World Bank Document

RESTRICTED AEI 6 FILE CIOPY Vol. 5 Public Disclosure Authorized This report is for official use only by the Bank Group and specifically authorized organizations or persons. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized

ECONOMIC DEVELOPMENTS

EAST AFRICA

(in five volumes) Public Disclosure Authorized VOLUME V

A PROGRAM OF REGIONAL PREINVESTMENT STUDIES

July 30, 1971 Public Disclosure Authorized

Eastern Africa Department EQUIVALENTS

Currency

1 Kenya/Tansania/Uganda Shilling (Sh) = U.S. $o.14

U.S. $1 5h 7.14

B Stg. 1 = S 17.1428 THE MISSION

This report, is based on the findings of a mission which visited Kenya, Tanzania and Uganda during November-December 1970. The mission consisted of the following:

J.H. Collier (IBRD) Chief of Mission P.Engelmann (IBRD) Preinvestment Adviser K.G.V. Krishna (IBRD) Chief Economist

J.R. Burrows(IBRD) Economist (Kenya) G.E. Okurume (IBRD) Economist (Uganda) S. Farag (IBRD) Economist (Tanzania)

W. Schaefer-Kehnert (IBRD) Sr. Agriculturalist D.J. Wood (IBRD) Agricultural Economist J. Edwards (IBRD) Agricultural Specialist (Kenya) J.P. Dumoulin (IBRD) Agricultural Engineer I. Abushar (Cons.) Crops Specialist (Kenya) N.M. Mutter (Cons.) Crops Specialist (Tanzania) R.K. Ellinger (IBRD-ADS) Agricultural Specialist (Uganda) F. Th.ornley (IBRD-ADS) Agricultural Specialist (Uganda) R.G. Grimshaw (IBRD) Agricultural Specialist (Tanzania) R.F. McMahon (IBRD) Education Specialist S.M. Noor (IBRD) Education Specialist B. Kesic (Cons.) Public Health Specialist J. Marchat (WHO) Public Health Specialist N.R. Fendall (Cons.) Population Specialist G. Wyatt (IBRD) Power Engineer J.F. Hurlebaus (IBRD) Water Supply Economist S.H. Dennis (Cons.) Water Supply Engineer D.H.F. Bickers (IBRD) Transport Economist F.D.T. Reid (IBRD) Highway Engineer S. Hayden (Cons.) Aviation Specialist A.J. Hayman (IBRb) Tourism Specialist A.P. Van Huyck (Cons.) Urban and Housing Specialist

ECONOMIC DEVELOPMENTS IN EAST AFRICA

VOLUJME V: A PROGRAM OF REGIONAL PREINVESTMENT STUDIES

CONTENTS

Page No.

A NOTE ON PREINVESTMENT STUDY PROGRAMS

SUMARY

1. AGRICULTURE ...... 1

2. INDUJSTRY ...... o . 6

3. TELECOMMUNICATIONS ...... 10

4. TRANSPORTATION ...... 11

5. TOURISM ...... 23

A NOTE ON PREINVESTMENT STUDY PROGRAMS

1i. The preinvestment study/ programs prepared by the 1970 mission for Kenya, Tanzania and Uganda are presented in Volumes II, III and IV respectively.. Those studies which cover more than one country, or the region as a whole, are presented in Volume V. This note briefly sets out the objectives and scope of these programs, and explains the approach and methods used in their preparation.

Objectives and Scope

2. The programs of preinvestment studies presented in this report are intended to:

(1) assist the Governments of Kenya, Tanzania and Uganda and the East African Community in defining and scheduling studies which accord with their development objectives;

(2) provide the UNDP and other agencies with a sound basis for allocating funds for preinvestment assistance in the East African region; and

(3) accelerate and improve the preparation of development projects in this region, for possible financing by international or bilateral lending agencies.

3. The programs consist of recommendations on the priority and scope of proposed studies and, in most cases, estimates of the time and resources required for study execution. These estimates are generally to an accuracy of plus or minus thirty percent.

4. An attempt was made to identify and include in the programs all important studies required for investment decisions in the next five years. As a minimum goal, however, the recommended programs are intended to cover alL studies that should be started within the next two years.

5. No attempt was made to define all details of the studies proposed in the programs. Further elaboration of study scope and refinement of the cost estimate will be needed before Governments can make formal application

/1 The term "preinvestment study" as used in this report means units of work which (a) must be completed prior to investment decisions relating to projects or sectors significant for national or regional development and (b) will require the assignment of a team of experts or consulting firm(s). The purpose of these studies may be to (1) establish investment priorities, (2) determine the feasibility of individual projects, or (3) define changes in governmental policies, operations and institutions necessary for the successful implementation or functioning of investment projects. Page 2

to t.he UNDP (or other development assistance agency) for financing of a specific study. This additional work is expected to be done by the Govern- ments or by agencies interested in sponsoring or assisting the studies, as Part of the steps following adoption of the program./l

6. The programs do not include work related to final engineering of projects, preparation of contract documents for construction or procurement, and more specialized types of studies such as those required to draft legis- lation that would implement recammended policy and administrative changes. These activities are considered to be in the "investment" rather than the "preinvestment" stage.

Approach and Methods Used

7. Prior to the departure of the 1970 Economic Mission to East Africa, discussions were held with the Finance and Planning Ministries of Kenya, Tanzania and Uganda, with representatives of the East African Community, and with the Resident Representatives of the UNDP in each country, on the propose- approach to preparing preinvestment study programs. These agencies compiled inventories of completed, current and proposed preinvestment studies known to them. These inventories and supplementary information provided by various sectaral ministries and bilateral agencies were reviewed and evaluated.

8. Based on the available information about existing studies and a general review of development prospects in the major sectors, additional needs for future studies were identified. In most sectors, the approach to this work was as follows:

(1) starting with a development strategy for the sector as a wxhole, both the principal investment needs and the policies and insti- tutional changes necessary for the development of the sector were ieentified;

(2) where deficiencies in the knowledge of sector problems and resources could be observed, an attempt was made to define the areas where further study is needed to provide a proper basis for investment planning;

(3) working back from prospective investalents, the studies needed for establishing project feasibility and the best alternative were considered; and

(4) based on a review of government operations and of the administrative framework in each sector, the advisory services or studies needed for improving policies, organization, management and personnel training were identified, as required for the successful execution of projects.

/1 The World Bank Group will not necessarily be associated with the financing or execution of studies reccmmended in this report or with the financing of the investment projects resulting from the studies. Page 3

9. This resulted in a broad outline of the overall needs for preinvestment studies in the sectors. These results were discussed with the Fi- nance and Planning Ministries, other responsible Government and Community agencies, the Resident Representative of the UNDP and the participating specialized UN organizations. The M'ission's exchanges of views with these agencies formed the basis for selection of the studies to be included in the recammended program.

10. Outlines were prepared of the scope of the work to be accomplished by the proposed studies. No attempt was made, however, to define the scope of studies with the accuracy needed for the actual execution of this work; nor was it considered practical in most cases to make a thorough analysis of all available data and to evaluate alternative study designs in sufficient depth to ensure that optimum solutions had been found. Within the time available, preliminary judgements were made on these subjects, so as to provide a meaningful basis for the study program. The result at this stage is merely a "preliminary design" of each of the studies which in- cludes:

(1) a statement of purpose, containing the main questions to be answered and the development objectives that would be served;

(2) an indication of the type of detail (or degree of accuracy) expected in the study results;

(3) an outline of main areas of investigation, with a list of the important study tasks; and

(4) a general assessment of data availability and of the difficulties likely to be encountered in data collection.

11. Based on this "preliminary design", the probable duration and approximate cost of most of the studies were estimated. In several cases it was not possible within the time available to make more than an estimate of the broad order of magnitude of study costs. For most of the proposed studies, however, tentative budgets could be prepared by assessing the likely composition of the study team and the approximate number of man- months required in each category of staff. Basic information on the recommended studies has been summarized on "Study Data Sheets" which are presented at the end of each sectoral chapter in Volumes II, III, IV and V of this report.

SUZMARY

1L. This volume of the 1970 Bank Economic Mission's report contains a number of preinvestment studies which cover more than one country of the East African region. Like the programs of studies for Kenya, Tanzania and Uganda presented in other volumes of this report, the proposals for regional preinvestment studies were prepared by the mission in cooperation with the Ministries of the three Governments, the Resident Office of the IUNDP in each country, and several specialized agencies of the United Nations. For these studies in particular, the mission was assisted in its work by the East African Community and by the staff of a number of its Corporations.

2. All the studies in this volume necessarily involve more than one of the Partner States, and hence must be carried out on a regional basis if they are to be done at all. However, there are other studies included in the separate country volumes which might advantageously be carried out on a regional basis, even though they could be done by each country sepa- rately. For example, the studies concerned with new communications media in education, non-formal training, nutrition problems, and perhaps some others, could be organized to cover all three countries at once, in which case, there could well be some saving in cost. If the three Governments agreed, these studies could be carried out under the aegis of the East African Community.

:3. Some of the studies will be the responsibility of the East African Corporations, while others fall, more appropriately, within the ambit of the East African Community Secretariat itself. The Community already has a number of study proposals, some of which have been approved by the Partner States, including one on air freight, one on training requirements for tourism, one on the tourist development of con+iguous areas and one on industry. Since decisions on theso studies have alreacr been taken aid their terms of reference agrood, no data sieets for the, Zre re

It. TThis volume contains seven recommendations for regional preinvestment s;tudies. For five of these, it was possible to make preliminary determination of scope, duration and cost; their total cost is expected to be in the order of US$1.0 million equivalent.

5". The sectoral classification of the proposed studies, all of which are recommended for commencement in FY71-72,/1 is as follows:

/1 The suggested starting year is the fiscal year in which fieldwork for the proposed studies should commence. The f'iscal year in East Africa starts on July 1 and ends on June 30. Number of Rroposed Regional Sector /* Studies

1. Agriculture 2 4. Industry 1 7. Telecommunications 8. Transportation 4 >. Tourism Total 7

6. The text of each chapter in this volume (except for those on telecommunications and tourism) is followed by (1) a list of the regional studies proposed in the sector, and (2) Study Data Sheets, which provide an outline of the studies' purpose, scope, timing and related data; for five of the studies, information is also provided on the recommended staffing and tentative budgets. Notations have been made of the interest expressed by potential sponsors in financing the studies, but only when there was a specific indication from the sponsoring agency. In general, it is expected that decisions on sources of financing for the studies will be made after the program as a whole has been reviewed by the Governments and the East African Community.

/* The sector nw^xe. shcwn here are derived from the pattern followed in the preinve.tnmc..t studies volumes for each of the three countries. CHAPI£ 1

.;GR.LCULCU?ME (Sector iWo. 1)

1.. Discussions of the agricultural sectors of Kenya, Tanzania and Uganda, together with related preinvestment studies, are given in other volumes of this Report./l Two agricultural studies, however, cover aspects of livestock and fisheries development which concern all three countries of the East African Community and are therefore presented here:

Suggested Estimated Estimated Study Starting Duration Cost No. Name of Proposed Study Year in Months (US$ millions)

1-1 Cattle Availability (Feeder FY71-2 2 0.03 and Breeding Stock)

1-2 Lake Victoria Commercial FY71-2 24 0.50 Fish Stocks Assessment Total: 0.53

/1 . Kenya, Volume II, Chapter 1; Tanzania, Volune III, Chapter lj Uganda, Volume IV, Chapter 1. -2 - FORM No.- 386 INTERN,TIONAL DEVELOPMENT INTERNATIONAL BANK FOR INTERNATIONAL FINANCE (11.69) ASSOCIATION RECONSTR'JCTION AND DEVELOPMENT CORPORATION

PREINVESTMENT PROGRAM - STUDY DATA SHEET No.: 1 1 (i)

Area: Country: Sector(s): Eastern Africa EAC/KENYA, Agriculture TANZANIA, UGANDA

1. NAMEOF PROPOSED STUDY: Cattle Availability (Feeder and Breeding Stock).

2. PURPOSE: Provide key beef and dairy cattle importing countries: Uganda, Tanzania, Zambia, Malawi, Congo (K), and Ethiopia with estimates of regional cattle availability.

3. SCOPE: Demand estimates for imports of grade beef breeding cattle, feeder beef cattle, grade and crossbred dairy;stock and improved bulls (dairy and beef) would be made for Uganda, Zambia, Tanzania, Ethiopia, Malawi and Congo (K) in relation to existing and proposed livestock projects. Supply availability from Kenya (NED and Highlands), Somalia, Southern Ethiopia, Southern Sudan and Central Tanzania for these same types of cattle would then be assessed.

4. BACKGROUND: (a) Related Studies (b) Other Available Data (c) Expected Data Problems - FAO East African Livestock Survey; - PMEA - IDA Appraisal Reports; - IDA (Waddngton) - IDA Economic Reports. - Ministry of Agriculture - Dalgety and other traders in Kenya.

5. TIMING: (a) Duration and Phasing of Study (b) Desired Starting Date 2 months FT 71-72

6. COMMENT ON POTENTIAL STUDY SPONSORS:

7. PROJECT(S) EXPECTED TO RESULT FROM STUDY (if known): (a) Description (b) Estimated Investment (US$ equivalent) Basis for all livestock development projects in Eastern Africa. (c) Financing Need and Potential Source

8. ORDER OF MAGNITUDE OF STUDY COST (US$ equivalent): Sheet Prepared by: A..Schumacher/R.Ellinger 3 0,000 Dept. or Agency: IBRD/APD/PMEA Date: January 1971 19. STAFF'S COMMENT ON PRIORITY RANKING OF STUDY: Sheet Revised by: JN-6chaefer -ehner t/ Highest priority due to impending IDA livestoc Revised: JItem(s)Feb '71: projects in Uganda and Tanzania, main constraints Iem(so Rency: Fb '71: 8 being cattle availability. Dept. or Agency: TBRD/P]NEA/APD Date: January 1971 ______I.______FORM No. 386.01 INTERNATIONAL DEVELOPMENT INTERNATIONAL BANK FOR INTERNATIONAL FINANCE (11-69) ASSOCIATION RECONSTRUCTION AND DEVELOPMENT CORPORATION

PREINVESTMENT PROGRAM - STUDY DATA SUPPLEMENT No.: 1- 1 (2) (to be filled in when possible)

I. TENTATIVE STAFFING Type of Specialist Number on Team Total Man-Months (a)Foreign Professional Staff: Livestock Marketing Specialist 1 2 Economist 1 2 Animal Husbandry Specialist 1 2

Total: 6

(b)Local Professional Staff

(c)Local Supporting Staff

2. TENTATIVE STUDY BUDGET (US$ equivalent) Foreign Local Currency Currency Total (a)Professional Staff Costs 18 ,000 18,c000 (b)Equipment - _ _ (c)Other (Travel, non-prof. staff, etc.): 6,000 6,000 12,000 (d)Total 24,000 6,G00 30,000

3. OTHER COMMNTS

Supplement Prepared by: A.Schumacher/R? Dept. or Agency: TBTh/APD/PMEA ±linger Date: January 1971 W.bchaeler-Keinert/ Supplement Revised by: J. P. Dumoulin Item(s) Revised: Feb '71: 2 Dept. or Agency: IBRD/pIEA /APD Date: January 1971. - 4 - ,FURM No. 386 INTERNATIONAL DEVELOPMENT INTERNATIONAL BANK FOR INTERNATIONAL FINANCE (11 .69) ASSOCIATION RECONSTRUCTION AND DEVELOPMENT CORPORATION

PREINVESTMENT PROGRAM - STUDY DATA SHEET No.: 1 - 2 ( 1)

Area: Country ISector(s): Eastern Africa BAC/Kenya, Agriculture Tanzania, Uganda |

1. NAME OF PROPOSED STUDY: Lake Victoria Commercial Fish Stocks Assessment.

2. PURPOSE: To provide information on fish stocks, at present largely unknown, essential for rational management and obtaining of maximum sustained yield when intensive fishing operations begin.

3. SCOPE: The study should: (a) obtain an accurate catalogue of fish species, particularly of the genus Ha lochromis in the Lake; (b)J assist the East African Freshwater Fisheries Research Organization (EAFFRO) and the UNDP Lake Victoria Fisheries Research Project (LVFRP) in their estimating of the abundance of the various species; (c) gain knowledge of the feeding habits and fecundity (rate of recruitment to the fishable stocks) of various species.

4. BACKGROUND: (a) Related Studies (b) Other Available Data (c) Expected Data Problems - Studies by Lake Victoria Fisheries Research Project (LVFRP); - Some Data on Fish Stocks and Taxonomy Available; - The Haplochromis group comprises many closely related species, very difficult to identify. Though of major commercial importance, they are at present very little known.

5. TIMING: (a) Duration and Phasing of Study (b) Desired Starting Date

Two years. FY 71-2

6. COMMENT ON POTENTIAL STUDY SPONSORS:

7. PROJECT(S) EXPECTED TO RESULT FROM STUDY (if known): (a) Description (b) Estimated Investment (US$ equivalent) It is proposed to develop a fish meal industry based on trawler fishing of Haplochromis (c) Financing Need and Potential Source species. The results of the study will provide data essential for the sound management of the fish resources. 8. ORDER OF MAGNITUDE OF STUDY COST (US$ equivalent): Sheet Prepared by:R.Ellinger/F. Thacley

500,000 Dept. or Agency: 1BRD/P/MEA Date: January 1971 9. STAFF'S COMMENT ON PRIORITY RANKING OF STUDY: High priority. Sheet Revised by: 1 t- Dumo ulin Important to provide data so-as to prevent mis-management of Lake Victoria fishery. Timed to Item(s) Revised: Feb '71: 6,8,9 coincide with phase II of LVFRP. Dept. or Agency: IBRD/PPEA-APD Date: January 1971 FORM No. 386.01 INTERNATIONAL DEVELOPMENT INTERNATIONAL BANK FOR INTERNATTONAL FtNANCE (11-691 ASSOCIATION RECONSTRUCTION AND DEVELOPMENT CORPORAT1ON 1 - 2 (2) PREINVESTMENT PROGRAM - STUDY DATA SUPPLEMENT No.: (2 (to be filled in when possible)

1. TENTATIVE STAFFING TyPe cf Spec alist mumber cn Team Total Han-Iorths (a) Foreign Professicnal Staff: Fisheries systeratics experts 2 48 Biochemist (cell science) 1 24 Fisheries Ebologist 1 24 Master Laboratary Technician 1 24

Total: 5 120

(b) Local Professional Staff

2. TENTATIVE STUDY BUDGET (US$ equivalent) Foreign Local Total Currency Currency (a) Professional Staff Costs : 340,000 _ 3140,000 (b) Equipment 30°,000 - 30,000 (c) Other (Travel, non-prof. staff, etc.): 10,000 120,000 130,000

(d) Total 380,000- 120 3000 500,000

3. OTHER CO*ENTS (a) It is planned that a team of foin sfmntists and an expert technician make an intensive two year survey in collaboration with the EAFFRO and LVFRP who will provide logistic support in the supply of ship time, laboratory space study material and local staff. The team will identify all species present by a combination of morphometric and biochemical methods of taxonomy using electrophoretic and karyological (especially chromosome squash) techniques and the whole computerized0 The main taxocenes (species groups) of commercial importance will be identified and work commenced on their ecology, feeding habits, growth rate, rate of reproduction and distribution within the lake. Finally, the importance of each taxocene will be evaluated relative to the ecosystem as a whole and the fishable amount ofmch assessed. Foundations will be laid for future monitoring of the fishery as it proceeds. (b) Adequate knowledge of the fish stock is essential in any fishery in order to extract the maximum without depletion or even extinction of individual species. While intensive commercial fishing on Lake Victoria will very soon start, these essential prerequisites to correct management are dangerously lacking at present.

(c) It is assumed that phase II of the LVFRP will deal adequately with problems of distribution, storage and marketing of fish; the cost of studies in these areas is therefore not included in the above estimates.

Supplement Prepared by:R .Ellinger/F.Thcrriby Dept. or Agency: IBRD/PNEA Date: January 1971 W.Schaefer-K. P.Eng Supplement Revised by: J.p. mimoulir, mann ltem(s) Revised: Feb '71: 2 3(c) Dept. or Agency: IBRDD Pk-APA 1j3BD Date January 1971 7/19/71 - 6 -

CHAPTER 2

INDUSTRY (Sector No. 4)

Background and Key Issues

1. An account of industrial progress in the three cointries of Easu Africa and the problems re]ated to its future development is given in the IBRD Report of April, 1971_L

2. The efforts of the EAC to promote indus1 rialization within a common market have met with only limited success. 2 The EAC secretariat recently obtained agreement from the member Governments to make a new effort to establish some multinational industries. In January 1971, a consultant (Maxwell Stamp) was commissioned to undertake preliminal7y or "fact-finding" studies on the possibility of establishing multinational industries in iron and steel) chemicals (including petrochemicals) and motor vehicles. Mbmber Goverriments believe that some significant success in these efforts would have a long-term beneficial impact on both indus- trialization and common market development.

Proposed Preinvestment Studies

3. On the basis of the preliminary "factfinding" studies, a number of projects will be proposed for further study. Because of the importance placed on the proposed industries, because the investmnent usually required in any of those industries is large, and, because their economic viability may be the subject of some controversy, it is important that each completed study be as comprehensive and accurate as possible. For this reason, Study 4-1 is proposed to help the community review the consultant's recommendations and reports on investvigations and to carry out the additional project preparation work required. Becausse of the importance of the decisions on those industries, each study should be d6signed to determine both the national and the community costs and benefits. Special attention should be given to estimating domestic value added by manufacturing and the domestic cost per unit of foreign exchange savings.

4. Each proposed project will require a two-stage study, beginning with a basic feasibility analysis and ending after complete project preparation and commitment of financing.d In some cases the potential

/1 Industrial Development in East Africa: Progress, Policies, Problems and Prospects, Part I, the East African Conmmnunity.

/2 In this context the term multinational industries refers generally to those large-scale industrial units which have been identified by the Partner States as requiring access tc the market of more than one of the three Paltner States and whose establishment will scrve to accelerate the whole pace of industrial development in East Africa.

13 A feasibility study on each project may be neaded to enabls the Govern- ments to negotiate a division of the projects. After such negotia- tions, complete project preparation will be required. investors may carry out one or both stages of study and preparation, but some projects will probably require outside assistance.

5. It should be noted that there is a major problem area in which no study has been recommended. In textiles, where the industry has been beset by excess capacity, high costs and some poor quality, a comprehensive study is presently being completed by UNIDO and will be distributed shortly. Whether or not further studies are required will depend on the nature of the recommendations contained in that report.

6. The proposed regional study in the industry sector is:

Suggested Estimated Study Starting Duration Cost No. Name of Proposed Stu_y Year (Months) (US $ mi:Llion)

4-1. Feasibility studies and FY71-2 12 project preparation for multinational industries

7. In addition to the foregoing it is recommended that close coordination with the EAC be established with regard to the following studies recommended in other volumes of this report, as these studies may have an important bearing on the Secretariat's assigned tasks in multi-national sectors:

Volume II - Study 4-3: Nitrogenous Fertilizer Plant.

Volume III - Study 4-2: Karagwe Tinfield Development; Ty tl - Study 4-.: Development of Liganga Iron Ore; If it - Study h-5: Iron and Steel Manufacturing in Tanzania.

Volume IV - Study 4-3: Interlocking Project , Kilembe/Lake Katwe/East African Steel Co. - 8 - vRM No 386 INTERNATIONAL DEVELOPMENT INFERNATIONAL BANK FOR INTERNATIONAL FINANCE (11-69) ASSOCIATION RECONSTRUCTION AND DEVELOPMENT CORPORATION

PREINVESTMENT PROGRAM - STUDY DATA SHEET No.: 4-1 (1)

Area: Country: East Sector(s): East Africa African Community Industry

I. NAMEOF PROPOSED STUDY: Feasibility studies and project preparation for multinational industries. 2. PURPOSE: To determine the technical, commercial, and economic feasibility of establishing various multinational producing units in chemicals (including petrochemicals), motor vehicles and iron and steel, and to undertake additional project preparation for those projects deemed feasible.

3. SCOPE: For each project that is recommended by studies currently in progress, this study should entail: a) feasibility determinations that cover, to the extent possible, all pertinent technical and commercial factors and include estimates of costs of production and potential profitability. This should include determination of economic feasibility including estimates of the proportion of final value contributed by domestic value added and of the domestic effort cost per unit of foreign exchange savings (see * oa,4cl(2),item 3). b) for projects deemed feasible, completion of project preparation up to the point of commitment of financing. In some cases the potential private investors may carry out (a) and/or (b) phases of the study.

4. BACKGROUND: (a) Related Studies (b) Other Available Data (c) Expected Data Problems -UNIDO prefeasibility study on EADB industry reports of iron Release by EADB motor vehicle industry for EAC (1970) and steel products, chemicals of its industry -TVA study of fertilizer and transport equipment reports. potential in Kenya and EAC (1970) (presently available only -EADB/IBRD study on fertilizer in Kampala). industry in EAC (1969-70) (Cont'd on 4-1(2), item 3)

5. TIMING: (a) Duration and Phasing of Study (b) Desired Starting Date

Approximately one year, but may depend on the nature of the prefeasibility recommendations. FY71/72

6. COMMENT ON POTENTIAL STUDY SPONSORS:

7. PROJECT(S) EXPECTED TO RESULT FROM STUDY (if known): (a) Description (b) Estimated Investment (US$ equivalent)

To be determined by on-going studies of the (c) Financing Need and Potential Source subject industries.

8. ORDER OFMAGNITUDE OF STUDY COST (US$ equivalent): Sheet Prepared by: A. Cracco/W. Cole Dept. or Agency: IBRD/IPD Date: February 23, 1971 9. STAFF'S COMMENT ON PRIORITY RANKING OF STUDY: Sheet Revised by: High priority. This study should commence as soon Item(s) Revised: as prefeasibility results are krnown. Dept. or Agency:

Date:

W _ _~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~j______- 9 - FORM No. 386.01 INTERNATIONAL DEVELOPMENT INTERNATIONAL BANK FOR INTERNATIONAL FINANCE (II.-.9) ASSOCIATION RECONSTRUCTION AND DEVELOPMENT CORPORATION

PREINVESTMENT PROGRAM - STUDY DATA SUPPLEMENT No.: 4-1 (2) (to be filled in when possible)

1. TENTATIVE STAFFING Type of Specialist Number on Team Total Man-Months (a) Foreign Professional Staff:

Total:

(b) Local Professional Staff

2. TENTATIVE STUDY BUDGET (US$ equivalent) Foreign Local Total Currency CurrencyToa (a) Professional Staff Costs (b) Equipment (c) Other (Travel. non-prof. staff, etc.):

(d) Total

3. OTHER CO MENTS (ContId from 4.-1(l), item 3a): The IBRD report of October l4, 1970 (Volume I) points to the importance in investment decisions of considering domestic value added and the domestic effort cost per unit of foreign exchange savings.

(Cont'd from 4-ll), Item 4): (a) Related Studies: Prefeasibility studies by consultant (Maxwell Stamp) on iron and steel, chemical and motor vehicles industries (in progress).

General The phasing of the studies is not known at this time. Possibly, following completion of all feasibility determinations (see 4-1 (l), item 3a) the member governments will negotiate a division of projects for siting purposes. For this reason, it would be desirable that the feasibility studies be prepared simultaneously,

Supplement Prepared by: A. Cracco/ W. Cole Dept. or Agency: IBRD/IPD Date: February 23, 1971

Supplement Revised by: Item(s) Revised: Dept. or Agency: _ Date:_ - 10 -

CHAPTER 3

TELECOM IJCATIONS (Sector No. 7)

1. Teleconmmunications services in East Africa are operated by the East African Post and Telecommunications Corporation (EAP&TC) as common services for Kenya, Uganda and Tanzania. EAP&TC operate under the overall supervision of the Communications Council which, in turn, is responsible to the East African Authority for all communications matters in the three countries.

2. EAP&TC is governed by a Board of Directors on which all three countries are represented, and is required through its operations to be financially viable. It possesses a considerable amount of autonoriy but major increases in tariffs and major expenditures for development must be approved by the Conmunications Council. EAP&TC is a majority shareholder in the East Africa External Telecommunications Company, whiclh is operated in association with Mlessrs. Cable and Wireless Ltd.

3. The present desand for local telephone and telex services in East Africa is considerab'e and there are relatively large waiting lists. The long distance network is seriously overloaded and modercnization and improvement is urgent. International facilities are satisfactory, following the recent completion of a satellite earth station.

4. Ongoing telecommunications projects, partly financed by the Bank and SIDA, will meet requirements up to the end of 1972. It is however a matter of some urgency that EAP&TC should proceed with the plans for the next development program starting in 1973, if difficulties similar to those existing at present are to be avoided in the future.

5. The financial results obtained by EAP&TC are satisfactory. The corporation contributes from its o-vin resources about 50 percent of the cost of the ongoing development provisions and has relatively high rates of return and satisfactory operating ratios.

6. Development of the telecommunications network is a continuing process based on the information available on the existing network, and no preinvestment study is required. - 11 -

CHAPTER 4

TRANSPORTATCI (Sector No. 8) Background

1. Apart from the Tanzania/Zambia railway link now under construction, the railways, ports and air services (but not the airports) of the three Partner States of the East African Community are owned and operated by three public Corporations created as institutions or the Community under the 1967 Treaty for East African Cooperation. The Corporations are required to conduct their business according to commercial principles. The Treaty provides that the Corporations cannot be required by any of the Partner States to operate new services that are not financially viable unless the Government concerned agrees to underwrite possible losses.

Key Issues and Proposed Transport Studies

(a) Railways

2. The East African Railways Corporation's (EARC) freight traffic, accounting for nearly nine-tenths of its total revenues, has continued to increase in spite of substantial competition from road operators, particularly on the most important Mombasa-I1airobi route, A prime reason for the loss of much highly profitable tonnage, particularly petrol and aviation s-pirit, to road trar.sport has been the retention of a railway tariff created when the railway enjoyed a virtual monopoly of inland transport; this tariff did not take into account the competition of modern road transport or the cost structure of railway opera-tions. To help remedy the situation, it has now been agreed that the Corporation will adjust its tariff where necessary for traffic which, although susceptible to road competition, can be profitably carried by rail at competitive rates.

3. To recapture profitable tonnages from roads it is also necessary to ensure that EARC has the capacity to handle the traffic efficiently. How- ever, on the Mombasa-Nairobi-Kampala route there are already problems in dealing with the existing volume of railway movements. The opportunities for expanding the railway's capacity together with, and indeed largely as a result of, a more efficient use of its track and equipment, are numerous and compl:icated. Similar operating alternatives exist on other parts of the system where capacity is adequate to handle traffic demands, and proper study of them is needed to provide a sound basis for future planning and investments. The proposed study 8-1 would provide a simulation of railway operations in a computerized model which can demonstrate the consequences on operations, and on operating costs, of the options available for providing line capacity.

4. EARC is now engaged on a Sh 650 million Development Program for the four-year period 1969-72. At this time, however, it is necessary to consider in detail an investment program for the subsequent period 1973-76. To do this will require a comprehensive study of the Corporation's future technical and commercial development, taking into account the innovations and improvements possible in operating techniques and the potential future - 12 -

traffic the railway can be e;pected to attract/l. It is proposed that this Study (8-2) be undertaken by EARC's own staff, assisted by Canadian railway experts already seconded to the Corporation.

5. A study by consultants of all EAFC's passenger services and lines with only light freight traffic will soon be underway, and, therefore, has not been included in the reccamended study program.

(b) Air Transport

6. All East African airports served by scheduled flights are owned and operated by the individual Partner States, the Community's major responsibility, through its Directorate of Civil Aviation and the East African Meteorological Department, being limited to air traffic control and related facilities, including aids for take-off and landing.

7. Large-scale investment prograxr, either underway or in the planning stage, for all of East Africa's international airports are being implemented by the three countries independently. In Kenya feasibility and detailed engineering studies for expanding Nairobi Airport are nearing completion, while a study of the feasibility of providing Mombasa with an airport to accommodate inter-continental flights is also nearly ready. In Tanzania the new Kilimanjaro International Airport is expected to be in operation by August 1971, and a preliminary feasibility study for the expansion of Dar es Salaam Airport is already available. In Uganda, construction of a new runway at Entebbe Airport is well underway, and detailed engineering is ready for a new terminal building at the Airport. In addit-on, improvements are proposed for a number of national and East African airports, though in some cases the initiative has come first frog, East African Airways (EAA) rather than from the Partner States, as a result of the Corporation's proposals to introduce new aircraft types on particular routes.

8. At the present time, EAA operates scheduled services to twenty airports in Tanzania, four in Kenya and four in Uganda. Kenya is considering the introduction of EAA scheduled flights to some six additional airports, while in Uganda it seems possible that services to at least two other airports may be sought.

9. It is likely that a number of EAA's domestic services are not financially viable, though many of them may be fully justified on economic or social grounds. However, an independent study of the alternatives for future national and East African air service, which may resolve these problems, has not been made. Furthermore, in the absence of a comprehensive analysis of the East African air system, the Partner States do not have a proper basis for making investment decisions on a number of proposed projects for terminal improvement or expansion at the regional airports.

10. It is therefore proposed that an independent study of the domestic and regional schedules services (8-3) be undertaken to provide an objective

/1 The EAC has recently issued guidelines for the preparation of 5-year development programs by all its Corporations. - 13 -

starting point for a review by the national and East African three Partner States of the economic and social requirements to be met by air services. In doing so, it would also offer a coordinated basis for planning ground facilities in each of the Partner States, together with the operational requirements of EAA.

11. Though East Africa's air freight services, particularly to and from Europe, have expanded considerably in the last few years, the potential for further rapid growth demands a careful review of services and ground facilities alike. Such a study should be on a Community systems basis because this is how the airlines themselves - especially the Community's olwn airline - can best consider alternativres for meeting the individual needs of the three countries. The Community has already established terms of reference for such a study, which should be completed in advance of the proposed air systems study or incorporated in it.

12. East Africa's seaports are currently the subject of three studies by consultants for the East African Harbors Corporation (EAHC): (1) a study of future traffic through all East African ports, including forecasts of Zambian traffic through Dar es Salaam, is being completed; (2) a study of port operations, and in particular of cargo-handling methods and procedures, is underway; (3) terms of reference have been agreed for a Development Study of Dar es Salaam Port, to formulate a master plan for the port in the light of the traffic forecasts, and the study is expected to begin by about mid- 1971.

13. Although no additional studies are proposed specifically for the ports at this time, it is proposed that a comprehensive investigation of all the implications and requirements of a large-scale introduction of containers for seaborne traffic be undertaken. This study (8-h) would be concerned with the likcely impact of containerization on the Partner States, and its consequences for transport costs, quality of service, inland rail and road transportation, customs procedures and employnient. While the in-tention of shipping lines to introduce specialized container ships on the routes to East Africa is not yet clear, a proper understanding of the implications oi such an irnportant change would serve to strengthen the position of the Partner States in their discussions with maritime interests, and provide guidelines for the preparations necessary before the introduction of container traffic. List of Proposed Studies

Suggested Duration Estimated Study Starting in No. Cost Name of Proposed Study Year Month8 (Us $ mi2lions) 8-1 Railway Line Capacity Study FY71-2 7 0.15 8-2 East African Railways Cor- FY7l-2 12 - poration Investment Program 1973-76

8-3 Civil Aviation and Supporting FY71-2 6 0.20 Infrastructure 8-4 The Consequences of Introduc- FY71-2 6 0.14 ing Container Ships on Routes to East Africa Total: 0.49 - 15 - FORM ND. 386 INTERNATIONAL DEVELOPMENT INTERNATIONAL BANK FOR INTERNATIONAL FINANCE (11-69) ASSOCIATION RECONSTRUCTION AND DEVELOPMENT CORPORATION

PREINVESTNENT PROGRAM - STUDY DATA SHEET No.: 8-1 (1)

Area: Country: Sector(s): East Africa IEAC/KEMY, UGANIDA Transportation

1. NAMEOF PROPOSED STUDY: Railway Line Capacity Study

2. PURPOSE: To investigate alternatives for increasing capacity and/or improving efficiency of operations on the main lines of the East African Railways Corporation's network.

3. SCOPE: (a) Simulation of present railway operations by a computerized model. Input data: physical data of present track and signalling, rolling stock and traffic patterns Output data: running time of trains and operating costs. (b) Simulation of the effect of possible regrading realignments, extension of crossing sidings or introduction of new crossing, changes in signalling, new rolling stock changes in train diagrams, dieselization, electrification, etc., on the running time and operating cost of trains. (c) Recommend optimum solution for increasing capacity, and indicate order of magnitude of investment required.

4. BACKGROUND: (a) Related Studies (b) Other Available Data (c) Expected Data Problems 1. Planning of railway invest- Track profile and layout, No special difficulty. ment for the period 1973-76 available rolling stock, (subsequent to this study traffic origin and destination, see study No. 8-2). train diagrams. List of possible improvements.

5. lTIMING: (a) Duration and Phasing of Study (b) Desired Starting Date 1. Simulation of present operations 4 Months FY71-2

2. Simulation of alternative improvements 3 Months Total time: 7 months 6. CO*ENT ONPOTEN1IAL STUDY SPONSORS: East African Railways Corporation (EARC) study to be fundedl with proceeds of Loan 67h-EA.

7. PROJECT(S) EXPECTED TO RESULT FROM STUDY (if known): (a) Description (b) Estimated Investmnt (US$ equivalent) Investments in the improvement of marshalling yards, signalling or any other according to the (c) Financing Need and Potential Source study's findings and recommendations. EARC's own funds and IBRD Loan 674- EA and possible loan resulting from 'study No. 8-2. 8. ORDER OF MAGNITUDE OF STUDY COST (US$ equivalent): Sheet Prepared by. Jose A. Bronfman 150,000 Dept. or Agency: IBRD/TPD Date: October 1970

9. STAFF'S COMMENT ON PRIORITY RANKING OF STUDY: High priority Sheet Revised by: P. Engel ann because the present limited capacity of the Mombasa- Item(s) Revised: 1,2,3(b)(c) Nairobi-Kampala line, the backbone of the railway and Dept or Agency IBRD transport system of the East African Community, is . _ already causing difficulty. Date: 7/19/71 - 16 - FORM No. 386.01 INTERNATIONAL DEVELOPMENT INTERNATIONAL BANK FOR INTERNATIONAL FINANCE (11-69) ASSOCIATION RECONSTRUCTION AND DEVELOPMENT CORPORATION PREINVESTMENT PROGRAM - STUDY DATA SUPPLEMENT No.: 8-1 (2) (to be filled in when possible)

I. TENTATIVE STAFFING Type of Specialist Number on Team Total Man-Months (a) Foreign Professional Staff: Systems Analysts 3 21

Total: 3 21

(b) Local Professional Staff

2. TENTATIVE STUDY BUDGET (US$ equivalent) Foreign Local Currency Currency Total (a) Professional Staff Costs 105,000 20,000 125,000 (b) Equipment (c) Other (Travel, non-prof. staff, etc.):(incl.computer)15,000 10,000 25,000 (d) Total 120,000 30,000 150,000

3. OTHER COMMENTS All data on line characteristics, traffic patterns and rolling stock to be provided from the records of the EARC.

Supplement Prepared by: J.A.Bronfman4pgkH. Dept. or Agency: IBRD 1 ers Date: February 1971

Supplement Revised by: P. Engelmann Item(s) Revised: 1,2,3 Dept. or Agency: I_B__D Date: 7/20/71 - 17 - FORM No. 386 INTERNATIONAL DEVELOPMENT INTERNATIONAL BANK FOR INTERNATIONAL FINANCE (11-69). ASSOCIATION RECONSTRUCTION AND DEVELOPMENT CORPORATION

PREINVESTMENT PROGRAM - STUDY DATA SHEET No.: 8 - 2

Area: Country: Sector(s): East Africa EAC/Kenya, Transportation I Tanzania, Uganda I

1. NAMEOF PROPOSED STUDY: East African Railways Corporation Investment Program 1973-76

2. PURPOSE: To prepare the 1973-76 EARC's investment program and plan of action to achieve operational efficiency and financial viability in providing for the transportation needs of the developing economies of the region.

3. SCOPE: Review the role of railway transportation within the national economies and the transport sector. Prepare traffic forecast. Review investment required to satisfy demand, to improve quality of railway service and to reduce its cost. Review progress of works under the 1969-72 investment plan ascertaining the carry-over to th 1973-76 plan. Provide for completion of the dieselization program by end 1976.

4. BACKGROUND: (a) Related Studies (b) Other Available Data (c) Expected Data Problems l.National development plans of Kenya, Uganda and Tanzania. Delay of EARC in produc- 2.EIU's East Africa Transport Study. ing traffic, operational 3.EARC's internal data and financial statistics. !4.IBRD appraisal of Third Railway Project in EA, 1970.

5. TIMING: (a) Duration and Phasing of Study (b) Desired Starting Date One Year FY71-2

6. COMMENT ON POTENTIAL STUDY SPONSORS: The EARC should undertake this study with its own staff assisted by the Canadian Railway experts already engaged by them. Appropriate coordination should be established with the planning offices of the EAC Com.Communications Council and ECPC in Arusha.

7. PROJECT(S) EXPECTED TO RESULT FROM STUDY (if known): (a) Description (b) Estimated Investment (US$ equivalent) EARC's 1973-76 Investment Plan, Third Railway not known Project (c) Financing Need and Potential Source Foreign exchange element: not known Potential source: IBRD/IDA

8. ORDER OF MAGNITUDE OF STUDY COST (US$ equivalent): Sheet Prepared by: Jose A. Bronfman Not known Dept. orAgnc: IBRD/TPD Date: Uctober 1970

9. STAFF'S COMMENT ON PRIORITY RANKING OF STUDY: This study should Sheet Revised by: P. Engelmann enjoy the highest priority. It is vital to the Item(s) Revised: 6 continued improvement of railway services and the Dept. or Agency: IBRD achievement of financial viability in a competitive environment. Date: 7/19/71 I_____ - 18 - FoRM No. 386 INTERNATIONAL DEVELOPMENT INTERNATIONAL BANK FOR INTERNATIONAL FINANCE (II.69) ASSOCIATION RE:CONSTRUCTION AND DEVELOPMENT CORPORATION

PREINVESTMENT PROGRAM - STUDY DATA SHEET No.: 8-R (- )

Area: Country: EAC/Kenya, Sector(s): East Africa Tanzania, Uganda Transportation

l. NAMEOF PROPOSED STUDY: EAST AFRICAN COMMUNITY - Civil Aviation and Supporting Infrastructure.

2. PURPOSE: With a view to meeting economic, social and political requirements of the EAC and it partner states more effectively, prepare recommendations, after consideration of alternatives of meeting these requirements and giving due consideration to the corporate requirements of EAA for (1) a program for network alterations or changes in the level of scheduled air seRices, and (2) a program for coordinated development of ground facilities. 3. SCOPE: (a) Analyze present and potential scheduled aviation network by flight sectors and assess existing and recommended services for the next 5 and 10 years. The analysis should cover: a. existing and future traffic developments; b. type and frequency of service; c. load factors and financial status of sectors; and d. aircraft type, of those available to EAA, best suited to sectors; (b Recommend an investment program to meet the anticipated ground facility requirements for the next 5 and 10 years including estimated costs and timing; and (c) The analysis and recommendations should give particular attention to the needs of tourism and horticultural exports and should also take into account the ground facility requirements of private aviation.

4. BACKGROUND: (a) Related Studies (b) Other Available Data (c) Expected Data Problems i) EAA 1971-75 Five Year Plan and Partner States' 5-yr. Develop- Traffic forecasting on revision to 1972-76; ment Plans; DGCA statistical low traffic sectors. ii)Current airport improvement plans returns; UNDP Aviation Train- of the partner states; ing programs; 5-yr. Plan of Charter and general iii)EAC Air Freight Study (under way). Meteorologic Department. aviation statistics.

5. TIMING: (a) Duration and Phasing of Study (b) Desired Starting Date

Nine months FY71-2

6. COMMENT ON POTENTIAL STUDY SPONSORS: The East African Community should be the sponsor for this study. UNDP may be interested in financing the cost of consultants.

7. PROJECT(S) EXPECTED TO RESULT FROM STUDY (if known): (a) Description (b) Estimated Investment (US$ equivalent) General program of airport improvements to meet level of service requirements. Possible reorganization (c) Financing Need and Potential Source of EAA to provide better management of regional system with its particular requirements.

8. ORDER OF MAGNITUDE OF STUDY COST (US$ equivalent): Sheet Prepared by: S. Hayden 200,000 Dept. or Agency: Transportation Projects Date: February 1971 9. STAFF'S COMMENT ON PRIORITY RANKING OF STUDY: High priority to Sheet Revised by: P. Engelmann ensure rational approach to airport improvement program Item(s) Revised: 1,3(a)(c)&4(a)(b) so that needs of partner states are reasonably considered. The abilities and limitations of EAA to provide Dept. or Agency: IBRD |service must also be a factor in the recommendea Date: 7/19/71 ;program. ______- 19 - FORMI No. 386.01 INTERNATIONAL DEVELOPMENT INTERNATIONAL BANK FOR INTERNATIONAL FINANCE ('I.fi9) ASSOCIATION RECONSTRUCTION AND DEVELOPMENT CORPORATION

PREINVESTMENT PROGRAM - STUDY DATA SUPPLEMENT No.: 8 (2) (to be filled in when possible)

I. TENTATIVE STAFFING Type of Specialist Number on Team Total Man-Months (a) Foreign Professional Staff: Air Transport Economist 1 9

Airports/General Engineer 1 9

Airline Route Analyst 1 6

ATC/Comm Specialists 2 6

Total: _ _5 30

(b) Local Professional Staff : Economists, Engineers, etc. b- 6 36

2. TENTATIVE STUDY BUDGET (US$ equivalent) Foreign Local Total Currency Currency (a) Professional Staff Costs : 130,000 50,000 l8oO,OO (b) Equipment : _

(d) Total 140lOo000 60,000 200.000

3. OTHER CO>MENTS At the present time East African Airways Corporation (EAA) provides scheduled service to airports in Kenya, Tanzania and Uganda. Construction and maintenance of the ground facilities is the responsibility of the individual states. The EAC Director General of Civil Aviation (DGCA) is responsible for providing communication, navigational aid and air traffic control personnel and equipment for all of the airports and airways in the Community. EAA provides flight equipment and air crews and to a large extent determines the routing and scheduling for the various services. The aircraft currently in use are: 5-Super VO-10; 3-DH 6 Comet 4; 4-Fokker F-27; 4-DHC Twin Otter; and -Douglas DC-3. Three Douglas DC-9 are on order and the first should soon replace the Comets in trunk route services within the Community.

EAA's Five Year Plan (1972-1976) provides for gradual upgrading of internal services to obtain maximum utilization of the DC-9 and F-27 aircraft. Introduction of these aircraft on sectors previously served with lower class equipment will require planning and investment by the Partner States in upgraded ground facilities and will also require additional DGCA investment in equipment and operating personnel. As a commercial organization, EAA bases its planning on developing a route structure that will provide the greatest possible utilization of the various types of aircraft in its fleet. Planning on this basis, while essentially correct for an airline, does not necessarily best serve the economic, social and political reouirements of the Partner States. Route development planning should be a cooperative function of the Partner States and their airline aimed at reaching the best adjustment be- tween the States' air transport requirements and the airline's corporate limitations in meeting such requirements while remaining economically and financially viable.

The financial burden on the Partner States and the Supplement Prepared by: S. Hayden DCA to provide infrastructure to support the air trans- Dept. orAgency: Transportation Projects port requirements is not a small one. Without carefully Date: February 1971 oordinated planning by all concerned parties the obvious enefits of the air transport sector to the welfare of Sugiplemnent Revised by: the P,artner St.ates may be unnecessarily frustrated. Item(s) Revised:

Dept. or Agency: (continued on Sheet 8-3 (3)) Date: - 20 -

No. 8-3 (3)

PREINVESTMENT PROGRAM-STUDY DATA SUPPLEMENT

Other Comments (continued from Sheet 8-3 (2)):