in importance particularly as sisal has declined, and the State Farm program remains small. Tanzania's national herd of 13 million cattle is the second largest in Africa. The herd is largely of Zebus, grazed extensively over the 40 percent of the country which is free from tsetse infestation. There is limited use of oxen for cultivation, mainly in the western cotton areas. Tanzania is largely self-sufficient in staples, but 11 percent of total imports in 1970 were foods among which dairy products, wheat and maize were major items. 3. The Second Five-Year Plan. The emphasis in SFYP is on rural de- velopnqent. The major aim of the Plan is to make significant progress towards socialist organization of rural activity, based on ujamaa vijijini. State Farms fill a need for larger scale production units, but the approach to mechanization is to be cautious, based on proven viability. A similar cau- tion is expressed towards irrigation development. Agricultural production is to be increased within a framework of crop priorities based on production possibilities, market prospects, and a desire for increased self-sufficiency. High priority is given to raising nutritional standards in the country, and to the expansion of selected export crops including cotton, flue-cured to- bacco, tea, oil-seeds and cashewnuts. Sisal, pyrethrum and coffee are given lower priority. Increased efficiency in production is noted to be important for wheat and maize, and quality improvements are important to tea, flue- cured tobacco, cashewnuts and coffee. A vigorous policy for the development of public marketing institutions is foreseen, and cooperatives are to play a central role in primary marketing. 4. The previous Bank economic mission to Tanzania was in the country shortly after SFYP was launched. The mission made a close appraisal of the 1/ SITC sections 0, 1, 2 less 27 and 28, and 4. ANNEX I Page 2 Plan proposals for agriculture and rural development, but performance under the Plan obviously could not be appraised. This Annex focuses on progress so far, rather under half-way through the Plan period, and attempts to out- line prospects by the end of that time. Production and prospects of major commodities are dealt with in Section B. Some of the more important pro- grams and current policy issues are discussed in Section D. B. Commodity Production and Prospects 5. Recent commodity production levels and performance and prospects for major commodities in the SFYP period are discussed below. A summary view of agricultural growth prospects and its effect on the economy is given in Section C. Cotton 6. In recent years cotton has given way to coffee as Tanzania's most valuable single crop and highest export earner. It has, however, the great- est potential for absolute growth of any agricultural product in the country. The Mwanza, Shinyanga, Mara and West Lake Regions, around Lake Victoria, accounted for 96 percent of production in 1969/701/. Production is very variable. Peak production was in 1965/66, a year of exceptionally favorable weather, when over 436,000 bales 2/ were ginned and this level was approached in 1969/70, another climatically good year. However, average production is well under 400,000 bales which was taken as the base output for the first year of SFYP, and a long way short of the SFYP trend target of 615,000 bales by 1974. 3/ Over the past decade production has about doubled, but the growth has been far from steady. if this average rate of expansion were to continue, the target would not be achieved until 1971 or 1978. 1/ The cotton growing season in Tanzania starts with planting in late November or in December and ends with harvesting in May to August in the following year. The season referred to throughout this report is this growing season: in this case the year of harvest, 1970. The LSMB records a season which refers to ginning and selling, and would in this case be 1970/71. 2/ All bale figures used in this report are standard bales of 400 lbs net weight. Running, or actual bales, reported by LSMB, are heavier by up to 5 percent. 3/ SFYP, Volume I, p. 197. The Plan is inconsistent on this, however, and quotes 700,000 bales in Volume II, p. 57, and 700,000 in climatically favorable years in Volume I, p. 44. 700,000 bales was quoted by Tanzania as the target at the Inter-Cotton Advisory Committee meeting in May/ June 1971. MANNEX I Page 3 Table 1: COTTON PRODUCTION AND EXPORT VALUE Production Export Value./ Actual 3-yr Average Season ('000 bales of 400 lbs) (Sh million) (% of Exports) 1960/61 167.5 190.0 154 14.4 1964/65 370.1 365.5 256 17.2 1965/66 436.2 366.8 350 19.8 1966/67 294.2 337.8 251 14.5 1967/68 283.1 323.5 283 16.9 1968/69 393.2 366.5 235 13.3 1969/70 423.2 383.9 247 13.4 1970/71 335.9/2 - n.a. n.a. /1 In calendar year in which production season ends. Includes inter- territorial trade. /2 Provisional. Source: Kilimo and East African Customs and Excise. 7. The last Bank economic mission considered the 700,000 target ambi- tious and in its report noted the need to overcome a number of problems if this was to be achieved. These included: (a) the lack of an integrated cotton production campaign; (b) a low input of agricultural staff in the cotton areas, poor quality of staff, and inadequate liaison between extension and research; (c) an expected 15 percent decline in world cotton prices for 1969-74, likely to be reflected in producer prices; (d) alternative cash crops competing for resources in the cotton area, and receiving emphasis in Kilimo programs; (e) a low use of fertilizers and insecticides. 8. There has been little change in the average level of production of cotton since the last mission, and to the problems noted - all of which re- main- may be added a short-term but critical shortage of trucks which seems ANNEX I Paged to have affected distribution of seed for the 1971/72 crop, and may affect collection of the crop in 1972; and possible disruption caused by the reor- ganization of the Nyanza Cooperative Union (NCU). There is little chance that the Plan target will be met even with a major effort to increase pro- duction, and no prospect of it being reached without such an effort. The 1970-71 Economic Survey refers to A major exercise, under way by Kilimo, to increase cotton production. Little evidence was found of any consistent and concentrated effort, however, in spite of the fact that achieving the higher cotton target could gross an increment of Tsh 200 million ($28 million) a year in foreign exchange, compared with anticipated increments of Tsh 82.1 million ($11.5 million) by 1978 from tobacco developments and a projected Tsh 6.4 million ($8.9 million) at maturity (about 12 years) from a recently negotiated tea credit. Increases are possible both from expansion of area and intensification. 9. Scope for Production Increases. There are no reliable figures on which to judge past changes in area or yields. Overall yields have increased in the last 3 decades almost entirely as a result of improved seed, but it seems that most recent growth in production has come about from area expan- sion. Continued increases in area can only take place in limited areas. Some can be anticipated in new areas of Mara, Tabora and West Lake Regions, and a limited extension of area within the present cotton-growing areas of Shinyanga and Mwanza Regions. Continued expansion of area at the rate of population growth in Mwanza and Shinyanga, and at the trend rate of produc- tion increase (7.2 percent) in all other areas implies an expansion in pro- duction of about 45,000 bales in 3 years from this source. 10. Further area expansion could come about if farmers who have recently shifted from cotton production into rice and maize return to cotton growing. The two crops compete directly with cotton for labor time, and have been fa- vored by relatively high statutory prices. Between 1965/66 and 1968/69, the price of rice to farmers rose by about 25 percent, and production costs are just double recent quotations for major foreign producers. 1/ In contrast cotton prices rose only 10 percent in this period and remain as much as one- fifth below the levels of the 1950's and early 1960's. The rice price policy has probably cost considerable cotton exports as well as depriving consumers of relatively cheap food. The area transferred to rice production has not been established. One considered estimate is that 1970/71 production was down 68,000 bales as a result of the relatively favorable price of rice. Paddy purchases from the combined Mara, Mwanza and Shinyanga Regions in the last 6 years are recorded as follows (m tons): 1965/66 1966/67 1967/68 1968/69 1969/70 1970/71 4,340 3,420 5,820 11,650 15,620 18,000 (est.) 1/ Malawi, 1969: $66.14/m. ton at central depot. Madagascar, 1967 $65.00/ m. ton, delivered mill, compared with $127 ex main agents store in Tanzania. ANNEX I Page s Wice prices should be cut, but not too rapidly for fear of over-reaction by producers. A feasible rate of change of policy on rice prices could possibly rr-aulj in an increase of 210,000 bales by the end of the next three years: nore if this was combined with increases in producer prices for cotton. il. Yield increases will come about from use of new seed varieties, application of fertilizers and spray, and improved management. Plans exist for the distribution of UK 69 seed to cover an area currently producing 180,000 bales. A 20 percent increase in yields from improved seed would give an in- crement of 36,000 bales. The acceptance of fertilizer and spray would depend on relative prices of the inputs and cotton, the proven increments from fer- tilizers, the effectiveness of the ultra-low volume (ULV) sprays on which ex- perlrents are being conducted, and the coverage and quality of extension staff. 12. Fertilizer recommendations for the Western cotton zone are the ap- nilcatton of 125 kg/ha of amonium sulphate or its equivalent, plus 125 kg oe n:ingle superphosphate per ha, for a total cost, at present unsubsidized prices, of about Tah 150/-ha. This is a blanket recommendation for the whole of the zone. The average increment to be expected from small farms does not appear to have been established. On experimental plots increments of 23-30 percent are obtained regularly. This is on early planted, correctly spaced, sprayed cotton on which the average yield of control plots is typ- ically at least twice that of the average on farmers' plots in the Western Cotton Growing Area (WCGA). Applied to the average yield in WCGA of about 500 kg/ha, a 25 percent increment would barely pay for the fertilizer: a fuil 50 percent would leave about Tah 150/mha to cover extra labor for fer- tilizer application, interest on any loan, profit, and risk. 13. Risk is a very important element in farmers' decisions, and will be viewed relative to income expectations. Given the wide range of climatic and soil conditions in WCGA, the individual farmer is exposed to considerable risk of under or over applying fertilizer and not achieving a worthwhile re- turn in consequence. More locally, specific recommendations should be de- velcoped for sub-areas or Districts to reduce this risk. Fertilizer use is thought to have been applied to only about 15,000 ha in recent years. Even if this reached 40,000 ha in the next 3 years, the increment would only be about 9,000 bales. High acceptance rates are, however, unlikely without more specific, lower risk, recommendations. Once these are made they should be adhered to, because another problem met with in WCGA is that recommenda- tions have changed frequently in recent years, confusing farmer and extension worker alike. A proposal for strengthening soil analysis facilities has been wade, and this combined with existing research results is believed to be enough to enable refinement of present recommendations. Resources should be devoted t.o this work; but it cannot have much impact within the remaining 3-year pe- riod of SFYP. 14. Tanzania has been quick to see the advantages of ULV sprays. In pilot projects ia 1970/71, 800 ha were sprayed, and a further experimental program for 1971/72 will treat 2,000 ha. Rather extravagant claims have ANNEX I Page t_ been made for the increment to spraying - about 1,500 kg per ha. A more realistic level would oe 250 kg/ha. The UNV technique increases acceptance because the rate of application can be 6-8 times that using conventional hand pumps with water-soluble high volume sprays, and the task of drawing 30 gal- lons of water per ha - a grave disincentive to correct spraying in the con- ventional system - is avoided. TIhe organizationi of spraying teams will take time to develop, and it is doubtful whether more than 20,000 ha or 5 percent of the planting can be fully covered by 1974, and to be effective this must also receive fertilizer application. An increment of 10,000 bales could come from this source, however. 15. An element in the acceptaice rate for fertilizer, spray and im- proved management techniques - wnich are needed to complement the new inputs - is the coverage by extension staff botlh in numbers and quality. There appears to be one extension worker to every 1,000 farmers in the cotton zone, a poorer ratio than in the uountry as a Whole. Surveys have sheown that even cursory contact is made with only 30 percent of farmers in the area in any year, and that the quality of the adv'ice givent is often unsatisfactory. Increases in numbers of staff may help boost cotton production: reorganization of the extension system - as, for example, is proposed in ujamaa villages: and better maintenance of skills, supervision, aud follow-up could increase ef- fectiveness of existinLg staff. However, the i,mfpact of aa extension service will depend above all on the economic viability of the recommendations being made. The yield increases reliably expected from fertilizer and spray ap- plication, from modifying the timing of operations, from better land prepara- tion or weeding, must give returns of several times the farmers' cost if the improvements are to be accepted. Generally, this has not applied to the recommendations made in WCGA. The full benefit of individual recommendations is, however, only achieved when the other improvements are also made. This is the argument for a package approach to the provision of inputs and exten- sion advice, an approach which would be eminently suited to the WCGA where a high proportion of farmers are engaged on the same crop. A number of differ- ent packages could be designed to fit varying coniditions, although to be effective the quality of extension staff would have to be improved by re- training and closer supervision. 16. The value of returns, and acceptance of new ideas will be effected by the prices paid to farmers. In the face of falling world prices, increas- ed prices to growers may not be possible by the mid-1970's. A temporary halt in the decline, occasioned by a world shortage of cotton, allows this to be done if export duties are drastically cut, or removed, and marketing and ginning made more efficient. Export duty takes about 7 cents/kg seed cotton from the farmer, and it has been estimated that a further 6 to 9 cents/kg could be pared from primary society and ginninig costs. A recent estimate put the price elasticity of supply of Tanzania cotton at 2.44, but the price in this case is a long-term "normal" expectationi. If this is accepted an increase in price by 4-5 cents/kg seed cotton, maintained through the plan period, could lead to a further 35,000-40,000 bales increase by about 1974. Because cotton prices are expected to fall, producers prices ANNEX I Page 7 probably could only be raised and held by this amount if the export duty were paid into a stabilization fund which could be run down as prices fell. 17. In summary, a crude estimate of possibilities for production in- creases in the immediate future would be: (a) Area expansion (i) new land opened up 45,000 bales (ii) reduction in rice price 20,000 " (b) Yield increases (i) improved seed 36,000 R (ii) fertilizers 9,000 (iii) ULV sprays 10,000 Vc) Area and yield response to price increases 40,000 160,000 or anything from 100,000-200,000 bales. Variations in weather conditions can cause 100,000-bale changes in the crop from year to year, but a normal year in 1974 may be looked upon as 540,000 bales; a good year perhaps 580,000 bales. This is 75,000-120,000 bales short of the target figures but assumes a continuation of present efforts plus revisions of price policy. There se-cas to be very little chance that the target will be reached on schedule, and clearly a renewed effort needs to be made to reach and surpass this in the near future. 1i. Diversion for domestic consumption has increased recently to about 110.000 bales a year. This could rise to about 130,000 bales by the end of S'-YP, leaving 410,000 bales for export, or 450,000 in a favorable year. 19. A Cotton Campaign. The previous Bank economic report set out niae recommendations for lines of action on a cotton campaign. Principal among them are: (a) a drastic reduction or elimination of the export duty on cotton; (b) the appointment of an Interregional Committee to draw up a campaign to increase cotton production; (c) the development of a "package approach" as part of the cam- paign; (d) an examiination of the feasibility of introducing a subsidy on insecticides for a definite period; ANNEX T Page 8 (e) mounting a full farm management survey in WCGA; (f) accelerated itterpretation of fertilizer trials to produce district-level recommendatħons; and (g) when these recomrnendatħons are available, to consider the pos- sibili ties of iatroduc!ng a subsidy on fertilizers to encourage acceptance. Except for the establishment of a cotton campaign committee which does not seem to have been very active, the recommendations have not been pursued, although they remain generally valid. Any insecticide subsidy should be applied to endosulfan and, if necessary, an inisecticide effective against dysdercus and calidea, for delivery by ULV sprays. Alternatively, the sub- sidy elemeD*t could be applied to spraying teams organized by Kilimo to pro- vide a spray service to farmers. The fertħlizer recommendations should be developed for each district, and it is probably possible to develop specific recommendations for ujamaa villages. There appears to be some justification for additional feeder roads in Viaswa aud Shirnyanga districts. 20. A project to boost cotton production in Geita district has been under preparation since November, 1970. It is proposed that it should be submitted for Bank Group financing. The project, touching on 50,000 farmers growing 60,000 ha of cotton, would result in an increment of close to 100,000 bales a year when fully operative. This is, however, based on very high yield and management assumptions. The preparation of the project has been delayed by new policy requirements th3t all production under the project is based on ujamaa villages, and that extensive tractor mechanization is intro- duced. The area is one of the more difficult ones in which to encourage ujamaa villages, and mechanization is not likely to pay in the conditions under which it will operate. The project as at present envisaged will not produce rapid results, will divert resources from more feasible programs, and will be unnecessarily difficult to manage. Insisting that only farmers who have accepted ujamaa production should benefit in a scheme of this type is clearly politically justifiable, but it is far from clear that mechaniza- tion helps either political or economic objectives in Geita. A program for Geita should initially concentrate on a low capital-cost approach in which farmers - if desired, confined to those who have developed an ujamaa plot - can obtain inputs or credit in a package. More rapid growth of ujamaa pro- duction will be achievable in new, peripheral, areas. In these new areas, also, because labor rather than land is the dominant constraint, some mech- anization could be justified. Improved techniques should not, however, be thought of only in terms of ploughing land. A major labor bottleneck in cotton production typically occurs in weeding, and another at, and follow- ing, harvest time. in spite of the high yield penalties to late planted cotton in unimproved systems these are often more important than land prep- aration, and point not only to the limited usefulness of tractor mechaniza- tion applied to land clearing only, but also to the possibilities in herbi- cides, and the need to examine whiether time spent on cotton sorting and ANNEX I Page 9 marketing could be reduced. Sorting at the time of picking has been shown to reduce labor needs, and it may also be questioned whether the present grading of seed cotton is necessary for at least that part of the crop con- sumed within Tanzania. Time spent by farmers on the physical marketing of cotton may also be reduceable by changes in collection and payment systems. Cof.ee 21. Since 1968, coffee has surpassed cotton as Tanzania's largest single earner of foreign exchange: in 1970 the value of the crop was an all time record of Tsh 312 million, over 18 percent of total exports. A major factor was the firm price, which followed a frost in Brazil. Table 2: COFFEE EXPORTS Total Arabica Robusta Value Value '000 million '000 Value Million % m tons Tsh m tons Tsh Tsh of exports 1960-62 av. 21.7 127.0 3.6 10.3 137.3 1966 35.9 251.5 9.3 49.6 301.1 18.0 1967 32.7 202.3 7.0 34.3 236.6 14.4 1968 34.9 221.4 8.4 42.2 263.6 16.7 1969 35.8 215.9 8.3 41.5 257.4 15.4 1970 33.1 245.8 5.3 66.6 312.4 18.5 Source: E.A. Customs and Excise. 22. Brazilian production was less hard hit than anticipated, however, and prices weakened in late 1970 and 1971. By mid-1971, the average price for Tanzania milds on quota markets was 10 percent below levels of the prev- ious year. Milds account for 80 percent of production. Total Tanzanian production is well in excess of the present 622,511 bag (37,350 m. ton) quota under the International Coffee Agreement. For years, a considerable quantity of Tanzania coffee has been sold on non-quota markets on which prices are on average 10-15 percent below those of quota sales for the same type of coffee. The estimated crop for 1971/72, 48,000 m. tons, is about 67 percent of the Plan target level for 1974 and about equal to the 1972/73 production goal (810,000 bags) under the ICA. In spite of vigorous selling on new mar- kets, Tanzania can be expected to develop considerable surplus stocks of coffee: probably mostly of the lower priced hard coffees dominated by Robustas from the West Lake region. A provisional figure of 180,000 bags ANNEX I Page 1 0 (10,800 tons) will be stored by the Tanzania Coffee Board (TCB) at Noshi, and later, storage for Robustas will be bs4a-' ed at Tanga.port. Surpluses are soor likely to exceed the 180,000 bag s;el, however. Table 3: COFFEE PRODUCTION AMD SALES Production Coffee Board Sales ('000 Mn. tons) 4fi_d Hard Mild Hard Total Volume Price Volume Price ('000 m. tons) (Tsh:ton) ('000 m. tons) (Tshfton) 1966 39.0 13.0 51,9 34.9 6,124 14.8 4,848 1967 29.7 10.4 40.2 30.4 5,530 10.9 4,592 1968 35.1 16&4 5L,5 366 5,210 14.2 4,344 1969 35.9 10.3 46.l 40J 4,754 13.2 3,850 1970 32.5 16.1 48' 24.i 65758 15.1 5,110 Source: The Economic Survey, 1970-71. 23. Crop Prospects. The SFYP aims to reduce dependence on coffee by expansion into new crops, including tobacco, and to cut the rate of growth of coffee production. This is to be effected by diversħfication within the growing areas and by pricing and marketing measures. The diversification program includes the development of tea in Mbeva, West Lake and Tanga, and dairying in Kilimanjaro and West Lake. The tea development is moving well. There has been some movement into dairying by private estates -- currently responsible for one quarter of Tanzanian coffee production -- and a 1,100 acre dairy state farm is planned for Bukoba. An additional cess of Tsh 8 million is to be raised in 1971/72 to pay for the purchase of a coffee curing works and storage at Moshi. This implies a tax of 7-8 cts per kg on growers prices, and is the equivalent of a 25 percent additional collection from ex- port duty. 24. The International Coffee Agreement has succeeded in stabilizing coffee prices within agreed limits. It is assumed that the agreement will continue beyond its expiring date of 1973. Given the continued existence of the ICA and restraint in coffee planting, coffee prices in the mid-1970's will probably be between the high level of 1970 and those of the surplus situation of 1969 while world exports grow at about 3 percent p.a. Prices are projected to drop by a further 4-5 percent by the end of the decade. 25. Tanzania should clearly continue with efforts to divert resources into production of alternative crops, particularly in the areas of the lower value and more eratically priced hard coffees. Consideration could be given to continuing a levy in place of the storage cess in following years, to ANNEX I Page 11 further discourage marginal producers. It could replace, as a source of revenue, the current export duty on cotton. The average price of seed cot- t'nn to growers could then be raised by 5-6kJkg without loss of central gov- ernment revenue. 46- Little research effort is currently going into coffee. This policy is understandable given the surplus production situation, the limited research funds available, and the existence in neighboring Kenya of knowledge which can be adapted to the Tanzania situation fairly readily. A close watch should, however, be kept for the spread of Coffee Berry Disease, present in the Kili- manjaro area. Control of this virulent fungus is achieved by copper sprays which can be applied by farmers themselves. Efforts to improve coffee qual- ity, particularly by improving pulpery management, should continue. A high priarity study into the causes of varying performances by pulperies was suggested in the 1971 preinvestment program and should be proceeded with without delay. S:Lsal 27. Tanzania continues to produce about one-third of the world supply of sisal, a position it shares with Brazil. Sisal is the third most impor- tant source of foreign exchange. The export value of over Tsh 170 million rep.esents 10 percent of all exports. A decade ago, sisal was easily the leading export, and earnings of Tsh 310 million were well over one-quarter of the total. Table 4: SISAL FIBRE - AREA PRODUCTION, EXPORTS AND PRICE Mature Area Production Exports Value of Exports Export Price (000 ha) (....'0 m.tous... (Tsh, million) (E 11 m.ton) 1960-62 av. 213.8 217.4 /2 196 284 72.6 1966 228.6 221.6 184 223 60.6 1967 236.6 216.6 191 191 50.6 1968 230.1 208.0 178 91 49.6 1969 227.5 212.1 161 151 54.8 1970 n.a. 202.2 204 170 48.8 1971 n.a. 168.0 /3 n.a. n.a. n.a. /1 Sisal export prices are usually, as here, quoted in i sterling. /2 1962. /3 Provisional. ANNEX I Page l2 28. The threats of oversupply on a slowly declining market and compe- tition from synthetics continue. in recognition of these factors SFYP aims to reduce export sales to 152-173,000 u. tons, cut production costs, and find new end-users for sisal. Both the reduced production and the increased efficiency targets are being achieved. The provisional production figure for 1971 is probably below trend, and is below Tanzania's quota for exports of fibre and cord under the new informal agreement between producers. 29. The Future of Sisal. The important issue will be Tanzania's ability to produce at a cost which is low enough to compete on the one hand with Brazilian sisal - produced mainly by smallholders - and on the other hand with the synthetic substitute, polypropylene. If Tanzanian production costs are close to the Braziliani level, there is far greater likelihood of survival of the quota agreeelent reactfvated i% May 1971. The earlier agree- ment, after holding price§ stable for 18 months, had collapsed early in 1970 following overselling by Bra&El. It has been estimated that the lowest price Brazil could stand (in 1970) was the equivalent of Tsh 740 m. ton/ex-estate, or about Tsh 775 f.o.b. Dar-es-Salaai. With or without the agreement, how- ever, prices will have tu hold at a level which excludes the possibility of a switch by spinners and users to polypropyleue products. This level is hard to define but could be in the range of E65-b70 per m. ton, cif London, or Tsh 800-900 per m. ton fob DWr-es-Salaam. 30. Limited information shows a wide range of costs on Tanzania estates. The best can produce in the Tah 650-850/m. ton range, and this has to be the target for all estates wnich are to continue in production. In 1968 under one-third of all estates were in this range. Factors af- fecting costs will be estate size, labor wages and productivity, and sisal yields. There is 11o fixed optimum siWe of estate, but very small estates are unlikely to be efficient. Unit labor costs are tending to rise - both wages and indirect costs in housing and welfare services - and can only be held down per unit of output if productivity is increased. Major strides have been made in this direction in Tanzania, at the cost, inevitable in this declining-market situation, of cucting employment. Apart from sound management, labor productivity will also be improved by high fiber yields, a function of estate location and planting material. In the present ration- alization program these factors are recognized by confining replanting to the larger, better sited, high yielding estates, while smaller estates are allowed to go out of sisal production. Use of higher-yielding hybrid mate- rial is presently limited by its susceptibilitv to disease. The diversifi- cation program for estates which cannot compete should continue, in spite of the problems it is facing. However, this objective should not divert attention from the priae need to concinue to improve productivity in the sisal industry. 31. Hopes of finding new end-uses for sisal are pinned to the develop- ment of a sisal pulp mill, to process annually 3.2 million m. tons of green sisal into 120,000 m. tons of air-dry pulp for the manufacturing of high quality paper abroad. Tsh 360 million are earmarked in SFYP for this proj- ect, but current cost estimates are between Tsh 900 million and one billion. ANNIEX I Page 13 Tho Jroject has been subjected to several studies and is still being ap- praited by N)C officials. A location near Hale in Tanga region has been se½-ctnd because of the availability of power, water, good transport links, new sisal land and existing sisal estates. The latter will provide only 25 iercent of material. The mill would be planned to depend on new plant- ing for most cf its requirements, and to ensure an even supply this would p .z½2b17 te gown on an estate basis. Both bolls and leaves would be used, but only 15 percent of available bolls can be incorporated in the pulp. 32. Assur-ing reasonably rapid progress with pre-investment require- ments, the earliest date at which the mill could begin operations would be 197$. Full capacity would be reached about 1982, when the export value would be about Tsh 220 million, about 12 percent of the present total ex- por°- s. 33. Tanzania remains the second largest world producer of cashewnuts Twit.h a third of the world crop. Cashewnuts, exported in shell are Tanzania's foulrth iargest export, currently worth about Tsh 120 million p.a. About 15- 20 percent of the crop is processed in Tanzania and there is a small export of locally sheled nuts. Growth in export value has averaged over 11 percent p.a. .,ver the last decade but has stagnated in the SFYP period. However, thn crop has potential for considerable further development. Early esti- rtaLns for purchases of the 1971/72 crop put it at a record 140,000 m. tons. Table 5: CASHEWNUTS: PURCIASES AND EXPORTS (in shell) 1960-62 av. 1966 1967 1968 1969 1970 1971 Purchases /1 ('000 m. tons) n.a. 73.1 80.7 76.6 111.0 114.2 113.1 Exports ('000 m. tons) 46.0 72.2 70.9 79.7 82.2 77.4 n.a. Export value (Tsh, million) 42 100 92 107 119 115 n.a. /1 July of previous year to June of year under reference. Soturce: NAPB and E.A. Customs and Excise. 34. Cashewnuts in Tanzania are harvested by smallholders. Ninety-eight percent of the crop is grown in Mtwara, Lindi and Coast regions. Marketing is by cooperatives selling to NAPB which has a monopoly for export and local sales. Prices to growers are fixed for each of 13 zones and declared an- nutally before the main harvest. The whole raw nut export crop is sent to india for shelling and re-export. Shelling is a skilled but unpleasant hand ANNEX I Page 14 operation which has not attracted Tanzania labor. Improvements in machines for processing, and the recent creation of an Indian monopsony which is al- ledged to have forced Tanzania prices down by about 15 percent in 1971 have encouraged new interest in processing the crop in Tanzania. However, Tanzania's harvest comes at a time (September-February) when alternative sup- plies for the Indian processors are seasonally short. This has caused the processors to compete strongly for the crop, giving Tanzania a price advan- tage but making the establishment of economic processing plants in Tanzania more difficult. This makes it more likely that the India State Trading Corporation will relax its buying policy when faced with the threat of losing supplies to Tanzanian processors. An analysis of the possibilities of cashew processing in Tanzania was carried out by a firm of consultants which sub- mitted its report to NDC in January 1970. Seven hand-processing plants have been set up with the help of UNDP technical assistance and a further 7 are planned. These are based on Ujamaa villages and are reported to be doing well. 35. Increasing Returns to Cashew. The previous mission pointed out the desirability of more active extension effort on growing cashew than is envisaged by SFYP. Given the good long run price and volume prospects for the crop this advice remains pertinent. Shorter term gains to the economy can be achieved by: a. increasing the harvest of the existing crop - this may be achieved by improving access to remote areas and improving primary marketing efficiency; b. improving the quality of the crop, which depends largely on regular gathering of fallen nuts, keeping the ground beneath trees clear of weeds, good drying by farmers, and improved storage at primary society level; and c. local processing of the crop which will give considerable foreign exchange and employment benefits but for which quality improvements are prerequisites if processing is to be viable. 36. The report on cashew processing sets out a sound development plan which includes the introduction of quality standards and price differentials for quality, the introduction of re-drying facilities, and the establishment of both hand and mechanical processing. A program is set out under which machine processing gradually replaces hand shelling and, if early action is taken, 90 percent of the crop could be processed in Tanzania by 1980. Early research is needed into improved storage methods, and to identify nut quali- ties relevant to processing yields and which can be measured in the field. The gross value added in processing is about Tsh 600-900 per ton of raw nuts: the net foreign exchange gain of locally processing the present crop could be about Tsh 75 million per annum, and the value of Cashewnut Shell Liquid (CNSL) recovered from the shells could add a further Tsh 10-12 million. This assumes achievement of high quality nuts, but gives some measure of the potentially achievable returns. ANNEX I Page 15 37. A medium priority study of the cashew industry was included in the Bank-prepared 1971 preinvestment study proposals. The priority rating does not reflect the added urgency for action since the formation of the India State Trading Corporation, and omits a need to draw up a feeder road and storage program in Mtwara and Lindi Regions. Local estimates are that one- third of the present crop is not harvested. If these are accurate the pay- off from feeder road construction would be considerable. Good roads are im- portant because the crop is harvested throughout the rains. 38. Some NAPB overhead costs are charged as a percentage of selling price and FOB price, rather than in approximate proportion to the cost of handling, and this hits unfairly at high value crops like cashewnuts over low-value bulky crops such as cassava and maize. Levies made on this basis, including export tax at 7.5 percent, account for Tsh 200 out of Tsh 400 estimated costs added between Board buying price and FOB. The possibilities o£ modifying this method of charging should be examined; and the benefits of devoting the proceeds to increasing producer prices or increasing directly productive investment in the cashew crop should be weighed. In 1970/71 some Tsh 4 million from the Levy was devoted to storage development for the crop. A close watch should also be kept on the marketing costs of cooperatives. There is strong evidence of inefficiencies with some societies, particularly in Mtwara and Lindi Regions, and these reduce producer prices and incentives, and therefore the growth of a foreign exchange earner with good prospects. A recent study estimated that prices to producers could be increased by at least 15 percent by improving marketing procedures. The figure could well have been put higher. Other savings could be achieved by some amalgamation of societies. Those handling under about 400 tons of nuts a year appear to have excessively high unit costs. 39. Some extra return to the cashew crop will arise from the use of cashew apples to produce "moshi", the local raw spirit which is to be re- distilled in a newly opened distillery in Dar-es-Salaam to produce the national liquor, Konyagi. Under 1/2 percent of available fruit is needed for planned production, however, so the value of the joint product will not stimulate cashewnut production. Tea 40. The growth of Tanzania's tea production has been considerable since the early 1960's. Recent acreage and production figures are shown in Table 6. ANNEX I Page 16 Table 6: TEA AREA, PRODUCTION AND VALUE (Area - '000 ha: Production - kg million, made tea: Value - Tsh million) 1962 1965 1966 1967 1968 1969 1970 1971 Area under tea Immature /1 1.7 1.6 1.8 1.5 1.4 1.4 1.8 2.2 /2 Producing 6.4 7.8 8.2 8.9 9.4 9.8 10.1 11.5 /2 Total 8.1 9.4 10.0 10.4 10.8 11.2 11.9 13.7 /2 Production 4.3 5.7 6.8 7.2 7.9 8.8 8.5 n.a. Value /3 32 29 45 43 45 56 52 n.a. /1 Planted less than 3 years. /2 Estimates. /3 Average export price, applied to total production. Source: TTA and E.A. Trade Reports. 41. The drop in production in 1970 was caused by a partial failure of the long rains: a crop of 9.5 million kg can be expected for 1971. Con- tinued expansion through the plan period is expected with the assistance of an IDA credit (1972) for a smallholder tea development. NORAD is also parti- cipating in this proJect. Total project costs are estimated at Tsh 115 mil- lion of which Tsh 76.5 million will be financed by IDA. 42. Expansion Prospects. The expansion of smallholder tea planting will take place in Rungwe and Njombe districts in the southern highlands, in Bukoba, and in Korogwe. The IDA project covers 8,345 ha of the total 9,700 ha expansion called for in SFYP. It will make little impact within the Plan period, but at full maturity, about 1984, the project will produce about 9.5 million kg of made tea. This will double Tanzania's present pro- duction, half of which will then be in the hands of smallholders. The value of Tanzanian tea exports, by the mid-1980's, given only the current expansion, could be Tsh 120 million. 43. The Plan also calls for an additional 20,000 ha of planting in the five years following. This is an ambitious target, but there seems every reason why Tanzania should plan to continue tea expansion beyond the present plan period. Prices may be expected to be rather lower than those obtained recently but the good quality and high yields obtainable by Tanzania small- holders should assure them of a competitive place in the world market. Even a 10,000 ha expansion in the late 1970's could raise the value of Tanzania's ANNEY 1 tea exports to about sili 17: million per aunum by 198" atid Ttili 2h)o) it I Lion when in full production. Flue-cured Tobacco 44. In the last 5 years, flue-cured tobacco production has been expand- ing at an average rate of 18% p.a., mainly by smallholders. The 1970/71 crop was smaller than anticipated due to a drought in the western growing region. The crop is currently worth about Tsh 45 million to growers, and all tobacco exports, mainly flue-cured, are valued at about Tsh 59 million, making it the 5th agricultural export of the mainland. Table 7: FLUE-CURED TOBACCO - PRODUCTION, PRICE, AND VALUE Crop Year Production Av. Price to Growers Value to Growers (m. tons) (Tsht/kg) (Tsh '000) 1963/64 1,497 5.54 8,316 1966/67 3,576 4.76 17,022 1967/68 4,592 5.20 23,878 1968/69 5,103 5.16 26,331 1969/70 8,137 5.12 41,661 1970/71 8,926 5.12 45,701 Source: T.T.B. 45. Development Plans. Flue-cured tobacco development is being assisted by an IDA credit of US$9.0 million (Tsh 64 million) for a project which aims to increase flue-cured tobacco production by about 9,000 m. tons by 1978 at which date total production is planned to be over 20,000 m. tons. While sig- niificant progress has been made during the first two years of the SFYP, the Plan target production growth rate of 25% p.a. appears to be overambitious. The target production level for 1974 of 15,900 m. tons will probably not be aclhieved. 46. The tobacco project involves the settlement of 15,000 new tobacco growers in villages of 100 farmers each, 10 such villages being served by a cooperative society. Seasonal and medium-term credit, the construction of curing barns, grading sheds, access roads and water supplies; the provision of extension staff, and the construction of storage, processing facilities, and auction floors are included in the project. 47. The rate of settlement of farmers has been slower than anticipated, and received an absolute set-back with the net loss of nearly 200 settlers in ANNEX I Page 1 8 the last quarter of 1971. Another problem requiring early attention is the present serious shortage of wood in the Iringa area (this has been a factor in the poor quality of the Iringa crop), and the slow development of firewood plantations in the new areas. Priority should be given to an economic ap- praisal of using alternative fuels to wood. The urgency in this study is ac- centuated by the need to construct different types of curing barns if wood is not used for curing. Improvements to a number of links are needed - par- ticularly Tabora-Kitunda and Chunya-Gua. The development of flue-cured tobac- co involves a number of ministries, divisions and parastatals, and both cen- tral and regional officers. Aggravated by budget cuts in FY 1971/72, this is causing problems of coordinationi and is slowing development of the crop. Consideration is being given to the creation of a Tobacco Authiority. This would be a sound move, and it is to be hoped that the central control given an Authoritv would extend to research and training as well as production oper- ations. 48. Export market prospects for flue-cured tobacco are good, but prices may be influenced by develupments in Rhodesia. A current slight up-trend in prices could be revised if Rhodesian farmers re-enter the world market on a big scale as before the sanctions imposed following the country's Unilateral Declaration of Independence in 1965. Tanzania cani also expect to have to ex- port a higher proportion of its crop to overseas rnarkets -- as opposed to East Africa -- at lower average values. Tanzanian officials are convinced that they can hold on to their markets even if Rhodesia does export again. Compla- cency would be misplaced however. Rhodesian exports probably would not reach to former levels, and would presumably not have the advantage which Tanzania lhas of associate status in the important EEC market. The high quality Rode- sian produce will particularly compete with US exports, but the efficiency of the Rhodesian producers who hiave stayed in tobacco productioni make their po- tential entry into otlher markets an ever-present possiblity. The importance of Tanzania retaining a highi quality product, and low-cost production, cannot be overstressed. Other Tobacco 49. Production of fire-cured tobacco in 1970/71 suffered from bad weath- er at harvest. The modest expansion of 6% p.a. envisaged in SFYP, if based on the average production for 1968/69-1970/71, will give about 4,000 m. tons by 1974, and this is probably as much as the market will absorb. AN1TEX I Page 19 Table 8: FIRE-CURED TOBACCO -- PRODUCTION, PRICE AND VALUE Crop Year Production Av. Price to Growers Value to Growers (m. tons) (Tsh/kg) (Tsh 'O00) 1963/64 862 n.a. n.a. 1966/67 1,527 1.48 2,260 1967/68 3,161 1.83 5,785 1968/69 2,159 1.78 3,843 1969/70 3,527 1.75 6,172 1970/71 2,143 1.69 3,622 Source: TTB 50. Prospects for Burley tobacco are rather brighter than for fire- cured. In the absence of Rhodesian flue-cured, Burley has been used for to- bacco in whiclh aroma has been added, and world exports grew by about 5% p.a., in the last half of the 1970's. This would be a suitable crop for Morogoro Region, and could be established without elaborate prior research using in- formation available from neighboring countries. Pyrethrum 51. From a rather minor crop of under 300 tons of dried flowers grown on European-owned estates in the early 1950's, pyrethrum production in Tan- zania rose to a peak of 6,000 tons, one-third of world demand in 1967. Ninety-five percent of the Tanzania crop in 1967 was grown by smallholders. The following year, prices were reduced by over 20% following a lead by Kenya, and production declined steadily. The fall in production also oc- cured in Kenya and Ecuador, the other significant producers, to the point that there has been a world shortage of pyrethrum and a price increase. ANNEX I Page 20 Table 9: PThiREThRUM PRODUCTION AND EXPORTS Prode_tion Pyrethrin /1 (Dried Flowers) Content Export ValueL_ (i. tons) CO (Tsh million) 1962 1]276 1.29 7.0 1965/66 4)J 1.23 30.5 1966/67 5,9Y11 1.23 31.1 1967/68 ,.184 1.17 20.3 1963/69 4,,333 1 '0 22.9 1969/70 29455 1.25 12.9 1970/71 2,709 n.a. n.a. /1 Extract, flowers and residues. Source: Kilimo and E.A. Customs and Excise. 52. The combined net export value of flowers, powder, extract, and re- sidues of Tsh 12.9 million in 1970 represents about 1%d of Tanzania's agricul- tural exports in that year. In 1967 ic was about 2" of agricultural exports. The SFYP aimed at discouraging expansion of production while looking for new markets. The production response since 1967 to the price fall has, however, been excessive, and growers are being asked to increase production. The small 1971 recovery may have been in response to official encouragement of growers in the Southern Highlands or to a small rise in thie average price actually received in 1970. This would reflect the higher pyrethrin content of that year, because the basic price to growers, set at Tsh 4/05 per kg of dried flowers at 1.30 percenit pyrethrin, remained unchanged. 53. It appears tihat Tanzania has, however, been slow to react to changed conditions on the market. Official encouragement and a higher base price to growers caused Kenya smallholders to expand production from under 6,000 m tons of flowers in 1969/70 to nearly 10,000 m tons in 1970/71, and production there is expected to top the 1967/65 record in the current year. New producers - Zaire, Rwanda, and Kashmir - are appearing, and Tanzania will lose its place in the world market unless early steps are taken. There are two principal lines of action whiclh Tanzania should be taking to maintain this small but valuahlie smiallholder crop: (a) enisure that as much of the market price as possible is passed on to growers, and (b) raise productivity by improving yields and pyrethrin content. ANMEX I P~age 21 54. Faced with the same world market, Kenya growers received Sh 4/65 per kg for 1.30% flowers, 16% more than Tanzania growers, and they further benefit from average pyrethrin contents as much as 10% above Tanzania's. 11 In 1970/71, not only was the increase in world prices not passed on to Tan- zania growers, but there is some evidence that cooperative society levies on this price tended to increase in absolute as well as relative terms. This may reflect increasing costs, aggravating the effect on unit prices of diminishing volumes, but it also calls for a close look at the efficiency of the cooperative marketing organizations, including the possiblity of amalgamating societies which handle small quantities of flowers. A study of the pyrethrum industry, to decide future production, processing and mar- keting policies, has been included in the program of the Marketing Develop- ment Bureau and work has started on this. Although emphlasis in the terms of reference is on overseas marketing it may be anticipated that action on the rationalization of the collection system will prove of more immediate importance. 55. A comparison of smallholder and estate yields, and of Kenya pyre- thrin content with the Tanzania average, indicates the scope for improvements in smallholder productivity. Smallholder production has competitive advan- tages over estates which is becoming increasingly important as low cost syn- thetic8 are developed. This advantage can only be realized, however, if im- proved varieties with higher yields and pyrethrin content are used, and if drying and handling is adequate to preserve the quality of the crop. 56. There are good prospects that the use of natural pyrethrins in in- secl:icidal sprays will continue in spite of the development of a synthetic substitute. So far no one svnthetic which is non-toxic to humans combines the knock--down ability, killing power, and non-persistance of pyrethrin. WIuch will depend on how quickly these properties are developed, on the re- lative prices of natural and synthetic forms, and the continued use of pyre- thrins in conjunction with man-made insecticides. Likely technological ad- vances such as the development of ultra low volume sprays, and increasing the persistance of the spray, both of which could make the use of pyrethrin sprays economical for agricultural use, appear to favor the continued use of pyrethrum as much as they support synthetics. Oilseeds 57. Only a small part of groundnut, castor, sesame and sunflower produc tion is recorded as marketed. SFYP states an aim to increase production in contrast to the decline in the 1960's, and one or more of these crops is in the first three crop priorities in 21 districts. However, purchases by the NAPB have generally continued to decline in the Plan period, and no local or national extension effort has been put into oilseeds. World market prices have fluctuated but the trend has stayed level for the past 15 years. How- ever, increased marketing costs since oilseeds became commodities handled by NAPB have reduced the level of producer prices by 25% or more. Into store prices on groundnuts have been raised recently (and a further increase may be 1/ In June 1971, Kenya declared new prices for the 1971/72 season giving the farmer Sh 4/96 per kg for 1.30% flowers. ANNEX I Page 22 planned) but the effect of this on producers may have been lost through ex- cessive deductions by Cooperative Unions. Drought also hit production in 1970/71. Table 10: OILSEEDS - RECORDED PURCHASES, /1 BUYING PRICES, /2 EXPORTS AND VALUE 1960/62 av. 1966 1967 1968 1969 1970 1971 Groundnuts /4 Purchases (m. tons) 12,612L2 7,530 7,692 6,412 3,487 3,106 5,000' Buying price (Tsh/ton)L/ n.a. 1,230 1,230 1,230 1,345 1,380 1,450 Exports (m. tons) 8,756 4,900 5,853 3,850 1,102 1,363 n.a. Export value (million Tsh) 11.8 7.0 7.3 5.5 2.1 2.3 n.a. Sesame Purchases (m. tons) n.a. 6,890 8,008 5,685 7,870 5,166 7,500/4 Buying price (Tsh/ton)/6 n.a. 1,210 1,400 1,400 1,380 1,340 1,340 Exports (m. tons) 10,358 7,386 6,484 7,062 7,563 5,287 n.a. Export value (million Tsh) 13.1 12.2 11.7 10.0 11.2 9.8 n.a. Castor Seeds Purchases (m. tons) n.a. 13,160 8,763 10,618 5,725 13,101 13,500/4 Buying price (Tsh/ton)/6 n.a. 740 685 830 920 320 780 Exports (m. tons) 14,410 16,127 14,144 7,822 9,026 2,807 n.a. Export value (million Tsh) 13.5 12.9 13.0 8.1 8.7 2.4 n.a. Sunflower Seeds Purchases (m. tons) n.a. 5,460 5,059 7,560 5,925 5,895 7,60fl4 Buying price (Tsh/ton)/7 n.a. 560 535 535 565 555 575 Exports (m. tons) 11,888 5,557 4,212 4,809 4,714 10,088 n.a. Export value (million Tsh) 6.8 5.2 3.2 3.5 3.5 8.9 n.a. /1 Crop year - year under reference and following year. /2 FOR coast. /3 1961-1962 average. /4 Estimates. These appear to be rather optimistic. /5 Edible nuts. Edible nuts fetch a premium of about Tsh 200/m ton FOR Coast over crushing nuts. /6 FAQ. /7 Tanzania mixed. Source: NAPB and E.A. Customs and Excise. 58. In 1970/71, some 450 ha were under soya on Nachingweya State Farm and vields of 1,200 kg/ha are reported. About 100 m. tons of sova beans were exported in 1970. ANNEX I Page 2? 59. Net exports of oilseeds in 1970 were worth about Tsh 23.4 million, and net exports of vegetable oils were valued at a further Tsh 1.2 million. I2oth, of these figures exclude copra and copra oil, discussed below. World market: oilseed prices have recently been buoyant having risen 30-40% from 1968 through 1970. The peak - caused largely by short groundnut crops in Nigcria and Senegal and unexpected retention of sunflower seeds by the USSR - has passed, and prices are expected to be back at 1968 levels by 1974/75. With growing local domestic demand (which will only partially be met from cott3n seed oil), it is expected that exports will continue at, or below, the current level. Copra and Copra Oil 6U. There are no statistics of coconut production, but copra and copra oil .ixports have been recorded since 1968. Table 11: COPRA AND COPRA OIL - NET EXPORTS AND VALUE 1968 1969 1970 COPRA - Exports (m. tons) 11,752 16,276 9,093 Export value (Tsh million) 16.8 18.6 11.5 Av. value (Tsh/m. ton) 1,426 1,159 1,263 COP".A OIL - Exports (m. tons) 1,460 2,649 8,935 Export value (Tsh million) 4.4 6.8 22.0 Av. value (Tsh/m. ton) 3,030 2,557 2,458 Total export value (Tsh million) 21.2 25.2 33.5 61. The plan target for copra production of about 14,500 m. tons was exceeded in 1969, and considerable added value is being achieved by increas- ing local processing and export of oil. Competition with sales of fresh nuts is reported to be restricting growth, but the crop clearly has consi- derable potential. There is little information available on producing areas or anticipated increases in production. The 1970 export of oil and copra suggests the produce of about 18,000 ha being marketed for export, and the only known planned development of the crop - 200 ha planted on Zagarene State Farm - will make no impact within SFYP period, and little in total. Export projections made later in the report assume the equivalent of 25,000 m. tons of copra exported, with 80 percent processed in Tanzania and prices slightly below 1970 levels. Wheat 62. The aim of SFYP is self-sufficiency in soft wheat, estimated at 85 percent of total need. This objective is far from being reached although 1970 was a good production year. Demand is estimated to be rising 15 percent p.1 ,. ANNEX I Page 24 Table 12, ITBEAT - PRODUCTION AND 'IMPORTS ('000 m. tons) 1960-62 av. 1966 1967 1968 1969 1970 Soft wheat production 11.5/1 33.3 29.7 27.2 25.0 37.6 Soft wheat imports e. Keiiya 1 9 . 4.4 23.7 28.5 5.1 17.8 Total whole wheat inports 25.9 19.6 29.1 36.0 9.7 19.5 Milled wheat imports 4.3 4.5 0.1 8.9 6.5 9.3 Value of wheat imporcs 19.7 15.2 18.7 26.9 11.3 18.8 (Tsh million) /1 1961-62 average. Source: NAPB and E.A. Customs and Excise. 63. Ten State farms were to have been the main instrument for expanded wheat production. In fact, only 3 liave been developed, namely Mlilondikwa, Ilindi, and Sumbawanga (Nkundi), all in the Southern highlands. Following highly unsatisfactory results, the intention is uow to concentrate efforts on these through the plan period. Yields or0 the farms have varied between 3 and 15 bags/ha: even the higher level is barely economic. It has proved difficult to find a satisfactory nutrient balance on the varied soils of the farms, rust attack caused significant losses, and the research on wheat problems has been concentrated on the Arusha area where growing conditions are very different. The difficulties of growing wheat on the State farms are aggravated by lack of skilled management, a problem which has hit the whole State farm program. There has been sole wheat production by ujamaa villages especially in Iringa Region. They appear to be successful but the impact on total needs must be small and unless yields are at least doubled the crop will not give continuously attraccive returns to growers. 64. The world market price of wheat, which declined in 1969, is likely to continue to be relatively low but stable, through the 1970's. A sharp rise in 1970 was caused by a shortage of feed grains and a consequent in- creased demand for soft wheat. It was a temporary phenomenon and prices are now back to pre-rise levels. 65. A program of wheat research which includes soil investigations is now underway, financed by a $100,000 grant from Canada. Until useable re- sults are available from this work, the present restraint on wlheat production on State farms should continue. There has been no declared change in SFYP policy on wheat production, however. The recommendations of the previous mission remain relevant. These were that the priority accorded wheat in SFYP ANEX I Page 25 regional programs be relaxed, that smailholder production should only be encouraged in the northern areas where it is clearly economic, and that a production economist examine the prospects for wheat production, pricing and marketing and guide government policy on the basis of his findings. A low priority study included in the program of the Marketing Development Bureau does not, as presently framed, sufficiently emphasize production policy aspects to cover this need. 'a!atze 66. Maize is the staple food of many of the people in rural Tanzania and the most important cereal in the country. only a small proportion of the crop passes through official marketing channels and this residual there- fore fluctuates widelv. The SFYP objective is to be self-sufficient in the crop and carry sufficient stocks to maintain supplies in years of bad harvest. Average purchases and sales by the statutory marketing institution over the past decade have been 100,000 m. tons, varying between 47,000 m. tons in 1969-70 and an estimated 175,000 m. tons in 1970-71. In 1972 maize is being imported. 67. The basic policy of maintaining self-sufficiency is sound. Ex- ports are typically at a loss, and imports when needed tend to be costly because of transport charges. The major problem is maintaining an even, low cost, supply for the commercial markets. Government is attempting to establish stocks which would cover random fluctuations in supply but must be hindered in this by an inflexible pricing policy and high marketing costs, discussed later in this annex. Costs of production could be lowered by the adoption of high-yielding hybrids available e.g. from Kenya and using fertilizer. A campaign to introduce these techniques, which have been such a success in neighboring Kenya and Zambia, has started. Higher yields will simultaneously benefit the producer, allow lower prices to urban consumers, and encourage poultry producers. Sugr 68. Sugar is an estate crop, produced entirely for domestic consumption. SFYP calls for self-sufficiency by 1974, estimated in the plan document to require production of 112,000 m. tons. A more recent estimate puts domestic sugar demand at 15,000-125,0o0 m. tons by the end of SFYP period. Production in 1970171 was set back by an insect attack on the largest estate, TPC at Arusha Chini, and generally production is barely keeping up with demand. ANNEX I Page 26 Table 13: SUGAR PR(DUCTION, IMPORTS AND CONSUMPTION 1960-62 av. 1966 1967 1968 1969 1970 1971 Production ('000 m. tons) 32.7 71.0 71.8 82.4 92.0 87.3 92.9 Imports ('000 m. tons) 23.8 1.0 1.5 7.5 3.6 4.9 18.0/1 Consumption ('000 m. tons)/2 60.4 76.2 75.8 82.9 88.7 102.8 n.a. Consumption per capita (kg) 5.75 6.37 6.18 6.59 6.86 7.74 n.a. /1 Estimate. /2 Includes Zanzibar. Source: Economic Survey, 1970-71; E.A. Customs and Excise. 69. Per capita consumption of sugar in Tanzania is about half that of neighboring Uganda and Kenya. It is however increasing rapidly although erratically; the trend over the five years through 1971 has been about 8 per- cent growth p.a. 70. A consulting group, reporting in July 1969, has provided guidelines for expansion. The report considers the domestic industry can provide 125,000 m. tons by 1974 and 180,000 by 1979. The immediate extra production can come from existing estates, but a new factory unit is required and it is suggested that this should be developed on the Mtibwa estate. The capital cost of the expansion of production to 125,000 m. tons is estimated at Tsh 75 million. For the further development to meet 1979 demand it will probably be desirable to develop a completely new estate and factory, although some additional expansion at Mtibwa may also be justified. Preliminary surveys to obtain information for a final decision should start now. Location will be influenced more by production conditions - adequate land, availability of irrigation water, and climate - than by market location. A site in Kigoma may be suitable, but a rigorous economic investigation should be carried out. Rice 71. The aim of SFYP is to transform Tanzania from a net importer of rice to an exporter. Production has risen faster than consumption so that considerable surpluses of rice are in store, but exports are only possible at a loss. ANNEX I Page 27 Table 14: PADDY PRODUCTION, SALES, AND PRICES, AND RICE IMPORTS 1961/62 1965/66 1966/67 1967/68 1968/69 1969/70 1970/71 Peaddv Production ('000 m. tons) n.a. 131.3 110.2 n.a. n.a. n.a. 181.1 Piirchases 2000 m. tons) 30.3 19.8 37.5 30.1 46.1 50.3 63.5 t ot ockls f'000 nm. tons) n.a. 1.4 1.6 3.5 8.0 30.5 59.0 Price/ 1 (T Sh/m. ton) n.a. 600 610 680 750 750 750 Rice 3iv;sports/2 2.1 13.6 2.7 15.1 8.0 7.3 n.a. ', Into-store price, standard grade. /2 Calendar year of second part of crop year. Srnurcz: ERB, NAPB, Kilimo, E.A. Customs and Excise. 72. Paddy Policies. Production has been stimulated by high producer prices, about 55-60 cents/kg, but at the same time consumption has been re- strained by high fixed consumer prices and an inadequate distribution system. Exports at prices which cover cost of production are not possible because this cost is double the price at which rice is being sold on the world market by mialor producers, and quality is below world market standards. In consequ- ence, paddy representing over one-year's demand for marketed rice is being held in stock. In May 1971 stocks were calculated to be 69,650 m. tons equal to 47,000 tons of rice. The spread between producers and consumers prices is probably excessive. The Cooperative Union and Society costs, deducted from the basic into-store price to arrive at farmers prices, need close scrutiny, while fixed milling and wholesale margins are large enough to allow efficient and inefficient operations alike to function. 73. The over-high fixed prices for rice have several effects. Among these, they: (a) cause a direct diversion of resources from other crops of higher national value - e.g. the reduction in cotton production in the NCU area attributed to rice growing; (b) encourage a mis-allocation of capital into mechanized, irrigated rice because this appears viable at the declared prices; ANTNEX I Page 28 (c) are causing excessive demands for investment and working capital for storage, which is probably causing NAPB a financial loss; and (d) responsible for being consumers charged unnecessarily high prices for rice and rice products; effective demand is thereby reduced. 74. The objective of national self-sufficiency would be valid, provided production could be carried out in areas in which unused resources were available because they lack alternative crops, and if foreign exchange were critically short. However, as the last mission recommended, Tanzania should drop the goal of trying to export rice. It is recommended that a gradual downward adjustment in prices be effected and price differentials introduced to favor smallholder production in areas such as Rungwe over the Lake Victoria area where competition with cotton is working against the national interest. At the same time, every effort should be made to narrow marketing margins at all levels, and reduce consumer prices of rice. 75. Some changes have already been made and the government is clearly aware of the problem facing it. A Paddy Study Croup was established in May 1971, charged with examining cost structures and margins allowed in the paddy price formula and to suggest improvements in the marketing system. The retail price of rice was dropped by 14% (from T Sh 1/75 per kg for Grade I to T Sh 1/50/kg) in December 1971. However, for the first time producer prices were fixed for the 1971/72 season. These appear to be at levels generally at or above those paid in 1970/71. The prices are not uniform throughout the country. The highest are in the cotton zones of Mwanza and Shinyanga regions at 61 cents/kg, and lowest, at 57 cents/kg, close to Dar es Salaam. The rationale behind this pattern is not clear, but the likely effect, unless poor weather intervenes, is a record rice crop and further inroads on the cotton crop. Beef Cattle 76. Tanzania's beef supply is drawn from mixed herds of indigenous breeds raised under extensive traditional techniques in the areas (about 40 percent of the country) clear of tsetse fly. Two-thirds of the herd is lo- cated in Shinyanga, Arusha, Dodoma and Mara Regions. The second largest in Africa, the herd has been growing at 3 percent over the last 50 years but this rate has accelerated in the past decade. Offtake has tended to be about 9 percent of the herd, but under a third of this has been for sales of slaughter stock. Three-quarters of the sale for slaughter goes to urban and rural markets in Tanzania as fresh meat. The rest, exported as processed and live beef cattle was valued at Tsh 29 million in 1970, 2 percent of total exports. ANNEX I Page e Table 15: NATIONAL HERD SIZE AND OFFTAKE ('000 head) 1961 1966 1967 1968 1969 19X7 7otal herd size 8,139 10,524 11,087 11,685 12,323 13,003/1 Itoc-rded sales/2 234 284 251 237 364 o'les as % of lherd 2.9 2.7 2.3 2.0 3.0 2.4 Total offtake/3 1,333 1,180 951 979 1,150 1,19^ 'til-aka as % of herd 16.3 11.2 8.6 8.4 9.3 9. /1 Other estimates put current figure at 11.7 and 12.5 million. /2 Official sales of slaughter stock excluding immatures. /:4 Assumed equal to hide exports. Sou-ce: Kilimo 77-. Development Prospects. Over the past two decades, urban consumption has risen at an average rate of 9 percent p.a. On reasonable assumptions of population growth, continuing urbanization rates, real income increases, in- cori-: elasticity of demand, consumption is expected to continue increasing at 7-13 percent p.a. On the supply side the key variables are the rate of growth (f the national herd and the rate of commercial offtake. The latter has avcraged about 2.5 percent but could reach 4 percent, a rate already exceeded in some districts. Middle range results from different assumptions on these 1:artables and different opinions on the true size of the herd, suggest an exnorrt surplus by 1976 of 90,000 to 190,000 head of cattle. On the basis thqt the rate of offtake will be rather slow to increase at first a juidgment hb-.S been made that the exportable surplus in the next 5 years will grow to .?s- average of 110,000 head by 1976 and that improved rates of offtake which couild become effective by 1980 could double this surplus in that year- This essumes that a recent reversal of the old pricing policy which has encouraged dom7stic consumption in urban areas and discouraged cattle sales, is adhered to- This reversal - effected in January 1972 - involved an average cattle orice increase to the farmer of nearly 40 percent. This price increase is also aimed at eliminating unrecorded cattle export to neighboring countries. i8. Beef offtake, the rate of live weight gain, and growth of herd size are greatly limited by the traditional management of cattle and the attitude of herders to them. Offtake will also be effected by the efficiency of the marketing organization, and returns to stock will also be lowered bv shrinkage amni mortality between purchase and slaughter. A disappointing offtake in 1970 has been blamed in part on the elimination of company buyers at District ma-'kets and the inability of District Councils to fulfill this function. AINIEX I Page 30 Through 1971 this has hcn further effected by the policy of holding beef prices down in urban ce-nters. These markets take over half the offtake for sale, but butchers prices averaged around Tsh 250 per head of cattle in 1970 compared with export prices of Tsh 400. As mentioned in the preceding para- graph, prices were raised substantially in January 1972 and it is assumed that: this particular problem has been overcome. 79. A major beef d~velopment project submitted for Bank Group financing aims to tackle these pr*blems in 8 sub-projects to develop new production units, produce vaccitne L control Foot and 111outh Disease, improve stock routes and holding grourids, estab14l;h a major ne-,J buying organization and open new processing plants within the producing areas to turn out products for domestic and overseas markets. The improved marketing structure and cattle-route improvement is central to the pro4ect. Tne marketing company is proposed as a subsidiary of NAFCO, and the opportunity should be taken on its establishment to rationalize control of livestock production in Tanzania, at present divided between the Advisorv Services Division and Production Development Division of iilirro, with fesearch separated again in the Research and Training Division; ?Iaendeleo, and the parastatal NACO. A Livestock Coordination Commnittee thas been formind to recommend a more work- able structure. The increase in annual beef production derived from the project at maturity (13 years) is estimated at nearly 50,000 m. tons cdw, worth Tsh 176 million. The project, the parts of which are integrated and interdependent, envisages a 5-year investment program totalling Tsh 278 million. Dairying 80. In 1970, Tanzania's imports of milk were the equivalent of about 155,000 liters a day, a. nun-significant reduction from the level recorded by the last mission. Milk and dairy imports were valued at Tsh 42 million in 1970, up from Tsh 32 mi:liion in 196g. However, nearly 60 percent of milk imports in 1970 were in the form of dried skimmed milk with a landed value of Tsh 0.40 per liter and under 2 percent was as fresh whole milk from Kenya, imported at Tsh 1.75 per liter. Since the last nission there appears to have been a rational move towards providing more of Tanzania's nutritional requirements from low cost sources. 81. Dairy Projects. Declared dairy policy remains to develop low-cost local production to replace imports. For the commercial market this will require production from about 40,000 exotic and upgraded cattle. A growing local demand in producing areas can also be expected and should be met. Three major projects are being developed: these incorporate dairy State Farms as components. The projects are: (a) The establisnment of two plants in Musoma region to process milk presently used for ghee into "long-life" milk and dried nilk. Supplies approaching 25,000 liters a day are available. The Tsh 9 million project has been largely financed from Danish progrxu loans and the dried milk slant *s scheduled to ANTEX I PagTe 3? start operations in April 1972. Two dairy State Farms in the Region will provide a further 5,000 liters per day. (b) The development of a Freisian herd of 1,000 and a condensed milk processing plant on the Kitulo plateau. The project is in a detailed planning stage and dairy production levels of 20,000 liters in 1982 and over 60,000 liters in 1990 are forecast. Low-cost production is anticipated. The scheme would also provide stock for local farmers and provide an alternative source of income to coffee farmers in Rungwe. (c) Production by small farmers in the Kilimanjaro, Arusha and Tanga Regions to utilize surplus capacity in the Arusha creamery. A State Farm at Oljoro and the 800-ha NACO farm at Rongai produce cross-lined stock for farmers to replace 7,000 existing unimproved milkers. The project still requires further planning. 82. These schemes, together with a dairy program in Bukoba district, planned as part of coffee diversification plans for the area, could produce about 25 percent - 30 percent of present imports by 1985. This is less than the likely increase in demand. There is a need and a potential for much greater dairy development including the establishment of small, low-coSt units, close to major population centers to supply high value fresh milk, and more production by small farmers using improved stock to supply rural needs. Such a small milk unit could be a standard feature of ujamaa vtillages in tsetse-free areas. 83. The importance of dairying as an import substitution development and as a cheap source of improved nutrition indicates a need for greatly intensified and coordinated effort. Responsibilities are again divided bet- ween divisions of Kilimo and parastatals. Much of the development effort so far has been ad hoc, depending on bilateral aid offers or the availability of coffee diversification funds. A coordinated program should be developed covering production, distribution and processing into the range of needed milk products. The program should cover production for local markets as well as urban centers for which centralized processing is necessary. It should take account of needed infrastructure including water supplies, col- lecting points and transport, veterinary and services and farmer training, and stock multiplication. The program should be based on a detailed study aimed at framing an optimum mix of locations, producing units and products in the light of anticipated demand and alternative sources of supply. A study on these lines was proposed in the 1971 pre-investment study program and should be pursued with high priority. It could be carried out by the Dairy Vorking Party, suggested by the last mission. High level technical assistance will be needed and could be obtained under a bilateral aid program Fisheries 84. A bad year on both marine and freshwater fisheries in 1969 inter- rupted wfhat appears to be a fairly strong rising trend in Tanzania's fish ANNEX I Page 32 production suggesting that SFYP targets will be exceeded. Nearly 90 percent of production but only two-tlhirds of value, is derived from freshwater fisheries, dominated by Lake Victoria. Table 16: FI51l PRODUCTION ('000 m. tons) AND VALUE (Tsh milli-on) 1964 T967 1968 1969 1970/1 Weight Value Height Value Weight ValLe Weight Value- Weight Value Freshwater 87.3 43.1 S8.6 59.0 120.1 63.8 95.8 49.6 165.5 80.0 of which Lake Victoria 49.4 33.6 43.8 33.4 59.4 40.2 53.9 33.4 n.a. n.a. Marine 10.1 12.2 19.6 30.6 22.0 34.4 17.0 28.8 20.5 40.8 Total 97.4 55.3 118.2 89.6 142.1 98.2 112.8 78.2 186.0 120.8 /1 Preliminary. Source: Fisheries Division. 85. Recorded trade in fish showed exports of Tsh 28.7 million in 1970, or 1.7 percent of total exports, mostly of smoked and dried fish. Imports totalled Tsh 4.6 million. this healthiy trade balance is a relatively new feature. The fisheries division of Maliasili suggests that a large proportion of the benefit is absorbed in market costs and improvements in marketing mav be a profitable approach to fisheries development. Table 17: INTERTERRITORIAL FISH TRADE, 1966-1970 (Tsh million) 1966 1967 1968 1969 1970 Net balance -1.0 -0.3 +5.5 +21.3 +24.1 Source: Fisheries Division. 36. The industry is in the hands of some 35,000 fishermen, operating about 15,000 vessels, only 3 percent of whichi are equipped witlh engines. Production is about 20-25 m. tons per vessel p.a. on Lake Victoria and aver- ages under 10 m. tons p.a. elsewhere. Plans are in hand to develop fishing units included as projects in SFYP. Villages are to be established withi moderni facilities, including ice plants, storage, powered craft with modern equipment, auction hialls, processing kilns and drying racks. Thirty inland aind ll corstal sites have been clhosen. A number of trial units are reported to be working well in thie 2-3 years since their establishment. Development ANN EX I Page 33 loans are recovered by fisheries division staff at the rate of 1/3 of the value of the catch. Other developments include boat building. Two yards established under the first Plan are operating, and three more included in SFYP are due to open. The yards are run by the fisheries division, although this type of operation would, perhaps, be better run on commercial principles Forestry 87. The export performance of the forest industry is shown in Table 18. The unfavorable trade balance, which started immediately after 1960, is caused by paper imports which in 1969 made up 82 percent of total wood pro- duct imports. Table 18: FOREST IMPORTS AND EXPORTS 1960 1966 1967 196811 1969/ EXPORTS Roundwood (logs) 3 Quantity '000 m 2.4 1.4 1.7 1.7 4.6 Value million Tsh 1.8 0.9 0.9 0.9 1.9 Sawnwood 3 Quantity '000 m 25.7 21.5 17.2 18.9 28.1 Value million Tsh 14.1 11.6 9.7 11.1 19.2 Wood Products 3 Quantity '000 m n.a. n.a. n.a. n.a. n.a. Value million Tsh * 2.6 1.4 2.8 3.2 Total Exports (Tsh million) 15.9 15.1 12.0 14.8 24.3 IMPORT S Sawnwood Quantity 'OO0 m3 6.6 9.2 9.9 15.2 14.5 Value million Tsh 1.3 2.4 2.6 4.2 4.0 Wood Products 3 Quantity '000 m n.a. n.a. n.a. n.a. n.a. Value million Tsh 10.1 40.2 40.9 50.4 51.5 Total Imports (Tsh million) 11.4 42.6 43.5 54.6 55.5 /1 Include Zanzibar. Source: PAO 88. An inventory of forest resources is now being undertaken with Canadian technical and financial assistance under an agreement signed late in 1970. The inventory will cover the whole country. Preliminary results, due late in 1972, will provide the first data on which detailed appraisals for maJor investments in forest industries can be based. These appraisals were recommended in the Bank's 1972 pre-investment study program. ANNEX I Page 34 89. Responsibility for forestry projects, formerly under NDC, was taken over by the newly created Wood Industries Corporation (TWIC) in September 1971. TWIIC has sole responsibility for timber exports although it is not yet involved in direct marketing and is currently responsible, through 3 opera- tional companies, for 15 percent of timber products in the country. It is anticipated this proportion will be increased 3-4 times. 90. A survey of the best location of the wood industry is needed for the Third Plan. Two studies are proposed in the Bank's 1971 pre-investment program - one for hardwood development and the other for softwood. A start on relevant work has been made in an ongoing UNDP project. An interim re- port on Forest Industries Development Planning was published in 1971. The original project could not be completed because of lack of a forest inventory and has now been extended to include an indic-ative forestry development plan- ing was published in 1971. The original project could not be completed be- cause of lack of a forest inventory and has now been extended to include an indicative forestry development plan. As the forest inventory results become available, projects will also be identified, and detailed studies arising from these should be given high priority. C. Summary of Export Growth Prospects 91. Major influences on agricultural growth are the prospects for export earnings, particularly of cotton, coffee, sisal, cashew and tobacco. Estimates of agricultural exports in 1974 are given in Table 19. ANNFEX I Page 35 Table 19: PROJECTION OF AGRICULTURAL EXPORTS Change 1970 (Actual) 1974 (Estimate) 1970-1974 Quantity FOB Value Quantity FOB Value Value ('000 Price (Tsh, ('000 Price (Tsh, (Tsh, Commodity m. tons) (Tsh.) million) m. tons) (Tsh.) million) million) % Coffee 44.8 6963 312 55.0 5855 322 +10 +3 Cotton 60.7 4075 247 81.8/1 4010 328 +81 +33 Sisal 217.2 837 179 220.0 850 187 + 8 +4 Cashewnuts 77.4 1487 115 130.0 1485 193 +78 +68 Tobacco 7.5 7898 59 13.5 7740 104 +45 +76 Tea 6.9 6084 42 10.9 6300 67 +25 +60 Pyrethrum Products - - 13 - - 15 + 2 +15 Oilseeds (Net) & vegetable oils - - 25 - - 24 - 1 - 4 Coconut Products 22.2/2 - 33 25.0/2 - 39 + 6 +18 Mieat and meat Products 4.2/3 8620 36 ) 8.2/4 8000 66 +27 +69 Live animals 10.2/4 315 3 ) Total 1064 1345 +281 +26 /1 Assuming good weather conditions. /2 Copra equivalent. /3 In 1969, 6,200 tons. /4 '000 head. This represents a rate of growth of 6% p.a. in the 4-year period, given favorable weather for cotton. Poor weather could reduce average growth to 4.5%. The most significant growth prospects in tne SFYP period are in cashewnuts, tobacco and cotton. The rise in cotton production assumes a consistent anid concerted campaign is pursued immediately. Production, how- ever, will still be well below the SFYP target. Export growth is lower because, in the 4 years, domestic consumption is assumed to increase by ANNEX I Page 36 20,000 bales, worth Tsh 14.5 million at export prices. No major increase in local processing of cashewnuts is assumed in the 4 year-period and export growtlh assumes increased marketing from the existing crop. The rise in tobacco assumes no continuing delays in the development of the IDA assisted project. 92. In the period to 1980 the best prospects for continued growth probably rest with cotton (the 700,000 bale good weather target should be achievable as a standard crop by 1980), tea (exports of which are expected to treble by 1984), and beef (assuming proposals currently under discussion come to function). Continuing expansion in tobacco can be anticipated as current projects mature in the late 1970's, and in cashewnuts as Tanzania develops local processing. D. Services, Programs and Policy _ssues 93. Most of the issues raised in this section were treated in Part III of the Annex to the report of the 1969 mission and where possible that report is taken as the base in the following discussion. The Ujamaa Villagre Program 94. There has been a tendency for outside observers to interpret Tanzania's unique Ujamaa village strategy narrowly as a villagization or a resettlement program. This is too limited a view of the ujamaa policy, which is one of developing a socialist society throughout the country, in both urban and rural areas, and encouraging cooperative forms of activity as a means of establishing this social transformation. The immediate objectives are social and political - to foster a sense of self-reliance through self-help, to achieve equality of income, and to raise rural incomes in order to close the rural/urban gap and reduice the flow of people to the major tzxns. It is, however, recognized that to be successful in these spheres, the stratgey must be economically viable, and cooperative production - only possible with the new, social attitude - is set as the final goal. The formation of _ijiji vya u_jamaa or ujamaa villages, which is one of the more conspicuous features of the execution of the policy, is important in those rural areas of Tanzania where the greatest progress towards ujamma has been made so far. However, cooperative production can take place without anv change in location of settlement and in many areas, particularly the most closely settled ones, will prnbably be developed on that basis. 95. Proa s_s in Uiamaa Developrent. It is hard to gauge progress with ujanaa in quantitative terms, for progress is marked by the acceptance of a cooperative attituide to working and living and the economic success of this approach to production. A count of ujamna villages and the population involved in them is some miide. However. village formation is reported in 3 stages based on sources of finance open to the village. The first stage dominates ANNEX I Page 37 the statistics but is sufficiently unspecific to allow widely varying inter- pretations. There is some evidence of over-reporting in this category in the latest figures available 1/, given in Table 20. The stages shown in the table are: (a) A formative stage during which villages require financial aid for activities such as clearing bush, access road construction, purchase of initial equipment. In practice, they often also need food aid which cannot always be raised locally. At this stage the Regional Development Funds are the major source of assistance. Villages that are members of primary marketing cooperatives also receive the same servicing facilities as individual members. (b) A growing stage in which the village menbers learn to live and work together increasingly putting more of their work effort into commercial crops and activities. The village has a workable constitution, and when it has become economical- ly viable registers as an Agricultural Association. Credit may then be obtained from the Rural Development Bank (RDI3). (c) The final, mature, stage is when the ujamaa village registers with the Registrar of Co-operatives as a full multi-pturpose cooperative society, and has adequate security to attract commerical credit from, for example, the National Bank of Commerce, Cooperative Unions, and the Marketing Boards. The assessment of when this stage is reached is carried out by the local Cooperative Officer, Agricultural Officer, and TANU secretary. 96. By October 1971 about 40 villages had been registered with the Registrar of Cooperatives and were accepted as being in Stage III. 97. As Table 20 shows, progress with the development of ujainaa villages varies considerablv by region, and even greater differences are to be found between smaller administrative areas. The differences reflect both the variety of motives which bear on the formation of villages, and the social and geo- graphic conditions of the areas. The greatest development has been in the three districts bordering the Ruvuma river, the boundary with Mozambique. One-third of all the people recorded as in ujamma villages are in this area - the recently reduced Mtwara Region - where the dominant motivation has been defense. Elsewhere the largest number of villages has been formed in areas which have limited involvement in the cash economy, are sparsely populated, and have a rather harsh environment. This covers the central plateau area 1/ For example, local officials reported only 59 villages in Stage I in Iringa Region, not 349 as published. On the other hand, Dodoma is now reported to have over 300 villages in process of development. ANNEX I Page 38 Table 20: FORMATION OF UJAMAA VILLAGES (Progress to April 1971) Number of Villages Approximate Population in Villages Stage Stage Stage Regional total Percent of Average I II III Total in villages regional per Region population village Arusha 38 5 1 44 '),000 1.3 200 Coast 31 26 1 58 55,000 6.0 940 Dodoma 132 17 1 150 47,000 5.9 310 Iringa 349 - 1 350 84,ooo 10.8 240 Kigoma 93 15 - 108 32,000 6.3 300 Kilimanjaro 9 2 - 11 2,000 0.3 190 Mara 226 20 4 250 95,000 15.5 380 Mbeya 191 - 3 194 50,000 4.6 260 Morogoro 21 2 1 22 5,000 0.7 210 Mtwara 651 21 - 672 282, 000 44.1 420 Lindi 162 26 - 188 79,000 18.3 420 Mwanza 38 3 _ 41 8,000 0.7 190 Ruvuma 105 15 - 120 12,000 2.7 100 Shinyanga 131 1 132 13,000 1.3 100 Singida 42 15 - 57 13,000 2.7 230 Tabora 35 43 4 82 20,000 3.2 240 Tanga 113 32 1 146 23, o00 2.7 160 West Lake 43 - - 43 11,000 1.5 250 Total 2,410 241 :L7 2.668 840,0oo 6.3 315 Source: The Economic Survey, 1970-71. ANNEX r Page 39 of Tanzania, and includes fDodoma where there has been a concentration of planning effort and technical assistance, and Kigoma where stich an effort is scheduled. It is in these areas where the concept of physical movement into concentrated villages (probably located on a new water supply) and the introduction of new crops (necessitating rather intensive technical guidance, modern inputs and credit), is a particularly appropriate approach. Because of the real need for services, and the flexibility which available land presents, these areas are probably the easiest (after the border areas which are felt to be threatened) in which to get acceptance of ujamaa. The- pulblicity given to the growth of ujamaa villages in tnese areas has also given the impression that the form of village found here is a blue-print for the country. 98. Progress in numbers has been noticeably slower in two types of area. These are: (i) the densely populated highland areas where individually owned land is under coffee, tea or bananas - such as in Kilimanjaro, Bukoba and Rungwe districts - where ujamaa will be based on cooperative work on existing crops and is unlikely to involve any shift of settlement. If a work org,aniza- tion can be developed which relates the reward of the individual to his effort a cooperative approach to crop production, mnarketing and processing couild develop smoothly and provide economic benefit in these areas. (ii) Generally less densely populated areas with established cash crops such as cotton, tobacco, and cashew. These are drier regions than the mountains with more extensive cultivation, and marked seasonal peak labor requirements, curTertly met bv hiring. Progress towards ujamaa in the Coast and Lindi Region caShew areas is reported satisfactory, but technical and social problems seem par- ticularly likely in the important cotton area around Lake Victoria. In this area there is sufficient pressure on land for there to be landless workersz there is considerable variation in farm size, and among many grouns a highly individualistic attitude, typical of first-generation settlers. 99. The extent to which farmers have really accepted the principles of ujamaa, and the effects of communal farming on production are very difficutlt to Judge in the short time that active ujamaa development has been under way- The total impact has probably not been big so far. Villages have mainly been established in the politically easiest and economically poorest areas, an- while farmer/adviser contact has probably been enhanced the acceptance of new ideas is usually a gradual - but snowballing - process. In the earlv years of ujamaa development, over-zealous officials exerted pressure on farmers to form villages. Firm action was taken against those who thus transgressed against the basic principle of ujamaa formation, that it takes place on the uni-coerced initiative of members. This principle has been ad-- hered to for the last three years, but there are signs of undue persuasior again being used, almost certainly without the approval of central policy makers. This can arise from the very great powers now resting with Regional Commissioners who can interpret ujamaa principles in their own way. It As, also, extremely difficult to operate the stated policy of giving ujamaa villages priority with social services without unduly depriving other far- mers of their due and without using the policy to coerce those who have been slow to accept ujamaa rather than as an encouragement for them to conform. ANNEX I Page 40 It will do great harm to the ujataaa movement if these niew departures from principle continue unchecked. 100. Economic Impact. If there is economic justification for communal farming it rests on (a) greater production arising from economies of scale and division of labor, and (b) the more economiTcal - and therefore increased per capita - provision of governumeiit services sucth as extension advice, water supplies, schools and dispensaries. The case for economies of scale is based on (i) sharing bulk orders of inputs, and group marketing; (ii) making more efficient use of labor and hand or powered implements, enabling a greater area to be cultivated; (iii) allowing specialization of function, such as herding and tool repair, in the village, and (iv) enabling wider access to and acceptance of yield-increasing technical advice anid new techniques. There is probably validity in the argunment that a group of farmers will accept an innovation regarding which individuals might be indifferent. There is, however, a lack of emTIpirical evidence on where economies of scale are achievable in commercial production and on optimum scale of different operations. There are also few sig,ns -hat it i; re:ogni:ed that radical changes are needed in farn, nmanagement as production bec-imes increasingly communal and larger scale. In a gradual transition, adequate managers might evolve from among the villagers, but n;ore rapid change to communal farming is likely to lead to expensive mistakes wliicii cantnot be corrected by an extension service that is not familiar with or trained in decision making on large farms. The potential savings arisinig fromii the provision of services to groups are clearer, and it is stated policy to give priority to requests from villages where people have adopted the principle of ujamaa. The service aspect of ujamaa villages probably is over-emphasized a.t the expense of the more fundamental prodaction--iicrease consid.erations whi,rh need priority in planning and evaluation. 101. The channelling of agricultural credit will probably be facilitated by the creation of cohesiv,e ujamnaa unirs, and so will rthe economic distribu- tion of packages of inputs supported by extension services. Potentially, ujamaa villages extend the coverage of cooperative marketing organization - which is the only form of marketing organization left to Tanzanian farmers with the exodus of the A.sian traders who formerly filled this role. For crops such as tea and coffee with fairiy even labor profiles and measurable labor inputs and production there is no obvious difficulty with communal production. Any problem is likely to arise from rights to land and past investment (par- ticularly in densely populated areas where the crops are already established) and not from the nature of the cr'op per se. The considerably higher management requirement of tobacco and the need for care in handlinig and grading calls for special consideration in this crop. The marked seasonal labor profile of cotton, the high pay-off obtained from timely operations, and its inclusion in a rotation with food crops, probably makes the crop more difficult - although by no means impossible - to handle in a communal system which excludes seasonal labor employment. Successful introduction of ujamaa principles to cotton growing probably calls for major changes in farm management techniques. These would include new rotations and crop proportions, introduction of minimum ANNEX I Page l tillage techniques, intensification of cultivation from use of low-volume sprays and fertilizers, the development and use of herbicides to overcome the major labor bottleneck, and changes in picking and sorting - the latter possibly including elimination of seed cotton grading for at least part of the crop to overcome the second labor peak. There may be some scope for mechaniza tion but this would need to follow intensification and a reorganization of landholdings. It cannot economically be imposed on the existing low-yield system. The problems inherent in the introduction of economic mechanization have showm themselves in Tanzania before. They should not be forgotten when consideration is given to its application to ujamaa production. 102. The emphasis in the development of ujamaa settlements, where these are called for, is supposed to be on low capital cost through self- help and maximum local participation. There are some good examples where villagers have been supplied with basic materials, particularly cement and corrugated galvanized iron sheets, and, with some technical guidance, have erected sclhools, barns and water storage tanks. On the other hand there has been a recent divergence from this principle in the tobacco project villages, and everywhere there is a considerable hidden cost in the building of new villages arising from the diversion of labor from cultivation to new construction work, while existing homesteads are still intact. This cost will be lower if most construction is done in the dry season when the alternatives open to labor are limited, but high if it extends into the cropping season, as it has tended to do. 103. Mobilisation and Services. The mobilizing force in ujamaa devel- opment has been the party, TANU. Organized down to cells of ten families, TANlI certainly reaches the grass-roots of the rural areas, and in its pyramid structure rising through village development committees and ward organiza- tions has an effective hierarchy to channel both policy decisions and local opinions. At village level it provides a forum within which the decision of a group of farmers to cooperate can be debated and agreed upon, and through which technical advice (e.g., on site selection, crops to grow, areas to plant) and rudimentary planning to support the change can be channelled. The Ministry principally charged with furthering the development of ujamaa villages is Maendeleo, and technical support is given by other Ministries, especially Kilimo. 104. Maendeleo 1/, the portfolio for which is held by the President, has an Ujamaa Village Division which controls the ujamaa village program, co- ordinates with TANU and other executive Ministries, and undertakes conti- nuous evaluation of the operation of the ujamaa policy. Maendeleo's Rural Development Division is responsible for all training of staff, work-group leaders, and farmers in ujamaa ideology and skills and for the organization of rural construction units of which 45 were established in 1970-71, and 17 more are planned. To operate its training program the Division has taken charge of all District Training Centers, and Farmers Training Centers and amalgamated them to form Rural Training Centers (RTC). It has also drawn 1/ The M4inistry has recently become a part of the Prime Minister's office, following a major reorganization of the Government, announced in February 1972. ANNEX I Page 42 up outline curricula in ujamaa ideology, agriculture, construction skills, rural industry, home economics and health. To reach the target of one RTC in each of the 62 Districts of the country a furtlher 32 will have to be built. 105. Agricultural services to ujamaa villages are provided by the Agriculture, Food and Advisory Services Division (AFAS) and the Production, Development and Technical Services Division (the Production Division), of Kilimo. AFAS is the main extension arm of the Ministry in both crop produc- tion and livestock. An aim of ujamaa policy is to attach an extension worker to each village of sufficient size but so far little progress has been made with such a reorganization. There would be insufficient diploma and certi- ficate holders to staff a full program, but proposals are under discussion for these to be supplenmented by trained Voluntary Agricultural Cadres drawn from primary sclhool leavers, selected and supported by the villages. The work of the production Division directly effecting ujamaa villages centers on running State Farms, seed multiplication centers and poultry hatcheries, and providing mechanical cultivation services. State Farms were seen as the solu- tion to the production in a socialist state of cash crops which can be grown most economically on a large-scale basis, or where a combination of research and development was required. State farms were also to provide services such as workshop facilities to nearby ujamaa villages. For a variety of reasons the production side of the State Farm Program has been cut back and the number of farms developed will be less than originally planned. The service role will continue, however, but additional service centers may need to be opened, per- haps based on strategically sited, established, ujamaa villages. It is anti- cipated that the production side of Kilimo will be played down in favor of an increased service function. 106. Problems. There can be little doubt that the major problems of ujamaa development are still ahead. It is in the districts in which cash crop production is most developed, individual rights in land are most en- trenched, cattle are most irmportant in the social syster!, or pressure on land is greatest, that the least progress has been made so far and the most resistence can be expected in the future. The districts concerned contain half the population of the mainland. Formulae which do not depend on physically moving village sites, but which allow for reapportionment of land holdings as an essential component will be necessary in many of these areas, and considerable social and technical research into a valid approach to ujamaa in these areas, is going to be needed. The ujamaa approach aims at replacing the individual profit motive with new, social incentives, but the individual still expects to receive a reward which reflects his effort, and returns on production being shared on the basis of work done. Forms of worlk organ- ization and farm planning which fit the ujamaa concept and enable the inm dividual to see he receives a fair return still have to be developed. An ujamaa village researci section is already conducting studies on these ques- tions with reference to tobacco, tea and dairy production, and ranching areas. The governnmenit is clearly aware of the potential difficulties ahead. It is important that the objective examination of progress with the program should ANNEX I Page -,3 continue, and greater efforts made to quantify economic costs and benefits as well as political and social gains. 107. In other areas, established social services are going to place increasing burden on recurrent expenditures and on the small stock of well- trained manpower. A corollary of a greater impact by extension staff is the need for these staff to be fully competent and efficient, not or.l1 technically but also in the principles of ujamaa. The Rural Develo-mert: Division of Maendeleo has been operating ujamaa training courses for 3 years, but is itself short of staff for this task, and considerable technical training of new staff and retraining of existing extension workers is still needed. It will also be necessary to adapt many existing research results to the new conditions of ujamaa production. The need to make an adequate economic impact on an individual village to maintain initial enthusiasm wiJl probably restrain the speed of development of village numbers. Tne government's "frontal" approach, which implies allowing the growth of ujamaa villages wherever there is a demand for them, may be incompatible with gov- ernment resource constraints - both financial and manpower. This is clearly recognized in the current strategy of concentrating on limited regions a: a time in the provision of special planning teams. Not only are there short- ages of funds and technical personnel for village development, but there have been considerable problems of coordination between village planning efforts on the one hand and district and regional authorities, and executive ministries, on the other. A strengthening of regional planning capacity already a plank of policy - and a greater development effort on a regional basis should assist in overcoming this problem. Difficulties within villages, which are likely to be a continuing concern, are the lack of organization, leadership and management skills among village members, and problems of measuring the share of communal production which is the due of the individual. The former can be helped by planning, training, and with assistance from extension services. The authorities are aware of the problems. However, they may not have adequately appraised their impact on the speed of ujaraa village development. State Farms 108. Great emphasis is put in SFYP on the development of State Farms, to cover over 100,000 ha in the plan period. The exact number of fart's proposed is not clear in the plan document but is about 30. The farms, operated by the Production Division of Kilimo, were to be at the same time production units, training and testing centers for the agricultural service, and service centers for ujamaa villages. As the last mission pointed out, the program was launched without adequate technical data being avaiable, and lacking adequately trained managers, and without even elementary economic analysis of the proposed pro- duction metliods. 109. The Present Position. Progress with the program is summarized in Table 21. The ambitious SFYP targets have been curtailed for each tyDe of State Farm. One-third of the number planned have become operational and it ANNEX I Page 4 appears that plans to develop 19 or 20 of the farms have been shelved. Only four farms - two dairy farms, the Vine State Farm in Dodoma, and the Rice State Farm at Kilingali - have an assured future, and of these, the Dodoma and Kilingali farms are not economic. Table 21: PROGRESS WITH STATE FARMS, 1969-1971 Number Area in Area in Plan Number Planted Plan (ha) Operating (ha) Present Status Wheat 10 35,000 4 1,500 Plans for 6 dropped: rest under review. 2 now mixed farms Rice 4 2,500 1 500 3 dropped. Kilingali to expand to 600 ha cropped. Vines 1 400 1 45 Plan reduced to 80 ha. Oil Palm 1 2,000 1 180 Expansion frozen. Coconuts 2 4,800 1 300 1 dropped. New clearing on Zegerni halted. Dairy 4 n.a. 1 n.a. 2 dropped. 1 due to be stocked mid-1972. Expansion to 4,500 ha planned. Beef 8 n.a. nil n.a. 6 mixed farms dropped. Others not yet stocked and future of one uncertain. Goats 1 n.a. nil nil Dropped. Oilseeds 1 1,600 1 450 800 ha planned for 1971/72. 32 46,300 11 2,975 110. Three of the operating wheat farms a-re in Mbeya Region. Over 10,000 ha are available at the ililundikwa W4heat State Farm, but not more than 700 ha has been planted in any one season and due to shortage of finance onlv 400 ha were to be soxm in 1971/72. Although 15 bags/ha has been obtained on the farm, in 2 years of erratic rainfall aggravated by stem rust attack and lack of knowledge of the nutrient balance of the varied soils of the area, only 7-8 bag/ha were harvested. Average performance has been no better at Nkundi (Sumbawanga I) where maximum planting has been 800 ha, and in the first year of operations at Ilindi only 3 bags/ha were obtained from 325 ha, probably due to potash and trace element deficiencies concerning which there has been little or no research. In 1971/72 Ilindi is to be diversified with livestock. This change has also been made on Rwamkoma Farm in Mara Region where, following ANNEX I Page 45 wheat crops of only 4-6 bags/ha dairy cattle have been added and are now the main enterprise. A Rural Craft Workshop was established on this farm in 1970. It is unlikely that wheat areas on State farms will increase beyond thle present level at which they account for perhaps 3% of Tanzania's pro- duxction. 111. The Rice State Farm at Kilangali in Kilosa District is now in its thiird year of operations, Of 600 ha of irrigated land avaiable, the maximum so far cropped has been 340 ha but expansion to the full area is planned. Mtoderate paddy yields of 25 bags of 90 kg per ha have been obtained and the cost of production has been covered by the price received. However, the 7APB into-store price is artificially high - at Tsh 750/m.ton, twice possible im- port levels - and it is to this import price that the costs and returns should be related. .loreover, the Farm still lacks a drainage system the installation of which is needed if salinity is to be avoided and which will add significantlv to production costs. On data available, if fully developed and fully crooped, the farm could produce at about Tsh 660 m. ton at present yields. If yields were raised to 40 bags/ha with the use of fertilizer costs could be reduced to Tsh 400-420 m. ton, still rather more than would market prices and above smallholder costs in other areas. 112. The Vine State Farm in Dodoma is not to be expanded to the level originally proposed following a decision that wine graphs should be grown in ujamaa villages from planting material issued from the State Farm. Of 45 ha planted in 1971, about 30 were in production in 1971. Farmers are paid the high price of Tsh 2/50 kg, and between tnis and the low throughput the winery is presently losing Tsh 5/00 per bottle of wine which wholesales at Tsh 8/00. The '40,000 bottle production in 1970/71 is a small fraction of capacity. Soya beans grown on the Oilseed State Farm at Nachingweya are reported to have yielded 1,250 kg/ha and received Tsh 1,180/m. ton. Costs were not available, but at these rates the mechanical cultivation of 450 ha should have been profitable. Of the Dairy State Farms, the Oljoro Farm in Arusha Region is stocked with 400 mixed breeds. These are to be replaced by 500 Friesians which will supply the Arusha Creamery. The UJtegi Farm in N. Mara is due to be stocked in mid-1972. The Coconut State Farm at Zegereni was scheduled to be 400 ha in extetit. Plans have now been reduced to 325 ha of wlhich 180 ha have been planted. Further clearing has been stopped because of budget cuts in FY 71/72 and wqork is being concentrated on the cleared area. Tne farm can be expected to yield its first crop about 1977. Proposals for a farm at Lindi have been dropped. 113. Prospects. For FY 1971/72 the State Farm program has been put on a care-and-maintenance basis. It may not be revived. It has been suggested that Kilimo will de-empEhasize its direct production side and become primarily a service organization providing research, and extension services, and farm inputs. It would appear logical that the production side of anv viable State Farms should be run, on strictly commerical lines, by NAFCO companies. Tle farms should be subjected to a long overdue economic analysis and non-viable farms should be closed. If there is economic justification for maintaining ANNEX I Page 6 any farms which are nur- financially viable, the operating company slhould receive a pavment which covers the difference. Training and service facili- ties, if still provided at these sites, should be charged separately from operations so that the costs are clearly identifiable. Depending on how many farms were considered commercial prospects, NAFCO would probably require considerable extra staff, both technical and managerial, to run the farms, and would need to stren then head-office planning and management. Foreign tech- nical assistance should be sought for such posts. 114. The over-riding problems which have faced the State Farms have been the shortage of competent and experienced maanagers to run complex enterprises for which technical anid economic daca were lacking. This has been aggravated by the inflexibility of government accounting systems. The lack of prior plan- ning and research has been reflected in unexpectedly low yields, to which bad weather, disease, and bird and pest attack have also contributed. Although adequate data are tnot available to establish costs, it is clear that high cost production has been the general result. Tractor Mechanization 115. The Second Five Year Plan takes a balanced view of meclhanization. It puts emphasis on the need to improve hand and animal drawn equipment, but at the same time points out that tractors can be introduced in selected areas after careful study has established tiheir viability. This caution towards tractor mechanization is a reflection of the unfortunate history of tractors in Tanzania including major losses on bulk introduction of tractor to coopera- tives during the First Plan. Private tractors are, however, operating in Tanzania, many of them successfully, and imports have continued to rise during SFYP period. A major growth in the number of ploughs sold occured from 1967 through 1970. 616 agricultural tractors were imported in 1968, 704 in 1969 and 812 in 1970, making up two-thirds of the total cost of farm machinery imported in that year. The majority of the tractors are probably used in agriculture, and the largest number is in the Western Cotton Growing Area. 116. Problems of Mechanization. In accordance with the policy of scal- ing down tractor cultivation services, only two pilot tractor hire units (THU) have been operating. These were established in 1970/71 at Rufiji and Urambo, with1 fleets of 13 and 15 tractors respectively. There have been proposals for an enlargement in the number of tractor units, although it was intended that the operating results of tile two pilot units should be firmly established before any new expansion in tractor hire services was attempted. The exact status of the proposal to create new TIhU is not clear. The policy on mech- anization is, however, clearly evolving, and there are indications of a new entijusiasm for tractor cultivation. 117. In its right setting, tractor mechanization in Tanzania is justified and can he economic. Its hiistorv is not a happy one, in Tanzania or elsewhere in Africa, but enough experience has been gained for the conditions which limit ANNEX I Page 4.7 economic tractor mechanization to be understood. Some of tihe probletns arc common to all forms of organization of tractor operation, oth(ers apply olnly, or especially, to government-run hire units and not to individually owne'i tractors or contract hire units. In a nutshell, tractor mecihanization in tropical Africa has generally been faced with a tendency to high unit costs on the one hand, and low returns to operations on the other. 118. High costs result from an initial cost of equipment which is rather high by the time it has been transported from a distant country of origin. A similar high cost of spares, aggravated by poor maintenance and repair services; and a high level of breakages resulting both from operating in fields which are inadequately cleared of stumps, roots and rock, and from poor handling by inexperienced drivers. In government-run units a further cost usually arises from a need to have supervision of operations, and to carry a staff to measure jobs, and collect and account for fees. The most important cause of high unit costs is, however, the most ubiquitous and intractable. This is the low total paying hours achieved in the years operations and over which the fixed costs must be spread. Even for tractors that are operating over 1,000 hours a year fixed costs typically make up 55-60% of costs. 119. Short revenue-earning hours are a direct result, on the one hand, of the short agricultural season of the tropical savannah, dictated by the period of rains, and on the other of the small range of operations which tractors can carry out on farms still practicing traditional methods of cultivation. The limits imposed by the seasons cannot be modified signi- ficantlv, and therefore operations have to be planned to give maximum rcvenue-earning within the time available. This means that tractors must be kept working throughout the twelve hours of daylight, seven days a week, during the cultivation season. Consequently drivers and maintenance facili- ties must be organized on double shifts. This has proved difficult to achieve in government-run services, although there is no overriding reason why it should. A high level of non-revenue earning hours in the cultivation season also tends to arise from poor access to farms and plots which are typically small and irregular in shape resulting in excessive time snent maneuveritng. It is also typical that only a small proportion of farmers in any area demand tractor services. Operations therefore tend to be widely scattered and time is wasted in travel between farms. This is a slightly less intractable problem than those of access and plot conformation, because when dealing with individual farms, it can be reduced by a realistic pricing policy that differentiates between charges for work on farms that are near- contiguous and close to the tractor base, and those which are scattered and distant. It is a problem which is also largely overcome by block farm operations and it is an advantage of ujamaa villages that they could provide a means for undertaking cultivation in good sized blocks. The villages must still be of sufficient size or sufficiently close together to keep turn-round and travel time to a reasonable level. Excessive idle time on tractors is also caused by undue delavs in obtaining spares and undertaking repairs. Where commercial facilities are inadequate, this delay is the usual reason for establishing government workshops and stores. All too often, however, tthe cost of these relative to the cost of delays _s not evaluated, and projects are typically over-capitalized as a result. ANNEX I Page 1d8 120. The limited range of paying operations which is carried out by tractors aggravates the prcblem of a short working season. The major use of tractors in Africa is tillage operations. Transport is probably the second highest consumer of hours, though more as a means of using otherwise slack time than because tractor-and-Lrailer transport is the most economical form of transport. Little planting, spraving or weeding is tractorized and virtually no harvesting. But weeding, rather than initial cultivation is the major labor bottleneck in muclh of the agriculture of tropical Africa, and this may be aggravated bv mechlanization of initial cultivation. Harvesting operations also are frequentlv an important constraint and will be increase by extended tillage. The apparent potential of tractors is not tapped because successful operation on non-tillage work needs even greater complementary changes in traditional agricultural methlods than does ploughing - particularly pure cropping, row-planting and improved seed with even-ripening and uniform stand characteristics as minimum recuirements. in addition a whole range of new management skills need to be learnt by farmers who, however shrewd in their own familiar field, have little or no education to facilitiate the absorption of radically inew ideas. 121. o mechanize successfully on a large scale, major changes in the whole pattern of agriculture must be brought about. These are also needed to offset higher paid-out costs under mechanization. A switch i n cropping patterns to emphasize .igh-value crops, improved seed, use of insecticides, fertilizers, and improved post-harvest handling will all be needed to increase returns to land to make cractor cultivation viable. These in turn lead to an increased demand for extension services and seasonal credit, and an organiza- tion to support it. In short, widespread use of tractors needs intensifica- tion of agriculture as a pre-requisite. It is not a substitute for the dif- ficult problems of introducing improved management into smallholder agricul- ture. Indeed, intensification of existing areas will frequently be a better approach to transforming agricultural production than an extension of area using tractor power, particularly as costs of new clearing are tending to rise relative to end returns. 122. Mechanization in Tanzania. In the first year's operations at Urambo and Rufiji, the problems outlined above show in the operating re- sults. At Urambo, an average of 560 hours of running per annum was achieved, but muclh of this was for transport. Revenue was only 70 percent of the cost. At Rufiji, where work was on communal paddy and individual maize and paddy, each tractor aclaieved 60 ha operations in the year, and the nominal revenue was 79 percent of the cost. It is understood that a large part of this re- venue has not been collected, and, as only 2/3 of the area which received a first ploughing was in fact planted, farmers may be faced with an extremely nigh bill relative to tileir returnis. Major losses have also been experienced in cooperative tractor operations in WCGA. It has been reported that recently LSFIH; was paving over Tshi 2 million a year towards cooperative society losses. This is thic equivalent of about Tsh 6/00 per hia of cotton grown, whether mecihanically cultivated or not. ANNEX I Page 49 123. The problems aggravating seasonal utilization, as reported from the Urambo and Rufiji THU, are similar to those found elsewhere in Africa. These included breakages to tractors and equipment because land had not been adequately cleared of stumps and because of inexperienced drivers; a high proportion of unproductive travelling; idle time caused by lack of spares, and shortage of tools with which to undertake repairs; and thefts of fuel and equipment. 124. The lessons learned from these pilot units will point the wav to sound agricultural mechanization in Tanzania. Any analysis of the overall advantages and costs of mechanization must however cover more than financial operating results. In superficial analyses tractor operations often look better than they are. There are two basic reasons for this: (a) frequently not all costs are taken into account when senior planning and supervisory staff engaged in the administra- tion of schemes are not charged to them, and bad debts are ignored; (b) prices taken into account are distorted. This is likely in Tanzania where produce prices are, in some cases, above import parity, e.g. wheat and rice. Distortion also occurs when the prices of alternatives to mechanization are above market levels (e.g. labor, where this is subject to minimum wage legislation, and fertilizers manufactured domestically at prices higlher than those on the market), and where the exchange rate undervalues the foreign exchange with which tractors, tractor equipment, and fuels have to be bought. 125. The pilot units should continue operations, and until the problems presented are analyzed and ironed out, an expansion in the number of govern- ment THU should be delayed. Consideration could also be given to a different approaclh from ThU's, which appears more suited to the Tanzania situation. This would be to start now on a training program for drivers, mechanics and agricultural staff to prenare them as teaching staff for ujamaa villages. The ultimate objective would be to provide these personnel to fullv estab- lished ujamaa villages which are large enough (or close enough to a similar village to provide adequate acreage on a share basis) whenever the village is readv to own its own tractor. The trainees, who should live in the village for the period necessary to train members of the village in their skills, would be provided at less than cost as a normal extension function. There may be a need for government operated workshops and stores. These could be sited on strategically placed ujamaa villages which adopt tractors relatively early, and services should be provided on a cost basis to neighboring ujamaa villages. A careful cost/benefit analysis should show any such center to be viable before it is established. 126. The need for high level management and intensification of agri- culture applies even more to ujamaa villages, than it does to individual ANNEX I Page 50 smallholders. In ujamaa villages there is the increased possibility of more rapid improvement of management and the introduction and acceptance of im- proved practices. However, these changes will not occur overnight, and the introduction of tractors should be viewed as a later stage in the develop- ment of ujamaa farms. Mechanization has been spoken of as an added in- centive to farmers to form ujamaa villages. In the short run this may be true, but the premature introduction of high capital cost mechanization could, as it has done with smallholders and with cooperative groups before, place a debt burden on ujamaa villages which would threaten their future as economic entities. Marketing, Cooperatives, and Prices 127. Most agricultural products destined for export, and a number of crops sold entirelv internally, are handled by, or at least regulated by, statutory marketing agencies. The Boards, and a summary of their activities in 1970, are shown in Table 22. In 1971 NAPB handled 10 scheduled crops, dried cassava having been added to the list. "Oilseeds" covers groundnuts, sesame, sunflower and castor. The scheduling of millet, sorghum and mixed beans is under consideration. 128. Since 1961 an increasing number of major crops have been sold exclusively through Cooperative Unions and their member societies. There has in consequence been a rapid growth of cooperatives and of the Coopera- tive Development Division of Kilimo. In 1961 there were 799 active register- ed societies of which 721 were produce marketing societies. At the start of SFYP the total had risen to 1,700 and in 1971 there were 1,775 with 1,326 marketing societies. 129. Prices to producers of most of the crops handled by boards are controlled to varying degree. These have generally been into-store prices from which cooperatives have deducted thieir costs to arrive at prices for members. These therefore vary according to the efficiency of the society. Oilseeds, cereals, cashew and cassava have been in this category. For other crops, notably cotton and tobacco, fixed producer prices for different grades are set. Prices on wheat, cardomoms, and different tobacco grades are the same for all parts of the country. For 1972/73, differences bv area have been set for paddy and oilseeds. For the 1971 cotton harvest, price differentials were set according to the time seed-cotton was marketed, a bonus being given on the mid-season price for early sales and a penalty set on late cotton. Tl1is differential both acknowledged savings in process- ing costs on early cotton and the added production from early nlanted cotton. It is therefore regretable that the penalty was later rescinded. It is intended that prices should be declared in October or November, in good time to influence planting, but this is not always achieved. The ultimate responsibility for setting prices rests with the Economic Committee of the Cabinet. 130. Problems in Marketing. Before the launching of SFYP, Kilimo com- missioned a comprelhensive study of the marketing and pricing system, and the AMfTRY I Page51_ Table 22: MARKETING BOARDS - QUANTITIEs HANDLED, ACTIVITIES AND PRICING Volume Percent Value of handled Tanza- Sales ('000 nian (Tsh Board Produce m.tons) output million) Major Activities Basis of Pricing the Produce Coffee Coffee 50 100 300 Licenses handlers and buyers. Sets gra- Auctions, Moshi and Mombasa. des; administers ICO quotas; finances Most sales are in auctions. produce upon receipt at curing works; runs auction. Extensive accounting. Lint & Raw Lint 77 100 330 Kilimo announces purchase prices Auctions in Dar es Salaam. Seed for Lint and producer prices for seed Board pays no geographical Cotton-seed 150 100 25 cotton. LSMIB buys all lint and seed differentials. Sales also at ginneries; establishes grades F, by tender and private treaty. marketing dates; licenses handlers, Seed to domestic oil mills mills and ginneries. by negotiation. Tobacco Tobacco 11 100 50 Sets grades and conditions for han- Private treaty. Board pays no dling, purchases from societies and/or geographical differentials. unions, stores, re-dries and sells. Sales made through brokers. Pyrethrum Pyrethrum 2.5 100 13 Contracts with extraction plant at Negotiation with extraction Arusha for sale; gives general guidance plant on basis of world mar- to societies on shipment to plant. Re- ket conditions. Price based gisters producers (societies). at Arusha. Sisal Sisal 202 97 175 Administers quotas, licenses handlers, Private treaty, brokers sell agents and estates. to manufacturer users. Sugar Sugar 87 90 122 Licenses producers and handlers, gene- Determined on the basis of rally directs their operations; pur- conditions within the coun- chases product from producers at prices try. No differentials. set and contracts with State Trading for sales. Tea Made Tea 8.5 100 52 Board merely licenses producers and ex- Auction at Nairobi or porters, no direct function in market- private treaty. ing and pricing. Tanzania Tea Author- ity will continue above and take direct action in allocating additional acreage to small holders, building roads and erecting processing plants. National Maize 145 10-20 60 Establishes grades, licenses processors, Cereals based on internal Agricul - announces nrices for full season and conditions; maize and rice tural Wheat 24 95+ 16 other terms of purchase, appoints buying above export parity, wheat Products agents who take all offerings on behalf above import parity. Board Rice 28 25 24 of Board. Board sells all cereals for Cashews auctioned and nego- (NAPB) internal use, exports and imports as tiated, all oilseeds nego- Cashew 111 100 154 required. Most cashew and all oilseeds tiated. No differentials exported. Domestic sales at prices an- for cashews or cereals. Oilseeds (4) 23 95+ 27 nounced at start of season. Cardamoms 0.15 100(7) 7 Dairy Involved to a limited extent in pricing fluid milk and making plans for the processing industry in Upper Mara. Source: Kriesel et al: 'Agricultural Marketing in Tanzania' (1970); and NAPB. ANNEX I Page 52 organization and management of the marketing boards and cooperatives. The studv report was submitted in June 1970. 1/ The report suggests that exist- ing internal pricing and marketing policies are presenting serious obstacles to growth, and reflect historical needs more than current policies and needs. The problems vary according to the commodity or board concerned, and at board, union and society level. Central to tihem, however, are a tendency to high costs of marketing, and distortions to the economy arising from the policies. 131. Unnecessarily high1 costs are arising from several sources. WXith the piecemeal growth of centralized marketing the flow of produce to market has become more complex. As regulations have replaced prices as guides to marketing, an increasing flow of directives and a growing apparatus for licencing, inspection and enforcement have to be paid for. There has been some tendency to duplicate functions, especiallv between boards and unions. In some cases direct selling by society to board would seem highly desirable. Inefficiencies have been cdetected particularly at society level. In some, overstaffing and overpayment of committee members and staff are found. In otlhers competent personnel cannot be retained at the salaries offered. Unit marketing costs of societies are typically in inverse relation to the quantities handled, and manv societies are too small. But there is some evidence of produce losses increasing as total quantities handled increase. Unions' non-operating expenses have been high. In 1967 handling costs made Up only about half their total costs, while 46 percernt consisted of losses from other operations (mainly tractors), bad debts, and cash losses. As witlh societies, wide variatiolls of unit costs between unions indicate scope for improvements in efficiencv. Important among these are reductions in transport costs. An illustration of inicreasing marketing costs, and the pressure they cause on producer returns is given in Figure 1 whiich Sihows the relative chaanges in producer and retail prices and estimated marketing c.iarges for maize in Iringa Region from 1956-60 to 1969. 132. Distortions arise from the inflexibility of a bureaucratic market- ing system, and, particularly, from pricing and cost allocation policies. In various ways these have favored production of food crops - rice, maize, and cassava - against the foreign exchiange earners, cotton, oilseeds and cashewnuts. Lack of differentials by location favors distant, high-cost growing areas over those close to the market, and orices which are unvaried for a whole season encourage use of scarce central, high-cost storage, while on-farm capacitv is under-utilized. Control of cbnsumer prices on, e.g., beef and cotton seed oil discriminates in favor of urban dwellers over producers - counter to stated policy - and has inhibited production. 1/ Herbert C. Kriesel et al: "Agricultural 'larketing in Tanzania: Back- ground Research and Policy Proposals.' Project sponsored jointly by Tanzania and US AI) unrder contract with Michigan State University. ANNEX I Page 53 Figure 1. INDEX OF PRODUCER AND RETAIL PRICES OF MAIZE, AND ESTIMATED MARKETTNG CHARGES, IRINGA, 1956-1969 (1956-1960 Average = 100) Percent 19ĥ5 1960 300 - / Marketing Charges 240 - 210 180 . Retail Price 150 120 ' 90 Price to Producers 6C - 3C / 301 1956 1958 1960 1962 1964 1966 1968 1970 1972 YEARS Source: Kriesel et al: Agricultural Marketing in Tanzania. (19070) ANNEX I Page $k, 133. Price control has given some stability in prices, and this appears to be a policy objective, at least for NAPB. It may be questioned whether this is a worthwhile policy objective, however, and wzhether the costs of achieving it do not outweigh any advantages. An approach which would cause less distortion would be to set guaranteed minimum prices, applicable at a central point or points, at which Boards would always buy, but leave scope for paying higher prices at different times in the season or if market conditions warrant it. This could give farmers more stable incomes, which woulci seem to be an objective compatible with overall policy, while still giving price guarantees. The present policv, in stabilizing prices, destabilizes income on crops whose yields are subject to unforeseeable fluctuations, and, in the absence of large reserves which would absolve the government from a need to be cautious in price-fixing, probably depresses average income to producers as well. 134. Current Action. lfajor changes in the organization of the Boards are now underway, based on - although not exactly following - the 1970 marketing report. Two new agricultural corporations are being formed which will between them handle the internal marketing and export of most of the agricultural products of Tanzania. These are: (a) The Foodcrops Marketing Corporation (FM!C) tihe nucleus of whichl will be NAPB and which will handle the internal marketing of all food crops, including two new additions to the list of sclheduled crops, vegetables and fresh fruits; and (b) The Agricultural Products Exnort Corporation (APEX) which will handle all export crops and take over the functions of thle boards now handling cotton, coffee, pyrethrum, sisal, oilseeds, cashewnuts, and cardamoms. Crops which have both domestic and export markets will be handled entirely by whichever Corporation would be responsible for marketing the larger part of tLie croo. Thus domestic sales of cotton and casheumuts will be made by APE.;. Tea, tobDacco and livestock products are excluded from this reorgani- zat iOTn. 135. Small savings in management costs are expected from this reorgani- zation, and rather more from the centralizing of some of the existing Boards' services, such as statistics, research, transport aind storage. It is proposed that APEX be divided into a Planning Department and a Commodities Denartment, with Divisions for each commoditv or commoditv group in the latter, and a Produce Inspection Section providing services to all Divisions. FrTC, on the othier lhand, will probahlv be organized on functional lines, the major departments covering 1arketirig, Storage, Research, and Development, and Auclit. It is proposed thlat botn corporations stiould be strer:theiied hy th-:e provision of technzical assistance experts in tile kev areas or accounts, marketlng, storage and economic studies. ANNEX I page r 7 136. A service which will be common to both corporations is the SuPPlv of market forecasts and long-term economic information by the Mlarketing ))cvelopment Bureau, to stay in Kilimo where it also provides research for pilLicy guidance. This is a 4-1/2 year UNDP/FAO project which officially 10:a-ted in January 1970, and was expected to have 5 experts operating by ; eRr 3end. The Bureau has made an impressive start with objective commod- 1 s'j ctudiies, and under its terms of reference will also be providing train- ilnE cour.,es, conducting feasibility studies, and collecting market infor- mation. 127. The establishment of APEX and FMC is a step towards the ration- PIJ-'Zation of marketing in Tanzania, but major problems remain. These z4e:cer particularly to pricing policy, and the efficiency of cooperatives. ttt;ntion should now focus on these concerns, and especially: (ai) the scope for more flexible pricing, which still offers peasant farmers guarantees, but more effectively guides production and resource use in the national interest, including through the effective operation of buffer stocks by FMC; (b) methods of reducing costs incurred by cooperatives, in- cluding the scope for amalgamation of societies, the nossibilities of direct society-to-marketing corporation operations, the elimination of duplication of function between marketing corporation and union, and the best approaches to improving staff quality. The rationale for controlled marketing in Tanzania is the elimination of "cXpl6itation", the expropriation by an individual or group of an unfair ;iare of the returns on production. If the efficiency of the controlled markz>ting system is not improved, it itself will be a major instrument in the Cxploitation of both producer and domestic consumer. le&ional and Rural Development 128. Government policy is to give top priority to rural development, en emphasis which implies the diversion of more money and manpower resources to ruiral areas at the expense of urban areas. The policy is reflected in thren related measures, although more clearly in the Plan than in the act, or in budgetary allocations. The three measures are: (a) a policy of regional izAtion, (b) the policy of Ujamaa Vijijini, and (c) a policy of developing nine towns away from Dar-es-Salaam. 139. The policy of regionalization aims to take project planning and execution away from the center and put it firmly in the 18 administrative regions, each under a Regional Commissioner heading a Regional Development C,OnMTittee (RDC). As part of a major reorganization of Government announced in February 1972 Regional Commissioners were given Ministerial status. The decentralization policy is also reflected in a recent reorganization ANNEX I Page 56 of the structure of the cooperative movement towards multi-purpose coopera- tives with a regional coverage, instead of specialist cooperatives, with a multiregional or only local coverage. The Rural Develonment Bank (RDB) is also planning to operate on a regional basis, and there is increasing allo- cation of the Rural Development Fund (RDF) to the Regions for allocation by RDC. The major impact and the major effort in Ujamaa Village develop- ment has been in rural areas, and the program has been most effective in the more backward regions where the attraction of social services and the attentions of government personnel is the greatest. Any rural development program in Tanzania should work through and use Ujamaa villages and there is a need to integrate ujamaa planning and Regional Planning. 140. The policy of developing nine towns, away from Dar-es-Salaam, is primarily an industrial location policy which has not so far been particularly successful. The towns selected are all regional capitals and are designated as poles for future growth. The policy is however, probably too narrow in conception, and should embrace the growth of a larger number of towns, or better a hierarchy of towns of different sizes as urban service ct:nters providing facilities and employment opportunities to the rural areas of the country. 141. The trend towards more regional autonomy could facilitate local participation in the development process and ensure expression of local views, although the TANU structure does seem to offer adequate potential for this. The policy is not without problems, however. The RDC's do not as yet have sufficient trained manpower to undertake detailed planning. To build up adequate teams at this point in time will place a big strain on limited manpower resources. There is also a fine line between the advantages of giving expression to local needs and the disadvantages of uncoordinated development. It is not clear how this balance will be kept. The Regional Commissioners have substantial real power in their areas. Their power will increase as a result of the February 1972 Government reorganiza- tion whicr, inter alia will in future also increase the share of total de- velopment funds directly available to Regional autlhorities. Regional Commissioners, who are appointed by the President are responsible for the local interpretation and implementation of such policies as ujamaa develop- ment, with the consequence that developments crossing regional boundaries can be subject to diverse directions, not always in line with stated policy. There appears to be a need to distinguish more clearly between the advant- ages of devolving economic planning as opposed to political decision making. The regionalization of cooperative unions could impose an over-stratified organization on the management, which could increase marketing costs, and create rather artificial areas of operations. However, although the break- up of NCU may be unfortunate on grounds of efficiency, the demand for the change did apparently come from the component regions and could be justi- fied from the view point of increased local identification with operations. 142. The emphiasis placed by the Tanzania government on rural and regioinal develonment points to possibilities for creating in the country A NNEX I Page r 7 one or more integrated regional development projects. The potential for such a project was given a superficial examination during the mission, with particular emphasis placed on one region - Kigoma - more to make the examination of potentials and problems specific than because this is necessarily the only or best area for such a development. There does appear to be scope for a project in this area, based on a river basin. 143. Kigoma Region. Kigoma is the most westerly region of Tanzania. The regional headquarters is in the town of Kigomna on Lake Tanganyika, at the end of the Central Line from Dar-es-Salaam. Most of the region has an annual rainfall of over 1,000 millimeters (39 inches). Precipitation is reliable. The soils of the area vary from a group of low fertility with moderate potential for pasture and less demanding annual crops, through to soils of high fertility with high potential for tree crops, wheat and horticulture, and a considerable alluvial area with great potential, in some parts requiring flood control. Most of the area is plateau at between three and four thousand feet, but high ground rises to six thousand feet. Kigoma Region has a population of about one-half a million people. The population density overall is 33 per square mile but approaches 60 per square mile in the central District of kasulu. The area has provided a considerable seasonally migrant work force to the,cotton and tobacco areas of Kwanza, Sliinyanga, and Tabora. New home-based employment opportunities are required for the area. The Region is in the direct path of the sponta- neous permanent migration which has transformed Sukumaland over the past two decades, and with good land available can expect an influx of new settlers from a continuation of this movement. By mid-1971, 6.3 percent of the Region's population was living in Ujamaa villages - the natLonal average - but the Region is earmarked as the next one (after Dodoma) on which a major effort would be concentrated. Tlhrough Kigoma Region runs a perennial river, the Malagarasi, which, on its circuitous course, encloses the area of highest potential in the Region. The Malagarasi BasTn offers a suitable natural region on which to base a development scheme. The basin is embraced by a single regional administrative organization. 144. Although the Kigoma Region has considerable potential, it is, on a per capita basis, the second poorest Region in the country. This is partly a reflection of the isolation of the region, but it has been argued that it is more the result of past policies of not developing an area which provided a valuable labor supply for other cash-crop areas. On balance it appears that Kigona has a considerably higher potential than its present production indicates. 145. The area of the Malagarasi Basin has possibilities for the grow- ing of tea, wheat, oil palm, rice, beef cattle, and horticultural crops. There is probably also potential for expanding cotton and oil seeds, and for dairy development. There is an under-exploited fisheries potential in Lake Tanganyika for which the twin town of Kigoma-Ujiji is the obvious center. Tea nurseries have already been established and the results are reported promising, although the area is not included in the present tea expansion ANNEX I Page78 program. Oil palm has been established, but no program has been evaluated or pursued and hybrid palms have not been used. A ranch area, Uvinza, in the south of the Malagarasi Basin, is included in current plans for live- stock development, and over 6,000 acres are reported to be under cotton. 146. Investments in the area are required in adaptive research for crops, in farm planning, agricultural inputs, vermin control and credit. A tsetse clearing program is called for, and an enlargement of fish landing facilities and fisheries research are needed. A considerable part of the established fishing industry is based on the export to Zambia of a small high protein fish (locally known as "dagaa") and there is scope for the expansion of this export trade. Flood control could be combined with sup- plemental irrigation, and low-cost power from the Malagarasi River. Pre- liminary studies covering these aspects of developing the river are already available in Tanzania. Road communications within the region are poor and both main and feeder roads would be needed in a development program. There is a need for telecommunications between the two major population centers of the area, Kigoma and Kasulu. A large investment in rural water supplies is probably not needed, but health and education services in the region are well below average for the country. There is a small tourism potential in the site of Livingstone's meeting with Stanlev in 1871 at Ujiji, and in the Gombe Chimpanzee Reserve. Hotel facilities at Kigoma are at present inadequate for the realization of this potential. 147. In spite of its remoteness, the region has a number of factors which may give it a comparative advantage over other rural areas for agro- and other indusPtries. Chief of these is a situation on an established rail- way line which crosses the entire country. This is combined with favorable agricultural conditions, including an irrigation potential, possibilities of cheap power, available labor, and its situation close to land-locked export markets in Zaire and Zambia. Kigoma could well have a higher claim for such developments as sugar growing and manufacture, and vegetable canning than other areas presently considered, and has a potential for fish processing. 148. A rural development project in the Malagarasi Basin, or in Kigoma Region in general, would involve a wide range of disciplines. Planning and execution should be based on the existing regional development committee, which would provide local knowledge and participation, but which badly needs support in planning and execution. It would provide services on an inte- grated basis which it is the objective of the Government to provide, but which at present it cannot do because of shortage of resources. A project of this nature would fit in well with Government's philosophy of assisting the more backward areas in priority over those that are already reasonably well developed. A project would directly touch on a quarter of a million people if confined only to the Ntalagarasi Basin, and to nearly double that number if embracing the whole Region. 149. If the concept of a rural development project of this nature is to be developed, early action is needed on a pre-investment study to ident- ify the best area for investment, identify the components of the investment ANNEX I Page 59 program, and assess the likely size of aid, including technical assistance, required. Irrigation 150., Irrigation development in Tanzania continues as an uncoordinated program and shares with the State Farm program and mechanization develop- ments problems of lack of research, management and personnel. About 1 per- cent of the crop area of the country is irrigated, but little thought appears to have been given to the need for irrigation in a country which is short of capital and trained manpower and in which rainfed agriculture has con- siderable scope for further development. Because of high development costs, poor yields, and lack of markets for high value crops, irrigation schemes in Tanzania have been high cost and uneconomic. Those that approach financial viability only do so because rice prices are artificially inflated. 151. Since the last mission, the Water Development and Irrigation Division (WD and ID) has been moved out of Kilimo again and is now in the Ministry of Water Development and Power (Maji).. The integration of irrigation development and agricultural planning hoped for after the 1969 reorganization has not taken place, nor has a proposed Tsh 4 million program for training 40 irrigation field staff been effected. An FAO agricultural economist has, however, been attached to WD and ID for 2 years and has sub- mitted a report on the economics and planning of irrigation which is now under consideration. 152. Progress in the Second Plan. During SFYP, some 30,000 ha have been covered by topographic and soil surveys and designs covering nearly 9,000 ha in 14 schemes have been completed or are in preparation. Construc- tion has been carried out on 9 government schemes including 1,400 ha on the Kahe scheme, 1,000 ha on Kilangali state farm, and a 325 ha paddy development at Ruvu National Service Camp. Extensions are continuing at Kaha and Ruvi and a 1,600 ha extension at Mbarali was started in 1971. The total increase in irrigated area in the first two years of SFYP was 2,500 ha, about 60 per- cent of target. The developed area of Kahe has been handed over to NDC for kenaf production and plans are to triple the area by 1974. However, research on best varieties to grow, on the best cropping pattern, and on the economics of the project are still lacking. The Mbarali scheme has been faced with high costs because of poor yields. It needs further leveling before adequate water distribution and weed control can be achieved, and trials of IRRI rice varieties have only just been started. These must be evaluated before introduction, but some improved varieties will have to be introduced if high enough yields are to be achieved to make the scheme viable. The ex- panison of the scheme before these problems are settled appears premature. It is, however, to be run as a self-contained, vertically integrated, unit under Chinese sponsorship and under this management could become a viable proposition. The Ruvu NS camp is only an hour's journey from Dar-es-Salaam. It seems likely that fresh vegetables for the urban market would be a more profitable crop than the paddy presently grown. This possibility should be examined. ANNEX I Page G0 153. A program of sub-irrigation schemes for ujamaa villages has been embarked upon and is reported to have been extended to 20-30 villages. Water is supplied to vegetable plots through sub-surface plastic pipes at capital costs in excess of Tsh 11,000 per ha and annual maintenance costs over Tsh 1,500/ha. The economics of this approach compared to alternatives do not appear to have been evaluated. An appraisal should be carried out before the program is continued xith. 154. Future Action. The irrigation policy for Tanzania needs reappraisal Irrigation is costly and difficult, and at this stage in Tanzania's develop- ment is probably diverting scarce resources from more productive use. Pro- duction schemes which could pay off will be for the limited markets for high-value crops, and localized smailholder developments undertaken at minimum cost and possibly a few developments on flood plains wbich do not require major engineering'and drainage investments. Any other prograT should consist of long-term pilot projects on which agro-economic aspects of irrigation agriculture can-be tested. 155. The separation of the irrigation program from Kilimo is causing considerable problems of coordination. A new change in policy is reported however, whereby Maji undertakes all engineering of irrigation works but then hands the area over to Kilimo for operation. This organization could be workable provided the initiative for developments comes from Kilimo, and plans are drawn up on the basis of rigorous feasibility studies develop- ed in cooperation between Maji and Kilimo, and - for any large-scale developments - with the cooperation of the NAFCO company which would operate the scheme. Irrigation works must be planned on the basis of need and proven viability, not on technical feasibility, and must be regarded as one of several alternative approaches to production and not an engineering operation which is an end in itself. 156. Research on crops and cropping systems which will give high enough yields to justify the cost of irrigation is lacking and needs to be developed. So does training of management and staff who would operate schemes or provide extension advice on smallholder operations. The size and priority of such research and training should depend on the results of the new look at policy. The analysis of SFYP correctly points up the criteria that should guide irrigation development but these have not been followed in the act. They should be. Research 157. Agricultural and livestock research remains the responsibility of the Research, Training, and Farmers' Education Division of Kilimo. The division operates some 40 research stations, substations and laboratories (major centers are listed in Table 23) and has a professional establishment of 100. Due to continuing shortages of funds and staff, however, research has been on a care and maintenance basis for some years, and the lack of central direction in the research program which was noted by the previous ANNEX I Page 61 mission continues. During 1970, at the request of the government of Tanzania, a definitive study of Tanzania's research needs was undertaken by a USAID team. The report, submitted in April 1971, is under consid- eration. Little action on fundamental problems had been taken up to October 1971. 158. The many issues relevant to the research program in Tanzania focus on five principal considerations: the provision of funds, the establishment of a policy for research, staffing, the research organization, and the use of research results. These are inter-related problems. Funds serve little purpose if staff cannot be recruited or retained. Adequate funds are unlikely to be voted if research priorities in the national interest have not been established or if staff are lacking. 159. The following points emerge from reports, papers and discussions on agricultural and livestock research in Tanzania: (a) the Research Division budget has been cut and this certainly restricts work. Pre-requisites to securing a claim on more funds are to get research priorities established, show research to provide a high pay-off relative to other uses of limited funds, and show that staff would be available to fill posts; (b) no economic evaluation has been made which would guide research policy at the national level (to establish crop priorities, weighi advantages of dif- ferent levels of applied research and chose between alternative approaches to production), while at farm level (where it is needed to identify problems in crop production most in need of attention) the posting of farm management researchers to research stations, al- though very useful, was shortlived. The USAID report reiterates the need for a strong agricultural economics research program. The little work currently going on in this field is scattered and uncoordinated. An excep- tion is the badly needed census of agriculture, currently underway, discussed below; (c) the recruitment and retention of professional staff has been adversely affected by excessive transfers of officers and short-term contracts for expatriates. iMorale in the Research Division is low, and work is suffering badly from lack of continuity and the understandable frustration of research personnel. This is the most easily solved of the problems facing research in Tanzania, but has persisted for the last three years; (d) over half the established professional posts and a number of technical positions are vacant. Most of these should be MIE I Table 23:i F,i1 Lie Lo.,e:-t :L : Cvroai: Lcgr:'ra-. sec Crops (l;h., Growth of tourism will also be restricted unless the commercial - ici of Tanzania and its partners in the East African Community in the .zerts of the regional carrier, East African AirTays Corporation (-AAC), .: S-; a.i to encourage the expansion of charter inclusive tours. EA,XC may be expected to carry an increasing volume of charter traffic, V.X ; it l.as the equipment to do so. Air fares from London to Dar-es-4alaam :; ror $771 for the normal economy class round trip, down to between $. .. per seas on a chaiter flight, which further underlines th I key 'SR-,i-: cncC of policy towards charter licenses. Althoug-h Tanzania i's further -;or. che mA!ii-n markets than Kenya, it has the advantage of an internaticnal ;.;- -o. the coast. Visitors to Kenya's coast have at present to -rake a ~..tiv;ly expensive and inconvenient transfer from Nairobi, except for those -ing :maller charter aircraft which can operate to Mombasa. This ad-antage -:.: 'z.nia will cease when the planned improvermnts to M.ombasa airport are In the medium and long-term, the investments needed to support the n;-en of tourism depend upon policy issues yet to be determined by the iover-o-.ient Specifically, the emphasis of any development program depends -n -7hewhcr the government wishes to exploit the potential offered by the or whether tourism development is to be largely restricted to the r:ama -:rks. There are, however, two hotel projects aied one lodge project (4;:i.':sec! in paragraphs 21-23 below) whose justification would be largely independent of the decision on whether or not to develop coastal tourism. A ':h. time of tlhe mission's visit, financing had no: '.en secured for any "..vA-Irica Hotel extension 2i. The new Africa Hotel is owned and operated by Coastal Hotels Ltd., a .tbidiary of TTC. It is located in central Dar-es-Salaam, on the site of 1T,ld hotel dating back to early colonial times. The existing hotel has 14, 'A a -;ery high rate of occupancy, guests being mostly businessmen or *oa~:.4ate families looking for rental accommodation. The hotel's patio bar e--ed res'aurant provides one of the few meeting places for tourists sightsee- i-nl in Dar-es-Salaam. Reconstruction has proceeded in stages, the hotel now hrviag '48 beds. An adjoining site has been cleared for the addition of '4'; sit4gle bedded rooms and 8 twin suites, together with enlarged public areas, hc-.s.. a simmning pool and car parking. The project cost of the proposed e*.ħston is estimated at Sh. 19.0 million (US$2.7 million). YrcunW Meru Hotel, Artsha 22. Hotel accommodation in Arusha is limited. The completion of the rnen. Kili.manjaro airport is expected to increase the number of holiday visi- tors to th; area, and the headquarters of the East African Community attracts bi-;;iiness visitors. TTC is promoting a project to build a 400 bed hotel, at eai estimated project cost of Sh. 35 million (US$5 million). The financing ANNEX II Page 6 plan envisages long term debt of Sh. 21 million (US$2.9 million), the remain- ing Sh. 14 million being provided as equity by TTC. Preliminary designs have been prepared bv Danish architects. Preliminary discussions have been held with the Sheraton International Corporation on possible management arrange- ments. Mount Kilimanjaro Lodge 23. A new Mount Kilimanjaro National Park is being established with assistance from the Government of Norway. The possibilitv of securing fur- ther assistance for the construction of a lodge was under review during the mission's visit. The proposed lodge would have 150 beds, with adequate cen- tral services for an extension of 200 beds later. The estimated total cost for 150 beds would be Sh. 9.6 million (US$1.34 million), and the financing plan envisages equity of Sh. 3.6 million, (US$0.50 million) and a loan of Sh. 6.0 million (US$0.84 million). The Arthur D. Little investment program 24. The program of tourism investments proposed by Arthur D. Little (ADL) for the Deriod 1969/70 - 1978/79 is based on the development of both the established Northern Circuit, and largely new Southern Circuits, includ- ing the beaches. The total capital cost of the program is estimated at Sh. 700 million (WS$98 million) over the ten year period, of which 30 per- cent would be foreign exchange. Over half of the proposed investment would be in 7,000 new hotel and lodge beds. The rest is allocated to roads and administrative buildings in the National Parks, beach development, marine parks, tourist boats, airstrips, a hotel school, game development, histori- cal restorations, and some miscellaneous tourist services. ADL pronose that the Government finance some 30 percent of the cost of the program, parastatal corporations another 8 percent, private equity 21 percent, local loans 20 percent, the balance of 22 percent (IUS$21.6 million) being expected to be provided by international loans and grants. It is likely that the ADL pro- gram will prove too ambitious, unless the government assigns a much higher priority to tourism than-iseems to be the case at the present time. A key issue, w˘hich the ADL report stresses, is policv towards incentives for both Tanzanian and foreign investors. Conclusion 25. Tanzania can undoubtedly develop tourism into a major source of foreign exchange. It has powerful attractions for a large and growing mar- ket, and in TTC has the institutional basis for effectively promoting the sector. The most urgent requirement is for clarification of government poli- cies towqards the sector, and the subsequent approval of a revised investment program. Kev issues are likely to be: the priority of the sector vis-a-vis other claims on resources; the geographical direction of tourist investments: regional promotion in cooperation with Communitv partners- incentives for private investment; and civil aviation policy. A'NNEX II 7 Page 7 TOURISM STATISTICAL APPENDIX Index Table No. 1. Visitor arrivals, 1960-69 2. Tourist arrivals by nationality and purpose of trip, 1968-69 3. Visitors to National Parks 4. International hotel capacity and ownership - mid-1971 5. Hotel capacity and occupancies, 1969-70 ANNEX II Page 8 TABLE 1 TANZANIA Visitor Arrivals 1960-69 Arrivals through T Year First_Arrivals Kenya/Uganda Totals 1960 7,5534 2,313 9,847 1961 7,051 4,867 12,218 1962 9,257 6,409 15,666 1963 9,878 10,472 20,350 1964 7,140 13,117 20,257 1965 8,278 13,222 21,500 1966 10,800 17,559 28,359 1967 16,000 18,619 34,619 1968 N.A. N.A. 49,105 1969 N.A. N.A. 55,884 1/ Including transit passengers but excluding dependents and holders of Kenyan or Ugandan passports. Source: East African Statistical Department for years 1960-1967 and Tanzanian Bureau of Statistics for years 1968 and 1969. ANNEX II TABLE 2 TANZANIA Tourist Arrivals1/ by nationality and purpose of trip, 1968,1969 1 968 1969 Nationality Holiday Business Total Holiday Business Total Anericas 8,530 1,411 9,941 11,809 1,276 13,085 JK! 1/ 3,516 1,903 5,419 3,857 1,552 5,439 UK, East Africa residents- 3,516 1,903 5,419 3,&87 1,552 5,439 W. Gernany 2,691 555 3,246 2,763 574 3,337 uther Europe 8,187 3,016 11,203 9,259 2,705 11,964 Asia 2,206 1,973 4,181 2,484 1,715 L,199 Africa (excl. E.African 2,098 1,948 4,04j6 2,970 2,983 5,953 nationals) Other (incl. not stated) 639 293 932 1,092 4_15 1,507 TOTAL 31,385 13,002 44,387 38,151 12,772 50,923 1J excluding transit passengers 2J/ 50% if visitors having British passports are assumed to be residents of East Africa. ANNEX II Page 10 TABLE 3 TANZANIA Visitors to National Parks, '000 1966 1967 19G8 1969 1970 Sergengeti iT§T ii3 21.9 29.0 35.4 Lake Manyara 21.7 29.3 33.9 41.9 54.8 Ngorongoro 23.6 25.8 33.5 44.7 56.6 Arusha 6.3 8.6 10.6 11.6 14.1 Mi kuni 5.1 6.2 5.8 8.1 14.0 Ruaha .6 .5 .3 .6 .7 Tarangire - _ _ 3-4 TOTAL 69.0 86.6 106.0 135.8 178.9 1/ Includes non-fee paying vi.sits (schools, officials etc.) which in 1969 and 1970 accounted for 5.7% and 7.6% of the total respectively. Source: Bureau of Statistics ANNEX II P a,e 1, TARLE l International-/ hotel capacity and ownership - mid 1_971 Ownership Number of Location Room Beds Private St-te Dar es Salaam Hotel Afriquc 33 60 100 Hotel Kilimanjaro 200 400 - *i .T.0.0 Hotel Skyway 80 130 100 Motel Azip 57 102 50 5Z) Gov't. New Africa Hotel 95 1t44 - 1 00 T.7.C. Oysterbay Hotel 21 42 100 Palm Beach Hotel 25 40 100 Twiga Hotel 6 100 S 9~74 Beac'h Hotels Africana Hotel 200 400 100 Pqhari Beach Hotel 100 200 70 30 T.T.C. Kunduchl Beach Hotel 100 200 100 '.,.C. htafia Fishing Club 6 12 1C.-J. T.7. Mafia Fishing Lodge 40 80 1icy _ C Silversands 4 90 100 Wildlife Lodges 2 Fort Ikoma 60 120 100 Hotel Tanzanite 30 60 100 Lake Manyara Hotel 100 200 100 T.7.3. Lobo 'Wlildlife Lodae 75 150 1M T.T.'- t4ikumi i'ldlife Lodge 50 100 .'_ . Momella Gpme Lodge 48 105 100 kgoron-oro 'Rlldlife Lodge 75 150 1CY) T. .C. Seronera Lodge (tent camp) 60 120 100 Tarangire Tent Camp 34 68 100 Mt. Ileru Gaame Sanctuary 5 10 100 Arusha/14oshi Hotels 1 New Arusha Hotel (Arusha) 71 1h6 100 New Safari Hotel (Arusha) 35 60 30 70 T.T.C. Kibo Hotel (:arangu) 43 79 100 Livingston Hotel (Moshi) 67 108 100 Total, mainland Tanzania 4 Zanzibar (Furaha ya Visiwani Hotels Ltd.) Africa House 12 28 Zanzibar -t. Zanzibar Hotel 25 2 Zanzibaz X .'t Total 1.822 3,512 I/ Hotels charging 30 Sns. or more per night for bed and breakfast. TABLF 5 Hotel CapacitY AMd Oeupancies, 1969-1970 Northern DAr *s Arueha/ WildiUfe Salaam Moshi Areal/ Zanzibar. Other Areas Total Unit 196919g70 7b9 7970 7969 9 97 199 1970 1969 IM 19b9 1970 Nunbar of hotels No. 21 30 13 16 7 10 2 2 39 12 82 100 Pally roots available No. 731 1,295 409 46B 270 492 37 37 545 587 1,992 2,879 Pooa occupancy rate (annuL.l average) S 65.1 4U.4 33.4 32.3 56.3 36.4 23.2 14.3 40.1 36.5 49.4 39-1 Traily beds available No. 1,381 2,448 689 809 545 993 80 80 1,008 1,115 3,703 5,445 Bad occuparcy rate (aanual average) S 40.3 31.2 26.1 27.1 44.8 31.3 15.3 9.2 27.0 24.8 34.3 29.1 Total annual beds occupied '000 213 279 73 82 94 113 4 3 115 101 500 575 5 100.0 103.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Of which residunts of: Ttaania 36.o 34.9 34.1 36.9 7.1 3.5 23.2 32.0 83.4 79.3 40.5 36.3 Kenya, Z ra, majbia S 13.1 10.8 13.2 10.0 7.8 3.5 L.8 7.0 6.1 7.4 10.9 8.6 Other Al ric.n Countries S 4.9 4.2 2.0 2.4 1.9 4.2 3.9 1.4 2.5 1.6 3.4 3.5 Furop,e % 24.2 29.6 32.7 26.6 38.6 39.7 27.0 30.6 4.6 8.7 24.4 27.5 Smerica % 9.8 7.7 16.t 20.9 41 4 h5.6 30.9 23.8 0.7 1.2 15.1 *5.9 Aaia/f.i3tralia S 12.0 12.8 1.9 3.2 3.2 3.5 10.2 5.2 2.7 1.8 5.7 7.9 1/ Means accommodations *ituated ln and aro7md National Parks in the north. Noter T>ia to incomplete coverage 1970 figures are mubject to light revision. Fource: Uureau of Statistics. ANNEX III TABLE OF CONTENTS URBAN/REGIONAL DEVELOPMENT AND HOUSING Pag No. URBAN/REGIONAL DEVELOPMENT ............................... 1 Urbanization Trends .. .. 1 Ujamaa Villages ..... 2 Regional Trends .. .. 4 Urban/Regional Development Policy .. . . 4 The Policy and Performance Gap in Urban/Regional Planning 5 Recommendations ....................8..................... 8 HOUSING ...... 8 Policy Objectives .. .. 8 The Housing Demand ....................................... 9 Housing Administration ....... ...............0........, 10 Housing Supply ..... 11 The Second Five-Year Plan (1970-74) .... 14 Performance Under Second Plan . . . ......................... 16 Low Cost Housing . ........................ . ............... 16 Site and Service Program .... .. . . ... . ........ 17 Squatter Housing and Slum Clearance .... 18 Map Showing Regional and District Bounderies ANNEX IIn Page 1 URBAN/REGIONAL DEVELOPMENT AND HOUSING, I. Urban/Regional Development 1. The purpose of this review is three-fold: to examine recent urban- ization and regional development trends in Tanzania, to describe the Govern- ment's policy in urban and regional development, and to evaluate the policy's conceptual framework and performance. Urbanization Trends 2. The population of Tanzania was 12.9 million in 1970, widely scat- tered over an area of 364,900 square miles. The urban population, including cities and towns with 1,800 or more persons was approximately 774,000 or a:bout 6.5 percent of the total. The national total was growing at approxi- matzly 2.7 percent and that of the urban areas at about 7 percent. Assuming that the growth rates observed in 1970 will be maintained, 2.7 million and 19.5 million of the country's population will be found in the urban and rural areas respectively by 1987. In spite of the high rate of urban growth, Tanzania will therefore remain a predominantly rural country. 3. The rapid growth of Tanzania's urban areas is the result of the country's high natural growth rate and rural to urban migration. Like other African countries, Tanzania's death rates have been falling due to improved public health while the birth rates have remained high. Crude death rates are estimated at 21 per 1 ,00 while crude birth rates are put at 46/48 per 1,000. Better employment opportunities, improved housing and accessibility to health an educational facilities are among the factors that underlie migra tion to cities. 4. While the urban areas as a whole grew at 6.3 percent per annum during the period 1957-67, Dar-es-Salaam had a growth rate of 7.8 percent reaching as high as 11 percent between 1965 and 1967. If these growth rates continue, Tanzania's urban population will double in size very eleven years; the capital will double in size every nine years, having one million people by 1985 and over 3 million by the year 2,000. The more rapid rate of growth in Dar-es-Salaam is due in part to the emphasis it has received under past investment programs, resulting in the creation of new employment possibil- ities. In addition, Dar-es-Salaam is the socio-political center of the country. 5. The following table provides 1967 population and estimates for 1971 and 1987 for nine major urban centers slated for accelerated develop- ment under the Second Five-Year Plan: ANNEX III Page 2 Table 1: POPULATION OF THE NINE DESIGNATED URBAN GROWTH CENTERS Population Population 1967 Estimated Estimate Estimate Population Growth Rate 1971 1987 1. Tanga 60,900 4.0% 73,000 150,000 2. Mwanza 34,900 6.3% 44,000 110,000 3. Arusha 32,300 14.9% 45,000 250,000 4. Moshi 27,000 5.2% 34,700 125,000 5. Morogoro 25,300 6.5% 30,000 80,000 6. Dodoma 23,600 6.0% 29,000 75,000 7. Tabora 21,000 2.7% 22,600 38,000 8. Mtwara 20,400 4.5% 23,000 37,000 9. Mbeya 12,500 10.0% 16,400 50,000 Source: Ministry of Economic Affairs and Development Planning. These rapidly expanding urban centers will require increased expenditures, necessitating a diversion of the already limited capital resources of the country away from the rural sector. The Government, recognizing this, states that urban growth must be planned and controlled within the frame- work of national development objectives which emphasize rural development. Ujamaa Villages 6. In keeping with the emphasis on rural development, the Government has embarked on the mobilization of the people into Ujamaa villages to better utilize rural manpower resources and increase rural productivity. Ujamaa villages consist of groups of families who farm the land collectively and share in the proceeds according to the amount of work contributed. The Ujamaa village concept is intended to promote and improve the economic and social conditions of the village members through self-help and self reliance. 7. Significant progress has been achieved in setting up Ujamaa villages in the past three years, as seen in the following table: Table 2: NUMBER OF UJAMAA VILLAGES ESTABLISHED DURING 1968-71 Number of Villages Approx. Population At the end of 1968 180 50,000 At the end of 1969 650 300,000 Beginning of 1971 2,668 840,000 At the end of 1971 4,484 1,599,307 Source: Ministry of Economic Affairs and Development Planning. At the end of 1971, the Ujamaa Village population was about 12 percent of the total population, which is nearly twice the urban population. It is ANNEX III Page 3- estimated that about a quarter of the national population will be organized in the Ujamaa village system by 1981, giving a possible population distrib- ution in the country as follows: Table 3: ESTIMATED POPULATION DISTRIBUTION 1981 Total Population of the Country 18.5 million - living in cities and towns 1.9 million - living in Ujamaa villages 4.6 million - living scattered in the rural 12.0 million Source: Annual Plan 1970-71 Economic Survey 1970-71. According to the 1970-71 Economic Survey, the average population per Ujamaa village is now 300, or about 60 families, but regional averages range from over 900 in the Coast Region to 100 in Ruvuma and Shinyanga Re- gions. The number of Ujamaa villages by region at the beginning of the year wes: Table 4: UJAMAA VILLAGES BY REGION 1971 (DECEMBER) Mtwara 748 Kigoma 132 Iringa 651 Tabora 81 Mara 376 Coast 121 Mbeya 493 Singida 201 Lindi 592 Arusha 59 Dodoma 246 West Lake 46 Tanga 132 Mwanza 127 Shinyanga 150 Morogoro 113 Ruvuma 205 Kilimanjaro 11 Source: Ministry of Economic Affairs and Development Planning. The large range of villages by region, 748 in Mtwara to 11 in Kilimanjaro, is the result of existing growth and settlement patterns. The Kilimanjaro region had been extensively cultivated prior to the policy of village development, so there was little land on which to settle large numbers of people in new villages. The Mtwara Region, located in the southern part of the country, had little population growth or expansion of agricultural and industrial activities prior to implementation of Ujamaa policy. Collective clearing of the land and governmental impetus to develop the village system in this region accounts for the large number of villages. In addition, many of these villages have been formed for defense purposes along the border with Mozambique ANNEX III Page 4 Regional Trends 9. There are 18 administrative regions in Tanzania as shown in the Map at the end of this report. The pattern of settlement and growth is quite uneven throughout the country. Tanzania inherited a regional development pattern from colonial times in which economic activity and population move- ments tended to follow transport routes, areas with agricultural potential especially for export crops, and established industrial centers of which Dar- es-Salaam was the only significant one. In this pattern, growth was concen- trated in the area around Dar-es-Salaam, and the northern belt from Tanga northwest through Arusha-Mfoshi to Mwanza on Lake Victoria. There was some development in the central railway depot towns but this was not significant. 10. The regional development pattern has changed little since independ- ence. Arusha/Moshi has become an industrial center of some importance and the recent flourish of activity on the Tan-Zam road and railway has stimulated development in Mbeya near the Zambia border. The recent Ujamaa village pro- gram has also stimulated development in the area around the port of Mwtara near the Mozambique border. In sum, the pattern of regional development in Tanzania has tended to bypass the central part of the country and has con- centrated most notably in the coastal area and the north-northeast band from Tanga to Mwanza on Lake Victoria. Urban/Regional Development Policy 11. Government policy in the field of urban/regional planning deals with three aspects: the growth of towns and cities, the development of Ujamaa villages in the rural areas, and the promotion of regional growth. With regards to urban areas, the Government recognises that the population of the urban areas will continue to grow faster than that of the nation as a whole, and, that while this growth cannot be completely stopped, it can and should be reduced to manageable proportions. Therefore, the gov- ernment's policy objectives are: (a) to formulate an urban program which will stimulate and comple- ment rural development, i.e. promotion of other urban growth centers so as to reduce migration to Dar es Salaam. (b) to invest enough in urban areas in order to avoid the emergence of unacceptable urban social conditions without, at the same time, allowing cities to become an increasing drain on the country's financial and physical resources. 12. The two important tools that the Government intends to employ in the implementation of its urban policy are the provision of infrastructure in the designatect growtli center towns, and the encouragement of industries to locate there rather than in Dar-es-Salaam. 13. In order to stimulate rural development and provide counter attrac- tion points for population who might otherwise drift to the cities, the Second Plan places particular emphasis on Ujamaa villagisation. The Ujamaa villages ANNEX III Page C are a new element in the topology of population distribution centers in the country, and are intended to play a significant role in the spatial distribu- tion of the demand for those services which have been associated hitherto with urban areas only. The government is promoting Ujamaa Villages through: (a) the education and training of Party and Government leaders in the ideology of Ujamaa Villagisation; (b) the education of the people, and (c) technical assistance in setting up the villages, providing infrastructure, and services. Both the urban centers and Ujamaa villages are subsystems of a region. Ac- cording to the Second Plan, the regional strategy is: (a) to make maximum use of the growth potential of each region; (b) to emphasize participation of the people and their institutions (i.e. the Party) in the regional planning process and; (c) to narrow the gap between regions in terms of the supply of essential services. While the region would provide the administrative unit within which the planning process is to take place, the actual planning would give priority to areas of special significance, i.e. the nine specified growth towns, hinterlands of big infrastructure projects (Tan-Zam Road and railway for example). Planning based on areas of special significance would help articulate the link between urban areas, Ujamaa Villages, and regional planning and development. 14. Besides initiating surveys around promising growth points and selecting regional exercises, the Government has created a number of in- stitutions which are supposed to play an instrumental role in the regional development of the country. These include: regional economic secretaries to advise and coordinate planning activities at the level of the region, and District Corporations to undertake industrial and wholesale tr-de and other economic activities at the district level. For funding purposes, the Government has created the Regional Development Fund, the Self-Help Fund and the Tanzania Rural Development Bank. The amount of funds flowing through these institutions is still fairly small. The Policy and Performance Gap in Urban/Regional Planning 15. The section on urbanization and regional development trends (see para. 5) shows that the population of urban areas is growing twice as fast as that of the nation as a whole, and that Dar-es-Salaam remains the dominant city in the urban system. Dar-es-Salaam is five times as large as Tanga, the second largest city in the country. Ujamaa villages are growing very rapidly, and four years after their inception they have twice as many people as are AJrNEX ITT Page 5 found in urban areas. Even with this remarkable growth of Ujamaa Villages, however, trends in regional development still show that those regions sur- rounding the cities of Dar-es-Salaam, Mwanza, Arusha-Moshi are growing faster than the rest of the country. In otlher words, the introduction of Ujamaa Villages has not had an effect on the historical coincidence of city and regional growth in the country. Great numbers of people and economic ac- tivity still move to the traditional centers of growth. 16. It is, of course, true that most of the Ujamaa Villages are only three years old and it will be some time before they can have an impact on the established patterns of migration and regional development in the coun- try. Nevertheless, the continued heavy migration to Dar-es-Salaam in the face of all the stated emphasis on growth towns, Ujamaa Villages and rural development appears to indicate that an important link is missing in the hierarchy of major spatial population centers. The hierarchy now consists of Ujamaa Villages, urban areas, and regions; people can either move into the villages or into the urban areas. The Ujamaa Villages are often too small to stimulate economic activity and support services that are found in urban areas. Nor are Ujamaa Villages located in such a pattern that a group of them could support a minimum range of services such as schools, health centers or markets. A potential rural migrant in search of a job and/or better social facilities is therefore unlikely to find the Ujamaa Village a substitute for going to the designated urban growth points. The potential migrant has to move a great distance whatever city he chooses to go to. This gives Dar-es-Salaam the edge over many other cities because opportunities there are perceived to be much better. 17. It appears that what is needed in order to enable the Ujamaa Vil- lage to contribute to a more balanced urban/regional distribution of popu- lation and economic activity in Tanzania is an intermediate supportive net- work of regional centers, located in such a way as to reduce the transporta- tion factor among villages. A more cohesive settlemnent pattern of Ujamaa Villages grouped around a regional center would allow them to collectively maintain a primary school, health center, and a market. In addition, these centers would provide a larger range of goods and services such as storage and marketing facilities, and a secondary school, available to the villagers on a daily or periodic basis as needed. The accessibility to an expanded range of communal facilities and services would aid in reducing the drift to the larger urban cities. Furthermore, these regional centers would pro- vide the support needed to make the Ujamaa villages economically viable. 18. There is, of course no assurance that the elaboration of the con- ceptual framework for regional planning along the lines suggested above will in itself, change the traditional pattern of economic activity and po- pulation movements. It is instructive to note that Government efforts in regional development up to now have net with little success. Those regions with good agricultural, industrial or tourist potential have continued to attract more people and activities. The remaining areas are relatively stagnant in spite of all the elaborate machinery for regional plans. The poor performance so far appears due to the fact that some of the Government's objectives in regional development call for reversing strongly established ANNEX III Page 7 trends in a situation in which: (a) the relationships between various re- gions, their resources and c&pabilities are not knoTrn, and (b) there is a shortage of planning staff at the center, let alone in the regions. 19. With regard to urban growth policy, the stated desire for rural- urban balance is not being successfully implemented. The present pattern o' public expenditures and industrial expansion continues to favor the urban aZŽeas. During the first two years of the current Plan, the government made nigher urban investments than actually programmed, utilizing funds initially allocated to rural development. Table 5: PERCENTAGE BREAKDOWN OF TOTAL CENTRAL GOVERNMENT DEVELOPMENT EXPENDITURES 1969/74 1969/70 1970/71 Whole Plan Estimated Period Budgeted Actual Budgeted Actual RIiral impact 63.8 48.8 46.8 48.3 48.0 Urban irapact 15.6 39.6 41.1 40.3 36.2 National infrastructure 20.6 11.6 12.1 11.4 17.8 100.0 100.0 100.0 100.0 100.0 Source: Ministry of Economic Affairs and Development Planning. Direct expenditures in urban areas were Sh 241 per capita and about Sh 62 per capita in the rural areas, where the majority of thke population is located. 20. The industrial deceantralisation policy, designed to promote the growth of other towns besides Dar-es-Salaam, has not so far been very effec- tive. Of the approximately thirty major industries allocated in the two years, only ten have gone to the growth towns, and seven of these ten have gonie to Arusha-Moshi. Therefore, only three of the thirty industries were shares by the seven least industrialized growth towns. Dar-es-Salaam has retained the other twenty. 1/ In a7ftion, government policy called for the provision of a master plan for each of the nine urban centers, preliminary to uDgrading their infrastructure and locating new industry. However, to date, only Arusha has its master ,,aa; the other master plans will be pre- pared with foreign technical assistance. The preparation of master plans and the provision of infrastrU.ctu:e alone, however, will not necessarily ensure the success of the urbanZ "rowth points policy. Industries are not likely to locate in towns far away from. markets and sources of their material 1/ The Economic Survey 197G-1971. ANNEX III Page 5 inputs. The fact that recent industrial location has tended to favor Dar- es-Salaam and Arusha-Moshi raises some question as to the realism of Tanzania's attempt to develop as many as 9 growth towns. Recommend at ions 21. In order to more successfully implement regional and urban develop- ment objectives, the present strategy must be reevaluated. Specifically, the Government should: (a) articulate the regional planning framework, paying particular attention to the interrelatedness of Ujamaa Villages, urban centers, especially the designated growth points, and regions. In this regard, consideration should be given to the develop- ment of regional centers in conjunction with Ujamaa Villages. (b) assess development potential of each of the urban centers and regions. The information collected should form the basis for continuous monitoring of both urban and regional development strategy. It appears to us that unless the urban and regional strategy is formulated in a way that makes maximnum effective use of the economic potential of towns and regions, its chances for success will be minimal. II. HOUSING 22. The high rate of urbanisation that Tanzania has experienced in recent years has imposed heavy demands for infrastructure and social services in the country's towns and cities. Anong the services for which needs are most pressing is housing. While housing demand in Tanzania has two components - rural and urban, the government expects people in the rural areas to provide their own housing. The following discussion con- cerns housing in urban areas only. Policy Objectives 23. Tanzania's stated housing policy is based on self-reliance. The Government is aware that its people are poor and public financial resources available for housing are severely limited. It believes that just as Tanzania's rural population has traditionally built its own shelter with minimal assistance from the state, so should the residents of the country's urban areas where the housing problem is most acute. Therefore, the Govern- ment would like to see its public housing corporation (a) build houses which meet urban conditions and yet remain within the financial means of the majority of urban people, (b) provide serviced sites on which individuals would then erect their own housing. 24. The Government's objectives are reasonable. It remains to be determined, however, the extent to which its policies and programs are serv- ing the above objectives and suggest ways for improving performance. ANNEX ITT Page 9 The Housing Demand 25. It is not possible to obtain time series data on housing needs in Tanzania covering even as recent a period as the First Five-Year Plan (1964- 1969). According to data provided by the Ministry of Land, Housing and Urban Development the estimates for housing needs in urban areas during the Second Five-Year Plan (1970-1974) period are as follows: Table 6: ESTIMATED HOUSING DEMAND IN URBAN AREAS, 1970-1974 Number of Average Source Dwelling Units Annual Needs UJrban Population Growth 63,500 8,200 Overcrowding 19,500 3,800 Replacement 25,000 5,000 Total 108,000 17,000 Source: Ministry of Economic Affairs and Development Planning. 26. Based on information derived from past data and surveys carried out by the National Housing Corporation (NHC), the following breakdown of annual needs by income group have been calculated. Table 7: ESTIMATED AVERAGE ANNUAL HOUSING DEMAND IN URBAN AREAS BY INCOME GROUP Family Income Dwelling Units Needed % of Total Cumulative % Shillings per month 0 - 300 8,500 50 50 300 - 500 5,250 31 81 300 - 1000 1,875 11 92 1000 + 1,375 8 100 Source: Ministry of Economic Affairs and Development Planning. While the reliability of these data is not beyond question, they, nevertheless, indicate the magnitude and dimension of the housing problem in Tanzania. About half of the families in need of shelter earn less than Sh 4200 (US$600) a year and fully two-thirds earn less than Sh 6000 (US$850) a year. Assuming the rule of thumb that people cannot afford a house costing much more than 2-1/2 ANNEX III Page 10 times their annual income, it follows that the bulk of Tanzania's urban dwellers cannot afford houses costing much more than $1500 to $2000 to con- struct. And assuming that people cannot afford renting at more than 25 percent of their income 1/, they can pay monthly rents between 90 and 125 shillings only and on the average 50 Shs per month for the lowest 49 per- cent of wage earners. In other words while the demand for shelter in the urban areas is for units whose standards are above those in the rural areas, it is nevertheless still well below that which ordinary mortgage finance can deal with. According to data in Table 7, the demand in the lower income brackets is primarily for rental units. Only the public sector and the individuals concerned can be expected to help solve the problem. Public sector resources are themselves stretched, making self-help and self-reliance the only viable alternative. Housing Administration 27. The administrative organization for housing includes the following institutions: (1) The Ministry of Land, Housing and Urban Development is responsible for: (i) the physical planning of the urban areas and assisting in the Planning of Ujamaa villages in rural areas; (ii) the formulation and execution of housing policy; (iii) coordination of housing efforts of other government agencies, community development organization and building cooperatives, (particularly on self-help basis); (iv) ensuring the provision and development of the proper land, rural and urban in coordination with the tMinistry of Water Development and Power which is in charge of water, sewerage and drainage supplies; (2) NHC and Maendaleo (now part of the Prime Minister's Office) charged with low cost housing and research in urban and rural areas respectively. The NHC program provides the backbone of public housing in Tanzania. 1/ Tanzanian literature on housing assumes that people cannot spend much more than 10 percent of their monthly income on housing. This assump- tion seems unreallstic; it probably results from the fact that the government charges civil servants only 10 percent of their salaries for rent on government supplied housing. ANNEX III Page 11 (3) The Permanent Housing Finance Company of Tanzania (PHFCT) which is partly owned by the Commonwealth Development Corporation finances high income housing needs. (4) Mwanchi Engineering and Construction Co. (MECCO) is a parastatal builder of buildings, bridges, roads, etc. (5) The Ministries of Communications, Transport and Labour and National Education and Parastatals, also finance and/or build houses. 28. A lack of coordination among the housing institutions is a serious problem. Plans and projects of the different institutions are frequently unknown by the others; empty newly-built houses are found without the neces- sary infrastructure. Housing Supply 29. Little data is available on the number of housing units constructed by the Government for its employees and by the PHFCT during the first Tanzania Five-Year Plan (1964-1969). It is, however, generally agreed that the numbers were not very large. At the beginning of the Plan period, the Government accepted the recommendation of the ADU Report (1964) 1/ and divested itself of the responsibility for providing housing to all its employees. PHFCT was not established until 1967 and its operations began a year later. 30. NHC carried out the bulk of housing construction during the first plan period. The amounts of funds spent by the Government and the Corpora- tion were as follows: Table 8: CENTRAL GOVERNMENT EXPENDITURES ON HOUSING DURING THE FIRST PLAN (1964-1969) (Shs thousands) Government Expenditure Central Government Year on Staff Quarters Contributions to NHC Total 1964-1965 10,000 10,000 1965-1966 802 9,200 10,000 1966-1967 354 15,620 15,974 1967-1968 9,344 17,700 27,044 1968-1969 2,129 16,850 18,979 Total 12,629 69,370 81,999 Source: Second Five-Year Plan. 1/ ADU Commission was appointed to study the role of Government in supply- ing housing for its employees including the rents charged. ATNEX III Page 12 31. The number of housing units built by NHC during the first plan period and its distribution by area is shown below: Table 9: HOUSING UNITS CONSTRUCTED BY NHIC DURINC FIRST FIVE-YEAR PLAN (1964-1969) BY LOCATION Location Low Cost /1 Iedium Cost /2 Total Dar es Salaam 4,292 386 4,678 Other Townships 878 204 1,082 Ex-Townships 296 27 323 Rural Areas 239 5 234 Total 5,705 622 6,327 /1 Cost: Shs 7,700 - 15,400 7h Cost: Shs 15,460 - 35,000 Source: Second Five-Year Plan 32. Based on Table 9 the Corporation built an average of about 1200 units a year compared to an estimated 17,000 units required a year during the 1970-1974 period. In Dar es Salaam NHC built about 1,000 units a year compared to a reported annual requirement of about 6,000 new units. 1/ 33. Such data as are available on recent housing output (exclusive of squatter housing) shows clearly that the supply is well below the 17,000 units that are required annually. On the average, in 1970 for example, it was estimated that the total number of housing units built from all public sources amounted to about 5,150 units of which 3,000 were high and medium cost units and 1,712 low rental units. 2/ Ignoring, for the moment, the needs attributable to overcrowding and replacement, it still means that only about 40 percent of the estimated needs arising from population growth were actually being met. 3/ Moreover, a substantial part of newly built units were going to replace units torn down by the slum clearance schemes. It is estimated that at least 70 percent of the 5700 low cost units built during the First Five-Year Plan were for this purpose. In short, not only has the supply of housing units been low compared to the needs, the addi- tions to housing stock were even less. 1/ Dar Master Plan. 2/ S. Benjamin, "Squatter Communities in Tanzania". Economic Research Bureau, University College, Dar es Salaam. 3/ The extent of private sector contribution is not known. ANNEX III Page 13 34. It should also be noted that of the 5,150 units built in 1970, 60 percent were medium and high standard units costing between Sh 15,460 (US$2,210) and Sh 35,000 (US$5,000) as opposed to the minimum standard cost- ing between Sh 7,700 and Sh 15,400 (US$1,100-2,200). About half of the low cost units are the so-called multi-family type houses. Accepting for the moment, as Tanzanians assume, that families can spend only 10 percent of their income on housing, then 50 percent of the people in need of housing can pay up to 35 shillings (US$5) a month for rent, and 67 percent of them can pay only up to 50 shillings (US$7). Based on information in Table 10 below, it appears that probably about 60 percent of Tanzanians in need of housing could not or were not expected to afford the so-called low cost units built by NHC. In short, not only has the housing output been very low, it has tended to address itself not to the needs of the actual low income people. From data available really low income people can only afford rents for the one room units. Table 10: NHC HOUSES AND FLATS /1 Area Unit Cost Cost M2 Rent per month M2 Shs Shs Shs Individual Family House 3 room 65 15,400 240 140 Multifamily 1 room 21 4,600 230 45 Multifamily 2 room 30 6,900 230 65 Multifamily 3 room 42 9,200 230 90 Multifamily 6 room 122 25,000 205 220 Multifamily tenanted 1 room 20 4,600 230 45 Single family tenanted 2 room 30 6,900 230 65 Flat 1 room 41 13,200 330 127 Flat 1 room 27 8,910 330 81 Flat 2 room 41 13,200 330 127 Flat multifamily 1 room 21 6,930 330 64 /1 Unit cost includes materials (46 percent), labor (9 percent), elec- tricity, water consumption (7 percent), NHC overhead (23 percent), land (7 percent), septic tank (8 percent); approximate figures. ANNEX III Page 1 35. The low income groups (i.e. at least half those in need of housing (see Table 7) have had to provide shelter for themselves by doubling up or squatter settlements. Dar es Salaam, with about 40 percent of Tanzania urban population, bears the brunt of squatter problem with an estimated 1/3 of its total population living in them. And the situation has worsened with time as can be seen from the following table: Table 11: ESTIMATES OF SQUATTER HOUSING AND DWELLING UNITS IN DAR ES SALAAM 1963-1971 No. of Squatter No. of Dwelling Year Housing Units Units 1963 7,000 28,000 1967 14,720 48,000 1971 20,000 64,000 Source: Ministry of Economic Affairs and Development Planning. The Second Five-Year Plan (1970-1974) 36. The government's housing program under the Second Five-Year Plan is designed to meet some of the problenms identified above by increasing the out- put of housing units and gearing the public housing program more towards the lower quartile of the urban population where the need is greatest. 37. The Plan target is the production of 40,000 units in towns between 1970 and 1974 or about 8,000 units a year by the public sector. It was as- sumed that the private sector would build the balance of housing demand, or about 12,000 units a year. The distribution of the target units by type, institution and expenditures are shown in the following table: ANNT;X III Page 1 5 Text Table 12: Government Housing Program for Second Five-Year Plan Programs Expenditure- No. of Thousands Shs. Lnits Specifications Inatitutions Total 25,000 Site and Services Plots: Laidsurvey 7,075 Land grade infrasturcture, National Housing basic services and founda- Corporation (NRc) 68 000 tion future house in humid zones, 5,000 a year 10,000 Minimum Standard Eouses: Shs 6,000 to 11,000 each; 2,000 a year N.H.C. 70,000 5,000 Medium Standard Houses: N.H.C. for P.H.F.C. who will (PHfFC) 125,000 finance them - Shs 11,000 to 35,000 each Middle-High Income Loans: Permanent Housing no contribution Shs 75,000 or less each; Financing Corporation by the Government (2,000 loans) Staff Flats in Dar, National Cooperative 480 Iringa, Arusha Bank Teachers' Houses: Ministry of Education 45,510 Staff Houses (expansion) (University) - DAP. - 2,250 100 Government Program types Min., Communication 20,000 250 A (100 units) and B Trans. and Labour - (250 units) CIDA Housirg DAR ditto 380 30 U.N. Housing DAR ditto 3,000 Housing Prison Staff Min., Home Affairs 3,520 Housing Immigration Staff ditto 866 Institutional Housing for Staff Min. of Health 4,000 Pural Housing Improvement min., Regional 17,000 through aided sel'-help for Administration and improvirng traditional house, Rural Development building systems and (Iiaendeleo) materials 10, 380 TotaJl Public Sector (without PHF0) 370,080 Middle-High and High Standards Private Sector 600,000 Total_ Fxpenditures 970,480 ANNEX I]I Page 16 33. Even if the Second Plan housing program were fully carried out, it would still provide only about 40% of the 17,000 units required annually. Doubling-up, squatter housing, and privately constructed housing will be the only solutions in those circumstances. Two elements in the NUiC prooram are, however, encouraging: first -.HC is now providing housing in the cost range of Sh 6,000 to 11,000 per unit instead of the Sh 7,700 to 35,000 range which applied during the first plan and secondly, the Government has now introduced a "site and services" program with a target of 25,000 plots to be provided in urban areas for the very low income groups. Performance Under Second Plan 39. Data available on the performance of the PHFCT and NIIC at this time (i.e. two years into the plan) show that the planned targets are not being met. The PIIFCT built 670 units in 1970 and 229 units in the first three- quarters of 1971. Although there would be a problem of adequate funds for PUFTC if the volume of its business increased, the main problem appears to be that of the limits of the effective market to which its programs are directed. It appears that this problem could be tackled through the reduc- tion of subsidies to those elements of Tanzanian society who are able to build their own houses - namely the civil servants and employees of para- statal organizations. Althoughi the niumber of persons involved is not large, the accommodations are provided at rents set at 10 percent of gross salary, which amounts to a hidden subsidy for that group of people in the country most able to pay. The following table indicates the magnitude of the sub- sidies involvecd for certain groups of civil servants and parastatal employees Table 13: EXTENT OF HOUSING SUIBSIDY FOR GOVEFTMENT EMIPLOYEES Salary of Entitled Economnic Officer per Month Type of House 10% of Salary _ Rent_ Subsidy Pil PM PM PM 4200 Sh Grade A-I 420 Sh 1125 Sh 705 Sh 3150 Sh Grade A-V 315 Si 3 00 Sli 485 Sh 2350 Sh Grade A-VIII 20S5 Sh 630 Sh 345 Sh The withdrawal of these subs:iiies should be examineil. Were they to be with- drawn that would open up a mnarket for the Perm,anent Housing7 Finiance Company of Tanzania Limited (PIIFCT) -ind free Goverorient resources to be applied to those groups where need is more acute. Low Cost liousin- 40. In low income housing, NHC's goal was to build 4,000 uLnits during thie first two vears of the plan period. Nl'C corTipleted 2,254 low cost units and had a further 1,25. und'er construction by tie end of 1971. The actual ANNEX III Page 17 costs encountered were higher than originally planned, so of the 2,254 units built, 528 were Swahili house units, housing more people per unit, resulting in fewer housing units than initially planned. In medium cost units, NHC's goal was 1,000 units for the two year period, only 604 houses were built and 242 are now under construction. PHFCT financed 672 units; 142 units were built as a part of special projects. 41. Again NHC, like PHFCT is operating well below the targets. Here it appears that the problems revolve around: (a) shortage in building personnel, especially since projects formerly done by contractors and private builders have now to be executed by NHC itself; (b) limited budget allocations; (c) inadequate means of transportation of building materials; (d) a lack of coordination between NHC and other agencies resulting in delays in the installation of infrastructure; (e) rising costs due to increased labor costs and other factors. 42. The steps that might be taken to eliminate some of these constraints need careful examination, such a study should include a review of the building capacity and capabilities of NHC. If NHC cannot meet the targets, perhaps the use of private contractors to build houses on behalf of NHC should be considered in order to avoid delays due to NHC's limited building capacity. Site and Services Program 43. NIC has made least progress in its site and services program. Although about 10,000 plots were called for, in the first two years of the plan, only 624 were developed over a 2-year period and 216 were under con- struction in 1971. This program could clearly be the most important system for housing urban low-income groups. At the same time, it could be the most economical program for the government, facilitating the national policy of self-help. 44. The apparent lack of progress in the site and services program is not surprising in view of the very large size of the proposed program in a country which has had little experience with this kind of solution to the problems of shelter. A thorough examination of the situation is required before one can pin-point the factors underlying present inadequate perform- ance. Nevertheless, based on experience with this type of program elsewhere, one can tentatively point out the factors that are critical to the success of "site and services" programs. These include: ANNEX III Page 18 (a) choosing realistic standards and phasing in the servicing of sites so that the sites do not become too expensive to those people for whom they are intended; (b) ensuring that the candidates for sites have the means (jobs, credit, construction material, technical assistance) to build shelter once serviced lots are provided; (c) security of tenure so people have an incentive to improve their housing; (d) effective management of the program so that the delivery and maintenance of services to the plots is guaranteed and service charges collected. Community organization and development among residents of sites and services is usually critical for the realization of rent collection; (e) providing for other community services, health facilities, etc. 45. It is not clear to what extent some of these questions were examined before the program was launched. For example, why does the government provide foundations on the plots which tends to raise the costs substantially? Was the possibility of some kind of credit scheme considered for the program? Can NHC with its present overstretched staff manage and implement the site and service program? Squatter Housing and Slum Clearance 46. However well NHC's low cost housing and site and services programs may work in the future, they are unlikely to add substantially to housing stock if they are accompanied by a policy of slum (squatter settlement) clearance. Government policy regarding this very important question remains ambiguous. Does the government intend to continue slum clearance schemes? Will this be a general or selective policy? These are important questions because squatter housing provides shelter for a substantial number of urban dwellers in Tanzania and will continue to do so for some time to come. 47. The Swahili type house constitutes about 90 percent of squatter accommodation in Dar es Salaam which reportedly house one-third of the city's inhabitants or 100,000 people. Each house typically contains 4 to 6 rooms on either side of a 5' wide central corridor. Across the enclosed yard at the rear will be a kitchen and toilet; cooking is done in the yard itself. Usually, the owner lives in one or two rooms and rents the others. Up to 25 people in up to six separate family 2nits may be accommodated in each house; generally, rooms are the minimum 9 m . Each room in Dar es Salaam suburbs may rent for Sh 25 with a mud floor and Sh 30 for a cement floor. An owner can construct a 4-room house of mud-brick or Swahili house for Sh 3,500. If he rents all the rooms and has no other expense, gross rental would recover expenses in three years. ANNEX III --ae ge 4P. TheL point in describing the Swahili howase is to show. tt-t pro- videp: rcasonable shelter and, even more, at rents within reach of t-9. bulk or the Low income people as is shown in the table below: Tahic 14: COMPARATIVE COSTS: A SWARILI -r MODERN !C'T... Traditional Houle Area Unit Cost Cost M2 Rent per 7`nth-Shs 1M2 Shs Shs Fannni arket Mud and atick (4 room 95 3,500 36 100 Swahili house (1 room 23 880 36 10 25 Mud and stick (4 room 95 7,600 80 C) 140 brought up to ( NHC construction ( standards (1 roorm 23 1,65G SO 20 35 Source: J. Leaning "Low Cost Housing in Tanzania - A Factual Analysis". 49. The case against indiscriminate demolishing of squatter eettlc-mentr was aptly summed by a Dar squatter landlord in a recent interview with a staff writer of the Tanzanian Standard (January 19, 1972). He said: "What surprises me is that these City Council people do not realize that to a large extent, these very houses they classify as shanties somehow eased the housinz problem in this town ..... The house (his) is definitely poor compared to some in Dar es Salaam but it serves the purpose." 50. It would appear, therefore, that instead of clearing squatter housing the Government should examine the possibility of a policy of encou- raging their improvement with special attention to the environment that surrounds them, including water and drainage. This would not only conserve available housing stock but would constitute a significant cost saving as illustrated in Table 14 above, to say nothing of social costs involved in destroying viable communities which often serve to integrate rural migrants into the urban community. 51. In order to eliminate the inconsistencies in policy and performance, it is recommended that the Government: (a) implement the recommendations of the ADU Report (1964) with respect to subsidies for civil servants. This could have a double effect: widen the market for PHECT and release resources which could be applied to the low cost housing and "site and services" programs; (b) examine the building and management capabilities of the NHC with. the view to improving them. In the meantime, stop-gap measures may have to be taken to ensure Plan ANNEX III Page 70- output targets. Such measures might include the use of contractors and private builders to construct houses for NHC; (c) undertake a complete review of the "site and services" program to see what and where the constraints to the implementation of the program lie. In such a review, close attention should be paid to the economic and socio-characteristics of the target population, the standards used in the program, the means and likelihood which the target population has of actually building their own houses, and the management of the program. The "site and services" program is so critical to the realization of housing urban dwellers through self- reliance that were these initial attempts at instituting this type of solution left to fail, the consequences would be far reaching; and (d) should define clearly its policy towards squatter housing. A policy of improving instead of clearing them, except in select cases, would in the long run help to ease housing shortage. U G A NDO A 4- - -tA K E > / 36' TANZANIA 40 VIC'\A < KCE NY A REGIONS AND DISTRICTS Bukobamuo e, RWANDA Biiliima --~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Region boundaries AKE I K-. 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