Documcuntof

The World Bank

FOR OFFICLAL USE ONLY

Repot No. 8452

PROJECT COMPLETION REPORT

TANZANIA

SECOND TECHNICAL ASSISTANCE PROJECT(CREDIT 1060-TA)

MARCH 19, 1990

Africa Regional OfficeSouthern Africa DepartmentIndustry & Energy Division

This dcument bas a resricted ditrbutio and may be used by reciiens only in te perfornamce ofeir offieia duties. Its contets may not otherwise be dscbsed wihout Wold Bank audhorzation.

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CuaiiCY IOVALUTS

Cmency Unit T Tanzanian Shilling (TSh) - 100 cents

FY78: US$1 TSh 7.7

FY79180: US$l TSh 8.2

FY81: US$l . TSh 8.3

FY82: US$l - TSh 9.3

FY83: US$l = TSh 10.1

FY84: US$l TSh 15.3

FY85: US$l TSh 17.5

FY86: US$l - TSh 32.7

FY87: US$1 TSh 64.3

FY88s US$1 , TSh 98.7

FY89 (May): USS1 TShl37.4

Rate at appraisals TSh 8.3

ABBREVIATIONS AND ACRONYS

TAC Tanzania Audit Corporation

TAU a Technical Assistance Unit

TIB Tanzania Investment Bank

FTISAL YEAR

Government: July 1 - June 30

TIB: July 1 - June 30

THE WORLD BANK FOR OFFIAL USI ONLYWashmnSton. DC 20433

USA

Ohte d 01wc14v.Cafi

March 19, 1990

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on Tanzania -Second Technical Assistance Project(Credit 1060-TA)

Attached, for information, is a copy of a report entitled *ProjectCompletion Report on Tanzania - Second Technical Assistance Project (Credit1060-TA)g prepared by the Africa Regional Office. No audit of this projecthas been made by the Operations Evaluation Department at this time.

Attachment

This document has a restficted distribution and may be used by recpients only in the performanceof their official duties. Its contents may not otherwise be disclosed without Wortd Bsak authorization.

FOR OMCIAL USE ONLY

TANZANIA

SECOND TECHNICAL ASSISTANCE PROJECT (CREDIT 1060-TA)

PROJECT COMPLETION REPORT

TABLE OF CONTENTS

Page No.

Preface ................... ........ .......................... Basic Data Sheet ........... .......... ............ *. liHighlights .......................................................... iii

I. BACKGROUND ... ... #* . ... *e*. ........*...... .. *.. 1

The Economy .......... ... ........... . . . .. 1The Industrial Sector .. ......... ................. 1The Financial Sector .................... .. ........... 2Previous Bank Group Involvement ...................... 4

II. PROJECT OBJECTIVES AND DESCRIPTION .................... ..... 4

III. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL ........ 5

IV. PROJECT IMPLEMENTATION ..... .#.. ......... ...... ..... .. .. 6

Use of Subproject Funds ........ ...............*****....... 7training ........................... 8Tanzania Audit Corporation ........................... 9Procurement .................... *..... O.*.....* .................. 9Compliance with Covenants ...... ........... .......... . 9Bank Supervision .................. *.#........... 00................ 9

V. CONCLUSIONS ..........*............. ... ....... . . 9

Annexes

I. Previous Bank Group Involvement ..... ................ 12II. Schedule of Disbursements ..... ..... .. ...... ...... .. ..... 13TII. Status of Subprojects .................................... 15IV. Subproject Summaries .. #* ........*............ 17V. Summary of Utilization of Training Component ............. 26VI. Status of Training Subprojects ........................... 27

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.

TANZANIA

SECOPD TECHNICAL ASSISTANCE PROJECT (CREDIT 1060-TA)

PROJECT COMPLETION REPORT

PREFACE

This is the Project Completion Report (PCR) for the SecondTechnical Assistance Project in Tanzania, for which Credit 1060-TA in theamount of SDR8.4 million was approved on August 8, 1980. The credit wasclosed on June 30, 1988, three years behind schedule. Disbursementstotalled SDR6.7 million, SDRI.7 million was cancelled. The lastdisbursement was in March 1989.

The PCR was prepared by the Industry and Energy Division of theSouthern Africa Department based, inter alia, on a draft report submittedby the Borrower, a field mission and documents in the project file.

This PCR was read by the Operations Evaluation Department (OED).The draft PCR was sent to the Borrower on October 31, 1989, for comments byDecember 19, 1989, but none were received.

ii

PROJECT COMPLETION REPORT

TANWANIAs SECOND TECHNICAL ASSISTANCE PROJECT(Cr. 1060-TA)

Basic Data Sheet

Disbursements (in SDR million):

Oritinal Disbursed Cancelled Outstanding, as of 3131189Cr. 1060-TA 8.4 6.7 1.7 6.7

IDA Fiscal Years 1981 1982 1983 1984 1985 1986 1987 1988 1989

Planned 0.3 1.1 3.5 6.4 8.4 -- -- -- --Actual 0.0 0.5 1.1 2.6 3.6 4.6 5.1 5.7 6.7X of planned 0 S0 31S 41S 432 552 602 681 782

Date of final disbursements March 1989

Ken Dates:Original ActuallRevised

Appraisal 11;79Board approval 07/15/80 08108180Credit s±gning 10124180Credit effectiveness 01123/81 02/10181Completion of comuitments 06/30184 12/31/86Closing 06/30/85 06/30/88

Borrower Government of TanzaniaExecuting agency Tanzania Investment Bsnk

MLssion Data:No. No. of No. of Report

Mission MonthlYear of Weeks Peole Staffyseks Date

Appraisal 07/80Supervision:

I 03/81 0.4 1 0.4 04181II 09/81 0.4 2 0.8 11/81III 09182 0.2 1 0.2 11182IV 11/83 0.6 1 0.6 02/84V 10/84 0.6 1 0.6 01/85VI 02/86 1.0 1 1.0 03/86VII 12187 1.5 1 1.5 02/87

Completion 07/89 0.8 1 0.8 08/89

PROJECT COMPLETION REPORT

TANZANIA: SECOND TSECMNCAL ASSISTANCE PROJECT(Cr. 1060-TA)

Hibi ti

1. The Second Technical Assistance Project. Cr. 1060-TA. was IDA'ssecond line of credit for technical assistance in Tanzania. Its objectivewas to further the work begun under the first Technical Assistance Project,Cr. 601-TA, by providing financing for: (i) consultant services to preparepreinvestment, capacity utilization and export marketing studies, as wellas engineering work for high priority projects, project preparation andimplementation services, and some sectoral studies; (ii) training forTanzanians in project preparation, implementation and evaluation, and inaccounting and auditing; and (iii) consultants and equipment for the TechnicalAssistance Unit of the Tanzania Investment Bank (TIB) (paras. 2.01-2.02).

2. The credit was appraised in November 1979 and approved in August1980. It became effective in February 1981. Implementation of the studiescomponent of the project, which was the largest component, was much slowerthan expected at appraisal primarily because of the worsening eco4omicsituation, which made the identification of suitable subprojects much moredifficult. Implementation of the other components was largely on schedule.Because of the delays associated with the subproject component. the closingdate was postponed three years to June 30, 1988; final disbursement was notmaae until March 1989 (parss. 3.01-4.02).

3. Like the first line of credit, TA II was channelled through TIS.

TIB, and in particular the Technical Assistance Unit, performed well as theexecuting agency. A total of 39 subprojects was financed under the credit.

At the time the project completion report was written, TIB indicated that19 studies had led to projects that had been or were being implemented, andthat another nine were likely to be implemented; the conclusions were notknown on four studies, and seven had been determined not to b' viable.While these numbers appear satisfactory. it is important to note that insome cases the degree of implementation has been relatively minor.Moreover. the viability of several projects m ay been adversely affected bythe changing economic situation in Tanzania, and in particular by thedevaluing shilling (paras. 4.03-4.07).

4. The success of the training component is more concrete. Thecredit disbursed SDR1.026 million for training, versus an expectedSDR765,000. About 800 participants benefitted from training, includingalmost 500 participants in seminars and courses for TIB clients. Theemphasis on in-country training enabled more people to participate, atconsiderably lower costs than overseas training (paras. 4.08-4.09).Training for the Tanzania Audit Corporation (TAC) did not live up toappraisal expectations, and cannot be considered a success. Fifteen TACpersonnel participated in the training, of which only three achieved theexpected skill level (para. 4.10).

5. Any lessons to be drawn from the implementation of Cr. 1060-TAmust be viewed in the context of the changing economic situation during thelife of the project. The project was essentially well-prepared and well-

iv

implemented. The primary lesson to be learned from the experience of thisproject is that technical assistance projects require a very large humanresource input, both from the borrower and from the Bank. The size of thishuman input may seem disproportionate to the volume of funds involved, butwithout this input, the result may be that studies of inappropriatesubjects andlor of poor quality are done. If so, the two objectives ofthis type of project -- the creation of a pipeline of viable projects andthe fostering of local expertise -- are ill-served (paras. 5.01-5.08).

PROJECT C0MPL-T:ON REPORT

TANZANTA

SECOND TECEN1CAL ASSISTANCE PROJECT(Cr. 1060-TA)

I. BACKRON

The Econamy

1.01 After independence in 1961, the economy of Tanzania underwentseveral years of rapid growth. In 1967, the country embarked on an era ofsocialism. The new priorities, as enunciated in the Arusha Declaration,emphasized self-reliance, basic education and rural development, and led,in the late 1960s and early 1970s, to a rapid growth of the public sector.In dhe late 1970s, an unfortunate combination of external factors(worsening terms of trade, the war with Uganda, and the break-up of theEast African Community) weakened Tanzania's economy. Attempts at policyreform made in the early 1970s failed to address the key problems.

1.02 The 1984185 budget was the first indication of a new pragmatismin economic management; the exchange rate was devalued by one third,parastatal subsidies were cut, and an import liberalization program wasinitiated. In mid-1986, the Government produced a medium-term 'EconomicRecovery Program" (ERP) aimed at achieving a positive growth rate in realper capita income, reducing inflation, and restoring a sustainable balanceof payments position. The cornerstone of the ERP was the adjustment of theTanzanian currency.

1.03 The Government remains committed to the ERP. In 1986, for thefirst time since 1980, the rate of growth of real GDP, at 3.4 percent,exceeded the population growth rate. The 1987 real GDP growth rateaccelerated to an estimated 4.5 percent. Much of the growth in economicactivity is taking place outside the official sector and is not captured inthe GDP statistics.

1.04 Over the next decade, the Tanzanian economy is expected to growat an average real rate of 4.6 percent per annum. Reduced distortions(resulting from the reforms in the exchange rate, trade and pricingregimes), alleviation of serious infrastructural bottlenecks, andinstitutional improvements are expected to lead to significant improvementsin the efficiency of resource allocation. The process of resourcereallocation, economic restructuring and rehabilitation is also expected toresult in a reduction in import dependence over time, and in sm..ler importrequirements to sustain the projected GDP growth rate.

The Industrial Sector

1.05 Until the mid 19609, Tanzania had a small industrial sectordominated by private firms. Manufacturing employed about 25,000 people andcontributed very little to GDP. In 1974, the Government adopted the BasicIndustrial Strategy (BIS), emphasizing import-substitution and theproduction of capital and intermediate goods, and focusing on the

2

parastatal sector. Implementation of the BIS resulted in large capital andimport-intensive investments in industry. Despite US$2 billion ofinvestments, Tanzania's industry was estimated to be producing only aboutthree percent of the country's GDP in the mid-1980s (measured at worldprices), while using imported inputs equivalent of almost one-third oftotal imports. Capacity utilization averaged 25 percent and one-third ofindustrial activities were estimated to be producing with negative value-added at world prices.

1.06 A Bank review of the industry sector was undertaken in October1985, and led tG the publication of 'Tanzania: An Agenda in IndustrialRecovery* (Report no. 6357-TA) in June 1987. The report indicated that:(i) parastatals are significantly over represented in the highlyinefficient activitiest (ii) on average, import and capital-intensiveactivities are signifizantly less efficient than labor-intensive activitiesthat utilize local resources; and (iii) smaller firms, employing fewer than100 employees, are more efficient than larger firms.

1.07 The major ongoing reforms have already resulted in somereallocation of resources. The industrial sector is currently operating atthe same level of average capacity utilization as in 1984, but using fewerresources. A decrease in production and utilization of inputs is alreadyapparent among many inefficient industrial activities while some efficientfirms have managed to increase capacity utilization. However, a majorrestructuring of inefficient industries and a significant expansion ofefficient activities will only take place as the Government continues toimplement the macroeconomic and trade reform program and initiatesindustr.il restructuring measures in key subsectors and firms. In additionto the policy distortions that have plagued industry, there are significantstructural, operational and managerial inefficiencies in the sector atpresent. including managerial and skilled labor shortages, infrastructuralbottlenecks, and shortages in raw materials and other inputs.

1.08 The IDA Industrial Rehabilitation and Trade Adjustment Program,which was approved by the Board In December 1988, would support thebroadening of the Government's ERP through reform in the trade and pricingregimes and the initiation of restructuring and rehabilitation of _.4eindustrial sector. The cornerstone of the proposed policy package is amajor trade liberalization effort supported by the ongoing excaange rateadjustment. It is hoped that the policy reform measures supported underthis operation would make a major contribution to the continued reccveryand sustained growth of the Tanzanian economy. To date, progress on theimplementation of the IRTAC has been good; all the trade reform componentsare being implemented in an efficient and timely manner.

The Financial Sector

1.09 Tanzania's banking system comprises a central bank -- the Bankof Tanzania (BOT) -- and 10 financial institutions: two commercial banks,four development banks, a savings bank, a housing bank, an insurancecompany and a national provident fund. The major commercial bank, theNational Bank of Commerce (NBC), enjoys a virtual monopoly in themobilization and allocation of short-term funds. All the institutions arefully state-owned except thes (i) East African Development Bank (EADB),

3

which is mainly owned by the governments of Kenya, Tanzania and Uganda;(ii) Tanganyika Development Finance Co., Ltd. (TDFL), which is jointlyowned by TIB and three development finance institutions from the U.K.,Federal Republic of Germany, and the Netherlands; and (iii) Cooperative andRural Development BSnk, which is owned by the Govern.ment, cooparatives andBOT. TIB is wholly owned by the Tanzanian Government, the National Bank ofCommerce and the National Insurance Corporation. Its main role has been toprovide term finance to the directly productive bectors of the economy.Tanzania has no private capital market.

1.10 The main issues affecting the financial sector are thesignificant misallocation of credit and the lack of domestic resourcemobilization. Monetary and credit policies and targets are determined inthe Government's annual Finance and Credit Plan, which indicates thedistribution of credit by economic activity and borrower. Over 90 percentof the credit allocated is absorbed by the Government and publicenterprises. Many factors have been important in determining thesignificant misallocation of financial resources in the economy, including:

(a) negative and controlled interest rates. Interest rates.vnich are set annually by BOT, have been negative in realterms since 1975. Although interest rates have recentlybeen adjusted and are now more in line with inflation, thenegative levels of interest rates have resulted in reducedsavings, lending rationing, and capital flight;

(b) limited competition in the mobiliza:ion and allocation offinancial resources. NBC has a virtual monopoly in themobilization and allocation of short-term funds;

(c' rescheduling practices and lack of recognition andappropriate absorption of losses by the finaucialinstitutions; and

(d) political pressures in granting loans and provisions ofGovernment guarantees for certain types of loans.

These factors have all combined to cause the technical insolvency of mostof Tanzania's financial institutions.

1.11 The imposition of aggregate credit ceilings for the economy hasmeant that many efficient firms are left out of the official creditallocation system. Private firms receive a very small share of the credit,and many have turned to informal credit markets, which pay exorbitantinterest rates. Firms in the private sector have also had problems inraising equity due to the lack of a private capital market, and therefore,tend to be over-leveraged, particularly in debt denominated in foreigncurrency. The successive devaluations of the past few years have had aserious negative impact on their debt servicing abilities.

1.12 As with other financial institutions, TIB has suffered asubstantial deterioration in the quality of its portfolio. A substantialnumber of TIB's investments are in enterprises that depend on imported rawmaterials, and many of these enterprises are over-leveraged in term debt

4

denominated in foreign currencies. Over the years, the profitability ofthese enterprises has been undermined by% (i) the shortage of foreignexchangs and resulting shortage of imported raw materials; (ii) swcessivedevaluations of the Tanzanian shilling, which have increased their debtburden; (iii) price controlas and (iv) restrictions on overdraftfacilities. The lack of full recognition by TIB of the extent of theeconomic losses incurred by clients, and the continuing misallocation ofcredit by TIB to finance the losses of inefficient enterprises has furthercompounded the problem. The level of interest rates iaposed on TIB hasalso had a negative effect on TIB's financial performance and its abilityto allocate resources, and successive devaluations and the high levels ofinflation of the past years have eroded TIB's capital base and increasedits indebtedness.

1.13 In 1988, the Government set up a Presidential Commission tostudy the monetary and banking system. The role of this commission is toreview the structure and functioning of the financial system in order torecommend appropriate institutional and policy reforms for improvingeffectiveness and efficiency. With the aid of consultants, thePresidential Commission is carrying out a series of studies on thefinancial sector that will eventually form a blueprint for sector reform,and possibly the basis for a fvture IDA finnancial sector adjustmentoperation.

Previous Bank Group Involvement

1.14 The Bank Group first assisted TIE in 1974 with a line of creditfor US$6 million (IDA Credit 460-TA), which was reviewed in ProjectPerformance Audit Report (PPAR) No. 3881 dated March 30, 1982. Thisoperation was followed by three IBID lines of credit (Lns. 1172-TA, 1498-TAand 1750-TA), totalling US$55 million, the last in conjunction with an EECSpecial Action Credit of US$15 million. These operations were reviewed inPPAR No. 7744 dated May 4, 1989. TIB has alseo administered two IDAtechnical assistance credits2 Cr. 601-TA, for US$6 million, which wasreviewed in Project Completion Report No. 6732 dated April 8, 1987, and Cr.1060-TA, for SDB 8.4 million, which is the object of this review. A briefdescription of past operations is in Annex I.

IT. PROJECT OBJECTIVES AND DESCBIPTION

2.01 The first technical assistance credit, Cr. 601-TA, wasimplemented to assist the Government of Tanzania in its efforts to reorientthe public investment program from infrastructural to directly productiveprojects, with the emphasis on export-oriented projects and improvedcapacity utilization, by providing financing for studies and consultingservices. Cr. 601-TA was judged to have been a success for the most partby both the borrower and the Bank; it was useful in helping the borroweridentify, fermulate and evaluate projects and build up project appraisaland implementation capabilities. However, it was felt that the project hadnot fulfilled initial expectations regarding improved industrial efficiencyand capacity utilization. It was hoped that a second technical assistancewould address these two areas.

5

2.02 The Second Technical Assistance Project, Cr. 1060-TA, had thefollowing components at the time of credit approval: ti) approximately 68percent of credit proceeds would be lent to productive enterprises andgovernment agencies to assist them in carrying out pre-investment, capacityutilization and export marketing studies, as well as detailed engineeringwork for high priority projects; (ii) approximately 18 percent would go toproductive enterprises and government agencies to assist them in carryingout training programs in the country for management and technical stafffrom the various sectors, and a limited amount of overseas trainiug; and(iii) approximately 6 percent would finance the improvement of theTechnical Assistance Unit through the financing of professional staff,vehicles and equipment. Although the description of eligible subprojectswas broad, it was stressed in project documents and to the borrower thatmore emphasis under the second technical assistance credit should be givento financing subprojects addressing capacity utilization and export-oriented studies. Most of the credit was to have been channelled by theGovernment to TIB as a grant. TIB, in turn, was to make available fundsfor studies and training to Tanzanian sponsors and beneficiaries also on agrant basis. All sub-borrowers of TA It funds, however, signed a legalagreement with TIB agreeing that for studies that led to viable projects,the sponsor would repay the loan to TIB. In that case, the sub-borrowerassumed the foreign exchange risk.

IIn. PROJECT IDENTIFICATION, PREPARATION AMD APPRAISAL

3.01 The Second Technical Assistance Project was prepared by theGovernment with tW-e assistance of the Bank as a follow-on project to thefirst Technical Adsistance Project. It was appraised in November 1979.During the preparation process, the following major issues were raiseds

The need to strengthen the Technical Assistance Unit.To expedite the identification of project ideas and toimprove the monitoring of subproject implementation,the TAU was strengthened through the filling of twopreviously unfilled but budgeted positions for anenergy or industrial engineer and an agriculturaleconomist (both expatriates). The Bank agreed atnegotiations that funds be allocated in the credit foran additional industrial engineer and an agriculturaleconomist.

Screening of reQuests for feasibilfty studies. TIBwould insist on prefeasibility studies for largeprojects, would provide written justification as tothe probability of investment, and would work withclients to structure completed feasibility studiesinto workable financial proposals and implementationplans.

The need for more capacity utilization and exportpromotion studies. Because of the very small amount

6

of funds disbursed on capacity utilitzation and exportpromotion studies under TA I, and because of theworsening economic environment, TIB was encouraged touse local consultants to do small studies to identifyneeds for capacity utilization studies, and the scopeof the consultancy studies was broadened tospecifically include export oriented studies.

The status of TA I. Concern was expressed about thestat"- if TA I with regard to usefulness of thestuu&es and adequacy of review procedures.

The need for training of Tanzania Audit Corporationstaff. Because of the pressing need la Tanzania formore trained audit and accounting staff, it was agreedat negotiations to expand the project description andto increase the credit amount to provide for trainingfor TAC staff.

3.02 More general issues concerning the performance of the financialand industrial sectors were raised in various Bank reports on Tanzania.The Bank Group and the Government held discussions on these issues withinthe context of its general country economic work. The provision oftechnical assistance was considered part of the strategy to alleviate theshortage of qualified human resources.

3.03 On August 8, 1980, th- Bank/IDA's Executive Directors approved acredit of SDR8.4 million to the Government of Tanzania on standard IDAterms. The Government agreed to channel the IDA funds to TIB as a grant.The Credit Agreement was signed October 24, 1980 and the credit becameeffective February 10, 1981. There were no conditions of effectiveness.

TV. PROJECT IHPLEHFNTATION

4.01 The project was implemented over a period of eight years,instead of four years as originally planned. The closing date of thecredit was extended twice for a total of three years, from June 30, 1984 toJune 30, 1988. The delay in implementation was primarily due to problemsin identifying suitable subprojects, which was made more difficult by theworsening economic environment in Tanzania.

4.02 SDR 6.7 million, or 78 percent, of the SDR 8.4 million creditwas disbursed. The final costs of the project, compared to appraisalestimates, follow (in SDR million):

7

Appraisal Estimates Actual CostsLocal Foreign Total Local Foreign Total

Consultantservices 1.5 5.7 6.2 * 4.1

Training 0.3 1.6 1.9 2.0Project Unit 0.5 0.5 1.0 0.6Unallocated - 0.6 0.6

Total 2.3 8.4 10.7 6.7

*Local costs not available.

The schedule of disbursements by quarter is in Annex II.

Use of subDro1ect funds

4.03 SDR4.1 million, or 61 percent, of disbursed funds vent tofinance 39 subprojects; 11 studies that had originally been expected tohave been done were cancelled. About 17 subprojects financed feasibilitystudies, done at a foreign exchange cost of SDR1.3 million. Eightsubprojects (cost of SDRO.8 million) financed studies with the objective ofimproving efficiency and/or rehabilitation. Five subprojects (SDRO.5million) were oriented towards increasing exports and foreign investment.The remaining studies included three bridging loans. and a few marketingand capacity expansion Ptudies. Details on the subprojects are in AnnexIII; a descriition of each subproject is found in Annex IV.

4.04 The average size of a subloan was SDR1O5,116; the average sizeof an A subloan was SDR169,038 and for a B subloan SDR44,390. As might beexpected, the industry sector was the largest sectoral beneficiary ofsubproject funds, receiving SDR1.6 million, or 39 percent, of the SDR4.1million disbursed for subprojects in the form of 18 subprojects (46 percentof total number of subprojects). Subprojects in the energy sector totalednine (23 percent of total subprojects), valued at SDR1.5 million (37percent of subproject disbursements). Six agriculture subprojects (15percent of all subprojects) were done at a cost of SDRO.4 million (10percent of subproject funds); the transport, financial and tourism sectorsaccounted for the remaining subprojects. Geographically, over half thesubprojects (66 percent of subprojects funds) benefitted three or moreregions. The area of Dar es Salaam received about five percent ofsubproject funds, more than any of the other regions.. The rest of thesubprojects were distributed throughout the country.

4.05 Virtually all funds for studies went to government andparastatal agencies. Five parastatals in particular benefitted from TA IIfunds, receiving 40 percent of IDA funds disbursed for studies (these sameparastatals received over 58 percent of the funds disbursed under TA I).Very few of the companies that borrowed under the second, third and fourthIBRD lines of credit took advantage of the technical assistance funds underthis operation (the same was true for TA I).

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4.06 Twenty-eight (72 percent) of the 39 subprojects were done byexpatriate consultants. Eight subprojects (21 percent) were done byTanzanian consultants (which included one joint consulting venture betweena European and Tanzanian firms). The nationalities of three consultants isnot given (8 percent). The Bank has received copies of 27 of the 38 reportsprepared under TA II. Most of these reports adequately met the terms ofreference; only three of those reviewed were inadequate, either overall(e.g., Mang'ula Mechanical) or on specific issues (State Travel Services).

4.07 At the time of writing, TIB estimated that 19 studies (48.7percent) had been or were being implemented, nine (23.1 percent) werelikely to be implemented, seven (17.9 percent) had not proved viable, andthe conclusions of four studies (10.3 percent) were not yet known. Thepercentage of implemented or implementable subprojects somewhat overstatesthe success of this component. Several subprojects are categorized by TIBas implemented, where only "some' of the recommendations have, in fact,been implemented (e.g., A-4, B-24), or where implementation has been slowand/or spotty (e.g., A-10). TIB has determined that the loans for 13, or34 percent of subprojects, are "recoverable" and should be repaid; to date,however, only three loans have been repaid. The remaining 26 subloans (66percent of subloans) are not recoverable. Of these, seven, or 28 percent,cannot be recovered because the projects are not viable. The rest werecategorized as non-recoverable because of their nature (e.g., certainstudies, like pre-investment and market), because they were sponsored byTIB or because they had originally been given as grants. These percentagesare similar to those under TA I; only eight (27 percent) of the subprojectswere determined to be recoverable, of which only one has to date beenrepaid.

Training

4.08 The training component of Cr. 1060-TA was the quickestdisbursing. This component assisted the Government and its institutions tocarry out training programs in Tanzania, and to a lesser extent overseas,for management and technical staff. The original allocation of SDR765,000was increased by SDR400,000, and SDR1.026 million of the allocation wasdisbursed by credit closing. Most training was conducted locally at theEastern and Southern African Management Institute (ESAMI) in Arusha. Theshort courses included Industrial and Agro-Industrial Project Appraisal,Project Implementation, Export Marketing, Corporate Planningh for ChiefExecutives of Parastatals, and TIB-Clients Seminar. Most of the fundsspent on training - 71.4 percent -- were spent on local training. A totalof 14 group courses and seminars were conducted for 799 participants frompublic and private institutions. Twenty-eight individuals were trainedoverseas at a cost of SDR293,169. A total of five vehicles and somecomputer hardware and software were acquired under the credit at a cost ofSDR181,231. Details on training are found in Annexes V and VI.

4.09 TIB was a very capable institution at the start of projectimplementation, and was strengthened by the training provided under thecredit, as described in para 4.07. The Technical Assistance Unitfunctioned well and worked well with the rest of TIB. During projectimplementation, four expatriate staff were recruited at a cost ofSDR504,840.

9

Tanqan!a Audit Corporation

4.10 Fifteen Tanzania Audit Corporation staff underwent training inaccountancy at institutes in the U.K. at a cost of SDR 765,000 (anadditional seven received similar training financed by SIDA). At the timeof the PCR, eight of the 15 had returned to Tanzania; three with full ACCAlevel 3 qualifications. four with level 2 qualifications, and one with nosignificant improvement. Of the seven that remained abroad, one was doingvery poorly, and the others were studying at level 2.

4.11 The computerizatior. of TIB was begun under TA II. The purchaseof six Wang personal computers and the services of a computer expert werefinanced under the credit. The loan accounting and payroll systems werecomputerized under TA II. and training of TIB staff was ongoing.Implementation of this aspect of the project was good.

Procurement

4.12 Procurement for all components went smoothly, although forseveral of the subprojects, delays were experienced due to difficulties inlocating several consulting firms that were interested in bidding for thework.

Comliance with Covenants

4.13 There were four main covenants associated with the project, withwhich TIB was in compliance during implementation. TIB progress reportswere particularly helpful.

Bank Supervision

4.14 Supervision of Cr. 1060 began in FY82 and continued throughFY89. Staffweeks spent on supervision totalled 63.1 (average of 7.9 weeksper year), and ranged from a low of 2.3 staffweeks in the first year ofsupervision to a high of 13.8 in FY87.

V. CONCLUSIONS

5.01 The objective of the project was to assist the Government ofTanzania to reorient investment in the country to directly productivesectors by providing consulting services and training. The assessment ofthe need for technical assistance and the objective of the project were andremain valid. However, Cr. 1060-TA can only be described as a limitedsuccess, largely for reasons outside the control of the borrower and IDA.

5.02 The outstanding factors in the implementation of this projectwere the general deterioration of the economy, and the devaluation of theTanzania shilling. This uncertain and unfavorable economic environmentmade investment in general risky, but particularly so for the privatesector and especially for investments involving foreign currency debt.

10

5.03 If the number of studies whose recommendations were implemented(all or partial) is taken as an indicator of success, the studies componentcan be considered to have been a moderate success. However, TIBexpectations concerning the number of subprojects that are suitable forimplementation may be optimistic. Most of these subprojects would requiresignificant infusions of foreign exchange, the availability of which in thecurrent economic environment is questionnable. In addition, for severalsubprojects, the time elapsed between completion of the study andimplementation of the recommendations have seen and will continue to seesignificant devaluations of the shilling, which could very likely changethe outcome and recommendations of the studies.

5.04 Another measure of the success of the subproject component ofCr. 1060 could be the number of subloans that have been repaid, it havingbeen the intention of the Staff Appraisal Report that a subloan that leadto a viable subproject would be repaid by the borrower. To date, onlythree subloans have been repaid under TA II, and only one under TA I. Inthis area, fault can be found in the design of the project, which did notmake clear what the criteria for repayment would be; TIB has excluded, forexample, efficiency studies from repayment, the results of which ifimplemented might have led to significant increases in profits.

5.05 More emphasis was given under TA II, than under TA I, to theselection of subprojects that focused on improving efficiency andrehabilitation. The geographic and sectoral distribution of thesubprojects was appropriate. The number of studies carried out byTanzanian firms was also impressive. On the negative side, it isregrettable that so little of the money disbursed for studies under Cr.1060-TA reached the more efficient private sector, which had borrowed quitesignificantly under the previous IBRD lines of credit. It must bequestioned whether TIB was aggressive enough in working with privatecompanies to develop study ideas and, accordingly, whether the Bankadequately monitored and followed up on this issue with TIB. However, indiscussing the lack of private sector use of Cr. 1060 funds, the effect ofeconomic uncertainty, particularly the devaluations of the shilling, shouldbe kept in minds any company that took on foreign currency denominateddebt under the earlier IBRD lines of credit and saw this debt increaseeight-fold, would be very loathe to take on additional foreign-currencydenominated debt.

5.06 The training component, with the exception of training for theTanzania Audit Corporation, can be judged a success. A large number ofparticipants vas reached, and TIB in particular has seemed to benefit fromthis component. The emphasis in the design of the operation on in-countrytraining was appropriate. The training for the Tanzania Audit Corporationcannot be considered a success, considering that only three of the 15participants obtained the level of skill hoped for at appraisal.

5.07 Lessons learned. The most important lesson to be learned fromthis operation is the recognition that for a technical assistance projectto be successful, a great deal of time must be invested in it not only onthe part of the borrower and implementing agency, but also on the part ofthe Bank. Although the staff time required under this sort of operationmay seem out of proportion to the funds invested in the operation, it

1U

should be recognized and accepted that a significant amount of staff timeis necessary. in particular to adequately review subproject proposals fromthe borrower (perhaps even to assist the borrower in identifying suitablesubprojects) and to review the consultant reports that result from thosestudies. Failing this time. it may result that inappropriate studies aredone and/or studies are done poorly.

5.08 Although there are advantages to scheduling a repeater projectto closely follow the preceding operation, the timing of this operation wassomewhat premature. At the time of loan committee review, less than 20percent of the 25 feasibility studies had been completed under TAX. It wastherefore difficult to evaluate the usefulness of the studies and theadequacy of review procedures, both those of the borrower and IDA.

12

PROJECT COMPLEI=ON REPORT

SECOND TECHCAL ASSISTANCE PROJECT(Cr. 1060-TA)

Previous Bank Group Involvement

Cr. 469-TA for US$6 million vas signed February 13, 1974 andbecame effective April 18, 1974. It closed on June 30, 1980.

Ln. 1172-TA for US$15 million was approved on October 28, 1975,signed on November 12, 1975, and became effective on February 20, 1976.The loan financed part of TIB's foreign exchange requirements to cover itscommitments through December 31, 1977. The loan was committed by June 1978and closed one year later than anticipated on December 31, 1981.

Lu. 1498-TA for US$15 million was approved on December 6, 1977,signed on December 28, 1977, and became effective on April 3, 1978. Aswith the previous loan, the purpose of this loan was to finance part ofTIB's foreign exchange needs up to December 1980. The loan was fullycoiaitted and closed as scheduled on December 31, 1980 and June 30, 1983,respectively.

Ln. 1750-TA was for US$25 million; at negotiations it was agreedthat an additional US$15 million would be lent to TIB from the EEC SpecialAction Fund. The loan was approved on July 24, 1979, signed on August 20,1979, and became effective on February 5, 1980. As with the previousloans, the main purpose was to provide foreign exchange resources for TIB'scommitments up to June 30, 1983. The loan was fully committed two yearslater than anticipated on June 30, 1985, and closed a year later on June30, 1986. The EEC Special Action Credit wes also closed on June 30, 1986,about three years later than anticipated.

Cr. 601-TA, for US$6 million, was approved November 25, 1975,signed on January 9, 1976, and became effective on September 14, 1976. Thepurpose of the project vas to Improve the quality of investments in therpoductive sectors by providing technical assistance to prepare a pipelineof investment projects. The credit was fully committed by December 30,1980, one year behind schedule, and closed December 31, 1982, having beenextended two years.

13

ANNKX II

PROJECT CONPLETION REPORT

TANZANIA

SECOND SRCHNICAL ASSISTANCE PROJECT(Cr. 1060-TA)

Schedule of Disbursements(SDR '000)

Actual asIDA Fiscal Year Appraisal 2 of Appraisal

and Quarter Estimates Actual Estimates

1981June 30, 1981 305 0 --

1982September 30, 1981 500 0 --

December 31, 1981 690 0 -

March 31, 1982 880 100 11June 30, 1982 1.070 500 47

1983September 30, 1982 1,660 722 43December 31, 1982 2,290 867 38March 31, 1983 2,900 922 32June 30, 1983 3,510 1,120 32

1984September 30, 1983 4,220 1,408 33December 31, 1983 4,930 1,772 36March 31, 1984 5,640 2,160 39June 30, 1984 6,350 2,560 40

1985September 30, 1984 6,870 2,810 41December 31, 1984 7,380 2,890 39March 31, 1985 7,890 3,380 43June 30. 1985 8,400 3.590 43

1986September 30, 1985 4,010 48December 31, 1985 4,180 50March 31, 1986 4,410 53June 30, 1986 4,590 55

1987September 30, 1986 4,750 56December 31, 1986 4,880 58March 31, 1987 4,990 59June 30, 1987 5,076 60

14

1988September 30, 1987 5,094 61December 31, 1987 5,440 65March 31, 1988 5,519 66June 30, 1988 5,680 68

1989September 30, 1988 6,153 73December 31, 1988 6,478 77March 31, 1989 6,567 78

TANZANIA

Second Technical Amitatance Credit

(C;. lO6-TA)

Status of Subprojecte---- t--------

Iteve,Recomena- Do" BS k

Subprojec t D A _ tio. been O4ve Final Statua of RepaymentoSitw4ln, Number Approvd Approved Diebured Type banert Conultant iW t. Report? Frm Subborror to TS

Om sm

Car a Sblate Urban Tren. A-1 09/17/Si S1,il90.00 2,044.7 Fesibility WC nh Ye no Cot overm ftom tAt.Mara Poser Sltatie A-2 12/14/01 104,110.00 44,90.20 Prairvatment Teneec Sbeco (CSa) Jr" no Rei;d.tfrdrogention Project. A-S 03N/26/S 651,50.00 49231.i2 PrafeibilI ty Tonteeco Acre (CCa) N o Pre-inV4*eatnt t*tAdy, OrittOM Off,pobrign Eschange Shortage 07/20/82 1 4484.00 14M705.97 RvieW To tl 1C (Too) ay Stad for t1d; written off.Alcohol from Silm *,o" A-1 12/09/0 2 174,#55.00 200,010.31 Feaibtlity Aeboni Elctroatt (Site.) mt hot,n bbstract Projoct nt viablo; trict. off,tagr 0OP'I & vtfinf A-S 02/24/0 187,410.00 135,000.40 Efficiency coto. of Tao. Zoo. Carads Pecific (Can) yes ya Som r*coemndatioe Implemented; nir4ta oftf.

Poee.lana P,rtland Comat A-? 04/11/03 196,490.00 191,887.46 ateilbil"ty toas. Seruji I lD Circl (tiI) "oitkely yatAimo Survey A-t 06/7a/0 979.990.D0 230.77.64 Survey T ttDtCorp Kotint(Cao)/8Ci () y "a-to e*twdiee to be oen; written off.Tang. Plaherloe Corp. A-9 OCS/tSt/ 170,620.00, 168,120.54 8ffic./rab. TAfKCO not knion yea so Recomendations eoplentad; written off.

beg Coneertion A-10 015/28/ 170,7001.00 104,207.5 Officiecy 108 TOI1(Tan) fair am Study for tie; written off.Auto Compenst A-1l 04/17/04 1008i00.00 196,900.8 ft aibility S9C W.S.At(ino ) good no To be repald.P5ROCC A-12 10/10/84 201,860.00 0.00 Feseibilit t_Xt -- n/a ./ Cancelled

0.Pau Operatione A-IS 0t/16/0 15J765.0O 74,630.3t Eporwt Tan. ebroj I Ce.aenta(Sae) not i.c. ya Project not viable: eritten off.Maeac Mining A-14 0/04r/06 2t1i611.00 0.00 Pea.ibilibty Tana.laer a -- t/a nh CancelledSoo Wei ia 553 6S4 A-IS 05/24/8 1.606.400.00 li5,0o6.4 riedging T&n.Pab.Oat.Cerp. Jr ya y* Repid trough Petrol. TA Project.TI1 Sowrrerr A-li 06/19/86 112,182.0 69,5S4.88 Review T10 TtStO CTrn) yea Ya Study for tlsB *ritte, off.TA o A-17 0O/i2/ 4750D00,00 474,874.7h Uriing Teo wns"() d ym Repaid. _National Transport Corp. A-1B 10/2p1/8iti 143t016.00 14070t.67 Bridging WiC t/a yo n, Written off. VI

Emerald iiam A-19 1%," 166826.00 22701. 2t FeaMility rrr.Oematooe Roeeo Raearch N re y Rep0st eat ryt deterined.

lackreef C.4ato Iinam A-20 0/3/87 300170.00 143,173.41 RalbIlItatilO wC Brit.Nioing Con. C oh y etipeyent not yet determined.leat Ilem Eport Stratey A-21 09/28/? 1,2070.00 116.480442 Erto tSlC Wener (US) a Yea rant ftand written off.

S,787.044.00 82.11.720.67

tioal Chtemcalt tnd. -1 04/281t 6i,020.00 40,784.08 FibilbMar MCI Sue-ain4 (1) good ro to be repid.tional Chleal lad. 9-2 07/S"i/I 61,400.00 0.00 Feaeibility NCt Itandret rCM) n/a CanCelled

Soft Drib Cocentrateo 9- 07/221 20t1920.00 121017.49 Fe"Mib 1P Tim Cian) yea yam Project not viable; eritten off.Sticler'e Gorge vHdro- W -4 09/9/S1 43,000.00 87,060.01 Feeibilit l(Sm>r*la S) ae Project no viable; written off.

electric Poser PlatCe ir in, Cemt Plent b-5 05/25/2 88,500 0.00 fseaibility Ton. Si I /a / Cantel edYaccine (MCI) t-U 01/11/84 "6,790.00 47,197.04 Possibility WeI tB good no To be repaid.Tlot - Special Papera 8-7 04/11/84 6S,91.M00 69,87.81 Feeibilitw TMA P.C. E nttrl (U) am yeu ProJect rot viable; written off.tlW - Product.odicatorte 5-8 04/11/84 S3,80.00 0.00 Prodctivty tie B/a n/a n/aShet gleam 8- o0/09/84 SB,2000 81,1".97 Epot Toot. Seruji oa You no Mirket aurvey; writtn off.

KIlltoejre SSt Uhiite5 9-10 06/07/"8 40,185.00 13,001.11 Feibility K9ll .dou. tCtr. Time (Tan) M ye Prv obility of ieplemetatico; aritten off.

,oarta 4 Feldespr MialnsClay ProeeingGypem 1ining, ProceesingBrich and Roeoflog TilesCeraic Tablearam

Charcoal Stoven -11 01/08/06 1,09.00 11091.95 Feaibitibw im t1SC10T(r) ya ye I l5tende World bob project; writteA

"oel Stdy -12 09/117/05 19,087.00 0.00 TMdtirv n/a 0/a n/a CancelledCharceli Prodwction &-18 09/5/85 4,040.00 26,146.07 opeaelbiityM TISOCOTa) yam yea Zelemaentd unde Wiorld Bank project; written

Fondry Nd Forg sector 8-14 I/04/WS 90,814.00 0S0746.00 Proinvatment tCC ec (moth) hit yea Sutsectot etudy; written off.Aru^ea Coaf.Ctr, Notel 15 01/0/ 41,9t7700 0.00 Femeibility Are .Inter.cnfCtr:. r a n/a n/. ConcelledAfro-Cooling 9-16 01/14/66 64,719.00 86,1.11 Efficncy Afro-Cooling Tbchholln ((S) good yea To be repaid.llang'ul Toole ' -17 00/19/60 49S590.01 48,70.69 Market mm tt" S )/e"mcooetioo ifpiemented; written off.

Spi brrking t -1B 11/7/S 0 66060.00 50,074.31 Fetibility Aluminu Africa Mader Dalor (India) oh yea Projet nt viable; written off.ToeWtil Eo"rt Stratey -19 01/285/7 0.00 0.00 Strateg yEtCO pie "/a /a Amount IncreeJed am A-21.Man. Woden Shattlam B-20 O1/2/7 4756O5.00 0.00 Feaibilitt 1O n/* n/a n/% CanceliedTlagayiks Tyre Retweding i-SI 0/01/7 60,000.00 50o577.8S Feecib1iity Coafric Techoolink (M) r a yea To be repaid.Ilsangat* Estatem 9-22 00/20/07 45415.00 7,707.69 Feesibiity Tean. Foodi "ilter (UK) lood ya To be rCs d.

Te Factories 5-23 02/007 15,018.00 82.708.56 Capacity Tsan. Tao Ninte r OO good ya Study cr.4 tfinhd.

StWoe T YvI Servie 8-24 40831/ 76,475.0 78,ae9.U 14 CiCY STSJTTC Co h o 3bmdet;e 1pe.oe.d; a;tn off.Kohe 1toted, 5sr 0SP/0 P.83.00 47.904.20 Effi iocjt A< I "FCOa 1o (UK) a. To be re.*e4.

_.ge Irrigatin 8-26 018/8it7 01, 7.00 Ii7,462.17 Effieleoc k= IIcrm (UK) oY es Prolect 05 vieablo, .ribteo off.Kegea Saro Co" 1rel3. 8-27 01/191/81 t4,848.0 0.00 n/s 0/ a/b4#cultur*e Crp 11 06/i5/8? 70'00.00 0 9,078.10 Foobit,y e Kineter (tU oh see Sehteor *WdJt ar;155. off.

cue oveI Store. 8-29 0208/0 86.70000 0.00 P llot Tod. Pets. Sgo. - C n celled

1,486.440.00 887,791.74

total. * 11 rojeee 4,099.S21.41.eer"., e la eub#rj.. (MO) 15.'l8u."average eis, eubprJec (A) reO1 6.40ever" es-e ubroJet, (a) 44*810.50

17

ANM IV

TANZANIA

Technical Assistance Credit (Cr. 1060-TA)

Subproiect Sumuaries

A-1 Dar es Salsam Urban Transport System - SDR31.890 saProved;SDR25,044.97 disbursed

This study was a continuation of a feasibility study begun under Cr.601-TA to define an appropriate urban transport system for Dar es Salaam.Some of the recommendations have been implemented, e.g., widening of llorogoroRoad between the junction of the United Nations Road to U.W.T. Road has beenfully implemented. Expansion of the UDA fleet is also being iwnlemented, butnot per the phased plan due to resource constraints.

A-2 Ntera Power Station - SDR104.110 agproved: SDR44,983.20 disbursed

A review of the preinvestment study carried out by StECO offinancial and technical aspects of Mtera Power Station Project. The reviewhad the effect of increasing quantities and prices. The resultant costestimate increased by about 33 percent over SWECO's estimate. The projectis being implemented with funds from the World Bank. SIDA, NORAD, FW, Italy,France, and Kuwait Fund.

A-3 Three River Study on Urdroelectric Generation - SDR561,540amproved: SDR492,582.92 dlsbursed

The objective of this study was to undertake full reconnaissance andpre-feasibility investigations of potential hydroelectric development for theRumakali, Ruhuhu and Malagarasi rivers. Data gathered under this study wasused in Tanesco's master plan for the development of hydro-electric power inTanzania.

A-4 Implications of Foreign Excbange Shortage on TIB-FinancedProiects - SDR144,645 anproved: SDRl24,705.97 disbursed

The impact and implications of the foreign exchange shortage on theTIB portfolio, and specifically on ten TIB-financed projects, were studied.The study examined the extent to which operating problems were related to theforeign exchange shortage, and made recommendations for improvement. Thestudy indicated that while some of the companies were heavily dependent onimported inputs, others were found to have problems not directly related tothe forex shortage. The report recommended some management and operationalrestructuring. Some recommendations have been impiemented and have resultedin improved operations for some companies. The companies covered under thissubproject were Afro-Cooling, Aluminum Africa, General Tyre East Africa, KiboPaper, Mwanza Fishnets, Polysacks, Sabuni, Tanzania Cables, Tanzania

18

Electrical Goods Manufacturing, and Tanzania Pharmaceutical Industries.

A-S Alcohol from Sisal Waste - SDR274,355 approved: SDR205,010.31disbursed

A feasibility study, sponsored by a company with large sisalholdings, was undertaken on producing alcohol from sisal waste. The reportconcluded that it is technically feasible to produce alcohol from sisalwaste. A pilot plant is requAred to determine the detailed specificationsfor optimal commerc. .1 production. The costs for putting up the pilot plantare, however. quite high, and Amboni has at the moment shelved the project.

A-6 Operatioz and Staffing of Tazara Railroads - S1)R137,410 aproved;SDR35.8 CJ.48 disbursed

The purpose of the study, which was sponsored jointly by thegovernments of Zambia and Tanzania, was to pinpoint operational andinstitutional weaknesses, assess costs in terms of physical and humanresources needed, and to draw up a timetable for implementation of agreedmeasures. The consultants" report focused on institutional (staff disciplineand organization), rather than structural, issues as the main problem, whichthe consultants believed were due to the joint control by two governments.TIB reports that recommendations have been implemented and that theperformance of Tazara has improved.

A-7 Pozzolana Portland Cement - SDR196,450 approved: SDR19;,857.46disbursed

The above was a two-phase feasibility study to carry out geologicalinvestigations on the quantity and quality of pozzolana material in the MbeyaRegion, and thfen to carry out technical and financial evaluations ofpozzolana cement manufacturing operations. Suitable materials and adequatequantities have been found near Mbeya Cement Works. Recommendations havebeen made to implement the project in phases.

A-8 Joint Airmag Survey - SDR279,000 aaproved; SDR191.857.46 disbursed

An airmag survey was carried out over Tanganyils Grabem and LakeVictoria to prepare a promotion report for oil companies, with the ultimateobjective of attracting oil companies into investing risk capital inhydrocarbon exploration. The survey was sponsored jointly by the governmentsof Zaire, Tanzania, Uganda and Kenya and financed out of World Bank loans andcredits on a pro-rata line-kms basis. Some exploration has been undertakenbased on the data obtained from the study.

A-9 Institutional and Operation Study of Tanzania FisheriesCorporation - SDR17O7620 approved; SDR168,120.54 disbursed

The above subproject studied the institutional and operationalarrangements for the Tanzania Fisheries Corporation (TAFICO), with theobjective of streamlining operations, identifying a suitable capitalstructure, developing an efficient and effective organizational structure andmanagement system. Recommendations have been implemented and TIB reportsthat TAEICO is operating profitably.

19

A-10 Energy Conservation Study - SDR170,700 am3roved,SDR134,207.55 disbursed

The study consisted of in-plant energy audits to examine all formsof energy consumption and recommendations for improving energy efficiency.Proposed by the Tanzania Textile Corporation, TIB became the sponsor becauseit decided the study should include other industries also. The study covered15 industries. The recommendations were found to be useful by each of the15 companies, but implementation of the recommendations has been slow due tolack of foreign exchange.

A-ll Manufacture of Additional Auto Comaonents - SDR188,320aProved; SDR198,990.50 disbursed

The above feasibility study looked at the possibility ofmanufacturing additional motor and tractor components through themodernization/upgrading/expansion of existing factories (Tanzania Cables,Vacu-lug, Rubber Industries and Auto-Mech). Several components formanufacture have been identified, including hoses, molded rubber componentsand shock absorbers. The State Motor Corporation is now coordinating theimplementation of the viable projects.

A-12 Oil Production Study - SDR201.360 aiDroved: cancelled

The study was to examine the feasibility of increasing productionof oilseeds by establishing a nucleus farm and by planning an outgrower orcontract farming scheme for Tanzanian farmers. The study was cancelled atthe request of MOPROCO, for unspecified reasons.

A-13 Gypsum Mining - SDR153,76S aDiroved: SDR74.630.36 disbursed

The study considered the mechanization of gypsum mining operationsand the establishment of gypsum-based industries. The mechanization ofgypsum mining was not found to be financially viable. However, in view ofthe gypsum shortage in the cement industry and the positive foreign exchangeeffects, some investment for mechanization has been recommended. Theproduction of plaster of paris and gypsum blocks was not found to befinancially viable.

A-14 Geological Investigation and Feasibility Study on Mining Meerschaumand other Minerals - SDR261.516 approved: cancelled

The economic and financial viability of the mining of meerschaum andrelated minerals Was to have be-n studied. The study was cancelled.

A-1S Rehabilitation of Songo Gas Wells SS-3 and SS-4 -SDRl.503.400approved; SDRU3,556.64 disbursed

Rehabilitation work was undertaken under this subproject to controlgas leakages at two wells. The amount was granted as bridging finance andwas recovered from the IDA Petroleum Technical Assistance Project.

20

A-16 Review of Eight TTB Borrower Companies - SDR112,152approvedt SDR69.524.58 disbursed

This subproject financed the second part of a two-phase study begununder A-4 on the ability of eight TIB borrowers ta meet their financialobligations. The companies had failed to honor their financial obligationsto TIB. The review identified technical, financial and managerial problems.Some of the recoumendations have been implemented by TIB. More importantly,the reports formed the basis for continuing TIB monitoring and supervisionof the projects. The companies included under this study were MorogoroTannery, TPB Southern Extraction Rehabilitation, Maputa ya Tlulu, CataSouthern Factories, Tanga Cement, and Mbeya Cement.

A-17 Pre-imulementation Work for Electric Power SystemsRehabilitation - SDR475,000 approved: SDR474.374.79 disbursed

The subproject financed project preparation activities for the IBRDPower Rehabilitation Project (e.g., detailing of project components,preparation of specifications, tender evaluation). The rehabilitation isbeing executed with funding from the World Bank, Kuwait Fund, Norway, KfW,CIDA and FINIDA.

A-18 Trucking Prolect - SDR142,316 approved: SDR140,976.67 disbursed

Subproject A-18 was a bridging loan to finance the projectimplementation services of the advisory staff between the Fifth and SixthHighway Projects. The services of eight transportation advisors werecovered.

A-19 Emerald Mines in Rukwa Region - SDR 165.265 approved:8DR227,001 disbursed

The Tanzania Gemstone Industries sponsored this feasibility studyand geological exploration to establish the quantity and quality of gemstonebearing minerals, with the emphasis on emeralds. The study was carried outup to Phase II, which was mainly exploration work. Emerald occurrences werelocated at Hponda, Ngongo and Katwa in the region. Phase II of the project,i.e., economic and financial viability, could be carried out due to theexpiration of the credit. TGI and TIB are seeking other sources of financingto complete the project study.

A-20 Geological Investigation and Operational Review of Buckreef GoldMining Co., Ltd - SDR 389.270 approved: SDR 143,173 disbursed

The study, sponsored by Buckreef Gold Mining (BGM), was to have beendone in two phases. Phase I would identify all aspects of operations thatimpede output at the designed capacity and determine rehabilitation workrequired to improve performance. Phase II would cover geologicalinvestigations, both surface and underground exploration, so as to establishthe life of the mine. Only Phase I was carried out. A number of bottlenecksto operational performance have been identified and measures recommended.BGM is now soliciting for funds to implement the recommendations and also tocontinue with Phase II.

21

A-21 Exlort strategy for the Textile Industry - SDR122,870approved; SDR116, 430 disbursed

Sponsored by the National Textile Corporation (TEXCO), thissubproject studied the export potential for textiles and related products,and identified key bottlenecks to exports. TEXCO has accepted a number ofrecommendations made by the consultant. The sponsor in collaboration withTIB is now preparing workable plans for implementation.

B-1 Manufacture of Sulfuric Acid and Derivatives - SDR61,020 approved-SDR48,784.68 disbursed

The objective of the study was to determine the viability of settingup a plant for manufacture of sulfuric acid and derivatives. The sponsor,National Chemical Industries (NCI), intends to carry out the project withsome modifications aimed at cutting down investment costs, and is mobilizingfunds to implement the study recommendations.

B-2 Manufacture of Calcium Ammonium Nitrate from Ammonia - SDR6l.400approved: cancelled

The study was to determine the viability of setting up plants forthe manufacture of ammonium nitrate and calcium ammonium nitrate fromammonia. The study was cancelled because of NCI's involvement in 8-1.

B-3 Manufacture of Soft Drinks Concentrates - SDR20.920approved; SDRlZ.027.49 disbursed

The purpose of the study was to determine the viability ofmanufacturing soft drink concentrates from local raw materials to supply thesoft drink bottling plants in Tanzania. The idea was not found to be viable.

B-4 Technical Evaluation for Stieglers Gorne HtdroelectricPower Protect - SDR43,000 approved; SDR37.060.11 disbursed

The study reviewed the technical aspects of the above power plant,as carried out by Halfslund-Norplan of Sweden. The project was shelvedbecause of high investment costs.

B-5 Coal Firing in Cement Plants - SDR88,345 apprwved; cancelled

The study was cancelled.

B-6 Manufacture of Vaccines, Veterinary Drust and Accaracides -SDR96,790 approved: SDR47.197.04 disbursed

The study looked at the feasibility of manufacturing vaccines,accaracides and veterinary drugs in existing pharmaceutical and vaccineplants. The sponsor, NCI, is mobilizing funds to implement the study'srecommendations.

22

B-7 Maufacture of Specialty Paper - SDR6S.925 approved:SDR69.877.31 disbursed

The objective of the study was to assess the feasibility of settingup a specialty paper manufacturing unit from locally available raw materials,with special emphasis on using sisal waste. The project was not found to beviable.

B-8 TI8 Performance Indicators - SDR3,890 aMproved: financedby non-IDA funds

Under the study, performance standards were determined to use inevaluating the performance of TIB personnel. These standards are now beingused by TIB.

3-9 Extort Market for Sheet Glass Products - SDR38.130 approved:SDR32.196.97 disbursed

The objective of the study was to determine export marketconditions, as well as domestic demand for the various products to bemanufactured by Tanzania Glass Co., Ltd. The study findings have beenincorporated in the company's plans.

3-10 Small-Scale Units In the Killmaniaro Region - SD40,285 approved;SDR27.203.89 disbursed

The study assessed the viability of establishing small-scaleindustry units for earthware, stoneware and forging in the Kilimanjaroregion. Five projects were identified and discussions are proceeding withprospective sponsors.

3-li Production and Marketing of Charcoal Stoves - SDR15.809 aPiroved:SDR£1.891.95 disbursed

The study evaluated the technical, financial and economic viabilityof producing and marketing improved charcoal stoves in Dar es Salaam. Studyrecommendations are being implemented.

B-12 Establishment of International Hotel in Dar es Salaam - SDR19.087approved: cancelled

The study would have updated a feasibility study done in 1980 underthe first TA Credit (601-TA) on the establishment of an international hotelin Dar es Salaam. The study was cancelled.

B-13 Production and Marketing of Charcoal in Dar es Salaam - SDR42.646approved: SDR23.146.07 disbursed

The study evaluated the viability of establishing a pilot projectfor the production and marketing of charcoal in the Dar es Salaam region.Study recommendations are being implemented.

23

B-14 Foundry and Forge Sector - SDR93,314 approved: SDR86,747 disbursed

Under the subproject, sponsored by the National DevelopmentCorporation, a comprehensive plan was prepared that would serve as the basisfor the future expansion and development of the foundry and forge industryin Tanzania. The study identified fundamental constraints within theindustry that limit growth and efficiency, and identified projects forimplementation. However, the identified projects require financial andeconomic evaluation before they can be implemented.

B-15 Expansion of the Arusha International Conference Center andEstablishment of a Hotel in Arusha - SDR41,977 approved; cancelled

A feasibility study was planned to study the expansion of thefacilities of the Arusha International Conference Center (to aco^mmodate3,500 delegates, up from 800) and the establishment of a 400-500 room hotelin Arusha. The study was cancelled.

B-16 Upgrading and Expansion of Afro-Coolin8. Ltd. - SDRSI.719 approved:SDR36,195 disbursed

The study examined how to rehabilitate and modernize Afro-CoolingSystems, Ltd., in order to improve product quality and lowpr productioncosts. The study recommendations are being implemented.

B-17 Marketing of Machine Tools Products - SDU49.590 approved:SDR 45.971 disbursed

The objective of the study was to determine domestic demand for theproducts of Mang'ula Mechanical and Machine Tools, and recommend an effectivemarketing strategy and optimum product mix. The sponsor is looking for fundsto implement the recommendations.

B-18 Shipbreaking Operations - SDP66,050 approved: SDR50,074 disbursed

This subproject determined the feasibility of establishingshipbreaking facilities in the Dar es Salaam port area for the purpose ofsupplying scrap metal to Aluminum African Ltd. The project was found to beinviable.

B-19 See subproiect A-21.

B-20 Wooden Shuttle Manufacture - SDR47,585 approved; cancelled

The study was cancelled.

B-21 Rehabilitation of Tyre Retreaditm Factory - SDR 52.957approved; SDR5O,577 disbursed

Sponsored by COMAFRIC, the study assessed market demand, reviewedexisting production facilities and prepared a feasibility study for thepossible upgrading and expansion to meet demand. The project was found tobe viable and the sponsor is mobilizing funds for implementation.

24

3-22 Ishabilitation of Risangata Estate - SDR45.415 anproved: SDR37,708disbursed

The study identified the range of technical and operational needsof the Kisangata Estate, in relation to the chosen crops or enterprise mix(including sisal) and the scale of operations that would ensure that a viablebusiness could be undertaken. Study recommendations are being implemented.The study was sponsored by the Tanzania Food Corporation.

B-23 Establishment of New Tea Factories - SDR35,815 approved: SDR32,704disbursed

This feasibility study, sponsored by the Tanzania Tea Authority,examined the possibility of establishing additional tea processing capacityin Njoube and Rungwe districts. The study recommended establishment of a newfactory in Njombe and raising and balancing the capacities of Mwakaleli andKatumba factories in Rungwe. The recommendations are being implemented.

B-24 Institutional and 2Drational Study of State Trael Services -SDR78,475 a"proved: SDR78,089 disbursed

The study examined the organizational and capital structure andactivities of the State Travel Service in order to streamline operations andimprove perfoumance. A development strategy was also developed. TheTanzania Tourist Corporation and STS are working on plans to implement therecommendations found to be acceptable.

3-25 Rehabilitation of Kahe Estates - SDR57,893 approved:SDR47 ,904 disbursed

Under the sponsorship of NAFCO, consultants carried out a study onthe rehabilitation of 1,400 hectares of unused land in Kahe Estates, and tosuggest the best crop mix to maximize profits. The project was found to beviable under a less capital intensive approach. The project is to beimplemented with the assistance of Japanese grants, World Food Program, andthe Tanzania Government.

3-26 Review of Buawema Irrigation Prolect - SDR61,752 approved:SDR57.482 disbursed

Under the sponsorship of RAFCO, the consultant studied the natureand extent of facilities already developed at the project site and determinedthe most appropriate crop mix to be cultivated in order to maximize overallbenefits of the project. The project was found to be inviable.

3-27 Zagera Sugar Cane Irrigation Project - SDR54,348 approved;cancelled

The study was cancelled.

B-28 Horticultural Development - SDR70,000 approved; SDR69,078 disbursed

This study, sponsored by TIB, looked at the export market prospects

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for a variety of horticultural produce. It also identified suitable areasin the country for promoting the most appropriate crops. Only recentlycompleted, TIB is now carrying out further promotional work in order tosingle out particular projects and identify project promoters who could befurther assisted by the Bank through provision of term finance to implementthe projects.

B-29 Pllot Study of Gun Naval Stores - SDR36.700 approved: cancelled

Subproject B-29 was to be a pilot scale study to determine thetechnical parameters for the possible production of gum naval stores. Thestudy was cancelled.

TANZANIA INVESTMENT BANK -TECHNICAL ASSISTANCE 1060-TA

SWi"ARY OF UTILIZATION OF TRAINING COIPONENTS MSDROOO)

NON-TIB TIB LOCAL TOTALTRAINEES TRAINEES GROUP

No. of Commitments 16 8 14 38

Value of Commitments 152.521 140.648 733.427 1,026.648

Portion of value overseas 152.524 140.640 - 293.169

Portion of value-local - - 733.427 733.427

% of value-overseas 28.5'

No. of participants 18 10 799 827

No. of man-month 41 48 653 742

Cost per participant 8.47 14.06 0.91 1.24

Cost per man-month 3.72 2.93 1t12 1.38

% of participant 2% 1% 97% 100%

% of commitment 14.9 13.7 71.4 100t

TANZANIA INVESTMENT BANKTECHNICAL ASSISTANCE

CREDIT 1060-TA: STATUS OF PROJECTS APPROVED (SDR'OOO)

TRAINING PROJECT AMOUNT AMOUNT NET COST NET COST NO. OF TRAINiNGNO. APPROVED DISBURSED TI8 NON-TIB OVERSEAS LOCAL PARTICIPANTS MONTHS

narketing & Finance C-1 19.960 19.960 - 19.96 19.96 - 2 5Foreign Investment C-2 13.563 13.563 13.563 - 13.563 1 2Workshop & PoIicy C-3 8.354 - 8.354 - 8.354 - 1 1.5EnterprisesClients seminar C-4 44.414 44.414 - 44.414 - 44.414 100 25Agro-Industrial ProjectAppraisal C-5 72.696 72.812 - 72.o96 - 72.696 29 65n1SC in Management ADL C-6 42.812 42.812 42.812 - 42.812 - 2 24Petroleum Management C-7 12.802 12.802 - 12.802 12.802 - I 4Urban Transport Man. C-8 5.533 5.533 - 5.533 5.533 - 1 3General Management C-9 9.299 9.299 - 9.299 9.299 - 1 3management Consultancv C-10 12.147 12.147 12.147 - 12.147 - 1 3Programme nlaterialsManageuent C-ll 5.774 5.7/4 - 5.774 5.774 - 1 3Chief Executive Prog. C-12 20.145 20.145 20.145 - 20.145 - 2 4 4

Project Implementation Course C-13 38.281 38.281 - 38.281 - 38.281 15 30Financial (lar.aement C-14 11.357 11.357 11.357 - 11.357 - 1 3Fish2ries Development C-15 13.741 13.741 - 13.741 13.741 - 2 3.5Policy on Public Ent. C-:6 5.776 5.776 - 5.776 5.776 - 1 1.5Solvent Extraction C.17 14.664 14.664 - 14.664 14;664 - 2 2Export Promotion Seminar C-18 53.885 53.885 - 53.885 - 53.885 25 37.5Agro-Industrial Project C-19 62.904 62.904 - 62.904 - 62.904 29 65Appraisal Traffic Oper&ti-ns C-20 6.768 6.768 - 6.768 6.768 - 1 1.5t18 Clients Seminar C-21 50.674 50.674 - 50.674 - 50.674 150 37.5Subsistances Allowance C-22 5.089 5.089 5.089 - 5.089 - 1 3Project Implementation C-23 47.673 47.673. 47.673 - 47.673 30 45Export Market C-24 20.333 20.333 - 20.333 - 20.333 25 37.5 <Procurement Policies C-25 6.446 6.446 - 6.446 - - 19 5

Agro-InduStrial Project C-26 56.519 56.519 _ 56.519 - 56.519 30 67.5Appraisal Advanced Management C-27 24.490 24.49 24.490 - 24.490 - 1 6Export Marketing Course C-28 33.423 33.423 - 33.423 - 33.423 25 56Maintenance of PV.Ysicai C-29 8.519 8.519 - 8.519 8.!19 - .1 3Assets Implementation C-30 64.081 64.081 - 64.081 - 64.081 25 37.5Agra-Industrial C-31 70.514 64.060 - 64.060 - 64.060 22 30.5Course TIB Clients $eminar C-32 68.624 68.624 - 68.624 - 68.624 225 56In Plant Training C-33 7.549 7.549 - 7.549 7.549 - 1 2Public Finance C-34 9.920 11.045 11.045 - 11.045 - 1 3Transport Menagement C-35 9.600 11.315 - 11.315 11.315 1 2Site flanagen.ent C-36 6,570 7.304 - 7.303 7.303 - 1 3flaintenance Management C-38 8.994 8.718 - 8.718 8.718 - 1 3Corporate Planning C-37 66.797 55.860 - 55.860 - 55.860 50 3

TOTAL 38 Projects 1040.69 1026.596 140.640 885.940 293.169 733.427 827 74213.7% 86.3' 28.5% 71.5%

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