Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. P-2668-TA

REPORT AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED CREDIT

TO THE

UNITED REPUBLIC OF TANZANIA

FOR THE

DAR ES SALAM PORT ENGINEERING PROJECT

December 5, 1979

This document kms a resricted distribution and may We used by recipients only in the performance oftheir offical duties. Its contents may not otherwise be disclosed without World Bank autborization.

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CURRENCY EQUIVALENTS

Currency Unit = Tanzanian Shilling (TSh.)US$1.00 = TShs. 8.301.0 TSh. = US$0.12

(As the Tanzania Shilling is officially valued in relationto a basket of currencies, the US Dollar/Tanzania Shillingexchange rate is subject to change. Conversions in thisreport were made at US$1.00 to TShs. 8.30 which is closeto the 1979 average exchange rate.)

WEIGHTS AND MEASURES

1 meter (m) = 3.28 feet (ft)1 kilometer (km) = 0.62 miles (mi)1 square kilometer (sq km) = 0.386 square miles (sq mi)

GLOSSARY OF ABBREVIATIONS

EAC - East African CommunityEAHC - East African Harbours CorporationMCT - Ministry of Communications and TransportMFP - Ministry of Finance and PlanningMOW - Ministry of WorksNMC - National Milling CorporationODA - Overseas Development Administration (UK)TANZAM - Tanzania/ZambiaTAZARA - Tanzania-Zambia Railway LineTCSL - Tanzania Coastal Shipping Line, Ltd.TRA - Tanzania Harbours AuthorityTRC - Tanzania Railway CorporationZTRS - Zambia-Tanzania Road Services

FISCAL YEAR

Government : July 1 - June 30

Tanzania Harbours Authority: July 1 - June 30

FOR OFFICIAL USE ONLY

TANZANIA

DAR ES SALAAM PORT ENGINEERING PROJECT

CREDIT AND PROJECT SUMMARY

BORROWER: United Republic of Tanzania

BENEFICIARY: Tanzania Harbours Authority (THA)

AMOUNT: US$2.5 million equivalent

TERMS: Repayable in 10 years including 2 years of grace and carryinga service charge of 3/4 of 1% per annum. The credit wouldbe refinanced under any subsequent credit or loan the BankGroup may provide to implement a proposed Harbours Projectat Dar es Salaam.

RELENDING TERMS: The proceeds of the credit would be onlent to the TanzaniaHarbours Authority for 10 years including 2 years of graceat an interest rate of 7.95% per annum. The exchange riskwould be assumed fully by THA.

PROJECT The proposed credit is intended to finance the detailedDESCRIPTION: engineering designs and the preparation and evaluation of

tenders required for Civil Works under a proposed HarboursProject in order to firm up the cost estimates for theProject. The engineering credit would finance:

(a) a feasibility study of the location of a bulk grainsilo;

(b) preliminary and final engineering designs, costestimates and tender documents for a bulk grain silo(with a ship unloader, conveyor system and elevator)and an import storage warehouse;

(c) final engineering designs, cost estimates and tenderdocuments for (i) deepening and straightening ofthe entrance channel, (ii) a container facility,(iii) the replacement of the petroleum jetty, and(iv) a harbour tug berth; and

(d) assistance to THA in prequalification of interestedcivil works contractors and in the evaluation of civilworks tenders.

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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The risk involved in the proposed engineering project isminimal as the same consultants who carried out satis-factorily the updating study of the port of Dar esSalaam had been selected for the engineering servicesand as no major delay is anticipated.

ESTIMATED COSTS: 1/Local Foreign Total------ (US$ million)------

Engineering Consultants:

Home Office - 1.38 1.38Overseas (Tanzania) .30 .21 .51Sub-Contracts - .21 .21

Support, subsistenceand transport .15 .20 .35

Subtotal .45 2.00 2.45

Price contingencies .05 .30 .35

Physical contingencies - .20 .20

Total Engineering CostNet of Taxes and Duties .50 2.50 3.00

FINANCING PLAN: The proposed credit would finance the foreign exchangecomponent of the engineering services; the remaining US$.5million in local costs would be financed by THA.

ESTIMATEDDISBURSEMENTS: IDA Fiscal Year

1980 1981 1982-----(US$ million)-----

Annual .4 1.9 .2Cumulative .4 2.3 2.5

RATE OF RETURN: Not applicable

1/ The proj,ect is exempted from identifiable taxes and duties.

INTERNATIONAL DEVELOPMENT ASSOCIATION

REPORT AND RECOMMENDATION OF THE PRESIDENTTO THE EXECUTIVE DIRECTORS

ON A PROPOSED CREDITTO THE UNITED REPUBLIC OF TANZANIA

FOR THE DAR ES SALAAM PORT ENGINEERING PROJECT

1. I submit the following report and recommendation on a proposedcredit of US$2.5 million equivalent to the United Republic of Tanzania tohelp finance the detailed engineering designs and the preparation and evalua-tion of tenders for civil works required for a proposed Harbours Project.The credit would carry a service charge of 3/4 of 1% per annum and wouldbe repayable in 10 years including 2 years of grace. The proceeds of thecredit would be onlent to the Tanzania Harbours Authority under a subsidiaryloan agreement which would be on terms and conditions acceptable to theAssociation including an interest rate of 7.95% per annum and repayment in10 years including 2 years of grace. The exchange risk would be assumed fullyby THA. The Credit would be refinanced under any subsequent credit or loanthe Bank Group may provide to implement a proposed Harbours Project at Dar esSalaam.

PART I - THE ECONOMY

2. A Basic Economic Mission visited Tanzania in August 1976. TheBasic Economic Report was distributed in December 1977 (Report No. 1616-TA).A new Country Economic Memorandum will be issued later in this fiscal year.A summary of social and economic data is in Annex I.

Profile of the Economy

3. Tanzania is one of the 30 least developed countries in the worldwith a per capita income in 1978 of US$230. The economy is still heavilydependent on agriculture: 90% of the labor force is engaged in agricultureand approximately 50% of GDP and two-thirds of total exports are derived fromagricultural production. The industrial sector is still small, producingabout 10% of GDP, approximately the same percentage as 11 years ago. Theservice sector produces about 40% of GDP. Overall population density islow, though a few areas are considered overpopulated. Population growth isestimated at 3.0% per annum with both fertility and mortality at relativelyhigh levels.

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4. Since the Arusha Declaration in 1967 Tanzania has pursued a socialistdevelopment strategy. Banking, insurance, and most large-scale enterprisesin manufacturing, plantation agriculture, transportation, and wholesale tradeare under state control. There is extensive state intervention in economicactivity, including import licensing, foreign exchange controls, price control,the reservation of some activities to the state or cooperative sector, anddetailed Government investment planning. The second major feature ofTanzania's development strategy is its strong emphasis on rural developmentand social programs to benefit the poor and reduce inequalities in incomedistribution. This is reflected in ambitious programs for the provisionof rural water supplies and health services and in the decision to achieveuniversal entry into primary education beginning in 1977.

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Long Term Economic Trends

5. In the decade 1968-78 real GDP at factor cost grew at an annualaverage rate of 4.8%, or about 1.8% per annum per capita. While economicgrowth was severely disrupted by the economic crisis following the failureof rains and large increases in import prices in 1973 and 1974, the economyhas recovered well with annual growth at 5 to 6% for 1976 through 1978.During this decade the service sector grew the fastest - 6.3% p.a., followedby the industrial sector - 4.0% p.a. and then agriculture - 3.9% p.a.

6. The Government has a good record of domestic resource mobilization.Between 1967-68 and 1977-78 the share of recurrent revenues rose from 15.1%to 19.3% of GDP. However, most of this increase occurred before 1975-1976.Since then revenue has been increasing at a rate below the GDP growth rate(in 1974/75 revenue was 22% of GDP). This increase was achieved through acombination of highly progressive direct taxes and proportional or moderatelyprogressive indirect taxes. Except during the economic crisis in 1974-75,the rate of national savings has also been high: gross national savingsfluctuated at around 16-17% of GNP from the mid-1960s through 1973, fellto half that level during the crisis years and recovered to the pre-crisislevel in 1976 and 1977. These are high levels of savings for a country at

Tanzania's income level.

7. Some progress has also been made in achieving the Government'sobjective of a more equitable income distribution. Between 1969 and 1975the average urban rural gap remained approximately constant, halting the trendtowards an increasing gap in the early 1960s. It is likely that the gap hasbeen slightly reduced since 1976 due to continued recovery of agriculturalproduction and higher producer prices. However, regional income differentialsin rural areas have tended to widen slightly. Within the formal urban sector

there has been a dramatic narrowing of the post-tax income differentialbetween the highest-paid government officials and minimum wage earners from 50to 1 in 1961 to 8 to 1 in 1975. However, a large informal sector has emerged

comprising large numbers of unemployed and underemployed workers with earningssignificantly below the official urban minimum wage. The policies of wagerestraint and higher producer prices pursued since 1975 should have a bene-ficial impact on almost all dimensions of income distribution, and the basicneeds oriented programs in rural water and health and in universal primaryeducation (para. 4 above) are resulting in a significant redirection inpublic expenditures toward the rural poor.

8. Despite this impressive overall record of development, some pro-blems have begun to manifest themselves in recent years. Exports have failedto keep pace with the growth of the rest of the economy. The overall exportindex is down almost one-third since 1966. This poor performance in exports

is due to the poor growth rate of agricultural cash crops. While agricul-tural output has increased impressively in recent years (10.9% in 1976 and8.2% in 1977), most of this growth has been in the hard-to-measure subsistencesector, while the monetary sector has lagged well behind. Over the last decadesubsistence growth has averaged 5.1% per annum while monetary sector growth

has been only 2.3% per annum. This has led to a severe retardation of growthof exports of agricultural products. This failure of export growth has led toincreasing dependency on foreign loans and grants to pay for imports.

9. A second problem that is becoming more serious is the decelerationof the growth of domestic revenues. While still at a high ratio to GDPcompared to most other developing countries, government revenues have beengrowing more slowly than GDP in recent years. At the same time recurrentexpenditures have been higher than budgeted. As a result, public sectorsavings have been well below expectations and the Government has had to relymore upon borrowing (both foreign and local) and external aid for financing

development than was planned.

Recent Economic Developments

10. During 1975-77 the Government followed a program agreed to at thetime of the first Program Loan (No. 1063-TA) in late 1974. This programincluded redirecting investment to more productive sectors, higher agricul-tural producer prices, constraints on wages and salaries, price and tax

increases to restrain consumption and tight control of imports. These poli-

cies, aided by the boom in coffee prices, succeeded in keeping governmentspending under control with low levels of borrowing from the banking system

and led to a balance of payments surplus of almost US$150 million in 1977.Food production increased and government stocks of most foodgrains reachedrecord levels. In 1978 the Government was able to ease import restrictionsand begin to import the spares and raw materials needed by industry, whichhad been running below capacity.

11. Unfortunately the price of coffee, Tanzania's major export, began tofall at the same time that imports were liberalized. Also, in October, 1978war broke out with Uganda and the resulting imports of military equipment anddomestic mobilization put an increasing strain on the balance of paymentsand the domestic budget. Consequently the current account showed a deficitof more than US$450 million in 1978 and the overall balance of payments wasalmost US$300 million in deficit. As a result, reserves were drawn down andthe country was forced to delay payment of about US$60 million in import bills.

12. The situation has deteriorated further in 1979 and the Government'seconomic policies are facing a major challenge. The overall balance ofpayments is expected to be almost US$200 million in deficit and as a resultarrears are expected to be about US$200 million by the end of the year. Atthe same time the domestic budget deficit has ballooned. The recurrent budgetis expected to show a deficit of almost 1 billion shillings for 1978/79 andgovernment borrowing from the banking system is expected to be more than 3

billion shillings, a major component in an almost 35% increase in the moneysupply. Import licenses have been reduced by almost 40% from the 1978 levelin real terms (following a 10% devaluation in January of 1979). The Governmenthas been able to arrange for almost US$75 million in funds from the IMF fromits first credit tranche, the Trust Fund and the Export Compensatory Fund, butnegotiations for further assistance from the IMF have so far been unsuccessful.The 1979/80 budget calls for a reduction in the level of recurrent expenditure

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and borrowing from the banking system of 1.67 billion shillings, but throughthe first quarter of this fiscal year borrowing was already 1.4 billionshillings. A major problem is lack of budgetary discipline as spendingagencies have been able to exceed their budgetary allocations with the Treasurycontinuing to honor their checks. The Government urgently needs to develop acomprehensive program to deal with the current crisis, as it did in 1974. TheBank has offered to help the Government in developing such a program.

13. Tanzania continues to attract large amounts of foreign assistanceon concessional terms. Because of the very concessional terms on which aidhas been given to Tanzania and the Government's reluctance in the past to usehigher cost commercial loans and supplier's credits, the overall debt serviceratio has historically been low (less than 10%). However, the recent balanceof payments crisis has forced the Government to utilize such loans recentlyand as a result the debt service ratio is estimated at 12% in 1979 and 15% in1980. We expect it will remain in the range of 15-20% throughout the 1980's.In 1978 the Bank held 12% of Tanzania's external debt (for the Bank Group, itwas 28%) and received 37% of Tanzania's debt service (40% for the Bank Group).We are projecting this debt service share to fall to about 21% in 1980 and toremain around 25% for the coming decade.

14. Tanzania's development will require resources in excess of domesticsavings and external capital made available solely to finance the foreignexchange costs of projects. Given the Government's efforts to mobilizedomestic resources and in view of our support for its increased emphasison local cost intensive rural investments, the Bank Group will continue tofinance a high proportion of total costs including, in appropriate cases, aportion of local costs.

East African Community (EAC)

15. The recent developments in the East African Community were outlinedin a report to the Executive Directors dated December 19, 1977 (R77-312).Dr. Victor Umbricht, the independent mediator appointed by the Partner States,has visited East Africa on numerous occasions and has now prepared reports tothe Partner States on the results of his fact-finding work on the EAC Corpora-tions and the General Services, and the methodology adopted in appraising theassets and liabilities. The next phase of the mediator's work will be tomake recommendations on the allocation of these assets and liabilities. Themediator's report and recommendations on the future structure of the EastAfrican Development Bank (EADB) have been accepted in principle by the PartnerStates and the revised EADB Charter along with the Treaty to enact the newCharter have been submitted to the three Governments for signature.

16. The de facto breakup of the Community has had some impact onTanzania's budget as new national entities take over the services formerlyprovided by the EAC Corporations. A major development related to the EACdifficulties was the closure of the border with Kenya. Kenya was a majortrading partner of Tanzania and considerable adjustments have had to be madein locating new suppliers for some items and developing alternative outletsfor some manufactured goods and agricultural products.

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PART II - BANK GROUP OPERATIONS IN TANZANIA 1/

17. Tanzania joined the Bank, IDA and IFC in 1962. Beginning withan IDA credit for education in 1962, 38 IDA credits and 19 Bank loans, ofwhich two on Third Window terms, amounting to US$747.0 million have sofar been approved for Tanzania. In addition, Tanzania has been a beneficiaryof 10 loans totalling US$244.8 million which have been extended for thedevelopment of the common services and development bank operated regionallyby Tanzania, Kenya and Uganda through their association in the East AfricanCommunity. IFC investments in Tanzania, totalling US$4.7 million, were madeto the Kilombero Sugar Company in 1960 and 1964. This Company encounteredfinancial difficulties and in 1969 IFC and other investors sold their interestin the Company to the Government. A new IFC investment of US$1.7 million insoap manufacturing in Mbeya was approved by the Executive Directors on June8, 1978 and an investment of US$1.5 million in metal product manufacturing wasapproved on May 10, 1979. Annex II contains summary statements of Bank loans,IDA credits and Ik'C investments to Tanzania and the East African Communityorganizations as of September 30, 1979 and notes on the execution of ongoingprojects.

18. To support Tanzania's overall development strategy Bank Group lend-ing operations are increasingly focusing on the rural sector and directlyproductive projects. While up to the end of FY 1972 Bank Group operationswere directed mainly to infrastructure, the overwhelming majority of theoperations approved since FY73 have been for directly productive projects.Furthermore, a number of recent Bank Group supported infrastructure projectshave been closely linked with specific productive activities. For example,the Urban Water Supply Project (Loan No. 1354-TA) approved in January 1976,will support the Industrial Complex in Morogoro (Loans No. 1385-T-TA and1386-TA) and the Morogoro Textile Project (Loan No. 1607-TA and Credit Noe833-TA). Directly productive projects recently approved include the SecondCashewnut Development Project (Credit No. 801-TA), the Tobacco HandlingProject (Credit No. 802-TA), the Mwanza/Shinyanga Rural Development Project(Credit No. 803-TA), the Mufindi Pulp and Paper Project (Loan No. 1650-TA andCredit No. 875-TA) and the Tanganyika Development Finance Company Limited(TDFL) Project (Loan No. 1745-TA). In addition, a Tourism RehabilitationProject (Credit No. 860-TA), a Sixth Education Project (Credit No. 861-TA)and a Fifth Highway Project (Credit No. 876-TA) were approved by the Boardin FY79. A fourth line of credit to the Tanzania Investment Bank (Loan No.1750-TA) was also approved on July 24, 1979. Projects which have been ap-praised include a Second Urban Water Supply Project, a line of credit tothe Tanzania Rural Development Bank (TRDB), a Pyrethrum Project, a CoconutProject, a Tea Processing Project, an Education Project and a FoodgrainStorage and Milling Project. A rural development project in Mara, a smallscale industries project, an urban project, a harbours project, a railwayproject, and an agricultural services project are also under preparation.

1/ This section is essentially the same as that of the President's Reporton the Tanzania Investment Bank (TIB) Projected dated July 12, 1979.

19. Although the comparatively high undisbursed proportion of loans

and credits, detailed in Annex II, is in large part a result of the recentapproval of many of these projects, it also reflects the fact that overallproject implementation has been slower than was projected. It is clear in

retrospect that both the Bank Group and Tanzania have been optimistic re-

garding Tanzania's absorptive capacity. The causes of the difficulties inimplementation are varied. Some stem from the scarcity of suitably trained

and experienced manpower, some reflect the problems in identifying agronomicinput packages appropriate to the needs of smallholder farmers while othersresult from the strains associated with attempting a "frontal attack" on

poverty. These problems have been compounded by frequent and drastic ad-ministrative changes, which -- though potentially the source of long-termbenefits -- have certainly disrupted orderly execution of projects and madeparts of earlier project concepts obsolete. Also, the Uganda war (para. 11)has had some impact on project implementation. In the early stages of thewar, there was some diversion of equipment and manpower; however these problems

have largely been solved. The problem over the medium term are the financialimplications of the war. If general economic problems resulting from the warare not resolved, the availability of adequate local funds could become amajor constraint to implementation. In general, difficulties have been mostsevere in agriculture, particularly in the smallholder rural sector. As ourlending program has increasingly concentrated on this sector, these problems

have become correspondingly more apparent and severe. By contrast, the

"modern" sector projects have tended to fare better: the Tanzania InvestmentBank, Mwanza Textile, Morogoro Industrial Estate and Cashewnut ProcessingProjects, for example, are proceeding well.

20. As the Bank Group's lending program has expanded, increasingattention has been given to measures designed to improve project implementa-tion. A course was conducted in Dar es Salaam in 1973 and again in 1978 onBank Group procurement with the relevant Government officials. A specialproject implementation unit was set up in the Ministry of Agriculture and11 Agricultural Development Services staff have been assigned to Bank Groupfinanced projects in agriculture and rural development. The need to establisha close and continuous working level dialogue between responsible Tanzanianofficials and Bank Group staff on implementation problems was one of the primereasons for the expansion of the Resident Mission to two professionals in

October 1976. In February 1977 a regular Government/Bank Group review ofproject implementation was established. Monthly discussions on Bank Groupprogram chaired by the Ministry of Finance and Planning (MFP) and attended by

Bank Group staff and officials from implementing agencies deal in detail with

individual problem projects and problems which are affecting project imple-

mentation across a number of sectors. As a result of these efforts, there has

been a noticeable improvement in project implementation. Actions agreed to

during the reviews have been completed relatively fast and coordination andcommunication between the MFP and the various ministries and agencies res-

ponsible for project implementation has improved markedly.

21. The Government has become increasingly conscious of the importance

of effective implementation. In addition to fully supporting the project

implementation review system, MFP has set up a unit to oversee project per-

formance. Furthermore, there have been more consistent responses to Bank

suggestions and a willingness to openly discuss project problems raised by

Bank Staff. As a consequence, the disbursement records of Bank Group financed

projects have improved somewhat over the last two years, and a recent analysis

indicated that the Tanzanian disbursement performance is about equal to the

Bank-wide average. While there is still a potential for further significant

improvements, the Government is implementing its investment program, including

Bank Group and other foreign aided projects, more effectively than in the

past.

PART III - THE TRANSPORT SECTOR

Background

22. Tanzania, with a population of about 17 million, has a land area of

about 945,000 sq km. Less than 10% of the population lives in towns, but the

urban population is increasing much faster than the national population growth

rate (para. 3). Poor road conditions and lack of adequate transport seriously

constrain the country's economic growth, especially the marketing of agricul-

tural products and the delivery of agricultural inputs. To facilitate rural

development and to improve overall efficiency, the Government in 1972 decen-

tralized various administrative activities, giving the country's 25 adminis-

trative regions (20 on the mainland) substantial power to control the planning

and budgeting of resources in their respective jurisdictions. While the

development of adequate transport services is critical to the success of the

regional efforts only limited progress has been made in improving the transport

infrastructure, reflecting, among other things, severe staff constraints and

limited financial resources.

The Transport System

23. Tanzania's transport system comprises roads (about 45,000 km), two

railway systems (totalling 3,570 km of track), three main ocean ports and

some minor ocean and lake ports, two international airports and over 50

smaller airfields. A pipeline conveys crude oil between Dar es Salaam and

Zambia; in addition, one of the railways, and a major road, were built

mainly to carry Zambian traffic. Since the collapse of the East African

Community (EAC) in 1977, Tanzania has become wholly responsible for management

of its transport system.

24. Highways. Of the total road network in Tanzania only 7% is paved;

93% is gravel or earth. In addition, as only about 900 km of the gravel roads

have been engineered, most of the gravel or earth roads typically become

impassable during the wet season. Roads classified as trunk roads (9,316 km)

link the mainland's 20 regional capitals and connect Tanzania with neighboring

countries; they vary in standard from two-lane paved roads to unimproved earth

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tracks. Roads classified as secondary roads (7,694 km) link other centersof economic activity with the trunk road network while those classified asregional and district roads (about 28,000 km) form the balance of the system.The 9,316 km trunk road system includes about 2,100 km of secondary roads andregional roads recently reclassified to trunk roads.

25. Railways. Two railway systems serve Tanzania: The TanzaniaRailway Corporation (TRC) and the Tanzania-Zambia Railway Authority (TAZARA).TRC was established as a corporate entity in 1977 to operate that part of theEast African Railway Corporation (EARC) located within Tanzanian territory.Although not all the issues involved in this transfer have been resolved,TRC now manages and operates the 2,600 km, 1.0 m gauge railway in centraland northern Tanzania. Linking Dar es Salaam and Tanga with Arusha, Mwanza,Dodoma, Tabora and Kigoma, the TRC railway is particularly important forlong-distance transport internally as well as for transit traffic to and fromsome of its neighbors, particularly Burundi, Rwanda and Zaire. TRC's opera-tions and services are presently unsatisfactory because of low availabilityof locomotives and wagons and lack of workshop facilities, as well as thedeteriorated condition of equipment and track. Large investments are requiredand the Canadian Government along with a number of other bilateral agencieshave agreed to provide substantial financial assistance. Also, a project isbeing prepared for possible Bank Group financing (para. 18).

26. TAZARA, financed by the Peoples Republic of China and owned jointlyby Tanzania and Zambia, commenced operations in 1976 and consists of 1.067 mgauge track extending 970 km from Dar es Salaam to the Zambian border andcontinuing another 890 km into Zambia. The principal traffic at present is,and for some years will continue to be, Zambian exports of copper and Zambianimports. Future growth of Tanzanian traffic on the line will depend ondevelopment of the country's southern regions. TAZARA operations haveexperienced increasing difficulties; maintenance of locomotives, turn-aroundtime of wagons, and coordination with the port of Dar es Salaam are presentlypoor. The Government is currently making efforts to improve this situation.In addition a number of bridges in Zambian territory have recently beendestroyed in military actions related to the civil war in Zimbabwe-Rhodesia;these are now being repaired.

27. Ports. Dar es Salaam is Tanzania's principal sea port, Tangaand Mtwara are the other major ports. Dar es Salaam is located in a naturalharbour on the East African seaboard of the Indian Ocean. In addition tohandling the bulk of Tanzania's traffic, this port has traditionally handledtransit traffic for the eastern part of Zaire, and the landlocked countriesof Burundi and Rwanda. In recent years it has also become a major port forZambia's seaborne imports and exports, particularly since the opening ofTAZARA in 1976.

28. Shipping. The Tanzania Coastal Shipping Line, Ltd. (TCSL), estab-lished in 1971, is a parastatal corporation with a monopoly of carryingfreight and passengers between various coastal and island ports south of Dares Salaam. Traffic between Dar es Salaam, Mtwara and Lindi is highly seasonalwith heavy traffic in the rainy season when alternative road transport isunreliable, circuitous, and costly. Until an improved coastal road including

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a costly bridge over the Rufiji River can be built (which appears unlikely formany years), the TCSL will play an important role in transport to and fromsoutheastern Tanzania.

29. Some transport services are also provided by TRC on Lake Victoriabetween Mwanza, Bukoba and Musoma ports. On Lake Tanganyika, Burundi-ownedships transport considerable cargo-between Bujumbura and Kigoma, the westernterminus of TRC.

30. Air Transport. With its vast distances, difficult terrain andlimited road network, domestic air service is particularly important inTanzania. Of the more than 50 designated airfields, only a few are builtto standards high enough to permit operation of jet aircraft; many of theremainder are dirt and grass strips used only occasionally. Internationalairports are located in Dar es Salaam and Kilimanjaro; Mtwara, Tabora, Dodoma,Mwanza and Zanzibar also have paved runways. The national air transportcompany, Air Tanzania, was established in 1977 following termination ofoperations of the East African Airways Corporation to service a wide networkof domestic routes. Using Fokker E-27 aircraft, Twin-Otters and two Boeing737s, the airline provides services to major centers within the country andlimited services between Tanzania and certain neighboring countries. AirTanzania performance has improved markedly during this year. No regularair service is available between Tanzania and Kenya; all road, rail and airtraffic between the two countries was suspended in February 1977 (para. 16above).

31. Pipeline. A pipeline financed by the Italian Government andoperated by the TANZAM Oil Pipeline Company was completed in 1968 from Dares Salaam to Ndola in Zambia. Initially the 1,705 km line (900 km in Tanzania)of 20.3 cm pipe carried gasoline to Zambia, but following construction of arefinery at Ndola, the line now transports crude oil. Its design capacityexceeds 700,000 tons p.a., and traffic flow has generally been at about thatlevel.

Transport Planning and Coordination

32. The Ministry of Works (MOW) is responsible for planning majorhighway investments while the Ministry of Communications and Transport (MCT)oversees planning for other transport modes. The regional authorities haveresponsibility for planning, implementing and maintaining local roads. MFPhas the principal responsibility for financing transport investments andpreparing investment programs based on proposals from MOW, MCT, and theregions (after preliminary review by the Office of the Prime Minister). Astransport planning capability is weak in all the ministries involved and sincedata for planning are not systematically collected, little meaningful transportplanning has taken place in Tanzania. To begin to address this problem, BankGroup staff have been advising both MCT and MOW on preparation of a project-specific national transport plan which would define priorities and programsfor investments in the sector. Thus far, neither Ministry has been able tocommit significant resources to this exercise and MCT is recommending that aNational Transport Study covering all modes of transport should be undertakenby consultants with assistance from the Bank Group. This proposal is nowbeing reviewed by the Bank.

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33. Coordination of investments within the transport sector is weak,largely because of the lack of planning capability. A major cause of thisproblem was the dissolution of the East African Community. During itsexistence, air transport, ports, and a portion of the rail system operatedunder cooperative statutory institutions of the Community, with planning andcoordination at the Community level. Since these transport elements are nowoperating under new agencies established by the Tanzania Government, therehave been significant problems in reestablishing the necessary management andoperational systems. While these problems have not led to serious misinvest-ments, there is a growing need to give transport investment coordination moreattention in view of Tanzania's overall resource constraints and the highcosts of the priority investments required in transport services. Coordina-tion of investments among transport and non-transport sectors has also beenlimited. For example, in the high potential agriculture areas in south-western Tanzania the benefits realized by Tanzania from heavy transportinvestments in the TANZAM corridor have been limited. The Government is nowgiving priority to the development of this area.

Previous Bank Group Lending in Transport

34. The Bank Group has supported extensively the development of thetransport sector in Tanzania. At the national level, investments have beenmade in highways and trucking. Highway lending includes five projectstotalling $76.7 million: the first project financed construction of a totalof 860 km of roads, the second project assisted in the construction of theTANZAM Highway, and the third project focused on road construction in SouthernTanzania and betterment of feeder roads. All were completed successfully.The fourth and fifth projects are still under implementation and are aimed atimproving trunk road maintenance capacity throughout the country. The TruckingProject, which is also under implementation, is directed at the development ofefficient trucking services through direct investment in a number of publictrucking companies, training and the financing of increased spare partsinventories. In addition, a number of rural development and agriculturalprojects include road construction components.

35. Bank Group assistance to Tanzania for ports and railways was providedin the past within the framework of the East African Community. Loans amount-ing to US$166 million were made to the East African Railways and HarboursAdministration and its successors the East African Railways Corporation (EARC)and East African Harbours Corporation (EAHC); these projects benefitted allthree Partner States. In Tanzania, the projects have assisted the develop-ment of EARC's northern and central lines and financed a large portion of thedevelopment of Dar es Salaam Port. The specific investments in harboursinclude four projects: Loan 110-EA (1955 - US$24.0 million) was made to theEast African High Commission to meet part of the costs to be incurred during1954-57 by the East African Railways and Harbours Administration in itsdevelopment program. Among other things, this loan financed the completion ofdeep-water berths at Mombasa and at Dar es Salaam and a new lighterage wharfat Tanga. The project works were satisfactorily completed in 1957. Loan428-EA (1965 - US$38.0 million) was made to the East African Common Services

- 11 -

Authority to finance part of the foreign exchange cost of the developmentprogram of the East African Railways and Harbours Administration during1965-67. This loan helped finance completion of two new deep-water berths atMombasa and one new deep-water berth at Dar es Salaam. The project works weresuccessfully completed in 1971. Loan 638-EA (1969 - US$35.0 million) was madeto the East African Harbours Corporation to help finance its 1969-72 develop-ment program, specifically the construction of two new deep-water berths anda dry bulk wharf at Mombasa, as well as the completion and/or construction offive new deep-water berths and a single buoy tanker terminal at Dar es Salaam,in addition to modernization of existing facilities at both ports. While thisproject was completed in 1977, both this loan and the subsequent Loan No.865-EA were affected by the political problems which the EAC experiencedthroughout the seventies. Loan 865-EA (1972 - US$26.5 million) was made tothe East African Harbours Corporation to help finance its 1972-76 developmentprogram, specifically the construction of three deep-water berths and modern-ization at Dar es Salaam, the construction of back-of-port facilities and atug berth, and modernization of other facilities at Mombasa, and improvementof lighterage facilities at Tanga. The physical implementation of thisProject was satisfactorily completed in 1978 and despite some delay in con-struction, the final costs remained within acceptable limits.

Bank Group Strategy in the Ports Subsector

36. The Bank Group's strategy in the ports subsector is to support theGovernment's program for its development in order to ensure that Tanzania aswell as landlocked neighboring countries have an efficient outlet to the sea.The Bank Group recognizes the importance of Dar es Salaam Port in Tanzania'stransport system and its vital role as a regional port serving Zambia, Zaire,Burundi and Rwanda. Bank Group involvement is intended to ensure that Dar esSalaam Port continues to keep abreast of technical trends and improves itsefficiency in order to keep up with the growth of shipping, container traffic,and bulk grain shipments. To achieve this, the Bank Group is focusing onensuring that THA's requirements for both technical assistance and the devel-opment of Tanzanian personnel will be met. While THA has employed many of thestaff of the former EAHC (which had a reputation of an efficient organizationin the East African context), it is a new organization which will require timeto develop and grow.

PART IV - THE ENGINEERING PROJECT

37. The Port of Dar es Salaam is the key link in the Tanzanian transportsystem and while traffic has increased rapidly over the past 4 to 5 years(particularly after Zambia closed its borders to the south), virtually nomajor investments have been made since the Third Harbours Project in 1972.This has not reflected a lack of planning or preparation (as noted below,the developments necessary are well studied) but rather the general diffi-culties that were faced by all of the EAC's Corporations in the mid seventies.The uncertainties regarding the future of the EAC made financing further

- 12 -

investments impossible. The Port of Dar es Salaam, therefore, faces a con-

siderable backlog of high priority investment. When the organizational issues

were resolved after the collapse of the EAC (para. 15) by forming a national

port authority, THA, the Government of Tanzania in March 1978, approached the

Bank Group for financing of the most urgent investments. Two preparation

missions were mounted in 1978 and an appraisal mission visited Tanzania in

April 1979. As noted below (see para. 39), and in view of the nature of thework involved, it was decided to proceed initially with an engineering credit.Negotiations of the engineering credit were held in Dar es Salaam in October

1979; the Tanzanian delegation included representatives of the Ministry ofFinance and Planning, the Ministry of Communication and Transport, the Tanzania

Harbours Authority, and the Attorney General's Chambers. A Credit and Project

Summary is at the front of this report and a supplementary project data sheet

is at Annex III.

Background

38. As one element directed at ensuring the continued orderly develop-

ment of the Port of Dar es Salaam, a development study (financed by the UNDP

with the Bank as executing agency) was carried out in 1973-74 by Bertlin and

Partners (UK). This resulted in a long-term master plan for port development

including a detailed investment program. As a follow-up to this master plan

a preliminary design effort was undertaken in 1976-77 to investigate further

the various proposed facilities, to evaluate engineering alternatives, and to

establish preliminary cost estimates for the principal components. By late

1977, it became increasingly apparent that the detailed investment program

had to be updated to ensure adequate consideration of the growth in container

traffic, of bulk grain handling requirements, and the increasing need for

warehousing for imports. This updating, including a review of traffic pro-

jections, was initiated in October 1978 and carried out by the consultants

Bertlin and Partners (UK) and was financed by the United Kingdom. It was

completed in March 1979 and concluded that further development of the Port of

Dar es Salaam had high priority and that facilities for handling bulk grain,

container traffic, and warehousing for imports are justified and should be

included; these components had not been included in the original master plan.

39. In April 1979, an appraisal mission reviewed the harbours project

proposed in the updating study for financing. While the mission concluded

that all the investment proposals were economically, financially and tech-

nically viable, it was not able to finalize project costs. The principal

uncertainty involves dredging, which constitutes a major portion of project

costs. To achieve a sufficient degree of accuracy in cost estimates in order

to ensure adequate financing for the proposed Harbours Project, it was there-

fore considered desirable to postpone completion of the appraisal of this

project until detailed designs have been completed and bids for the dredging

contract have been received. Therefore, the appraisal mission recommended an

engineering credit to finance the additional work required. Furthermore, as

preliminary engineering is not available for either the bulk grain-handling

facilities or the import warehouses, these would also be undertaken under the

engineering credit.

- 13 -

Dar es Salaam Port

40. Until 1956 Dar es Salaam was a lighterage port. In that year threeberths were completed; eight others have been added since then. In 1958the petroleum jetty within the harbour was commissioned, and in 1973 thesingle buoy mooring facility was added outside the harbour. Traffic consistsof vessels covering a spectrum from dhows and coasters to modern freighters andtankers. Presently, few specialized ships (dry bulk carriers, containerships, etc.) call at Dar es Salaam due to lack of appropriate facilities andas yet marginal traffic for these specialized carriers. However, the signif-icant growth in worldwide specialized shipping must be reflected in consideringthe long term needs for developing the port. While the port was constructedas a traditional rail-served facility, trucks are playing an ever increasingrole in transport to and from the port. Break bulk cargo is handled con-ventionally with a combination of ships! gear, quay cranes, tractors, trailers,forklifts and yard cranes. Availability of this equipment is insufficientdue to inadequate maintenance. Stevedores lack adequate handlingequipment and gear for use aboard ships, and there is a shortage of properlytrained supervisors. The proposed Harbours Project will assist THA's develop-ment as an organization through technical assistance and training,as well asaddress its equipment needs for Dar es Salaam.

41. Facilities. The harbour is rather narrow with limited ship maneuver-ing room. The entrance channel is a natural water fairway, some 3.5 km inlength dredged in 1953 to provide a minimum water depth of 7.6 m at low water.The present channel alignment contains three bends in the configuration ofan "S" curve. These bends, together with the limited water depth, imposesevere restrictions on ship movements in and out of the inner harbour.Ships drawing in excess of 7 m must enter and depart on the tides and arrivalor departure at night is not possible with large ships. Addressing theseconstraints will be a major aim of the proposed Harbours Project.

42. The main cargo handling facilities are situated on the east side ofthe harbour, consisting of approximately 600 m of lighter wharf (minimum depth2.4 m) and 11 general cargo alongside berths with a total length of 2,013 m.There are eight stream berths for deep sea vessels within the inner harbourfor working of ships to lighters. There is a petroleum jetty in the innerharbour adjacent to and south of the general cargo berths; and a single buoymooring terminal at Mjimwema Bay outside the harbour for large tankers.General cargo berths and their stacking areas are served by travelling portalcranes. The lighterage wharf is served by portal cranes and mobil cranes.The reorganization of the cargo handling facilities to increase the efficiencyof the port will be a second major objective of the proposed Harbours Project.

43. The Port of Dar es Salaam has few facilities for handling specialcommodities. Molasses and edible oils are handled over one berth through embed-ded pipelines. Bulk grain is handled inefficiently over general cargo berths,using vacuvators discharging into hoppers from where it is trucked to either the

- 14 -

Tanzania National Milling Corporation (NMC) silo, or to the TAZARA rail depot

for onward shipment. As there are no special facilities for the growing

container traffic, containers are handled over all berths. While recentlycontainers in transit have been segregated into two areas for better manage-

ment, they continue to be loaded and offloaded from ships at all berths,

contributing to traffic disruption as well as congestion. It is anticipated

that bulk grain handling facilities and container handling facilities will be

included in the proposed Harbors Project.

44. Organization, Management and Operation. The Port of Dar es Salaam

was formerly one of the two principal ports (the other being Mombasa) of the

East African Harbours Corporation (EAHC). Upon the collapse of the EAHC, the

Tanzania Harbours Authority (THA) was created by legislation in July 1977

to establish, administer and operate a system of harbours to serve the needs

of Tanzania. THA is headed by a full-time Chairman and a Board of Directors,

all appointed by the President, whose duty is to "carry out the functions and

manage the business and affairs of the Authority." MCT is responsible for the

''general direction and control of the Authority." The chief executive officer

of the Authority, who is also a member of the Board, is the General Manager

who is responsible for the day-to-day operations. The principal subordinate

element of the THA is the Port of Dar es Salaam, headed by the Port Manager.

The port management organization is composed of two principal elements (opera-

tions and services), each headed by an assistant manager. Under operations

are included the operations manager, commercial manager, harbour master, and

port engineer; under services are included managers for supplies, finance,

and personnel, and a medical officer. The financial results of the ports

operation are at present satisfactory. THA's tariff structure is sound and

its earnings have been sufficient to cover the cost of its operations includ-

ing current debt service obligations. However, with the launching of the

proposed Harbours Project, it will have to meet the local currency portion of

some TSh. 380 million of the proposed project costs over a period of about

four years. It will be able to do so only if the current rate of internal

generation of cash is increased through improved efficiency and higher tariffs.

To achieve this, THA, by June 30, 1980, will review its tariff levels to

determine appropriate changes which should be made in tariff levels to ensure

coverage of the economic cost of its operations, including the financing of

the local currency costs of its future investments. The findings and recom-

mendations of this review will be furnished to the Association for its review

and comment (Section 3.03 of the draft Project Agreement). This issue will be

further addressed during processing of the proposed Harbours Project.

45. Past and Present Traffic. There has been a steady growth in thetraffic of Dar es Salaam Port, even though it is subject to fluctuations due

to changing economic conditions in the countries which it serves, 1/ political

conditions in the region, and disruptions or deterioration in the regionalland transport systems - rail and highway.

1/ Tanzania, Zambia, Burundi, Rwanda, Zaire, and to some extent, Uganda.

- 15 -

Dar es Salaam Port Traffic(Thousand Tons)

1974 1975 1976 1977 1978

General Cargo

Exports 625 639 987 955 1,049Imports 761 978 1,034 1,190 1,378

Total 1,386 1,617 2,021 2,145 2,427

Oil

Exports 249 1/ 196 1/ 249 1/ 217 1/ 114 2/Imports 1,698 1,772 1,818 1,892 1,736

Total 1,947 1,968 2,067 2,109 1,850

1/ Including bunkering.2/ Not including bunkering.

Description of the Engineering Credit and a Proposed Harbours Project

46. Because of the substantial uncertainties surrounding the cost

estimates for the civil works involved in the proposed Harbours Project, atwo-phased approach to financing is proposed. The first phase would involve

an engineering credit to cover detailed engineering design and preparation of

tender documents for the anticipated port investment including a feasibilitystudy of the location of a bulk grain silo. The civil works for whichdetailed design and preparation of tender documents is proposed include:straightening and deepening the entrance channel; a container facility; a

petroleum jetty; a tug berth; a grain silo with ship unloader, conveyor system

and elevator; and an import storage warehouse. This would require topographicand hydrographic surveys; sub-surface exploration (drilling); civil, elec-

trical, and mechanical engineering; architectural services; drafting; andsupport costs for the effort (transportation, accommodations, subsistence,printing, communications, overhead, etc.). An estimated 300 man-months ofengineering effort, at a man-month cost of about US$6,500 (including theman-month rate, international travel and subsistence) will be required.

47. The second phase would cover the financing of the proposed HarboursProject. This would consist of the items for which design work is proposed

as well as technical assistance and training components and equipment forthe Port of Dar es Salaam. As noted above (para 37), an initial appraisalmission visited Tanzania in April 1979; a post appraisal mission would be

expected to finalize an investment proposal after the engineering serviceshave been completed. However, in order to confirm that the estimated civil

- 16 -

works costs are accurate, it is expected that the bids for that item will bereceived before presentation of the proposed Harbours Project to the ExecutiveDirectors. It is not anticipated that any contract will be signed prior toconsideration of the proposed Harbours Project by the Executive Directors.

48. It is proposed that the engineering credit would be refinanced underany subsequent credit or loan provided by the Bank Group for the proposedHarbours Project. While other alternatives for financing the engineeringcredit were considered, they were rejected because the prospective funds wereinadequate to meet the cost of the engineering services and would have undulydelayed their completion.

Implementation of the Engineering Credit

49. Detailed engineering and preparation of tender documents will beundertaken by Bertlin and Partners (UK) (para. 38), the consultants selectedby the Tanzania Harbours Authority (THA) and accepted by the Association(Section 2.02(a) of the draft Project Agreement). Copies of documents pre-pared by the consultants for the project, including reports, drafts, plans,designs, specifications, work schedules and estimates of costs will be fur-nished to the Association (Section 2.02(c) of the draft Project Agreement).THA will execute the contract for these services by assigning principalresponsibility to its Director of Engineering and Technical Services. Thepersonnel of this Directorate have the capability to supervise the executionof a design contract. Terms of reference for the design contract were devel-oped jointly by the Association staff and THA staff. Upon completion of theengineering services, the Government and THA would consult with the Asso-ciation on the recommendations and conclusions relating to the project(Section 3.01(d) of the draft Development Credit Agreement and Section2.02(d)(ii) of the draft Project Agreement).

Project Costs, Financing and Disbursement

50. The estimated total cost of the engineering services is US$3.0million net of taxes and duties. 1/ This cost estimate includes an adequatemargin for contingencies (22%) and is based on a recent quotation. Theforeign exchange component would amount to US$2.5 million equivalent or 83% oftotal costs. Details of project costs are included in the credit and projectsummary. The proposed engineering credit of US$2.5 million would be repayableover 10 years, including 2 years of grace and carrying a service charge of3/4 of 1% per annum (Sections 2.05 and 2.07 of the draft Development CreditAgreement). The proceeds of the credit would be onlent by the Governmentto THA under a Subsidiary Loan Agreement on terms and conditions acceptableto the Association; this would include an interest rate of 7.95% per annum,repayment in 10 years including 2 years of grace and the foreign exchangerisk borne by THA (Section 3.01(b) of the draft Development Credit Agreement).The proposed engineering credit would finance the entire foreign exchange costand THA would finance the local costs amounting to US$.5 million equivalent

1/ The project is exempted from identifiable taxes and duties.

- 17 -

(Section 2.01 of the draft Project Agreement). The proposed engineeringcredit would be disbursed over a period of 20 months against 100% of theforeign cost of the consultant's services. All withdrawal claims would befully documented.

Reporting and Accounting

51. THA will maintain records adequate to record the progress of theengineering credit and to reflect project expenditures; the Association willbe able to inspect all relevant records and documents (Section 2.04 of thedraft Project Agreement). THA would have its accounts audited each fiscalyear by independent auditors acceptable to the Association. Within six monthsof the end of each fiscal year it would furnish its audited financial state-ments to the Association (Section 3.02 of draft Project Agreement).

Justification and Risks

52. The risk involved in the proposed engineering project is minimal asthe same consultants who carried out the long-term development and updatingstudies of the Port of Dar es Salaam have been selected for the engineeringservices (paras 38 and 49); the consultants' previous work has been satis-factory. No major delay in the implementation of the project is therefore

anticipated. The proposed Harbours Project, for which the engineering creditis a necessary prior action, will be a major step towards the development andthe modernization of the Port of Dar es Salaam. Its objective will be to

improve the ports productivity, management efficiency, capability to handlebulk grains and containers, and facilitate the entrance to and departure fromthe harbour by ships. The project does not include any expansion in physicalfacilities for handling break-bulk cargo as such, although it will contributegreatly to the effective capacity for handling general cargo. The improvementin efficiency of the port will relieve congestion and improve throughput, aswell as introduce modern techniques for grain and container handling. Aportion of the cargo handling equipment fleet will be replaced as it becomesworn out. Improvements in equipment maintenance will be introduced; wasteremoval will be facilitated; and a capability for continuing maintenance ofthe paved surfaces of the port area will be provided. Technical assistance incritical areas of port operations and management will be provided, as well as

assistance in training of personnel in critical skills, both at the port'straining center, and through offshore training.

53. The major risks involved in the proposed Harbours Project for whichengineering design is to be undertaken are two fold: (i) traffic forecasts;and (ii) capacity of the regional transport system to serve the Port of Dar esSalaam. The principal uncertainty relates to Zambian traffic. Zambia, alandlocked country, has traditionally been served by numerous routes throughZaire/Angola, Mozambique, Rhodesia, and South Africa, as well as Tanzania. In

recent years the availability of all these routes, except that throughTanzania, have been interrupted or denied completely due to political turmoilin the region. Future availability of these alternative routes is currentlyuncertain and is expected to remain so. It is clear that access to the seavia Tanzania is the most economical and responsive one for Zambia.

- 18 -

54. The second uncertainty relates to the transport links between thePort of Dar es Salaam and the interior. The links to Zambia are the TANZAMhighway and TAZARA. In expectation that TAZARA would carry the bulk ofZambia's traffic, the trucking services (mainly through ZTRS), were allowedto deteriorate; however, TAZARA's performance has fallen short of expecta-tions (low locomotive availability, poor wagon turnaround, and recently landslides and damaged bridges). To deal with this, trucking services are nowbeing restored, and the international community is beginning to assist TAZARAto deal with its difficulties. On a somewhat lesser scale, but of greatimportance to the countries concerned, are the serious difficulties of the TRCin efficiently linking the Port with a large area of Tanzania, and with thelandlocked region comprising Burundi, Rwanda, Uganda and eastern Zaire.Substantial investment aid, notably from the Canadian Government, is alreadycommitted for the Railway, and a project is being prepared for possible BankGroup financing. It is expected that these will provide significant inputinto the rehabilitation of this railway.

55. It is evident that the Port of Dar es Salaam cannot be consideredin isolation, but only as one link in a regional transport system. Conse-quently, careful consideration has been given to the foregoing uncertaintiesin relation to improvement of the port. With all factors taken into account,the proposed Harbours Project is justified and has high priority. Thisjudgment is based on the assumption that Zambia will continue to use Dares Salaam as its principal outlet to the sea, and that the transport linksconnecting Dar es Salaam to Zambia, Burundi, Rwanda and eastern Zaire willbe restored to an acceptable level of efficiency.

PART V - LEGAL INSTRUMENTS AND AUTHORITY

56. The draft Development Credit Agreement between the United Republicof Tanzania and the Association, the draft Project Agreement between theAssociation and the Tanzania Harbours Authority, and the Recommendation ofthe Committee provided for in Article V, Section 1(d), of the Articles ofAgreement of the Association are being distributed to the Executive Directorsseparately.

57. Features of the draft Development Credit and Project Agreements ofspecial interest are referred to in the text and listed in Section III ofAnnex III to this report. Execution of a subsidiary loan agreement satisfac-tory to the Association, between the Government and THA would be a conditionof effectiveness (Section 5.01 of the draft Development Credit Agreement).

58. I am satisfied that the proposed credit would comply with theArticles of Agreement of the Association.

- 19 -

PART VI - RECOMMENDATION

59. I recommend that the Executive Directors approve the proposed credit.

Robert S. McNamaraPresident

Attachments

Washington, D.C.

December 5, 1979

- 20 -

TABLE 3A L iTANZANIA - SOCIAL IVDICATORS DATA SHEET

LEFEJLNCE GROUPS (ADJUSTED A;RACESLAND AREA (THOUSAZD SO. -- (OST REC17 ESTIMATE) --

TOTAL 945.1 SAME UHLE NEXT, hiGNiaACRICULTUPAL 510.1 MOST RECENT CEOCIAPHIC INCOME INCOrz

1960 Lk 1970 Lb ESTI.MATE b LZGION Le CGOUP / GROUP la

CN? PER CAPITA (USS) 70.0 120.0 230.0 306.1 209.6 461.5

LIIERCT CONSUMfl!04 ?ER CAPITA(KILOGRAMS OF COAL EQUIVA'T) 41.0 62.0 68.0 60.6 83.9 262.1

POPUtATION ANI! VITAL STATISTICSPOPULATION, SlD-MLAR (MILLIOS) 10.2 13.3 16.4URBAN POPULATION OF5LC OP TOTAL) 4.8 6.9 9.7. 17.1 16.2 24.6

POPULATION PROJECTIONSPOPULATION IN TYAR 20CO (MILLIONS) 32.0STATIONALY POPULATION (MILLIONS) 94.0TZAR STATIONARY POPUJLTION IS RACHED 2145

POPULATION DENSITYPER SQ. EN. 11.0 14.0 17.0 18.4 59.4 45.3tP Sq. KM. AGRICULTUI.L LAND 21.0 26.0 32.0 50.6 252.0 149.0

POPULATION AGE STRUCTOUR (PERCDET)0-14 YRS. 46.4 46.5 46.0 44.1 43.1 45.2

15-64 TRS. 51.0 51.1 5t.0 52.9 53.2 51.965 ns. AND ABOVE 2.6 2.4 3.0 2.8 3.0 2.8

POPULATION GROVE RATE CPECEIT)TOTAL 2.2 2.7 3.0 2.7 2.4 2.7URBAN 5.0 6. 8.35 5.7 4.6 4.3

CRUDE BIRTU RATE (PtR TiOUSAN) 47.0 47.0 46.0 46.3 42.4 39.4CRLUDE DEATH IATE (PE TAOUSAND) 22.0 19.0 16.0 17.2 15.9 11.7GROSS tEPRODUCTION LATE .. 3.2 3.2 3.1 2.9 2.7FAMILY PLANNING

ACCEPTORS. ANINUAL (TROUSANS) .. .. 93.6USERS (PERCENT OF iAAXCED NO ) .. .. .. .. 12.2 13.2

FOOD AND NUTRITIONINDEX OF FOOD PROOUCTIO4

PEI CAPITA (1969-71-100) 95.3 104.0 93.0 94.3 98.2 99.6

PER CAPITA SUPPLY OFCALORILS (PERCENT or

UEQUILEXLNTS) 69.0 88.0 86.0 69.5 93.3 94.7PRTtINS (CLAMS PE DOY) 42.0 43.0 47.1 55.8 52.1 54.3

Or WssCH A:lMALAIM PULSE 22.0h 23.0 20.0 17.9 13.6 17.4

CHILD (ACGS 1-4) MO.RAIITY LATH 32.0 25.0 20.0 22.3 18.5 11.4

HEALSELIFE EXPECTANCT AT AMR (TELS) 42.0 47.0 51.0 47.0 49.3 54.7INFANT MORTALITY RATE PuRTROUSAND) .. 55.OL& 125.0 .. 105.4 68.1

ACCESS TO SAFE NAT7 0 CICSNT OfPOPULATION)

TOTAL .. 13.0 39.0 20.3 26.3 34.4UWAN .. 61.0 88.0 53.9 58.5 57.9IRDAL .. 9.0 36.0 10.1 15.8 21.2

ACClSS TO 1ZRZEA DISPCSAL (?ZCENTDr POPULTION)

TOTAL .. .. 17.0 22.5 16.0 40.6gum .. .. U. 62.5 65.1 71.3RURAL .. .. 14.0 13.9 3.5 27.1

POPULATION PU PSYSICIAN 210

00.OLL .20677.0 16490.0/t 17424.7 11396.4 6799.4

POPULATION PER uRSLNc PQSON *300.0oj. 4641.0 33O.00. 2506.6 5552.4 L522.1POPULATION PQ bOSPITAL ED

TOTAL 57S.0& 6S6.0 .. 502.3 1417.1 726.5auRBA .. .. .. 201.4 197.3 27n.

ROAL .. .. .. 1403.6 2445.9 1404.4

&AMlISSIONS PU UDSPITALSI .. - .. . 23.4 24.6 27.5

HOUSINGAV*AGE SI2C or 8oUs5COL

TOTAL ALL .. 9 3.3 5.4R1 .. 3.2 .. 4.9 4.9 5.1

&RVAL .. 4.5/j 5.3 3.5 3 4 3.3

ACCGH NIfl oF PERSONS PF OMTOTAL .. .. ..UR.A .. .. .....RURAL .. .. ..

&CCCSS TO CLICTUCITY (PUlCUTOF DWELLI4CS)

TOTAL .. .. .. .. n.3 MI.1OKBA" .. .. .. .. 11.8 43.1RURL .. .. .. .. .. 9.9

- 21 -

TABLE 3A]TANZANIA - SOCIAL tYDtCAi0XS DATA SWEET

S PTJ.ZUNC ClROUPS (AZhUSJtED AX AE URAW.AXIA - utOS1 R!C s -SS.-tt ) --

S0.I SAil Nt I H.E,

IIC55 SZC.NT CIOGCRIIC 1NC0.X rYCOMt1960 lb 1970./b ESTIMATE /b ttC1o0 /c 'GROV? /d CG)UP

tDUCATIONAJUS tEO EOLL<ttNT RATIOS

PRIMIAY1 TOTAL 28.0 38.0 70.0 59.0 63.3 62.7MALi 37.0 46.0 79.0 64.2 9. 6 7.3FaIALt 20.0 30.0 60.0 4.2 48.4 75.8

SECONDARY: SOTAL 2.0 3.0 3.0 9.0 16.7 21.'MALU 2.0 4.0 5.0 12.0 22.1 33.0FE-LA 1.0 2.0 2.0 4*. 10.2 15.5

VOCATIONAL ENROL. (2 0F StCOhtDAI) 23.0 .. .. 7.0 5.6 9.8

PUPIL-TtACHER IlATIOPRI MA I 45.0 '6.0 50.0 42.2 41.0 >.15ECONDARY 20.0 19.0 20.0 22.9 21.7 23.4

AWLT LTS RACY LArt (PUCIET) 9.5/I 28.1Ls 66.0 20.8 31.2 54.0

CON5Li?:ONPASSENGER CARS Pn ThOUSAND

POPVLATION 3.0 2.5 2.8 4.0 2.8 9.3RADIO LtCE VIES PE* TOOUSAJ

POPULATION 2.0 11.0 19.0 44.3 27.2 76.9TV lLECEIVERS t£R THOUSAht

POPL'LATIOt .. 0.3 .. 2.9 2.4 13.5nISPAPER (C-AnY CD.IRALtMILEST-) CDRCULATION PUTHOUSAND POPULATION 3.0 5.0 '.5 5.6 5.3 18.3C71C:lA ANUAL ATTENDANCE PER CAPITA 0.5 .. 0.2 0.4 1.1 2.5

LABOR FORCESOTAL LASOR FORCE (THOUSA)DS) 4578.0 5769.0 6486.0

?DIALZ (PERCENT) 37.1 36.6 36.3 . 31.9 24.8 29.2ACICLLTUR.E (PECrYIT) 69.3 86.0 864.0 77.6 69.4 62.7INDUSTRY (PERCE.NS) 3.J 5.0 6.0 7.9 10.0 11.9

PARTICIPATION RATE (PUCERCS)TOTAL 44.7 43.5 42.2 40.8 36.9 37.1HAUL 56.9 55.7 5.3 53.9 52.4 *8.8VDIALE 32.8 3I.S 30.3 25.6 18.0 20.U

CONOfMIC D(PEIDEYCY lATIO 1.1 1.1 1.2 1.2 1.2 1.4

INCOME oIsMtIoNPERCEN£ OF PRWVJAE INCOMIZCEIVED SY

RIC.HIST 5 PERCENT OF HOUSEROLDS .. 33.5 .. .. .. 15.2IlCHEST 20 PRCE.NT 0 IIOUSEHOLDS .. 63.3 .. .. .. 48.2

LO6TSS 20 P£RCENT OF ROOSEROLDS .. 2.3 .. .. .. 6.3LOVEST 40 PIECLES OF WOUSEWOLDS .. 7.8 .. .. .. 16.3

P?RTY TARGET CROUPSESTIMATED ABSOLLME POVElTY UICCIZLUVEL (USS PER CA.PTA)

CURAN .. .. 117.0 147.6 ".2 241.3RURAL .. .. 89.0 96.8 8.9 136.6

ZSTtASTO RELATIVE POYESM IICO#ZlEVEL (US* PuE CAPITA)

uA .. .. 7.0 138.4 9!.9 179.7RURAL *-1.0 71.0 5".8 103.7

ESTIMATED P?P?LATIOtt 5?LOV AISOLUJTPOVERTY LNCOM UVI;L (PERCENT)

U1R .. .. U2.0 34.5 44.1 24.5tUIAL .. .. 85.0 4U.7 53.9 37.5

Not avallable.oc applicable.

* -- -- wiTs

The adjusced group averages for eacb indLcator are populactoo-vight.d geomecrtrc Sean, eacludiag the extremevalues of the indicetor and the est populated country In ech gcoup. Coverage of eounctries &on thetedicator, depends oan veilabLItt of daca and is soc unilorm.

/,j Unless othcrF. . aoced, data for 1960 rtofr to any year between 1959 enid 161; for 170. between 1969md 1971; and for Most Recent Etimate. between 1974 and 1977.

e Atrtic South of Sahara; /d Low Incose (S280 or lose per capita. 1976); /0 Lotr 1U%dl. Laceoe(5261-550 por capita, 19767 /f aimnl&ad Tansania; L 1987; /h 1961-63; /1 1942; U Rgits-tcred. net *11 practice in the country.

Most Secant Lttiaets et CSIP per tapits to for 1976.

Augst. 1979

- 22 -

DWINITIONB OF SOCIAL INICATORS Pg

Notes: Although the data are drawn fro a sures generally Judged the most authoritative sod reliable, it should also be acted that they asy not be interns-tionally comparable because of the lack of standardized definitions and concepts used by different countries in collecting the data. The data are, nonetheless,useful to describe orders of magnitude, indicate trends, and charaterize certain najor differences between countries.

The adjusted group averagSes for each indicator are population-weighted geometric means, excluding the extreme, values of the indicator and the mast populatedcountry in each group. Due to lack of data, group averages of all jedicators for Capital Surplus 011 Exporters and of indicators of Access to Water and ExcreteDisposal, Housing, Ioons Distribution and Poverty for other country groups are population-weighted geometric meso without exclusion of the extrem values andthe most Populated coutry. Since the coverage of coutries among the indicators depends on availabilityo ata ad is not uniform, caution oust be exercisedIn relatingtavetrages of one indicator to anothr. These avenages are mostly useful as approximation of execed" values when coppalin the vaue of one

idcator ataim a-n the coutry and referene groups.

IARD AREA (thousand sq.km.) Access to EKoreta Dispsa (eentfpplto)-ttl urban, and rual-Total - Total surface area comprising land area. and inland waters. Nubrof peol (tota, uba,and rrl evdb xrt ipslaAgricultural - Most recent estimate of agricultural area used temporarily perc entages of their respective populations. Excreta, disposal may include

or permanently for crops, pastures, market and kitchen gardens or to the collection and disposal, with or without treatment, of human emrrts.lie fallow. and wants-water by water-borne systems or the use of pit privies and -oilar

installations.GRP PERCAPITA (USS) - GNtP per capita estimates at cur,rent market prices,) Popujgdjipgpe ~ician - Population divided by number of Practicing physicianscaclted by sans conversion method an World Bank Atlas (1976-78 basis)uife ; jiltii6 hd1Ca.l school at university level.1960, 19,70, and 1978 data. Population per Nurs ing Person - Population divided by number of practicing male

ENfERGY CONSUR(TION PER CAPITA - Annual consumption of cormercial energy and female graduate nuses, Practical nurses, and assistant nures..(coal an int,ptoem aua a o yr- ula d Ige-Poultio.n perHoapital Bed - total, urban, and rural - Popuiation (total, urban,thermal electricit)in kilogroams of coal equivalent per capita; 1960 adraldiided by their respective number of hospital beds available in1970, and 1976 data, public and Private general and specialized hostpital and rehabilitation centers.

Hospitals are establishments permanently staffed by at leant one Physician.POPUIATIOR AND VITAL STATISTICS Establishments providing principally custodial care are not Included. Rural

Total Population, kid-YearNbilliona) - As of JUly 1; 1960, 1970, and hospitals, however, inclode health and medical centers sot Permsnently staffed1977 data. by aphysician (but by a medical assistant, nurse, midwife, etc.) which offer

Urban Ppltion (percent of total) - Ratio of urban to total population; in-patient accommodation and provide a limited range of medical facilities.differntdefisitioss of urban-areasmay affect comparability of data Admissins per Hospital Bed - Total number cf admi..i.s to or discharges fromamong conries; 1960, 1970, and 1975 data, hositals divided by thnubrobe.Popltio ProjctionsPopulation is year 2000 - Current Population projections ore based on HOUISIRG

1975 total population by age and en and thsir mortality and fertility Average Size of Hosholfd (persZonsper household) - total, urban, and rura -rates. Projection pareameters for mortality rates comprise of three A household consist fa ru of Individuals who share living quarters andlevels ass uming life expectancy at birth increasing with country's their main mals.A boarder or lodger say or may not be included in theper capita income lee,ad female life expectancy stabilizing at household for saitical purposes.77.5 years. The Parameters for fertility rate also have three levels Average number of person per room - ttal, urban and rural - Average comberassuming declise is fertility according to incme, level and pant of persona par room inal rban and rural occupied conentional dwellings,fesally planing Performance. Each coutry is them assigned one of these respectively. Dwellings exclude non-permanent structures and unoccpied parts.nine combinations of mortality and fertility trends for projection Access tO Electricity (percnt of dellings) total, urban an .rra - Con-prpoe.ventional dwellings wt lcrct nlvn uresa percentage of

Stationrypopulation - In a stationary population there is no growth total, uran, and rural dwellings respectively.since the birth rate Is equal to the death rate, and also the agestructure reunions constant. Thin is achieved only after fertility rates EDLEATIONdeclin to the replacement level of unit net reProduction rate, when -Adj-usted Horollas,t Ratioseach geeaion of woe replaces Itself exactly. The stationary popu- Primary school - total, male and female - Gross total, male and female enroll-

lain -sz a estimated us the basis of the projected characteristics eto.l ages at the primary level as percentages of respective Primaryof ths population in the year 2000, and the rate of decline of fertility school-age populations; normally includes children aged 6-11 years, butrate tor relcmn ee.adjusted for different lengths of Primary education; for coutries with

Tearotatosar poplationis reached - The yea. when stationary Population universa education enrollment may exceed 100 percent since som pupilsn!ticeoha bees reached. are below or shove the official school age.

Popultio Density Secoodaryschooli-etotal maead female - Computed as abcs.; --codaryPer so. km. - M4id-year population per square, kilometer ClOG hectares) of edctoreuesat l:eas or years of approved primary iatruction;

total area provides general vocational, or teacher training instrutioso for pupi1sPer so. ho. agicultural land - Computed as above for agricultural land usually of 12 to 17 ye"ar of age; correspondence courses are g.nserlly

only. ~~~~~~~~~~~~~~~~~~excluded.Popuation Age Struture(percent) - Children (0-lb years), working-age Vocational erlment (percen of eondary) - Vocational institutiono include

C 15-b4 yeas) and etird7 (6 years and over) as peroentages of mid-year technlcal *inusril,. ore ohr programs which operate independently or anpopulation;. 1960, 17,and 0197 data. departumnts of cecondary institutions.

Population Growth Rate (percen.t) - total - Annual growth rates of total mid- Pupil-teacher rati - prmr,ad secondar - Total students enrolled inyear Populations for 1950-60, 1500-7 an 90f.primary and secodr aevels divided by numbers of teachers is the coe-c

Population Growth Rat.pe~rcent) - urban - Annual growth rates of urban sponding levels.populatio,nsafor 1_950-, 1960-70, and 1970-75. Adult literacy rate.iercenat) - Literate adults Cable to rend and wits) as

CueRrtb Bae_erthousad) - Annual. live birth. per thousand of mid- percentage of tt aut population aged 15 years and over.year, population; 1 , 90,ad 1977 data.

Crude Death Hate e tosn)- Annual deaths per thouand of mid-year CONSUI4PTICSpopulatti..;1960' 19707iiCd 1977 data. Passenger Cur (per thosad poatina) Pansenger cars comprise motcr ones

Gross Reproduction Rate-Acerage sober of daughters a woman will bear seating less than sihth person; ecldes ambulances, heresad militaryin her normal reproducti ve Period if sh.excperiences Present age- vehicles.specIfic fertility rates; usually five-year averages ending In 1960, Radio Receivers (per thuad popuain -All types of receivers for radic19701, an-d 1975. brodcasts to generalpubiF a thousand of population; eccludes unlicensed

FiiyPannin AccePtors An l(thousands) - Anneal number of receivers In countries and in years, when registration of radio sets .aninacceptors of birth-coto eie under auspices of national family effect; data for recent ye-ar msy not be comparable since m-t coun triePlanning program. abolished licensing.

Family Planning - Users (percent of marriedwmen) Percentage of married TV Receivers(era thousanddtpoultion) - TV receivers for broadcast to generalwomen of child-hearing age 1~Ayas h use birth-control devices publipethuadPouainexludes unlicensed TV receivers in countriesto all married woe in sane age group. sod in years when registration of TV sets was in effect.

F2~~~~D NUr: TION 11-12tV~~~~~~ewpayr irculation (per ihoMuand population) - Shows the nverage circulationFOGS ASP NUTRITIOR - ~~~~~~~ofdal gneraLl.iterest newspaper", defined as, a periodical publicatiocInexo Fo P-cues per Capita (199-71=100) - Indes of Per capita devoted Primarily to recording general sews. It is considered to be "dail'y"

annual productica of all fond commdities. Product Ion excludes sed and if It appears at leant four times a week.feed and is on calendar year basis. CoomoodIties cover primary goods Cinema, Annual Attendance perCpt c er-Bsdo h ubro ikt( e.g. sugaran instead of sugar) which are edible and cotain nutrients soddrn h er neCludingamision to Bdrive-in numem r and mobilet

(eg "cfeead tea are excluded). Aggregate production of each country -nita.is based on national average producer price nights.Per capita oupply of calories (perent of requirements) - Computed from LABOR FORCE

energy equivalent of net fond supplies available in country per capita To-t-al Labcr Force (thousands) - &.onmically active persons, including armdpcr day. Available supplies comprise domestic production, Imports less fcr"s and unemployed but excluding houewives, students, etc. Defisitlonsexports, and changes in stock. Ret supplies exclude animal feed, seeds, is various count ries are not conparble.quantities used is food processIng, and loss.es in distribution. Require- Feal (pcent)c- Female labor force as Percentage of tctal labor force.nects were estimated by FAG based on Physiological needs for normal 192Mlture acnt) - labor fore in farming, forestry, hunting andact ivity and health considering ecvirconmental temperature, body weights, fishing as perentage of total labor force.age and sec distributions of population, and allowing 10 percent for Indust y(.percent) - Labor fcrce is mining, construction, manfacturing andwsate ahoshold level.Z 5iiy water and gas as percentage of total labor force.Per caPita suppl of protein (grams per day) - Protein content of per PripaonBt(ecnt) - totl al and feae- PartIcipatio.n orcapita net supply of food per day. Ret oupply of food is defined as ativ ty ratesaecmue mttl ae adfml ao oc sprshove. Requirement for all coutries established by USSi provide for a cantages of total, male and female population of all ages respectively;minim allowancet of 6o gram of totalprotein per day and 20 gramma of 1960. 1970, and 1975 data. These are ILO's participation rates reflectinganimal and pulse protein, of which 10 grams, should be animal protein, age-sex structure of the population, and long time trend. A fe estimatesThese standards are lower than those of 75 greamse of total prote in and are from national soure.s.23 gram of animal Protein as an average for the world, proposed by FAG Economic Deedec Raio - Ratio of Population under 15 and 65 and over toin tie Third World Food Survey. telbrfcein age group of 15-64 year..

Per caPita proteinspl fom anmaad pulse - Protein supply of foodderive frmaiml n plses in grams, par day. lOEDNILTQ

Child Cages 1-4) NrauyRte (per thousand) - Annual. deaths per thousand Percentage of Priva.te Incom (botphin cash and kind) - Received by richestIn age group 1-4 years, to childres In this age group; for most devel- 5 percent, riches 20pret, porest 20 Percent, an poorest hO percentopiug coutrIes data derived from life tables, of households.

HEALTH POVERTY TARGET GROUPSLife Expectancy at Sirth -(yars - Avelrage nhr of years of life Estimated Absolu.te Poverty Incom Level CUS$ per capibta)' -uba ad rural

reaiin at birth150 190 n 977. data Absolute poverty income leve is that Income leve blwbih a minimalScfat itiaity Rate (per ithusad) -Annual deaths of infants under one nutritionally adequate diet plus essential non-food requirements is not

year of age per thousand live births, affordable.Accen. to Safe Water (percentof ltis - ~total,turban and rura - Estimated Relative Poverty noeLvlCS per capita) - urban and rural-

Rumbr o peple(total uban, sdrUra wih resnbeaccess to Rural relative poverty incme ee isoe-third of average per capitasafe cater supply (includes treated suface waters or untreated but personal income of the country. Urban level Is derived from the rural leveluncontaminated ester ouch as that from protected boreholes, springs, with adjustment for higher cost of living in urban area.and sanitary wells) as percentages of their respective Populations. In Estimated P,poltion Below Absolute PovertyIcm ee ?ret ra and

anurban ware a public fountain or standpost located not mere than rua a Pret o uaio ubnad rural who ae absolute pr200 meters from a house nay be considered asbinzihi esoalaccess of that house. In rural areas reasonable naccess would implythat the housec ife or members of the hcusehold do not have to spend a Ecos-mic and Social Data DivIi.ondiaroportionate part of the day is fetohing the family's water seeds coo-mic Analysis sod PrJecti.s. Department

August 1979

-23 - I

TAPZ7AN

Ietosil lPi910_t Oat. 5t-t

Act-el 7!1 Prola tud Arae Ar. Groeth Rat. ? 19771972 1973 1974 1975 1976 1977 1976 1979 1980 1985 1990 1972-77 19 H7-85 1995-90 Share of

1972 1973 -72-,, 19"N" i -I-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~11

A NATIONAL ACCOUTS(MIlli.on US $ t 1977 Ptir-a)

I GOD 2773.9 2662.2 3004.7 3119.4 3364.1 3548.4 3734.1 3890.2 3921.6 4891.8 6139.9 5.0 4.1 4.7 100.0I Gains fro- Ta of Trade (7T) -161 0 -207.5 -349.9 -345.7 -69.9 -116.1 -135.0 -181.5 -196.8 -215.8 -239.2 . . . -3.33 Grta... ntm 2612.9 2454.7 2655.8 2773.7 3294.2 3426.3 3599.1 3700.7 3724.6 4176.0 5900.7 5.6 4.0 4'9 96.74 lVort 1006.7 101'0.8 895.4 . 710 8042.4 1066.4 869. 7 845.1 1014.6 1211.7 -5.9 3. 4 0 3.6 22.7

5 faorta - olm a 1034.7 1004.5 741.3 734.5 824.5 486.3 694.4 733.5 687.4 831.9 1067.5 -8.2 2.5 5.1 19.46. Rporta - 7T ad ated 899.7 803.3 546.5 493.7 681.1 486.3 559.4 552.0 490.6 616.0 828.3 -5.2 -1.3 6.1 19.47 pTsoora GA -f7T adjoated 191.0 207.5 340.9 345.7 69.9 116.1 507.0 337.7 354.5 398.6 383.4 . . . 3.3

8. Total CooaoapAiaon 2163.0 1986 3 2483.1 2555.0 2634.9 2986.6 3392.6 3379.6 3268.5 4825.2 4950.8 6.6 3.8 4.2 84 3

9. lotearnt 648.9 682.2 755 7 669.3 635.7 671.9 713.3 666.8 810.6 1049.4 1333.3 1.0 5.7 4.9 19.010. Hatetome Ninloe 430.4 464 5 304.1 314.2 076.4 537.1 200.3 336.2 506.6 693.0 986.0 1.1 3.2 7.3 15.2

11. Oat Glcaf.ntoga 489.9 468.4 252.7 218.7 639.3 439.7 206.3 329.1 456.3 650.8 949.9 -0.4 5.0 7.8 12.412. MOP t torrent US0 1564.1 1866.2 2239.1 2564.4 2761.4 3542.4 4495.1 4075.7 5401.1 9899.3 18256.3 17.6 13.7 13.2

B. SE8TOR UU7TUT(Share of Gop *A 1977 fti.ea)

1. Iedoatry 16.3 17.5 16.0 15.1 14.4 13.8 14.2 14.2 14.4 15.3 16.6 1.3 5.1 6.40. 48tircltora 51.1 54.0 46.8 48.6 50.4 51.0 49.3 48.9 48.5 4.0 6 4.3 4.7 2.4 3.9

5. SamItem 52.7 29.5 37.2 36.4 35.3 35.2 36.5 36.9 37.3 30.7 39.1 6.3 5.1 4.9

C. PRICES

1. NApoet frt-e I148a 36.4 43 3 64.2 63.6 76.7 100.0 91.1 91.7 94.8 132.5 177.0 22.4 3.6 6.02. Iwort Prtta Irdoaa 45.0 54.1 87.1 94.6 90.8 100.0 114.0 124.7 132.8 179.0 228.1 18.4 7.6 5.03. 7o.ay of Trade 84.7 60.0 73.7 67.2 82.7 100.0 79.9 73.6 71.4 74.1 77.6

4. MP? D .flator (US S) 56.4 70.1 74.5 82.2 82.1 100.0 120.4 125.2 137.7 202.4 297.3 12.1 9.2 8.05. Aneraa d tch-ge. fate (TSb/USS) 7.143 7.021 7.143 7.614 8.379 8.274 7.689 8.281

D. IE3 I9DICA70RS 1972-77 1978-85 1985-90

1. I1OR 4.40 4.71 4.652. bwort Elaatl-lay -0.02 0.73 0.773 Aneroja t .4Ial Sanlna Rate 17 11.9 15.24. tnaraa tetlotal Ganln8e Gte 19.0 12.7 15.55. -grgltAl -altalE Sant R tae. -0.24 0.33 0.046. IlI-rt/GOP 29.8 22.3 20.17. -neat tt/GIP 2.40 22.0 22.68 tao.ra G p/cGY 7.0 10.1 7.4

E EllPLOYKElt

1. Labor Torte (alIlloo)2. E Aloyaat (7 here) 100.0 100.02.1 AOrltoltre 91.0 04.02.2 ladnatry 2.0 6.02.5 Somltee 7 0 10.0

2/ rn.. Pt_e.F. PUBLIC FIN60Cr Attoel Attoal Eat.

(MIllIto TShillitga) 1965/66 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79

1. Qorroo3t tvenete 716 2357 2023 5946 3919 5250 6860 69601.1 Tao teteo 602 1927 2510 3161 3302 4279 5317 57212. o "rrett tpet-dltAre 707 2223 2700 3961 3716 4641 5592 66662.1 Ge Ieral Adtia-tretlot 267 749 944 1341 1293 1759 1870 22963 -oret SanRga 9 134 238 -15 203 609 568 3024. -oretet GretA. . 62 214 377 469 626 709 17495. Surploc Aallable for Fi-itnrlt

Genelopeect xfpetdltore ... 196 452 362 672 1235 1277 2051A. Detelopoatt GRpendtt-re 230 956 1442 2225 2253 2763 3585 57807. noerll fftlrlt _ -760 -1190 -1863 -1581 -1520 -230a -37298 Flnanrltd of tte naClAlt

Ixterral toera 03 456 467 661 564 777 660 1834Dat1"tl BtrroeIn8a

long-tar-". 269 346 402 480 1331 536 1151Short-ten .. 35 377 719 537 -584 1112 745

1/ It 1966 priee and 1977 indet ba. year. oEAo22/ Conttee Qcnarnuent

o a .

92C llQ ~5 R .0001 0-L.'oOo e .0.0. 99it-¢ r 01 .0 w9.00_

|~~~10 S. 0 s - - ° 000 01 00 ta>g .0 00 000t

^ n ^ iOfl>i g >~.aaS B o -n t BBfl0Ol 000 00 c00.~ 0'i' 0 l" "*n ,z .rn~~~~ ~ ~ 00. 00000. e. OB.,-.' t S11 0r n00'- n l B Cn .000.0.=,,li & B " " n cO- _ 00.0 e0. 00 -= 0_. 0 ee 0 1e 0 n e n 1* 00

B > d o n X o n g 0000*rI r10 n0g0n _ _V 2o z z

< B " gF = B g01n r.0n.n OtO 2°eto o

-. -; ' 0 010 0 e0r00 6 : 0010 ,.0

n o _ 0 0 0.t0-r ___-I.000 OlBo0

IIb *0 2

~~~~~~~~~~~~o

0- 0 4 00 to 00 .. O0. O0 C1C. 1 J 0O e 3

-so -_o -° I '° ; ° , . °1to C 00B Io - ~

0 -- Ig tol 0 S .o 000 > "~ 4- I e - 0

.000 to C0 cI o1000 000 00 -c. 0- 010. 01- Io t

B 000- 0 0-0000.0.0 ~ 4X to..0000 0q 1to 000.00 WOb Q

0 0' - .0.0001.00~ ~ 0-o-.Oooso o Iw. I lIto 00 1100000'~ ~~~~~~~ 0'° Is °- -> ' 10000- .0000.0 00 000 0 000

.000'~ ~~ ~~~~ 0 0 o.00 100010 c 0 00 0o 000 000'o @X n=

a~~~~~~~~ - .0~ -ct I .0 0;o 1

_ cF '00 0 .°0 F Ft to FIo|u tO 0 I t'r.0F0 010

00' 1 1 0.0 0 0 00000 ttr0 I 00 o0 t

t4~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0 00 0000l1

-25- Annex 1Page 6

TANZANIA

Debt- /and Creditworthiness

Actual Preliminary1972 1973 1974 1975 1976 1977 1978

A. Medium and Long-term Debt (Disbursed Only)(US $ Million)

1. Total Debt Outstanding (DOD: End of Period) 441.7 557.1 728.3 917.1 1029.2 1123.4 1213.12. Including Undisbursed 835.5 987.3 1280.5 1359.0 1555.9 1649.3 1806.43. Public Debt Service 43.3 39.3 32.4 34.1 41.6 48.4 49.63.1 Interest 11.1 12.5 13.6 16.2 19.5 22.1 24.74. Other M & LT Debt Service .. .. ..

B. Debt Burden

1. Debt Service Ratio 41.3 9.3 6.8 7.3 6.6 7.1 7.82. Debt Service/GDP 2.8 2.1 1.4 1.3 1.2 1.4 1.13. Public Debt Service/Government Revenue 14.7 10.3 6.6 6.4 7.6 7.0 5.8

C. Terms

1. Interest on Total DOD/Total DOD 2.5 2.2 1.9 1.8 1.9 2.0 2.02. Total Debt Service/Totai DOD 9.8 7.1 4.4 3.7 4.0 4.3 4.1

D. Dependency Ratios for M & LT Debt

1. Gross Disbursements/Imports (incl. NFS) 23.5 20.8 20.7 31.4 17.6 22.2 14.52. Net Transfer/Imports (incl. NFS) 16.2 16.4 18.3 29,2 14.4 18.9 12.43. Net Transfer/Gross Disbursements 68.8 79.1 88.3 92.8 82.1 85.2 85.8

E. Exposure

1. IBRD Disbursements/Gross Total Disbursements 16.9 19.1 10.4 21.0 14.0 17.2 17.82. Pank Group Disbursements/Gross Total Disbursements 19.4 21.8 14.0 28.2 37.2 37.8 31.63. IBRD DOD/Total DOD 12.2 13.4 12.4 15.4 15.1 16.3 17.34. Bank Group DOD/Total DOD 23.1 23.8 21.1 24.2 25.7 29.3 31.35. IBRD Debt Service/Total Debt Service 10.2 15.3 20.4 26.4 34.1 33.1 40.56. Bank Group Debt Service/Total Debt Service 11.1 16.3 22.5 28.4 36.5 35.5 43,5

Outstanding December 31. 197Amount Percent

(US $ Million)

F. External Debt (Disbursed Only)

209.9 17.31. IBR 379.2 31.32. Bank Group 619.2 51.03. Other Multilateral 714.2 58.94. Governments 317.3 26.2

of which Centrally Planned Economies 317.3 1.5. Suppliers 16.5 1.46. Financial Institutions 20.3 1.75

7.Bonds 3.1 6.38. Public Debt, n.e.i. 3.1 6.39. Total Public M & LT Debt-/ 1/ 1213.1 100.0

10. Total Public Debt (incl. undisbursed) 1806.4 148.9

G. Debt Profile

1. Total Debt Service 1979-83/Total D0D End of 1978

InoDA1/ Inlude Tanania' notonalshar of 4% ofEAC ebt.November 26, 1979

- 26 -ANNEX IIPage 1 of 17

THE STATUS OF BANK GROUP OPERATIONS IN TANZANIA

A. STATEMENT OF BANK LOANS AND IDA CREDITS TO TANZANIAAS OF SEPTEMBER 30, 1979

(US$ million)Amount less cancellation

No. Year Borrower Purpose Bank 1/ TW IDA 1/ Undisbursed

Five loans and thirteen credits fully disbursed 77.2 90.8

287-TA 1972 Tanzania Smallholder Tea 10.8 1.4371-TA 1973 Tanzania Fourth Education 10.3 2.2382-TA 2/ 1973 Tanzania Livestock 18.5 3.2454-TA 1974 Tanzania Cotton 17.5 10.0460-TA 1974' Tanzania Tanzania Investment Bank 6.0 0.61014-TA 1974 Tanzania Cashewnut 21.0 3.2495-TA 1974 Tanzania Sites and Services 8.5 2.2507-TA 1974 Tanzania Highway Maintenance 10.2 3.7508-TA 1974 Tanzania Rural Development (Kigoma) 10.0 6.01041-TA 1974 Tanzania Sugar 9.0 1.1580-TA 1975 Tanzania Dairy 10.0 6.41128-TA 1975 Tanzania Textile 15.0 2.51172-TA 1975 TIB Tanzania Investment Bank 15.0 1.5601-TA 1976 Tanzania Technical Assistance 6.0 3.2606-TA 1976 Tanzania National Maize Program 18.0 11.8607-TA 1976 Tanzania Fifth Education 11.0 7.5

1306T-TA 1976 Tanzania Power 30.0 14.51307-TA 1976 Tanzania Forestry 7.0 4.5652-TA 1976 Tanzania Fisheries 9.0 8.1658-TA 1976 Tanzania Tobacco Processing 8.0 1.51354-TA 1977 Tanzania Urban Water Supply 15.0 12.11385T-TA 1977 Tanzania Morogoro Industrial Complex 11.5 5.71386-TA 1977 Tanzania Morogoro Industrial Complex 11.5 5.6703-TA 3/ 1977 Tanzania Rural Development (Tabora) 7.2 5.8732-TA 1977 Tanzania Second Sites and Services 12.0 11.8743-TA 1977 Tanzania Trucking 15.0 11.31498-TA 1977 TIB Tanzania Investment Bank 15.0 9.2801-TA 1978 Tanzania Second Cashewnut 27.5 13.3802-TA 1978 Tanzania Tobacco Handling 14.0 14.0803-TA 1978 Tanzania Rural Dev. (Mwanza/Shinyanga) 12.0 11.41607-TA 1978 Tanzania Morogoro Textile 25.0 25.0833-TA 1978 Tanzania Morogoro Textile 20.0 19.1860-TA 1979 Tanzania Tourism Rehabilitation 14.0 14.0861-TA 1979 Tanzania Sixth Education 12.0 12.0875-TA 4/ 1979 Tanzania Mufindi Pulp and Paper 30.0 30.01650-TA 4/ 1979 Tanzania Mufindi Pulp and Paper 30.0 30.0876-TA 4/ 1979 Tanzania Fifth Highway 20.5 20.51745-TA 6/ 1979 TDFL Tanganyika Development

Finance Co., Ltd. 11.05/ 11.01750-TA 4/ 1979 TIB Tanzania Investment Bank 25.G0- 25.0

Total 276.7 41.5 428.8 381.9of which has been repaid 7.0 - 7.5Total now outstanding 269.7 41.5 421.3Amount sold 0.1

of which has been repaid 0.1Total now held by Bank and IDA 1/ 269.7 41.5 421.3Total undisbursed 130.7 20.2 231.0 381.9

1/ Net of exchange adjustments.2/ Includes Norwegian participation of $6.2 million of which $5.6 million

has been disbursed.3/ Amount excludes Canadian participation of $4.8 million.4/ Not yet effective.5/ Excludes $15.0 million EEC Special Action Credit being administered by IDA.6/ Declared effective November 1, 1979.

- 27 -

ANNEX IIPage 2 of 17

B. SUMMARY STATEMENT OF BANK LOANS FOR COMMON SERVICES GUARANTEEDBY KENYA, TANZANIA AND UGANDA AS OF SEPTEMBER 30, 1979

(US$ million)Loan Amount (less cancellations)No. Year Borrower Purpose Bank 1/ Undisbursed

Five loans fully disbursed 93.4

638-EA 1969 EAHC Harbours 35.0 0.6674-EA 1970 EARC Railways 42.4 0.4865-EA 1972 EAHC Harbours 26.5 0.9914-EA 1973 EAPTC Telecommunications 32.5 4.11204-EA 1976 EADB Development Finance 15.0 5.9

Total 244.8 11.9

of which has been repaid 52.8

Total now outstanding 192.0

Amount sold 24.4

of which has been repaid 24.4 0.0

Total now held by Bank 1/ 192.0

Total undisbursed 11.9 11.9

1/ Net of exchange adjustments.

- 28 -

ANNEX IIPage 3 of 17

C. PROJECTS IN EXECUTION I/(AS OF SEPTEMBER 30, 1979)

There are currently 36 projects under execution in Tanzania.

AGRICULTURAL SECTOR

Credit No. 287-TA - Smallholder Tea Project: US$10.8 millionCredit of March 3, 1972; Date of Effectiveness - July 26,

1972; Closing Date - December 31, 1979

After initial serious management problems, the Tanzania Tea

Authority (TTA) has finally reached a satisfactory level of senior staffing

and this has had a clear impact on the working of TTA and resulted in improved

control over field activities. Factory engineers have been appointed for all

factories. Because of weak extension and poor farm practices in the past,

about 1,600 ha of the 9,671 ha planted since 1971 must be infilled or rehabil-

itated, and yields have been lower than anticipated. In line with the 1976

survey of the tea industry, additional planting has been carried out and

effective rehabilitation and infilling has been achieved except in the Bukoba

area. Recommendations of the survey regarding crop yields, husbandry tech-

niques, field organization, TTA structure and extension activities are also

being implemented. Furthermore, market trends in tea have taken a favorableturn. In general, progress on the project is improving. The closing date

will be postponed to allow sufficient time for completion of the Mwakaleli

factory.

Credit No. 382-TA - Second Livestock Development Project:US$18.5 million Credit of May 23, 1973; Date of Effectiveness -September 28, 1973; Closing Date - December 31, 1980

This project was the subject of an in-depth review in November

1976 and again in January 1979. Although progress has been made in alleviating

the financial problems of the meat processing parastatal (TPL), in correcting

some of the deficiencies in the livestock marketing parastatal (TLMC), and in

adopting some of the decentralized management recommendations in the ranching

parastatal (NARCO), TPL will still need to improve its overall efficiency, and

NARCO its unsatisfactory financial situation. The most serious issue is the

1/ These notes are designed to inform the Executive Directors regarding

the progress of projects in execution and in particular to report

any problems which are being encountered and the action being taken

to remedy them. They should be read in this sense, and with the under-

standing that they do not purport to present a balanced evaluation of

strengths and weaknesses in project execution.

- 29 -

ANNEX IIPage 4 of 17

lack of adequate financial support from the Treasury; this issue was taken up

during the last review and the Tanzania Livestock Development Authority (LIDA)

is organizing a meeting between NARCO, the Commissioner for Public Investment

(CPI) and the Tanzania Rural Development Bank (TRDB) to address the issue

of equity contributions In summary, although progress has been made, major

problems remain and will require continued attention. The closing date of

the Credit has been postponed by 12 months to December 31, 1980 in order to

complete the ranch development program.

Credit No. 454-TA - Geita Cotton Project: US$1705 million

Credit of January 17, 1974; Date of Effectiveness -April 5. 1974; Closing Date December 31, 1982

The project continued to show good progress since the appo-Intmentin October 1977 of a new Project Manager 0 However, in view Cf the failure

of the crop technical packages to give economic responses, the pro'ect mustnow be consi-dered to be an infrastructure and adaptive research project rather

than an agri'cultural product-ion project. A major object,ve i's now to develop

a more soundly based and productive agricultural strategy 0 The most sign-'fi 4

cant progress has been in the trial program with about 50 well distriboustedand superv-Lsed trlal sites and improved credit recovery 0 Recruitment ofstaff has been more vigorously pursued since the Project Im3lementationReviews began0 Project problems remaining are the lack of senior staff,the shortage of extens'-on staff, delay in deliveries of some equipment andf-ThanciLng of road construction 0 The project will continue to be kept underclose review0

Loan No0 1014--TA Cashewnut Development Project: US$21. 0

million Loan of June 24, 1974; Date of Effectiveness -September 26, 1974; Closing Date -- December 31, 1981

Construction of the five factories and ancillary facilities is pro-

ceeding well in accordance with the revised completion schedule. Processing

plant and machinery has been delivered to two factories, and is under shipment

for the remaining threeo The project faces problems with regard to expected

marketed production reaching potential processing capacity. This continued

decline in the marketed production is, however, puzzling in view of the price

increase and the attractive returns per labor day. An intensive analysis ofthe cashewnut production issue is to be carried out by the Government agencies

responsible for review of agricultural production in Tanzania. The take over

of the industry by the Cashewnut Authority (CATA) and the consolidation of its

activities are proceeding; its management has improved since the appointment

of a new General Manager last year.

- 30 -

ANNEX IIPage 5 of 17

Credit No. 508-TA - Kigoma Rural Development Project: US$10.0million Credit of August 21, 1974; Date of Effectiveness -

November 20, 1974; Closing Date - December 31, 1980

Progress has been made in improving control of materials flow forcivil works, promotion of a coffee production program, labor-intensive roadworks, project accounting and disbursement performance, and increasing farmerdemand for inputs. However, project implementation continues to be slow.Little construction work has taken place over the last five months of wetseason agricultural activities. Trials were planted late in two of thethree districts due to misallocation of project finance vehicles. Littleaction has been taken on procurement. As recommended in the mid-term reviewof this project, agreement has been reached on a number of proposed amend-ments to the legal documents in order to make the project design more flexible.

Credit No. 513-TA and Loan No. 1041-TA - Kilombero SugarDevelopment Project: US$9.0 million Credit and US$9.0 millionLoan of September 27, 1974; Date of Effectiveness -February 14, 1975; Closing Date - December 31, 1979

Project work is virtually completed except for purchase of somevehicles and completion of the sugar survey and the training program. In viewof this, the closing date may have to be extended by nine months. KilomberoSugar Company's (KSC) land development on behalf of outgrowers continues andis expected to exceed appraisal estimates due to lower than expected caneyields. A new management advisory agreement for a further two years withemphasis on agriculture will be financed by the Netherlands. Phase III ofthe Sugar Study has been started and should be completed shortly. With regardto the Sugar Development Corporation's request to Treasury to consider KSC'sproposals as to its debt-equity ratio, the Treasury has decided to provideKSC TSh. 100 million as equity and TSh. 100 million as loan from Dutch/Danishsources. The loan will be at an interest rate of 7% p.a. with 30 yearsrepayment including 5 years of grace. The Subsidiary Loan Agreement is underpreparation and is expected to be signed by the Treasury shortly.

Credit No. 652-TA - Fisheries Development Project: US$9.0million Credit of July 12, 1976; Date of Effectiveness -

October 12. 1976; Closing Date - December 31. 1981

The Project is progressing at a slower pace than anticipated andfishing operations are now expected to begin by early 1980. Eight vessels forthe coastal commercial centers are already under construction, and procurementof engines and fishing gear is in progress. Tender documents for the procure-ment of steel boats for the Kigoma Commercial Center are being finalized.The recent outbreaks of cholera at Lake Tanganyika have caused a setback inProject activities on the Lake, particularly the Ujamaa Village Program, andsteps have been taken to speed up the identification of suitable villages andthe preparation of investment plans.

- 31 -ANNEX IIPage 6 of 17

Credit No. 606-TA - National Maize Project: US$18.0 millionCredit of January 29, 1976; Date of Effectiveness - May 28,1976; Closing Date - June 30, 1980

Although the project has made some satisfactory progress with regardto village participation, delivery of inputs and concentration of high poten-tial maize regions, it is beset by a number of problems which must be overcomeif the project is to achieve its primary objective. Following a midtermreview of the project, the Government submitted in September 1978 draft pro-posal for a three year Intensification Phase in six regions where potentialfor increasing production exists, extending the project period from July 1979to June 1982. The project has therefore been redesigned in order to intensifythe project activities during the remaining period. The redesign of theproject has been agreed upon by the Government, BADEA (the co-financier) andthe Association.

Credit No. 580-TA - Dairy Development Project: US$10.0million Credit of August 15, 1975; Date of Effectiveness -

November 13, 1975; Closing Date - April 30, 1981

The project status deteriorated during 1978. The large scale para-statal farms have been poorly managed, production is below expectation andfinancial prospects are dismal. The ujamaa component proceeds slowly andthe Tanzania Rural Development Bank is actively investigating alternativemeans of assisting village milk production and consumption. The foot andmouth disease control investigation has commenced. The project will continueto be kept under close review.

Loan No. 1307-TA - Sao Hill Forestry Project: US$7.0million Loan of July 12, 1976; Date of Effectiveness -October 12, 1976; Closing Date - June 30, 1982

Although the project got off to a slow start, physical progress hasnow been satisfactory for the past two years. The nurseries are well stockedand maintained, and the current planting program on schedule. Progress onfire protection, road construction and building is satisfactory. Procurementof equipment needed for the next season is, however, delayed and projectaccounts need updating. These are partly due to staffing problems; theposition of financial controller and workshop foreman became vacant as wellas the position of assistant project manager and silviculturist/economist.Government is approaching bilateral agencies for recruitment assistance.

- 32 -ANNEX IIPage 7 of 17

Credit No. 658-TA - Tobacco Processing Project: US$8.0 millionCredit of September 16, 1976; Date of Effectiveness - February 15,1977; Closing Date - December 31, 1981

Improvements to the existing line were completed except for instal-lation of the main circuit breaker equipment. Building work at Morogoro isproceeding satisfactorily. TAT/TTPC are preparing a properly coordinatedbuilding program to cover the balance of the project, and proposals areawaited from the Treasury rationalizing the financial and functional responsi-bilities of these entities. TAT's financial position is critical due to highbank overdrafts. The Treasury has agreed to reimburse TAT TSh. 29 millionrepresenting the local contribution it has spent on the project. In addition,TAT has also claimed TSh. 13 million from the Treasury to meet the costincurred by them during 1977-78. TTPC's accounts for 1976/77 have beenaudited and the report is expected shortly.

Credit No. 703-TA and Credit No. 703-TA-5 - Tabora RuralDevelopment Project: US$12.0 million Credits 1/ of May 11,1977; Date of Effectiveness - November 11, 1977;Closing Date - June 30, 1983

The level of regional commitment to the project has been good andoverall project performance is satisfactory; disbursements are on schedule.However, some delays have been experienced in the delivery of equipment andvehicles procured under the project, and shortage of trained extension agentsin the Region continues to hamper the crop development component. Thesedelays should not be over-emphasized since project management has beeneffective in getting the project initiated.

Credit No. 801-TA - Second Cashewnut Development Project;US$27.5 million Credit of June 14, 1978; Date of Effectiveness -October 2, 1978; Closing Date - December 31, 1984

This credit became effective on October 2, 1978. Project implemen-tation is progressing satisfactorily. However, CATA is facing some financialdifficulties which are being discussed with the Treasury.

Credit No. 802-TA - Tobacco Handling Project: US$14.0 millionCredit of June 14, 1978; Date of Effectiveness - January 5, 1979;Closing Date - April 30, 1983

The project has made a slow start. Procurement of vehicles andequipment is also lagging. However, progress on recruitment of technicalassistance has been good. The Building Engineer, Financial Systems Develop-ment Assistant and Transport Officer are all in post. Three suitable can-didates have been identified for the five posts of Regional Accountant andadvertisement of the other two have been done.

1/ Credit No. 703-TA-5 (US$4.8 million) is financed under the special CIDAarrangement; Credit No. 703-TA is an IDA Credit of US$7.2 million.

- 33 -ANNEX IIPage 8 of 17

Credit No. 803-TA - Rural Development Project (Mwanza/Shinyanga): US$12.0 million Credit of June 14, 1978;Date of Effectiveness - March 5, 1979;

Closing Date - December 31, 1984

While some of the senior support staff have been recruited, most key

posts remain to be filled, and although good progress has been made in the

livestock, water resource and forestry components, the expected implementation

of an experimental program of agricultural extension has not been initiated.

Future supervision missions will pay particular attention to progress made by

the agricultural extension staff towards improving the extension system. The

effects of the Uganda war are still being felt in the project's area causing

problems for the supplies situation.

EDUCATION SECTOR

Credit No. 371-TA - Fourth Education Project: US$10.3million Credit of April 13, 1973; Date of Effectiveness -

July 2, 1973; Closing Date - December 31, 1979

Physical implementation, particularly the execution of civil works,

has improved considerably and overall completion of the project has reached

95%. However, to allow sufficient time for completion, the Closing Date has

been postponed by 18 months to December 31, 1979, but would still require an

additional 6 months. Total project cost is now estimated at about TSh. 109

million, an increase of approximately 5% over the appraisal estimate of

TSh. 104 million. The Government does not foresee any financial problem in

providing the required additional funds. Three Community Education Centers

out of eight have started operating programs for village development, educa-

tion and training for youth and adults. The two Vocational Training Centers

are in operation at almost full capacity. The technical assistance and

fellowship programs are approaching completion and matching funds disbursed.

Savings under the technical assistance and fellowship component of the project

are estimated at approximately US$1.3 million.

Credit No. 607-TA - Fifth Education Project: US$11.0 million

Credit of January 29, 1976; Date of Effectiveness - March 23,1976; Closing Date - June 30, 1982

Progress in physical implementation is satisfactory. Construction

of extensions to fifteen secondary schools is progressing well and construc-

tion of 1,500 houses for Village Management Technicians, although delayed,

shows some improvement. In fact, housing construction is in line with VMT

training which will be extended until mid-1980 as a result of the reassignment

of over 500 VMTs as Village Managers in January 1978. There are delays in

recruitment of experts by UNESCO to assist a secondary school facilitiessurvey and in recruitment of accountancy experts for the National Board of

Accountants and Auditors. Implementation of a separate review of accountancy

training and a survey of primary schools are progressing slowly. Despite

these delays, project completion can be expected by the initial Closing Date

of June 30, 1982 and no financial problems are envisaged at present.

- 34 -ANNEX IIPage 9 of 17

Credit 861-TA - Sixth Education Project - US$12.0 millionCredit of January 22, 1979; Date of Effectiveness - June 25, 1979;Closing Date - June 30, 1985

This credit became effective on June 25, 1979. The Ministry ofLabor has appointed a representative to the Project Unit and is working withthe Ministry of Education on a plan for coordinating project implementation.

TOURISM SECTOR

Credit No. 860-TA - Tourism Rehabilitation ProjectUS$14.0 million Credit of January 22, 1979; Date ofEffectiveness - August 24, 1979; Closing Date - June 30, 1983

This credit became effective on August 24, 1979. Project implemen-tation is progressing satisfactorily. Recruitment of project coordinator isbeing finalized and the consultants for the rehabilitation of project lodgesand hotels, have been appointed.

TRANSPORTATION SECTOR

Credit No. 507-TA - Highway Maintenance Project: US$10.2million Credit of August 21, 1974; Date of Effectiveness -

November 20, 1974; Closing Date - December 31, 1980

After a slow start, project implementation improved. Seventeen ofthe 22 local staff positions are filled and virtually all expatriate expertswill have local counterparts to train. All equipment procured through ICBhave been delivered. Rehabilitation, regravelling and routine maintenanceactivities have improved in both quality and quantity. However, it is neces-sary to recast the project by amending its scope to address the problems whichhave been encountered in implementing the project; these changes will bringthe project in line with the Fifth Highway Project. The Closing Date has beenpostponed to December 31, 1980 to allow for completion of the project and thedisbursement. The technical assistance contract with the consulting firm"ORT" will expire in November 1979, and the Government is now recruitingindividual experts to complete the project.

Credit No. 743-TA - Trucking Industry Rehabilitationand Improvement Project: US$15 million Credit ofNovember 3, 1977; Date of Effectiveness - April 3, 1978;Closing Date - June 30, 1983

Implementation planning is progressing well. Initial progress inthe recruitment of technical assistance has been good, with 24 people in postor approved out of a total of 29. The project is experiencing some problemwith equity contribution for the proposed project transport companies. TheTreasury proposed to provide the balance of the equity contribution for

- 35 -

ANNEX IIPage 10 of 17

1979/80. The National Transport Coordination (NTC) has submitted a reportto the Treasury regarding the availability and distribution of vehicle spareparts in recent years. NTC has also commissioned a study of the role andobjective of the National Institute of Transport. The design of the transportdata collection system is progressing well.

Credit No. 876-TA - Fifth Highway Project; US$20.5 millionCredit of March 2, 1979; Closing Date - December 31, 1984

This Credit is not yet effective.

URBAN SECTOR

Credit No. 495-TA - National Sites and Services Project;US$8.5 million Credit of July 12, 1974; Date of Effectiveness -

October 3, 1974; Closing Date - December 31, 1979

Infrastructure construction has been completed satisfactorily onall project sites. Construction of health facilities in Dar es Salaam iscompleted and ready of occupation. Education facilities for the Dar esSalaam sites have been completed; the rest of the community facilities in theproject are nearing completion. Progress on the lending program administeredby the Tanzania Housing Bank is slow although satisfactory progress is beingmade in the implementation of the action program to improve it. Total projectcost is estimated (at current exchange rates) at US$15.9 million, compared tothe appraisal estimate of US$16.7 million.

Credit No. 732-TA - Second National Sites and ServicesProject: US$12.0 million Credit of November 3, 1977; Date ofEffectiveness - April 3, 1978; Closing Date - June 30, 1982

Progress on implementation is satisfactory for the residential com-ponents although overall implementation progress is slow. Preparation of thesmall scale industry component is also making satisfactory progress. Allproject staff have now been appointed. The Consultants' report on the LandRent and Service Charge Study was approved by the Government in January 1978and a pilot test of the new Urban Charge System for cost recovery proposed inthe study was carried out in Morogoro. However, progress in the implementa-tion of this system in other areas is slow. Disbursements are substantiallybehind appraisal estimates. These issues will be reviewed during the nextsupervision mission.

- 36 -

ANNEX IIPage 11 of 17

WATER SUPPLY SECTOR

Loan No. 1354-TA - Urban Water Supply Project: US$15.0 millionLoan of January 5, 1977; Date of Effectiveness - March 2, 1977;Closing Date - June 30, 1981

Of the five main contracts for water supply works in Morogoro, con-tract for exploratory drilling at Mindu Dam site is completed, two contractsfor plant (pumping and treatment) are in the stage of final inspection ofgoods prior to shipment to Tanzania, and two construction contracts wereawarded In December 1978 and March 1979. Completion of the water worksexpansion is expected in February 1981, 21 months behind schedule, but apilot operation is scheduled to commence in November 1980. Project cost isnow estimated at US$27.6 million, 43% over the appraisal estimate of US$19.2million. In December 1978, the Government approved an increase in its contri-bution to the project to cover the financing gap. Some progress has been madetowards creation of a parastatal national urban water supply authority andincrease in tariff to maintain their levels in real terms at the level exist-ing in July 1976. Progress in project implementation and the expected largeincrease in project costs will have to be closely monitored.

POWER SECTOR

Loan No. 1306-T-TA - Kidatu Hydroelectric Project Phase II;US$30 million Loan on Third Window Terms of August 12, 1976;Date of Effectiveness - March 1, 1977; Closing Date -December 31, 1981 _

The project is financed by IBRD, SIDA and KfW. All contractshave been awarded. Project construction is on schedule at all sites. TANESCOhas obtained approval on its tariff increase. Current estimated project costis US$97.8 million compared to appraisal estimate of US$89 million, a costoverrun of 28%. This is mainly due to underestimation of the project costs bythe engineering consultants. KfW has already increased its contribution tothe project and SIDA has indicated that it would be prepared to increase itsallocation to cover its proportionate share of the cost overruns. Plans tomake any additional contribution by the Bank to bridge the gap is beingreviewed. It is expected that US$7.0 million from the EEC Special ActionFund will be allocated to this project.

- 37 -

ANNEX IIPage 12 of 17

INDUSTRIAL SECTOR

Credit No. 460-TA - Tanzania Investment Bank Project:US$6.0 million Credit of February 13, 1974; Date of Effective-ness - April 18, 1974; Closing Date - December 31, 1979

This Credit has been fully committed. Because of a reallocationof funds from a subproject previously approved to a new one still under.implementation, the credit is still not fully disbursed and the closingdate has been postponed to December 31, 1979 but may require a further post-ponement of 6 months.

Loan No. 1171-TA - Tanzania Investment Bank: US$15.0 millionLoan of November 12, 1975; Date of Effectiveness - February 20,1976; Closing Date - December 31, 1980

This loan is fully committed and disbursements are proceedingsatisfactorily.

Loan No. 1498-TA - Tanzania Investment Bank: US$15.0million Loan of December 28, 1977; Date of Effectiveness -April 3, 1978; Closing Date - June 30, 1981

This loan is now fully committed and disbursements are proceedingsatisfactorily.

Loan No. 1128-TA - Mwanza Textile Project: US$15.0 millionLoan of June 19, 1975; Date of Effectiveness - October 6,1975; Closing Date - July 1, 1980

The project provides for expansion of an existing textile mill andis designed to increase annual fabric production capacity by 20 million linearmeters. Project implementation performance has been acceptable and all tech-nical installations are now operating satisfactorily. The National TextileCorporation (TEXCO), the holding company for state-owned textile mills, hasagreed to institute an immediate action program to improve the operatingperformance of existing mills. The project was technically completed inOctober 1978 with a savings of about US$1.7 million. In order to utilize thisamount for rehabilitation of the existing facilities, which are essential partsof the project, the Closing Date was postponed by one year to July 1, 1980.

- 38 -

ANNEX IIPage 13 of 17

Credit No. 601-TA - Technical Assistance Project: US$6.0

million Credit of January 9, 1976; Date of Effectiveness -

September 14, 1976; Closing Date - June 30, 1980

Total commitments as of September 30, 1979 were US$4.8 million of

which US$4.1 million,- US$0.4 million and US$0.3 million were for consultancy

services, training and project unit services, respectively. The procedures

for processing proposals have been streamlined and it is expected that the

pace of commitments and disbursements will be increased.

Loan No. 1385-T-TA/Loan No. 1386-TA - Morogoro Industrial

Complex: US$11.5 million Loan on Third Window Terms andUS$11.5 million Bank loan, both of April 6, 1977; Date ofEffectiveness - July 6, 1977; Closing Date - December 31, 1982

Project implementation is proceeding satisfactorily in spite of

some initial delays in the appointment of consultants and start-up of pro-

curement. Although there will be some delays in the start-up of individualcomponents of the Industrial Complex, completion of the project is still

scheduled for July 1982. Revised capital cost estimates are only slightly

higher than those contained in the Appraisal Report.

Credit No. 833-TA/Loan No. 1607-TA - Morogoro Textile Project:

US$20.0 million Credit and US$25.0 million Loan of June 29,1978; Date of Effectiveness - May 7, 1979; Closing Date -June 30, 1985

This loan and this credit became effective on May 7, 1979. Prep-

aration of tender documents are progressing satisfactorily and no delay in

project completion is anticipated.

Credit No. 875-TA/Loan No. 1650-TA - Mufindi Pulp and PaperProject: US$30.0 million Credit and US$30.0 million Loanof April 6, 1979; Closing Date - December 31, 1983

This loan and this credit are not yet effective.

Loan No. 1745-TA - Tanganyika Development Finance Company, Ltd.(TDFL) Project: US$11.0 million Loan of July 27, 1979;Closing Date - December 31, 1983

This loan is not yet effective.

- 39 -

ANNEX IIPage 14 of 17

EAST AFRICAN COMMUNITY

There are currently five projects in execution in the East AfricanCommunity. 1/

Loan No. 638-EA - Second Harbours Project: US$35.0 millionLoan of August 25, 1969; Date of Effectiveness - December 16,1969; Closing Date - December 31, 1977

Loan No. 865-EA - Third Harbours Project: US$26.5 millionLoan of December 18, 1972; Date of Effectiveness - April 16,1973; Closing Date - June 30, 1978

The Second Harbours project included financing for five generalcargo berths and a single bay tanker terminal for the Port of Dar es Salaam;two general cargo berths and a bulk cement wharf for Mombasa; tugs, lighters,cargo handling equipment, offices, housing and general improvements for bothports. The Third Harbours project included three new deep water berths,modernization of two berths and a lighterage quay, a training school build-ing and central repair area for Dar es Salaam; modernization of several berthsand a lighterage quay, construction of a tug berth, cold storage facilitiesand a training building in Mombasa and improvement of a lighterage quay inTanga. Construction of all major project elements has been completed anda joint project completion report was issued in January 1979. Because ofshortage of funds under both loans, the following minor project elements havenot been submitted for Bank financing: the second phase of modernization ofthe lighterage quay and a training school for Dar es Salaam; modernizationof the lighterage quay and a training school for Mombasa. Locally financedcontracts have been awarded for these project elements with the exception ofthe modernization of the lighterage quay in Mombasa. General cargo throughputhas increased above appraisal forecasts for Dar es Salaam, and cargo handlingproductivity has improved with increasing throughput; however, port laborproductivity has stagnated in Mombasa where general cargo throughput hasdeclined considerably. Legislation to establish a Tanzania Harbours Author-ity and a Kenya Ports Authority has been enacted. Management of Ports in

1/ Since October 1, 1977, the East African Community loans (excluding theEast African Development Bank) have been disbursed on the basis ofseparate national guarantees. The agreed allocation of undisbursedbalances for each loan, as proposed in a report to the Executive Direc-tors dated December 29, 1977 (R77-312) and approved on January 12, 1978,is given in this Annex. The closing date for Loans 638-EA, 674-EA and865-EA have passed. However, since the amount allocated to and guaran-teed by each Partner State is clearly identified under the terms of theAgreement signed on January 25, 1978 as proposed in the above report(R77-312), we are continuing disbursements.

- 40 -

ANNEX IIPage 15 of 17

both countries is competent. Some US$34.4 million of Loan 638-EA and US$25.6

million of Loan 865-EA has already been disbursed. The agreed allocation of

undisbursed funds at October 1, 1977 between the countries concerned is given

below:

For Loan No. 638-EA (US$ million)

Kenya 0.7

Tanzania 0.6

Total 1.3

For Loan No. 865-EA

Kenya 1.7Tanzania 0.3

Total 2.0

Loan No. 674-EA - Third Railways Project: US$42.4 million

Loan of May 25, 1970; Date of Effectiveness - October 30,1970; Closing Date - June 30, 1978

The original purpose of the project was to complete the Railways'

1969-1972 Development Program, including track improvement, procurement of

rolling stock and other equipment, and to finance studies of the economic

feasibility of certain railway lines and services. The physical execution

of the original project has been seriously delayed due to administrative and

political problems within the Community. In November 1974, the Executive

Directors approved a reallocation of the uncommitted balance of the Loan to

be used for consultant services and emergency investments in track material.

All three countries have now enacted legislation to establish their own Rail-

ways Corporations. The agreed allocation of undisbursed funds at October 1,

1977 among the various countries concerned is given below:

$ Million

Kenya 2.0Tanzania 3.8Uganda 1.9

Total 7.7

On January 12, 1978, the Executive Director approved the utilization

of US$1.2 million equivalent to finance the East African Mediation effort.

- 41 -

ANNEX IIPage 16 of 17

Loan No. 914 EA - Third Telecommunications Project: US$32.5million Loan of June 22, 1973; Date of Effectiveness -September 19, 1973; Closing Date - December 31, 1979

The project included provision for procurement of local telephoneexchange equipment, cables and subscriber apparatus, microwave and UHE/VHFsystems and multiplex equipment, interurban cables and wires, automaticswitching and signalling equipment, telegraph, telex and data equipment,and training. All project items except the microwave radio system have beencompleted; this system is likely to be completed by mid-1980. The slippageof the project's completion was due to initial delays in procurement causedby staffing and other problems associated with the relocation of headquarters.At September 30, 1979, about US$28.4 million of the loan had been disbursed.The agreed allocation of undisbursed funds as at October 1, 1977 among thecountries concerned is as follows:

$ Million

Kenya 2.4Tanzania 3.5Uganda 0.1

Total 6.0

Loan No. 1204-EA - East African Development Bank: US$15.0million Loan of March 1, 1976; Date of Effectiveness - June 7,1976; Closing Date - March 31, 1980

The environment within the Community has continued to have a nega-tive impact on EADB operations. Level of operations both for appraisal andsupervision has been depressed, but there has been some improvement in thestate of the portfolio with the arrears affected portfolio falling from 50%as of June 30, 1977 to 43% as of June 30, 1979. Some US$9.1 million of theloan has been disbursed to date, and the uncommitted balance amounts toUS$3.0 million.

- 42 -

ANNEX IIPage 17 of 17

D. STATEMENT OF IFC INVESTMENT IN TANZANIAAS OF SEPTEMBER 30, 1979

Fiscal Year Obligor Type of Business Amount in US$ MillionLoan Equity Total

1960 and 1964 Kilombero Sugar Company Food Processing 3.96 0.70 4.66

1978 Highland Soap and Soap Manufacture 1.37 0.40 1.77Allied Products Limited

1979 Metal Products Limited Household Utensils 1.33 0.18 1.51

Total gross commitments 6.66 1.28 7.94

Less cancellations, terminations,repayments and sales 3.96 0.70 4.66

Total commitments now held by IFC 2.70 0.58 3.28

Total Undisbursed 2.70 0.58 3.28

- 43 -

ANNEX III

TANZANIA

DAR ES SALAAM PORT ENGINEERING PROJECT

SUPPLEMENTARY PROJECT DATA SHEET

I. Timetable of Key Events

(a) Time taken to prepare the credit 6 months

(b) Project prepared by : Government and Consultant

(c) First presented to the Bank Group : April 1979

(d) Preparation mission

(e) Appraisal mission

(f) Completion of negotiations October 1979

(g) Estimated date of effectiveness March 1980

LI. Special Bank Implementation Actions

None

III. Special Conditions

(a) By June 30, 1980, THA will complete a review of its tariff

levels and furnish the findings and recommendations of suchreview to the Association for its review and comments(para. 44).

(b) Upon completion of the engineering services, the Governmentand THA would consult with the Association on the recom-

mendations and conclusions relating to the project (para. 49).

(c) Completion of a Subsidiary Loan Agreement, satisfactory to

the Association between the Government and THA would be a

condition of effectiveness (para. 57).

IBRD 14457'soc. / ~~~~~~~~~~~~~~~~~~~~~~~~~~~AUGOUST 1979

/l/ ORf,caI Host~~~~~~~rta Ettatee~~~P 1,

~ oa Post Gatt %

o I \ he I/d P. GadS Nhed3

rNmc C,.~~~~~~~~~~~~raeke CIT

'71~~~~~~~~~~~~~~Sa L~g4e Anhorag

>7 Maoerrga~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

5 // ~ H ~ ~ Ra Ahclo:g

I ~~~~~~~~~~~~~~~~~~~~~~~~AogieB h

J, ~~~~~~~~TANZANIA

PORT O F DAR E S SALAAM/ i/

TIPER C)IL REFINFRY EXISTING AND PROPOSED DEVELOPMENTSI CONTAINER FACIL TY /7

~~~~~~~~~ ~~~~~~~2 IMPORT WAREHOUSE cso

/ ~ ~~~~~13 GRAIN SILO, UJNLOADER, AND CONVEYOR

SOrtc j4 TUG BERTH5 OIL BERTH Wa R' t~

~~~~~ I ~~~~~~~~~~~6 DEMOLITION OF EXISTING OIL JETTY

ZAR~~~E TANZANIA .: nih B-k a ae oordh h

- i 15T0Ra TR RC RAILWAY (Ir Gmgol.) rrr

Ocean TAZARA RAILWAY III.o G..g. el

tO t9'~~~~~~~~~~~~~~~~~~~ I ~~~~~~~MOORING BUOYS Wo t,rhld o-k -depei 05f50-

a E-t F-y Pt~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Er er t ooelrh h ~O 510O

300 600 -. _ ,osasrfe,hooa,e

,~~~~A RAAL,AWR ~~~~~~~~~~~~~~~METERS.

IBRD 14458AUGUST 1979

LIGHTER) WHPARF

*SN 0 g DAR ES SALAAM

KURASINI c

0/

DOCKYARD ~AKABEWEST FERRY

C r ee ,PO 9Sit FONT -< i

EAST FERAS R GO

RS RONGONI $0 , ?X ,

3~~~~~!3

This rap has been prepared by theWorld Banks staff e-elsrely for, .the coanenenca of the readers ofthe report to shech it is attachedThe dnore,nations used and the 2boundaries shown on this rap - Pdo not reply, on the part of the '

World Bank and its affiliates, anv1odgreet on the legal statos ofany territory or any endor-erer tor acceptance of such boundaries. TANZAN IA

PORT OF DAR ES SALAAMENTRANCE CHANNEL IMPROVEMENT

r0k jfieleoiO * :-': '' : CHANNEL DREDGING - .

k r' IS4;r vr Andictn CURRENT CHANNEL ALIGNMENT T_ / -'

s,iv ;GOceoiri PREVIOUS CHANNEL ALIGNMENT

TANZANIA A BOIlA-I IRE i2-l rANZANIAk Doe Drc SScloare * BEACON OR LIGHT

REEF

10- r s t A + 5 METERS 2000MAJOR STREETS -

0 1000 2000-q f0ALWAI I METERS