Language: English Original: English

AFRICAN DEVELOPMENT FUND

PROJECT: MARKETING INFRASTRUCTURE, VALUE ADDITION AND RURAL FINANCE PROGRAMME (MIVARFP) COUNTRY: TANZANIA PROJECT APPRAISAL REPORT Date: 17 May 2011

Appraisal Team

Team Leader: Ibrahim Amadou , Principal Agricultural Economist, OSAN.1 Team Members: Jonathan Nyamukapa, Snr. Financial Management Specialist, OSAN.1; Ulrich Boysen, Principal Agro-Industry Specialist, OSAN.2; Ms. Kisa Mfalila Environmental Specialist, OSAN4; Dennis Rweyemamu, Agriculture Expert, TZFO; Balozi Hija, Procurement Officer, TZFO, and Evaristus Kuatsinu, Consultant Civil/Infrastructure Engineer Sector Manager (OIC): Alex Mend, OSAN.1 Acting Sector Director: Adbirahman Beileh, OSAN Regional Director: Gabriel Negatu, OREA

Peer Reviewers

Sebastian Okeke, Snr Agricultural Economist, OSAN.1 Tarek Ahmed, Snr Irrigation Engineer, OSAN.3 Asaph Nuwagira, Agriculture and Rural Development Expert, UGFO; Charles Corliss Wetherill, Agro-Industry Expert, OSAN.1

TABLE OF CONTENTS

I – STRATEGIC THRUST & RATIONALE ................................................................................................ 1 1.1 PROJECT LINKAGES WITH COUNTRY STRATEGY ............................................................................... 1 1.2 RATIONALE FOR BANK’S INVOLVEMENT ......................................................................................... 2 1.3 DONORS COORDINATION ................................................................................................................. 2

II – PROJECT DESCRIPTION ..................................................................................................................... 3 2.1 PROJECT OBJECTIVE ....................................................................................................................... 3 2.2 PROGRAMME COMPONENTS ............................................................................................................ 3 2.3 TECHNICAL SOLUTIONS RETAINED AND OTHER ALTERNATIVES EXPLORED ...................................... 5 2.4 PROJECT TYPE ................................................................................................................................ 5 2.5 PROJECT COST AND FINANCING ARRANGEMENTS ............................................................................ 5 2.6 PROJECT’S TARGET AREA AND POPULATION .................................................................................... 7 2.7 PARTICIPATORY PROCESS FOR PROJECT IDENTIFICATION, DESIGN AND IMPLEMENTATION ................. 7 2.8 BANK GROUP EXPERIENCE, LESSONS REFLECTED IN PROJECT DESIGN .............................................. 8 2.9 KEY PERFORMANCE INDICATORS .................................................................................................... 8

III – PROJECT FEASIBILITY ..................................................................................................................... 9 3.1 ECONOMIC AND FINANCIAL PERFORMANCE ..................................................................................... 9 3.2 ENVIRONMENTAL AND SOCIAL IMPACTS ........................................................................................ 10

IV – IMPLEMENTATION .......................................................................................................................... 13 4.1 IMPLEMENTATION ARRANGEMENTS .............................................................................................. 13 4.2 MONITORING ............................................................................................................................... 15 4.3 GOVERNANCE ............................................................................................................................... 16 4.4 SUSTAINABILITY ........................................................................................................................... 16 4.5 RISK MANAGEMENT ..................................................................................................................... 16 4.6 KNOWLEDGE BUILDING................................................................................................................ 17

V – LEGAL INSTRUMENTS AND AUTHORITY .................................................................................... 18 5.1 LEGAL INSTRUMENT ..................................................................................................................... 18 5.2 CONDITIONS ASSOCIATED WITH BANK’S INTERVENTION ............................................................... 18 5.3 COMPLIANCE WITH BANK POLICIES .............................................................................................. 18 5.4 RECOURSE IN CASE OF HARM CAUSED BY NON COMPLIANCE WITH THE BANK POLICIES ........ ERROR! BOOKMARK NOT DEFINED.

VI – RECOMMENDATION ........................................................................................................................ 18

APPENDIX I: MAP OF THE PROGRAMME AREA APPENDIX II: TANZANIA: COMPARATIVE SOCIO-ECONOMIC INDICATORS APPENDIX III: TABLE OF ADB’S PORTFOLIO IN TANZANIA

i

Currency Equivalents As of April 2011

Currency Unit = Tanzania Shillings (TZS) UA 1 = TZS 2313.20 UA 1 = USD 1.5855

Fiscal Year July 1 – June 30

Weights and Measures

1 metric tonne = 2204 pounds (lbs) 1 kilogramme (kg) = 2.200 lbs 1 metre (m) = 3.28 feet (ft) 1 millimetre (mm) = 0.03937 inch (”) 1 kilometre (km) = 0.62 mile 1 hectare (ha) = 2.471 acres

Acronyms and Abbreviations AAMP Area-based Agricultural Modernization Programme ADB African Development Bank ADF African Development Fund AGRA Alliance for Green Revolution in Africa AMSDP Agricultural Marketing Systems Development Programme ASDP Agricultural Sector Development Programme A-WG Agriculture Working Group (A-WG) of the Development Partners

Group AWPB Annual Work Programme and Budget BOT Bank of Tanzania CAADP Comprehensive African Agriculture Development Programme DC District Council DED District Executive Director DFP District Focal Person DFT District Facilitation Team DPG Development Partners Group EIRR Economic Internal Rate of Return ESMP Environmental and Social Management Plan FIRR Financial Internal Rate of Return GOT Government of Tanzania IFAD International Fund for Agricultural Development ISSC Inter-Sectoral Steering Committee KMCS Knowledge Management and Communication System KPI Key Performance Indicator LGA Local Government Authority

ii

LMIC Local Market Infrastructure Committee M&E Monitoring and Evaluations MANR Ministry of Agriculture and Natural Resources MIS Management Information System MKUKUTA Swahilli for National Strategy for Growth and Reduction of Poverty MKUZA Swahili for Zanzibar Strategy for Growth and Reduction of Poverty MOU Memorandum of Understanding MTR Mid-Term Review MUVI Kiswahili acronym for Rural Micro Small and Medium Enterprise

Support Programme NBF Non-Bank Finance NCB National Competitive Bidding NEMC National Environmental Management Council NPV Net Present value NSADP Northwest Smallholder Agricultural Development Project NSGRP National Strategy for Growth and Reduction of Poverty O&M Operation and Maintenance PCR Project Completion Report PCT Project Coordination Team PME Programme Monitoring and Evaluation PMES Planning, Monitoring and Evaluation System PMO Prime Minister’s Office PSC Programme Steering Committee RCC Regional Consultative Council RFSP Rural Financial Services Programme TZFO Tanzania Field Office WFP World Food Programme WRS Warehouse Receipt System ZSGRP Zanzibar Strategy for Growth and Reduction of Poverty

iii

Loan Information Client’s information BORROWER: United Republic of Tanzania EXECUTING AGENCY: Prime Minister’s Office Financing plan

Source Amount (UA’Million)

Instrument

ADF LOAN 40.00 Project Loan Government/Districts 2.08 Equity Recipient Communities 0.11 N/A Other Financing Partners (IFAD, AGRA)

63.30

TOTAL COST 105.49

ADF’s key financing information

Loan currency

UA

Interest type* N/A Interest rate spread* N/A Commitment fee* 0.5% Other fees* 0.75% Service Charge Tenor 600 months Grace period 120 months FIRR, NPV (base case) B/C: NA

NPV: NA EIRR (base case) 22.4%

NPV: TZS 215.8 billion

*if applicable Timeframe - Main Milestones (expected)

Concept Note approval

October, 2010

Project approval June, 2011

Effectiveness September, 2011 Completion September, 2016 Last Disbursement December, 2016 Last repayment 50 years; December, 2066

iv

Project Summary PROJECT OVERVIEW 1. The Marketing Infrastructure Value Addition and Rural Finance Programme (MIVARFP) has been designed to upscale the successful activities implemented under the first phase Bank and IFAD financed Agricultural Marketing Systems Development Programme (AMSDP). The overall Programme comprises three major components namely: (i) Marketing Infrastructure and Systems Development; (ii) Rural Finance; and (iii) Programme Coordination. The project will be implemented over five years (2011-2016) and the overall programme cost is estimated at UA 105.49 million to be co-financed with IFAD and AGRA. The Bank’s share is UA 40 million (38%) and that of GOT, including contributions from the beneficiary communities is UA 2.19 million (2%) excluding taxes and duties. 2. Given resource limitations, the Bank financed Marketing Infrastructure and Value Addition activities of Component 1 will be implemented in 32 Districts (out of 129) in sixteen (16) identified regions (14 in Mainland and 2 in Zanzibar) based on their economic potential with respect to the production of key crops and livestock. Programme components to be solely supported by IFAD and AGRA will be implemented nation-wide. The 32 districts have a combined population of about 6.1 million (1.2 million households, 270,000 of which are female-headed) which will benefit directly or indirectly from the programme. Females constitute 88% of agriculture labour and 23% of heads of households. The main benefits expected from Bank financed Marketing Infrastructure and Systems development component of MIVARFP are: improved market opportunities and increased value addition for the targeted commodities1, resulting in increased incomes of the participating smallholder households. These benefits will primarily result from: (i) improved access to goods, services, markets and information; (ii) reduced transaction costs; (iii) reduced post-harvest losses; (iv) enhanced food safety; (v) improved product quality and increased producer (farm gate) prices; (vi) increased output and productivity; and (vii) improved economies of scale. Increased output, income and employment in rural areas will result in increased demand for goods and services, which is expected to generate additional income and employment effects, and increase government tax revenues. Increased exports and/or reduced imports will result in foreign exchange earnings/savings. Furthermore, consumers may benefit from improved availability of better quality food commodities, and hence improved food security. Other institutional benefits expected from the programme are: (i) effective functioning of producer and marketing groups; (ii) sustainable management of priority marketing infrastructure investments by district councils and local communities; and (iii) strengthened capacity of private sector operators to sustainably manage Warehouse Receipt System (WRS) that benefit smallholder farmers. Environmental and social benefits are also expected from the programme focusing on inclusive rural poverty reduction and promotion of sustainable agro-based enterprises. These benefits will positively impact the lives of women who account for about half of the 76% of rural folk engaged in agriculture.

1 Key commodities that have been identified at this stage include rice, maize, sorghum, cassava, beans, sunflower, spices, livestock (dairy

and meat) and fish.

v

NEEDS ASSESSMENT 3. The ADF supported Marketing Infrastructure Component of the MIVARF Programme is a follow-up to the Bank & IFAD financed Agricultural Marketing Systems Development Programme (AMSDP). The Project Completion Report (PCR) for Bank-financed activities of the AMSDP was conducted in June 2009, which confirmed the success of the programme in increasing the percentage of all-year passable rural roads and decrease in the number of households located more than 10kms from passable roads; increased volume of goods moved within and out of the focal areas and access of farmers’ produce to markets; and increased price of farmers produce and districts’ revenue collection. The Government of the United Republic of Tanzania (GOT), in July 2009, formally expressed satisfaction with the benefits derived by the rural poor from AMSDP and IFAD-financed Rural Financial Services Programme (RFSP), and requested the Bank Group and IFAD’s support for up-scaling of these benefits to cover the whole country, including Zanzibar. The proposed programme provides an opportunity for deepening the gains under the AMSDP, including contributing towards overhauling the marketing infrastructure across the country with prospects for improved market management, agricultural production and incomes and livelihoods; leading to poverty reduction across the country. 4. Tanzania stands the risk of falling behind its poverty reduction goals because of poor infrastructure. Such poor infrastructure significantly account for the high proportion (83%) of marketing costs attributable to transport charges for agricultural commodities like maize. The incentive to invest in MIVARF is therefore improving farmer profit margins mainly through reduction in operational costs and value addition. The ADF-financed activities under the proposed programme are the construction/rehabilitation of markets which will become centres of commercial and social interactions, and growth centres around which other ancillary activities/enterprises will emerge. The improved markets and additional/rehabilitated rural feeder roads will create more opportunities for small-scale farmers to sell their produce at competitive prices, thereby benefitting consumers. The Producer empowerment and Rural Finance activities (supported by IFAD & AGRA) will facilitate access to credit by beneficiaries, creating a synergy between the different programme activities.

BANK’S ADDED VALUE 5. The programme will provide opportunities for leveraging the lessons learned from previous Bank Group and IFAD projects (including the first phase AMSDP) in agricultural and rural development and expand the scope for partnerships to the private sector, and development partners. The partnership between the Bank and IFAD for the financing of MIVARFP is underpinned by the following conclusions from the joint evaluation of the agricultural and rural development policies and operations of the two institutions in Africa2: (a) ADB and IFAD have distinct but complementary roles highly relevant to Africa’s needs in the field of agriculture and rural development; and (b) should deepen their partnership based on their respective areas of comparative advantage. The Bank has a Memorandum of Understanding (MOU) with IFAD, for Bank funding of hardware infrastructure related activities/programmes, while IFAD focuses essentially on the software services. In this programme, the Bank will finance mostly infrastructure while IFAD and AGRA finance the 2 AfDB and IFAD. Towards purposeful partnerships in African agriculture: a joint evaluation of the agriculture and rural development policies and operations. April 2010

vi

Rural Finance component and the Producer Empowerment sub-component. The Producer empowerment and Rural Finance activities will facilitate access to credit by beneficiaries of Bank financed marketing infrastructure, creating complementarities between the different programme activities. The programme will contribute to addressing some of the critical issues for sustained agricultural development and poverty reduction related to private sector development, rural financial services and markets, which are not currently the focus of the Agricultural Sector Development Programme (ASDP). KNOWLEDGE MANAGEMENT 6. A baseline survey will be undertaken during the first semester of PY1, to establish benchmarks against which the outcomes and impact on the beneficiaries would be assessed. In each programme district, a survey will be carried out during the first quarter of programme implementation in order to get an overview of the types and number of value addition and income generating activities and micro and small enterprises in the district. This survey will also identify constraints and potentials, as well as needs in terms of capacity building for entrepreneurs, and critical infrastructure and services. The analytical studies will generate information that will aid decision making by implementers as well as other stakeholders of the programme. In addition, the Programme will finance the development of a Knowledge Management (KM) system consisting of: design of an appropriate monitoring and documentation system; development of appropriate institutional arrangements including procurement and financial management; monitoring, evaluation and documentation; KM; communication; and knowledge based programme support, decision making and policy dialogue.

vii

Results-Based Logical Framework

Country and project name:

Tanzania: Marketing Infrastructure, Value Addition and Rural Finance Programme (MIVARFP)

Purpose of the project :

To enhance rural incomes and food security on a sustainable basis

RESULTS CHAIN

PERFORMANCE INDICATORS MEANS OF VERIFICATION

RISKS/MITIGATION MEASURES Indicator

(including CSI) Baseline Target

IMPA

CT

Income poverty reduced Food security Increased Agricultural growth increased

Percentage in households below the basic needs poverty line Percentage reduction in households below the food poverty line Percentage increase in agricultural growth

37.6 % in 2009 19 % in 2009 2.7% in 2009

20.4% In 2015 17% in 2015 6.3 % in 2015

National Bureau of Statistics

OU

TC

OM

ES

1.Improved access to agricultural markets for smallholder producers and traders

Revenue from markets/warehouses Transport charges from farm to primary market

US$ 3.0 million p.a. 6.4 US$ per ton

US6.0 million p.a. by PY5 Reduce by 25% by PY5

PCR & M&E system

Slippage in the government’s reforms The sustainability of the market and warehouse facilities, particularly with regard to maintaining the Operations and Maintenance schedules Mitigation Measures: District Engineers will be trained to ensure post contract continuity and maintenance of infrastructure. A % of revenue will be maintained to cater for O&M

2. Reduction of post-harvest losses for key food crops

Percentage of post-harvest losses for maize & rice

Maize – 22% Rice – 13%

Maize – 14% Rice – 9%

3. Increased income of producers and traders

Mean per capita Household Monthly Agricultural Income

TZS 11,324 (US$8.0)

Increase by 25% by PY5

OU

TPU

TS

Component I. Marketing Infrastructure and Systems Development Subcomponent 1: Marketing Infrastructure 1.1 Rural markets and warehouses storage constructed /rehabilitated and maintained. 1.2 Feeder roads upgraded to all-weather condition 1.3 governmental staff trained to be able to sustainably manage food marketing infrastructure

1.1 No. of storage and market places constructed/ rehabilitated 1.2 Km of roads constructed/ rehabilitated 1.3.1 No. of Local Market Infrastructure Committees (LMICs) trained and in operation 1.3.2 No. and type of Local Market Infrastructure managed by committees

NA 1.1: 70 (36 markets-25 with cold-storage; 2 ice plants; 32 warehouses) market/storage facilities constructed/ rehabilitated 1.2: 1550 km of feeder roads upgraded 1.3: 70 LMICs operational (720 members; 40% of whom are female)

Quarterly progress reports. Procurement audit reports MTR and PCR

Resistance of beneficiaries to the intervention principles like compliance to eligibility criteria and making counterpart contribution. Insufficient capacity of District Councils to effectively manage and supervise the various activities. Insufficient effective demand for agricultural commodities Mitigation Measures: Ensuring a high level of transparency and local stakeholders’ participation in program to increase accountability; training; and support from Design and Supervising consultants Interventions will focus on existing agribusiness and products with a high demand, and help producers match supply to the buyers’ requirements by facilitating market information

viii

Subcomponent 2: Value addition 2.1 Post harvest centre rehabilitated and equipped 2.2 New technology disseminated for post harvest management of food crops 2.3 New financial skills for producers 2.4 On the job training for farmers and processors groups.

2.1 No of PH training centres rehabilitated/ resourced 2.2 No. Bankable Value Addition proposals 2.3 No. of processors linked with services providers. 2.4 No. agro- processors with new knowledge 3.

NA 2.1: 16 PH training centres rehabilitated/resourced 2.2: At least 50 bankable value Addition proposals prepared 2.3: 5,000 processors linked to service providers 2.4: 350 staff/trainers and 37,500 trainees graduate; 2,500 outreach training of farmer groups from PH centres.

Quarterly progress reports MTR and PCR

Component 3: Project Management: Program efficiently and effectively managed

3.1 No. of annual work programs, progress reports, M&E and KM reports prepared, Annual audit reports prepared and approved. 3..2 No. of service providers contracted.

NA 3.1: 20 Quarterly Progress Reports; 5 NEMC semester review reports; 5 procurement & environmental audit reports, MTR and PCR 3.2: Service providers contracted - civil works (21) - Goods (4 consulting services)

AWPBs and minutes of PSC meetings. PCT ToR and contracts

KE

Y A

CT

IVIT

IES

COMPONENTS INPUTS (UA MILLION) Subcomponent 1.1 Marketing Infrastructure 1.1.1 Civil Works for Road Rehabilitation, construction/rehabilitation of markets places , warehouse and storage facilities 1.1.2 Design studies Subcomponent 1.2 Value Addition Component 1.2.1 Construction and equipment for the rehabilitation of Post-harvest training centres 1.2.2 Training and TA to disseminate new technology 1.2.3 TA to facilitate linkage between agro processors & credit providers 1.2.4 Training of farmers & processors 1.2.5 Preparation of bankable proposals Subcomponent 1.3 Producer Empowerment (IFAD & AGRA) Component II Rural Finance (IFAD & AGRA) Component III Program Management and Coordination 3.1 Establish program management and coordination structures 3.2 Establish MIS, Financial management, audit and procurement systems 3.3 Strengthen technical implementation capacity at the regional and district levels 3.4 Prepare good quality and timely progress and financial reports

Total ADF Others 1.1 35.68 33.51 DCs/Beneficiaries 1.2 4.29 4.27 GOT/DCs 1.3 14.26 - IFAD/AGRA II. 40.59 - IFAD/AGRA/other III. 10.67 2.22 IFAD 105.49 40.00

3 Disaggregated by type of beneficiary group and gender.

ix

PROJECT TIME FRAME (November 2010 – July 2016)

ID Task Name 2010 2011 2012 2013 2014 2015 201610 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10t

1 Internal processing of appraisal

2 Negotiation

3 Loan Approval

4 Loan signature

5 Loan effectiveness/disbursement effectiveness

6 Recruit Key PCT Staff

7 Procure/recruit TA's/specialists consultants

8 Proj. Mgt. - Training & Capacity Building

9 Capacity Building of Market Staff and other Officials

10 Civil Works

Designs & bid docs.

Procurement of Contractors

Construction of Infrastructure facilities

11 Purchase of Goods & Equipment

12 Monitoring and Evaluation

Baseline survey ((incl. environment)

Monitoring & reporting/Quarterly reports

Supervision/NEMC monitoring exercise

Audit (Financial and Environmental)

Mid-Term Review

Impact Study

Project Completion Report

1

REPORT AND RECOMMENDATION OF THE MANAGEMENT OF THE ADB GROUP TO THE BOARD OF DIRECTORS ON A PROPOSED LOAN TO

TANZANIA FOR THE MARKETING INFRASTRUCTURE, VALUE ADDITION AND RURAL FINANCE PROGRAMME (MIVARFP)

Management submits the following Report and Recommendation on a proposed loan for UA 40 million on ADF terms to finance the Marketing Infrastructure, Value Addition and Rural Finance Programme (MIVARFP) in Tanzania I – STRATEGIC THRUST & RATIONALE

1.1 Project Linkages with Country Strategy 1.1.1 The programme would support the Bank Group’s Agricultural Sector Strategy (AgSS; 2010-2914) pillars of: agricultural infrastructure intervention focusing on rural and community roads, markets, storage infrastructure and support for agro-processing; and sustainability and resilience of agricultural infrastructure investments to climate variability. The programme is also in line with the Bank’s Framework Paper on Post Harvest Loss Reduction, in addition to being consistent with the Tanzania Country Strategy Paper (2011-2015) in particular the pillar 1 on infrastructure development; and pillars 2 and 3 of the Comprehensive Africa Agriculture Development Programme (CAADP). The programme is also consistent with (a) Tanzania’s National Strategy for Growth and Reduction of Poverty II (NSGRP-II 2010/11 to 2014/15), known in Swahili as MKUKUTA-II (2010/11-2014/15) Cluster I goal of Growth for Reduction of Income Poverty on the mainland and; Zanzibar Strategy for Growth and Reduction of Poverty II (ZSGRP II, 2010/11-14/14), i.e. MKUZA II in Swahili. MIVARFP will also support the Government’s Kilimo Kwanza (‘Agriculture First’) pillars on improved infrastructure, including market centres, value addition and increased access to input and produce markets. The Kilimo Kwanza (Agriculture First), launched in August 2009 is aimed at mobilizing all sectors of the economy to bring about an agricultural revolution in Tanzania and the pillars of Kilimo Kwanza include: (i) financing; (ii) policy and regulatory incentives for increased private sector investments; (iii) industrialization, value addition and increased access to input and produce markets; and (iv) improved infrastructure. 1.1.2 Under the NSGRP II, Goal 2 (reducing income poverty through promoting inclusive, sustainable and employment enhancing growth and development) of Cluster I (Growth for reduction in income poverty) the main thrust is on achieving poverty reduction through broad based and sustainable activities. Cluster strategies for raising growth of agriculture in all aspects (crops, livestock, fisheries) include introducing and strengthening investments in physical market infrastructure (market places), and large scale agricultural and fisheries storage facilities. Expansion and modernization of roads, especially rural roads to support agriculture is also emphasized in order for the country to realize its full potential necessary for accelerating growth and increasing incomes. In the case of the Zanzibar Strategy for Growth and Reduction of Poverty II (ZSGRP II), Pillar 1 (Create an Enabling Environment for Growth) refers to construction/rehabilitation of all remaining roads; Pillar 2 (Promote Sustainable Pro-Poor and Broad Based Growth) to increased agricultural growth; and Pillar 3 (Reduce Income Poverty and Attain Overall Food Security) to poverty reduction. The Tanzania Country Strategy Paper (2011-2015) is focused towards implementing the Pillars of the NSGRP II and ZSGRP II supporting inclusive growth and competitiveness. The Comprehensive African Agriculture Development Programme (CAADP) Pillar 2 focuses on

2

improved access through improved rural infrastructure and other trade-related intervention; and Pillar 3 relates to improvement in domestic marketing. The MIVARFP is fully aligned with these initiatives as it aims to improve market access through investments in feeder roads, market centres and storage facilities. 1.2 Rationale for Bank’s Involvement The MIVARFP has been designed to upscale the successful activities implemented under the Agricultural Marketing System Development Programme - AMSDP (and IFAD-funded RFSP), deepen access to financial services for agricultural and rural development, and benefit from the emerging experience of the use of a value chain approach by Rural Micro Small and Medium Enterprise Support Programme (MUVI). Strategically, the programme is in line with the Bank’s Medium Term Strategy which focuses on agricultural programming through interventions in infrastructure improvement. The Bank has financed the AMSDP, which GOT, the Bank and partner funding institutions have judged as successful. The programme will provide opportunities for leveraging the lessons learned from previous Bank Group and IFAD projects in agricultural and rural development and expand the scope for partnerships to the private sector and development partners. The partnership between the Bank and IFAD for the financing of MIVARFP is underpinned by the following conclusions from the joint evaluation of the agricultural and rural development policies and operations of the two institutions in Africa4: (a) ADB and IFAD have distinct but complementary roles highly relevant to Africa’s needs in the field of agriculture and rural development; and (b) It is recommended that ADB and IFAD should deepen their partnership based on their respective areas of comparative advantage. The Bank has a Memorandum of Understanding (MOU) with IFAD, for Bank funding of hardware infrastructure related activities/programmes, while IFAD focuses essentially on the software services. In this programme, the Bank will finance mostly infrastructure while IFAD and AGRA finance the Rural Finance component and the Producer Empowerment sub-component. The Producer empowerment and Rural Finance activities (supported by IFAD & AGRA) will facilitate access to credit by beneficiaries of Bank financed marketing infrastructure, creating complementarities between the different programme activities. The programme will contribute to addressing some of the critical issues for sustained agricultural development and poverty reduction related to private sector development, rural financial services and markets, which are not currently the focus of the Agriculture Sector Development Programme (ASDP).

1.3 Donors Coordination The Bank is a major Development Partner (DP) in the agriculture sector in Tanzania, providing about 18.8% of the sector development assistance. Aid to the agricultural sector is dominated by three multilateral donors: the World Bank, IFAD and the African Development Bank, all of which participate in the ASDP basket. Recognizing government leadership and ownership in the development process, DPs are committed to supporting implementation of the Agriculture Sector Development Strategy (ASDS) and the ASDP. An important element of this support is working to build more effective donor harmonization. To this end, an Agriculture Working Group (A-WG) of the Development Partners Group (DPG) was established, and the Bank is an active member. The purpose of the A-WG is to promote coherence and consistency in development assistance to the agricultural sector through coordination of Development Partners’ support to the sector with a view to achieving 4 AfDB and IFAD. Towards purposeful partnerships in African agriculture: a joint evaluation of the agriculture and rural development policies and operations. April 2010

3

harmonization, promoting coordinated policy dialogue and reducing transaction costs. Current members of the A-WG include the Bank, Irish Aid, World Bank, IFAD, FAO, Japan (JICA), WFP, USAID, EC and Switzerland (Swiss Aid). Leadership of the group has been agreed by Government in consultation with the DPG Main for the next five years. Ireland (Irish Aid) is the Chair of the group for two years (2008/2009 – 2010/2011), with FAO as Deputy Chair. USAID will take over as chair (from Ireland) for a three year period (2011/12 – 2014/2015), with the Bank as the co-Chair. The chair and depute chair, together with the secretariat take joint responsibility for providing leadership and continuity of the group. The Group is well informed about the current programme through consultations with the Bank, IFAD and AGRA Teams both at identification and preparation phases especially but also at this appraisal stage. The Tanzania Field Office is an active member of the group.

Sector or subsector* Size GDP Exports Labour Force

Agriculture Sector 26% 16% 66%

Players - Public Annual Expenditure (average 2008/09 to 2009/10)**

Government Donors

USD 153 m USD 272 m

36% 64% ADB 18.8% World Bank 44.0%

IFAD 22.8% Japan 3.6% Ireland 0.6% WFP 1.8% FAO 0.02% EU 8.4%

Level of Donor Coordination Existence of Thematic (Agriculture) Working Groups Y

Existence of SWAPs or Integrated Sector Approaches Y

ADB's Involvement in donors coordination**** M * as most appropriate ** Years [yy1 to yy2] *** for this sector or sub-sector **** L: leader, M: member but not leader, none: no involvement

II – PROJECT DESCRIPTION

2.1 Project Objective The overall sector goal is to contribute to poverty reduction and accelerated economic growth on a sustainable basis in Tanzania through enhanced rural incomes and food security. The specific objective of the ADF component is to enhance rural incomes and food security through improved market access (feeder roads, market centres and storage, community management of infrastructure), increased share of value added of small- and medium-scale producers and processors including training and matching grants for equipment.

2.2 Programme components The overall Programme comprises three major components namely: (1) Marketing Infrastructure and Systems Development; (2) Rural Finance; and (3) Programme Coordination

4

and Management as described in Table 2.1. The programme will be financed by the Bank in parallel with IFAD and AGRA as follows: ADF will finance the Marketing Infrastructure Development and Value Addition aspects of Component 1 and part of Component 3; while IFAD and AGRA will support the producer empowerment and market linkages activities of Component 1, all of Component 2 and part of Component 3.

Table 1.1: Programme Components Component

name Est. cost

(UA million) Component description

1. Marketing Infrastructure and Systems Development

54.23 [37.78]

1.1 Marketing Infrastructure

35.68 [33.51]

70 district markets/storage facilities and market-to-production area connecting feeder roads (1550km) will be constructed as follows: 1.1 Market Centres: Improved building and service infrastructure for 32

district markets (25 with cold-storage facilities), 2 ice-plants, 4 border markets; and 32 warehouse facilities (6 new and 26 rehabilitation) all with service infrastructure;

1.2 Feeder Roads: Improve 1550 km of district roads to all-weather condition complete with bridges, culverts, and side drains; together with community labour intensive upgrading of 100km of village access tracks;

1.3 Capacity Building: for government staff (16 regions and 32 districts) and beneficiary communities to plan for, implement and manage marketing facilities including supply of office equipment and motorcycles to districts for construction supervision;

1.4 Design: Technical Assistance for detailed design (of standard market buildings and service infrastructure and feeder roads); and construction supervision of markets, storage facilities and roads by district engineers.

1.2 Value Addition

4.29 [4.27]

1.5 Rehabilitation and resourcing of 16 Post Harvest (PH) training centres; 1.6 PH Training Centres assisted to undertake various studies, provide

training to medium-scale producers and processors and link them up to service providers.

1.3 Producer Empowerment and market linkages

14.26[0] 1.7 Sensitisation, training, capacity building and knowledge management, and feasibility for Agricultural Commodity Exchange on the warehouse receipt system (WRS) ; capacity building of producer and marketing groups for preparation of marketing and value addition intervention proposals; facilitating market linkages and support to market information systems.

2.Rural Finance

40.59[0] 2.1 Grassroots financial services: capacity building/upgrading of 1200 informal financial institutions, 200 SACCOS (20 new) with at least 500 members each, MFIs to expand rural services to 7000-10000 clients; 15 community banks and the apex Community Bank Association.

2.2 Rural Financial Systems Development: Technical Assistance Facility for leveraging the existing US$20 million AGRA designed Tanzanian incentive-Based Sharing System for Agricultural Lending (TIRSAL) to secure US$ 200 million for rural and agricultural lending; capacity building for value chain actors; rural innovation fund (RIF); improving the legal and policy framework for rural micro-finance; and knowledge management

3. Programme Coordination & Management

10.67 [2.22]

3.1 Planning, management, coordination and implementation of project activities;

3.2 Monitoring and Evaluation including various studies, progress and supervision reports;

3.3 Procurement of relevant office equipment, vehicles. Note: Amounts in brackets are ADF portions of the total which exclude duties and taxes

5

2.3 Technical Solutions Retained and Other Alternatives Explored The proposed design of market facilities provides for smaller sized blocks of sheds, stalls etc. as compared to those constructed under the previous Bank funded Agricultural Marketing Systems Development Programme (AMSDP). This would allow planning of each site to contain an appropriate mix of facilities based on the size, orientation and shape of the site, type and volume of business activity, and projections of trading. The design of the storage facilities also will ensure that vents provided do not allow in water or vermin. As far as possible, facilities will be provided at existing marketing points. Any relocation will be within reasonable walking distance from the existing site and population centres and done in full consultation and agreement with traders. Users will be provided alternative temporary re-location facilities during the construction period. All storage or market interventions will also include provision for feeder road access and health and fire safety measures and will be guided by an overall layout plan. The selected technical design for the proposed programme reflects critical success factors and enhances efficient functioning markets. These include: i) providing safety and security; ii) environmental sustainability; iii) adequate space and functionality commensurate with growth rate of the area; and iv) efficient management practices. The alternative that was considered and rejected is provided in Table 2.2.

Table 2.2 : Project Alternatives Considered and Reasons for Rejection Alternative name Brief description Reasons for rejection Construction of one standard market shed across the country

All markets to have similar sized design consisting of (a) one main structure which houses the marketing area/shed (600 person capacity), offices and in some cases storage; and (b) separate standard sized sanitary facilities (toilets, bathrooms and solid waste bays) and water supply

§ Diversity of the markets in terms of site layouts, population size, number of traders, level and type of economic activity including frequency of trading per week. These may require different types and sizes of economic facilities including those not now provided for such as shops, cold storage for fresh fish, meat, fresh vegetables, stalls etc; and ancillary facilities such as fences, packing areas, eating places § Some of the markets were constructed at new sites very far

from existing marketing and population centres. In some cases such new markets are not operational for reasons related to the location, lack of access, or services (water, electricity) § Budgetary Constraints as the large spans proved to

require high cost per floor space for the particular type of facility

2.4 Project Type This is an investment loan. 2.5 Project Cost and Financing Arrangements The overall cost of the programme (Table 2.3a) is UA 105.49 million with UA 40 million being financed by a Bank Group loan. The programme will be financed by the Bank in parallel with IFAD and AGRA as follows: IFAD (US$ 91.0 million or about UA 57.42 million – loan agreement already signed), AGRA (US$ 7.3 million or about UA4.62 million). The rest of the programme cost (UA 3.45 million) will be met through the contributions of GoT/Districts (UA2.08 million), beneficiaries (UA0.11) and others, such as the Financial Sector Deepening Trust in the case of Rural Finance (UA1.26 million). The cost of the ADF

6

component, including price contingency (7.5% domestic and 1.6% foreign) and physical contingency for civil works (5%), but excluding duties and taxes, is estimated at UA 42.19 million of which UA 22.39 million (53%) is in foreign exchange and UA 19.80 million (47%) is in local costs. These costs will be covered by the ADF loan of UA 40.00 million and Government of Tanzania’s (GOT) contribution (including those of Districts and communities) of UA 2.19 million. GOT’s contribution will be in respect of District Council (DC) 5% cash contributions for the market and warehouse facilities; community labour for works on village access tracks, maintenance of roads by DCs after final handing over by the contractor, and salaries of DC and Regional Council staff engaged in civil works supervision. The costs of the ADF supported components of the programme are summarised in Tables 2.3b – 2.6 below.

Table 2.3a: Total Programme Cost Estimates by Component and Financier (in million

UA)

Components GOT/ DCs

Beneficiary Communities

AfDB IFAD AGRA Others* Total

Marketing Infrastructure & Systems Development

2.08 0.11 37.78 12.42 1.84 - 54.23

Rural Finance - - - 36.54 2.78 1.26 40.59 Programme Coordination & Management

- - 2.22 8.46 - - 10.67

Total project cost 2.08 0.11 40.00 57.42 4.62 1.26 105.49 * Financial Sector Deepening Trust, Tanzania

Table 2.3b: Programme Cost Estimates of the ADF-financed Components (in million

UA) Components F.E. L.C. Total % F.E.

Market Infrastructure & Systems Development 19.18 15.56 34.75 55 Programme Coordination & Management 1.58 0.48 2.06 77 Total base cost 20.77 16.04 36.81 56 Physical contingency 0.80 0.54 1.34 60 Price Contingency 0.82 3.22 4.04 20 Total project cost 22.39 19.80 42.19 53

Table 2.4: Sources of Finance for ADF-financed Components (in million UA) Sources of financing F.E. L.C. Total % total ADF 22.39 17.61 40.00 94.8 Government/Districts - 2.08 2.08 4.9 Beneficiary Communities - 0.11 0.11 0.3 Total project cost 22.39 19.80 42.19 100.0

Table 2.5: Programme Cost by Category of Expenditure for ADF financed Components (in million UA)

Categories of expenditure F.E. L.C. Total %F.E A. Works 16.06 10.78 26.84 60 B. Goods 1.46 0.01 1.47 99 C. Services 3.25 3.33 6.58 49 D. Operation Cost - 1.92 1.92 - Total base cost 20.77 16.04 36.81 56 Physical contingency 0.80 0.54 1.34 60 Price Contingency 0.82 3.22 4.04 20 Total project cost 22.39 19.80 42.19 53

7

Table 2.6 : Expenditure Schedule for ADF-financed Components (in million UA) Components/Year 2011/12 2012/13 2013/14 2014/15 2015/16 Total Marketing Infrastructure & Systems Development 4.45 9.54 12.57 11.92 1.49 39.97 Programme Coordination & Management 0.52 0.36 0.47 0.38 0.49 2.22 Total cost 4.97 9.90 13.04 12.30 1.98 42.19

2.6 Project’s Target Area and Population 2.6.1 The Bank financed Marketing Infrastructure and Value Addition activities of Component 1 will be implemented in 32 Districts (out of 129) in sixteen (16) regions (14 in Mainland and 2 in Zanzibar) based on their economic potential with respect to the production of key crops and livestock. In the mainland, the selected regions include: Morogoro, Shinyanga, Mwanza, Mbeya, Iringa, Ruvuma, Rukwa, Arusha, Kilimanjaro, Tanga, Manyara, Dodoma, Singida, and Coast. The selected regions in the mainland include the Southern Agricultural Growth Corridor of Tanzania (SAGCOT). In Zanzibar, 2 regions will be selected within the Southern and Northern Zanzibari Tourism Corridors. Meanwhile the IFAD and AGRA financed Component 2 (and Producer Empowerment aspects of Component 1) will be implemented in all the 26 regions of the United Republic of Tanzania (21 on the Mainland and 5 in Zanzibar). The 32 districts supported by the ADF have a combined population of about 6.1 million (1.2 million households) which will benefit directly or indirectly from the programme. Females constitute 84% of agriculture labour and 23% of heads of households. 2.6.2 Individual beneficiary communities/sites for intervention will be chosen based on the level of trading activity, potential for private-public partnership, scope for expansion and environment issues at the site, temporary relocation arrangements/agreements and ranking by the District Councils. Most of the markets in the country operate in temporary makeshift structures with few basic infrastructures. The few with structures lack basic amenities. Management is generally not well structured.

2.7 Participatory Process for Project Identification, Design and Implementation The formulation of the project was largely participatory, with the relevant stakeholders fully involved in the process of project identification through to the design phase. A joint ADB/IFAD mission undertook an identification mission (initial design) of the proposed programme during November-December 2009 and an ADB/IFAD/AGRA preparation mission in April 2010. A Bank Appraisal Mission took place in November 2010 to validate the programme information gathered during the preparation phase. All three missions held discussions in Dar es Salaam with various stakeholders. The Appraisal mission made field visits to Arusha, Mbeya and Zanzibar; the preparation mission included a three-day workshop and field visits to Arusha and Zanzibar, while the identification mission made field visits to Arusha, Moshi, Morogoro, Dodoma, Mbeya and Zanzibar. All three wrap-up meetings of the missions were chaired by the Deputy Permanent Secretary of the Prime Minister’s Office (PMO) and attended by representatives of government, development partners and other stakeholders in the areas covered by the proposed programme. These consultations identified lessons from previous projects/programmes and made inputs into the design of the programme. All stakeholders welcome the programme and expressed their readiness to cooperate to ensure its successful implementation. During programme

8

implementation, provision has been made for the sensitisation of regional and district councils and potential beneficiaries, and their participation in the choice of participating districts and the location and scope of facilities for individual sub-projects based on agreed criteria. Community/District management of completed market centres will also be encouraged. 2.8 Bank Group Experience, Lessons Reflected in Project Design 2.8.1 The Bank has considerable experience in implementing infrastructure-related agricultural and infrastructure projects in Tanzania. These include the just-concluded AMSDP (pre-cursor to the MIVARF), Road-sector projects such as the 3500km of gravel roads funded since 1997 and on-going upgrading of the 223.5km Singida-Babati-Minjingu bituminous-surfaced road, the 87.4 km Unguja (Zanzibar) bituminous-surfaced roads and the Arusha-Namanga road rehabilitation/upgrading projects. 2.8.2 More specifically the lessons from the AMSDP PCR which has informed programme design include: (a) The need for better provision for the design of rural roads concerning the use of appropriate expertise (civil, geodetic/geomatic and geotechnical engineers) to avoid some of the design problems experienced. This has been mitigated by use of qualified civil engineering design firms in support of district staff. (b) The need to reduce delays or outright default in the 5% cash contribution towards works construction. This has been mitigated by use of upfront payment or evidence of provision in the district budget and in-kind community contribution. (c) The need for putting in place, from the outset, a well designed and robust M&E system, and to have good baseline data, outcome indicators and means of verification against which project outcomes and impacts could be measured. (d) The need to reduce implementation delays resulting from the processing of contractors’ payments in situations which involve several small contractors undertaking small works spread over a vast area. This has been mitigated by the use of the special accounts (as opposed to direct payment) operated by experienced Programme Coordination Team (PCT) accountants. (e) The need to strengthen capacity of some District procurement entities by including a Procurement Officer at the PCT (f) Some market facilities are not operational or under-used for reasons related to the location, lack of access, or services (water, electricity), or absence of management. Designs for MIVARFP will be based on a site specific needs assessment with full involvement of beneficiaries. The AMSDP also has good lessons in project management including amongst others, benefits of the demand-driven private-sector run facilities, involvement of co-financiers, use of existing government systems and the need for value addition in creating market expansion for the products of smallholders. 2.8.3 Besides, the programme has also benefited from similar projects funded by other development partners such as the World bank funded Agriculture Sector Development Project (2006-11) set up to enable farmers have better access to and use of agricultural knowledge, technologies, marketing systems and infrastructure; and the Common Fund for Commodities’ (CFC) Tanzania Agricultural Commodity Warehouse Receipt System (2000-4) which, although for coffee and cotton, has lessons in WRS management. 2.9 Key Performance Indicators 2.9.1 The programme’s Planning, Monitoring and Evaluation System (PMES), will be an integral part of the Management Information System (MIS) and linked to the Knowledge Management and Communication System (KMCS), to provide (i) timely and accurate information on programme implementation progress, and constant feedback for decision

9

making and addressing potential plan deviations and problems during implementation; and (ii) the basis for assessing the achievement of programme results. A Programme Logical Framework (Logframe) including a set of indicators at impact, outcome and output level has been prepared which provides the basis for results-based M&E. The indicators will be operationalised in the form of an M&E Plan prior to programme start. The PCT supported by Technical Assistance, will be responsible for fine-tuning the M&E Plan during the first six months of programme implementation, with the participation of the main programme stakeholders. A tailor-made M&E software with a simple user interface will be developed to ensure its appropriateness and manageability. The PMES databases will be aligned, to the extent possible, with the Local Government Monitoring Database (LGMD2) which feeds into the ASDP and ASLM M&E frameworks. Apart from strengthening the link between the programme and ASDP, this would greatly reduce the workload of the district staff that will be involved in routine data collection for the programme, who also works on the LGMD2 data collection. Baseline surveys to be conducted during the first semester of PY1 will establish benchmarks against which the programme outcomes and impact will be assessed. A Mid-term Review (MTR) will be conducted during the first semester of PY3. Similarly, upon completion of project activities, the PCT will initiate the process of project completion review (PCR). 2.9.2 The KPIs, to be attained by the programme and in the beneficiary Districts, include:

(i) Transport charges from farm-gate to primary market (US$6.4/Ton) reduced by 25%

(ii) Mean per capita Household Monthly Agricultural Income (US$8.0) increased by 25%

(iii) Percentage of Households consuming less than three meals per day (51%) reduced by 15%

(iv) Average post harvest losses from harvest to consumption reduced from 22% for maize and 13% for rice by 8% and 4% respectively

(v) Revenue generated by District Councils from markets/warehouses increased from US$3.0 million by 100%

(vi) 16 Post Harvest training centres rehabilitated and resourced to train 350 staff/trainers and 37,500 in-centre; and 2,500 outreach farmers groups; provide US$1.6 million matching grants for agro-processing equipment and link processors to service providers;

(vii) 70 market/storage facilities (36 markets, 25 with cold-storage, two ice plants and 32 warehouses) constructed or rehabilitated each with its Local Market Infrastructure Committee (LMIC) operational (40% of whom are female); and 1550 km of feeder roads upgraded to all-weather condition.

III – PROJECT FEASIBILITY

3.1 Economic and Financial Performance Table 3.1 : Key Economic Figures

EIRR (base case): 22.4%

NPV = TZS 215.8 billion

10

The economic analysis has been undertaken over a 20 year span in line with the projected economic life of the program and is on an estimation of programme-wide benefits from (a) investments in rural roads and market infrastructure; (b) incremental incomes resulting from increases in value of sales of commodities supported due to capacity building and warehouse support; and (c) rural finance support (financed by IFAD). The benefits from improved road and market infrastructure result from increased volume of produce marketed, reduced transport costs, post harvest losses. The following assumptions were made: (i) programme costs exclude taxes and duties and price contingencies from Year: (ii) the recurrent cost for Project Year 6 to 20 is assumed to be 30% of the total recurrent costs for PY5; (iii) 10% of the total civil works (primarily road and market infrastructures) investment costs have been provided for to cover expected annual operation and maintenance (O&M) costs from PY6-20. (iv) With regards to benefits, it has assumed that traffic flow within programme roads will increase by 25%; (v) 10% post-harvest loss reduction due to new markets, training on Post Harvest Loss reduction and marketing; and (vi) 50% profit margin and 80% loan recovery on rural finance portfolio. The results of the sensitivity analysis indicate that MIVARFP’s economic viability is robust to adverse changes in costs, the programme still remains viable with increases in capital and recurrent costs of up to 81%. The programme is also robust to changes in incremental benefits and only becomes uneconomic if incremental benefits are reduced by 45%. The financial analysis of representative enterprise/business models shows reasonable incremental returns (US$ 200 – 1,300) for pineapples, cassava, rice and maize. Further details of the economic and financial performance and underlying assumptions are presented in Annex B7 of the Technical Annexes.

3.2 Environmental and Social Impacts Environment 3.2.1 The environment classification of the programme is Category 2. The construction and rehabilitation of markets and feeder (rural) roads will generate localised, site-specific environmental and social impacts largely occurring during the construction phase of the project (soil erosion, dust emission, water pollution, etc.), and none of these are large-scale in scope. The civil works – which will not be located close to environmentally sensitive areas – will follow the alignments of existing roads and rights-of-way, limiting any involuntary resettlement of communities in the project areas. An environmental and social management plan (ESMP) describing measures to mitigate the impacts has been prepared. 3.2.2 Positive Impacts: The programme will significantly improve household income and social-economic well being of farmers through improved access to markets. By improving the community access roads, it is expected that the farmers’ travel time to markets and other social services such as hospitals and schools, will be reduced. Moreover, it is expected that volume of trade will increase, stimulating different commercial activities in the beneficiary areas which will in turn lead to better prices of farm produce, as well as facilitate access to farm inputs and services which will ultimately lead to increased agricultural productivity and generate positive impact on food security. The programme will also create multiplier effects on the local economy through creation of employment opportunities as the programme will encourage the use of labour-intensive methods during implementation of the sub-projects especially for construction purposes and in the operation of food processing facilities. Better marketing and hygiene conditions from the construction of toilets and waste management facilities within the vicinity of the markets, will significantly improve the health conditions of the local community.

11

3.2.3 Negative Impacts: During the construction phase of the programme, potential negative impacts will likely be associated with stripping of soil, loss of vegetation due to the creation of borrow pits, soil erosion on road cuts and fills and on stripped borrow areas, silting of roadside ditches and subsequent sedimentation downstream, soil and water pollution due to spillage of toxic and hazardous materials, as well as noise, dust and air pollution generated from construction activities. The project will also reduce the clearance of vegetation along the alignment. With regard to public markets and associated agro-processing facilities, occupational health and safety issues, and poor solid waste disposal could likely induce negative environmental impact. No potential long-term and cumulative impacts are anticipated if the mitigation measures are well implemented. 3.2.4 Mitigation: Given the demand-driven nature of the sub-projects which will be identified during the implementation stage of the Programme, more detailed design stage and site-specific ESIAs and related ESMPs will be prepared during implementation in compliance with the Bank’s environmental and social assessment procedures and the Tanzania environmental laws and regulations. Civil works will be managed by applying environmental specifications in the bidding documents to be implemented by Contractors according to the ‘Ministry of Works Specification 2000’. The design of the markets makes provision for water supply (potable, wells, boreholes or rain water harvesting where appropriate), surface water drainage of the precincts, solid waste disposal through septic tanks, garbage collection and disposal system, fire-fighting equipment and training of the local market management committees. In the case of the feeder roads the standard design allows for adequate cross-falls and side drains, limitation of soil erosion by limiting site clearance, and re-instatement of borrow areas. Monitoring of mitigation measures will be carried out jointly by the PCT and the National Environmental Management Council (NEMC). The design team will work with NEMC to anticipate and mitigate any potential negative impacts. In addition, NEMC will be assisted to monitor compliance during construction of any sub-project. In general, the programme will not affect the environment irreversibly. Climate Change 3.2.5 Climate change models for Tanzania indicate that the country will likely face both increases in precipitation and rise in temperatures in the future. In recent years, some Districts have experienced unusual climatic changes resulting into occasional flash floods, especially in low/flat plains. These have had serious effects on the road infrastructure curtailing transport and movement between districts. The design of the programme has taken this aspect into consideration, particularly for the feeder and community roads that will be constructed under the programme. This will include ensuring use of quality/certified construction materials, raising the height/camber of the district/feeder roads to facilitate easy drain of rain water off the road surface; installing sizable culverts and drains; and development of a road maintenance plan. Gender 3.2.6 It is estimated that 84% of Tanzanian women are employed in agriculture, against 80% for men; and 23% of rural households are headed by women, and these have an average land holding of 1.6ha compared with 2.7ha for the male headed households. Therefore the programme will benefit the 84% of rural women engaged in agriculture and more so the 23% of households headed by women. Specifically the programme will target women by two

12

provisions in the criteria for participation of rural groups and individuals in the programme: (a) at least 40% of the beneficiaries of group activities are women and female headed households; and (b) at least 40% of the potential clients are women. Towards achieving the aim of the National Strategy for Gender Development (2005) of having 50% women representation in political and decision making positions by 2015, the programme will also provide for at least 40% representation of women on the Local Market Infrastructure Committees. The programme seeks to intervene on the following levels: (i) increase women farmers influence in decision making in the value chain; (ii) increase women farmers’ knowledge and information and link them to appropriate credit facilities; (iii) involve men in understanding that shared control over value chain of agricultural produce are beneficial to the well-being of the family and the community; and (iv) explore new niche products and high value chains that women producers might better remain control of (details are provided in Technical Annex B8).

Social 3.2.7 It is estimated that over 1.2 million Households (270,000 female-headed) or approximately 6.1 million people will benefit directly or indirectly from the programme. The main benefits expected from Marketing Infrastructure and Systems development are improved market opportunities and increased value addition for the targeted commodities, resulting in increased incomes of the participating smallholder households. These benefits will primarily result from: (i) improved access to goods, services, markets and information; (ii) reduced transaction costs; (iii) increased output and productivity; (iv) enhanced food safety; (v) reduced post-harvest losses; (vi) improved product quality and increased producer (farm gate) prices; and (vii) improved economies of scale. Increased exports and/or reduced imports will result in foreign exchange earnings/savings. 3.2.8 Other institutional benefits expected from the programme are: (i) effective functioning of producer and marketing groups; (ii) sustainable management of priority marketing infrastructure investments by district councils and local communities; and (iii) strengthened capacity of private sector operators to sustainably manage WRS that benefit smallholder farmers. Environmental and social benefits are also expected from the programme focusing on inclusive rural poverty reduction and promotion of sustainable agro-based enterprises. These benefits will positively impact the lives of women who account for a significant proportion of the rural population engaged in agriculture.

Involuntary Resettlement 3.2.9 There will be no involuntary resettlement as a result of the programme. However, since the construction of the new market structures may be undertaken on the current market sites, the movement of traders to temporary sites will take place during the construction period (approximately six to nine months). The identified temporary sites will be provided with minimum amenities, including water and sanitation to enable the continuation of the marketing activities with minimum disruption. Traders will be moved systematically with assurance of no loss of assets or livelihood. District Councils and Communities and market representatives will make binding agreements covering the modalities of movement and reinstatement. The cost of any such activity will be borne by the District Council. No major realignment of any of the feeder roads is expected and consequently no significant relocation is anticipated.

13

IV – IMPLEMENTATION

4.1 Implementation Arrangements Executing Agency 4.1.1 Based on an analysis of past and ongoing experience and the concurrence of the government, the Prime Minister’s Office (PMO) which was the Executing Agency of the AMSDP, will also be the executing agency for the MIVARFP. The PMO will remain the lead Implementing Agency (IA) with actual execution at the Local Government Authority (LGA) level. The Programme Steering Committee (PSC) with membership from key public sector stakeholders from the Mainland and Zanzibar, two private sector representatives and including the National Programme Coordinator, will be responsible for overall policy guidance, approval of Annual Work Plans and Budgets (AWPBs), implementation oversight and performance monitoring. It is understood that an enhanced ASDP institutional arrangement which includes representation from PMO will be the forum for broader discussions on the agricultural sector. MIVARFP activities will also be reported there. The coordination of programme activities will be done by a PCT which reports to the Permanent Secretary of PMO and whose composition is specified in the draft Programme Implementation Manual (PIM). The PCT will be responsible for the review and update of the draft PIM, which will be approved by the Bank prior to implementation. The PCT also maintains overall responsibility for management and supervision of MIVARF, including coordinating the preparation of the work plans, budgets and budget execution, procurement of goods, works and services, financial management and accounting, monitoring and reporting, knowledge management, and facilitating compliance with environmental, gender and other social safeguards. In Zanzibar, the Inter-Sectoral Steering Committee (ISSC) chaired by the Principal Secretary of the Ministry of Agriculture and Natural Resources (MANR) will play the role of the PSC. The ISSC will be represented in the PSC to ensure more effective coordination of programme activities in Zanzibar and the Mainland. A smaller PCT has already been established in Zanzibar under the MANR, comprising a Programme Coordinator, Programme Monitoring and Evaluation (PME) Officer and Finance Officer. To facilitate the smooth take off of the programme, the GOT had in January 2011, appointed three key staff of the PCT (i.e. Programme Coordinator, Finance Officer & PME officer), retained from the completed AMSDP & RFSP. 4.1.2 Implementation at the Regional level will be coordinated by the Regional Administrative Secretary (RAS) through the existing Regional Consultative Committee (RCC). The RAS will be assisted by the Regional Focal Person, a PME Officer and a Knowledge Management (KM) Officer. At the district level, programme implementation will be coordinated by the District Executive Director (DED) assisted by a District Focal Person (DFP) and District PME Officer who will work closely with the existing District Facilitation Team (DFT). Reports on programme implementation will be made to the Full Council and the District Consultative Committee by the DED. Procurement Arrangements 4.1.3 All procurement of goods, works and acquisition of consulting services financed by the Bank shall be carried out in accordance with the Bank’s Rules and Procedures for the Procurement of Goods and Works or, as appropriate, Rules of Procedure for the Use of

14

Consultants, using relevant Bank Standard Bidding Documents. The Prime Minister’s Office (PMO) and the respective LGAs, will be responsible for all procurement activities for Mainland Tanzania, while the Ministry of Agriculture and Natural Resources (MNR) will be responsible for all program’s procurements in Zanzibar. Table 4.1 below summarizes procurement arrangements and the details are provided in Annex B5

Table 4.1 : Procurement Arrangements

in UA Million Category NCB Shortlist Other NBF Total

A. Civil Works 30.87 - - 0.09 30.96 (30.36) - - - (30.36) B. Goods 1. Motor Vehicles 0.08 - - - 0.08 (0.08) - - - (0.08) 2. Motorcycles 0.05 - - - 0.05 (0.05) - - - (0.05) 3 Office & Other Equipment 0.14 - - - 0.14 (0.14) - - - (0.14) 4. Labour-based tools - - 0.01 - 0.01 - - (0.01) - (0.01) 5. Food Processing Demo. Equipt. - - 1.25 - 1.25 - - (1.25) - (1.25) C. Services 1. Training & Capacity Building - 2.92 0.09 - 3.01 - (2.92) (0.09) - (3.01) 2. Technical Assist. & Consultancies - 3.32 0.88 - 4.20 - (3.32) (0.88) - (4.20) 3. Audit Services - 0.13 - - 0.13 - (0.13) - - (0.13) D. Personnel - - - 1.00 1.00 - - - - - E. Operating Costs - - 0.77 0.59 1.36 - - (0.77) - (0.77) Total 31.14 6.37 3.00 1.68 42.19 (30.63) (6.37) (3.00) - (40.00) Note: Figures in parenthesis are the respective amounts financed by African Development Fund * Other includes: National Shopping, Direct Purchase, Force Account and Community Participation ** Non-Bank Funded: Items financed by Beneficiaries and the Government 4.1.4 The capacity assessment carried out at the PMO has shown that the office has sufficient technical capacity to manage the program procurement activities. No procurement capacity assessment could be carried out at the specific LGAs, since the beneficiary districts are presently unknown due to the demand – driven nature of the programme. However, LGAs are generally known to have some weaknesses in undertaking procurement activities. As a broad mitigation measure, the PCT will be strengthened through recruitment of a Senior Procurement Specialist to be based in Arusha to support the LGAs (districts) and coordinate procurement activities of the program as well as liaise with the PMO procurement team.

4.1.5 The program procurement in Zanzibar shall be centralized under the Ministry of Agriculture and Natural Resources Zanzibar. However, the procurement unit is not yet in place, presenting a potential procurement risk. In this regard, the appraisal Team strongly recommended that MANR establishes a Procurement Management Unit as required by Zanzibar Procurement Act of 2005 that will also be responsible of procurement activities of

15

the programme amongst other things. As a mitigation measure, the programme will recruit a Senior Procurement Specialist to support the program procurement activities and build up capacity of the newly established procurement unit in Zanzibar. Detailed assessment for both entities is provided on Sub-section 5.12 of Annex B5. 4.1.2 Financial Management and Disbursement Arrangements An assessment of the proposed Financial Management and Disbursement arrangements for the project was carried out as part of Appraisal. The assessment rated the overall residual financial management risk as moderate, with key strengths drawn from the prior experience of implementing the closed AMSDP, in addition to staff continuity from the AMSDP to the new programme where possible. The Programme will therefore be implemented using existing public financial management systems to ensure sustainability and ownership. While a common accounting and reporting system will be used, reports specific by financier will be produced, in addition to a consolidated programme summary. The programme accounts will be audited by the National Audit Office of Tanzania, guided by the relevant audit terms of reference of the Bank/AGRA/IFAD. The annual audit report will be due and receivable six months after the end of the financial year reported on. Disbursement will be through the time proven Special Account system. Three dedicated (special) USD accounts (one for each participating partner) will be maintained at the Bank of Tanzania (BOT) for the programme, managed by the PCT. In addition, programme T shillings bank accounts will be opened for use by the Mainland, Zanzibar, the regional and district levels. However, the bulk of payments for eligible expenditures will be made directly by the PCT, with minimal transfers to Zanzibar, the regions and districts to cover primarily their own operational costs based on agreed supervision rates. Details of the arrangements for FM and Disbursement, as well as a pictorial funds flow chart, are included in the Technical Annex B.4.

4.2 Monitoring

Timeframe Milestone Monitoring process / feedback loop

Year 1 Baseline study PCT and Regional & District Councils to monitor

Year 1 – 5 Implementation Beneficiaries, Regional and District Councils, PMO, NEMC, & PCT

Year 1-5 Audit Reports (procurement & environmental) NEMC semestrial review of ESMP, District's ESMP monitoring at the sub-project level

Annually by PCT

Year 3 Mid-Term Review & Site Specific Environmental & Social impact assessments

Bank and PCT to monitor

Year 5 Impact Study PCT and Regional and District Councils

Year 5 Project Completion Report PMO and PCT to monitor; Bank to participate

16

4.3 Governance Implementation of the programme requires good governance at all levels from national to grassroots (i.e., more responsiveness, more transparency, more accountability and efficient use of resources), more so as Tanzania has dropped from 3.2 (in 2007) to 2.6 (in 2009) in terms of Corruption Perception Index (CPI). Good governance should permeate the modalities of effective social organization, coordination and interaction for development. This will be achieved by an institutional framework which is capable of mobilizing all the capacities in society and coordinating action for development. Hence, the proposed institutional arrangements are designed to ensure good governance as an instrument for the promotion and realization of programme objectives in a transparent manner while promoting democratic and popular participation. Deliberate efforts must be made to empower the beneficiaries and catalyse their democratic and popular participation. Working together with key stakeholders, the strategy should entail empowering target local governments and communities and promoting broad-based grassroots participation in the mobilization of resources, knowledge and experience with a view to stimulating initiatives at all levels of programme implementation.

4.4 Sustainability Under the Marketing Infrastructure and Systems Development component, private sector participation and commercial incentives are the keys to sustainability. The programme will not initiate activities that do not have good commercial prospects. The programme design linking the agro-processing and marketing dimension to the improvement of access to financial services is intended to strengthen commercial sustainability of programme activities. Regarding organizational sustainability, producer groups would be sufficiently strengthened to continue with their production and collective marketing roles and to take on new market opportunities as they arise. The Marketing infrastructure subcomponent will support the establishment/upgrading and training of infrastructure committees to take responsibility for operation and maintenance of the facilities; and build the capacity of district councils, private sector actors and communities towards sustainable post-programme operation and maintenance. To assist the Management Committees settle in, the programme will finance the O&M activities of the markets for one year after final handing over by the contractor. Thereafter, O&M cost will be funded from revenues collected. The accepted norm is that 40% of revenues from the markets are retained by the management committee for its operations. Districts will maintain the feeder roads from PRO-RALG’s 30% share of the Road Fund. These funds currently cover only about 60% of the national maintenance requirements but have been increasing, in real terms, at about 3-10% per year. Targeted deployment of available funds on already rehabilitated roads will ensure their sustainability. Subsequently annual increases can then help reduce the backlog. The running cost of equipment provided for under the programme would be borne by the users.

4.5 Risk Management 4.5.1 The programme itself is regarded as only moderately risky as most interventions are based on proven approaches and/or focus on the areas of intervention that were successfully supported by AMSDP (and RFSP). However, the potential risks identified are:

17

4.5.2 One key risk is that of insufficient effective demand for agricultural commodities, due either to lack of response from the private sector (traders, modern retailers and agro-processors), lack of competitiveness of domestic producers and entrepreneurs, or administrative export restrictions especially for food crops. Fortunately, the export restriction on maize, which has been in place for about two years following government concern about food security in the aftermath of the global economic crisis, has been lifted and the commencement of the East African Common Market in July 2010 has widen the official regional market for food crops. Also, MIVARF interventions will take market demand as the starting point, focusing on existing agribusiness and products with a high national or regional demand, and help producers match supply to the buyers’ requirements through facilitating market information.

4.5.3 The possibility of resistance by programme beneficiaries to the new principles to be emphasized in the programme, such as competition for resources, compliance with agreed eligibility criteria and beneficiary contribution. A high level of transparency and ownership through stakeholders’ sensitization workshops will precede the launching of the programme. 4.5.4 The insufficient capacity of regional and district authorities as well as marketing infrastructure management committees to effectively manage and supervise the various programme activities. This will be mitigated by the various tailor made capacity building activities that the programme will provide to various implementers at various levels aimed at enhancing their competences to cope with the demands of the programme.

4.6 Knowledge Building 4.6.1 The strategy of Knowledge Management within the programme is to ensure that innovative experiences, learning and good practice are captured, synthesized, documented and shared continuously within Tanzania Field Office (TZFO), the Country Team, in-country partners, IFAD and other regional and international partners including that of market access (SCAPEMA) and rural finance (RFKMP) for IFAD projects in the Eastern and Southern Africa region. 4.6.2 With regards to the implementation of the Knowledge Management system, the PME capacity at the regional level will be strengthened so that each region can analyze its implementation experience and incorporate this for enhanced programme results and sharing. The annual supervision and implementation support mission of the programme will not only be for assessing fiduciary issues, but also to assess knowledge and capacity gaps and how these are managed. The PME system of the programme will also provide key learning opportunities for understanding and assessing progress towards meeting targets. Awareness will be created within the private sector to make the actors more effective participants in service provision and create opportunities for new graduates to enter the market for service provision in the rural areas.

18

V – LEGAL INSTRUMENTS AND AUTHORITY

5.1 Legal instrument ADF Loan to the United Republic of Tanzania.

5.2 Conditions Associated with Bank’s Intervention • Conditions Precedent to Entry into Force: The entry into force of the Loan Agreement

shall be subject to the fulfilment by the Borrower of the provisions of Section 12.01 of the General Conditions Applicable to the African Development Fund Loan Agreements and Guarantee Agreements.

• Conditions Precedent to First Disbursement: The obligations of the Fund to make the

first disbursement shall be conditional upon the entry into force of the Loan Agreement and the fulfilment by the Borrower of the following conditions:

(i) Provide evidence of having opened (i) a foreign currency special account in the Bank of Tanzania and (ii) local currency accounts with commercial banks acceptable to the Fund for each of Mainland Tanzania and Zanzibar, for the deposit of proceeds of the Loan;

(ii) Provide evidence of the establishment of the Program Steering Committee responsible for interalia overall policy guidance and implementation oversight for the Program composed of, at the minimum, the following members: two (2) representatives from the public sector stakeholders for each of Mainland Tanzania and Zanzibar; and two (2) private sector representatives.

• Undertaking. The Borrower undertakes to implement the ESMP and report, on quarterly

basis, on the progress thereof in a form acceptable to the Fund. 5.3 Compliance with Bank Policies

This project complies with all applicable Bank policies and guidelines.

VI – RECOMMENDATION Management recommends that the Board of Directors approve the proposed loan of UA 40 million to the Government of Tanzania for the purposes and subject to the conditions stipulated in this report.

Appendix I: Map of the Programme Area Market Infrastructure, Value Addition and Rural Finance Programme (MIVARFP)

This map has been drawn by the African Development Bank Group exclusively for the use of the readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank and its members any judgement concerning the legal status of a territory nor any approval or acceptance of these borders.

Dodoma

Uganda

DemocraticRepublic of the Congo

Mozambique

Malawi

Zambia

Kenya

Burundi

Rwanda

km10050 1500

N

Kigoma

Kagera

Programme area

U.UrbanWest

Mara

Mtwara

Lindi

Pemba North

Pemba SouthU. North

U. SouthDar es Salaam

Tabora

AfDB Intervention Regions

Morogoro

Shinyanga

Mwanza

MbeyaIringa

Ruvuma

Rukwa

Arusha

Kilimanjaro

Tanga

Manyara

DodomaSingida

Unguja

Pemba

Coast(Pwani)

Appendix II: Tanzania: Comparative Socio-Economic Indicators

Year Tanzania Africa Developing Countries

Developed Countries

Basic Indicators Area ( '000 Km²) 945 30 323 80 976 54 658 Total Population (millions) 2009 43.7 1,008 5,629 1,069 Urban Population (% of Total) 2009 25.9 39.6 44.8 77.7 Population Density (per Km²) 2009 46.3 3.3 66.6 23.1 GNI per Capita (US $) 2008 440 1 428 2 780 39 688 Labor Force Participation - Total (%) 2009 49.5 41.2 45.6 54.6 Labor Force Participation - Female (%) 2009 49.7 41.2 39.8 43.3 Gender -Related Development Index Value 2005 0.464 0.525 0.694 0.911 Human Develop. Index (Rank among 182 countries) 2007 151 0.514 n.a n.a. Popul. Living Below $ 1 a Day (% of Population) 2006 … 50.8 25.0 …

Demographic Indicators Population Growth Rate - Total (%) 2009 2.9 2.3 1.3 0.7 Population Growth Rate - Urban (%) 2009 4.7 3.4 2.4 1.0 Dependency Ratio (%) 2009 91.6 78.0 52.8 49,O Sex Ratio (per 100 female) 2009 99.4 100.7 93.5 94.8 Life Expectancy at Birth - Total (years) 2009 56.3 55.7 66.9 79.8 Life Expectancy at Birth - Female (years) 2009 57.1 56.8 68.9 82.7 Crude Birth Rate (per 1,000) 2009 41.3 35.4 21.5 12.0 Crude Death Rate (per 1,000) 2009 11.0 12.2 8.2 8.3 Infant Mortality Rate (per 1,000) 2009 61.6 80.0 49.9 5.8 Child Mortality Rate (per 1,000) 2009 100.0 83.9 51.4 6.3 Total Fertility Rate (per woman) 2009 5.5 4.5 2.7 1.8 Maternal Mortality Rate (per 100,000) 2004 578.0 683.0 440.0 10.0 Women Using Contraception (%) 2004 26.4 61.0 75.0

Health & Nutrition Indicators Physicians (per 100,000 people) 2007 4.8 42.9 78.0 287.0 Nurses (per 100,000 people)* 2007 102.4 120.4 98.0 782.0 Births attended by Trained Health Personnel (%) 2005 43.4 50.5 63.4 99.3 Access to Safe Water (% of Population) 2008 54.0 64.0 84.0 99.6 Access to Health Services (% of Population) 2006 … 61.7 80.0 100.0 Access to Sanitation (% of Population) 2008 24.0 38.5 54.6 99.8 Adults (aged 15-49) Living with HIV/AIDS (%) 2007 5.7 4.5 1.3 0.3 Incidence of Tuberculosis (per 100,000) 2007 297.0 313.7 161.9 14.1 Child Immunization Against Tuberculosis (%) 2007 89.0 83.0 89.0 99.0 Child Immunization Against Measles (%) 2007 90.0 74.0 81.7 92.6 Underweight Children (% of children under 5 years) 2005 22.0 25.6 27.0 0.1 Daily Calorie Supply per Capita 2005 2 019 2 324 2 675 3 285 Public Expenditure on Health (as % of GDP) 2006 3.7 5.5 4.0 6.9

Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2008 110.2 100.2 106.8 101.5 Primary School - Female 2008 109.3 91.7 104.6 101.2 Secondary School - Total 2006 … 35.1 62.3 100.3 Secondary School - Female 2006 … 30.5 60.7 100.0 Adult Illiteracy Rate - Total (%) 2007 27.7 59.4 19.0 … Adult Illiteracy Rate - Male (%) 2007 21.0 69.8 13.4 … Adult Illiteracy Rate - Female (%) 2007 34.1 57.4 24.4 …

Environmental Indicators Land Use (Arable Land as % of Total Land Area) 2007 10.2 6.0 9.9 11.6 Annual Rate of Deforestation (%) 2006 … 0.7 0.4 -0.2 Annual Rate of Reforestation (%) 2006 … 10.9 … … Per Capita CO2 Emissions (metric tons) 2008 0.1 1.1 1.9 12.3 Sources : ADB Statistics Department Databases; (compiled from World Bank: World Development Indicators; UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports). last update : September 2010 Note : n.a: Not Applicable ; … : Data Not Available.

Appendix III: Table of ADB’s portfolio in Tanzania

List of active projects (loans and grants) by Sector:

SOURCE OF

FINANCE

APPROVED AMOUNT

(UA million) APPROVAL

DATE TOTAL

DISBURSED %

DISBURSED A: PUBLIC SECTOR PROJECTS District Agricultural Sector Investment Project ADF 36 24-Nov-04 16.66 46.27

ADF- G 7 24-Nov-04 6.73 96.07 Agriculture Sector Dev. Progamme - Phase 1 ADF 40 5-Sep-07 36.17 91 SUB-TOTAL (AGRICULTURE) 83 59.56 72 Road Rehabilitation and Upgrading Project ADF 38.65 03 Sep. 2001 38.65 100 Zanzibar Roads Upgrading Project ADF 16.22 9-Jun-04 10.04 64.0

ADF- G 0.71 9-Jun-04 0.71 100 Singida-Minjingu-Babati Road Upgrading ADF 60 17-Sep-07 17.5 33 Tanzania Road Sector Support ADF 152 2-Dec-09 0 0 SUB-TOTAL (TRANSPORT) 267.58 69.19 26 Dar es Salaam Water Supply and Sanitation ADF 36.94 17-Dec-01 28.63 84.3

ADF- G 1.31 17-Dec-01 1.17 89.16 Rural Water Supply and Sanitation Programme ADF 45 13-Sep-06 45 100

ADF-G 10 13-Sep-06 10 100 Rural Water Supply and Sanitation Programme II** ADF 59 15-Sep-10 0 0 Electricity V Project ADF 28.68 14 Dec. 2007 0.0 0

ADF-G 1.32 14 Dec. 2007 0.49 37.84 Iringa-Shinyanga Transmission Line** ADF 45.36 26 Oct 2010 0 0 Zanzibar Water & Sanitation Project ADF 25 11-Nov-08 0.05 0.21 SUB-TOTAL (PUBLIC UTILITIES) 273.9 87.85 32 Support to SAP for Vocational Ed & Training ADF 14.22 9-Jul-03 12.81 90.13

ADF- G 1.6 9-Jul-03 0.5 31.33 Support to Maternal Mortality Reduction Project ADF 40 11-Oct-06 11.95 30 Prog. in Support of Secondary Education Dev. Plan ADF 20 5-Sep-07 20 100 Small Entrepreneurs Loan Facility II ADF 20 10-May-10 9.55 47.77 SUB-TOTAL (SOCIAL) 95.82 54.82 57 Institutional Support for Good Governance II ADF 5.62 20-Sep-10 0 0 SUB-TOTAL (MULTI SECTOR) 5.62 0 0

B: MULTINATIONAL PROJECTS

Arusha - Namanga - Athi River Rd Upgr. (TZ/Ken) ADF 49.24 13 Dec. 2006 26.69 54.21 ADF -G 3.5 18 Dec. 2006 0.31 8.84

East Africa Transport and Trade Facilitation (EAC) ADF-G 6.2 29 Nov. 2006 1.28 20.58 East Africa Trade & Transport (TTFA) ADF-G 1 29 Nov. 2006 0.37 37.37 East Africa Trade & Transport (NCTTCA) ADF-G 2 29 Nov. 2006 0.92 46.23 Isaka-Kigali Railway Feasibility Study (TZ/Rw/Bur) ADF-G 1.66 20 Oct. 2004 0 Prog d’Amenagement du Lac Tanganyika ADF 4.99 17 No 2005 0.88 18

SUB TOTAL (MULTINATIONAL) 68.59 30.45 44’ju%

C: PRIVATE SECTOR: Equity Investment in Access Bank of Tanzania Pr. Loan 0.6 18 Dec. 2006 0 CRDB SME Partial Credit Guarantee Facility Pr. Loan 0.15 22-Jul-08 0 SUB TOTAL (PRIVATE) 0.6 0.00 GRAND TOTAL 795.11 301.87